UNIVERSAL DIS=
PLAY
CORPORATION
375 Phillips Boulevard
Ewing, New Jersey 08618
________________=
________
NOTICE OF 2009
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JU=
NE 25,
2009
________________=
________
Dear Shareholders:
You are cordially inv=
ited
to attend our 2009 Annual Meeting of Shareholders on Thursday, June 25, 200=
9,
at 4:00 p.m., Eastern Time, at the Crowne Plaza Hotel (formerly the Holiday=
Inn
on City Line Avenue), 4100 Presidential Boulevard, Philadelphia, Pennsylvan=
ia
19131. We are holding the mee=
ting
to:
(1) =
Elect
seven members of our Board of Directors to hold one-year terms;
(2) =
Approve
our 2009 Employee Stock Purchase Plan;
(3) =
Ratify
the appointment of KPMG LLP as our independent registered public accounting
firm for 2009; and
(4) =
Transact
any other business that may properly come before the shareholders at the
meeting.
If you were the record
owner of shares of our common stock at the close of business on April 9, 20=
09,
you may attend and vote at the meeting.&nb=
sp;
If you cannot attend the meeting, you may vote by returning the encl=
osed
proxy card or, if you hold your shares in “street name,” the
enclosed voting instruction form.
Any shareholder of record may vote in person at the meeting, even if=
he
or she has already returned a proxy card. A list of all shareholders of recor=
d will
be made available for review by registered shareholders both at the meeting
and, during regular business hours, at our headquarters in Ewing, New Jersey
for 10 days prior to the meeting.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Sidney D. Rosenbl=
att
Sidney D. Rosenblatt
Executive Vice
President, Chief Financial Officer,
Treasurer
and Secretary
Ewing, New Jersey
April 24, 2009
________________________________________________=
_____________________________________________
As promptly as possible, please complete, sign, =
date
and return the enclosed proxy card or voting instruction form in the
postage-paid return envelope provided.&nbs=
p;
Please fill out and return the proxy card or instruction form whethe=
r or
not you expect to attend the annual meeting in person. If you are a shareholder of record=
and
you attend the meeting in person, you may revoke your proxy and vote your
shares at that time.
________________________________________________=
_____________________________________________
UNIVERSAL DIS=
PLAY
CORPORATION
375 Phillips Bou=
levard
Ewing, New Jersey
08618
________________=
________
PROXY STATEME=
NT FOR
2009 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JU=
NE 25,
2009
________________=
________
INFORMATION
CONCERNING THIS SOLICITATION
The Board of Directors of Universal Display
Corporation (we, us or the “Company”) is soliciting proxies for=
the
2009 Annual Meeting of Shareholders to be held on Thursday, June 25, 2009, =
at
4:00 p.m., Eastern Time, at the Crowne Plaza Hotel (formerly the Holiday In=
n on
City Line Avenue), 4100 Presidential Boulevard, Philadelphia, Pennsylvania
19131 (the “Annual Meeting”).&=
nbsp;
This proxy statement contains important information for shareholders=
to
consider when deciding how to vote on the matters brought before the Annual
Meeting. Please read it caref=
ully.
At the Annual Meeting, our shareholders will be =
asked
to vote upon:
(1) =
the
election of seven members of our Board of Directors to hold one-year terms;=
(2) =
a
proposal to approve our 2009 Employee Stock Purchase Plan;
(3) =
a
proposal to ratify the appointment of KPMG LLP as our independent registered
public accounting firm for 2009; and
(4) =
such
other business as may properly come before the shareholders at the Annual
Meeting.
Voting materials, whi=
ch
include the proxy statement, a proxy card and our 2008 Annual Report to
Shareholders, will be mailed to all registered shareholders beginning on or
about April 24, 2009. Shareho=
lders
holding their shares in “street name” should receive the proxy
statement and a voting instruction form from their broker, bank or other
custodian, nominee or fiduciary. We
will pay the expenses of these solicitations. In addition to solicitation by mai=
l,
proxies may be solicited by telephone or in person by some of our officers,
directors and regular employees or independent contractors who will not be
specially engaged or compensated for such services.
Our principal executi=
ve
offices are located at 375 Phillips Boulevard, Ewing, New Jersey 08618. Our general telephone number is (6=
09)
671-0980.
VOTING
AT THE ANNUAL MEETING
Our Board of Director=
s has
set April 9, 2009 as the record date for the Annual Meeting (the “Rec=
ord
Date”). As of the Record
Date, we had outstanding 36,316,903 shares of common stock and 200,000 shar=
es
of Series A Nonconvertible Preferred Stock. Each holder of our common stock or
Series A Nonconvertible Preferred Stock is entitled to one vote per share on
all matters to be voted on at the Annual Meeting. Holders of our common stock and Se=
ries A
Nonconvertible Preferred Stock vote together as a single class on all matte=
rs.
Only shareholders of =
record
as of the close of business on the Record Date may attend and vote at the
Annual Meeting. The presence,=
in
person or by proxy, of shareholders entitled to cast at least a majority of=
the
votes that all shareholders are entitled to cast on a particular matter to =
be
acted upon at the Annual Meeting will constitute a quorum for purposes of t=
hat
matter. Shareholders of recor=
d who
return a proxy card but abstain from voting or fail to vote on a particular
matter will be considered “present” for quorum purposes with
respect to the matter. In add=
ition,
shares held by brokers or nominees who have notified us on a proxy card or
otherwise in accordance with industry practice that they have not received
voting instructions with respect to a particular matter and that they lack =
or
have declined to exercise voting authority with respect to such matter
(referred to in this proxy statement as “uninstructed shares”),
will be considered “present” for quorum purposes with respect to
the matter. Votes not cast by
brokers or nominees with respect to uninstructed shares are referred to in =
this
proxy statement as “broker non-votes.”
The persons named in =
the
enclosed proxy will vote the shares represented by each properly executed p=
roxy
as directed therein. In the a=
bsence
of such direction on a properly executed proxy card, the persons named in t=
he
enclosed proxy will vote “FOR” the persons nominated by our Boa=
rd
of Directors for election as directors and “FOR” the proposals =
to
approve our 2009 Employee Stock Purchase Plan and to ratify the appointment=
of
KPMG LLP as our independent registered public accounting firm. As to other items of business that=
may
properly be presented at the Annual Meeting for action, the persons named in
the enclosed proxy will vote the shares represented by the proxy in accorda=
nce
with their best judgment.
A shareholder of reco=
rd may
revoke his or her proxy at any time before its exercise by giving written
notice of such revocation to our Corporate Secretary. In addition, any shareholder of re=
cord
may vote by ballot at the Annual Meeting, even if he or she has already ret=
urned
a proxy card.
The preliminary voting
results will be announced at the Annual Meeting. The final results will be publishe=
d in
our quarterly report on Form 10-Q for the quarter ending June 30, 2009.
Your vote is
important. Please complete, s=
ign
and return the accompanying proxy card or voting instruction form whether or
not you plan to attend the Annual Meeting.=
If you plan to attend the Annual Meeting to vote in person and your
shares are registered with our transfer agent in the name of a broker, bank=
or
other custodian, nominee or fiduciary, you must secure a proxy from that pe=
rson
or entity assigning you the right to vote your shares of common stock.
Important Notice Regarding the Availability of
This
proxy statement and our 2008 Annual Report to Shareholders are available at=
www.universaldisplay.com in the “For
Shareholders – SEC Documents” section.
PROPOSAL
1
ELECTION
OF DIRECTORS
Our Board of Director=
s has
fixed the number of directors at seven, all of whom are to be elected at the
Annual Meeting. Each director
elected will serve until our next annual meeting of shareholders and such t=
ime
as a successor has been selected and qualified, or until the director’=
;s
earlier death, resignation or removal. Each nominee has consented to being
nominated and to serve if elected.
If any nominee should subsequently decline or be unable to serve, the
persons named in the proxy will vote for the election of such substitute
nominee as shall be determined by them in accordance with their best judgme=
nt.
Pursuant to our Amend=
ed and
Restated Articles of Incorporation, the holder of our Series A Nonconvertib=
le
Preferred Stock is entitled to nominate and elect two of the members of our
Board of Directors. The holde=
r of
the Series A Nonconvertible Preferred Stock has waived this right with resp=
ect
to the election of directors at the Annual Meeting.
All nominees are pres=
ently
members of our Board of Directors whose terms expire at the Annual
Meeting. The nominees for ele=
ction
are as follows:
=
&nb=
sp; =
&nb=
sp;
__________________________________________
NOMINEES
FOR ELECTION AS DIRECTORS
=
&nb=
sp; =
&nb=
sp; =
&nb=
sp; =
____________________________________________________________________=
___
|
|
|
|
|
Year First Became Director, |
|
|
|
|
Age |
|
Principal Occupations and Cer=
tain
Directorships |
|
|
Sherwin I.
Seligsohn…………...………... |
|
73 |
|
Mr. Seligsohn =
is our
Founder and has been the Chairman of our Board of Directors since June 19=
95.
He also served as our Chief Executive Officer from June 1995 through
December 2007, and as our President from June 1995 through
May 1996. Mr. Seligsohn serves as the sole Director, President =
and
Secretary of American Biomimetics Corporation, International Multi-Media
Corporation, and Wireless Unified Network Systems Corporation. He is also
Chairman of the Board of Directors, President and Chief Executive Officer=
of
Global Photonic Energy Corporation. From June 1990 to October 1991,
Mr. Seligsohn was Chairman Emeritus of InterDigital Communications, =
Inc.
(InterDigital), formerly International Mobile Machines Corporation. He
founded InterDigital and from August 1972 to June 1990 served as
its Chairman of the Board of Directors. Mr. Seligsohn is a member of the
Industrial Advisory Board of the Princeton Institute for the Science and
Technology of Materials (PRISM) at Princeton University. |
|
|
Steven V.
Abramson……………...……... |
|
57 |
|
Mr. Abramson i=
s our
President and Chief Executive Officer, and has been a member of our Board=
of
Directors since May 1996. Mr. Abramson served as our President and C=
hief
Operating Officer from May 1996 through December 2007. From
March 1992 to May 1996, Mr. Abramson was Vice President,
General Counsel, Secretary and Treasurer of Roy F. Weston, Inc., a worldw=
ide
environmental consulting and engineering firm. From December 1982 to
December 1991, Mr. Abramson held various positions at InterDigi=
tal,
including General Counsel, Executive Vice President and General Manager of
the Technology Licensing Division. |
|
|
Sidney D.
Rosenblatt…………...……….. |
|
61 |
|
Mr. Rosenblatt=
has
been our Executive Vice President, Chief Financial Officer, Treasurer and
Secretary since June 1995, and has been a member of our Board of Dir=
ectors
since May 1996. Mr. Rosenblatt is the owner of and served as the
President of S. Zitner Company from August 1990 through
December 1998. From May 1982 to August 1990,
Mr. Rosenblatt served as the Senior Vice President, Chief Financial
Officer and Treasurer of InterDigital. |
|
|
|
|
|
|
Year First Became Director, |
|
|
|
|
Age |
|
Principal Occupations and Cer=
tain
Directorships |
|
|
Leonard
Becker…...…………………... |
|
85 |
|
Mr. Becker has=
been
a member of our Board of Directors since February 2001. For the last=
40 years,
Mr. Becker has been a general partner of Becker Associates, which is
engaged in real estate investments and management. He served on the Board=
of
Directors of American Business Financial Services, Inc. (OTCBB:
“ABFIQ.PK”), as well as on its compensation and audit committ=
ees,
until March 2007. He also previously served as a director of Eagle
National Bank and Cabot Medical Corporation. |
|
|
Elizabeth H.
Gemmill..………………... |
|
63 |
|
Ms. Gemmill ha=
s been
a member of our Board of Directors since April 1997. Since
March 1999, she has been Managing Trustee and, more recently, Presid=
ent
of the Warwick Foundation. From February 1988 to March 1999,
Ms. Gemmill was Vice President and Secretary of Tasty Baking Company.
Ms. Gemmill is Chairman of the Board of Philadelphia University and
serves on the Board of Beneficial Mutual Bancorp, Inc., the Philadelphia
College of Osteopathic Medicine, and the YMCA of Philadelphia and Vicinit=
y.
She previously served as a director of American Water Works Company, Inc.
(NYSE: “AWK”) until it was sold in early 2003, and as a direc=
tor
of Philadelphia Consolidated Holdings Corporation (NASDAQ:
“PHLY”) until it was sold in December 2008. |
|
|
C. Keith
Hartley……...…………………=
.. |
|
66 |
|
Mr. Hartley ha=
s been
a member of our Board of Directors since September 2000. Since June
2000, he has been the President of Hartley Capital Advisors, a merchant
banking firm. From August 1995 to May 2000, he was the managing
partner of Forum Capital Markets LLC, an investment banking company. In t=
he
past, Mr. Hartley held the position of managing partner for Peers &a=
mp;
Co. and Drexel Burnham Lambert, Inc. He also serves as a director of Idera
Pharmaceuticals, Inc. (NASDAQ: “IDRA”) and Swisher Internatio=
nal
Group, Inc. |
|
|
Lawrence Lacerte………………………..<= o:p> |
|
56 |
|
Mr. Lacerte ha=
s been
a member of our Board of Directors since October 1999. Since July 19=
98,
he has been Chairman of the Board of Directors and Chief Executive Office=
r of
Exponent Technologies, Inc., a company specializing in technology and
Internet-related ventures. Prior to that time, he was the founder, Chairm=
an
of the Board of Directors and Chief Executive Officer of Lacerte Software
Corp., which was sold to Intuit Corporation in June 1998. |
|
Vote Required and
Recommendation of our Board of Directors
Directors are elected=
by a
plurality and the seven nominees who receive the most votes will be
elected. Shareholders may vot=
e for
or withhold their vote from each nominee, or the entire group of nominees a=
s a
whole. Broker non-votes are n=
ot
considered “votes cast” with respect to this proposal and will =
have
no effect on the outcome of the election of directors. Shareholders do not have cumulative
voting rights with regard to the election of members of our Board of Direct=
ors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
EACH OF THE NOMINEES FOR DIRECTOR.
Director Independe=
nce
Our Board of Director=
s has
determined that a majority of its members are “independent
directors” within the meaning of applicable NASDAQ listing
requirements. Our independent
directors are Mr. Becker, Ms. Gemmill, Mr. Hartley and Mr. Lacerte. In addition, based on these listing
requirements, our Board of Directors has determined that Mr. Seligsohn, Mr.
Abramson and Mr. Rosenblatt are not independent directors because they are =
all
officers of the Company.
Our independent direc=
tors
meet in executive session on a periodic basis in connection with
regularly-scheduled meetings of the full Board of Directors, as well as in
their capacity as members of our Audit Committee and Compensation Committee=
.
Board Meetings and
Committees; Annual Meeting Attendance
In 2008, our Board of
Directors held eight meetings. Six
of our incumbent directors attended all of these meetings and one of our
incumbent directors attended seven of the meetings. Our Audit Committee held four meet=
ings
in 2008, and each member of the Audit Committee attended all of these
meetings. Our Compensation
Committee held eight meetings in 2008.&nbs=
p;
Three members of the committee attended all of these meetings and one
member of the committee attended seven of the meetings. All incumbent directo=
rs and
nominees for election as director are encouraged, but not required, to atte=
nd
our annual meetings of shareholders.
All but one of the current members of our Board of Directors attended
our annual meeting of shareholders in 2008. Dire=
ctor
Nominations Our
Board of Directors has not established a standing committee to nominate
candidates for election as directors.
Instead, a majority of our independent directors recommend, and our =
full
Board of Directors selects, the candidates that will be nominated to stand =
for
election as directors at our annual meeting of shareholders. Our Board of Directors believes th=
at
this process is appropriate given the relatively small size of our Board of
Directors and the fact that each independent director already serves on both
the Audit Committee and the Compensation Committee. Since we do not have a nominating
committee, our Board of Directors has not adopted a nominating committee
charter. In
nominating candidates for election as directors, both our independent direc=
tors
and our full Board of Directors consider the skills, experience, character,
commitment and diversity of background of each potential nominee, all in the
context of the requirements of our Board of Directors at that point in
time. Each candidate should b=
e an
individual who has demonstrated integrity and ethics, has an understanding =
of
the elements relevant to the success of a publicly-traded company, and has =
established
a record of professional accomplishment in such candidate’s chosen
field. Each candidate also sh=
ould
be prepared to participate in all Board and committee meetings that he or s=
he
attends, and should not have other personal or professional commitments that
might reasonably be expected to interfere with or limit such candidate̵=
7;s
ability to do so. Additionall=
y, in
determining whether to recommend a director for re-election, the
director’s past attendance at Board and committee meetings is conside=
red. Our
Board of Directors has no stated specific, minimum qualifications that must=
be
met by candidates for election as directors. However, in accordance with SEC ru=
les
and applicable NASDAQ listing requirements, at least one member of our Boar=
d of
Directors is expected to meet the criteria for an “audit committee
financial expert” as defined by SEC rules, and a majority of the memb=
ers
of the Board are expected to meet the definition of “independent
director” within the meaning of SEC rules and applicable NASDAQ listi=
ng requirements. Any
shareholder of record entitled to vote in the election of directors at an
annual or special meeting of our shareholders may nominate one or more pers=
ons
to stand for election to the Board at such meeting in accordance with the
requirements of our Amended and Restated Bylaws. In order to be considered by our B=
oard
of Directors in connection with the nominations process for our 2010 annual
meeting of shareholders, all such director nominations must be received by =
our
Corporate Secretary at our principal executive offices by February 25, 2010=
. Each such submission must be in wr=
iting
and must comply with the notice, information and consent provisions contain=
ed
in our Amended and Restated Bylaws.
In addition, each such submission must include any other information=
required
by Regulation 14A under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”).
Submissions should be addressed to our Corporate Secretary at the
following address: Universal Display Corporation, 375 Phillips Boulevard,
Ewing, New Jersey 08618. Our
independent directors and the full Board of Directors will consider all
candidates identified by shareholders through the processes described above,
and will evaluate each of them, including incumbent directors, based on the
same criteria. Although we ha=
ve no
formal policy regarding shareholder nominees, our Board of Directors believ=
es
that shareholder nominees should be viewed in substantially the same manner=
as
other nominees. The considera=
tion
of any candidate for director will be based on an assessment of the
individual’s background, skills and abilities, together with an
assessment of whether such characteristics qualify the individual to fulfill
the needs of our Board of Directors at that time. Audit Committee Our Board of Director=
s has
established a standing Audit Committee.&nb=
sp;
The members of our Audit Committee are Mr. Becker, Ms. Gemmill, Mr.
Hartley and Mr. Lacerte. Ms.
Gemmill is the Chairperson of our Audit Committee. Our Audit Committee
operates pursuant to a written charter that complies with the applicable
provisions of the Sarbanes-Oxley Act of 2002 and related rules of the
Securities and Exchange Commission (the “SEC”) and NASDAQ listi=
ng
standards. The Audit Committee
Charter was last reviewed and updated by our Board of Directors on April 7,
2009, and a copy of the updated charter is publicly available through the
“For Investors” section of our website at www.universaldisplay.com. According to its char=
ter,
our Audit Committee is responsible for, among other things: ·
reviewing o=
ur
financial statements and discussing these statements and other relevant
financial matters with management and our independent registered public
accounting firm; ·
selecting a=
nd
evaluating our independent registered public accounting firm and approving =
all
audit engagement fees and terms; ·
pre-approvi=
ng all
audit and non-audit services provided to us, including the scope of such
services, the procedures to be utilized and the compensation to be paid; ·
assessing t=
he
effectiveness of our internal control system and discussing this assessment
with management and our independent registered public accounting firm; ·
reviewing o=
ur
financial reporting and accounting standards and principles, significant
changes in these standards and principles, or in their application, and key
accounting decisions affecting our financial statements, including alternat=
ives
to, and the rationale for, these decisions; ·
discussing =
with
management and our independent registered public accounting firm, as
appropriate, our risk assessment and risk management policies, including our
major exposures to financial risk and the steps taken by management to moni=
tor
and mitigate these exposures; and ·
reviewing a=
nd
investigating any matters pertaining to the integrity of management, includ=
ing
any actual or potential conflicts of interest or allegations of fraud, and =
the
adherence of management to our standards of business conduct. Each member of our Au=
dit
Committee meets the financial knowledge and independence criteria of the NA=
SDAQ
listing requirements. Our Boa=
rd of
Directors has determined that Ms. Gemmill is an “audit committee
financial expert” as such term is defined under SEC regulations, and =
that
Ms. Gemmill meets the financial sophistication and independence standards
mandated by the NASDAQ listing requirements. Report of the Audit Committee The Audit Committee h=
as
reviewed and discussed with Company management the audited financial statem=
ents
of the Company for the fiscal year ended December 31, 2008, as well as
management’s assessment of the Company’s internal control over
financial reporting as of December 31, 2008. In addition, the Audit Committee h=
as
discussed with the Company’s independent registered public accounting
firm, KPMG LLP, the matters required to be discussed by Statement on Auditi=
ng
Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU &sec=
t; 380),
as adopted by the Public Company Accounting Oversight Board (PCAOB) in Rule
3200T, including the opinion regarding internal control over financial
reporting pursuant to PCAOB Auditing Standard No. 5. The Audit Committee also has recei=
ved
the written disclosures and the letter from KPMG LLP required by the PCAOB,=
and
has discussed the independence of KPMG LLP with that firm. Based on the Audit Committee’=
;s
review of the matters noted above and its discussions with management and t=
he
Company’s independent registered public accounting firm, the Audit
Committee recommended to the Company’s Board of Directors that the
audited financial statements be included in the Company’s Annual Repo=
rt
on Form 10-K for the period ended December 31, 2008. Respectfully sub=
mitted
by the Audit Committee Elizabeth H. Gem=
mill
(Chairperson) Leonard Becker C. Keith Hartley=
Lawrence Lacerte Compensation Committee Our
Board of Directors has established a standing Compensation Committee. The members of our Compensation
Committee are Mr. Becker, Ms. Gemmill, Mr. Hartley and Mr. Lacerte. Ms. Gemmill is the Chairperson of =
our
Compensation Committee. Our
Compensation Committee, which does not operate pursuant to a written charte=
r,
is responsible for, among other things: · =
recommendin=
g to
the full Board of Directors the base salary, incentive compensation and any
other compensation for the Company’s Chief Executive Officer, Chief
Financial Officer, Chief Technical Officer and Founder; · =
recommendin=
g to
the full Board of Directors the compensation for service as a member of the
Board of Directors or any Board committees; · =
reviewing a=
nd
approving or ratifying management’s recommendations for equity
compensation awards to other employees and consultants of the Company; · =
administeri=
ng and
discharging the duties imposed on the Committee under the terms of the
Company’s Equity Compensation Plan and, if approved by shareholders, =
the
Company’s Employee Stock Purchase Plan; and · =
performing =
such
other functions and duties as are deemed appropriate by the full Board of
Directors. Our
Compensation Committee has historically determined the compensation for the
Company’s executive officers in two stages. Base salary adjustments and perqui=
sites
and other benefits (life insurance coverage, automobile allowance, etc.) ha=
ve
been approved mid-year, to coincide with the annual employment anniversarie=
s of
these individuals with the Company.
Annual bonus equity compensation awards, long-term incentive equity
compensation awards, and any special cash or non-cash awards have been gran=
ted
at or shortly after year-end. This
enables the Committee to review the Company’s fiscal performance for =
the
year in determining these grants. For
2008, compensation for non-employee members of our Board of Directors was
recommended by our Compensation Committee and approved in December 2007. In
order to facilitate the Compensation Committee’s activities, Company
management recommends to the Committee compensation for the Company’s
executive officers and directors.
However, the Committee exercises independent judgment in determining
compensation for the Company’s executive officers and directors, and =
in
recommending this compensation to the full Board of Directors for approval.=
As part of this process, the Commi=
ttee meets
in executive session to review and ultimately finalize its recommendations.=
In
2007, the Compensation Committee engaged Hay Group as consultants to assist=
the
Committee in evaluating whether to adopt a supplemental executive retirement
plan (SERP) for certain of the Company’s executive officers. Hay Group provided the Committee w=
ith a
report outlining various design alternatives for the proposed plan, the
prevalence of benefits offered by other companies with similar plans, proje=
cted
cost estimates for implementation of the plan and a summary of other design=
and
accounting considerations. The
Committee is still considering Hay Group’s report. Compensation
Committee Interlocks and Insider Participation Each member of our
Compensation Committee is an independent director under the NASDAQ listing
requirements. None of the mem=
bers
of our Compensation Committee were officers or employees of the Company or =
its
subsidiary during 2008, were formerly officers of the Company or its
subsidiary, or had any relationship with the Company since the beginning of
2008 that requires disclosure under Item 404 of Regulation S-K. Nor have there been, since the beg=
inning
of 2008, any compensation committee interlocks involving our directors and
executive officers that require disclosure under Item 407 of Regulation
S-K. Report of the Compensation Committee The Compensation Comm=
ittee
of the Company has reviewed and discussed the Compensation Discussion and
Analysis required by Item 402(b) of Regulation S-K with management and,
based on such review and discussions, the Compensation Committee recommende=
d to
the Board that the Compensation Discussion and Analysis be included in this
Proxy Statement. Respectfully sub=
mitted
by the Compensation Committee Elizabeth H. Gem=
mill
(Chairperson) Leonard Becker C. Keith Hartley=
Lawrence Lacerte Shar=
eholder
Communications Shareholders
may send communications to our Board of Directors, or to individual members=
of
our Board of Directors, care of our Corporate Secretary at the following
address: Universal Display Corporation, 375 Phillips Boulevard, Ewing, New
Jersey 08618. In general, all
shareholder communications sent to our Corporate Secretary for forwarding to
our Board of Directors, or to specified Board members, will be forwarded in
accordance with the sender’s instructions. However, our Corporate Secretary r=
eserves
the right to not forward to members of our Board of Directors any abusive,
threatening or otherwise inappropriate materials. Information on how to submit compl=
aints
to our Audit Committee regarding accounting, internal accounting controls or
auditing matters can be found on the “For Investors” section of=
our
website at www.universaldisplay.com. The information on our website
referenced in this proxy statement is not and should not be considered a pa=
rt
of this proxy statement. EXECUTIVE COMPENSATION Compensation Discussion and Analysis Compensation Philosophy and Objectives Compensation and bene=
fits
programs are an important part of the relationship between our Company and =
its
executive officers. Compensat=
ion
for our executive officers is intended to be competitive, thereby allowing =
us
to attract, motivate and retain talented personnel. We also seek to reward our executi=
ve
officers for accomplishments and contributions to the Company’s long-=
term
strategic and short-term business goals. How We Determine Executive Compensation Each year, our Compen=
sation
Committee reviews and approves the compensation for our executive
officers. This process begins=
with
a review of the compensation paid to our executive officers in recent prior
years. We use prior compensat=
ion as
a starting point because we believe, as a general matter, that executive
compensation should remain relatively consistent from year-to-year. The market for our OLED technologi=
es and
materials is still at an early stage, which poses risks for our business.
With prior compensati=
on as
a baseline, we then consider the extent to which we have achieved our busin=
ess
goals for the current year, including our goals for revenue growth, expense
management, balance sheet stability, technical progress, new and expanded
business relationships and increased shareholder value. We also evaluate the individual
performance of our executive officers in relation to the achievement of our
business goals. As part of th=
is
process, we reassess our business goals in relation to the actual growth of=
the
OLED market over the past year.
Since many of our business goals depend on dynamic market factors
outside of the control of our executive officers, we want to ensure that we
measure our Company’s and their individual performance against goals =
that
are realistic.
In addition, we consi=
der
the expected contributions of each individual executive officer to the futu=
re
of our business. This helps us
determine the value of long-term incentive compensation awards to our execu=
tive
officers, such as shares of restricted stock. In determining these awards, we al=
so
consider the level of compensation that would be appropriate for motivating
each individual executive officer to remain committed to our Company and its
future success. Since the OLED
market is still at an early stage, our executive officers face a risk that =
our
business might not ultimately succeed.&nbs=
p;
We believe that long-term incentive compensation awards to our execu=
tive
officers help offset that risk.
Finally, we consider =
other
factors that may be relevant. With
respect to 2008 compensation decisions, for example, we considered whether =
the
downturn in the general economy should have any impact on compensation
decisions respecting our executive officers.
Executive management =
makes
recommendations to our Compensation Committee regarding all aspects of
compensation for our executive officers.&n=
bsp;
However, final decisions on any major element of compensation, as we=
ll
as total compensation for our executive officers, are made by our Compensat=
ion
Committee. Awards to our exec=
utive
officers are then approved by our full Board of Directors. Our Chief Executive Officer does n=
ot
participate in Compensation Committee or Board deliberations regarding his
compensation. Also, meetings =
of our
Compensation Committee are scheduled well in advance of the proposed meeting
date, and the Committee does not establish equity grant dates in order to
affect the value of any particular award.
In making compensation
decisions, we consider publicly available information regarding the
compensation paid to executives at other companies. However, this information is not
tabulated or summarized, and we do not engage in any form of compensation
benchmarking. Instead, compar=
isons
are more generally based on industry norms and compensation packages as
reported by the public news media.
In determining execut=
ive compensation,
we consider the current value to our executive officers of compensation pai=
d or
issued to them for prior years.
However, we have not focused on gains or losses from prior option gr=
ants
or other awards because we believe that those gains or losses are not
particularly significant in relation to overall compensation, and that gain=
s or
losses from prior awards do not have a substantial effect on the future
performance of our executive officers.&nbs=
p;
We also do not use tally sheets in determining compensation for our
executive officers, and in 2008 we did not utilize any external consultants=
to
assist us in determining executive compensation.
Elements of Compensation
For 2008, total
compensation to our executive officers consisted of the following elements:=
Our executive officers
receive both cash and non-cash, or equity, compensation. Equity compensation is further bro=
ken
down into annual bonus awards that vest immediately, long-term incentive aw=
ards
that typically vest with continued service over time, and special non-cash
awards tied to particular events.
We utilize annual bonus awards and special cash and non-cash awards =
to
reward our executive officers for their performance during the past year.
Actual compensation a=
mounts
are determined by our Compensation Committee in its discretion. However, the mix of compensation
components has remained relatively consistent year-to-year, in large part
because there are few similarly situated companies with which we compare
ourselves, and because our executive officers have come to expect an elemen=
t of
consistency in their compensation over time.
Should unusual events=
or
circumstances occur which have a material impact on our Company, we would
expect the Compensation Committee to consider them in deciding whether to m=
ake
any significant changes in executive compensation. With respect to 2008, the Committee
considered whether general economic conditions should have any impact on our
executive compensation. Ultim=
ately,
the Committee determined that there is, at present, a limited connection be=
tween
the Company’s growth and development and the current state of the ove=
rall
economy.
Base salaries=
We believ=
e that
there is a general expectation by our executive officers that their base
salaries will remain relatively consistent year-to-year, subject to limited
merit-based adjustments. We a=
lso
believe that this relatively simple approach is commonly used to determine =
the
base salaries of executives at other small companies. More substantial adjustments in th=
e base
salaries of our executive officers may be warranted in the future when the
market for our OLED technologies and materials matures, or under circumstan=
ces
different from those in our current environment.
In 2008, the base sal=
aries
of Mr. Seligsohn, Mr. Abramson and Mr. Rosenblatt were moderately increased
over the prior year. This was
consistent with prior year base salary increases for these executive office=
rs,
and with increases in the base salaries of our other employees during 2008.=
The increases were primarily merit=
-based
and intended to reward our executive officers for their overall performance=
on
behalf of the Company. To a l=
esser
extent, the increases were intended to offset increases in the cost of livi=
ng,
although no actual survey of cost of living indices was conducted. The base salaries of Mr. Seligsohn=
, Mr.
Abramson and Mr. Rosenblatt were adjusted effective as of July 1, 2008,
the annual employment anniversary date for each of these individuals.
In 2008, the base sal=
ary of
Dr. Brown was increased significantly over the prior year in conjunction wi=
th
Dr. Brown having been promoted to Senior Vice President and Chief Technical
Officer. This increase reflec=
ts the
significance of Dr. Brown’s role with the Company. Dr. Brown’s base salary was
adjusted effective as of June 22, 2008, her annual employment annivers=
ary
date.
Ms. Mahon became an
executive officer of the Company effective January 1, 2008, which was also =
her
annual employment anniversary date.
In conjunction with this change in status, Ms. Mahon was given the
additional title of General Manager of Material Supply Business. Ms. Mahon’s base salar=
y was
adjusted commensurate with her receiving this additional title and becoming=
an
executive officer of the Company.
Thereafter during 2008, Ms. Mahon did not receive a base salary
adjustment.
Consistent with previ=
ous
years, all adjustments to the salaries of Mr. Seligsohn, Mr. Abramson, Mr.
Rosenblatt and Dr. Brown were recommended by executive management and appro=
ved
by our Compensation Committee at a meeting held on August 5, 2008.
As in the past, each =
of Mr.
Abramson and Mr. Rosenblatt received the same base salary in 2008. This reflects our historic practic=
e of
treating these two individuals equally based on their longstanding dedicati=
on
and commitment to the Company, and the comparable value that each of them h=
as
provided and continues to provide to our business success.
As in prior years, Mr.
Seligsohn’s base salary for 2008 was set taking into account his shar=
ed
duties and responsibilities for other companies that he previously
founded. Most notable in this
regard is Global Photonic
Energy Corporation (GPEC), a privately-held corporation of which Mr. Seligs=
ohn
and his family are the largest shareholders, and for which Mr. Selig=
sohn
serves as Chairman of the Board of Directors and Chief Executive Officer
Annual bonus =
equity
compensation awards
Bonus equity compensa=
tion
awards are typically awarded to our executive officers on an annual basis a=
t or
shortly after the end of each calendar year. These awards have historically tak=
en the
form of immediately-vesting shares of our common stock, and this practice
continued with the awards made for 2008.&n=
bsp;
The awards are determined based on both Company and individual
performance during the prior year.
They are recommended by executive management and approved by our Com=
pensation
Committee and full Board of Directors.
Our Compensation Comm=
ittee
did not set formal performance goals and corresponding awards for the Compa=
ny’s
executive officers for 2008. =
As it
had in prior years, the Committee determined that the awards to the Company=
’s
executive officers for 2008 would be recommended by the Committee in its
discretion, taking into consideration the Company’s financial results,
business performance and other relevant factors, at year-end. The Committee concluded that this
approach was appropriate in light of the early stage of the OLED market and=
the
difficulty in assessing the Company’s performance by traditional
financial metrics.
Bonus equity compensa=
tion
awards to our executive officers for 2008 were recommended by our Compensat=
ion
Committee and approved by our full Board of Directors at meetings held on
January 6, 2009. On that date=
, the
closing price of our common stock on the NASDAQ Global Market was $10.12 per
share. The awards took the fo=
rm of
immediately vesting shares of our common stock in the following amounts:
Based on the closing =
price
of our common stock on each respective grant date, the bonus equity
compensation awards to Mr. Seligsohn, Mr. Abramson and Mr. Rosenblatt for 2=
008
were of the same value as corresponding awards that these individuals recei=
ved
for 2007. Our executive manag=
ement
recommended, and the Committee agreed, that this was appropriate given our
current business and financial situation.&=
nbsp;
In recommending the awards, executive management noted that the Comp=
any
had accomplished many of its business goals for 2008, but that not all of t=
hese
business goals were achieved based mainly on slower than expected growth of=
the
OLED market.
The bonus equity
compensation awards to Dr. Brown and Ms. Mahon for 2008 were each moderatel=
y increased
over the prior year. Our exec=
utive
management recommended these increases based on Dr. Brown having been promo=
ted
to Senior Vice President and Chief Technical Officer, and Ms. Mahon having =
become
an executive officer and received the additional title of General Manager of
Material Supply Business.
For the reasons indic=
ated
earlier, Mr. Abramson and Mr. Rosenblatt again received the same bonus equi=
ty
compensation awards for 2008, and Mr. Seligsohn’s award was set taking
into account his shared duties and responsibilities for GPEC and other
companies.
Long-term inc=
entive
equity compensation awards
Long-term incentive e=
quity
compensation awards are typically granted to our executive officers on an
annual basis in conjunction with the grant of annual bonus equity compensat=
ion
awards to these individuals. =
These
awards previously were issued in the form of options to purchase shares of =
our
common stock. However, due to
changes in the financial accounting rules based on the adoption of FAS 123R=
, this
practice was discontinued for years after 2005. Since then, long-term incentive eq=
uity
compensation awards to our executive officers have taken the form of restri=
cted
shares of our common stock. T=
he
shares vest over a period of time and vesting is contingent on the officer
continuing to be employed by us on the vesting date.
We use long-term ince=
ntive
equity compensation awards to link the compensation paid to our executive
officers with their future performance and the future performance of our co=
mmon
stock. We believe that this h=
elps
align the interests of our executive officers with those of our
shareholders. We also use the=
se
awards to encourage our executive officers to remain with the Company throu=
gh
the applicable vesting period. As
with other compensation to our executive officers, long-term incentive equi=
ty
compensation awards are recommended by executive management and approved by=
our
Compensation Committee and full Board of Directors.
Long-term incentive e=
quity
compensation awards to our executive officers were approved at meetings of =
our
Compensation Committee and full Board of Directors on January 9, 2008. These awards took the form of rest=
ricted
shares of our common stock as follows:&nbs=
p;
Mr. Seligsohn – 10,905 shares; Mr. Abramson – 16,357 sha=
res;
Mr. Rosenblatt – 16,357 shares; Dr. Brown – 10,905 shares; and =
Ms.
Mahon – 3,271 shares. T=
he
shares vest in equal increments of one-third each on the next three
anniversaries of the grant date, provided that the officer is an employee of
the Company on the applicable vesting date. We consider one-third of these sha=
re
awards to be compensation to our executive officers for each of the years 2=
008,
2009 and 2010.
The first
one-third of the restricted share awards granted to our executive officers =
on
January 9, 2008 vested on January 9, 2009.=
This resulted in the issuance of shares of common stock to our execu=
tive
officers as follows: Mr. Seli=
gsohn
– 3,635 shares; Mr. Abramson – 5,453 shares; Mr. Rosenblatt =
211;
5,453 shares; Dr. Brown ̵=
1; 3,635
shares; and Ms. Mahon – 1,091 shares. The second one-third of restricted share awards
previously granted to our executive officers on January 9, 2007 also vested=
on
January 9, 2009. This resulte=
d in
the issuance of additional shares of common stock to our executive officers=
as
follows: Mr. Seligsohn –
4,563 shares; Mr. Abramson – 6,844 shares; Mr. Rosenblatt – 6,8=
44
shares; Dr. Brown – 4,5=
63
shares; and Ms. Mahon – 1,369 shares. As with other equity awards that we
grant, portions of the vesting shares were withheld in consideration of the
Company’s payment of associated payroll taxes on behalf of these
officers. The number of share=
s so
withheld were as follows: Mr.
Seligsohn – 2,419 shares; Mr. Abramson – 4,859 shares; Mr. Rose=
nblatt
– 4,859 shares; Dr. Brown – 2,419 shares; and Ms. Mahon –=
888
shares.
As with other compens=
ation,
Mr. Abramson and Mr. Rosenblatt received the same long-term incentive equity
compensation awards, and Mr. Seligsohn’s award was set taking into
account his shared duties and responsibilities for GPEC and other companies=
.
Special cash =
and non-cash
awards
From
time to time, we issue special cash and non-cash awards to our employees,
including our executive officers.
For example, we have historically awarded a small amount of equity
compensation to our employees in connection with the filing and issuance of=
U.S.
patents on which they are named inventors.=
From time to time, we have also issued cash awards to our employees =
in
connection with their having achieved special recognition in their field or=
in
the industry. We believe that=
these
awards are a small but important component of compensation intended to
recognize our employees for special individual accomplishments that are lik=
ely
to benefit us and our business.
Our
executive management recommended, and our Compensation Committee approved, a
total of $2,000 in special non-cash awards to Dr. Brown during 2008. These awards were granted in recog=
nition
of the filing of four U.S. patent applications on which Dr. Brown was a nam=
ed
inventor. For each patent
application, Dr. Brown received an award of $500. The actual number of shares was
determined based on the closing price of the common stock on the NASDAQ Glo=
bal
Market on the date of grant, with any remaining amounts after the issuance =
of
whole numbers of shares being paid to Dr. Brown in cash. As with other equity awards, some =
of the
shares were withheld in consideration of the Company’s payment of
associated payroll taxes on behalf of Dr. Brown.
These
share awards to Dr. Brown were granted consistent with our historical pract=
ice
of awarding equity compensation based on the filing and issuance of U.S.
patents on which our employees are named inventors. We did not issue any other special=
cash
or non-cash awards to our executive officers in 2008.
Perquisites a=
nd
other benefits
We
provide benefits to all of our employees, including our executive
officers. These include paid =
time
off, paid sick time, Company-sponsored life, short-term and long-term
disability insurance, individual and family medical and dental insurance,
401(k) plan matching contributions, and other similar benefits. We believe that these benefits are=
an
important factor in helping us maintain good relations with our employees a=
nd
in creating a positive work environment.
For some of these employee benefits, the actual amount provided
depends on the employee’s salary, such that our higher-salaried
employees, including our executive officers, receive total benefits that are
greater than those of other employees. For example, matching contributions
under our 401(k) plan were the maximum permissible amount of $6,900 for eac=
h of
our executive officers in 2008.
We also made life and disability insurance premium payments on behalf of our executive officers in 2008. <= span style=3D'color:black'>Again, the actual amount of these payments depends in= part on the employee’s age and salary, such that payments made on behalf of our older or higher-salaried employees, which includes our executive office= rs, will be greater than those made on behalf of other employees. These life insurance premium payments were also higher for our executive officers because they are entit= led to a benefit equal to two times their annual base salary, as compared to our other employees who are entitled to a benefit equal to their annual base salary. In addition, we made premium payments for supplemental disability insurance coverage for Mr. Abramson and Mr. Rosenblatt. = However, the dollar value of all of these payments was relatively small compared to the total compensation paid to our executive officers for the year, and in any event we consider these type of benefits = to be standard components of executive compensation at most companies.<= o:p>
In
2008, we provided an automobile allowance of $500 per month to each of Mr.
Abramson and Mr. Rosenblatt, and we attributed $517 in income to Mr.
Seligsohn’s for his use of a Company-owned automobile. In addition, we reimbursed Mr.
Seligsohn, Mr. Abramson and Mr. Rosenblatt for reasonable expenses associat=
ed
with the automobiles they used to commute to our offices in Ewing, New Jers=
ey,
such as expenses for automobile repairs and insurance. All of these individuals live a
considerable distance from our offices in Ewing, New Jersey, such that we b=
elieve
it is appropriate to partially compensate them for their work-related
automobile usage. Again, we d=
o not
consider this additional benefit to be a substantial component of executive
compensation.
Our
executive officers have been receiving the benefits described above for the
past several years. Our
Compensation Committee approved continuation of these benefits for our
executive officers at a meeting held on August 5, 2008. This approval occurred in conjunct=
ion
with the Committee’s approval of annual base salary increases for our
executive officers.
Our
Compensation Committee is evaluating whether to adopt a supplemental execut=
ive
retirement plan (SERP) for certain of our executive officers. In 2007, the Committee engaged Hay=
Group
to provide a report outlining various design alternatives for the proposed
plan, the prevalence of benefits offered by other companies with similar pl=
ans,
projected cost estimates for implementation of the plan and a summary of ot=
her
design and accounting considerations.
The Committee is considering Hay Group’s report as part of its
ongoing effort to evaluate design alternatives for the proposed SERP.
Stock Ownership Guidelines
We
do not have any stock ownership guidelines for our executive officers. However, all of our executive offi=
cers
are major shareholders in the Company, and all have substantial holdings of
outstanding stock, vested stock options and stock purchase warrants. We believe that these current hold=
ings
are sufficient to ensure that our executive officers remain committed to our
Company and its business.
Recovery of Bonuses
We
do not have any formal policy respecting the recovery of bonuses or other
amounts from our executive officers due to the restatement or adjustment of=
any
performance measures on which they were based. Since bonus and other equity
compensation awards to our executive officers have not been based on any
specific or measurable performance objectives, we do not believe that such a
policy is appropriate at this time.
Change in Control Payments
In
April 2003, we entered into change in control agreements with our executive
officers. These agreements we=
re amended
and restated in November 2008 in order to bring them into compliance with the strict timing and documentary requirements of
Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder. Both
the original agreements and the amended and restated agreements were approv=
ed
by our Board of Directors.
The
change in control agreements provide for certain cash payments and other
benefits to our executive officers in the event that their employment is
terminated, or their responsibilities are substantially reduced, in connect=
ion
with a change in control of the Company.&n=
bsp;
We believe that these agreements help to reinforce and encourage the=
continued
attention and dedication of our executive officers to the Company in the ev=
ent
they are asked to help facilitate a change in control.
Under
the change in control agreements, our executive officers would receive bene=
fits
equal to two times their base salaries and annual bonuses, plus ancillary
benefits relating to life and disability insurance, medical and dental cove=
rage
and employment outplacement services.
The change in control agreements utilize a “double-triggerR=
21;
mechanism because we believe that our executive officers should only receive
these benefits if they suffer a reduction in employment status associated w=
ith
a change in control. The agre=
ements
also include “gross-up” provisions that would compensate our
executive officers for any taxes they might owe in connection with receipt =
of
these benefits.
We
believe that the terms of the change in control agreements for our executive
officers are reasonable and appropriate for a small company with new and
exciting technologies such as ours.
More detailed information about these agreements and the specific
benefits and compensation payable to our executive officers in connection w=
ith
a change in control are set forth elsewhere in this proxy statement.
Tax Consequences of Our Compensation Program
Internal Reve=
nue
Code §162(m)
In determining the to=
tal
compensation payable to our executive officers, we considered the potential
impact of Section 162(m) of the Internal Revenue Code (the
“IRC”). Section 1=
62(m)
disallows any publicly-held corporation from taking a tax deduction for
compensation in excess of $1 million paid to its executive officers in any
taxable year, unless that compensation is performance-based. Our policy is that executive
compensation qualify for deductibility under applicable tax laws to the ext=
ent
consistent with our overall compensation objectives. For 2008, Sect=
ion
162(m) did not limit the deductibility of the compensation paid to any of o=
ur
executive officers.
Internal Reve=
nue
Code §409A
Section 4=
09A of
the IRC provides that nonqualified deferred compensation benefits are inclu=
dible
in an employee’s income when vested, unless certain requirements are
met. If these requirements ar=
e not
met, employees are also subject to an additional income tax and interest.
Internal Reve=
nue
Code §280G
Section 2= 80G of the IRC disallows a company’s tax deduction for “excess parachu= te payments.” Additionally, Section 4999 of the IRC imposes a 20% excise tax on any person who receives excess parachute payments. Presently, all of our executive officers are entitled to payments up= on the termination of their employment following a change in control of the Company, some of which may qualify as “excess parachute payments.” Accordingly,= our tax deduction for any such excess parachute payments would be disallowed un= der Section 280G of the IRC. More= over, we are required to make additional payments to these individuals to cover any excise taxes imposed on them by reason of the payments they receive in connection with a change in control. As previously indica= ted, we believe that this tax “gross-up” obligation is reasonable and appropriate given our current size and status.<= o:p>
Summary Compensation Table
The following table
provides information on the compensation of our Chief Executive Officer, our
Chief Financial Officer and our other executive officers for services in all
capacities to the Company and its subsidiaries for 2008, 2007 and 2006. This group is referred to in this =
proxy
statement as the “Named Executive Officers.”
|
Name and Principal Position |
Year |
Salary
($) |
Bonus ($) |
St=
ock Awards
($) |
Op=
tion
Awards ($) |
Al=
l Other Compensation
($) |
Total ($) |
|
Sherwin
I. Seligsohn………….. |
2008 |
295,931 |
––– |
331,989(2) |
––– |
20,573(3) |
648,493 |
|
2007 |
279,404 |
––– |
264,960(4) |
––– |
19,673(5) |
564,037 |
|
|
2006 |
263,796 |
––– |
200,000(6) |
2,338(7) |
20,564(8) |
486,698 |
|
|
Steven
V. Abramson………….. |
2008 |
489,149 |
––– |
547,982(2) |
––– |
25,303(9) |
1,062,433 |
|
2007 |
461,829 |
––– |
447,423(4) |
––– |
28,418(10) |
937,670 |
|
|
2006 |
436,030 |
––– |
350,000(6) |
––– |
23,185(11) |
809,215 |
|
|
Sidney
D. Rosenblatt………….. |
2008 |
489,149 |
––– |
547,982(2) |
––– |
34,166(12) |
1,071,296 |
|
2007 |
461,829 |
––– |
447,423(4) |
––– |
32,984(13) |
942,236 |
|
|
2006 |
436,030 |
––– |
350,000(6) |
––– |
27,220(14) |
813,250 |
|
|
Julia
J. Brown, Ph.D…………... |
2008 |
326,553 |
––– |
361,995(2)(15) |
––– |
9,023(16) |
697,572 |
|
2007 |
289,002 |
––– |
289,957(4) |
1,790(17) |
8,283(18) |
589,032 |
|
|
2006 |
272,657 |
25,000(19) |
200,000(6) |
2,239(20) |
8,508(21) |
508,404 |
|
|
Janice
K. Mahon…………... |
2008 |
243,032 |
––– |
124,591(2) |
––– |
9,106(22) |
376,729 |
|
2007 |
––– |
––– |
––– |
––– |
––– |
––– |
|
|
2006 |
––– |
––– |
––– |
––– |
––– |
––– |
_______________
(1) <=
/span>Effective
as of January 1, 2008, Mr. Seligsohn was appointed to the newly-created off=
icer
position of Founder and Chairman of the Board, and Mr. Abramson was named o=
ur
President and Chief Executive Officer.
(2) <=
/span>This
amount reflects the compensation expense recognized by the Company for 2008
with respect to all stock awards to the Named Executive Officers, regardles=
s of
the date made or the compensation year to which they relate. The amount includes the 2008 expen=
se
associated with unrestricted shares of common stock granted to the Named
Executive Officer on January 6, 2009, and restricted shares of common stock
granted to the Named Executive Officer on January 9, 2007 and
January 9, 2008, portions of which grants vested on January 9,
2009. With respect to all awa=
rds,
shares of common stock were withheld for the payment of associated payroll
taxes. These awards are discu=
ssed
in greater detail in the section of this proxy statement entitled
“Compensation Discussion and Analysis,” under the headings
“Annual bonus equity compensation awards” and “Long-term
incentive equity compensation awards.”
(3) <=
/span>Based
on (a) auto expense reimbursements and allowance of $1,064; (b) life and
disability insurance premium payments of $12,609; and (c) 401(k) plan
contributions of $6,900.
(4) <=
/span>This
amount reflects the compensation expense recognized by the Company for 2007=
with
respect to all stock awards to the Named Executive Officers, regardless of =
the
date made or the compensation year to which they relate. The amount includes the 2007 expen=
se
associated with unrestricted shares of common stock granted to the Named
Executive Officer on January 9, 2008, and restricted shares of common stock
granted to the Named Executive Officer on January 9, 2007, portions of
which grants vested on January 9, 2008. With respect to all awards, shares=
of
common stock were withheld for the payment of associated payroll taxes. These awards are discussed in grea=
ter
detail in the section of this proxy statement entitled “Compensation
Discussion and Analysis,” under the headings “Annual bonus equi=
ty
compensation awards” and “Long-term incentive equity compensati=
on
awards.”
(5) <=
/span>Based
on (a) auto expense reimbursements and allowance of $919; (b) life and
disability insurance premium payments of $12,004; and (c) 401(k) plan
contributions of $6,750.
(6) <=
/span>This
amount reflects the compensation expense recognized by the Company for 2006
with respect to all stock awards to the Named Executive Officers, regardles=
s of
the date made or the compensation year to which they relate. The amount includes the 2006 expen=
se
associated with unrestricted shares of common stock granted to the Named
Executive Officer on January 9, 2007.
With respect to all awards, shares of common stock were withheld for=
the
payment of associated payroll taxes.
These awards are discussed in greater detail in the section of this
proxy statement entitled “Compensation Discussion and Analysis,”
under the heading “Annual bonus equity compensation awards.”
(7) <=
/span>FAS
123R grant date value of 250 stock options, with an exercise price of $12.40
per share, granted on June 20, 2006 as a bonus for the issuance of a U.S.
patent that was assigned to the Company.
(8) <=
/span>Based
on (a) auto expense reimbursements of $570; (b) life and disability insuran=
ce
premium payments of $13,394; and (c) 401(k) plan contributions of $6,600.
(9) <=
/span>Based
on (a) auto expense reimbursements and allowance of $7,045; (b) life and
disability insurance premium payments of $11,358; and (c) 401(k) plan
contributions of $6,900.
(10) =
Based
on (a) auto expense reimbursements and allowance of $7,927; (b) life and
disability insurance premium payments of $13,741; and (c) 401(k) plan
contributions of $6,750.
(11) =
Based
on (a) auto expense reimbursements and allowance of $3,957; (b) life and
disability insurance premium payments of $12,628; and (c) 401(k) plan
contributions of $6,600.
(12) =
Based
on (a) auto expense reimbursements and allowance of $7,559; (b) life and
disability insurance premium payments of $19,707; and (c) 401(k) plan
contributions of $6,900.
(13) =
Based
on (a) auto expense reimbursements and allowance of $8,743; (b) life and
disability insurance premium payments of $17,491; and (c) 401(k) plan
contributions of $6,750.
(14) =
Based
on (a) auto expense reimbursements and allowance of $2,983; (b) life and
disability insurance premium payments of $17,637; and (c) 401(k) plan
contributions of $6,600.
(15) =
Also
based on (a) 24 shares of common stock granted on June 19, 2008 as a bonus =
for
the issuance of a U.S. patent application that was assigned to the Company;=
(b)
64 shares of common stock granted on November 4, 2008 as a bonus for the
issuance of two U.S. patent applications that were assigned to the Company;=
(c)
39 shares of common stock granted on December 18, 2008 as a bonus for the
issuance of a U.S. patent application that was assigned to the Company; and=
(d)
51 shares of common stock withheld for payment of $569 in associated payroll
taxes.
(16) =
Based
on (a) life and disability insurance premium payments of $2,123; and (b) 40=
1(k)
plan contributions of $6,900.
(17) =
FAS
123R grant date value of 250 stock options, with an exercise price of $14.16
per share, granted on January 15, 2007 as a bonus for the issuance of a
U.S. patent that was assigned to the Company.
(18) =
Based
on (a) life and disability insurance premium payments of $1,533; and (b) 40=
1(k)
plan contributions of $6,750.
(19) =
Cash
bonus in recognition of being named a Fellow of the Institute of Electrical=
and
Electronics Engineers.
(20) =
FAS
123R grant date value of 250 stock options, with an exercise price of $11.89
per share, granted on January 17, 2006 as a bonus for the filing of a =
U.S.
patent application that was assigned to the Company.
(21) =
Based
on (a) life insurance premium payments of $1,908; and (b) 401(k) plan
contributions of $6,600.
(22) =
Based
on (a) life and disability insurance premium payments of $2,206; and (b) 40=
1(k)
plan contributions of $6,900.
Compensation to =
each
of the named executive officers for 2008, 2007 and 2006 consisted of the
following:
·
Base salary=
, paid
in cash;
·
In the case=
of
Dr. Brown, a cash bonus for 2006 in recognition of her having been named a
Fellow of the Institute of Electrical and Electronics Engineers;
·
Discretiona=
ry
awards of common stock granted as performance bonuses for 2008 on January 6,
2009, for 2007 on January 9, 2008, and for 2006 on January 9, 2007;
·
Discretiona=
ry
awards of restricted common stock granted as long-term incentive equity
compensation on January 9, 2008 and January 9, 2007, the portion of such aw=
ards
considered as compensation for 2007 having vested on January 9, 2008, =
and
the portion of such awards considered as compensation for 2008 having veste=
d on
January 9, 2009;
·
In the case=
of
Mr. Seligsohn and Dr. Brown, unrestricted stock and/or stock option awards
granted as bonuses for the filing of U.S. patent applications or the issuan=
ce
of U.S. patents on which they are named inventors, and with respect to which
the Company is the assignee; and
·
Perquisites=
in
the form of auto expense allowances and reimbursements, life and disability
insurance premium payments, and 401(k) plan matching contributions.
Grants of Plan-Based Awards Table<= o:p>
The following ta=
ble
summarizes each grant of an award made to a Named Executive Officers in 200=
8.
|
Name |
Gr=
ant Date |
Al=
l Other
Stock Awards: Number of Shares of Stock (#) |
Al=
l Other
Option Awards: Number of Securities Underlying Options (#) |
Ex=
ercise
or Base Price of Option Awards ($/Share) |
Gr=
ant Date
Fair Value of Stock and Option Awards ($) |
|
Sherwin
I. Seligsohn…. |
1/9/2008 |
21,810(1) |
––– |
––– |
399,995 |
|
Steven
V. Abramson…. |
1/9/2008 |
35,440(2) |
––– |
––– |
649,970 |
|
Sidney
D. Rosenblatt…. |
1/9/2008 |
35,440(2) |
––– |
––– |
649,970 |
|
Julia
J. Brown, Ph.D….. |
1/9/2008 |
23,173(3) |
––– |
––– |
424,993 |
|
Janice
K. Mahon…....... |
1/9/2008 |
7,633(4) |
––– |
––– |
139,989 |
|
Julia
J. Brown, Ph.D….. |
6/19/2008 |
34(5) |
––– |
––– |
490 |
|
Julia
J. Brown, Ph.D….. |
11/4/2008 |
90(6) |
––– |
––– |
989 |
|
Julia
J. Brown, Ph.D….. |
12/18/2008 |
54(7) |
––– |
––– |
500 |
_______________
(1) <=
/span>Consists
of (a) an award of 10,905 immediately vesting shares of common stock, with a
certificate for 7,379 of these shares having been issued and the remaining
shares having been withheld for payment of associated payroll taxes; and (b=
) an
award of 10,905 shares of restricted common stock, which shares vest in equ=
al
increments over the first three anniversaries of the grant date, provided t=
hat
the grantee is an employee of the Company at such time. (2) Consists of (a) an award of 1=
9,083
immediately vesting shares of common stock, with a certificate for 13,167 of
these shares having been issued and the remaining shares having been withhe=
ld
for payment of associated payroll taxes; and (b) an award of 16,357 shares =
of
restricted common stock, which shares vest in equal increments over the fir=
st
three anniversaries of the grant date, provided that the grantee is an empl=
oyee
of the Company at such time. (3) Consists of (a) an award of 1=
2,268
immediately vesting shares of common stock, with a certificate for 8,341 of
these shares having been issued and the remaining shares having been withhe=
ld
for payment of associated payroll taxes; and (b) an award of 10,905 shares =
of
restricted common stock, which shares vest in equal increments over the fir=
st
three anniversaries of the grant date, provided that the grantee is an empl=
oyee
of the Company at such time. (4) Consists of (a) an award of 4=
,362
immediately vesting shares of common stock, with a certificate for 2,660 of
these shares having been issued and the remaining shares having been withhe=
ld
for payment of associated payroll taxes; and (b) an award of 3,271 shares of
restricted common stock, which shares vest in equal increments over the fir=
st
three anniversaries of the grant date, provided that the grantee is an empl=
oyee
of the Company at such time. (5) Consists of an award of 34
immediately vesting shares of common stock, with a certificate for 24 of th=
ese
shares having been issued and the remaining shares having been withheld for
payment of associated payroll taxes. (6) Consists of an award of 90
immediately vesting shares of common stock, with a certificate for 64 of th=
ese
shares having been issued and the remaining shares having been withheld for
payment of associated payroll taxes. (7) Consists of an award of 54
immediately vesting shares of common stock, with a certificate for 39 of th=
ese
shares having been issued and the remaining shares having been withheld for
payment of associated payroll taxes. Grants of plan-b=
ased
awards to each of the named executive officers in 2008 consisted of the
following: ·
Discretiona=
ry
awards of common stock granted as performance bonuses for 2007; ·
Discretiona=
ry
awards of restricted common stock granted as long-term incentive equity
compensation, with one-third of the award being considered compensation for
each of the years 2008, 2009 and 2010; and ·
In the case=
of
Dr. Brown, stock awards granted as bonuses for the filing of U.S. patent ap=
plications
on which she is a named inventor, and with respect to which the Company is =
the
assignee. Outstanding Equity Awards at Fiscal
Year-End Table The following ta=
ble
summarizes the outstanding equity awards to the Named Executive Officers as=
of
December 31, 2008. Name Option Awards Stock Awards Nu=
mber of
Securities Underlying Unexercised Options (#) Op=
tion
Exercise Price ($) Op=
tion Expiration
Date Nu=
mber of
Shares of Stock that Have Not Vested (#) Ma=
rket
Value of Shares of Stock that Have Not Vested ($) Sherwin I. Seligsohn…….=
.. 30,000 3.875 10/12/2009 15,000 9.4375 12/14/2010 20,000 10.3125 3/30/2011 40,250 8.56 12/17/2011 40,000 5.45 9/23/2012 250 6.65 1/24/2013 40,000 16.94 1/20/2014 50,000 8.14 1/18/2015 50,000 10.51 12/30/2015 250 12.40 6/20/2016 20,031 189,293 Steven V. Abramson……...=
30,000 3.875 10/12/2009 15,000 9.4375 12/14/2010 20,000 10.3125 3/30/2011 40,000 8.56 12/17/2011 40,000 5.45 9/23/2012 40,000 16.94 1/20/2014 50,000 8.14 1/18/2015 50,000 10.51 12/30/2015 30,045 283,925 Sidney D. Rosenblatt…….=
. 30,000 3.875 10/12/2009 15,000 9.4375 12/14/2010 20,000 10.3125 3/30/2011 40,000 8.56 12/17/2011 40,000 5.45 9/23/2012 40,000 16.94 1/20/2014 50,000 8.14 1/18/2015 50,000 10.51 12/30/2015 30,045 283,925 Julia J. Brown, Ph.D…….=
.. 15,000 3.875 10/12/2009 90,000 16.75 4/18/2010 10,000 24.375 6/21/2010 10,000 9.4375 12/14/2010 250 10.375 2/15/2011 20,000 10.3125 3/30/2011 500 13.90 4/19/2011 30,000 8.56 12/17/2011 250 9.10 4/15/2012 30,000 5.45 9/23/2012 250 9.94 11/18/2012 250 9.60 6/16/2013 30,000 16.94 1/20/2014 500 13.28 4/20/2014 250 10.07 11/23/2014 40,250 8.14 1/18/2015 500 9.43 6/7/2015 40,000 10.51 12/30/2015 250 11.89 1/17/2016 250 14.16 1/15/2017 20,031 189,293 Janice K. Mahon……...….. 7,500 3.875 10/12/2009 7,500(1) 9.4375 12/14/2010 15,000(1) 10.3125 3/30/2011 17,500 8.56 12/17/2011 17,500 5.45 9/23/2012 10,000 13.92 12/23/2013 15,000 8.14 1/18/2015 20,000 10.51 12/30/2015 6,008 56,776 (1) Ms. Mahon has a pecuniary int=
erest
in only one-half of these stock options. Opti=
on
Exercises and Stock Vested Table The following table
summarizes the exercises of stock options, SARs and other similar instrumen=
ts,
and the vesting of stock, including restricted stock, restricted stock units
and similar instruments, for the Named Executive Officers during 2008. Name Nu=
mber of
Shares Acquired on Exercise (#) Va=
lue
Realized on Exercise(1)<=
/sup> ($) Nu=
mber of
Shares Acquired on Vesting (#) Va=
lue
Realized on Vesting(2)<=
/sup> ($) Sherwin
I. Seligsohn………. 20,000 85,000 4,563 83,685 Steven
V. Abramson………. 20,000 85,000 6,845 125,537 Sidney
D. Rosenblatt………. 20,000 85,000 6,845 125,537 Julia
J. Brown, Ph.D ………. 40,000 278,868 4,563 83,685 Janice
K. Mahon…………... ––– ––– 1,369 25,107 _______________ (1) Based on the difference betwe=
en the
closing price of our common stock on the NASDAQ Global Market on the date of
exercise and the exercise price of the stock options or warrants exercised.=
(2) Based on the closing price of=
our
common stock on the NASDAQ Global Market on the date of vesting. Potential Payments Upon Termination or
Change-in-Control In April 2003, the Co=
mpany
entered into Change in Control Agreements with the Named Executive Officers
(the “Original CIC Agreements”). These agreements provided for cert=
ain
cash payments and other benefits to the Named Executive Officers in the eve=
nt
of an effective termination of these individuals’ employment in
connection with a “Change in Control” of the Company. In November 2008, the Original CIC
Agreements were amended and restated to bring them into compliance with Sec=
tion
409A of the Internal Revenue Code of 1986, as amended, and regulations issu=
ed
thereunder. At the same time,=
the
Original CIC Agreement with Ms. Mahon was amended to ensure that she would =
be
treated the same as our other Named Executive Officers in the event of a
termination of her employment for a Change in Control. Under the Amended and Restated CIC
Agreements (the “Amended CIC Agreements”), the benefits to which
our Named Executive Officers would be entitled in the event of a terminatio=
n of
employment for a Change in Control =
include
the following: ·
a lump-sum
payment equal to two times the sum of the average annual base salary and the
annual bonus to the individual, including any authorized deferrals, salary
reduction amounts and any car allowance, and including the fair market doll=
ar
value equivalent of any bonus amounts paid in the form of stock options, st=
ock
appreciation rights, warrants, stock awards or performance units; ·
a lump-sum
payment equal to the estimated after-tax premium cost to the individual of
continuing any Company-sponsored life, travel or accident insurance and
disability insurance coverage for the individual (and where applicable, his=
or
her spouse and dependents), based on coverage levels in effect immediately
prior to the termination date (less any contributions that would have been
required by the individual), for two years; ·
a lump-sum
payment equal to the Company-provided contributions to which the individual
would be entitled under the Company’s 401(k) savings and retirement p=
lans,
assuming the individual continued working for the Company for two years at =
his
or her annual base salary; ·
effective
immediately preceding the Change in Control (but contingent upon the
consummation of the Change in Control), full vesting of all outstanding,
unvested equity awards held by the individual immediately preceding the Cha=
nge
in Control that have not yet become vested (and exercisable to the extent
applicable), except that awards which vest based on the attainment of
performance criteria would not automatically vest but would instead be gove=
rned
by the terms of the plan or agreement evidencing the award; ·
continued g=
roup
hospitalization, health and dental care coverage, at the level in effect as=
of
the termination date (or generally comparable coverage) for the individual =
and,
where applicable, the individual’s spouse and dependents, for two yea=
rs
assuming the individual continued working for the Company; ·
a lump-sum
payment equal to $10,000 for outplacement assistance services for two years;
and ·
an addition=
al
payment to cover any excise tax imposed on the individual by reason of the
individual receiving the payments and benefits specified above. For each of the Named
Executive Officers, the estimated payments and benefits that would be provi=
ded
by the Company under the Amended CIC Agreements are set forth in the follow=
ing
table, based on the assumption that a triggering event took place on Decemb=
er
31, 2008. Name Lu=
mp Sum
Payment of Two Times Annual Base Salary(1) ($) Lu=
mp Sum
Payment of Two Times Annual Bonus(2)
($) Lu=
mp Sum
Payment for Accrued and Unused Paid Time Off and Sick Time ($) Lu=
mp Sum
Payment of Estimated After-Tax Cost to Continue Life, Travel and Disabil=
ity
Insurance for Two Years ($) Lu=
mp Sum
Payment of Estimated Contribu-tions Under 401(k) Savings and Retirement
Plans for Two Years($) Es=
timated
Value of Ongoing Payments to Continue Group Hospitaliza-tion, Health and
Dental Coverage for Two Years ($) Es=
timated
Value of Unvested Stock Options and Stock Awards Subject to Accelerated =
Vesting(3) ($) Pa=
yment
for Outplace-ment Assistance Services ($) Va=
lue of
Tax Reimburse-ment Payments on Account of Excise or Other Taxes ($) To=
tal
Payments and Benefits ($) Sherwin I. Seligso=
hn 571,511 1,224,135 69,571 25,168 14,700 10,539 189,293 10,000 ––– 2,114,917 Steven
V. Abramson 1,008,601 1,524,135 114,994 26,770 14,700 32,249 283,925 10,000 ––– 3,015,374 Sidney
D. Rosenblatt 1,008,601 1,524,135 68,996 37,502 14,700 32,249 283,925 10,000 ––– 2,980,108 Julia
J. Brown, Ph.D. 700,000 1,059,308 80,770 4,691 14,700 24,751 189,293 10,000 732,728 2,816,241 Janice
K. Mahon 482,370 445,654 39,006 4,550 14,700 32,478 56,776 10,000 345,857 1,431,391 _______________ (1) Under the Amended CIC Agreeme=
nts,
this is to be based on the highest monthly base salary paid or payable to t=
he
employee during the twenty-four (24) months prior to December 31, 2008,
including any amounts earned but deferred.=
It is also to include any annual car allowance. For purposes of this calculation, =
the
employee’s bi-weekly salary as of the payment period ended on Decembe=
r 19,
2008 was utilized. Also, an a=
nnual
car allowance of $6,000 is included for each of Mr. Abramson and Mr.
Rosenblatt. (2) Under the Amended CIC Agreeme=
nts,
this is to be based on the highest annual bonus to the employee for the last
three full fiscal years prior to December 31, 2008, and is to include =
the
fair market dollar value equivalent of any stock, restricted stock or stock
options issued as bonus consideration, determined as of the date of issuance
and without regard to any restrictions or vesting conditions. For purposes of this calculation, =
the
employee’s 2005 annual bonus was utilized. (3) Assumes all unvested or restr=
icted
stock options and stock awards automatically vest on a Change of Control.
Exercisable
In consideration of
receiving these payments and benefits, each Named Executive Officer has agr=
eed
not to compete with the Company for six months following his or her termina=
tion
in connection with a Change in Control.&nb=
sp;
Each Named Executive Officer has further agreed that, for two years
following his or her termination he or she will not knowingly (i) solicit or
recruit any of the Company’s employees to compete with the Company, or
(ii) divert or unreasonably interfere with the Company’s business
relationships with any of its suppliers, customers, partners or joint ventu=
rers
with whom the individual had any involvement. In addition, each Named Executive
Officer is required to execute a general release of all employment-related
claims he or she may have against the Company in order to receive the payme=
nts
and benefits specified under the Amended CIC Agreements.
As used in the Amende=
d CIC
Agreements, a Change in Control of the Company would occur if:
· =
any person =
first
becomes the beneficial owner of securities of the Company (not including
securities previously owned by such persons or any securities acquired dire=
ctly
from the Company) representing 30% or more of the then-outstanding voting
securities of the Company;
· =
the individ=
uals
who constitute our Board of Directors at the beginning of any 24-month peri=
od
cease, for any reason other than death, to constitute at least a majority of
our Board of Directors;
· =
the Company
consummates a merger or consolidation with any other corporation, except wh=
ere
the voting securities of the Company outstanding immediately prior to the
merger or consolidation continue to represent at least 50% of the voting
securities of the Company (or the surviving entity of the merger or
consolidation or its parent), or where no person first becomes the benefici=
al
owner of securities of the Company representing 30% or more of the
then-outstanding voting securities of the Company;
· =
the shareho=
lders
of the Company approve a plan of complete liquidation or dissolution of the
Company, or an agreement is consummated for the sale or disposition by the =
Company
of all or substantially all of its assets, excluding a sale or disposition =
by
the Company of all or substantially all of its assets to an entity, at least
50% of the voting securities of which are owned by persons in substantially=
the
same proportion as their ownership of the Company immediately prior to the
sale; or
· =
any person
consummates a tender offer or exchange for voting stock of the Company and,
directly or indirectly, becomes (in one or more transactions) the
“beneficial owner” of securities of the Company representing a
majority of the voting securities of the Company.
As used in the Amende=
d CIC
Agreements, a termination of a Named Executive Officer in connection with a
Change in Control of the Company would include a termination of the individ=
ual’s
employment:
· =
by the Comp=
any at
the time of or within two years after a Change in Control, other than for t=
he
individual’s death or incapacity for a period of 12 consecutive month=
s,
or for cause;
· =
by the indi=
vidual
within two years after a Change in Control for (i) the Company’s brea=
ch
of the Amended CIC Agreement or any other material obligation of the Compan=
y to
the individual, (ii) any significant reduction by the Company of the
individual’s authority, duties or responsibilities, (iii) any demotio=
n or
removal of the individual from his or her employment grade, compensation le=
vel
or officer positions, or (iv) a relocation by more than 50 miles of the off=
ices
of the Company at which the individual principally works; and
· =
by either t=
he
Company or the individual during the one year period immediately preceding =
a Change
in Control, unless the Company establishes by clear and convincing evidence
that the termination was for good faith business reasons not related to the=
Change
in Control.
Compensation of Directors
The following table
provides information on the compensation of members of our Board of Directo=
rs
(who are not Named Executive Officers) for 2008.
|
Name |
Fe=
es
Earned or Paid in Cash ($) |
St=
ock Awards
($) |
Op= tion Awards(1) ($)<= o:p> |
Al=
l Other Compensation
($) |
Total
($) |
|
Leonard
Becker………. |
44,310 |
94,764(2) |
––– |
––– |
139,074 |
|
Elizabeth
H. Gemmill... |
44,310 |
94,764(2) |
––– |
––– |
139,074 |
|
C.
Keith Hartley……… |
44,310 |
94,764(2) |
––– |
––– |
139,074 |
|
Lawrence
Lacerte…….. |
44,310 |
94,764(2) |
––– |
––– |
139,074 |
_______________
(1) <=
/span>The
aggregate numbers of shares issuable to each director upon the exercise of
options outstanding as of December 31, 2008 were as follows: Mr. Becker – 105,000 shares;=
Ms.
Gemmill – 140,000 shares; Mr. Hartley – 130,000 shares; and Mr.
Lacerte – 0 shares. The=
re
were no restricted stock awards to any of our directors outstanding as of
December 31, 2008.
(2) This amount reflects the compensation expense
recognized by the Company for 2008 with respect to all stock awards to the
named director. The amount includes the 2008 expense associated with unrest=
ricted
share awards to the named director that were approved on December 18, 2007 =
and
December 18, 2008.
Compensation to =
each non-employee
member of the Board of Directors for 2008 consisted of the following:
·
Director fe=
es,
paid in cash; and
·
Stock awards
recommended by the Compensation Committee and approved on December 18, 2007=
. These awards were granted in quart=
erly
installments at the end of each calendar quarter during 2008.
Committee chairperson=
s did
not receive any additional fees or other compensation for service in this
capacity. In addition to the
foregoing amounts, we reimbursed members of our Board of Directors for their
reasonable travel expenses to attend all Board and committee meetings in 20=
08.
PROPOSAL
2
APPROVAL OF THE COMPANY’S 20=
09
EMPLOYEE STOCK PURCHASE PLAN
On April 7, 2009, our Board of Directors adopted=
the
Universal Display Corporation 2009 Employee Stock Purchase Plan (the “=
;Stock
Purchase Plan”), subject to shareholder approval. If approved by our shareholders, t=
he Stock
Purchase Plan will be effective on June 25, 2009.
Our Board of Directors believes it is in our best
interests and the interests of our shareholders to adopt the Stock Purchase
Plan. The Stock Purchase Plan=
is
intended to encourage ownership in our common stock by eligible employees a=
nd
to provide an additional incentive for them to promote the success of our
business. Shareholder approva=
l of
the Stock Purchase Plan is necessary in order for the Stock Purchase Plan to
meet the requirements of Section 423 of the Internal Revenue Code and to co=
mply
with the listing maintenance standards of the NASDAQ Global Market.
Vote Required and Recommendati=
on
of our Board of Directors
This proposal will be approved= if a majority of the votes cast by all shareholders, voting as a single class,= are FOR approval. Abstentions on = this proposal are not considered “votes cast” and will have no effec= t on the outcome of the vote. Simi= larly, broker non-votes are not considered “votes cast” with respect to this proposal and, therefore, will have no effect on the outcome of the vot= e.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR”
ADOPTION OF THIS PROPOSAL 2.
The material terms of the Stock Purchase Plan are
summarized below. A copy of t=
he
full text of the Stock Purchase Plan is attached to this Proxy Statement as=
Exhibit
A. This summary of the Stock
Purchase Plan is not intended to be a complete description of the Stock
Purchase Plan and is qualified in its entirety by the actual text of the St=
ock
Purchase Plan to which reference is made.
Summary =
of the
2009 Employee Stock Purchase Plan
The Stock Purchase Plan allows emplo=
yees
of our Company and its subsidiaries to purchase shares of our common stock =
at
up to a 15% discount through payroll deductions. The purpose of the Stock Purchase =
Plan
is to provide participating employees with the opportunity to acquire an
ownership interest in us. The=
se
ownership interests are designed to provide an incentive for participants to
help increase our success and provide an opportunity to share in that succe=
ss
as we continue to shape the future of OLED technologies and materials.
The Stock Purchase Plan is administered by our
Compensation Committee, or another committee appointed by our Board of
Directors for such purpose. T=
his
committee will have full discretionary authority to interpret and construe =
any
provision of the Stock Purchase Plan and to adopt such rules and regulations
for administering the Stock Purchase Plan as it deems necessary. All references in the Plan to the =
Plan
Administrator refer to this committee.
We have reserved 1,000,000 shares of our common =
stock
for issuance under the Stock Purchase Plan, subject to adjustments in certa=
in
circumstances described below. In the
event of stock splits, stock dividends, recapitalizations, combination of
shares, exchange of shares and other events affecting our common stock, the
Plan Administrator shall make such adjustments as it deems appropriate to t=
he
maximum number and class of securities issuable under the Stock Purchase Pl=
an,
the maximum number and class of securities purchasable per participant on a=
ny
purchase date, and the number and class of securities and the price per sha=
re
in effect under each outstanding option, in order to prevent the dilution or
enlargement of benefits.
Each of our employees and employees of our
subsidiaries that adopt the Stock Purchase Plan who are regularly scheduled=
to
work more than 20 hours per week and for more than five months per calendar=
year
will be eligible to participate in the Stock Purchase Plan. Under the requirements of the Inte=
rnal
Revenue Code, an employee who owns 5% or more of the total combined voting
power of all classes of our stock is not eligible to participate. For purposes of determining who is=
a 5%
owner, attribution of ownership rules apply, and shares of stock subject to
outstanding options are taken into account.
Under the Stock Purchase Plan, there will be a
series of consecutive purchase periods.&nb=
sp;
The first purchase period will begin on July 1, 2009 and will end on=
September
30, 2009, subject to shareholder approval of the Stock Purchase Plan. Unless the Plan Administrator dete=
rmines
otherwise prior to the beginning of a purchase period, each subsequent purc=
hase
period will begin at three-month intervals on each January 1, April 1, July=
1
and October 1 and will last for three months, ending on March 31, June 30,
September 30 or December 31, as the case may be.
Each eligible employee who elects to participate=
in a
purchase period will be granted an option to purchase shares of our common
stock on the first day of the purchase period. The option will automatically be
exercised on the last day of the purchase period, which is the purchase dat=
e,
based on the employee’s accumulated contributions to the Stock Purcha=
se
Plan. The purchase price of e=
ach
share of our common stock under the Stock Purchase Plan will be equal to 85=
% of
the lesser of the price per share of our common stock on the first day of t=
he purchase
period or the price of our common stock on the last day of the purchase per=
iod. Participants will generally be per=
mitted
to allocate up to 10% of their compensation to purchase our common stock un=
der
the Stock Purchase Plan.
Participants may stop their participation in the= Stock Purchase Plan at any time during any purchase period. A participant who elects to cease participation in the Stock Purchase Plan for a particular purchase period m= ay not rejoin that purchase period at a later date. Participation ends automatically u= pon termination of employment or if the participant ceases to be an eligible employee for any reason (including death, disability or change in status).<= o:p>
The maximum number of shares that a participant =
may
purchase on any purchase date may not exceed 12,500 shares, subject to
adjustment by the Plan Administrator prior to the beginning of the purchase
period and subject to share adjustments as described above. In addition, no participant may pu=
rchase
more than $25,000 of our common stock during each calendar year under the S=
tock
Purchase Plan.
If we experience a change of control while the S=
tock
Purchase Plan is in effect, all outstanding options under the Stock Purchase
Plan will automatically be exercised immediately prior to the effective dat=
e of
the change of control. The pu=
rchase
price for each share of our common stock under the Stock Purchase Plan on s=
uch
purchase date will be equal to 85% of the lesser of the price per share of =
our common
stock on the first day of the purchase period or the price per share of our
stock immediately prior to the change of control. If a change of control occurs, the
limitation on the aggregate number of shares that a participant may purchas=
e on
any given purchase date will continue to apply.
In general terms, a change of control under the
Stock Purchase Plan means the occurrence of any one of the following events=
:
Our Board of Director=
s may
amend or terminate the Stock Purchase Plan at any time. Our Board of Directors may not ame=
nd the
Stock Purchase Plan without shareholder approval if such amendment increases
the number of shares of our common stock issuable under the Stock Purchase
Plan, except for permissible adjustments in the event of changes in our
capitalization, alters the purchase price formula to reduce the purchase pr=
ice
payable for shares purchasable under the Stock Purchase Plan, or modifies t=
he
eligibility requirements under the Stock Purchase Plan.
Unless sooner termina=
ted by
our Board of Directors, the Stock Purchase Plan will terminate upon the
earliest of (i) the date on which all shares available for issuance under t=
he
Stock Purchase Plan have been issued; or (ii) the date on which all options=
are
exercised in connection with a change of control.
No options have been
granted under the proposed Stock Purchase Plan. It is not possible at present to p=
redict
the number of employees who will elect to participate in the Stock Purchase
Plan, or which employees will elect to participate in the Stock Purchase Pl=
an
after the Annual Meeting.
The last sales price =
of our
common stock on April 9, 2009, was $10.13 per share.
Federal Income Tax
Consequences of the Plan
The following is a br=
ief
description of the U.S. federal income tax consequences generally arising w=
ith
respect to options that may be awarded under the Stock Purchase Plan. The Stock Purchase Plan is intende=
d to
qualify as an employee stock purchase plan within the meaning of Section 42=
3 of
the Internal Revenue Code. The
Stock Purchase Plan is not intended to qualify under Section 401 of the
Internal Revenue Code and is not subject to the requirements of the Employee
Retirement Income Security Act of 1974, as amended. This description of the federal in=
come
tax consequences of the Stock Purchase Plan is not a complete description.<=
span
style=3D'mso-spacerun:yes'> There may be different tax consequ=
ences
under certain circumstances, and there may be federal gift and estate tax
consequences and state, local and foreign tax consequences. All affected individuals should co=
nsult
their own advisors regarding their own situation. This discussion is intended for the
information of the shareholders considering how to vote at the Annual Meeti=
ng
and not as tax guidance to individuals who will participate in the Stock
Purchase Plan.
Under the Internal Re=
venue
Code as currently in effect, a participant in the Stock Purchase Plan will =
not
be deemed to have recognized income, nor will we be entitled to a deduction,
upon the participant’s purchase of our common stock under the Stock
Purchase Plan. Instead, a
participant will recognize income when he or she sells or otherwise dispose=
s of
our common stock or upon his or her death.
If a participant sell=
s our
common stock purchased under the Stock Purchase Plan more than two years af=
ter
the date on which the option to purchase our common stock was granted and m=
ore
than one year after the purchase of our common stock (the holding period), a
portion of the participant’s gain will be ordinary income and a porti=
on
will be capital gain. The
participant will be taxed at ordinary income tax rates on the excess of the
value of our common stock on the date on which the option was granted (on t=
he
first day of the purchase period) over the purchase price, or, if less, the
entire gain on the sale. The
participant will have additional capital gain or loss equal to the differen=
ce,
if any, between the proceeds of the sale and the participant’s basis =
in
our common stock (the purchase price plus any ordinary income realized).
If a participant sell=
s our
common stock before the expiration of the holding period, the participant g=
enerally
will be taxed at ordinary income tax rates to the extent that the value of =
our
common stock on the purchase date exceeded the purchase price. We will be entitled to a correspon=
ding
deduction. The participant wi=
ll
have additional capital gain or loss on the difference between the proceeds=
of
the sale and the participant’s basis in our common stock (the purchase
price plus any ordinary income realized).&=
nbsp;
The capital gain rate will depend on how long our common stock is he=
ld
by the participant.
The estate of a parti=
cipant
who dies while holding our common stock purchased under the Stock Purchase =
Plan
will recognize ordinary income in the year of the participant’s death=
in
an amount equal to the excess of the value of our common stock on the date =
on
which the option was granted over the purchase price, or, if less, the amou=
nt
by which the fair market value of our common stock on the date of death exc=
eeds
the purchase price.
PROPOSAL
3
RATIFICATION
OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2009
At its April 7, 2009
meeting, our Audit Committee recommended and approved the appointment of KP=
MG
LLP (“KPMG”) as the Company’s independent registered publ=
ic
accounting firm to audit the consolidated financial statements of the Compa=
ny
for the year ending December 31, 2009. KPMG has served in this capacity s=
ince
being engaged by us on July 30, 2002.
We are seeking the ratification of our appointment of KPMG as our
independent registered public accounting firm for 2009 at the Annual Meetin=
g of
Shareholders.
We expect that a
representative of KPMG will be present at the Annual Meeting and will be
available to respond to appropriate questions. If this representative desires to =
do so,
he or she will have the opportunity to make a statement at the Annual Meeti=
ng.
Vote Required=
and
Recommendation of our Board of Directors
This proposal will be
approved if a majority of the votes cast by all shareholders, voting as a
single class, are FOR approval.
Abstentions on this proposal are not considered “votes cast=
221;
and will have no effect on the outcome of the vote. Similarly, broker non-votes are not
considered “votes cast” with respect to this proposal and,
therefore, will have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A V=
OTE
“FOR”
ADOPTION OF THIS PROPOSAL 3.
Fees Billed by the Company’s Independent
Auditors
The audit and tax fee=
s to
us from KPMG for 2008 and 2007 are set forth in the table below:
|
Fee Category |
2008 |
2007 |
|
Audit Fees |
$220,000 |
$258,450 |
|
Audit-Related Fees |
–=
;–– |
–=
;–– |
|
Tax Fees |
–=
;–– |
12,317 |
|
All Other Fees |
–=
;–– |
–=
;–– |
_______________
(1) <=
/span>Consisted
of fees relating to the audit of consolidated financial statements, the aud=
it
of internal control over financial reporting, quarterly reviews, the issuan=
ces
of consents relating to registration statements filed with the SEC, and a
comfort letter issued in connection with a 2007 stock offering.
(2) <=
/span>Consisted
of fees relating to international tax services, including with respect to t=
he
Company’s establishment of a corporate presence in Hong Kong.