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:
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¨
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Preliminary Proxy Statement
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¨
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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¨
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Definitive Additional Materials
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¨
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Definitive Material Pursuant to §240.14a-12
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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):
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x
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No fee required
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¨
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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¨
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Fee paid previously with preliminary materials.
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¨
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed
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SCHEDULE 14A INFORMATION
INRAD OPTICS, INC.
181 Legrand Avenue
Northvale, New Jersey 07647
Notice of Annual Meeting of Shareholders
To be held on Tuesday, June 23, 2020
To The Shareholders of Inrad Optics, Inc.:
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Shareholders (the “Annual Meeting”) of INRAD OPTICS, INC. (the "Company")
will be held on Tuesday, June 23, 2020 at 10:00 a.m. Due to concerns regarding the COVID-19 outbreak and to assist in protecting
the health and well-being of our shareholders and employees, this year’s Annual Meeting will be held via the internet. Shareholders
will be able to listen, vote and ask questions regardless of location via the internet at http://viewproxy.com/InradOptics/2020/vm. You
will not be able to attend the Annual Meeting in person.
The Annual Meeting is being held for the
following purposes:
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1.
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To
elect two directors, named herein, to hold office for a term of three years;
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2.
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To
ratify the appointment of PKF O’Connor Davies, LLP as the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2020;
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3.
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To
approve, as a non-binding advisory vote, our named executive officer compensation;
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4.
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To
consider and vote to approve the Company’s 2020 Equity Compensation Plan; and
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5.
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To
transact such other business as may properly come before the meeting or any adjournment thereof.
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The Board of Directors has fixed the close
of business on May 5, 2020, as the date for determining the shareholders of record entitled to receive notice of, and to vote at,
the Annual Meeting.
Please complete,
sign and return the proxy card whether or not you plan to attend the Annual Meeting. Alternatively, you may vote online at www.proxyvote.com.
Your vote is important regardless of the number of shares you own. Voting by proxy will not prevent you from voting at the
virtual Annual Meeting (provided you follow the revocation procedures described in the accompanying proxy statement) but will
assure that your vote is counted if you cannot attend.
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By Order of the Board of Directors
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/s/ Theresa A. Balog
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Theresa A. Balog, Secretary
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Northvale, New Jersey
April 29, 2020
We urge you to
vote your shares over the Internet, via telephone or through the mail at your earliest convenience.
INRAD OPTICS, INC.
181 Legrand Avenue
Northvale, NJ
07647
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS
Tuesday, June 23, 2020
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 on Tuesday, June 23, 2020 at 10:00 a.m. local time. Due to concerns regarding the COVID-19 outbreak and to assist in
protecting the health and well-being of our shareholders and employees, this year’s Annual Meeting will be held via the
internet. Shareholders will be able to listen, vote and ask questions regardless of location via the internet at http://viewproxy.com/InradOptics/2020/vm. You
will not be able to attend the Annual Meeting in person.
The enclosed proxy
is solicited by the Board. This Proxy Statement and the enclosed form of proxy are first being sent to shareholders on or about
May 15, 2020.
In
order to participate in the Annual Meeting live via the Internet, you must register at http://viewproxy.com/InradOptics/2020
by 11:59 p.m. Eastern Time by June 18, 2020.
If you are a registered holder, you must register using the virtual control number included on your proxy card. If you hold your
shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and
you will be assigned a virtual control number in order to vote your shares during the Annual Meeting. If you are unable to obtain
a legal proxy to vote your shares, you will still be able to attend the 2020 Annual Meeting (but will not be able to vote your
shares) so long as you demonstrate proof of stock ownership. Instructions on how to connect and participate via the Internet,
including how to demonstrate proof of stock ownership, are posted at http://viewproxy.com/InradOptics/2020.
On
the day of the Annual Meeting, if you have properly registered, you may enter the Annual Meeting by logging in using the event
password you received via email in your registration confirmation at http://viewproxy.com/InradOptics/2020/vm.
You may submit questions
in writing during the Annual Meeting. You will need your virtual control number. As part of the Annual Meeting, we will hold a
live question and answer session, during which we intend to answer questions submitted in writing during the meeting in accordance
with the Annual Meeting procedures which are pertinent to the Company and the meeting matters, as time permits. Answers to any
questions that are not addressed during the meeting will be published following the meeting on our website. Questions and answers
will be grouped by topic and substantially similar questions will be grouped and answered once.
If you encounter
any difficulties accessing the Annual Meeting live audio webcast during the meeting time, please email VirtualMeeting@viewproxy.com
or call (866) 612-8937.
Even if you plan
to attend the live webcast of the Annual Meeting, we encourage you to vote in advance by Internet, telephone or mail so that your
vote will be counted even if you later decide not to attend the virtual Annual Meeting.
Shareholders Entitled to Vote
Only shareholders of record at the close
of business on May 5, 2020, 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 13,730,577 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 PKF O’Connor Davies, 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.
You may vote your shares at the Annual
Meeting via live webcast, over the Internet, by telephone or by mail. If you wish to vote your shares at the Annual Meeting, there
will be a live link provided during the Annual Meeting. (You will need the virtual control number assigned to you.)
To vote over the
Internet, you must go to www.proxyvote.com. To vote by mail, complete, sign and return
the proxy card in the enclosed postage-paid envelope. If you properly complete your proxy card and send it to us in time to vote,
your “proxy” (one of the individuals named on your proxy card) will vote your shares as you have directed.
If you hold your shares through a bank,
brokerage firm or other nominee, you should vote your shares in accordance with the steps required by such bank, brokerage firm
or other nominee.
Votes Required
to Approve Each Proposal
With respect to the first proposal (election
of directors), directors are elected by affirmative vote by a plurality of the Common Stock entitled to vote at the Annual Meeting.
With respect to the second proposal (ratification
of the auditors), the affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of shares of Common
Stock entitled to vote is required to approve this proposal
With respect to the third proposal (approval
of executive compensation), the affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of shares
of Common Stock entitled to vote is required to approve this non-binding advisory resolution.
With respect to
the fourth proposal (approval of the Company’s 2020 Equity Compensation Program), the affirmative vote of a majority of
the votes cast at the Annual Meeting by the holders of shares of Common Stock entitled to vote is required to approve this non-binding
advisory resolution.
Voting: Revocation of Proxies
A form of proxy is enclosed for use at
the Annual Meeting if a shareholder is unable to attend the virtual Annual Meeting. 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 attending the Annual Meeting and voting online, provided you file a written
revocation with the Secretary of the Annual Meeting prior to the voting of such proxy.. 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 online. 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 23, 2020. THIS PROXY STATEMENT,
THE ACCOMPANYING FORM OF PROXY CARD AND OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019, 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) each named executive officer 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 28, 2020. 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 c/o Inrad Optics, Inc., 181 Legrand Avenue, Northvale, NJ 07647.
Beneficial Ownership of Common Stock
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Amount and
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Nature of
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Percent of
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Beneficial
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Common
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Name and Address of Beneficial Owner
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Ownership
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Stock
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Luke P. LaValle, Jr.
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59,999
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(1)
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0.3
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%
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Dennis G. Romano
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59,999
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(2)
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0.3
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%
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N.E. Rick Strandlund
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59,999
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(3)
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0.3
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%
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Jan M. Winston
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59,999
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(4)
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0.3
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%
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Amy Eskilson
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310,736
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(5) (11)
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1.6
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%
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William J. Foote
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135,864
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(6)
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0.7
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%
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George Murray
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185,085
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(7)
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1.0
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%
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All Directors and Executive
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901,589
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(8)
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0.0
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%
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Officers as a group (9 persons)
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Clarex Ltd. & Welland Ltd.
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7,914,089
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(9)
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41.7
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%
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Bay Street and Rawson Square
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P.O. Box N 3016
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Nassau, Bahamas
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Emancipation Management LLC
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3,904,605
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(10)
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20.6
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%
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825 Third Avenue
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New York, NY 10022
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Inrad Optics, Inc. Employees 401(k) Plan
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1,028,328
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(11)
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0.0
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%
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Amy Eskilson, as Trustee
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181 Legrand Avenue
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Northvale, NJ 07647
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Minerva Advisors LLC
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1,118,700
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(12)
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5.9
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%
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50 Monument Road, Suite 201
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Bala Cynwyd, PA 19004
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(1)
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Including 59,999 shares issuable upon exercise of options
exercisable within 60 days of April 28, 2020.
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(2)
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Including 59,999 shares issuable upon exercise of options
exercisable within 60 days of April 28, 2020.
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(3)
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Including 59,999 shares issuable upon exercise of options
exercisable within 60 days of April 28, 2020.
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(4)
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Including 59,999 shares issuable upon exercise of options
exercisable within 60 days of April 28, 2020.
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(5)
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Including 201,299 shares issuable upon exercise of options
exercisable within 60 days of April 28, 2020 and 94,436 shares allocated to Ms. Eskilson in the Inrad Optics, Inc. 401(k) Plan
over which she has voting and dispositive power.
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(6)
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Including 102,599 shares issuable upon exercise of options
exercisable within 60 days of April 28, 2020 and 31,103 shares allocated to Mr. Foote in the Inrad Optics, Inc. 401(k) Plan over
which he has voting and dispositive power.
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(7)
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Including 97,801 shares issuable upon exercise of options
exercisable within 60 days of April 28, 2020 and 97,284 shares allocated to Mr. Murray in the Inrad Optics, Inc. 401(k) Plan (over
which he has voting and dispositive power.
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(8)
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Including 669,728 shares issuable upon exercise of options
exercisable within 60 days of April 28, 2020.
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(9)
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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 and 196,875
shares issuable upon conversion of accrued interest on convertible promissory notes.
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(10)
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These figures are based upon information set forth in
Schedule 13G filed February 7, 2020, on behalf of the following reporting persons:
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Emancipation
Management LLC (a)
Circle
N Advisors, LLC (a)
Charles Frumberg (a)
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(a)
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Each of these reporting persons is deemed a beneficial
owner of 3,904,605 shares of Inrad Optics, Inc. held by Emancipation with shared investment power but no voting power with respect
to these 3,904,605 shares.
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(11)
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These figures are based upon information provided
by Amy Eskilson, Trustee of the 401(k) Plan. Ms. Eskilson, as Trustee of the 401(k) Plan, shares voting power with respect to
the shares held by the 401(k) Plan, but does not have dispositive power over such shares. Ms. Eskilson disclaims beneficial ownership
of the shares held by the 401(k) Plan, except to the extent of the shares allocated to her in the 401(k) Plan in her individual
capacity, and such shares are not reflected in the amounts of shares listed as being beneficially held in her individual capacities
in this table.
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(12)
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These figures are based upon information set forth
in Schedule 13G filed February 13, 2020, on behalf of the following reporting persons:
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Minerva Advisors LLC
(a)
Minerva Group, LP (a)
Minerva GP, LP
Minerva GP, Inc. (a)
David P. Cohen (a)
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(a)
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Each of these reporting persons is deemed a beneficial
owner of 1,118,700 shares of Inrad Optics, Inc. held by Minvera Group, L.P. with both investment power and voting power with respect
to these 1,118,700 shares.
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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 six members of the Board: two Class I Directors whose terms will expire at the 2020 Annual Meeting of
Shareholders, two Class II Director whose term will expire at the 2021 Annual Meeting of Shareholders and two Class III
Directors whose terms will expire at the 2022 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 the nominees
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 the nominees serve or served during the past five years as a Board member, and the
period during which the nominees have served as a director of the Company.
Nominated to the Board of Directors:
Name
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Age
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Since
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Positions; Business Experience
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Class I Directors — Term to Expire in 2020
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Dennis G. Romano
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77
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2009
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Director of the Company (September 2009 - present)
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Consultant - Defense and Engineering/Construction Industry (2007 - 2009)
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Senior Vice President of Business Development, Defense Business Unit, Washington Group International, a provider of engineering, construction and technical services (2002 – 2007)
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Vice President, Business Strategy and Development,
Northrop Grumman Corporation (1999 - 2001)
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Various Senior and Executive Level Positions, Marketing, Business Development and Strategy, Northrop Grumman Corporation (1995 - 1999)
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Vice President of Business Development, Grumman Aircraft Engineering Corporation (1993 - 1995)
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Marketing and Business Development, Grumman Aircraft Engineering Corporation (1974 - 1993)
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Aircrew member, flight test organization, Grumman Aircraft Engineering Corporation (1968 - 1974)
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Avionics Technician, Grumman Aircraft Engineering Corporation (1964 - 1968)
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N.E. Rick Strandlund
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76
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2009
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Director of the Company (January 2009 - present)
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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)
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Other continuing directors:
Name
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Age
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Since
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Positions; Business Experience
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Class II Director — Term Expires in 2021
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William J. Foote
|
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69
|
|
2017
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Director of the Company (October 2017 - present)
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VP and Chief Accounting Officer, Inrad Optics Inc. (2018- 02/08/2019)
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Chief Financial Officer, Inrad Optics, Inc. (2006 - 2018)
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Secretary and Treasurer, Inrad Optics, Inc. (2009 – 2018)
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Chief Financial Officer, INSL-X Products Corporation (2002 - 2005)
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Chief Financial Officer, ASD Group (2000 – 2002)
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Vice President Finance, Controller, Director, Benjamin Moore & Co. (1990 -1999)
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Luke P. LaValle, Jr.,
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78
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2005
|
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Director of the Company (2005 - present)
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President and Chief Executive Officer, AmVPerican Capital Management Inc. (1980 -
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present)
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Senior Investment Officer, United States Trust Company of NY (1967 - 1980)
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Lt. Colonel, US Army Reserve (Retired)
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Class III Directors — Term to
Expire in 2022
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Amy Eskilson
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59
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2012
|
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Director of the Company (October 2012 - present)
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President and Chief Executive Officer of the Company (October 2012 - present)
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Vice President of Sales and Marketing of the Company (February 2011-September 2012)
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Director of Business Development, Thorlabs Inc. (2001-2011)
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Sales, Technical Support and Marketing roles, Thor Labs Inc. (1992-2000)
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Jan M. Winston
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83
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2000
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Chairman of the Board of Directors of the Company (2009 - present)
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Director of the Company (2000 - present)
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Management Consultant (1997 - present)
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Division Director/General Manager IBM Corporation (1981 - 1997)
Executive positions held in Development, Finance and Marketing
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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:
Amy Eskilson
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·
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More
than 20 years of experience in operations, senior management and executive level positions in the photonics industry in both domestic
and global manufacturing environment
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·
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Broad
and deep experience in acquisitions; facilitated 8 transactions in the photonics sector over a 9 year period prior to joining
Inrad Optics, Inc.
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·
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Founding
team member experience involving privately funded high technology start-ups and R & D institutional spin-off companies
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·
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Extensive
experience working with government and university research facilities; defense, aerospace, and technology corporations, small
businesses and start-ups
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·
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Expertise
in corporate and public relations, technology licensing, contracts, marketing and export control/ITAR, corporate real estate and
facilities management
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·
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Proven
leadership and business building skills including strategic planning, manufacturing management, corporate culture building and
change management
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William J. Foote
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·
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Financial
and accounting professional with experience gained in a number of senior financial roles with small and mid-cap manufacturing
companies both public and private
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·
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Certified
Public Accountant and Certified Professional Accountant in Canada
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·
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Membership
in Illinois Society of CPA’s and AICPA
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·
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Prior
Board experience with Benjamin Moore & Co, Ltd.
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·
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Over
12 years as Chief Financial Officer of Inrad Optics, Inc.
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Luke P. LaValle, Jr.
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·
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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
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·
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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
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·
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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, 101st Airborne Division
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·
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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.
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·
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Chairman
of the Company’s Audit Committee
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Denis G. Romano
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·
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Global
business experience in business development as Chief Business Development Officer of a business unit of Washington Group International
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·
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Over
20 years of experience in business and strategy development for U.S. and International government clients
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·
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Senior
executive leadership for multiple business development organizations with a large international presence
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·
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Operational
management experience and joint leadership, in a $700 million business unit in the defense sector with Washington Group International
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·
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Extensive
background in business development, marketing and strategic development and implementation
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·
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Chairman
of the Company’s Nominating Committee
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N.E. Rick Strandlund
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·
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Global
business experience as President and CEO of NanoProducts Corporation and as President and CEO of Research Electro-Optics, Inc.
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·
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Thin-film
optical coating experience as VP and General Manager of Optical Coating Laboratory, Inc.
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·
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Board
experience as Chairman of the Board of NanoProducts and as a former director of Research Electro-Optics, Inc.
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·
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Strategic
and business development leadership of two global high-tech, photonics related manufacturing organizations
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·
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Prior
leadership experience in new product and new technology development
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·
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MBA
in Management and Bachelor of Science in Aerospace Engineering
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·
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Chairman
of the Company’s Compensation Committee
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Jan M. Winston
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·
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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
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·
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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
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·
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AB
degree from Princeton University and attendance at the Columbia Graduate School of Business Administration
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·
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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
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·
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Served
as Chairman of the Audit Committee, Chairman of the Compensation Committee and is the current Chairman of the Board
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The Board of Directors unanimously
recommends that you vote FOR the election of the Board’s nominees for Class I director: Dennis Romano and
N.E. Rick Strandlund
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PKF O’Connor Davies, LLP served as
the Company’s independent registered public accounting firm since December 13, 2017, 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, 2020.
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 PKG O’Connor Davies, LLP as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2020 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 PKF O’Connor Davies, 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.
The Board of Directors unanimously
recommends that you vote FOR the proposal to ratify the appointment of PKF O’Connor Davies, LLP as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2020.
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 18 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 the Dodd-Frank Wall
Street Reform and Consumer Protection Act, or the Dodd-Frank Act and Section 14A of the Exchange Act, as amended, and as a
matter of good corporate governance, the Board of Directors is asking shareholders to approve the following resolution at the 2020
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 2020 Annual Meeting of Shareholders pursuant to the compensation disclosure 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 next such advisory vote on named executive officer compensation
will occur at the Company’s 2021 Annual Meeting of Shareholders.
The Board of Directors unanimously
recommends that you vote FOR the approval, on an advisory basis, of the compensation of our named executive officers.
PROPOSAL FOUR
APPROVAL OF THE INRAD OPTICS, INC.
2020 EQUITY COMPENSATION PROGRAM
On February 12, 2020, the Board of Directors of the Company
(the “Board”) adopted the Inrad Optics, Inc. 2020 Equity Compensation Program (the “Program”), subject
to shareholder approval. The Company has outstanding awards under the 2010 Equity Compensation Program (the “2010 Program”),
which expired by its terms on March 23, 2020 such that no further awards may be made under the 2010 Program following that date.
The Company had reserved 4,000,000 shares of the Company’s Common Stock for issuance under the 2010 Program. As of March
23, 2020, there were 2,859,233 shares that remained available for issuance under the 2010 Program. Approval of the Program is intended
to ensure that the Company has a new replacement equity compensation program under which it can continue to provide stock options
at levels determined appropriate by the Compensation Committee of the Board. The following is a brief description of the material
features of the Program. Such description is qualified in its entirety by reference to the Program, a copy of which is set forth
as Exhibit A to this Proxy Statement.
PURPOSE
The purpose of the Program is to help attract and retain superior
directors, officers, employees and consultants of the Company and its subsidiaries and to encourage them to devote their abilities
and industry to the success of the Company.
SHARES AND INCENTIVES AVAILABLE UNDER THE PROGRAM
The Program provides for grants of options, stock appreciation
rights, and restricted stock awards (collectively, the “Awards”). An aggregate of 4,000,000 shares of Common Stock
are authorized for issuance under the Program, which amount will be proportionately adjusted in the event of certain changes in
the Company’s capitalization, a merger, or a similar transaction. If any of the options (including incentive stock options)
or stock appreciation rights granted under the Program expire or terminate for any reason before they have been exercised in full,
the unissued shares subject to those expired or terminated options and/or stock appreciation rights shall again be available for
purposes of the Program. If the conditions associated with the grant of any restricted shares or restricted stock units
are not satisfied within the time period required by the Award, the shares associated with such Award shall again be available
for purposes of the Program. Such shares may be authorized and unissued shares or treasury shares. As of April 28, 2020, the closing
sale price per share of the Common Stock on the OTC Bulletin Board was $1.46.
ELIGIBILITY
Persons eligible to receive Awards under the Program are all
directors, officers, employees and consultants of the Company and its subsidiaries and any person who has agreed to become an employee
or consultant of the Company or any subsidiary of the Company. As of April 28, 2020, the Company and its subsidiaries had a total
of 58 employees, including four executive officers, five non-employee directors, no consultants, other advisors, or other individual
service providers. As of April 28, 2020, no person is eligible to participate as a result of agreeing to become an employee or
consultant of the Company or any subsidiary. As awards under the Program are within the discretion of the Program Administrator,
the Company cannot determine how many individuals in each of the categories described above will receive Awards.
DETERMINATION OF ELIGIBILITY; ADMINISTRATION OF THE PROGRAM
The Program will be administered by the Board or by a committee
appointed by the Board (the “Committee”), which, except as otherwise determined by the Board, will consist solely of
two or more directors each of whom is a “non-employee director” within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Within the scope of its authority, the Board or Committee may
delegate to a committee of one or members of the Board who are not non-employee directors the authority to grant Awards under the
Program to eligible persons who are not then subject to Section 16 of the Exchange Act. When acting to administer the Program,
the Board or the Committee is referred to as the “Program Administrator.”
The Program Administrator has full discretion and authority
to: (a) interpret the Program; (b) define its terms; (c) prescribe, amend and rescind rules and regulations relating to the Program;
(d) select eligible individuals to receive the Awards; (e) determine when the Awards shall be granted under the Program; (f) determine
the type, number, and terms and conditions of the Awards to be granted and the number of shares of stock to which Awards will relate;
and (g) make all other determinations that may be necessary or advisable for the administration of the Program.
Any action of the Program Administrator is final, conclusive
and binding on all participants in the Program and on their legal representatives, heirs and beneficiaries. The Program provides
that members of the Board or the Committee acting as the Program Administrator will not be liable for any act or determination
taken or made in good faith in their capacities as such members and will be fully indemnified by the Company with respect to such
acts and determinations.
TYPES OF AWARDS
The Program is comprised of four parts: (i) the Incentive Stock
Option Plan (“Incentive Plan”), (ii) the Supplemental Stock Option Plan (“Supplemental Plan”), (iii) the
Stock Appreciation Rights Plan (“SAR Plan”), and (iv) the Restricted Stock Award Plan.
INCENTIVE PLAN. The Company intends that options granted pursuant
to the provisions of the Incentive Plan will qualify and will be identified as “incentive stock options” (“ISOs”)
within the meaning of Section 422 of the Code. The Program Administrator may grant ISOs to purchase Common Stock to any employee
of the Company or its subsidiaries. These options shall expire on the date determined by the Program Administrator, but they shall
not expire later than 10 years from the date the options are granted. Any ISO granted to any person who owns more than 10% of the
combined voting power of all classes of stock of the Company or any of its subsidiaries shall expire no later than 5 years from
the date it was granted.
The exercise price of ISOs may not be less than the fair market
value of the Company’s Common Stock on the date of grant. However, the exercise price of an ISO granted to a 10% or more
stockholder may not be less than 110% of the fair market value of the Company’s Common Stock on the date of grant. The aggregate
fair market value, determined at the time of grant, of the shares of Common Stock with respect to which ISOs are exercisable for
the first time by an optionee during any calendar year may not exceed $100,000.
SUPPLEMENTAL PLAN. Options granted under this Supplemental Plan
shall not be ISOs as defined in Section 422 of the Code. The Program Administrator may grant supplemental stock options to eligible
participants in the Program. These options shall expire on the date determined by the Program Administrator, but they shall not
expire later than 10 years from the date the options are granted. The exercise price of supplemental stock options may not be less
than the fair market value of the Company’s Common Stock on the date of grant unless the Award otherwise complies with Section
409A of the Internal Revenue Code or is exempt from Section 409A.
SAR PLAN. The Program Administrator may grant stock appreciation
rights (“SARs”) to eligible participants in the Program. These SARs may be granted either together with supplemental
stock options or ISOs (“Tandem Options”) or as naked stock appreciation rights (“Naked Rights”). Tandem
Options entitle the holder to receive from the Company an amount equal to the fair market value of the shares of Common Stock which
the recipient would have been entitled to purchase on that date upon the surrender of the unexpired option, less the amount the
recipient would have been required to pay to purchase the shares upon the exercise of the option. Naked Rights entitle the holder
to receive the excess of fair market value of those rights on the exercise date over the fair market value of those rights when
they are granted. Payments to recipients who exercise SARs may be made, at the discretion of the Program Administrator, in cash
or by Company check, in shares of Common Stock with a fair market value equal to the amount of payment, or any combination of these
totaling the payment amount.
RESTRICTED STOCK AWARD PLAN. The Program Administrator may grant
restricted shares of Common Stock to eligible participants in the Program. In addition, the Company may grant
to eligible participants the right to receive shares of Common Stock after certain vesting requirements are met (“restricted
stock units”). Each grant of restricted shares or restricted stock units confers upon the recipient the right
to receive a specified number of shares of Common Stock of the Company contingent upon the achievement of specified performance
objectives within a specified period and/or the recipient’s continued employment with or service to the Company for a specified
period.
EXERCISE
Options may be exercised by providing written notice to the
Company, specifying the number of shares to be purchased and accompanied by payment for such shares, and otherwise in accordance
with the applicable option agreement. Payment may be made in cash, other shares of Common Stock or by a combination of cash and
shares. The Program Administrator may also permit cashless exercises pursuant to procedures approved by the Program Administrator.
VESTING OF OPTIONS
Unless otherwise provided by the Program Administrator at the
time of grant or acceleration, stock options vest in 3 equal annual installments, with the initial one-third vesting 12 months
after the date of grant.
TRANSFERABILITY OF AWARDS
Grants of stock options and other Awards are generally not transferable
except by will or by the laws of descent and distribution, except that the Program Administrator may, in its discretion, permit
transfers of supplemental stock options and/or stock appreciation rights granted in tandem with such options for estate planning
or other purposes subject to any applicable restrictions under federal securities laws. Common Stock which represents restricted
shares or restricted stock units prior to the satisfaction of the stated conditions may not be sold, pledged, assigned or transferred
in any manner.
AWARD LIMITATIONS
The maximum number of shares of Common Stock subject to options,
separately exercisable stock appreciation rights or other Awards that an individual may receive in any calendar year is 500,000.
ACCELERATION OF VESTING; CHANGE IN CONTROL
The Program Administrator may, in its discretion, accelerate
the exercisability of any option or stock appreciation right or provide that all restrictions and risks of forfeiture pertaining
to restricted shares and restricted stock units shall lapse upon the occurrence of a “change in control” of the Company.
Each of the following constitutes a change in control under the Program: (i) the consummation of a merger or consolidation where
the Company is not the surviving Company or in which the Company’s shareholders before the transaction do not own 50% or
more of the common stock of the surviving corporation immediately after the transaction; (ii) the sale or other disposition of
all or substantially all of the assets of the Company; (iii) shareholder approval for a complete liquidation or dissolution of
the Company; (iv) a purchase by a “person” within the meaning of Sections 13(d) of the Securities Exchange Act of 1934,
as amended, by a corporation or by any other entity of any voting securities of the Company pursuant to a tender offer or exchange
offer, unless the Board previously determined that such purchase would not be deemed a Change in Control for purposes of the Program;
(v) a purchase by a person, corporation or other entity of beneficial ownership of at least 50% of the Company’s voting securities,
unless the Board previously determined that such purchase would not be deemed a Change in Control for purposes of the Program;
or (vi) if the individuals who were members of the Board when the Program was adopted (the “Original Directors”), who
are thereafter elected to the Board and whose election, or nomination for election, to the Board was approved by the Original Directors
then still in office (“Additional Original Directors”), and who thereafter are elected to the Board and whose election
or nomination for election to the Board was approved by the Original Directors and Additional Original Directors then still in
office, cease for any reason to constitute a majority of the members of the Board.
If a change in control occurs pursuant to a merger or consolidation
or sale of assets as described above, then each outstanding Award shall be assumed or an equivalent benefit shall be substituted
by the entity determined by the Board to be the successor corporation unless the successor does not so agree at least 15 days prior
to the merger, consolidation or sale of assets. In that instance, each Award shall be deemed to be fully vested and exercisable
and the restrictions or conditions associated with each restricted stock award and restricted stock unit award not so assumed or
substituted shall immediately lapse or be deemed satisfied immediately prior to the merger or consolidation or sale of assets and
the shares of Common Stock associated with such restricted stock award or restricted stock unit award shall be issued and delivered
to the recipient of such Award.
SUBSTITUTE OPTIONS
In the event that the Company, directly or indirectly, acquires
another entity, the Program Administrator may authorize the issuance of stock options (“substitute options”) to the
individuals performing services for the acquired entity in substitution of stock options previously granted to those individuals
in connection with their performance of services for such entity upon such terms and conditions as the Program Administrator shall
determine, taking into account the conditions of Code Section 424(a), as from time to time amended or superseded, in the case of
a substitute option that is intended to be an incentive stock option within the meaning of Section 422 of the Code. Shares
of Common Stock underlying substitute stock options shall not constitute shares of Common Stock issued pursuant to the Program
for any purpose.
TERMINATION, RESCISSION AND RECAPTURE OF AWARDS
In the event the recipient of an Award engages in certain specified
activities, either during employment or service with the Company or after service with the Company terminates for any reason, the
recipient is considered to have acted contrary to the long-term interests of the Company, and the Company may terminate any outstanding,
unexercised, unexpired or unpaid Awards (“Termination”), rescind any exercise, payment or delivery pursuant to the
Award (“Rescission”), or recapture any Common Stock (whether restricted or unrestricted) or proceeds from the recipient’s
sale of shares of Common Stock issued pursuant to the Award (“Recapture”), if the recipient does not comply with certain
conditions. Such specified activities include, but are not limited to, (i) disclosure by the recipient to anyone outside
the Company of any proprietary or confidential information or material, as those or other similar terms are used in any applicable
patent, confidentiality, inventions, secrecy, or other agreement between the recipient and the Company with regard to any such
proprietary or confidential information or material; (ii) assisting any organization that is or is working to become competitive
with the Company; (iii) solicitation of non-administrative employees of the Company to terminate employment with the Company; (iv)
engaging in activities which are materially prejudicial to or in conflict with the interests of the Company.
RECOUPMENT OF AWARDS
The Program Administrator may require that each recipient agree
to reimburse the Company for all or any portion of any Awards granted under the Program (“Reimbursement”) if (i) the
granting vesting or payment of such Award (or portion thereof) was predicated upon the achievement of certain financial results,
(ii) the recipient either benefited from a calculation that later proved to be materially inaccurate, or engaged in one or more
material acts of fraud or misconduct that caused or partially caused the need for a financial restatement by the Company or any
material Subsidiary; or (iii) a lower granting, vesting, or payment of such Award would have occurred based upon the conduct described
in (ii) above. In each such instance, the Program Administrator will require Reimbursement, Termination, or Rescission
of, or Reimbursement relating to, any such Award granted to a recipient, plus a reasonable rate of interest.
EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE AS A DIRECTOR
OR CONSULTANT
Except as otherwise provided in any agreement evidencing an
Award or option:
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(a)
|
in the event that a participant’s employment
or service with the Company is terminated for “cause,” any outstanding options and Awards of such participant shall
terminate immediately;
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(b)
|
in the event that a participant’s employment
or service with the Company terminates due to death or disability (within the meaning of Section 22(e)(3) of the Code), all options
and stock appreciation rights of such participant (other than Naked Rights) will lapse unless exercised, to the extent exercisable
at the date of termination, within one year following such date of termination, all restricted share and restricted stock unit
awards for which all conditions of the Award have been satisfied (other than continued employment or status as a consultant) shall
be paid in full (any remaining Awards of such participant will be forfeited), and all Naked Rights shall be fully paid by the
Company as of the date of death or disability; and
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(c)
|
in the event that a participant’s employment
or service with the Company terminates for any other reason: (i) any outstanding options and Awards (other than Naked Rights)
shall be exercisable, to the extent exercisable on the date of termination, for a period of 90 days after the date of such termination
if the recipient resigned, and 12 months after the date of such termination if it was an involuntary termination other than for
cause; (ii) all Naked Rights not payable on the date of termination shall terminate immediately; and (iii) restricted share and
restricted stock unit awards shall terminate immediately unless the conditions of the Award have been satisfied.
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AMENDMENT, SUSPENSION OR TERMINATION OF THE PROGRAM
The Program will terminate on the day preceding the tenth anniversary
of its adoption, unless sooner terminated by the Board. Prior to that date, the Program Administrator may amend, modify, suspend
or terminate the Program, provided, however, that (a) stockholder approval is obtained when required by law, and (b) no such amendment,
modification, suspension or termination by the Program Administrator shall adversely affect the rights of participants, without
their consent, under any outstanding Award.
OTHER INFORMATION
A “new plan benefits” table, as described in the
SEC’s proxy rules, is not provided because the grant of options and other awards under the Plan is discretionary, and we
cannot determine now the specific number or type of options or awards to be granted in the future to any particular person or group.
However, please refer to “Executive Compensation” in this Proxy Statement, which provides information on the grants
made in the previous fiscal year, and please refer to the description of grants made to our non-employee directors in the last
previous year under the heading “Compensation of Directors” in this Proxy Statement.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS AND AWARDS
BECAUSE OF THE COMPLEXITY OF THE FEDERAL INCOME TAX LAWS
AND THE APPLICATION OF VARIOUS STATE INCOME TAX LAWS, THE FOLLOWING DISCUSSION OF TAX CONSEQUENCES IS GENERAL IN NATURE AND RELATES
SOLELY TO FEDERAL INCOME TAX MATTERS. PARTICIPANTS OF THE PROGRAM ARE ADVISED TO CONSULT THEIR OWN PERSONAL TAX ADVISORS. IN ADDITION,
THE FOLLOWING SUMMARY IS BASED UPON AN ANALYSIS OF THE INTERNAL REVENUE CODE AS CURRENTLY IN EFFECT, EXISTING LAWS, JUDICIAL DECISIONS,
ADMINISTRATIVE RULINGS, REGULATIONS AND PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE.
ISOs. In general, an optionee granted an ISO will not recognize
taxable income upon the grant or the exercise of the ISO (assuming the ISO continues to qualify as such at the time of exercise).
The excess of the fair market value of shares of Common Stock received upon exercise of the ISO over the exercise price is, however,
a tax preference item which can result in imposition of the alternative minimum tax. The optionee’s “tax basis”
in the shares of Common Stock acquired upon exercise of the ISO generally will be equal to the exercise price paid by the optionee,
except in the case in which the optionee pays the exercise price by delivery of the shares of Common Stock otherwise owned by the
optionee (as discussed below).
If the shares acquired upon the exercise of an ISO are held
by the optionee for the “ISO holding period” of at least two years after the date of grant and one year after the date
of exercise, the optionee will recognize long-term capital gain or loss upon the sale of the ISO Shares equal to the amount realized
upon such sale minus the optionee’s tax basis in the shares, and such optionee will not recognize any taxable ordinary income
with respect to the ISO. As a general rule, if an optionee disposes of the shares acquired upon exercise of an ISO before satisfying
both holding period requirements (a “disqualifying disposition”), the gain recognized on the disposition will be taxed
as ordinary income equal to the lesser of (i) the fair market value of the shares at the date of exercise of the ISO minus the
optionee’s tax basis in the shares, or (ii) the amount realized upon the disposition minus the optionee’s tax basis
in the shares. If the amount realized upon a disqualifying disposition is greater than the amount treated as ordinary income, the
excess amount will be treated as capital gain for federal income tax purposes. Certain transactions are not considered disqualifying
dispositions including certain exchanges, transfers resulting from the optionee’s death, and pledges and hypothecations of
ISO Shares.
In general, if an optionee, in exercising an incentive stock
option, tenders shares of Common Stock in partial or full payment of the option price, no gain or loss will be recognized on the
tender. However, if the tendered shares were previously acquired upon the exercise of another incentive stock option
and the tender is within two years from the date of grant or one year after the date of exercise of the other option, the tender
will be a disqualifying disposition of the shares acquired upon exercise of the other option.
SUPPLEMENTAL STOCK OPTION PLAN. No income will be recognized
to the optionee at the time of the grant of an option, nor will the Company be entitled to a tax deduction at that time. Upon the
exercise of a supplemental stock option, the optionee will be subject to ordinary income tax equal to the excess of the fair market
value of the stock on the exercise date over the exercise price. The Company will be entitled to a tax deduction in an amount equal
to the ordinary income realized by the optionee. If shares acquired upon such exercise are held for more than one year before disposition,
any gain on disposition of such shares will be treated as long-term capital gain.
STOCK APPRECIATION RIGHT. Neither the holder of a Tandem Option
nor the holder of a Naked SAR will be deemed to receive any income at the time a SAR is granted. When any part of a SAR is exercised,
the optionee will be deemed to have received ordinary income on the exercise date in an amount equal to the sum of the fair market
value of shares and cash received. The Company will be entitled to a corporate income tax deduction in an equal amount. Income
recognized by an optionee upon the exercise of a SAR will be subject to federal withholding taxes.
RESTRICTED STOCK AWARDS. Generally, absent an election
to be taxed currently under Section 83(b) of the Code (a “Section 83(b) Election”), there will be no federal income
tax consequences to either the recipient or our Company upon the grant of a restricted stock award. At the expiration
of the restriction period and the satisfaction of any other restrictions applicable to the restricted shares, the recipient will
recognize ordinary income and our Company generally will be entitled to a corresponding deduction equal to the fair market value
of the Common Stock at that time. If a Section 83(b) Election is made within 30 days after the date the restricted stock
award is granted, the recipient will recognize an amount of ordinary income at the time of the receipt of the restricted shares,
and our Company generally will be entitled to a corresponding deduction, equal to the fair market value (determined without regard
to applicable restrictions) of the shares at such time. If a Section 83(b) Election is made, no additional income will
be recognized by the recipient upon the lapse of restrictions on the shares (and prior to the sale of such shares), but, if the
shares are subsequently forfeited, the recipient may not deduct the income that was recognized pursuant to the Section 83(b) Election
at the time of the receipt of the shares.
RESTRICTED STOCK UNIT AWARDS. The recipient of a
restricted stock unit will recognize ordinary income as and when the units vest and the shares of our Common Stock are issued. The
amount of the income will be equal to the fair market value of the shares of our Common Stock issued at that time, and our Company
will be entitled to a corresponding deduction. The recipient of a restricted stock unit will not be permitted to make
a Section 83(b) Election with respect to such Award.
COMPENSATION DEDUCTION LIMITATION. Section 162(m) of the Code
generally disallows a tax deduction for compensation in excess of $1 million paid in a taxable year by a publicly held corporation
to its chief executive officer and certain other “covered employees”. Our Program Administrator intends to consider
the potential impact of Section 162(m) on grants made under the Program, but reserve the right to approve grants of options and
other Awards for an executive officer that exceeds the deduction limit of Section 162(m).
WITHHOLDING. If the Company determines that the satisfaction
of withholding tax or other withholding liabilities under any state or federal law is required as a condition of, or in any connection
with, the exercise or delivery or purchase of shares pursuant to the exercise of any option, stock appreciation right or performance
share under the Program, then the exercise of the option, stock appreciation right or performance share shall not be effective
unless the withholding tax or other withholding liabilities shall have been satisfied in a manner acceptable to the Company.
The affirmative vote of a majority of the votes cast by the
holders of shares entitled to vote thereon is required for approval of Proposal Four. If the stockholders do not vote for approval,
since the 2010 Program has expired in March 2020, no plan will be in place for an equity compensation program. Proxies will be
voted in accordance with the specifications marked thereon, and, if no specification is made, will be voted “FOR” the
approval of the Program.
The Board of Directors unanimously recommends that you vote FOR the proposal to approve the Company’s 2020 Equity Compensation Program.
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 2019 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 2019, 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 2019.
Director Compensation Earned in
Fiscal Year 2019
|
|
Fees earned or paid in cash
|
|
Option Awards (1)
|
|
Total
|
Name
|
|
$
|
|
$
|
|
$
|
William Foote
|
|
13,500
|
|
6,800
|
|
20,300
|
Luke P. LaValle, Jr.
|
|
14,000
|
|
6,800
|
|
20,800
|
N.E. Rick Strandlund
|
|
14,000
|
|
6,800
|
|
20,800
|
Luke P. LaValle, Jr.
|
|
14,000
|
|
6,800
|
|
20,800
|
Jan M. Winston
|
|
19,000
|
|
6,800
|
|
25,800
|
|
(1)
|
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 10,000 stock
options with an exercise price of $0.71 per share to each of the directors on February 27, 2019. The stock options had a fair
value of approximately $0.68 per share on the grant date. The number of stock options which vested in 2019 to each non-employee
director was as follows: William J. Foote, 21,666; Luke P. LaValle, Jr., 9,999; Dennis G. Romano, 9,999; N.E. Rick Strandlund,
9,999 and Jan M. Winston, 9,999. As of December 31, 2019, the aggregate number of option awards outstanding for each non-employee
director then serving as a director was as follows: William J. Foote, 84,266; Luke P. LaValle, Jr., 70,000; Dennis G. Romano,
70,000; N.E. Rick Strandlund, 70,000; and Jan M. Winston, 70,000.
|
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
Composition of the Board
The Board of Directors in 2019 consisted
of four independent directors, the Company’s President and CEO, Amy Eskilson and William J. Foote, former Chief Financial
Officer, Chief Accounting Officer and Secretary who was unanimously elected to the Board on October 18, 2017. Mr. Foote retired
as Chief Financial Officer as of October 1, 2018, and Chief Accounting Officer as of February 8, 2019, and will continue to serve
as a member of the Board.
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 Stock Market and applicable SEC rules. 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. Although Mr. Foote is no longer employed by the Company, he continues to serve on the Board and is
therefore not independent.
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 11 times during fiscal year 2019,
including six meetings by telephone. Board members are encouraged, but not required by any specific Board policy, to attend the
Company’s Annual Meeting.
All six Board members, then in office,
were in attendance at the 2019 Annual Meeting. During 2019, each non-employee director of the Company was also a member of each
Committee of the Board of Directors, except for Mr. Foote who is not independent and therefore does not service on the Audit Committee,
and each Board member attended at least 75% of the aggregate of (i) the total number of meetings of our Board (held during the
period for which such directors served on the Board) and (ii) the total number of meetings of all committees of our Board on which
the director served (during the periods for which the director served on such committee or committees).
The by-laws 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 more than 19 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, 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. has served as the Audit Committee Chairman since assuming the role in December 2006.
The three other members of the Audit Committee are Messrs. Romano, Strandlund and Winston. The Board of Directors has determined
that the members of the Audit Committee each satisfy the requirements for independence under applicable SEC rules, as well as the
independence standards of the NASDAQ Stock Market. In 2019, the Audit Committee was comprised of all independent 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
has adopted a written charter approved by the Board, a copy of which is available on our website at www.inradoptics.com.
The Audit Committee met four times during
2019 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 under applicable SEC rules.
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 has served as the Chairman of the Compensation Committee since his appointment
in May 2009. Messrs. Foote, LaValle, Romano, and Winston are also members of the Compensation Committee.
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 no charter.
The Compensation Committee has the authority
to hire independent advisors to help fulfill its duties. No independent advisors were hired in 2019.
The Compensation Committee held one meeting
during 2019 to review and establish compensation policy for the year with all members in attendance at all of the meetings.
Nominating Committee
During 2019, the Nominating Committee was
comprised of all 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. The Nominating Committee has adopted a written charter
approved by the Board, a copy of which is available on our website at www.inradoptics.com.
Mr. Dennis Romano has served as Chairman
of the Nominating Committee since his appointment by the Board of Directors on January 18, 2012. The other four members of the
Nominating Committee are Messrs. Foote, LaValle, Strandlund, and Winston.
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 (120th) 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 2020 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:
Executives Officers of the Registrant
|
|
Name
|
|
Age
|
|
Since
|
|
Position with the Company
|
Amy Eskilson
|
|
59
|
|
2012
|
|
President and Chief Executive Officer
|
Theresa A. Balog
|
|
58
|
|
2019
|
|
Chief Financial Officer, Corporate Secretary and Treasuer
|
Thomas A. Caughey
|
|
71
|
|
2011
|
|
Vice President of Product Development
|
George Murray
|
|
56
|
|
2013
|
|
Vice President of Sales and Marketing
|
Amy Eskilson joined the Company on February
2011, as Vice President of Sales and Marketing and was appointed an officer on March 2011. She has held the position of President
and CEO since October 2012. From 2001 to 2011, she served as Director of Business Development for Thorlabs, Inc., a photonic tool
catalog company. In this role Ms. Eskilson coordinated a team responsible for 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 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.
Theresa A. Balog joined Inrad Optics in
May 2019, and was elected Chief Financial Officer, Corporate Secretary and Treasurer in June 2019. Ms. Balog has previously served
as Chief Financial Officer for Clear Align, LLC and MakerBot Industries, Vice President and Global Controller and Chief Accounting
Officer for VWR International, Executive Director for MSCI, Inc., and Vice President and Controller for KeySpan Energy. She has
also held a number of positions with Columbia Energy Group and served as a on the board of SBLI USA. Ms. Balog is a Certified
Public Accountant and holds masters’ degrees from Wilmington University (HR Management) and the University of Delaware (Accounting)
and a BBA from St. Mary’s College.
Thomas A. Caughey has been with the Company since 1978. He was appointed an officer in
March 2011 and serves as Vice-President of Product Development, a position he has held for more than 16 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. Mr. Caughey 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 in January 2013 and was appointed an officer at that time. He joined the Company as Sales Manager,
West Region in March 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.
Executive Compensation
The following Summary Compensation Table
sets forth, for the years ended December 31, 2019 and 2018, 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
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Stock
|
|
|
All Other
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name & Principal Position
|
|
Year
|
|
$
|
|
|
$
|
|
|
$(1)(2)
|
|
|
$
|
|
|
$(3)
|
|
|
$
|
|
Amy Eskilson
|
|
2019
|
|
|
196,148
|
|
|
|
-
|
|
|
|
27,200
|
|
|
|
-
|
|
|
|
8,100
|
|
|
|
231,448
|
|
President & CEO
|
|
2018
|
|
|
180,003
|
|
|
|
-
|
|
|
|
39,200
|
|
|
|
-
|
|
|
|
8,100
|
|
|
|
227,303
|
|
George Murray
|
|
2019
|
|
|
147,893
|
|
|
|
-
|
|
|
|
13,600
|
|
|
|
-
|
|
|
|
6,255
|
|
|
|
167,748
|
|
Vice President, Sales & Marketing
|
|
2018
|
|
|
139,006
|
|
|
|
-
|
|
|
|
19,600
|
|
|
|
-
|
|
|
|
6,255
|
|
|
|
164,861
|
|
Thomas Caughey
|
|
2019
|
|
|
123,372
|
|
|
|
-
|
|
|
|
10,200
|
|
|
|
-
|
|
|
|
5,243
|
|
|
|
138,815
|
|
Vice President, Research & Development
|
|
2018
|
|
|
116,501
|
|
|
|
-
|
|
|
|
9,800
|
|
|
|
-
|
|
|
|
5,243
|
|
|
|
131,544
|
|
|
(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 9 to our Consolidated Financial Statements filed on March 30, 2020, with the Securities and Exchange
Commission in our annual report on Form 10-K.
|
|
(2)
|
On February 27, 2019, stock options with an exercise
price of $0.71 per share and a fair value of $0.68 per share were granted to each of Ms. Eskilson (40,000 stock options), Mr.
Murray (20,000 stock options) and Mr. Caughey (15,000 stock options). On July 3, 2018, the Company granted stock options with
an exercise price of $1.00 per share and a fair value of $0.98 per share to each of Ms. Eskilson (40,000 stock options), Mr. Murray
(15,000 stock options) and Mr. Caughey (10,000). All stock options granted in 2019 and 2018 have a ten year term and vest over
three years, one-third each year upon the anniversary of the grant. The amounts reflect the aggregate grant date fair value of
each award.
|
|
(3)
|
All Other Compensation includes the fair value of Company
stock contributed in 2019 and 2018 as a match to the Company’s Section 401(k) Plan for individual executive contributions
to the Plan in the 2018 and 2017 Plan years, respectively. This amounted to $8,100 for Ms. Eskilson, $6,255 for Mr. Murray, and
$5,243 for Mr. Caughey, respectively.
|
Employment Agreements
The Company has not entered into any employment
agreement with any of Ms. Eskilson, Mr. Caughey or Mr. Murray.
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, 2019.
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
|
|
Option Awards (1)
|
Name & Principal Position
|
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
|
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
|
|
Option Exercise Price
$
|
|
|
Option Expiration Date
|
Amy Eskilson
|
|
-
|
|
|
40,000
|
|
|
0.71
|
|
|
02/27/29
|
President & CEO
|
|
|
13,333
|
|
|
|
26,667
|
|
|
|
1.00
|
|
|
07/03/28
|
|
|
|
26,667
|
|
|
|
13,333
|
|
|
|
0.57
|
|
|
01/18/27
|
|
|
|
40,000
|
|
|
|
|
|
|
|
0.35
|
|
|
02/22/26
|
|
|
|
25,000
|
|
|
|
|
|
|
|
0.19
|
|
|
01/13/25
|
|
|
|
20,000
|
|
|
|
|
|
|
|
0.27
|
|
|
01/21/24
|
|
|
|
30,000
|
|
|
|
|
|
|
|
0.50
|
|
|
09/12/22
|
|
|
|
6,300
|
|
|
|
|
|
|
|
0.95
|
|
|
12/21/21
|
Total
|
|
|
161,300
|
|
|
|
80,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Caughey
|
|
|
-
|
|
|
|
15,000
|
|
|
|
0.71
|
|
|
02/27/29
|
Vice President, Research & Development
|
|
|
3,333
|
|
|
|
6,667
|
|
|
|
1.00
|
|
|
07/03/28
|
|
|
|
1,667
|
|
|
|
-
|
|
|
|
0.35
|
|
|
02/22/26
|
|
|
|
6,300
|
|
|
|
-
|
|
|
|
0.95
|
|
|
12/21/21
|
|
|
|
3,400
|
|
|
|
-
|
|
|
|
0.98
|
|
|
03/24/21
|
Total
|
|
|
14,700
|
|
|
|
21,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Murray
|
|
|
-
|
|
|
|
20,000
|
|
|
|
0.71
|
|
|
02/27/29
|
Vice President, Sales & Marketing
|
|
|
6,667
|
|
|
|
13,333
|
|
|
|
1.00
|
|
|
07/03/28
|
|
|
|
10,000
|
|
|
|
5,000
|
|
|
|
0.57
|
|
|
01/18/27
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
0.35
|
|
|
02/22/26
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
0.19
|
|
|
01/13/25
|
|
|
|
6,000
|
|
|
|
-
|
|
|
|
0.27
|
|
|
01/21/24
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
0.50
|
|
|
09/12/22
|
|
|
|
3,400
|
|
|
|
-
|
|
|
|
0.95
|
|
|
12/21/21
|
|
|
|
3,400
|
|
|
|
-
|
|
|
|
0.98
|
|
|
03/04/21
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
1.00
|
|
|
03/29/20
|
Total
|
|
|
84,467
|
|
|
|
38,333
|
|
|
|
|
|
|
|
|
(1)
|
Options have a ten year term and vest over three years,
one third each year upon each anniversary of the grant.
|
Equity Compensation Plan Information
The following table give the 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, 2019. These Plans were the Company’s
only equity compensation Plans in existence as of December 31, 2019.
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
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 Issance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)
|
|
Equity Compensation Plans Approved by Shareholders (1)
|
|
|
1,147,267
|
|
|
$
|
0.63
|
|
|
|
2,859,233
|
|
Equity Compensation Plans Not Approved by Shareholders
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
Total
|
|
|
1,147,267
|
|
|
$
|
0.63
|
|
|
|
2,859,233
|
|
|
(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, 2019, there was a total of 6,500 options outstanding under the 2000 Plan and
1,140,767 options outstanding under the 2010 Plan. In 2019, 84,041 stock options expired or were forfeited under the 2000 Plan.
Under the 2010 Equity Compensation Plan, a total of 200,000 stock options were awarded to employees and directors, and a total
of 26,900 stock options were forfeited in 2018. No stock options were exercised under the 2010 Equity Compensation Plan in 2019.
|
Certain Relationships and Related Party
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 Company 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. The Audit Committee is responsible for the review and approval of all related party transactions.
In April 2018, 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, 2021. 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, 2024.
In addition, in April 2018, 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, 2021. 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, 2024.
No payments against the total principal
of $2,500,000 have been made. In 2019, the Company paid a total of $112,500 in interest on the outstanding Subordinated Convertible
Notes described above. Accrued interest on the notes amounted to $112,500 as of December 31, 2019.
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. If the Company makes any substantive
amendments to the Code of Ethics or grants any waiver, including any implicit waiver from a provision of the Code of Ethics to
its directors or executive officers, the Company will disclose the nature of such amendments or waiver in its website or in a current
report on Form 8-K.
Relationship with Independent Public
Accountants
PKF O’Connor Davies 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, 2020.
Householding of Annual Meeting Materials
Some banks, brokers and other nominee record
holders may be participating in the practice of “householding” proxy statements. This means that only one copy of this
Proxy Statement may have been sent to multiple stockholders in the same household. We will promptly deliver a separate copy of
this Proxy Statement to any stockholder upon written or oral request to: Inrad Optics, Inc., 181 Legrand Avenue, Northvale, New
Jersey 07647, Attn.: Secretary, or by phone at (201) 767-1910. Any stockholder who wants to receive a separate copy of this Proxy
Statement, or of our proxy statements or annual reports in the future, or any stockholder who is receiving multiple copies and
would like to receive only one copy per household, should contact the stockholder’s bank, broker, or other nominee record
holder, or the stockholder may contact us at the address and phone number above.
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, PKF O’Connor Davies, LLP (“PKF”) for the audit of the financial
statements included in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2019 were $67,500. Audit
fees billed or expected to be billed by PFK for the audit of the financial statements included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2018, were $67,500. Audit fees billed or expected to be billed by PKF for reviews
of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, for the year ended December 31, 2020,
were $46,500.
Audit-Related Fees
The Company was billed $0 and $2,275 by
the Company’s principal accountants for the fiscal years ended December 31, 2019 and 2018, 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 $15,000 by the Company’s principal accountants for each of the fiscal years ended December 31,
2019 and 2018, 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. The Company did not have any
other fees in 2019 and 2018.
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, 2019:
|
(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 the applicable requirements of the Public Company Accounting Oversight
Board and the SEC;
|
|
(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
|
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 2018 Annual Report
on Form 10-K, as filed with the SEC on March 30, 2020.
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.
Luke P. LaValle, Jr., Audit Committee Chairman
Dennis Romano
N.E. Rick Strandlund
Jan M. Winston
NOTICE REGARDING FILING OF SHAREHOLDERS
PROPOSALS
AT 2021 ANNUAL MEETING
Any proposal intended to be presented by
a shareholder at the 2021 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 December 30, 2020, to be considered for
inclusion in the Proxy Statement for the 2021 Annual Meeting and by March 31, 2021, in order for the proposal to be considered
timely for consideration at next year’s 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. Your participation in discussion of the Company’s affairs will be welcome.
|
/S/ Theresa A. Balog
|
|
Theresa A. Balog, Secretary
|
Dated: April 29, 2020
A copy of the Company's annual report
on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission containing consolidated
financial statements of the Company as of December 31, 2019, is available (excluding exhibits) without cost to shareholders upon
written request to Theresa A. Balog, 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, INC.
ATTN: Theresa
A. Balog
181 LEGRAND AVENUE
NORTHVALE, NJ 07647
|
VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions
to obtain your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to
receive or access proxy materials electronically in future years.
VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The
Notice & Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com
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