SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of
The Securities Exchange Act of 1934
Filed
by the Registrant
x
Filed by a Party other than the Registrant
Check the appropriate box
|
¨
|
Preliminary Proxy Statement
|
|
¨
|
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
|
x
|
Definitive Proxy Statement
|
|
¨
|
Definitive Additional Materials
|
|
¨
|
Definitive Material Pursuant to §240.14a-12
|
INRAD OPTICS, INC.
|
(Name of Registrant as Specified In Its Certificate of Incorporation)
|
|
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
|
Payment of Filing Fee (Check the appropriate box):
|
¨
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
|
|
(1)
|
Title of each class of securities to which transaction applies:
|
|
|
|
|
(2)
|
Aggregate number of securities to which transaction applies:
|
|
|
|
|
(3)
|
Per unit price or other underlying value of transaction computed pursuant t to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
|
|
|
|
|
(4)
|
Proposed maximum aggregate value of transaction:
|
|
|
|
|
(5)
|
Total fee paid:
|
|
|
|
|
¨
|
Fee paid previously with preliminary materials.
|
|
¨
|
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
|
|
(1)
|
Amount Previously Paid:
|
|
|
|
|
(2)
|
Form, Schedule or Registration Statement No.:
|
|
|
|
|
(3)
|
Filing Party:
|
|
|
|
|
(4)
|
Date Filed
|
|
|
|
SCHEDULE 14A INFORMATION
INRAD OPTICS, INC.
181 Legrand Avenue
Northvale, New Jersey 07647
Notice of Annual Meeting of Shareholders
To be held on Wednesday, June 18, 2014
To The Shareholders of Inrad Optics, Inc.:
NOTICE IS HEREBY GIVEN that the Annual
Meeting of Shareholders of INRAD OPTICS, INC. (the "Company") will be held at the offices of the Company, 181 Legrand
Avenue, Northvale, New Jersey 07647, on Wednesday, June 18, 2014 at 10:00 a.m. for the following purposes:
|
1.
|
To elect two directors, named herein, to hold office for a term of three years;
|
|
2.
|
To ratify the appointment of Baker Tilly Virchow Krause, LLP (formerly Holtz Rubenstein Reminick,
LLP) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014;
|
|
3.
|
To approve, as a non-binding advisory vote, our named executive officer compensation; and
|
|
4.
|
To transact such other business as may properly come before the meeting or any adjournment thereof.
|
The Board of Directors has fixed the close
of business on April 25, 2014, as the date for determining the shareholders of record entitled to receive notice of, and to vote
at, the Annual Meeting.
We urge you to vote your shares over
the Internet or through the mail at your earliest convenience.
|
By Order of the Board of Directors
|
|
|
|
/s/ William J. Foote
|
|
William J. Foote, Secretary
|
Northvale, New Jersey
|
|
May 9, 2014
|
|
INRAD OPTICS, INC.
|
181 Legrand Avenue
|
Northvale, NJ 07647
|
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS
Wednesday, June 18, 2014
This Proxy Statement is being
furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of INRAD OPTICS,
INC., a New Jersey corporation with its principal offices at 181 Legrand Avenue, Northvale, New Jersey 07647 (the
"Company"), to be used at the Annual Meeting of Shareholders of the Company (the “Annual Meeting”) to
be held at the offices of the Company, 181 Legrand Avenue, Northvale, New Jersey, 07647 on Wednesday, June 18, 2014 at 10:00
a.m. This Proxy Statement and the enclosed form of proxy are first being sent to shareholders on or about May 19, 2014.
Shareholders Entitled
to Vote
Only shareholders of record at the close
of business on April 25, 2014, the record date fixed by the Board of Directors, will be entitled to notice of, and to vote at,
the Annual Meeting. At the close of business on the record date, there were 12,349,493 shares of the Company's Common Stock, par
value $0.01 per share (the "Common Stock"), outstanding and entitled to vote at the meeting. Each share is entitled to
one vote. The presence in person or by proxy of owners of a majority of the outstanding shares of the Company's Common Stock will
constitute a quorum for the transaction of business at the Company's Annual Meeting.
For purposes of determining the votes cast
with respect to any matter presented for consideration at the Annual Meeting, only those cast "for" are included. Abstentions
and broker non-votes are counted only for the purpose of determining whether a quorum is present at the Annual Meeting. Owners
of Common Stock are not entitled to cumulative voting in the election of directors. Owners of Common Stock will not have any dissenters’
rights of appraisal in connection with any of the matters to be voted on at the Company’s Annual Meeting.
If you hold your shares in
“street name” through a broker or other nominee, you should instruct your broker or nominee how to vote. A
“broker non-vote” occurs when a nominee holding shares for a beneficial owner returns a duly executed proxy that
does not include any vote with respect to a particular proposal because the nominee did not have discretionary voting power
with respect to the matter being considered and did not receive voting instructions from the beneficial owner. If
that happens, the nominees may vote those shares only on matters deemed “routine,” such as the ratification of
auditors. Only Proposal No. 2 for the ratification of the appointment of Baker Tilly Virchow Krause, LLP as our
independent registered public accounting firm is considered a “routine” matter. Thus, if you do not give your
broker or nominee specific voting instructions, your shares may only be voted for Proposal No. 2 and not voted for the
other matters. If your shares are not voted, they will not be counted in determining the number of votes cast. However,
shares represented by such “broker non-votes” will be counted for determining whether there is a quorum.
Votes Required to Approve
Each Proposal
The proposal to elect the two director
nominees will require an affirmative vote for the proposal by a plurality of the Common Stock entitled to vote at the Annual Meeting.
The proposal to ratify the appointment
of Baker Tilly Virchow Krause, LLP (formerly Holtz Rubenstein Reminick, LLP) as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2014 will require an affirmative vote for the proposal by a majority of
the votes cast at the Annual Meeting by the holders of shares of Common Stock entitled to vote.
The proposal to approve the non-binding
advisory resolution with respect to the compensation of our named executive officers will be approved if the number of votes cast
in favor of the proposal exceeds the number of votes cast against it.
Voting: Revocation
of Proxies
A form of proxy is enclosed for use at
the Annual Meeting if a shareholder is unable to attend in person. Each proxy may be revoked at any time before it is exercised
by giving written notice of revocation to the Secretary of the Company, by filing a later dated proxy with the Secretary at any
time prior to its exercise or by voting at the meeting. The presence at the meeting of a stockholder who has given a proxy does
not revoke the proxy unless the stockholder files a notice of revocation or votes by written ballot. All shares represented by
valid proxies pursuant to this solicitation (and not revoked before they are exercised) will be voted as specified in the form
of proxy. If no specification is given, the shares will be voted in favor of the Board's nominees "for" director and
"for" the other proposals described in this Proxy Statement.
IMPORTANT NOTICE REGARDING
THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS OF INRAD OPTICS, INC. TO BE HELD ON JUNE 18, 2014. THIS
PROXY STATEMENT, THE ACCOMPANYING FORM OF PROXY CARD AND OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
2013, INCLUDING FINANCIAL STATEMENTS, ARE AVAILABLE AT
www.proxyvote.com
. Under rules issued by the Securities and Exchange
Commission (the “SEC”), we are providing access to our proxy materials both by sending you this full set of proxy materials
and by notifying you of the availability of our proxy materials on the internet.
Costs of Solicitation
The entire cost of soliciting these proxies
will be borne by the Company. In following up the original solicitation of proxies by mail, the Company may make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy materials to the beneficial owners of
the stock and may reimburse them for their expenses in so doing. If necessary, the Company may also use its officers and their
assistants to solicit proxies from the shareholders, either personally or by telephone or special letter.
PRINCIPAL SHAREHOLDERS
The following table presents certain information
available to the Company at the date hereof with respect to the security ownership of the Company’s Common Stock by (i) each
of the Company’s directors and nominees, (ii) all executive officers of the Company, (iii) all executive officers and directors
as group, and (iv) each person known by the Company to beneficially own more than five percent (5%) of the Company's common stock
outstanding as of April 25, 2014. Percentages that include ownership of options or convertible securities are calculated assuming
exercise or conversion by each individual or entity of the options (including “out-of-the-money options”), or convertible
securities owned by each individual or entity separately without considering the dilutive effect of option exercises and security
conversions by any other individual or entity. Accordingly, the percentages may add to more than 100%. The address of each principal
shareholder, unless otherwise indicated, is Inrad Optics, Inc., 181 Legrand Avenue, Northvale, NJ 07647.
Beneficial Ownership of Common Stock
(1)
|
|
Amount and Nature of
|
|
|
Percent of
|
|
Name and Address of Beneficial Owner
|
|
Beneficial Ownership
|
|
|
Common Stock
|
|
Luke P. LaValle, Jr.
|
|
|
31,111
|
(2)
|
|
|
*
|
|
Dennis G. Romano
|
|
|
15,000
|
(3)
|
|
|
*
|
|
N.E. Rick Strandlund
|
|
|
15,000
|
(4)
|
|
|
*
|
|
Jan M. Winston
|
|
|
48,711
|
(5)
|
|
|
*
|
|
William D. Brucker
|
|
|
25,227
|
(6)
|
|
|
*
|
|
Thomas A. Caughey
|
|
|
26,974
|
(7)
|
|
|
*
|
|
Amy Eskilson
|
|
|
29,200
|
(8)(16)
|
|
|
*
|
|
William J. Foote
|
|
|
40,271
|
(9)(16)
|
|
|
*
|
|
George Murray
|
|
|
8,400
|
(10)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive
|
|
|
247,161
|
(11)
|
|
|
2.0
|
%
|
Officers as a group (11 persons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clarex Ltd. & Welland Ltd.
|
|
|
8,491,914
|
(12)
|
|
|
50.8
|
%
|
Bay Street and Rawson Square
|
|
|
|
|
|
|
|
|
P.O. Box N 3016
|
|
|
|
|
|
|
|
|
Nassau, Bahamas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NSB Advisors LLC
|
|
|
2,227,006
|
(13)
|
|
|
18.0
|
%
|
200Westage Business Center Drive
|
|
|
|
|
|
|
|
|
Suite 228
|
|
|
|
|
|
|
|
|
Fishkill, NY 12524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JAM Capital Partners Management, LLC
|
|
|
1,152,231
|
(14)
|
|
|
9.3
|
%
|
16 Boardwalk Plaza
|
|
|
|
|
|
|
|
|
St. Simons Island, GA 31522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lynn E. Gorguze
|
|
|
1,067,005
|
(15)
|
|
|
8.6
|
%
|
1200 Prospect Street, Suite 325
|
|
|
|
|
|
|
|
|
LaJolla, CA 92037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inrad Optics, Inc. Employees 401(k) Plan
|
|
|
932,929
|
(16)
|
|
|
7.6
|
%
|
Amy Eskilson and William J. Foote, as trustees
|
|
|
|
|
|
|
|
|
181 Legrand Avenue
|
|
|
|
|
|
|
|
|
Northvale, NJ 07647
|
|
|
|
|
|
|
|
|
* Less than 1%
|
(1)
|
Unless otherwise indicated, each of the shareholders named in the table has sole voting and investment
power with respect to the shares beneficially owned, subject to the information contained in the footnotes to the table.
|
|
(2)
|
Including 28,611 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(3)
|
Including 15,000 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(4)
|
Including 15,000 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(5)
|
Including 39,611 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(6)
|
Including 24,341 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(7)
|
Including 25,099 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(8)
|
Including 14,200 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(9)
|
Including 38,109 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(10)
|
Including 15,666 shares issuable upon exercise of options exercisable within 60 days of April 25,
2014.
|
|
(11)
|
Including 215,638 shares issuable upon exercise of options exercisable within 60 days of April
25, 2014.
|
|
(12)
|
Including 2,500,000 shares and warrants to purchase an additional 1,875,000 shares at $1.35 per
share which are issuable upon conversion of convertible promissory notes.
|
|
(13)
|
These figures are based upon information set forth in Schedule 13G filed February 13, 2013. NSB
Advisors has sole investment power but no voting power with respect to these 2,227,006 shares.
|
|
(14)
|
These figures are based upon information set forth in Schedule 13D filed March 17, 2014. JAM Capital
Partners Management, LLC has sole investment power and sole voting power with respect to these 1,152,231 shares.
|
|
(15)
|
These figures are based upon information set forth in Schedule 13G/A filed February 14, 2014. Lynn
E. Gorguze has sole investment power and sole voting power with respect to 535,950 shares held by Lynn Gorguze Separate Property
Trust dated 4/21/98 of which Ms. Gorguze is the sole trustee and sole investment power and sole voting power with respect to 531,055
shares held by Vincent and Gloria Gorguze Trust dated 3/27/98 of which Ms. Gorguze is a trustee.
|
|
(16)
|
These figures are based upon information provided by Amy Eskilson and William J. Foote, the trustees
of the Inrad Optics, Inc. 401(k) Plan (the “401(k) Plan”). Amy Eskilson and William J. Foote, as trustees of the 401(k)
Plan, share voting power with respect to the shares held by the 401(k) Plan, but do not have dispositive power over such shares.
Ms. Eskilson and Mr. Foote disclaim beneficial ownership of the shares held by the 401(k) Plan and such shares are not reflected
in the amounts of shares listed as being beneficially held in their respective individual capacities in this table.
|
OTHER MATTERS
At the time this Proxy Statement was mailed
to shareholders, management was not aware that any other matter will be presented for action at the Annual Meeting. If other matters
properly come before the Meeting, it is intended that the shares represented by proxies will be voted with respect to those matters
in accordance with the best judgment of the persons voting them
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board is divided into three classes
(Class I, Class II and Class III) with directors of the Board (collectively, “Directors”) in each class
serving staggered three-year terms. At each annual meeting of shareholders, the terms of Directors in one of these three classes
expire. At that annual meeting of shareholders, Directors are elected to a Class to succeed the Directors whose terms are then
expiring, with the terms of that Class of Directors so elected to expire at the third annual meeting of shareholders thereafter.
There are currently five members of the Board: two Class I Directors whose terms will expire at the 2014 Annual Meeting of
Shareholders, one Class II Director whose term will expire at the 2015 Annual Meeting of Shareholders and two Class III
Directors whose terms will expire at the 2016 Annual Meeting of Shareholders.
The following table sets forth the name
and age of the Class I nominees for election to the Board of Directors, the principal occupation or employment of each nominee
for the past five or more years, the principal business of the organization in which said occupation is or was carried on, the
name or any other public corporation for which each nominee serves or served during the past five years as a Board member, and
the period during which each nominee has served as a director of the Company.
Nominated for Election to Board of
Directors:
Name and Age
|
|
Since
|
|
Positions; Business Experience
|
|
|
|
|
|
Class I Directors
— Term to Expire in 2017
|
|
Dennis G. Romano, 71
|
|
2009
|
|
Director of the Company (September 2009 - present)
|
|
|
|
|
Consultant - Defense and Engineering/Construction Industry (2007 - 2009)
|
|
|
|
|
Senior Vice President of Business Development, Defense Business Unit, Washington Group International, a provider of engineering, construction and technical services (2002 – 2007)
|
|
|
|
|
Vice President, Business Strategy and Development, Northrop Grumman Corporation (1999 - 2001)
|
|
|
|
|
Various Senior and Executive Level Positions, Marketing, Business Development and Strategy, Northrop Grumman Corporation (1995 - 1999)
|
|
|
|
|
Vice President of Business Development, Grumman Aircraft Engineering Corporation (1993 - 1995)
|
|
|
|
|
Marketing and Business Development, Grumman Aircraft Engineering Corporation (1974 - 1993)
|
|
|
|
|
Aircrew member, flight test organization, Grumman Aircraft Engineering Corporation (1968 - 1974)
|
|
|
|
|
Avionics Technician, Grumman Aircraft Engineering Corporation (1964 - 1968)
|
|
|
|
|
|
N.E. Rick Strandlund, 70
|
|
2009
|
|
Director of the Company (January 2009 - present)
|
|
|
|
|
Chairman, President and CEO, Nanoproducts Corporation, a producer and developer of nanoproduct materials and technologies (2005 - 2013)
|
|
|
|
|
President and CEO, Research Electro-Optics, Inc., a manufacturer of thin-film coatings and components (2002 - 2004)
|
|
|
|
|
President and COO, Research Electro-Optics Inc. (1997 - 2002)
|
|
|
|
|
Vice-President/General Manager, Santa Rosa Division, Optical Coating Laboratory, Inc. (1993 - 1996)
|
|
|
|
|
Vice President/General Manager, Commercial Products Division, Optical Coating Laboratory, Inc. (1986 - 1993)
|
Other Continuing Directors:
|
|
|
|
|
|
|
|
Name and Age
|
|
Since
|
|
Positions; Business Experience
|
|
|
|
|
|
Class II Directors
— Term Expires in 2015
|
|
|
|
|
|
Luke P. LaValle, Jr., 72
|
|
2005
|
|
Director of the Company (2005 - present)
|
|
|
|
|
President and Chief Executive Officer, American Capital Management Inc. (1980 - present)
|
|
|
|
|
Senior Investment Officer, United States Trust Company of NY (1967 - 1980)
|
|
|
|
|
Lt. Colonel, US Army Reserve (Retired)
|
|
|
|
|
|
Class
III Directors — Term Expires in 2016
|
|
|
|
|
|
Amy Eskilson, 53
|
|
2012
|
|
Director of the Company (October 2012 - present)
|
|
|
|
|
President and Chief Executive Officer of the Company (October 2012 - present)
|
|
|
|
|
Vice President of Sales and Marketing for the Company (February 2011-September 2012)
|
|
|
|
|
Director of Business Development, Thorlabs Inc. (2001-2011)
|
|
|
|
|
Sales, Technical Support and Marketing Roles, Thor Labs, Inc. (1992-2000)
|
Jan M. Winston, 77
|
|
2000
|
|
Chairman of the Board of Directors of the Company (2009- present)
|
|
|
|
|
Director of the Company (2000 - present)
|
|
|
|
|
Management Consultant (1997 - present)
|
|
|
|
|
Division Director/General Manager IBM Corporation (1981 - 1997)
|
|
|
|
|
Executive positions held in Development, Finance and Marketing
|
The Board believes that the above-mentioned
experience, along with the other experience, qualifications, attributes and skills of the Board members described in the summary
below, provide the Company with the perspectives and judgment necessary to guide the Company’s strategies and monitor their
execution:
Other Experience, Qualification, Attributes and Skills of
Board Members
The Board considered the following experience,
qualifications, attributes and skills of its nominees and the other continuing elected directors in determining that each should
serve as a director of the Company:
Dennis G. Romano
|
·
|
Global business experience in business
development as Chief Business Development Officer of a business unit of Washington Group International
|
|
·
|
Over 20 years of experience in business
and strategy development for U.S. and International government clients
|
|
·
|
Senior executive leadership for multiple
business development organizations with a large international presence
|
|
·
|
Operational management experience and
joint leadership, in a $700 million business unit in the defense sector with Washington Group International
|
|
·
|
Extensive background in business development,
marketing and strategic development and implementation
|
|
·
|
Chairman of the Company’s Nominating
Committee
|
N.E. Rick Strandlund
|
·
|
Global business experience as President
and CEO of NanoProducts Corporation
|
|
·
|
Thin-film optical coating experience as
VP and General Manager of Optical Coating Laboratory, Inc.,
|
|
·
|
Board experience as Chairman of the Board
of NanoProducts and as a former director of Research Electro-Optics, Inc.
|
|
·
|
Strategic and business development leadership
of two global high-tech, photonics related manufacturing organizations
|
|
·
|
Prior leadership experience in new product
and new technology development
|
|
·
|
MBA in Management and Bachelor of Science
in Aerospace Engineering
|
|
·
|
Chairman of the Company’s Compensation
Committee
|
Luke P. LaValle, Jr.
|
·
|
Investment professional with over 40 years
of experience in analyzing, researching and investing in smaller public growth companies with U.S. Trust Co of NY and American
Capital Management, Inc. Senior analyst and membership in the NY Society of Security Analysts
|
|
·
|
Extensive board experience with V Band
Corporation, a public company, from 1992 to 1995 and several private companies including Benmarl Wine Company, Ltd. (1982-1992)
and Westhampton Yacht Squadron, Ltd. (1985-1995)
|
|
·
|
Military experience with rank of Lieutenant
Colonel, Military Intelligence, USAR (retired) and previous assignments to Army Staff, Office of Operations, Plans and Strategy,
The Pentagon and Intelligence Officer, 101
st
Airborne Division
|
|
·
|
Business and military experience includes
analysis of tactical and strategic issues, the formation of operational plans based upon situational experience and the development
and assessment of alternative courses of action with practical application to planning, direction, guidance and control of the
operations of smaller sized organizations like Inrad Optics, Inc.
|
|
·
|
Chairman of the Company’s Audit
Committee
|
Amy Eskilson
|
·
|
Over 20 years’ experience in operations,
senior management and executive level positions in the photonics industry in both domestic and global manufacturing environment.
|
|
·
|
Broad and deep experience in acquisitions;
facilitated 8 transactions in the photonics sector over a 9 year period.
|
|
·
|
Founding team member experience involving
privately funded high technology start-ups and R& D institutional spin-off companies.
|
|
·
|
Extensive experience working with government
and university research facilities; defense, aerospace, and technology corporations, small businesses and start-ups.
|
|
·
|
Expertise in corporate and public relations,
technology licensing, contracts, marketing and export control/ITAR, corporate real estate and facilities management.
|
|
·
|
Proven leadership and business building
skills including strategic planning, manufacturing management, corporate culture building and change management.
|
Jan M. Winston
|
·
|
Extensive background in high technology
sector and over 35 years with IBM in a variety of managerial and executive positions primarily in the development of new computer
systems and new software products such as the personal computer and speech recognition software
|
|
·
|
Diverse experience gained through senior
level roles in the areas of product development, marketing, finance, planning and strategy, including general management and profit
and loss responsibilities in both the domestic and international area
|
|
·
|
AB degree from Princeton University and
attendance at the Columbia Graduate School of Business Administration
|
|
·
|
Experience as a management consultant
serving clients such as IBM, as well as smaller manufacturing organizations, covering various projects such as product management,
strategic and financial planning, and management systems.
|
|
·
|
Served as Chairman of the Audit Committee,
Chairman of the Compensation Committee and is the current Chairman of the Board
|
The Board of Directors unanimously recommends that you vote FOR the election of the Board’s nominees for Class I director: Dennis G. Romano and N.E. Rick Strandlund.
|
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Baker Tilly Virchow Krause, LLP (formerly
Holtz Rubenstein Reminick, LLP) served as the Company’s independent registered public accounting firm during the fiscal year
ended December 31, 2013 and has been appointed by the Company’s Audit Committee to serve as the Company’s independent
registered public accountants for the current fiscal year ending December 31, 2014.
The Company’s Audit
Committee has the responsibility to select, retain and oversee the work of outside auditors and, when appropriate, to replace
the outside auditors. Stockholder ratification of the appointment of Baker Tilly Virchow Krause, LLP as the
Company’s independent registered public accounting firm for the fiscal year ending December 31, 2014 is not required by
law or by the Company’s Certificate of Incorporation or by-laws. However, the Board of Directors is submitting the
selection of Baker Tilly Virchow Krause, LLP to the Company’s stockholders for ratification as a matter of good
corporate governance and practice. If the stockholders fail to ratify the appointment, the Company will reconsider whether or
not to retain that firm. Even if the selection is ratified, the Company may appoint a different independent registered public
accounting firm during the year if the Audit Committee of the Board of Directors determines that such a change would be in
the best interests of the Company and its stockholders. A representative of Baker Tilly Virchow Krause, LLP is not expected
to be present at the Annual Meeting but will be available by telephone to respond to appropriate questions from the stockholders.
The Board of Directors unanimously recommends that you vote FOR the proposal to ratify the appointment of Baker Tilly Virchow Krause, LLP as the Company’s independent registered public accounting firm during the fiscal year ending December 31, 2014.
|
PROPOSAL THREE
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER
COMPENSATION
The Board of Directors is asking shareholders
to approve an advisory resolution on our named executive officer compensation as disclosed in this Proxy Statement. Our Compensation
Committee has structured our executive compensation program to attract, motivate and retain highly qualified employees, to align
our executives’ interests with those of our shareholders and to provide our executives with certain additional compensation
when superior financial results are achieved. The Compensation Committee and the Board of Directors believe that our compensation
policies and procedures are effective in achieving our goals.
The Board of Directors is urging shareholders
to read the “Executive Compensation” section of this Proxy Statement beginning on page 16 of this Proxy Statement,
which includes the “Summary Compensation Table” and other related compensation tables, notes and narrative related
to the compensation of our named executive officers.
In accordance with recently adopted Section 14A
of the Exchange Act, and as a matter of good corporate governance, the Board of Directors is asking shareholders to approve the
following resolution at the 2014 Annual Meeting of Shareholders:
RESOLVED, that the shareholders of
Inrad Optics, Inc. (the “Company”) approve the compensation of the Company’s named executive officers as
disclosed in the Proxy Statement for the Company’s 2014 Annual Meeting of Shareholders pursuant to the
compensation disclosur rules of the SEC (which includes the Executive Compensation section, the Summary Compensation Table
and related narrative discussion).
Although this proposal, commonly referred
to as a “say-on-pay” vote, is an advisory vote that will not be binding on the Board of Directors or the Compensation
Committee, the Board of Directors and the Compensation Committee will consider the results of this advisory vote when making future
decisions regarding our named executive compensation program.
The Board of Directors unanimously recommends that you vote FOR the approval, on an advisory basis, of the compensation of our named executive officers.
|
Compensation
of Directors
Compensation for
non-employee directors consists of two components: cash (i.e. meeting attendance fees, retainer and cash bonuses) and awards
under the Company’s 2010 Equity Compensation Program (the “Program”). Under the Program, stock option
grants and restricted stock unit grants may be made by the Compensation Committee which serves as the Program Administrator.
Equity-based grants are intended to align the interests of the Company’s directors with that of other shareholders. The
Company does not require its directors to own stock.
Fees paid to non-employee
directors were $500 during fiscal year 2013 for each board or committee meeting attended in person, and $250 for each meeting in
which they participated via telephone.
In addition, each non-employee
director is paid an annual retainer fee, in quarterly installments. For 2013, the annual retainer was $15,000 for the Chairman
and $10,000 for each of the other outside directors.
The Company provides
for reimbursement of expenses for all directors in the performance of their duties, including reasonable travel expenses incurred
attending meetings.
Directors, who are also
employees of the Company, do not receive any additional fees for such services.
The table that follows
provides information on components of non-employee director compensation in 2013.
Director Compensation
in Fiscal Year 2013
Name
|
|
Fees earned or
paid in cash ($)
|
|
|
Stock Unit
Awards($)
(1)
|
|
|
Option Awards ($)
(2)
|
|
|
Total ($)
|
|
Luke P. LaValle, Jr.
|
|
|
15,750
|
|
|
|
—
|
|
|
|
1,550
|
|
|
|
17,300
|
|
Dennis G. Romano
|
|
|
15,750
|
|
|
|
—
|
|
|
|
1,550
|
|
|
|
17,300
|
|
Joseph J. Rutherford (3)
|
|
|
7,000
|
|
|
|
—
|
|
|
|
1,550
|
|
|
|
8,550
|
|
N.E. Rick Strandlund
|
|
|
15,750
|
|
|
|
—
|
|
|
|
1,550
|
|
|
|
17,300
|
|
Jan M. Winston
|
|
|
20,750
|
|
|
|
—
|
|
|
|
1,550
|
|
|
|
22,300
|
|
|
(1)
|
The aggregate fair value of restricted stock unit grants is the product of the number of units
granted times the closing price of common stock of the Company on the date of the grant. The Company did not award any restricted
stock unit grants. As of December 31, 2013, there were no restricted stock unit grants outstanding for non-employee directors.
|
|
(2)
|
The value of stock option awards is computed in accordance with FASB ASC Topic 718. These amounts
reflect the aggregate grant date fair value of the awards. The Company granted 5,000 stock options with an exercise price of $0.35
per share to each of the directors on February 6, 2013. The stock options had a fair value $0.31 per share on the grant date. The
number of stock options which vested in 2013 to each non-employee director was as follows: Luke P. LaValle, Jr., 3,334; Dennis
G. Romano, 3,334; N.E. Rick Strandlund, 3,334 and Jan M. Winston, 3,334. As of December 31, 2013, the aggregate number of option
awards outstanding for each non-employee director then serving as a director was as follows: Luke P. LaValle, Jr., 33,611; Dennis
G. Romano, 20,000; N.E. Rick Strandlund, 20,000; and Jan M. Winston, 44,611.
|
|
(3)
|
Joseph J. Rutherford retired as an officer
of Inrad Optics, Inc. on December 31, 2012 but continued as a director of the Company until his resignation on April 21, 2013.
Mr. Rutherford’s director compensation represents non-employee fees and stock option awards subsequent to his retirement
from the Company and prior to his resignation from the Board of Directors.
Upon
Mr. Rutherford’s retirement, the Board of Directors agreed to immediately vest a total of 40,000 outstanding employee stock
options and extend the exercise period for all vested stock options for a period of three years from his retirement date. Upon
his resignation from the Board of Directors on April 21, 2013, the Board approved the immediate vesting of 5,000 stock options
that Mr. Rutherford received in February, 2013 in his capacity as a director of the Company and extended the option exercise period
for these options for a period of three years from the date of his resignation.
|
THE BOARD OF DIRECTORS
AND ITS COMMITTEES
Board of Directors
Composition of the Board
The Board of Directors in 2013 consisted
of four independent directors, and the Company’s President and CEO, Amy Eskilson. In 2013, Mr. Joseph J. Rutherford served
on the Board, as an outside director, until his resignation on April 21, 2013.
The Board of Directors has determined that
each of its four outside directors, Mr. Luke P. LaValle, Jr., Mr. Dennis G. Romano, Mr. N.E. Rick Strandlund and Mr. Jan M.
Winston has no material relationship with the Company (other than as director) and is therefore “independent” within
the meaning of the current listing standards of the Nasdaq National Market and the requirements of the Sarbanes Oxley Act. In its
annual review of director independence, the Board of Directors considers all commercial, banking, consulting, legal, accounting
or other business relationships any director may have with the Company. The Board of Directors considers a “material relationship”
to be one that impairs or inhibits, or has the potential to impair or inhibit, a director’s exercise of critical and disinterested
judgment on behalf of the Company and its shareholders. When assessing the “materiality” of a director’s relationship
with the Company, the Board of Directors considers all relevant facts and circumstances not only from the standpoint of the director
in his or her individual capacity, but also from the standpoint of the persons to whom the director is related and organizations
with which the director is affiliated.
Ms. Eskilson does not serve on any Committees
of the Board. Mr. Jan M. Winston served as Chairman of the Board during the year. The Board met 14 times during fiscal year 2013,
including five meetings by telephone. All members attended at least 75% of all meetings. Board members are encouraged, but not
required by any specific Board policy, to attend the Company’s Annual Meeting. During 2013 each non-employee director of
the Company was also a member of each Committee of the Board of Directors and each attended all of the meetings of the Board and
the respective committees of the Board on which they served in fiscal 2013, except as previously noted.
The Bylaws of the Company provide for a
range of no less than four and no more than six directors.
The Board does not have a policy on whether
or not the roles of Chief Executive Officer and Chairman of the Board should be separate and, if they are to be separate, whether
the Chairman of the Board should be selected from the non-employee directors or be an employee. The Board believes that it should
be free to make a choice from time to time in any manner that is in the best interests of the Company and its shareholders.
Currently, Mr. Winston serves as the Chairman
of the Board and Ms. Eskilson serves as a director and Chief Executive Officer. The Board of Directors believes this is the most
appropriate structure for the Company at this time because it makes the best use of Mr. Winston’s skills and experience,
including 14 years as a director of the Company.
Board’s Role in the Oversight
of Risk Management
Companies face a variety of risks, including
credit risk, liquidity risk, and operational risk. In fulfilling its risk oversight role, the Board focuses on the adequacy of
the Company’s risk management process and overall risk management system. The Board believes an effective risk management
system will (1) adequately identify the material risks that the Company faces in a timely manner, (2) implement appropriate risk
management strategies that are responsive to the Company’s risk profile and specific material risk exposures, (3) integrate
consideration of risk and risk management into business decision-making throughout the Company, and (4) include policies and procedures
that adequately transmit necessary information with respect to material risks to senior executives and, as appropriate, to the
Board or relevant committee.
The Audit Committee has been designated
to take the lead in overseeing risk management at the Board level. Accordingly, the Audit Committee schedules time for periodic
review of risk management, in addition to its other duties. In this role, the Audit Committee receives reports from management
and other advisors, and strives to generate serious and thoughtful attention to the Company’s risk management process and
system, the nature of the material risks the Company faces, and the adequacy of the Company’s policies and procedures designed
to respond to and mitigate these risks.
Although the Board’s primary risk
oversight has been assigned to the Audit Committee, the full Board also periodically receives information about the Company’s
risk management system and the most significant risks that the Company faces. This is principally accomplished through Audit Committee
reports to the Board and summary versions of the briefings provided by management and advisors to the Committee.
In addition to the formal compliance program,
the Board and the Audit Committee encourage management to promote a corporate culture that understands risk management and incorporates
it into the overall corporate strategy and day-to-day business operations. The Company’s risk management structure also includes
an ongoing effort to assess and analyze the most likely areas of future risk for the Company. As a result, the Board and Audit
Committee periodically ask the Company’s executives to discuss the most likely sources of material future risks and how the
Company is addressing any significant potential vulnerability.
Audit Committee
The Company has a separately designated
standing Audit Committee. Luke P. LaValle, Jr. serves as the Audit Committee Chairman since assuming the role in December 2006.
The Board of Directors has determined that the members of the Audit Committee each satisfy the requirements for independence under
Section 301 of the Sarbanes-Oxley Act, as well as the independence standards of the NASDAQ National Market. In 2013, the Audit
Committee was comprised of all outside directors throughout the year. The Audit Committee is empowered by the Board of Directors
to, among other things, serve as an independent and objective party to monitor the Company’s financial reporting process,
internal control system and disclosure control system, review and appraise the audit efforts of the Company’s independent
accountants, assume direct responsibility for the appointment, compensation, retention and oversight of the work of the outside
auditors and for the resolution of disputes between the outside auditors and the Company’s management regarding financial
reporting issues, and provide an open avenue of communication among the independent accountants, financial and senior management,
and the Company’s Board of Directors.
The Audit Committee met four times during
2013 with all members in attendance at all of the meetings.
Audit Committee Financial Expert
The Board of Directors of the Company has
determined that Mr. LaValle is an “audit committee financial expert” as such term is defined by the SEC.
Compensation Committee
The Compensation Committee is comprised
of all outside directors, and is responsible for establishing appropriate salaries and bonuses for all executive officers
and senior management of the Company. N.E. Rick Strandlund serves as the Chairman of the Compensation Committee since his appointment
in May 2009.
The Compensation Committee has the responsibility
of granting equity-based incentive compensation (i.e. stock options and grants of restricted stock units) to eligible employees
including the executive officers, and to its directors. The Compensation Committee duties also include administering and interpreting
the Company’s 2010 Equity Compensation Program (“the Stock Compensation Plan”). The duties relating to the Company’s
Stock Compensation Plan include selecting from eligible employees those persons to whom awards will be granted and determining
the type of award, the number of shares to be included in each award, any restrictions for some or all of the shares subject to
the award and the award price. The Compensation Committee reviews and approves all matters regarding the compensation of the executive
officers and other executives of the Company.
The Compensation Committee has the authority
to hire independent advisors to help fulfill its duties. No independent advisors were hired in 2013.
The Compensation Committee held five meetings
during 2013 to review and establish compensation policy for the year with all members in attendance at all meetings.
Nominating Committee
During 2013, the Nominating Committee was
comprised of all independent, outside directors. The Nominating Committee met once during the year with all members in attendance.
The Committee strives to compose the Board of Directors with a collection of individuals who bring a variety of complementary skills
which, as a group, will possess the appropriate skills and experience to oversee the Company’s business. Accordingly, although
diversity may be a consideration in the Committee’s process, the Committee and the Board of Directors do not have a formal
policy with regard to the consideration of diversity in identifying director nominees.
Mr. Dennis Romano serves as Chairman of
the Nominating Committee since his appointment by the Board of Directors on January 18, 2012.
Procedures for Considering Nominations
Made by Stockholders
The Nominating Committee’s charter
describes procedures for nominations to be submitted by shareholders and other third-parties, other than candidates who have previously
served on the Board or who are recommended by the Board. The charter states that a nomination must be delivered to the Secretary
of the Company at the principal executive offices of the Company not later than the close of business on the ninetieth (90th) day
nor earlier than the close of business on the one hundred twentieth (120
th
) day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that if the date of the annual meeting is more than thirty days before or more
than sixty days after such anniversary date, notice to be timely must be so delivered not earlier than the close of business on
the one hundred twentieth day prior to such annual meeting and not later than the close of business on the later of the ninetieth
day prior to such annual meeting or the close of business on the tenth day following the day on which public announcement of the
date of such meeting is first made by the Company. The public announcement of an adjournment or postponement of an annual meeting
will not commence a new time period (or extend any time period) for the giving of a notice as described above. The charter requires
a nomination notice to set forth as to each person whom the proponent proposes to nominate for election as a director: (a) all
information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an
election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director
if elected), and (b) information that will enable the Nominating Committee to determine whether the candidate satisfies the criteria
established by the Nominating Committee, as described below.
Qualifications
The charter describes the minimum qualifications
for nominees and the qualities or skills that are necessary for directors to possess. Each nominee:
|
·
|
must satisfy any legal requirements applicable to members of the Board;
|
|
·
|
must have business or professional experience that will enable such nominee to provide useful input
to the Board in its deliberations;
|
|
·
|
must have a reputation in the Company’s industry, for honesty and ethical conduct;
|
|
·
|
must have a working knowledge of the types of responsibilities expected of members of a board of
directors of a public corporation; and
|
|
·
|
must have experience, either as a member
of the board of directors of another public or private company or in another capacity that demonstrates the nominee’s capacity
to serve in a fiduciary position.
|
Identification and Evaluation of Candidates
for the Board
Candidates to serve on the Board will be
identified from all available sources, including recommendations made by shareholders. The Nominating Committee’s charter
provides that there will be no differences in the manner in which the Nominating Committee evaluates nominees recommended by shareholders
and nominees recommended by the Committee or management, except that no specific process shall be mandated with respect to the
nomination of any individuals who have previously served on the Board. The evaluation process for individuals other than existing
Board members will include:
|
·
|
a review of the information provided to the Nominating Committee by the proponent;
|
|
·
|
a review of reference letters from at least two sources determined to be reputable by the Nominating
Committee; and
|
|
·
|
a personal interview of the candidate;
|
together with a review of such other information
as the Nominating Committee shall determine to be relevant.
Third Party Recommendations
In connection with the 2014 Annual Meeting
of Shareholders, the Nominating Committee did not receive any nominations from any shareholder or group of shareholders which owned
more than 5% of the Company’s Common Stock for at least one year.
Communication with the Board
The Board has established a procedure that
enables shareholders to communicate in writing with members of the Board. Any such communication should be addressed to the Company’s
Secretary and should be sent to such individual c/o the Company at its principal place of business at 181 Legrand Ave, Northvale,
NJ 07647. Any such communication must state, in a conspicuous manner, that it is intended for distribution to the entire Board.
Under the procedures established by the Board, upon the Secretary’s receipt of such communication, the Company’s Secretary
will send a copy of such communication to each member of the Board, identifying it as a communication received from a shareholder.
Absent unusual circumstances, at the next regularly scheduled meeting of the Board held more than two days after such communication
has been distributed, the Board will consider the substance of any such communication.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive
Officers of the Registrant
The following table sets
forth the name and age of each executive officer of the Company, the period during which each such person has served as an executive
officer and the current position with the Company held by each such person:
Name and Age
|
|
Since
|
|
Position With the Company
|
|
|
|
|
|
Amy Eskilson, 53
|
|
2012
|
|
President and Chief Executive Officer
|
|
|
|
|
|
William J. Foote, 63
|
|
2006
|
|
Chief Financial Officer, Corporate Secretary and Treasurer
|
|
|
|
|
|
William D. Brucker, 66
|
|
2007
|
|
Vice President Human Resources and Administration
|
|
|
|
|
|
Thomas A. Caughey, 65
|
|
2011
|
|
Vice President of Product Development
|
|
|
|
|
|
George Murray, 49
|
|
2013
|
|
Vice President of Sales and Marketing
|
Amy Eskilson joined the Company on February
7, 2011 as Vice President of Sales and Marketing and was appointed an officer on March 24, 2011. Previously, she spent a number
of years with Thorlabs, Inc., a photonic tool catalog company where she served as Director of Business Development from 2001 to
2011. In this role Amy coordinated a team responsible for a total of eight acquisitions. She fostered the development
of multiple partner companies and executed both technology transfers and IP license agreements. Prior to that she was the inside
sales and technical support manager for Thorlabs and served in various marketing roles beginning in 1992. Ms. Eskilson was also
involved as a founding member in several private photonic companies including Nova Phase, Inc., Menlo Systems, Inc. and Idesta
Quantum Electronics where she also served on the Board of Directors. She received her BA in Communications in 1985 from Montclair
State University.
William J. Foote joined
the Company in May 2006 and was appointed Chief Financial Officer and Corporate Secretary on May 16, 2006. In June, 2009, he was
appointed to the position of Treasurer. He previously served as Chief Financial Officer of INSL-X Products Corporation, a paint
and coatings manufacturer, from 2002 through 2005. From 2000 to 2002, he was CFO of ASD Group, Inc., a publicly held contract
manufacturer serving the OEM marketplace in the high-tech sector. From 1990 through 1999, Mr. Foote held several executive positions
including Corporate Controller, Director and Vice-President of Finance positions with Benjamin Moore & Co., a paint and
coatings manufacturer. Earlier in his career, Mr. Foote served in various senior financial roles in Canada. Mr. Foote
is both a Certified Public Accountant and a Chartered Accountant (Canada). His past experience includes working in the audit area
with the public accounting firm of KPMG (Canada). He holds a Bachelor of Arts degree from Carleton University in Ottawa and a Master’s
Degree in Accounting from the University of British Columbia.
William D. Brucker joined
the Company in 2000 as Director of Human Resources. In 2006 he was appointed Vice President of Human Resources and Administration.
Prior to joining the Company, Mr. Brucker held corporate divisional HR leadership responsibilities with Hughes Aircraft/Raytheon,
RJR/Nabisco, Proctor & Gamble, and The Journal of Commerce. In addition to competency in classic HR disciplines including regulatory
compliance, he has experience in multi-site organizations and facility/operational integration and transition. Mr. Brucker holds
a BA degree from Salem College. Mr. Brucker was appointed an officer of the Company on January 19, 2007.
Thomas A. Caughey has been with the Company
since 1978. He was appointed an officer on March 24, 2011 and serves as Vice-President of Product Development, a position he has
held for more than 15 years. His current role has focused on development of systems involving non-linear crystals, and advances
in the development of individual crystal components that the company manufactures. Previously, he was a research associate at Texas
Tech University, working in the area of picosecond spectroscopy of chemical reactions. Tom holds a Doctorate in physical chemistry
from the University of Wisconsin – Madison and an undergraduate degree in chemistry from the University of Michigan –
Ann Arbor.
George Murray assumed the role of Vice
President of Sales and Marketing on January 14, 2013 and was appointed an officer on January 30, 2013. He joined the Company as
Sales Manager, West Region on March 29, 2010. Previously, he spent a number of years with Axsys Technologies Imaging Systems,
a developer, manufacturer and distributor of optical systems for the aerospace, defense, semiconductor, medical and graphic arts
industries. In addition, he held increasingly responsible roles in applications engineering, product marketing and sales management,
including international sales, with Photon Dynamics, a provider of inspection systems to the automotive, electronics and semiconductor
industries. He also held sales engineer, product marketing manager and system engineer roles with the Gerber group of Companies,
a provider of inspection and imaging systems and CAD CAM software. Mr. Murray holds an MBA from Rensselaer Polytechnic Institute
and a B.S., Mechanical Engineering from the University of Connecticut.
Each of the executive
officers has been elected by the Board of Directors to serve as an officer of the Company until the next election of officers,
as provided by the Company’s by-laws.
Summary of Cash and Certain Other Compensation
The following
Summary Compensation Table sets forth, for the years ended December 31, 2013 and 2012, the compensation paid by the Company
and its Subsidiaries, with respect to the Company’s Chief Executive Officer and two other highest paid executives.
Summary Compensation
Table
Name & Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Option
Awards
($)
(1)(2)
|
|
|
Stock
Awards
($)
(1)
|
|
|
All Other
Compensation
($)
(3)
|
|
|
Total
($)
|
|
Amy Eskilson,
|
|
|
2013
|
|
|
|
180,003
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,448
|
|
|
|
187,451
|
|
President and CEO
|
|
|
2012
|
|
|
|
160,771
|
|
|
|
—
|
|
|
|
12,900
|
|
|
|
—
|
|
|
|
3,553
|
|
|
|
177,204
|
|
William J. Foote, CFO,
|
|
|
2013
|
|
|
|
149,656
|
|
|
|
—
|
|
|
|
3,100
|
|
|
|
—
|
|
|
|
6,815
|
|
|
|
159,571
|
|
Corporate Secretary and Treasurer
|
|
|
2012
|
|
|
|
149,656
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,869
|
|
|
|
158,525
|
|
George Murray,
|
|
|
2013
|
|
|
|
136,468
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
—
|
|
|
|
4,276
|
|
|
|
143,744
|
|
Vice President of Sales and Marketing
|
|
|
2012
|
|
|
|
95,014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,619
|
|
|
|
98,633
|
|
|
(1)
|
The aggregate grant date fair value of option awards and stock awards are computed in accordance
with FASB ASC Topic 718, in accordance with SEC rules. The valuation is based on the assumptions set forth in note 10 to our Consolidated
Financial Statements filed on March 31, 2014 with the Securities and Exchange Commission in our annual report on Form 10-K.
|
|
(2)
|
On September 12, 2012, Ms. Eskilson was awarded a 10 year stock option of 30,000 shares with an
exercise price of $0.50. These stock options vest over three years, one-third upon each anniversary of the grant and had an aggregate
fair value of $12,900 on the date of the grant.
|
|
(3)
|
Included in All Other Compensation is the fair value of Company stock, in addition to cash, contributed
in 2013 as a match to the Company’s Section 401(k) Plan for the 2012 Plan year for Ms. Eskilson ($7,448), Mr. Foote ($6,815)
and Mr. Murray ($4,276).
|
Grants of Plan-Based Awards
Shown below is information on grants of
stock options and restricted stock units pursuant to the 2010 Equity Compensation Plan made during the fiscal year ended December 31,
2013 to the executive officers named in the Summary Compensation Table for performance during the fiscal year.
Grants of Plan-Based Awards
Name
|
|
Grant
Date
|
|
All Other
Option and
Stock
Awards:
Number of
Securities
Underlying
Award (#)
|
|
|
Exercise or
Base
Price of
Option and
Stock
Awards
($/Sh)
|
|
|
Grant Date Fair Value of
Stock Option and Stock
Awards ($)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
William J. Foote, CFO, Secretary and Treasurer (2)
|
|
2/6/2013
|
|
|
10,000
|
|
|
|
.35
|
|
|
|
3,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Murray, Vice President of Sales and Marketing
|
|
1/14/2013
|
|
|
15,000
|
|
|
|
.23
|
|
|
|
3,000
|
|
|
(1)
|
The grant date fair value of stock option is the value computed in accordance with
FASB ASC Topic 718
, using the Black-Scholes options pricing model. The grant date fair value of restricted stock unit grants
is the number of shares granted times the closing market price on the day of grant. Stock options and stock awards are subject
to three year vesting, unless specifically disclosed. Stock options have a ten year term.
|
|
(2)
|
The award of the stock option grant on January 14, 2012 was in recognition of Mr. Murray’s
appointment as Vice President of Sales and Marketing. Mr. Foote received an award of a stock option grant on February 6, 2013 in
recognition of performance in 2012.
|
Outstanding Equity-Based
Awards at Fiscal Year-End
The following table
provides information pertaining to vested and non-vested stock options held by each of the executive officers named in the Summary
Compensation Table as of December 31, 2013.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
OPTION AWARDS (1)
|
|
|
STOCK AWARDS (2)
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
($)
|
|
|
Number of
Shares or
Units of
Stock that
have not
Vested
(#)
|
|
|
Market
Value of
Shares of
Units of
Stock that
Have not
Vested
($)
|
|
Amy Eskilson,
|
|
|
10,000
|
|
|
|
20,000
|
|
|
|
.50
|
|
|
|
9/12/2022
|
|
|
|
|
|
|
|
|
|
President and CEO
|
|
|
4,200
|
|
|
|
2,100
|
|
|
|
.95
|
|
|
|
12/21/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: 14,200
|
|
|
|
Total: 22,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Foote, CFO, Secretary and Treasurer
|
|
|
—
|
|
|
|
10,000
|
|
|
|
.35
|
|
|
|
02/06/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
4,200
|
|
|
|
2,100
|
|
|
|
.95
|
|
|
|
12/21/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
4,200
|
|
|
|
2,100
|
|
|
|
.98
|
|
|
|
03/24/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
6,300
|
|
|
|
—
|
|
|
|
1.00
|
|
|
|
12/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
4,598
|
|
|
|
—
|
|
|
|
1.75
|
|
|
|
01/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
3,378
|
|
|
|
—
|
|
|
|
1.50
|
|
|
|
01/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
1.75
|
|
|
|
05/08/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: 32,676
|
|
|
|
Total: 14,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Murray,
|
|
|
—
|
|
|
|
15,000
|
|
|
|
.23
|
|
|
|
01/14/2023
|
|
|
|
|
|
|
|
|
|
VP of Sales and Marketing
|
|
|
2,266
|
|
|
|
1,134
|
|
|
|
.95
|
|
|
|
12/21/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
2,266
|
|
|
|
1,134
|
|
|
|
.98
|
|
|
|
03/24/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
1.00
|
|
|
|
03/29/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: 9,532
|
|
|
|
Total: 17,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Options vest at the rate of one-third per year over the first three years of the ten year life of
the option.
|
|
(2)
|
Stock awards vest at the rate of one-third
per year on the anniversary date of the award.
The grant date fair value of restricted stock unit grants is the number of
shares granted times the closing market price on the day of grant.
|
Equity Compensation Plan Information
The following table gives
information about the Company’s Common Stock that may be issued upon the exercise of options, warrants and rights under
the Company’s 2000 Equity Compensation Program and the 2010 Equity Compensation Plan, as of December 31, 2013. These
plans were the Company’s only equity compensation plans in existence as of December 31, 2013.
Plan Category
|
|
(a)
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
|
|
(b)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
|
(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plans Approved by Shareholders (1)
|
|
979,021
|
|
$
|
.96
|
|
|
|
3,495,902
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plans Not Approved by Shareholders
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
979,021
|
|
$
|
.96
|
|
|
|
3,495,902
|
|
|
(1)
|
The 2000 Equity Compensation Program expired on June 2, 2010 but each outstanding option, warrant
and right granted under the Program shall expire on the date determined under the terms of the original award, which in no event,
shall exceed 10 years. The 2010 Equity Compensation Program was adopted by the Company’s shareholders at the Annual Meeting
held on June 2, 2010. Under this Program, an aggregate of up to 4,000,000 shares of common stock may be granted. As of December
31, 2013 there were a total of 474,923 options outstanding under the 2000 Plan and 504,098 options outstanding under the 2010 Plan.
In 2013, 5,000 stock grants vested and were issued and 48,900 stock options expired under the 2000 Plan. A total of 95,000 stock
options were awarded under the 2010 Equity Compensation Plan to employees and directors and a total of 28,902 stock options were
forfeited.
|
Compliance with Section 16(a) Beneficial Ownership
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and officers, and persons who beneficially
own more than 10% of a registered class of the Company’s equity securities, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission. These persons are required by the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) reports that they file.
Based
solely on our review of (i) Forms 3 and 4 and amendments thereto furnished to the Company during 2013, (ii) any Forms 5 and amendments
thereto furnished to the Company with respect to 2013, and (iii) any written representations that no Form 5 was required, with
respect to the period from January 1, 2013 through December 31, 2013, we are not aware of any required Section 16(a)
reports that were not filed on a timely basis.
Certain
Relationships and Related Transactions
The documented ethics
policies of the Company restrict certain types of related party transactions between the Company and its directors, officers, and
employees of the Company. Specifically, compensation for services provided by directors, officers, and employees to the Company
may not be through any source but the Company. The Company’s policies do permit related parties to participate in financial
transactions, limited to financing via debt or equity. In such instances, the Board of Directors has an informal policy of requiring
that the terms of such financing, including but not limited to interest rates and fees, are at least equal to or better than the
terms obtainable via financing from other sources.
In August 2012, the maturity
date of a $1,500,000 Subordinated Convertible Promissory Note issued in favor of Clarex Limited (“Clarex”), a major
shareholder and debt holder, was extended to April 1, 2015. The note was originally issued on October 31, 2003 and bears interest
at 6%. Interest accrues yearly, is payable on maturity of the note and, along with principal, may be converted into securities
of the Company as follows: the Note is convertible in the aggregate into 1,500,000 units with each unit consisting of one share
of common stock and one warrant. Each warrant allows the holder to acquire 0.75 shares of common stock at a price of $1.35 per
share. The expiration date of the warrants under the conversion terms has been extended to April 1, 2018.
In addition, in August
2012, the maturity date of a $1,000,000 Subordinated Convertible Promissory Note issued in favor of Welland Limited, an affiliate
of Clarex, bearing interest at 6% was extended to April 1, 2015. The note was originally issued on December 31, 2002. Interest
accrues yearly, is payable on maturity of the note and, along with principal, may be converted into securities of the Company
as follows: the Note is convertible in the aggregate into 1,000,000 units with each unit consisting of one share of common stock
and one warrant. Each warrant allows the holder to acquire 0.75 shares of common stock at a price of $1.35 per share. The expiration
date of the warrants under the conversion terms has been extended to April 1, 2018.
No payments against the total principal
of $2,500,000 have been made. The Company paid a total of $150,000 in interest on the Notes in 2013 and expects to pay its quarterly
interest obligations on such Notes of $37,500 going forward through the maturity date.
Code of Ethics
The Company has adopted
a Code of Ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting
officer or controller (or persons performing similar functions). A copy of such Code of Ethics is available on the Company website
at
www.inradoptics.com
and will be made available without charge and upon written request addressed to the attention of
the Secretary of the Company and mailed to the Company’s principal executive offices, 181 Legrand Avenue, Northvale, NJ 07647.
Relationship with Independent Public
Accountants
Baker Tilly Virchow Krause, LLP, (the “Auditors”)
independent registered public accountants, has been selected by the Audit Committee to examine and report on the financial statements
of the Company for the fiscal year ending December 31, 2014. Representatives of Baker Tilly Virchow Krause, LLP will be available
during the annual meeting to respond to any appropriate questions that may arise.
Principal
Accounting Fees and Services
In accordance with the
requirements of the Sarbanes-Oxley Act of 2002 and the Audit Committee’s charter, all audit and audit-related work and all
non-audit work performed by the Company’s independent accountants is approved in advance by the Audit Committee, including
the proposed fees for such work. The Audit Committee is informed of each service actually rendered.
Audit Fees.
Audit fees billed or
expected to be billed by the Company’s principal accountant, Baker Tilly Virchow Krause, LLP for the audit of the financial
statements included in the Company’s Annual Reports on Form 10-K, and reviews of the financial statements included in
the Company’s Quarterly Reports on Form 10-Q, for the years ended December 31, 2013 and 2012 were $100,000 for
each year, respectively.
Audit-Related Fees
The Company was billed
$2,725 and $2,405 by the Company’s principal accountant for the fiscal years ended December 31, 2013 and 2012, respectively,
for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s
financial statements and are not reported under the caption “
Audit Fees”
above.
Tax Fees
The Company was billed
or is expected to be billed an aggregate of $16,000 and $18,000 by the Company’s principal accountant for the fiscal years
ended December 31, 2013 and 2012, respectively, for tax services, principally the preparation of income tax returns.
All Other Fees
The Applicable law and
regulations provide an exemption that permits certain services to be provided by the Company’s outside auditors even if they
are not pre-approved. The Company has not relied on this exemption at any time since the Sarbanes-Oxley Act was enacted. There
have been no other fees that have been pre-approved by the Audit Committee of the Board of Directors.
Audit Committee Report
In connection with the preparation and
filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013:
|
(1)
|
the Audit Committee reviewed and discussed the audited financial statements with the Company’s
management;
|
|
(2)
|
the Audit Committee discussed with the Company’s independent auditors the matters required
to be discussed by SAS 61, as amended;
|
|
(3)
|
the Audit Committee received and reviewed the written disclosures and the letter from the Company’s
independent auditors required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees)
and discussed with the Company’s independent auditors any relationships that may impact their objectivity and independence
and satisfied itself as to the auditor’s independence; and
|
|
(4)
|
based on the review and discussions referred to above, the Audit Committee recommended to the Board
that the audited financial statements be included in the 2013 Annual Report on Form 10-K.
|
This report shall not be deemed incorporated
by reference by any general statement incorporating this Proxy Statement by reference to any filing under the Securities Act of
1933, as amended, or under the Securities Exchange Act of 1934, as amended, and shall not be deemed filed under either of such
acts except to the extent that the Company specifically incorporates this information by reference.
This report is furnished by the Audit Committee
of the Board of Directors.
/s/
Luke P. LaValle, Jr.
|
|
/s/ Jan M. Winston
|
Luke P. LaValle, Jr.
|
|
Jan M. Winston
|
Audit Committee Chairman
|
|
|
/s/
Dennis G. Romano
|
|
/s/ N. E. Rick Strandlund
|
Dennis G. Romano
|
|
N. E. Rick Strandlund
|
NOTICE REGARDING FILING OF SHAREHOLDERS
PROPOSALS
AT 2015 ANNUAL MEETING
Any proposal intended to be presented by
a shareholder at the 2015 Annual Meeting of Shareholders must be received by the Company at the Company’s principal executive
offices, 181 Legrand Avenue, Northvale, NJ 07647 no later than the close of business on January 10, 2015 to be considered for inclusion
in the Proxy Statement for the 2015 Annual Meeting and by March 26, 2015 in order for the proposal to be considered timely for
consideration at next years’ Annual Meeting (but not included in the Proxy Statement for such meeting).
The Annual Meeting of Shareholders is called
for the purposes set forth in the Notice. The Board does not know of any matter for action by shareholders at such meeting other
than the matters described in the Notice. However, the enclosed proxy will confer discretionary authority with respect to matters
which are not known at the date of printing hereof which may properly come before the meeting. It is the intention of the person
named in the proxy to vote in accordance with their judgment on any such matter.
You are cordially invited to attend the
Annual Meeting in person. Your participation in discussion of the Company’s affairs will be welcome.
|
/S/ William J. Foote
|
|
William J. Foote, Secretary
|
Dated: May 9, 2014
A copy of the Company's annual report on Form 10-K for the
fiscal year ended December 31, 2013, filed with the Securities and Exchange Commission containing consolidated financial statements
of the Company as of December 31, 2013, is available (excluding exhibits) without cost to shareholders upon written request to
William J. Foote, Secretary, Inrad Optics, Inc., 181 Legrand Avenue, Northvale, NJ 07647. The annual report is not to be regarded
as proxy soliciting material or as a communication by means of which any solicitation is to be made.
Inrad Optics (PK) (USOTC:INRD)
Historical Stock Chart
From Jun 2024 to Jul 2024
Inrad Optics (PK) (USOTC:INRD)
Historical Stock Chart
From Jul 2023 to Jul 2024