UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
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Soliciting Material under §240.14a-12 |
Retractable Technologies, Inc. |
(Name of the Registrant as Specified In Its Charter)
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if other than the Registrant)
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RETRACTABLE TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 2022
To the Shareholders of Retractable Technologies, Inc.:
You are cordially invited
to attend Retractable Technologies, Inc.'s 2022 virtual Annual Meeting of shareholders. The Annual Meeting will be held at 10:00
a.m. Central time on May 10, 2022 by webcast available at www.virtualshareholdermeeting.com/RVP2022.
Further information regarding
the Annual Meeting is set forth in the attached Proxy Statement, which was first delivered to security holders on March 31, 2022.
At this year's Annual Meeting,
you will be asked to vote on: 1) the election of three Class 2 Directors; and 2) an advisory vote to approve executive compensation.
We hope you will be able to
attend the virtual Annual Meeting, but if you cannot do so, it is important that your shares be represented. We urge you to read the Proxy
Statement carefully and to vote in accordance with the Board of Directors' recommendations by telephone, Internet, or mail, whether
or not you plan to attend the virtual Annual Meeting.
Thank you for your continued
support.
|
Sincerely, |
|
|
|
|
|
THOMAS J. SHAW
CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER |
RETRACTABLE TECHNOLOGIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 2022
TABLE OF CONTENTS
Retractable Technologies, Inc.
511 Lobo Lane
Little Elm, TX 75068-5295
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 2022
The Board of Directors of
Retractable Technologies, Inc. solicits your vote for the virtual Annual Meeting to be held by webcast at www.virtualshareholdermeeting.com/RVP2022
on the 10th day of May, 2022 at 10:00 a.m. Central time and for any adjournment thereof.
A Notice of Internet Availability
of Proxy Materials and other appropriate proxy materials (to those requesting paper copies) were mailed to shareholders on March 31,
2022.
The Board of Directors is
asking you to vote on: 1) the election of three Class 2 Directors; and 2) an advisory vote to approve executive compensation.
VOTING INFORMATION
How do I vote?
You may vote your shares in
any of the following four ways:
Vote during the virtual Annual Meeting
You will be able to participate in the
webcast of the Annual Meeting, vote your shares electronically, and submit your questions during the live audio webcast of the meeting
by visiting www.virtualshareholdermeeting.com/RVP2022 and entering your 16-digit control number. Online access will open shortly prior
to the start of the Annual Meeting to allow time for you to log in.
Vote by Internet
To vote now by internet, go to www.proxyvote.com.
Have your 16-digit control number available and follow the instructions. Alternatively, scan the QR barcode on your proxy card or notice.
Vote by Mail
You can vote by mail by returning the
enclosed proxy card, if applicable, or requesting a paper copy of the materials, which will include a proxy card.
Vote by Phone
You can vote by phone by calling 1-800-690-6903.
Have your 16-digit control number available and follow the instructions.
Your 16-digit control number
is located on your proxy card or the Notice of Internet Availability of Proxy Materials. If you received more than one Notice or proxy
card, this means you, or persons with whom you share an address, have more than one account. If you do not plan to vote in person, we
encourage you to vote using all your proxy cards and/or control numbers.
Who may vote?
All shareholders of record
of Common Stock on March 11, 2022, the record date, are entitled to vote.
May I change my vote?
You may change your vote even
after you have submitted your proxy by (1) voting again by Internet or telephone; (2) sending a written statement revoking your
proxy to the Secretary of the Company; (3) submitting a properly signed proxy with a later date; or (4) voting during the virtual
Annual Meeting.
How does the Board recommend I vote?
The Board of Directors recommends
that you vote:
| • | “For All” in the election of Class 2 Directors; and |
| • | “For” the proposal regarding an advisory vote to approve executive compensation. |
If appointed by you, the proxy
holders will vote your shares as you direct with regard to the matters described in this Proxy Statement. In the absence of your direction,
they will vote your shares as recommended by the Board of Directors. Unless you indicate otherwise, the proxy holders are also authorized
to vote your shares on any matters that are not known by the Board of Directors as of the date of this Proxy Statement and that may be
properly presented for action at the Annual Meeting.
What if I do not provide voting instructions
to my broker?
If you are a beneficial owner
and do not provide voting instructions to your broker, your broker will not be permitted to vote on your behalf for the election of directors.
For your vote to be counted, you need to communicate your voting decisions to your broker, bank, or other financial institution as soon
as possible and before May 10, 2022.
How many votes are required?
For
the election of Directors, a plurality is required for the election of each nominee.
What constitutes a quorum?
The presence, in person or
by proxy, of the holders of a majority of all the outstanding shares of Common Stock entitled to vote is necessary to constitute a quorum
at the Annual Meeting. Each share of Common Stock entitles the holder to one (1) vote per share. On March 11, 2022, there were
33,123,205 outstanding shares of Common Stock.
Abstentions will be considered
present for purposes of calculating the vote but will not be considered to have been voted in favor of the matters voted upon, and broker
non-votes will not be considered present for purposes of calculating the votes.
Are there any special attendance requirements
for attending the virtual meeting?
You must have your 16-digit
control number to log into the virtual meeting. If you do not have your control number, you will not be granted access. If you are a beneficial
owner, please contact your broker for your control number.
Who pays the expenses incurred in connection
with the solicitation of proxies?
The Company will pay the cost
of soliciting proxies. In addition to the use of the U.S. mail, proxies may be solicited by the Directors, Officers, and employees of
the Company without additional compensation, by personal interview, telephone, or other means of electronic communication. Arrangements
also may be made with brokerage firms and other custodians, dealers, banks, and trustees, or their nominees who hold the voting securities
of record, for sending proxy materials to beneficial owners. Upon request, the Company will reimburse the brokers, custodians, dealers,
banks, or their nominees for their reasonable out-of-pocket expenses.
Who may I contact with questions?
Shareholders with questions
are encouraged to contact Michele M. Larios, Secretary and General Counsel of the Company, at 511 Lobo Lane, Little Elm, Texas 75068,
or by telephone at (888) 806-2626.
PROPOSAL 1
THE ELECTION OF THREE CLASS 2 DIRECTORS
The Board of Directors has
determined that the Board shall be comprised of six members. Currently, the Board is divided into two classes currently consisting of
three Class 1 members and three Class 2 members. The Board of Directors has nominated Thomas J. Shaw, Walter O. Bigby, Jr.,
and John W. Fort III to serve as Class 2 Directors. All nominees currently serve as Class 2 Directors. Generally, Directors
serve for two-year terms. If the nominees are elected, the Class 2 Director nominees will hold office until the 2024 annual meeting,
when their respective successors are elected and qualified, or upon their earlier retirement, resignation, or removal.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE “FOR ALL” IN THE ELECTION OF CLASS 2 DIRECTORS.
The biographies below describe
the qualifications, experience, attributes, and skills that led the Board to determine that it is appropriate for each person to serve
as a Director.
THOMAS J. SHAW
Nominee for Class 2 Director
Founder, Chairman of the Board, President, Chief
Executive Officer, and Class 2 Director
Director since our inception
Age 71
Thomas J. Shaw, our Founder,
has served as Chairman of the Board, President, Chief Executive Officer, and Director since our inception. We believe it is appropriate
for Mr. Shaw to continue to serve as a Director and as the Chairman of the Board because of his deep knowledge of the strengths and
weaknesses of our products (as their primary inventor) and of the Company (as its Founder). Further, his strategic knowledge of the Company
and its competitive environment arising from his ongoing services as its CEO is vital to the successful supervision of the Company by
the Board of Directors. Finally, Mr. Shaw’s educational background in both Engineering and Accounting is helpful to Board deliberations.
In addition to his duties overseeing our Management, he continues to lead our design team in product development of other medical safety
devices that utilize, among other things, his unique patented friction ring technology. Mr. Shaw has extensive experience in industrial
product design and has developed several solutions to complicated mechanical engineering challenges.
MARCO LATERZA
Class 1 Director
Director since 2005
Age 74
Marco Laterza joined us as
a Director effective as of March 22, 2005. We believe it is appropriate Mr. Laterza continue to serve as a Director because
of his skills as a CPA as well as his decades of experience in advising individuals and entities with regard to corporate planning and
financial issues. Such skills and experience provide a valuable contribution in his role as the designated financial expert on the Audit
Committee as well as provide valuable independent accounting advice to the Board. Since 2015, Mr. Laterza has owned and operated
an accounting practice and income tax consulting practice. From 1988 through 2014, Mr. Laterza owned and operated a public accounting
practice. His practice included corporate, partnership and individual taxation, compilation/review of financial statements, financial
planning, business consulting, and trusts and estates. Formerly, Mr. Laterza was employed in a number of positions from 1977 to 1985
with El Paso Natural Gas Company eventually serving as its Director of Accounting.
AMY MACK
Class 1 Director
Director since 2007
Age 54
Amy Mack joined us as a Director
on November 19, 2007. We believe it is appropriate that Ms. Mack continue as a Board member due both to her experience as a
nurse (the primary retail user of our products) as well as her experience in running her own company. Since April of 2000, she has
been the Secretary of EmergiStaff & Associates, a nursing agency, and she served as the Chief Nursing Officer of EmergiStaff &
Associates from 2000 to 2010. From 2003 to 2010, she was the owner and Aesthetics Nurse Specialist for Spa O2 & Medical Aesthetics.
Ms. Mack has served as an emergency room nurse in various emergency rooms throughout her career as a nurse.
WALTER O. BIGBY, JR.
Nominee for Class 2 Director
Director since 2012
Age 57
Walter O. Bigby, Jr.
has served on our Board of Directors since July 2012. We believe it is appropriate for Mr. Bigby to continue to serve as a Director
due to his experience in owning and operating healthcare-related businesses. Mr. Bigby’s experience includes ownership of several
small businesses, including hospitals, nursing homes, commercial real estate, and office equipment providers. Mr. Bigby has
owned and operated Bastrop Rehabilitation Hospital, a rehabilitation hospital in Louisiana, since 2001. He is currently a minority
interest owner in a nursing home in Louisiana. In 1995, Mr. Bigby sold his home health agency to Columbia HCA and remained
a contract employee of the company (Hayden Health, Inc.) for three years developing other home health markets. Mr. Bigby
has over a decade of experience operating healthcare businesses heavily regulated by Federal agencies and has experience with Medicare
and Medicaid.
DARREN E. FINDLEY
Class 1 Director
Director since 2017
Age 58
Darren E. Findley has served
on our Board of Directors since September 2017. He has over thirty years of experience in recruiting, talent, and engagement solutions
experience. He is President of Engage2Excel, where he leads the recruitment solutions team. Mr. Findley worked at AMN Healthcare
from May 2015 to May 2016, as vice president and general manager of recruitment process outsourcing. In this role, his primary
focus was growing the business segment and delivering top talent into healthcare facilities. Prior to AMN Healthcare, his roles included
vice president and managing director of recruitment solutions at IBM/Kenexa from July 1999 to May of 2015, where he managed
a $35 million portfolio and led global recruitment-outsourcing programs for clients, including UnitedHealth Group, US Steel, Flowserve,
Allstate Insurance, Express Scripts and Sprint PCS. In 2016, he was hired by Engage2Excel. He holds a BBA from Harding University. We
believe it is appropriate for Mr. Findley to continue to serve as a Director because he has decades of management experience and
brings a unique perspective to the Board with experience in recruitment and staffing for healthcare and other industries.
JOHN W. FORT III
Nominee for Class 2 Director
Vice President, Treasurer, and Chief Financial
Officer; and Class 2 Director
Director since 2019
Age 53
On April 1, 2019, John
W. Fort III was elected Vice President, Treasurer and Chief Financial Officer and was appointed to fill a vacancy on the Board of Directors
for Class 2 Director. Mr. Fort joined us in March of 2000 as a Financial Analyst and served as our Director of Accounting
from October of 2002 until April 1, 2019. His primary responsibilities in his role as Director of Accounting included managing
the day-to-day operations of the Accounting and Finance Department and coordination of the annual audits, and interim reviews by our independent
accountants, as well as our cost accounting and forecasting functions. Mr. Fort is currently responsible for our financial, accounting,
investor relations, information technology, risk management, and forecasting functions. We believe it is appropriate for Mr. Fort
to continue to serve as a Director because of his experience.
Non-Director Executive Officer
MICHELE M. LARIOS
Vice President, General Counsel, and Secretary
Age 55
Michele M. Larios joined us
in February 1998 and currently serves as our Vice President, General Counsel, and Secretary. Ms. Larios is responsible for our
legal and legislative, human resource, and regulatory functions. In addition to working on all legal matters, both internally and with
outside counsel, Ms. Larios oversees work on any pertinent legislative issues and all relevant regulatory matters.
There are no family relationships
among the above persons.
No Directors hold Directorships
in other reporting companies.
CORPORATE
GOVERNANCE
The Board of Directors has
the responsibility for establishing corporate policies and for our overall performance, although it is not involved in day-to-day operations.
Currently, over half of the Directors serving on our Board of Directors are independent as defined in Section 803 of the Company
Guide of the NYSE American LLC (“NYSE American”). Our current independent Directors are Marco Laterza, Amy Mack, Walter O.
Bigby, Jr., and Darren E. Findley.
The Board of Directors meets
quarterly throughout the year to review significant developments affecting the Company and to act upon matters requiring its approval.
It also holds special meetings as required from time to time when important matters arise requiring Board action between scheduled meetings.
During the last fiscal year, the Board of Directors met five times. No incumbent director attended fewer than 75% of the aggregate of
meetings of the Board of Directors and the Committees on which he or she served in 2021. The Board of Directors has established standing
Audit, Compensation and Benefits, and Nominating Committees. Each Committee has a written charter, which is available on our website at
www.retractable.com.
We have a policy encouraging
Board members’ attendance at Annual Meetings. All members of the Board attended the 2021 virtual Annual Meeting in person or via
remote communication.
Board Leadership Structure and Role in Risk
Oversight
Our leadership structure combines
the roles of the Chairman of the Board ("Chairman") and Chief Executive Officer ("CEO"). We believe it is in the shareholders'
best interests for Thomas J. Shaw to serve in this dual role as CEO and Chairman. This structure fosters an important unity of leadership
between the Board and Management and enables the Board to organize its functions and conduct its business in the most efficient and effective
manner. As founder of the Company and primary inventor of our products, Thomas J. Shaw has a unique understanding of our operations and
the anticompetitive environment in which we operate, which understanding is necessary to perform the dual role of CEO and Chairman.
We have no lead independent
director due to the small size of the Board and due to the fact that the independent directors currently carry out their responsibilities
effectively.
The primary responsibility
for the identification, assessment, and management of the various risks that we face belongs with Management. The Board oversees these
risks. For instance, at every meeting, the Board reviews the principal factors influencing our operating results, including the competitive
environment and ongoing litigation, and discusses with our executive officers the major events, activities, and changes affecting the
Company. The oversight of risks also occurs at the committee level. For instance, pursuant to its charter, the Audit Committee is charged
with reviewing and discussing financial risk exposures with Management and the measures Management has taken to monitor and control such
exposures. Our Chairman, because of his dual role as CEO, is able to ensure that risks facing the Company are appropriately brought to
the Board and/or its committees for their review.
Audit Committee
We have a separately designated
standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee represents
and assists the Board of Directors in discharging its responsibilities relating to the accounting, reporting, and financial practices
and legal compliance of the Company. The Audit Committee has general responsibility for oversight of the accounting and financial processes
of the Company, including oversight of: (1) the integrity of the Company’s financial statements and its financial reporting
and disclosure practices, (2) the Company’s compliance with legal and regulatory requirements, and (3) the qualification
and independence of the Company’s auditors and the performance of the annual audit and interim reviews of the Company’s financial
statements by the independent auditors. The Audit Committee also provides an open avenue of communication among the independent auditors,
financial and senior management, and the Board of Directors. The Audit Committee met a total of five times in 2021. The members of the
Audit Committee are independent as defined by the listing standards of the NYSE American. The Audit Committee currently consists of Marco
Laterza, Walter O. Bigby, Jr., and Darren E. Findley. Marco Laterza currently serves as its designated Audit Committee Financial
Expert.
Audit Committee Report
The Audit Committee reviewed
and discussed the audited financial statements with Management. The Audit Committee discussed with Moss Adams LLP the matters required
to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The
Audit Committee received the written disclosures and the letter from Moss Adams LLP required by applicable requirements of the PCAOB regarding
the independent accountant's communications with the audit committee concerning independence and discussed with the independent accountant
the independent accountant’s independence. Based on the review and discussions with Moss Adams LLP, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in the Company’s annual report on Form 10-K for
the year ended December 31, 2021 for filing with the SEC.
|
Marco Laterza |
|
WALTER O. BIGBY, jR. |
|
DARREN E. FINDLEY |
Nominating Committee
The Nominating Committee assists
the Board of Directors by identifying qualified candidates for Director positions, recommending Director nominees for the annual meetings,
recommending candidates for election by the Board of Directors to fill vacancies on the Board, and recommending Director nominees for
Committees upon request of the Board. The Nominating Committee met one time in 2021. The Nominating Committee currently consists of Marco
Laterza, Amy Mack, Darren E. Findley, and Walter O. Bigby, Jr. All members of our Nominating Committee are independent as defined
by the NYSE American’s listing standards.
Director Nomination Policies
It is the policy of the Nominating
Committee to consider all bona fide candidates recommended by shareholders for nomination for election to the Board. The Committee considers
such candidates using the same screening criteria as are applied to all other potential nominees for election, provided that the shareholder
nominations are submitted in a timely and complete manner.
Nominees properly submitted
by any shareholder will be considered for recommendation by the Nominating Committee to the Board of Directors and for recommendation
by the Board to the shareholders in our Proxy Statement. The procedure to be followed by shareholders in submitting such recommendations
for the next Annual Meeting is set forth in detail herein in the section entitled “2023 Annual Meeting.”
We establish, through our
Nominating Committee, selection criteria that identifies desirable skills and experience for prospective Board members, including those
properly nominated by shareholders. The Board, with the assistance of the Nominating Committee, selects potential new Board members using
the criteria and priorities established from time to time based upon the needs of the Company. The composition, skills, and needs of the
Board change over time and will be considered in establishing the desirable profile of candidates for any specific opening on the Board
of Directors.
At a minimum, recommended
nominees by the Nominating Committee for service on the Board must be well regarded and experienced participants in their field(s) of
specialty, familiar at the time of their appointment with our business, willing to devote the time and attention necessary to deepen and
refine their understanding of the Company and the issues facing it, and must have an understanding of the demands and responsibilities
of service on a public company board of directors. The Nominating Committee will also consider such qualities as independence from the
Company. Each nominee will be considered both on his or her individual merits and in relation to existing or other potential members of
the Board, with a view to establishing a well-rounded, diverse, knowledgeable, and experienced Board. The Nominating Committee has no
formal policy with regard to the consideration of diversity in identifying nominees for director. The Nominating Committee and Board broadly
define diversity to include diversity of professional experience and viewpoint, as well as diversity of race, gender, nationality, and
ethnicity.
The Nominating Committee considers
nominees recommended by Board members, Management, and the shareholders. It is further empowered, when necessary in its judgment, to retain
and compensate third party search firms to assist in identifying or evaluating potential nominees.
The Class 2 Director
nominees herein were recommended by the Nominating Committee and approved by the Board of Directors.
Compensation and Benefits Committee
The Compensation and Benefits
Committee has authority over the following responsibilities: discharging the Board of Directors’ responsibilities relating to the
compensation of our executive officers and Directors; preparing, if necessary, an annual report on compensation and such other reports
that may be required; and administering our equity and other incentive compensation plans, if any. Changes in the amount and/or form of
compensation to executive officers are not generally pursued unless first proposed by Management. The committee’s authority may
not be delegated except back to the full Board of Directors.
On January 29, 2021,
the Company’s Compensation and Benefits Committee retained Longnecker & Associates, a compensation consulting company.
This engagement was the first time since 2017 that the Company had engaged such a consultant or engaged in a review of comparable compensation
programs. The role of the compensation consultant and the nature and scope of the compensation consultant’s assignment are set forth
in the Compensation Discussion and Analysis herein. The reports by Longnecker & Associates described in the Compensation Discussion
and Analysis were created in direct response to the instructions and directions given by the Compensation and Benefits Committee. Longnecker &
Associates was engaged solely to provide advice on the amount or form of executive compensation and no additional services were rendered.
The Compensation and Benefits
Committee met three times during 2021. The Compensation and Benefits Committee currently consists of Marco Laterza, Amy Mack, Walter O.
Bigby, Jr., and Darren E. Findley. All members of our Compensation and Benefits Committee are independent as defined by the NYSE
American listing standards.
Code of Ethics
Effective as of August 11,
2020, we adopted a restated code of ethics that applies to all employees, including, but not limited to, our principal executive and financial
officers. Our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote:
| 1. | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interests
between personal and professional relationships; |
| 2. | Full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with,
or submit to, the SEC and in our other public communications; |
| 3. | Compliance with applicable governmental laws, rules, and regulations; |
| 4. | The prompt, internal reporting of violations of the code to an appropriate person or persons identified
in the code; and |
| 5. | Accountability for adherence to the code. |
A copy of the code is posted
on our website at www.retractable.com. Please follow the link to “Investors” then click “Governance” then click
“Charters,” then select “RVP Corporate Code of Conduct.” Any amendment to this code or waiver of its application
to the principal executive officer, principal financial officer, principal accounting officer, or controller or similar person shall be
disclosed to investors by means of a Form 8-K filing with the SEC.
As set forth in the Code of
Business Conduct and Ethics, all employees and Directors are generally prohibited from engaging in short sales, transactions in puts,
calls, or other derivative securities, or hedging transactions related to the Company’s securities.
Communications with the Board of Directors
The Board of Directors has
established a Disclosure Representative Policy and a standing Disclosure Representative position. It is our policy that the Disclosure
Representative serves as the primary contact for shareholders and others desiring to communicate directly with the Board of Directors.
It is further our policy that all communications addressed to the Board of Directors or the Disclosure Representative are sent to all
Board members. The current Disclosure Representative is Mr. Marco Laterza. Communications intended for the Board of Directors should
be in writing, addressed to the attention of the “Disclosure Representative” or Mr. Marco Laterza, and sent to 511 Lobo
Lane, Little Elm, Texas 75068-5295.
Shareholders may also contact
Michele M. Larios, Secretary and General Counsel of the Company, who will respond to questions individually unless the question is directed
to the full Board of Directors or the Disclosure Representative.
Certain Relationships and Related Transactions
In accordance with our Audit
Committee Charter, the Audit Committee has reviewed and approved all related party transactions. In particular, the Audit Committee reviews
all proposed transactions where the amount involved meets or exceeds $120,000.
In 1995, Thomas J. Shaw, President,
Chief Executive Officer, and shareholder holding more than 5% of the outstanding Common Stock, contracted with us under the Technology
Licensing Agreement for the exclusive worldwide licensing rights to manufacture, market, sell, and distribute retractable medical safety
products. A royalty of 5% of gross sales of all licensed products sold to customers over the life of the Technology Licensing Agreement
is paid. Additionally, if the Company sublicenses the technology and the sublicensee’s customers are not known to the Company, then
Mr. Shaw shall be entitled to receive from the Company fifty percent (50%) of the royalties actually paid to the Company by such
sublicensee. Royalties of $9,841,190 and $4,423,970 were paid to Mr. Shaw in 2021 and 2020, respectively. As of March 11, 2022,
a total of $200,000 in royalties relating to 2021 sales have been paid to Mr. Shaw during 2022.
On November 16, 2021,
we and Mr. Shaw entered into the Third Amendment to Technology License Agreement (the “Amendment”). The Amendment expands
the scope of the Technology License Agreement and provides additional protection to the parties in the event of a Hostile Takeover, as
defined by the Amendment. Under the Amendment, under certain conditions, Mr. Shaw is granted the unilateral right to terminate the
Technology License Agreement or cancel or convert a license thereunder from exclusive to nonexclusive following a Hostile Takeover.
SECURITY OWNERSHIP
Security Ownership of Certain Beneficial Owners
The following table sets forth
certain information regarding the beneficial ownership of our capital stock as of March 11, 2022, for each person known by us to
own beneficially 5% or more of the voting capital stock.
Title of Class | |
Name and Address of Beneficial Owner | |
Amount and Nature of Beneficial Ownership | | |
Percent of Class (1) | |
Common Stock | |
Thomas J. Shaw(2) 511 Lobo Lane Little Elm, TX 75068 | |
| 15,549,060 | | |
| 46.9 | % |
| |
| |
| | | |
| | |
| |
BML Investment Partners, L.P. and Braden M. Leonard(3) 65 E Cedar - Suite 2 Zionsville, IN 46077 | |
| 2,808,000 | | |
| 8.5 | % |
(1) The
Percent of Class is calculated by dividing the Amount of Beneficial Ownership, as shown in the table above, by the sum of the total
outstanding Common Stock (33,123,205 shares).
(2) 972,400
of the shares owned by the August 2010 Family Trust are controlled by Mr. Shaw pursuant to a Voting Agreement. These shares
are voted by Mr. Shaw until such time as they are sold. Additionally, Mr. Shaw has investment power over 500,000 shares of Common
Stock as Trustee pursuant to a trust agreement for the benefit of a family member.
(3) 2,450,000
shares are held by BML Investment Partners, L.P. and an additional 358,000 are held by Braden M. Leonard, according to a Schedule 13G
filed on January 27, 2022. Braden M. Leonard is the managing member of the general partner of BML Investment Partners, L.P.
Security Ownership of Management and Directors
The following table sets forth
certain information regarding the beneficial ownership of our capital stock as of March 11, 2022, for each Named Executive Officer
specified by Item 402 of Regulation S-K (i.e., our CEO, CFO, and three other highest paid officers) and Director of the Company. Except
pursuant to applicable community property laws or as otherwise discussed below, each shareholder identified in the table possesses sole
voting and investment power with respect to his or her shares.
Title of Class | |
Name of Beneficial Owner | |
Amount and Nature of
Beneficial Ownership | | |
Percent of Class(1) | |
Common Stock | |
| |
| | | |
| | |
As a Group | |
Named Executive Officers and Directors | |
| 16,698,260 | | |
| 50.4 | % |
As Individuals | |
Thomas J. Shaw(2) | |
| 15,549,060 | | |
| 46.9 | % |
| |
Michele M. Larios(3) | |
| 861,000 | | |
| 2.6 | % |
| |
John W. Fort III(4) | |
| 9,900 | | |
| <1 | % |
| |
Marco Laterza(5) | |
| 95,000 | | |
| <1 | % |
| |
Walter O. Bigby, Jr. | |
| 90,000 | | |
| <1 | % |
| |
Amy Mack(6) | |
| 50,000 | | |
| <1 | % |
| |
Darren E. Findley | |
| 4,200 | | |
| <1 | % |
| |
Kathryn Duesman(7) | |
| 20,700 | | |
| <1 | % |
| |
Lawrence G. Salerno(8) | |
| 18,400 | | |
| <1 | % |
(1) The
Percent of Class is calculated for the individuals holding Common Stock by dividing each beneficial owner's Amount of Beneficial
Ownership, as shown in the table above, by the sum of the total outstanding Common Stock (33,123,205 shares) plus that beneficial owner's
stock equivalents (options), if any. The Percent of Class is calculated for the "As a Group" row by totaling all of the
Percent of Class percentages appearing in the chart.
(2) 972,400
of the shares owned by the August 2010 Family Trust are controlled by Mr. Shaw pursuant to a Voting Agreement. These shares
are voted by Mr. Shaw until such time as they are sold. Additionally, Mr. Shaw has investment power over 500,000 shares of Common
Stock as Trustee pursuant to a trust agreement for the benefit of a family member.
(3) 1,000
of these shares are owned by Ms. Larios’ children. 800,000 of these shares are owned by trusts for the benefit of non-family
members for which Ms. Larios serves as trustee.
(4) These
shares are acquirable by the exercise of stock options.
(5) 10,000
of these shares are acquirable by the exercise of stock options.
(6) These
shares are acquirable by the exercise of stock options.
(7) Ms. Duesman
is not an executive officer, but qualifies as “named executive officers” by virtue of Item 402(a)(3)(iv) of Regulation
S-K.
(8) Mr. Salerno
is not an executive officer, but qualifies as “named executive officers” by virtue of Item 402(a)(3)(iv) of Regulation
S-K.
There are no arrangements,
the operation of which would result in a change of control of the Company, other than:
1. The 972,400 shares owned
by the August 2010 Family Trust shall cease to be controlled by Mr. Shaw under the Voting Agreement upon their sale to a third
party for value; and
2. Mr. Shaw has voting
control over 15,049,060 shares of the currently outstanding shares of the Common Stock (45.4%) and investment power over 14,576,660 shares
(44.0%) and total beneficial ownership of 46.9% of the currently outstanding shares of the Common Stock. Assuming the exercise of all
vested options and conversion of all outstanding preferred shares, Mr. Shaw would have beneficial ownership of 46.4% of the Common
Stock.
COMPENSATION
Compensation Discussion and Analysis
Compensation Consultant Report
On January 29, 2021,
the Compensation and Benefits Committee retained Longnecker & Associates, a compensation consultant. This engagement was the
first time since 2017 that the Company had engaged a compensation consultant or engaged in a review of comparable compensation programs.
The Compensation and Benefits
Committee, after reviewing the factors set forth in Rule 10C-1(b)(4) under the Securities Exchange Act of 1934, determined that
Longnecker & Associates was independent.
The Compensation and Benefits
Committee received a report from Longnecker & Associates on March 10, 2021 analyzing the competitiveness of the base salary,
annual or other periodic incentives, and long-term incentives paid to the Company’s three executive officers. The results of the
report indicated that increases in base salary as well as one-time stock option grants and bonuses proposed by Management were reasonably
aligned to the external market. As part of its analysis, Longnecker & Associates noted the Company’s 2021 stock option
awards were intended to be one-time “mega grants” in contrast to the external market which typically provided annual long-term
incentives. To facilitate a comparison, the 2021 stock option awards were compared to three years of other issuers’ annual long-term
incentives.
Consistent with the conclusions
of the Longnecker & Associates report, the Compensation and Benefits Committee granted the executive officers the following compensation.
To Mr. Shaw, the Committee granted a stock option for the purchase of one million shares of Common Stock as well as a special bonus
of $300,000 and an increased annual salary of $1 million. To Ms. Larios, the Committee granted a stock option for the purchase of
250,000 shares of Common Stock as well as a special bonus of $100,000 and an increased annual salary of $400,000. To Mr. Fort, the
Committee granted a stock option for the purchase of 100,000 shares of Common Stock as well as a special bonus of $100,000 and an increased
annual salary of $300,000. In support of the increases, the Committee determined that the Company’s three officers have significant
responsibilities which contribute to the long-term survival of the Company. The cash bonuses were granted as a reward for past service
and loyalty.
For its report, Longnecker &
Associates used a 50/50 blend of peer data and survey data. The following public peer companies were used for the comparisons: BIOLASE, Inc.,
GenMark Diagnostics, Inc., Utah Medical Products, Inc., Allied Healthcare Products, Inc., IRadimed Corporation, Electromed, Inc.,
Chembio Diagnostics, Inc., Sientra, Inc., Antares Pharma, Inc., Apyx Medical Corporation, Atrion Corporation, BioLife Solutions, Inc.,
Cerus Corporation, OraSure Technologies, Inc., Pulmonx Corporation, SI-BONE, Inc., Silk Road Medical, Inc., and Viemed
Healthcare, Inc.
The Objectives of Our Compensation Plan
Our executive officer compensation
program (the “Compensation Program”) is based on the belief that competitive compensation is essential to attract, retain,
motivate, and reward highly qualified and industrious executive officers. Our Compensation Program is intended to accomplish the following:
| • | attract and retain highly talented and productive executive officers; |
| • | provide incentives and rewards for superior performance by the executive officers; and |
| • | align the interests of executive officers with the interests of our shareholders. |
Our Compensation Program is
designed to reward both superior long-term performance by our executive officers and their loyalty.
Elements of Compensation
To achieve these objectives,
the Compensation and Benefits Committee has approved an executive officer compensation program that consists of four basic components:
| • | base salary; |
| • | short-term incentive compensation in the form of cash bonuses; |
| • | long-term incentive compensation in the form of stock options; and |
| • | medical, life, and benefit programs (which are generally available to all employees). |
Executive compensation is
not based on the individual’s contribution to specific, quantitative corporate objectives due to the fact that we compete in a market
environment where significant achievement or performance is not always correlated with corporate results.
Base Salary
We choose to pay a significant
component of our compensation in base salary due to the fact that our ability to grow has been constrained by larger market players. Until
such time as we believe that we have consistent access to the market, we believe that it is appropriate to weigh our Compensation Program
heavily in favor of base salaries rather than incentive compensation.
Management establishes the
initial recommendations regarding compensation for all employees. Executive compensation remains the same until there is a review of such
compensation by the Compensation and Benefits Committee. Additionally, the Compensation and Benefits Committee sets the compensation for
new officers. Compensation, other than that of the Chief Executive Officer, has generally not been reviewed annually. Under the terms
of Mr. Shaw’s employment agreement, his compensation is reviewed annually.
The base salary for each of
our executive officers is subjectively determined primarily on the basis of the following factors: experience, individual performance,
contribution to our performance, level of responsibility, duties and functions, salary levels in effect for comparable positions within
and without our industry, and internal base salary comparability considerations. However, salaries can also be affected by our long-term
needs.
Cash Bonuses
From time to time and when
our cash reserves allow, we grant cash bonuses in order to reward significant efforts or the accomplishment of short term goals. The bonuses,
when paid, are paid on a discretionary basis as determined by the Compensation and Benefits Committee. In 2021, the Compensation and Benefits
Committee granted special cash bonuses to the Company’s three officers in the following amounts: $300,000 for Mr. Shaw, $100,000
for Ms. Larios, and $100,000 for Mr. Fort. Prior to 2021, bonuses were last granted in 2017.
Long-Term Incentives: Stock
Options
Long-term incentives are provided
through grants of stock options. Our 2008 Stock Option Plan expired on July 25, 2018 although some stock options remain outstanding
under such plan. On March 16, 2021, the Board approved the 2021 Stock Option Plan (the “2021 Plan”) and set aside and
reserved 2,000,000 shares of Common Stock for issuance pursuant to the 2021 Plan. The 2021 Plan was approved by the shareholders at the
May 11, 2021 shareholder meeting. The 2021 Plan provides for the granting of incentive stock options and non-qualified stock options
at a price equal to at least 100% of the fair market value of the Company’s Common Stock as of the date of grant. Participants in
the 2021 Plan may include employees, consultants, and non-employee Directors. On March 16, 2021, the Compensation and Benefits Committee
approved option grants to purchase 1,000,000, 250,000, and 100,000 shares of Common Stock to our chief executive officer, general counsel,
and chief financial officer, respectively. These shares will vest in their entirety three years from the grant date.
Stock options align the interests
of executive officers with those of shareholders and to provide each executive officer with a significant incentive to manage from the
perspective of an owner with an equity stake in the Company.
Generally, option awards to
executive officers are granted by the Compensation and Benefits Committee and for others are granted at the discretion of the Board. The
Committee (or Board, as applicable) considers, among other factors, our financial condition and the expected expense of the grants.
Each stock option grant to
employees allows the employee to acquire shares of Common Stock at a fixed price per share (never less than the closing stock price of
the Common Stock on the date of grant or the prior trading day, as applicable) for a fixed period (usually ten years). Options generally
vest based on a time-based formula. Accordingly, stock option grants provide a return to the employee only if the employee remained employed
by us during the vesting period, and then only if the market price of the underlying Common Stock appreciates.
All outstanding awards have
been granted on the basis of historical performance. There is no discretion to change the awards once granted. The Company adopted a Clawback
Policy on March 16, 2021 to address recoupment of any incentive compensation granted based on the attainment of certain financial
measures in the event of certain restatements of the Company’s financial statements.
Shareholder Advisory Votes
This annual meeting will present
our shareholders with another opportunity to advise us with respect to executive compensation by casting an
advisory vote on the compensation paid to our named executive officers. A majority of the advisory votes cast in 2019 on the executive
compensation proposals were voted in favor of the executive compensation and three-year frequency of shareholder advisory votes on compensation.
In 2021, we determined it was appropriate to raise the salaries of our executive officers and grant bonuses and stock options following
receipt of an analysis from a third-party consultant as well as the Compensation and Benefits Committee’s review of the contributions
of the executives to our successes in 2020-2021.
The
Compensation and Benefits Committee will continue to take into account the outcome of these advisory votes when making compensation decisions
for the named executive officers.
Factors We Consider in Determining to Change
Compensation Materially
We consider our cash position,
current liquidity trends, and the short-term and long-term needs for cash reserves when evaluating whether we can change compensation
materially at a given time. On an individual-by-individual basis, we also consider the value of past option compensation, the competitiveness
of that individual’s base salary, and that individual’s contribution to our goals. On occasion, we engage compensation consultants
as well. Longnecker & Associates was engaged in January 2021 to review increases in compensation and new option grants to
our principal executive officer, principal financial officer, and general counsel. Its report presented a market analysis for our three
executive officers’ base salary, annual incentives, and long-term incentives.
The Impact of the Accounting and Tax Treatments
Stock options granted to executives
and other employees are expensed for accounting purposes under the Stock Compensation Topic of the Financial Accounting Standards Board
Accounting Standards Codification. Stock option expense is not recognized for tax purposes, except in the case of non-qualified stock
options. For non-qualified stock options, the intrinsic value of the option is recognized when the option is exercised.
Section 162(m) of
the Internal Revenue Code generally disallows tax deductions for compensation to executives over $1 million.
Compensation Pursuant to Employment Agreement
We have an Employment Agreement
with Mr. Thomas J. Shaw (the “Employment Agreement”). No other executives or Directors are compensated pursuant to employment
agreements.
The Employment Agreement provides
for an initial period of three years which ended December 31, 2010 and automatically and continuously renews for consecutive two-year
periods. The Employment Agreement is terminable either by us or Mr. Shaw upon 30 days’ written notice or upon Mr. Shaw’s
death. The Employment Agreement details a variety of causes for termination and payments owed to Mr. Shaw in each case.
The Employment Agreement dated
January 1, 2008 provides for an annual salary of at least $416,400 with an annual salary increase equal to no less than the percentage
increase in the CPI over the prior year. The Employment Agreement requires that Mr. Shaw’s salary be reviewed by the Compensation
and Benefits Committee annually, which shall make such increases as it considers appropriate. In 2021, the Compensation and Benefits Committee
relied upon a report from a compensation consultant to increase Mr. Shaw’s 2021 salary to $1,000,000.
Under the Employment Agreement,
we are obligated to provide certain benefits, including, but not limited to, participation in qualified pension plan and profit-sharing
plans, participation in the Company's Cafeteria Plan and other such insurance benefits provided to other executives, paid vacation, and
sick leave. We are also obligated to furnish him with a cellular telephone and suitable office space as well as reimburse him for any
reasonable and necessary out of pocket travel and entertainment expenses incurred by him in carrying out his duties and responsibilities,
membership dues to professional organizations, and any business-related seminars and conferences.
Mr. Shaw has the right
under this agreement to resign in the event that there is a change of control. A “Change of Control” shall be deemed to have
occurred on either of the following dates: (i) the date any one person (other than Mr. Shaw), or more than one person acting
as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the Company possessing 30% or more of the total possible voting power of the stock of the Company (assuming the
immediate conversion of all then outstanding convertible preferred stock) or (ii) the date a majority of members of the Board of
Directors is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members
of the Company’s Board of Directors before the date of the appointment or election. Mr. Shaw further has the right to resign
if there is a change in ownership. A change in ownership is defined to have occurred on the date that any one person (other than Mr. Shaw)
or more than one person acting as a group acquires ownership of the Company’s stock that, together with the stock previously held
by such person or group, constitutes more than 50% of the total fair market value or total voting power (assuming the immediate conversion
of all then outstanding convertible preferred stock) of the Company. In such event Mr. Shaw is entitled to salary through the date
of termination, salary for 24 months, reimbursement of expenses, and applicable benefits.
Compensation Committee Report
The Compensation and Benefits
Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Management,
and, based on the review and discussions referred to in paragraph (e)(5)(i)(A) of Item 407 of Regulation S-K, has recommended to
the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
|
WALTER O. BIGBY, JR. |
|
AMY MACK |
|
MARCO LATERZA |
|
DARREN E. FINDLEY |
The following Summary Compensation
Table sets forth the total compensation paid or accrued by us over the past three fiscal years to or for the account of the named executive
officers:
Summary Compensation Table for 2019-2021
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Option Awards ($)(4) | | |
All Other Compensation ($)(5) | | |
Total ($) | |
Thomas J. Shaw | |
2019 | | |
499,526 | | |
| — | | |
| — | | |
| 5,600 | | |
| 505,126 | |
President and CEO | |
2020 | | |
511,016 | | |
| — | | |
| — | | |
| 5,700 | | |
| 516,716 | |
(principal executive officer) | |
2021 | | |
1,000,000 | | |
| 300,000 | | |
| 10,210,000 | | |
| 5,800 | | |
| 11,515,800 | |
| |
| | |
| | |
| | | |
| | | |
| | | |
| | |
Michele M. Larios | |
2019 | | |
350,000 | | |
| — | | |
| — | | |
| 2,962 | | |
| 352,962 | |
Vice President, General Counsel | |
2020 | | |
350,000 | | |
| — | | |
| — | | |
| 1,015 | | |
| 351,015 | |
| |
2021 | | |
400,000 | | |
| 100,000 | | |
| 2,552,500 | | |
| 1,346 | | |
| 3,053,846 | |
| |
| | |
| | |
| | | |
| | | |
| | | |
| | |
John W. Fort III(1) | |
2019 | | |
200,000 | | |
| — | | |
| — | | |
| 923 | | |
| 200,923 | |
Vice President, CFO | |
2020 | | |
200,000 | | |
| — | | |
| — | | |
| 4,000 | | |
| 204,000 | |
(principal financial officer, principal accounting officer) | |
2021 | | |
300,000 | | |
| 100,000 | | |
| 1,021,000 | | |
| 5,538 | | |
| 1,426,538 | |
| |
| | |
| | |
| | | |
| | | |
| | | |
| | |
Kathryn M. Duesman(2) | |
2019 | | |
174,999 | | |
| — | | |
| — | | |
| 3,493 | | |
| 178,492 | |
Vice President of Clinical Affairs | |
2020 | | |
180,912 | | |
| 100,000 | | |
| — | | |
| 3,608 | | |
| 284,520 | |
| |
2021 | | |
192,156 | | |
| 124,767 | | |
| — | | |
| 3,841 | | |
| 320,764 | |
| |
| | |
| | |
| | | |
| | | |
| | | |
| | |
Lawrence G. Salerno(3) | |
2019 | | |
148,722 | | |
| — | | |
| — | | |
| 2,992 | | |
| 151,714 | |
Director of Operations | |
2020 | | |
165,333 | | |
| 100,000 | | |
| — | | |
| 5,305 | | |
| 270,638 | |
| |
2021 | | |
179,667 | | |
| 106,775 | | |
| — | | |
| 3,511 | | |
| 289,953 | |
(1) Mr. Fort’s
2019 salary includes his salary from his former position as Director of Accounting of the Company. Mr. Fort became a named executive
officer on April 1, 2019.
(2) Ms. Duesman
is not an executive officer, but qualifies as “named executive officers” by virtue of Item 402(a)(3)(iv) of Regulation
S-K.
(3) Mr. Salerno
is not an executive officer, but qualifies as “named executive officers” by virtue of Item 402(a)(3)(iv) of Regulation
S-K.
(4) On
March 16, 2021, the Compensation and Benefits Committee approved option grants to purchase 1,000,000, 250,000, and 100,000 shares
of Common Stock to Mr. Shaw, Ms. Larios, and Mr. Fort, respectively. These shares will vest in their entirety three years
from the grant date (assuming continued employment) and have an exercise price of $13.00 per share. The value of an option for the purchase
of each underlying share of Common Stock is $10.21 using the Black-Scholes option pricing model with a risk-free rate of 1.20% and a volatility
factor of 92.66%. The option awards have a ten-year term.
(5) Represents
the 401(k) matching contributions of the Company.
GRANTS OF PLAN-BASED AWARDS
The following Grants of Plan-Based
Awards for 2021 table sets forth information regarding grants of awards made under any plan to each named executive officer in the last
completed fiscal year.
Grants of Plan-Based Awards for 2021
Name | |
Grant Date | | |
Estimated Future Payouts Under Equity Incentive Plan Awards Target #(1) | | |
Exercise or Base Price of Option Awards $/Share | | |
Grant Date Fair Value of Stock and Option Awards | |
Thomas J. Shaw | |
03/16/2021 | | |
| 1,000,000 | | |
$ | 13.00 | | |
$ | 10,210,000 | |
President and CEO | |
| | |
| | | |
| | | |
| | |
(principal executive officer) | |
| | |
| | | |
| | | |
| | |
| |
| | |
| | | |
| | | |
| | |
John W. Fort III | |
03/16/2021 | | |
| 100,000 | | |
$ | 13.00 | | |
$ | 1,021,000 | |
Vice President, CFO | |
| | |
| | | |
| | | |
| | |
(principal financial officer) | |
| | |
| | | |
| | | |
| | |
| |
| | |
| | | |
| | | |
| | |
Michele M. Larios | |
03/16/2021 | | |
| 250,000 | | |
$ | 13.00 | | |
$ | 2,552,500 | |
Vice President, General Counsel | |
| | |
| | | |
| | | |
| | |
| |
| | |
| | | |
| | | |
| | |
| |
| | |
| | | |
| | | |
| | |
Kathryn M. Duesman | |
— | | |
| — | | |
| — | | |
| — | |
Vice President of Clinical Affairs | |
| | |
| | | |
| | | |
| | |
| |
| | |
| | | |
| | | |
| | |
| |
| | |
| | | |
| | | |
| | |
Lawrence G. Salerno | |
—- | | |
| — | | |
| — | | |
| — | |
Director of Operations | |
| | |
| | | |
| | | |
| | |
(1) These
options were granted under the 2021 Stock Option Plan.
Narrative Disclosure to Summary Compensation
Table and Grants of Plan-Based Awards Table
Please see “Compensation
Pursuant to Employment Agreement” above and “Potential Payments Upon Termination or Change of Control” below for terms
of our only employment agreement in effect.
With the exception of option
grants made in 2021 to the Company’s three executive officers, salary has historically represented a substantial portion of the
total compensation for named executive officers. This form of payment had been favored by the Company over equity awards due to the market
environment in which the Company has historically operated. Bonuses and option grants are not made annually.
The vesting schedule for each
of the Company’s executive officers’ option grants is three years from the date of grant. Other than continued employment,
there are no performance-based conditions to the awards. All computations assume that the officers will continue employment for the requisite
three-year period.
Outstanding Equity Awards at Fiscal Year-End
The following Outstanding
Equity Awards at Fiscal Year-End Table sets forth information regarding unexercised options held by the named executive officers as of
December 31, 2021.
Name | |
Number of Securities Underlying Unexercised Options Exercisable | | |
Number of Securities Underlying Unexercised Options Unexercisable(1) | | |
Option Exercise Price ($) | | |
Option Expiration Date | |
Thomas J. Shaw | |
| — | | |
| 1,000,000 | | |
$ | 13.00 | | |
| 03/16/2031 | |
President, CEO | |
| | | |
| | | |
| | | |
| | |
(principal executive officer) | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Michele M. Larios | |
| — | | |
| 250,000 | | |
$ | 13.00 | | |
| 03/16/2031 | |
Vice President, General Counsel | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
John W. Fort III | |
| 9,900 | | |
| — | | |
$ | 2.75 | | |
| 09/09/2026 | |
Vice President, CFO | |
| — | | |
| 100,000 | | |
$ | 13.00 | | |
| 03/16/2031 | |
(principal financial officer, principal accounting officer) | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Kathryn M. Duesman | |
| — | | |
| — | | |
| — | | |
| — | |
Vice President of Clinical Affairs | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Lawrence G. Salerno | |
| — | | |
| — | | |
| — | | |
| — | |
Director of Operations | |
| | | |
| | | |
| | | |
| | |
(1) Each
unearned option indicated above vests on March 16, 2024.
401(k) Plan
We do not have a pension plan
other than the 401(k) plan which is available to all employees on the first day of the third month following the date of employment.
We implemented an employee
savings and retirement plan (the “401(k) Plan”) in 2005 that is intended to be a tax-qualified plan covering substantially
all employees. Under the terms of the 401(k) Plan, employees may elect to contribute up to 88% of their compensation, or the statutory
prescribed limit, if less. We may, at our discretion, match employee contributions. We made matching contributions of $117,917 in 2019,
of which $18,064 were to named executive officers. We made matching contributions of $162,008 in 2020, of which $17,385 were to named
executive officers. We made matching contributions of $204,032 in 2021, of which $20,036 were to named executive officers.
Potential Payments upon Termination or Change of Control
Other than the information
set forth below for Mr. Shaw, no other compensatory contract existed for payments upon termination or change of control.
The following table identifies
the types and amounts of payments that shall be made to Thomas J. Shaw, our CEO, in the event of a termination of his employment or a
change of control per his Employment Agreement. Such payments shall be made by us and shall be one-time, lump sum payments except as indicated
below.
Payment Triggering Event(1) | |
Salary Through Trigger Event Date(2) | |
Amounts Owed Under Benefit Plans(3) | |
Reimbursement of Expenses | |
Undiscounted Salary For a Period of 24 Months | | |
Payment Equal to 90 Days’ Salary | | |
Value of
Payments(4) | |
Death | |
x | |
x | |
x | |
| — | | |
| — | | |
— | |
| |
| |
| |
| |
| | | |
| | | |
| |
Disability | |
x | |
x | |
x | |
| 2,000,000 | | |
| — | | |
2,000,000 | |
| |
| |
| |
| |
| | | |
| | | |
| |
Termination With Cause | |
x | |
— | |
x | |
| — | | |
| — | | |
— | |
| |
| |
| |
| |
| | | |
| | | |
| |
Termination Without Cause | |
x | |
x | |
x | |
| 2,000,000 | | |
| — | | |
2,000,000 | |
| |
| |
| |
| |
| | | |
| | | |
| |
Resignation (Other Than After a Change of Control) | |
x | |
x | |
x | |
| — | | |
| 246,575 | | |
246,575 | |
| |
| |
| |
| |
| | | |
| | | |
| |
Resignation (After a Change of Control) | |
x | |
x | |
x | |
| 2,000,000 | | |
| — | | |
2,000,000 | |
(1) The
above payments would be paid under Mr. Shaw's agreement at certain times assuming the termination or change of control occurred December 31,
2021. Any payments arising as a result of disability or resignation would be paid no sooner than six months and one day from the termination
date but no later than seven months from the termination date. Any payments arising as a result of death would be paid no later than the
90th day following the death. Payments arising as a result of termination with cause or termination without cause would be
paid no later than the 30th day following the date of termination, except that any amount due in excess of an amount equal
to the lesser of: i) two times annual compensation or ii) two times the limit on compensation under section 401(17) of the Internal Revenue
Code of 1986 shall be paid no earlier than six months and one day after the date of termination but in no event later than seven months
after the date of termination. Under Mr. Shaw's agreement, Mr. Shaw has agreed to a one-year non-compete, not to hire or attempt
to hire employees for one year, and not make known our customers or accounts or to call on or solicit our accounts or customers in the
event of termination of his employment for one year unless the termination is without cause or pursuant to a change of control. However,
it is not clear that the above payments are conditioned on the performance of these contractual obligations.
(2) Mr. Shaw
is paid every two weeks. Therefore, the maximum value for this column in the event the triggering event took place immediately prior to
a scheduled payment date is two weeks’ salary ($38,462).
(3) Mr. Shaw
participates in our benefit plans which do not discriminate in scope, terms, or operation in favor of executive officers. Such plans are
generally available to all salaried employees. Accordingly, the value of such payments is not included in the “Value of Payments”
column.
(4) This
value does not include payments under our benefit plans for reasons set forth in footnote 3 above. In addition, this value assumes that
the triggering event occurred on December 31, 2021. Authorized payments under the Employment Agreement are also capped to one dollar
less than the amount that would cause Mr. Shaw to be the recipient of a parachute payment under Section 280G(b) of the
Internal Revenue Code.
Compensation of Directors
The following table identifies
the types and amounts of compensation earned by our current and former Directors (with the exception of those that are named executive
officers) in the last Fiscal Year:
Name | |
Fees Earned or Paid in Cash | | |
Total | |
Marco Laterza | |
| 6,000 | | |
| 6,000 | |
Amy Mack | |
| 4,000 | | |
| 4,000 | |
Walter O. Bigby, Jr. | |
| 6,000 | | |
| 6,000 | |
Darren E. Findley | |
| 6,000 | | |
| 6,000 | |
Thomas J. Shaw and John W.
Fort III are named executive officers who were also Directors in 2021. Their compensation is reflected in the Summary Compensation and
other tables presented earlier.
In 2020, we set the non-employee
Directors’ compensation as follows: if they do not live in North Texas and travel to attend Board meetings, $1,500 per meeting (plus
reimbursed travel expenses) and otherwise, $1,000 per meeting. If they participate in Board meetings by phone, then the compensation is
$250 per meeting. We do not pay any additional amounts for committee participation or special assignment. However, our policy varying
fees based on method of participation has been suspended indefinitely, beginning with the March 2020 meeting. Due to the COVID-19
pandemic, we have required telephonic meetings for the Board of Directors and all committees. As such, we determined it appropriate to
pay $1,000 (or $1,500, as applicable) per telephonic Board meeting until Management determines that health conditions would permit in-person
meetings.
Compensation Committee Interlocks and Insider
Participation
The Compensation and Benefits
Committee is currently composed of Walter O. Bigby, Jr., Amy Mack, Marco Laterza, and Darren E. Findley. Each of these members of
this committee is an independent Board member and none have ever been employees of the Company.
There are no interlocking
Directors or executive officers between us and any other company. Accordingly, none of our executive officers or Directors served as a
Director or executive officer for another entity whose executive officers or Directors served on our Board of Directors.
Compensation Policies and Practices As They
Relate To Risk Management
We do not believe that risk-taking
incentives are created by our compensation policies. We do not have business units. We believe that our compensation expense is a reasonable
percentage of revenues overall. We have not set specific performance criteria for the award of bonuses or equity awards. Salaries and
bonuses, if any, are awarded based on skill, experience, and our overall revenues. Non-cash awards are made periodically in the form of
stock options which we believe align the recipient’s interests with those of stockholders. No changes to our compensation policies
and practices have been implemented as a result of changes to our risk profile.
Pay Ratio Disclosure
The ratio of the Company’s
median of annual total compensation for employees to the total compensation of the principal executive officer is 1: 252. The median of
annual total compensation for all employees other than the principal executive officer was $45,635. The total compensation for the principal
executive officer (as set forth on the Summary Compensation Table) was $11,515,800. We calculated the median of annual total compensation
for all employees as of December 31, 2021 using payroll records.
PROPOSAL 2
ADVISORY VOTE ON THE COMPENSATION OF THE COMPANY’S
NAMED EXECUTIVE
OFFICERS
In
accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as well as Section 14A
of the Securities Exchange Act of 1934 and the rules promulgated thereunder, we are providing you with the opportunity to cast a
non-binding advisory vote on a resolution to approve the compensation of our named executive officers as disclosed in this proxy statement.
This vote is not intended to address any specific element of compensation, but instead is intended to address the overall compensation
of the named executive officers as disclosed in this proxy statement. The next advisory vote on compensation will occur in 2025 pursuant
to the three-year frequency of such votes supported by advisory votes cast on frequency in 2019.
The
Board and its Compensation and Benefits Committee believe the compensation of our named executive officers for 2021 was reasonable and
appropriate. We believe that the performance of our executives has been outstanding. You are encouraged to read the entirety of the Compensation
section of this proxy statement for more detail about our compensation policies.
Effect of the Proposal
Pursuant
to the provisions of the Dodd-Frank Act and the rules of the SEC, the resolution on executive compensation set forth below (i) is
advisory and is therefore not binding on the Company, the Board, or the Compensation and Benefits Committee; (ii) is not to be construed
as overruling any decisions of the Company, the Board, or the Compensation and Benefits Committee; and (iii) does not create or imply
any additional fiduciary duties or changes to fiduciary duties of the Company, the Board, or the Compensation and Benefits Committee.
The Board believes that it and its Compensation and Benefits Committee are in the best position to consider the extensive information
that from time to time should be taken into consideration in determining named executive officer compensation. Nonetheless, the Company,
the Board, and the Compensation and Benefits Committee value your opinions and will take into consideration the outcome of this vote as
part of their future deliberations regarding named executive officer compensation.
Text of the Resolution to be Adopted
“RESOLVED, that the
Shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy
statement for the 2022 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the SEC, including the Compensation
Discussion and Analysis, the compensation tables, and any related narrative disclosures.”
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL REGARDING AN ADVISORY VOTE TO
APPROVE EXECUTIVE COMPENSATION.
ACCOUNTING MATTERS
Moss Adams LLP has been selected
again as our independent accountants for the year ending December 31, 2022. A representative of Moss Adams LLP will attend the virtual
Annual Meeting and will have the opportunity to make a statement if he or she so desires. A Moss Adams LLP representative will be available
to respond to appropriate shareholder questions at that time.
Audit Fees
The aggregate fees billed
by Moss Adams LLP for professional services rendered for the audit of our annual financial statements for 2021 and 2020 and the reviews
of the financial statements included in our Forms 10-Q for 2021 and 2020 and services normally provided by the accountants in connection
with statutory and regulatory filings for these periods were $290,745 and $280,772, respectively.
Audit Related Fees
The aggregate fees billed
by Moss Adams LLP for professional services rendered for the audit of our 401(k) plan for 2021 and 2020 were $16,826 and $18,350,
respectively.
Tax Fees
The aggregate fees billed
by Moss Adams LLP for preparation of federal and state income tax returns and tax consulting costs related to notices from taxing authorities
for 2021 and 2020 were $70,525 and $61,925, respectively.
All Other Fees
The aggregate fees billed
by Moss Adams LLP for the preparation of its September 2021 report and related audit of the schedule of expenditures of federal awards
for the U.S. Department of Defense Technology Investment Agreement for the year ended December 31, 2020 was $36,750.
Pre-Approval Policies and Procedures
The engagement of the independent
accountants was entered into pursuant to the approval policies and procedures of the Audit Committee. Before any independent accountant
was engaged to render services, the engagement was approved by the Audit Committee. The Audit Committee implemented its approval procedures,
i.e., they were not delegated to any other party. All of the services provided were pre-approved by the Audit Committee.
DELIVERY OF SINGLE OR MULTIPLE SETS OF DOCUMENTS
TO ONE HOUSEHOLD
We have adopted a procedure
approved by the SEC called "householding." Under this procedure, certain shareholders of record who have the same address and
last name and do not participate in electronic delivery of proxy materials will receive only one copy of our annual report and proxy statement,
unless one or more of these shareholders notifies us that they would like to receive individual copies. This reduces our printing costs
and postage fees. Shareholders who participate in householding will continue to receive separate proxy cards.
If you and other shareholders
of record with whom you share an address currently receive multiple copies of our annual report and/or proxy statement, and you would
like to receive only a single copy of the annual report or proxy statement for your household, please contact Michele M. Larios, Secretary
and General Counsel of the Corporation, at 511 Lobo Lane, Little Elm, Texas 75068, (888) 806-2626.
If you participate in householding
and would like to receive a separate copy of our annual report or this proxy statement, please contact us in the manner described in the
immediately preceding paragraph. We will deliver the requested documents to you promptly upon receipt of your request.
2023 ANNUAL MEETING
Proposals
by shareholders that are submitted for inclusion in our proxy statement for our 2023 Annual Meeting must follow the procedures set forth
in Rule 14a-8 under the Securities Exchange Act of 1934 and our bylaws. To be timely under Rule 14a-8, they must be received
by our Corporate Secretary, Michele Larios, at 511 Lobo Lane, Little Elm, Texas 75068-5295, at
least 120 days prior to the anniversary of the mailing date of the most recent annual meeting, meaning by December 1, 2022.
If
a shareholder does not submit a proposal for inclusion in our proxy statement but does wish to propose an item of business to be considered
at the annual meeting of shareholders (other than director nominations), that shareholder must give advance written notice of such proposal
to our Corporate Secretary at least 45 days prior to the anniversary of the mailing date of the most recent annual meeting. For our 2023
Annual Meeting, notice must be given by February 14, 2023, and must comply with certain other requirements contained in our bylaws,
as well as all applicable statutes and regulations. Proposals received after this date will be considered untimely and may not,
in the Board of Directors’ discretion, be addressed at the next annual meeting.
We reserve the right to reject,
rule out of order, or take other appropriate action with respect to any proposal that does not comply with these requirements.
A shareholder may nominate
a person, on their own initiative, for consideration for recommendation by the Board to the shareholders in our Proxy Statement for the
2023 annual meeting. Such notice must be received by December 1, 2022 and must set forth:
1. The
name and address of the shareholder making the nomination and of the person to be nominated;
2. A
representation that the shareholder is a holder of record of Common Stock of the Company entitled to vote at such meeting (specifying
the number of shares beneficially held) and intends to appear in person or by proxy at the meeting;
3. A
description of all arrangements or understandings between the shareholder and the nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination is being made by the shareholder and any material interest of the shareholder in making
the nomination;
4. Such
other information regarding the nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant
to the then current proxy rules of the SEC; and
5. The
consent of the nominee to serve as a Director if so recommended by the Board and duly elected at the annual meeting by the shareholders.
We evaluate Director nominees
recommended by shareholders in the same manner in which we evaluate other Director nominees.
Appendix A
FORM OF PROXY CARD
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RETRACTABLE TECHNOLOGIES, INC.
511 LOBO LANE
LITTLE ELM, TX 75068-5295 |
VOTE BY INTERNET
Before The Meeting – Go
to - www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting
instructions and for electronic delivery of information up until 11:59 p.m. Eastern time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create
an electronic voting instruction form. |
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During The Meeting – Go to www.virtualshareholdermeeting.com/RVP2022
You may attend the meeting via the internet and vote during
the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. |
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ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the costs
incurred by Retractable Technologies, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications
electronically in future years. |
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VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59 p.m. Eastern time the day before the cut-off date or meeting date. Have your proxy card
in hand when you call and then follow the instructions. |
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VOTE BY MAIL
Mark, sign and date your proxy card and
return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood,
NY 11717. |
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TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
KEEP
THIS PORTION FOR YOUR RECORDS. |
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DETACH
AND RETURN THIS PORTION ONLY. |
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THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED.
RETRACTABLE
TECHNOLOGIES, INC. |
For
All |
Withhold
All |
For All
Except |
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To
withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s)
on the line below. |
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL" IN THE ELECTION OF CLASS 2 DIRECTORS |
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1. ELECTION OF THREE CLASS 2 DIRECTORS:
Nominees:
01) Thomas J. Shaw
02) Walter O. Bigby, Jr.
03) John W. Fort III |
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THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE FOLLOWING PROPOSAL |
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For |
Against |
Abstain |
2. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION |
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3.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. |
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The
undersigned hereby revokes all previous proxies related to the shares covered hereby and confirms all their said proxies and their
substitutes may do by virtue hereof. |
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PLEASE
SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. |
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(NOTE:
Please sign exactly as your name(s) appear(s) hereon. All holders must sign. When signing as attorney, executor, administrator,
or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation,
please sign in full corporate name, by authorized officer. If a partnership, please sign in partnership name by authorized person.) |
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It
is understood that, when properly executed, the shares represented by this proxy will be voted in the manner directed herein by the
undersigned shareholder. WHERE NO CHOICE IS SPECIFIED BY THE SHAREHOLDER, THE PROXY WILL BE VOTED "FOR ALL"
IN THE ELECTION OF DIRECTORS AND “FOR” PROPOSAL 2. IF THE PROXY IS EXECUTED IN SUCH A MANNER SO AS NOT TO
WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF ANY NOMINEE, IT SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE
FOR SUCH NOMINEE. |
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To
obtain information about voting at the meeting, please call the Company at (888) 806-2626. |
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Signature
[PLEASE SIGN WITHIN BOX] |
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Signature
(Joint Owners) |
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ANNUAL MEETING OF SHAREHOLDERS OF
RETRACTABLE TECHNOLOGIES, INC.
MAY 10, 2022
COMMON STOCK
Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting:
The proxy materials including the Notice and Proxy
Statement and Form 10-K are available at www.proxyvote.com.
PLEASE DETACH ALONG PERFORATED LINE AND MAIL
IN THE ENVELOPE PROVIDED.
PROXY FOR COMMON STOCK
RETRACTABLE TECHNOLOGIES, INC.
511 Lobo Lane
Little Elm, Texas 75068-5295
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS
The undersigned hereby acknowledges
receipt of the Notice of the Annual Meeting of Shareholders of Retractable Technologies, Inc. (the “Company”) to be held
on May 10, 2022, at 10:00 a.m., Central time by webcast at www.virtualshareholdermeeting.com/RVP2022 (the “Annual Meeting”),
and the Proxy Statement in connection therewith, and appoints Thomas J. Shaw and Michele Larios, and each of them, individually, as the
lawful agents and proxies of the undersigned (with all powers the undersigned would possess if personally present, including full power
of substitution), and hereby authorizes each of them to represent and to vote, as designated on the reverse side, all the shares of Common
Stock of the Company held of record by the undersigned as of the close of business on March 11, 2022, at the Annual Meeting or any
adjournment or postponement thereof.
At the Annual Meeting, the
following matters will be voted on by the holders of Common Stock:
1. Election
of Three Class 2 Directors; and
2. Advisory
Vote to Approve Executive Compensation
The matters to be voted on
are not related to or conditioned on the approval of other matters.
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(Continued and to be signed on the reverse side)
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