DEF 14A 1 d308971ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.     )

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¨ Preliminary Proxy Statement
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þ Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material under §240.14a-12

Universal Biosensors, Inc.

 

(Name of Registrant as Specified in its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

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Universal Biosensors, Inc.

ABN 51 121 559 993

 

1 Corporate Avenue

Rowville Victoria 3178

Australia

 

Telephone: +61 3 9213 9000

Facsimile:  +61 3 9213 9099

Email:        info@universalbiosensors.com

www.universalbiosensors.com

  

LOGO

 

March 26, 2012

Dear Stockholder (including a holder of a “Chess Depositary Interest” (“CDI”)):

You are cordially invited to the Meeting of Stockholders of Universal Biosensors, Inc. (the “Company”, “we”, “our” or “UBI”), to be held at Level 12, 117 York Street, Sydney NSW 2000 Australia, on May 10, 2012 at 10:00 a.m. Australian Eastern Standard Time.

We discuss the matters to be acted upon at the meeting in more detail in the attached Notice of Meeting and Proxy Statement. A copy of our annual report on Form 10-K for the fiscal year ended December 31, 2011 is available at our website at www.universalbiosensors.com and previously has been distributed to stockholders or is accompanying this Proxy Statement. We encourage you to read the annual report. It includes our audited financial statements and other important information about us.

To ensure your representation, if you are a CDI Holder please sign, date and return the enclosed CDI Voting Instruction Form or give your instructions online using the instructions on your CDI Voting Instruction Form. If you are a stockholder, please sign, date and return the enclosed Proxy Card. We hope that you can attend the Meeting.

Thank you for your continued support of Universal Biosensors.

 

Yours sincerely,
/s/    Paul Wright
Mr. Paul Wright
Chief Executive Officer


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UNIVERSAL BIOSENSORS, INC.

NOTICE OF MEETING OF STOCKHOLDERS

TO BE HELD MAY 10, 2012

March 26, 2012

NOTICE IS HEREBY GIVEN that the 2012 Meeting of Stockholders (the “Meeting”) of Universal Biosensors, Inc. (ARBN 121 559 993) (the “Company”) will be held on May 10, 2012 at 10:00 a.m. Australian Eastern Standard Time at Level 12, 117 York Street, Sydney NSW 2000 Australia, for the following purposes:

1) To re-elect two members of the Board of Directors to hold office until the Meeting of Stockholders in 2015, or until their successors are duly elected and qualified;

2) To approve, on an advisory basis, the compensation of the Company’s named senior executives as disclosed in this Proxy Statement; and

3) To transact such other business as may properly come before the meeting and any adjournment or postponement thereof.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE MEETING TO BE HELD ON MAY 10, 2012

 

Date and Time:   Thursday, May 10, 2012 at 10:00 a.m. Australian Eastern Standard Time
Place:   Level 12, 117 York Street, Sydney NSW 2000 Australia
Items of Business:  

1) To re-elect two members of the Board of Directors to hold office until the Meeting of Stockholders in 2015, or until their successors are duly elected and qualified;

 

2) To approve, on an advisory basis, the compensation of the Company’s named senior executives as disclosed in this Proxy Statement; and

 

3) To transact such other business as may properly come before the meeting and any adjournment or postponement thereof.

 

The Board of Directors recommends that you vote “For” Proposals 1 and 2.

Record Date:   The record date for the determination of (i) stockholders of record entitled to receive notice of and to vote at the Meeting and (ii) holders of CDIs of record entitled to receive notice of and to direct CHESS Depositary Nominees Pty Ltd ACN 071 346 506 (“CDN”) how to vote at the Meeting, or any adjournments or postponements thereof is the close of business on March 16, 2012. A complete list of stockholders and CDI holders of record on the record date will be available at the Company’s executive offices located at 1 Corporate Avenue, Rowville VIC 3178 and at Level 12, 117 York Street, Sydney NSW 2000 Australia, for ten days before the Meeting.
Internet Availability of Documents:   You may access a copy of the proxy statement and the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2011 at www.universalbiosensors.com

These items are fully discussed in the following pages, which are made part of this notice.

Your Board of Directors recommends that you vote “FOR” the nominees for the Board and “FOR” the approval of the compensation for named senior executives of the Company.

If you are a stockholder, you are encouraged to vote your shares by attending the meeting or by signing, dating and mailing your Proxy Card to the Company’s registrar in the enclosed envelope. If you are a CDI Holder, you are encouraged to vote your CDIs by signing, dating and mailing your CDI Voting


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Instruction Form to the Company’s registrar in the enclosed envelope. Instructions for voting are set forth on the CDI Voting Instruction Form. Alternatively, holders of CDIs can direct CDN how to vote online by following the instructions at www.boardroomlimited.com.au/vote/ubiagm2012.

 

BY ORDER OF THE BOARD OF DIRECTORS
/s/    Cameron Billingsley
Cameron Billingsley
Company Secretary

YOUR VOTE IS IMPORTANT, WHETHER YOU OWN A FEW SHARES/CDIs OR MANY.

This Proxy Statement is dated March 13, 2012 and is being first mailed to stockholders and CDI Holders of UBI on or about March 26, 2012.


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UNIVERSAL BIOSENSORS, INC.

PROXY STATEMENT FOR MEETING OF STOCKHOLDERS

To be held May 10, 2012

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     Page  

Information About Solicitation and Voting

     1   

Proposal One — Election of Directors

     3   

Proposal Two — Advisory Vote on the Compensation of Named Senior Executives

     3   

Management of the Company

     4   

Executive Compensation

     14   

Independent Public Accountants

     26   

Security Ownership of Certain Beneficial Owners and Management

     27   

Certain Relationships and Related Transactions

     29   

Other Matters

     30   

Stockholder Communications with Board of Directors

     32   

Availability of Form 10-K

     32   

Where You Can Find More Information

     32   

Householding

     32   


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UNIVERSAL BIOSENSORS, INC.

PROXY STATEMENT FOR MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 10, 2012

INFORMATION ABOUT SOLICITATION AND VOTING

General

The enclosed proxy and CDI Voting Instruction Form is solicited by the Board of Directors of Universal Biosensors, Inc. (the “Company” or “UBI”) for use in voting at the meeting of stockholders (the “Meeting”) to be held on May 10, 2012 at 10:00 a.m. Australian Eastern Standard Time at Level 12, 117 York Street, Sydney NSW 2000 Australia, and any postponement or adjournment of that meeting. Directions to the Meeting can be obtained by calling +61 (2) 8115 9805 or +61 (3) 9213 9000. The purpose of the Meeting is to consider and vote upon the proposals outlined in this Proxy Statement and the attached notice. The Company’s telephone number is +61 3 9213 9000.

Record Date and Voting Securities

As of the close of business on March 6, 2012, there were in total 159,146,213 shares of common stock outstanding, par value US$0.0001 per share. 158,991,999 of our outstanding shares are held by CHESS Depositary Nominees Pty Ltd ACN 071 346 506 (“CDN”), a wholly-owned subsidiary of ASX Limited ACN 008 624 691, which operates the Australian Securities Exchange (“ASX”) and the balance is held by 77 of our employees. Securities of companies incorporated outside of Australia, such as UBI, are traded as CHESS Depositary Interests (“CDIs”) on the ASX. CDIs represent beneficial interests in the common stock held by CDN. CDIs are traded on the ASX. As of March 6, 2012, there were 158,991,999 CDIs on issue and available to be traded on ASX. As of March 6, 2012, there were 77 holders of shares (including CDN) and 1,507 holders of CDIs (“CDI Holders” or “Holders of CDIs”).

CDIs are exchangeable, at the option of the holder, into shares of our common stock at a ratio of 1:1. Holders of CDIs have the right to direct CDN, as the holder of record of the underlying shares of common stock represented by their CDIs, how it should vote the underlying shares of common stock represented by their CDIs and to attend stockholders’ meetings of the Company. If CDN does not receive a duly executed CDI Voting Instruction Form from a CDI Holder as to how to vote the underlying shares represented by those CDIs, those shares will not be voted and will not be considered present at the Meeting for quorum purposes. A holder of CDIs will be entitled to vote at the Meeting only if such holder directs CDN to designate such holder as proxy to vote the underlying shares of common stock represented by CDIs held by such holder. Holders of CDIs who wish to direct CDN how to vote the underlying shares of common stock represented by their CDIs should complete and return the enclosed CDI Voting Instruction Form or submit their instructions online by following the instructions on the CDI Voting Instruction Form, which is being delivered with this Proxy Statement to each CDI Holder.

The record date is the close of business on March 16, 2012 (the “Record Date”). Only stockholders and CDI Holders of record on the books of the Company at the close of business on the Record Date are (1) with respect to stockholders, entitled to receive notice of and to vote at, and (2) with respect to CDI Holders entitled to receive notice of and to direct CDN how to vote at, the Meeting and any adjournments thereof. Under arrangements established between the Company and CDN in connection with the issuance of CDIs, the holders of CDIs at the close of business on the Record Date are entitled to notice of and to attend the Meeting and to direct CDN how to vote by completing a CDI Voting Instruction Form or by submitting their voting instructions online.

Voting and Solicitation

Each stockholder of record can vote at the Meeting by attending the Meeting in person and voting at the Meeting or by completing and returning your properly dated and duly executed Proxy Card, to Boardroom Pty Limited or the Company no later than 10:00 a.m. Australian Eastern Standard Time on May 10, 2012 in the manner set out below but may alternatively deliver a completed Proxy Card to us at the Meeting.

Holders of CDIs who wish to direct CDN how to vote but who are not attending the Meeting must return their duly executed voting instructions, via the enclosed CDI Voting Instruction Form, to Boardroom Pty Limited

 

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or the Company no later than 10:00 a.m. Australian Eastern Standard Time on May 10, 2012 in the manner set out below. If you are a CDI Holder and you wish to direct CDN to designate you or another person as proxy to vote the underlying shares of common stock represented by CDIs held by you and attend the Meeting in person, you are encouraged to return your properly dated and duly executed CDI Voting Instruction Form to Boardroom Pty Limited or the Company in the manner set out below but may also deliver the completed CDI Voting Instruction Form to us at the Meeting. Alternatively, CDI Holders may submit their instructions online by visiting www.boardroomlimited.com.au/vote/ubiagm2012 by no later than 10:00 a.m. Australian Eastern Standard Time on May 10, 2012. To use the online facility you will need the secure access information set out on your CDI Voting Instruction Form.

 

By hand    Boardroom Pty Limited, Level 7, 207 Kent Street, Sydney NSW 2000, Australia;
By post   

Boardroom Pty Limited, GPO Box 3993, Sydney NSW 2001, Australia; or

Universal Biosensors, Inc., 1 Corporate Avenue, Rowville VIC 3178, Australia;

By facsimile   

Boardroom Pty Limited on +61 2 9279 0664; or

Universal Biosensors, Inc. on +61 3 9213 9099.

At the Meeting, Proxy Holders and CDN may only vote the shares represented by all properly dated, executed and returned Proxy Cards (in the case of stockholders) and properly dated, executed and returned CDI Voting Instruction Form (in the case of CDI Holders) in accordance with the instructions of the respective stockholders and CDI holders (proxies cannot be voted for a greater number of persons than the number of nominees named). If no specific instructions are given on a properly dated, executed and returned Proxy Card (in the case of stockholders) or CDI Voting Instruction Form (in the case of CDI Holders), the shares will be voted “FOR” the nominees for the Board and “FOR” the approval, on an advisory basis, of the compensation for named senior executives of the Company. In addition, if other matters come before the Meeting, the Proxy Holders and CDN will vote in accordance with their or its best judgment with respect to such matters. On all matters to be voted on, each share and, accordingly, each CDI, has one vote.

We are making this proxy solicitation by and on behalf of the Board of Directors. The cost of preparing, assembling, printing and mailing this Proxy Statement and the proxies solicited hereby will be borne by the Company. Proxies may be solicited personally or by telephone, electronic mail or facsimile by the Company’s officers, directors and regular employees, none of whom will receive additional compensation for assisting with solicitation.

Quorum; Required Vote

A quorum is required for the transaction of business during the Meeting. A quorum is present when the holders of one-third of the common stock issued and outstanding and entitled to vote at a meeting, are present in person or represented by proxy. Shares that are voted “FOR”, “AGAINST” or “ABSTAIN” on a matter are treated as being present at the Meeting for purposes of establishing a quorum and are also treated as votes cast by the common stock present in person or represented by proxy at the Meeting and entitled to vote on the subject matter. If no specific instructions are given on a properly dated, executed and returned Proxy Card (in the case of stockholders) or CDI Voting Instruction Form (in the case of CDI Holders), the shares will be treated as being present at the Meeting for purposes of establishing a quorum. Broker non-votes discussed below are not considered entitled to vote on matters that are not considered routine.

The candidates for election as directors at the Meeting who receive the highest number of affirmative votes present or represented by proxy and entitled to vote at the Meeting will be elected. The affirmative vote of a majority of shares of the Company’s common stock present or represented by proxy and entitled to vote at the Meeting will constitute approval of the compensation for named senior executives of the Company. This vote is advisory only and is therefore not binding on the Company.

Abstentions will not be counted with respect to the election of directors but will have the effect of negative votes with respect to the advisory votes on the compensation for named senior executives.

A broker “non-vote” occurs when your broker (if applicable) submits a proxy for your shares but does not indicate a vote for a particular proposal because the broker does not have authority to vote on that proposal and

 

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has not received specific voting instructions from you. If your shares are held by a broker, the broker may require your instructions in order to vote your shares. If you give the broker instructions, your shares will be voted as you direct. If you do not give instructions, one of two things can happen depending on the type of proposal. If the proposal is considered “routine,” the broker may vote your shares in its discretion. For other proposals including the proposals in relation to the re-election of directors and the compensation of named senior executives, brokers that are members of an exchange registered as a national exchange under the U.S. Securities Exchange Act of 1934 may not vote your shares without your instructions.

Revocability of Proxies

If you are a stockholder entitled to vote or CDI Holder and you have submitted a Proxy Card or CDI Voting Instruction Form (as applicable), you may revoke your Proxy Card or CDI Voting Instruction Form at any time before the Meeting by delivering a written revocation to the Company Secretary of the Company or by delivering a duly executed Proxy Card or CDI Voting Instruction Form bearing a later date.

PROPOSAL ONE — ELECTION OF DIRECTORS

Our Board of Directors has been structured as a ‘staggered Board’ comprising three classes of directors with members in each class of directors serving for staggered three-year terms or until his or her successor is duly elected or until his or her earlier death, resignation or removal. The Board of Directors currently consists of two Class I directors (currently Mr. Andrew Denver and Mr. Andrew Jane), whose term will expire at this year’s Meeting of stockholders, three Class II directors (currently Mr. Denis Hanley, Dr. Elizabeth (Jane) Wilson, and Mr. Paul Wright), whose term will expire at the Meeting of stockholders to be held in 2014, and two Class III directors (currently Mr. Marshall Heinberg and Dr. Colin Adam), whose term will expire at the Meeting of stockholders to be held in 2013.

Two (2) director nominees are seeking to be re-elected at the Meeting to hold office until the Meeting of stockholders in 2015, or until their successors are duly elected and qualified: Mr. Andrew Denver and Mr. Andrew Jane. Each of Mr. Andrew Denver and Mr. Andrew Jane is presently a director whose term will expire at the Meeting. If re-elected, Mr. Andrew Denver and Mr. Andrew Jane will hold office until the Meeting of stockholders in 2015, and until their successor is duly elected and qualified.

For details of the qualifications, skills and experience of each of the relevant directors, refer to the section below titled “Management of the Company — Board of Directors”. The nominees are willing to be elected and to serve for the three-year term. Management expects that the nominees will be available for election, but if any nominee is not a candidate at the time the election occurs, it is intended that such proxy will be voted for the election of another nominee or nominees to be designated by the Board of Directors to fill any such vacancy. See also “Management of the Company.”

The Board of Directors unanimously recommends that you vote FOR the election of each of the nominated directors. The proxy holders and CDN will vote as directed on the Proxy Card (in the case of stockholders) or CDI Voting Instruction Form (in the case of CDI Holders) or, if no direction is made in a duly dated, executed and returned Proxy Card (in the case of stockholders) or CDI Voting Instruction Form (in the case of CDI Holders), “FOR” this proposal. However, brokers who are members of a U.S. national securities exchange may not vote or submit instructions to the proxy holders or CDN if the beneficial owner of the shares has not given instructions. The election of each director requires a plurality of the shares of Common Stock present and voting at the Meeting.

PROPOSAL TWO — ADVISORY VOTE ON THE COMPENSATION OF SENIOR EXECUTIVES

The Company is providing stockholders with the opportunity to cast an advisory vote on the executive compensation programs and policies and the compensation paid to the senior executive officers named in this Proxy Statement. This proposal is known as a “say-on-pay vote” and is required pursuant to Section 14A of the United States Securities Exchange Act. Details of our compensation for our senior executives is set out under the headings “Compensation Discussion and Analysis”, “Compensation Committee Report”, “Summary

 

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Compensation Table”, “Grants of Plan-Based Awards During 2010” and “Narrative disclosure to summary compensation table and grants” of this Proxy Statement. These disclosures are intended to comply with Item 402 of United States Regulation S-K. As discussed in the Compensation Discussion and Analysis section of this Proxy Statement, our compensation principles and underlying programs are designed to attract, motivate and retain key executives who are crucial to our long-term success. The vote is advisory and is not binding on the Company. However, the Remuneration and Nomination Committee will take into account the outcome of the vote when considering future executive compensation arrangements. Details of how the Remuneration and Nomination Committee has considered the results of the advisory vote will be included in the Compensation Discussion and Analysis sections of future proxy statements.

We will seek an advisory vote in relation to compensation every year, which we believe will be the most effective means for conducting and responding to such an advisory vote.

The Board of Directors unanimously recommends that you vote FOR this proposal to approve, on an advisory basis, the compensation for the Company’s senior executives as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related disclosure required pursuant to Item 402 of Regulation S-K contained in this Proxy Statement. The proxy holders and CDN will vote as directed on the Proxy Card (in the case of stockholders) or CDI Voting Instruction Form (in the case of CDI Holders) or, if no direction is made in a duly dated, executed and returned Proxy Card (in the case of stockholders) or CDI Voting Instruction Form (in the case of CDI Holders), “FOR” this proposal. However, brokers who are members of a U.S. national securities exchange may not vote or submit instructions to the proxy holders or CDN if the beneficial owner of the shares has not given instructions. In order to be adopted as an advisory vote, this proposal must be approved by the affirmative vote of the holders of a majority of the shares of Common Stock present and entitled to vote at the Meeting.

MANAGEMENT OF THE COMPANY

The following table sets out the name, age and position of our directors, executive officers and certain significant employees at March 6, 2012:

 

Name

  

Age

  

Position

  

Served Since

Andrew Denver

   63    Director    2002
      Chairman of the Board of Directors    2005

Paul Wright

   47    Chief Executive Officer and Director    2011

Salesh Balak

   43    Chief Financial Officer    2006

Garry Chambers

   48    Vice President, Operations    2002

Alastair Hodges, Ph.D.

   52    Chief Scientist    2002

Adrian Oates, Ph.D.

   50    Vice President, Quality and Regulatory    2007

Frederick (Fred) Davis, Ph.D.

   49    Vice President, Business Development    2011

Colin Adam, Ph.D.

   68    Non-executive Director    2006

Denis Hanley

   64    Non-executive Director    2001

Marshall Heinberg

   54    Non-executive Director    2010

Andrew Jane

   50    Non-executive Director    2006

Jane Wilson

   53    Non-executive Director    2006

As described on Form 8-K filed with the Securities and Exchange Commission on September 15, 2010, Mr. Andrew Denver was appointed as interim Chief Executive Officer of the Company on September 9, 2010. As described on Form 8-K filed with the Securities and Exchange Commission on February 25, 2011, on February 24, 2011, our Board approved the appointment of Mr. Paul Wright as the Director and Chief Executive Officer of the Company effective as of March 1, 2011. Up until May 31, 2011, Mr. Denver continued to act as Interim Chief Executive Officer of the Company for a transitional period following Mr. Paul Wright’s appointment on March 1, 2011. Since June 1, 2011, Mr. Denver continued as non-executive Chairman of the Company.

 

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Board of Directors

Mr. Andrew Denver BSc. (Hons.), M.B.A., F.A.I.C.D.

Mr. Denver has extensive expertise that is relevant to the Company, including in assisting the commercialization of several technology companies. Mr. Denver has a wide ranging knowledge of the life sciences industry of which our Company is a part, risk assessment, financial reporting experience and general management, which are important in the success of our business. Mr. Denver has served as the Interim Chief Executive Officer of the Company from September 2010 to May 2011, a director of the Company since December 2002 and as Chairman since September 2005. Mr. Denver has been a member of the Remuneration and Nomination Committee since January 2008 and was a member of the Audit & Compliance Committee from 2006 to January 2008 and from January 2010 to July 2010. Mr. Denver has served as a director of Universal Biosensors Pty Ltd since December 31, 2002. Mr. Denver is seeking reappointment at the Meeting as a Class I director for a term of three years. Between 2002 and 2005, Mr. Denver was President of Pall Asia, a subsidiary of Pall Corporation after the acquisition by Pall Corporation of US Filter’s Filtration and Separations business, where he was also President. Pall Corporation is a technology based filtration, separation and purification multinational company. Mr. Denver is a director and founder of PFM Cornerstone Ltd and The Principals Funds Management Pty Ltd, companies which help Australian technology businesses, which are predominately in the life sciences industry, commercialize their technologies. Mr. Denver is a non-executive director of SpeeDx Pty Ltd and Cochlear Ltd, all of which are life sciences companies, and until September 2010 and October 2008, was also a non-executive director of CathRx Ltd and Anzon Australia Ltd, respectively. Mr. Denver graduated from the University of Manchester with a Bachelor of Science Degree (Honors) in Chemistry and achieved a distinction in his M.B.A. at the Harvard Business School and is a Fellow of the Australian Institute of Company Directors.

Mr. Paul Wright M.A., F.A.I.C.D.

Mr. Wright was appointed as Chief Executive Officer and a director of the Company on February 24, 2011 with an effective date of March 1, 2011. Mr. Wright has experience as Chief Executive Officer with two global technology companies and extensive experience in international management consulting and commercial development with a focus on manufacturing industries. Mr. Wrights’s term of appointment as a director of the Company ends on the date of our 2014 Meeting of stockholders. Between 2008 and 2011, Paul Wright acted as a company director for two Australian private companies (Metallic Waste Solutions Pty Ltd and Comcater Pty Ltd). During 2006 and 2007, Mr. Wright was Chief Executive Officer of Vision BioSystems, a major subsidiary of Vision Systems Limited, which develops, manufactures and markets diagnostic instruments and consumables worldwide. Following the acquisition of Vision Systems Limited by Danaher Corporation in 2006, Mr. Wright worked for Danaher Corporation to assist with the integration of Vision Systems into the new parent until 2007. From 1999 to 2006, Mr. Wright was Chief Executive Officer of Invetech, a leading international product development consultancy. Prior to this, Mr. Wright gained extensive experience in international strategy consulting and commercial development, with a focus on manufacturing industries including roles at TNT Logistics and Bain & Company. Mr. Wright holds a Masters degree in Aeronautical Engineering from the University of Cambridge, a Diploma in Production Methods & Management from the University of Cambridge and has studied Corporate Finance at the London Business School. Mr. Wright is a Fellow of the Australian Institute of Company Directors.

Dr. Colin Adam B.E. (Met.), Ph.D.

Dr. Adam has extensive knowledge which is relevant to our Company of the life sciences industry and biomedical and general scientific research and development generally. Dr. Adam also has extensive project management experience in commercialization of technologies, such as ours, with global potential. Dr. Adam has been a non-executive director since December 2006 and was a director of Universal Biosensors Pty Ltd between July 2002 and December 2006. Dr. Adam’s term of appointment as a director of the Company ends on the date of our 2013 Meeting of stockholders. Dr. Adam has been a member of the Audit & Compliance Committee since July 2010 and between 2006 and November 2010 was a member of the Remuneration and Nomination Committee. In 2000, Dr. Adam was the Acting Chief Executive of the Commonwealth Scientific and Industrial

 

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Research Organization (“CSIRO”), the peak Australian Government body with a mission for technological development and industrial research and development, which includes significant research and development in the life sciences industry of which we are a part. Between 1996 to 1999, Dr. Adam was Deputy Chief Executive directly responsible for all the CSIRO’s commercial activity, including the start-up of several spin-off companies from the organization’s extensive research portfolio. Prior to working with the CSIRO, Dr. Adam’s career has included executive positions within the US aerospace industry for Pratt & Whitney Aircraft in Florida and Allied Corporation in New Jersey. Dr. Adam has served as a member of the Australian Government’s Industry Research and Development Board, the Australian Prime Minister’s Science Engineering and Innovation Council and the Victorian Premier’s Science, Engineering and Technology Taskforce. Dr. Adam is a director and founder of PFM Cornerstone Ltd and The Principals Funds Management Pty Ltd, companies which help Australian technology businesses, which are predominately in the life sciences industry, commercialize their technologies. Dr. Adam was appointed as a director of CathRx Ltd, a life sciences company, in September 2010. Until January 2010, August 2005 and September 2006, Dr. Adam served on the Boards of Ausmelt Limited, Ceramic Fuel Cells Ltd and Tele-IP Ltd, respectively, the latter in the capacity of its non-executive Chairman. Dr. Adam has a Bachelor of Metallurgical Engineering Degree and a Ph.D. in Metallurgy from the University of Queensland.

Mr. Denis Hanley A.M., M.B.A., F.C.P.A., F.A.I.C.D.

Mr. Hanley has been a successful angel investor, assisting the commercialization of several Australian technologies. Mr. Hanley has extensive knowledge relevant to our Company, including of the life sciences industry of which our Company is a part, risk assessment, financial reporting experience and general management. Mr. Hanley has served as a non-executive director since September, 2001 and is a member of the Audit & Compliance Committee. Mr. Hanley’s term of appointment as a director of the Company ends on the date of our 2014 Meeting of stockholders. Mr. Hanley is a qualified accountant and company director with more than 35 years’ experience in the management of technology-based growth businesses, such as our Company. Mr. Hanley has significant experience in developing and commercializing new technology based Australian corporations to become successful global entities. His experience includes 14 years as chief executive officer of Memtec Limited, growing the start-up company to become an international force in filtration and separations technology, listed on the New York Stock Exchange. Prior to this, Mr. Hanley spent more than a decade at global medical company Baxter Healthcare, both in the U.S. and also as Australian Managing Director. Mr. Hanley has served on the Australian Industry Research and Development Board and various technology councils and roundtables. Denis Hanley is a director and founder of PFM Cornerstone Ltd, a company which helps Australian technology businesses, which are predominately in the life sciences industry, commercialize their technologies. Mr. Hanley is currently non-executive Chairman of Pharmaxis Ltd and CathRx Ltd, which are both life sciences companies, and until October 2007 was non-executive director of Lochard Ltd. Mr. Hanley holds an M.B.A. with High Distinction from Harvard Graduate School of Business, where he was named a Baker Scholar.

Mr. Marshall Heinberg B.S. (Hons), J.D.

Mr. Heinberg has extensive experience relevant to our Company including insight into the global capital markets and has worked with several life science and technology companies. Mr. Heinberg was appointed a non-executive director of the Company in January 2010 and has served as a member of the Remuneration and Nomination Committee since November 2010. Mr. Heinberg’s term of appointment as a director of the Company ends on the date of our 2013 Meeting of stockholders. Mr. Heinberg is head of Oppenheimer’s Investment Banking Department and a Senior Managing Director of the firm. Mr. Heinberg began his investment banking career in 1987 as an Associate in the Corporate Finance Division of Oppenheimer & Company, which was acquired by the Canadian Imperial Bank of Commerce (CIBC) in 1997. Mr. Heinberg held several senior roles at CIBC World Markets including serving as a member of the U.S. Management Committee, the Deals Committee which approved U.S. corporate finance debt capital decisions and the Investment Committee which approved private equity and fund investments. Mr. Heinberg also served as a member of the Equity Transaction Committee and Financial Advisory Transaction Committee. Over the course of his career, Mr. Heinberg has held responsibility for various industry sectors including environmental, industrial growth, technology and telecommunications. His transaction experience includes public and private debt and equity financings, as well as numerous exclusive sale and strategic advisory assignments. Mr. Heinberg was named Head of CIBC’s U.S.

 

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Investment Banking Department in 2001. Upon the acquisition of CIBC’s U.S. wholesale business in 2008, Mr. Heinberg was named head of Oppenheimer’s Investment Banking Department. Mr. Heinberg is also a non-executive director of Image Entertainment, Inc., a leading independent licensee and distributor of entertainment programming in North America. Mr. Heinberg has extensive experience working with both leading growth companies as well as financial sponsors. Prior to joining Oppenheimer, Mr. Heinberg practiced corporate law for approximately four years. Mr. Heinberg graduated from the University of Pennsylvania, the Wharton School with honors, with a degree in economics. He received his law degree from Fordham Law School.

Mr. Andrew Jane BSc. (Hons.), MSc.

Mr. Jane has extensive experience relevant to our Company, including in biomedical research and development project management, marketing and business development. Mr. Jane’s primary expertise is in the commercialization and globalization of technology based products, such as those products being developed by us. Mr. Jane has served as a non-executive director since August 2006 and is Chairman of the Remuneration and Nomination Committee. Andrew Jane was a director of Universal Biosensors Pty Ltd between August 15, 2006 and December 6, 2006. Mr. Jane is seeking reappointment at the Meeting as a Class I director for a term of three years. In 2003, Mr. Jane joined CM Capital Investments Pty Ltd, a Brisbane based venture capital investment company, as an Investment Manager and was promoted to Partner in 2006. Prior to this, Mr. Jane worked for Lake Technology, an audio technology company as Director of Business Development and Licensing, where he worked closely with Lake Technology’s strategic partner, Dolby Laboratories, an audio technology company in San Francisco, and was responsible for a significant number of global licensing deals during his four years there. Prior to Lake Technology, Mr. Jane held R&D management positions of increasing responsibility at AGEN Biomedical and the CSIRO. Mr. Jane is currently a director of a number of life sciences companies including Advent Pharmaceuticals Pty Ltd, Altiris Therapeutics, Inc., Piedmont Pharmaceuticals, Inc., Piedmont Pharmaceuticals Pty Ltd, SpeeDx Pty Ltd and is an observer to the Board of Metastatix, Inc. and Osprey Medical, Inc. Mr. Jane received his Master of Science in Instrumentation from the University of Manchester Institute of Science and Technology and holds a Bachelor of Science (Honors) in Physics from St Andrews University in Scotland.

Dr. Jane Wilson M.B.B.S., M.B.A., F.A.I.C.D.

Dr. Wilson is a professional company director with extensive experience relevant to our Company in medicine and finance, with a special interest in the commercialization of research in the biotechnology sector. Dr. Wilson has served as a non-executive director since December 2006. Dr. Wilson is Chairman of the Audit & Compliance Committee and until January 2008, a member of the Remuneration and Nomination Committee. Dr. Wilson’s term of appointment as a director of the Company ends on the date of our 2014 Meeting of stockholders. Dr. Wilson is the Finance Director of the Winston Churchill Memorial Trust and was the inaugural Chair of Horticulture Australia Ltd from 2000 to 2004. She is involved in a number of charitable and cultural organizations and has also served on the Queensland Government Biotechnology Taskforce and the boards of Energex Ltd, WorkCover Queensland, AGEN Biomedical Limited and Protagonist Ltd. Dr. Wilson was an inaugural member of the Queensland Premier’s Smart State Council and is a member of the University of Queensland Senate. She has an M.B.A. from the Harvard Business School where she studied agribusiness and the health sector. Dr. Wilson is the current Chairman of IMBcom Limited, the commercialization company of the Institute for Molecular Bioscience, and is Past President of the Australian Institute of Company Directors — Queensland Division, as well as a director of Sonic Healthcare Ltd and CathRx Ltd.

Executive Officers

Mr. Salesh Balak B.A., C.A.

Mr. Balak has served as our Chief Financial Officer since November 2006 and as a director of Universal Biosensors Pty Ltd since September 2010. Prior to joining Universal Biosensors, he was chief financial officer and company secretary of Pearl Healthcare Limited, an ASX listed entity engaged in the manufacturing and healthcare sector. Mr. Balak joined Pearl Healthcare Limited in April 2003 initially as its Group Accounting Manager and was promoted to Chief Financial Officer in June 2004. While at Pearl Healthcare Limited,

 

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Mr. Balak was instrumental in the successful acquisition of four businesses and integration of its existing businesses. Prior to joining Pearl Healthcare Limited, Mr. Balak spent 13 years in the Business Services, Audit and Financial Advisory Services divisions of KPMG in both the Melbourne and Fiji offices. He holds a Bachelor of Arts in accounting and economics and is a member of the Institute of Chartered Accountants and Certified Practicing Accountants.

Mr. Garry Chambers

Mr. Chambers has served as our Head of Engineering since April 2002 and as Vice President of Operations since September 1, 2006. Prior to joining Universal Biosensors Pty Ltd, Mr. Chambers was a senior engineer with MediSense (UK), one of the first biotechnology companies to produce mass market biosensors. In 1991, Mr. Chambers relocated to Australia to join Memtec Limited, a company involved in the operation, design and installation, filtration and separation of products for water supply and waste water recycling plants, to work on sensor technologies. From 1999 to 2001, he was part of a core team based in the United States that developed the glucose sensor technology. Mr. Chambers is an inventor on patents in 9 families issued and pending.

Dr. Alastair Hodges BSc. (Hons.), Ph.D.

Dr. Hodges has been working in the field of electrochemical sensors for the last 12 years and has served as our Chief Scientist since April 2002. Dr. Hodges has a BSc. (Hons.) in chemistry and gained a Ph.D. in electrochemistry from the University of Melbourne in 1987. Dr. Hodges worked as a research scientist, then senior and principle research scientist in the Defense Science and Technology Organization and the CSIRO in the fields of electrochemistry and transport processes, particularly involving membranes, until 1995, when he joined Memtec Limited to work on sensor technologies. Memtec was involved in the operation, design and installation, of filtration and separation products for water supply and waste water recycling plants. From 1999 to 2001 Dr. Hodges led a team that worked in the US on the development of glucose sensor technology. Dr. Hodges has published thirteen papers in refereed journals and is the primary inventor of patents in 34 families issued and pending.

Dr. Adrian Oates BSc, MSc (Preliminary), Ph.D.

Dr. Oates joined us in September 2007 as Vice President, Quality & Regulatory having spent over 20 years in the device, biological and pharmaceutical health care industries. His early career was as a research scientist and manager as well as head of project management at CSL Limited where a number of intravenous protein based replacement products were developed and commercialized. In 2000, he was appointed as Quality Director to oversee the implementation of the new Good Manufacturing Practices Code. He moved in 2004 to Cochlear Limited as Vice President, Quality & Regulatory where he was involved in the worldwide registration, accreditation and launch of a new sterile implantable medical device lead. After this, Dr. Oates returned to CSL Limited as Quality Director where successful FDA accreditation for Influenza vaccine was obtained. He holds a BSc (Biochemistry/Microbiology), a Master of Science (Preliminary) and a Doctor of Philosophy (Medicine) from Monash University.

Dr. Fred Davis BEng, PhD, GAICD.

Dr. Davis joined us as Vice President, Business Development in November 2011. His experience includes 20 years leading the development of diagnostic instruments and first-of-kind devices with Invetech. Invetech is a global innovator in instrument and new product development, custom automation and contract manufacturing. As Managing Director for Invetech since 2006 and Director of Instrument Development (2000-2006), Dr. Davis led an international business development team; driving strong international business growth and building long term partnerships with leaders in diagnostics and life sciences.

Dr. Davis holds a PhD in Mechanical Engineering from Bristol University, a Bachelor of Mechanical Engineering (Hons.1st) from Auckland University, a Graduate Certificate of Executive Business Administration from Mt. Eliza, and a Graduate Certificate of Technology Management from APESMA. He is a Graduate of the Australian Institute of Company Directors.

See also “Management of the Company” and “Management of the Company — Board of Directors.”

 

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Involvement in Certain Legal Proceedings

There are no legal, governmental or arbitration proceedings pending against us or Universal Biosensors Pty Ltd, which may have a material effect on our business.

Corporate Governance

We are not listed on a U.S. securities exchange and, therefore, not subject to the corporate governance requirements of any such U.S. exchange, including those relating to independence of directors. For purposes of determining whether our directors are independent under applicable rules and regulations promulgated by the Securities and Exchange Commission, we have chosen to use the definition of “independence” established by the Nasdaq Stock Market under its Marketplace Rules, as permitted by such rules and regulations.

We have determined that with the exception of Mr. Denver and Mr. Wright, all the current directors and nominees are independent as defined under the Marketplace Rules of the Nasdaq Stock Market.

We have determined that Mr. Wright is not independent as defined under the Marketplace Rules of the Nasdaq Stock Market because he is the Chief Executive Officer of the Company. We have determined that Mr. Denver is not independent as defined under the Marketplace Rules of the Nasdaq Stock Market because he held the role of Interim Chief Executive Officer of the Company since September 2010 to May 2011.

The ASX also provides guidelines for determination of whether a director should be considered independent for purpose of the ASX Listing Rules. Under these guidelines the holding of a substantial interest in the Company’s shares is considered a matter which may affect independence. Each of Messrs. Hanley, Denver and Jane and Dr. Adam are directors of companies which hold a substantial interest in the Company’s securities and therefore may not be considered independent for the purposes of the ASX guidelines.

Board Leadership Structure

The position of Chairman of the Board of Directors and Chief Executive Officer is held by two separate officers within our Company. From September 2010 to May 2011, our Chairman, Mr. Andrew Denver served as Interim Chief Executive Officer of the Company. It is the intention of our Board of Directors that the position of Chairman of the Board of Directors and Chief Executive Officer will be held by two separate officers of the Company. The Company does not have a lead independent director. Our Board of Directors believes the Company’s leadership structure is appropriate as having the position of Chairman and Chief Executive Officer held by two separate officers within our Company is indicative of stronger governance and reinforces the Company’s sound framework of internal control. The Board regularly deliberates and discusses its appropriate leadership structure and the role and responsibilities of the Chairman of the Board and the Chief Executive Officer, based upon the needs of the Company from time to time to provide effective oversight of management.

Risk Management

Oversight of the Risk Management System

The Board oversees the establishment, implementation and annual review of the Company’s risk management. The Chief Executive Officer and the Chief Financial Officer have declared in writing to the Audit & Compliance Committee that the controls and procedures have been assessed and found to be operating effectively. The operational and other compliance risk management processes have also been assessed and found to be operating effectively.

Whilst management provides reports to the Board on the status of the risk management system, which is aimed at ensuring risks are identified, assessed and appropriately managed, in some instances the Audit & Compliance Committee also reports to the Board on this matter.

 

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Risk Management Compliance and Control

The Board is responsible for the overall internal control framework, but recognizes that no cost-effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has developed an internal control framework as summarized below:

(a) Internal audits — the Company’s internal auditor reports to the Audit & Compliance Committee at least once per quarter on internal controls over financial reporting matters. On an annual basis, the Company gets audited on its Quality Management System, ISO 13485:2003, an international standard covering the global medical device sector. This certification covers the “design and development, production and distribution of blood glucose measuring systems and other in vitro diagnostic devices”.

(b) Financial reporting — there is a comprehensive budgeting system with an annual budget approved by the Board. Monthly actual results are reported against budget and major variances, if any, must be explained.

(c) Continuous disclosure — the Company has policies in place to ensure the Company complies with the continuous disclosure and other applicable requirements of the ASX Listing Rules.

The Chief Executive Officer and the Chief Financial Officer have stated in writing to the Audit & Compliance Committee that the Company’s financial reports are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board.

Assessment of Effectiveness of Risk Management

The internal auditor assists the Board in ensuring compliance with the internal controls and risk management program over financial reporting by regularly reviewing the effectiveness of the compliance and control systems. The Audit & Compliance Committee is responsible for approving the scope of work to be performed on a regular basis.

Internal Control and Sarbanes Oxley

Pursuant to section 404 of the Sarbanes-Oxley Act of 2002, we are required to evaluate the effectiveness of internal controls over financial reporting as of the end of each fiscal year. As part of our compliance efforts relative to section 404, we have fully implemented the controls over financial reporting. We have adopted the internal control framework set forth by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission in completing the assessment. The Audit & Compliance Committee has monitored, and will continue to monitor, the Company’s response to rules pursuant to section 404 of the Act.

Board Committees

Our Board of Directors met on eleven occasions during the year ended December 31, 2011 and acted by written consent on one occasion. Each director attended at least 75% of the aggregate of (i) the total number of meetings of the Board; and (ii) the total number of meetings held by all committees of the Board on which he or she served, other than Mr. Hanley who was unable to attend two of the six Audit and Compliance Committee Meetings. There are two committees of the Board: the Audit and Compliance Committee and the Remuneration and Nomination Committee.

Members of our Board of Directors are encouraged to attend the Meeting of Stockholders if they are available. All the current members of our Board of Directors attended the Meeting of Stockholders held in 2011.

Audit and Compliance Committee

The Company has a separately designated standing audit committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The current members of the Audit and Compliance Committee are Mr. Colin Adam, Mr. Denis Hanley and Dr. Jane Wilson (chairman). The Audit and Compliance Committee is governed by a formal charter, a copy of which is available on our website at www.universalbiosensors.com. The Board has determined that Mr. Adam, Mr. Hanley and Dr. Wilson meet the criteria for being independent under the Marketplace Rules of the Nasdaq Stock Market and for the purposes of ASX Guidelines. During the year ended December 31, 2011, the Committee met on six occasions. For more information in relation to the determination of which of our directors are considered independent under the Marketplace Rules of the Nasdaq Stock Market, refer to the section above titled “Corporate Governance”.

The Board has determined that Mr. Denis Hanley and Dr. Jane Wilson qualify as an “audit committee financial expert”, as defined under the rules and regulations of the Securities and Exchange Commission.

 

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Report of the Audit and Compliance Committee

The Audit and Compliance Committee’s primary role is to assist the Board of Directors in fulfilling its responsibility for oversight of the Company’s financial and accounting operations.

In discharging its responsibility for oversight of the audit process, the Committee obtained from the independent auditor, PricewaterhouseCoopers, the written disclosure and the letter required by applicable requirements of the Public Company Accounting Oversight Board describing any relationships between the auditor and the Company that might bear on the auditor’s independence consistent with the Independent Standards Board Rule 3526, “Communication with Audit Committees Concerning Independence, of the Public Company Accounting Oversight Board” (“PCAOB”) and discussed with the auditor any relationships that might impact the auditor’s objectivity and independence and satisfied itself as to the auditor’s independence.

The Committee discussed and reviewed with the independent auditor the communications required by generally accepted auditing standards, including those described in Statement on Auditing Standards No. 61, “Communication with Audit and Compliance Committees”, as amended, and discussed and reviewed the results of the independent auditor’s examination of the financial statements for the fiscal year ended December 31, 2011.

The Committee reviewed the audited financial statements of the Company as of and for the fiscal year ended December 31, 2011, with management and the independent auditor. Management has the responsibility for preparation of the Company’s financial statements and the independent auditor has the responsibility for examination of those statements. Based upon the above-mentioned review and discussions with management and the independent auditor, the Committee recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, for filing with the SEC.

By the Audit and Compliance Committee:

Jane Wilson (chairman)

Colin Adam

Denis Hanley

Remuneration and Nomination Committee

The current members of the Remuneration and Nomination Committee are Mr. Andrew Denver, Mr. Marshall Heinberg and Mr. Andrew Jane (chairman). The Remuneration and Nomination Committee is governed by a formal charter, a copy of which is available on our website at www.universalbiosensors.com. The Board has determined that Mr. Denver does not meet the criteria for being independent under the Marketplace Rules of the Nasdaq Stock Market. The Board has determined that Mr. Heinberg and Mr. Jane meet the criteria for being independent under the Marketplace Rules of the Nasdaq Stock Market. Mr. Denver, Mr. Heinberg and Mr. Jane are regarded as independent under ASX Guidelines. The primary functions of the Remuneration and Nomination Committee are to develop and facilitate a process for Board and Director evaluation, assess the availability of Board candidates, make specific recommendations to the Board on remuneration and incentive plans for Directors and senior management, advise the Board on the recruitment, retention and termination policies for senior management and undertake a review of the Chief Executive Officer’s performance, at least annually, including recommending to the Board, the Chief Executive Officer’s goals for the coming year and reviewing progress in achieving those goals. The Committee does not have any express right to delegate its authority but may do so on special authority from the Board. The Remuneration and Nomination Committee met on three occasions during the year ended December 31, 2011.

If necessary, the Remuneration and Nomination Committee may utilize a variety of methods for identifying and evaluating potential nominees to the Board of Directors. Consideration is given to professional and technical experience of potential nominees including industry and market knowledge, education and skills. Recommendations may come from current Board members, professional search firms, members of management,

 

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stockholders or other persons. The Remuneration and Nomination Committee will consider recommendations from any reasonable source, including director nominees recommended by stockholders. Stockholders wishing to suggest potential nominees can do so by contacting the Company Secretary. In assessing the qualifications of potential nominees, the Remuneration and Nomination Committee may rely on personal interviews or discussions with the candidate and others familiar with the candidate’s professional background, on third party reference checks and on such other diligence information as is reasonably available.

Nominations of persons for election to our Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors in accordance with the requirements of our amended and restated certificate of incorporation and amended and restated by-laws. Stockholders wishing to appoint a director must give timely notice thereof in proper written form. To be timely, a stockholder’s notice in the form required by our certificate of incorporation and by-laws must be delivered to or mailed and received at our principal executive offices: (a) in the case of an annual meeting, not less than 90 days and not more than 120 days prior to the anniversary date of the immediately preceding annual meeting, provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting.

“See also “Other Matters — 2013 Stockholder Proposals”

Director Selection Process

As discussed above, we maintain a standing Remuneration and Nomination Committee that is responsible for assembling a group of nominees that, taken together, have the background, experience, qualifications, attributes and skills appropriate for functioning as a board. The Remuneration and Nomination Committee periodically reviews the size and composition of the Board and determines whether to add or replace directors. The Remuneration and Nomination Committee looks for certain characteristics common to all Board members, including strong professional reputation, integrity, record of achievement and the ability and commitment to devote sufficient time and energy to the Board. The Remuneration and Nomination Committee seeks to nominate candidates who bring diverse backgrounds, skills, experience and perspectives to the Board. However, while diversity relating to background, skill, experience and perspective is one factor considered in the nomination process, the Company does not have a formal policy relating to diversity. Additionally, the Remuneration and Nomination Committee seeks to include at least one member who qualifies as an “audit committee financial expert.”

Compensation Committee Interlocks and Insider Participation

The current members of the Remuneration and Nomination Committee are Mr. Marshall Heinberg, Mr. Andrew Denver and Mr. Andrew Jane (chairman). Prior to the establishment of our Remuneration and Nomination Committee in 2007, our Board of Directors was responsible for determining executive remuneration. None of our executive officers or employees other than the Chief Executive Officer participated in deliberation with respect to executive officer compensation.

None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our board of directors or compensation committee. Other than acting as directors, none of the members of our compensation committee, with the exception of Mr. Andrew Denver, have been an officer or employee of us or one of our subsidiaries. Mr. Denver, a member of the compensation committee, was appointed as our and our subsidiary’s Interim Chief Executive Officer from September 2010 to May 2011.

For more information on the Committee’s processes and procedures for the consideration and determination of executive and director compensation, see “Compensation Discussion and Analysis” and “Compensation of Directors.”

 

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Compensation of Directors

The following table provides information about the compensation of our non-executive directors for the year ended December 31, 2011.

 

Name

  Fees Earned or
Paid in Cash

A$
  Aggregate
Grant
Date Fair
Value of
Stock
Awards

A$
  Aggregate
Grant
Date Fair
Value of
Option
Awards

A$
  Non-Equity
Incentive Plan
Compensation

A$
  Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings

A$
  All Other
Compensation(1)

A$
  Total
A$
             

Dr Colin Adam

      55,000                 4,950         59,950  

Denis Hanley

      55,000                 4,950         59,950  

Marshall Heinberg

      55,000                 413         55,413  

Andrew Jane

      60,000                         60,000  

Dr Elizabeth (Jane) Wilson

      60,000                 5,400         65,400  

 

(1) Represents compulsory superannuation payment of 9% of base pay. Andrew Jane does not receive superannuation as his directors fees are invoiced by and paid to his employer, CM Capital Investments Pty Ltd. Marshall Heinberg is not a resident for Australian tax purposes and therefore only receives superannuation when he attends meetings held in Australia.

Our Remuneration and Nomination Committee makes recommendations to the Board of Directors with respect to the remuneration and benefits provided to directors and executive officers. The Board of Directors then determines what levels of director remuneration and benefits are appropriate. Pursuant to the ASX Listing Rules, our stockholders have approved an aggregate remuneration pool available to non-executive directors of A$700,000 per annum. The annual remuneration payable to our non-executive directors is currently comprised of:

 

   

a base fee of A$150,000 per annum for the chairman and A$50,000 for other non-executive directors;

 

   

an additional fee for directors serving on sub-committees, currently A$5,000 per annum and an additional A$5,000 for each chairman of such sub-committee; and

 

   

statutory superannuation for the independent non-executive directors, which is currently 9% of the base fee (other than Mr. Jane who does not receive superannuation as his directors fees are invoiced by and paid to his employer and Mr. Heinberg, who being a non-resident for Australian tax purposes, only receives superannuation when he attends meetings held in Australia).

In addition, a director may be paid all traveling and other expenses properly incurred in attending meetings of directors or committees or stockholder meetings or otherwise in connection with the execution of his or her duties.

Code of Ethics

We have adopted a Code of Ethics for our Chief Executive Officer and Chief Financial Officer. The Code of Ethics is available on our website at www.universalbiosensors.com. We intend to satisfy any disclosure requirement under item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Ethics for our Chief Executive Officer and Chief Financial Officer, by posting such information on our website at www.universalbiosensors.com.

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Principles used to determine the nature and amount of remuneration

The objective of our executive reward framework is to ensure the reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for stockholders and conforms to market best practice for delivery of reward. Our performance depends upon the quality of our directors and executives. In order to attract, motivate and retain highly skilled directors and executives, we embody the following principles in our remuneration framework:

 

   

provide competitive remuneration to attract, motivate and retain high caliber directors and executives with appropriate skills and experience;

 

   

remunerate with a mix of short and long term components;

 

   

remunerate executives according to individual performance and pre-determined benchmarks through cash bonuses; and

 

   

link executive remuneration to stockholder value through options.

The Remuneration and Nomination Committee has processes in place to review the performance of the Board of Directors and our senior executives. Our Remuneration and Nomination Committee takes into consideration elements such as the following in setting compensation policies:

 

   

peer group comparisons with our financial performance (peer group comparison refers to comparing the practices of peers, and selecting those we believe are most suitable for the Company. The Company uses data available in the public domain, such as annual reports, for such companies in a similar industry to benchmark our policies);

 

   

regulatory requirements;

 

   

rate of employee turnover;

 

   

content and effectiveness of our employee training;

 

   

results of any employee surveys; and

 

   

ability to retain and attract new employees.

Corporate performance is also taken into account in setting compensation policies and making compensation decisions.

Our executive remuneration comprises of separate and distinct components. The framework provides a mix of fixed pay and a blend of short and long-term incentives. As executives gain seniority with the group, the balance of this mix shifts to a higher proportion of “at risk” rewards such as bonuses and employee options. The executive remuneration framework currently has four components:

 

   

base pay;

 

   

short-term performance incentives in the form of cash bonuses;

 

   

long-term incentives through participation in our employee stock option plan (“Employee Option Plan”), including through the use of market price employee stock options and zero exercise price stock options; and

 

   

statutory superannuation.

The combination of these comprises the executive’s total remuneration.

Base pay and cash bonuses are paid in cash. Options, which constitute the current form of long-term equity incentive, take the form of options granted under the Employee Option Plan. Executive remuneration has provided substantial grants of stock options in order to promote share ownership as a direct means of incentivizing our executive officers and aligning the interests of our executive officer’s with the interests of our stockholders.

 

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Base pay

Executives are offered a base pay that comprises the fixed component of their remuneration. Base pay is structured as a total employment cost package, which may be delivered as a combination of cash and prescribed non-financial benefits at the executives’ discretion. Base pay is provided to meet competitive salary norms. Competitive salary norms relates to the goals of achieving competitive salary levels with a comparison group of companies. An indicative understanding of salary levels for the executives are available from the public domain including annual reports of similar companies and remuneration surveys that are conducted by several organizations. Base pay for senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion. There is no guaranteed base pay increases included in any senior executives’ contracts. In setting base salaries, consideration is given to salary compensation of executive officers within our industry and the performance of the executive in the previous year. A grading system is used to assess the performance of the executives at year end. The grade is used as a guide to the percentage increase in salaries. The quantum of the percentage increase is set by the Remuneration and Nomination Committee following recommendations from management taking into account factors such as inflation and performance of the Company and industry comparisons (salary compensation of executive officers within our Company is compared to executive compensation within companies in a similar industry). This data is available from the public domain and includes annual reports and remuneration surveys. At this time, the Company does not use professional compensation consultants to review remuneration although it does gain insight and feedback when it uses professional recruiters to identify candidates for new roles. It is the intention of the Remuneration and Nomination Committee to pay base salaries to our executive officers that is commensurate with their qualifications and demonstrated performance and that bring continuing and increasing value to our stockholders.

Short-term incentives — Cash bonuses

If an executive achieves pre-determined milestones as set by the Remuneration and Nomination Committee, a cash bonus, up to a maximum amount for each executive as set by the Remuneration and Nomination Committee, may be paid to the relevant executive. The Remuneration and Nomination Committee may also decide to pay discretionary bonuses to executives depending on their performance during the financial year. The cash bonuses are awarded for superior performance against short-term goals. We believe that paying such cash bonuses will:

 

   

promote the growth, profitability and expense control necessary to accomplish corporate strategic long-term plans;

 

   

encourage superior results by providing a meaningful incentive; and

 

   

support teamwork among employees.

If payable, cash bonuses are payable in the first quarter of each year. Each executive has a maximum potential cash bonus set by the Remuneration and Nomination Committee and determined depending on the accountabilities of the role and the impact on the organization.

Each year, the Remuneration and Nomination Committee considers the appropriate targets and key performance indicators to link short-term incentives and the level of payout if targets are met. This includes setting any maximum cash bonuses that may be paid to an executive, and minimum levels of performance to trigger payment of short-term incentives. The “targets and performance indicators” and “pre-determined milestones” are collectively referred to as key performance indicators (“KPIs”) which are set by the Remuneration and Nomination Committee for the executives each financial year. The KPIs are generally a combination of the following:

 

   

Achieving budgets;

 

   

Regulatory submissions of our products by a specified date;

 

   

Managing risks;

 

   

Reaching a certain stage of our product development by a specified date; and

 

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Achieving other key milestones for our products by a specified date including entering into strategic partnerships for the commercialization of our product and receiving regulatory clearance to sell our product.

The KPIs to be achieved by the executives have not been disclosed. Disclosure of the specific KPIs would require us to disclose market sensitive information, including key dates for our products and the product development stage of our products. Such disclosure would result in competitive harm to our business and that of our business partners.

For the year ended December 31, 2011, the KPIs linked to short-term incentives were based on group, departmental and personal objectives. The KPIs, which are challenging but not unattainable, require performance in achieving specific targets as well as other key, strategic non-financial measures linked to drivers of performance in future reporting periods.

The Remuneration and Nomination Committee is responsible for assessing whether the KPIs are met. To help make this assessment, the Remuneration and Nomination Committee receives detailed reports on performance from management.

The cash bonus payments may be adjusted up or down in line with under or over achievement against the target performance levels. This is at the discretion of the Remuneration and Nomination Committee.

Long-term incentives — Options and Restricted Shares

Our long term incentives primarily consist of stock option grants under our Employee Option Plan (“Employee Options”). The Employee Option Plan was adopted in 2004 and approved by our stockholders in October 2006. The Employee Option Plan permits our Board to grant employee stock options to our employees. The total number of options that may be granted under the Employee Option Plan is the maximum amount permitted by law and the ASX Listing Rules and the limits imposed on our authorized capital in our amended and restated certificate of incorporation. The overall objective for the Employee Option Plan is to provide an equitable and competitive means to reward our executive and other officers for their contribution to our long-range success. Our goal is to meet the following objectives:

 

   

link each participant’s remuneration to our long-term success through the appreciation of stock price;

 

   

align the interests of our officers with the interests of our stockholders, by linking the long-term value of the compensation to stockholder returns;

 

   

generally provide annual grants of options that are market competitive; and

 

   

improve our ability to attract and retain officers.

Historically, the Company has granted market price Employee Options to all of its employees. In 2009, the Company commenced granting zero priced employee options (“ZEPOs”) to its senior executive officers. The value of options granted is determined at the time of Board of Directors approval to grant and there is a direct relationship between the value of a stock option granted and the market price of our common stock. We believe that granting stock options is an effective method of motivating our executive and other officers to manage our business in a manner consistent with the interest of our stockholders. The Company may grant market priced options at the commencement of employment of senior executives to attract suitable candidates. The Company currently intends to grant ZEPOs to senior executive officers on a recurring basis. Because such grants allow for equity participation by senior executives and provide continuing incentives notwithstanding market downturns, the Company considers them to be a valuable tool for senior executive retention.

The grant of stock options to our officers is based primarily on their performance, title and base pay. Options granted since 2010 generally have a seven year term and vest in equal tranches over three years. Options granted prior to 2010, however, had a ten-year term. Our policies for allocating compensation between long-term incentives (primarily through the granting of options and some use of Restricted Shares) and currently paid out compensation (base pay and short-term incentives) is to achieve the goals set above. Currently, the allocation between long-term and short term incentives is determined by the Remuneration and Nomination Committee having regard to the seniority and experience of the employee.

 

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Stock-option awards are generally granted annually to senior executives and officers in conjunction with the review of the performance of our executive and other officers.

Since 2009, we have also issued restricted shares to all employees under our Employee Share Plan (“Restricted Shares”). Our Employee Share Plan was adopted by the Board of Directors in 2009. The Employee Share Plan permits our Board to grant shares of our common stock to our employees. The number of shares able to be granted is limited to the amount permitted to be granted at law, the ASX Listing Rules and by the limits on our authorized share capital in our certificate of incorporation. All our employees are eligible for shares under the Employee Share Plan. The Company currently proposes to issue A$1,000 worth of restricted shares of common stock to all employees of the Company on a recurring basis, but no more frequently than annually. The restricted shares have the same terms of issue as our existing shares of common stock but are not able to be traded until the earlier of three years from the date on which the shares are issued or the date the relevant employee ceases to be an employee of the Company or any of its associated group of companies. We believe that the granting of restricted shares is an effective method of motivating our employees in a manner consistent with the interest of our stockholders.

Other remuneration — Superannuation

As required by Australian law, we contribute to standard defined contribution superannuation funds on behalf of all employees at an amount up to nine percent of each such employee’s salary. Superannuation is a compulsory savings program whereby employers are required to pay a portion of an employee’s remuneration to an approved superannuation fund that the employee is typically not able to access until they are retired. We permit employees to choose an approved and registered superannuation fund into which the contributions are paid.

Overview of the compensation process

The composition of compensation for our executive officers includes the following: base pay, cash bonus, stock-based awards and superannuation. The elements of executive compensation are discussed at the meetings of our Remuneration and Nomination Committee. During the end or beginning of each year, the Remuneration and Nomination Committee discusses the base salaries and cash bonus plans for the applicable year for our executive officers, and makes recommendations to the Board of Directors for its approval. The Board of Directors usually approves the base pays and cash bonus plan recommended by the Remuneration and Nomination Committee; though if it does not, it could ask the Remuneration and Nomination Committee to prepare revised recommendations. At or about the same time, the Remuneration and Nomination Committee, subject to the approval of the Board of Directors, grants stock-based awards to our executive and other officers. Under the Listing Rules of ASX, the grant of options or shares to directors as remuneration (who may or may not be executives) requires stockholder approval.

As part of the Remuneration and Nomination Committee’s process, the Chief Executive Officer meets with our Human Resources Manager and executive officers, and reviews the elements of each executive officer’s (excluding the Chief Executive Officer’s) compensation during the preceding years. The Human Resources Manager and the Chief Executive Officer liaise on compensation recommendations for each of our executive officers (excluding the Chief Executive Officer’s compensation). The Chief Executive Officer then presents their recommendations to the Remuneration and Nomination Committee. The Chairman of the Remuneration and Nomination Committee may liaise with the Human Resources Manager whilst reviewing the Chief Executive Officer’s compensation. Our executive officers are not present when our Human Resources Manager makes her recommendations or during the Remuneration and Nomination Committee’s deliberations on the compensation of our executive officers.

Additionally, we will seek an advisory vote in relation to compensation from stockholders every year, which we believe will be the most effective means for conducting and responding to such an advisory vote. The Board will consider the outcome of each such stockholders advisory vote.

 

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Compensation Committee Report

The Remuneration and Nomination Committee has reviewed and discussed the information described under the caption “Compensation Discussion and Analysis” with members of management. Based on this review and discussion with management, the Remuneration and Nomination Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Members of the Remuneration and Nomination Committee

Mr. Andrew Jane (chairman)

Mr. Andrew Denver

Mr. Marshall Heinberg

You should not consider this report to be “soliciting materials” or to be “filed” with the SEC. It also is not subject to the liabilities of section 18 of the Exchange Act. In addition, this report shall not be deemed incorporated by reference into any prior or subsequent filing by us under U.S. federal securities laws, except to the extent that we specifically incorporate it by reference into a document filed by us under U.S. federal securities laws.

Summary Compensation Table

Our named executives are all employed by our wholly owned subsidiary, Universal Biosensors Pty Ltd.

 

Name and Principal

Position

  Year     Salary
A$
    Bonus(1)
A$
    Aggregate
Grant Date
Fair Value
of Stock
Awards(2)
A$
    Aggregate
Grant Date
Fair Value
of Option
Awards(3)
A$
    All Other
Compensation(4)
A$
    Total
A$
 

Paul Wright

    2011        334,869        37,500               1,909,000        33,513        2,314,882   

Managing Director/Chief

Executive Officer(5)

             

Andrew Denver

    2011        263,750                             23,738        287,488   

Chairman & Interim Chief

Executive Officer(6)

    2010        203,333                             18,300        221,633   
    2009        155,000                             13,950        168,950   

Salesh Balak

    2011        299,998        22,500        999        22,250        29,025        374,772   

Chief Financial Officer

    2010        243,223        36,484        999        39,500        25,174        345,380   
    2009        235,000        66,584        999        238,750        27,142        568,475   

Alastair Hodges

    2011        312,493        23,437        999        22,250        30,234        389,413   

Chief Scientist

    2010        293,421        29,342        999        39,500        29,049        392,311   
    2009        276,750        51,975        999        238,750        29,585        598,059   

Garry Chambers

    2011        312,493        23,437        999        22,250        30,234        389,413   

Vice President, Operations

    2010        293,421        38,145        999        39,500        29,841        401,906   
    2009        276,750        51,975        999        238,750        29,585        598,059   

Adrian Oates

    2011        303,812        30,381        999        22,250        30,077        387,520   

Vice President, Quality and

Regulatory

    2010        285,270        39,938        999        39,500        29,268        394,975   
    2009        269,062        64,313        999        238,750        30,004        603,128   

 

(1) Amounts reported in this column represent the cash annual incentive award for performance under our annual incentive plan. Cash annual incentive award for 2011 performance was considered and approved by our Board of Directors in March 2012. The level of bonuses varies from year to year and is dependent on the KPIs achieved by the executives.

 

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(2) In accordance with ASC 718, the fair value of the stock awards has been calculated as the closing price of the Company’s common stock on ASX on the day on which the employee stock awards were granted.

 

(3) In accordance with ASC 718, the fair value of the option grants was estimated on the date of each grant using the Trinomial Lattice model.

 

(4) Represents the superannuation payment of 9% of base pay.

 

(5) Mr. Wright was appointed as a director of the Company on March 1, 2011. No directors’ fees are payable to Mr. Wright in addition to his executive remuneration set out above.

 

(6) Mr. Denver was appointed as Interim Chief Executive Officer of the Company from September 2010 to May 2011. During this period no directors’ fees were payable to Mr. Denver in addition to his executive remuneration. The compensation amount includes his executive remuneration as well as his directors’ fees. The following shows the directors fees received by Mr. Denver during 2011:

 

Fees
Earned or
Paid in
Cash
A$

     Aggregate
Grant Date
Fair Value
of Stock
Awards
A$
     Aggregate
Grant Date
Fair Value
of Option
Awards
A$
     Non-Equity
Incentive Plan
Compensation
A$
     Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings
A$
     All Other
Compensation(a)
A$
     Total
A$
90,416                                                      8,137            98,553  

 

  (a) Represents compulsory superannuation payment of 9% of base pay.

Grants of Plan-Based Awards During 2011

The following table provides information regarding the plan-based awards that we made to the named executive officers during the year ended December 31, 2011.

 

Name

  Grant
Date
 

 

Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards

 

 

Estimated Future
Payouts Under Equity
Incentive Plan Awards

  All
Other

Stock
Awards:
Number of
Shares
of  Stock
or Units(2)
#
  All Other
Option
Awards:
Number  of
Securities

Underlying
Options(3)
#
  Exercise or
Base Price
of Option

Awards
(A$/Sh)
  Grant
Date Fair
Value of
Stock  and
Option/

SAR
Awards(4)
A$
        Target              
    Threshold
A$
  Grant
A$
  Maximum
A$
  Threshold
#
  Target(1)
#
  Maximum
#
       

Paul Wright(5)

      24/02/2011                                         400,000                         1,900,000         1.38         0.83  

Andrew Denver(6)

                                                                                       

Salesh Balak

      18/11/2011                                                         1,123         25,000         0.89         0.89  

Alastair Hodges

      18/11/2011                                                         1,123         25,000         0.89         0.89  

Garry Chambers

      18/11/2011                                                         1,123         25,000         0.89         0.89  

Adrian Oates

      18/11/2011                                                         1,123         25,000         0.89         0.89  

 

(1) The equity incentive plan awards includes 400,000 options awarded to the named executive that will vest upon CE marking or first regulatory approval in the United States of the final test described in the Collaboration Agreement with Siemens Healthcare Diagnostics, Inc.

 

(2) The restricted fully paid shares of our common stock were awarded to the named executives under the Employee Share Plan. The Restricted Shares are not able to be traded until the earlier of three years from the date on which the Restricted Shares are issued or the date an employee ceases to be an employee of the Company or any of its associated group of companies.

 

(3) The stock option awards shown in the table above are stock options that were awarded to the named executive officers as per the grant date indicated. With the exception of the stock options granted to Mr. Wright, all options granted to employees in 2011 vest in three equal tranches over three years with the first tranche vesting on December 31, 2012, the second tranche vesting on December 31, 2013 and the third tranche vesting on December 31, 2014. In relation to the stock options granted to Mr. Wright:

 

  a. 500,000 options vested on September 9, 2011 when the Company entered into a Collaboration Agreement with Siemens Healthcare Diagnostics, Inc.; and

 

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  b. 1,400,000 options vest in three equal tranches over three years. The first tranche vested on December 31, 2011, the second tranche vests on December 31, 2012 and the third tranche vesting on December 31, 2013.

While an executive is an employee of the Company, shares issued to executives on exercise of their employee options are not able to be traded for a period up to three years from the grant date following which time the Board of Directors (or its delegate) must grant approval to trade, which may be granted or withheld at its sole discretion, for the shares to be traded. The shares become immediately tradable if the Company’s executive ceases to be an employee of the Company and its associated group of companies.

 

(4) The fair value of the option grants were estimated on the date of each grant using the Trinomial Lattice model.

 

(5) Mr. Wright was appointed as a director of the Company on March 1, 2011.

 

(6) Mr. Denver was Interim Chief Executive Officer of the Company from September 2010 to May 2011.

Narrative disclosure to summary compensation table and grants

Cash Bonuses

The Chief Executive Officer is entitled to a maximum cash bonus equivalent to 25% of his base salary. The other executives are entitled to a maximum cash bonus equivalent to 20% of their base salary. The cash bonus component was arrived at after comparing them to peer groups. If a named executive achieves pre-determined milestones set by the Remuneration and Nomination Committee, a cash bonus, up to a maximum amount for each executive as set by the Remuneration and Nomination Committee, may be paid to the relevant executive. In 2011, named executives each had up to five KPIs each of which had a percentage indicative weighing against the potential bonus. Specific KPIs for 2011 are not disclosed as they would require us to disclose market sensitive information. For the year ended December 31, 2011, the KPIs linked to short-term incentives were based on group, departmental and personal objectives.

Employee Option Plan

The Employee Option Plan was adopted by the Board of Directors in 2004 and approved by our stockholders in October 2006. The Employee Option Plan permits our Board to grant stock options to our employees. The number of employee options able to be granted is limited to the amount permitted to be granted at law, the ASX Listing Rules and by the limits on our authorized share capital in our certificate of incorporation. The ASX Listing Rules generally prohibit companies whose securities are quoted on the ASX from issuing securities exceeding 15% of issued share capital in any 12 month period, without stockholder approval. Broadly speaking, options are issued to staff under two categories – options to new staff and options to existing staff (recurring options). Options to new staff are generally granted within the year they commence employment and are typically market price Employee Options. Recurring options are issued based on the events that transpired during the year. The recurring options granted to employees in 2011 were granted on the basis as described in this section. The number of options to be granted as part of a recurring grant of options is determined within salary bands. Additional options may be granted at other times upon the achievement of predetermined key performance indicators. The Company currently intends to grant ZEPOs to senior executives of the Company on a recurring basis. Other senior employees are expected to be granted market price Employee Options on a recurring basis. All employees are expected to be granted Restricted Shares on a recurring basis.

When exercisable, each option is convertible into one share of common stock at an exercise price determined on the date of grant. The exercise price is determined by the Board at the time of approval of grant. The exercise price of all market price options since 2009 has been calculated as the closing price of the Company’s common stock on ASX on the day on which the employee options were granted. The exercise price of all market price options up to 2009 have historically been calculated as the average closing price of the Company’s common stock on the ASX on the five days on which the Company’s common stock has traded prior to the approval of grant. The Company has also granted certain options with a zero exercise price. The contractual life of each option granted is between seven and ten years. No option holder has any right under the

 

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option to participate in any other issues of shares of our common stock or any other entity without first having exercised the options. Any exercise conditions must be satisfied before the options vest and become capable of exercise. To date, other than with respect to the “sign on” options granted to Paul Wright in 2011, options have been subject to time based vesting over either three or four years (depending on the year in which they were granted). The options granted to Mr Paul Wright at the commencement of his employment are subject to the vesting conditions summarized above under the heading Compensation Discussion and Analysis — Grants of Plan-Based Awards During 2011 (Refer to note 3). Exercise conditions are determined by the Board at the time of grant of the options. This determination would typically follow a recommendation from the Remuneration and Nomination Committee. To date, we have not extended or undertaken any other modifications to outstanding options. In 2007, the exercise price of all employee options on issue at that time were adjusted in accordance with a formula set out in the ASX Listing Rules as a result of a renounceable rights issue capital raising undertaken by the Company. The Company has not otherwise repriced any of its options. The options lapse on such date determined by the Board at the time of grant or earlier in accordance with the Employee Option Plan. Options may be subject to adjustment in the event of a stock split, stock dividend, consolidation or other change in the structure of our capitalization. Options carry no dividend or voting rights. With respect to options granted to named executives after 2009, the shares issued to those executives on exercise of their employee options are not able to be traded for a period up to three years from the grant date following which time the Board of Directors (or its delegate) must grant approval to trade, which may be granted or withheld at its sole discretion, for the shares to be traded. The shares become immediately tradable if the named executive ceases to be an employee of the Company and its associated group of companies.

Employee Share Plan

Our Employee Share Plan was adopted by the Board of Directors in 2009. The Employee Share Plan permits our Board to grant shares of our common stock to our employees. The number of shares able to be granted is limited to the amount permitted to be granted at law, the ASX Listing Rules and by the limits on our authorized share capital in our certificate of incorporation. All our employees are eligible for shares under the Employee Share Plan. The Company currently proposes to issue A$1,000 worth of Restricted Shares to all employees of the Company on a recurring basis, but no more frequently than annually. The Restricted Shares have the same terms of issue as our existing shares of common stock but are not able to be traded until the earlier of three years from the date on which the Restricted Shares are issued or the date the relevant employee ceases to be an employee of the Company or any of its associated group of companies.

Executive Service Agreements

Remuneration and other terms of employment for the executive officers are formalized in executive service agreements. The terms and conditions of each of the employment agreements with our executive officers who continued to serve at December 31, 2011 are substantially similar, a summary of which is set out below:

 

   

the executive must devote his time and attention exclusively to our business and affairs and the business and affairs of Universal Biosensors Pty Ltd, unless otherwise approved by the Company;

 

   

the executive is bound by customary confidentiality, intellectual property assignment and non-competition clauses;

 

   

the executive’s salary is to be reviewed on an annual basis;

 

   

the executive may be entitled to a discretionary cash bonus or be granted stock options under the Employee Option Plan as recommended by the Remuneration and Nomination Committee and determined by our Board of Directors from time to time;

 

   

each party has the right to terminate the agreement by giving three months notice to the other party or, in the case of Mr. Wright’s agreement, with six months notice;

 

   

we may also terminate the agreement, at any time with reasonable notice, with immediate effect for cause, for default by the executive in the performance of the executive’s responsibilities or the discharge of the

 

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executive’s duties, for fraudulent or dishonest conduct by the executive or intemperate use of alcohol or drugs by the executive or conviction of the executive for the commission of a felony or willful or intentional injury to our business or affairs; and

 

   

each agreement, with the exception of the agreement with Dr. Oates, Dr. Davis and Mr. Wright, will terminate automatically on a date specified in the executive employment agreement unless extended by us from time to time. If the parties whose contracts have fixed end dates do not expressly extend the agreement, the executive’s employment will automatically extend for a further 12 months on the same terms. Dr. Oates’ and Mr. Wright’s agreement does not have a specific end date and terminates with notice in accordance with its terms.

Subject to applicable law, other than payments during the notice period and any outstanding annual leave and long service leave entitlements, no additional payments are payable on termination or change of control.

 

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Outstanding Equity Awards at Fiscal Year-End

The following table provides information as of December 31, 2011 regarding equity awards, including unexercised stock options that had not vested, for each of the named executive officers.

 

     Option Awards

Name

   Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
   Option
Exercise
Price
(A$)
   Option
Expiration
Date

Andrew Denver(1)

                                            

Paul Wright(2)

       966,666          933,334          400,000          1.38          February 23, 2018  

Salesh Balak(3)

       208,000                            1.18          March 22, 2017  
       100,000                            0.89          March 16, 2018  
       8,333                                     May 14, 2019  
       21,666          73,334                            June 28, 2019  
       66,666          33,334                   1.72          November 9, 2019  
       8,333          16,667                            November 10, 2017  
                25,000                            November 17, 2018  

Alastair Hodges(4)

       768,448                            0.30          December 30, 2013  
       36,248                            0.35          December 31, 2015  
       36,000                            1.18          March 22, 2017  
       100,000                            0.89          March 16, 2018  
       16,667                                     May 14, 2019  
       31,666          73,334                            June 28, 2019  
       66,666          33,334                   1.72          November 9, 2019  
       8,333          16,667                            November 10, 2017  
                25,000                            November 17, 2018  

Garry Chambers(5)

       576,336                            0.30          December 30, 2013  
       36,248                            0.35          December 31, 2015  
       36,000                            1.18          March 22, 2017  
       100,000                            0.89          March 16, 2018  
       16,667                                     May 14, 2019  
       31,666          73,334                            June 28, 2019  
       66,666          33,334                   1.72          November 9, 2019  
       8,333          16,667                            November 10, 2017  
                25,000                            November 17, 2018  

Adrian Oates(6)

       400,000                            1.20          September 18, 2017  
       16,667                                     May 14, 2019  
       31,666          73,334                            June 28, 2019  
       66,666          33,334                   1.72          November 9, 2019  
       8,333          16,667                            November 10, 2017  
                25,000                            November 17, 2018  

 

 

(1) Mr. Denver was Interim Chief Executive Officer of the Company from September 2010 to May 2011.

 

(2) Of the options expiring on February 23, 2018:

 

  a. 500,000 options vested on September 9, 2011 when the Company entered into a Collaboration Agreement with Siemens Healthcare Diagnostics, Inc.;

 

  b. 1,400,000 of the employee options will vest in equal tranches over three years subject to continued employment at the time of vesting. The first tranche vested on December 31, 2011, the second tranche vests on December 31, 2012 and the third tranche vests on December 31, 2013; and

 

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  c. 400,000 options will vest upon CE marking or first regulatory approval in the United States of the final test described in the Collaboration Agreement with Siemens Healthcare Diagnostics, Inc., subject to Mr. Wright’s continued employment at that time.

 

(3) Of the options expiring on March 22, 2017, the options vested and became exercisable in three equal tranches on December 31, 2007, 2008 and 2009. Of the options expiring on March 16, 2018, the options vested and became exercisable in three equal tranches on December 31, 2008, 2009 and 2010. Of the options expiring on May 14, 2019, 8,333 options vested and became exercisable on December 31, 2011. Of the options expiring on June 28, 2019, 21,666 options vested and became exercisable on December 31, 2011, 35,000 options vest and become exercisable on December 31 2012, 25,000 options vest and become exercisable on December 31, 2013 and 13,334 options vest and become exercisable on December 31, 2014. Of the options expiring on November 9, 2019, one-third of the options vested and became exercisable on December 31, 2010, one-third of the options vested and became exercisable on December 31, 2011, whilst the remaining stock options vest and become exercisable on December 31, 2012. Of the options expiring on November 10, 2017, one-third of the options vested and became exercisable on December 31, 2011 whilst the remaining stock options vest and become exercisable in two equal tranches on December 31, 2012 and 2013. Of the options expiring on November 17, 2018, the options vest and become exercisable in three equal tranches on December 31, 2012, 2013 and 2014.

 

(4) Of the options expiring on December 30, 2013, the options vested and became exercisable in three equal tranches on December 31, 2004, 2005 and 2006. Of the options expiring on December 31, 2015, the options vested and became exercisable in three equal tranches on January 1, 2007, 2008 and 2009. Of the options expiring on March 22, 2017, the options vested and became exercisable in three equal tranches on December 31, 2007, 2008 and 2009. Of the options expiring on March 16, 2018, the options vested and became exercisable in three equal tranches on December 31, 2008, 2009 and 2010. Of the options expiring on May 14, 2019, 8,333 options vested and became exercisable on December 31, 2010 and the remaining stock options of 8,334 vested and became exercisable on December 31, 2011. Of the options expiring on June 28, 2019, 10,000 options vested and became exercisable on December 31, 2010, 21,666 options vested and became exercisable on December 31, 2011, 35,000 options vest and become exercisable on December 31 2012, 25,000 options vest and become exercisable on December 31, 2013 and 13,334 options vest and become exercisable on December 31, 2014. Of the options expiring on November 9, 2019, one-third of the options vested and became exercisable on December 31, 2010, one-third of the options vested and became exercisable on December 31, 2011, whilst the remaining stock options vest and become exercisable on December 31, 2012. Of the options expiring on November 10, 2017, one-third of the options vested and became exercisable on December 31, 2011 whilst the remaining stock options vest and become exercisable in two equal tranches on December 31, 2012 and 2013. Of the options expiring on November 17, 2018, the options vest and become exercisable in three equal tranches on December 31, 2012, 2013 and 2014.

 

(5) Of the options expiring on December 30, 2013, the options vested and became exercisable in three equal tranches on December 31, 2004, 2005 and 2006. Of the options expiring on December 31, 2015, the options vested and became exercisable in three equal tranches on January 1, 2007, 2008 and 2009. Of the options expiring on March 22, 2017, the options vested and became exercisable in three equal tranches on December 31, 2007, 2008 and 2009. Of the options expiring on March 16, 2018, the options vested and became exercisable in three equal tranches on December 31, 2008, 2009 and 2010. Of the options expiring on May 14, 2019, 8,333 options vested and became exercisable on December 31, 2010 and the remaining stock options of 8,334 vested and became exercisable on December 31, 2011. Of the options expiring on June 28, 2019, 10,000 options vested and became exercisable on December 31, 2010, 21,666 options vested and became exercisable on December 31, 2011, 35,000 options vest and become exercisable on December 31 2012, 25,000 options vest and become exercisable on December 31, 2013 and 13,334 options vest and become exercisable on December 31, 2014. Of the options expiring on November 9, 2019, one-third of the options vested and became exercisable on December 31, 2010, one-third of the options vested and became exercisable on December 31, 2011, whilst the remaining stock options vest and become exercisable on December 31, 2012. Of the options expiring on November 10, 2017, one-third of the options vested and became exercisable on December 31, 2011 whilst the remaining stock options vest and become exercisable in two equal tranches on December 31, 2012 and 2013. Of the options expiring on November 17, 2018, the options vest and become exercisable in three equal tranches on December 31, 2012, 2013 and 2014.

 

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(6) Of the options expiring on September 18, 2017, the options vested and became exercisable in three equal tranches on June 30, 2008, 2009 and 2010. Of the options expiring on May 14, 2019, 8,334 options vested and became exercisable on December 31, 2010 and the remaining stock options of 8,333 vested and became exercisable on December 31, 2011. Of the options expiring on June 28, 2019, 10,000 options vested and became exercisable on December 31, 2010, 21,666 options vested and became exercisable on December 31, 2011, 35,000 options vest and become exercisable on December 31 2012, 25,000 options vest and become exercisable on December 31, 2013 and 13,334 options vest and become exercisable on December 31, 2014. Of the options expiring on November 9, 2019, one-third of the options vested and became exercisable on December 31, 2010, one-third of the options vested and became exercisable on December 31, 2011, whilst the remaining stock options vest and become exercisable on December 31, 2012. Of the options expiring on November 10, 2017, one-third of the options vested and became exercisable on December 31, 2011 whilst the remaining stock options vest and become exercisable in two equal tranches on December 31, 2012 and 2013. Of the options expiring on November 17, 2018, the options vest and become exercisable in three equal tranches on December 31, 2012, 2013 and 2014.

Option Exercises and Stock Vested

The following table provides information during fiscal year 2011 regarding exercises of stock options, SARs or similar instruments, or vesting of stock, including restricted stock, restricted stock units or similar instruments, by any named executive officer.

 

Name

   Option Awards    Stock Awards
   Number of Shares
Acquired on Exercise

(#)
   Value Realized on
Exercise (A$)
   Number of Shares
Acquired on Vesting
(#)
   Value Realized on
Vesting (A$)

Paul Wright

                                   

Andrew Denver(1)

                                   

Salesh Balak

       18,333          16,500          1,123          999  

Alastair Hodges

                         1,123          999  

Garry Chambers

                         1,123          999  

Adrian Oates

                         1,123          999  

 

 

(1) Mr. Denver was Interim Chief Executive Officer of the Company from September 2010 to May 2011.

Consideration of Results of Prior Year Shareholder “Say-on-Pay” Vote

Last year was the first time we held a shareholder “say-on-pay” vote. Approximately 99% of our shareholders who cast votes, voted in favor of the compensation paid to our named executive officers for 2010. Accordingly, when developing our executive compensation program for 2012, we considered the overall level of support and did not make any material changes to the structure of our compensation program.

Pension benefits

We do not provide pension benefits to our named executives. Instead, as required by Australian law, we contribute to standard defined contribution superannuation funds on behalf of all employees at an amount up to nine percent of each such employee’s salary. Superannuation is a compulsory savings program whereby employers are required to pay a portion of an employee’s remuneration to an approved superannuation fund that the employee is typically not able to access until they are retired. We permit employees to choose an approved and registered superannuation fund into which the contributions are paid.

Non-qualified Defined Contribution and Other Non-qualified Deferred Compensation Plans

We do not maintain any non-qualified defined contribution or deferred compensation plans.

 

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Potential payments upon Termination or Change-in-control

See “Executive Compensation — Narrative disclosure to summary compensation table and grants — Executive Service Agreements.”

Equity Compensation Plan Information

Set out below are details of the Employee Option Plan as at December 31, 2011.

 

Plan Category

   Equity Compensation Plan Information
   Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
   Weighted average exercise
price of outstanding
options, warrants and rights
(A$)
   Number of Securities
remaining for future
issuance

Equity compensation plans approved by security holders

       11,417,536          1.02          (1 )

Equity compensation plans not approved by security holders

                         (1 )
    

 

 

      

 

 

      

Total

       11,417,536          1.02       
    

 

 

      

 

 

      

 

 

(1) The number of employee options able to be granted is limited to the amount permitted to be granted at law, the ASX Listing Rules and by the limits on our authorized share capital in our certificate of incorporation. The Listing Rules of ASX generally prohibits companies whose securities are quoted on ASX from issuing securities exceeding 15% of issued share capital in any 12 month period, without stockholder approval.

INDEPENDENT PUBLIC ACCOUNTANTS

Appointment of Independent Registered Public Accounting Firm

Our Audit & Compliance Committee has appointed PricewaterhouseCoopers, Australia as our independent public accountants for the fiscal year ended December 31, 2012. Representatives of PricewaterhouseCoopers, Australia will be present at the Meeting, will have the opportunity to make a statement if such representative desires to do so, and will be available to respond to appropriate questions.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

 

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Audit Fees

PricewaterhouseCoopers, Australia audited our financial statements for the year ended December 31, 2011.

 

     Year Ended
December  31
     2011
A$
   2010
A$

(a) Audit Fees

         

Annual Financial Statements

       327,980          432,291  

Form 10-Q

       111,129          108,300  
    

 

 

      

 

 

 
       439,109          540,591  

(b) Audit-Related Fees

         

Government Grant Audit

       9,500          3,105  
    

 

 

      

 

 

 
       9,500          3,105  

(c) Tax Fees

         

Tax Returns

       34,000          94,296  

Other tax Compliance and Advisory Services

       74,740          247,216  
    

 

 

      

 

 

 
       108,740          341,512  
    

 

 

      

 

 

 

Total

       557,349          885,208  
    

 

 

      

 

 

 

Tax fees payable to PricewaterhouseCoopers, Australia and United States are in relation to the review and filing of our tax returns. They also include fees for tax advice we may have sought from time to time.

All audit and non-audit services to be performed by the Company’s independent accountant must be approved in advance by the Audit & Compliance Committee. For audit services, each year the independent accountant provides the Audit & Compliance Committee with an engagement letter outlining the scope of proposed audit services to be performed during the year and the proposed fees, which must be formally accepted by the Committee before the audit commences. Any additional service proposed to be provided after the annual pre-approval process of audit services requires specific pre-approval by Audit & Compliance Committee. The Committee may delegate either general or specific pre-approval authority to any one of the Committee members or the Chief Financial Officer. The member or Chief Financial Officer to whom such authority is delegated must report any pre-approval decisions to the Committee at its next meeting. Accordingly, the Committee pre-approved all of the fees last year.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents certain information known to us regarding beneficial ownership of our shares of common stock as of March 6, 2012 by the following persons:

 

   

each person known by us to be the beneficial owner of more than 5% of our common stock;

 

   

our executive officers;

 

   

our directors; and

 

   

our executive officers and directors as a group.

Beneficial ownership is determined according to the rules of the Securities and Exchange Commission and generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power of that security, and includes options and warrants that are exercisable within 60 days.

 

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Information with respect to beneficial ownership has been furnished to us by each director, executive officer and owner of 5% or more of our shares. Holders of our CDIs have beneficial ownership of an equivalent number of our shares. Unless otherwise indicated, to our knowledge, each holder of our CDIs possesses sole power to direct CDN how to vote and has investment power over the shares listed, except for shares owned jointly with that person’s spouse.

The table below lists applicable percentage ownership based on 159,146,213 shares of common stock outstanding as of March 6, 2012 and 7,854,111 options to purchase our shares that are exercisable as of March 6, 2012 and within 60 days of this date. Options to purchase our shares that are exercisable within 60 days of March 6, 2012 are deemed to be beneficially owned by the person holding these options for the purpose of computing percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other holder.

Unless otherwise indicated in the table below, the address for each of the persons listed in the table below is c/o Universal Biosensors, Inc., 1 Corporate Avenue, Rowville, Victoria 3178.

 

Name and Address

of Beneficial Owner

   Number of
Shares(1)
     Percentage of
Class
 

Paul Wright(2)

     994,666         *   

Salesh Balak(3)

     442,001         *   

Garry Chambers(4)

     2,633,340         1.65

Alastair Hodges Ph.D.(5)

     3,123,113         1.95

Adrian Oates Ph. D.(6)

     534,001         *   

Andrew Denver(7)

     7,668,955         4.82

Colin Adam Ph.D.(8)

     5,626,951         3.54

Denis Hanley(9)

     7,303,994         4.59

Andrew Jane(10)

     17,794,384         11.18

Elizabeth Wilson(11)

     2,046,500         1.29

Marshall Heinberg(12)

             *   

Total Directors and Executives as a group (11 persons)

     48,167,904         29.55

Johnson & Johnson Development Corporation(13)

     14,915,400         9.37

CM Capital Venture Trust No. 3(14)

     17,794,384         11.18

PFM Cornerstone Ltd(15)

     11,883,018         7.47

Cogent Nominees Pty Limited(16)

     8,500,000         5.34

 

 

* Represents beneficial ownership of less than one percent of our outstanding ordinary shares.

 

(1) Includes shares issuable pursuant to options exercisable as of March 6, 2012 and within 60 days of this date. The figures represent the amounts last notified to us unless otherwise stated. The relevant stockholders may have acquired or disposed of shares since the last notification that are not reflected.

 

(2) Includes: (i) 28,000 shares held by a super fund on behalf of Mr. Wright; and (ii) 966,666 options exercisable as of March 6, 2012 and within 60 days of this date

 

(3) Includes: (i) 26,667 shares in the form of CDIs Mr. Balak holds directly; (ii) 412,998 options exercisable as of March 6, 2012 and within 60 days of this date; and (iii) 2,336 restricted fully paid shares.

 

(4) Includes: (i) 1,759,088 shares in the form of CDIs Mr. Chambers holds directly; (ii) 2,336 restricted fully paid shares ; and (iii) 871,916 employee options exercisable as of March 6, 2012 and within 60 days of this date.

 

(5) Includes: (i) 2,056,749 shares in the form of CDIs Dr. Hodges holds directly; (ii) 2,336 restricted fully paid shares; and (iii) 1,064,028 employee options exercisable as of March 6, 2012 and within 60 days of this date.

 

(6) Includes: (i) 8,333 shares in the form of CDIs Mr. Oates holds directly; 523,332 options exercisable as of March 6, 2012 and within 60 days of this date; and (ii) 2,336 restricted fully paid shares.

 

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(7) Includes: (i) 1,087,425 shares in the form of CDIs Mr. Denver holds directly; (ii) 1,181,812 shares in the form of CDIs held by a trust of which Mr. Denver is a potential beneficiary; (iii) 4,662,768 shares in the form of CDIs held by The Principals Cornerstone Fund Pty Ltd on trust for Mr. Denver; (iv) 736,950 shares in the form of CDIs held by Mr. Denver’s spouse.

 

(8) Includes: (i) 964,183 shares in the form of CDIs held by a superannuation fund of which Dr. Adam is a potential beneficiary; (ii) 4,662,768 shares in the form of CDIs held by The Principals Cornerstone Fund Pty Ltd on trust for Dr. Adam.

 

(9) Includes: (i) 2,313,230 shares in the form of CDIs which Mr. Hanley holds directly; (ii) 279,105 shares in the form of CDIs held by a superannuation fund of which Mr. Hanley is a potential beneficiary and 48,889 shares in the form of CDIs held by a trust of which Mr. Hanley is a potential beneficiary; (iii) 4,662,770 shares held by The Principals Cornerstone Fund Pty Ltd on trust for Mr. Hanley.

 

(10) Includes: (i) 14,286,272 shares in the form of CDIs held by CM Capital Investments Pty Ltd as trustee of CM Capital Venture Trust No.3; and (ii) 3,508,112 shares in the form of CDIs held by CM Capital Investments Pty Ltd as trustee of CM Capital 3A. Andrew Jane is a partner of CM Capital Investments Pty Ltd. Mr. Jane may be taken to have an indirect pecuniary interest in an indeterminate portion of all shares of common stock held by CM Capital Investments Pty Ltd as trustees for CM Capital Venture Trust No. 3 and CM Capital 3A. Mr. Jane disclaims beneficial ownership in such shares, except to the extent of his pecuniary interest therein.

 

(11) Includes: (i) 1,600,000 shares in the form of CDIs held by companies of which Dr. Wilson is a director and a potential beneficiary; (ii) 46,500 shares in the form of CDIs held as trustee; and (iii) 400,000 shares in the form of CDIs held by a superannuation fund of which Dr. Wilson is a director and a potential beneficiary.

 

(12) Mr. Heinberg is a non-controlling shareholder of PFM Cornerstone Ltd, and does not have investment control. PFM Cornerstone Ltd holds 11,883,018 shares in the form of CDIs.

 

(13) Johnson & Johnson Development Corporation is a wholly owned subsidiary of Johnson and Johnson Corporation. Based on the latest Amendment to Schedule 13G filed on January 25, 2012, Johnson & Johnson and Johnson and Johnson Development Corporation, beneficially owned 14,915,400 shares of the Company. The address of Johnson & Johnson is One Johnson & Johnson Plaza, New Brunswick, NJ 08901, US.

 

(14) Includes (i) 14,286,272 shares in the form of CDIs held by CM Capital Investments Pty Ltd as trustee of the CM Capital Venture Trust No.3; and (ii) 3,508,112 shares in the form of CDIs held by CM Capital Investments Pty Ltd as trustee of CM Capital 3A. The address of CM Capital Investments Pty Ltd is Level 9, 545 Queen Street, Brisbane QLD 4000, Australia.

 

(15) The address of PFM Cornerstone Ltd is PO Box Q92 Queen Victoria Building NSW 1230, Australia. Each of Messrs. Denver and Hanley and Dr. Adam is a non-controlling shareholder, director and executive officer of PFM Cornerstone Ltd, none of whom has investment control. Mr. Heinberg is also a non-controlling shareholder of PFM Cornerstone Ltd, and does not have investment control.

 

(16) The address of Cogent Nominees Pty Ltd is PO Box R209, Royal Exchange NSW 1225.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Related Persons

Each of our executive officers is a party to an executive service agreement with us. See “Executive Compensation — Narrative disclosure to summary compensation table and grants — Executive Service Agreements.” In addition, we have entered into indemnification agreements with our directors and certain of our executive officers in addition to the indemnification provided for in our amended and restated certificate of incorporation and our amended and restated by-laws.

In September 2011, we entered into a license agreement with SpeeDx Pty Ltd (“SpeeDx”) pursuant to which SpeeDx granted us a license in the field of molecular diagnostics. Under the agreement we make milestone payments totaling A$500,000 if certain specified targets are achieved and payments ranging from 5% to 15% of

 

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our sales and licensing revenues to SpeeDx. Messrs Denver and Jane are directors of the Company and SpeeDx Pty Ltd. Certain of our substantial shareholders also hold substantial shareholdings in SpeeDx. CM Capital Pty Ltd, which holds approximately 11% of our shares and of which Mr Jane is a director, holds approximately 34% of the issued shares in SpeeDx. PFM Cornerstone Limited, which holds approximately 8% of our shares and of which Messrs Denver and Hanley and Dr Adam are directors, holds approximately 34% of the issued shares in SpeeDx. Johnson & Johnson Development Corporation has a beneficial interest in approximately 9% of our shares. An affiliate of Johnson & Johnson, Johnson and Johnson Research Pty Ltd owns approximately 13% of issued shares in SpeeDx.

Based on the latest Amendment to Schedule 13G filed on January 25, 2012, Johnson and Johnson Development Corporation (a venture capital wholly owned subsidiary of Johnson & Johnson) beneficially held 14,915,400 shares in the Company as at December 31, 2011 which represents approximately 9.4% of the Company’s shares.

The following transactions occurred with LifeScan, Inc. during the 2011 fiscal year:

 

     As of December, 31
     2011
A$

Current Receivables — Owing by LifeScan

    

Sale of goods

       1,999,764  

Sale of services

       2,890,019  
    

 

 

 
       4,889,783  
    

 

 

 

Current Liabilities — Owing to LifeScan

    

Purchase of goods

       786,708  
    

 

 

 

Revenue from LifeScan

    

Revenue from products

       12,063,582  

Revenue from services

       2,632,870  
    

 

 

 
       14,696,452  
    

 

 

 

Johnson and Johnson Development Corporation which owns approximately 9% of the Company’s shares, and LifeScan, Inc. are both wholly owned subsidiaries of Johnson and Johnson.

Related Party Transaction Policy and Procedure

Pursuant to our Bylaws, a majority of disinterested directors or stockholders will be required to independently consider and approve any material related party transactions involving our executive officers or directors. When considering related party proposals in the past, our Board has formed a sub-committee of disinterested directors to consider and approve the relevant related party proposals. Additionally, we will seek approval of stockholders in relation to any material related party transactions as may be required under the Listing Rules of ASX.

OTHER MATTERS

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires that our executive officers and directors and other persons who beneficially own more than 10% of a registered class of our equity securities file with the SEC reports of ownership and reports of changes in ownership of shares and other equity securities. Such executive officers and directors and other persons who beneficially own more than 10% of a registered class of our equity securities are required by the SEC to furnish us with copies of all Section 16(a) filed by such reporting persons.

 

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Based solely on our review of such forms furnished to us or written representations provided to us by the reporting person, we believe that all filing requirements applicable to our executive officers, directors and other persons who beneficially own more than 10% of a registered class of our equity securities were complied with in the financial year ended December 31, 2011 other than: (i) a delinquent Form 4 filed on August 8, 2011 for Mr. Denver reporting his beneficial ownership interest following the purchase of an aggregate of 5,000 shares of the Company’s common stock by Mr. Denver’s wife in four transactions occurring from May 26, 2011 to June 6, 2011; (ii) a delinquent Form 4 filed on November 23, 2011 for each of Mr. Chambers, Dr. Hodges and Dr. Oates reporting each of their beneficial ownership interests following the granting of options to acquire 25,000 shares of the Company’s common stock to each of them on November 18, 2011; (iii) a delinquent Form 4 filed on November 23, 2011 for Mr. Balak reporting his beneficial ownership interests following his exercise of options to purchase 18,333 shares of the Company’s common stock on November 10, 2011 and the granting of options to acquire 25,000 shares of the Company’s common stock to him on November 18, 2011; (iv) a delinquent Form 3 filed on November 28, 2011 for Mr. Davis reporting his initial beneficial ownership of the Company’s shares following his appointment as Vice President of Business Development on November 18, 2011; and (v) a delinquent Form 4 filed on November 28, 2011 for Mr. Davis reporting his beneficial ownership following the granting of options to acquire 175,000 shares of the Company’s common stock to him on November 18, 2011.

2013 Stockholder Proposals

Under Rule 14a-8 under the Securities Exchange Act of 1934, as amended, some stockholder proposals may be eligible for inclusion in our 2013 proxy statement. These stockholder proposals must be submitted, along with proof of ownership of our stock in accordance with Rule 14a-8(b)(2), to our corporate headquarters, in care of our Company Secretary. We must receive all submissions no later than November 27, 2012. We strongly encourage any stockholder interested in submitting a proposal to contact our Company Secretary in advance of this deadline to discuss the proposal, and stockholders may want to consult knowledgeable counsel with regard to the detailed requirements of applicable securities laws. Submitting a stockholder proposal does not guarantee that we will include it in our proxy statement. The Board reviews all stockholder proposals.

Alternatively, under our Bylaws, if a stockholder does not want to submit a proposal for the 2013 meeting for inclusion in our proxy statement under Rule 14a-8, or intends to nominate a person as a candidate for election to the Board directly (rather than through our Nominating and Corporate Governance Committee), the stockholder may submit the proposal or nomination to our Company Secretary between January 10, 2013 and February 9, 2013. However, if the date of the 2013 meeting is changed by more than 30 days from the anniversary of the 2012 meeting, our Company Secretary must receive the notice no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

Stockholders who intend to nominate an individual for election to the Board or to bring any other business before a meeting of stockholders must follow the procedures outlined in Sections 4.10 and/or 4.11 of Article IV of our Bylaws. We will not entertain any proposals or nominations at the annual meeting that do not comply with these requirements. If the stockholder does not also comply with the requirements of Rule 14a-4(c)(2) under the Securities Exchange Act of 1934, as amended, we may exercise discretionary voting authority under proxies that we solicit to vote in accordance with our best judgment on any such stockholder proposal or nomination. Our Bylaws are posted on our Web site at www.universalbiosensors.com in the “Corporate Governance” section under “Investor information.” To make a submission or to request a copy of our Bylaws, stockholders should contact our Company Secretary.

Other Business

Management is not aware of any matters to be presented for action at the Meeting, except matters discussed in the Proxy Statement. If any other matters properly come before the meeting, it is intended that the shares represented by proxies will be voted in accordance with the judgment of the persons voting the proxies.

 

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STOCKHOLDER COMMUNICATIONS WITH BOARD OF DIRECTORS

Any stockholder who wishes to send any communications to the Board or to individual directors should deliver such communications to the Company’s executive offices, 1 Corporate Avenue, Rowville VIC 3178, Attention: Company Secretary (companysecretary@universalbiosensors.com). Any such communication should indicate whether the communication is intended to be directed to the entire Board or to a particular director(s), and must indicate the number of shares of common stock beneficially owned by the stockholder. The Company Secretary will forward appropriate communications to the Board and/or the appropriate director(s). Inappropriate communications include correspondence that does not relate to the business or affairs of the Company or the functioning of the Board or its committees, advertisements or other commercial solicitations or communications, and communications that are frivolous, threatening, illegal or otherwise not appropriate for delivery to directors.

AVAILABILITY OF FORM 10-K

We are providing without charge to each person solicited by this Proxy Statement a copy of our Annual Report on Form 10-K, including our financial statements but excluding the exhibits to Form 10-K other than Exhibit 13. The Annual Report includes a list of the exhibits that were filed with the Form 10-K, and we will furnish a copy of any such exhibit to any person who requests it upon the payment of our reasonable expenses in providing the requested exhibit. For further information, please contact our Company Secretary, Cameron Billingsley at +612 8115 9801 or write us at 1 Corporate Avenue, Rowville VIC 3178. You may also send an email to us at companysecretary@universalbiosensors.com. Our Annual Report on Form 10-K and our other filings with the SEC, including the exhibits, are also available for free on the SEC’s Internet site (http://www.sec.gov).

WHERE YOU CAN FIND MORE INFORMATION

We file annual and quarterly reports, proxy statements and other information with the SEC. Stockholders may read and copy any reports, statements or other information that we file at the SEC’s public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. Our public filings are also available from commercial document retrieval services and at the Internet Web site maintained by the SEC at http://www.sec.gov. The Company’s Annual Report on Form 10-K was mailed along with this Proxy Statement.

For directions to the Meeting, please call +61 (2) 8115 9805 or +61 (3) 9213 9000.

STOCKHOLDERS SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE THEIR SHARES AT THE MEETING. NO ONE HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED MARCH 13, 2012. STOCKHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE.

HOUSEHOLDING

We have adopted a procedure approved by the Securities and Exchange Commission called “householding.” Under this procedure, a householding notice will be sent to stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials, and they will receive only one copy of our Annual Report and Proxy Statement unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces our printing costs and postage fees. Each stockholder who participates in householding will continue to receive a separate proxy card. If you participate in

 

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householding and wish to receive a separate copy of this proxy statement or the 2011 Annual Report, please contact our Company Secretary, Cameron Billingsley, at +612 8115 9801 or write us at 1 Corporate Avenue, Rowville VIC 3178. You may also send an email to us at companysecretary@universalbiosensors.com. A separate copy of this proxy statement and the 2011 Annual Report will be delivered promptly upon request.

If any stockholders in your household wish to begin receiving separate Annual Reports and separate Proxy Statements, they may call our Company Secretary, Cameron Billingsley, at +612 8115 9801 or write us at 1 Corporate Avenue, Rowville VIC 3178. They may also send an email to us at companysecretary@universalbiosensors.com. Other stockholders who have multiple accounts in their names or who share an address with other stockholders can authorize us to discontinue mailings of multiple annual reports and Proxy Statements by calling or writing to the Company Secretary at 1 Corporate Avenue, Rowville VIC 3178 or by email at companysecretary@universalbiosensors.com.

BY ORDER OF THE BOARD OF DIRECTORS

Cameron Billingsley

Company Secretary

Universal Biosensors, Inc.

 

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LOGO

 

Universal Biosensors Inc.

ARBN 121 559 993

CDI Voting Instruction Form

Share Registry:

BOARDROOM PTY LIMITED

GPO Box 3993

Sydney NSW 2001

Level 7, 207 Kent Street

Sydney NSW 2000

Tel: + 61 2 9290 9600

Fax: + 61 2 9279 0664

Barcoded CDI holder Reference Number

Annual Meeting – May 10, 2012

Your Voting Instructions are being sought so that CHESS Depositary Nominees Pty Ltd (“CDN”) may respond to a proxy solicitation on behalf of the Board of Directors of Universal Biosensors, Inc. (“Company”). The underlying shares represented by these Voting Instructions will be voted as specified by the undersigned. These Voting Instructions revoke any prior Voting Instructions given by the undersigned. Unless authority to vote for one or more of the nominees is specifically withheld, the underlying shares represented by a signed CDI Voting Instruction Form will be voted for the election of all nominees as directors and, unless otherwise specified, for proposal 2, even if the designated proxy appointed has an interest in the outcome of the resolutions. The underlying shares will be voted in the discretion of the proxies as to any other matter that may come before the Annual Meeting. However, brokers who are members of a U.S. national securities exchange may not vote or submit instructions to the proxy holders or CDN if the beneficial owner of the shares has not given instructions. You can give your voting instructions either online or by completing and returning this form.

TO GIVE YOUR VOTING INSTRUCTIONS ONLINE

STEP 1 : VISIT www.boardroomlimited.com.au/vote/ubiagm2012

STEP 2: Enter your holding/Investment type

STEP 3: Enter your SRN/HIN and VAC: <VAC NUMBER>

Alternatively, please complete the following:

I/We being a holder of CHESS Depositary Interests (“CDIs”) of the Company hereby instruct:

CDN to direct its designated proxy, (mark box with an “X” ) OR the following nominated proxy,

(Enter the name of the person you wish CDN to appoint: (If no nominated proxy is specified above, CDN will direct its designated proxy),

to vote the shares underlying my/our CDI holding at the annual meeting of the Company to be held at 10:00 am Australian Eastern Standard Time on May 10, 2012 at Level 12, 117 York Street, Sydney NSW 2000, Australia, and at any adjournment of that meeting in respect of the proposals outlined below.

Please mark with an X to indicate your directions.

For Against Abstain

Proposal 1

(a) Re-election of Mr. Andrew Denver

(b) Re-election of Mr. Andrew Jane

Proposal 2

Approval of named Senior Executive Compensation

CDI Holders should be aware that under applicable United States rules, abstaining from the vote with respect to proposal 2 has the effect of a vote AGAINST such proposal. By executing this CDI Voting Instruction Form the undersigned hereby authorizes CHESS Depository Nominees Pty Ltd to appoint such proxies or their substitutes to vote in their discretion on such other business as may properly come before the annual meeting. The undersigned acknowledges receipt with this CDI Voting Instruction Form of a copy of the Proxy Statement for the Company’s 2012 Annual Meeting that more fully describe the proposals set forth herein.

PLEASE SIGN HERE This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Shareholder 1 Joint Shareholder 2 Date

Sole Director/ Company Secretary Director

Annual Meeting Universal Biosensors Inc


Table of Contents

LOGO

 

CDI Voting Instruction Form ARBN 121 559 993

INSTRUCTIONS FOR COMPLETING THIS FORM

1. Your vote is important

Holders of CDIs have the right to attend stockholders’ meetings of the Company and to direct CDN, as the holder of record of the underlying shares of common stock represented by their CDIs, how it should vote the underlying shares of common stock represented by their CDIs. If CDN does not receive a direction from a CDI holder as to how to vote the underlying shares represented by those CDIs, those shares will not be voted and will not be considered present at the meeting for quorum purposes.

2. Instructing CDN to direct your vote

Holders of CDIs who wish to direct CDN how to vote the underlying shares of common stock represented by their CDIs should: (i) vote online by following the instructions at: www.boardroomlimited.com.au/vote/ubiagm2012 ; or (ii) complete and return this CDI Voting Instruction Form to Boardroom Pty Limited or the Company.

3. Instructing CDN to nominate a proxy

A holder of CDIs will be entitled to vote at the meeting only if such holder directs CDN to designate such holder as proxy to vote the underlying shares of common stock represented by CDIs held by such holder.

4. Signing Instructions

Each CDI holder must sign this form as follows in the spaces provided:

Individual: Where the CDIs are held in one name, the registered CDI holder must sign in the signature box.

Joint Holding: Where the CDIs are held in joint names, all of the registered CDI holders must sign in the signature boxes.

Power of Attorney: If you are signing under a Power of Attorney, you must lodge an original or certified photocopy of the appropriate Power of Attorney with your completed CDI Voting Instruction Form.

Companies: Only duly authorized officer/s can sign on behalf of a company. Please indicate the office held by signing in the appropriate box or boxes.

5. Lodgement of an Instruction Form

Holders of CDIs who are not attending the meeting must give their voting instructions online or return their duly executed Voting Instructions, via this CDI Voting Instruction Form, to Registries Limited or the Company no later than 10:00 a.m. Australian Eastern Standard Time on May 10, 2012 in the manner set out below. Alternatively you may deliver your completed CDI Voting Instruction Form to us at the meeting. If you are entitled to provide voting instructions and you have submitted your instructions online or via a CDI Voting Instruction Form, you may revoke your instructions at any time before the meeting by delivering a written revocation to the Secretary of the Company or by delivering a duly executed proxy or CDI Voting Instruction Form bearing a later date.

Hand deliveries: Boardroom Pty Limited

Level 7, 207 Kent Street

Sydney NSW 2000

Postal address: Boardroom Pty Limited

GPO Box 3993

Sydney NSW 2001

Universal Biosensors, Inc.

1 Corporate Avenue

Rowville VIC 3178

Fax number: Boardroom Pty Limited on +61 2 9279 0664

Universal Biosensors, Inc. on +61 3 9213 9099

Alternatively, give your voting instruction online at: www.boardroomlimited.com.au/vote/ubiagm2012


Table of Contents

LOGO

 

Universal Biosensors Inc.

ARBN 121 559 993

Proxy card

Share Registry:

BOARDROOM LIMITED

GPO Box 3993

Sydney NSW 2001

Level 7, 207 Kent Street

Sydney NSW 2000

Tel: + 61 2 9290 9600

Fax: + 61 2 9279 0664

Appointment of Proxy

Your proxy is solicited by the Board of Directors of Universal Biosensors, Inc. (“Company”). Your shares will be voted as specified by the undersigned. This proxy revokes any prior proxy given by the undersigned. If no specific instructions are given, your shares will be voted for the election of all nominees as directors and, unless otherwise specified, for proposal 2, even if the designated proxy appointed has an interest in the outcome of the resolutions. This proxy will be voted in the discretion of the proxies as to any other matter than may come before the Annual Meeting. However, brokers who are members of a U.S. national securities exchange may not vote or submit instructions to the proxy holders if the beneficial owner of the shares has not given instructions.

To Vote Online

STEP 1 : VISIT www.boardroomlimited.com.au/vote/ubiagm2012

STEP 2: Enter your holding/Investment type

STEP 3: Enter your SRN/HIN and VAC: <VAC NUMBER>

Alternatively, please complete the following:

I/We being a stockholder of Universal Biosensors, Inc. and entitled to attend and vote appoint:

Write here the name of the person you are appointing as proxy (or failing him or her or if no proxy is specified, the Company Secretary of the Company).

as my/our proxy to vote for me/us and on my/our behalf in accordance with the following directions at the Annual Meeting to be held at 10:00 am Australian Eastern Standard Time on May 10, 2012 at Level 12, 117 York Street, Sydney NSW 2000, Australia, and at any adjournment of that meeting in respect of the resolutions outlined below.

This proxy card is to be used in respect of (insert number) shares of common stock I/we hold. You may appoint more than one proxy. Please copy this form if you require multiple forms.

Voting directions to your proxy – please mark to indicate your directions

Please mark with an X to indicate your directions.

For Against Abstain

Proposal 1

Re-election of Mr. Andrew Denver

Re-election of Mr. Andrew Jane

Proposal 2 Approval of named Senior Executive Compensation

Stockholders should be aware that under applicable United States rules, abstaining from the vote with respect to proposal 2 has the effect of a vote AGAINST the relevant proposal.

The undersigned acknowledges receipt with this Proxy card of a copy of the Notice of Annual Meeting and Proxy Statement for the Company’s 2012 Annual Meeting that more fully describe the proposals set forth herein.

PLEASE SIGN HERE - This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Shareholder 1

Joint Shareholder 2

Date

Sole Director & Sole Company Secretary Director

Name & Address


Table of Contents

LOGO

 

Annual Meeting

Universal Biosensors, Inc.

Proxy card

INSTRUCTIONS FOR COMPLETING PROXY CARD

SIGNING INSTRUCTIONS

You must sign this form as follows in the spaces provided:

Individual: Where the holding is in one name, the holder must sign.

Joint Holding: Where the holding is in more than one name, all of the shareholders should sign.

Power of Attorney: If you are signing under a Power of Attorney, you must lodge an original or certified photocopy of the appropriate Power of Attorney with your completed Proxy card.

Companies: Only duly authorized officer/s can sign on behalf of a company. Please indicate the office held by signing in the appropriate box or boxes.

DELIVERY ADDRESSES

Duly executed proxy cards must be returned to Boardroom Pty Limited or the Company no later than 10:00 a.m. Australian Eastern Standard Time on May 10, 2012 in the manner set out below. Alternatively you may deliver your completed proxy card to us at the meeting.

Hand deliveries: Boardroom Pty Limited

Level 7, 207 Kent Street

Sydney NSW 2000

Postal address: Boardroom Pty Limited

GPO Box 3993

Sydney NSW 2001

Universal Biosensors, Inc.

1 Corporate Avenue

Rowville VIC 3178

Fax number: Boardroom Pty Limited on +61 2 9279 0664

Universal Biosensors, Inc. on +61 3 9213 9099

Alternatively, vote online at: www.boardroomlimited.com.au/vote/ubiagm2012