U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
Filed
by the Registrant
x
Filed
by a Party other than the Registrant
¨
Check the appropriate box:
¨
Preliminary Proxy Statement
¨
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x
Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material Pursuant to §240.14a-12
DYNASIL CORPORATION OF AMERICA
(Exact name of registrant as specified in its
charter)
(Name of Person(s) Filing Proxy Statement if
Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
x
No fee required.
¨
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
¨
Fee paid previously with preliminary materials.
¨
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration
Statement No.:
(3) Filing Party:
(4) Date Filed:
DYNASIL CORPORATION OF AMERICA
313 Washington Street, Suite 403
Newton, MA 02458
(617) 668-6855
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 AM,
ON FEBRUARY 23, 2017
To the Stockholders of Dynasil Corporation of America:
The annual meeting of stockholders of Dynasil
Corporation of America (the “Company”), a Delaware corporation, will be held at the offices of Radiation Monitoring
Devices, Inc. at 44 Hunt Street, Watertown, Massachusetts 02472 on February 23, 2017 beginning at 10:00 A.M. local time. At the
meeting, stockholders will act upon the following matters:
(1) Election of seven (7)
Directors, each for a term of one year;
(2) Ratification of appointment of
RSM US LLP as the Company's independent registered public accounting firm for the fiscal year ending September 30, 2017;
(3) Advisory vote regarding executive
compensation;
(4) Advisory vote regarding the frequency
of the Executive Compensation Advisory Vote; and
(5) Any other matters that
properly come before the meeting.
Stockholders of record at the close of business
on December 27, 2016 are entitled to vote at the meeting or any postponement or adjournment thereof.
The accompanying form of proxy is solicited
by the Board of Directors of the Company.
Stockholders (whether they own one or many
shares and whether they expect to attend the annual meeting or not) are requested to vote, sign, date and promptly return the accompanying
proxy in the enclosed self-addressed stamped envelope. A proxy may be revoked at any time prior to its exercise (a) by notifying
the Secretary of the Company in writing, (b) by delivering a duly executed proxy bearing a later date, or (c) by attending the
annual meeting and voting in person.
By order of the Board of Directors:
Patricia M. Kehe, Corporate Secretary
January 5, 2017
Newton, Massachusetts
DYNASIL CORPORATION OF AMERICA
313 Washington Street, Suite 403
Newton, MA 02458
(617) 668-6855
PROXY STATEMENT
INFORMATION CONCERNING THE PROXY SOLICITATION
Important Notice
Regarding the Availability of Proxy Materials for the
Stockholder Meeting to
Be Held on February 23, 2017:
This proxy statement and
the Annual Report are available to the Company’s
stockholders electronically
via the Internet at
http://www.dynasil.com/investors/proxy-information/
|
This proxy statement contains information related
to the annual meeting of stockholders of Dynasil Corporation of America (“Dynasil” or the “Company”) to
be held on Thursday, February 23, 2017, at 10:00 A.M., local time, at the offices of Radiation Monitoring Devices, Inc. at 44 Hunt
Street, Watertown, MA, and at any adjournment or postponement thereof. The mailing date for this proxy statement, along with the
proxy form and 10-K annual report, is on or about January 11, 2017.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At the Company's annual meeting, stockholders
will act upon the matters outlined in the accompanying notice of meeting, including the election of directors, ratification of
the Company's independent registered public accounting firm, a proposal to approve the compensation of the Company’s executive
officers and an indication of the frequency with which the stockholders should vote to approve the compensation of the Company’s
executive officers. In addition, the Company's management will report on the performance of the Company during fiscal year 2016
and respond to questions from stockholders.
Who is entitled to vote?
Stockholders of record at the close of business
on the record date, December 27, 2016, are entitled to receive notice of the annual meeting and to vote the shares of common stock
that they held on that date at the meeting, or any postponement or adjournment of the meeting. Each outstanding share entitles
its holder to cast one vote on each matter to be voted upon. If your shares are held in “street name” in a brokerage
account or by a bank or other holder of record, you are considered the beneficial owner of those shares. As a beneficial owner,
you may direct your broker or other holder of record on how to vote your owned shares by following their instructions.
Who can attend the meeting?
All stockholders as of the record date, or
their duly appointed proxies, may attend the meeting.
Please note that if you hold your shares in
"street name" (that is, through a broker, bank or other nominee), you will need to bring a copy of a brokerage statement
or similar document or record reflecting your stock ownership as of the record date and check in at the registration desk at the
meeting.
What constitutes a quorum?
The presence at the meeting, in person or by
proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum, permitting
the transaction of business at the meeting. As of the record date, 16,906,265 shares of common stock of the Company were outstanding.
Proxies received but marked as abstentions, votes withheld and broker non-votes will be counted for purposes of determining if
a quorum is present at the meeting.
How do I vote?
You may vote your shares held of record either
by attending the meeting and voting in person or by proxy. For vote counting purposes, we encourage you to mail your proxy in advance
of the meeting, even if you plan to attend in person. To vote in person, you must attend the meeting and bring your proxy card,
as received from the Company or from your brokerage house. You do not need to register in advance to attend the meeting. If you
choose to vote by proxy, you must complete and properly sign the accompanying proxy card and return it to the Company in the enclosed
postage prepaid envelope. If you vote by mail and your proxy card is received in time for voting and not revoked, it will be voted
in accordance with your instructions. If no instructions are indicated, the shares represented by the proxy card will be voted
by the proxy holders:
·
FOR
the election of the director nominees named herein;
·
FOR
the ratification of the appointment of RSM US LLP as the Company’s independent registered public accounting firm for
the fiscal year ending September 30, 2017;
·
FOR
approval of the compensation of the Company’s executive officers;
·
IN
accordance with the judgment of the proxy holders named on the proxy card as to any other matter that is properly brought before
the meeting, or any adjournments or postponements thereof.
"Street name" stockholders who wish
to vote at the meeting will need to make arrangements with their broker, bank or other nominee in advance of the meeting to vote
their shares in person.
Can I change my vote after I return my
proxy card?
Yes. Even after you have submitted your proxy,
you may change your vote at any time before the proxy is exercised by filing with the Secretary of the Company either a notice
of revocation or a duly executed proxy bearing a later date. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, although attendance at the meeting will not by itself revoke a previously granted proxy.
What vote is required to approve each
item?
Election of directors.
Directors shall
be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote
on the election of directors. A properly executed proxy marked "WITHHOLD AUTHORITY" with respect to the election of one
or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes
of determining whether there is a quorum. Accordingly, a “WITHHOLD AUTHORITY” will have the effect of a negative vote.
Ratification of independent registered public
accounting firm.
The affirmative vote of a majority of the shares cast at the meeting is required to ratify the appointment
of RSM US LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2017.
A properly executed proxy marked "ABSTAIN" with respect to this matter will not be voted, although it will be counted
for purposes of determining whether there is a quorum. Accordingly, an abstention will have no effect on the outcome of this matter.
Advisory Vote approving the compensation
of the Company’s executive officers
. The proposal will be considered approved at the annual meeting if more votes are
cast in favor than against. Abstentions and broker non-votes will not count as votes cast for or against this proposal.
Advisory Vote on the frequency with which
the stockholders should vote to approve the compensation of the Company’s executive officers.
The affirmative vote of
the holders of a majority of the shares represented in person or by proxy and entitled to vote on the item will be required for
approval. If none of the alternatives of this proposal (one year, two years or three years) receive a majority vote, we will consider
the highest number of votes cast by stockholders to be the frequency that has been selected by stockholders.
If you hold your shares in "street name"
through a broker, bank or other nominee, your broker, bank or nominee will not be permitted to exercise voting discretion with
respect to the election of directors or matters related to executive compensation. Thus, if you do not give your broker or nominee
specific instructions, your shares will not be voted on such proposals and will not be counted in determining the number of shares
necessary for approval of such proposals. Shares represented by such "broker non-votes" will, however, be counted in
determining whether there is a quorum.
STOCK OWNERSHIP
Who are the largest owners of the Company's
common stock?
As of December 27, 2016, Dr. Gerald Entine,
the former owner of the Company’s RMD subsidiary, owned approximately 17% of the outstanding shares of the Company’s
common stock and Mr. Craig Dunham, a director and former CEO and President of the Company, owned approximately 12% of the outstanding
shares of the Company’s common stock. See the table and notes below.
How many shares of stock do the Company's
directors and executive officers and significant stockholders own?
The following table and notes set forth the
beneficial ownership of the common stock of the Company as of December 27, 2016, by each person who was known by the Company to
beneficially own more than 5% of the common stock, by each director, nominee for director and named executive officer, and by all
directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC and includes
voting or dispositive power with respect to the securities. Unless otherwise indicated below, to our knowledge, all persons listed
below have sole voting and dispositive power with respect to their shares of our common stock, except to the extent authority is
shared by spouses under applicable law. Except as otherwise indicated, the address of each beneficial holder is c/o Dynasil
Corporation of America, 313 Washington Street, Suite 403, Newton, Massachusetts 02458.
Name and
Address
|
|
No.
of Shares and nature of
|
|
|
Percent
of
|
|
Of
Beneficial Owner
|
|
Beneficial
Ownership(1)
|
|
|
Class
|
|
Gerald Entine (2) 100 Belvidere
St. #10B, Boston, MA 02199
|
|
|
2,846,325
|
|
|
|
16.84
|
%
|
Craig Dunham (3)
|
|
|
2,004,778
|
|
|
|
11.86
|
%
|
Peter Sulick (4),(7)
|
|
|
1,606,660
|
|
|
|
9.50
|
%
|
Lawrence Fox (5),(7)
|
|
|
244,689
|
|
|
|
1.45
|
%
|
David Kronfeld
|
|
|
207,677
|
|
|
|
1.23
|
%
|
Thomas Leonard
|
|
|
166,676
|
|
|
|
|
*
|
William Hagan (2),(7)
|
|
|
131,377
|
|
|
|
|
*
|
Alan Levine
|
|
|
88,065
|
|
|
|
|
*
|
Robert Bowdring
(6)
|
|
|
67,558
|
|
|
|
|
*
|
All
Officers and Directors as a Group (8 persons) (1)
|
|
|
4,517,480
|
|
|
|
26.72
|
%
|
* Represents beneficial ownership of less than
1% of the outstanding shares of common stock.
(1) The numbers and percentages shown include
shares of common stock that the identified person has a right to acquire within 60 days of December 27, 2016. In calculating the
percentage of ownership, such shares are deemed to be outstanding for the purpose of computing the percentage share of common stock
owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage share of common stock owned
by any other stockholders. The number of shares outstanding on December 27, 2016 was 16,906,265.
(2) Includes shares held in the name of his family trust of which
he is a trustee.
(3) Includes 1,000,000 shares of common stock
held by the Dunham Family Limited Liability Company of which Mr. Dunham is the sole managing member.
(4) Includes 77,500 shares of common stock held in two irrevocable
trusts for his children and grandchildren of which family members are trustees. Mr. Sulick expressly disclaims beneficial ownership
of the securities beneficially held by the trusts except to the extent of his pecuniary interest therein.
(5) Includes options to purchase 21,980 shares
of the Company’s common stock at $3.03 per share, options to purchase 36,232 shares of the Company’s common stock at
$1.82 per share and options to purchase 64,935 shares of the Company’s stock at $2.33 per share.
(6) Includes 60,000 shares of restricted stock
that vest annually in 20,000 share increments through February 1, 2019.
(7) As of December 1, 2016, Mr. Sulick and
family own the equivalent of 12.7% of the Company’s Xcede Technologies, Inc. subsidiary’s (“Xcede”) outstanding
common stock, Mr. Fox owns the equivalent of 1.9% of Xcede’s outstanding common stock, Dr. Hagan owns the equivalent of 0.3%
of Xcede’s outstanding common stock, and Dr. Entine owns the equivalent of 1.3% of Xcede’s outstanding common stock.
See “Related Party Transactions” for more information.
EXECUTIVE OFFICERS
Set forth below is a list of our current executive officers.
Name
|
|
Age
|
|
Position
|
Peter Sulick
|
|
66
|
|
Chairman of the Board, CEO and President
|
Robert Bowdring
|
|
59
|
|
Chief Financial Officer
|
Below is a description of the business experience
of Mr. Bowdring. Mr. Sulick’s business experience is described in the section entitled “Election of Directors.”
Robert J. Bowdring
, 59, joined the Company
as Corporate Controller in March of 2013. Mr. Bowdring became the Company’s Chief Financial Officer on February 1, 2016.
Mr. Bowdring is a member of the board of directors of INVO Bioscience, a small publicly traded development-stage infertility medical
device company based in Medford, MA. Mr. Bowdring served as the Chief Financial Officer for INVO Bioscience from 2008 until 2013.
He served as Chief Financial Officer of Cyphermint, Inc. from 2003 to 2008, and as Vice President and Corporate Controller for
Lifeline Systems from 1989 to 2003. Prior to 1989, Mr. Bowdring held positions of increasing responsibility at Remanco, Inc., Warburton’s
Inc., Cyborg Corporation, and Technogenics, Inc. Mr. Bowdring has a B.A. in Accounting from the University of Massachusetts.
PROPOSAL 1
ELECTION OF DIRECTORS
As of the date of the annual meeting of stockholders,
the number of members of the Board of Directors is fixed at seven (7) members. The seven (7) directors set forth below are standing
for election to hold office subject to the provisions of the Company’s by-laws until the next Annual Meeting of Stockholders,
and until their respective successors are duly elected and qualified. All of the directors nominated for election at the annual
meeting were recommended for nomination to the Board of Directors by the Nominating and Corporate Governance Committee. Directors
shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled
to vote on the election of directors. The following table sets forth the name, age, position with the Company and respective director
service dates of each person who has been nominated to be a director of the Company:
|
|
|
|
Position(s)
|
|
|
Nominee for Director
|
|
Age
|
|
With the Company
|
|
Director Since
|
|
|
|
|
|
|
|
Mr. Craig Dunham
|
|
60
|
|
Director
|
|
2004
|
|
|
|
|
|
|
|
Mr. Lawrence Fox
|
|
73
|
|
Director
|
|
2011
|
|
|
|
|
|
|
|
Dr. William Hagan
|
|
65
|
|
Lead Director
|
|
2012
|
|
|
|
|
|
|
|
Mr. David Kronfeld
|
|
69
|
|
Director
|
|
2010
|
|
|
|
|
|
|
|
Mr. Thomas Leonard
|
|
62
|
|
Director
|
|
2016
|
|
|
|
|
|
|
|
Mr. Alan Levine
|
|
73
|
|
Director
|
|
2013
|
|
|
|
|
|
|
|
Mr. Peter Sulick
|
|
66
|
|
Chairman, CEO & President
|
|
2008
|
Each nominee listed above has consented to
his nomination and is expected to stand for election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE NOMINEES LISTED ABOVE
.
Business Experience and Qualifications
of the Directors and Director Nominees
Craig Dunham
, 60, Director, invested
in Dynasil and then joined the Company in October 2004 as President, CEO and a director. In May of 2011, Mr. Dunham retired from
his management role at Dynasil and became CEO and Director of Applied Pulsed Power Inc., a pulsed power components and systems
company near Ithaca, NY, a role he held until 2015. Starting March 2014, Mr. Dunham served as a consultant to the board of directors
of LightPath Technologies (NASDAQ:LPTH) and he formally became a Director and member of the Audit Committee in April 2016. Since
April 2015, he has done a variety of business and M&A consulting. Prior to joining Dynasil, Mr. Dunham spent about one year
partnering with a private equity group to pursue acquisitions of mid-market manufacturing companies. From 2000 to 2003, he was
Vice President/General Manager of the Tubular Division at Kimble Glass Corporation. From 1979 to 2000, he held progressively increasing
leadership responsibilities at Corning Incorporated in manufacturing, engineering, commercial and general management positions.
At Corning, he delivered results in various glass and ceramics businesses including optics and photonics businesses. Mr. Dunham
earned a B.S. in Mechanical Engineering and an M.B.A. from Cornell University. Mr. Dunham brings to the Board executive leadership,
operations and management experience, business acumen, strategy development, optics/photonics market knowledge and knowledge of
the acquisitions process.
Lawrence Fox
, 73, Director, has been
a member of the Board since February 2011. Mr. Fox has served as a partner since 1976 and is former managing partner of Drinker
Biddle & Reath LLP, where he specializes in securities and general commercial litigation and the counseling of law firms. Currently,
he is a visiting lecturer of law and the Crawford Lecturer at Yale Law School. From 2007 to 2010 he was a lecturer on law at Harvard
Law School. He was the I. Grant Irey, Jr. adjunct professor at Penn Law School from 2000 to 2008. He is the author of a long list
of articles that have appeared in regional and national publications, covering a wide variety of subjects with particular emphasis
on ethical issues and has written numerous book chapters relating to internal investigations, sanctions, expert witnesses and other
topics. Mr. Fox currently serves as a director for Aberdeen The Chile Fund, Inc., Aberdeen The First Israel Fund, Inc., Aberdeen
The Indonesia Fund, Inc., Aberdeen The Latin America Equity Fund, Inc., Credit Suisse High Yield Bond Fund, Inc. and Credit Suisse
Asset Management Income Fund, Inc. He has a B.A. degree from the University of Pennsylvania and a LLB from the University of Pennsylvania
Law School. Mr. Fox brings extensive legal and corporate governance experience to the Board from his legal experience and previous
Board positions which significantly expand the Board’s depth of corporate governance experience as we meet the rigorous NASDAQ
requirements through his participation as chairman of the Nominating and Corporate Governance Committee and on the Audit Committee.
William Hagan, Ph.D.
, 65, joined the
Board of Directors in July of 2012. Since 2011, Dr. Hagan has served as President of Hagan & Associates LLC. Prior to forming
his consulting business, Dr. Hagan was the Acting Director of the Department of Homeland Security’s Domestic Nuclear Detection
Office (DNDO) reporting to the Secretary of Homeland Security from December of 2009 until August of 2010. Before serving as Acting
Director, Dr. Hagan was the DNDO’s Acting Deputy Director from January of 2008 until December of 2009. Prior to that position,
Dr. Hagan served as Assistant Director for the Transformational and Applied Research Directorate. Prior to his four years of service
at the DNDO, Dr. Hagan was a Senior Vice President at Science Applications International Corporation (SAIC). During a 30-year career
at SAIC, his areas of emphasis included nuclear technology, telecommunications, optics, transportation, system integration, and
technology assessments. Business roles included Group leadership, mergers and acquisitions, venture capital investment, and business
development. Dr. Hagan received a bachelor’s degree in Engineering Physics, a master’s degree in Physics, and a master’s
degree in Nuclear Engineering from the University of Illinois at Urbana. He received his Ph.D. in Physics from the University of
California at San Diego. Dr. Hagan brings a combination of experience in and understanding of commercial, government, and high
technology business to his role on the Board and as chairman of the Compensation Committee.
David Kronfeld
, 69, Director, has been
a member of the board since February 3, 2010. Mr. Kronfeld founded JK&B Capital (JK&B) in 1996, a venture capital firm
focused in the software, information technology and communications markets with over $1.1 billion of cumulative capital under management,
where he continues to work. Mr. Kronfeld is an experienced venture capital investor and telecommunications industry executive with
over 30 years of experience. Prior to forming JK&B, Mr. Kronfeld was a General Partner at Boston Capital Ventures (BCV) where
he focused on making venture capital investments in telecommunications and software companies. Before joining BCV, Mr. Kronfeld
was Vice President of Acquisitions and Venture Investments with Ameritech where he was responsible for directing venture capital
investments in a broad array of telecommunications-related companies and all of Ameritech's mergers and acquisitions activities.
In addition, Mr. Kronfeld was a Senior Manager at Booz Allen & Hamilton and a Systems Analyst at Electronic Data Systems (E.D.S.).
He has served on four public company boards, thirty private company boards, and currently sits on the board of directors of NeuLion,
Inc, a public IPTV company. Mr. Kronfeld earned a Bachelor of Science in Electrical Engineering with high honors and a Master of
Science in Computer Science from Stevens Institute of Technology, and a Master of Business Administration from The Wharton School
of Business. Mr. Kronfeld brings extensive venture capital experience in evaluating opportunities and managing portfolio businesses
as well as multiple Board experiences which enable him to contribute to the Company’s Compensation and Nominating/Governance
Committees.
Thomas C. Leonard
, 62, Director, has
been a member of the Board since February 25, 2016. Mr. Leonard joined the Company as Chief Financial Officer on January 14, 2013
and retired from that position on January 31, 2016. Mr. Leonard is a member of the board of directors and Chairman of the Audit
Committee of Kadant Corp., a publicly traded manufacturing company based in Westford, MA. Mr. Leonard served as Chief Financial
Officer for Pennichuck Corp, a publicly traded water utility company, from 2008 until 2013. He served as Vice President of CRA
International from 2006 to 2008, and as Managing Director for Huron Consulting Group from 2002 to 2006. From 1987 to 2002, Mr.
Leonard held positions of increasing responsibility at Arthur Andersen LLP, ending his time there as Partner in Charge of Audit
Division. Mr. Leonard is a Certified Public Accountant and has a B.A. in Accounting. Mr. Leonard brings extensive public company
financial and corporate governance experience to the Board, as well as his three years of experience as CFO of the Company.
Alan Levine
, 73, joined the Board of
Directors in May of 2013. Mr. Levine was Vice President and Chief Financial Officer of the Graduate Management Admission Council
from 2007 to 2011. From 1998 to 2007, Mr. Levine served in a number of Chief Financial Officer and Financial Consultant roles,
largely in technology-based companies. Mr. Levine was a Partner with Ernst & Young LLP from 1986 to 1998. Prior to serving
in the Partner role, Mr. Levine was an Audit Principal, Audit Manager and Audit Senior during twenty-four years with Ernst &
Young. His areas of business expertise include entrepreneurial services, venture capital financing, initial public offerings and
accounting and financial education. He currently serves as a director and Audit Committee member for RBC Bearings Incorporated.
Mr. Levine received his Master of Accounting from the University of Arizona and a Bachelor of Arts from the University of Vermont.
Mr. Levine was a Certified Public Accountant for 30 years. Mr. Levine brings to the Board, Audit Committee and Compensation Committee
extensive public company financial and corporate governance experience.
Peter Sulick
, 66, Chairman, CEO and
President, joined the Board in June of 2008. Mr. Sulick is currently President and CEO of AmeriSite, LLC, a family-owned real estate
development and investment company, which he founded in 1998. From 2009 until 2016, Mr. Sulick served on the Board of Prism Microwave.
During that time, he served as the Chairman of the Board and CEO. Prism was founded in 2008 and provided RF conditioning products
for the mobile wireless infrastructure industry. From 1985 until 2002, Mr. Sulick founded and led telecommunications companies
that were later acquired by Nextel and T-Mobile. In the early part of his career, Mr. Sulick was a principal financial officer
for Cablevision Systems and has also held several senior-level financial positions at the Communications Operations Group of ITT.
He began his career in the audit department at Arthur Andersen & Co, in New York City following graduate school. He is a certified
public accountant who earned his MBA in finance from the University of Massachusetts and a B.S. in Business Administration from
The Citadel and was recently awarded an Honorary Doctorate in Entrepreneurship from The Citadel. Mr. Sulick brings to the Board
entrepreneurial skills, executive leadership and business and financial acumen to serve as Chairman and in his role as CEO and
President.
Directors’ Compensation
Each of our non-employee directors receives
an annual retainer of $50,000, a minimum of 50% of which is required to be paid in the form of equity, with the remaining 50% being
paid in cash or equity, in any ratio, at the director’s election. The Chairman and Audit Committee Chairman are paid additional
annual cash retainers of $20,000 and $10,000, respectively, in recognition of the added responsibility associated with these positions.
Our directors also receive reimbursement of out-of-pocket expenses incurred in attending Board and committee meetings.
Equity is given as director compensation in
either quarterly stock grants at market price or options to purchase stock with either a) a three year term, granted at thirty-three
percent (33%) above market price, or b) a five year term, granted at fifty percent (50%) above market price.
Directors’ Compensation For Fiscal
Year Ended September 30, 2016
Pursuant to our Director Compensation Policy,
each of our non-employee directors received total annual compensation of $50,000, 50% of which is payable in equity of the Company
and the remaining 50% of which is payable at the director’s election in either cash or equity of the Company. We do not pay
our directors additional retainers for their service on Board committees.
The table below summarizes the compensation
paid to, or earned by, our non-employee directors for the director compensation year ended January 31, 2017. Mr. Sulick, our President
and Chief Executive Officer, does not receive any compensation for his Board service beyond the compensation he receives as an
executive officer of the Company.
|
|
Fees Earned or Paid In
|
|
|
|
|
Name
|
|
Cash ($)
|
|
|
Stock Awards($)(1)
|
|
|
Total($)
|
|
Craig Dunham (2)
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
50,000
|
|
Lawrence Fox (2)
|
|
|
-
|
|
|
|
50,000
|
|
|
|
50,000
|
|
William Hagan (2)
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
50,000
|
|
David Kronfeld (2)
|
|
|
-
|
|
|
|
50,000
|
|
|
|
50,000
|
|
Thomas Leonard (2), (3)
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
50,000
|
|
Alan Levine (2)
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
60,000
|
|
(1) Represents the aggregate grant date fair
value of the stock awards received by the director during fiscal year 2016 determined in accordance with FASB ASC Topic 718. Assumptions
used in the calculation of these amounts are included in footnote 10 to our audited financial statements for the fiscal year
ended September 30, 2016 included in our Annual Report on Form 10-K filed with the SEC on December 21, 2016.
(2) For the director compensation year beginning
February 2016, the six non-employee directors were asked to specify whether they wished to receive the equity portion of their
director compensation and any equity portion of the electable 50% of their compensation in common stock grants or stock options.
Mr. Fox chose to receive both the equity and electable components of his director compensation as options to purchase stock, which
were issued on February 1, 2016 with an exercise price of $2.33 per share, 33% above the grant date market price of $1.75 per share,
with a three year term, all of which options were fully vested at the time of the grant. The remaining five non-employee directors
chose to receive the equity component of their compensation as quarterly stock grants. In regards to the 50% of their compensation
for which Directors may elect cash or equity, Mr. Dunham, Dr. Hagan, Mr. Leonard and Mr. Levine each elected to take this amount
entirely in cash. Mr. Kronfeld elected to take the entire electable amount of his compensation in quarterly stock grants. The quarterly
stock grants for the director compensation year beginning February 2016 were made on February 1, 2016 at the grant date closing
market price of $1.75, on May 2, 2016 at the grant date closing market price of $1.62, on August 1, 2016 at the grant date closing
market price of $1.42 per share and on October 1, 2016 at the grant date closing market price of $0.99.
(3) On February 1, 2016, Mr. Leonard was granted
an option to purchase 16,129 shares of Xcede Technologies, Inc. common stock at the option price of $1.00 per share in recognition
of his service as a member of the Xcede board of directors. Twenty-five percent (25%) of this option will vest on February 1, 2017
and an additional 3.125% of the option vests each month thereafter. As of December 27, 2016, no shares underlying such option were
vested.
CORPORATE GOVERNANCE
Director Independence
The Board has determined that all directors
and nominees for director, other than Mr. Sulick and Mr. Leonard, are independent under the NASDAQ and SEC rules, based on information
known to the Company and on the annual questionnaire completed by each director.
Board Leadership Structure
The Company has historically had different
persons serving in the offices of Chairman of the Board and Chief Executive Officer (CEO), although it has no formal policy requiring
that structure. As Mr. Sulick is currently serving both of these roles, Dr. Hagan serves as Lead Director. The responsibilities
of the lead director include setting the Board's agenda in collaboration with the CEO, providing guidance to the CEO, acting as
a regular communication channel between the Board and CEO, presiding over executive sessions of the Board to review the Company's
performance and management effectiveness, coordinating the activities of non-employee directors, reviewing the activities and effectiveness
of the Board committees, and evaluating the need for any changes. The Board believes that having a separate Chairman or lead director
allows the CEO to focus principally on managing the Company, which adds value to the Company’s senior management team and
operating business units, enhances Board involvement and communications among the non-employee directors, and ensures consistent
Board leadership during any CEO transition.
Board’s Role in Risk Oversight
The Company’s business involves many
operational and financial risks, which management and the Board seek to mitigate through careful planning and execution. Assessing
and managing risk is primarily the responsibility of the Company’s management. However, the Board of Directors has an active
role, as a whole and also at the committee level, in overseeing management of the Company’s risks. The Board of Directors
provides oversight by receiving reports from management in Board meetings and conference calls, as well as through periodic management
reports. These include reports on the market environment and strategic situation, customer sales results and forecasts, availability
of raw materials and components, product development, liquidity, and overall financial performance and forecasts. Board members
have the opportunity to provide input and direction to management on managing risks on a current basis, either directly or through
the Lead Director or Chairman. In order to ensure that longer term risks are also considered in a timely and consistent matter,
each year the full Board reviews and approves a budget that is used by management throughout the year. The Chairman oversees the
Company’s business activities, including its management of operational risks, between meetings of the Board. The Audit Committee
has responsibility for overseeing the Company’s internal financial and accounting controls. As such, the Audit Committee
regularly discusses with management and the Company’s independent registered public accounting firm the Company’s major
financial and controls-related risk exposures and the steps that management has taken to monitor and control such exposures. The
Compensation Committee is responsible for overseeing the management of risks relating to the Company’s executive compensation
plans and arrangements. The Company believes that Board leadership by an independent lead director or chairman enhances the Board’s
ability to oversee the Company’s operational and financial risks.
Board
Meetings
During the fiscal year ended September
30, 2016, the Board of Directors held a total of eight meetings. Mr. Dunham, Dr. Hagan, Mr. Kronfeld, Mr. Levine and Mr. Sulick
attended all fiscal year 2016 meetings. Mr. Leonard also attended all eight of the fiscal year 2016 Board of Director meetings,
although, three of the meetings were held prior to his election as a director on February 25, 2016, thus Mr. Leonard attended those
meetings in his capacity as the Company’s Chief Financial Officer. The Board regularly holds sessions at which only non-employee
directors are present, including a portion of each quarterly meeting. All Board members are expected to attend the annual meeting
of stockholders, subject to special circumstances. All of the Board members attended the annual meeting of stockholders on February
25, 2016.
Committees of the Board
The Board of Directors has an Audit Committee,
a Compensation Committee and a Nominating and Corporate Governance Committee, all the members of which are independent, as defined
by Securities and Exchange Commission rules and NASDAQ listing standards, as applicable. As Mr. Leonard was an employee of the
Company until January 31, 2016, he is not considered independent under these guidelines and does not serve on any Board committees.
Additionally, due to the participation of three of the directors in the financing of Xcede Technologies, Inc. (“Xcede”),
the three directors who are not investors in Xcede, Mr. Dunham, Mr. Levine and Mr. Kronfeld were appointed to an Independent Xcede
Committee, which is charged with independently representing the Company’s interests in any decisions involving the financing
of Xcede. In addition to the meetings described below, the members of each committee communicate regularly amongst themselves and
with management on Company matters.
Each of the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee operates under a written charter that is
available on the Company’s web site: http://www.dynasil.com/investors/corporate-governance/board-committees/.
Compensation Committee
.
The
current members of the Compensation Committee are Dr. Hagan, Mr. Kronfeld and Mr. Levine, with Dr. Hagan serving as the Chairman.
Mr. Levine was appointed to the Compensation Committee effective February 1, 2016, upon Dr. Michael J. Joyner’s departure
from the Board. The Compensation Committee is responsible for negotiating and approving salaries and employment agreements for
officers of the Company. Current compensation practices are outlined in the Director Compensation and Executive Compensation sections
of this proxy statement. There were four Compensation Committee meetings in fiscal year 2016 and each of the committee members
attended all of those meetings.
Ge
nerally
all executive officer and director compensation programs of the Company are subject to the review and approval of the Compensation
Committee, which also reviews and determines the base salary and incentive compensation of the executive officers. The Chief Executive
Officer provides a compensation recommendation for each executive officer (other than himself), which the Compensation Committee
considers in making its decisions. Compensation decisions are made throughout the year as circumstances warrant. All compensation
actions taken by the Compensation Committee are reported to the full Board of Directors, and certain actions are subject to the
approval of the Board, excluding management directors. The Compensation Committee has previously used a compensation consultant
to provide comparable market data as well as compensation advice in setting executive and director compensation and policies. The
Compensation Committee also reviews and makes recommendations to the Board on director compensation and equity awards.
The Compensation Committee is composed
of outside directors who are not officers or employees of the Company. The Board has determined that these directors are all independent
under applicable NASDAQ and SEC rules.
Audit Committee
. The current members
of the Audit Committee are Mr. Fox, Mr. Dunham and Mr. Levine, with Mr. Levine serving as both Chairman and Audit Committee Financial
Expert. The Audit Committee is responsible for reviewing reports of the Company's financial results, audits, internal controls,
and adherence to its Business Conduct Guidelines, compliance with federal procurement and other laws and regulations, and other
matters. The Audit Committee recommends to the Board of Directors the selection of the Company's outside auditors, reviews their
procedures for ensuring their independence with respect to the services performed for the Company and approves their compensation.
There were six Audit Committee meetings in fiscal year 2016 and Mr. Levine and Mr. Dunham attended all of those meetings. Mr. Fox
was excused from one meeting.
The Audit Committee is composed of outside
directors who are not officers or employees of the Company. The Board has determined that these directors are all independent under
applicable NASDAQ and SEC rules.
Nominating and Corporate Governance
Committee.
The current members of the Nominating and Corporate Governance Committee are Mr. Fox, Mr. Kronfeld and Mr. Dunham,
with Mr. Fox serving as the Chairman.
Mr. Dunham was appointed to the Nominating and Corporate Governance Committee effective
February 1, 2016, upon Dr. Joyner’s departure from the Board. Nominations for the February 23, 2017 annual stockholders meeting
to which this proxy statement relates were developed by this committee and approved by the full Board on December 14, 2016. The
Nominating and Corporate Governance Committee held one meeting in fiscal year 2016.
Director Nominations
The Nominating and Corporate Governance
Committee is responsible for (i) identifying individuals qualified to become Board members, consistent with criteria approved by
the Board, and (ii) recommending to the Board the persons to be nominated for election as directors at any meeting of stockholders
and the persons to be elected by the Board to fill any vacancies on the Board. Director nominees are considered for recommendation
by the Nominating and Corporate Governance Committee in accordance with the policies and principles in its charter and the criteria
set forth in the Corporate Governance Guidelines, as outlined below. It is expected that the Nominating and Corporate Governance
Committee will have direct input from the Chairman of the Board, the Chief Executive Officer and, if one is appointed, the Lead
Director.
Criteria for Nomination as a Director
General Criteria
|
1.
|
Nominees should have a reputation for integrity, honesty and adherence to high ethical standards.
|
|
2.
|
Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments
in matters that relate to the current and long-term objectives of the Company and should be willing and able to contribute positively
to the decision-making process of the Company.
|
|
3.
|
Nominees should have a commitment to understand the Company and its industry and to regularly attend
and participate in meetings of the Board and its committees.
|
|
4.
|
Nominees should have the interest and ability to understand the sometimes conflicting interests
of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and
the general public, and to act in the interests of all stockholders.
|
|
5.
|
Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s
ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director.
|
|
6.
|
Nominees shall not be discriminated against on the basis of race, religion, national origin, sex,
sexual orientation, disability or any other basis proscribed by law. The value of diversity on the Board should be considered.
|
Application of Criteria to Existing
Directors
The re-nomination of existing directors
should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above. In addition,
the Nominating and Corporate Governance Committee shall consider the existing directors’ performance on the Board and any
committee, which shall include consideration of the extent to which the directors undertook continuing director education.
Criteria for Composition of the Board
The backgrounds and qualifications of the
directors considered as a group should provide a significant breadth of experience, knowledge and abilities that shall assist the
Board in fulfilling its responsibilities.
The Nominating and Corporate Governance
Committee’s process for evaluating nominees for director, including nominees recommended by stockholders, is to consider
their skills, character and professional ethics, judgment, leadership experience, business experience and acumen, familiarity with
relevant industry issues, national and international experience, and other relevant criteria as they may contribute to the Company’s
success. This evaluation is performed in light of the Committee’s views as to what skill set and other characteristics would
most complement those of the current directors, including the diversity (principally, of education and backgrounds), age, skills
and experience of the Board as a whole.
In order to recommend a candidate for consideration
by the Nominating and Corporate Governance Committee, a stockholder must provide the Committee with the candidate's name, background
and relationship with the proposing stockholder, a brief statement outlining the reasons the candidate would be an effective director
of the Company and information relevant to the considerations described above. Such information should be sent to the Nominating
and Corporate Governance Committee of Dynasil Corporation of America, 313 Washington Street, Suite 403, Newton, MA 02458;
Attn:
Corporate Secretary. The Nominating and Corporate Governance Committee may seek further information from or about the candidate,
or the stockholder making the recommendation, including information about all business and other relationships between the candidate
and the stockholder.
REPORT OF THE AUDIT COMMITTEE OF
DYNASIL CORPORATION OF AMERICA
December 13, 2016
To the Board of Directors of Dynasil Corporation
of America:
We have reviewed and discussed with management
the Company's audited consolidated financial statements as of and for the fiscal year ended September 30, 2016.
We have discussed with the independent
accountants the matters required to be discussed by Statement on Auditing Standards No. 16, Communications with Audit Committees,
as amended, as adopted by the Public Company Accounting Oversight Board.
We have received and reviewed the written
disclosures and the letter from the independent accountants required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and
have discussed with the independent accountants the accountants’ independence.
Based on the reviews and discussions referred
to above, we recommended to the Board of Directors that the consolidated financial statements referred to above be included in
the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016.
The information contained in this report
shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission,
nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference in such
filing.
By:
|
/s/ Alan Levine
|
Alan Levine, Chairman
|
|
|
By:
|
/s/ Lawrence Fox
|
Lawrence Fox
|
|
|
By:
|
/s/ Craig Dunham
|
Craig Dunham
|
Audit Committee
Dynasil Corporation of America
EXECUTIVE COMPENSATION
Fiscal Year 2016 Summary Compensation
Table
Name and Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock
Awards ($)
(2)(3)
|
|
|
All Other
Compensation ($)
(4)
|
|
|
Total ($)
|
|
Peter Sulick
|
|
|
2016
|
|
|
|
310,177
|
|
|
|
60,573
|
|
|
|
145,800
|
|
|
|
55,278
|
|
|
|
571,827
|
|
Chairman, President &
|
|
|
2015
|
|
|
|
300,000
|
|
|
|
29,250
|
|
|
|
112,400
|
|
|
|
59,852
|
|
|
|
501,502
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Leonard (1)
|
|
|
2016
|
|
|
|
82,288
|
|
|
|
40,546
|
|
|
|
-
|
|
|
|
-
|
|
|
|
122,834
|
|
Former Chief Financial Officer
|
|
|
2015
|
|
|
|
202,163
|
|
|
|
40,550
|
|
|
|
-
|
|
|
|
-
|
|
|
|
242,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Bowdring (1)
|
|
|
2016
|
|
|
|
175,487
|
(5)
|
|
|
21,750
|
|
|
|
105,000
|
|
|
|
-
|
|
|
|
302,237
|
|
Chief Financial Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Corporate Controller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Thomas Leonard retired from his role
as Chief Financial Officer, effective January 31, 2016. Robert Bowdring assumed the role of Chief Financial Officer upon Mr. Leonard’s
retirement. Prior to February 1, 2016, Mr. Bowdring was the Company’s Corporate Controller.
(2) Represents the aggregate grant date
fair value of the restricted stock awards received by the executive officer during the year indicated, determined in accordance
with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in footnote 11 to our audited financial
statements for the fiscal year ended September 30, 2016 included in our Annual Report on Form 10-K filed with the SEC
on December 21, 2016.
(3) Mr. Sulick’s stock awards in
fiscal year 2016 represent four fully vested stock grants of 20,000 shares each of the Company’s common stock under the Company’s
2010 Stock Incentive Plan issued as quarterly compensation on December 23, 2015, February 18, 2016, May 18, 2016 and August 17,
2016, valued at a total of $116,000 and an additional 20,000 shares of the Company’s common stock under the Company’s
2010 Stock Incentive Plan issued as a performance bonus award on February 18, 2016, valued at $29,800. Mr. Sulick’s stock
awards in fiscal year 2015 represent three fully vested stock grants of 20,000 shares each of the Company’s common stock
under the Company’s 2010 Stock Incentive Plan issued as quarterly compensation on February 23, 2015, May 19, 2015 and August
18, 2015, valued at a total of $84,800 and an additional 20,000 shares of the Company’s common stock under the Company’s
2010 Stock Incentive Plan issued as a performance bonus award on May 19, 2015, valued at $27,600.
(4)
Amount consists of reimbursement
for living expenses and local transportation costs while in the area of our corporate headquarters in Newton, Massachusetts and
for air travel between Massachusetts and Mr. Sulick’s place of residency.
(5) Salary amount in 2016 represents the
sum of (i) the pro-rated portion of Mr. Bowdring’s annual base salary as Corporate Controller of $148,625 in effect during
the period from the beginning of fiscal year 2016 to February 1, 2016 and (ii) the pro-rated portion of his annual base salary
as Chief Financial Officer of $185,000 in effect during the period from February 1, 2016 to the end of fiscal year 2016. See “Executive
Officer Compensatory Arrangements” below.
Executive Officer Compensatory Arrangements
Peter Sulick
For fiscal 2016, Mr. Peter Sulick’s
annual compensation consisted of a base cash salary of $310,500 and a stock compensation component, consisting of quarterly stock
awards of 20,000 shares each, which shall continue as long as he is employed as the Company's CEO and President. Additionally,
Mr. Sulick has the opportunity annually to earn a performance bonus payable in stock and cash based on the achievement of quarterly
performance goals and the Board of Directors’ periodic qualitative assessment of the Company's progress on its strategic
objectives.
Cash and stock bonus amounts are payable
quarterly following the achievement of quarterly performance goals. Actual amounts payable to Mr. Sulick will be determined by
the number of quarters in which the performance goals are met and, in the case of the cash bonus, the extent to which the target
performance goals are met or exceeded. All compensatory stock awards granted to Mr. Sulick shall be issued from the Company's 2010
Stock Incentive Plan.
Mr. Sulick had the following bonus opportunity
in fiscal year 2016:
|
·
|
A target cash bonus equal to 25% of Mr.
Sulick's then annual base cash salary. For fiscal year 2016, this target cash bonus equaled $19,406 per quarter or $77,625 per
year and was dependent on the achievement of quarterly target cash bonus performance criteria. If performance had exceeded target
goals by specified amounts, this cash bonus opportunity increased to $26,198 per quarter or $104,794 per year; and
|
|
·
|
A stock bonus consisting of an additional
20,000 shares per quarter, for an aggregate of 80,000 shares per year, depending on the achievement of quarterly stock bonus performance
criteria.
|
For fiscal year 2016, Mr. Sulick earned
20,000 shares of bonus stock and a total of $45,800 in cash bonuses, of which $33,573 was paid to him during the fiscal year, the
remainder paid subsequent to the filing of Company’s Annual Report on Form 10-K on December 21, 2016.
For fiscal year 2017, with the approval
of the Board of Directors, Mr. Sulick decreased his annual base cash salary to $275,000, and amended the stock compensation component
to quarterly stock awards of 16,250 shares each. The performance bonus plan was also amended to include the following bonus opportunity
for fiscal year 2017:
|
·
|
A target cash bonus of $18,750 per quarter
or $75,000 per year, approximately 27% of Mr. Sulick's annual base cash salary of $275,000 per year and was dependent on the achievement
of quarterly target cash bonus performance criteria. If performance exceeds target goals by specified amounts, this cash bonus
opportunity increases to $25,312 per quarter or $101,250 per year.
|
|
·
|
At Mr. Sulick’s recommendation,
the Board of Directors temporarily suspended the stock bonus component of the plan, which consists of 20,000 shares per quarter,
for an aggregate of 80,000 shares per year, depending on the achievement of quarterly stock bonus performance criteria. The Board
and Mr. Sulick will re-evaluate this decision at a later point in the year.
|
Thomas Leonard
Mr. Leonard retired from his position as
Chief Financial Officer of the Company on January 31, 2016. Prior to his retirement, his fiscal year 2016 annual base cash salary
was $207,800.
Robert Bowdring
Mr. Bowdring served as the Company’s
Corporate Controller until he assumed the role of Chief Financial Officer on February 1, 2016. For fiscal year 2016, Mr. Bowdring’s
annual base cash salary for his new role was $185,000. Additionally, Mr. Bowdring is eligible annually to earn a cash performance
bonus of up to twenty-five (25%) percent of his base salary.
Mr. Bowdring earned an annual cash bonus
of $32,058, in fiscal year 2016, which was paid subsequent to the end of the fiscal year.
On February 1, 2016, Mr. Bowdring was granted
a time-vested restricted stock award of 60,000 shares of the Company’s stock. The shares in this grant vest in three equal
annual increments, beginning with the grant date, provided that he is employed with the Company continuously through the applicable
vesting date. Mr. Bowdring’s Employment Letter specifies that his employment is at-will employment. Mr. Bowdring is also
eligible to participate in the Company’s standard employee benefit programs at the corporate office location, including medical,
dental, life and disability insurance and participation in a 401K plan. Mr. Bowdring is also subject to certain non-solicitation
covenants for twelve months following termination of employment and non-competition covenants for six months following termination
of employment in accordance with Dynasil’s standard executive arrangements.
The Board of Directors increased Mr. Bowdring’s
annual base cash salary to $190,550, effective on his anniversary date of February 1, 2017.
Outstanding Equity Awards at Fiscal
2016 Year-End
|
|
Option Awards
|
|
|
|
|
|
Stock Awards
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value of
|
|
|
|
Underlying Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
Shares or Units of
|
|
|
Shares or Units of
|
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Stock That Have
|
|
|
Stock That Have
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Date
|
|
|
Not Vested (#)
|
|
|
Not Vested ($)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Sulick
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Bowdring
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
59,400
|
|
|
(1)
|
Calculated by multiplying the number of shares of restricted stock by the closing price of Dynasil’s common stock on
the NASDAQ Capital Market on September 30, 2016 ($0.99).
|
Related Party Transactions
During the years ended September 30, 2016
and 2015, building lease payments of $1,000,000 and $961,000, respectively were paid to Charles River Realty, dba Bachrach, Inc.,
which is owned by Gerald Entine and family. Dr. Entine is a former director and employee of the Company, as well as a greater than
5% beneficial owner of the Company’s stock. On December 6, 2012, the Company (Lessee), through its wholly-owned subsidiaries,
Dynasil Products and RMD, entered into an Omnibus Amendment (the “Amendment”) to Leases for two leases with Charles
River Realty, d/b/a Bachrach, Inc. As a result of the Amendment, the leases, which were scheduled to expire June 30, 2013, became
month-to-month tenancies and will continue until terminated by either the Lessor or the Lessee. Such month-to-month tenancies may
be terminated by Lessor upon not less than three years' prior written notice to Lessee and may be terminated by Lessee upon not
less than six months' prior written notice to Lessor. Additionally, the monthly base rent is subject to an annual 4% increase on
July 1.
Dr. William Hagan provides consulting services
to RMD through his consulting company, Hagan & Associates LLC (“H&A”). During the year ended September 30,
2016, H&A was paid approximately $700 in fees. No amounts were paid during 2015. This consulting arrangement is expected to
continue into the future.
In October, 2013, the Company’s subsidiary,
Dynasil Biomedical, formed Xcede Technologies, Inc., a joint venture with Mayo Clinic, to spin out and separately fund the development
of its tissue sealant technology. Xcede issued $5.1 million of convertible promissory notes in order to fund its operations. Mr.
Sulick and family members invested $1,065,000, Mr. Lawrence Fox invested, $150,000, Dr. Zuckerman (the Xcede CEO) and family invested
$125,000, Ms. Lunardo (Optometrics COO) invested $25,000, Dr. Hagan invested $25,000, Kanai Shah (the RMD President) invested $25,000
and Dr. Entine’s Family Trust invested $100,000 in Xcede and were issued convertible promissory notes in those original principal
amounts. On November 18, 2016, Xcede converted these promissory notes into preferred stock.
As of December 1, 2016, Mr. Sulick and
family own the equivalent of 12.7% of Xcede’s outstanding common stock, Mr. Fox owns the equivalent of 1.9% of Xcede’s
outstanding common stock, Dr. Zuckerman and family own the equivalent of 1.2% of Xcede’s outstanding common stock, Ms. Lunardo
owns the equivalent of 0.3% of Xcede’s outstanding common stock, Dr. Hagan owns the equivalent of 0.3% of Xcede’s outstanding
common stock, Dr. Shah owns the equivalent of 0.3% of Xcede’s outstanding common stock and Dr. Entine owns the equivalent
of 1.3% of Xcede’s outstanding common stock.
Patricia Tuohy is the Company’s Director
of Business Development. During the year ended September 30, 2016, Ms. Tuohy worked a full year in this position and earned $168,000
in compensation. During the year ended September 30, 2015, Ms. Tuohy worked a partial year and earned $103,000. Ms. Tuohy is Peter
Sulick’s daughter.
Equity Compensation Plan Information
The Company adopted Stock Incentive Plans
in 1996 and 1999 that permit, among other incentives, grants and options to officers, directors, employees and consultants to purchase
up to 3,750,000 shares of the Company’s common stock. At the February 3, 2010 annual meeting, a new Stock Incentive
Plan was adopted by the stockholders which permits up to 6,000,000 shares of the Company’s common stock to be issued through
this plan. Options granted pursuant to the 2010 plan are exercisable at or above the common stock’s fair market value
on the date of grant and generally vest over a three to five-year period. At September 30, 2016, 3,646,924 shares of
common stock were available for issuance under the 2010 plan and 123,147 stock options were outstanding, with exercise prices from
$1.82 to $3.03. For the 2010 plan to date, options have been granted at exercise prices ranging from $1.82 to $7.32 per share.
At September 30, 2016, no options remain
outstanding that were issued through the 1999 Stock Incentive Plan.
Plan Category
|
|
Number of securities to
be issued upon
exercise of outstanding
options, warrants, and
rights ( a )
|
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights ( b )
|
|
|
Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column ( a ))
|
|
Equity compensation plans approved by security holders
|
|
|
123,147
|
|
|
$
|
2.30
|
|
|
|
3,654,980
|
(1)
|
Equity compensation plans not approved by security holders
|
|
|
none
|
|
|
|
none
|
|
|
|
none
|
|
(1) Consists of 3,646,924 shares of common stock available for
issuance in the 2010 Stock Incentive Plan and 131,203 shares of common stock available for issuance under the Amended and Restated
Employee Stock Purchase Plan.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Subject to the approval of the Company’s
stockholders, the Audit Committee has determined that RSM US LLP, which firm has been the independent registered public accounting
firm of the Company its last five fiscal years, should continue to be the independent registered public accounting firm of the
Company for fiscal 2017. Although ratification by our stockholders is not required by our by-laws or otherwise, the Audit Committee
believes that it is appropriate to seek stockholder ratification of this appointment in light of the critical role played by the
independent registered public accounting firm. In the event this ratification is not received, the Audit Committee will reconsider
the selection of RSM US LLP. One or more representatives of RSM US LLP will be available at the annual meeting. They will have
the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions
from stockholders.
Accountants Fees
RSM US LLP was our independent registered
public accounting firm for fiscal years 2016 and 2015. During the period covering the fiscal years ended September 30, 2016 and
2015, RSM US LLP (formerly McGladrey LLP through October 25, 2015) performed the following professional services:
(a)
Audit Fees
The aggregated fees billed by RSM US LLP
for professional services rendered for the audit of the Company's consolidated financial statements included in its Annual Report
on Form 10-K for the year ended September 30, 2016, the review of the consolidated financial statements included in the Company’s
Quarterly Reports on Form 10-Q during that fiscal year and out-of-pocket expenses are $303,951. The aggregated fees billed or to
be billed by RSM US LLP for professional services rendered for the audit of the Company's consolidated financial statements included
in its Annual Report on Form 10-K for the year ended September 30, 2015, the review of the consolidated financial statements included
in the Company’s Quarterly Reports on Form 10-Q during that fiscal year and out-of-pocket expenses are $276,115.
(b)
Audit-Related Fees
The Company incurred no audit related fees
for the fiscal years ended September 30, 2016 or 2015.
(c)
Tax Fees
During fiscal years 2016 and 2015, the
Company incurred fees of $48,000 and $40,000, respectively, for professional services rendered by RSM US LLP for tax compliance.
(d)
All Other Fees
The Company incurred no fees for other
services provided by RSM US LLP during fiscal years 2016 and 2015, respectively.
(e)
Pre-approval Policies and Procedures
The Board of Directors has adopted a pre-approval
policy requiring that the Audit Committee pre-approve the audit and non-audit services performed by the independent auditor in
order to assure that the provision of such services do not impair the auditor’s independence. All auditor fees were
pre-approved during fiscal years 2016 and 2015.
The affirmative vote of a majority of the
shares cast at the meeting is required to ratify the appointment of RSM US LLP as the Company’s independent registered public
accounting firm for the fiscal year ending September 30, 2017.
THE BOARD OF DIRECTORS RECOMMENDS A “VOTE” FOR
RATIFICATION OF RSM US LLP AS THE COMPANY’S INDEPENDENT AUDITOR FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2017.
PROPOSAL 3
ADVISORY VOTE REGARDING EXECUTIVE OFFICERS’
COMPENSATION
This proposal, commonly known as “Say
on Pay,” asks the stockholders to approve the compensation of the Company’s executive officers as described under “Executive
Compensation” on pages 16 to 18 of this proxy statement.
The compensation paid to the Company’s
executive officers is intended to align their interests with the long-term interests of the Company’s stockholders and is
based on a pay-for-performance philosophy. It is straightforward, consisting principally of salary, which must be competitive to
retain the skills and experience of excellent employees, annual bonus to reward strong performance, and equity compensation to
encourage long-term commitment and team performance. Not all elements may be provided every year, depending on the performance
of the Company and the executive. The Board believes that the executives’ compensation met the Company’s goals and
that it should be approved by the stockholders.
The vote solicited by this proposal is
advisory and its outcome will not be binding on the Board nor require the Board to take any action. Moreover, the outcome of the
vote will not be construed as overruling any decision of the Board, or creating or implying any additional fiduciary duty of the
Board. However, the Board expects to take into account the outcome of this vote when considering future executive compensation
arrangements for the Company’s executive officers.
The proposal will be considered approved
at the annual meeting if more votes are cast in favor than against. Abstentions and broker non-votes will not count as votes cast
for or against this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.
PROPOSAL 4
ADVISORY VOTE ON FREQUENCY OF EXECUTIVE
COMPENSATION ADVISORY VOTE
The Company is required by the Dodd-Frank
Act to provide stockholders with a "say-on-pay" vote every one, two or three years, as determined by a separate advisory
stockholder vote held at least once every six years. The Company currently conducts “say-on-pay” votes once every two
years, The Company’s Board of Directors proposes that stockholders provide advisory (non-binding) approval of the frequency
of advisory votes on executive compensation at the company, as per Item No. 4 in this proxy statement. Stockholders may indicate
whether they would prefer an advisory vote on named executive officer compensation once every one, two or three years. Stockholders
may abstain by submitting a proxy card without instruction on this Proposal 4.
The approval of a majority of our shares
represented at the meeting, whether in person or by proxy, is required for advisory (non-binding) approval of Proposal 4. If none
of the alternatives of Proposal 4 (one year, two years or three years) receive a majority vote, we will consider the highest number
of votes cast by stockholders to be the frequency that has been selected by stockholders. However, because this vote is advisory
and not binding on the Board of Directors or the Company in any way, the Board may decide that it is in the best interests of our
stockholders and the company to hold an advisory vote on executive compensation more or less frequently than the option approved
by our stockholders.
The Board has not made a recommendation
on this Proposal 4 because it has decided to consider the views of the Company's stockholders before making a determination.
OTHER MATTERS
As of the date of this proxy statement,
the Company knows of no business that will be presented for consideration at the annual meeting of stockholders other than the
items referred to above. In the event that any other matter is properly brought before the meeting for action by the stockholders,
proxies in the enclosed form returned to the Company will be voted in accordance with the recommendation of the Board of Directors
or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder.
ADDITIONAL INFORMATION
Stockholder Proposals for the Annual
Meeting.
Stockholders interested in submitting a proposal for consideration at the Company's annual meeting of stockholders
in 2018 may do so by following the procedures prescribed in Rule 14a-8 under the Securities Exchange Act of 1934 and the Company's
by-laws. To be eligible for inclusion in the Company’s proxy materials for the annual meeting in 2018, stockholder proposals
must be received by the Company's Corporate Secretary no later than September 8, 2017. A stockholder who wishes to make a proposal
at the 2018 annual meeting, but does not wish to have the proposal included in the proxy statement for that meeting, must give
notice of the proposal to us no later than November 27, 2017, in order for the notice to be considered timely under Rule 14a-4(c)
of the SEC.
Stockholder Communications to the
Board.
Stockholders interested in communicating to the Dynasil Board of Directors may do so through the Dynasil website,
www.dynasil.com, by clicking on “Contact” and then “Request Information”. All communications from stockholders
to Board members (other than communications soliciting the purchase of products and services) will be promptly relayed to the Board
members to whom the communications are addressed
.
Proxy Solicitation Costs.
The proxies being solicited hereby are being solicited by the Company. The cost of soliciting proxies in the enclosed form will
be borne by the Company. Officers and regular employees of the Company may, but without compensation other than their regular compensation,
solicit proxies by further mailing or personal conversations, or by telephone, telex, facsimile or electronic means. The Company
will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the
beneficial owners of stock.
By order of the Board of Directors:
Patricia M. Kehe, Corporate Secretary
January 5, 2017
Newton, Massachusetts
PROXY FORM
|
DYNASIL CORPORATION OF AMERICA
|
PROXY FORM
|
Annual
Meeting of Stockholders - To Be Held February 23, 2017 at 10:00 AM local time at
44 Hunt Street, Watertown, MA.
THE BOARD OF DIRECTORS SOLICITS
THIS PROXY
The undersigned hereby appoint(s)
PETER
SULICK
and
ROBERT BOWDRING
or either of them, as attorney-in-fact, agent and proxy of the undersigned, with full power
of substitution, to vote all shares of common stock of Dynasil Corporation of America that the undersigned would be entitled to
cast if personally present at the Annual Meeting of Stockholders of the Company, and at any postponement or adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED
BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR EACH OF THE BELOW LISTED PERSONS AS A DIRECTOR AND PROPOSALS
TWO, THREE AND FIVE.
Please date, sign exactly as your name
appears on the form and mail the proxy promptly
. When signing as an attorney, executor, administrator, trustee or guardian,
please give your full title as such. If shares are held jointly, both owners must sign.
Important Notice Regarding the Availability
of Proxy Materials for the
Stockholder Meeting to Be Held on February 23, 2017:
This
Proxy Statement and the Annual Report are available to the Company’s stockholders electronically via the Internet at
http://www.dynasil.com/investors/proxy-information/.
Director Nominees:
(1) Craig
Dunham, (2) Lawrence Fox, (3) William Hagan, (4) David Kronfeld, (5) Thomas Leonard, (6) Alan Levine and (7) Peter Sulick
|
|
The
Board of Directors Recommends a Vote For Each of the Directors Listed in Proposal One and For Proposals Two, Three and Five:
|
(1)
|
ELECTION OF DIRECTORS: Craig
Dunham, Lawrence Fox, William Hagan, David Kronfeld, Thomas Leonard, Alan Levine, Peter Sulick
|
|
FOR
¨
all nominees (except as
marked to the contrary)
|
WITHHOLD
¨
authority to vote for all nominees
|
|
Withhold authority to vote for the individual
¨
nominees(s) identified in the space provided below
|
|
|
|
|
|
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
|
|
|
(2)
|
To ratify the appointment of RSM US LLP as the Company’s
|
|
|
|
|
independent registered public accounting firm for the 2017 fiscal year.
|
¨
|
¨
|
¨
|
|
|
|
|
|
(3)
|
To approve the Compensation of the Company’s Named Executive
|
¨
|
¨
|
¨
|
|
Officers.
|
|
|
|
|
|
|
|
|
(4)
|
Please circle your advisory choice of frequency of advisory vote on
|
One Year
|
Two Years
|
Three Years
|
|
Executive Compensation:
|
|
|
|
|
|
|
|
|
(5)
|
Any other matters that properly come before the meeting.
|
¨
|
¨
|
¨
|
SIGNATURE
|
|
DATE
|
|
|
[name of shareholder 1]
|
|
|
|
|
|
|
SIGNATURE
|
|
DATE
|
|
|
[name of shareholder 2]
|
|
|
|
|
|
[address of shareholder]
|
Dynasil Corp of America (NASDAQ:DYSL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Dynasil Corp of America (NASDAQ:DYSL)
Historical Stock Chart
From Apr 2023 to Apr 2024