CEL-SCI CORPORATION
8229 Boone Blvd.
Suite 802
Vienna, Virginia 22l82
(703) 506-9460
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD May 30, 2017
To the Shareholders:
Notice is hereby given that the annual meeting of the shareholders of
CEL-SCI Corporation ("CEL-SCI") will be held at 4820-C Seton Drive, Baltimore,
MD 21215, on May 30, 2017 at 10:30 a.m. local time, for the following purposes:
(1) to elect the directors who shall constitute CEL-SCI's Board of
Directors for the ensuing year;
(2) to approve the adoption of CEL-SCI's 2017 Non-Qualified Stock Option
Plan which provides that up to 20,000,000 shares of common stock may
be issued upon the exercise of options granted pursuant to the Plan;
(3) to approve the adoption of CEL-SCI's 2017 Stock Bonus Plan which
provides that up to 4,000,000 shares of common stock may be issued to
persons granted stock bonuses pursuant to the Plan;
(4) subject to the determination of CEL-SCI's directors that a reverse
split would be in the best interest of CEL-SCI's shareholders, to
approve a reverse split of CEL-SCI's common stock. A condition of the
reverse stock split is that the ratio of the reverse split will be
determined by CEL-SCI's Board of Directors, provided that, in any
case, the reverse split ratio will not be greater than 1 for 25. The
Board of Directors may elect not to proceed with a stock split without
further action by the shareholders;
(5) to approve, on a non-binding advisory basis, the compensation of
CEL-SCI's executive officers;
(6) to approve, on a non-binding advisory basis, the frequency of the
advisory vote regarding the compensation of CEL-SCI's executive
officers;
(7) to ratify the appointment of BDO USA, LLP as CEL-SCI's independent
registered public accounting firm for the fiscal year ending September
30, 2017; and
to transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
April 5, 2017 is the record date for the determination of shareholders
entitled to notice of and to vote at the meeting. Shareholders are entitled to
one vote for each share held. As of April 5, 2017, there were ___________
outstanding shares of CEL-SCI's common stock.
CEL-SCI CORPORATION
___________, 2017 Geert R. Kersten, Chief Executive Officer
The Board of Directors solicits the enclosed proxy. Your vote is important no
matter how large or small your holdings. To assure your representation at the
meeting, please vote promptly.
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be held on May 30, 2017. This Proxy Statement is
available at: www.irdirect.net/CVM/sec_filings/
If you need additional copies of this Proxy Statement or
the enclosed proxy card, or if you have other
questions about the proposals or how to vote your shares, you may contact our
proxy solicitor:
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ADVANTAGE PROXY
(877) 870-8565 (toll free) or (206) 870-8565 (collect)
Or by email at: ksmith@advantageproxy.com
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ATTACHED PROXY CARD,
AND SIGN, DATE AND RETURN THE PROXY CARD, OR VOTE VIA THE INTERNET
OR BY TELEPHONE
TO SAVE THE COST OF FURTHER SOLICITATION,
PLEASE VOTE PROMPTLY
THIS PAGE INTENTIONALLY LEFT BLANK
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CEL-SCI CORPORATION
8229 Boone Blvd.
Suite 802
Vienna, Virginia 22l82
(703) 506-9460
PROXY STATEMENT
The accompanying proxy is solicited by CEL-SCI's directors for voting at
the annual meeting of shareholders to be held on May 30, 2017, and at any and
all adjournments of such meeting. If the proxy is executed and returned, it will
be voted at the meeting in accordance with any instructions, and if no
specification is made, the proxy will be voted for the proposals set forth in
the accompanying notice of the annual meeting of shareholders. Shareholders who
execute proxies may revoke them at any time before they are voted, either by
writing to CEL-SCI at the address shown above or in person at the time of the
meeting. Additionally, any later dated proxy will revoke a previous proxy from
the same shareholder. This proxy statement was posted on the CEL-SCI's website
on or about April 17, 2017.
There is one class of capital stock outstanding. Provided a quorum
consisting of one-third of the shares entitled to vote is present at the
meeting, the affirmative vote of a majority of the shares of common stock voting
in person or represented by proxy is required to elect directors. Cumulative
voting in the election of directors is not permitted. The other proposals to
come before the meeting will be adopted if votes cast in favor of the proposal
exceed the votes cast against the proposal.
Shares of CEL-SCI's common stock represented by properly executed proxies
that reflect abstentions or "broker non-votes" will be counted as present for
purposes of determining the presence of a quorum at the annual meeting. "Broker
non-votes" represent shares held by brokerage firms in "street-name" with
respect to which the broker has not received instructions from the customer or
otherwise does not have discretionary voting authority. Abstentions and broker
non-votes will not be counted as having voted against the proposals to be
considered at the meeting.
PRINCIPAL SHAREHOLDERS
The following table lists, as of March 15, 2017, information with respect
to the persons owning beneficially 5% or more of CEL-SCI's outstanding common
stock and the number and percentage of outstanding shares owned by each director
and officer of CEL-SCI and by the officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
or her shares of common stock.
Number of Percent
Name and Address Shares (1) of Class
----------------- ---------- --------
Geert R. Kersten 19,286,849 (2) 8.6%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Patricia B. Prichep 3,883,382 1.8%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
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|
Eyal Talor, Ph.D. 3,740,424 1.7%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Daniel H. Zimmerman, Ph.D. 563,313 *
8229 Boone Blvd., Suite 802
Vienna, VA 22182
John Cipriano 1,772,718 *
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Alexander G. Esterhazy 417,483 *
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland
Peter R. Young, Ph.D. 439,277 *
208 Hewitt Drive, Suite 103-143
Waco, TX 76712
Bruno Baillavoine 83,334 *
8229 Boone Blvd., Suite 802
Vienna, VA 22182
All Officers and Directors 30,186,780 13.4%
as a Group (8 persons)
MMCAP International, Inc. 33,306,916 13.79%
P.O. Box 259
George Town Financial Centre
Grand Cayman, Cayman Islands KY1-1208
Sabby Healthcare Master Fund, Ltd. 51,074,489 20.06%
Sabby Volatility Warrant Master Fund, Ltd.
89 Nexus Way, Camana Bay
Grand Cayman, Cayman Islands KY1-9007.
|
* Less than 1% of outstanding shares.
(1) Includes shares issuable prior to June 30, 2017 upon the exercise of
options or warrants held by the following persons:
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Options or Warrants
Exercisable Prior to
Name June 30, 2017
------ --------------------
Geert R. Kersten, Esq. 7,306,780 (3)
Patricia B. Prichep 530,304
Eyal Talor, Ph.D. 462,093
Daniel Zimmerman, Ph.D. 374,201
John Cipriano 145,000
Alexander G. Esterhazy 394,167
Peter R. Young, Ph.D. 409,501 (4)
Bruno Baillavoine 83,334
MMCAP International, Inc. 25,516,674
Sabby Healthcare Master
Fund, Ltd./Sabby Volatility
Warrant Master Fund, Ltd. 38,600,000
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(2) Amount includes shares held in trust for the benefit of Mr. Kersten's
children and securities held in a separate trust, for which Mr. Kersten is
a beneficiary.
(3) Amount includes shares issuable upon the exercise of Series S warrants
which were purchased in the open market, and shares issuable upon the
exercise of Series N and Series Y warrants held in the trust.
(4) Amount includes shares issuable upon the exercise of Series S warrants
which were purchased in the open market.
OFFICERS AND DIRECTORS
Information concerning CEL-SCI's officers and directors follows:
Name Age Position Committees
---- --- -------- ----------
Geert R. Kersten, Esq. 57 Director, Chief Executive
Officer and Treasurer
Patricia B. Prichep 65 Senior Vice President of
Operations and Corporate
Secretary
Eyal Talor, Ph.D. 60 Chief Scientific Officer
Daniel H.
Zimmerman, Ph.D. 75 Senior Vice President of
Research, Cellular Immunology
John Cipriano 74 Senior Vice President of
Regulatory Affairs
Alexander G. Esterhazy 75 Director, Independent Audit, Compensation,
and Nominating
Peter R. Young, Ph.D.(1) 71 Director, Independent Audit, Compensation,
and Nominating
Bruno Baillavoine 64 Director, Independent Audit, Compensation,
and Nominating
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(1) Dr. Young is the chairman of the Audit, Compensation and Nominating
committees.
The directors of CEL-SCI serve in such capacity until the next annual
meeting of CEL-SCI's shareholders and until their successors have been duly
elected and qualified. The officers of CEL-SCI serve at the discretion of
CEL-SCI's directors. CEL-SCI's officers devote substantially all of their time
to CEL-SCI's business.
Geert Kersten has served in his current leadership role at CEL-SCI since 1995.
Mr. Kersten has been with CEL-SCI since 1987, the early days of CEL-SCI's
inception. He has been involved in the pioneering field of cancer immunotherapy
for almost three decades and has successfully steered CEL-SCI through many
challenging cycles in the biotechnology industry. Prior to CEL-SCI, Mr. Kersten
worked at the law firm of Finley & Kumble and worked at Source Capital, an
investment banking firm located in McLean, VA. He is a native of Germany,
graduated from Millfield School in England, and completed his studies in the US.
Mr. Kersten received his Undergraduate Degree in Accounting and an M.B.A. from
George Washington University, and a law degree (J.D.) from American University
in Washington, DC. Mr. Kersten's experience overseeing the financing and
research and development of CEL-SCI for over 25 years qualifies him to continue
to serve on CEL-SCI's board of directors. Mr. Kersten is also the inventor of a
patent on the potential use of Multikine in managing cholesterol.
Patricia B. Prichep joined CEL-SCI in 1992 and has been CEL-SCI's Senior
Vice President of Operations since March 1994. Between December 1992 and March
1994, Ms. Prichep was CEL-SCI's Director of Operations. Ms. Prichep became
CEL-SCI's Corporate Secretary in May 2000. She is responsible for all day-to-day
operations of CEL-SCI, including human resources and is the liaison with
CEL-SCI's independent registered public accounting firm for financial reporting.
From June 1990 to December 1992, Ms. Prichep was the Manager of Quality and
Productivity for the NASD's Management, Systems and Support Department. She was
responsible for the internal auditing and work flow analysis of operations.
Between 1982 and 1990, Ms. Prichep was Vice President and Operations Manager for
Source Capital, Ltd. She handled all operations and compliance for Source
Capital and was licensed as a securities broker. Ms. Prichep received her B.A.
from the University of Bridgeport in Connecticut.
Eyal Talor, Ph.D. joined CEL-SCI in October 1993. In October 2009, Dr.
Talor was promoted to Chief Scientific Officer. Between this promotion and March
of 1994 he was the Senior Vice President of Research and Manufacturing. He is a
clinical immunologist with over 19 years of hands-on management of clinical
research and drug development for immunotherapy application (pre-clinical to
Phase III), in the biopharmaceutical industry. His expertise includes;
biopharmaceutical R&D and Biologics product development, GMP (Good Manufacturing
Practices) manufacture, Quality Control testing, and the design and building of
GMP manufacturing and testing facilities. He served as Director of Clinical
Laboratories (certified by the State of Maryland) and has experience in the
design of clinical trials (Phase I - III) and GCP (Good Clinical Practices)
requirements. He also has broad experience in the different aspects of
biological assay development, analytical methods validation, raw material
specifications, and QC (Quality Control) tests development under FDA/GMP, USP,
and ICH guidelines. He has extensive experience in the preparation of
documentation for IND and other regulatory submissions. His scientific area of
expertise encompasses immune response assessment. He is the author of over 25
publications and has published a number of reviews on immune regulations in
relation to clinical immunology. Before coming to CEL-SCI, he was Director of
R&D and Clinical Development at CBL, Inc., Principal Scientist - Project
Director, and Clinical Laboratory Director at SRA Technologies, Inc. Prior to
that he was a full time faculty member at The Johns Hopkins University, Medical
Intuitions; School of Public Health. He has invented technologies which are
covered by two US patents; one on Multikine's composition of matter and method
of use in cancer, and one on a platform Peptide technology (`Adapt') for the
treatment of autoimmune diseases, asthma, allergy, and transplantation
rejection. He also is responsible for numerous product and process inventions as
well as a number of pending US and PCT (Patent Cooperation Treaty) patent
applications. He received his Ph.D. in Microbiology and Immunology from the
University of Ottawa, Ottawa, Ontario, Canada, and had post-doctoral training in
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clinical and cellular immunology at The Johns Hopkins University, Baltimore,
Maryland, USA. He holds an Adjunct Associate teaching position at the Johns
Hopkins University Medical Institutions.
Daniel H. Zimmerman, Ph.D. was CEL-SCI's Senior Vice President of Cellular
Immunology between 1996 and December 2008 and again since November 2009. He
joined CEL-SCI in January 1996 as the Vice President of Research, Cellular
Immunology. Dr. Zimmerman founded CELL-MED, Inc. and was its president from
1987-1995. From 1973-1987, Dr. Zimmerman served in various positions at
Electronucleonics, Inc. His positions included: Scientist, Senior Scientist,
Technical Director and Program Manager. Dr. Zimmerman held various teaching
positions at Montgomery College between 1987 and 1995. Dr. Zimmerman has
invented technologies which are covered by over a dozen US patents as well as
many foreign equivalent patents. He is the author of over 40 scientific
publications in the area of immunology and infectious diseases. He has been
awarded numerous grants from the National Institutes of Health (NIH) and the
Department of Defense. From 1969-1973, Dr. Zimmerman was a Senior Staff Fellow
at the NIH. For the following 25 years, he continued on at NIH as a guest
worker. Dr. Zimmerman received a Ph.D. in Biochemistry in 1969, and a Masters in
Zoology in 1966 from the University of Florida as well as a B.S. in Biology from
Emory and Henry College in 1963.
John Cipriano was CEL-SCI's Senior Vice President of Regulatory Affairs
between March 2004 and December 2008 and again since October 2009. Mr. Cipriano
brings to CEL-SCI over 30 years of experience with both biotech and
pharmaceutical companies. In addition, he held positions at the United States
Food and Drug Administration (FDA) as Deputy Director, Division of Biologics
Investigational New Drugs, Office of Biologics Research and Review and was the
Deputy Director, IND Branch, Division of Biologics Evaluation, Office of
Biologics. Mr. Cipriano completed his B.S. in Pharmacy from the Massachusetts
College of Pharmacy in Boston, Massachusetts and his M.S. in Pharmaceutical
Chemistry from Purdue University in West Lafayette, Indiana.
Alexander G. Esterhazy has been a Director of CEL-SCI since December 1999
and has been an independent financial advisor since November 1997. Between July
1991 and October 1997, Mr. Esterhazy was a senior partner of Corpofina S.A.
Geneva, a firm engaged in mergers, acquisitions and portfolio management.
Between January 1988 and July 1991, Mr. Esterhazy was a managing director of DG
Bank in Switzerland. During this period Mr. Esterhazy was in charge of the
Geneva, Switzerland branch of the DG Bank, founded and served as Vice President
of DG Finance (Paris) and was the President and Chief Executive Officer of
DG-Bourse, a securities brokerage firm. Mr. Esterhazy brings extensive financial
expertise that is valuable to CEL-SCI. His knowledge and experience with respect
to finance matters gives him the necessary qualifications to continue to serve
on CEL-SCI's board of directors, audit committee, nominating committee and
compensation committee.
Peter R. Young, Ph.D. has been a Director of CEL-SCI since August 2002. Dr.
Young has been a senior executive within the pharmaceutical industry in the
United States and Canada for most of his career, originally in organizations
that are now part of Sanofi S.A. Over the last 20 years he has primarily held
positions of Chief Executive Officer or Chief Financial Officer and has
extensive experience with acquisitions and equity financing. Since November
2001, Dr. Young has been the President of Agnus Dei, LLC, which has acted as a
partner in an organization managing immune system clinics which treated patients
with diseases such as cancer, multiple sclerosis and hepatitis. Dr. Young was
also the President and Chief Executive Officer of SRL Technology, Inc., a
company involved in the development of pharmaceutical drug delivery systems.
Between 1998 and 2001, Dr. Young was the Chief Financial Officer of Adams
Laboratories, Inc, the developer of Mucinex(R). Dr. Young received his Ph.D. in
Organic Chemistry from the University of Bristol, England after obtaining his
Bachelor's degree in Honors Chemistry, Mathematics and Economics. Subsequently,
he qualified as a Fellow of the Chartered Institute of Management Accountants.
CEL-SCI believes Dr. Young's extensive knowledge of the life sciences industry,
coupled with his business acumen and financial expertise, gives him the
qualifications and skills to serve as a director, the chair of the audit
committee, the chair of the nominating committee and a member of CEL-SCI's
compensation committee.
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Bruno Baillavoine has been a Director of CEL-SCI since June 2015. Since
2010, Mr. Baillavoine has been a partner of Globomass Holdings Limited, a
London, England based developer of renewable energy projects from concept
through final operations. Since 2012 Mr. Baillavoine has been the Executive
Chairman of Globomass Holdings. Globomass Holdings has subsidiaries in Ireland,
Bulgaria, Croatia, Serbia, and has recently acquired a 20% stake in a US based
renewable energy company. Between 1978 and 1982 he was the marketing manager of
Ravenhead Ltd., a manufacturer of glass tableware, and part of United Distillers
Group (later acquired by Grand Metropolitan). During this time Mr. Baillavoine
became the UK Business Manager where he restored market share and profit for
United Distillers. From 1982 to 1986 Mr. Baillavoine was Group Corporate
Planning and Group Marketing Director for Prontaprint where he expanded the
number of shops to 500 locations in four years. Mr. Baillavoine joined Grand
Metropolitan Plc between 1986-1988 (now Diageo Plc), an FTSE 100 beverage, food,
hotel and leisure company, as director in the Special Operations division. In
this capacity, he developed plans for Grand Met's trouble-shooting division for
over 20,000 Grand Met retail outlets. From 1988-1991 he was the Managing
Director of Nutri Systems (UK) Ltd., a subsidiary of the US based provider of
professionally supervised weight loss programs. Between 1991 and 1995, Mr.
Baillavoine was Director of BET Group plc, a multinational business support
services group, and in 1992, was promoted to the Managing Director for the
manufacturing businesses. The 2.3 billion pound turnaround of BET during his
tenure is one of the most successful turnarounds of a top 100 FTSE company.
Since 1995, Mr. Baillavoine has held a number of CEO positions across a wide
range of industries and geographical locations. Mr. Baillavoine has European and
American educations (US high school and University of Wisconsin Eau Claire
1972-1976). CEL-SCI believes Mr. Ballavoine is qualified to act as a director
due to his extensive business experience and success in the turnaround and
growth of global businesses.
CEL-SCI's nominating committee, consisting of Mr. Esterhazy, Mr.
Baillavoine and Dr. Young, has nominated Geert R. Kersten, Alexander G.
Esterhazy, Peter R. Young and Bruno Baillavoine to stand for election as
directors at the annual meeting. Unless the proxy contains contrary
instructions, it is intended that the proxies will be voted for the election of
the nominees to the board of directors. In case any nominee shall be unable or
shall fail to act as a director by virtue of an unexpected occurrence, the
proxies may be voted for such other person or persons as shall be determined by
the persons acting under the proxies in their discretion. All nominees to the
board of directors have consented to stand for election. CEL-SCI's Nominating
Committee Charter can be reviewed at CEL-SCI's website: cel-sci.com/about
cel-sci/corporate overview.
CEL-SCI does not have any policy regarding the consideration of director
candidates recommended by shareholders since a shareholder has never recommended
a nominee to the Board of Directors and under Colorado law, any shareholder can
nominate a person for election as a director at the annual shareholders'
meeting. However, CEL-SCI's nominating committee will consider candidates
recommended by shareholders. To submit a candidate for the Board of Directors
the shareholder should send the name, address and telephone number of the
candidate, together with any relevant background or biographical information, to
Dr. Peter Young at the address shown on the cover page of this proxy statement.
CEL-SCI's nominating committee has not established any specific qualifications
or skills a nominee must meet to serve as a director. Although CEL-SCI does not
have any process for identifying and evaluating director nominees, CEL-SCI does
not believe there would be any differences in the manner in which CEL-SCI
evaluates nominees submitted by shareholders as opposed to nominees submitted by
any other person.
CEL-SCI's Board of Directors does not have a "leadership structure", as
such, since each director is entitled to introduce resolutions to be considered
by the Board and each director is entitled to one vote on any resolution
considered by the Board. CEL-SCI's Chief Executive Officer is not the Chairman
of CEL-SCI's Board of Directors.
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CEL-SCI's Board of Directors has the ultimate responsibility to evaluate
and respond to risks facing CEL-SCI. CEL-SCI's Board of Directors fulfills its
obligations in this regard by meeting on a regular basis and communicating, when
necessary, with CEL-SCI's officers.
Alexander G. Esterhazy, Peter R. Young and Bruno Baillavoine are
independent as that term is defined in section 803 of the listing standards of
the NYSE MKT.
CEL-SCI's Board of Directors met four times during the fiscal year ended
September 30, 2016. All of the Directors attended these meetings, either in
person or by telephone conference call. In addition, the Board of Directors had
a number of informal telephonic meetings during the course of the year.
CEL-SCI has adopted a Code of Ethics which is applicable to CEL-SCI'S
principal executive, financial, and accounting officers and persons performing
similar functions. The Code of Ethics is available on CEL-SCI's website, located
at cel-sci.com/company_code_of_ethics.
If a violation of this code of ethics act is discovered or suspected, the
Senior Officer must (anonymously, if desired) send a detailed note, with
relevant documents, to CEL-SCI's Audit Committee, c/o Dr. Peter Young, 208
Hewitt Drive, Suite 103-143, Waco, TX 76712.
CEL-SCI does not have a policy with regard to Board member's attendance at
annual meetings. All Board members, with the exception of Alexander Esterhazy,
attended the last annual shareholder's meeting held on July 22, 2016.
Holders of CEL-SCI's common stock can send written communications to
CEL-SCI's entire Board of Directors, or to one or more Board members, by
addressing the communication to "the Board of Directors" or to one or more
directors, specifying the director or directors by name, and sending the
communication to CEL-SCI's offices in Vienna, Virginia. Communications addressed
to the Board of Directors as whole will be delivered to each Board member.
Communications addressed to a specific director (or directors) will be delivered
to the director (or directors) specified.
Security holder communications sent to specified Board members or not sent
to the Board of Directors as a whole are not relayed to Board members.
Executive Compensation
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) outlines CEL-SCI's
compensation philosophy, objectives and process for its executive officers. This
CD&A includes information on how compensation decisions are made, the overall
objectives of CEL-SCI's compensation program, a description of the various
components of compensation that are provided, and additional information
pertinent to understanding CEL-SCI's executive officer compensation program.
The Compensation Committee determines the compensation of CEL-SCI's Chief
Executive Officer and delegates to the Chief Executive Officer the
responsibility to determine the base salaries of all other officers, other than
himself, under the constraints of an overall limitation on the total amount of
compensation to be paid to them.
Compensation Philosophy
CEL-SCI's compensation philosophy extends to all employees, including
executive officers, and is designed to align employee and shareholder interests.
The philosophy's objective is to pay fairly based upon the employee's position,
9
experience and individual performance. Employees may be rewarded through
additional compensation when CEL-SCI meets or exceeds targeted business
objectives. Generally, under CEL-SCI's compensation philosophy, as an employee's
level of responsibility increases, a greater portion of his or her total
potential compensation becomes contingent upon annual performance.
A substantial portion of an executive's compensation incorporates
performance criteria that support and reward achievement of CEL-SCI's long term
business goals.
The fundamental principles of CEL-SCI's compensation philosophy are
described below:
o Market-driven. Compensation programs are structured to be competitive
both in their design and in the total compensation that they offer.
o Performance-based. Certain officers have some portion of their
incentive compensation linked to CEL-SCI's performance. The
application of performance measures as well as the form of the reward
may vary depending on the employee's position and responsibilities.
Based on a review of its compensation programs, CEL-SCI does not believe
that such programs encourage any of its employees to take risks that would be
likely to have a material adverse effect on CEL-SCI. CEL-SCI reached this
conclusion based on the following:
o The salaries paid to employees are consistent with the employees'
duties and responsibilities.
o Employees who have high impact relative to the expectations of their
job duties and functions are rewarded.
o CEL-SCI retains employees who have skills critical to its long term
success.
Review of Executive Officer Compensation
CEL-SCI's current policy is that the various elements of the compensation
package are not interrelated in that gains or losses from past equity incentives
are not factored into the determination of other compensation. For instance, if
options that are granted in a previous year have an exercise price which is
below the market price of CEL-SCI's common stock, the Committee does not take
that circumstance into consideration in determining the amount of the options or
restricted stock to be granted the next year. Similarly, if the options or
restricted shares granted in a previous year become extremely valuable, the
Committee does not take that into consideration in determining the options or
restricted stock to be awarded for the next year.
CEL-SCI does not have a policy with regard to the adjustment or recovery of
awards or payments if relevant performance measures upon which they are based
are restated or otherwise adjusted in a manner that would reduce the size of an
award or payment.
Components of Compensation - Executive Officers
CEL-SCI's executive officers are compensated through the following three
components:
o Base Salary
o Long-Term Incentives ("LTIs") (stock options and/or grants of common
stock)
o Benefits
These components provide a balanced mix of base compensation and
compensation that is contingent upon each executive officer's individual
performance. A goal of the compensation program is to provide executive officers
with a reasonable level of security through base salary and benefits. CEL-SCI
10
wants to ensure that the compensation programs are appropriately designed to
encourage executive officer retention and motivation to create shareholder
value. The Compensation Committee believes that CEL-SCI's stockholders are best
served when CEL-SCI can attract and retain talented executives by providing
compensation packages that are competitive but fair.
In past years, base salaries, benefits and incentive compensation
opportunities were generally targeted near the median of general survey market
data derived from indices covering similar biotech/pharmaceutical companies. The
companies included Advaxis, Inc., Amicus Therapeutics, Inc., Celsion Corp.,
CytRx Corporation, GERON Corp, Idera Pharmaceuticals, Inc., Northwest
Biotherapeutics, Inc., Oragenics, Inc., StemCells, Inc., TG Therapeutics, Inc.,
Venaxis, Inc., Arrowhead Research Corp, CorMedix Inc., Fibrocell Science, Inc.,
Hemispherx Biopharma, Inc., Opexa Therapeutics, Inc., Mateon Therapeutics, Inc.
(formerly OXiGENE, Inc.), Catalyst Bioscience, Inc., Tenax Therapeutics, Inc.,
Trovagene, Inc. and ZIOPHARM Oncology, Inc.
During fiscal year 2014, CEL-SCI used a third party consultant to provide
it with recommendations for strategic long term incentive compensation for
certain key executives. The recommendation resulted in the formation of the 2014
Incentive Stock Bonus Plan that was voted on and passed by the shareholders at
the annual meeting on July 22, 2014.
Base Salaries
Base salaries generally have been targeted to be competitive when compared
to the salary levels of persons holding similar positions in other
pharmaceutical companies and other publicly traded companies of comparable size.
Each executive officer's respective responsibilities, experience, expertise and
individual performance are considered.
A further consideration in establishing compensation for the senior
employees is their long term history with CEL-SCI. Taken into consideration are
factors that have helped CEL-SCI survive in times when it was financially weak,
such as: willingness to accept salary cuts, willingness not to be paid at all
for extended time periods, and in general an attitude that helped CEL-SCI
survive during financially difficult times.
Long-Term Incentives
Stock grants and option grants help to align the interests of CEL-SCI's
employees with those of its shareholders. Options and stock grants are made
under CEL-SCI's Stock Option, Incentive Stock Bonus, Stock Bonus and Stock
Compensation Plans. Options are granted with exercise prices equal to the
closing price of CEL-SCI's common stock on the day immediately preceding the
date of grant, with pro rata vesting at the end of each of the following three
years.
CEL-SCI believes that grants of equity-based compensation:
o Enhance the link between the creation of shareholder value and
long-term executive incentive compensation;
o Provide focus, motivation and retention incentive; and
o Provide competitive levels of total compensation.
CEL-SCI's management believes that the pricing for biotechnology stocks is
highly inefficient until the time of product sales. As such, any long term
compensation tied to progress as measured by share price is not as efficient as
11
it should be. The plan approved by the shareholders in July 2014, which covers
senior and mid-level employees, seeks to address this issue by rewarding
employees for meeting major operational milestones and significantly improved
share prices.
Benefits
In addition to cash and equity compensation programs, executive officers
participate in the health and welfare benefit programs available to other
employees. In a few limited circumstances, CEL-SCI provides other benefits to
certain executive officers, such as car allowances.
All executive officers are eligible to participate in CEL-SCI's 401(k) plan
on the same basis as its other employees. CEL-SCI matches with shares of common
stock that have a value equal to 100% of each employee's contribution not to
exceed the lesser of $1,000 or 6% of his or her salary.
Compensation Table
The following table sets forth in summary form the compensation received by
(i) the Chief Executive and Financial Officer of CEL-SCI and (ii) by each other
executive officer of CEL-SCI who received in excess of $100,000 during the three
fiscal years ended September 30, 2016.
All
Restricte Other
Stock Option Compen-
Name and Fiscal Salary Bonus Awards Awards sation
Principal Position Year (1) (2) (3) (4) (5) Total
------------------ ---- ----- --- ------ ----- --------- -----
$ $ $ $ $ $
Maximilian de Clara, 2016 345,618 -- -- 46,352 40,000 431,970
Former President (6) 2015 332,750 -- -- 69,190 40,000 441,940
2014 393,250 -- -- 298,648 73,183 765,081
Geert R. Kersten, 2016 558,432 -- 15,900 -- 54,981 629,314
Chief Executive 2015 514,083 -- 16,050 -- 54,981 585,114
Officer and Treasurer 2014 584,621 -- 3,236,526 82,917 57,581 3,961,645
Patricia B. Prichep, 2016 245,804 -- 14,725 -- 9,031 269,559
Senior Vice President 2015 235,702 -- 14,128 -- 6,906 256,736
of Operations and 2014 247,852 -- 1,735,938 5,278 6,531 2,045,599
Secretary
Eyal Talor, Ph.D., 2016 303,597 -- 9,600 -- 6,031 319,227
Chief Scientific
Officer 2015 290,983 -- 9,600 -- 6,031 306,613
2014 283,283 -- 1,731,290 55,278 6,031 2,075,882
Daniel Zimmerman,
Ph.D., 2016 228,413 -- 13,708 37,081 6,031 285,233
Senior Vice
President of 2015 219,026 -- 13,148 52,003 6,031 290,209
Research, Cellular 2014 213,231 -- 13,274 227,319 6,031 459,855
Immunology
John Cipriano, 2016 211,405 -- -- -- 31 211,437
Senior Vice
President of 2015 202,718 -- -- -- 31 202,749
Regulatory Affairs 2014 197,354 -- 888,614 41,549 31 1,127,458
|
(1) The dollar value of base salary (cash and non-cash) earned. The officers of
the Company received stock in lieu of salary increases in FY 2016 and 2015.
12
(2) The dollar value of bonus (cash and non-cash) earned.
(3) The fair value of the shares of restricted stock issued during the periods
covered by the table is shown as compensation for services to the persons
listed in the table. For all persons listed in the table, the shares were
issued as CEL-SCI's contribution on behalf of the named officer who
participates in CEL-SCI's 401(k) retirement plan and, by far the largest
part, restricted shares issued from the 2014 Incentive Stock Bonus Plan
that was voted on and passed by the shareholders at the annual meeting on
July 22, 2014. These shares are not vested and are held in escrow. The
shares will only be earned upon the achievement of certain milestones
leading to the commercialization of CEL-SCI's Multikine technology, or
specified increases in the market price of CEL-SCI's stock. If the
performance or market criteria are not met as specified in the Incentive
Stock Bonus Plan, all or a portion of the awarded shares will be forfeited.
The value of all stock awarded during the periods covered by the table is
calculated according to ASC 718-10-30-3 which represented the grant date
fair value.
(4) The fair value of all stock options granted during the periods covered by
the table are calculated on the grant date in accordance with ASC
718-10-30-3 which represented the grant date fair value.
(5) All other compensation received that CEL-SCI could not properly report in
any other column of the table including the dollar value of any insurance
premiums paid by, or on behalf of, CEL-SCI with respect to term life
insurance for the benefit of the named executive officer and car allowances
paid by CEL-SCI. Includes board of directors fees for Mr. de Clara and Mr.
Kersten.
(6) On August 31, 2016, Mr. de Clara resigned as President for personal health
reasons.
Employee Pension, Profit Sharing or Other Retirement Plans
CEL-SCI has a defined contribution retirement plan, qualifying under
Section 401(k) of the Internal Revenue Code and covering substantially all
CEL-SCI's employees. CEL-SCI's contribution to the plan is made in shares of
CEL-SCI's common stock. Each participant's contribution is matched by CEL-SCI
with shares of common stock which have a value equal to 100% of the
participant's contribution, not to exceed the lesser of $1,000 or 6% of the
participant's total compensation. CEL-SCI's contribution of common stock is
valued each quarter based upon the closing price of its common stock. The fiscal
2016 expenses for this plan were $168,262. Other than the 401(k) Plan, CEL-SCI
does not have a defined benefit, pension plan, profit sharing or other
retirement plan.
Compensation of Directors During Year Ended September 30, 2016
Paid in Stock Option
Name Cash Awards (1) Awards (2) Total
---- -------- ---------- ---------- -----
Maximilian de Clara (3) $ 40,000 - 46,352 $ 86,352
(3)
Geert Kersten $ 40,000 - - $ 40,000
Alexander Esterhazy $ 45,000 - 46,352 $ 91,352
Peter R. Young $ 50,000 - 46,352 $ 96,352
Bruno Baillavoine $ 45,000 - 46,352 $ 91,352
|
(1) The fair value of stock issued for services.
(2) The fair value of options granted computed in accordance with ASC
718-10-30-3 on the date of grant which represents their grant date fair
value.
(3) On August 31, 2016, Mr. de Clara resigned as President for personal health
reasons.
13
Directors' fees paid to Maximilian de Clara and Geert Kersten are also
included in the Executive Compensation table.
On August 31, 2016 Maximilian de Clara resigned as an officer and director
of the Company. In consideration for Mr. de Clara's past services to the
Company, the Company entered into a Termination Agreement with Mr. de Clara
which provided for the following:
1. The Company issued 650,000 restricted shares of its common stock to
Mr. de Clara. The first 325,000 shares were issued promptly after
August 31, 2016. Of the first 325,000 shares, none of the shares may
be sold prior to February 28, 2017. Starting on February 28, 2017,
each month the Company will remove the restrictive legend on 65,000
shares. The second 325,000 shares will be issued on August 31, 2017,
but may not be sold prior to February 28, 2018. Starting on February
28, 2018, each month the Company will remove the restrictive legend on
65,000 shares. The foregoing procedure will continue until the
restricted legend has been removed on all 650,000 shares.
2. All options held by Mr. de Clara vested as of August 31, 2016.
Employment Contracts
Geert Kersten
On August 31, 2016, CEL-SCI entered into a three-year employment agreement
with Geert Kersten, CEL-SCI's Chief Executive Officer. The employment agreement
with Mr. Kersten, which is essentially the same as Mr. Kersten's prior
employment agreement, as amended on August 30, 2013, provided that, during the
term of the agreement, CEL-SCI would pay Mr. Kersten an annual salary of
$559,052, plus any increases in proportion to salary increases granted to other
senior executive officers of CEL-SCI, as well any increases approved by the
Board of Directors during the period of the employment agreement.
During the employment term, Mr. Kersten will be entitled to receive any
other benefits which are provided to CEL-SCI's executive officers or other full
time employees in accordance with CEL-SCI's policies and practices and subject
to Mr. Kersten's satisfaction of any applicable condition of eligibility.
If Mr. Kersten resigns within ninety (90) days of the occurrence of any of
the following events: (i) a reduction in Mr. Kersten's salary (ii) a relocation
(or demand for relocation) of Mr. Kersten's place of employment to a location
more than ten (10) miles from his current place of employment, (iii) a
significant and material reduction in Mr. Kersten's authority, job duties or
level of responsibility or the imposition of significant and material
limitations on the Mr. Kersten's autonomy in his position, or (iv) a Change in
Control, then the employment agreement will be terminated and Mr. Kersten will
be entitled to receive a lump-sum payment from CEL-SCI equal to 24 months of
salary ($1,118,104) and the unvested portion of any stock options would vest
immediately ($590,329). For purposes of the employment agreement a change in the
control of CEL-SCI means: (1) the merger of CEL-SCI with another entity if after
such merger the shareholders of CEL-SCI do not own at least 50% of voting
capital stock of the surviving corporation; (2) the sale of substantially all of
the assets of CEL-SCI; (3) the acquisition by any person of more than 50% of
CEL-SCI's common stock; or (4) a change in a majority of CEL-SCI's directors
which has not been approved by the incumbent directors.
The employment agreement will also terminate upon the death of Mr. Kersten,
Mr. Kersten's physical or mental disability, willful misconduct, an act of fraud
against CEL-SCI, or a breach of the employment agreement by Mr. Kersten.
14
If the employment agreement is terminated for any of the foregoing, Mr.
Kersten, or his legal representatives, as the case may be, will be paid the
salary provided by the employment agreement through the date of termination, any
options or bonus shares of CEL-SCI then held by Mr. Kersten will become fully
vested and the expiration date of any options which would expire during the four
year period following his termination of employment will be extended to the date
which is four years after his termination of employment.
Patricia B. Prichep / Eyal Talor, Ph.D.
On August 31, 2016, CEL-SCI entered into a three-year employment agreement
with Patricia B. Prichep, CEL-SCI's Senior Vice President of Operations. The
employment agreement with Ms. Prichep, which is essentially the same as Ms.
Prichep's prior employment agreement entered into on August 30, 2013 provided
that, during the term of the agreement, CEL-SCI would pay Ms. Prichep an annual
salary of $245,804 plus any increases approved by the Board of Directors during
the period of the employment agreement.
On August 31, 2016, CEL-SCI entered into a three-year employment agreement
with Eyal Talor, Ph.D., CEL-SCI's Chief Scientific Officer. The employment
agreement with Dr. Talor, which is essentially the same as Dr. Talor's prior
employment agreement entered into on August 30, 2013, provided that, during the
term of the agreement, CEL-SCI would pay Dr. Talor an annual salary of $303,453
plus any increases approved by the Board of Directors during the period of the
employment agreement.
If Ms. Prichep or Dr. Talor resigns within ninety (90) days of the
occurrence of any of the following events: (i) a relocation (or demand for
relocation) of employee's place of employment to a location more than ten (10)
miles from the employee's current place of employment, (ii) a significant and
material reduction in the employee's authority, job duties or level of
responsibility or (iii) the imposition of significant and material limitations
on the employee's autonomy in her or his position, the employment agreement will
be terminated and the employee will be paid the salary provided by the
employment agreement through the date of termination and the unvested portion of
any stock options held by the employee will vest immediately.
In the event there is a change in the control of CEL-SCI, the employment
agreements with Ms. Prichep and Dr. Talor allow Ms. Prichep and/or Dr. Talor (as
the case may be) to resign from her or his position at CEL-SCI and receive a
lump-sum payment from CEL-SCI equal to 18 months of salary ($368,706 and
$455,180 respectively). In addition, the unvested portion of any stock options
held by the employee will vest immediately ($108,010 and $108,010 respectively).
For purposes of the employment agreements, a change in the control of CEL-SCI
means: (1) the merger of CEL-SCI with another entity if after such merger the
shareholders of CEL-SCI do not own at least 50% of voting capital stock of the
surviving corporation; (2) the sale of substantially all of the assets of
CEL-SCI; (3) the acquisition by any person of more than 50% of CEL-SCI's common
stock; or (4) a change in a majority of CEL-SCI's directors which has not been
approved by the incumbent directors.
The employment agreements with Ms. Prichep and Dr. Talor will also
terminate upon the death of the employee, the employee's physical or mental
disability, willful misconduct, an act of fraud against CEL-SCI, or a breach of
the employment agreement by the employee. If the employment agreement is
terminated for any of these reasons the employee, or her or his legal
representatives, as the case may be, will be paid the salary provided by the
employment agreement through the date of termination.
Compensation Committee Interlocks and Insider Participation
CEL-SCI has a compensation committee comprised of Mr. Alexander Esterhazy,
Mr. Bruno Baillavoine and Dr. Peter Young, all of whom are independent
directors.
15
During the year ended September 30, 2016, no director of CEL-SCI was also
an executive officer of another entity, which had an executive officer of
CEL-SCI serving as a director of such entity or as a member of the compensation
committee of such entity.
Loan from Officer and Director
Between December 2008 and June 2009, CEL-SCI's former President, and a
director, Maximilian de Clara, loaned CEL-SCI $1,104,057. Between July 2009 and
July 2015, the loan from Mr. de Clara bore interest at 15% per year. At Mr. de
Clara's option, the loan was convertible into shares of CEL-SCI's common stock,
determined by dividing the amount to be converted by $4.00. In accordance with
the loan agreement, CEL-SCI issued Mr. de Clara warrants to purchase 164,824
shares of CEL-SCI's common stock exercisable at a price of $4.00 per share.
These warrants expired on December 24, 2014. In consideration for an extension
of the due date, Mr. de Clara received warrants to purchase 184,930 shares of
CEL-SCI's common stock exercisable at a price of $5.00 per share. These warrants
expired on January 6, 2015. In consideration of Mr. de Clara's agreement to
subordinate his note to the convertible preferred shares and convertible debt as
part of a prior year settlement agreement, CEL-SCI extended the maturity date of
the note to July 6, 2015. In August 2014, the loan and warrants, which
subsequently expired, were transferred to the de Clara Trust, of which CEL-SCI's
Chief Executive Officer, Geert Kersten, is currently a beneficiary. Mr. de Clara
continued to receive the interest payments. In October 2014, 2,844,627 Series N
warrants were transferred to the Trust.
On June 29, 2015, CEL-SCI extended the maturity date of the note to July 6,
2017, lowered the interest rate to 9% per year and changed the conversion price
to $0.59, the closing stock price on the previous trading day. The new terms
were effective July 7, 2015. Concurrently, CEL-SCI extended the expiration date
of the Series N warrants, which are exercisable at a price of $0.53 per share,
to August 18, 2017.
On October 11, 2015, at the request of Lake Whillans Vehicle I, LLC, the
note was extended for one year to July 6, 2018.
On January 12, 2016, CEL-SCI owed the de Clara Trust $1,105,989, which
amount included accrued and unpaid interest. On January 13, 2016, the de Clara
Trust demanded payment on the note payable. At the same time CEL-SCI sold
3,000,000 shares of its common stock and 3,000,000 Series X warrants to the de
Clara Trust for approximately $1,100,000. Each warrant allows the de Clara Trust
to purchase one share of CEL-SCI's common stock at a price of $0.37 per share at
any time on or before January 13, 2021.
Stock Option, Bonus and Compensation Plans
CEL-SCI has Incentive Stock Option, Non-Qualified Stock Option, Stock
Bonus, and Stock Compensation Plans as well as an Incentive Stock Bonus Plan.
All Stock Option, Bonus and Compensation Plans have been approved by the
stockholders. A summary description of these Plans follows. In some cases these
Plans are collectively referred to as the "Plans".
Incentive Stock Option Plans. The Incentive Stock Option Plans authorize
the issuance of shares of CEL-SCI's common stock to persons who exercise options
granted pursuant to the Plans. Only CEL-SCI's employees may be granted options
pursuant to the Incentive Stock Option Plans.
Options may not be exercised until one year following the date of grant.
Options granted to an employee then owning more than 10% of the common stock of
CEL-SCI may not be exercisable by its terms after five years from the date of
grant. Any other option granted pursuant to the Plans may not be exercisable by
its terms after ten years from the date of grant.
16
The purchase price per share of common stock purchasable under an option is
determined by CEL-SCI's Compensation Committee but cannot be less than the fair
market value of the common stock on the date of the grant of the option (or 110%
of the fair market value in the case of a person owning more than 10% of
CEL-SCI's outstanding shares).
Non-Qualified Stock Option Plans. The Non-Qualified Stock Option Plans
authorize the issuance of shares of CEL-SCI's common stock to persons that
exercise options granted pursuant to the Plans. CEL-SCI's employees, directors,
officers, consultants and advisors are eligible to be granted options pursuant
to the Plans, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with a
capital-raising transaction or promoting CEL-SCI's common stock. The option
exercise price is determined by CEL-SCI's Compensation Committee.
Stock Bonus Plans. Under the Stock Bonus Plans, shares of CEL-SCI's common
stock may be issued to CEL-SCI's employees, directors, officers, consultants and
advisors, provided however that bona fide services must be rendered by
consultants or advisors and such services must not be in connection with a
capital-raising transaction.
Stock Compensation Plan. Under the Stock Compensation Plan, shares of
CEL-SCI's common stock may be issued to CEL-SCI's employees, directors,
officers, consultants and advisors in payment of salaries, fees and other
compensation owed to these persons. However, bona fide services must be rendered
by consultants.
Incentive Stock Bonus Plan. Under the 2014 Incentive Stock Bonus Plan,
shares of CEL-SCI's common stock may be issued to executive officers and other
employees who contribute significantly to the success of CEL-SCI, to participate
in its future prosperity and growth and aligns their interests with those of
CEL-SCI's shareholders. The purpose of the Plan is to provide long term
incentive for outstanding service to CEL-SCI and its shareholders and to assist
in recruiting and retaining people of outstanding ability and initiative in
executive and management positions.
Other Information Regarding the Plans. The Plans are administered by
CEL-SCI's Compensation Committee ("the Committee"), each member of which is a
director of CEL-SCI. The members of the Committee were selected by CEL-SCI's
Board of Directors and serve for a one-year tenure and until their successors
are elected. A member of the Committee may be removed at any time by action of
the Board of Directors. Any vacancies which may occur on the Committee will be
filled by the Board of Directors. The Committee is vested with the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Committee is empowered to select those persons to whom
shares or options are to be granted, to determine the number of shares subject
to each grant of a stock bonus or an option and to determine when, and upon what
conditions, shares or options granted under the Plans will vest or otherwise be
subject to forfeiture and cancellation.
In the discretion of the Committee, any option granted pursuant to the
Plans may include installment exercise terms such that the option becomes fully
exercisable in a series of cumulating portions. The Committee may also
accelerate the date upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plans, Incentive
Stock Bonus Plan or Stock Compensation Plans and any options granted pursuant to
the Incentive Stock Option Plans or the Non-Qualified Stock Option Plans will be
forfeited if the "vesting" schedule established by the Committee administering
the Plans at the time of the grant is not met. For this purpose, vesting means
the period during which the employee must remain an employee of CEL-SCI or the
period of time a non-employee must provide services to CEL-SCI. At the time an
employee ceases working for CEL-SCI (or at the time a non-employee ceases to
perform services for CEL-SCI), any shares or options not fully vested will be
forfeited and cancelled. At the discretion of the Committee payment for the
shares of common stock underlying options may be paid through the delivery of
shares of CEL-SCI's common stock having an aggregate fair market value equal to
the option price, provided such shares have been owned by the option holder for
17
at least one year prior to such exercise. A combination of cash and shares of
common stock may also be permitted at the discretion of the Committee.
Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plans, Incentive Stock Bonus
Plan or Stock Compensation Plans will generally not be transferable until the
person receiving the shares satisfies the vesting requirements imposed by the
Committee when the shares were issued.
The Board of Directors of CEL-SCI may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner it deems
appropriate, provided that such amendment, termination or suspension will not
adversely affect rights or obligations with respect to shares or options
previously granted.
Stock Options
The following tables show information concerning the options granted during
the fiscal year ended September 30, 2016, to the persons named below:
Options Granted
---------------
Options Exercise Expiration
Name Grant Date Granted Price Date
---- ---------- ------- -------- ----------
Daniel Zimmerman 7/22/2016 100,000 $0.47 7/21/2026
Alexander Esterhazy 7/22/2016 125,000 $0.47 7/21/2026
Peter Young 7/22/2016 125,000 $0.47 7/21/2026
Bruno Baillavoine 7/22/2016 125,000 $0.47 7/21/2026
Maximilian de Clara 7/22/2016 125,000 $0.47 7/21/2026
|
The following tables show information concerning the options cancelled and
exercised during the fiscal year ended September 30, 2016, to the persons named
below:
Options Cancelled
-----------------
Weighted
Weighted Average
Average Remaining
Exercise Contractual
Name Total Options Price Term (Years)
---- ------------- -------- ------------
None
Options Exercised
-----------------
Date of Shares Acquired Value
Name Exercise On Exercise Realized
---- -------- ------------ --------
|
None
18
The following lists the outstanding options held by the persons named
below:
Shares underlying unexercised
Option which are:
------------------------------ Exercise Expiration
Name Exercisable Unexercisable Price Date
------- ----------- ------------- -------- ----------
Maximilian de
Clara 20,000 6.30 09/13/17
20,000 6.20 03/04/18
143,625 2.50 04/23/19
50,000 (2) 3.80 07/06/19
25,000 3.80 07/20/19
25,000 4.80 07/20/20
25,000 6.90 04/14/21
47,200 3.20 12/01/16
37,500 3.90 05/17/22
100,000 2.80 12/17/17
37,500 2.10 06/30/23
75,000 1.09 02/25/24
100,000 1.10 08/05/24
150,000 1.08 08/25/24
125,000 0.66 06/21/25
125,000 0.47 07/21/26
----------
1,105,825
Geert R. Kersten 20,000 6.30 09/13/17
20,000 6.20 03/04/18
183,861 (1) 2.50 04/23/19
133,334 (2) 3.80 07/06/19
30,000 3.80 07/20/19
30,000 4.80 07/20/20
30,000 6.90 04/14/21
125,440 3.20 12/01/16
45,000 3.90 05/17/22
189,000 2.80 12/17/17
195,549 2.80 12/17/22
45,000 2.10 06/30/23
60,000 1.09 02/25/24
----------
1,107,184
266,666 (2) 3.80 07/06/19
304,451 2.80 12/17/22
30,000 1.09 02/25/24
--------
601,117
Patricia B.
Prichep 10,000 6.30 09/13/17
10,000 6.20 03/04/18
71,710 (1) 2.50 04/23/19
100,000 (2) 3.80 07/06/19
15,000 3.80 07/20/19
15,000 4.80 07/20/20
15,000 6.90 04/14/21
38,520 3.20 12/01/16
30,000 3.90 05/17/22
58,000 2.80 12/17/17
81,187 2.80 12/17/22
30,000 2.10 06/30/23
40,000 1.09 02/25/24
19
|
----------
514,417
200,000 (2) 3.80 07/06/19
68,813 2.80 12/17/22
20,000 1.09 02/25/24
---------
288,813
Eyal Talor, Ph.D. 10,000 6.30 09/13/17
10,000 6.20 03/04/18
24,082 (1) 2.50 04/23/19
100,000 (2) 3.80 07/06/19
15,000 3.80 07/20/19
15,000 4.80 07/20/20
15,000 6.90 04/14/21
27,773 3.20 12/01/16
30,000 3.90 05/17/22
37,417 2.80 12/17/17
81,187 2.80 12/17/22
30,000 2.10 06/30/23
40,000 1.09 02/25/24
--------
435,459
200,000 (2) 3.80 07/06/19
68,813 2.80 12/17/22
20,000 1.09 02/25/24
--------
288,813
Daniel Zimmerman,
Ph.D. 7,500 6.30 09/13/17
7,500 6.20 03/04/18
15,000 4.80 07/20/20
15,000 6.90 04/14/21
25,200 3.20 12/01/16
22,500 3.90 05/17/22
39,200 2.80 12/17/17
22,500 2.10 06/30/23
30,000 1.09 02/25/24
133,334 1.10 08/05/24
33,334 0.62 06/25/25
----------
351,068
15,000 1.09 02/25/24
66,666 1.10 08/05/24
66,666 0.62 06/25/25
100,000 0.47 07/21/26
--------
248,332
John Cipriano 7,500 6.30 09/13/17
7,500 6.20 03/04/18
15,000 4.80 07/20/20
15,000 6.90 04/14/21
1,600 3.20 12/01/16
10,000 2.50 09/30/19
22,500 3.90 05/17/22
22,500 2.10 06/30/23
20
|
30,000 1.09 02/25/24
--------
131,600
15,000 1.09 02/25/24
---------
15,000
|
(1) Options awarded to employees who did not collect a salary, or reduced or
deferred their salary between September 15, 2008 and June 30, 2009. For
example, Mr. Kersten and Ms. Prichep did not collect any salary between
September 30, 2008 and June 30, 2009.
(2) Long-term performance options: The Board of Directors has identified the
successful Phase III clinical trial for Multikine to be the most important
corporate event to create shareholder value. Therefore, one third of the
options can be exercised when the first 400 patients are enrolled in
CEL-SCI's Phase III head and neck cancer clinical trial. One third of the
options can be exercised when all of the patients have been enrolled in the
Phase III clinical trial. One third of the options can be exercised when
the Phase III trial is completed. The grant-date fair value of these
options awarded to the senior management of CEL-SCI amounted to $3.3
million in total.
Summary. The following shows certain information as of March 15, 2017
concerning the stock options and stock bonuses granted by CEL-SCI pursuant to
the Plans. Each option represents the right to purchase one share of CEL-SCI's
common stock.
Shares
Total Reserved
Shares for Remaining
Reserved Outstanding Shares Options/Share
Name of Plan Under Plans Options Issued Under Plans
------------ ----------- ---------- ------- ------------
Incentive Stock Option 3,460,000 1,648,966 N/A 1,511,334
Plans
Non-Qualified Stock Option 9,680,000 6,531,752 N/A 2,420,630
Plans
Bonus Plans 5,594,000 N/A 4,003,926 1,589,247
Stock Compensation Plan 3,350,000 N/A 2,087,257 1,229,692
Incentive Stock Bonus Plan 16,000,000 N/A 15,600,000 400,000
|
Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans, 1,680,918
shares were issued as part of CEL-SCI's contribution to its 401(k) plan.
The following table shows the weighted average exercise price of the
outstanding options granted pursuant to CEL-SCI's Incentive and Non-Qualified
Stock Option Plans as of September 30, 2016, CEL-SCI's most recent fiscal year
end. CEL-SCI's Incentive and Non-Qualified Stock Option Plans have been approved
by CEL-SCI's shareholders.
Number of Weighted
Securities to Average
be Issued Upon Exercise Number of Options
Exercise of Price of Remaining Available
Outstanding Outstanding For Future Issuance
Plan category Options Options Under Plans
------------ ------------- ----------- -----------------
Incentive Stock 1,648,966 $ 2.97 1,511,334
Option Plans
Non-Qualified Stock 6,940,321 $ 2.23 2,059,261
Option Plans
|
21
Compensation Committee
During the year ending September 30, 2016, CEL-SCI had a Compensation
Committee which was comprised of Alexander Esterhazy, Peter Young and Bruno
Baillavoine. During the year ended September 30, 2016, the Compensation
Committee formerly met on two occasions to amend the vesting of awarded shares
issued from the 2014 Incentive Stock Bonus Plan and to approve the termination
agreement with Mr. de Clara.
The following is the report of the Compensation Committee:
The key components of CEL-SCI's executive compensation program include
annual base salaries and long-term incentive compensation consisting of stock
options. It is CEL-SCI's policy to target compensation (i.e., base salary, stock
option grants and other benefits) at approximately the median of comparable
companies in the biotechnology field. Accordingly, data on compensation
practices followed by other companies in the biotechnology industry is
considered.
CEL-SCI's long-term incentive program formerly consisted of periodic grants
of stock options with an exercise price equal to the fair market value of
CEL-SCI's common stock at the close of the previous trading day. To encourage
retention, the ability to exercise options granted under the program was subject
to vesting restrictions. Decisions made regarding the timing and size of option
grants took into account the performance of both CEL-SCI and the employee,
"competitive market" practices, and the size of the option grants made in prior
years. The weighting of these factors varied and was subjective.
Since share price and performance targets during the lengthy drug
development process are not always logically aligned, a major change in the long
term incentive plan for senior and middle management was introduced in 2014.
This substituted restricted shares issued from the 2014 Incentive Stock Bonus
Plan that was voted on and passed by the shareholders at the annual meeting on
July 22, 2014 for options. These shares were not vested at issuance and are held
in escrow. The shares will only be earned upon the achievement of certain
milestones leading to the commercialization of CEL-SCI's Multikine technology or
upon specified increases in the market price of CEL-SCI's stock. The first
milestone for the restricted stock was reached in January 2015; however,
CEL-SCI's Compensation Committee amended the term of the restricted stock so
that is the shares are not vested and still held in escrow. If the performance
or market criteria are not met as specified in the Incentive Stock Bonus Plan
ten years after the grant date, then the portion of the awarded shares that have
not been earned will be forfeited.
On August 31, 2016 Maximilian de Clara resigned as an officer and director
of CEL-SCI. In consideration for Mr. de Clara's past services to the Company,
the Company entered into a Termination Agreement with Mr. de Clara. The
Termination Agreement was approved by CEL-SCI's Compensation Committee.
On August 31, 2016, CEL-SCI entered into a three-year employment agreement
with Geert Kersten, CEL-SCI's Chief Executive Officer. The employment agreement
with Mr. Kersten, which is essentially the same as Mr. Kersten's prior
employment agreement, as amended on August 30, 2013, provided that, during the
term of the agreement, CEL-SCI would pay Mr. Kersten an annual salary of
$559,052, plus any increases in proportion to salary increases granted to other
senior executive officers of CEL-SCI, as well any increases approved by the
Board of Directors during the period of the employment agreement.
On August 31, 2016, CEL-SCI entered into a three-year employment agreement
with Patricia B. Prichep, CEL-SCI's Senior Vice President of Operations. The
employment agreement with Ms. Prichep, which is essentially the same as Ms.
Prichep's prior employment agreement entered into on August 30, 2013 provided
that, during the term of the agreement, CEL-SCI would pay Ms. Prichep an annual
salary of $245,804 plus any increases approved by the Board of Directors during
the period of the employment agreement.
On August 31, 2016, CEL-SCI entered into a three-year employment agreement
with Eyal Talor, Ph.D., CEL-SCI's Chief Scientific Officer. The employment
agreement with Dr. Talor, which is essentially the same as Dr. Talor's prior
22
employment agreement entered into on August 30, 2013, provided that, during the
term of the agreement, CEL-SCI would pay Dr. Talor an annual salary of $303,453
plus any increases approved by the Board of Directors during the period of the
employment agreement.
During the year ending September 30, 2016, the compensation paid to
CEL-SCI's other executive officers was based on a variety of factors, including
the performance in the executive's area of responsibility, the executive's
individual performance, the executive's experience in his or her role, the
executive's length of service with CEL-SCI, the achievement of specific goals
established for CEL-SCI and its business, and, in certain instances, to the
achievement of individual goals.
Financial or stockholder value performance comparisons were not used to
determine the compensation of CEL-SCI's other executive officers since CEL-SCI's
financial performance and stockholder value are influenced to a substantial
degree by external factors and as a result comparing the compensation payable to
the other executive officers to CEL-SCI's financial or stock price performance
can be misleading.
During the year ended September 30, 2016, CEL-SCI granted options for the
purchase of 225,000 shares of CEL-SCI's common stock to CEL-SCI's executive
officers. In granting the options to CEL-SCI's executive officers, the Board of
Directors considered the same factors which were used to determine the cash
compensation paid to such officers.
Except as otherwise disclosed in this proxy statement, during the year
ended September 30, 2016, CEL-SCI did not issue any shares of its common stock
to CEL-SCI's officers or directors in return for services provided to CEL-SCI.
The foregoing report has been approved by the members of the Compensation
Committee:
Alexander Esterhazy
Peter Young
Bruno Baillavoine
CEL-SCI's Compensation Committee Charter can be reviewed at CEL-SCI's
website: cel-sci.com/about cel-sci/corporate overview.
Audit Committee
During the year ended September 30, 2016, CEL-SCI had an Audit Committee
comprised of Alexander Esterhazy, Peter Young and Bruno Baillavoine. All members
of the Audit Committee were independent as defined by Section 803 of the NYSE
MKT Listing Standards. Dr. Young serves as the audit committee's financial
expert. The purpose of the Audit Committee is to review and approve the
selection of CEL-SCI's independent registered public accounting firm and review
CEL-SCI's financial statements with CEL-SCI's independent registered public
accounting firm.
During the fiscal year ended September 30, 2016, the Audit Committee met
four times. All members of the Audit Committee attended these meetings.
23
The following is the report of the Audit Committee:
(1) The Audit Committee reviewed and discussed CEL-SCI's audited financial
statements for the year ended September 30, 2016 with CEL-SCI's
management.
(2) The Audit Committee discussed with CEL-SCI's independent registered
public accounting firm the matters required to be discussed by PCAOB
(Public Company Accounting Oversight Board) Standard No. 16
"Communication with Audit Committees".
(3) The Audit Committee has received the written disclosures and the
letter from CEL-SCI's independent registered public accounting firm
required by PCAOB independence standards, and had discussed with
CEL-SCI's independent registered public accounting firm the
independent registered public accounting firm's independence; and
(4) Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in CEL-SCI's Annual Report on Form
10-K for the year ended September 30, 2016 for filing with the
Securities and Exchange Commission.
(5) During the year ended September 30, 2016, CEL-SCI paid BDO USA, LLP,
CEL-SCI's independent registered public accounting firm, fees for
professional services rendered for the audit of CEL-SCI's annual
financial statements and the reviews of the financial statements
included in CEL-SCI's 10-Q reports for the fiscal year and all
regulatory filings. The Audit Committee is of the opinion that these
fees are consistent with BDO USA, LLP maintaining its independence
from CEL-SCI.
The foregoing report has been approved by the members of the Audit
Committee:
Alexander G. Esterhazy
Peter Young
Bruno Baillavoine
CEL-SCI's Board of Directors has adopted a written charter for the Audit
Committee. CEL-SCI's Audit Committee Charter can be reviewed at CEL-SCI's
website: cel-sci.com/about cel-sci/corporate overview.
PROPOSAL TO APPROVE THE ADOPTION OF THE
2017 NON-QUALIFIED STOCK OPTION PLAN
Shareholders are being requested to approve the adoption of CEL-SCI's 2017
Non-Qualified Stock Option Plan. CEL-SCI's employees, directors, officers,
consultants, and advisors are eligible to be granted options pursuant to the
2017 Non-Qualified Plan as may be determined by CEL-SCI's Board of Directors or
the Compensation Committee, provided however that bona fide services must be
rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
The 2017 Non-Qualified Plan authorizes the issuance of up to 20,000,000
shares of CEL-SCI's common stock to persons that exercise options granted
pursuant to the Plan. As of March 15, 2017, CEL-SCI had not granted any options
to purchase shares of common stock under the 2017 Non-Qualified Plan.
The 2017 Non-Qualified Plan will function and be administered in the same
manner as CEL-SCI's other Non-Qualified Plans except that the exercise price of
any options granted pursuant to 2017 Plan may not be changed, except in the case
24
of stock splits, reorganizations or recapitalizations and there are no
provisions requiring CEL-SCI to pay cash for an option under any circumstances.
The Board of Directors recommends that the shareholders of CEL-SCI approve the
adoption of the 2017 Non-Qualified Plan.
PROPOSAL TO APPROVE THE ADOPTION OF THE
2017 STOCK BONUS PLAN
Shareholders are being requested to approve the adoption of CEL-SCI's 2017
Stock Bonus Plan. The purpose of the 2017 Stock Bonus Plan is to furnish
additional compensation and incentives to CEL-SCI's employees, directors,
officers, consultants and advisors and to allow CEL-SCI to continue to make
contributions to its 401(k) plan with shares of its common stock instead of
cash.
Since 1993 CEL-SCI has maintained a defined contribution retirement plan
(also known as a 401(k) Plan) covering substantially all CEL-SCI's employees.
Since 1998 CEL-SCI's contribution to the plan has been made in shares of
CEL-SCI's common stock as opposed to cash. CEL-SCI's contribution of common
stock is made quarterly and is valued based upon the price of CEL-SCI's common
stock on the NYSE MKT. The Board of Directors is of the opinion that
contributions to the 401(k) plan with shares of CEL-SCI's common stock serves to
further align the interest of CEL-SCI's employees with CEL-SCI's shareholders.
The 2017 Stock Bonus Plan, if adopted, will authorize the issuance of up to
4,000,000 shares of CEL-SCI's common stock to persons granted stock bonuses
pursuant to the plan. As of March 15, 2017, CEL-SCI had not granted any stock
bonuses pursuant to the 2017 Stock Bonus Plan.
The 2017 Stock Bonus Plan will function and be administered in the same
manner as CEL-SCI's existing Stock Bonus Plans. The Board of Directors
recommends that the shareholders of CEL-SCI approve the adoption of the 2017
Stock Bonus Plans.
PROPOSAL TO GIVE THE BOARD OF DIRECTORS THE AUTHORIZATION TO
REVERSE SPLIT CEL-SCI'S COMMON STOCK AT ANY TIME BEFORE THE 2018
ANNUAL MEETING IF THE BOARD OF DIRECTORS BELIEVES THIS TO BE
IN THE BEST INTEREST OF CEL-SCI'S SHAREHOLDERS
Stockholders are being requested to give the Company's Board of Directors
the authorization to reverse split the outstanding shares of the Company's
common stock by a ratio that will be determined by the Company's Board of
Directors, provided that, in any case, the reverse split ratio will not be
greater than 1 for 25. The Company's Board of Directors reserves the right, even
after stockholder approval, to forego the reverse stock split if it determines
such action is not in the Company's best interests or the best interests of the
Company's shareholders. In fact, in prior years the Board of Directors had
received shareholder permission to proceed with a reverse split, but elected not
to move forward with it. If the Board of Directors does not proceed with the
reverse split, shareholder approval for authorization to reverse split the
Company's common stock will expire at the 2018 Annual Meeting Shareholders. If
the reverse split is abandoned, the Board of Directors may again seek
stockholder approval at a future date for a reverse stock split if it deems a
reverse stock split to be advisable at that time.
If the Board of Directors were to decide to move forward with a reverse
stock split following shareholder approval of such an action, the goal would be
to have a resulting share price for the Company's common stock between $2.00 and
$4.00. The Company's Board of Directors has not made any determination as to
whether it will actually proceed with a reverse split of the Company's common
stock; it is only seeking shareholders' approval for such a step at this time.
The Company's Board of Directors believes that, since it is not possible to
predict future market conditions, it would be in the best interests of the
shareholders to adopt a proposal that allows the Board of Directors to determine
25
whether or not to proceed with a reverse stock split and if so, to determine the
ratio of the stock split.
In considering whether a reverse stock split may be desirable the Board of
Directors will take into consideration four factors:
1) On December 9, 2016, the Company received a written notice from the
NYSE MKT, the exchange upon which the Company's stock is traded, that
the Company is not in compliance with the NYSE MKT continued listing
requirements. Although the Company currently has until June 11, 2018
to regain compliance, based upon discussions with the NYSE MKT, the
Board of Directors believes that a higher share price may be important
to improving the Company's chances to meet the NYSE MKT continued
listing requirements.
2) Most brokerage firms, a majority of investment funds, and almost all
mutual funds are prohibited from purchasing or recommending to clients
lower-priced securities such as the Company's common stock. If they
are permitted to purchase lower-priced securities, most of those firms
or funds require a higher level of paperwork and internal review
making the purchase less attractive. Therefore, the Company believes
that the fact that the Company's common stock is a lower-priced
security eliminates many potential investors from purchasing our
common stock based on the stock price alone, severely limiting the
potential for share price improvement upon the achievement of major
events. Therefore, a reverse split could enhance the appeal of the
Company's common stock to the financial community resulting in a
broader market for the common stock than that which currently exists.
3) Recognized analysts generally will not recommend lower-priced
securities.
4) The Company's low share price may create the impression that the
Company is not credible.
The proposed reverse stock split would combine a whole number of
outstanding shares of the Company's common stock into one share of common stock,
thus reducing the number of outstanding shares. As a result, the number of
shares of the Company's common stock owned by each stockholder would be reduced
in the same proportion as the reduction in the total number of shares
outstanding, so that the percentage of the outstanding shares owned by each
stockholder would remain unchanged. This is important. Each shareholder's
ownership interest would remain unchanged. That means that if you owned 0.1% of
the Company before a reverse split, you will still own 0.1% of the Company after
the reverse split. As of March 15, 2017, the Company had 215,999,614 outstanding
shares of common stock
While the Company expects that the reverse stock split will increase the
market price of its common stock, the Company cannot guarantee that the reverse
stock split will increase the market price of its common stock by a multiple
equal to the reverse split ratio, or result in any permanent increase in the
market price, which can be dependent upon many factors, including the Company's
business and financial performance and prospects. Should the market price
decline after the reverse stock split, the percentage decline may be greater,
due to the smaller number of shares outstanding, than it would have been prior
to the reverse stock split. In some cases the stock price of companies that have
adopted reverse stock splits has subsequently declined to pre-reverse split
levels. Accordingly, the Company cannot assure its shareholders that the market
price of its common stock immediately after the effective date of the reverse
stock split will be maintained for any period of time, or that the reverse stock
split will not have an adverse effect on the Company's stock price. A reverse
stock split is sometimes viewed negatively by the market and, consequently, can
lead to a decrease in the Company's overall market capitalization. If the per
share price does not increase proportionately as a result of the reverse stock
split, the Company's overall market capitalization will be reduced. The
determination of the Board of Directors to proceed or not to proceed will
include weighing the need and the positive factors for a reverse split versus
those potential negative factors.
26
The Company's Articles of Incorporation provide that the Company is
presently authorized to issue 600,000,000 shares of common stock. The reverse
split, if adopted, would not change the number of shares of common stock which
the Company is authorized to issue. However, a reverse split would reduce the
number of the Company's outstanding shares, which would enable the Company to
issue more shares than it would be able to issue if the reverse split was not
adopted. The following table illustrates the effects of the reverse split at
certain exchange ratios within the 1 for 10 or 1 for 25 range, without giving
effect to any adjustments for fractional shares of common stock, on our
outstanding shares of common stock and authorized shares of capital stock as of
March __, 2017:
After Reverse Stock Split
Before Reverse -------------------------------------------------
Stock Split 1-for-10 1-for-20 1-for-25
------------- ------- -------- --------
Common Stock Authorized 600,000,000 600,000,000 600,000,000 600,000,000
Preferred Stock Authorized 2,000,000 2,000,000 2,000,000 2,000,000
Common Stock Outstanding 215,999,614 21,599,961 10,799,981 8,639,985
Common Stock Underlying 204,036,481 20,403,648 10,201,824 8,161,459
Options and Warrants
Common Stock Available
for grant under Company
Stock and Option Plans 7,082,575 708,258 354,129 283,303
Total Common Stock 172,881,330 557,288,133 578,644,066 582,915,253
Authorized but Unreserved
|
As of March 15, 2017, the Company did not have any definitive agreements,
arrangements, plans, intentions or commitments, written or oral, with any person
to sell or issue any additional shares of its common stock, whether for cash or
otherwise, except for the Company's obligation to issue common stock upon the
exercise of outstanding options and warrants or the conversion of notes.
According to the records of the Company's transfer agent, a reverse stock
split in the maximum range (1 for 25) would eliminate 558 shareholders of
record.
The Company would still have approximately 260 shareholders of record after
a 1 for 25 reverse stock split and would continue to be registered under Section
12 of the Securities Exchange Act of 1934. The Company has approximately 29,000
shareholders whose shares are held in the name of brokers, financial
institutions or clearing agencies (i.e. "street name").
Any fractional shares resulting from the reverse stock split will be
rounded to the nearest whole share.
The Company's Board of Directors recommends that stockholders vote FOR this
proposal.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
CEL-SCI is offering its shareholders an opportunity to cast a non-binding
advisory vote to approve the compensation of CEL-SCI's executive officers, as
disclosed in this proxy statement, (commonly referred to as a "say-on-pay"
vote). Although the vote is non-binding, CEL-SCI values continuing and
constructive feedback from its shareholders on compensation and other important
matters. The Board of Directors and the Compensation Committee will consider the
voting results when making future compensation decisions.
27
Accordingly, CEL-SCI asks its shareholders to vote for the following
resolution at the annual meeting:
"RESOLVED, that CEL-SCI's shareholders approve, on a non-binding advisory
basis, the compensation of CEL-SCI's executive officers, as disclosed in
CEL-SCI's proxy statement for the 2017 Annual Meeting of Shareholders
pursuant to the compensation disclosure rules of the Securities and
Exchange Commission, including the Summary Compensation Table and the
other related tables and narrative disclosure in CEL-SCI's proxy
statement."
To the extent there is any significant vote against the named executive
officer compensation as disclosed in this proxy statement, CEL-SCI's Board of
Directors and its Compensation Committee will consider shareholders' concerns
and the Compensation Committee will evaluate whether any actions are necessary
to address those concerns.
The Board of Directors recommends that the shareholders approve on a
nonbinding advisory basis the aforementioned resolution approving the
compensation of CEL-SCI's executive officers set forth in this proxy statement.
28
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE
ON EXECUTIVE COMPENSATION
CEL-SCI is offering its shareholders an opportunity to cast an advisory
vote on whether a non-binding advisory vote to approve the compensation of
CEL-SCI's executive officers should occur every one, two or three years.
Although the vote is non-binding, CEL-SCI values continuing and constructive
feedback from its shareholders on executive compensation and other important
matters. The Board of Directors and the Compensation Committee will take into
consideration the voting results when determining how often a non-binding
advisory vote to approve the compensation of the Company's named executive
officers should occur.
The Board of Directors recommends that the shareholders of CEL-SCI cast a
vote of "3 Years" on the frequency of holding an advisory vote on executive
compensation.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has selected BDO USA, LLP, an independent registered
public accounting firm, to audit the books and records of CEL-SCI for the fiscal
year ending September 30, 2017. A representative of BDO USA, LLP is expected to
be present at the shareholders' meeting.
BDO USA, LLP served as CEL-SCI's auditors for the years ended September 30,
2016 and 2015. The following table shows the aggregate fees billed to CEL-SCI
during these years by BDO USA, LLP:
Year Ended September 30,
2016 2015
---- ----
Audit Fees $ 311,000 $ 362,000
Audit-Related Fees -- --
Tax Fees -- --
All Other Fees -- --
|
Audit fees represent amounts billed for professional services rendered for
the audit of CEL-SCI's annual financial statements and the reviews of the
financial statements included in CEL-SCI's 10-Q reports for the fiscal year and
all regulatory filings including filings under the Securities Act of 1933.
Before BDO USA, LLP was engaged by CEL-SCI to render audit or non-audit
services, the engagement was approved by CEL-SCI's audit committee.
The Board of Directors recommends that the shareholders of CEL-SCI approve
its selection of BDO USA, LLP as CEL-SCI's independent public accounting firm to
audit the books and records of CEL-SCI for the year ending September 30, 2017.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
CEL-SCI's Annual Report on Form 10-K and 10-K/A for the year ending September
30, 2016 is available at www.irdirect.net/cvm/sec_filings.
SHAREHOLDER PROPOSALS
Any shareholder proposal which may properly be included in the proxy
solicitation material for the annual meeting of shareholders following CEL-SCI's
fiscal year ending September 30, 2017 must be received by the Secretary of
CEL-SCI no later than January 2, 2018.
29
GENERAL
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement, and all other costs in connection with
solicitation of proxies will be paid by CEL-SCI including any additional
solicitation made by letter or telephone. Failure of a quorum to be present at
the meeting will necessitate adjournment and will subject CEL-SCI to additional
expense.
CEL-SCI's Board of Directors does not intend to present and does not have
reason to believe that others will present any other items of business at the
annual meeting. However, if other matters are properly presented to the meeting
for a vote, the proxies will be voted upon such matters in accordance with the
judgment of the persons acting under the proxies.
Please complete, sign and return the attached proxy promptly.
30
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31
CEL-SCI CORPORATION PROXY
This Proxy is solicited by CEL-SCI's Board of Directors
The undersigned stockholder of CEL-SCI acknowledges receipt of the Notice of the
Annual Meeting of Stockholders to be held May 30, 2017, 10:30 a.m. local time,
at 4820-C Seton Drive, Baltimore, MD 21215, and hereby appoints Geert R. Kersten
with the power of substitution, as Attorney and Proxy to vote all the shares of
the undersigned at said annual meeting of stockholders and at all adjournments
thereof, hereby ratifying and confirming all that said Attorney and Proxy may do
or cause to be done by virtue hereof. The above named Attorney and Proxy is
instructed to vote all of the undersigned's shares as follows:
The Board of Directors recommends a vote FOR all the nominees listed below:
(1) To elect the persons who shall constitute CEL-SCI's Board of Directors for
the ensuing year.
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
Nominees: Geert R. Kersten Alexander G. Esterhazy Peter R. Young
Bruno Baillavoine
The Board of Directors recommends you vote FOR the following proposals;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) To approve the adoption of CEL-SCI's 2017 Non-Qualified Stock Option Plan
which provides that up to 20,000,000 shares of common stock may be issued
upon the exercise of options granted pursuant to the Non-Qualified Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the adoption of CEL-SCI's 2017 Stock Bonus Plan which provides
that up to 4,000,000 shares of common stock may be issued pursuant to the
Stock Bonus Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Subject to the determination of CEL-SCI's directors that a reverse split
would be in the best interest of CEL-SCI's shareholders, to approve a
reverse split of CEL-SCI's common stock, provided that, in any case, the
reverse split ratio will not be greater than 1 for 25. A condition of the
reverse stock split is that the ratio of the reverse split will be
determined by CEL-SCI's Board of Directors. The Board of Directors may
elect not to proceed with a stock split without further action by the
shareholders.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To approve, on a non-binding advisory basis, the compensation of CEL-SCI's
executive officers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) To approve, on a non-binding advisory basis, the frequency of the advisory
vote regarding the compensation of CEL-SCI's executive officers.
[ ] ONE YEAR [ ] TWO YEARS [ ] THREE YEARS [ ] ABSTAIN
(7) To ratify the appointment of BDO USA, LLP as CEL-SCI's independent
registered public accounting firm for the fiscal year ending September 30,
2017.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DISCRETION IS INDICATED, THIS PROXY WILL BE VOTED
IN FAVOR OF ALL NOMINEES TO THE BOARD OF DIRECTORS AND ITEMS 2 THROUGH 7.
Directions to the Annual Meeting can be found at
www.cel-sci.com/annual_meeting.html.
Dated this ____ day of _______________ 2017.
(Signature)
(Signature)
Please sign your name exactly as it appears on your stock certificate. If shares
are held jointly, each holder should sign. Executors, trustees, and other
fiduciaries should so indicate when signing.
Please Sign, Date and Return this Proxy so that your shares may be voted at the
meeting.
Send the proxy by regular mail, email, or fax to:
CEL-SCI Corporation
Attn: Gavin de Windt
8229 Boone Blvd., #802
Vienna, VA 22182
Phone: 703-506-9460
Fax: 703-506-9471
Email: gdewindt@cel-sci.com
32
IMPORTANT ANNUAL STOCKHOLDERS'
MEETING INFORMATION -- YOUR VOTE
COUNTS!
Stockholder Meeting Notice
Important Notice Regarding the Availability of Proxy Materials for the
CEL-SCI Corporation Stockholder Meeting to be Held on May 30, 2017.
Under new Securities and Exchange Commission rules, you are receiving this
notice that the proxy materials for the annual stockholders' meeting are
available on the Internet. Follow the instructions below to view the materials
and vote online or request a copy. The items to be voted on and location of the
annual meeting are on the reverse side. Your vote is important!
This communication presents only an overview of the more complete proxy
materials that are available to you on the Internet. We encourage you to access
and review all of the important information contained in the proxy materials
before voting. The proxy statement, annual report and letter to shareholders are
available at:
www.envisionreports.com/CVM
Easy Online Access -- A Convenient Way to View Proxy Materials
and Vote When you go online to view materials, you can also vote
your shares. Step 1: Go to www.envisionreports.com/CVM to view
the materials.
Step 2: Click on Cast Your Vote or Request
Materials.
Step 3: Follow the instructions on the screen
to log in.
Step 4: Make your selection as instructed on each screen to
select delivery preferences and vote.
When you go online, you can also help the environment by consenting to receive
electronic delivery of future materials.
Obtaining a Copy of the Proxy Materials - If you want to receive a paper or
e-mail copy of these documents, you must request one. There is no charge to
you for requesting a copy. Please make your request for a copy as
instructed on the reverse side on or before May 16, 2017 to facilitate
timely delivery.
33
Stockholder Meeting Notice
CEL-SCI Corporation's Annual Meeting of Stockholders will be held at 4820-C
Seton Drive, Baltimore, MD 21215, on May 30, 2017, at 10:30 a.m. local time.
Proposals to be voted on at the meeting are listed below along with the Board of
Directors' recommendations.
The Board of Directors recommends that you vote FOR the following:
(1) To elect the persons who shall constitute CEL-SCI's Board of Directors
for the ensuing year.
The Board of Directors recommends you vote FOR the following proposals:
(2) To approve the adoption of CEL-SCI's 2017 Non-Qualified Stock Option
Plan which provides that up to 20,000,000 shares of common stock may
be issued upon the exercise of options granted pursuant to the Plan.
(3) To approve the adoption of CEL-SCI's 2017 Stock Bonus Plan which
provides that up to 4,000,000 shares of common stock may be issued to
persons granted stock bonuses pursuant to the Plan.
(4) Subject to the determination of CEL-SCI's directors that a reverse
split would be in the best interest of CEL-SCI's shareholders, to
approve a reverse split of CEL-SCI's common stock. A condition of the
reverse stock split is that the ratio of the reverse split will be
determined by CEL-SCI's Board of Directors, provided that, in any
case, the reverse split ratio will not be greater than 1 for 25. The
Board of Directors may elect not to proceed with a stock split without
further action by the shareholders.
(5) To approve, on a non-binding advisory basis, the compensation of
CEL-SCI's executive officers.
(6) To approve, on a non-binding advisory basis, the frequency of the
advisory vote regarding the compensation of CEL-SCI's executive
officers.
(7) To ratify the appointment of BDO USA, LLP as CEL-SCI's independent
registered public accounting firm for the fiscal year ending September
30, 2017.
To transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
PLEASE NOTE - YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you
must vote online or request a paper copy of the proxy materials to receive a
proxy card. If you wish to attend and vote at the meeting, please bring this
notice with you.
Directions to attend the meeting can be found on our website at
http://www.cel-sci.com/annual_meeting.html.
Here's how to order a copy of the proxy materials and select a future
delivery preference:
Paper copies: Current and future paper delivery requests can be submitted
via the telephone, Internet or email options below. Email copies: Current
and future email delivery requests must be submitted via the Internet
following the instructions below.
If you request an email copy of current materials you will receive an email
with a link to the materials.
PLEASE NOTE: You must use the number in the shaded bar on the reverse side
when requesting a set of proxy materials.
_ Internet - Go to www.envisionreports.com/CVM. Click Cast Your
Vote or Request Materials. Follow the instructions to log in and
order a paper or email copy of the current meeting materials and
submit your preference for email or paper delivery of future
meeting materials.
_ Telephone - Call us free of charge at 1-866-641-4276 using a
touch-tone phone and follow the instructions to log in and order
a paper copy of the materials by mail for the current meeting.
You can also submit a preference to receive a paper copy for
future meetings.
34
_ Email - Send email to investorvote@computershare.com with "Proxy
Materials CEL-SCI Corporation" in the subject line. Include in
the message your full name and address, plus the number located
in the shaded bar on the reverse, and state in the email that
you want a paper copy of current meeting materials. You can also
state your preference to receive a paper copy for future
meetings.
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