def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
UNIVERSAL DISPLAY CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee paid previously with preliminary materials. |
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registration statement number, or the Form or Schedule and the date
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UNIVERSAL DISPLAY CORPORATION
375 Phillips Boulevard
Ewing, New Jersey 08618
NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 2008
Dear Shareholders:
You are cordially invited to attend our 2008 Annual Meeting of Shareholders on Thursday, June 19,
2008, at 4:00 p.m., Eastern Time, at the Crowne Plaza Hotel (formerly the Holiday Inn on City Line
Avenue), 4100 Presidential Boulevard, Philadelphia, Pennsylvania 19131. We are holding the meeting
to:
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Elect seven members of our Board of Directors to hold one-year terms; |
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Consider and vote on a proposal to ratify the appointment of KPMG LLP as the Companys
independent registered public accounting firm for 2008; and |
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Transact any other business that may properly come before the shareholders at the
meeting. |
If you were the record owner of shares of our common stock at the close of business on April 9,
2008, you may attend and vote at the meeting. If you cannot attend the meeting, you may vote by
returning the enclosed proxy card or, if you hold your shares in street name, the enclosed voting
instruction form. Any shareholder of record may vote in person at the meeting, even if he or she
has already returned a proxy card. A list of all shareholders of record will be made available for
review by registered shareholders both at the meeting and, during regular business hours, at our
headquarters in Ewing, New Jersey for 10 days prior to the meeting.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Sidney D. Rosenblatt
Sidney D. Rosenblatt
Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
Ewing, New Jersey
April 28, 2008
As promptly as possible, please complete, sign, date and return the enclosed proxy card or voting
instruction form in the postage-paid return envelope provided. Please fill out and return the
proxy card or instruction form whether or not you expect to attend the annual meeting in person.
If you are a shareholder of record and you attend the meeting in person, you may revoke your proxy
and vote your shares at that time.
UNIVERSAL DISPLAY CORPORATION
375 Phillips Boulevard
Ewing, New Jersey 08618
PROXY STATEMENT FOR 2008 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 2008
INFORMATION CONCERNING THIS SOLICITATION
The Board of Directors of Universal Display Corporation (we, us or the Company) is soliciting
proxies for the 2008 Annual Meeting of Shareholders to be held on Thursday, June 19, 2008, at 4:00
p.m., Eastern Time, at the Crowne Plaza Hotel (formerly the Holiday Inn on City Line Avenue), 4100
Presidential Boulevard, Philadelphia, Pennsylvania 19131 (the Annual Meeting). This proxy
statement contains important information for shareholders to consider when deciding how to vote on
the matters brought before the Annual Meeting. Please read it carefully.
At the Annual Meeting, our shareholders will be asked to vote upon:
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the election of seven members of our Board of Directors to hold one-year terms; |
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a proposal to ratify the appointment of KPMG LLP as the Companys independent
registered public accounting firm for 2008; and |
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such other business as may properly come before the shareholders at the Annual
Meeting. |
Voting materials, which include the proxy statement, a proxy card and our Annual Report for 2007,
will be mailed to all registered shareholders beginning on or about April 28, 2008. Shareholders
holding their shares in street name should receive the proxy statement and a voting instruction
form from their broker, bank or other custodian, nominee or fiduciary. We will pay the expenses of
these solicitations. In addition to solicitation by mail, proxies may be solicited by telephone or
in person by some of our officers, directors and regular employees or independent contractors who
will not be specially engaged or compensated for such services.
Our principal executive offices are located at 375 Phillips Boulevard, Ewing, New Jersey 08618.
Our general telephone number is (609) 671-0980.
VOTING AT THE ANNUAL MEETING
Our Board of Directors has set April 9, 2008 as the record date for the Annual Meeting (the Record
Date). As of the Record Date, we had outstanding 35,846,015 shares of common stock and 200,000
shares of Series A Nonconvertible Preferred Stock. Each holder of our common stock or Series A
Nonconvertible Preferred Stock is entitled to one vote per share on all matters to be voted on at
the Annual Meeting. Holders of our common stock and Series A Nonconvertible Preferred Stock vote
together as a single class on all matters.
Only shareholders of record as of the close of business on the Record Date may attend and vote at
the Annual Meeting. The presence, in person or by proxy, of shareholders entitled to cast at least
a majority of the votes that all shareholders are entitled to cast on a particular matter to be
acted upon at the Annual Meeting will constitute a quorum for purposes of that matter.
Shareholders of record who return a proxy card but abstain from voting or fail to vote on a
particular matter will be considered present for quorum purposes with respect to the matter. In
addition, shares held by brokers or nominees who have notified us on a proxy card or otherwise in
accordance with industry practice that they have not received voting instructions with respect to a
particular matter and that they lack or have declined to exercise voting authority with respect to
such matter (referred to in this proxy statement as uninstructed shares), will be considered
present for quorum purposes with respect to the matter. Votes not cast
by brokers or nominees with respect to uninstructed shares are referred to in this proxy statement
as broker non-votes.
The persons named in the enclosed proxy will vote the shares represented by each properly executed
proxy as directed therein. In the absence of such direction on a properly executed proxy card, the
persons named in the enclosed proxy will vote FOR the persons nominated by our Board of Directors
for election as directors and FOR the proposal to ratify KPMG LLP as our independent registered
public accounting firm. As to other items of business that may properly be presented at the Annual
Meeting for action, the persons named in the enclosed proxy will vote the shares represented by the
proxy in accordance with their best judgment.
A shareholder of record may revoke his or her proxy at any time before its exercise by giving
written notice of such revocation to our Corporate Secretary. In addition, any shareholder of
record may vote by ballot at the Annual Meeting, even if he or she has already returned a proxy
card.
The preliminary voting results will be announced at the Annual Meeting. The final results will be
published in our quarterly report on Form 10-Q for the quarter ending June 30, 2008.
Your vote is important. Please complete, sign and return the accompanying proxy card or voting
instruction form whether or not you plan to attend the Annual Meeting. If you plan to attend the
Annual Meeting to vote in person and your shares are registered with our transfer agent in the name
of a broker, bank or other custodian, nominee or fiduciary, you must secure a proxy from that
person or entity assigning you the right to vote your shares of common stock.
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PROPOSAL 1
ELECTION OF DIRECTORS
Our Board of Directors has fixed the number of directors at seven, all of whom are to be elected at
the Annual Meeting. Each director elected will serve until our next annual meeting of shareholders
and such time as a successor has been selected and qualified, or until the directors earlier
death, resignation or removal. Each nominee has consented to being nominated and to serve if
elected. If any nominee should subsequently decline or be unable to serve, the persons named in
the proxy will vote for the election of such substitute nominee as shall be determined by them in
accordance with their best judgment.
Pursuant to our Amended and Restated Articles of Incorporation, the holder of our Series A
Nonconvertible Preferred Stock is entitled to nominate and elect two of the members of our Board of
Directors. The holder of the Series A Nonconvertible Preferred Stock has waived this right with
respect to the election of directors at the Annual Meeting.
All nominees are presently members of our Board of Directors whose terms expire at the Annual
Meeting. The nominees for election are as follows:
NOMINEES FOR ELECTION AS DIRECTORS
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Year First Became Director, |
Name of Director |
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Principal Occupations and Certain Directorships |
Sherwin I. Seligsohn
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72 |
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Mr. Seligsohn is our Founder and has been the
Chairman of our Board of Directors since June
1995. He also served as our Chief Executive
Officer from June 1995 through December 2007,
and as our President from June 1995 through
May 1996. Mr. Seligsohn serves as the sole
Director, President and Secretary of American
Biomimetics Corporation, International
Multi-Media Corporation, and Wireless Unified
Network Systems Corporation. He is also
Chairman of the Board of Directors, President
and Chief Executive Officer of Global Photonic
Energy Corporation. From June 1990 to October
1991, Mr. Seligsohn was Chairman Emeritus of
InterDigital Communications, Inc.
(InterDigital), formerly International Mobile
Machines Corporation. He founded InterDigital
and from August 1972 to June 1990 served as
its Chairman of the Board of Directors. Mr.
Seligsohn is a member of the Industrial
Advisory Board of the Princeton Institute for
the Science and Technology of Materials
(PRISM) at Princeton University. |
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Steven V. Abramson
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56 |
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Mr. Abramson is our President and Chief
Executive Officer, and has been a member of
our Board of Directors since May 1996. Mr.
Abramson served as our President and Chief
Operating Officer from May 1996 through
December 2007. From March 1992 to May 1996,
Mr. Abramson was Vice President, General
Counsel, Secretary and Treasurer of Roy F.
Weston, Inc., a worldwide environmental
consulting and engineering firm. From
December 1982 to December 1991, Mr. Abramson
held various positions at InterDigital,
including General Counsel, Executive Vice
President and General Manager of the
Technology Licensing Division. |
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Sidney D. Rosenblatt
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Mr. Rosenblatt has been our Executive Vice
President, Chief Financial Officer, Treasurer
and Secretary since June 1995, and has been a
member of our Board of Directors since May
1996. Mr. Rosenblatt is the owner of and
served as the President of S. Zitner Company
from August 1990 through December 1998. From
May 1982 to August 1990, Mr. Rosenblatt served
as the Senior Vice President, Chief Financial
Officer and Treasurer of InterDigital. |
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Leonard Becker
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Mr. Becker has been a member of our Board of
Directors since February 2001. For the last
40 years, Mr. Becker has been a general
partner of Becker Associates, which is engaged
in real estate investments and management. He |
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Principal Occupations and Certain Directorships |
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served on the Board of Directors of American
Business Financial Services, Inc. (OTCBB: |
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ABFIQ.PK), as well as on its compensation
and audit committees, until March 2007. He
also previously served as a director of Eagle
National Bank and Cabot Medical Corporation. |
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Elizabeth H. Gemmill
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62 |
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Ms. Gemmill has been a member of our Board of
Directors since April 1997. Since March 1999,
she has been Managing Trustee and, more
recently, President of the Warwick Foundation.
From February 1988 to March 1999, Ms. Gemmill
was Vice President and Secretary of Tasty
Baking Company. Ms. Gemmill is Chairman of
the Board of Philadelphia University and
serves on the Boards of Directors of
Philadelphia Consolidated Holdings Corporation
(NASDAQ: PHLY), Beneficial Mutual Bancorp,
Inc., the Philadelphia College of Osteopathic
Medicine, and the YMCA of Philadelphia and
Vicinity. She previously served as a director
of American Water Works Company, Inc. (NYSE: AWK) until it was sold in early 2003. |
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C. Keith Hartley
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Mr. Hartley has been a member of our Board of
Directors since September 2000. Since June
2000, he has been the President of Hartley
Capital Advisors, a merchant banking firm.
From August 1995 to May 2000, he was the
managing partner of Forum Capital Markets LLC,
an investment banking company. In the past,
Mr. Hartley held the position of managing
partner for Peers & Co. and Drexel Burnham
Lambert, Inc. He also serves as a director of
Idera Pharmaceuticals, Inc. (AMEX: IDP) and
Swisher International Group, Inc. |
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Lawrence Lacerte
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55 |
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Mr. Lacerte has been a member of our Board of
Directors since October 1999. Since July
1998, he has been Chairman of the Board of
Directors and Chief Executive Officer of
Exponent Technologies, Inc., a company
specializing in technology and
Internet-related ventures. Prior to that
time, he was the founder, Chairman of the
Board of Directors and Chief Executive Officer
of Lacerte Software Corp., which was sold to
Intuit Corporation in June 1998. |
Vote Required and Recommendation of our Board of Directors
Directors are elected by a plurality and the seven nominees who receive the most votes will be
elected. Shareholders may vote for or withhold their vote from each nominee, or the entire group
of nominees as a whole. Broker non-votes are not considered votes cast with respect to this
proposal and will have no effect on the outcome of the election of directors. Shareholders do not
have cumulative voting rights with regard to the election of members of our Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR.
Director Independence
Our Board of Directors has determined that a majority of its members are independent directors
within the meaning of applicable NASDAQ listing requirements. Our independent directors are Mr.
Becker, Ms. Gemmill, Mr. Hartley and Mr. Lacerte. In addition, based on these listing
requirements, our Board of Directors has determined that Mr. Seligsohn, Mr. Abramson and Mr.
Rosenblatt are not independent directors because they are all officers of the Company.
Our independent directors meet in executive session on a periodic basis in connection with
regularly-scheduled meetings of the full Board of Directors, as well as in their capacity as
members of our Audit Committee and Compensation Committee.
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Board Meetings and Committees; Annual Meeting Attendance
In 2007, our Board of Directors held 10 meetings. Five of our incumbent directors attended all of
these meetings and two of our incumbent directors attended nine of the meetings. Our Audit
Committee held four meetings in 2007, and each member of the Audit Committee attended all of these
meetings. Our Compensation Committee held nine meetings in 2007. Two members of the committee
attended all of these meetings and two members of the committee attended eight of the meetings.
All incumbent directors and nominees for election as director are encouraged, but not required, to
attend our annual meetings of shareholders. All but two of the current members of our Board of
Directors attended our annual meeting of shareholders in 2007.
Director Nominations
Our Board of Directors has not established a standing committee to nominate candidates for election
as directors. Instead, a majority of our independent directors recommend, and our full Board of
Directors selects, the candidates that will be nominated to stand for election as directors at our
annual meeting of shareholders. Our Board of Directors believes that this process is appropriate
given the relatively small size of our Board of Directors and the fact that each independent
director already serves on both the Audit Committee and the Compensation Committee. Since we do
not have a nominating committee, our Board of Directors has not adopted a nominating committee
charter.
In nominating candidates for election as directors, both our independent directors and our full
Board of Directors consider the skills, experience, character, commitment and diversity of
background of each potential nominee, all in the context of the requirements of our Board of
Directors at that point in time. Each candidate should be an individual who has demonstrated
integrity and ethics, has an understanding of the elements relevant to the success of a
publicly-traded company, and has established a record of professional accomplishment in such
candidates chosen field. Each candidate also should be prepared to participate in all Board and
committee meetings that he or she attends, and should not have other personal or professional
commitments that might reasonably be expected to interfere with or limit such candidates ability
to do so. Additionally, in determining whether to recommend a director for re-election, the
directors past attendance at Board and committee meetings should be considered.
Our Board of Directors has no stated specific, minimum qualifications that must be met by
candidates for election as directors. However, in accordance with SEC rules and applicable NASDAQ
listing requirements, at least one member of our Board of Directors is expected to meet the
criteria for an audit committee financial expert as defined by SEC rules, and a majority of the
members of the Board are expected to meet the definition of independent director within the
meaning of SEC rules and applicable NASDAQ listing requirements.
Any shareholder of record entitled to vote in the election of directors at an annual or special
meeting of our shareholders may nominate one or more persons to stand for election to the Board at
such meeting in accordance with the requirements of our Amended and Restated Bylaws. In order to
be considered by our Board of Directors in connection with the nominations process for our 2009
annual meeting of shareholders, all such director nominations must be received by our Corporate
Secretary at our principal executive offices by February 19, 2009. Each such submission must be in
writing and must comply with the notice, information and consent provisions contained in our
Amended and Restated Bylaws. In addition, each such submission must include any other information
required by Regulation 14A under the Securities Exchange Act of 1934, as amended (the Exchange
Act). Submissions should be addressed to our Corporate Secretary at the following address:
Universal Display Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618.
Our independent directors and the full Board of Directors will consider all candidates identified
by shareholders through the processes described above, and will evaluate each of them, including
incumbent directors, based on the same criteria. Although we have no formal policy regarding
shareholder nominees, our Board of Directors believes that shareholder nominees should be viewed in
substantially the same manner as other nominees. The consideration of any candidate for director
will be based on an assessment of the individuals background, skills and abilities, together with
an assessment of whether such characteristics qualify the individual to fulfill the needs of our
Board of Directors at that time.
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Audit Committee
Our Board of Directors has established a standing Audit Committee. The members of our Audit
Committee are Mr. Becker, Ms. Gemmill, Mr. Hartley and Mr. Lacerte. Ms. Gemmill is the Chairperson
of our Audit Committee.
Our Audit Committee operates pursuant to a written charter that complies with the applicable
provisions of the Sarbanes-Oxley Act of 2002 and related rules of the Securities and Exchange
Commission (the SEC) and NASDAQ listing standards. The Audit Committee Charter was last reviewed
by our Board of Directors on April 8, 2008, and a copy of the updated charter is publicly available
through the For Investors section of our website at http://www.universaldisplay.com.
According to its charter, our Audit Committee is responsible for, among other things:
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reviewing our financial statements and discussing these statements and other
relevant financial matters with management and our independent registered public
accounting firm; |
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selecting and evaluating our independent registered public accounting firm and
approving all audit engagement fees and terms; |
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pre-approving all audit and non-audit services provided to us, including the
scope of such services, the procedures to be utilized and the compensation to be
paid; |
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assessing the effectiveness of our internal control system and discussing this
assessment with management and our independent registered public accounting firm; |
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reviewing our financial reporting and accounting standards and principles,
significant changes in these standards and principles, or in their application, and
key accounting decisions affecting our financial statements, including alternatives
to, and the rationale for, these decisions; |
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discussing with management and our independent registered public accounting
firm, as appropriate, our risk assessment and risk management policies, including
our major exposures to financial risk and the steps taken by management to monitor
and mitigate these exposures; and |
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reviewing and investigating any matters pertaining to the integrity of
management, including any actual or potential conflicts of interest or allegations
of fraud, and the adherence of management to our standards of business conduct. |
Each member of our Audit Committee meets the financial knowledge and independence criteria of the
NASDAQ listing requirements. Our Board of Directors has determined that Ms. Gemmill is an audit
committee financial expert as such term is defined under SEC regulations, and that Ms. Gemmill
meets the financial sophistication and independence standards mandated by the NASDAQ listing
requirements.
Report of the Audit Committee
The Audit Committee has reviewed and discussed with Company management the audited financial
statements of the Company for the fiscal year ended December 31, 2007, as well as managements
assessment of the Companys internal control over financial reporting as of December 31, 2007. In
addition, the Audit Committee has discussed with the Companys independent registered public
accounting firm, KPMG LLP, the matters required to be discussed by Statement on Auditing Standards
No. 61 (Codification of Statements on Auditing Standards, AU § 380), as may be modified or
supplemented, and the matters required by auditing standards of the Public Company Accounting
Oversight Board (PCAOB), including the opinions regarding internal control over financial reporting
pursuant to PCAOB Auditing Standard No. 5. The Audit Committee also has received the written
disclosures and the letter from KPMG LLP required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and has discussed the independence of KPMG LLP
with that firm. Based on the Audit
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Committees review of the matters noted above and its discussions with management and the Companys
independent registered public accounting firm, the Audit Committee recommended to the Companys
Board of Directors that the audited financial statements be included in the Companys Annual Report
on Form 10-K for the period ended December 31, 2007.
Respectfully submitted by the Audit Committee
Elizabeth H. Gemmill (Chairperson)
Leonard Becker
C. Keith Hartley
Lawrence Lacerte
Compensation Committee
Our Board of Directors has established a standing Compensation Committee. The members of our
Compensation Committee are Mr. Becker, Ms. Gemmill, Mr. Hartley and Mr. Lacerte. Ms. Gemmill is
the Chairperson of our Compensation Committee.
Our Compensation Committee, which does not operate pursuant to a written charter, is responsible
for, among other things:
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recommending to the full Board of Directors the base salary, incentive compensation and
any other compensation for the Companys Chief Executive Officer, Chief Financial Officer,
Chief Technical Officer and Founder; |
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recommending to the full Board of Directors the compensation for service as a member of
the Board of Directors or any Board committees; |
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reviewing and approving or ratifying managements recommendations for equity
compensation awards to other employees and consultants of the Company; |
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administering and discharging the duties imposed on the Committee under the terms of the
Companys Equity Compensation Plan; and |
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performing such other functions and duties as are deemed appropriate by the full Board
of Directors. |
Our Compensation Committee has historically determined the compensation for the Companys executive
officers in two stages. Base salary adjustments and perquisites and other benefits (life insurance
coverage, automobile allowance, etc.) have been approved mid-year, to coincide with the annual
employment anniversaries of these individuals with the Company. Annual bonus equity compensation
awards, long-term incentive equity compensation awards, and special cash and non-cash awards have
been granted at or shortly after year-end. This enables the Committee to review the Companys
fiscal performance for the year in determining these grants.
For 2007, our Compensation Committee determined the compensation for members of the Companys Board
of Directors in advance. This compensation was paid in quarterly installments shortly following
the end of each quarter during the year. No separate compensation is awarded for committee
service, and directors who are employees or officers of the Company do not receive separate
compensation for their service on the Board.
Company management recommends to the Compensation Committee compensation for all of the Companys
employees, including its executive officers and directors, in order to facilitate the Committees
activities. However, the Committee exercises independent judgment in making its determinations of
compensation for executive officers and directors, and in recommending this compensation to the
full Board of Directors. This includes meetings of the Committee in executive session to review
and ultimately finalize its recommendations.
In 2007, the Compensation Committee engaged Hay Group as consultants to assist the Committee in
evaluating whether to adopt a supplemental executive retirement plan (SERP) for certain of the
Companys executive officers.
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Hay Group provided the Committee with a report outlining various design alternatives for the
proposed plan, the prevalence of benefits offered by other companies with similar plans, projected
cost estimates for implementation of the plan and a summary of other design and accounting
considerations. The Committee is considering Hay Groups report as part of its ongoing effort to
evaluate design alternatives for the proposed SERP.
Compensation Committee Interlocks and Insider Participation
Each member of our Compensation Committee is an independent director under the NASDAQ listing
requirements. None of the members of our Compensation Committee were officers or employees of the
Company or its subsidiary during 2007, were formerly officers of the Company or its subsidiary, or
had any relationship with the Company since the beginning of 2007 that requires disclosure under
Item 404 of Regulation S-K. Nor have there been, since the beginning of 2007, any compensation
committee interlocks involving our directors and executive officers that require disclosure under
Item 407 of Regulation S-K.
Report of the Compensation Committee
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review
and discussions, the Compensation Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this Proxy Statement.
Respectfully submitted by the Compensation Committee
Elizabeth H. Gemmill (Chairperson)
Leonard Becker
C. Keith Hartley
Lawrence Lacerte
Shareholder Communications
Shareholders may send communications to our Board of Directors, or to individual members of our
Board of Directors, care of our Corporate Secretary at the following address: Universal Display
Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618. In general, all shareholder
communications sent to our Corporate Secretary for forwarding to our Board of Directors, or to
specified Board members, will be forwarded in accordance with the senders instructions. However,
our Corporate Secretary reserves the right to not forward to members of our Board of Directors any
abusive, threatening or otherwise inappropriate materials. Information on how to submit complaints
to our Audit Committee regarding accounting, internal accounting controls or auditing matters can
be found on the For Investors section of our website at http://www.universaldisplay.com.
The information on our website referenced in this proxy statement is not and should not be
considered a part of this proxy statement.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
Compensation and benefits programs are an important part of the relationship between our Company
and its executive officers. Compensation for our executive officers is intended to be competitive,
thereby allowing us to attract, motivate and retain talented personnel. We also seek to reward our
executive officers for accomplishments and contributions to the Companys long-term strategic and
short-term business goals.
How We Determine Executive Compensation
Each year, our Compensation Committee reviews and approves the compensation for our executive
officers. This process begins with a review of the compensation paid to our executive officers in
recent prior years. We use prior compensation as a starting point because we believe, as a general
matter, that executive compensation should remain relatively consistent from year-to-year. The
market for our OLED technologies and materials is still at a very early stage, which poses risks
for our business. By keeping executive compensation relatively constant year-to-year, we provide a
stable pay environment for our executive officers while they work to grow our business and
revenues.
With prior compensation as a baseline, we then consider the extent to which we have achieved our
business goals for the current year, including our goals for revenue growth, expense management,
balance sheet stability, technical progress, new and expanded business relationships and increased
shareholder value. We also evaluate the individual performance of our executive officers in
relation to the achievement of our business goals. As part of this process, we reassess our
business goals in relation to the actual growth of the OLED market over the past year. Since many
of our business goals depend on dynamic market factors outside of the control of our executive
officers, we want to ensure that we measure our Companys and their individual performance against
goals that are realistic.
In addition, we consider the expected contributions of each individual executive officer to the
future of our business. This helps us determine the value of long-term incentive compensation
awards to our executive officers, such as shares of restricted stock. In determining these awards,
we also consider the level of compensation that would be appropriate for motivating each individual
executive officer to remain committed to our Company and its future success. Since the OLED market
is still at an early stage, our executive officers face a risk that our business might not
ultimately succeed. We believe that long-term incentive compensation awards to our executive
officers help offset that risk.
Executive management makes recommendations to our Compensation Committee regarding all aspects of
compensation for our executive officers. However, final decisions on any major element of
compensation, as well as total compensation for our executive officers, are made by our
Compensation Committee. Awards to our executive officers are then approved by our full Board of
Directors. Our Chief Executive Officer does not participate in Compensation Committee or Board
deliberations regarding his compensation. Also, meetings of our Compensation Committee are
scheduled well in advance of the proposed meeting date, and the Committee does not establish equity
grant dates in order to affect the value of any particular award.
In making compensation decisions, we consider publicly available information regarding the
compensation paid to executives at other companies. However, this information is not tabulated or
summarized, and we do not engage in any form of compensation benchmarking. Instead, comparisons
are more generally based on industry norms and compensation packages as reported by the public news
media.
In determining executive compensation, we consider the current value to our executive officers of
compensation paid or issued to them for prior years. However, we have not focused on gains or
losses from prior option grants or other awards because we believe that those gains or losses are
not particularly significant in relation to overall compensation, and that gains or losses from
prior awards do not have a substantial effect on the future performance of our executive officers.
We also do not use tally sheets in determining compensation for our executive officers, and in 2007
we did not utilize any external consultants to assist us in determining executive compensation.
- 9 -
Elements of Compensation
For 2007, total compensation to our executive officers consisted of the following elements:
|
|
|
Base salaries; |
|
|
|
|
Annual bonus equity compensation awards; |
|
|
|
|
Long-term incentive equity compensation awards; |
|
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|
Special cash and non-cash awards; and |
|
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Perquisites and other benefits. |
Our executive officers receive both cash and non-cash, or equity, compensation. Equity
compensation is further broken down into annual bonus awards that vest immediately and long-term
incentive awards that typically vest with continued service over time. We utilize annual bonus
awards to reward our executive officers for their performance during the past year. We use
long-term incentive awards that vest over time largely to motivate our executive officers to
perform in future years. We believe that each of these components is an important and necessary
element of executive compensation.
Actual compensation amounts are determined by our Compensation Committee in its discretion.
However, the mix of compensation components has remained relatively consistent year-to-year, in
large part because there are few similarly situated companies with which we compare ourselves, and
because our executive officers have come to expect an element of consistency in their compensation
over time. Should unusual events or circumstances occur which have a material impact on our
Company, we would expect the Compensation Committee to consider them in deciding whether to make
any significant changes in executive compensation.
Base salaries
We believe that there is a general expectation by our executive officers that their base salaries
will remain relatively consistent year-to-year, subject to limited merit-based adjustments. We
also believe that this relatively simple approach is commonly used to determine the base salaries
of executives at other small companies. More substantial adjustments in the base salaries of our
executive officers may be warranted in the future when the market for our OLED technologies and
materials matures, or under circumstances different from those in our current environment.
In 2007, the base salaries of our executive officers were increased by five and one-half percent
(5.5%) over the prior year. These increases were consistent with prior year base salary increases
for our executive officers, and with increases in the base salaries of our other employees in 2007.
The increases were primarily merit-based and intended to reward our executive officers for their
overall performance on behalf of the Company. To a lesser extent, the increases were intended to
offset increases in the cost of living, although no actual survey of cost of living indices was
conducted. The base salaries of Mr. Seligsohn, Mr. Abramson and Mr. Rosenblatt were adjusted
effective as of July 1, 2007, and the base salary of Dr. Brown was adjusted effective as of June
22, 2007, which in each case is the individuals annual employment anniversary date. Consistent
with previous years, these adjustments were recommended by executive management and approved by our
Compensation Committee at a meeting held on September 11, 2007.
As in the past, each of Mr. Abramson and Mr. Rosenblatt received the same base salary in 2007.
This reflects our historic practice of treating these two individuals equally based on their
longstanding dedication and commitment to the Company, and the value that each of them has provided
and continues to provide to our business success.
As in prior years, Mr. Seligsohns base salary for 2007 was set taking into account his shared
duties and responsibilities for other companies that he previously founded. Most notable in this
regard is Global Photonic Energy Corporation (GPEC), a privately-held corporation of which Mr.
Seligsohn and his family are the largest shareholders, and for which Mr. Seligsohn serves as
Chairman of the Board of Directors and Chief Executive Officer.
- 10 -
Annual bonus equity compensation awards
Bonus equity compensation awards are typically awarded to our executive officers on an annual basis
at or shortly after the end of each calendar year. These awards have historically taken the form
of immediately-vesting shares of our common stock, and this practice continued with the awards made
for 2007. The awards are determined based on both Company and individual performance during the
prior year. They are recommended by executive management and approved by our Compensation
Committee and full Board of Directors.
Our Compensation Committee instituted an Executive Performance Compensation Program for our
executive officers in 2004. This program, which was slated to continue through 2007, contemplated
that equity compensation awards to our executive officers would be based, in part, on the
achievement of performance goals to be set annually by the Compensation Committee for each
individual executive officer. These goals and the awards for achieving them were to be established
in a manner designed to reward enhanced Company and individual performance of both a qualitative
and quantitative nature. Specific metrics for quantitative assessment were to include, for
example, revenues, earnings, expense management, stock price and the number of new contracts
executed.
The Committee, however, did not set formal performance goals and corresponding awards for the
Companys executive officers for 2007. As it had in 2005 and 2006, the Committee determined that
the awards to the Companys executive officers for 2007 would be recommended by the Committee in
its discretion, taking into consideration the Companys financial results, business performance and
other relevant factors, at year-end. The Committee concluded that this approach was appropriate in
light of the early stage of the OLED market and the difficulty in assessing the Companys
performance by traditional financial metrics. For similar reasons, the Committee has determined
not to renew the Executive Performance Compensation Program for 2008 or thereafter.
Bonus equity compensation awards to our executive officers for 2007 were recommended by our
Compensation Committee and approved by our full Board of Directors at meetings held on January 9,
2008. On that date, the closing price of our common stock on the NASDAQ Global Market was $18.34
per share. The awards took the form of immediately vesting shares of our common stock in the
following amounts: Mr. Seligsohn 10,905 shares; Mr. Abramson 19,083 shares; Mr. Rosenblatt
19,083 shares and Dr. Brown 12,268 shares. Portions of the shares awarded were withheld in
consideration of the Companys payment of associated payroll taxes on behalf of these individuals.
The number of shares so withheld were as follows: Mr. Seligsohn 3,526 shares; Mr. Abramson
5,916 shares; Mr. Rosenblatt 5,916 shares and Dr. Brown 3,927 shares.
Based on the closing price of our common stock on each respective grant date, the bonus equity
compensation awards to our executive officers for 2007 were identical in value to the corresponding
awards that these individuals received for 2006. Our executive management recommended, and the
Committee agreed, that this was appropriate given our current business situation. In recommending
the awards, executive management noted that the price of our common stock had increased
substantially in 2007, and that we had signed two new commercial agreements and announced the
achievement of several technical milestones during the year. However, executive management also
noted that our revenues for 2007 remained essentially unchanged from the prior year, and that the
OLED market continued to grow at a pace slower than we had originally expected.
For the reasons indicated earlier, Mr. Abramson and Mr. Rosenblatt again received identical bonus
equity compensation awards for 2007, and Mr. Seligsohns award was set taking into account his
shared duties and responsibilities for GPEC and other companies. In addition, Dr. Browns bonus
equity compensation award for 2007 was $25,000 higher than it was for 2006. However, she had
received a special cash award of $25,000 for 2006, so the combined values of her special cash
awards and bonus equity compensation awards were the same for 2007 as for 2006.
Long-term incentive equity compensation awards
Long-term incentive equity compensation awards are typically granted to our executive officers on
an annual basis in conjunction with the grant of annual bonus equity compensation awards to these
individuals. These awards previously were issued in the form of options to purchase shares of our
common stock. However, due to changes in the financial accounting rules based on the adoption of
FAS 123R, this practice was discontinued at the end of 2005. Since then, long-term incentive
equity compensation awards to our executive officers have taken the form of
- 11 -
restricted shares of our common stock. The shares vest over a period of time and vesting is
contingent on the officer continuing to be employed by us on the vesting date.
We use long-term incentive equity compensation awards to link the compensation paid to our
executive officers with their future performance and the future performance of our common stock.
We believe that this helps align the interests of our executive officers with those of our
shareholders. We also use these awards to encourage our executive officers to remain with the
Company through the applicable vesting period. As with other compensation to our executive
officers, long-term incentive equity compensation awards are recommended by executive management
and approved by our Compensation Committee and full Board of Directors.
Long-term incentive equity compensation awards to our executive officers were approved at meetings
of our Compensation Committee and full Board of Directors on January 9, 2007. These awards took
the form of restricted shares of our common stock as follows: Mr. Seligsohn 13,689 shares; Mr.
Abramson 20,533 shares; Mr. Rosenblatt 20,533 shares and Dr. Brown 13,689 shares. The
shares vest in equal increments of one-third each on the next three anniversaries of the grant
date, provided that the officer is an employee of the Company on the applicable vesting date. We
consider one-third of these share awards to be compensation to our executive officers for each of
the years 2007, 2008 and 2009.
The first one-third of the restricted share awards granted on January 9, 2007 vested on January 9,
2008. This resulted in the issuance of shares of common stock to our executive officers as
follows: Mr. Seligsohn 4,563 shares; Mr. Abramson 6,845 shares; Mr. Rosenblatt 6,845
shares and Dr. Brown 4,563 shares. As with other equity awards that we grant, portions of the
vesting shares were withheld in consideration of the Companys payment of associated payroll taxes
on behalf of these officers. The number of shares so withheld were as follows: Mr. Seligsohn
1,346 shares; Mr. Abramson 2,020 shares; Mr. Rosenblatt 2,020 shares and Dr. Brown 1,346
shares.
As with other compensation, Mr. Abramson and Mr. Rosenblatt received identical long-term incentive
equity compensation awards, and Mr. Seligsohns award was set taking into account his shared duties
and responsibilities for GPEC and other companies.
Special cash and non-cash awards
From time to time, we issue special cash and non-cash awards to our employees, including our
executive officers. For example, we have historically awarded a small number of stock options to
our employees in connection with the filing and issuance of patents on which they are named
inventors. From time to time, we have also issued cash awards to our employees in connection with
their having achieved special recognition in their field or in the industry. We believe that these
awards are a small but important component of compensation intended to recognize our employees for
special individual accomplishments that are likely to benefit us and our business.
On January 15, 2007, executive management recommended and our Compensation Committee approved an
award to Dr. Brown of options to purchase 250 shares of our common stock. This award was granted
in recognition of the issuance of a U.S. patent for which Dr. Brown is a named inventor. As
indicated, this award was granted consistent with our historical practice of making such awards to
patent inventors. We did not issue any other special cash or non-cash awards to our executive
officers in 2007.
Due to changes in the financial accounting rules based on the adoption of FAS 123R, we are no
longer issuing options to purchase shares of our common stock in recognition of patent filings or
issuances. Effective as of January 1, 2008, such recognition awards now take the form of
unrestricted shares of our common stock. This policy change applies to all of our employees,
including our executive officers.
Perquisites and other benefits
We provide benefits to all of our employees, including our executive officers. These include paid
sick and vacation time, Company-sponsored life, short-term and long-term disability insurance,
individual and family medical and dental insurance, 401(k) plan matching contributions, and other
similar benefits. We believe that these benefits are
- 12 -
an important factor in helping us maintain good relations with our employees and in creating a
positive work environment.
For some of these employee benefits, the actual amount provided depends on the employees salary,
such that our higher-salaried employees, including our executive officers, receive total benefits
that are greater than those of other employees. For example, matching contributions under our
401(k) plan were the maximum permissible amount of $6,750 for each of our executive officers in
2007.
We also made life and disability insurance premium payments on behalf of our executive officers in
2007. Again, the actual amount of these payments depends in part on the employees age and salary,
such that payments made on behalf of our older or higher-salaried employees, which includes our
executive officers, will be greater than those made on behalf of other employees. These life
insurance premium payments were also higher for our executive officers because they are entitled to
a benefit equal to two times their annual base salary, as compared to our other employees who are
entitled to a benefit equal to their annual base salary. In addition, we made premium payments for
supplemental disability insurance coverage for Mr. Abramson and Mr. Rosenblatt. However, the
dollar value of all of these payments was relatively small compared to the total compensation paid
to our executive officers for the year, and in any event we consider these type of benefits to be
standard components of executive compensation at most companies.
In 2007, we also provided an automobile allowance of $500 per month to each of Mr. Abramson and Mr.
Rosenblatt, and we reimbursed Mr. Seligsohn, Mr. Abramson and Mr. Rosenblatt for reasonable
expenses associated with the automobiles they used to commute to our offices in Ewing, New Jersey,
such as expenses for automobile repairs and insurance. All of these individuals live a
considerable distance from our offices in Ewing, New Jersey, such that we believe it is appropriate
to partially compensate them for their work-related automobile usage. Again, we do not consider
this additional benefit to be a substantial component of executive compensation.
Our executive officers have been receiving the benefits described above for the past several years.
Our Compensation Committee approved continuation of these benefits for our executive officers at a
meeting held on September 11, 2007. This approval occurred in conjunction with the Committees
approval of annual base salary increases for our executive officers.
Our Compensation Committee is currently evaluating whether to adopt a supplemental executive
retirement plan (SERP) for certain of our executive officers in 2008. The Committee engaged Hay
Group to provide a report outlining various design alternatives for the proposed plan, the
prevalence of benefits offered by other companies with similar plans, projected cost estimates for
implementation of the plan and a summary of other design and accounting considerations. The
Committee is considering Hay Groups report as part of its ongoing effort to evaluate design
alternatives for the proposed SERP.
Stock Ownership Guidelines
We do not have any stock ownership guidelines for our executive officers. However, all of our
executive officers are major shareholders in the Company, and all have substantial holdings of
outstanding stock, vested stock options and stock purchase warrants. We believe that these current
holdings are sufficient to ensure that our executive officers remain committed to our Company and
its business.
Recovery of Bonuses
We do not have any formal policy respecting the recovery of bonuses or other amounts from our
executive officers due to the restatement or adjustment of any performance measures on which they
were based. Since bonus and other equity compensation awards to our executive officers have not
been based on any specific or measurable performance objectives, we do not believe that such a
policy is appropriate at this time.
Change in Control Payments
In 2003, we entered into change in control agreements with our executive officers. These
agreements were approved by our Board of Directors. The agreements provide for certain cash
payments and other benefits to our
- 13 -
executive officers in the event that their employment is terminated, or their responsibilities are
substantially reduced, in connection with a change in control of the Company. We believe that
these agreements help to reinforce and encourage the continued attention and dedication of our
executive officers to the Company in the event they are asked to help facilitate a change in
control.
Under the change in control agreements, our executive officers would receive benefits equal to two
times their base salaries and annual bonuses, plus ancillary benefits relating to life and
disability insurance, medical and dental coverage and employment outplacement services. The change
in control agreements utilize a double-trigger mechanism because we believe that our executive
officers should only receive these benefits if they suffer a reduction in employment status
associated with a change in control. The agreements also include gross-up provisions that would
compensate our executive officers for any taxes they might owe in connection with receipt of these
benefits.
We believe that the terms of the change in control agreements for our executive officers are
reasonable and appropriate for a small company with new and exciting technologies such as ours.
More detailed information about these agreements and the specific benefits and compensation payable
to our executive officers in connection with a change in control are set forth elsewhere in this
proxy statement.
Tax and Other Financial Consequences of Our Compensation Program
Internal Revenue Code §162(m)
In determining the total compensation payable to our executive officers, we considered the
potential impact of Section 162(m) of the Internal Revenue Code (the IRC). Section 162(m)
disallows any publicly-held corporation from taking a tax deduction for compensation in excess of
$1 million paid to its executive officers in any taxable year, unless that compensation is
performance-based. Our policy is that executive compensation qualify for deductibility under
applicable tax laws to the extent consistent with our overall compensation objectives.
For 2007, Section 162(m) limited the deductibility of the compensation paid to certain of our
executive officers. In November 2007, each of Mr. Abramson and Mr. Rosenblatt exercised warrants
to purchase 100,000 shares of our common stock on a cashless basis. The warrants had been issued
to Mr. Abramson and Mr. Rosenblatt as equity compensation on April 2, 1998, at an exercise price of
$6.36 per share, and would have expired on April 2, 2008 if not exercised by then. The transaction
would have increased the Companys tax loss for 2007 by $2,204,000 but for the operation of Section
162(m), which limited the Companys tax deduction to $199,942. Excluding the exercise of these
warrants, Section 162(m) would not have limited the deductibility of any of the compensation paid
to our executive officers for 2007.
Internal Revenue Code §409A
Section 409A of the IRC provides that nonqualified deferred compensation benefits are includible in
an employees income when vested, unless certain requirements are met. If these requirements are
not met, employees are also subject to an additional income tax and interest. All of our
compensation plans and arrangements presently meet these requirements, except for our change in
control agreements. These agreements will be amended in 2008 to ensure compliance by the
applicable December 31, 2008 deadline. As a result, all of our executive officers will be taxed
when the deferred compensation is actually paid to them, and we will be entitled to a tax deduction
at that time.
Internal Revenue Code §280G
Section 280G of the IRC disallows a companys tax deduction for excess parachute payments.
Additionally, Section 4999 of the IRC imposes a 20% excise tax on any person who receives excess
parachute payments. Presently, all of our executive officers are entitled to payments upon the
termination of their employment following a change in control of the Company, some of which may
qualify as excess parachute payments. Accordingly, our tax deduction for any such excess
parachute payments would be disallowed under Section 280G of the IRC. Moreover, we are required to
make additional payments to these individuals to cover any excise taxes imposed on
- 14 -
them by reason of the payments they receive in connection with a change in control. As previously
indicated, we believe that this tax gross-up obligation is reasonable and appropriate given our
current size and status.
Accounting Treatment under FAS 123R
As previously indicated, we have modified our approach to granting equity compensation awards due
to the adoption of FAS 123R. The adoption of this new accounting standard has substantially
increased the cost of granting stock option awards. Consequently, we have essentially eliminated
such awards from the compensation granted to our executive officers, replacing them with other
forms of equity compensation.
New Executive Officer
Effective January 1, 2008, Ms. Janice K. Mahon became an executive officer of our Company. Ms.
Mahon is our Vice President of Technology Commercialization and the General Manager of our Material
Supply Business. Ms. Mahons compensation and other relevant information will appear in next
years proxy statement.
Summary Compensation Table
The following table provides information on the compensation of our Chief Executive Officer, our
Chief Financial Officer and our other executive officers for services in all capacities to the
Company and its subsidiary for 2007 and 2006. This group is referred to in this proxy statement as
the Named Executive Officers.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
All Other |
|
|
Name and |
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
Compensation |
|
Total |
Principal Position |
|
Year |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Sherwin I. Seligsohn
|
|
2007 |
|
279,404 |
|
|
|
264,960(2) |
|
|
|
|
19,673 |
(3) |
|
|
564,037 |
|
Chairman of the
Board and Chief
Executive
Officer(1) |
|
2006 |
|
263,796 |
|
|
|
200,000(4) |
|
2,338(5) |
|
|
20,564 |
(6) |
|
|
486,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven V. Abramson
|
|
2007 |
|
461,829 |
|
|
|
447,423(2) |
|
|
|
|
28,418 |
(7) |
|
|
937,670 |
|
President and Chief
Operating
Officer(1) |
|
2006 |
|
436,030 |
|
|
|
350,000(4) |
|
|
|
|
23,185 |
(8) |
|
|
809,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sidney D. Rosenblatt
|
|
2007 |
|
461,829 |
|
|
|
447,423(2) |
|
|
|
|
32,984 |
(9) |
|
|
942,236 |
|
Executive Vice
President and Chief
Financial Officer |
|
2006 |
|
436,030 |
|
|
|
350,000(4) |
|
|
|
|
27,220 |
(10) |
|
|
813,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Julia J. Brown, Ph.D.
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|
2007 |
|
289,002 |
|
|
|
289,957(2) |
|
1,790(11) |
|
|
8,283 |
(12) |
|
|
589,032 |
|
Vice President and
Chief Technical
Officer |
|
2006 |
|
272,657 |
|
25,000 |
|
200,000(4) |
|
2,239(13) |
|
|
8,508 |
(14) |
|
|
508,404 |
|
|
|
|
(1) |
|
Effective as of January 1, 2008, Mr. Seligsohn was appointed to the newly-created
officer position of Founder and Chairman of the Board, and Mr. Abramson was named our
President and Chief Executive Officer. |
|
(2) |
|
This amount reflects the compensation expense recognized by the Company for 2007 with
respect to all stock awards to the Named Executive Officers, regardless of the date made or
the compensation year to which they relate. The amount includes the expense associated
with restricted shares of common stock granted to the Named Executive Officer on January 9,
2007, which shares vested on January 9, 2008. With respect to all awards, shares of common
stock were withheld for the payment of associated payroll taxes. These awards are
discussed in greater detail in the section of this proxy statement entitled Compensation
Discussion and Analysis, under the headings Annual bonus equity compensation awards and
Long-term incentive equity compensation awards. |
|
(3) |
|
Based on (a) auto expense reimbursements of $919; (b) life and disability insurance
premium payments of $12,004; and (c) 401(k) plan contributions of $6,750. |
- 15 -
(4) |
|
This amount reflects the compensation expense recognized by the Company for 2006 with
respect to all stock awards to the Named Executive Officers, regardless of the date made or
the compensation year to which they relate. With respect to all awards, shares of common
stock were withheld for the payment of associated payroll taxes. These awards are
discussed in greater detail in the section of this proxy statement entitled Compensation
Discussion and Analysis, under the heading Annual bonus equity compensation awards. |
|
(5) |
|
Grant date value of 250 stock options, with an exercise price of $12.40 per share,
granted as a bonus for the issuance of a patent on June 20, 2006. |
|
(6) |
|
Based on (a) auto expense reimbursements of $570; (b) life and disability insurance
premium payments of $13,394; and (c) 401(k) plan contributions of $6,600. |
|
(7) |
|
Based on (a) auto expense reimbursements and allowance of $7,927; (b) life and
disability insurance premium payments of $13,741; and (c) 401(k) plan contributions of
$6,750. |
|
(8) |
|
Based on (a) auto expense reimbursements and allowance of $3,957; (b) life and
disability insurance premium payments of $12,628; and (c) 401(k) plan contributions of
$6,600. |
|
(9) |
|
Based on (a) auto expense reimbursements and allowance of $8,743; (b) life and
disability insurance premium payments of $17,491; and (c) 401(k) plan contributions of
$6,750. |
|
(10) |
|
Based on (a) auto expense reimbursements and allowance of $2,983; (b) life and
disability insurance premium payments of $17,637; and (c) 401(k) plan contributions of
$6,600. |
|
(11) |
|
Grant date value of 250 stock options, with an exercise price of $14.16 per share,
granted as a bonus for the filing of patent on January 15, 2007. |
|
(12) |
|
Based on (a) life and disability insurance premium payments of $1,533; and (b) 401(k)
plan contributions of $6,750. |
|
(13) |
|
Grant date value of 250 stock options, with an exercise price of $11.89 per share,
granted as a bonus for the filing of patent on January 17, 2006. |
|
(14) |
|
Based on (a) life insurance premium payments of $1,908; and (b) 401(k) plan
contributions of $6,600. |
Compensation to each of the named executive officers for 2007 and 2006 consisted of the following:
|
|
|
Base salary, paid in cash; |
|
|
|
|
In the case of Dr. Brown, a cash bonus for 2006 in recognition of her having been named
a Fellow of the Institute of Electrical and Electronics Engineers; |
|
|
|
|
Discretionary awards of common stock granted as performance bonuses for 2007 on January
9, 2008, and for 2006 on January 9, 2007; |
|
|
|
|
Discretionary awards of restricted common stock granted as long-term incentive equity
compensation on January 9, 2007, the portion of such awards considered as compensation for
2007 having vested on January 9, 2008; |
|
|
|
|
In the case of Mr. Seligsohn and Dr. Brown, stock option awards granted as bonuses for
the filing of U.S. patent applications or the issuance of U.S. patents on which they are
named inventors, and with respect to which the Company is the assignee; and |
|
|
|
|
Perquisites in the form of auto expense allowances and reimbursements, life and
disability insurance premium payments, and 401(k) plan matching contributions. |
Grants of Plan-Based Awards Table
The following table summarizes each grant of an award made to a Named Executive Officers in 2007.
- 16 -
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All Other |
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All Other |
|
Option |
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Stock |
|
Awards: |
|
Exercise |
|
Grant Date |
|
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Awards: |
|
Number of |
|
or Base |
|
Fair Value of |
|
|
|
|
|
|
Number of |
|
Securities |
|
Price of |
|
Stock and |
|
|
|
|
|
|
Shares of |
|
Underlying |
|
Option |
|
Option |
|
|
Grant |
|
Stock |
|
Options |
|
Awards |
|
Awards |
Name |
|
Date |
|
(#) |
|
(#) |
|
($/Sh) |
|
($) |
Sherwin I. Seligsohn |
|
|
1/9/2007 |
|
|
|
27,378 |
(1) |
|
|
|
|
|
|
|
|
|
|
400,000 |
|
Steven V. Abramson |
|
|
1/9/2007 |
|
|
|
44,489 |
(2) |
|
|
|
|
|
|
|
|
|
|
650,000 |
|
Sidney D. Rosenblatt |
|
|
1/9/2007 |
|
|
|
44,489 |
(2) |
|
|
|
|
|
|
|
|
|
|
650,000 |
|
Julia J. Brown, Ph.D. |
|
|
1/9/2007 |
|
|
|
27,378 |
(3) |
|
|
|
|
|
|
|
|
|
|
400,000 |
|
Julia J. Brown, Ph.D. |
|
|
1/15/2007 |
|
|
|
|
|
|
|
250 |
|
|
|
14.16 |
|
|
|
1,790 |
|
|
|
|
(1) |
|
Consists of (a) an award of 13,689 immediately vesting shares of common stock, with a
certificate for 9,278 of these shares having been issued and the remaining shares having
been withheld for payment of associated payroll taxes; and (b) an award of 13,689 shares of
restricted common stock, which shares vest in equal increments over the first three
anniversaries of the grant date, provided that the grantee is an employee of the Company at
such time. |
|
(2) |
|
Consists of (a) an award of 23,956 immediately vesting shares of common stock, with a
certificate for 14,148 of these shares having been issued and the remaining shares having
been withheld for payment of associated payroll taxes; and (b) an award of 20,533 shares of
restricted common stock, which shares vest in equal increments over the first three
anniversaries of the grant date, provided that the grantee is an employee of the Company at
such time. |
|
(3) |
|
Consists of (a) an award of 13,689 immediately vesting shares of common stock, with a
certificate for 9,386 of these shares having been issued and the remaining shares having
been withheld for payment of associated payroll taxes; and (b) an award of 13,689 shares of
restricted common stock, which shares vest in equal increments over the first three
anniversaries of the grant date, provided that the grantee is an employee of the Company at
such time. |
Grants of plan-based awards to each of the named executive officers in 2007 consisted of the
following:
|
|
|
Discretionary awards of common stock granted as performance bonuses for 2006; |
|
|
|
|
Discretionary awards of restricted common stock granted as long-term incentive equity
compensation, with one-third of the award being considered compensation for each of the
years 2007, 2008 and 2009 ; and |
|
|
|
|
In the case of Dr. Brown, a stock option award granted as a bonus for the issuance of a
U.S. patent on which she is a named inventor, and with respect to which the Company is the
assignee. |
Outstanding Equity Awards at Fiscal Year-End Table
The following table summarizes the outstanding equity awards to the Named Executive Officers as of
December 31, 2007.
- 17 -
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Option Awards |
|
Stock Awards |
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Number of |
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|
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|
|
|
|
Shares of |
|
Market Value of |
|
|
Number of Securities |
|
Option |
|
|
|
|
|
Stock that |
|
Shares of Stock |
|
|
Underlying Unexercised |
|
Exercise Price |
|
Option |
|
Have Not |
|
that Have Not |
Name |
|
Options (#) Exercisable |
|
($) |
|
Expiration Date |
|
Vested (#) |
|
Vested ($) |
Sherwin I. Seligsohn |
|
|
20,000 |
|
|
$ |
4.50 |
|
|
|
12/18/2008 |
|
|
|
13,689 |
|
|
|
282,952 |
|
|
|
|
30,000 |
|
|
$ |
3.875 |
|
|
|
10/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
$ |
9.4375 |
|
|
|
12/14/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
$ |
10.3125 |
|
|
|
3/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
40,250 |
|
|
$ |
8.56 |
|
|
|
12/17/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
5.45 |
|
|
|
9/23/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
6.65 |
|
|
|
1/24/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
16.94 |
|
|
|
1/20/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
$ |
8.14 |
|
|
|
1/18/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
$ |
10.51 |
|
|
|
12/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
12.40 |
|
|
|
6/20/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven V. Abramson |
|
|
20,000 |
|
|
$ |
4.50 |
|
|
|
12/18/2008 |
|
|
|
20,533 |
|
|
|
424,417 |
|
|
|
|
30,000 |
|
|
$ |
3.875 |
|
|
|
10/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
$ |
9.4375 |
|
|
|
12/14/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
$ |
10.3125 |
|
|
|
3/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
8.56 |
|
|
|
12/17/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
5.45 |
|
|
|
9/23/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
16.94 |
|
|
|
1/20/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
$ |
8.14 |
|
|
|
1/18/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
$ |
10.51 |
|
|
|
12/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sidney D. Rosenblatt |
|
|
20,000 |
|
|
$ |
4.50 |
|
|
|
12/18/2008 |
|
|
|
20,533 |
|
|
|
424,417 |
|
|
|
|
30,000 |
|
|
$ |
3.875 |
|
|
|
10/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
$ |
9.4375 |
|
|
|
12/14/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
$ |
10.3125 |
|
|
|
3/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
8.56 |
|
|
|
12/17/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
5.45 |
|
|
|
9/23/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
16.94 |
|
|
|
1/20/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
$ |
8.14 |
|
|
|
1/18/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
$ |
10.51 |
|
|
|
12/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Julia J. Brown, Ph.D. |
|
|
25,000 |
|
|
$ |
5.88 |
|
|
|
6/4/2008 |
|
|
|
13,689 |
|
|
|
282,952 |
|
|
|
|
15,000 |
|
|
$ |
4.50 |
|
|
|
12/18/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
$ |
3.875 |
|
|
|
10/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
90,000 |
|
|
$ |
16.75 |
|
|
|
4/18/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
$ |
24.375 |
|
|
|
6/21/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
$ |
9.4375 |
|
|
|
12/14/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
10.375 |
|
|
|
2/15/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
$ |
10.3125 |
|
|
|
3/30/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
500 |
|
|
$ |
13.90 |
|
|
|
4/19/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
$ |
8.56 |
|
|
|
12/17/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
9.10 |
|
|
|
4/15/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
$ |
5.45 |
|
|
|
9/23/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
9.94 |
|
|
|
11/18/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
9.60 |
|
|
|
6/16/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
$ |
16.94 |
|
|
|
1/20/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
500 |
|
|
$ |
13.28 |
|
|
|
4/20/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
10.07 |
|
|
|
11/23/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
40,250 |
|
|
$ |
8.14 |
|
|
|
1/18/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
500 |
|
|
$ |
9.43 |
|
|
|
6/7/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
10.51 |
|
|
|
12/30/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
11.89 |
|
|
|
1/17/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
$ |
14.16 |
|
|
|
1/15/2017 |
|
|
|
|
|
|
|
|
|
Option Exercises and Stock Vested Table
The following table summarizes the exercises of stock options, SARs and other similar instruments,
and the vesting of stock, including restricted stock, restricted stock units and similar
instruments, for the Named Executive Officers during 2007.
- 18 -
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
Number of Shares |
|
|
|
|
Shares Acquired |
|
Value Realized on |
|
Acquired on |
|
Value Realized on |
Name |
|
on Exercise (#) |
|
Exercise(1) ($) |
|
Vesting (#) |
|
Vesting ($) |
Sherwin I. Seligsohn |
|
|
25,000 |
|
|
|
302,150 |
|
|
|
|
|
|
|
|
|
Steven V. Abramson |
|
|
125,000 |
|
|
|
1,404,150 |
|
|
|
|
|
|
|
|
|
Sidney D. Rosenblatt |
|
|
125,000 |
|
|
|
1,406,200 |
|
|
|
|
|
|
|
|
|
Julia J. Brown, Ph.D. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the difference between the closing price of our common stock on the NASDAQ
Global Market on the date of exercise and the exercise price of the stock options or
warrants exercised. |
Potential Payments Upon Termination or Change-in-Control
In April 2003, the Company entered into Change in Control Agreements with the Named Executive
Officers (the CIC Agreements). The CIC Agreements provide for certain cash payments and other
benefits to the Named Executive Officers in the event of an effective termination of these
individuals employment in connection with a Change in Control of the Company, as defined in the
CIC Agreements. These benefits include the following:
|
|
|
immediate vesting of all stock options, stock appreciation rights, warrants, stock
awards and performance units held by the individual, whether or not restricted or
subject to the satisfaction of any performance goals or other criteria; |
|
|
|
|
a lump-sum payment equal to two times the sum of the average annual base salary and
the annual bonus to the individual, including any authorized deferrals, salary
reduction amounts and any car allowance, and including the fair market dollar value
equivalent of any bonus amounts paid in the form of stock options, stock appreciation
rights, warrants, stock awards or performance units; |
|
|
|
|
a lump-sum payment equal to the estimated after-tax cost to the individual of
continuing any Company-sponsored life or other insurance, travel or accident insurance
and disability insurance coverage in effect for the individual, and where applicable,
his or her spouse and dependents, for two years; |
|
|
|
|
to the extent permitted by law, the benefits to which the individual would be
entitled under the Companys long term incentive, savings and retirement plans,
assuming the individual continued working for the Company for two years at his or her
annual base salary; |
|
|
|
|
continued group hospitalization, health and dental care coverage, with coverage
equivalent to the coverage to which the individual would be entitled if he or she
continued working for the Company for two years at his or her annual base salary; |
|
|
|
|
outplacement assistance services for two years at a total cost not to exceed
$10,000; and |
|
|
|
|
an additional payment to cover any excise tax imposed on the individual by reason of
the individual receiving the payments and benefits specified above. |
For each of the Named Executive Officers, the estimated payments and benefits that would be
provided by the Company are set forth in the following table, based on the assumption that a
triggering event took place on December 31, 2007.
- 19 -
Estimated Payments and Benefits on Termination in Connection With a Change-in-Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
Estimated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
After-Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump Sum |
|
Ongoing |
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment |
|
Contribu- |
|
Ongoing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
tions |
|
Payments |
|
Estimated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump Sum |
|
Estimated |
|
Under |
|
to |
|
Value of |
|
|
|
|
|
Value of |
|
|
|
|
Lump |
|
|
|
|
|
Payment |
|
After-Tax |
|
Long- |
|
Continue |
|
Unvested |
|
|
|
|
|
Tax |
|
|
|
|
Sum |
|
Lump |
|
for |
|
Cost to |
|
Term |
|
Group |
|
Stock |
|
Payment |
|
Reimburse |
|
|
|
|
Payment |
|
Sum |
|
Accrued |
|
Continue |
|
Incentive, |
|
Medical, |
|
Options |
|
for |
|
-ment |
|
|
|
|
of Two |
|
Payment |
|
and |
|
Life, |
|
Savings |
|
Health and |
|
and Stock |
|
Outplace- |
|
Payments |
|
|
|
|
Times |
|
of Two |
|
Unused |
|
Travel and |
|
and |
|
Dental |
|
Awards |
|
ment |
|
on |
|
Total |
|
|
Annual |
|
Times |
|
Paid Time |
|
Disability |
|
Retirement |
|
Care |
|
Subject to |
|
Assistance |
|
Account of |
|
Payments |
|
|
Base |
|
Annual |
|
Off and |
|
Insurance |
|
Plans for |
|
Coverage |
|
Accelerated |
|
Services |
|
Excise or |
|
and |
|
|
Salary(1) |
|
Bonus(2) |
|
Sick Time |
|
for Two |
|
Two Years |
|
for Two |
|
Vesting(3) |
|
(4) |
|
Other |
|
Benefits |
Name |
|
($) |
|
($) |
|
($) |
|
Years ($) |
|
($) |
|
Years ($) |
|
($) |
|
($) |
|
Taxes ($) |
|
($) |
Sherwin I. Seligsohn |
|
|
571,511 |
|
|
|
1,224,135 |
|
|
|
65,942 |
|
|
|
26,322 |
|
|
|
13,800 |
|
|
|
11,018 |
|
|
|
282,952 |
|
|
|
10,000 |
|
|
|
663,642 |
|
|
|
2,869,322 |
|
Steven V. Abramson |
|
|
956,646 |
|
|
|
1,524,135 |
|
|
|
108,998 |
|
|
|
26,555 |
|
|
|
13,800 |
|
|
|
31,442 |
|
|
|
424,417 |
|
|
|
10,000 |
|
|
|
955,230 |
|
|
|
4,051,223 |
|
Sidney D. Rosenblatt |
|
|
956,646 |
|
|
|
1,524,135 |
|
|
|
76,898 |
|
|
|
38,481 |
|
|
|
13,800 |
|
|
|
31,442 |
|
|
|
424,417 |
|
|
|
10,000 |
|
|
|
1,041,926 |
|
|
|
4,117,745 |
|
Julia J. Brown,
Ph.D. |
|
|
590,404 |
|
|
|
1,059,308 |
|
|
|
68,122 |
|
|
|
6,336 |
|
|
|
13,800 |
|
|
|
23,964 |
|
|
|
282,952 |
|
|
|
10,000 |
|
|
|
746,454 |
|
|
|
2,801,340 |
|
|
|
|
(1) |
|
Under the CIC Agreements, this is to be based on the highest monthly base salary paid
or payable to the employee during the twenty-four (24) months prior to December 31, 2007,
including any amounts earned but deferred. It is also to include any annual car allowance.
For purposes of this calculation, the employees bi-weekly salary as of the payment period
ended on December 21, 2007 was utilized. Also, an annual car allowance of $6,000 is
included for each of Mr. Abramson and Mr. Rosenblatt. |
|
(2) |
|
Under the CIC Agreements, this is to be based on the highest annual bonus to the
employee for the last three full fiscal years prior to December 31, 2007, and is to include
the fair market dollar value equivalent of any stock, restricted stock or stock options
issued as bonus consideration, determined as of the date of issuance and without regard to
any restrictions or vesting conditions. For purposes of this calculation, the employees
2005 annual bonus was utilized. |
|
(3) |
|
Assumes all unvested or restricted stock options and stock awards automatically vest on
a change of control. Does not include restricted stock bonuses awarded on January 9, 2008. |
|
(4) |
|
Assumes the maximum amount payable under the CIC Agreements for outplacement assistance
services. |
In consideration of receiving these payments and benefits, each Named Executive Officer has agreed
not to compete with the Company for six months following his or her termination in connection with
a change in control of the Company. Each Named Executive Officer has further agreed that, for two
years following his or her termination he or she will not knowingly (i) solicit or recruit any of
the Companys employees to compete with the Company, or (ii) divert or unreasonably interfere with
the Companys business relationships with any of its suppliers, customers, partners or joint
venturers with whom the individual had any involvement. In addition, each Named Executive Officer
is required to execute a general release of all employment-related claims he or she may have
against the Company in order to receive the payments and benefits specified under the CIC
Agreement.
As used in the CIC Agreement, a change in control of the Company would occur if:
|
|
|
any person first becomes the beneficial owner of securities of the Company (not
including securities previously owned by such persons or any securities acquired
directly from the Company) representing 30% or more of the then-outstanding voting
securities of the Company; |
- 20 -
|
|
|
the individuals who constitute our Board of Directors at the beginning of any
24-month period cease, for any reason other than death, to constitute at least a
majority of our Board of Directors; |
|
|
|
|
the Company consummates a merger or consolidation with any other corporation, except
where the voting securities of the Company outstanding immediately prior to the merger
or consolidation continue to represent at least 50% of the voting securities of the
Company (or the surviving entity of the merger or consolidation or its parent), or
where no person first becomes the beneficial owner of securities of the Company
representing 30% or more of the then-outstanding voting securities of the Company; |
|
|
|
|
the shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company, or an agreement is consummated for the sale or disposition
by the Company of all or substantially all of its assets, excluding a sale or
disposition by the Company of all or substantially all of its assets to an entity, at
least 50% of the voting securities of which are owned by persons in substantially the
same proportion as their ownership of the Company immediately prior to the sale; or |
|
|
|
|
any person consummates a tender offer or exchange for a majority of the voting
securities of the Company. |
As used in the CIC Agreement, a termination of a Named Executive Officer in connection with a
change in control of the Company would include a termination of the individuals employment:
|
|
|
by the Company within two years after a change in control of the Company other than
for the individuals death or incapacity, or for cause; |
|
|
|
|
by the individual within two years after a change in control of the Company for (i)
any significant reduction by the Company of the individuals authority, duties or
responsibilities, (ii) any demotion or removal of the individual from his or her
employment grade, compensation level or officer positions, (iii) any requirement that
individual undertake business travel to an extent substantially greater than is
reasonable and customary for his or her position, (iv) a relocation by more than 25
miles of the offices of the Company at which the individual principally works, (v) the
Companys breach of the CIC Agreement, or (vi) a failure of the Company to obtain an
agreement from any successor to assume the Companys obligations under the CIC
Agreement; and |
|
|
|
|
by either the Company or the individual during the one year period prior to a change
in control of the Company, unless the Company establishes by clear and convincing
evidence that the termination was for good faith business reasons not related to the
change in control. |
We expect to amend the CIC agreements in 2008 to ensure compliance with the requirements of Section
409A of the Internal Revenue Code and to make other minor changes to update the agreements.
Compensation of Directors
The following table provides information on the compensation of members of our Board of Directors
(who are not Named Executive Officers) for 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
Stock |
|
Option |
|
All Other |
|
|
|
|
Paid in Cash |
|
Awards |
|
Awards(1) |
|
Compensation |
|
Total |
Name |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Leonard Becker |
|
|
42,000 |
|
|
|
62,400 |
(2) |
|
|
|
|
|
|
|
|
|
|
104,400 |
|
Elizabeth H. Gemmill |
|
|
42,000 |
|
|
|
62,400 |
(2) |
|
|
|
|
|
|
|
|
|
|
104,400 |
|
C. Keith Hartley |
|
|
42,000 |
|
|
|
62,400 |
(2) |
|
|
|
|
|
|
|
|
|
|
104,400 |
|
Lawrence Lacerte |
|
|
42,000 |
|
|
|
62,400 |
(2) |
|
|
|
|
|
|
|
|
|
|
104,400 |
|
- 21 -
|
|
|
(1) |
|
The aggregate numbers of shares issuable to each director upon the exercise of options
outstanding as of December 31, 2007 were as follows: Mr. Becker 105,000 shares; Ms.
Gemmill 140,000 shares; Mr. Hartley 130,000 shares; and Mr. Lacerte 0 shares.
There were no restricted stock awards to any of our directors outstanding as of December
31, 2007. |
|
(2) |
|
Grant date value of 5,000 shares issued as compensation for 2007, the closing price of
the Companys common stock on the NASDAQ Global Market being $12.48 per share on the grant
approval date. |
Compensation to each member of the Board of Directors for 2007 consisted of the following:
|
|
|
Director fees, paid in cash; and |
|
|
|
|
Stock awards approved by the Compensation Committee on December 19, 2006, and granted in
quarterly installments at the end of each calendar quarter during 2007. |
Committee chairpersons did not receive any additional fees or other compensation for service in
this capacity. In addition to the foregoing amounts, we reimbursed members of our Board of
Directors for their reasonable travel expenses to attend all Board and committee meetings in 2007.
- 22 -
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANYS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2008
At its April 8, 2008 meeting, our Audit Committee recommended and approved the appointment of KPMG
LLP (KPMG) as the Companys independent registered public accounting firm to audit the
consolidated financial statements of the Company for the year ending December 31, 2008. KPMG has
served in this capacity since being engaged by us on July 30, 2002. We are seeking the
ratification of our appointment of KPMG as our independent registered public accounting firm for
2008 at the Annual Meeting of Shareholders.
We expect that a representative of KPMG will be present at the Annual Meeting and will be available
to respond to appropriate questions. If this representative desires to do so, he or she will have
the opportunity to make a statement at the Annual Meeting.
Vote Required and Recommendation of our Board of Directors
This proposal will be approved if a majority of the votes cast by all shareholders, voting as a
single class, are FOR approval. Abstentions on this proposal are not considered votes cast and
will have no effect on the outcome of the vote. Similarly, broker non-votes are not considered
votes cast with respect to this proposal and, therefore, will have no effect on the outcome of
the vote.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ADOPTION OF THIS PROPOSAL 2.
Fees Billed by the Companys Independent Auditors
The audit and tax fees to us from KPMG for 2007 and 2006 are set forth in the table below:
|
|
|
|
|
|
|
|
|
Fee Category |
|
2007 |
|
2006 |
Audit Fees(1) |
|
$ |
258,450 |
(1) |
|
$ |
185,000 |
(1) |
Audit-Related Fees |
|
|
|
|
|
|
|
|
Tax Fees |
|
$ |
12,317 |
(2) |
|
|
|
|
All Other Fees |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consisted of fees relating to the audit of consolidated financial statements, the audit
of internal control over financial reporting, quarterly reviews, a comfort letter issued in
connection with a stock offering, and the issuances of consents. |
|
(2) |
|
Consisted of fees relating to international tax services, including with respect to the
Companys establishment of a corporate presence in Hong Kong. |
Audit Committee Pre-Approval Policies and Procedures
Our Audit Committee currently approves all engagements to provide both audit and non-audit
services, and has not established formal pre-approval policies or procedures. During 2007, our
Audit Committee approved non-audit services, as defined by Rule 2-01(c)(7)(i)(C) of Regulation S-X,
relating to international tax matters, including with respect to our establishment of a corporate
presence in Hong Kong.
- 23 -
EQUITY COMPENSATION PLANS
The following table includes information on our equity compensation plans (including individual
compensation arrangements), both those previously approved and not approved by our shareholders, as
of December 31, 2007:
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities to |
|
Weighted-average |
|
Number of securities |
|
|
be issued upon exercise |
|
exercise price of |
|
remaining available for |
|
|
of outstanding options, |
|
outstanding options, |
|
future issuance under equity |
Plan Category |
|
warrants and rights |
|
warrants and rights |
|
compensation plans(1) |
Equity compensation
plans approved by
security holders |
|
|
3,226,100 |
|
|
$ |
9.77 |
|
|
|
1,472,295 |
|
Equity compensation
plans not approved
by security holders |
|
|
1,201,489 |
(2) |
|
$ |
15.32 |
|
|
|
|
|
Total |
|
|
4,427,589 |
|
|
$ |
11.28 |
|
|
|
1,472,295 |
|
|
|
|
(1) |
|
Excludes securities reflected in the column entitled Number of securities to be issued
upon exercise of outstanding options, warrants and rights. |
|
(2) |
|
Equity compensation plan arrangements not approved by shareholders consist of various
warrants to purchase shares of our common stock. These warrants were granted under written
agreements containing substantially similar terms. The material distinguishing features of
each such arrangement are identified in the table below. All grants are fully vested. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Unexercised |
|
Exercise |
|
|
|
|
Grantee(s) |
|
Shares |
|
Price |
|
Grant Date |
|
Expiration Date |
Consultant/Agent |
|
|
10,000 |
|
|
$ |
7.00 |
|
|
|
4/2/1998 |
|
|
|
4/2/2008 |
|
Consultant/Agent |
|
|
15,000 |
|
|
$ |
7.25 |
|
|
|
6/30/1998 |
|
|
|
6/30/2008 |
|
Scientific Advisory Board Member |
|
|
113,994 |
(a) |
|
$ |
12.39 |
(a) |
|
|
2/17/2000 |
|
|
|
2/17/2010 |
|
Julia J. Brown, Ph.D. |
|
|
90,000 |
|
|
$ |
16.75 |
|
|
|
4/18/2000 |
|
|
|
4/18/2010 |
|
PPG Industries, Inc. |
|
|
28,168 |
|
|
$ |
24.28 |
|
|
|
2/15/2001 |
|
|
|
2/15/2008 |
|
Gerard Klauer Mattison & Co., Inc. |
|
|
186,114 |
(b) |
|
$ |
13.51 |
(a) |
|
|
8/22/2001 |
|
|
|
8/22/2008 |
|
PPG Industries, Inc. |
|
|
121,843 |
|
|
$ |
24.28 |
|
|
|
2/15/2002 |
|
|
|
2/15/2009 |
|
PPG Industries, Inc. |
|
|
136,024 |
|
|
$ |
10.14 |
|
|
|
2/15/2003 |
|
|
|
2/15/2010 |
|
PPG Industries, Inc. |
|
|
315,461 |
|
|
$ |
10.39 |
|
|
|
2/15/2004 |
|
|
|
2/15/2011 |
|
PPG Industries, Inc. |
|
|
184,885 |
|
|
$ |
24.28 |
|
|
|
2/15/2005 |
|
|
|
2/15/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total warrants and options not
approved by security holders |
|
|
1,201,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
As adjusted, in accordance with anti-dilution provisions of the applicable warrant
agreements. |
|
(b) |
|
All or a portion of these warrant shares have been transferred by the original grantee
to a third party. |
- 24 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The table below sets forth certain information, as of the Record Date, with respect to persons
known by the Company to beneficially own more than five percent (5%) of any class of our voting
securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
Name and Address |
|
Beneficially |
|
Percentage |
Title of Class |
|
of Beneficial Owner(1) |
|
Owned(2) |
|
Ownership(2) |
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
Scott Seligsohn(3)(4) |
|
|
3,432,742 |
|
|
|
9.6 |
% |
|
|
Lori S. Rubenstein(3)(5) |
|
|
3,301,000 |
|
|
|
9.2 |
% |
|
|
Steven G. Winters(3)(6) |
|
|
3,176,000 |
|
|
|
8.9 |
% |
|
|
FMR Corp.(7) |
|
|
3,611,220 |
|
|
|
10.1 |
% |
|
|
Edward C. Johnson 3d(7) |
|
|
3,611,220 |
|
|
|
10.1 |
% |
|
|
Mazama Capital Management, Inc.(8) |
|
|
3,005,814 |
|
|
|
8.4 |
% |
|
|
Invesco Ltd.(9) |
|
|
2,647,539 |
|
|
|
7.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Series A
Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
American Biomimetics Corporation(6)(10) |
|
|
200,000 |
|
|
|
100 |
% |
|
|
Sherwin I. Seligsohn(10) |
|
|
200,000 |
|
|
|
100 |
% |
|
|
|
(1) |
|
Unless otherwise indicated, the address of each beneficial owner is 375 Phillips
Boulevard, Ewing, New Jersey 08618. |
|
(2) |
|
Unless otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of our common stock and Series A
Preferred Stock beneficially owned by them. The percentage ownership for each beneficial
owner listed above is based on 35,846,015 shares of our common stock and 200,000 shares of
our Series A Preferred Stock outstanding as of the Record Date. In accordance with SEC
rules, options or warrants to purchase shares of our common stock that were exercisable as
of the Record Date, or would become exercisable within 60 days thereafter, are deemed to be
outstanding and beneficially owned by the person holding such options or warrants for the
purpose of computing such persons percentage ownership, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any other person. |
|
(3) |
|
Includes (i) 1,500,000 shares of our common stock owned by the Sherwin I. Seligsohn
Irrevocable Indenture of Trust dated July 29, 1993, FBO Lori S. Rubenstein (the Rubenstein
Trust), of which Lori S. Rubenstein, Scott Seligsohn and Steven G. Winters are
co-trustees; (ii) 1,500,000 shares of our common stock owned by the Sherwin I. Seligsohn
Irrevocable Indenture of Trust dated July 29, 1993, FBO Scott Seligsohn (the Seligsohn
Trust), of which Lori S. Rubenstein, Scott Seligsohn and Steven G. Winters are
co-trustees; and (iii) 176,000 shares of our common stock owned by American Biomimetics
Corporation, of which the Rubenstein Trust and Seligsohn Trust are the principal
shareholders. Ms. Lori S. Rubenstein is Mr. Sherwin I. Seligsohns adult daughter, and Mr.
Scott Seligsohn is Mr. Sherwin I. Seligsohns adult son. |
|
(4) |
|
Includes 53,250 options to purchase shares of our common stock and 203,492 shares of
our common stock owned directly by Mr. Scott Seligsohn. |
|
(5) |
|
Includes 125,000 shares of our common stock owned directly by Ms. Rubenstein. |
|
(6) |
|
The address of these beneficial owners is c/o Wolf, Block, Schorr and Solis-Cohen LLP,
1650 Arch Street, 22nd Floor, Philadelphia, PA 19103. |
|
(7) |
|
Based solely on a Schedule 13G/A filed by FMR Corp. and Edward C. Johnson 3d, Chairman
of FMR Corp., on February 13, 2008. These shares are beneficially owned by Fidelity
Management & Research Company (Fidelity), a wholly-owned subsidiary of FMR Corp. and a
registered investment advisor. The ownership of one investment |
- 25 -
|
|
company, Fidelity Growth Company Fund, amounted to 3,491,020 of the shares. Fidelity has
sole power to dispose of or to direct the disposition of all of the shares, but does not
have sole or shared power to vote or to direct the vote of any of the shares. Voting of the
shares occurs under written guidelines established by the Board of Trustees for the various
Fidelity funds that own the shares. The reported address for each of Fidelity Management &
Research Company, FMR Corp., Fidelity Growth Company Fund and Edward C. Johnson 3d is 82
Devonshire Street, Boston, Massachusetts 02109. |
|
(8) |
|
Based solely on a Schedule 13G filed by Mazama Capital Management, Inc. (Mazama) on
February 7, 2008. Mazama has sole power to dispose of or to direct the disposition of all
of the shares, and has sole power to vote or to direct the vote of 1,688,400 of the shares.
The reported address for Mazama is One Southwest Columbia Street, Suite 1500, Portland,
Oregon 97258. |
|
(9) |
|
Based solely on a Schedule 13G filed by Invesco Ltd. (Invesco), a Bermuda
corporation, on February 9, 2008. These shares are beneficially owned by PowerShares
Capital Management LLC (PCM), a wholly-owned U.S. subsidiary of Invesco and a registered
investment advisor. PCM has sole power to vote and dispose of, or to direct the vote or
disposition of, all of the shares. The reported address for each of Invesco and PCM is
1360 Peachtree Street NE, Atlanta, Georgia 30309. |
|
(10) |
|
Mr. Sherwin I. Seligsohn, our Founder Chairman of the Board, is the sole Director,
Chairman, President and Secretary of American Biomimetics Corporation, which owns all
200,000 shares of our Series A Preferred Stock. |
Security Ownership of Management
The table below sets forth certain information, as of the Record Date, with respect to the
beneficial ownership of any class of our equity securities beneficially owned by all directors,
nominees for director and Named Executive Officers of the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
Name and Address |
|
Beneficially |
|
Percentage |
Title of Class |
|
of Beneficial Owner(1) |
|
Owned(2) |
|
Ownership(2) |
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
Sherwin I. Seligsohn(3) |
|
|
701,371 |
|
|
|
1.9 |
% |
|
|
Steven V. Abramson |
|
|
593,429 |
|
|
|
1.6 |
% |
|
|
Sidney D. Rosenblatt |
|
|
500,175 |
|
|
|
1.4 |
% |
|
|
Julia J. Brown, Ph.D. |
|
|
413,743 |
|
|
|
1.1 |
% |
|
|
Leonard Becker |
|
|
165,819 |
|
|
|
* |
|
|
|
Elizabeth H. Gemmill |
|
|
174,319 |
|
|
|
* |
|
|
|
C. Keith Hartley(4) |
|
|
186,347 |
|
|
|
* |
|
|
|
Lawrence Lacerte |
|
|
776,319 |
|
|
|
2.2 |
% |
|
|
All directors and executive officers
as a group (8 persons) |
|
|
3,511,522 |
|
|
|
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
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Series A Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
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Sherwin I. Seligsohn(5) |
|
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200,000 |
|
|
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100 |
% |
|
|
|
* |
|
Represents less than 1% of our outstanding common stock. |
|
(1) |
|
Unless otherwise indicated, the address of each beneficial owner is 375 Phillips
Boulevard, Ewing, New Jersey 08618. |
|
(2) |
|
Unless otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of our common stock beneficially
owned by them. The percentage ownership for each beneficial owner listed above is based on
35,846,015 shares of our common stock and 200,000 shares of our Series A Preferred |
- 26 -
|
|
Stock outstanding as of the Record Date. In accordance with SEC rules, options or warrants
to purchase shares of our common stock that were exercisable as of the Record Date, or would
become exercisable within 60 days thereafter, are deemed to be outstanding and beneficially
owned by the person holding such options or warrants for the purpose of computing such
persons percentage ownership, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. The numbers of shares of common
stock listed include the following number of shares issuable upon the exercise of
outstanding warrants or options: Sherwin I. Seligsohn 305,750; Steven V. Abramson
305,000; Sidney D. Rosenblatt 305,000; Julia J. Brown 358,500; Leonard Becker
105,000; Elizabeth H. Gemmill 140,000; C. Keith Hartley 130,000; and Lawrence Lacerte
0. |
|
(3) |
|
Includes 176,000 shares of our common stock owned by American Biomimetics Corporation,
of which Mr. Sherwin I. Seligsohn is the sole Director, Chairman, President and Secretary.
Also includes 21,000 shares of our common stock owned by The Seligsohn Foundation, of which
Mr. Sherwin I. Seligsohn is the sole trustee. Does not include (i) 1,500,000 shares of our
common stock owned by the Rubenstein Trust; (ii) 1,500,000 shares of our common stock owned
by the Seligsohn Trust; (iii) 125,000 shares of our common stock owned by Ms. Lori S.
Rubenstein; and (iv) 53,250 options to purchase shares of our common stock and 203,492
shares of our common stock owned by Mr. Scott Seligsohn, as to which in each case Mr.
Sherwin I. Seligsohn disclaims beneficial ownership. |
|
(4) |
|
Includes 23,528 shares of our common stock owned by Mr. Hartleys Defined Benefit
Pension Plan. |
|
(5) |
|
Mr. Sherwin I. Seligsohn is the sole Director, Chairman, President and Secretary of
American Biomimetics Corporation, which owns all 200,000 shares of our Series A Preferred
Stock. |
- 27 -
CERTAIN TRANSACTIONS WITH RELATED PERSONS
Our Relationship with Global Photonic Energy Corporation
Global Photonic Energy Corporation (GPEC) is a private company that was formed by Sherwin I.
Seligsohn, our Founder and Chairman of the Board, at about the same time we began operating in
1994. GPECs business focuses on organic photovoltaic solar cell technologies. These technologies
are related to our organic light emitting device (OLED) technologies, in that similar processes and
materials used to emit light from an OLED may be useful for converting solar energy into
electricity in an organic photovoltaic device.
Sherwin I. Seligsohn currently serves as Chairman of the Board, Chief Executive Officer and
President of GPEC. Certain other of our employees who are not directors or executive officers of
the Company also are employed by and/or serve on the Board of Directors of GPEC. Mr. Seligsohn and
these other individuals receive separate salaries, bonuses and other compensation from GPEC for
their work in these various capacities.
During 2007, we leased to GPEC approximately 556 square feet of space (constituting three offices)
at our Ewing, New Jersey facility. We also permitted GPEC employees to reasonably access and use
other areas of our facility, and to utilize associated utilities and other ancillary services
(telephone services, computer printer services, photocopying services, Internet access, computer
backup, etc.) as required in connection with GPECs occupancy of the leased office space. We
charged GPEC $18.50 per square foot per year for use of the leased office space, plus an additional
$109.50 per month for associated utilities and other ancillary services. For 2007, payments from
GPEC for these purposes totaled $11,600. This arrangement ended effective as of February 29, 2008,
at which time GPEC relocated its offices to another building.
In 2007, we also subleased to GPEC one-half of 850 square feet of office space leased by us in
Coeur dAlene, Idaho. Two employees we share with GPEC work at this facility. We charged GPEC
$400 per month for this leased space, which is one-half of the amount paid by us under the lease,
including all rent and utilities. For 2007, payments from GPEC for this leased space totaled
$4,800. This arrangement ended effective as of January 1, 2008, at which time we assigned to GPEC
the entire lease and rental obligation for the Coeur dAlene, Idaho office space. The two
employees we share with GPEC are still working at this facility.
For many years, we and GPEC have both funded research in the laboratories of Dr. Stephen R.
Forrest, formerly at Princeton University and now at the University of Michigan, and Dr. Mark E.
Thompson at the University of Southern California. Our funded research relates to OLEDs and other
organic opto-electronic devices, and GPECs funded research relates to organic photovoltaic solar
cells. On occasion, inventions arising from this funded research have application to both our and
GPECs fields of interest.
To address this potential overlap of interest, we reached an understanding with GPEC, memorialized
in a letter dated June 4, 2004, that patent rights derived from research funded under the research
agreements after that date would be licensed to each of the Company and GPEC exclusively in its
respective field of interest. For GPEC, this field is organic photovoltaic cell for solar energy
conversion. For us, this field is thin film organic electronics for displays, lasers, lighting,
organic tfts, organic memories and other thin-film organic devices, but not including thin film
organic photovoltaic cells for solar energy conversion. We agreed to pay 75% and GPEC agreed to
pay 25% of the legal fees and other costs for patent filings claiming inventions that have
application to both parties fields of interest, which filings are made in agreed upon countries.
If only one of the parties wishes to make a patent filing in a particular country, that party bears
the entire cost of the filing. Otherwise, the parties exchange no money or other consideration on
account of this arrangement.
Our Relationship with Scott Seligsohn
We employ Scott Seligsohn, son of Sherwin I. Seligsohn, as an executive assistant to Sherwin I.
Seligsohn in his capacity as our Chief Executive Officer and Chairman of our Board of Directors,
and more recently in his capacity as our Founder and Chairman of the Board of Directors. For 2007,
we paid Scott Seligsohn base salary and bonus compensation of $100,020.
- 28 -
Policies and Procedures for Approval of Related Person Transactions
Consistent with applicable NASDAQ listing requirements, the Audit Committee of our Board of
Directors is responsible for reviewing all transactions between us and related persons for
potential conflicts of interest on an ongoing basis, and for approving all such transactions.
Related persons include any of our directors or nominees for director, any of our executive
officers, any shareholders owning more than 5% of any class of our equity securities, and immediate
family members of any of these persons.
To help identify transactions with related persons, each year, we submit and require our directors
and executive officers to complete Director and Officer Questionnaires identifying any transactions
with us in which they or their family members have an interest. Responses to these Director and
Officer Questionnaires are reviewed and transactions that might reasonably pose a conflict of
interest are brought to the attention of the Audit Committee for consideration.
The transactions with the related persons identified above were all reviewed with our Audit
Committee at a meeting on April 8, 2008. At this meeting, the Audit Committee ratified each of
these transactions following its consideration of the potential conflicts of interest.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and directors, as well as persons
beneficially owning more than 10% of any class of our equity securities, to file with the SEC
reports of beneficial ownership and reports of changes in beneficial ownership of these equity
securities. Based solely on our review of these reports as furnished to us during or with respect
to 2007, we believe that our executive officers, directors and holders of more than 10% of any
class of our equity securities met all applicable filing requirements, except for one Form 4 filing
for Leonard Becker that was submitted one business day late, and one Form 4 filing for Lawrence
Lacerte that was submitted two business days late.
ETHICS AND BUSINESS CONDUCT
Code of Ethics and Code of Conduct for Employees
We have adopted Corporate Policies and Procedures applicable to all of our officers and other
employees, which we last updated in December 2006 and which was ratified by our Board of Directors
on January 15, 2007. A portion of these policies and procedures (our Code of Conduct for
Employees) constitutes our code of ethics for the Chief Executive Officer, Chief Financial
Officer and Controller within the meaning of applicable SEC rules. Our Code of Conduct for
Employees also serves as our code of conduct applicable to all officers and employees of the
Company as required by applicable NASDAQ listing standards. In December 2007, all of our employees
were asked to review and affirm their knowledge and understanding of the Code of Conduct for
Employees. Our Code of Conduct for Employees is publicly available through the For Investors
section of our website at http://www.universaldisplay.com.
If we make any further amendments to our Code of Conduct for Employees (other than technical,
administrative, or other non-substantive amendments), or if we grant any waivers of the Code of
Conduct for Employees (including implicit waivers) in favor our Chief Executive Officer, Chief
Financial Officer or Controller, we will disclose the nature of the amendment or waiver, its
effective date and to whom it applies in that same location on our website, or in a current report
on Form 8-K that we file with the SEC. In addition, any waiver of our Code of Conduct for
Employees with respect to our executive officers must be approved by our Board of Directors.
Code of Conduct for Directors
Our Board of Directors has adopted a Code of Conduct for Directors that serves as our code of
conduct applicable to all of our directors as required by applicable NASDAQ listing requirements.
The Code of Conduct for Directors was last ratified by our Board of Directors at a meeting held on
April 8, 2008. Our Code of Conduct for
- 29 -
Directors is publicly available through the For Investors section of our website at
http://www.universaldisplay.com. Any waiver of our Code of Conduct for Directors must be
approved by our Board of Directors and will be disclosed as required under applicable regulations.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals to us on matters appropriate for shareholder action at our next
annual meeting of shareholders in accordance with regulations adopted by the SEC. Proposals must
be received by December 29, 2008, to be considered for inclusion in the proxy statement and form of
proxy for our next annual meeting of shareholders. Shareholder proposals received by us after
March 14, 2009, will be deemed untimely, and proxy holders will have the right to exercise
discretionary voting authority with respect to such proposals.
All shareholder proposals must be in writing and must comply with the notice, information and
consent provisions contained in our Amended and Restated Bylaws. Proposals should be directed to
the attention of our Corporate Secretary at Universal Display Corporation, 375 Phillips Boulevard,
Ewing, New Jersey 08618.
ANNUAL REPORT TO SHAREHOLDERS
A copy of our 2007 Annual Report, containing financial statements for the year ended December 31,
2007, is being transmitted with this proxy statement. A copy of our Annual Report on Form 10-K for
the year ended December 31, 2007, including the financial statements and any financial statement
schedules, may be obtained, without charge, by writing to us at Universal Display Corporation, 375
Phillips Boulevard, Ewing, New Jersey 08618, Attn: Corporate Secretary.
|
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/s/ Sidney D. Rosenblatt
|
|
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Sidney D. Rosenblatt |
|
|
Executive Vice President, Chief Financial Officer,
Treasurer and Secretary |
|
|
Ewing, New Jersey
April 28, 2008
- 30 -
Appendix A
UNIVERSAL DISPLAY CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON JUNE 19, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Sherwin I. Seligsohn, Steven V. Abramson and Sidney D. Rosenblatt,
jointly and severally, as proxies, each with power to appoint a substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all of the shares of common stock
of Universal Display Corporation held of record by the undersigned on April 9, 2008, at the Annual
Meeting of Shareholders to be held on June 19, 2008, or any adjournment thereof.
PLEASE COMPLETE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN YOUR PROXY PROMPTLY
(Continued and to be signed on the reverse side)
A-1
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE þ
1. |
|
Election of the seven directors proposed in the accompanying Proxy Statement, each to serve
for a one-year term and until a successor is selected and qualified. |
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NOMINEES |
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o
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FOR ALL NOMINEES
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o
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Steven V. Abramson |
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o
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Leonard Becker |
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o
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WITHHOLD AUTHORITY
FOR ALL NOMINEES
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o
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Elizabeth H. Gemmill |
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o
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C. Keith Hartley |
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o
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FOR ALL EXCEPT
(See Instructions Below)
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o
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Lawrence Lacerte |
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o
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Sidney D. Rosenblatt |
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o
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Sherwin I. Seligsohn |
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INSTRUCTION: |
|
To withhold authority to vote for any individual nominee(s), mark FOR ALL
EXCEPT and fill in the circle next to each nominee you wish to withhold, as shown here: n |
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FOR
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AGAINST
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ABSTAIN |
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2. |
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Ratification of the Appointment of KPMG
LLP as the Companys Independent Registered
Public Accounting Firm for 2008
|
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o
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o
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|
o |
The shares represented by this proxy, if it is properly executed, will be voted in the manner
directed herein by the undersigned shareholder(s). If no direction is made, the shares represented
by this proxy will be voted FOR all nominees for director and FOR Proposal 2. To the extent
permissible under applicable law, this proxy also delegates discretionary authority to vote on any
matter that may properly come before the meeting, or any adjournment or postponement thereof.
|
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To change the address on your account, please check the box at right
and indicate your new address in the address space above. Please note
that changes to the registered name(s) on the account may not be
submitted via this method. |
|
o |
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Signature of Shareholder: |
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Date
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Signature of Shareholder:
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Date |
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person. |
A-2