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
(Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant
¨
Check the appropriate box:
| x | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)) |
| ¨ | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material Under Rule 14a-12 |
IGI Laboratories, Inc.
(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):
| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11. |
| 1) | Title of each class of securities to which transaction applies: |
| 2) | Aggregate number of securities to which transaction applies: |
| 3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) | Proposed maximum aggregate value of transaction: |
| ¨ | Fee paid previously with preliminary materials. |
| ¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing: |
| 1) | Amount previously paid: |
| 2) | Form, Schedule or Registration Statement No: |
IGI LABORATORIES, INC.
105 Lincoln Avenue, PO Box 687
Buena, New Jersey 08310
, 2015
To Our Stockholders:
You are cordially invited
to attend the 2015 annual meeting of stockholders of IGI Laboratories, Inc. to be held at 10:00 a.m. local time on May 20,
2015, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 666 Third Avenue, New York, NY 10017.
Details regarding the
meeting, the business to be conducted at the meeting, and information about IGI Laboratories, Inc. that you should consider when
you vote your shares are described in this proxy statement.
At the annual meeting,
six persons will be elected to our Board of Directors. In addition, we will ask stockholders to approve a proposed amendment to
the IGI Laboratories, Inc. Amended and Restated Certificate of Incorporation to increase the number of our authorized shares of
common stock, to approve the issuance of our common stock upon conversion of our convertible senior notes due 2019, to ratify the
selection of EisnerAmper LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2015
and to approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this proxy statement. The
Board of Directors recommends the approval of each of the proposals. Such other business will be transacted as may properly come
before the annual meeting.
We hope you will be
able to attend the annual meeting. Whether you plan to attend the annual meeting or not, it is important that you cast your vote
either in person or by proxy. You may vote over the Internet as well as by telephone or by mail. When you have finished reading
the proxy statement, you are urged to vote in accordance with the instructions set forth in this proxy statement. We encourage
you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend.
Thank you for your
continued support of IGI Laboratories, Inc. We look forward to seeing you at the annual meeting.
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Sincerely, |
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Jason Grenfell-Gardner |
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President and Chief Executive Officer |
IGI LABORATORIES, INC.
105 Lincoln Avenue, PO Box 687
Buena, New Jersey 08310
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS
TIME: 10:00 a.m. local time
DATE: May 20, 2015
PLACE: Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., 666 Third Avenue, NY, NY 10017
PURPOSES:
| 1. | To elect six directors to serve one-year terms until
the 2016 annual meeting; |
| 2. | To approve a proposed amendment to our Amended and Restated Certificate of Incorporation to increase
the number of authorized shares of our common stock to 100,000,000 shares; |
| 3. | To approve the issuance of our common stock upon conversion of our convertible senior notes due
2019; |
| 4. | To ratify the appointment of EisnerAmper LLP as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2015; |
| 5. | To approve, by an advisory vote, the compensation of our named executive officers, as disclosed
in this proxy statement; and |
| 6. | To transact such other business that is properly presented at the annual meeting and any adjournments
or postponements thereof. |
WHO MAY VOTE:
You may vote if you were the
record owner of IGI Laboratories, Inc. common stock at the close of business on March 26, 2015. A list of stockholders of
record will be available at the annual meeting and during the 10 days prior to the annual meeting, at our principal executive offices,
which are located at 105 Lincoln Avenue, PO Box 687, Buena, New Jersey 08310.
All stockholders are cordially
invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote and submit your
proxy by the Internet, telephone or mail in order to ensure the presence of a quorum. You may change or revoke your proxy
at any time before it is voted at the meeting.
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BY ORDER OF THE BOARD OF DIRECTORS |
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Jenniffer Collins |
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Corporate Secretary |
TABLE OF CONTENTS
PRELIMINARY COPIES FILED PURSUANT TO
RULE 14a-6(a)
IGI LABORATORIES, INC.
105 Lincoln Avenue, PO Box 687
Buena, New Jersey 08310
PROXY STATEMENT FOR THE IGI LABORATORIES,
INC.
2015 ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON MAY 20, 2015
This proxy statement,
along with the accompanying notice of 2015 annual meeting of stockholders, contains information about the 2015 annual meeting of
stockholders of IGI Laboratories, Inc. including any adjournments or postponements of the annual meeting. We are holding the annual
meeting at 10:00 a.m. local time, on May 20, 2015, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 666 Third
Avenue, New York, NY 10017.
In this proxy statement,
we refer to IGI Laboratories, Inc. as “IGI,” “the Company,” “we”
and “us.”
This proxy statement
relates to the solicitation of proxies by our Board of Directors for use at the annual meeting.
On or about ,
2015, we began sending this proxy statement, the attached Notice of Annual Meeting of Stockholders and the enclosed proxy card
to all stockholders entitled to vote at the annual meeting.
Although not part of
this proxy statement, we are also sending, along with this proxy statement, our 2014 annual report, which includes our financial
statements for the fiscal year ended December 31, 2014.
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON MAY 20, 2015
This proxy statement
and our 2014 annual report to stockholders are available for viewing, printing and downloading at www.proxyvote.com.
To view these materials please have your 12-digit control number(s) available that appears on your proxy card. On this
website, you can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic
delivery.
Additionally, you
can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December
31, 2014 on the website of the Securities and Exchange Commission, or the SEC, at www.sec.gov, or in the “SEC
Filings” section of the “Investor Relations” section of our website at www.igilabs.com. You
may also obtain a printed copy of our Annual Report on Form 10-K, including our financial statements, free of charge, from us by
sending a written request to: Jenniffer Collins, IGI Laboratories, Inc., 105 Lincoln Avenue, PO Box 687, Buena, New Jersey
08310. You may also request a copy by emailing us at investorrelations@igilabs.com. Exhibits will be provided upon written
request and payment of an appropriate processing fee.
IMPORTANT INFORMATION ABOUT THE ANNUAL
MEETING AND VOTING
Why is the Company Soliciting My Proxy?
The Board of Directors
of IGI Laboratories, Inc. is soliciting your proxy to vote at the 2015 annual meeting of stockholders to be held at the offices
of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., on May 20, 2015, at 10:00 a.m. local time and any adjournments of the meeting,
which we refer to as the annual meeting. The proxy statement, along with the accompanying Notice of Annual Meeting of Stockholders,
summarizes the purposes of the meeting and the information you need to know to vote at the annual meeting.
We have made available
to you on the Internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and
a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 because you owned shares of IGI Laboratories,
Inc. common stock on the record date. The Company intends to commence distribution of the proxy materials to stockholders on or
about , 2015.
Who Can Vote?
Only stockholders who
owned our common stock at the close of business on March 26, 2015 are entitled to vote at the annual meeting. On this record date,
there were 52,827,453 shares of our common stock outstanding and entitled to vote. Our common stock is our only class of
voting stock.
You do not need to
attend the annual meeting to vote your shares. Shares represented by valid proxies, received in time for the annual meeting and
not revoked prior to the annual meeting, will be voted at the annual meeting. For instructions on how to change or revoke your
proxy, see “May I Change or Revoke My Proxy?” below.
How Many Votes Do I Have?
Each share of our
common stock that you own entitles you to one vote.
How Do I Vote?
Whether you plan to
attend the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through
this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed
via the Internet or telephone. You may specify whether your shares should be voted for or withheld for each nominee for director
and whether your shares should be voted for, against or abstain with respect to each of the other proposals. If you properly submit
a proxy without giving specific voting instructions, your shares will be voted in accordance with the Board’s recommendations
as noted below. Voting by proxy will not affect your right to attend the annual meeting. If your shares are registered directly
in your name through our stock transfer agent, American Stock Transfer and Trust Company, or you have stock certificates registered
in your name, you may vote:
| · | By the Internet or by telephone. Follow the instructions included in the proxy card to vote
by the Internet or telephone. |
| · | By mail. If you received a proxy card by mail, you can vote by mail by completing, signing,
dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your
shares voted, they will be voted in accordance with the Board’s recommendations as noted below. |
| · | In person at the meeting. If you attend the meeting, you may deliver a completed proxy card
in person or you may vote by completing a ballot, which will be available at the meeting. |
Telephone and Internet voting facilities
for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on May 19, 2015.
If your shares are
held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions
from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone
and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. If your shares are not
registered in your own name and you plan to vote your shares in person at the annual meeting, you should contact your broker or
agent to obtain a legal proxy or broker’s proxy card and bring it to the annual meeting in order to vote.
How Does the Board of Directors Recommend
That I Vote on the Proposals?
The Board of Directors recommends
that you vote as follows:
| · | “FOR” the election of the nominees for director; |
| · | “FOR” the amendment to our Amended and Restated Certificate of Incorporation,
as amended; |
| · | “FOR” the approval of the issuance of our common stock upon conversion of our
convertible senior notes due 2019; |
| · | “FOR” the ratification of the selection of EisnerAmper LLP as our independent
registered public accounting firm for our fiscal year ending December 31, 2015; and |
| · | “FOR” the compensation of our named executive officers, as disclosed in this
proxy statement. |
If any other matter
is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy
in accordance with his or her best judgment. At the time this proxy statement was first made available, we knew of no matters that
needed to be acted on at the annual meeting, other than those discussed in this proxy statement.
May I Change or Revoke My Proxy?
If you give us your
proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of the
following ways:
| · | if you received a proxy card, by signing a new proxy card with a date later than your previously
delivered proxy and submitting it as instructed above; |
| · | by re-voting by the Internet or by telephone as instructed above; |
| · | by notifying the Corporate Secretary of IGI Laboratories, Inc. in writing before the annual meeting
that you have revoked your proxy; or |
| · | by attending the annual meeting in person and voting in person. Attending the annual meeting in
person will not in and of itself revoke a previously submitted proxy. You must specifically request at the annual meeting that
it be revoked. |
Your most current vote, whether
by telephone, the Internet or proxy card, is the one that will be counted.
What if I Receive More Than One Notice
or Proxy Card?
You may receive more
than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered form
or held in street name. Please vote in the manner described above under “How Do I Vote?” for each account to
ensure that all of your shares are voted.
Will My Shares be Voted if I Do Not
Vote?
If your shares are
registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under
“How Do I Vote?” If your shares are held in street name and you do not provide voting instructions to the bank,
broker or other nominee that holds your shares as described above, the bank, broker or other nominee that holds your shares has
the authority to vote your unvoted shares only on the ratification of the appointment of our independent registered public accounting
firm (Proposal 4 of this proxy statement) without receiving instructions from you.. Therefore, we encourage you to provide
voting instructions to your bank, broker or other nominee. This ensures your shares will be voted at the annual meeting and in
the manner you desire. A “broker non-vote” will occur if your broker cannot vote your shares on a particular matter
because it has not received instructions from you and does not have discretionary voting authority on that matter or because your
broker chooses not to vote on a matter for which it does have discretionary voting authority.
Your bank, broker or
other nominee does not have the ability to vote your uninstructed shares in the election of directors. Therefore, if you hold your
shares in street name, it is critical that you cast your vote if you want your vote to be counted for the election of directors
(Proposal 1 of this proxy statement). In the past, if you held your shares in street name and you did not indicate how you wanted
your shares to be voted in the election of directors, your bank, broker or other nominee was allowed to vote your shares on your
behalf in the election of directors as it deemed appropriate. In addition, your bank, broker or other nominee is prohibited from
voting your uninstructed shares on any matters related to executive compensation, an amendment to our Amended and Restated Certificate
of Incorporation to increase authorized shares of common stock and the issuance of shares of common stock upon conversion of our
convertible senior notes due 2019. Thus, if you hold your shares in street name and you do not instruct your bank, broker or other
nominee how to vote in the election of directors or on matters related to executive compensation, the amendment to our Amended
and Restated Certificate of Incorporation and the issuance of shares of common stock upon conversion of our convertible senior
notes due 2019, no votes will be cast on these proposals on your behalf.
What Vote is Required to Approve Each
Proposal and How are Votes Counted?
| Proposal 1: Elect Directors |
|
The nominees for director who receive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. |
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| Proposal 2: Approve Amendment to our Amended and Restated Certificate of Incorporation |
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The affirmative vote of the majority of the holders of the Company’s common stock entitled to vote is required to approve the amendment to our Amended and Restated Certificate of Incorporation. Abstentions and broker non-votes will be treated as votes against this proposal. |
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| Proposal 3: Approval of the issuance of our common stock upon conversion of our convertible senior notes due 2019 |
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The affirmative vote of the majority of the holders of the Company’s common stock entitled to vote is required to approve the issuance of our common stock upon conversion of our convertible senior notes due 2019. Abstentions and broker non-votes will be treated as votes against this proposal. |
| Proposal 4: Ratify Selection of Independent Registered Public Accounting Firm |
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The affirmative vote of a majority of the shares cast affirmatively or negatively for this proposal is required to ratify the selection of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders do not ratify the selection of EisnerAmper LLP as our independent registered public accounting firm for 2015, our Audit Committee of our Board of Directors will reconsider its selection. |
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| Proposal 5: Approve an Advisory Vote on the Compensation of our Named Executive Officers |
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The affirmative vote of a majority of the shares cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Abstentions will be treated as votes against this proposal. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Although the advisory vote is non-binding, the Organization and Compensation Committee and the Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. |
Where Can I Find the
Voting Results of the Annual Meeting?
The preliminary voting
results will be announced at the annual meeting, and we will publish preliminary, or final results, if available, in a Current
Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form
8-K, then we will file an amended report on Form 8-K to disclose the final voting results within four business days after the final
voting results are known.
What Are the Costs of Soliciting these
Proxies?
We will pay all of
the costs of soliciting these proxies. We have engaged Morrow & Co., LLC, 470 West Ave., Stamford, Connecticut 06902,
to assist us with the solicitation of proxies for a fee of $5,500, plus expenses. In addition, our directors and employees
may solicit proxies in person or by telephone, fax or email. We will pay these employees and directors no additional compensation
for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials
to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses.
What Constitutes a Quorum for the Annual
Meeting?
The presence, in person
or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to vote at
the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at
the annual meeting in person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum
exists.
Attending the Annual Meeting
The annual meeting
will be held at 10:00 a.m. on May 20, 2015, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
When you arrive at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., signs will direct you to the appropriate meeting rooms.
You need not attend the annual meeting in order to vote.
Householding of Annual Disclosure Documents
The rules of the Securities
and Exchange Commission (the “SEC”) concerning the delivery of annual disclosure documents allow us or your
broker to send a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your
broker believe that the stockholders are members of the same family. This practice, referred to as “householding,”
benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses.
The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your
broker or from us that communications to your address will be “householded,” the practice will continue until you are
otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue
to have access to and utilize separate proxy voting instructions.
If your household received
a single set of proxy materials this year, but you would prefer to receive your own copy, please contact Broadridge Financial Solutions,
Inc., by calling their toll free number, 1-888-237-1900.
If you do not wish
to participate in “householding” and would like to receive your own set of IGI’s proxy materials in future years,
follow the instructions described below. Conversely, if you share an address with another IGI stockholder and together both
of you would like to receive only a single set of proxy materials, follow these instructions:
| · | If your IGI shares are registered in your own name, please contact Broadridge Financial Solutions,
Inc., and inform them of your request by calling them at 1-888-237-1900 or writing them at 51 Mercedes Way, Edgewood, New York
11717. |
| · | If a broker or other nominee holds your IGI shares, please contact the broker or other nominee
directly and inform them of your request. Be sure to include your name, the name of your brokerage firm and your account number. |
Electronic Delivery of Company Stockholder
Communications
Most stockholders can
elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail.
You can choose this
option and save the Company the cost of producing and mailing these documents by:
| · | following the instructions provided on your proxy card; |
| · | following the instructions provided when you vote over the Internet; or |
| · | going to www.proxyvote.com and following the instructions provided. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table
sets forth certain information with respect to the beneficial ownership of our common stock as of March 29, 2015 for (a) the executive
officers named in the Summary Compensation Table on page 28 of this proxy statement, (b) each of our directors and director nominees,
(c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more
than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or
investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group
within 60 days of March 29, 2015 pursuant to the exercise of options or warrants to be outstanding for the purpose of computing
the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders
named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned
by them based on information provided to us by these stockholders. Percentage of ownership is based on 52,827,453 shares
of common stock outstanding on March 29, 2015. Except as otherwise indicated, the address of each of the persons in this table
is c/o IGI Laboratories, Inc., 105 Lincoln Avenue, PO Box 687, Buena, New Jersey 08310.
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Shares Beneficially Owned | |
| Name and Address of Beneficial Owner | |
Number | | |
Percent | |
| | |
| | |
| |
| 5% or more Stockholders: | |
| | | |
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| Life Sciences Opportunities Fund II, L.P.(1)(8) | |
| 1,494,873 | | |
| 2.8 | % |
| Life Sciences Opportunities Fund (Institutional) II, L.P.(1)(8) | |
| 8,356,988 | | |
| 15.8 | % |
| Signet Healthcare Partners, LLC(1)(8) | |
| 9,851,861 | | |
| 18.6 | % |
| Janus Capital Management LLC(2) | |
| 5,335,342 | | |
| 10.1 | % |
| Amzak Capital Management, LLC(3) | |
| 4,574,576 | | |
| 8.7 | % |
| Allianz Global Investors U.S. LLC (4) | |
| 3,590,013 | | |
| 6.8 | % |
| Allianz Global Investors U.S. Holdings LLC (4) | |
| 3,590,013 | | |
| 6.8 | % |
| Stephen J. Morris(5) | |
| 2,843,849 | | |
| 5.4 | % |
| Pembroke Management, LTD(6) | |
| 2,811,354 | | |
| 5.3 | % |
| | |
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| Directors and Named Executive Officers: | |
| | | |
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| Jason Grenfell-Gardner(7) | |
| 988,338 | | |
| 1.8 | % |
| James C. Gale(1)(8) | |
| 9,991,485 | | |
| 18.9 | % |
| Narendra Borkar(9) | |
| 165,000 | | |
| * | |
| Bhaskar Chaudhuri(10) | |
| 130,000 | | |
| * | |
| Steven Koehler(11) | |
| | | |
| * | |
| John Celentano(12) | |
| | | |
| * | |
| Jenniffer Collins(13) | |
| 244,706 | | |
| * | |
| | |
| | | |
| | |
| All current executive officers and
directors as a group (8 persons) (1)(7)(8)(9)(10)(11)(12)(13) | |
| 11,519,529 | | |
| 21.8 | % |
| * | Represents beneficial ownership of less than 1% of the
outstanding shares of our common stock. |
| (1) | Total aggregate ownership of the LOF Funds, as defined below, equals 9,851,861. However, the information
provided in the table above is presented on the basis of the beneficial ownership of our shares of common stock by the LOF Funds
as disclosed in a Schedule 13D filed by Life Sciences Opportunities Fund II, L.P. with the SEC on March 10, 2015, which
reported ownership as of March 5, 2015. Life Sciences Opportunities Fund II, L.P. (“LOF”) directly holds 1,494,873
shares and Life Sciences Opportunities Fund (Institutional) II, L.P. (“LOF Institutional”, together with LOF,
the “LOF Funds”) directly holds 8,356,988 shares, for a total of 9,851,861 securities that are held indirectly
by Signet Healthcare Partners, LLC (“General Partner”), the general partner of each of the LOF Funds, James
C. Gale, a director of ours, and the chief investment officer, a manager and member of the General Partner, the controlling member
of the General Partner, SMW Investments I, LLC (“SMW”), and Don A. Sanders, Ben T. Morris and Donald V. Weir,
the managing members of SMW. The 9,851,861 securities held by the LOF Funds are subject to shared voting power and shared dispositive
power with the General Partner, Mr. Gale, SMW, Mr. Sanders, Mr. Morris and Mr. Weir. The General Partner, Mr. Gale, SMW, Mr. Sanders,
Mr. Morris and Mr. Weir disclaim beneficial ownership of the reported securities except to the extent of their pecuniary interest
therein, if any. The address of each filer is Carnegie Hall Tower, 152 West 57th Street, 19th Floor, New York, NY 10019, except
SMW, which is 600 Travis, Suite 5900, Houston, TX 77002. |
| (2) | This information is based solely on a Schedule 13G/A filed by Janus Capital Management LLC (“Janus
Capital”) with the SEC on February 18, 2015, which reported ownership as of December 31, 2014. Janus Capital is an investment
adviser or sub-advisor to its managed portfolios, including Janus Triton Fund. Janus Capital is the beneficial owner of 5,335,342
shares of IGI and has sole power to vote and dispose of all 5,335,342 shares. Janus Triton Fund is the beneficial owner of 2,665,784
shares and has the sole power to vote and dispose of all 2,665,784 shares. The address of Janus Capital and Janus Triton Fund is
151 Detroit Street, Denver, CO 80206. |
| (3) | This information is based solely on a Schedule 13G/A filed by Amzak Capital Management, LLC with
the SEC on July 18, 2014, which reported ownership as of June 27, 2014. Includes shares held by Amzak Capital Management, LLC (“Amzak”),
and Michael D. Kazma and Gerry Kazma, the managers of Amzak, who are deemed to share voting and investment power with respect to
the shares held by Amzak. Each of Amzak, Michael D. Kazma and Gerry Kazma disclaim beneficial ownership of the reported securities
except to the extent of their pecuniary interest therein, if any. The address of Amzak, Michael D. Kazma and Gerry Kazma is 1 N.
Federal Highway, Suite 400, Boca Raton, FL 33432. |
| (4) | Total aggregate ownership of Allianz, as defined below, equals 3,590,013. However, the information
provided in the table above is presented on the basis of the beneficial ownership of our shares of common stock by Allianz as disclosed
in a Schedule 13G filed by Allianz Global Investors U.S. Holdings LLC (“AGI Holdings”) with the SEC on February
13, 2015, which reported ownership as of December 31, 2014. Allianz Global Investors GmBH (“Allianz GmBH”),
an affiliate of AGI Holdings, has sole voting and dispositive power over 354,827 shares. Allianz Global Investors U.S. LLC (“AGI
US,” and, together with AGI Holdings and Allianz GmBH, “Allianz”) has sole voting power over 3,338,673
shares and sole dispositive power over 3,590,013 shares. Because AGI Holdings is the parent holding company of AGI US, it may be
deemed to beneficially own the securities held by AGI US’s clients or accounts. The address of the AGI Holdings and AGI US
is 680 Newport Center Drive, Suite 250, Newport Beach, CA 92660. |
| (5) | This information is partially based on a Form 4 filed with the SEC on July 7, 2009. Includes 2,546,855
shares which Mr. Morris owns jointly with his wife and 200 shares owned directly by his wife. Excludes 160,765 shares which are
owned by Mr. Morris’ children as Mr. Morris disclaims beneficial ownership of such shares due to his children’s attainment
of the age of majority. The address of Mr. Morris is 66 Navesink Avenue, Rumson, NJ 07760. |
| (6) | This information is based solely on an Schedule 13G filed by Pembroke Management, LTD with the
SEC on February 9, 2015, which reported ownership as of December 31, 2014. Pembroke's
address is 1002 Sherbrooke Street West, Suite 1700, Montreal, Quebec H3A 354, Canada. |
| (7) | Includes 163,338 shares of common stock held by Mr. Grenfell-Gardner, 691,666 shares
of common stock which may be acquired pursuant to stock options exercisable within 60 days after March 29, 2015, 25,000 shares
of common stock which may be acquired pursuant to restricted stock units (“RSUs”) exercisable within 60 days
after March 29, 2015 and 108,334 shares of restricted stock that have not vested and will not vest within 60 days of March 29,
2015. Does not include 81,250 shares underlying restricted stock units which have not vested and will not be exercisable within
60 days after March 29, 2015 or options to purchase 555,834 shares of our common stock which have not vested and will not be exercisable
within 60 days after March 29, 2015. |
| (8) | Includes 19,624 shares of common stock held by Mr. Gale and 120,000 shares of common
stock which may be acquired pursuant to stock options exercisable within 60 days after March 29, 2015. Does not include options
to purchase 35,000 shares of our common stock which have not vested and will not be exercisable within 60 days after March
29, 2015. |
| (9) | Includes 165,000 shares of common stock which may be acquired pursuant to stock options
exercisable within 60 days after March 29, 2015. Does not include options to purchase 30,000 shares of our common stock
which have not vested and will not be exercisable within 60 days after March 29, 2015. |
| (10) | Includes 130,000 shares of common stock which may be acquired pursuant to stock options exercisable
within 60 days after March 29, 2015. Does not include options to purchase 25,000 shares of our common stock which have not
vested and will not be exercisable within 60 days after March 29, 2015. |
| (11) | Does not include options to purchase 65,000 shares of our common stock which have not vested
and will not be exercisable within 60 days after March 29, 2015. |
| (12) | Does not include options to purchase 30,000 shares of our common stock which have not vested and
will not be exercisable within 60 days after March 29, 2015. |
| (13) | Includes 12,206 shares of common stock held by Ms. Collins, 225,000 shares of common stock
which may be acquired pursuant to stock options exercisable within 60 days after March 29, 2015 and 7,500 shares of common stock
which may be acquired pursuant to RSUs exercisable within 60 days after March 29, 2015. Does not include 31,500 shares underlying
restricted stock units which have not vested and will not be exercisable within 60 days after March 29, 2015 or options to purchase
90,000 shares of our common stock which have not vested and will not be exercisable within 60 days after March 29, 2015. |
MANAGEMENT AND CORPORATE GOVERNANCE
Our Board of Directors
On March 27, 2015,
our Board of Directors accepted the recommendation of the Nominating and Corporate Governance Committee and voted to nominate Jason
Grenfell-Gardner, Narendra N. Borkar, Bhaskar Chaudhuri, Steven Koehler, James C. Gale and John Celentano for election at the annual
meeting for a term of one year to serve until the 2016 annual meeting of stockholders, and until their respective successors have
been elected and qualified, or until his earlier resignation or removal.
Set forth below are
the names of the persons nominated as directors, their ages, their offices in the Company, if any, their principal occupations
or employment for at least the past five years, the length of their tenure as directors and the names of other public companies
in which such persons hold or have held directorships during the past five years. Additionally, information about the specific
experience, qualifications, attributes or skills that led to our Board of Directors’ conclusion at the time of filing of
this proxy statement that each person listed below should serve as a director is set forth below:
| Name |
|
Age |
|
Position with the Company |
| |
|
|
|
|
| Jason Grenfell-Gardner |
|
40 |
|
Director, President and Chief Executive Officer |
| Narendra N. Borkar(1) |
|
74 |
|
Director |
| Bhaskar Chaudhuri(2)(3) |
|
60 |
|
Director |
| Steven Koehler(2) |
|
64 |
|
Director |
| James C. Gale(1)(3) |
|
65 |
|
Director and Chairman |
| John Celentano(1)(2) |
|
55 |
|
Director |
| (1) | Member of the Organization and Compensation Committee of
the Board of Directors. |
| (2) | Member of the Audit Committee of the Board of Directors. |
| (3) | Member of the Nominating and Corporate Governance Committee
of the Board of Directors. |
Our Board of Directors
has reviewed the materiality of any relationship that each of our directors has with IGI, either directly or indirectly. Based
upon this review, our Board has determined that the following members of the Board are “independent directors” as defined
by NYSE MKT: James C. Gale, Narendra N. Borkar, Bhaskar Chaudhuri, Steven Koehler and John Celentano.
Jason Grenfell-Gardner – President,
Chief Executive Officer and Director
Jason Grenfell-Gardner,
age 40, has served as President and Chief Executive Officer of IGI Laboratories, Inc. since July 30, 2012 and has served
as a member of our Board of Directors since 2012. Prior to joining IGI, Mr. Grenfell-Gardner spent over eight years at Hikma Pharmaceuticals,
PLC, and its subsidiaries, including West-Ward Pharmaceutical Corp. in the United States. He served in a number of roles, most
recently as Senior Vice President of Sales and Marketing from 2008 to June 2012. Before joining Hikma and beginning in 1998, Mr.
Grenfell-Gardner worked throughout Central and Eastern Europe as a partner at Trigon Capital, a boutique investment bank, focused
on mergers and acquisitions. During his time in that region, Mr. Grenfell-Gardner served as chairman of the board of directors
of AB Sanitas, as well as other board positions. Mr. Grenfell-Gardner holds an M.A. (Hons) in Economics from the University of
St. Andrews in Scotland and an MBA from INSEAD. We believe Mr. Grenfell-Gardner’s qualifications to serve on the Board of
Directors include his experience as a pharmaceutical executive and his experience in the commercialization of pharmaceutical products.
Narendra N. Borkar – Director
Narendra N. Borkar,
age 74, has served as a member of our Board of Directors since 2009. Since 2006, Mr. Borkar has been employed as an independent
consultant in the pharmaceuticals industry. From 2004 to 2006, he served as Chief Executive Officer of Aurobindo Pharma USA, Inc.
From 1997 to 2003, he served as Chief Executive Officer of Caraco Pharmaceutical Laboratories, Ltd. From 1981 to 1997, he served
in various senior roles for Novartis AG (formerly Ciba Geigy Corp.), from 1979 to 1981 as General Manager of Apte Amalgamations
Ltd., and from 1976 to 1979 as an Engineer for Hoffmann-La Roche AG. Prior to that time, he served as a Project Manager for Union
Carbide Corp. and Merck & Company, Inc. Mr. Borkar holds a B.S. in Chemical Engineering from Bombay University, an M.S. from
the University of Detroit, and an MBA from Rutgers, the State University of New Jersey. We believe Mr. Borkar’s qualifications
to serve on the Board of Directors include his years of experience in the pharmaceutical industry, including prior positions in
various senior executive roles at pharmaceutical companies.
Bhaskar Chaudhuri – Director
Bhaskar Chaudhuri,
age 60, has served as a member of our Board of Directors since 2010. Mr. Chaudhuri has more than 20 years’ experience in
pharmaceutical management, research and development. Since June 2011, he has been the Operating Partner at Frazier Healthcare Ventures.
Prior to that time, Mr. Chaudhuri served as President of Valeant Pharmaceuticals International, Inc. from January 2009 to September
2010. Prior to joining Valeant, Mr. Chaudhuri served for seven years as President and Chief Executive Officer of Dow Pharmaceutical
Sciences, Inc. and as a member of its board of directors from 2003 to 2008, at which time Dow was acquired by Valeant. Prior to
that, Mr. Chaudhuri served as Executive Vice President of Scientific Affairs at Bertek Pharmaceuticals, Inc., a subsidiary of Mylan
N.V., from 1998 to 2000. Prior to his positions at Bertek, Mr. Chaudhuri served as the General Manager of the Dermatology Division
of Mylan. Mr. Chaudhuri joined Mylan through the acquisition of Penederm, Inc., where he worked from 1992 to 1998 in a number of
senior positions before becoming the Vice President of Research and Development. Mr. Chaudhuri serves on the boards of directors
of Corium International, Inc., Silvergate Pharmaceuticals, Inc. and Thesan Pharmaceuticals, Inc. Mr. Chaudhuri holds a B.S. in
Pharmacy and an M.S. in Industrial Pharmacy from Jadavpur University and a Ph.D. in Pharmaceutics from the University of Louisiana.
We believe Mr. Chaudhuri’s qualifications to serve on the Board of Directors include his many years of experience in the
pharmaceutical industry, including his prior positions in senior executive roles at major pharmaceutical companies.
Steven Koehler – Director
Steven Koehler, age
64, has served as a member of our Board of Directors since October 13, 2014. Mr. Koehler retired from Merck & Co., Inc.
in September 2011 where, from November 2009 to September 2011, he served as Vice President, Schering-Plough Controller and Special
Projects, and was a member of the Finance Senior Leadership Team. From March 2006 to November 2009, Mr. Koehler served as
Vice President, Corporate Controller of Schering-Plough Corporation, where he also served as Chief Accounting Officer and led the
finance integration after Schering-Plough’s acquisition of Organon International B.V. Prior to his positions at Schering-Plough,
Mr. Koehler served in several capacities at The Medicines Company, including Senior Vice President and Chief Financial Officer,
from 2004 through 2006, and Vice President, Finance and Business Administration, from 2002 to 2004. From 2001 to 2002, Mr. Koehler
was Vice President, Finance and Chief Financial Officer, of Vion Pharmaceuticals, Inc. Prior to his position at Vion,
Mr. Koehler served in a number of senior finance positions at Knoll Pharmaceuticals, Inc. and Knoll AG between 1995 and 2001.
Mr. Koehler was Vice President, Finance and Treasurer, of Boots Pharmaceuticals, Inc. from 1993 to 1995. From 1977 to
1993, he held positions in finance and accounting with the American Hospital Supply Corporation, then with Baxter International,
Inc. after the two companies merged in 1985. Mr. Koehler began his career with Arthur Andersen LLP in Chicago from 1973 to
1977. Mr. Koehler is a Certified Public Accountant and holds a B.A. from Duke University and an MBA from the Kellogg
Graduate School of Management, Northwestern University. We believe Mr. Koehler’s qualifications to serve on the Board of
Directors include his many years of experience in the pharmaceutical industry, including his senior leadership positions at several
pharmaceutical companies, as well as his extensive financial experience.
James C. Gale – Director
James C. Gale, age
65, has served as a member of our Board of Directors since 2009. Mr. Gale is the Founding Partner of Signet Healthcare Partners
and currently serves as its Managing Director. Prior to founding Signet in 1999, from 1991 to 1998, Mr. Gale was head of principal
investment activities and investment banking at Gruntal & Co., LLC. Prior to joining Gruntal, Mr. Gale originated and managed
private equity investments for Home Insurance Co., Gruntal’s parent company, from 1989 to 1994. Mr. Gale is currently the
Chairman of the Board of Alpex Pharma SA. He also serves on the boards of directors of Bion Pharmaceuticals, Inc., Pfenex Inc.
and SpePharm AG, and serves as lead director of Knight Therapeutics Inc. Mr. Gale holds a B.A. from the University of Arizona and
an MBA from the University of Chicago. We believe Mr. Gale’s qualifications to serve on the Board of Directors include his
investment experience, his role as the head of principal investment activities at Gruntal & Co., LLC, as well as his experience
as a director of pharmaceutical companies.
John Celentano – Director
John Celentano, age
55, has served as a member of our Board of Directors since March 2015. Mr. Celentano is an advisor to the pharmaceutical
industry. He retired from Bristol-Myers Squibb Company on July 1, 2013 where he served as Senior Vice President, Amylin Integration
Leader from July 2012 to June 2013 and as Senior Vice President, Human Resources, Public Affairs and Philanthropy from March 2010
to June 2012. Mr. Celentano serves on the boards of directors of privately held JJ White Inc. and YourEncore Inc., as well
as The Pennington School. Mr. Celentano additionally serves as Vice-Chairman of the board of directors of Catholic Medical Mission
Board, an international nonprofit healthcare organization. Mr. Celentano holds a B.A. from the University of
Delaware and an MBA from Drexel University. We believe Mr. Celentano’s qualifications to serve on the Board of Directors
include his extensive experience in the pharmaceutical industry.
Committees of the Board of Directors
and Meetings
Meeting Attendance.
During the fiscal year ended December 31, 2014, there were six meetings of our Board of Directors, and the various
committees of the Board met a total of seven times. No director attended fewer than 75% of the total number of meetings of the
Board and of committees of the Board on which he served during fiscal 2014. The Board has adopted a policy under which each member
of the Board is strongly encouraged to attend each annual meeting of our stockholders. All of our directors attended our annual
meeting of stockholders held in 2014.
Audit Committee.
Our Audit Committee met five times during fiscal 2014. This committee currently has three members, Steven Koehler (Chairman), Bhaskar
Chaudhuri and John Celentano. Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s
written charter and include the authority to retain and terminate the services of our independent registered public accounting
firm. In addition, the Audit Committee reviews annual financial statements, considers matters relating to accounting policy and
internal controls and reviews the scope of annual audits. All members of the Audit Committee satisfy the current independence standards
promulgated by the SEC and by the NYSE MKT, as such standards apply specifically to members of audit committees. The Board has
determined that Mr. Koehler is an “audit committee financial expert,” as the SEC has defined that term in Item 407
of Regulation S-K. Please also see the report of the Audit Committee set forth elsewhere in this proxy statement.
A copy of the Audit
Committee’s written charter is publicly available on our website at www.igilabs.com.
Organization
and Compensation Committee. Our Organization and Compensation Committee met once during fiscal 2014. This committee
currently has three members, Narendra Borkar (Chairman), James C. Gale and John Celentano. Our Organization and Compensation Committee’s
role and responsibilities are set forth in the Organization and Compensation Committee’s written charter, and includes reviewing,
approving and making recommendations regarding our compensation policies, practices and procedures to ensure that legal and fiduciary
responsibilities of the Board of Directors are carried out and that such policies, practices and procedures contribute to our success.
Our Organization and Compensation Committee also administers our 2009 Equity Incentive Plan, as amended (the “2009 Plan”),
and our 1999 Director Stock Option Plan, as amended (the “1999 Director Plan”). The Organization and Compensation
Committee is responsible for the determination of the compensation of our chief executive officer, and shall conduct its decision
making process with respect to that issue without the chief executive officer present. All members of the Organization and Compensation
Committee qualify as independent under the definition promulgated by the NYSE MKT.
The Organization and
Compensation Committee has the authority to directly retain the services of any consulting firm to assist in fulfilling its responsibilities
and to approve any fee arrangements for work performed. The Compensation Committee’s independent compensation consultant
during fiscal year 2014 was the Hay Group (the “Hay Group”). The Hay Group was engaged by, and reported directly to,
the Organization and Compensation Committee, which had the sole authority to hire or fire them and to approve fee arrangements
for work performed. The Hay Group assisted the Organization and Compensation Committee in fulfilling its responsibilities under
its charter, including advising on proposed compensation packages for executive officers, compensation program design and market
practices generally. The Organization and Compensation Committee authorized the Hay Group to interact with management on behalf
of the Organization and Compensation Committee, as needed, in connection with advising the Organization and Compensation Committee,
and the Hay Group was included in discussions with management and, when applicable, the Organization and Compensation Committee’s
outside legal counsel on matters being brought to the Organization and Compensation Committee for consideration. As described in
“Compensation Discussion and Analysis – Compensation Consultants,” the Hay Group assisted the Organization
and Compensation Committee in defining the appropriate market of our peer companies for executive compensation and practices. The
Hay Group also assisted the Organization and Compensation Committee in comparing our director compensation program and practices
against those of our peers. We used the information we obtained from the Hay Group primarily for evaluating our executive compensation
practices, including measuring the competitiveness of our practices. The Organization and Compensation Committee has assessed the
independence of the Hay Group pursuant to SEC rules and the corporate governance rules of the NYSE MKT and concluded that no conflict
of interest existed that would have prevented the Hay Group from independently representing the Organization and Compensation Committee.
The Organization and
Compensation Committee, and, where applicable, the Chief Executive Officer reviews the performance of each named executive officer
in light of the above factors and determines whether the named executive officer should receive any increase in base salary or
receive a discretionary equity award based on such evaluation. During fiscal year 2014, the Organization and Compensation Committee
did not adhere to a formula or other quantitative measures with respect to compensation but rather relied on qualitative and subjective
evaluations to determine the appropriate levels of compensation for our named executives.
Please also see the
report of the Organization and Compensation Committee set forth elsewhere in this proxy statement.
A copy of the Organization
and Compensation Committee’s written charter is publicly available on our website at www.igilabs.com.
Nominating and
Corporate Governance Committee. Our Nominating and Corporate Governance Committee met once during fiscal
2014 and has two members, Bhaskar Chaudhuri (Chairman) and James C. Gale. The Nominating and Corporate Governance Committee’s
role and responsibilities are set forth in the Nominating and Corporate Governance Committee’s written charter and include
evaluating and making recommendations to the full Board as to the size and composition of the Board and its committees, evaluating
and making recommendations as to potential candidates and evaluating current Board members’ performance. Both members of
the Nominating and Corporate Governance Committee qualify as independent under the definition promulgated by NYSE MKT.
If a stockholder wishes
to nominate a candidate for director who is not to be included in our proxy statement, it must follow the procedures described
in our Amended and Restated By-Laws and in “Stockholder Proposals and Nominations for Director” at the end of
this proxy statement.
In addition, under
our current corporate governance policies, the Nominating and Corporate Governance Committee may consider candidates recommended
by stockholders as well as from other sources, such as other directors or officers, third party search firms or other appropriate
sources. For all potential candidates, the Nominating and Corporate Governance Committee may consider all factors it deems relevant,
such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence,
knowledge of the industry in which we operate, possible conflicts of interest, diversity, the extent to which the candidate would
fill a present need on the Board of Directors, and concern for the long-term interests of the stockholders. In general, persons
recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes to propose
a candidate for consideration as a nominee by the Nominating and Corporate Governance Committee under our corporate governance
policies, it should submit such recommendation in writing to our Corporate Secretary at our corporate offices, 105 Lincoln Avenue,
PO Box 687, Buena, New Jersey 08310.
The Nominating and
Governance Committee considers issues of diversity among its members in identifying and considering nominees for director, and
strives, where appropriate, to achieve a diverse balance of backgrounds, perspectives, and experience on the board and its committees.
A copy of the Nominating
and Governance Committee’s written charter is publicly available on the Company’s website at www.igilabs.com.
Organization and
Compensation Committee Interlocks and Insider Participation. Our Organization and Compensation Committee has three members,
Narendra Borkar (Chairman), James C. Gale and John Celentano. No member of the Organization and Compensation Committee has been
an officer or employee of IGI. None of our executive officers serves on the board of directors or compensation committee of a company
that has an executive officer that serves on our Board of Directors or Organization and Compensation Committee.
Board Leadership Structure and Role
in Risk Oversight
Our Board of Directors
has five independent members and one non-independent member who serves as our President and Chief Executive Officer. We believe
that the number of independent, experienced directors that make up our Board of Directors, along with the independent oversight
of the Board of Directors by the Non-Executive Chairman, benefits our company and our shareholders. All of our independent directors
have demonstrated leadership in other organizations and are familiar with board of director processes.
The Chairman of the
Board of Directors presides at all meetings of the Board of Directors. The Chairman is appointed on an annual basis by a majority
vote of the directors. Currently, the offices of Chairman of the Board of Directors and Chief Executive Officer are separated.
We have no fixed policy with respect to the separation of the offices of the Chairman of the Board of Directors and Chief Executive
Officer. Currently, two separate individuals serve in the positions of Chairman of our Board of Directors and Chief Executive Officer.
We believe that our current leadership structure is optimal for the Company at this time.
Our management is principally
responsible for defining the various risks facing the Company, formulating risk management policies and procedures, and managing
our risk exposures on a day-to-day basis. The Board of Directors’ principal responsibility in this area is to ensure that
sufficient resources, with appropriate technical and managerial skills, are provided throughout the Company to identify, assess
and facilitate processes and practices to address material risk and to monitor our risk management processes by informing itself
concerning our material risks and evaluating whether management has reasonable controls in place to address the material risks.
The involvement of the Board of Directors in reviewing our business strategy is an integral aspect of the Board of Directors’
assessment of management’s tolerance for risk and also its determination of what constitutes an appropriate level of risk
for the Company.
While the full Board
of Directors has overall responsibility for risk oversight, the Board of Directors has elected to delegate oversight responsibility
related to certain risks committees, which in turn report on the matters discussed at the committee level to the full Board of
Directors. For instance, our Audit Committee focuses on the material risks facing the Company, including operational, market, credit,
liquidity and legal risks. Additionally, our Organization and Compensation committee could be charged with reviewing and discussing
with management whether our compensation arrangements are consistent with effective controls and sound risk management. Our management
reports to the Board of Directors and Audit Committee on a regular basis regarding risk management.
Stockholder Communications to the Board
Stockholders who wish
to send communications to our Board of Directors may do so by sending them c/o IGI Laboratories, Inc., Corporate Secretary, 105
Lincoln Avenue, PO Box 687, Buena, New Jersey 08310. Such communications may be addressed either to specified individual directors
or the entire Board of Directors. The Corporate Secretary will have the discretion to screen and not forward to directors communications
that the Corporate Secretary determines are communications unrelated to our business or governance, commercial solicitations, offensive,
obscene, or otherwise inappropriate. The Corporate Secretary will, however, compile all stockholder communications that are not
forwarded and such communications will be available to any director.
Executive Officers
During the year ended
December 31, 2014, we had one executive officer who was not also a director, Jenniffer Collins, who serves as our Chief Financial
Officer. We have employment agreements with each of our executive officers, Jason Grenfell-Gardner and Jenniffer Collins. See the
section of our proxy statement entitled “Executive Officer and Director Compensation – Employment Agreements with
Executive Officers.”
Jenniffer Collins – Chief Financial
Officer
Jenniffer Collins,
age 45, has served as our Chief Financial Officer since July 2011. Ms. Collins has over twenty years of experience in accounting
and finance. Prior to joining IGI, since October 2006, she served as Vice President - Treasurer and, previously, the Corporate
Controller of the Lightstone Group, a privately held real estate firm, and The Lightstone Value Plus REIT, a publicly traded real
estate investment trust. From January 2004 through October 2006, Ms. Collins served as Corporate Controller of Orchid Cellmark,
Inc., a publicly held biotechnology company, and, from July 2001 through January 2004, Ms. Collins served as Director of Finance
and Investor Relations for Tellium, Inc., a publicly held optical switching company, which was purchased by Zhone Technologies,
Inc. in November 2003. Her background also includes seven years of public accounting experience, including at Pricewaterhouse Coopers.
Ms. Collins earned her CPA in New Jersey in 1993 and graduated with a B.S. in accounting from Lehigh University.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Discussion and Analysis
The following Compensation
Discussion and Analysis presents an overview of our compensation program, focusing on the elements of compensation awarded or paid
to our President and Chief Executive Officer and our Chief Financial Officer, or our “Named Executive Officers.”
Summary of 2014 Results
We are pleased with
another year of progress that we believe is due to management’s effective and successful execution of the Company’s
strategic objectives established by our President and Chief Executive Officer and the Board of Directors. The key highlights
and accomplishments for our 2014 fiscal year include the following:
| · | Achieved total revenue of $33.7 million in 2014, an increase of 85% over the prior year. |
| · | Net income in 2014 was $5.3 million, or $0.09 per diluted share, compared to a net loss of $1.4
million, or $0.03 per basic and diluted share in 2013. |
| · | Filed 11 Abbreviated New Drug Applications (“ANDAs”) with the FDA in 2014. At
December 31, 2014 the Company has a total of 22 pending applications on file with the U.S. Food and Drug Administration (the “FDA”). |
| · | On July 2, 2014, the Company closed an underwritten public offering, under which the Company sold
an aggregate of 5,347,500 shares of common stock at a public offering price of $5.00 per share. The net proceeds were approximately
$24.9 million, after deducting underwriting discounts and commissions and other offering expenses paid by the Company. |
| · | On November 18, 2014, the Company entered into an asset-based revolving senior secured credit facility
with General Electric Capital Corporation, under which the Company can request revolving loan advances up to an aggregate amount
of $10 million, which may be increased to $15 million subject to certain conditions. At December 31, 2014, the interest rate in
effect for this facility was 4.2%. |
| · | In December 2014, the Company issued $143.75 million aggregate principal amount of 3.75% of Convertible
Senior Notes due in 2019. The net proceeds from the Notes were approximately $139 million, net of underwriting fees and other related
expenses. |
| · | In September 2014, the Company executed an agreement to acquire the regulatory rights and related
documents and records for 18 drug products from AstraZeneca Pharmaceuticals LP, 17 of which were previously marketed. The
acquisition included the regulatory rights and documents for 17 injectable products and one suppository product. All of these
products had been previously approved by the US FDA as ANDAs or New Drug Applications (“NDAs”) prior to their
discontinuation or withdrawal from the market. |
| · | In September 2014, the Company executed an agreement to acquire two previously marketed ophthalmic
drug products, in addition to the right to acquire three additional previously marketed injectable drug products from affiliates
of Valeant Pharmaceuticals International, Inc. after the completion of the due diligence process. All of these products
have been approved by the FDA as ANDAs or NDAs. |
The Organization and
Compensation Committee consulted with the Hay Group, an independent third party, in November 2014, to conduct a market benchmark
study and review the compensation arrangements between the Company and its Named Executive Officers in comparison to their peers
set forth below. Specifically, the independent third party’s assessment focused on the following areas of review:
| · | Competitiveness of the Company’s current executive compensation program, on a target
basis, relative to the proxy peer group; |
| · | Pay mix for each executive relative to the peer group and/or survey data ; and |
| · | Prevalence of long-term incentive (“LTI”) vehicles and practices within the
peer group as well as the mix of LTI. |
Make Whole Equity
Incentive Grants. On February 11, 2015, because our Named Executive Officers had not received any equity grants since
joining IGI (aside from equity grants pursuant to their employment agreements), the Organization and Compensation Committee decided
to issue a one-time, make whole equity grant to each of our Named Executive Officers as follows:
| · | To our President and Chief Executive Officer: |
| o | options to purchase up to 180,000 shares of our common stock at an exercise price of $10.67 per
share, with one-third of the common stock underlying such options to vest ratably over the next three anniversaries of the date
of grant, starting on February 11, 2016; and |
| o | 60,000 restricted stock units (“RSUs”), with one-third of the common stock underlying
such grant to vest ratably over the next three anniversaries of the date of grant, starting on February 11, 2016. Each RSU represents
the right to receive one share of our common stock; and |
| · | To our Chief Financial Officer: |
| o | options to purchase up to 75,000 shares of our common stock at an exercise price of $10.67 per
share, with one-third of the common stock underlying such options to vest ratably over the next three anniversaries of the date
of grant, starting on February 11, 2016; and |
| o | 24,000 RSUs, with one-third of the common stock underlying such grant to vest ratably over the
next three anniversaries of the date of grant, starting on February 11, 2016. Each RSU represents the right to receive one share
of our common stock. |
Annual Equity Incentive
Program for Management. On February 11, 2015, the Organization and Compensation Committee also decided to institute an annual
equity incentive program for our Named Executive Officers pursuant to which we would issue, in the sole discretion of our Organization
and Compensation Committee, to our (i) President and Chief Executive Officer, an annual equity grant of options to purchase shares
of our common stock and/or RSUs, in an amount equal to 100% of his annual base salary, and (ii) Chief Financial Officer, an annual
equity grant of options to purchase shares of our common stock and/or RSUs, in an amount equal to 60% of her annual base salary.
The equity grants would be made pursuant to our 2009 Plan and, if granted, would be subject to a three-year vesting schedule. The
allocation of different securities within each annual equity grant shall be determined by the Organization and Compensation Committee
in its sole discretion. The first such annual equity grants were approved on February 11, 2015, and were as follows:
| · | To our President and Chief Executive Officer: |
| o | options to purchase up to 42,500 shares of our common stock at an exercise price of $10.67 per
share, with one-third of the common stock underlying such options to vest ratably over the next three anniversaries of the date
of grant, starting on February 11, 2016; and |
| o | 21,250 RSUs, with one-third of the common stock underlying such grant to vest ratably over the
next three anniversaries of the date of grant, starting on February 11, 2016; and |
| · | To our Chief Financial Officer: |
| o | options to purchase up to 15,000 shares of our common stock at an exercise price of $10.67 per
share, with one-third of the common stock underlying such options to vest ratably over the next three anniversaries of the date
of grant, starting on February 11, 2016; and |
| o | 7,500 RSUs, with one-third of the common stock underlying such grant to vest ratably over the next
three anniversaries of the date of grant, starting on February 11, 2016. |
Bonuses. Based
on IGI’s strong performance for the fiscal year end 2014, the Organization and Compensation Committee recommended cash bonuses
of 115% of the target bonus for our President and Chief Executive Officer (or $281,750) and 114% of the target bonus for our Chief
Financial Officer (or $74,714). The Organization and Compensation Committee further decided, in light of what they believed to
be the significant contributions of our Named Executive Officers during our fiscal year ended 2014, to grant one-time performance
bonuses of $75,000 in cash and 25,000 RSUs to our President and Chief Executive Officer and $30,000 in cash and 7,500 RSUs to our
Chief Financial Officer. The common stock underlying each such grant of RSUs vested fully on the date of grant.
Compensation Philosophy and Objectives.
The Organization and
Compensation Committee leads the development of our compensation philosophies and practices, and attempts to ensure that the total
compensation paid to our executive officers is fair and reasonable relative to the extremely competitive nature of the specialty
generic pharmaceutical industry. For several years, our Company forged through business and financial challenges, and it was not
until more recently that the Company has experienced a significant turn-around that is largely attributable to the success of our
current management team. During the challenging downturn years, the Organization and Compensation Committee focused intently on
attracting and rewarding executives with the unique intersection of industry and turnaround skills and made compensation decisions
based on our objective of aligning the Company’s key executives’ goals and incentive pay with the goals of our shareholders
in order to enable and encourage the turn-around effort, while considering the significant cash constraints the Company operated
under from 2010 to 2014. Consistent with our ongoing goal to keep the Company’s key executives’ objectives and incentive
pay aligned with the goals of our shareholders, we continue to pursue a compensation philosophy that is intended to provide total
compensation opportunities, which include base salary, bonus, long term equity compensation and a health and welfare benefits package
intended to incentivize the uniquely skilled employees who will continue to carry out our strategic plan, mission and goals, while
maintaining our required high quality standards and growth.
In 2014, we refined
our compensation philosophy to reflect the Company’s current progress toward its mission to be a leader in the specialty
generic pharmaceutical industry in order to align it with the achievement of the Company’s business strategies, and to be
consistent with the compensation structure of our industry peers. Accordingly, we developed and adopted a philosophy
that is intended to serve the foundation upon which the executive compensation program is structured and administered and to serve
as a basis for guiding the continued development and evolution of the program.
Our compensation philosophy
is based on the following goals and principles:
| · | Attract and retain executives with proven track records of success to ensure the Company has the
caliber of executives needed to perform at the highest levels of the industry; |
| · | Support the Company’s emerging growth strategy to create long-term stockholder value, and
meet or exceed key corporate goals and objectives; |
| · | Appropriately balance current priorities and the longer-term strategy of the Company through short-
and long-term incentives; |
| · | Encourage teamwork and cooperation while recognizing individual contributions by linking variable
compensation to the Company and individual performance based on position responsibilities and ability to influence financial and
organizational results; and |
| · | Provide for a limited number of perquisites and supplemental benefits which will only be provided
if a compelling business rationale exists. |
Role of Organization and Compensation
Committee and Management
Our Organization and
Compensation Committee is composed exclusively of independent directors and meets regularly both with and without management present.
The Organization and Compensation Committee annually sets Named Executive Officer base salaries, establishes annual incentive compensation
pay for performance objectives based on both individual and company goals, makes actual awards of annual incentive compensation
based on attainment of these goals and other factors the Organization and Compensation Committee deems appropriate, and considers
awards of long-term equity compensation. In connection with its review and determination, the Organization and Compensation Committee
considers the input of the Chairman of our Board, who conducts a detailed review of the performance of our President and Chief
Executive Officer based on the Chairman’s substantial and meaningful experience in ownership and management of pharmaceutical
and life science companies. Our Chairman also presents his recommendation to the Organization and Compensation Committee
for any change in base salary or other compensation components for our President and Chief Executive Officer. The Organization
and Compensation Committee also seeks input from the President and Chief Executive Officer, particularly related to the establishment
and measurement of corporate and individual objectives and recommendations related to overall employee compensation matters.
Our President and Chief
Executive Officer reviews the performance of, and proposes salary increases for, all managers who report to him, including the
other Named Executive Officer. Any increases are generally based upon the individual’s performance during the previous year
in addition to the Company’s performance as it relates to the key objectives established at the beginning of the year. The
Organization and Compensation Committee reviews and approves the reasonableness of any proposed compensation for the Named Executive
Officers. In conducting its review and making its determinations, the Organization and Compensation Committee reviews a history
of base salary, cash incentive bonus targets and payouts and equity awards, prepared by the Company’s Human Resources Department
(“HR”). During the year, our President and Chief Executive Officer may not change the base salary
of the managers who report to him without the prior approval of our Organization and Compensation Committee.
Our HR evaluates compensation
levels and composition and fashions competitive pay packages on a company-wide basis. HR also works with the President
and Chief Executive Officer in planning for recruitment and retention of employees.
Compensation Consultants
The Organization and
Compensation Committee has maintained a structured approach to compensation for our Named Executive Officers and, in 2014, retained
its own independent compensation consultant to provide the Organization and Compensation Committee with support, advice and recommendations.
In 2014, our compensation consultant worked with the Organization and Compensation Committee in comparing our executive compensation
with pertinent market data taken from published salary surveys reflecting a broad range of entities, both within and outside our
own specialty pharmaceutical industry. The study also included publicly reported data from the following selected peer group: Aceto
Corporation; Amphastar Pharmaceuticals, Inc.; ANI Pharmaceuticals, Inc.; Antares Pharmaceuticals, Inc.; Cambrex Corporation; DepoMed
Inc.; Flamel Technologies SA; Insys Pharmaceuticals, Inc.; Intellipharmaceutics International, Inc.; Lannett Company, Inc.; Sagent
Pharmaceuticals, Inc.; Sciclone Pharmaceuticals, Inc.; and Tetraphase Pharmaceuticals, Inc. The Organization and Compensation Committee
reviewed these surveys and information in order to obtain a general understanding of current compensation practices and trends
for specific positions held as opposed to solely focusing on the Named Executive Officers. This analysis was reviewed
in order to confirm the appropriate data, measures and comparisons.
With respect to establishing
the overall compensation of the President and Chief Executive Officer and Chief Financial Officer, we gathered, analyzed and evaluated
the compensation mix provided by our peer group, while keeping in mind the other factors set forth in the Organization and Compensation
Committee’s charter. We do not select a specific target or benchmark our Named Executive Officers’ compensation
at a certain level or percentage based on other companies’ compensation arrangements. Based on our review of these sources,
we have determined that our total compensation and cash compensation for our Named Executive Officers fell significantly below
the aggregated 50th percentile of the named executive officers of our peer group. Our goal was to structure our compensation
in a manner where the compensation would be competitive in the market place with a long term focus for our Named Executive Officers’
compensation structure comes from their Long Term Incentive Awards.
The Organization and
Compensation Committee has analyzed whether the work of our current compensation consultant, the Hay Group, has raised any conflict
of interest, taking into consideration the following factors: (i) the provision of other services to the Company by the Hay Group;
(ii) the policies and procedures of the Hay Group that are designed to prevent conflicts of interest; (iii) any business or personal
relationship of the Hay Group or the individual compensation advisors employed by the Hay Group with our President and Chief Executive
Officer; (iv) any business or personal relationship of the individual compensation advisors with any member of the Organization
and Compensation Committee; and (v) any stock of the Company owned by the Hay Group or the individual compensation advisors employed
by the Hay Group. The Organization and Compensation Committee has determined, based on its analysis of the above factors, that
the work of the Hay Group and the individual compensation advisors employed by the Hay Group as compensation consultants to the
company has not created any conflict of interest.
Components of
Compensation
Our compensation program
generally provides equivalent benefits for all salaried and hourly-paid employees. For our managers, directors and vice presidents,
including our executive officers, we provide additional compensation designed to reward performance. For 2014, the principal
components of compensation for our Named Executive Officers were:
| · | Performance-Based Annual Bonus; |
| · | Long-Term Incentive Compensation, including periodic grants of long-term stock-based compensation,
such as stock options, which are subject to time-based vesting requirements; and |
| · | Health and Welfare Benefits. |
Base Salary. The
salaries for our Named Executive Officers have been established in order to be competitive with market practices so as to allow
us to attract and retain senior executive talent. Salary decisions are also influenced by equity grants based on the relationship
between salaries among the executives and each executive’s role and responsibilities and the impact on the Company’s
performance. Other factors considered by the Organization and Compensation Committee include an executive’s experience,
specific skills, tenure and individual performance. In setting base salaries for the Named Executive Officers, we also consider
how equity can be used to balance an executive’s overall compensation to make it competitive based on an analysis of peer
group data. In 2014, the base salaries of our President and Chief Executive Officer and Chief Financial Officer were
increased from $325,000 to $361,846 and from $212,100 to $226,572, respectively.
Performance-Based
Annual Bonus. Each year, the Organization and Compensation Committee adopts guidelines pursuant to which it calculates
the annual cash incentive awards available to our Named Executive Officers, subject to the Organization and Compensation Committee’s
oversight and modification. The Organization and Compensation Committee believes that our annual incentive program provides our
Named Executive Officers with a team incentive to both enhance our financial performance and perform at the highest level. The
terms of these programs are not contained in a formal written plan. No executive is part of an incentive plan that has any guaranteed
bonus amounts.
We structured specific
annual incentive compensation pay for 2014 based upon the Company’s achievement of its overall corporate goals. In addition,
the Chief Financial Officer’s annual incentive compensation pay is based on individual performance goals set and established
by the President and Chief Executive Officer and reviewed and approved by the Organization and Compensation Committee. After
our Board of Directors reviewed the strategic plan and budget for the year, the Organization and Compensation Committee set annual
corporate goals designed to induce achievement of that plan and budget. For 2014, in accordance with the employment
agreement for the President and Chief Executive Officer, our President and Chief Executive Officer’s bonus target was set
at 70% of base compensation, and the Chief Financial Officer’s bonus was set at 30% of base compensation
Since the Company exceeded
all of its overall corporate and budget goals for 2014, bonuses were paid for 2014 as follows:
| | |
Base Pay
for Bonus
Calculation
(a) | | |
Base Bonus
Opportunity
(b) | | |
Base Bonus
Available
(c) | | |
Base Bonus
Paid
(d) | | |
Discretionary
Bonus Value
Paid
(e) | | |
Total Bonus
Value
Paid
(f) | |
| Jason Grenfell-Gardner | |
$ | 350,000 | | |
| 70 | % | |
$ | 245,000 | | |
$ | 281,750 | | |
$ | 320,000 | | |
$ | 601,750 | |
| Jenniffer Collins | |
| 218,463 | | |
| 30 | % | |
| 65,539 | | |
| 74,714 | | |
| 105,000 | | |
| 179,714 | |
| TOTAL | |
$ | 568,463 | | |
| | | |
$ | 310,539 | | |
$ | 356,464 | | |
$ | 425,000 | | |
$ | 781,464 | |
Where:
| · | (c), or Base Bonus Available = Base Pay (a) x Base Bonus Opportunity (b); |
| · | (d), or Base Bonus Paid = Base Pay (a) x Base Bonus Opportunity (b) at 115% for our President
and Chief Executive Officer and 114% for our Chief Financial Officer; |
| · | (e), or Discretionary Bonus, was awarded by the Organization and Compensation Committee of the
Board of Directors, includes $70,000 discretionary bonus in cash and 25,000 RSUs for the President
and Chief Executive Officer, and a $30,000 discretionary cash bonus and 7,500 RSUs for the Chief Financial Officer. |
Not included in the table are
the following RSU grants made on February 11, 2015: an aggregate of 110,000 RSUs to our President and Chief Executive Officer,
which are valued at $10.67 per share, and an aggregate of 39,000 RSUs to our Chief Financial Officer, which are valued at $10.67
per share.
| · | (f), or Total Bonus Paid, equals Base Bonus Paid (d) + Discretionary Bonus Paid (e). |
For the year
ended 2014, the Company’s overall corporate objectives were as follows:
| · | Achieve a determined level of sales and adjusted EBIT and Gross Margin as a percentage of total
revenue; |
| · | Submit a certain number of ANDA filings; |
| · | Expand investor relations platform and shareholder base; and |
| · | Organizational development to include successful FDA inspections. |
Given that the foregoing
goals were met, our Board of Directors, based on the recommendation of our Organization and Compensation Committee, determined
that our Named Executive Officers were entitled to the additional discretionary bonuses paid.
Long Term Incentive
Compensation. The Organization and Compensation Committee considered how equity can be used to balance an executive’s
overall compensation to make it competitive based on an analysis of peer group data as well as to incentivize our Named Executive
Officers. Based on the foregoing considerations of competitiveness and incentivization, we decided to increase the equity compensation
portion of our executive’s overall compensation.
Benefits.
Employment and Consultant
Agreements. The Company entered into employment agreements with its President and Chief Executive Officer and Chief
Financial Officer in connection with their hiring. The Company does not have employment agreements with any other employees.
Company-Wide Benefits.
Executive officers and all full-time employees are eligible to participate in the Company’s standard benefit program, which
includes health insurance, 401(k), disability and life insurance, flexible spending accounts, travel assistance, paid time off
and holidays. The Company matches employee 401(k) contributions at a rate of 100% of the first 3% of compensation contributed
by participants and 50% of the next 2% of compensation contributed by participants. We do not offer any benefits to our Named Executive
Officers that are not offered to our other employees.
Other Considerations.
Tax Considerations. It
has been and continues to be our intent that all non-equity incentive payments be deductible unless maintaining such deductibility
would undermine our ability to meet our primary compensation objectives or is otherwise not in our best interest. At this time,
essentially all compensation (except certain equity incentives) paid to the Named Executive Officers is deductible under Section
162(m) of the Internal Revenue Code. We also regularly analyze the tax effects of various forms of compensation and
the potential for excise taxes to be imposed on the executive officers which might have the effect of frustrating the purposes
of such compensation.
Accounting Treatment
Considerations. We are especially attuned to the impact of Accounting Standards Codification (“ASC”)
Topic 718, Stock Compensation, with respect to the grant and vesting of equity compensation awards. Prior to
the granting of such awards, we analyze the short and longer-term effects of any particular award on our budget for the year of
grant and anticipated financial impact in future years. This information is taken into account in determining the type
and vesting parameters for equity-based compensation awards.
Timing of Equity
Grants and Equity Grant Practices. The Organization and Compensation Committee recommends to the Board equity compensation
to all of the Named Executive Officers and all other Company employees. All awards are made based on the closing price
of our stock on the date of the approved award. In addition, awards may be made to new employees upon their joining
the Company, and to employees who are promoted during the year. The timing of such awards depends on those specific
circumstances and is not tied to any other particular company event, anticipated events or announcements.
COMPENSATION COMMITTEE REPORT
The Organization and
Compensation committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by
Item 402(b) of Regulation S-K, which appears elsewhere in this proxy statement, with our management. Based on this review and discussion,
the Organization and Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis
be included in our proxy statement.
| |
Members of the IGI Laboratories, Inc. Organization and Compensation Committee |
| |
|
| |
Narendra Borkar |
| |
James C. Gale |
| |
John Celentano |
RISKS RELATED TO COMPENSATION PRACTICES
AND POLICIES
Consistent with SEC
disclosure requirements, we have assessed the Company’s compensation policies, practices and awards and have concluded that
our compensation policies, practices and awards do not create risks that are reasonably likely to have a material adverse effect
on the Company. Our management assessed the Company’s compensation and benefits programs to determine if the programs’
provisions and operations create undesired or unintentional risk of a material nature. We do not have any programs where a participant
may be able to directly affect variability or timing of a payout. Rather, our compensation programs include a combination of fixed
base salaries, cash bonuses, long-term incentive awards and employee retirement plans that are generally uniform in design and
operation throughout the Company and with all levels of employees.
Based on the foregoing,
we believe that our compensation policies, practices and awards do not create risks that are likely to have a material adverse
effect on the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage
risk-taking beyond the organization’s ability to effectively identify and manage significant risks, are compatible with our
effective internal controls and our risk management practices, and are supported by the oversight and administration of the Compensation
Committee with regard to executive compensation programs.
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
Summary Compensation Table
The following table
shows the total compensation paid or accrued during the last three fiscal years ended December 31, 2014, 2013 and 2012 to our Chief
Executive Officer and our Chief Financial Officer.
Name and
Principal Position |
|
Year |
|
|
Salary
($) |
|
|
Bonus
($) |
|
|
Stock
Awards
($)(4) |
|
|
Option
Awards
($)(4) |
|
|
All Other
Compensation ($) |
|
|
Total ($) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jason Grenfell-Gardner, |
|
|
2014 |
|
|
|
361,846 |
(2) |
|
|
351,750 |
(3) |
|
|
— |
|
|
|
— |
|
|
|
32,899 |
(5) |
|
|
746,495 |
|
| President and Chief |
|
|
2013 |
|
|
|
315,000 |
|
|
|
250,298 |
|
|
|
929,500 |
|
|
|
22,994 |
|
|
|
27,490 |
(6) |
|
|
1,545,282 |
|
| Executive Officer(1) |
|
|
2012 |
|
|
|
121,153 |
|
|
|
39,174 |
|
|
|
— |
|
|
|
276,759 |
|
|
|
3,224 |
(7) |
|
|
440,310 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jenniffer Collins, |
|
|
2014 |
|
|
|
226,572 |
(2) |
|
|
104,714 |
(8) |
|
|
— |
|
|
|
— |
|
|
|
25,363 |
(9) |
|
|
356,649 |
|
| Chief Financial |
|
|
2013 |
|
|
|
212,100 |
|
|
|
49,075 |
|
|
|
— |
|
|
|
— |
|
|
|
26,258 |
(10) |
|
|
287,433 |
|
| Officer |
|
|
2012 |
|
|
|
212,019 |
|
|
|
20,177 |
|
|
|
12,206 |
|
|
|
— |
|
|
|
24,337 |
(11) |
|
|
268,739 |
|
| (1) | Mr. Grenfell-Gardner commenced employment as our President and Chief Executive Officer on July
30, 2012. |
| (2) | Although Mr. Grenfell-Gardner’s annual base salary is $350,000, during the fiscal year
ended December 31, 2014, he received $361,846 in total base salary due to the inclusion of an additional payroll period
during the 2014 calendar year. Although Ms. Collin’s annual base salary is $218,463, during the fiscal year ended December
31, 2014, she received $226,572 in total base salary due to the
inclusion of an additional payroll period during the 2014 calendar year. |
| (3) | Includes receipt of a one-time performance bonus of $75,000
in March 2014. |
| (4) | These amounts represent the aggregate grant date fair value for stock awards for fiscal years 2012,
2013 and 2014, respectively, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in
determining grant date fair value may be found in Note 12 to our Financial Statements, included in our Annual Report on Form 10-K
for the year ended December 31, 2014. |
| (5) | Includes $17,547 relating to premiums for medical and dental insurance paid for by the Company,
$1,336 in premiums paid for by the Company for a life insurance policy to benefit Mr. Grenfell-Gardner with a face amount of $280,000,
and $14,016 of matching contributions made under the Company’s 401(k) plan. |
| (6) | Includes $17,915 relating to premiums for medical and dental insurance paid for by the Company,
$1,336 in premiums paid for by the Company for a life insurance policy to benefit Mr. Grenfell-Gardner with a face amount of $280,000,
and $8,239 of matching contributions made under the Company’s 401(k) plan. |
| (7) | Includes $2,667 relating to premiums for medical and dental insurance paid for by the Company and
$557 in premiums paid for by the Company for a life insurance policy to benefit Mr. Grenfell-Gardner with a face amount of $280,000. |
| (8) | Includes receipt of a one-time performance bonus of $30,000 in March 2014. |
| (9) | Includes $24,027 relating to premiums for medical and dental insurance paid for by the Company
and $1,336 in premiums paid for by the Company for a life insurance policy to benefit Ms. Collins with a face amount of $280,000. |
| (10) | Includes $24,923 relating to premiums for medical and dental insurance paid for by the Company
and $1,336 in premiums paid for by the Company for a life insurance policy to benefit Ms. Collins with a face amount of $280,000. |
| (11) | Includes $23,001 relating to premiums for medical and dental insurance paid for by the Company
and $1,336 in premiums paid for by the Company for a life insurance policy to benefit Ms. Collins with a face amount of $280,000. |
2014 Fiscal Year Grants of Plan-Based
Awards
There were no grants of
non-equity incentive plan awards or grants of equity awards made to our executive officers during the fiscal year ended December
31, 2014.
Narrative Disclosure to Summary Compensation
Table and Grants of Plan-Based Awards Table
Employment Agreements
with Executive Officers
President and Chief
Executive Officer. Jason Grenfell-Gardner joined IGI as our President and Chief Executive Officer and entered into an employment
agreement, effective July 30, 2012 (the “CEO Employment Agreement”). Under the CEO Employment Agreement, Mr.
Grenfell-Gardner is entitled to an annual base salary of $315,000, which was increased in accordance with terms of the CEO Employment
Agreement to $350,000 for the fiscal year ended 2014. Mr. Grenfell-Gardner is also eligible to receive an annual performance
bonus for each calendar year during the term of his employment, which may be payable in either cash, stock options and/or restricted
stock, provided Mr. Grenfell-Gardner is employed on December 31 of such fiscal year. Mr. Grenfell-Gardner’s target annual
performance bonus will be equal to 70% of his base salary then-in effect for the applicable fiscal year. The amount of any such
annual performance bonus shall be determined by the Organization and Compensation Committee of the Board of Directors in their
discretion, with reference to Mr. Grenfell-Gardner’s fulfillment of performance goals established by the Organization and
Compensation Committee of our Board of Directors.
In connection with
the entry into the CEO Employment Agreement, Mr. Grenfell-Gardner received (i) 325,000 shares of restricted stock (the “Restricted
Stock Award”), (ii) an option to purchase 975,000 shares of the Company’s common stock at an exercise price of
$1.02 per share (the “Primary Option”) and (iii) a supplemental option to purchase 50,000 shares of the Company’s
common stock (the “Supplemental Option”): options to purchase 25,000 shares of the Company’s common stock
at an exercise price of $1.02 per share were issued on July 30, 2012, and are now fully vested; options to purchase 25,000 shares
of the Company’s common stock at an exercise price of $2.89 were issued on December 30, 2013, and vest ratably on December
30 of each of 2013, 2014 and 2015. The Restricted Stock Award and the Primary Option are subject to and governed by the terms of
the 2009 Plan and a restricted stock award agreement and stock option award agreement, respectively, which agreements provide that
one-third of each award shall vest ratably on July 30 of each of 2013, 2014 and 2015. The Supplemental Option is subject to and
governed by the terms of the 2009 Plan and stock option award agreements. In addition, any options or restricted stock that remain
unvested immediately prior to a change in control, as defined below, will immediately vest, provided that Mr. Grenfell-Gardner
remains in continuous service with the Company through the consummation of that change in control.
Either party may terminate
Mr. Grenfell-Gardner’s employment at any time, provided that Mr. Grenfell-Gardner shall provide 30 days’ written notice
to the Company of any such termination.
Mr. Grenfell-Gardner
is also subject to certain restrictive covenants as set forth in the CEO Employment Agreement, including confidentiality, non-solicitation
and non-competition covenants. Mr. Grenfell-Gardner also agrees to assign certain intellectual property to the Company. Mr. Grenfell-Gardner
is also entitled to participate in certain of the Company’s benefit programs on the same terms and conditions generally provided
by the Company to its executive employees.
Chief Financial
Officer. Jenniffer Collins joined IGI as our Chief Financial Officer pursuant to an employment agreement, effective July 21,
2011 (the “CFO Employment Agreement”). Under the CFO Employment Agreement, Ms. Collins receives an annual base
salary of $210,000, which was increased in accordance with terms of the CFO Employment Agreement to $218,463 for the fiscal year
ended 2014. Ms. Collins is also eligible to receive an annual performance bonus for each calendar year during the term of her employment,
which may be payable in either cash, stock options and/or restricted stock, provided Ms. Collins is employed on December 31 of
such fiscal year. Ms. Collins’ target annual performance bonus will be equal to 30% of her base salary then-in effect for
the applicable fiscal year. The amount of any such annual performance bonus shall be determined by the Organization and Compensation
Committee of the Board of Directors in their discretion, with reference to Ms. Collins’ fulfillment of performance goals
established by the Board of Directors or any committee with respect to the applicable fiscal year.
In connection with
entering into the CFO Employment Agreement, Ms. Collins received an option to purchase 225,000 shares of the Company’s common
stock at an exercise price of $1.04 per share. The option is subject to and governed by the terms of the 2009 Plan and a stock
option award agreement, and is now fully vested. In addition, any options or restricted stock that remain unvested immediately
prior to a change in control, as defined below, will immediately vest, provided that Ms. Collins remains in continuous service
with the Company through the consummation of that change in control.
Either party may terminate
Ms. Collins’ employment at any time, provided that Ms. Collins shall provide 30 days’ written notice to the Company
of any such termination.
Ms. Collins is also
subject to certain restrictive covenants as set forth in the CFO Employment Agreement, including confidentiality, non-solicitation
and non-competition covenants. Ms. Collins also agrees to assign certain intellectual property to the Company. Ms. Collins is also
entitled to participate in certain of the Company’s benefit programs on the same terms and conditions generally provided
by the Company to its executive employees.
Outstanding Equity Awards
at 2014 Fiscal Year-End
The following table
shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December
31, 2014 to each of the executive officers named in the Summary Compensation Table.
| | |
Option Awards | |
Stock Awards | |
| Name | |
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | |
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(1) | | |
Option Exercise
Price
($) | | |
Option
Expiration Date | |
Number of Shares
or Units of Stock
That Have Not
Vested
(#)(1) | | |
Market Value of
Shares or Units of
Stock That Have
Not Vested
($) | |
| | |
| | |
| | |
| | |
| |
| | |
| |
| Jason Grenfell-Gardner, | |
| 675,000 | | |
| 325,000 | | |
$ | 1.02 | | |
7/30/22 | |
| 108,334 | | |
| 953,339 | (2) |
| President and Chief Executive
Officer | |
| 16,666 | | |
| 8,334 | | |
$ | 2.89 | | |
12/30/23 | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
Jenniffer
Collins, Chief
Financial Officer | |
| 225,000 | | |
| – | | |
$ | 1.04 | | |
12/22/21 | |
| – | | |
| – | |
| (1) | All of these options will vest on July 30, 2015. |
| (2) | The market value of the stock awards is determined by multiplying the number of shares by $8.80,
the closing price of our common stock on the NYSE MKT on December 31, 2014, the last day of our fiscal year. |
Option Exercises and Stock Vested in
2014
The following table
shows information regarding exercises of options to purchase our common stock and vesting of stock awards held by each executive
officer named in the Summary Compensation Table during the fiscal year ended December 31, 2014.
No executive officer
exercised an option to purchase our common stock during the fiscal year ended December 31, 2014.
| | |
Stock Awards | |
| Name | |
Number of Shares Acquired on
Vesting (#) | | |
Value Realized on Vesting ($) | |
Jason Grenfell-Gardner, President and Chief Executive Officer | |
| 108,333 | (1) | |
| 581,748 | |
| | |
| | | |
| | |
Jenniffer Collins, Chief Financial Officer | |
| 12,206 | (2) | |
| 45,162 | |
| (1) | 108,333 shares vested on July 30, 2014, and the value realized is calculated by multiplying the
number of vested shares by the closing price of our common stock on the NYSE MKT on the applicable vesting date. |
| (2) | 12,206 shares vested on January 26, 2014, and the value realized is calculated by multiplying
the number of vested shares by the closing price of our common stock on the NYSE MKT on the applicable vesting date. |
Pension Benefits
We do not have any
qualified or non-qualified defined benefit plans.
Nonqualified Deferred Compensation
We do not have any
nonqualified defined contribution plans or other deferred compensation plan.
Potential Payments upon Termination
or Change in Control
Set forth below is
a description of the potential payments we would need to make upon termination of Mr. Grenfell-Gardner’s and Ms. Collins’
employment or upon a change in control of the Company. Any such payments are conditioned upon such executive’s execution
and delivery to the Company, within 60 days following cessation of employment, of a general release of claims.
Termination by us
without cause. If the executive’s employment is terminated by the Company without cause (as defined below), we are required
to pay (i) their unpaid base salary through the effective date of termination and any reimbursable business expenses; (ii) the
executive’s base salary as then in effect for a period of six months following termination of employment; and (iii) the executive’s
annual performance bonus that would otherwise have been payable to the executive for the year in which the termination occurs,
prorated as of the date of termination. Further, to the extent then unvested, upon such termination, a pro-rata portion of the
executive’s options and restricted stock will become vested. However, any such payment obligations shall immediately terminate
upon a judicial determination that the executive has breached certain confidentiality, non-solicitation, non-competition and/or
conflict of interest provisions under their respective employment agreements.
Termination for
any other reason. If the executive’s employment is terminated by the Company other than without cause (as defined below),
including, but limited to, termination for cause, as a result of the executive’s death or disability, or as a result of the
executive’s resignation, we are required to pay their unpaid base salary through the effective date of termination.
Payments
upon a Change in Control. The employment agreements of Mr. Grenfell-Gardner and Ms. Collins provide that, in the event of a
“change in control,” provided they remain in continuous service with the Company through the consummation of such change
in control, all unvested options and restricted stock awarded to them will immediately vest.
“Cause,”
for purposes of each of the employment agreements, includes (i) commission of a willful and material act of dishonesty in the course
of the executive’s duties under their respective employment agreements, (ii) conviction by a court of competent jurisdiction
of a crime constituting a felony or conviction in respect of any act involving fraud, dishonesty or moral turpitude, (iii) the
executive’s performance under the influence of controlled substances, or continued habitual intoxication, during working
hours, after the Company shall have provided written notice to the executive and given the executive 30 days within which to commence
rehabilitation with respect thereto, and the executive shall have failed to commence such rehabilitation or continued to perform
under the influence after such rehabilitation, (iv) frequent or extended, and unjustifiable (not as a result of incapacity or disability)
absenteeism, which shall not have been cured within 30 days after the Company’s written notice of breach and its intention
to terminate the executive’s employment in accordance with the provisions of his or her employment agreement, (v) the executive’s
personal, willful and continuing misconduct or refusal to perform his or her duties and responsibilities, or to carry out directives
of the Board of Directors, which, if capable of being cured, shall not have been cured within 60 days after the Company’s
written notice of breach and its intention to terminate the executive’s employment in accordance with the provision of his
or her employment agreement or (vi) material non-compliance with the terms of his or her respective employment agreement, including,
but not limited to, any breach of certain confidentiality, non-solicitation, non-competition and conflict of interest provisions
thereunder.
A “change in
control,” for purposes of each of the employment agreements, includes (a) any “person,” as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than
(i) an individual or entity holding securities of the Company as of the date hereof which represent 3% or more of the outstanding
voting power of the all securities on matters to be generally voted upon by the Company's stockholders, (ii) Jane Hager, Edward
Hager, Steve Morris, Frank Gerardi or any of their respective affiliates, any entity of which any of the foregoing are trustees,
or trusts established for their benefit, (iii) the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (iv) Signet Healthcare Partners, its affiliates or any of its affiliated funds, or (v) any corporation
owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock
of the Company) is or becomes the owner, directly or indirectly, of outstanding securities of the Company representing 60% or more
of the combined voting power of the Company's then outstanding securities; (b) the consummation of a merger or consolidation of
the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 40% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or consolidation or (ii) a merger or consolidation effected
to implement a re-capitalization of the Company (or similar transaction) or a reincorporation of the Company into another jurisdiction;
or (c) a sale of all or substantially all of the assets of the Company.
Director Compensation
In 2009, our Board
of Directors unanimously adopted a non-employee director compensation program, which provides as follows:
| · | on January 2nd of each year (or at the time of his or her appointment), each non-employee director
shall be granted options to purchase 15,000 shares of our common stock under our 1999 Director Plan; |
| · | on January 2nd of each year each of the Chairman of the Board, the Audit Committee and the Organization
and Compensation Committee shall be granted options to purchase an additional 20,000, 20,000 and 15,000 shares of our common stock
under our 1999 Director Plan, respectively; and |
| · | an annual cash retainer of $25,000, which is payable on a quarterly basis. |
In addition, at the
time of his or her appointment, each newly elected director shall be granted options to purchase an additional 15,000 shares of
our common stock under our 2009 Plan.
All of such options
are granted at an exercise price equal to the closing price of our common stock on the NYSE MKT on the date of grant and vest fully
on the first anniversary of the date of grant.
The
following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2014 to each of our
non-employee directors. Directors who are employed by us are not compensated for their service on our Board of Directors. Mr. Grenfell-Gardner,
who served as our President and Chief Executive Officer during the year ended December 31, 2014, and continues to serve in
that capacity, does not receive additional compensation for his service as a director and, therefore, is not included in the Director
Compensation table below. All compensation paid to Mr. Grenfell-Gardner is reported in the Summary Compensation Table included
under “Executive Officer and Director Compensation.”
| Name | |
Fees Earned or
Paid in
Cash(1)
($) | | |
Option
Awards(2)(3)
($) | | |
Change in Pension
Value and
Nonqualified Deferred
Compensation
Earnings(4)
($) | | |
Total
($) | |
| | |
| | |
| | |
| | |
| |
| James. C. Gale | |
| 25,000 | (4) | |
| 14,127 | | |
| 25,000 | | |
| 39,127 | |
| | |
| | | |
| | | |
| | | |
| | |
| Narendra N. Borkar | |
| 25,000 | | |
| 28,254 | | |
| — | | |
| 53,254 | |
| | |
| | | |
| | | |
| | | |
| | |
| Bhaskar Chaudhuri | |
| 25,000 | | |
| 32,963 | | |
| — | | |
| 57,963 | |
| | |
| | | |
| | | |
| | | |
| | |
| Steven Koehler | |
| 5,435 | | |
| 88,536 | | |
| — | | |
| 93,971 | |
| | |
| | | |
| | | |
| | | |
| | |
| Damian Finio | |
| 9,103 | | |
| 30,000 | (5) | |
| — | | |
| 9,103 | |
| | |
| | | |
| | | |
| | | |
| | |
| Joyce Erony | |
| 117,302 | (4) | |
| 35,000 | (6) | |
| 117,302 | | |
| 117,302 | |
| | |
| | | |
| | | |
| | | |
| | |
| Michael Hemric | |
| 6,250 | | |
| 25,000 | (7) | |
| — | | |
| 6,250 | |
| (1) | Each non-employee director was paid a fee of $25,000 for the fiscal quarter ended December 31,
2014, other than Messrs. Koehler, Finio, Erony and Hemric, who were paid a fee of $5,435, $9,103, $117,302 and $6,250, respectively.
Such fees were prorated for the time such directors served on our Board of Directors and, in the case of Ms. Erony, included the
payment of deferred fees for past service. |
| (2) | These amounts represent the aggregate grant date fair value of options granted to each director
in 2014 computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining the grant date fair
value can be found in Note 12 to our Financial Statements, included in our Annual Report on Form 10-K for the year ended December
31, 2014, which, for Messrs. Gale, Borkar, Hemric, and Chaudhuri and Ms. Erony, with respect to an option to acquire 35,000 shares
of common stock, was $2.96 per share, for Mr. Koehler was $8.01 per share and for Mr. Finio was $5.50 per share. |
| (3) | As of December 31, 2014, the aggregate amount of shares of common stock that can be acquired by
each of director pursuant to outstanding option awards are as follows: (i) 120,000 for James
C. Gale, (ii) 165,000 for Narendra N. Borkar, (iii) 130,000 for Bhaskar Chaudhuri and (iv) 30,000 for Steven Koehler. All other
options listed for the other directors were forfeited because they each resigned prior to the full vesting of their options. |
| (4) | Each of Ms. Erony, our former Chairperson, and Mr. Gale, our current Chairman, agreed to defer
payment of his or her fees until the Company becomes profitable. Ms. Erony’s fees were paid on June 2, 2014, at the effective
time of her resignation. |
| (5) | Mr. Finio resigned from the Board of Directors effective August 11, 2014 and none of the shares
of common stock underlying such option grant vested prior to his resignation and, as a result, he forfeited such options. |
| (6) | Ms. Erony did not stand for re-election at the 2014 annual meeting of stockholders and none of
the shares of common stock underlying such option grant vested prior to her resignation and, as a result, she forfeited such options. |
| (7) | Mr. Hemric resigned from the Board of Directors effective April 1, 2014. As a result, none of the
shares of common stock underlying such option grant vested prior to his resignation and, as a result, he forfeited such options. |
EQUITY COMPENSATION PLAN INFORMATION
The
following table provides certain aggregate information with respect to all of the Company’s equity compensation plans in
effect as of December 31, 2014.
| | |
(a) | | |
(b) | | |
(c) | |
| Plan category | |
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights | | |
Weighted-average
exercise
price of outstanding
options,
warrants and rights | | |
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))(2) | |
| Equity compensation plans approved by security holders(1) | |
| 2,436,334 | | |
$ | 1.79 | | |
| 2,086,820 | |
| | |
| | | |
| | | |
| | |
| Equity compensation plans not approved by security holders | |
| – | | |
| – | | |
| – | |
| Total(1) | |
| 2,436,334 | | |
| | | |
| 2,086,820 | |
| (1) | These plans consist of the 1999 Stock Incentive Plan, as amended, the 1999 Director Plan and the
2009 Plan. |
| (2) | Includes information with respect to the 1999 Director Plan and the 2009 Plan. As of December 31,
2014, we had 412,984 shares available for issuance pursuant to the 1999 Director Plan and 1,673,836 shares available for issuance
pursuant to the 2009 Plan. |
REPORT OF AUDIT COMMITTEE
The Audit Committee
of the Board of Directors, which consists entirely of directors who meet the independence and experience requirements of the NYSE
MKT, has furnished the following report:
The Audit Committee
assists the Board of Directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal
and regulatory requirements and the quality of internal and external audit processes. This committee’s role and responsibilities
are set forth in our charter adopted by the Board of Directors, which is available on our website at www.igilabs.com. This
committee reviews and reassesses our charter annually and recommends any changes to the Board of Directors for approval. The Audit
Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention,
and oversight of the work of EisnerAmper LLP. In fulfilling its responsibilities for the financial statements for fiscal year December
31, 2014, the Audit Committee took the following actions:
| • | Reviewed and discussed the audited financial statements for the fiscal year ended December 31,
2014 with management and EisnerAmper LLP, our independent registered public accounting firm; |
| • | Discussed with EisnerAmper LLP the matters required to be discussed in accordance with Auditing
Standard No. 16- Communications with Audit Committees; and |
| • | Received written disclosures and the letter from EisnerAmper LLP regarding its independence as
required by applicable requirements of the Public Company Accounting Oversight Board regarding EisnerAmper LLP communications with
the Audit Committee and the Audit Committee further discussed with EisnerAmper LLP their independence. The Audit Committee also
considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial reporting
and audit process that the committee determined appropriate. |
Based on the Audit
Committee’s review of the audited financial statements and discussions with management and EisnerAmper LLP, the Audit Committee
recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2014 for filing with the SEC. As Mr. Celentano, who is currently a member of our Audit Committee,
was not yet a member of the Audit Committee at the time this report was issued, his signature is not included below.
| |
Members of the IGI Laboratories, Inc. Audit Committee |
| |
|
| |
Steven Koehler |
| |
Bhaskar Chaudhuri |
| |
John Celentano |
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the
Exchange Act requires our directors, executive officers and beneficial owners of more than 10% of our common stock to file with
the SEC initial reports of ownership and reports of changes in the ownership of our common stock and other equity securities. Such
persons are required to furnish us copies of all Section 16(a) filings.
Our records reflect
that all reports which were required to be filed pursuant to Section 16(a) of the Exchange Act were filed on a timely basis.
CERTAIN RELATIONSHIPS AND RELATED PERSON
TRANSACTIONS
Other than the compensation
agreements and other arrangements which are described in the “Executive Officer and Director Compensation” section
of this proxy statement, during our last fiscal year, there has not been, and there is not currently proposed, any transaction
or series of similar transactions to which we were or will be a party in which the amount involved exceeded $120,000 and in which
any of our directors, nominees for director, executive officers, holders of more than five percent of any class of our voting securities
or any member of the immediate family of the foregoing persons had or will have a direct or indirect material interest.
Policies and Procedures Regarding Review,
Approval, or Ratification of Related Person Transactions
The Audit Committee
is responsible for reviewing and approving in advance the terms and conditions of all related person transactions. In carrying
out its responsibilities, the Audit Committee reviews and considers information regarding the related person transaction as it
deems appropriate under the circumstances, which may include information such as the related person’s interest in the transaction,
the approximate dollar value involved in the transaction, whether the transaction was undertaken in the ordinary course of business,
whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third
party and the purpose of, and the potential benefits to us of, the transaction. The Audit Committee may approve or ratify the transaction
only if it determines that, under all of the circumstances, the transaction is not inconsistent with our best interests.
ELECTION OF DIRECTORS
(Notice Item 1)
On March 27, 2015,
the Board of Directors nominated Jason Grenfell-Gardner, Narendra N. Borkar, Bhaskar Chaudhuri, Steven Koehler, James C. Gale and
John Celentano for election at the annual meeting. If they are elected, they will serve on our Board of Directors until the 2016
Annual Meeting of Stockholders and until their respective successors have been elected and qualified, or until his or her earlier
resignation or removal.
Unless authority to
vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election
as directors of Jason Grenfell-Gardner, Narendra N. Borkar, Bhaskar Chaudhuri, Steven Koehler, James C. Gale and John Celentano.
In the event that any of the nominees become unable or unwilling to serve, the shares represented by the enclosed proxy will be
voted for the election of such other person as the Board of Directors may recommend in that nominee’s place. We have no reason
to believe that any nominee will be unable or unwilling to serve as a director.
A plurality of the
shares voted for each nominee at the Meeting is required to elect each nominee as a director.
The
Board Of Directors Recommends The Election Of JASON GRENFELL-GARDNER, NARENDRA N. BORKAR, BHASKAR CHAUDHURI, STEVEN KOEHLER,
JAMES C. GALE AND JOHN CELENTANO As Directors, And Proxies Solicited By The Board Will Be Voted In Favor Thereof Unless A
Stockholder Has Indicated Otherwise On The Proxy.
APPROVAL OF AN AMENDMENT TO OUR AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE OUR AUTHORIZED NUMBER OF SHARES OF COMMON STOCK FROM 60,000,000 TO 100,000,000
(Notice Item 2)
Background and Purpose
Our Amended and Restated
Certificate of Incorporation currently authorizes the issuance of 60,000,000 shares of common stock, par value $0.01, and 1,000,000
shares of preferred stock, par value $0.01. As of March 29, 2015, we had 52,827,453 shares of common stock issued and outstanding,
and we had a total of 2,436,834 shares of common stock reserved for issuance upon the exercise of outstanding options and other
equity-based awards. As of March 29, 2015, no shares of our preferred stock were issued or outstanding. No change to our number
of our authorized preferred stock is being made.
In addition, we completed
an offering of $143,750,000 Convertible Senior Notes due 2019 on December 16, 2014, convertible into cash or shares of our common
stock (which includes the exercise in full of an option to purchase an additional $18,750,000 of such notes) on December 22, 2014
(collectively, the “Notes”). We received aggregate net proceeds from the offering of approximately $138.7 million,
after deducting underwriting discounts and commissions and the estimated expenses of the offering. We used the net proceeds for
general corporate purposes, which included capital expenditures and potential future acquisitions and strategic transactions. Under
the terms of the Notes, upon a conversion which can occur on or after September 15, 2019, unless certain conditions occur, we will
pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at
our election. Because of the limited number of our authorized but unissued shares of common stock that were available at that time,
we could only reserve 2,583,069 shares of our common stock for conversion. As a result, in order to effectuate a stock settlement
upon conversion of the Notes, we must receive stockholder approval to amend our Amended and Restated Certificate of Incorporation
to authorize the balance of common stock needed in the event of full settlement of the conversion in common stock of the Company.
In the event the amendment is approved, we will reserve a sufficient number of shares of our authorized but unissued common stock
in order to be able to effectuate a stock conversion.
As described in further
detail in Item No. 3, this amendment will increase the number of our authorized shares of common stock by 40,000,000 shares,
which we need to be able to issue 12,732,168 shares of the
Company’s common stock as permitted under the Notes and to provide an appropriate number of authorized but unissued shares
that will provide us flexibility to undertake important strategic initiatives which the Board may approve from time to time. While
we have no current expectation that we would issue that number of shares upon conversion of the Notes, obtaining stockholder approval
of this proposal, along with the approval described in Item No. 3, will give us the flexibility to satisfy our conversion obligations
under the Notes in shares of common stock. Prior to obtaining such approval to increase the authorized number of shares of common
stock, we are required to satisfy those obligations solely in cash. Additionally, we expect that this approval, together with the
approval described in Item No. 3 would have the accounting consequences described in Item No. 3.
In addition to providing
us with the availability of converting the Notes into shares of our common stock, which would free up our cash, increasing the
number of authorized shares of common stock would give us overall greater flexibility in growing our company. An important component
of our business strategy is to continue to make significant investments to expand our business in the near future. We are always
investigating additional sources of financing, potential acquisitions and other opportunities for growth and increasing shareholder
value. The failure of stockholders to approve the amendment may require us to forego or otherwise limit our current expansion strategies
or potential attractive acquisition opportunities that may arise. The availability of such additional shares would provide us with
the flexibility to issue common stock upon conversion of the Notes, for use in possible future financings, stock dividends or distributions,
acquisitions, other strategic transactions and general corporate purposes that may be identified in the future by the Board of
Directors, without the possible expense and delay of seeking stockholder approval. We do not currently have any specific plans,
commitments, arrangements or understandings relating to the issuance of any additional shares of our authorized Common Stock that
will become available following the amendment to our Amended and Restated Certificate of Incorporation. The additional shares of
authorized common stock, when issued, would have the same rights and privileges as the shares of common stock currently issued
and outstanding.
As a result of the
foregoing, on March 27, 2014, our Board of Directors approved an amendment to our Amended and Restated Certificate of Incorporation,
subject to stockholder approval, to increase the number of shares of our common stock authorized for issuance from 60,000,000 to
100,000,000.
The affirmative vote
of at least a majority of the outstanding shares of our common stock will be required for approval of the amendment. If our stockholders
approve the amendment, we will file the amendment with the Secretary of State of the State of Delaware as soon as reasonably practicable
after the annual meeting.
The Board of Directors
believes that it is in our best interests to increase the number of authorized shares of common stock in order to maintain the
flexibility of delivering shares of Company common stock upon conversion of the Notes and have additional authorized but unissued
shares available for issuance to meet business needs as they arise.
Consequences of Approval of Additional
Authorized Common Stock
If approved, the
additional authorized shares of common stock will allow the Company to settle its obligations under the Notes, as outlined in Item
No. 3, with common stock instead of cash and provide the Company with additional flexibility to continue to make significant investments
in our business to expand this business in the near future. If approved, the additional authorized shares of common stock will
be available for issuance at such times and for such purposes as the Board of Directors may deem advisable without further action
by the Company’s stockholders, except as may be required by applicable laws or regulations, including the rules of the NYSE
MKT exchange. The additional 40,000,000 of authorized shares of common stock will be available for issuance by the Company in connection
with the conversion of the outstanding Notes, as described in Item No. 3. We do not currently have any specific plans, commitments,
arrangements or understandings relating to the issuance of any additional shares of our authorized common stock that will become
available following the amendment to our Amended and Restated Certificate of Incorporation. The Board does not intend to issue
any stock except on terms or for reasons which the Board deems to be in the best interests of the Company and its stockholders.
Because the holders of the Company’s common stock do not have preemptive rights, the issuance of additional shares of common
stock (other than on a pro-rata basis to all current stockholders, such as pursuant to a stock dividend) would have the effect
of reducing the current stockholders’ proportionate interests.
Under current NYSE
MKT rules, stockholder approval is generally required to issue common stock, or securities convertible into or exercisable for
common stock, in one or a series of related transactions, if such common stock represents 20% or more of the voting power of the
outstanding common stock of the Company. Common stock issued for cash in a public offering, however, is excluded from this stockholder
approval requirement as are the shares of common stock issued for cash in a private offering at a price at least equal to both
book value and market value of the common stock. NYSE MKT rules also require stockholder approval for an issuance of shares that
would result in a change of control of the Company as well as for stock issuances in connection with certain equity benefit plans
or related party transactions.
The Board of Directors
has the authority, without action by the stockholders, to designate and issue preferred stock in one or more series and to designate
the dividend rate, voting rights, conversion rights, conversion rates, rights and terms of redemption and other rights, preferences
and restrictions of each series, any or all of which may be greater than the rights of the common stock. It is not possible to
state the actual effect of the issuance of any preferred stock upon the rights of holders of the common stock until the Board of
Directors determines the specific rights of the holders of such preferred stock. The effects might include, among others, restricting
dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock
and delaying or preventing a change in control of the Company without further action by the stockholders. The Company at this time
has no plans or commitments to issue any shares of preferred stock. Subject to the requirements of the NYSE MKT, preferred stock
may be designated and issued from time to time without action by the Company’s stockholders to such persons and for such
consideration and on such terms as the Board of Directors determines.
Anti-takeover Effects
The proposal to increase
the authorized common stock may be construed as having an anti-takeover effect, because authorized and unissued common stock could
be issued for the purpose of discouraging an attempt by another person to take control of the Company. Neither the management of
the Company nor the Board of Directors, however, view this proposal as an antitakeover mechanism. In addition, this proposal is
not part of any plan by the Company to recommend a series of anti-takeover amendments to the Amended and Restated Certificate of
Incorporation that could be construed to affect the ability of third parties to take over or change control of the Company.
Certificate of Amendment
If the stockholders
approve the proposal, the Company will cause a certificate of amendment to the Company’s Amended and Restated Certificate
of Incorporation to be filed with the Delaware Secretary of State. Upon the effectiveness of the proposed amendment, paragraph
(1) of Article Fourth of our Amended and Restated Certificate of Incorporation would be revised to read substantially as follows:
| |
(1) |
The total number of shares of all classes of capital stock that the Corporation is authorized to issue is 101,000,000 shares, of which (i) 100,000,000 shares shall be common stock, par value $0.01 per share (“Common Stock”) and (ii) 1,000,000 shall be preferred stock, par value $0.01 per share (“Preferred Stock”). |
Upon effectiveness
of the certificate of amendment, the increase will be effective without any further action on the part of our stockholders.
The
Board of Directors recommends a vote to approve the amendment to our Amended and Restated Certificate of Incorporation to increase
the authorized capital Unless A Stockholder Indicates Otherwise On The Proxy.
APPROVAL OF THE ISSUANCE OF OUR COMMON
STOCK UPON CONVERSION OF OUR
3.75% CONVERTIBLE SENIOR NOTES DUE 2019
(Notice Item 3)
Background
As discussed in Item
No. 2, on December 16, 2014, we issued $125,000,000 aggregate principal amount of our Notes and, on December 22, 2014, the initial
purchasers of our Notes exercised their option to purchase an additional $18,750,000 aggregate principal amount of the Notes. The
Notes are convertible into cash or shares of our common stock. Upon receipt of the approvals described in this Item No. 3 and in
Item No. 2, we will have the discretion to elect to settle our conversion obligations in cash, shares of our common stock or a
combination of cash and shares of our common stock, based on the conversion rate for the Notes, which is initially 88.5716 shares
of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of $11.29 per share of our
common stock). The maximum number of shares that the Notes are convertible into, taking into consideration adjustments to the conversion
rate, is 16,169,848 shares. Unless and until such approvals are obtained, however, we will be required to settle our conversion
obligations in cash, as described below.
Because our common
stock is listed on the NYSE MKT, we are subject to NYSE MKT rules and regulations. Section 312.03(c) of the NYSE Listed Company
Manual requires shareholder approval in certain circumstances prior to the issuance of common stock or securities convertible into
or exercisable for common stock, in any transaction or series of related transactions if (1) the common stock has, or will have
upon issuance, voting power equal to 20% or more of the voting power outstanding before the issuance of such stock or of securities
convertible into or exercisable for common stock or (2) the number of shares of common stock to be issued is, or will upon issuance,
equal 20% or more of the number of shares of common stock outstanding before the issuance of the common stock or of securities
convertible into or exercisable for common stock.
Because the maximum
number of shares of our common stock issuable upon the conversion of the Notes could otherwise exceed the maximum amount issuable
under the continued listing standards of the NYSE MKT without obtaining shareholder approval, and because we do not have enough
shares of our common stock authorized and available for issuance to satisfy conversions of the Notes fully into shares of our common
stock, we agreed in the Indentures (as defined below) that, unless we had obtained shareholder approval to (i) amend our Amended
and Restated Certificate of Incorporation to sufficiently increase the number of authorized but unissued shares of our common stock
to permit the conversion and settlement of all Notes into shares of our common stock (assuming, for such purpose that all such
Notes will be settled through stock settlement at the maximum conversion rate of 112.4859 shares of common stock per $1,000 principal
amount of Notes (or up to a total of 16,169,848 shares), subject to adjustment in accordance with the terms of the Indentures (the
“Maximum Number of Convertible Shares”)), and (ii) to authorize the issuance of the Maximum Number of Convertible
Shares in accordance with the continued listing standards of the NYSE MKT, we would be required to settle our conversion obligations
entirely in cash. We agreed in the Indenture to, in accordance with Delaware law and the listing standards of the NYSE MKT, as
applicable, for each of our two successive regularly scheduled annual shareholder meetings until shareholder approval is obtained,
put forth a proposal on the official shareholder voting ballot seeking approval of our stockholders of each of the foregoing matters,
the Board of Directors recommending shareholders vote in favor of such proposals and supporting such proposals in the event of
any potential opposition.
Failure to obtain
such stockholder approval, along with the approval described in Item 2, with respect to the Notes would prevent the Company from
using shares of common stock instead of cash to settle amounts due upon conversion, thereby limiting the Company’s flexibility
in managing its cash position. In addition, restrictions in our then-existing credit facilities or other indebtedness, if any,
may not allow us make cash payments upon conversions of the Notes. Our failure to make any such cash payments could result in a
default under our then-outstanding indebtedness.
We are, therefore,
asking our shareholders to consider and vote upon this proposal to approve the issuance of common stock issuable upon conversion
of the Notes in excess of the Maximum Amount. The sum of the Maximum Number of Convertible Shares is 16,169,848 shares of common
stock. However, as noted above, our ability to issue shares of common stock upon conversion of the Notes is also limited by the
number of authorized but unissued shares of common stock under our Amended and Restated Certificate of Incorporation at the time
of the conversion or exercise. As of December 31, 2014, the number of authorized but unissued shares of common stock, excluding
common stock reserved for issuance upon the exercise of outstanding stock options and other equity based awards, was 4,735,713.
Of this amount, 2,583,069 shares have been reserved for the conversion of the Notes. Pursuant to Item 2, we are seeking to amend
our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock which, if approved
by our shareholders, could provide additional shares for the conversion of Notes.
Accounting Treatment
Under Accounting Standards
Codification 470-20, “Debt with Conversion and Other Options,” (“ASC 470-20”), an entity
must separately account for the liability and equity components of the convertible debt instruments (such as the Notes) that may
be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. Under
ASC 470-20, the equity component is the fair value of variable conversion features. The effect of ASC 470-20 on the accounting
for the Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’
equity on our consolidated balance sheet and the value of the equity component would be treated as original issue discount for
purposes of accounting for the debt component of the Notes. As a result, we will be required to record a greater amount of non-cash
interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Notes to
their face amount over the term of the Notes. We will report lower net income in our financial results because ASC 470-20 will
require interest to include both the current period’s amortization of the debt discount and the instrument’s coupon
interest, which could adversely affect our reported or future financial results, the market price of our common stock and the trading
price of the Notes.
Since the Company does
not have sufficient authorized shares available to share-settle the conversion option in full, the embedded conversion option does
not qualify for equity classification and instead is separately valued and accounted for as a derivative liability. On December
16, 2014, the initial value allocated to the derivative liability was $43.7 million of the $143.75 million principal amount of
the Notes, which represents a discount to the debt to be amortized through interest expense using the effective interest method
through the maturity of the Notes. Accordingly, the effective interest rate used to amortize the debt discount on the Notes is
12.94%. During each reporting period, the derivative liability is marked to fair value through the statement of operations. As
of December 31, 2014, the derivative liability, which is classified in long-term liability, had a fair value of $41.4 million.
This resulted in a change in the fair value of the derivative liability of $2.3 million for the year ended December 31, 2014. If
the Company receives shareholder approval for the increase in the number of shares of common stock authorized and available for
issuance upon conversion of the Notes so the conversion option can be share-settled in full, the conversion option may qualify
for equity classification and the bifurcated derivative liability would no longer need to be accounted for as a separate derivative
on a prospective basis from the date of reassessment. Any remaining debt discount that arose at the date of debt issuance from
the original bifurcation will continue to be amortized through interest expense.
The Notes
The Notes are governed
by an indenture (the “Indenture”) between us and Wilmington Trust, National Association, as trustee (the “Trustee”).
Under the terms of the Indenture, the Notes bear interest at a rate of 3.75% per year, payable semiannually in arrears on June
15 and December 15 of each year, beginning on June 15, 2015. The Notes will mature on December 15, 2019, unless earlier purchased,
redeemed or converted. Holders may convert their Notes at their option at any time prior to the close of business on the business
day immediately preceding September 15, 2019, only under the following circumstances: (1) during any calendar quarter commencing
after the calendar quarter ending on March 31, 2015 (and only during such calendar quarter), if the last reported sale price of
our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending
on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion
price on each applicable trading day; (2) during the ten consecutive business day period after any five consecutive trading day
period (the “Measurement Period”) in which the trading price per $1,000 principal amount of Notes for each trading
day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion
rate on each such trading day; (3) upon the occurrence of specified corporate events; or (4) if we call the Notes for redemption.
On or after September 15, 2019, until the close of business on the business day immediately preceding the maturity date, holders
may convert their Notes at any time, regardless of the foregoing circumstances.
The initial conversion
rate for the Notes is 88.5716 shares of common stock per $1,000 in principal amount of Notes, equivalent to a conversion price
of $11.29 per share of our common stock. The conversion rate is subject to adjustment upon the occurrence of specified events but
will not be adjusted for accrued and unpaid interest. The maximum number of shares that the Notes are convertible into, taking
into consideration adjustments to the conversion rate, is 16,169,848 shares. If we undergo a “fundamental change” (as
defined in the Indenture), holders may require us to repurchase all or part of their Notes for cash at a price equal to 100% of
the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change
repurchase date. In some circumstances involving a “make-whole adjustment event” (as defined in the Indenture), a converting
holder will also be entitled to an increase in the conversion rate as set forth in the Indenture.
The Terms of the
Notes are complex. The foregoing summary of terms is general in nature and is qualified by reference to the full text of the Indenture
and the Purchase Agreement attached as exhibits to our Current Report on Form 8-K filed with the SEC on December 17, 2014, as updated
in any subsequent filings.
The affirmative vote
of a majority of the votes cast in person or by proxy on the proposal at the annual meeting is required for approval of this proposal.
Broker non-votes will not be considered votes cast on the proposal and will not have a positive or negative effect on the outcome
of the voting. Under applicable NYSE MKT rules, abstentions will be deemed votes cast and will have the same effect as votes against
the proposal.
The
Board of Directors recommends a vote to approve the issuance of our Common Stock upon conversion of our 3.75% Convertible Senior
Notes due 2019 in excess of the NYSE MKT limits for share issuances without shareholder approval Unless A Stockholder Indicates
Otherwise On The Proxy.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
(Notice Item 4)
The
Audit Committee has appointed EisnerAmper LLP as our independent registered public accounting firm, to audit our financial statements
for the fiscal year ending December 31, 2015. The Board of Directors proposes that the stockholders ratify this appointment.
EisnerAmper LLP audited our financial statements for the fiscal year ended December 31, 2014. We expect that representatives of
EisnerAmper LLP will be present at the annual meeting, will be able to make a statement if they so desire, and will be available
to respond to appropriate questions.
In
deciding to appoint EisnerAmper LLP, the Audit Committee reviewed auditor independence issues and existing commercial relationships
with EisnerAmper LLP and concluded that EisnerAmper LLP has no commercial relationship with the Company that would impair its
independence for the fiscal year ending December 31, 2015.
The
following table presents fees for professional audit services rendered by EisnerAmper LLP for the audit of the Company’s
annual financial statements for the years ended December 31, 2014, and December 31, 2013, and fees billed for other services
rendered by EisnerAmper LLP during those periods.
| | |
2014 | | |
2013 | |
| Audit fees:(1) | |
| 273,000 | | |
$ | 224,000 | |
| Audit related fees: | |
| — | | |
| — | |
| Tax fees:(2) | |
| 24,000 | | |
| — | |
| All other fees: | |
| | | |
| | |
| Total | |
| 297,000 | | |
$ | 224,000 | |
| (1) | Audit fees consisted of audit work performed in the preparation of financial statements, as well
as work generally only the independent registered public accounting firm can reasonably be expected to provide, such as statutory
audits. |
| (2) | Tax fees consist principally of assistance with matters related to Section 328 Analysis as well
as tax compliance and reporting. |
The percentage of services
set forth above in the categories that were approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(C) (relating to the
approval of a de minimis amount of non-audit services after the fact but before completion of the audit), was 8%.
Policy on Audit Committee Pre-Approval
of Audit and Permissible Non-audit Services of Independent Public Accountant
Consistent with SEC
policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing
the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established
a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.
Prior to engagement
of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services
expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.
1. Audit
services include audit work performed in the preparation of financial statements, as well as work that generally only an
independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits,
and attest services and consultation regarding financial accounting and/or reporting standards.
2. Audit-Related
services are for assurance and related services that are traditionally performed by an independent registered public accounting
firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required
to meet certain regulatory requirements.
3. Tax
services include all services performed by an independent registered public accounting firm’s tax personnel except those
services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning,
and tax advice.
4. Other
Fees are those associated with services not captured in the other categories. The Company generally does not request such
services from our independent registered public accounting firm.
Prior to engagement,
the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires
our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout
the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent
registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the
Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm.
The Audit Committee
may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report,
for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
In the event the stockholders
do not ratify the appointment of EisnerAmper LLP as our independent registered public accounting firm, the Audit Committee will
reconsider its appointment.
The affirmative vote
of a majority of the shares cast affirmatively or negatively at the annual meeting is required to ratify the appointment of the
independent registered public accounting firm.
The
Board Of Directors Recommends A Vote To Ratify The Appointment Of EISNERAMPER LLP As Our Independent Registered Public Accounting
Firm, And Proxies Solicited By The Board Will Be Voted In Favor Of Such Ratification Unless A Stockholder Indicates Otherwise On
The Proxy.
ADVISORY VOTE ON APPROVAL OF EXECUTIVE
COMPENSATION
AS DISCLOSED IN THIS PROXY STATEMENT
(Notice Item 5)
We are seeking your
advisory vote as required by Section 14A of the Securities Exchange Act of 1934, as amended, on the approval of the compensation
of our named executive officers as described in the Compensation Discussion and Analysis, the compensation tables and related material
contained in this proxy statement. Because your vote is advisory, it will not be binding on our Organization and Compensation Committee
or our Board of Directors. However, the Organization and Compensation Committee and the Board of Directors will review the voting
results and take them into consideration when making future decisions regarding executive compensation. We
have determined to hold an advisory vote to approve the compensation of our named executive officers annually, and the next such
advisory vote will occur at the 2016 Annual Meeting of Stockholders.
Our compensation philosophy
is designed to align each executive’s compensation with IGI’s short-term and long-term performance and to provide the
compensation and incentives needed to attract, motivate and retain key executives who are crucial to our long-term success. Consistent
with this philosophy, a significant portion of the total compensation opportunity for each of our executives is directly related
to performance factors that measure our progress against the goals of our strategic and operating plans, as well as our performance
against that of our peer companies.
Stockholders are urged
to read the Compensation Discussion and Analysis section of this proxy statement, which discusses how our compensation policies
and procedures implement our compensation philosophy. The Organization and Compensation Committee and the Board of Directors believe
that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals.
In accordance with
the rules of the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder
vote at the 2015 annual meeting:
“RESOLVED,
that the compensation paid to the named executive officers of IGI Laboratories, Inc., as disclosed pursuant to the compensation
disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation
tables and the related material disclosed in this proxy statement, is hereby APPROVED.”
The affirmative vote
of a majority of the votes present or represented by proxy and entitled to vote at the annual meeting is required to approve,
on an advisory basis, this resolution.
The
Board Of Directors Recommends A Vote To Approve The Compensation Of Our Named Executive Officers, And Proxies Solicited By The
Board Will Be Voted In Favor Of Such Approval Unless A Stockholder Indicates Otherwise On The Proxy.
CODE OF CONDUCT AND ETHICS
We have adopted a code
of conduct and ethics, the 2012 Standards of Business Conduct, that applies to all of our employees, including our chief executive
officer and chief financial and accounting officers. The text of the 2012 Standards of Business Conduct is posted on our website
at www.igilabscom. Disclosure regarding any amendments to, or waivers from, provisions of the code of conduct and ethics
that apply to our directors, principal executive and financial officers will be included in a Current Report on Form 8-K within
four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of
such amendments or waivers is then permitted by the rules NYSE MKT.
OTHER MATTERS
The Board of Directors
knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the
annual meeting, proxies will be voted in accordance with the judgment of the persons named therein.
STOCKHOLDER PROPOSALS AND NOMINATIONS
FOR DIRECTOR
To be considered
for inclusion in the proxy statement relating to our 2015 Annual Meeting of Stockholders, we must receive stockholder
proposals (other than for director nominations) no later
than .
To be considered for presentation at the 2016 Annual Meeting, although not included in the proxy statement, proposals
(including director nominations that are not requested to be included in our proxy statement) must be received no earlier
than
and
no later than
, provided,
however, in the event that the date of the 2016 Annual Meeting is more than 60 days before or more than 60 days
after ,
proposals must be received no earlier than the 90th day prior to the 2016 Annual Meeting Date and no longer than
60 days prior to the 2016 Annual Meeting Date or the 15th day following the day on which public announcement of
the date of the 2016 Annual Meeting is first made by the Company. Proposals that are not received in a timely manner will not
be voted on at the 2016 Annual Meeting. If a proposal is received on time, the proxies that management solicits for the
meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules
of the SEC. All stockholder proposals should be marked for the attention of our Corporate Secretary at our corporate offices,
105 Lincoln Avenue, PO Box 687, Buena, New Jersey 08310.
Buena, New Jersey
, 2015
APPENDIX A – TEXT OF AMENDMENT TO
CERTIFICATE OF INCORPORATION
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
IGI LABORATORIES, INC.
It is hereby certified
that:
| FIRST: | The name of the corporation is IGI Laboratories, Inc. (the
“Corporation”). |
| SECOND: | The Amended and Restated Certificate of Incorporation of
the Corporation, as amended to date, is hereby further amended by striking out the first paragraph of Article Fourth in its entirety
and by substituting in lieu of the following: |
“FOURTH. The total number
of shares of all classes of stock which the Corporation shall have authority to issue is 101,000,000 shares, consisting of 100,000,000
shares of Common Stock, $.001 par value per share (the “Common Stock”) and 1,000,000 shares of Preferred Stock,
$0.01 par value per share (the “Preferred Stock”).”
| THIRD: | The amendment of the
Certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware. |
EXECUTED,
effective as of this ___ day of May, 2015.
| |
IGI LABORATORIES, INC. |
|
| |
|
|
| |
By: |
|
|
| |
|
Jason Grenfell-Gardner |
|
| |
|
President and Chief Executive Officer |
|
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