|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Name of Beneficial Owner
|
|
Number of
Shares
|
|
Percent of
Class(1)
|
|
Geoffrey S. M. Hedrick(2)
|
|
|
3,535,567
|
|
|
20.8
|
%
|
Shahram Askarpour(3)
|
|
|
523,500
|
|
|
3.1
|
%
|
Robert E. Mittelstaedt, Jr.
|
|
|
227,789
|
|
|
1.3
|
%
|
Winston J. Churchill
|
|
|
144,810
|
|
|
*
|
|
Glen R. Bressner
|
|
|
116,317
|
|
|
*
|
|
Roger A. Carolin(4)
|
|
|
53,314
|
|
|
*
|
|
Relland M. Winand
|
|
|
|
|
|
*
|
|
All executive officers and directors as a group (7 persons)
|
|
|
4,601,297
|
|
|
27.1
|
%
|
-
*
-
Less
than 1%.
-
(1)
-
As
used in this table, beneficial ownership means the sole or shared power to vote or direct the voting of a security, or the sole or shared investment power with
respect to a security (i.e., the power to dispose, or direct the disposition, of a security). A person is deemed as of any date to have beneficial ownership of any security that such person has
the right to acquire within 60 days after such date. Percentage ownership is based upon 16,982,092 shares of common stock outstanding as of January 22, 2020.
-
(2)
-
Includes
408 shares owned by Mr. Hedrick's spouse.
-
(3)
-
Includes
6,500 common shares owned beneficially by Dr. Askarpour, 515,000 common shares which Dr. Askarpour has the right to acquire pursuant to vested
stock options as of January 22, 2020, and 2,000 common shares owned by Dr. Askarpour's wife.
-
(4)
-
Mr. Carolin's
address is Great Valley Parkway, Suite 190, Malvern, PA 19355.
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Table of Contents
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about Company common stock that may be issued upon the exercise of options and pursuant to other awards
under all of the Company's existing equity compensation plans and arrangements as of September 30, 2019, including the 2009 Stock-Based Incentive Compensation Plan (the
"2009 Plan") and the 2019 Stock-Based Incentive Compensation Plan (the "2019 Plan").
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants, and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants, and rights
|
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
the first column)
|
|
Equity compensation plans approved by security holders
|
|
|
550,834
|
|
$
|
3.32
|
|
|
889,691
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
550,834
|
|
$
|
3.32
|
|
|
889,691
|
|
In
the fiscal years ended September 30, 2019, 2018 and 2017, awards were granted to the Company's non-employee directors under the Company's then-existing equity compensation
plans and arrangements with respect to 53,508, 57,470 and 67,115 shares, respectively.
2009 Stock-Based Incentive Compensation Plan
The 2009 Plan was approved by the Company's shareholders at the Company's Annual Meeting of Shareholders held on March 12, 2009. The 2009
Plan authorized the grant of stock appreciation rights, restricted stock, options, restricted stock units and other equity-based awards. Options granted under the 2009 Plan may be either "incentive
stock options" as defined in section 422 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), or nonqualified stock options, as
determined by the Compensation Committee of the Board (the "Compensation Committee").
Subject
to an adjustment necessary upon a stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or
share exchange, extraordinary or unusual cash distribution, or other similar corporate transaction or event, the maximum number of shares of common stock available for awards under the 2009 Plan was
1,200,000, all of which could be issued pursuant to awards of incentive stock options. In addition, the 2009 Plan provided that no more than 300,000 shares of common stock per year may be awarded to
any employee as a performance-based award under Section 162(m) of the Code. The 2009 Plan terminated on January 20, 2019 with respect to the grant of any new awards.
If
there is any change in the Company's corporate capitalization, the Compensation Committee must proportionately and equitably adjust the number and type of shares of common stock
covered by awards then outstanding under the 2009 Plan, the number and type of shares of common stock available under the 2009 Plan, the exercise or grant price of any award, or if deemed appropriate,
make provision for a cash payment with respect to any outstanding award, provided that no adjustment may be made that would adversely affect the status of any award that is intended to be a
performance-based award under Section 162(m) of the Code, unless otherwise determined by the Compensation Committee. In addition, the Compensation Committee may make adjustments in the terms
and conditions of any awards, including any performance goals, in recognition of unusual or nonrecurring events affecting the Company or any subsidiary, or in response to changes in applicable laws,
regulations or accounting principles, provided that no adjustment may be made that would adversely
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Table of Contents
affect
the status of any award that is intended to be a performance-based award under Section 162(m) of the Code, unless otherwise determined by the Compensation Committee.
2019 Stock-Based Incentive Compensation Plan
The 2019 Plan was approved by the Company's shareholders at the Company's Annual Meeting of Shareholders held on April 2, 2019. The 2019
Plan authorizes the grant of stock appreciation rights, restricted stock, options and other equity-based awards. Options granted under the 2019 Plan may be either "incentive stock options" as defined
in Section 422 of the Code or nonqualified stock options, as determined by the Compensation Committee.
Subject
to an adjustment necessary upon a stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or
share exchange, extraordinary or unusual cash distribution, or similar corporate transaction or event, the maximum number of shares of common stock available for awards under the 2019 Plan is 750,000,
plus 139,691 shares of common stock that were authorized but unissued under the 2009 Plan as of the effective date of the 2019 Plan (i.e., April 2, 2019), all of which may be issued
pursuant to awards of incentive stock options. In addition, the 2019 Plan provides that no more than 300,000 shares may be awarded in any calendar year to any employee. As of September 30,
2019, there were 889,691 shares of common stock available for awards under the 2019 Plan.
If
any award is forfeited, terminates or otherwise is settled for any reason without an actual distribution of shares to the participant, the related shares of common stock subject to
such award will again be available for future grant. Any shares tendered by a participant in payment of the exercise price of an option or the tax liability with respect to an award (including, in any
case, shares withheld from any such award) will not be available for future grant under the 2019 Plan. If there is any change in the Company's corporate capitalization, the Compensation Committee must
proportionately and equitably adjust the number and kind of shares of common stock which may be issued in connection with future awards, the number and kind of shares of common stock covered by awards
then outstanding under the 2019 Plan, the aggregate number and kind of shares of common stock available under the 2019 Plan, any applicable individual limits on the number of shares of common stock
available for awards under the 2019 Plan, the exercise or grant price of any award, or if deemed appropriate, make provision for a cash payment with respect to any outstanding award. In addition, the
Compensation Committee may make adjustments in the terms and conditions of any awards, including any performance goals, in recognition of unusual or nonrecurring events affecting the Company or any
subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.
The
2019 Plan will terminate on April 2, 2029, unless earlier terminated by the Board. Termination will not affect awards outstanding at the time of termination. The Board may
amend, alter, suspend, discontinue, or terminate the 2019 Plan without shareholder approval, provided that shareholder approval is required for any amendment which (i) would increase the number
of shares subject to the 2019 Plan; (ii) would decrease the price at which awards may be granted; or (iii) would require shareholder approval by law, regulation, or the rules of any
stock exchange or automated quotation system.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires the Company's officers (as defined under Section 16(a) of the Exchange Act), directors, and persons who own greater than 10% of a registered class of the Company's equity securities to
file reports of ownership and changes in ownership with the SEC. Based solely on a review of the forms the Company has received and on written representations from certain reporting persons that no
such forms were required for them, the Company believes that during the fiscal year ended September 30, 2019, the officers, directors, and 10% beneficial owners of the Company complied with all
of the applicable filing requirements of Section 16(a) of the Exchange Act.
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ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
At the Annual Meeting, the shareholders will elect five (5) directors to hold office until the annual meeting of shareholders in 2021, or
until their respective successors have been duly elected and qualified.
Upon
the recommendation of the Nominating & Corporate Governance Committee of the Board (the "Nominating & Corporate Governance
Committee"), the Board has nominated Messrs. Geoffrey S. M. Hedrick, Winston J. Churchill, Roger A. Carolin, Robert E. Mittelstaedt, Jr. and Glen R.
Bressner to serve as directors. Each of the foregoing persons currently serves as a director, and each has indicated a willingness to continue to serve as a director.
Unless
contrary instructions are given, the shares represented by a properly executed proxy will be voted "FOR" the elections of each of
the nominees. Shareholders must cast a separate vote "FOR" the candidacy of each nominee or to "WITHHOLD
AUTHORITY" with respect thereto. Each nominee must receive a majority of the votes cast to be elected. Should either nominee become unavailable to accept election as a
director, the persons named in the enclosed proxy will vote the shares that they represent for the election of such other person as the Board may recommend. The Board of
Directors recommends voting "FOR" the nominees for directors.
DIRECTORS AND NOMINEES
The members of the Board as of the date of the Annual Meeting, including the nominees for directors standing for election at this meeting,
together with certain information about them, are set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Director
Since
|
|
Current Term
Expires
|
|
Positions with the Company
|
Geoffrey S. M. Hedrick
|
|
|
77
|
|
|
1988
|
|
|
2020
|
|
Director, Chairman of the Board, Chief Executive Officer
|
Winston J. Churchill
|
|
|
79
|
|
|
1990
|
|
|
2020
|
|
Director
|
Roger A. Carolin
|
|
|
64
|
|
|
2016
|
|
|
2020
|
|
Director
|
Robert E. Mittelstaedt, Jr.
|
|
|
76
|
|
|
1989
|
|
|
2020
|
|
Director
|
Glen R. Bressner
|
|
|
59
|
|
|
1999
|
|
|
2020
|
|
Director, Vice-Chairman of the Board
|
Directors and Nominees
Geoffrey S. M. Hedrick. Mr. Hedrick founded the Company in February 1988 and has been Chairman of the Board since 1997.
Mr. Hedrick
resigned from his position as Chief Executive Officer of the Company on November 30, 2007, but continued as Chairman of the Board. He reassumed his former duties as Chief Executive Officer on
September 8, 2008. Prior to founding the Company, Mr. Hedrick served as President and Chief Executive Officer of Smiths Industries, North American Aerospace Companies. He also founded
Harowe Systems, Inc. in 1971, which was acquired subsequently by Smiths Group plc. Mr. Hedrick has over 45 years of experience in the avionics industry, and he holds a
number of patents in the electronics, optoelectric, electromagnetic, aerospace and contamination-control fields.
Winston J. Churchill. Mr. Churchill has been managing general partner of SCP Partners, a multi-stage venture capital firm that
invests in
technology-oriented companies, since he founded it in 1996, and has over 35 years of experience in private equity investing. He formed Churchill Investment Partners, Inc. in 1989 and CIP
Capital, L.P., a small business investment company, in 1990. Prior to that, he was a managing partner of a private investment firm that specialized in leveraged buyouts on
8
Table of Contents
behalf
of Bessemer Securities Corporation. From 1967 to 1983, he practiced law at the Philadelphia firm of Saul Ewing Arnstein & Lehr LLP and served as Chairman of its Banking and
Financial Institutions Department, Chairman of the Finance Committee, and a member of its Executive Committee. He has experience serving as a director of other public companies, including Amkor
Technology, Inc. (NASDAQ: AMKR), Recro Pharma, Inc. (NASDAQ: REPH), and formerly Griffin Industrial Realty Inc. (NASDAQ: GRIF), as well as a number of private companies. From 1989
to 1993, he served as Chairman of the Finance Committee of the Pennsylvania Public School Employees' Retirement System. He is currently a Trustee Fellow of Fordham University, Chairman of Young
Scholars Charter School, Chairman Emeritus of The Gesu School, and a trustee of American Friends of New College Oxford, England; for many years, he was also a trustee of Georgetown University, where
he chaired the Committee on Medical Affairs. He earned a Bachelor of Science in Physics, summa cum laude, from Fordham University, a Master of Arts in Economics from Oxford University, where he
studied as a Rhodes Scholar, and a Juris Doctor from Yale Law School.
Roger A. Carolin. Mr. Carolin is currently a Venture Partner at SCP Partners, a position he has held since 2004. Mr. Carolin
works to
identify attractive investment opportunities and assists portfolio companies in the areas of strategy development, operating management, and intellectual property. Mr. Carolin co-founded CFM
Technologies, Inc., a global manufacturer of semiconductor process equipment, and served as its Chief Executive Officer for 10 years, until the company was acquired. Mr. Carolin
formerly worked for Honeywell, Inc. and General Electric Co., where he developed test equipment and advanced computer systems for on-board missile applications. Mr. Carolin is
also a director of Amkor Technology, Inc. (NASDAQ: AMKR), a supplier of outsourced semiconductor assembly and test services. Mr. Carolin holds a B.S. in Electrical Engineering from Duke
University and an M.B.A. from the Harvard Business School.
Robert E. Mittelstaedt, Jr. Mr. Mittelstaedt served as Non-Executive Chairman of the Board of Directors of the Company from 1989
to 1997.
Mr. Mittelstaedt is Dean Emeritus of the W. P. Carey School of Business at Arizona State University where he served as Dean and Professor of Management from 2004 to 2013. Prior to that,
Mr. Mittelstaedt was Vice Dean of The Wharton School of the University of Pennsylvania since 1989. Mr. Mittelstaedt previously served on the Boards of Directors of Laboratory Corporation
of America Holdings, Inc. and W. P. Carey, Inc. Mr. Mittelstaedt holds a Bachelor of Science degree in Mechanical Engineering from Tulane University and an M.B.A. degree from The
Wharton School of the University of Pennsylvania.
Glen R. Bressner. Mr. Bressner has been a venture capitalist since 1985 and is co-Founder and Managing Partner of NEPA Venture
Funds,
Mid-Atlantic Venture Funds, Originate Ventures and Activate Venture Partners. He is also a shareholder and a director on the board of Alum-a-Lift, Inc., a family-owned manufacturer of material
handling solutions. From 1996 to 1997, Mr. Bressner served as the Chairman of the Board of the Greater Philadelphia Venture Group. Mr. Bressner holds a Bachelor of Science, cum laude, in
Business Administration from Boston University and a Masters of Business Administration degree from Babson College.
Director Qualifications
The Board believes that each of the directors and the nominees for director listed above have the sound character, integrity, judgment, and
record of achievement necessary to be a member of the Board. In addition, each of the directors and the nominees for director have exhibited, during their prior service as directors, the ability to
operate cohesively with the other members of the Board, and to challenge and question management in a constructive way. Moreover, the Board believes that each director and the nominees for director
bring a strong and unique background and skillset to
the Board, giving the Board, as a whole, competence and experience in diverse areas, including corporate governance and board service, finance, management, and aviation. Set forth below are certain
specific
9
Table of Contents
experiences,
qualifications, and skills that led to the Board's conclusion that each of the directors and the nominees for director listed above should continue to serve as a directors.
Mr. Hedrick,
as founder and Chief Executive Officer of the Company, provides the Board with a comprehensive knowledge of the Company, its history, and its businesses. In addition,
Mr. Hedrick brings the Board his insight into the aviation industry from over 45 years of leadership experience in executive positions in aviation companies, including Smiths
Group plc and Harowe Systems, Inc.
Mr. Churchill
brings the Board over 35 years of experience in private equity investing, during which he gained valuable insight into effective management of investments.
Mr. Churchill utilizes this insight to advise the Board on financial and investment matters. In addition, Mr. Churchill has extensive experience serving on the boards of directors of
other companies, both public and private. Mr. Churchill draws on his financial and corporate governance experience in his service on the Investment Committee of the Board (the
"Investment Committee") (as Chairman), the Nominating & Corporate Governance Committee, and the Audit Committee of the Board (the
"Audit Committee"). In addition, Mr. Churchill has maintained a pilot's license for over fifteen years and has Instrument and Multi-Engine
ratings. Consequently, he brings to the Board operational experience with state-of-the-art avionics.
Mr. Carolin
has over a decade of experience in private equity investing, previously worked in advanced computer systems and on-board missile applications, and has a significant
understanding the Company's industry and its business. He possesses specific knowledge and experience in technology, new business opportunities, operations, management, and finance, all of which are
relevant and important to the Company's business, and he capitalizes on these strengths in his service on the Audit Committee and the Compensation Committee.
Mr. Mittelstaedt,
having served as the Non-Executive Chairman of the Board for ten years, provides the Board with a comprehensive knowledge of the Company and its history. He was
CEO of an IT firm that he co-founded, built, and sold in the 1980s. In addition, Mr. Mittelstaedt has extensive academic business experience, having served as Dean of the W. P. Carey School of
Business at Arizona State University and Vice Dean at The Wharton School of the University of Pennsylvania. This experience has exposed Mr. Mittelstaedt to contemporary business strategies and
practices, which he draws from in his service on the Board. Mr. Mittelstaedt's experience on various other boards of directors provides him with insight into corporate governance, which he
utilizes in his service on the Nominating & Corporate Governance Committee (as Chairman) and the Compensation Committee (as Chairman).
Additionally, Mr. Mittelstaedt has been an active pilot for over 55 years and holds a FAA Commercial Pilot Certificate with Multi-Engine and Instrument ratings. Consequently, he brings
to the Board operational experience with state-of-the-art avionics.
Mr. Bressner
brings the Board a wealth of experience managing financial investments from his service at venture capital firms. Mr. Bressner provides the Board with a
thorough understanding of capital markets and other financial issues. Mr. Bressner's experience in managing investments also provides him with extensive finance and accounting knowledge, and he
applies this expertise in his service on the Audit Committee (as Chairman), the Investment Committee and the Nominating & Corporate Governance Committee. Mr. Bressner is also an audit
committee financial expert, as defined by SEC rules and regulations. His prior service as Chairman of the Board of Directors of the Greater Philadelphia Venture Group and on numerous other boards of
directors, including of several public entities, provides him with valuable experience in corporate governance matters.
INDEPENDENCE
The Board has determined, in its business judgment, that four (4) of the Company's five (5) directors are independent as
defined in the applicable NASDAQ Stock Market, LLC ("NASDAQ") listing standards, including that each member is free of any relationships that
would
10
Table of Contents
interfere
with his individual exercise of independent judgment. The following directors were determined to be independent: Glen R. Bressner, Winston J. Churchill, Robert E. Mittelstaedt, Jr., and
Roger A. Carolin (collectively, the "Independent Directors").
BOARD LEADERSHIP
The Board does not have a formal policy on whether the roles of Chief Executive Officer and Chairman of the Board should be separate. Currently,
Mr. Geoffrey S. M. Hedrick serves in both of these positions. The Board believes that it is in the best interests of the Company's shareholders to combine these offices as it promotes
information flow between management and the Board, effective decision making, and an alignment of corporate strategy. In addition, Mr. Glen R. Bressner, an Independent Director, serves as Vice
Chairman of the Board and as presiding director
during executive sessions of Independent Directors. The Board believes that its structural features, including four (4) independent directors on a board currently consisting of
five (5) directors, regular meetings of Independent Directors in executive session, an independent Vice Chairman of the Board, and key committees consisting wholly of Independent
Directors, provide for substantial independent oversight of the Company's management. However, the Board recognizes that, depending on future circumstances, other leadership models may become more
appropriate. Accordingly, the Board will continue to review periodically its leadership structure.
RISK OVERSIGHT
The Company faces a number of risks, including technological and intellectual property risk, regulatory risk, credit risk, liquidity risk,
reputational risk, and risk from adverse fluctuations in interest rates. Management is responsible for the day-to-day management of risks faced by the Company, while the Board, as a whole and through
its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board seeks to ensure that the risk management processes designed and implemented by management
are adequate. The Board consults periodically with management regarding the Company's risks.
While
the Board is ultimately responsible for risk oversight, the Company's board committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The
Audit Committee assists the Board in oversight of risk management in the areas of financial reporting and internal controls. The Compensation Committee assists the Board in oversight of risks related
to the Company's compensation policies and programs. The Investment Committee assists the Board in oversight of the risks related to the Company's cash investments. The Nominating & Corporate
Governance Committee assists the Board in oversight of risk associated with board organization, membership and structure, succession planning for directors and executive officers, and corporate
governance.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board maintains four standing committees: Audit, Compensation, Investment, and Nominating & Corporate Governance.
Audit Committee. The Audit Committee makes recommendations to the Board with respect to various auditing and accounting matters,
including the
selection and compensation of the Company's independent registered public accounting firm, the scope of the Company's annual audits, fees to be
paid to the independent registered public accounting firm, the performance and independence of the Company's independent registered public accounting firm, and the Company's accounting practices.
The
Audit Committee approves all services provided to the Company by the independent registered public accounting firm. The Audit Committee has established procedures for the receipt,
retention, and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous
11
Table of Contents
submissions
by employees of concerns regarding questionable accounting or auditing matters. In addition, the Audit Committee has responsibility for, among other things, the planning and review of the
Company's annual and periodic reports and accounts, and the involvement of the Company's independent registered public accounting firm in that process.
The
members of the Audit Committee are currently Messrs. Bressner (Chairman), Carolin and Churchill. The Audit Committee is comprised solely of independent members, as
independence for audit committee members is defined by the applicable NASDAQ listing standards. In addition, the Board has determined, in its business judgment, that each member of the Audit Committee
is financially literate, and that at least one of the Audit Committee members, Mr. Bressner, is an audit committee financial expert, as defined by SEC rules and regulations. The Audit Committee
has adopted a formal written charter that has been approved by the Board. The charter specifies the scope of the Audit Committee's responsibilities and procedures for carrying out such
responsibilities. A copy of the charter is available on the Company's website, www.innovative-ss.com, under the heading "Investor Relations."
Compensation Committee. The Compensation Committee is responsible for setting and administering the policies that govern all executive
compensation
decisions, including annual base salaries, bonuses, and equity-based compensation programs. The Compensation Committee evaluates annually the performance of the Company's Chief Executive Officer and
determines or recommends to the full Board the annual base salary, bonus, and equity-based compensation for the Chief Executive Officer. The Compensation Committee relies on the recommendations of the
Chief Executive Officer, following the Chief Executive Officer's annual performance reviews of other executive officers, in setting annual base salaries, bonuses, and equity-based compensation for
other executive officers. The Compensation Committee is also responsible for reviewing and overseeing the Company's benefit plans, equity incentive plans, and other compensation plans and policies for
employees, consultants, directors, and other compensated individuals, including the Chief Executive Officer.
The
members of the Compensation Committee are currently Messrs. Mittelstaedt (Chairman) and Carolin, each of whom, in the judgment of the Board, was found to be "independent" as
defined by the applicable NASDAQ listing standards. The Compensation Committee has adopted a formal written charter that has been approved by the Board. The charter specifies the scope of the
Compensation Committee's responsibilities and procedures for carrying out such responsibilities. A copy of the charter is available on the Company's website, www.innovative-ss.com, under the heading
"Investor Relations."
The
Compensation Committee has the authority under its charter to engage the services of outside consultants, advisors, and others to assist the Compensation Committee. However, the
Compensation Committee has not retained an outside consultant or advisor to advise it regarding the Company's compensation practices. Instead, the Compensation Committee independently determines the
appropriate levels of compensation for executive officers taking into account, among other factors, the performance of such individuals (as determined in annual reviews conducted by the Compensation
Committee for the Chief Executive Officer or by the Chief Executive Officer for the other executive officers), the Company's financial performance, cost of living, prior compensation practices, and
recruitment and retention needs. The Compensation Committee relies on the recommendations of the Company's Chief Executive Officer in determining whether and how much of a discretionary bonus may be
paid to the Company's employees (including executive officers other than the Chief Executive Officer) if the Company's financial performance exceeds the Board's expectations.
Compensation Committee Interlocks and Insider Participation. No member of the Compensation Committee is a former or current executive
officer or
employee of the Company. There are no compensation committee interlocks between the Company and any other entity involving the Company or such entity's executive officers or board members.
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Table of Contents
Investment Committee. The Investment Committee assists the Board in fulfilling its oversight responsibilities with respect to
recommendations
pertaining to the investment of excess capital, including with respect to the implementation of the Company's stock repurchase program. Messrs. Churchill (Chairman) and Bressner are currently
the members of the Investment Committee.
Nominating & Corporate Governance Committee. The Company has a Nominating & Corporate Governance Committee,
consisting of three
non-employee directors. The Nominating & Corporate Governance Committee members are currently Messrs. Mittelstaedt (Chairman), Churchill and Bressner,
each of whom, in the judgment of the Board, was found to be "independent" as defined by the applicable NASDAQ listing standards. The Nominating & Corporate Governance Committee has adopted a
formal written charter that has been approved by the Board. The charter specifies the scope of the Nominating & Corporate Governance Committee's responsibilities and procedures for carrying out
such responsibilities. A copy of the charter is available on the Company's website, www.innovative-ss.com, under the heading "Investor Relations."
The
Nominating & Corporate Governance Committee's functions include establishing the criteria for selecting candidates for nomination to the Board, seeking candidates who meet
those criteria, making recommendations to the Board of nominees to fill vacancies on or as additions to the Board, and monitoring the Company's corporate governance structure.
The
Nominating & Corporate Governance Committee seeks director candidates based upon a number of qualifications and criteria, including independence, knowledge, judgment,
character, leadership skills, education, experience, financial literacy, standing in the community, the ability to foster a diversity of backgrounds and views, and the ability to complement the
Board's existing strengths relative to the Company's business. In the case of potential independent director candidates, such eligibility criteria must be in accordance with SEC and NASDAQ rules.
While the Nominating & Corporate Governance Committee does not have a formal policy with regard to the consideration of diversity in identifying director nominees, the Nominating &
Corporate Governance Committee and the Board believe that it is essential that the Board be able to draw on a wide variety of backgrounds and professional experience among its members. The
Nominating & Corporate Governance Committee desires to maintain the Board's diversity through the consideration of factors such as education, skills, and relevant professional experience and to
identify the best possible nominees for the Board, regardless of a nominee's self-identified age, race, religion, national origin, sex, sexual orientation, disability any other basis proscribed by
law. The Nominating & Corporate Governance Committee does not intend to nominate representational directors, but instead, considers the entirety of each candidate's credentials in the context
of these standards and the characteristics of the Board in its entirety.
The
Nominating & Corporate Governance Committee will consider nominees for election to the Board who are timely recommended by shareholders, provided that a complete description
of the nominees' qualifications, experience, and background, together with a statement signed by each nominee in which he or she consents to act as such, accompany the recommendations. Such
recommendations should be submitted in writing to the attention of Chairman, Nominating & Corporate Governance Committee, at the Company's address at 720 Pennsylvania Drive, Exton, PA 19341,
and should not include self-nominations. Section 3.10 of the Company's Amended and Restated Bylaws contains provisions setting forth the requirements applicable to a shareholder nomination for
director. These requirements are summarized in this Proxy Statement under the caption "Shareholder Proposals for 2021 Annual Meeting And Other Matters."
Each
of the current nominees for director listed under the caption "ELECTION OF DIRECTORS" is an existing director standing for re-election. In connection with the Annual Meeting, the
Nominating & Corporate Governance Committee did not receive any recommendation for a
13
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candidate
from any shareholder or group of shareholders owning more than 5% of the Company's common stock.
The
Annual Meeting provides an opportunity each year for shareholders to ask questions of or otherwise communicate directly with members of the Company's Board on matters relevant to the
Company. Per Company policy, each director is requested to attend the Annual Meeting in person. All five of the Company's then-serving directors attended the Company's 2019 Annual Meeting of
Shareholders.
In
addition, shareholders may communicate with the Board, or if applicable, to a specific individual director, by sending a written communication to the attention of the Board or such
individual director at the following address: 720 Pennsylvania Drive, Exton, PA 19341, or by facsimile to (610) 646-0150.
Copies
of each written communication received at such address or facsimile number will be provided to the Board or to the specific individual director, unless such communication is
considered, in the reasonable judgment of the Corporate Secretary or other appropriate company officer, to be improper for submission to the intended recipient. Examples of shareholder communications
that would be considered improper for submission include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to the Company or the
Company's business, or communications that relate to improper or irrelevant topics.
The
Nominating & Corporate Governance Committee conducts an annual assessment of the size and composition of the Board and its committees and reviews with the Board the
appropriate skills and characteristics required of Board members. The Nominating & Corporate Governance Committee has not relied upon third-party search firms to identify board candidates, but
reserves the right to do so as required. To date, the Nominating & Corporate Governance Committee has relied upon recommendations from a wide variety of its business contacts, including current
executive officers, directors, community leaders, and shareholders as a source for potential board candidates.
Neither
the Nominating & Corporate Governance Committee nor the Company has engaged or paid any fees to a search firm in connection with the nomination of the directors for
election at the Annual Meeting covered by this Proxy Statement.
MEETINGS AND ATTENDANCE
During the fiscal year ended September 30, 2019, the full Board held four (4) meetings. From time to time during fiscal year 2019
the Board met in executive session without members of management present. The Audit Committee met six (6) times, the Investment Committee met one (1) time, the Compensation Committee met
two (2) times and the Nominating & Corporate Governance Committees met one (1) time. All of our directors attended at least 75% of the meetings of the full Board and the meetings
of the committees on which they served.
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