MICRON SOLUTIONS
, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To be held
May 25, 2017
INFORMATION
ABOUT THE ANNUAL MEETING AND VOTING
WHY
DID YOU FURNISH ME WITH THIS PROXY STATEMENT?
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of
Micron Solutions
, Inc., a Delaware corporation (the “
Company
”), for use at the Annual Meeting of the Company’s stockholders to be held at the
DoubleTree by Hilton
, 99 Erdman Way, Leominster, Massachusetts
on
Thursday
,
May 25, 2017
at
10:00 a.m.
, local time, and at any adjournments or postponements of the Annual Meeting. This proxy statement summarizes the information you need to make an informed vote on the proposals to be considered at the Annual Meeting. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply
access your
proxy card
and vote on the Internet
.
WHY
ARE YOU MAKING THESE MATERIALS AVAILABLE OVER THE INTERNET RATHER THAN MAILING THEM?
Under the "Notice and Access Rule" that the Securities and Exchange Commission (the "
SEC
") has adopted, we are again this year furnishing proxy materials to our stockholders on the Internet rather than mailing printed copies of those materials to each stockholder. This will help us conserve natural resources and it will save postage, printing and processing costs. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of our proxy materials unless you specifically request one. Instead, the Notice of Internet Availability will instruct you on how to (1) access and review the Company's proxy materials on the Internet and (2) access your proxy card to vote on the Internet. We anticipate that we will mail the Notice of Internet Availability to our stockholders on or
about April 1
3
, 201
7
.
The Proxy Materials are available at www.CSTPROXY.COM/
MICRONSOLUTIONS
INC
/
201
7
. Enter the 12-digit control number located on the Notice of Internet Availability
,
proxy card
or voter instruction form
.
HOW CAN
I HAVE PRINTED COPIES OF THE PROXY MATERIALS MAILED TO ME?
Instructions for requesting a paper copy of the proxy materials are set forth on the Notice of Internet Availability of Proxy Materials.
WHAT
PROPOSALS WILL BE ADDRESSED AT THE ANNUAL MEETING?
The following proposals will be addressed at the Annual Meeting:
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1.
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The
re-election
of
two
Class
I
directors to serve for three years, as identified below;
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2.
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To approve the non-binding advisory vote on executive compensation ("say-on-pay")
;
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3.
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The ratification of the appointment of Wolf & Company, P.C. as the Company's independent registered public accounting firm;
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4.
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The authorization to adjourn the Annual Meeting to a later date or dates if there are insufficient votes to approve the proposals; and
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5.
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To transact
such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.
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Our Board of Directors has taken affirmative action with respect to each of the foregoing proposals and recommends that the stockholders vote in favor of each proposal.
WHO
MAY VOTE ON THESE PROPOSALS?
Stockholders who owned shares of the Company’s voting stock at the close of business
on
April
3
, 201
7
(the “
Record Date
”) are entitled to vote at the Annual Meeting on all matters properly brought before the Annual Meeting.
On the Record Date, the Company had 2,8
20
,
99
9 shares of issued and outstanding common stock
, par value $0.01 per share (“
Common Stock
”).
HOW
MANY VOTES DO I HAVE?
Each share of Common Stock is entitled to one vote on each matter presented at the Annual Meeting.
WHAT IS THE DIF
FERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?
Stockholder of Record
If, on the Record Date, your shares were registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, you are a “stockholder of record” who may vote at the Annual Meeting. As the stockholder of record you have the right to direct the voting of your shares via the Internet, returning a proxy card to us or voting in person at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please vote via the Internet or complete, date and sign a proxy card to ensure that your vote is counted.
Beneficial
Owner
If, on the Record Date, your shares were held in an account at a brokerage firm or at a bank or other nominee holder, you are considered the beneficial owner of shares held “in street name.” Your broker or nominee is considered the stockholder of record for purposes of voting at the Annual Meeting.
As the beneficial owner, you have the right to instruct your broker, bank, or nominee how to vote your shares by using any voting instruction card supplied by them or by following their instructions for voting by telephone, online, or in person.
However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you receive a valid proxy from your brokerage firm, bank or other nominee holder. To obtain a valid proxy, you must make a special request of your brokerage firm, bank or other nominee holder.
HOW
DOES THE BOARD RECOMMEND THAT I VOTE?
The Board recommends that stockholders vote "FOR"
both
of the Class I nominees for director, "FOR" the non-binding advisory proposal regarding the Company's executive compensation, "FOR" the ratification of the appointment of Wolf & Company, P.C. as
the Company’s
independent registered public accounting firm, and "FOR" the authorization to adjourn the Annual Meeting to a later date or dates if there are insufficient votes present in person or represented by proxy at the Annual Meeting to approve the proposals.
WHAT
IS THE QUORUM REQUIREMENT?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares are represented by stockholders present at the Annual Meeting or by proxy. On the Record Date, there were
2,8
20
,
99
9
shares outstanding and entitled to vote. Thus, 1,4
10
,
500
shares must be represented by stockholders present at the meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. A broker non-vote occurs when a broker holding shares for a beneficial owner votes on one proposal but does not vote on another proposal because, in respect of such other proposal, the broker does not have discretionary voting power and has not received instructions from the beneficial own
er. If there is no quorum,
a majority of the votes present at the meeting may adjourn the meeting to another date.
WHY
WOULD THE ANNUAL MEETING BE ADJOURNED?
The Annual Meeting may be adjourned if a quorum is not present or to allow time for further solicitation of proxies in the event there are insufficient votes present in person or represented by proxy to approve the proposals.
For purposes of determining whether the stockholders have approved matters other than the election of directors and the advisory vote on executive compensation, abstentions are treated as shares present or represented and voting, so abstaining has the same effect as a negative vote. Shares held by brokers who do not have discretionary authority to vote on a particular matter and who have not received voting instructions from their customers are not counted or deemed to be present or represented for the purpose of determining whether stockholders have approved that matter, but they are counted as present for the purpose of determining the existence of a quorum at the Annual Meeting.
HOW DO I VO
TE BY PROXY?
If
you hold shares directly as the stockholder of record, you may direct how your shares are voted without attending the Annual Meeting. S
uch s
tockholders may deliver their proxies either:
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1.
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Electronically over the Internet as outlined in the Notice of Internet Availability; or
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2.
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By requesting, completing and submitting a properly signed paper proxy card as outlined in the Notice of Internet Availability
; or
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3.
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If you are a beneficial owner of shares held in street name, you may vote by proxy via the Internet by following the instructions provided by your brokerage firm, bank, broker-dealer or other similar organization that holds your shares.
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Returning the proxy card will not affect your right to attend the Annual Meeting and vote in person as described elsewhere herein. If you properly fill in your proxy card and send it to us in time to vote, your proxy (one of the individuals named on your proxy card) will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your proxy will vote your shares as recommended by the Board of Directors as follows:
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1.
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FOR
each of
the
two
Class I directors identified below
;
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2.
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FOR
the non-binding advisory proposal regarding the Company's executive compensation ("say-on-pay");
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3.
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FOR
the ratification of the appointment of Wolf & Company, P.C. as the Company's independent registered public accounting firm; and
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4.
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FOR
the authorization to adjourn the Annual Meeting to a later date or dates if there are insufficient votes present in person or represented by proxy at the Annual Meeting to approve the proposals.
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If any other matters are presented, your proxy will vote in accordance with his or her best judgment. At the time this proxy statement was finalized, we knew of no matters that needed to be acted on at the Annual Meeting other than those discussed in this proxy statement.
HOW
DO I VOTE IN PERSON?
If you are a stockholder of record (i.e., you own the shares directly in your name) and plan to attend the Annual Meeting, you may attend and vote in person on
May 25, 2017
, or at a later date if the meeting is adjourned or postponed to a later date, as long as you present valid proof of identification at the meeting. We will give you a ballot when you arrive. However, if your shares are held in the name of your broker, bank or other nominee, in addition to identification, you must bring proof of beneficial ownership in order to attend the meeting, which generally can be obtained from the record holder. In that event, you must also obtain a proxy or a power of attorney executed by the broker, bank or other nominee that owns the shares of record for your benefit and authorizing you to vote the shares at the meeting.
MAY
I REVOKE MY PROXY?
If you give a proxy, you may revoke it at any time before it is exercised. You may revoke your proxy in three ways:
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1.
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You may send in another proxy with a later date;
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2.
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You may notify the Company in writing (by you or your attorney authorized in writing, or if the stockholder is a corporation, under its corporate seal, by an officer or attorney of the corporation) at our principal executive offices before the Annual Meeting, that you are revoking your proxy; or
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3.
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You may vote in person at the Annual Meeting.
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WHAT
VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
Proposal 1:
Election of Directors.
The election of directors shall be determined by a plurality of the votes cast by the stockholders. Therefore, a
nominee who receives a plurality means he has received the highest number votes “for” his election than any other nominee for the same director's seat will be elected.
Proposal 2:
Non-binding Advisory Vote on Executive Compensation.
The approval of Proposal 2, the advisory vote on executive compensation, requires the affirmative vote of the holders of a majority of the shares of Common Stock present or represented by proxy at the Annual Meeting and entitled to vote on the matter.
Proposal 3:
Ratification of independent registered public accounting firm.
The approval of Proposal 3, the ratification of the appointment of our independent registered public accounting firm, requires the affirmative vote of the
holders of a majority of the shares of Common Stock present or represented by proxy
at the Annual Meeting and entitled to vote on the matter.
Proposal
4
:
Adjournment of the Annual Meeting.
The approval of Proposal 4, the adjournment of the Annual Meeting, requires the affirmative vote of the
holders of a majority of the shares of Common Stock present or represented by proxy
at the Annual Meeting and entitled to vote on the matter.
HOW ARE VOTE
S COUNTED?
Proposal 1
: You may either vote “FOR” or “WITHHOLD” authority to vote for each of the nominees for the Board of Directors. Shares present at the meeting or represented by proxy where the shareholder properly withholds authority to vote for such nominee and broker non-votes will not be counted toward such nominee's achievement of a plurality.
Proposal 2
: You may vote “FOR,” “AGAINST” or “ABSTAIN” on the non-binding, advisory vote on the compensation of our named executive officers. If you abstain from voting on the non-binding, advisory vote on the compensation of our named executive officers, your vote will have the same effect as a vote against the proposal. Broker non-votes will have no effect on the vote for this proposal.
Proposal 3
: You may vote “FOR,” “AGAINST” or “ABSTAIN” on the ratification of Wolf & Company, P.C. If you abstain from voting on the proposal to ratify Wolf & Company, P.C., your vote will have the same effect as a vote against the proposal. Brokers, bankers and other nominees have discretionary voting power on this routine matter and, accordingly, broker non-votes will have no effect on the vote for this proposal.
Proposal 4
: You may vote “FOR,” “AGAINST” or “AB
S
TAIN” on the proposal to authorize adjournment of the Annual Meeting. If you abstain from voting on the proposal to authorize adjournment of the Annual Meeting, your vote will have the effect of a vote against the proposal. Broker non-votes will have no effect on the vote for this proposal.
ARE
THERE ANY DISSENTERS' RIGHTS OF APPRAISAL?
The Board of Directors is not proposing any action for which the laws of the State of Delaware, the Company’s Certificate of Incorporation or the By-laws provide a right of a stockholder to dissent and obtain appraisal of or payment for such stockholder's shares.
WHO
BEARS THE COST OF SOLICITING PROXIES?
The Company will bear the cost of soliciting proxies in the accompanying form and will reimburse brokerage firms and others for expenses involved in forwarding proxy materials to beneficial owners or soliciting their execution.
WHERE
ARE THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES?
The Company’s principal executive offices are located at 25 Sawyer Passway, Fitchburg, Massachusetts and the Company's telephone number is (978) 345-5000.
HOW
CAN I OBTAIN ADDITIONAL INFORMATION ABOUT THE COMPANY?
The Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 201
6, under the Company’s former name, Arrhythmia Research Technology, Inc.,
has been made available on the Internet to all stockholders entitled to vote at the Annual Meeting and who received the Notice of Internet Availability.
It is also posted on the Company’s corporate website at
www.micronsolutionsinc.com
.
Additional copies will be furnished without charge to stockholders upon written request. Exhibits to the Form 10-K will be provided upon written request and payment of an appropriate fee. All written requests should be directed to
Micron Solutions
, Inc., Attn: Secretary of the Company, 25 Sawyer Passway, Fitchburg, Massachusetts 01420.
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”) which requires that the Company file reports, proxy statements and other information with the SEC. The SEC maintains a website on the Internet that contains reports, proxy and information statements and other information regarding registrants, including the Company, that file electronically with the SEC. The SEC's website address is http://www.sec.gov. In addition, the Company's Exchange Act filings may be inspected and copied at the public reference facilities of the SEC located at
Room 1580, 100 F Street, N.E., Washington, DC 20549, on official business days during the hours of 10:00 am to 3:00 pm. You may obtain information about the operation of the public reference room by calling the SEC at 1-202-551-8090.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Beneficial Owners of at Least Five Percent of our Common Stock
The following table shows, to the best of our knowledge, all persons we know to be beneficial owners of five percent or more of the voting securities of the Company as of the Record Date.
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Name and Address of Beneficial Owner
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Common Stock
Beneficially Owned
(1)
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Percent of Class
(1)
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REF Securities & Co.
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349,105
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(2)
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12.3%
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Rodd Friedman
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12 South Main Street, Suite 203
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Norwalk, CT 06854
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Chambers Medical Foundation
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296,268
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(3)
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10.5%
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Edwin K. Hunter, Trustee
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1807 Lake Street
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Lake Charles, LA 70601
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(1)
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Unless otherwise noted in these footnotes, the Company believes that all shares referenced in this table are owned of record by each person named as beneficial owner and that each person has sole voting and dispositive power with respect to the shares of Common Stock owned by each of them. In accordance with Rule 13d-3 under the Exchange Act, each person’s percentage ownership is determined by assuming that the options and warrants to purchase common stock that are held by that person, and which are exercisable within 60 days, have been exercised.
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(2)
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Based on information in a Schedule 13
D
filed on
November
4
, 201
6
, REF Securities & Co. (“REF Securities”) has sole voting and dispositive power
over
319,005
shares of common stock including 20,000 warrants to purchase common stock. Rodd Friedman, the managing partner and majority owner of REF Securities, has sole voting and dispositive
power over
349,105
shares of common stock including the
319,005
shares and
the 20,000
warrants held in the name of REF Securities.
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(3)
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Based on information included in a Schedule 13D/A filed with the SEC on September 21, 2011
,
by the Chambers Medical Foundation
(“Foundation”)
, such Trustee ha
s
sole voting and dispositive power with respect to 276,268 shares of common stock. In addition,
in
October
2014, the Foundation exercise
d
warrants
to purchase
20,000 shares of the Company’s common stock
held by it
.
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Security Ownership of Directors and Executive Officers
The following table shows the securities owned by each director and director nominee, the Named Executive Officers as defined below, and by all of the present executive officers and directors as a group as of the Record Date.
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Name and Address of Beneficial Owner
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Common Stock
Beneficially Owned
(1)
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Percent of Class
(1)
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Jason R. Chambers
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128,871
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(2)
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4.54%
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Paul F. Walter, M.D.
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98,055
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(2)
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3.45%
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E. P. Marinos
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97,948
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(3)
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3.44%
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Salvatore Emma, Jr.
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61,010
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(4)
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2.14%
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Derek T. Welch
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13,810
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(5)
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*%
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Robert A. Mello
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5,116
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(6)
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*%
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Marco F. Benedetti
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4,744
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(6)
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*%
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All Executive Officers and Directors as a Group (7 Persons)
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409,554
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(7)
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13.90%
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*Less than 1%
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(1)
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Unless otherwise noted in these footnotes, the Company believes that all shares referenced in this table are owned by each person named as beneficial owner and that each person has sole voting and dispositive power with respect to the shares of Common Stock owned by each of them. In accordance with Rule 13d-3 under the Exchange Act, each person’s percentage ownership is determined by assuming that the options and warrants to purchase common stock that are held by that person, and which are exercisable within 60 days, have been exercised. The address of all persons listed above is c/o
Micron Solutions
, Inc., 25 Sawyer Passway, Fitchburg, MA 01420.
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(2)
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Includes 2
2
,
5
00 shares issuable upon exercise of options.
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(3)
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Includes 2
2
,
5
00 shares issuable upon exercise of options and 10,000 warrants to purchase common stock.
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(4)
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Includes
35
,000 shares issuable upon exercise of options.
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(5)
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Includes
12,
000 shares issuable upon exercise of options.
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(6)
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Includes 2,500 shares issuable upon exercise of options.
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(7)
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Includes
1
29
,
5
00 shares of the Company's common stock that executive officers and directors have the right to acquire upon exercise of stock options and warrants that are currently exercisable or exercisable within 60 days.
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Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information, as of December 31, 201
6
, with respect to our equity compensation plans:
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Plan Category
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Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights (a)
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Weighted-average exercise
price of outstanding
options, warrants
and rights (b)
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Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a)) (c)
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Equity compensation plans approved by security holders
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214,500
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$
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5.96
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273,000
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(1)
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Equity compensation plans not approved by security holders
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—
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—
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—
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Total
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214,500
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$
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5.96
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—
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273,000
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(1)
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(1)
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2010 Equity Incentive Plan approved by stockholders at the 2010 annual meeting.
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Section 16(a) Beneficial Ownership Reporting Requirements
Section 16(a) of the Exchange Act requires the Company's executive officers and directors, and persons who own more than ten percent of any publicly traded class of the Company's equity securities, to file reports of ownership and changes in ownership of equity securities of the Company with the SEC and the New York Stock Exchange. Officers, directors, and greater-than-ten-percent stockholders are required by the SEC's regulations to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely upon a review of Forms 3 and Forms 4 furnished to the Company during the most recent fiscal year, and Forms 5 with respect to its most recent fiscal year, the Company believes that all such forms required to be filed pursuant to Section 16(a) of the Exchange Act were timely filed, as necessary, by the executive officers, directors, and security holders required to file the same during the fiscal year ended December 31, 201
6
.
INFORMATION
ABOUT DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
The current
directors and executive officers of the Company are as follows:
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Name
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Age
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Title
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Jason R. Chambers
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39
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Chairman of the Board
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Salvatore Emma, Jr.
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57
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President, Chief Executive Officer and Director
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Marco F. Benedetti
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57
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Director
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E. P. Marinos
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75
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Director
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Robert A. Mello
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63
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Director
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Paul F. Walter, M.D.
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80
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Director
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Derek T. Welch
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48
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Chief Financial Officer and Secretary
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Set forth below are descriptions of the backgrounds of the executive officers and directors of the Company and their principal occupations for the past five years.
Jason R. Chambers.
Mr. Chambers has served as a director of the Company since 2006
. He has served as Chairman of the Board since July 2016.
Mr. Chambers has served as President of Mountain Brook Water, a water bottling and distribution
company, from 2002 to present, and from 2001 to present has served as a consultant assisting The Chambers Medical Foundation, a private foundation (the "Foundation"), in assessing medical grant applications. Mr. Chambers was appointed Trustee of the Foundation in 2011. The Foundation beneficially owns approximately 10% of the Company’s outstanding common stock. Mr. Chambers holds a Bachelor of Science degree from Vanderbilt University School of Engineering and a Masters of Business Administration degree from Owen Graduate School of Management, Vanderbilt University with a concentration in finance and marketing. Mr. Chambers is also a Dana-Farber Cancer Institute Hematologic Oncology visiting committee member and a member of Vanderbilt’s School of Engineering Board of Visitors.
Mr. Chambers brings over 1
5
years of practical business and finance experience as the president of a growing enterprise along with knowledge of and relationships with the medical community through his non-profit activities.
Salvatore Emma, Jr
. Mr. Emma has served as the Company's President, Chief Executive Offi
cer, and d
irector of the Company since April 2013. Mr. Emma served as Vice President and General Manager of the Company's wholly-owned subsidiary, Micron Products, Inc. from 2008 until April 2013 when he was appointed President thereof. As Vice President and General Manager,
Mr. Emma guided efforts in strategy, operations, innovation and continuous improvement to meet the needs of leading multinational corporations and other customers in the medical products, defense, commercial, and consumer markets. Mr. Emma joined Micron Products in 2007 as Director of Information Technology. Prior to joining Micron Products, he was an enterprise information systems consultant from 1995 to 2007. In this role, he led a variety of strategic initiatives including ERP implementation, business intelligence, information systems design, programming, and business systems architecture. Previously, he served as Corporate Controller at Kervick Enterprises, Inc., an aerospace and orthopedics investment casting and forging manufacturing company. Mr. Emma holds a B.S. in Business Administration with a minor in Computer Science from Fitchburg State University.
As the only management representative on the Company's Board, Mr. Emma provides an insider's perspective to the Board about operations and strategy of the Company. In addition, he has experience in many aspects of the Company's business including operations, finance, and information systems. Mr. Emma also has a long history in the local community. His contacts and relationships in Fitchburg, Massachusetts and surrounding communities allow him to collaborate with local leaders in business and government.
Marco F. Benedetti.
Mr
.
Benedetti was appointed to the Board in July 2015.
Mr. Benedetti is currently Vice President for Business & Finance and Treasurer of Canisius College, a private college based in western New York with 4,000 full time students and a $100 million annual operating budget. Prior to joining Canisius College in 2013, Mr. Benedetti served nearly ten years at Greatbatch, Inc., a publicly-traded global manufacturer of components for medical devices for a variety of applications. He held a number of senior financial roles there, including Vice President of Finance - Financial Planning and Analysis, Investor Relations and Treasurer. Before that, Mr. Benedetti held senior finance positions at Ashton-Potter, U.S.A. LTD and International Imaging Materials, Inc. Mr. Benedetti is a certified public accountant and began his career at KPMG, LLP. He received a Masters of Business Administration and a Bachelor of Science in Business Administration from the State University of New York at Buffalo.
Mr. Benedetti brings over 30
years of financial and operational experience from medical device manufacturing, technology printing and public auditing. During that time, he built and led global operational, accounting and finance teams, directed strategic planning initiatives, analyzed and supported multiple acquisitions, identified growth and efficiency opportunities, and drove financial results.
His advanced degree in business administration
,
and finance experience
, qualify him to serve as a member of the Company’s Audit Committee.
E. P. Marinos
. Mr. Marinos has served as a director of the Company since 1994. He served as Chairman of the Board from 2001 to
July 2015
. From 1995 until 1997, he was President and Chief Executive Officer of the Company. Mr. Marinos has been Chief Executive Officer of AMT/EPM Associates, a consulting firm, since 2001. Mr. Marinos was President and Chief Executive Officer of Midcoast Interstate Transmission, Inc. (MIT), an interstate pipeline company, from 1997 until 2001. He also became Corporate Vice President of Administration for Midcoast Energy Resources, Inc. (MRS), MIT's parent company, and President and Chief Executive Officer of Kansas Pipeline Co. a subsidiary of MRS in 1999 and he held those positions until MRS was sold in 2001. From 2009 to 2012 he served as a director of the Bay Area Houston Ballet & Theatre, a non-profit organization. Mr. Marinos holds a B.S. in Business Administration with majors in Finance and Accounting from Wayne State University and is a member of the AICPA.
Mr. Marinos brings upwards of 18 years prior experience with a “Big 8” accounting firm, including
9
years of experience
,
at the Partner level,
providing audit and advisory services to a variety of industries including medical, engineering, banking and energy. His prior service as president and CEO of the Company as well as CEO and CFO of other publicly traded companies expand his breadth of knowledge of business and management. His advanced degree in business administration including majors in finance and accounting, as well as prior experience, qualify him to serve as a member of the Company’s Audit Committee.
Robert A. Mello.
Mr. Mello was appointed to the Board
in April
2015. Mr. Mello has served as the Vice President and Chief Operating Officer of Advanced Instruments, Inc., a leading supplier of instrumentation for clinical, pharmaceutical, biotechnology and microbiology laboratories around the world, since July 2013. From April 2000 to July 2013, Mr. Mello was employed as Corporate Vice President
of IRIS International, Inc. and President of its
IRIS Sample Processing division. Iris International is a leading provider of automated urinalysis instrumentation and bench top centrifuge products for use in major medical institutions, commercial laboratories, clinics, doctors' offices and research institutions. From 1988 to 2000, Mr. Mello was an operations executive with bioMerieux, which designs, manufactures and markets medical instruments and consumables, including from 1996 to 2000 as its Vice President of Operations at their Boston Immunodiagnostics facility and Vice President of Disposables Manufacturing-Clinical Microbiology. Prior to joining bioMerieux, Mr. Mello served as Vice President of Operations for Medical & Scientific Designs, Inc., an in-vitro diagnostics company where he was on the founding team in 1983 and as a Senior Technical Support Engineer at Ortho Diagnostics, Inc., a division of Johnson & Johnson. Mr. Mello is affiliated with the Diagnostics Marketing Association (DXMA), American Management Association (AMA), American Production and Inventory Control Society (APICS), and is certified in Production and Inventory Management (CPIM). He received his
Management,
B.S.
degree
from Lesley University, and his Electrical Engineering, ASEE degree from Bristol College.
Mr. Mello brings over 35 years of experience in startup and turn around operations for both small entrepreneurial companies and large public corporations in the medical diagnostics industry including instrumentation and consumables. Throughout his career he has directed all aspects of R&D, marketing, sales, manufacturing, engineering, QA/RA, materials, distribution, finance and facilities management. Mr. Mello has broad M&A experience from due diligence through deal negotiation to successful integration.
Paul F. Walter, M.D
. Dr. Walter has served as a director of the Company since its founding in 1982.
He served as Chairman of the Board from July 2015 to July 2016.
Dr. Walter retired from his position as an electrophysiologist and Professor of Medicine at Emory University
in 2010, where he served on the faculty since 1980.
He specialized in cardiology and clinical electrophysiology. Dr. Walter started the arrhythmia/electrophysiology service at Emory University in 1980. He performed clinical research studies in signal averaged electrocardiography when this test was being developed in the 1980s. He is a graduate of the University of Nebraska, College of Medicine with graduate studies at the University of Michigan.
Dr. Walter has over 30 years' experience on the Company’s Board and brings over 50 years of experience in the medical field and community, particularly as it relates to cardiology. His experience on the faculty of Emory University and in-depth knowledge and experience
as a physician
, uniquely position him to provide valuable insights into innovative products in the medical field as well as markets for such products.
Derek T. Welch.
Mr. Welch has served as the Company’s Chief Financial Officer since January 2015.
Mr. Welch was engaged as Corporate Controller of the Company in January 2013 and appointed Secretary of the Company in March 2013. Mr. Welch was appointed principal financial and accounting officer in September 2013 and was named Chief Financial Officer in January 2015. From September 2010 to December 2012, Mr. Welch served as Assistant Corporate Controller for Alere, Inc., a provider of point-of-care diagnostic and monitoring devices. From February 2007 to September 2010, Mr. Welch was the Assistant Controller of the medical services division of Fresenius Medical Care, a provider of kidney dialysis services. From May 2005 to February 2007, he served as Senior Accounting Manager at Cytyc Corporation (Hologic Inc.), a developer, manufacturer and supplier of diagnostic products, medical imaging systems and surgical products and from December 2002 to May 2005 he served as a Division Controller for Hannaford Supermarkets.
He currently serves on
the Board of Trustees of the Sizer School, a North Central Charter Essential School
and as a member of the
Governance Committee.
Mr. Welch is a certified public accountant and earned his Bachelor’s Degree in Business Administration, with a concentration in accounting, from the University of New Hampshire.
CORPORATE
GOVERNANCE
The Board of Directors
The Board of Directors oversees the business affairs of the Company and monitors the performance of management. Currently the numb
er of seats on the Board is six
. The Company’s By-laws further provide that the Board of Directors be divided in three classes serving staggered three year terms with each class to be as nearly equal in number as possible.
Members of the Board of Directors discussed various business matters informally on numerous occasions throughout the year
201
6
. There were
sixteen
formal Board meetings in person or by teleconference during
201
6
. During
201
6
, all directors then in office attended at least 75% of the meetings of our Board and Board committees on which they served. Independent directors meet on a regular basis as often as necessary to fulfill their responsibilities, including at least annually in executive session without the presence of non-independent directors and management.
Director Independence
The Company's common stock is listed on the NYSE MKT stock exchange. The Board considers the status of its members pursuant to the independence requirements set forth in the NYSE MKT Company Guide and applicable federal securities laws. Under these requirements, the Board undertakes a review at least annually of director independence. During this review, the Board considers transactions and relationships between each director or any member of his immediate family and the Company and its affiliates, if any. The purpose of this review is to determine whether any such relationships or transactions exist that are inconsistent with a determination that the director is independent. The following
current
directors,
Dr. Walter,
Mr. Benedetti, Mr. Chambers,
Mr. Ma
rinos and
Mr. Mello
are “independent” in each case as defined in the NYSE MKT Company Guide. The members of the Compensation Committee, Audit Committee and Nominating and Corporate Governance Committee are also “independent” for purposes of Section 10A-3 of the Exchange Act and NYSE MKT listing requirements. The Board bases these determinations primarily on a review of the responses of the directors and executive officers to questions regarding employment and transaction history, affiliations and family and other relationships and on discussions with the directors.
Board Leadership Structure and Role in Risk Oversight
The Board of Directors does not have a policy on whether the same person should serve as both the Chief Executive Officer and Chairman of the Board or, if the roles are separate, whether the Chairman should be selected from the non-employee directors or should be an employee.
In the even
t
the Chairman of the Board is also the Chief Executive Officer, or is otherwise not an independent director, the independent directors shall designate an independent director to serve as the Lead Director.
The Board believes that it should have the flexibility to make these determinations at any given point in time in the way that it believes best to provide appropriate leadership for the Company at that time. The current structure is that of separate Chief Executive Officer and Chairman of the Board of Directors. Mr. Salvatore Emma, Jr. serves as the Chief Executive Officer and President and is responsible for day-to-day leadership of the Company.
Mr. Jason R. Chambers has served as the Chairman of the Board since June 2, 2016.
Dr. Paul F. Walter
serve
d
as the Chairman of the Board
from July 2, 2015 through June 1, 2016
. The Board of Directors believes this is the most appropriate structure for the Company at this time as it recognizes the time, effort and energy that the Chief Executive Officer is required to devote to his position in the current business environment, as well as the commitment required to serve as the Chairman of the Board, particularly as the Board’s oversight responsibilities continue to grow.
The Board, either as a whole or through its committees, regularly discusses with management strategic and financial risks and exposures associated with the Company’s annual operating budget, their potential impact on the Company and the steps taken to manage them. While the Board of Directors is ultimately responsible for risk oversight at the Company, the Board’s committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. In particular, the Audit Committee focuses on financial and enterprise risk exposures and discusses with management and the independent registered public accounting firm, the Company’s policies with respect to risk assessment and risk management, including risks related to financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies and credit and liquidity matters. The Audit Committee also assists the Board of Directors in fulfilling its duties and oversight responsibilities relating to the Company’s compliance and ethics programs, including compliance with legal and regulatory requirements. The Executive and Finance Committee regularly reviews with management the Company’s financial arrangements, capital structure and strategic opportunities. The Nominating and Corporate Governance Committee annually reviews the Company’s corporate governance guidelines and focuses on succession planning. Finally, the Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from the Company’s compensation policies and programs.
Attendance Policy
All Board members are strongly encouraged to attend each meeting of the Board and committees on which they serve and be prepared to discuss the business presented. An attendance rate of at least 75% is the minimum acceptable rate of attendance at Board and committee meetings. A Board member’s record of attendance will be considered with respect to recommendation of the renewal of a Board term or future assignment to a committee. Directors are strongly encouraged to attend annual meetings.
One director
then in office attended last year's annual meeting of stockholders.
Committees of the Board of Directors
The Board of Directors has established the following standing committees, namely, an Audit Committee, a Compensation Committee, an Executive and Finance Committee and a Nominating and Corporate Governance Committee.
Audit Committee.
The Audit Committee is presently composed of three members of the Board:
Mr. E.P. Marinos
(Chairman),
Mr. Marco F. Benedetti
and
Mr.
Robert A. Mello
. The Audit Committee assists the Board of Directors in the oversight of the audit of the Company’s financial statements and the quality and integrity of its accounting, auditing and financial reporting processes. The Audit Committee also has the responsibility of reviewing the qualifications, independence and performance of the Company’s independent registered public accounting firm and is responsible for the appointment, retention, oversight and, where appropriate, termination of the independent registered public accounting firm. During fiscal year 201
6
, the Audit Committee held
five
meetings. The Board of Directors has determined that each of the members of the Audit Committee meets the criteria for independence under the applicable li
sting standards of the NYSE MKT. The Company’s Board of Directors has determined that the Audit Committee has
two
members, each independent, who qualify
as an “audit committee financial expert,” as defined
by the rules adopted by the SEC, namely, E.P. Marinos and Marco F. Benedetti.
The Board of Directors has adopted a written charter for the Audit Committee, which is reviewed annually by the Audit Committee. The current Audit Committee Charter is available on the Company’s web site, namely,
http://www.
micronsolutionsinc
.com/investor-relations/corporate-governance/
.
Compensation Committee
. The Compensation Committee is presently composed of three members of the Board:
Dr. Paul F. Walter
(Chairman)
,
Mr. E.P. Marinos
and
Mr.
Robert A. Mello
. The principal functions of the Compensation Committee are to evaluate the performance of the Company’s senior executives, to consider the design and competitiveness of the Company’s compensation plans, to review and recommend senior executive compensation and to administer the Company’s equity-based compensation plans. The Compensation Committee has the authority under its charter to engage the services of outside advisors, experts and others to assist the Compensation Committee. Duri
ng the fiscal year 201
6
, the Compensation Committee held
five
meetings. The Board of Directors has determined that each of the members of the Compensation Committee meets the criteria for independence under the applicable listing standards of the NYSE MKT. The current Compensation Committee Charter is available on the Company’s web site, namely,
http://www.
micronsolutionsinc
.com/investor-relations/corporate-governance/.
Executive and Finance Committee.
The Executive and Finance Committee is presently composed
of four members of the Board: Dr. Paul F. Walter, Mr. Salvatore Emma Jr
, Mr. Marco F. Benedetti and
Mr. Robert A. Mello
. The principal functions of the E
xecutive and Finance Committee are reviewing and evaluating significant business and policy decisions and making recommendations for
any required
action by the full Board of Directors.
Nominating and Corporate Governance Committee
. The Nominating and Corporate Governance Committee is presently composed of three members of the Board: Mr. E.P. Marinos (Chairman), Dr. Paul F. Walter and Mr. Jason R. Chambers. The Nominating and Corporate Governance Committee assists the Board in identifying individuals qualified to be directors, oversees the
composition, structure and evaluation of the Board and its committees, and develops and maintains a set of corporate governance guidelines. The Nominating and Corporate Governance Committee reviews these guidelines regularly and recommends changes as necessary or appropriate. During the fiscal year 201
6
, the Nominating and Corporate Governance Committee held
three
meetings. The Board of Directors has determined that each of the members of the Committee meets the criteria for independence under the applicable listing standards of the NYSE MKT. The current Nominating and Corporate Governance Committee Charter is available on the Company’s web site,
http://www.micronsolutionsinc.com/investor-relations/corporate-governance/
.
Nominees to the Board of Directors
Mr.
Jason R. Chambers
and
M
r.
Robert A. Mello
are the Board of Director’s nominees
for re-election
as Class I directors to the Board of Directors. See “Information about Directors and Executive Officers” above for information relative to their respective business experience.
The Company’s Nominating and Corporate Governance Committee identifies new director candidates through recommendations from members of the Committee, other Board members and executive officers of the Company and will consider candidates who are recommended by security holders, as described below. Although the Board does not have a formal diversity policy, the Committee and the Board will consider such factors as it deems appropriate to assist in developing a Board and committees that are diverse in nature and comprised of experienced and seasoned advisors. These factors focus on skills, expertise or background and may include decision-making ability, judgment, personal integrity and reputation, experience with businesses and other organizations of comparable size, experience as an executive with a publicly traded company, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board.
In accordance with the Company’s By-laws, f
or nominations by a stockholder to be properly brought before an annual meeting, the stockholder must have given written notice thereof, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Company, not later than 90 days nor earlier than the 120
th
day prior to the anniversary of the previous year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is scheduled to be held on a date more than thirty (30) days prior to or delayed by more than sixty (60) days after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the later of the close of business ninety (90) days prior to the annual meeting or the tenth (10
th
) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, which may include any public filing by the Company with the
SEC
, of the date of the annual meeting. For nominations by a stockholder to be properly brought before a special meeting of stockholders called for the purpose of electing directors, the stockholder must have given written notice thereof, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Company, not later than the close of business on the tenth (10
th
) day following the day on which public announcement of the date of the special meeting is first made by the Company.
The notice must set forth information with respect to the stockholder and nominee as specified in Section 3 of
Article III of
the Company's By-laws.
In addition to the provisions of Section 3 of
Article III of
the By-laws summarized above, a stockholder shall also comply with all of the applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein.
The Nominating and Corporate Governance Committee will evaluate new director candidates in view of the criteria described above, as well as other factors the Committee deems to be relevant, through reviews of biographical and other information, input from others, including members of the Board and executive officers of the Company, and personal discussions with the candidate when warranted by the results of these other assessments. The Committee will evaluate any director candidates recommended by security holders under the same process. In determining whether to recommend to the Board the nomination of a director who is a member of the Board, the Committee will review the Board performance of such director and solicit feedback about the director from other Board members.
Communicating with the Board
The Board desires to foster open communications with its security holders regarding issues of a legitimate business purpose affecting the Company. Each Board member is willing to accept correspondence. Communications from stockholders should be in the form of written correspondence and sent via registered mail or overnight delivery to the Company’s corporate office, care of the Secretary. Electronic submissions of security holder correspondence will not be accepted. The correspondence shall include supporting documentation evidencing the security holder’s stock or other holdings in the Company. The Secretary shall pass on any such communication, other than a solicitation for a product or service or a request for copies of reports filed with the
SEC
, to the appropriate Board member. Any security holder correspondence addressed generically to the Board of Directors will be forwarded to the Chairman of the Board.
Code of Conduct and Ethics
The Company has adopted a Code of Conduct and Ethics that applies to all its employees as well as its principal executive, financial and accounting officers. The current Code can be found on the Company’s website at
http://www.micronsolutionsinc
.com/investor-relations/corporate-governance/
. The Company intends to satisfy the disclosure requirements regarding any amendments to or waivers from a provision of the Code that applies to its principal executive, financial and accounting officers by posting such information on its website at the address set forth above.
REPORT
OF THE AUDIT COMMITTEE
The information contained in this Proxy Statement with respect to the Audit Committee Report, charter and the independence of the members of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “
Securities Act
”), or the Exchange Act, except to the extent that the Company specifically incorporates it by reference in such filing.
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the accounting firm that is engaged as the Company’s independent registered public accounting firm. The Company’s management is responsible for the Company’s internal controls, disclosure controls and financial reporting process. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States.
In the performance of the Audit Committee’s oversight function, we have reviewed and discussed with management the Company’s audited financial statements of the Company for the fiscal year ended
December 31, 201
6
and management’s assessment of the effectiveness of the Company’s internal control over financial reporting. We have also discussed with the Company’s independent registered public accounting firm the matters requiring discussion pursuant to Statement on Auditing Standards No. 61, as amended (Communications with Audit Committees) and as adopted by the Public Company Accounting Oversight Board in Rule 3200T and such other matters as we have deemed to be appropriate. We have also discussed with the Company’s independent registered public accounting firm matters relating to its independence, and have received the written disclosures and letter from it required by the applicable requirements of the Public Company Accounting Oversight Board.
On the basis of the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements for the year ended
December 31, 201
6
be included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 201
6
for filing with the
SEC.
|
|
By the Members of the Audit Committee:
|
|
|
|
Mr.
E.P. Marinos
, Chairman
|
|
|
|
Mr.
Marco F. Benedetti
|
|
|
|
Mr.
Robert A. Mello
|
Audit Committee Pre-Approval of Audit and Non-Audit Services
The Audit Committee pre-approves all audit and permissible non-audit services provided to the Company by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committee has adopted policies and procedures for the pre-approval of services provided by the independent registered public accounting firm. Such policies and procedures provide that management and the independent registered public accounting firm shall jointly submit to the Audit Committee a schedule of audit and non-audit services for approval as part of the annual plan for each fiscal year. In addition, the policies and procedures provide that the Audit Committee may also pre-approve particular services not in the annual plan on a case-by-case basis. Management must provide a detailed description of each proposed service and the projected fees and costs (or a range of such fees and costs) for the service.
As permitted under the Sarbanes-Oxley Act of 2002, the Audit Committee may delegate pre-approval authority to one or more of its members, for audit and non-audit services to a subcommittee consisting of one or more members of the Audit Committee. Any service pre-approved by a delegate
e
must be reported to the Audit Committee at the next scheduled meeting.
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth information regarding annual and long-term compensation with respect to the fiscal years ended December 31, 201
6
and 201
5
, paid or accrued by the Company to or on behalf of those persons who were, during the fiscal year ended December 31, 201
6
, the Company's Chief Executive Officer and the Company's most highly compensated executive officers serving as such as of December 31, 201
6
whose compensation was in excess of $100,000 (the “
Named Executive Officers
”).
|
|
|
|
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|
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|
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|
|
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|
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|
|
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
|
Non Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings ($)
|
All Other
Compensation
($)
(3)
|
Total
($)
|
|
Salvatore Emma, Jr.,
President & CEO
|
2016
|
241,313
|
—
|
—
|
25,945
|
(1)
|
—
|
—
|
—
|
267,258
|
|
|
2015
|
236,250
|
—
|
—
|
33,450
|
(2)
|
—
|
—
|
—
|
269,700
|
|
Derek T. Welch,
Chief Financial Officer
and Secretary
|
2016
|
156,000
|
—
|
—
|
15,570
|
(1)
|
—
|
—
|
—
|
171,570
|
|
|
2015
|
160,000
|
—
|
—
|
22,300
|
(2)
|
—
|
—
|
—
|
182,300
|
|
|
(1)
|
|
Amounts reflect the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Option awards were made on
November 30, 2016
with a Black-Scholes value of $
1.04
per share. A more detailed discussion of the assumptions used in the valuation of option awards made in fiscal year 201
6
may be
found in Note 9 of the Notes to the Financial Statements in the Company’s Form 10-K for the year ended December 31, 201
6
.
|
|
|
(2)
|
|
Amounts reflect the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Option awards were made on
January 20, 2015
with a Black-Scholes value of $
2.23
per share. A more detailed discussion of the assumptions used in the valuation of option awards made in fiscal year 201
5
may be
found in Note 9 of the Notes to the Financial Statements in the Company’s Form 10-K for the year ended December 31, 2015.
|
|
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(3)
|
|
Includes prerequisites based on the aggregate incremental cost to the Company unless the amount of such compensation is less than $10,000, gross-ups or other amounts reimbursed during the year for payment of taxes; accrued severance payments; contributions to defined contribution plans and the dollar value of insurance premiums paid by the Company with respect to life insurance for the benefit of the Named Executive Officer.
|
Employment Agreements
On December 28, 2016, the Board of Directors entered into an at-will employment agreement with Mr. Salvatore Emma, Jr., pursuant to which Mr. Emma will continue to be employed as the President and Chief Executive Officer of the Company and its wholly-owned subsidiaries commencing as of January 1, 2017 and continuing thereafter unless terminated by the Company with or without cause, pursuant to the terms of the agreement. The agreement replaced a prior two-year agreement entered into in January 2015. Pursuant to the agreement, Mr. Emma will be entitled to a base salary at the annualized rate of $247,500, shall be eligible for compensation under the Executive Incentive Plan adopted in 2016 and to participate in the Company’s other benefit plans. The agreement contains certain change in control provisions providing for payment equivalent to two years of base salary at the rate then in effect and confidentiality, non-compete and non-solicitation restrictions.
On December 28, 2016, the Board of Directors entered into an at-will employment agreement with Mr. Derek T. Welch, pursuant to which Mr. Welch will continue to be employed as the Chief Financial Officer and Secretary of the Company and its wholly-owned
subsidiary, Micron Products, Inc.
commencing as of January 1, 2017 and continuing thereafter unless terminated by the Company with or without cause, pursuant to the terms of the agreement. The agreement replaced a prior two-year agreement entered into in January 2015. Pursuant to the agreement, Mr. Welch will be entitled to a base salary at the annualized rate of $170,000, shall be eligible for compensation under the Executive Incentive Plan adopted in 2016 and to participate in the Company’s other benefit plans. The agreement contains certain change in control provisions providing for payment equivalent to two years of base salary at the rate then in effect and confidentiality, non-compete and non-solicitation restrictions.
Executive Incentive Plan
On November 30, 2016, the Board of Directors, based on the recommendation of the Compensation Committee, approved an Executive Incentive Plan (the “EIP”). The EIP established cash and equity incentive awards that may be earned by executives approved for participation in the
EIP
, including the Named Executive Officers of the Company (each, an “Executive”), based on the Company’s achievement of certain corporate performance metrics during the Company’s
2017
fiscal year. Any bonuses will be paid, if at all, from a bonus pool consisting of 10% of the Company’s net income before bonus, excluding certain extraordinary items in accordance with the budget approved by the Board. The payout of the bonus pool shall be measured 90% on net income and the remaining 10% will be determined by the Board in its discretion. In order for the pool to be funded, actual revenue must equal or exceed 90% of budgeted revenue. Funding of the pool is scaled relative to the extent of achievement of the plan as follows:
|
|
|
|
|
|
|
|
% Plan
Achievement
|
|
% Target Amount
Funded
|
|
|
|
<90%
|
|
0%
|
|
|
|
>90% but <100%
|
|
90%
|
|
|
|
100%
|
|
100%
|
|
|
|
105%
|
|
110%
|
|
|
|
110%
|
|
120%
|
|
|
|
115%
|
|
130%
|
|
|
|
120%
|
|
140%
|
|
|
|
125%
|
|
150%
|
|
|
|
>125%
|
|
150%
|
|
Bonuses will be established for each Executive based on position level and will be typically expressed as a percentage of the Executive’s annual base salary rate as of the last day of the applicable fiscal year. Annual base salary does not include other forms of compensation (such as, without limitation, bonus payments, long-term incentives, overtime compensation, stock based compensation and other variable compensation). Awards under the EIP may also be a specified fixed dollar amount.
Awards shall be comprised of cash and equity. The CEO and CFO awards, if any for 2017, shall be payable 50% in cash and 50% in equity. Awards, and the split between cash and equity, for other Executives shall be determined by the Compensation Committee. Awards will be payable in the form of equity may take the form of stock options or restricted stock units at the discretion of the Executive, or other forms of stock based compensation in accordance with the Company’s 2010 Equity Incentive Plan. Stock awards may also be in the form of stock grants at the sole discretion of the Board and in accordance with the 2010 Equity Incentive Plan.
The EIP also contains a long-term incentive plan (LTIP) to reward Executives for achievement of the Company’s strategic objectives that lead to maximization of shareholder value by continual growth of earnings per share (EPS). EPS targets shall be determined annually by the Board. In the event targeted EPS growth has been achieved, an equity award equal to one times the current year equity portion of the EIP, if awarded, or as otherwise determined by the Board shall be awarded in the form of stock-based compensation in accordance with the Company’s 2010 Equity Incentive Plan.
Outstanding Equity Awards at Fiscal Year End, December 31, 201
6
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|
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Option Awards
|
|
Stock Awards
|
|
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (#)
|
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or Other
Rights That Have
Not Vested ($)
|
|
Salvatore
Emma Jr.
|
10,000
|
(1)
|
—
|
|
—
|
9.86
|
5/19/2021
|
|
—
|
—
|
—
|
—
|
|
|
4,000
|
(2)
|
—
|
|
—
|
5.73
|
6/3/2021
|
|
—
|
—
|
—
|
—
|
|
|
6,000
|
(3)
|
6,000
|
(3)
|
—
|
2.58
|
4/2/2023
|
|
—
|
—
|
—
|
—
|
|
|
3,000
|
(4)
|
12,000
|
(4)
|
|
7.74
|
1/20/2025
|
|
—
|
—
|
—
|
—
|
|
|
—
|
|
25,000
|
(5)
|
|
4.02
|
11/30/2026
|
|
—
|
—
|
—
|
—
|
|
Derek T.
Welch
|
6,000
|
(6)
|
4,000
|
(6)
|
—
|
3.67
|
12/15/2023
|
|
—
|
—
|
—
|
—
|
|
|
2,000
|
(7)
|
8,000
|
(7)
|
—
|
7.74
|
1/20/2025
|
|
—
|
—
|
—
|
—
|
|
|
—
|
|
15,000
|
(8)
|
—
|
4.02
|
11/30/2026
|
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Exercisable as to 2,000 shares on 5/19/2012 and each anniversary until all 10,000 options are exercisable.
|
|
|
(2)
|
|
Exercisable as to 2,000 shares on 6/3/2012 and each anniversary until all 10,000 options are exercisable. In 2014, 6,000 options were exercised.
|
|
|
(3)
|
|
Exercisable as to 3,000 shares on 4/1/2014 and each anniversary until all 15,000 options are exercisable. In 2014, 3,000 options were exercised.
|
|
|
(4)
|
|
Exercisable as to
3
,000 shares on
1
/
20
/201
6
and each anniversary until all 1
5
,000 options are exercisable.
|
|
|
(5)
|
|
Exercisable as to
8,333
shares on
11
/
30
/201
7
and each anniversary until all
25
,000 options are exercisable.
|
|
|
(6)
|
|
Exercisable as to 2,000 shares on 12/15/2014 and each anniversary until all 10,000 options are exercisable.
|
|
|
(7)
|
|
Exer
cisable as to 2,000 shares on 1
/
20
/201
6
and each anniversary until all 10,000 options are exercisable.
|
|
|
(8)
|
|
Exercisable as to
5
,000 shares on 1
1
/
3
0/201
7
and each anniversary until all
15
,000 options are exercisable.
|
Employee Benefit Plans
The Company sponsors an Employee Savings and Investment Plan under Section 401(k) of the Internal Revenue Code covering all eligible employees of the Company. Employees can contribute up to 90% of their eligible compensation to the maximum allowable by the IRS. The Company’s matching contributions are at the discretion of the Company. The Company’s matching contributions in 201
6
and 201
5
were
$41,072 and $47,858,
respectively.
Equity Incentive Plan
On March 10, 2010, the Company's Board of Directors adopted the
Company’s
2010 Equity Incentive Plan (the “
2010 Plan
”) upon the recommendation of the Compensation Committee which was approved by stockholders at the 2010 Annual Meeting. The 2010 Plan authorizes the issuance of an aggregate of 500,000 shares.
T
he 2010 Plan provides the Company flexibility to award a mix of stock options, equity incentive grants, performance awards and other types of stock-based compensation.
Director Compensation
For fiscal year 201
6
each non-employee director received annual cash compensation of $30,000. Additionally, the Chairman of the Board received
a pro rata portion of
an additional $5,000 and the chairman of the audit committee received
a pro rata portion of
an additional $4,000. Directors who are full time employees receive no compensation for serving as directors. During fiscal year 201
6
our non-employee directors who were serving in such capacity in 201
6
received the following fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Fees Earned or
Paid in Cash
($)
(1)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
(2)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred Compensation
Earnings
|
All Other
Compensation
($)
|
Total
($)
|
|
Jason R. Chambers
|
28,917
|
(3)
|
—
|
|
—
|
—
|
—
|
—
|
28,917
|
|
Paul F. Walter, M.D.
|
26,250
|
(4)
|
—
|
|
—
|
—
|
—
|
—
|
26,250
|
|
E.P. Marinos
|
27,333
|
(5)
|
—
|
|
—
|
—
|
—
|
—
|
27,333
|
|
Marco F. Benedetti
|
18,750
|
(6)
|
3,750
|
(6)
|
—
|
—
|
—
|
—
|
22,500
|
|
Robert A. Mello
|
18,750
|
(6)
|
3,750
|
(6)
|
—
|
—
|
—
|
—
|
22,500
|
|
|
(1)
|
|
Includes amounts earned from the annual retainer and chairperson fees.
The Board of Directors elected to forego their fees in the second quarter of 2016.
|
|
|
(2)
|
|
Amounts reflect the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Option awards were made on December 18, 2015 with a Black-Scholes value of $1.53 per share. A more detailed discussion of the assumptions used in the valuation of option awards made in fiscal year 2015 may be found in Note 9 of the Notes to the Financial Statements in the Company’s Form 10-K for the year ended December 31, 201
5
.
The non-employee directors held the following stock options as of December 31, 201
6
: Mr. Chambers, 27,500
,
Dr. Walter,
27
,
5
00; Mr. Marinos,
27
,
5
00, Mr. Benedetti, 7,500; and Mr. Mello 7,500.
|
|
|
(3)
|
|
Mr
.
Chambers
w
as appointed Chairman of the Board as of June
2, 2016.
Mr. Chambers served as Chairman of the Audit Committee until June 1, 2016.
|
|
|
(4)
|
|
Dr. Walter
serve
d as Chairman of the Board until July 1, 2016.
|
|
|
(5)
|
|
Mr
.
Marinos was appointed Chairman of the Audit Committee June 2, 2016.
|
|
|
(6)
|
|
Mr. Benedetti and Mr. Mello elected to receive half of their fourth quarter director fees in common stock of the Company.
|
Compensation Committee Procedures
The following information relating to the Compensation Committee is not soliciting material and as such is not deemed filed with the SEC nor incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing.
The Compensation Committee is responsible for establishing and reviewing the Company’s executive compensation policies, advising the full Board of Directors on all compensation matters and administering the Company’s
equity based compensation plans including the 2
010
Equity Incentive
Plan
and the Executive Incentive Plan
.
The Compensation Committee works with management to develop relationships between pay levels, financial performance and returns to stockholders, in order to align our compensation structure with our organizational objectives. By tying compensation in part to particular goals, the Compensation Committee believes that a performance-oriented environment is created for the Company’s
executives. All decisions of the Committee relating to compensation of the President and Chief Executive Officer and
the Chief Financial Officer
are rev
iewed and approved by the
non-employee Directors.
The Company's executive compensation policies are designed to foster the Company's business goals of achieving profitable growth and premium returns to stockholders. The principal objectives of these policies are as follows: (1) to attract, motivate and retain executives of outstanding ability and character; (2) to provide rewards based on each person’s individual performance and the Company’s overall financial performance and growth during the prior year by placing a portion of compensation at risk; and (3) to align the interests of executives and stockholders through long-term, equity-based incentives and programs to encourage and reward stock ownership.
Compensation for
the Company’s
Named Executive Officers consists of three major components: base salary which is reviewed annually by the Compensation Committee;
annual
cash
bonus and equity
awards
which are determined based on individual performance and the Company's performance
as outlined in the Company’s EIP
; and long-term equity based incentive awards, typically in the form of stock options. The Company entered into employment agreements in
December 2016, replacing employment agreements entered into in
January 2015
,
with the Company's CEO and Chief Financial Officer, respectively. Each agreement provides that the executive officer shall be eligible to
participate in the EIP adopted in November 2016 based on the Company’s achievement of certain corporate performance metrics during the 2017 fiscal year.
See "Employment Agreements
"
and “Executive Incentive Plan”
above.
The Compensation Committee has the authority under its charter to engage the services of outside advisors, experts and others to assist the Compensation Committee.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
re were no transactions since the beginning of the last fiscal year required to be reported pursuant to Item 404 of Regulation S-K.
AUDIT
FEES
SUMMARY
Fees billed by Wolf
& Company, P.C. (“Wolf”)
for services rendered in connection with the fiscal year ended December 31, 201
6
and 201
5
are set forth below. All fees earned by Wolf were pre-approved by the Audit Committee.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Audit fees
|
|
$
|
149,400
|
|
$
|
139,000
|
|
Audit-related fees
|
|
|
2,600
|
|
|
—
|
|
Tax fees
|
|
|
—
|
|
|
—
|
|
All other fees
|
|
|
—
|
|
|
—
|
Audit Fees
Audit fees billed by Wolf for 201
6
consist of fees for the audit of the Company
’
s financial statements for the fiscal year ended December 31, 201
6
, and the review of the interim financial statements in the Company
’
s quarterly reports for the quarters ended March 31, 201
6
, June 30, 201
6
and September 30, 201
6
. Audit fees billed by Wolf for 201
5
consist of fees for the audit of the Company
’
s financial statements for the fiscal year ended December 31, 201
5
, and the review of the interim financial statements in the Company
’
s quarterly report for the quarter
s
ended
March 31, 201
5
, June 30, 201
5
and
September 30, 201
5
.
Audit-Related Fees
Audit-related fees billed by Wolf for 2016 consist of fees for assistance provided to management on the accounting for subordinated debt and warrant modifications.
There were no
audit-related fees billed by Wolf for 2015
.
Tax Fees
There were no tax fees billed by Wolf in 201
6
or 201
5
.
All Other Fees
There were no
o
ther
f
ees
billed by Wolf
for 201
6
or
201
5
.
PROPOSALS
RECOMMENDED FOR CONSIDERATION BY STOCKHOLDERS
PROPOSAL
1
ELECTION OF DIRECTORS
The Company’s By-laws provide that the number of directors shall be fixed from time to time by a vote of the majority of the Board of Directors. The By-laws further provide that the Board of Directors be divided into three classes (Class I, Class II and Class III) serving staggered three-year terms, with each class to be as nearly equal in number as possible. The Board of Directors
currently
consists of
six
members, namely, Mr. Jason R. Chambers and Mr. Robert A. Mello (Class I with term
s
expiring at the 2017 Annual Meeting); Mr. E. P. Marinos and Mr. Salvatore Emma, Jr. (Class II with terms expiring at the 201
8 Annual Meeting) and Mr. Marco F. Benedetti and
Dr. Paul F. Walter (Class III with term
s
expiring at the 201
9
Annual Meeting).
The Board of Directors, based on the recommendation of the Nominating and Corporate Governance Committee, has concluded that the nomination and
re-election
of
Mr.
Jason R. Chambers
and
Mr. Robert A. Mello
as Class I directors is in the best interests of the Company and recommends stockholder approval of
the re-election
of
such persons
, each for a thre
e-year term (expiring at the 2020
Annual Meeting) and until their respective successors have been duly elected and shall qualify.
The remaining directors
are expected to
continue to serve in their positions for the remainder of their terms. Biograp
hical information concerning Mr
.
Chambers
and
Mr. Mello
, as well as the other Company directors, can be found under “Information About Directors and Executive Officers” above.
Each of the nominees has
consented to being named in this Proxy Statement and to serve his respective term if elected. If a nominee should for any reason become unavailable for election, the Board may nominate a substitute nominee. If you have submitted a proxy and a substitute nominee is selected, proxies may be voted with discretionary authority by the persons appointed as proxies for any substitute nominee designated by the Board of Directors. Alternatively, if the Board does not select a substitute nominee, the proxy may vote only for the remaining nominees, leaving a vacancy on the Board that may be filled at a later date by the Board in accordance with the By-laws of the Company. As of the date of this Proxy Statement, the Board is not aware that any nominee is unable or will decline to serve as a director.
The persons named in the proxy will vote FOR
each such
nominee, except where authority has been withheld as to the nominee.
Recommendation and Vote
The election of directors shall be determined by a plurality of the votes cast by the stockholders.
The Board of Directors recommends that stockholders vote FOR the nominees for
re-election
to the Board of Directors of the Company.
PROPOSAL
2
APPROVAL OF A NON-BINDING ADVISORY
VOTE ON EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, the Company is providing stockholders with the opportunity to cast an advisory (non-binding) vote on compensation programs for our Named Executive Officers (sometimes referred to as "say-on-pay"). The Company conducts say-on-pay votes on an annual basis. Stockholders will be asked again in 2019 how frequently the Company should seek an advisory vote on the compensation of the Company's Named Executive Officers. Accordingly, you may vote on the following resolution at the Annual Meeting:
“Resolved, that the compensation
for
the Company's Named Executive Officers as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables in this Proxy Statement, is hereby approved.”
This vote will not be binding on the Board of Directors and may not be construed as overruling a decision by the Board, creating or implying any change to the fiduciary duties of the Board or any additional fiduciary duty by the Board or restricting or limiting the ability of stockholders to make proposals for inclusion in proxy materials related to executive compensation. The Compensation Committee, however, may take into account the outcome of the vote when considering future executive compensation arrangements.
Recommendation and Vote
The approval of the executive compensation programs for the Named Executive Officers requires the affirmative vote of the holders of a majority of the shares of Common Stock present or represented by proxy at the Annual Meeting and entitled to vote thereon.
The Board of Directors unanimously recommends a vote FOR approval of the compensation of the Company's Named Executive Officers as disclosed in this Proxy Statement.
PROPOSAL
3
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has engaged Wolf & Company, P.C. (“Wolf”) to serve as the Company's independent registered public accounting firm in connection with the audit for the fiscal year ended December 31, 201
6
and the review of the Company's financial statements for the quarters ended March 31, 201
7
, June 30, 201
7
, and September 30, 201
7
. Wolf has served as the Company's registered public accounting firm since October 15, 2013.
Although ratification is not required, the Board is submitting the selection of Wolf to its stockholders for ratification as a matter of good corporate practice. If the selection is not ratified by stockholders, the Audit Committee will consider the results in connection with its selection of auditors for the balance of 201
7
. Notwithstanding the ratification of the selection, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time if it determines that such a change would be in the Company's best interest and the best interest of its stockholders.
The Audit Committee, prior to engaging Wolf, considered the qualifications of that firm, its reputation for integrity, competence in the fields of accounting and auditing and its independence.
The Company has been informed that neither Wolf nor any of its partners have any direct financial interest or any material indirect financial interest in the Company nor have had any connection during the past three years with the Company in the capacity of promoter, underwriter, voting trustee, director, officer or employee
.
The Company does not expect a representative of Wolf
to be present at the Annual Meeting.
Recommendation and Vote
To be approved, the ratification of the appointment of Wolf requires the affirmative vote of the holders of a majority of the shares of Common Stock present or represented by proxy at the Annual Meeting and entitled to vote thereon.
The Board of Directors recommends that stockholders vote FOR the ratification of the appointment of Wolf & Company, P.C. as the Company's independent registered public accounting firm.
PROPOSAL
4
AUTHORIZATION TO ADJOURN THE ANNUAL MEETING
General
If, at the Annual Meeting, the number of shares of common stock, present in person or by proxy, is insufficient to constitute a quorum or the number or shares of common stock voting in favor is insufficient to approve any of the proposals, management may determine to move to adjourn the Annual Meeting to a later date or dates, if necessary, in order to enable the Board of Directors to solicit additional proxies. In that event, we will ask our stockholders to vote only upon the adjournment proposal and not the remaining proposals.
Among other things, approval of the adjournment proposal could mean that, even if we had received proxies representing a sufficient number of votes against any of the proposals to defeat the proposal, we could adjourn the Annual Meeting without a vote on the matter and seek to convince the holders of those shares to change their votes in favor of the proposals.
Generally, if the Annual Meeting is adjourned, no notice of the adjourned meeting is required to be given to stockholders, other than announcement at the Annual Meeting of the place, date and time to which the meeting is adjourned. However, the Company’s By-laws provide that if the adjournment or adjournments are for more than 30 days, or if after adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the adjourned meeting.
Recommendation and Vote
To be approved, the adjournment requires the affirmative vote of the holders of a majority of the shares of Common Stock present or represented by proxy at the Annual Meeting and entitled to vote on the matter, whether or not a quorum is present.
The Board of Directors recommends that stockholders vote FOR the proposal to authorize the Board of Directors to adjourn the Annual Meeting of stockholders to allow time for the further solicitation of proxies.
ADDITIONAL
INFORMATION
Stockholder Proposals and Submissions
A proposal by a stockholder intended for inclusion in our proxy materials for the 201
8
annual meeting of stockholders pursuant to Rule 14a-8 of the Exchange Act must be received no later
than December 1
5
, 20
17
. This requirement is separate from the SEC’s other requirements that must be met to have a stockholder proposal included in the Company's proxy statement. In addition, this requirement is independent of certain other notice requirements of the Company's By-laws as described below. All stockholder proposals and notices should be submitted to the Company at 25 Sawyer Passway, Fitchburg, MA 01420 Attn: Corporate Secretary.
Stockholder proposals inte
nded to be submitted at the 2018
annual meeting of stockholders outside the framework of Rule 14a-8 (including nominating persons for election as directors) must be received by the Company, in writing, at the above ad
dress no earlier than January 25
, 201
8 and no later than February 24
, 201
8
(subject to
adjustment as described in the By-laws) to be considered timely under the advance notice provisions of the Company’s By-laws and in order to be considered for such inclusion.
A copy of the relevant By-law provisions containing the requirements for making stockholder proposals may be obtained by contacting the Company's Secretary at the executive offices of the Company.
No Incorporation by Reference
In the Company’s filings with the SEC, information is sometimes “incorporated by reference.” This means that we are referring you to information that has previously been filed with the SEC and the information should be considered as part of the filing. Based on SEC regulations, the “Audit Committee Report” and the “Compensation Committee Procedures,” specifically are not incorporated by reference into any other filings with the SEC. In addition, this proxy statement includes website addresses. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this proxy statement.
Householding of Proxy Statements
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual report or Notice of Internet Availability of Proxy Materials with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report or Notice of Internet Availability of Proxy Materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A number of brokers with account holders who are our stockholders may “household” our proxy materials. In that event, a single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent.
If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report or Notice of Internet Availability of Proxy Materials, please notify your broker and the Company's Secretary in writing at 25 Sawyer Passway, Fitchburg, MA 01420 or by telephone at (978) 345-5000. You can also obtain a copy at www.CSTPROXY.COM/
MICRONSOLUTIONSINC/
201
7
. The Company will promptly deliver, without charge, an additional copy of any such proxy statement and annual report or Notice of Internet Availability upon request. Stockholders who currently receive multiple copies of the proxy materials at their address and would like to request householding of their communications should contact their broker.
Other Proposed Action
The Board of Directors does not intend to bring any other matters before the Annual Meeting, nor does the Board of Directors know of any matters which other persons intend to bring before the Annual Meeting. If, however, other matters not mentioned in this proxy statement properly come before the Annual Meeting, the persons named in the accompanying form of proxy will vote thereon in accordance with the recommendation of the Board of Directors.
|
|
|
|
|
By Order of the Board of Directors,
|
|
|
MICRON SOLUTIONS
, INC.
|
|
|
/s/ Derek T. Welch
|
|
|
Derek T. Welch
|
|
|
Secretary
|
Fitchburg, Massachusetts
April
1
3
, 2017