lake_def14a
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. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant
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Check the appropriate box:
☐ Preliminary Proxy
Statement
☐ Confidential, For Use
of the Commission Only (as permitted by
Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional
Materials
☐ Soliciting Material
Pursuant to § 240.14a-12
Lakeland Industries, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Lakeland
Industries, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Wednesday, June 16, 2021
To Our Stockholders:
WHAT: Our 2021 Annual Meeting of
Stockholders
WHEN: Wednesday, June 16, 2021, at 10:00 a.m.,
CDT
WHERE: Virtual Only at https://www.issuerdirect.com/lake
PURPOSE: At this meeting you
will be asked to:
1.
Elect two directors
to serve for a term of three years or until their successors have
been duly elected and qualified;
2.
Ratify the
selection of Deloitte & Touche LLP as our independent
registered public accounting firm for the fiscal year ending
January 31, 2022;
3.
Approve, on an
advisory basis, compensation of our named executive
officers;
4.
Approve the
amendment to the Lakeland Industries, Inc. 2017 Equity Incentive
Plan to increase the number of shares of common stock reserved for
issuance by 480,000 shares; and
5.
Transact any other
business as may properly come before the Annual Meeting of
Stockholders or any adjournments, postponements or rescheduling of
the Annual Meeting of Stockholders.
Due to
public health concerns resulting from the coronavirus (COVID-19),
and the related protocols that federal, state, and local
governments have implemented, after careful consideration, the
Company has determined to hold a virtual Annual Meeting in order to
facilitate stockholder attendance and participation by enabling
stockholders to participate from any location and at no cost. You
will be able to attend the meeting online, vote your shares
electronically and submit questions during the meeting. Details
regarding how to attend the Annual Meeting online are more fully
described in the accompanying proxy statement
To
participate in our Annual Meeting, including casting your vote
during the meeting, access the meeting website at https://www.issuerdirect.com/lake
and enter in your stockholder information provided on your ballot
or proxy information previously sent to you.
Only
stockholders of record at the close of business on April 19, 2021
will receive notice of, and be eligible to vote at, the Annual
Meeting of Stockholders or any adjournment thereof. The foregoing
items of business are more fully described in the Proxy Statement
accompanying this notice.
Your
vote is important, regardless of the number of shares you own.
Please carefully read the Proxy Statement and the voting
instructions. Whether or not you plan to attend the Annual Meeting
of Stockholders, you are respectfully requested by the Board of
Directors to sign, date and return the enclosed proxy card promptly
in the accompanying postage prepaid envelope if you received this
Proxy Statement in the mail, or follow the instructions contained
in the Notice of Internet Availability of Proxy Materials to vote
on the Internet.
INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the
Availability of Proxy Materials for the 2021 Annual Meeting of
Stockholders to be held on Wednesday, June 16, 2021 at 10:00
a.m. Pursuant to Securities and
Exchange Commission rules we have elected to utilize the
“notice and access” option of providing proxy materials
to our stockholders whereby we are delivering to all stockholders
electronic copies of all of our proxy materials, including a proxy
card, as well as providing access to our proxy materials on a
publicly assessable website. Lakeland’s Notice of
Annual Meeting, Proxy Statement and Annual Report to Stockholders
for the fiscal year ended January 31, 2021 are available on the
Internet at www.iproxydirect.com/lake.
This Notice and Proxy Statement are first being sent or given to
stockholders of record on or about May 3, 2021.
Decatur, Alabama
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By Order of the Board of Directors,
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May 3, 2021
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Charles D. Roberson
Secretary
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Lakeland
Industries, Inc.
202 Pride Lane SW
Decatur, AL 35603
(256) 350-3873
PROXY STATEMENT
Annual Meeting of Stockholders to be Held on Wednesday, June 16,
2021
GENERAL INFORMATION
This proxy statement and accompanying proxy are being furnished in
connection with the solicitation by the Board of Directors (the
“Board”) of Lakeland Industries, Inc., a Delaware
corporation (“Lakeland,” the “Company,”
“we,” “our,” or “us”), of
proxies to be used at the Annual Meeting of Stockholders of
Lakeland to be held on Wednesday, June 16, 2021 (the “Annual
Meeting”), and at any adjournment or postponement thereof.
Lakeland will bear the costs of this solicitation. The mailing
address of our principal executive offices is Lakeland Industries,
Inc., 202 Pride Lane SW, Decatur, AL 35603. This proxy statement
and accompanying proxy are first being sent or given to our
stockholders on or about May 3, 2021.
How can I participate in the Annual Meeting?
This
year’s Annual Meeting will be conducted solely as a virtual
meeting. No physical meeting will be held. The Board established the close of business on
April 19, 2021 as the record date for determining the stockholders
of record entitled to notice of and to vote at the Annual
Meeting. As of the record
date, 8,027,177 shares of
common stock were outstanding, which number excludes 7,292
shares of unvested restricted stock
that have voting rights and that are held by members of the
Board.
Each share of common stock entitles the record holder thereof to
one vote on each matter brought before the Annual
Meeting.
You can
join the Annual Meeting by accessing the meeting at https://www.issuerdirect.com/lake
and entering in your stockholder information provided to you on
your Notice of Annual Meeting or on your proxy card if you received
proxy materials by mail.
Please note that if you hold your shares through a broker, bank or
other nominee, in order to join the virtual meeting as a
stockholder and be able to vote and submit questions during the
Annual Meeting, you will need to contact your broker, bank or other
nominee to receive proof of your beneficial ownership and submit
such proof, along with your name and email address, to
proxy@issuerdirect.com
no later than 5:00 p.m., local time,
on May 28, 2021, which may be submitted via: (i) email to
proxy@issuerdirect.com
or (ii) mail to Shareholder Services,
1 Glenwood Avenue, Suite 1001, Raleigh, NC 27603. You
will receive a confirmation of your registration by email after we
receive your registration materials. Alternatively, if you hold
your shares through a broker, bank or other nominee, you may vote
in advance of the Annual Meeting by contacting your holder of
record.
Why is this year’s annual meeting being held in a
virtual-only format?
Due to
public health concerns resulting from the coronavirus (COVID-19),
and the related protocols that federal, state, and local
governments have implemented, after careful consideration, the
Company has determined to hold a virtual Annual Meeting in order to
facilitate stockholder attendance and participation by enabling
stockholders to participate from any location and at no cost. You
will be able to attend the meeting online, vote your shares
electronically and submit questions during the
meeting.
How can I ask questions?
You can
submit questions in writing to the virtual meeting website during
the annual meeting in the Q&A tab on the virtual platform. You
must first join the meeting as described above in “How can I
participate in the Annual Meeting?” No questions will be
taken in any other manner the day of the meeting.
We
intend to answer as many questions that pertain to Company matters,
as time allows during the meeting. Questions that are substantially
similar may be grouped and/or not answered to insure we are able to
answer questions in this virtual format.
Voting Methods
If you
are a registered stockholder on April 19, 2021, the record date,
you may vote your shares by:
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Attending the
virtual Annual Meeting and voting electronically during the
meeting:
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Proxy, via the
Internet;
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Completing and
mailing a printed proxy card (if you receive proxy materials by
mail).
Internet
voting facilities will close promptly at the close of the polls at
the virtual meeting. Telephone and fax voting facilities will close
at 11:59 p.m., local time, on June 15, 2021. Stockholders who vote
through the Internet, telephone or fax should be aware that they
may incur costs such as access or usage charges from telephone
companies or Internet service providers, and that these costs must
be borne by the stockholders. Stockholders who vote by Internet,
telephone or fax need not return a proxy card. All shares entitled
to vote and represented by properly executed proxies received
before the polls are closed at the Annual Meeting, and not revoked
or superseded, will be voted at the Annual Meeting in accordance
with the instructions indicated on those proxies.
What if I have technical difficulties or trouble accessing the
annual meeting webcast?
We
encourage you to test your computer and internet browser prior to
the meeting. If you experience technical difficulties, please call
the technical support number that will be posted on the Annual
Meeting log-in page.
How proxies work
The
Board is asking for your proxy. Giving us your proxy means you
authorized us to vote your shares at the Annual Meeting in the
manner you direct. You may vote or withhold your vote in respect of
each of our director nominees. You may also vote for or against
each of the other proposals or abstain from voting.
All
proxies will, unless a different choice is indicated, be voted
“FOR” the election of the two nominees for director
proposed by our Nominating and Governance Committee,
“FOR” the ratification of Deloitte & Touche LLP as
our independent registered public accounting firm for the fiscal
year ending January 31, 2021, “FOR” the resolution
approving the compensation of our named executive officers and
“FOR” the resolution approving the amendment of our
2017 Equity Incentive Plan.
You may
receive more than one proxy or voting card depending on how you
hold your shares. Shares registered in your name are covered by one
card. If you hold shares through someone else, such as a
stockbroker or bank, you may get material from them asking how you
want to vote. Specifically, if your shares are held in the name of
your stockbroker or bank you should request your stockbroker or
bank to issue you a proxy covering your shares.
If any
other matters come before the Annual Meeting or any postponement or
adjournment, each proxy will be voted in the discretion of the
individuals named as proxies on the card.
Revoking a proxy
You may
revoke your proxy at any time before the vote is taken by
submitting a new proxy with a later date, by voting via the
Internet or by telephone at a later time, by voting at the meeting
or by notifying Lakeland’s Secretary in writing at the
address under “Questions” on page 35.
Quorum
In
order to carry on the business of the Annual Meeting, we must have
a quorum. The presence at the Annual Meeting by proxy of the
holders of a majority of the shares eligible to vote constitutes a
quorum. If a share of common stock is represented for any purpose
at the Annual Meeting, it is deemed to be present for quorum
purposes and for all other matters as well. Shares of common stock
represented by a properly executed proxy will be treated as present
at the Annual Meeting for purposes of determining a quorum, without
regard to whether the proxy is marked as casting a vote or
abstaining.
How votes are counted and how are brokers non-votes
treated?
Votes will be counted by the inspector of election appointed for
the Annual Meeting, who will separately count “for”
votes, “against” votes, abstentions, and broker
non-votes.
Abstentions and broker non-votes are counted as present and
entitled to vote for purposes of determining a quorum. A broker
non-vote occurs when a broker, bank or other nominee has not
received voting instructions from the beneficial owner of shares
held in “street name” and the broker, bank or other
nominee does not have, or declines to exercise, discretionary
authority to vote on a particular matter. Brokers, banks or other
nominees have discretionary authority to vote shares in the absence
of specific instructions on “routine” matters but will
not be allowed to vote your shares without specific instructions
with respect to certain “non-routine” matters. Under
current Nasdaq Stock Market (“NASDAQ”) rules, the
ratification of the selection of independent registered public
accountants (Proposal No. 2) is considered routine and your broker,
bank or other nominee will be able to vote on this proposal even if
it does not receive instructions from you. However, they do not
have discretionary authority to vote on the election of the
directors (Proposal No. 1), on the approval (on an advisory basis)
of named executive officer compensation (Proposal No. 3), or on the
approval of the amendment of our 2017 Equity Incentive Plan
(Proposal No. 4), which are “non-routine” matters. We,
therefore, encourage you to provide instructions to your broker,
bank or other nominee regarding the voting of your
shares.
What vote is required to approve each proposal?
Proposal No. 1, the election of two directors requires a
plurality vote of the shares represented by proxy and entitled to
vote at the Annual Meeting. Any shares not voted on the election of
the two director nominees will have no effect on the outcome of the
election.
Proposal No. 2, the ratification of the selection of
Deloitte & Touche LLP as our
independent registered public accounting firm, requires the
affirmative vote of the holders of a majority of the shares
represented by proxy and entitled to vote at the Annual Meeting. If
you “abstain” from voting with respect to this
proposal, your vote will have the same effect as a vote
“against” the proposal.
Proposal
No. 3, the advisory vote on named executive officer compensation
will be considered approved by the affirmative vote of a majority
of the shares represented by proxy and entitled to vote on the
matter. Although this vote is non-binding, the Board and the
Compensation Committee of the Board, which is comprised of
independent directors, expect to take into account the outcome of
the vote when considering further executive compensation
decisions.
Proposal
No. 4, the approval of the amendment to our 2017 Equity Incentive
Plan, requires the affirmative vote of the holders of the majority
of the shares represented by proxy and entitled to vote on the
matter. If you “abstain” from voting on this proposal,
your vote will have the same effect as a vote against the proposal.
Broker non-votes will be disregarded and will have no effect of the
outcome of the vote.
How can I find out the results of the
voting at the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting.
Final voting results will be published in the Company’s
Current Report on Form 8-K, which the Company is required to file
with the Securities and Exchange Commission (“SEC”)
within four business days following the conclusion of our Annual
Meeting.
Householding of proxy material.
Some
banks, brokers and other nominee record holders may be
participating in the practice of “householding,” which
the SEC has approved. Under this procedure, you may only receive
one copy of the Notice of Internet Availability of Proxy Materials
and, if applicable, this Proxy Statement and our annual report, for
multiple stockholders in your household. Upon written or oral
request, we will deliver promptly another copy of the Notice of
Internet Availability of Proxy Materials and, if applicable, this
Proxy Statement and our annual report to any stockholder at a
shared address to which we delivered a single copy of any of these
documents. To receive a separate copy, please contact our Secretary
at Lakeland Industries, Inc., 202
Pride Lane SW, Decatur, AL 35603, by mail or at (256)
350-3873, by phone. If you want to receive separate copies of our
proxy statements and annual reports in the future, or if you are
receiving multiple copies and would like to receive only one copy
for your household, you should contact your bank, broker, or other
nominee record holder.
Has the Lakeland Board made a recommendation regarding the matters
to be acted upon at the Annual Meeting?
The Lakeland Board recommends that you vote
“FOR” the election of the two directors proposed by the
Nominating and Governance Committee (Proposal No. 1),
“FOR” the ratification of the selection of Deloitte
& Touche LLP as our independent registered public accounting
firm for the fiscal year ending January 31, 2022 (Proposal No.
2),“FOR” the approval (on
an advisory basis) of named executive officer compensation
(Proposal No. 3) and “FOR” the approval of the
amendment to the Lakeland Industries, Inc. 2017 Equity Incentive
Plan.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
As permitted by Delaware law, the Board is divided into three
classes, the classes being divided equally as possible and each
class having a term of three years. Each year the term of office of
one class expires. A director elected to fill a vacancy, including
a vacancy resulting from an increase in the number of directors
constituting the Board, serves for the remaining term of the class
in which the vacancy exists. The Board presently consists of seven
members, with two directors serving in Class I, two directors
serving in Class II, and three directors serving in Class
III.
The Board proposed that Jeffrey Schlarbaum and Charles D. Roberson,
whose terms expire at the Annual Meeting, each be elected as a
director to serve for a term expiring at the 2024 annual meeting of
stockholders and until their successors are duly elected and
qualified or until such director’s earlier resignation or
removal. Unless otherwise indicated, the enclosed proxy will be
voted for the election of Messrs. Schlarbaum and Roberson as
nominees, to serve for the term set forth above.
Should either nominee become unable to serve for any reason, which
is not anticipated, the Board may designate a substitute nominee,
in which event the persons named in the enclosed proxy will vote
for the election of such substitute nominee. Each person nominated
by the Board for election has agreed to serve if elected. We have
no reason to believe that any Board nominee will be unavailable or,
if elected, will decline to serve.
Vote Required
Directors are elected by a plurality of the votes properly cast by
proxy at the Annual Meeting. With respect to the election of
directors, you may vote “for” or “withhold”
authority to vote for the nominee listed below. Any shares not
voted “for” the nominee (whether as a result of
stockholder withholding or a broker non-vote) will not be counted
in the nominee’s favor and will have no effect on the outcome
of the election.
NOMINEE DIRECTORS – CLASS II
Terms Expiring in 2021
Name
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Age
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Position
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Director Since
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Jeffrey
Schlarbaum
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54
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Director
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2017
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Charles
D. Roberson
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58
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Chief
Executive Officer,
President,
Secretary and Director
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2020
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Jeffrey Schlarbaum
has served as a director since 2017. He has served as President and
Chief Executive Officer of IEC Electronics Corp., a publicly traded
electronic manufacturing services company, since February 2015.
From February 2013 to June 2013 and from June 2014 to February
2015, Mr. Schlarbaum pursued personal interests. From June 2013 to
June 2014, Mr. Schlarbaum served as Chief Operations Officer for
LaserMax, Inc., a manufacturer of laser gun sights for law
enforcement and the shooting sports community. From October 2010 to
February 2013, Mr. Schlarbaum served as President of IEC
Electronics Corp. Prior to that, Mr. Schlarbaum served as Executive
Vice President and President of Contract Manufacturing of IEC
Electronics Corp. from October 2008 to October 2010, Executive Vice
President from November 2006 to October 2008 and Vice President,
Sales and Marketing from May 2004 to November 2006. Mr. Schlarbaum
received a BBA in marketing from National University and an MBA
from Pepperdine University. Mr. Schlarbaum’s qualifications
to serve on our Board include his business education and multiple
prior executive positions at several companies.
Charles D.
Roberson has served as a
director, and our Chief Executive Officer, President and Secretary
since February 1, 2020. Mr. Roberson was our Chief Operating
Officer from July 2018 to January 31, 2020. From 2009 to July 2018,
he was our Senior Vice President, International Sales. Mr. Roberson
joined our Company in 2004 as Technical Marketing Manager and later
served as International Sales Manager. Prior to joining our
Company, Mr. Roberson was employed by Precision Fabrics Group, Inc.
as a Market Manager from 1995 to 2001 and as a Nonwovens
Manufacturing Manager from 1991 to 1995. He began his career as a
manufacturing manager for Burlington Industries, Inc. in its
Menswear Division from 1985 to 1991. Collectively, he has 30
years’ experience in the protective clothing industry as a
manufacturer of both roll goods and garments. Mr. Roberson’s
qualifications to serve on our Board include his prior business
experience and knowledge of our industry and of our
company.
INCUMBENT DIRECTORS - CLASS III
Terms Expiring in 2022
Name
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Age
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Position
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Director
Since
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Thomas
J. McAteer
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68
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Director
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2011
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James
M. Jenkins
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56
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Director
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2016
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Nikki
L. Hamblin
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44
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Director
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2021
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Thomas J.
McAteer has
served as a director since 2011. Mr. McAteer has served as Executive Vice President of
Management Development and Strategic Initiatives of Suffolk
Transportation since March 2013 and Chairman of the Board of New
World Medical Network, a private healthcare organization, since
2015. He also served as the Vice Chair of the Board and Chair of
the Compensation and Personnel Committee for the Long Island Power
Authority from December 2014 until January 2020. He served as the
Senior Vice President and Regional Market Head for Aetna's Medicaid
Division from March 2007 until March 2013. Prior to joining
Aetna’s Medicaid Division, Mr. McAteer served as the
President and CEO of Vytra Health Plans. In a thirteen-year career
at Vytra, Mr. McAteer played an executive leadership role in
growing Vytra from annual revenues of $70 million in 1993 to over
$375 million in 2005. In 2001, Mr. McAteer facilitated the sale of
Vytra to HIP Health Plans and, thereafter assumed the additional
responsibilities of Executive Vice President for Brand Leadership,
as well as joining the Executive Committee of the enterprise.
Before joining Vytra, Mr. McAteer served as the Chief Deputy County
Executive in Suffolk County, New York and prior to that as the
Director of Human Resources for the Metropolitan Transportation
Authority. Mr. McAteer's qualifications to serve on our Board
include his business experience and multiple prior executive
positions.
James M. Jenkins has
served as a director since 2016. Mr. Jenkins is the General Counsel
and Vice President of Corporate Development for Transcat, Inc.
(Nasdaq: TRNS), a provider of calibration, repair, inspection and
laboratory services, where he serves as Transcat’s chief risk
officer and advises management and the board of directors over
matters of corporate governance and securities law. He also
leads Transcat’s acquisition strategy. He joined Transcat in
September 2020. Prior to joining Transcat, he was a partner at
Harter Secrest & Emery LLP, a regional law firm located in New
York State. His practice focused in the areas of corporate
governance, and general corporate law matters, including initial
and secondary public offerings, private placements, mergers and
acquisitions, and securities law compliance. Mr. Jenkins joined the
firm in 1989 as an associate and was elected a partner effective
January 1, 1997. He is a Chambers rated attorney and served
as the Chair of the firm's Securities Practice Group from 2001 to
2020 and as a member of the firm’s Management Committee from
January 2007 to January 2013. From 2018 until September 2020, he
served as the Partner in Charge of the firm's New York City office.
Mr. Jenkins holds a BA from Virginia Military Institute and a J.D.
from West Virginia University College of Law. Mr. Jenkins
previously served on our Board from 2012 to 2015 and was a member
of our Audit and Corporate Governance Committees. Mr.
Jenkins’s qualifications to serve on our Board include his
corporate governance experience as well his current
business-related experience.
Nikki L. Hamblin has
served as a director since April 2021. Ms. Hamblin has served as
the Director of Advisor Service at Manning & Napier Advisors,
LLC, a publicly traded investment management company, since
September 2019. In addition to her current role, she is a member of
the firm’s Committee for Diversity & Inclusion.
Previously, she was the Director of Retirement Plan Services at GRP
Financial California, LLC, a retirement plan consulting firm, from
September 2017 to August 2019 and she served as Vice President, Key
Accounts at Manning & Napier from January 2013 to August 2017.
Prior to her experience at Manning & Napier, she served as an
investment banker specializing in middle-market private and
publicly owned mergers and acquisitions and financing transactions.
She obtained a Bachelor of Science degree from Syracuse University
and a Master of Business Administration with a concentration in
finance from the William E. Simon Graduate School of Business
Administration at the University of Rochester and has attained
multiple securities and financial planning licenses and
designations. Ms. Hamblin’s qualifications to serve on our
Board include her investment banking and finance
experience.
INCUMBENT DIRECTORS - CLASS I
Terms Expiring in 2023
Name
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Age
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Position
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Director Since
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Christopher
J. Ryan
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69
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Executive
Chairman
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1986
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A. John
Kreft
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70
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Director
|
2004
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Christopher J. Ryan
has served as our Executive Chairman of the Board since February 1,
2020. Mr. Ryan was our Chief Executive Officer and President from
November 2003 to January 31, 2020, Secretary from April 1991 to
January 31, 2020, and a director since May 1986. Mr. Ryan was our
Executive Vice President-Finance from May 1986 until becoming our
President in November 2003. Mr. Ryan also worked as a Corporate
Finance Partner at Furman Selz Mager Dietz & Birney, Senior
Vice President-Corporate Finance at Laidlaw Adams & Peck, Inc.,
Managing-Corporate Finance Director of Brean Murray Foster
Securities, Inc. and Senior Vice President-Corporate Finance of
Rodman & Renshaw, respectively, between 1983 to 1991. Mr. Ryan
served as a Director of Lessing, Inc., a privately held restaurant
chain based in New York, from 1995 to 2008. Mr. Ryan received his
BA from Stanford University, his MBA from Columbia Business School
and his J.D. from Vanderbilt Law School. Mr. Ryan’s
qualifications to serve on our board include his business and legal
education as well as his lengthy experience as a director at our
company and at other companies.
A. John Kreft has
served as a director since 2004, our Chairman of the Board from
June 2016 to January 31, 2020 and lead independent director since
February 1, 2020. Mr. Kreft has been President of Kreft Interests,
a Houston based private investment firm, since 2001. Between 1998
and 2001, he was the Chief Executive Officer of Baker Kreft
Securities, LLC, a NASD broker-dealer. From 1996 to 1998, Mr. Kreft
was a co-founder and manager of TriCap Partners, a Houston based
venture capital firm. From 1994 to 1996, he was employed as a
director at Alex Brown and Sons. Mr. Kreft has also held senior
positions at CS First Boston, including as a managing director from
1989 to 1994. Mr. Kreft received his MBA from the Wharton School of
Business. Mr. Kreft’s qualifications to serve on our board
include his extensive capital markets experience with debt and
equity financings and bank facilities. In addition, his familiarity
with acquisition due diligence and integration issues assists him
in his directorship of our company.
OUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE NOMINEES FOR DIRECTOR
CORPORATE GOVERNANCE
Lakeland
operates within a comprehensive plan of corporate governance for
the purpose of defining independence, assigning responsibilities,
setting high standards of professional and personal conduct and
assuring compliance with such responsibilities and
standards.
Director Independence
The standards relied upon by the Board in affirmatively determining
whether a director is “independent,” in compliance with
NASDAQ and SEC rules are comprised, in part, of those objective
standards set forth in such rules. In addition to these objective
standards and in compliance with NASDAQ and SEC rules, no director
will be considered independent who has a relationship which, in the
opinion of the Board, would interfere with the exercise of
independent judgement in carrying out the responsibilities of a
director. The Board exercises appropriate discretion in identifying
and evaluating any such relationship. The Board, in applying the
above-referenced standards and after considering all of the
relevant facts and circumstances, has affirmatively determined that
the Company’s independent directors are: A. John Kreft,
Thomas J. McAteer, James M. Jenkins, Jeffrey Schlarbaum and Nikki
L. Hamblin representing a majority of the members of the
Board.
Lakeland’s independent directors meet in executive sessions
when deemed necessary, but generally no less than twice a
year.
Board and Committee Meetings and Attendance
The Board has three standing committees – the Audit
Committee, the Compensation Committee, and the Nominating and
Governance Committee. Each committee operates under a written
charter adopted by the Board and each charter is available without
charge on our website at www.lakeland.com
under the heading “Investor
Relations-Financial Information & Policies” Hard
copies may also be obtained, without charge, by writing to our
Secretary at Lakeland Industries,
Inc., 202 Pride Lane SW, Decatur, AL 35603.
During
the fiscal year ended January 31, 2021, there were seven (7)
meetings of the Board; eight (8) meetings of the Audit Committee;
five (5) meetings of the Compensation Committee; and four (4)
meetings of the Nominating and Governance Committee. Each director
attended at least 75% of the aggregate number of meetings of the
Board, and the respective committees of which he is a member,
during the period for which he was a director during fiscal year
ended January 31, 2021.
Audit Committee
As of fiscal year ended January 31, 2021 and as of the record date,
the members of our Audit Committee consisted of A. John Kreft
(Chairman), James M. Jenkins and Jeffrey Schlarbaum. Each member of
the Audit Committee has been determined by the Board, as reviewed
on an annual basis, to meet the standards for independence required
of audit committee members by the NASDAQ listing standards and
applicable SEC rules. Our Board has determined that Mr. Kreft is an
“audit committee financial expert” within the meaning
of applicable SEC rules based upon, among other things, his MBA in
finance from the Wharton School of Business, four and a half
years’ experience with two “Big 4” accounting
firms, eighteen years of investment banking, underwriting and
advisory services experience with several brokerage firms such as
Credit Suisse and Alex Brown and three years as Chief Executive
Officer of a NASD broker dealer. Mr. Kreft has held five levels of
security licenses at various times including General Securities
Principal.
The formal report of our Audit Committee is included in this proxy
statement. The Audit Committee’s responsibilities include,
among other things:
●
the
oversight of the quality of our consolidated financial statements
and our compliance with legal and regulatory
requirements;
●
the
selection, evaluation and oversight of our independent registered
public accountants, including conducting a review of their
independence, determining their fees, overseeing their audit work,
and reviewing and pre-approving any internal control-related
services and permitted non-audit services that may be performed by
them;
●
the
oversight of annual audit and quarterly reviews, including review
of our consolidated financial statements, our critical accounting
policies and any material related-party transactions and the
application of accounting principles; and
●
the
oversight of financial reporting process and internal controls,
including a review of the adequacy of our accounting and internal
controls and procedures.
Compensation Committee
As of fiscal year ended January 31, 2021 and as of the record date,
the members of our Compensation Committee consisted of Thomas
McAteer (Chairman), A. John Kreft, and James M. Jenkins. All
members of the Compensation Committee have been determined to meet
the applicable NASDAQ and SEC standards for independence. Our
Compensation Committee’s role includes setting and
administering the policies governing the compensation of executive
officers, including cash compensation and equity incentive
programs, and reviewing and establishing the compensation of the
Chief Executive Officer and other executive officers. Our
Compensation Committee’s principal responsibilities, which
have been authorized by the Board, are:
●
approving
the corporate goals and objectives applicable to the compensation
for the Chief Executive Officer, evaluating at least annually the
Chief Executive Officer’s performance in light of those goals
and objects and determining and approving the Chief Executive
Officer’s compensation level based on this
evaluation;
●
reviewing
and approving other executive officers’ annual base salaries
and annual incentive opportunities (after considering the
recommendation of our Chief Executive Officer with respect to the
form and amount of compensation for executive officers other than
the Chief Executive Officer);
●
evaluating
the level and form of compensation for the Board of Directors and
committee service by non-employee members of our Board and
recommending changes when appropriate;
●
advising the Board on our compensation and
benefits matters, including making recommendations and decisions
where authority has been granted regarding our equity-based
compensation plans and benefit
plans generally, including employee bonus and retirement plans and
programs;
●
approving
the amount of and vesting of equity awards;
●
evaluating
the need for, and provisions of, any employment contracts/severance
arrangements for the Chief Executive Officer and other executive
officers; and
●
reviewing
and discussing with management our disclosure relating to executive
compensation proposed by management to be included in our proxy
statement and recommending that such disclosures be included in our
proxy statement.
Our Compensation Committee does not delegate any of its
responsibilities to other committees or persons. Participation by
executive officers in the recommendation or determination of
compensation for executive officers or directors is limited to (i)
recommendations by our Chief Executive Officer to our Compensation
Committee regarding the compensation of executive officers other
than with respect to himself and (ii) our Chief Executive
Officer’s participation in Board determinations of
compensation for the non-employee directors.
Director and Executive Compensation Survey. In order to
assure balance between the competitiveness of executive officer
compensation and maximization of shareholder value, the
Compensation Committee retained Willis Towers Watson
(“WTW”) to conduct a review of the Company’s
Board of Directors and Executive (Chief Executive Officer and Chief
Financial Officer) compensation plans. WTW, with input from the
Board of Directors, identified 14 publicly traded companies that
comprised the “Peer Group”. Inclusion within the
“Peer Group” was based on annual revenues ($100 million
to $500 million) and classification as operating within the
Industrial sector (Electrical Equipment, Commercial Services and
Supplies) or Consumer Durables & Apparel Industry.
In
evaluating WTW’s conclusions and recommendations, the
Compensation Committee considered the Company’s annual
revenue, EBITDA, Enterprise Value and Market Cap relative to the
“Peer Group” as well as the Company’s
compensation philosophies and objectives. The Company was
determined to be between the 33rd and 50th percentiles of the
“Peer Group” and consideration was weighted
accordingly.
A
summary of WTW conclusions and actions to be taken by the
Compensation Committee follows:
●
Executive
compensation was found to be at the lower end of market references,
less than the 25th percentile of the
“Peer Group”.
o
Special stock
grants were awarded to executives (Chief Executive Officer and
Chief Financial Officer) to bring their respective compensation
more in line with the “Peer Group” based on the
Company’s relative size.
o
It is anticipated
that periodic adjustments to bring total compensation in line with
the Company’s compensation philosophies and objectives will
be evaluated and made as necessary.
●
Annual equity
grants to executives were more performance based than the
“Peer Group”.
o
Annual
performance-based equity grants for executives in the future will
be more balanced between performance and time-based
shares.
●
The combined annual
bonus and performance equity values are in line with the
“Peer Group”, but were less leveraged than is common
practice.
o
Annual bonus and
performance-based equity program range has been expanded to enhance
“pay for performance” objectives of the Compensation
Committee.
●
Director
compensation was found to be at the upper end of the “Peer
Group”, however as the Company does not provide additional
fees for committee membership, total Director compensation falls
within the median and 75th percentile of the
peer group.
o
It is anticipated
that director retainers will be reduced, and committee membership
retainers will be added so that Director compensation reflects
“Peer Group” norms.
●
The Company’s
policy allowing Board members to defer cash fees into equity is
common, however providing a premium for doing so is not typical,
nor are the vesting restrictions that the Company places on these
deferrals.
o
Deferral of cash
fees for equity has been terminated and Director equity grants will
be changed from being performance-based to time-based and have
vesting restrictions. This brings Director equity compensation in
line with the “Peer Group” and satisfies The
Company’s compensation philosophy and
objectives.
In
addition to the above changes, the Compensation Committee has also
established Equity Retention Requirements and revised restrictions
on equity awards for Directors and executives. These retention
requirements and restrictions are consistent with practices within
the “Peer Group” and are designed to increase alignment
of executive and shareholder interests. The retention requirements
establish minimum equity positions, as a multiple of annual salary,
that must be maintained by Directors and executives. These
requirements are outlined below:
Title
|
Minimum Ownership
Requirement
|
CEO
|
4 times
base salary
|
Other
Officers
|
2 times
base salary
|
Directors
|
2 times
cash retainer
|
In
addition to the minimum ownership requirements, the Compensation
Committee has put in place additional restrictions on Director and
Executive equity grants. These restrictions are summarized
below:
●
Limited Disposition
of Shares Awarded Under the Plan
o
Disposition of
shares is not expected until minimum ownership levels are
attained.
o
Dispositions after
attainment of ownership minimums are limited to 50% of issued
awards.
●
Anti-Hedging and
Anti Pledging Policy
o
Shares obtained or
available under the equity award plan may not be hedged or pledged
for any purpose
o
Any negative
adjustment in financial reporting may result in surrender of shares
previously issued/vested.
Nominating and Governance Committee
As of the fiscal year ended January 31, 2021 and as of the record
date, the members of our Nominating and Governance Committee
consisted of James M. Jenkins (Chairman), A. John Kreft, and Thomas
McAteer. All of the members of the Nominating and Governance
Committee have been determined to meet the applicable NASDAQ and
SEC standards for independence. The purpose of the Nominating and
Governance Committee is to identify, screen and recommend to the
Board qualified candidates to serve as directors, to develop and
recommend to the Board a set of corporate governance principles
applicable to Lakeland, and to oversee corporate governance and
other organizational matters. The Nominating and Governance
Committee’s responsibilities include, among other
things:
●
reviewing
qualified candidates to serve as directors;
●
aiding
in attracting qualified candidates to serve on the
Board;
●
considering,
reviewing and investigating (including with respect to potential
conflicts of interest of prospective
candidates) and either accepting or rejecting candidates suggested
by our stockholders, directors, officers, employees and
others;
●
recommending
to the Board nominees for new or vacant positions on the Board and
providing profiles of the qualifications of the
candidates;
●
monitoring
our overall corporate governance and corporate compliance
program;
●
reviewing
and adopting policies governing the qualification and composition
of the Board;
●
reviewing
and making recommendations to the Board regarding Board structure,
including establishing criteria for committee membership,
recommending processes for new Board member orientation, and
reviewing and monitoring the performance of incumbent
directors;
●
recommending
to the Board action with respect to implementing resignation,
retention and retirement policies of the Board;
●
reviewing
the role and effectiveness of the Board, the respective Board
committees and the directors in our corporate governance
process; and
●
reviewing
and making recommendations to the Board regarding the nature and
duties of Board committees, including evaluating the committee
charters, recommending appointments to committees, and recommending
the appropriate chairperson for the Board.
Environmental, Social, and Governance Programs
As a
company dedicated to protecting and improving the health and safety
of workers, and their families, around the world, we believe that
ESG stewardship is critical to successfully executing of our
mission. Consistent with this belief, the Board is committed to
assuring that the Company’s ESG program flourishes and
benefits our employees and the communities within which we operate
around the world. The Nominating and Governance Committee and the
Board exercise oversight and provide direction to the executive
team with regard to the Company’s ESG programs and policies.
The Board considers sound stewardship of these matters critical to
development of the Company’s work force, the sustainability
of its supply chain, and sound corporate citizenship. The executive
team is charged with maintaining and implementing these policies
and programs and reports, at regular intervals, to the Nominating
and Governance Committee and the Board on progress and the status
of the Company’s ESG program and its elements. The ESG
program consists of policies, statements, and internal reporting
covering the following program elements:
●
Lakeland Employee
Code of Conduct
●
Supplier Code of
Conduct
●
Global Human Rights
Policy
●
Corporate Diversity
Program
●
Policy on Trade in
Conflict Minerals
●
Workplace Health
& Safety
Copies
of the Company’s ESG programs and policies can be found on
our website at www.lakeland.com under the
heading “Investor Relations-Financial Information &
Policies-ESG Programs and Policies.”
Director Nomination Procedures
The Nominating and Governance Committee will consider individuals
recommended by stockholders for nomination as candidates for
election to the Board at annual meetings of stockholders. Such
suggested nominees will be considered in the context of the
Nominating and Governance Committee’s determination regarding
all issues relating to the composition of the Board, including the
size of the Board, any criteria the Nominating and Governance
Committee may develop for prospective Board candidates and the
qualifications of candidates relative to any such criteria. The
Nominating and Governance Committee may also take into
consideration the number of shares held by the recommending
stockholder and the length of time that such shares have been held.
Any stockholder who wants to nominate a candidate for election to
the Board must deliver timely notice to our Secretary at our
principal executive offices. In order to be timely, the notice must
be delivered:
●
in the case of an annual meeting, not less than 90
days nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders, although if
the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, the notice must be received not less
than 90 days nor more than 120 days prior to the date of such
annual meeting or, if the first public announcement of the date of
such annual meeting is less than 100 days prior to the date of such
meeting, the 10th
day following the date public
disclosure of the annual meeting was made; and
●
in the case of a special meeting, not less than 90
days nor more than 120 days prior to the date of such special
meeting or, if the first public announcement of the date of such
special meeting is less than 100 days prior to the date of such
meeting, the 10th
day following the date public
disclosure of the special meeting was made.
The stockholder’s notice to the Secretary must set
forth:
●
as
to each person whom the stockholder proposes to nominate for
election as a director
o
the
nominee’s name, age, business address and residence
address;
o
the
nominee’s principal occupation and employment;
o
the
class and series and number of shares of each class and series of
capital stock of Lakeland which are owned beneficially or of record
by the nominee, and any other direct or indirect pecuniary or
economic interest in any capital stock of Lakeland held by the
nominee, including without limitation, any derivative instrument,
swap (including total return swaps), option, warrant, short
interest, hedge or profit sharing arrangement, and the length of
time that such interest has been held by the nominee;
and
o
any
other information relating to the nominee that would be required to
be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Securities and Exchange Act
of 1934, as amended (the “Exchange Act”), and the rules
and regulations promulgated thereunder.
●
as to the
stockholder giving the notice
o
the
stockholder’s name and record address;
o
the
class and series and number of shares of each class and series of
capital stock of Lakeland which are owned beneficially or of record
by the stockholder, and any other direct or indirect pecuniary or
economic interest in any capital stock of Lakeland held by the
stockholder, including without limitation, any derivative
instrument, swap (including total return swaps), option, warrant,
short interest, hedge or profit sharing arrangement, and the length
of time that such interest has been held by the
stockholder;
o
a description of
any proxy, contract, arrangement, understanding, or relationship
between the stockholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the
nomination(s) are to be made by the stockholder;
o
a representation by
the stockholder that the stockholder is a holder of record of stock
of Lakeland entitled to vote at such meeting by proxy at the
meeting to nominate the person or persons named in the
stockholder’s notice; and
o
any other
information relating to the stockholder that would be required to
be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder.
A
stockholder providing notice of any nomination proposed to be made
at an annual meeting or special meeting shall further be required,
for such notice of nomination to be proper, to update and
supplement the notice, if necessary, so that the information
provided or required to be provided in the notice is true and
correct as of the record date for the meeting and as of the date
that is ten business days prior to the meeting or any adjournment
or postponement thereof, and such update and supplement shall be
delivered to the Secretary at the principal executive offices of
the Company not later than five business days after the record date
for the meeting in the case of the update and supplement
requirement to be made as of the record date, and not later than
eight business days prior to the date for the meeting, any
adjournment or postponement thereof in the case of the update and
supplement required to be made as of ten business days prior to the
meeting or any adjournment or postponement thereof.
The
notice delivered by a stockholder must be accompanied by a written
consent of each proposed nominee to be named as a nominee and to
serve as a director if elected. The stockholder must be a
stockholder of record on the date on which the stockholder gives
the notice described above and on the record date for the
determination of stockholders entitled to vote at the
meeting.
The Nominating and Governance Committee believes that the minimum
qualifications for serving as a director are that a nominee
demonstrate, by significant accomplishment in his or her field, an
ability to make a meaningful contribution to the Board’s
oversight of the business and affairs of Lakeland and have an
impeccable record and reputation for honesty and ethical conduct in
both his or her professional and personal activities. In addition,
the Nominating and Governance Committee examines a
candidate’s specific experiences and skills, relevant
industry background and knowledge, time availability in light of
other commitments, potential conflicts of interest, interpersonal
skills and compatibility with the Board, and independence from
management and the Company. The Nominating and Governance Committee
also seeks to have the Board represent a diversity of backgrounds
and experience. The Nominating and Governance Committee does
not assign specific weights to particular criteria and no
particular criterion is necessarily applicable to all prospective
nominees. The Nominating and Governance Committee believes
that the backgrounds and qualifications of the directors,
considered as a group, should provide a composite mix of
experience, knowledge and abilities that will allow the Board to
fulfill its responsibilities.
The Nominating and Governance Committee identifies potential
nominees through independent research and through consultation with
current directors and executive officers and other professional
colleagues. The Nominating and Governance Committee looks for
persons meeting the criteria above and takes note of individuals
who have had a change in circumstances that might make them
available to serve on the Board, for example, retirement as a
Chief Executive Officer or Chief Financial Officer of a company.
The Nominating and Governance Committee also, from time to time,
may engage firms that specialize in identifying director
candidates. As described above, the Nominating and Governance
Committee will also consider candidates recommended by
stockholders.
Once a person has been identified by the Nominating and Governance
Committee as a potential candidate, the committee may collect and
review publicly available information regarding the person to
assess whether the person should be considered further. If the
Nominating and Governance Committee determines that the candidate
warrants further consideration by the committee, the Chairman or
another member of the committee will contact the person. Generally,
if the person expresses a willingness to be considered and to serve
on the Board, the Nominating and Governance Committee requests a
resume and other information from the candidate, reviews the
person’s accomplishments and qualifications, including in
light of any other candidates that the committee might be
considering. The Nominating and Governance Committee may also
conduct one or more interviews with the candidate, either in
person, telephonically or both. In certain instances, Nominating
and Governance Committee members may conduct a background check,
may contact one or more references provided by the candidate or may
contact other members of the business community or other persons
that may have greater first-hand knowledge of the candidate’s
accomplishments. The Nominating and Governance Committee’s
evaluation process does not vary based on whether a candidate is
recommended by a stockholder, although, as stated above, the
committee may take into consideration the number of shares held by
the recommending stockholder and the length of time that such
shares have been held.
Interested Party Communications
The Board has established a process to receive communications from
stockholders and other interested parties. Stockholders and other
interested parties may contact any member (or all members) of the
Board by mail. To communicate with the Board, any individual
director or any group or committee of directors, correspondence
should be addressed to the Board or any such individual director or
group or committee of directors by either name or title. All such
correspondence should be sent our Secretary at Lakeland Industries,
Inc., 202 Pride Lane SW, Decatur, AL 35603.
All communications received as set forth in the preceding paragraph
will be opened by the office of our Secretary for the sole purpose
of determining whether the contents represent a message to our
directors. Any contents that are not in the nature of advertising,
promotions of a product or service, or patently offensive material
will be forwarded promptly to the addressee. In the case of
communications to the Board or any group or committee of directors,
the Secretary’s office will make sufficient copies of the
contents to send to each director who is a member of the group or
committee to which the envelope is addressed.
Director Attendance at Annual Stockholder Meetings
We expect that each of our directors attend our annual meetings of
stockholders, as provided in our Corporate Governance Guidelines.
All our directors attended the annual meeting of stockholders held
on June 17, 2020.
Corporate Governance Guidelines and Practices
We are committed to good
corporate governance practices and as such we have adopted formal
Corporate Governance Guidelines. A copy of the Corporate Governance
Guidelines may be found on our website at www.lakeland.com
under the heading “Investor
Relations-Financial Information & Policies-Corporate
Governance Guidelines.” Below
are some highlights of our corporate governance guidelines and
practices:
o
Board Independence. We believe that the Board
should be comprised of a majority of independent directors and that
no more than two management executives may serve on the Board at
the same time. Currently, the Board has seven directors: five of
whom are independent directors under the applicable NASDAQ Rules,
one of whom is Executive Chairman (employee status), and one of
whom is a current member of management.
o
Board Committees. All of our Board
committees consist entirely of independent directors as defined
under the applicable NASDAQ Rules.
o
Chairman, CEO and Position Separation;
Leadership Structure. Our general policy is that there should be a
separation of the offices of the Chairman of the Board and Chief
Executive Officer. We currently have a different person serving in
each such role. Mr. Christopher J. Ryan is our Executive Chairman
and Charles D. Roberson is our Chief Executive Officer. In
addition, Mr. John Kreft is our lead independent director. The
decision whether to combine or separate these positions depends on
what our Board deems to be in the long-term interest of
stockholders in light of prevailing circumstances. Mr. Kreft had
served as Chairman of the Board from June 2016 until January 31,
2020. Mr. Ryan served as CEO from November 2003 until January 31,
2020 and since February 1, 2020 serves as our Executive Chairman.
Charles D. Roberson has served as our Chief Executive Officer since
February 1, 2020. This arrangement has allowed our Chairman to lead
the Board, while our Chief Executive Officer has focused primarily
on managing the operations of the Company. The separation of duties
provides strong leadership for the Board while allowing the Chief
Executive Officer to be the leader of the Company, focusing on its
customers, employees, and operations. Our Board believes the
Company is well-served by this flexible leadership structure and
that the combination or separation of these positions should
continue to be considered on an ongoing basis.
o
Independent Advisors. The Board and each
committee have the power to hire independent legal, financial or
other advisors at any time as they deem necessary and appropriate
to fulfill their Board and committee responsibilities.
o
Directors Are Subject to our Code of
Conduct. Board members must act at
all times in accordance with the requirements of our Code of
Conduct. This obligation includes adherence to our policies with
respect to conflicts of interest, ethical conduct in business
dealings and respect for and compliance with applicable law. Any
requested waiver of the requirements of the Code of Conduct with
respect to any individual director or executive officer must be
reported to, and is subject to the approval of, the Board, or the
Audit Committee.
o
Board Engagement. The Board has regularly
scheduled presentations from our finance and major business
operations personnel.
o
No Corporate Loans. Our stock plans and
practices prohibit us from making corporate loans to employees for
the exercise of stock options or for any other
purpose.
Risk Oversight
Management
is responsible for the day-to-day management of risks for Lakeland,
while our Board, as a whole and through its committees, is
responsible for the oversight of risk management. The Board sets
our overall risk management strategy and our risk appetite and
ensures the implementation of our risk management framework.
Specific committees of the Board are responsible for overseeing
specific types of risk. Our Audit Committee periodically discusses
risks as they relate to the Company’s financial statements,
the evaluation of the effectiveness of internal control over
financial reporting, compliance with legal and regulatory
requirements including the Sarbanes-Oxley Act, and related party
transactions, among other responsibilities set forth in the Audit
Committee’s charter. Our Audit Committee also periodically
may review our tax exposures and our internal processes to ensure
compliance with applicable laws and regulations. Our Board monitors
risks as they may be related to financing matters such as
acquisitions and dispositions, our capital structure, credit
facilities, equity issuances, and liquidity. Our Compensation
Committee establishes our compensation policies and programs in
such a manner that our executive officers are not incentivized to
take on an inappropriate level of risk. Our Audit Committee
Chairman reviews any employee reports regarding suspected
violations of our Code of Conduct. Each of our committees of the
Board regularly delivers reports to the members of the Board, in
order to keep the Board informed about what transpires at committee
meetings. In addition, if a particular risk is material or where
otherwise appropriate, the full Board may assume oversight over
such risk, even if the risk was initially overseen by a
committee.
Code of Ethics
The Board adopted our Code of Ethics that applies to all officers,
directors and employees. The Code of Ethics sets forth information
and procedures for employees to report ethical or accounting
concerns, misconduct or violations of the Code in a confidential
manner. The Code of Ethics is available on our website at
www.lakeland.com
under the heading “Investor
Relations-Financial Information & Policies-Code of
Ethics.” Amendments to, and waivers from, the Code of Ethics
will be disclosed at the same website address provided above and,
in such filings, as may be required pursuant to applicable law or
listing standards. We intend to satisfy the disclosure requirement
under Item 5.05(c) of Form 8-K regarding certain amendments to, or
waivers from a provision of our Code of Ethics by posting such
information on our website at www.lakeland.com
under the heading “Investor
Relations-Financial Information & Policies-Code of
Ethics.”
Compensation Committee Interlocks and Insider
Participation
No
member of our Compensation Committee is an officer or employee of
Lakeland, and none of our executive officers serves as a member of
a compensation committee of any entity that has one or more
executive officers serving as a member of our Compensation
Committee.
DIRECTOR
COMPENSATION
For the
fiscal year ended January 31, 2021, non-employee directors each
received $75,000 plus an additional annual fee of $10,000 for each
of the lead independent directors and the Chairman of the Audit
Committee, and $5,000 for each other committee chair position held.
For the fiscal year ended January 31, 2021, Mr. Ryan received
$185,000 for his services as Executive Chairman. For the fiscal
year ending January 31, 2022, Mr. Ryan will receive compensation of
$165,000 for his services as Executive Chairman. In fiscal year
2021, all of the independent directors chose to receive all fees in
cash. Non-employee directors also were issued awards of
performance-based restricted stock under our 2017 Equity Incentive
Plan in an amount of up to 4,348 shares at target level, with a
vesting period of three years. The actual number of shares that
will vest at the end of the three-year performance period will be
based on several defined performance and other factors over the
entirety of the three-year period. Members of the Board of
Directors are reimbursed for all travel-related expenses to and
from meetings of the Board and committees. Directors who are also
officers of the Company are not compensated for their duties as
directors.
The
following table sets forth compensation paid by the Company to
non-employee directors during the fiscal year ended January 31,
2021.
DIRECTOR COMPENSATION - FISCAL 2021
Name
|
Fees Earned or
Paid in Cash
($)
|
|
|
Non-Equity
Incentive Plan Compen-sation
($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other
Compen-sation
($)
|
|
|
|
|
|
|
|
|
|
A. John
Kreft
|
95,000
|
65,000(2)
|
--
|
--
|
--
|
--
|
160,000
|
Thomas
McAteer
|
80,000
|
65,000(3)
|
--
|
--
|
--
|
--
|
145,000
|
James
Jenkins
|
80,000
|
65,000(4)
|
--
|
--
|
--
|
--
|
145,000
|
Jeffrey
Schlarbaum
|
75,000
|
65,000(5)
|
--
|
--
|
--
|
--
|
140,000
|
(1)
Represents the aggregate grant date fair
value of restricted stock granted to the director during fiscal
year ended January 31, 2021. The amounts in this column do not
necessarily correspond to the actual value that will be realized by
the director. The assumptions used to calculate the fair value are
set forth in the footnotes to the Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year
ended January 31, 2021, as filed with the SEC. In respect of
valuing performance-based restricted stock grants, we estimated
that the target level of shares would vest over a three-year cycle
pursuant to our 2017 Equity Incentive Plan based on the price at
grant date ($14.95 per share), as reflected in the fair value
above. The level of award (minimum, target, or maximum) and final
vesting is based on the Company’s performance over the
entirety of the three-year cycle including revenue growth, EBITDA
margin and free cash flow. Certain of the shares are time based and
are awarded at the end of the three-year cycle as long as they
continue as a director. As of January 31, 2021, stock awards
(determined, where applicable, at maximum level) held by independent directors
were: (i) Mr. Kreft held 6,469 restricted common shares, (ii), Mr.
McAteer held 3,752 restricted common shares, (iii) Mr. Jenkins held
8,327 restricted common shares, and (iv) Mr. Schlarbaum held 3,752
restricted common shares, as of that date.
(2)
Mr. Kreft received
restricted stock grant of up to 4,348 shares at target totaling
$65,000.
(3) Mr.
McAteer received a restricted stock grant of up to 4,348 shares at
target totaling $65,000.
(4) Mr.
Jenkins received a restricted stock grant of up to 4,348 shares at
target totaling $65,000.
(5) Mr.
Schlarbaum received a restricted stock grant of up to 4,348 shares
at target totaling $65,000.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF DELOITTE & TOUCHE LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our
Audit Committee has selected Deloitte & Touche LLP
(“Deloitte”) as our independent registered public
accounting firm to audit our consolidated financial statements for
the fiscal year ending January 31, 2022 and has directed that
management submit the selection of Deloitte as our independent
registered public accounting firm for ratification by the
stockholders at the Annual Meeting. A representative of Deloitte is
expected to be available by phone at the Annual Meeting and will be
available to respond to appropriate questions from our stockholders
and will be given an opportunity to make a statement if he or she
desires to do so.
Neither our Bylaws nor other governing documents or applicable law
require stockholder ratification of the selection of
Deloitte as our independent registered
public accounting firm. However, the Audit Committee seeks to have
the selection of Deloitte ratified as a matter of good corporate governance. If the
stockholders fail to ratify the selection, the Audit Committee will
reconsider whether to retain that firm. Even if the selection is
ratified, the Audit Committee may in its discretion direct the
appointment of different independent registered public accountants
at any time during the year if they determine that such a change
would be in the best interests of the Company and its
stockholders.
Vote Required
The affirmative vote of the holders of a majority of the shares
present or represented by proxy and entitled to vote at the Annual
Meeting will be required to ratify the selection of
Deloitte. You may vote
“for,” “against” or “abstain.”
If you “abstain” from voting with respect to this
proposal, your vote will have the same effect as a vote
“against” this proposal.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THIS PROPOSAL
Change in independent registered public accounting
firm
As
reported in the Company’s Current Report on Form 8-K filed on
July 14, 2020, we engaged Deloitte as our independent registered
public accountants on July 9, 2020. The decision to dismiss Friedman LLP
(“Friedman”) was approved by the Audit Committee of the
Company’s Board of Directors.
The audit report of Friedman on the Company’s consolidated
financial statements as of and for the fiscal year ended January
31, 2020 did not contain an adverse opinion or a disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit
scope, or accounting principles. During the fiscal year ended
January 31, 2020, and during the subsequent interim period
preceding such dismissal, there were no disagreements with Friedman
on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Friedman,
would have caused it to make reference to the subject matter of the
disagreements in connection with its audit reports for such years.
In addition, during that time there were no “reportable
events” as that term is described in Item 304(a)(1)(v) of
Regulation S-K, except that the report of Friedman on the
effectiveness of internal control over financial reporting of the
Company as of January 31, 2020 identified a material weakness in
internal control over financial reporting. The report of Friedman
indicated that the Company did not design, implement, and
consistently operate effective process-level controls over the
product costing and valuation process to ensure the appropriate
valuation of the inventory on hand at year-end.
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee of the Board of
Directors of Lakeland Industries, Inc., describing the Audit
Committee’s responsibilities and practices, specifically with
respect to matters involving Lakeland’s accounting, auditing,
financial reporting and internal control functions. Among other
things, the Audit Committee reviews and discusses with management
and with Lakeland’s independent registered public accounting
firm the results of Lakeland’s year-end audit, including the
audit report and audited financial statements. The members of the
Audit Committee of the Board are presenting this report for the
fiscal year ended January 31, 2021.
The Audit Committee acts pursuant to a written charter. The
Nominating and Governance Committee and the Board consider
membership of the Audit Committee annually. The Audit Committee
reviews and assesses the adequacy of its charter annually. The
Audit Committee held eight meetings during the fiscal year ended
January 31, 2021.
All members of the Audit Committee are independent directors,
qualified to serve on the Audit Committee pursuant to the
applicable NASDAQ Rules. In
accordance with its charter, the Audit Committee oversees
accounting, financial reporting, internal control over financial
reporting, financial practices and audit activities of Lakeland and
its subsidiaries. The Audit Committee provides advice,
counsel, and direction to management and the independent registered
public accounting firm, based on the information it receives from
them. The Audit Committee relies, without independent
verification, on the information provided by Lakeland and on the
representations made by management that the financial statements
have been prepared with integrity and objectivity, on the
representations of management, and the opinion of the independent
registered public accounting firm that such financial statements
have been prepared in conformity with accounting principles
generally accepted in the United States, or
GAAP.
In connection with its review of Lakeland’s audited financial
statements for the fiscal year ended January 31, 2021, the
Audit Committee reviewed and discussed the audited financial
statements with management and discussed with
Deloitte, Lakeland’s independent
registered public accounting firm, the matters required to be
discussed by Public Company Accounting Oversight Board
(“PCAOB”) standards and the SEC. The Audit Committee
received the written disclosures and the letter from
Deloitte required by the applicable
requirements of the PCAOB and discussed with Deloitte
its independence from Lakeland. The
Audit Committee has also considered whether the provision of
certain permitted non-audit services by Deloitte
is compatible with their
independence.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board that the audited consolidated
financial statements be included in Lakeland’s Annual Report
on Form 10-K for its fiscal year ended January 31, 2021
for filing with the SEC.
During fiscal 2021, the Audit Committee met with management and
Lakeland’s independent registered public accounting firm and
received the results of the audit examination, evaluations of
Lakeland’s internal controls and the overall quality of
Lakeland’s financial organization and financial reporting.
The Audit Committee also meets at least once each quarter with
Lakeland’s independent registered public accounting firm and
management to review Lakeland’s interim financial results
before the publication of Lakeland’s quarterly earnings press
releases. The Audit Committee believes that a candid, substantive
and focused dialogue with the independent registered public
accounting firm is fundamental to the committee’s
responsibilities. To support this belief, the Audit Committee meets
separately with the independent registered public accounting firm
without the members of management present on at least an annual
basis.
The Audit Committee has established procedures for the receipt,
retention and treatment of complaints received by Lakeland
regarding accounting, internal accounting controls, or auditing
matters, including the confidential, anonymous submission by
Lakeland employees, received through established procedures, of
concerns regarding questionable accounting or auditing matters. We
have established a confidential email and hotline for employees to
report violations of Lakeland’s Code of Ethics or other
company policies and to report any ethical concerns.
The information contained in this report shall not be deemed
“soliciting material” to be “filed” with
the SEC, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except
to the extent that Lakeland specifically incorporates it by
reference into such filing.
The Audit Committee:
A. John Kreft,
Chairman
James
M. Jenkins
Jeffrey
Schlarbaum
INDEPENDENT AUDITOR FEE INFORMATION
The Audit Committee appointed Deloitte as the independent
registered public accounting firm to audit the financial statements
for the fiscal year ended January 31, 2021.
Fees billed for services by Deloitte related to fiscal 2021 and by Friedman (prior firm) related
to fiscal 2020 are as follows:
|
|
|
|
|
|
Audit
Fees
|
$500,000
|
$665,000
|
Audit-Related
Fees
|
$-----
|
$-----
|
Tax
Fees
|
$-----
|
$-----
|
All
Other Fees
|
$-----
|
$-----
|
Total
|
$500,000
|
$665,000
|
Audit Fees
Includes fees billed for professional services rendered for audit
of our annual financial statements in compliance with Section 404
of the Sarbanes-Oxley Act of 2002 and review of financial
statements included in our Forms 10-Q and other filings with the
SEC.
Audit-Related Fees
Includes certain services that are reasonably related to the
performance of the audit or review of Lakeland’s consolidated
financial statements.
Tax Fees
Includes service for tax compliance, tax advice and tax
planning.
All Other Fees
Includes fees billed for services not classified in any of the
above categories.
Audit Committee Pre-Approval Policy
In
accordance with applicable laws and regulations, the Audit
Committee reviews and pre-approves any non-audit services to be
performed by our independent registered public accounting firm to
ensure that the work does not compromise their independence in
performing their audit services. The Audit Committee generally also
reviews and pre-approves all audits, audit related, tax and all
other fees, as applicable. In some cases, pre-approval may be
provided by the full committee for up to a year and relates to a
particular category or group of services and is subject to a
specific budget and SEC rules. In other cases, the chairman of the
Audit Committee has the delegated authority from the committee to
pre-approve additional services, and such pre-approvals are then
communicated to the full Audit Committee at its next
meeting.
PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
As
required by Section 14A of the Exchange Act, the Company is
providing stockholders with an advisory (non-binding) vote on
compensation programs for our named executive officers (sometimes
referred to as “say on pay”). See “Executive
Officer Compensation.” Accordingly, you may vote on the
following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the named executive
officers, as disclosed in this Proxy Statement pursuant to the
SEC’s executive compensation disclosure rules (which
disclosure includes the compensation tables and the narrative
discussion that accompanies the compensation tables), is hereby
approved.
This
non-binding advisory vote on executive compensation will be
considered approved by the affirmative vote of a majority of the
shares represented by proxy and entitled to vote on the matter. You
may vote “for,” “against” or
“abstain.” Although this vote is non-binding, the Board
and the Compensation Committee, which is comprised of independent
directors, expect to take into account the outcome of the vote when
considering future executive compensation decisions.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THIS PROPOSAL
EXECUTIVE OFFICERS
Our Executive Officers are appointed by our Board and serve at its
discretion. Set forth below is information regarding our current
Executive Officers:
NAME
|
POSITION
|
AGE
|
Charles D. Roberson (1)
|
Chief Executive Officer, President and Secretary
|
58
|
Allen E. Dillard
|
Chief Financial Officer
|
61
|
Steven L. Harvey
|
Executive
Vice President for Global Sales and Marketing
|
60
|
(1)
Mr.
Roberson’s biography is included under the heading
“Election of Directors.” Mr. Roberson became Chief
Executive Officer, President and Secretary of the Company on
February 1, 2020, replacing Christopher J. Ryan, who held those
positions throughout the fiscal year ended January 31,
2020.
Allen E. Dillard has served as our Chief Financial Officer
since August 2019. Mr. Dillard was Chief Financial Officer of
Digium, Inc., a provider of telecommunications solutions from
September 2015 to August 2019. Mr. Dillard served as Chief
Executive Officer of Mobular Technologies, Inc., a technology
solutions provider, from September 2003 to September 2015.
Mr. Dillard has also served as CFO/Treasurer for Nichols Research
Corporation and Wolverine Tube, Inc. and was a senior manager at
Ernst and Young.
Steven L. Harvey has been our Executive Vice President for
Global Sales and Marketing since January 2021. From 2007 to
2018, Mr. Harvey was Vice-President of Global Sales and Service of
Digium, Inc., a provider of telecommunications solutions. From 2003
to 2007, Mr. Harvey was employed by Adtran, Inc., a provider of
networking and communications equipment as the Vice President of
Sales, Enterprise and Competitive Service Providers, as the Vice
President of Sales, Competitive Service Providers from 1998 to 2002
and as the Vice President of Sales, Enterprise from 1996 to 1998.
Mr. Harvey was also an Executive Vice President of, and held
various sales positions for, Data Processing Sciences, and began
his career at The Procter & Gamble Company.
EXECUTIVE OFFICER COMPENSATION
The
Company is both an accelerated filer and a smaller reporting
company. For purposes of executive officer compensation, the
Company is governed by the disclosure rules applicable to smaller
reporting companies. Therefore, the following Executive
Compensation Overview is not comparable to the “Compensation
Discussion and Analysis” that is required of SEC reporting
companies that are not smaller reporting companies. For additional
information with respect to executive compensation, please see
“Corporate Governance-Director and Executive Compensation
Survey” in the earlier part of this Proxy
Statement.
EXECUTIVE
COMPENSATION
OVERVIEW
Compensation Philosophy and Objectives. The Company seeks to pay its
executive officers’ total compensation that is competitive
with other companies of comparable size and complexity. Generally,
the types of compensation and benefits provided to the Chief
Executive Officer and other executive officers are comparable to
those provided to other executive officers of small cap, publicly
traded and similarly sized companies in the industry in which the
Company operates.
The
compensation policies of the Company are designed to:
●
Increase
stockholder value;
●
Increase the
overall performance of the Company;
●
Attract, motivate
and retain experienced and qualified executives; and
●
Incentivize the
executive officers to achieve the highest level of Company
financial performance.
While
the Company seeks to maintain competitive compensation arrangements
for its executives, it also strongly believes that the
competitiveness of the compensation packages should be based on the
total compensation achievable by the executive officers and that a
significant portion of that compensation should be incentive based
- linked to the performance of the Company. Consistent with Company
philosophy and objectives, executive compensation is weighted
heavily toward incentive compensation that is based on target
performance metrics that are common to all incentive compensation
throughout the Company. These targets are recommended by the
executive team and are subject to approval by the Compensation
Committee. Accordingly, the executive compensation packages
provided to the Chief Executive Officer and the other executive
officers are structured to include, among other things and in
addition to base salary, cash bonus, benefits, and equity
incentives. The Company seeks to have incentive compensation
comprise between 50% and 60% of total executive compensation, at
target performance levels. A reasonable portion of the compensation
packages for executive officers is in the form of restricted stock
grants, which are intended to provide incentives to executive
officers to achieve long-term growth in the earnings and price of
the Company’s common stock and enhance executive retention.
Additional annual cash bonus opportunities based on such parameters
as determined by the Compensation Committee are utilized to make
adjustments necessary to maintain the competitiveness of executive
compensation without compromising the Company’s commitment to
keeping executive incentive compensation greater that 50% of total
compensation. Overall compensation levels are set such that for
executive officers to achieve a competitive compensation level,
there must be growth in the market price of the Company’s
common stock and growth in the Company’s financial
performance parameters.
The
Compensation Committee believes that executive officer compensation
should seek to align the interests of executives with those of the
Company’s stockholders, by seeking to reward long-term growth
(not short-term) in the value of the Company’s common stock
and to reward the achievement of financial goals by the Company.
The current incentive components of restricted stock grants are
based upon levels of revenues, Earnings Before Interest, Taxes,
Depreciation and Amortization (“EBITDA”) margins, free
cash flow, as well as Board discretion and retention of employment,
and annual cash bonuses for executive officers are based on such
financial and operational parameters, as determined by the
Compensation Committee in connection with the Company’s
annual bonus program. This is intended to keep the executive team
focused on the core goal of overall long-term corporate
performance.
When
setting or recommending compensation levels, the Compensation
Committee considers the overall performance of the Company, the
individual performance of each of the executive officers, and their
individual contributions to and ability to influence the
Company’s performance, and also seeks to encourage teamwork
amongst the executives. The
Compensation
Committee believes that the level of total compensation, including
base salary, bonus, restricted stock grants and benefits of
executives should generally be maintained to compete with other
public and private companies of comparable size and complexity. The
Compensation Committee bases its determinations on a variety of
factors, including the personal knowledge of market conditions that
each member of the Compensation Committee has gained in his own
experience managing businesses, salary surveys available to the
Company, the knowledge of the Chief Executive Officer and other
executives as to local market conditions, information learned
regarding the compensation levels at other small cap companies in
the industrial apparel industry and other similarly sized
businesses and information provided by independent compensation
consultants. As evidenced by the WTW Compensation Survey conducted
for FY21, the Compensation Committee periodically evaluates the
types and levels of compensation paid by the Company to ensure that
it is able to attract and retain qualified executive officers and
that their compensation remains comparable to compensation paid to
similarly situated executives in comparable companies.
The
following describes in more specific terms the elements of
compensation that implement the compensation philosophy and
objectives described above, with specific reference to compensation
earned by the named executive officers for the fiscal year ended
January 31, 2021. “Named executive officers” refers to
those executive officers named in the Summary Compensation Table
that immediately follows this discussion.
Base Salaries. The base salary of each of our current named
executive officers is fixed pursuant to the terms of their
respective employment agreements with us and is determined by
evaluating the responsibilities of the position, the experience and
knowledge of the individual and the competitive marketplace at that
time for executive talent, including a comparison to base salaries
for comparable positions (considered in the context of the total
compensation paid by such companies). Salaries are reviewed from
time to time thereafter, generally in connection with the
expiration of employment agreements or when other considerations
warrant such review in the discretion of the Compensation Committee
and the Board, considering the foregoing factors as well as the
executive’s performance and the other factors considered in
setting total compensation described above.
When
salary adjustments are considered, they are made in the context of
the total compensation for executive officers, consistent with the
core principles discussed above. In each case, the participants
involved in recommending and approving salary adjustments consider
the performance of each executive officer, including consideration
of new responsibilities and the previous year’s corporate
performance. Individual performance evaluations take into account
such factors as achievement of specific goals that are driven by
the Company’s strategic plan and attainment of specific
individual objectives. The factors impacting base salary levels are
not assigned specific weights but are considered as a totality,
against the backdrop of the Company’s overall compensation
philosophy, and salary adjustments are determined in the discretion
of the Compensation Committee and the Board.
Bonuses. The Company has historically granted its annual
bonuses to executive officers based on corporate performance, as
measured by reference to factors which the Compensation Committee
believes reflect objective performance criteria over which
management generally has the ability to exert some degree of
control. With respect to the fiscal year ended January 31, 2021,
the Compensation Committee and the Board of Directors jointly
approved a bonus program pursuant to which the named executive
officers, as well as other key employees, would earn bonuses based
upon defined corporate performance goals and individual financial
and operational parameters. Corporate performance goals include
revenue growth, EBITDA margin, free cash flow and working
capital.
Equity Awards/Restricted Stock Grants. A third component of
executive officers’ compensation is grants of restricted
shares of common stock issued pursuant to our stock plans then in
effect; although the Compensation Committee may consider using
other equity-based incentives in the future and in fact issued a
stock option to Allen Dillard, the Company’s Chief Financial
Officer, upon his commencement of employment in August 2019 and to
Steven Harvey, Executive Vice President for Global Sales and
Marketing, upon his commencement of employment in January 2021. The
Compensation Committee grants restricted stock to the
Company’s executives in order to align their interests with
the interests of the stockholders. Restricted stock grants are
considered by the Company to be an effective long-term incentive
because the executives’ gains are linked to increases in
stock value, which in turn provides stockholder gains. Restricted
stock was granted to executive officers in accordance with the
terms of our 2017 Equity Incentive Plan in each of fiscal 2020 and
fiscal 2021. Such restricted stock grants vest at the end of a
three-year performance period, based upon revenue growth (35%),
EBITDA margin (25%), free cash flow (15%), retention of employement
(10%) and Board discretion (15%) subject to discretionary
adjustment for non-recurring items, achieved by the Company over
the entirety of this three-year period. At the end of the
applicable performance period, the number of shares based on
minimum, target, or maximum levels achieved will vest. With respect
to future restricted stock grants to executive officers, the
Compensation Committee expects to set specific performance goals
for vesting to be achieved, as well as a greater portion being
solely time-based.
Setting Executive Compensation. Base salaries and other compensation
for the Chief Executive Officer and other executive officers are
set by the Compensation Committee and reflect a number of elements
including recommendations by our Chief Executive Officer as to the
other executive officers based on evaluation of their performance
and the other factors described above. The Compensation Committee
works closely with the Chief Executive Officer in establishing
compensation levels for the other executive officers. Charles D.
Roberson, who assumed the role of Chief Executive Office on
February 1, 2020, and the individual executives engage in
discussions regarding the executive’s salary, and
Mr. Roberson reports on such discussions and makes his own
recommendations to the Compensation Committee. The Compensation
Committee will separately discuss with Mr. Roberson any
proposed adjustment to his own compensation. The Compensation
Committee reports to the Board on all proposed changes in executive
compensation after it has formed a view on appropriate adjustments
and makes recommendations for consideration of the Board for
executive officers other than the Chief Executive Officer. The
Compensation Committee sets the compensation level for the Chief
Executive Officer, and, with recommendations from the Board, for
the other executive officers. Salary levels and other aspects of
compensation for the Chief Executive Officer and the Chief
Financial Officer historically have been set forth in employment
agreements.
The
Compensation Committee is charged with the responsibility for
approving the compensation package for the Chief Executive Officer.
The Chief Executive Officer is not present during voting or
deliberation on his performance or compensation.
Retirement Benefits.
The Company does not provide any retirement benefits to its Chief
Executive Officer and Chief Financial Officer, other than matching
from time to time a portion of employee contributions to the
Company’s 401(k) plan.
Employment Agreements. The Company has entered into
employment agreements with its Chief Executive Officer, Chief
Financial Officer and Executive Vice President Sales and Marketing.
These employment agreements are described in more detail under the
caption “Narrative to Compensation Table”
below.
Taxation and Accounting Matters. Section 162(m) of the Internal
Revenue Code (the “Code”) may impose a limit on the
amount of compensation the Company may deduct in any one year with
respect to certain specified employees. Section 162(m) of the Code
denies a federal income tax deduction for certain compensation in
excess of $1.0 million per year paid to the chief executive
officer, the chief financial officer and the three other most
highly paid executive officers of a publicly traded corporation. We
believe that Section 162(m) of the Code will not limit our tax
deductions for executive compensation for fiscal year 2021. The
Compensation Committee’s policy is to qualify compensation
paid to our executive officers for deductibility for federal income
tax purposes to the extent feasible. However, to retain highly
skilled executives and remain competitive with other employers, the
Compensation Committee has the right to authorize compensation that
would not otherwise be deductible under Section 162(m) or
otherwise.
SUMMARY COMPENSATION TABLE
The
table below sets forth all salary, bonus and other compensation
paid (or payable in respect of bonuses) to our principal executive
officer and each of the two highest paid executive officers other
than the principal executive officer (our “named executive
officers”) for the fiscal years ended January 31, 2021 and
2020. As used in this Proxy Statement, FY refers to a fiscal year
ended January 31. For example, FY21 refers to the fiscal year ended
January 31, 2021.
Name and
Principal Position
|
|
|
|
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
All other
Compensation
($)
|
|
Charles
D. Roberson
Chief
Executive
|
|
2021
|
324,038
|
135,500
|
415,730
|
-----
|
-----
|
9,739(2)
|
885,007
|
Officer,
President and Secretary
|
|
2020
|
285,577
|
55,000
|
198,000
|
-----
|
--
|
78,086(2)
|
616,663
|
Allen
E. Dillard
|
|
2021
|
240,000
|
106,600
|
294,990
|
-----
|
-----
|
7,754(4)
|
649,344
|
Chief
Financial Officer
|
|
2020
|
110,769
|
48,000
|
172,800
|
174,549(3)
|
-----
|
-----
|
506,118
|
Steven
L. Harvey
Executive
Vice President for Global Sales and Marketing
|
|
2021
|
13,846
|
|
|
184,403(5)
|
|
|
198,249
|
(1)
“Stock
Awards” includes the value of restricted stock awarded based
on the aggregate grant date fair value of the awards. At grant
date, with respect to the restricted stock we had estimated that
the maximum level of shares (for the fiscal 2020 grants) and target
level of shares (for the fiscal 2021 grants) would vest over a
three-year cycle pursuant to the 2017 Equity Incentive Plan based
on the stock price at date of grant ($10.33 per share for fiscal
2020 and $13.95 per share for fiscal 2019), as reflected in the
fair value above. The amounts in this column do not necessarily
correspond to the actual value that will be realized by the named
executive officer. The level of award (minimum, target or maximum)
and final vesting is based on the Company’s aggregate level
of stated parameters over the entirety of the three-year cycle.
Messrs. Roberson and Dillard also received awards of restricted
shares in FY21 that will vest after one year of continued
employment.
(2)
Payments to Mr.
Roberson for relocation expenses of $68,347 in FY20 and $9,739 and
$9,995 Company contributions to 401(k) Plan in
FY21.
(3)
Represents a stock
option grant of 24,900 shares.
(4)
Represents
$7,754 Company contributions to 401(k) Plan in FY21.
(5)
Represents a stock
option grant of 10,200 shares.
NARRATIVE TO SUMMARY COMPENSATION
TABLE
We are
party to employment agreements with our three named executive
officers, a summary of the terms of which are set forth
below.
Charles D. Roberson has served as our Chief Executive
Officer, President and Secretary since February 1, 2020. Mr.
Roberson served as Chief Operating Officer of the Company from
July 2018 until January 31,
2020. Prior to such time, Mr.
Roberson served as Senior Vice President of International
Sales. Pursuant to the employment agreement entered into in
January 2020 with respect to his position as Chief Executive
Officer, which has a two-year term expiring on January 31, 2022,
Mr. Roberson receives a base salary of $325,000. Pursuant to this
agreement, Mr. Roberson is also eligible to participate, as
determined in the discretion of the Compensation Committee, in the
Company’s 2017 Equity Incentive Plan and any other
restrictive stock, stock appreciation rights, stock option or other
equity plans of the Company as may become effective; and based upon
parameters set forth in the Company’s annual bonus program,
if any, to receive an annual bonus of up to 20% of annual base
salary. In respect of fiscal 2021, Mr. Roberson earned a
performance and discretionary bonus of $135,500 and, in respect of
fiscal 2020, earned a performance and discretionary bonus of
$55,000. The Company granted Mr. Roberson, under the 2017 Equity
Incentive Plan during fiscal 2021, a performance-based award of up
to 14,130 restricted shares, based on target performance level,
subject to vesting in fiscal 2023, and granted during fiscal 2020 a
performance-based award of up to 15,973 restricted shares, based on
target performance level, subject to vesting in fiscal 2022. In
addition, during fiscal 2021, the Company granted Mr. Roberson an
award of 14,000 restricted shares, to vest after one year of
continued employment. Mr. Roberson participates in the
Company’s benefit plans and is entitled to the benefits
available to all other senior executives, including health
insurance coverage, and disability and life insurance. Pursuant to
his employment agreement, Mr. Roberson is subject to
non-competition and confidentiality restrictions which, in the case
of non-competition, covers the term of his employment and for a
period of one year thereafter. The potential payments to Mr.
Roberson in connection with any termination are discussed below
under “Potential Payments Upon
Termination.”
Allen E. Dillard serves as Chief Financial Officer of the
Company. Pursuant to the terms of his prior employment agreement
with the Company, Mr. Dillard’s term of employment was for a
period of 18 months which commenced on August 12, 2019 and expired
on February 11, 2021. Mr. Dillard was paid an annual base salary of
$240,000 in FY20. On February 15, 2021, the Company and Mr. Dillard
entered into a new employment agreement providing for employment
through February 1, 2022 and for a per annum base salary of
$285,000. Pursuant to his agreement, Mr. Dillard is also eligible
to participate, as determined in the discretion of the Compensation
Committee, in the Company’s 2017 Equity Incentive Plan and
any other restrictive stock, stock appreciation rights, stock
option or other equity plans of the Company as may become
effective; and if determined in its sole discretion by the
Compensation Committee, to receive an annual bonus in such amount,
and based upon such parameters (if any), as determined by the
Compensation Committee. Such annual bonus was up to 20% of base
salary for fiscal 2020 and fiscal 2021 and is up to 40% of his base
salary for fiscal 2022. In respect of fiscal 2020 and fiscal 2021,
Mr. Dillard earned performance and discretionary bonuses of $48,000
and $106,600, respectively. The Company granted Mr. Dillard, under
the 2017 Equity Incentive Plan, during fiscal 2020 (a) a stock
option to purchase 24,900 shares of common stock, exercisable at
$11.17 per share, and vesting over a three year period, and (b) a
performance-based award of up to 13,940 restricted shares, based on
target performance level, subject to vesting in fiscal 2022. During
fiscal 2021, the Company granted Mr. Dillard a performance based
award of up to 9,632 restricted shares, based on target performance
level, subject to vesting in fiscal 2023. In addition, during
fiscal 2021, the Company granted Mr. Dillard an award of 7,000
restricted shares to vest after one year of continued service. Mr.
Dillard participates in the Company’s benefit plans and is
entitled to the benefits available to other officers and employees,
including pension plans, profit sharing plans, health insurance
coverage, and disability insurance. Pursuant to his employment
agreement, Mr. Dillard is subject to non-competition and
confidentiality restrictions which, in the case of non-competition,
covers the term of his employment and for a period of one year
thereafter. The potential payments to Mr. Dillard in connection
with any termination are discussed below under “Potential
Payments Upon Termination.”
Steven L. Harvey serves as Executive Vice President for
Global Sales and Marketing of the Company. Pursuant to the employment agreement
which commenced on January 4, 2021 and has a two-year term expiring
on January 3, 2023 with an automatic 12-month extension unless
either party provides 90 days prior notice thereto. Mr. Harvey
receives a base salary of $240,000. Pursuant to his agreement, Mr.
Harvey is also eligible to participate, as determined in the
discretion of the Compensation Committee, in the Company’s
2017 Equity Incentive Plan and any other restrictive stock, stock
appreciation rights, stock option or other equity plans of the
Company as may become effective; and to receive an annual bonus of
up to 30% of annual base salary with respect to fiscal 2022 based
upon such parameters (if any) as determined by the Compensation
Committee and certain commission payments. The Company granted Mr.
Harvey, under the 2017 Equity Incentive Plan, during fiscal 2021 a
stock option to purchase 10,200 shares of common stock, exercisable
at $28.21 per share, and vesting over a three year period, Mr.
Harvey participates in the Company’s benefit plans and is
entitled to the benefits available to all other senior executives,
including health insurance coverage, and disability and life
insurance. Pursuant to his employment agreement, Mr. Harvey is
subject to non-competition and confidentiality restrictions which,
in the case of non-competition, covers the term of his employment
and for a period of one year thereafter. The potential payments to
Mr. Harvey in connection with any termination are discussed below
under “Potential Payments Upon
Termination.”
OUTSTANDING EQUITY AWARDS AT FISCAL 2021 YEAR-END
The
following table sets forth information with respect to outstanding
equity-based awards at January 31, 2021 for our named executive
officers.
|
|
|
Name
|
Number of
Securities Underlying Un-exercised Options (#)
Exercisable
|
Number of
Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity Incentive
Plan Awards: Number of Securities Underlying Unexercised Unearned
Options (#)
|
Option Exercise
Price ($)
|
|
Number of Shares
or Units of Stock that have not Vested (#)
(1)
|
Market Value of
Shares or Units of Stock that have not Vested ($)
(1)
|
Equity Incentive
Plan Awards: Number of Unearned Shares, Units or Other Rights that
have not Vested (#)(2)
|
Equity Incentive
Plan Awards: Market or Payout of Unearned Shares, Units or Other
Rights that have not Vested ($)(2)
|
Charles D.
Roberson,
CEO
|
-----
|
-----
|
-----
|
-----
|
-----
|
14,000
|
389,200
|
30,103
|
836,863
|
Allen E.
Dillard,
CFO
|
-----
|
-----
|
16,600(3)
|
11.17
|
|
7,000
|
194,600
|
23,572
|
655,302
|
Steven L.
Harvey,
Executive VP for
Global Sales and Marketing
|
|
|
10,200(4)
|
28.21
|
|
|
|
|
|
(1)
The number of
shares and their respective values in this chart reflect the total
over the one-year retention of employement period based on the
stock price as at January 31, 2021 of $27.80.
(2)
The number of
shares and their respective values in this chart reflect the total
over the three-year performance period pursuant to the 2017 Equity
Incentive Plan based on the stock price as at January 31, 2021 of
$27.80. The level of award (minimum, target or maximum) and final
vesting is based on the Company’s levels of revenue growth,
EBITDA margin, free cash flow, as well as Board discretion and
retention of employment, in respect of the fiscal 2019, 2020 and
2021 grants. The award was based on the target level for the fiscal
2020 and 2021 grants and the maximum level for the fiscal 2019
grants. Actual total number of shares vested may differ, and the
awards are spread over the three-year vesting period of the plan,
not just one, as implied by the chart.
(3)
The
stock options are for a term of 10 years, exercisable at $11.17,
and vest in two equal annual installments on August 12, 2021 and
August 12, 2022 subject to continued employment through the vesting
date.
(4)
The
stock options are for a term of 10 years, exercisable at $28.21,
and vest in three equal annual installments on January 4, 2022,
January 4, 2023 and January 4, 2024 subject to continued employment
through the vesting date.
POTENTIAL PAYMENTS UPON TERMINATION
Charles D. Roberson
Pursuant
to the terms of Mr. Roberson’s employment agreement, if Mr.
Roberson’s employment is terminated “for cause”
(as defined in the employment agreement), his employment agreement
would terminate immediately and he would be paid his accrued and
unpaid base salary through the date of termination, any annual
bonus earned for the year prior to the year of termination but not
yet paid and any other employee benefits generally paid by the
Company up to the date of termination (collectively, the “CR
Accrued Obligations”). In the event Mr. Roberson terminates
his employment for “good reason” (as defined in the
employment agreement) or he is terminated by the Company without
cause, Mr. Roberson is entitled to be paid (a) the CR Accrued
Obligations, (b) an additional twelve months of his then current
base salary payable in equal monthly installments, and (c) a pro
rata portion of any annual bonus earned for the year of termination
through the date of termination, as determined in good faith by the
Compensation Committee. In the event Mr. Roberson is terminated
without cause or if he terminates for good reason within 24 months
after a change in control (as defined in the employment agreement),
the Company is obligated to pay him (a) the CR Accrued Obligations,
(b) a lump sum amount equal to 24 months of base salary as in
effect at termination or during the year immediately prior to the
change in control, whichever is greater, and (c) two times a target
bonus amount, if any, in effect at termination. In the event of Mr.
Roberson’s death or disability (as defined in the employment
agreement), Mr. Roberson or his beneficiary or estate is entitled
to receive the CR Accrued Obligations and a pro-rata portion of his
annual bonus, if any, for the year of termination through the date
of termination. Mr. Roberson has the right to terminate his
agreement at any time on 60 days written notice, in which event he
will be entitled to the CR Accrued Obligations.
Allen E. Dillard
Pursuant
to the terms of Mr. Dillard’s employment agreement, if Mr.
Dillard’s employment is terminated “for cause”
(as defined in the employment agreement), his employment agreement
would terminate immediately and he would be paid his accrued and
unpaid base salary through the date of termination, any annual
bonus earned for the year prior to the year of termination but not
yet paid and any other employee benefits generally paid by the
Company up to the date of termination (collectively, the “AD
Accrued Obligations”). In the event Mr. Dillard terminates
his employment for “good reason” (as defined in the
employment agreement) or he is terminated by the Company without
cause, Mr. Dillard is entitled to be paid (a) the AD Accrued
Obligations, (b) an additional twelve months of his then current
base salary payable in equal monthly installments, and (c) a pro
rata portion of any annual bonus earned for the year of termination
through the date of termination, as determined in good faith by the
Compensation Committee. In the event Mr. Dillard is terminated
without cause or if he terminates for good reason within 18 months
after a change in control (as defined in the employment agreement),
the Company is obligated to pay his (a) the AD Accrued Obligations,
(b) a lump sum amount equal to 24 months of base salary as in
effect at termination or during the year immediately prior to the
change in control, whichever is greater, and (c) two times a target
bonus amount, if any, in effect at termination. In the event of Mr.
Dillard’s death or disability (as defined in the employment
agreement), Mr. Dillard or his beneficiary or estate is entitled to
receive the AD Accrued Obligations and a pro-rata portion of his
annual bonus, if any, for the year of termination through the date
of termination. Mr. Dillard has the right to terminate his
agreement at any time on 60 days written notice, in which event he
will be entitled to the AD Accrued Obligations.
Steven L. Harvey
Pursuant
to the terms of Mr. Harvey’s employment agreement, if Mr.
Harvey’s employment is terminated “for cause” (as
defined in the employment agreement), his employment agreement
would terminate immediately and he would be paid his accrued and
unpaid base salary and commissions through the date of termination,
any annual bonus earned for the year prior to the year of
termination but not yet paid and any other employee benefits
generally paid by the Company up to the date of termination
(collectively, the “SH Accrued Obligations”). In the
event Mr. Harvey terminates his employment for “good
reason” (as defined in the employment agreement) or he is
terminated by the Company without cause, Mr. Harvey is entitled to
be paid (a) the SH Accrued Obligations, (b) an additional twelve
months of his then current base salary payable in equal monthly
installments, and (c) a pro rata portion of any annual bonus earned
for the year of termination through the date of termination, as
determined in good faith by the Compensation Committee. In the
event Mr. Harvey is terminated without cause or if he terminates
for good reason within 18 months after a change in control (as
defined in the employment agreement), the Company is obligated to
pay his (a) the SH Accrued Obligations, (b) a lump sum amount equal
to 24 months of base salary as in effect at termination or during
the year immediately prior to the change in control, whichever is
greater, and (c) two times a target bonus amount, if any, in effect
at termination. In the event of Mr. Harvey’s death or
disability (as defined in the employment agreement), Mr. Harvey or
his beneficiary or estate is entitled to receive the SH Accrued
Obligations and a pro-rata portion of his annual bonus, if any, for
the year of termination through the date of termination. Mr. Harvey
has the right to terminate his agreement at any time on 60 days
written notice, in which event he will be entitled to the SH
Accrued Obligations.
PROPOSAL NO. 4
APPROVAL OF AN AMENDMENT TO THE LAKELAND INDUSTRIES,
INC.
2017 EQUITY INCENTIVE PLAN
General
Our Board is requesting that our stockholders approve the adoption
of an amendment to the Lakeland Industries, Inc. 2017 Equity
Incentive Plan (the “Plan”), which amendment was
approved by the Board on April 8, 2021 and will be effective
upon approval by our stockholders at the Annual Meeting. If this
proposal is approved, the maximum number of shares of common stock
that may be issued under the Plan in connection with Awards will be
increased from 360,000 to 840,000.
The Plan was approved by our Board and stockholders in 2017.
Section 11 of the Plan permits the Board to amend the Plan,
subject, in the case of amendments requiring stockholder
approval in order to comply with tax, securities, or other
applicable laws or regulations, including, but not limited to, the
listing requirements of the Nasdaq Global Market, to the approval by the Company’s
stockholders of such amendment in the manner so
required.
As of April 30, 2021, a total of 16,475 shares of our common stock
remain available for issuance under the Plan.
Reasons for Amendment of the Plan
The purpose of the Plan is to attract and retain key personnel and
to provide a means for directors, officers, and employees to
acquire and maintain an interest in our Company and share in our
growth and value. We believe that the increase in the number of
shares available for issuance under our Plan is essential to permit
our management to continue to provide long-term, equity-based
incentives to present and future directors, officers, and
employees. As of February 1, 2021 there were five non-employee
directors and 1,595 employees are eligible to participate in the
Plan.
Our Board believes that the number of shares currently remaining
available for issuance pursuant to future Awards under the Plan is
not sufficient for future granting needs. Our Board believes that
if the amendment to the Plan is approved by our stockholders, the
496,475 shares available for issuance under the Plan will result in
an adequate number of shares of Common Stock being available for
future Awards under the Plan for approximately 5 additional years
following the current year.
The principal features of the Plan, as amended, are summarized
below, but the summary is qualified in its entirety by reference to
the Lakeland Industries, Inc. 2017 Equity Incentive Plan, and
Amendment No.1 thereto, which are attached as Appendix A to
this Proxy Statement.
Highlights of the 2017 Equity Incentive Plan
The Plan permits the grant of (i) incentive stock options
(“ISOs”); (ii) nonqualified stock options
(“NQSOs” and, together with ISOs,
“Options”); (iii) restricted stock awards; (iv)
restricted stock units (“RSUs”); (v) awards based upon
achievement of specified performance conditions (“Performance
Awards”); and (vi) stock appreciation rights
(“SARs”), which we refer to collectively as Awards, as
more fully described below.
Some of the key features of the Plan that reflect our commitment to
effective management of incentive compensation are as
follows:
No Repricing of Options and
SARs. The prohibits,
without stockholder approval, the repricing of Options and
SARs.
No In-the-Money Options or
SARs. The Plan prohibits
the grant of Options or SARs with an exercise price or base price
less than the fair market value of our common stock as of the date
of grant.
Recoupment. Awards
made after the Plan is approved may be subject to rescission,
cancellation or recoupment, in whole or in part, under any current
or future “clawback” or similar policy maintained by us
that is applicable to any participant.
Independent
Administration. A
committee initially comprised of the Compensation Committee or such
other Board committee designated by the Board of at least two
independent directors (the “Committee”) will be
responsible for the general administration of the Plan with respect
to Awards granted to employees. In general, the full Board
administers the Plan with respect to Awards made to non-employee
directors.
All Awards granted under the Plan are governed by separate written
agreements, or award agreements, between us and the participants.
No Awards may be granted after expiration of the Plan, although
Awards granted before that time will remain valid in accordance
with their terms.
The Committee may grant Awards upon such terms and conditions (not
inconsistent with the provisions of the Plan) as it may consider
appropriate. Any of our employees, officers and directors or those
of our affiliates, are eligible to participate in the Plan if
selected by the Committee. In its discretion, the Committee may
delegate all or part of its authority and duties with respect to
granting Awards to one or more individuals, provided applicable law
so permits.
Subject to certain adjustments and approval of the proposed
amendment to the Plan, the maximum number of shares of common stock
that may be issued under the Plan in connection with Awards will be
increased by 480,000 to 840,000. The aggregate grant date fair
market value of Awards granted under the Plan, together with cash
paid, to a non-employee director for services during any fiscal
year shall not exceed $300,000. The maximum number of shares of
common stock underlying or subject to Awards that may be granted
during any calendar year to any individual participant shall be
fifty percent (50%) of the maximum number of shares that may be
issued in respect of Awards under the Plan. In the event of any
stock dividend, recapitalization, forward stock split or reverse
stock split, reorganization, division, merger, consolidation,
spin-off, combination, repurchase or share exchange, extraordinary
or unusual cash distribution or other similar corporate transaction
or event that affects our common stock, the Committee shall make
appropriate adjustment in the number and kind of shares authorized
by the Plan and covered under outstanding Awards as it determines
appropriate and equitable. Shares of our common stock subject to
Awards that expire unexercised or are otherwise cancelled or
forfeited, or if such Award is settled in cash in lieu of shares,
shall again be available for Awards under the Plan. Except for
expired, forfeited or cancelled Shares, the Plan is intended to
restrict the “recycling” of shares of common stock back
into the Plan; this means (i) shares used or withheld in settlement
of a tax withholding obligation associated with an Award, (ii)
shares tendered or held back upon the exercise of an Option in
satisfaction of the exercise price payable upon exercise of an
Option, or (iii) shares subject to a SAR that are not issued or
delivered as a result of the net stock settlement of an outstanding
SAR, will not become available for grant under the
Plan.
Options. An Option entitles the
holder to purchase from us a stated number of shares of common
stock. An ISO may only be granted to an employee of ours or our
affiliates (provided applicable law so permits). The Committee will
specify the number of shares of common stock subject to each Option
and the exercise price for such Option, provided that the exercise
price may not be less than the fair market value of a share of
common stock on the date the Option is granted. Notwithstanding the
foregoing, if ISOs are granted to any participant who holds,
directly or indirectly, 10% or more of the total combined voting
power of all classes of stock of the Company (“10%
stockholder”), the exercise price shall not be less than 110%
of the fair market value of common stock on the date the Option is
granted. Generally, all or part of the exercise price may be paid
either by certified or bank check or such other means as the
Committee will accept.
All Options shall not vest for at least one year after the date the
Option is granted, except as (i) the Committee may determine or
permit otherwise in the event of a change in control (as defined in
the Plan), or (ii) may be required or otherwise be deemed advisable
by the Committee in connection with Options granted through the
assumption of, or substitution for, outstanding awards previously
granted by a company acquired by the Company or any of its
affiliates or with which the Company or any of its affiliates
combines. The maximum term of an Option shall be determined by the
Committee on the date of grant but shall not exceed 10 years (5
years in the case of ISOs granted to any 10% stockholder). In the
case of ISOs, the aggregate fair market value (determined as of the
date of grant) of common stock with respect to which such ISOs
become exercisable for the first time during any calendar year
cannot exceed $100,000. ISOs granted in excess of this limitation
will be treated as NQSOs.
If a participant terminates employment with us (or our affiliates)
due to death or disability, the participant’s unexercised
Options may be exercised, to the extent they were exercisable on
the termination date, for a period of twelve months from the
termination date or until the expiration of the original Option
term, if shorter. If the participant employment with us (or our
affiliates) is terminated for cause (as defined in the Plan), all
unexercised Options (whether vested or unvested) shall terminate
and be forfeited on the termination date. If the
participant’s employment terminates for any other reason, any
vested but unexercised Options may be exercised by the participant,
to the extent exercisable at the time of termination, for a period
of 90 days from the termination date (or such time as specified by
the Committee at the time of grant) or until the expiration of the
original Option term, whichever period is shorter. Unless otherwise
provided by the Committee, any Options that are not exercisable at
the time of termination of employment shall terminate and be
forfeited on the termination date.
Restricted Stock. A restricted
stock award is a grant of shares of common stock, which may be
subject to forfeiture restrictions during a restriction period.
Such restriction period shall be for a minimum of one year, except
as (i) the Committee may determine or permit otherwise in the event
of a change in control, or (ii) may be required or otherwise be
deemed advisable by the Committee in connection with restricted
stock granted through the assumption of, or substitution for,
outstanding awards previously granted by a company acquired by the
Company or any of its affiliates or with which the Company or any
of its affiliates combines. The Committee may condition the
expiration of the restriction period, if any, upon: (i) the
participant’s continued service over a period of time with us
or our affiliates; (ii) the achievement by the participant, us or
our affiliates of any other performance goals set by the Committee;
or (iii) any combination of the above conditions as specified in
the award agreement. If the specified conditions are not attained,
the participant will forfeit the portion of the restricted stock
award with respect to which those conditions are not attained, and
the underlying common stock will be forfeited to us. At the end of
the restriction period, if the conditions, if any, have been
satisfied, the restrictions imposed will lapse with respect to the
applicable number of shares. During the restriction period, at the
discretion of the Committee, a participant will have the right to
vote the shares underlying the restricted stock. However, all
dividends will remain subject to restriction until the stock with
respect to which the dividend was issued
lapses.
RSUs. RSUs are granted in
reference to a specified number of shares of common stock and
entitle the holder to receive, on achievement of specific
performance goals established by the Committee, after a period of
continued service with us or our affiliates or any combination of
the above as set forth in the applicable award agreement, one share
of common stock for each unit or, at the sole discretion of the
Committee, an amount in cash equal to the fair market value, at the
time of distribution, of one share for each unit. All terms
governing RSUs, such as vesting, time and form of payment and
termination of units shall be set forth in the applicable award
agreement, provided, however, the period commencing with the date
of grant of the RSU and ending at such time or times as specified
by the Committee shall be for a minimum of one year, except as (i)
the Committee may determine or permit otherwise in the event of a
change in control, or (ii) may be required or otherwise be deemed
advisable by the Committee in connection with RSUs granted through
the assumption of, or substitution for, outstanding awards
previously granted by a company acquired by the Company or any of
its affiliates or with which the Company or any of its affiliates
combines.
Performance Awards. The
Committee may grant Performance Awards denominated as a number of
shares of common stock or a specified number of other Awards, which
may be earned upon achievement or satisfaction of performance goals
as may be specified by the Committee. The vesting period in respect
of any Performance Award shall be for a minimum of one year, except
as (i) the Committee may determine or permit otherwise in the event
of a change in control, or (ii) may be required or otherwise be
deemed advisable by the Committee in connection with Performance
Awards granted through the assumption of, or substitution for,
outstanding awards previously granted by a company acquired by the
Company or any affiliate or with which the Company or any affiliate
combines. The Committee may provide in an award agreement that the
performance goals for the Award be adjusted to include or exclude
the impact of items such as realized investment gains and losses,
extraordinary, unusual, non-recurring or infrequently recurring
items, asset write-downs, effects of accounting changes, currency
fluctuations, acquisitions, divestitures, reserve-strengthening and
other non-operating items.
Performance goals may be linked to a variety of factors including
the participant’s completion of a specified period of
employment or service with us or an affiliated company.
Additionally, performance goals can include objectives stated with
respect to us. The performance goals may include specified levels
of or increases in the Company’s or subsidiary’s return
on equity, diluted earnings per share, total earnings, earnings
growth, return on capital, return on assets, earnings before
interest and taxes (“EBIT”), earnings before interest,
taxes, depreciation and amortization (“EBITDA”), sales,
sales growth, gross margin, return on investment, increase in the
fair market value of the each share of common stock, share price
(including but not limited to, growth measures and total
stockholder return), net earnings, cash flow (including, but not
limited to, operating cash flow and free cash flow), cash flow
return on investment (which equals net cash flow divided by total
capital), inventory turns, financial return ratios, total return to
stockholders, market share, earnings measures/ratios, economic
value added (“EVA”), balance sheet measurements such as
receivable turnover, internal rate of return, increase in net
present value or expense targets, working capital measurements
(such as average working capital divided by sales), customer
satisfaction surveys and productivity.
The participant shall not have any stockholder rights with respect
to the shares of common stock subject to a Performance Award until
the shares are actually issued thereunder.
Stock Appreciation Rights. A
SAR entitles the participant to receive, upon exercise of the SAR,
the increase in the fair market value of a specified number of
shares of common stock from the date of the grant of the SAR and
the date of exercise payable in cash, in shares of common stock
valued at fair market value, or any combination thereof, as
determined by the Committee. Any grant may specify a waiting period
or periods before the SAR may become exercisable and permissible
dates or periods on or during which the SAR shall be exercisable,
and may specify the circumstances under which a SAR may vest,
including based on achievement of performance goals and/or future
employment or service requirements. A grant may also specify that a
SAR may be exercised only in the event of a change in control or
other similar transaction or event. No SAR may be granted with a
vesting period that is shorter than one year, except as (i) the
Committee may determine or permit otherwise in the event of a
change in control, or (ii) may be required or otherwise be deemed
advisable by the Committee in connection with SARs granted through
the assumption of, or substitution for, outstanding awards
previously granted by a company acquired by the Company or any
affiliate or with which the Company or any affiliate combines. The
Committee may provide that a SAR is deemed to be exercised at the
close of business on the date the SAR expires if such an exercise
would result in payment to the SAR
holder.
Transferability and other Award Restrictions. The Committee may impose restrictions on the
grant, exercise or payment of an Award as it determines
appropriate. Generally, Awards granted under the Plan shall be
nontransferable except by will or by the laws of descent and
distribution. For Awards (other than Options as set forth above),
in the event of termination of employment by reason of death or
disability of a participant who holds such Award (other than
Options) as to which such Award has not been fully vested, the
Committee may, in its sole discretion, take any action that it
deems to be equitable under the circumstances or in the best
interests of our Company, including without limitation waiving or
modifying any limitation, requirement, performance condition or
goal with respect to any such Award; provided that, the amount of
shares or cash obtained by virtue of any accelerated vesting shall
not exceed the number determined by multiplying the number of
shares of common stock underlying the Award/or cash value by a
fraction, the numerator of which is the number of full months
during the relevant restriction period of such Award during all of
which the participant was an employee or director of the Company or
its subsidiaries and the denominator of which is the number of full
calendar months in such restriction period; and provided further
that, in the case of any Award subject to Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”),
the Committee shall not take any action unless permissible under
Section 409A of the Code. No participant shall have any rights as a
stockholder with respect to shares covered by Options, RSUs, or
SARs unless and until such Awards are settled in shares of common
stock.
Compliance with Law. No Option shall be exercisable, no SAR shall
be settled, no shares of common stock shall be issued, no
certificates for shares of common stock shall be delivered and no
payment shall be made under the Plan except in compliance with all
applicable laws.
Amendment and Termination. The Board may amend, suspend or terminate
the Plan and the Committee may amend any outstanding Award at any
time; provided, however, that no such amendment or termination may
adversely affect Awards then outstanding without the holder’s
permission.
Change in Control. In the event of a change in control, the
Committee may, on a participant-by-participant basis (i) cause any
or all outstanding Awards to become vested and immediately
exercisable (as applicable), in whole or in part; (ii) cancel any
unvested Award or unvested portion thereof, with or without
consideration; (iii) cancel any Award in exchange for a substitute
award; (iv) redeem any restricted stock or RSU for cash and/or
other substitute consideration with value equal to fair market
value of an unrestricted share of common stock on the date of the
change in control; (v) cancel any Option in exchange for cash
and/or other substitute consideration with a value equal to: (A)
the number of shares subject to that Option, multiplied by (B) the
difference, if any, between the fair market value per share on the
date of the change in control and the exercise price of that
Option; provided, that if the fair market value per share on the
date of the change in control does not exceed the exercise price of
any such Option, the Committee may cancel that Option without any
payment of consideration therefor; (vi) take such other action as
the Committee shall determine to be reasonable under the
circumstances; and/or (vii) in the case of any Award subject to
Section 409A of the Code, such
Award shall vest and be distributed only in accordance with the
terms of the applicable award agreement and the Committee shall
only be permitted to use discretion to the extent that such
discretion would be permitted under Section 409A of the Code. In
the discretion of the Committee, any cash or substitute
consideration payable upon cancellation of an Award may be
subjected to (i) vesting terms substantially identical to those
that applied to the cancelled Award immediately prior to the change
in control, or (ii) earn-out, escrow, holdback or similar
arrangements, to the extent such arrangements are applicable to any
consideration paid to stockholders in connection with the change in
control. The Committee, in its sole discretion, has the authority
to determine the application of the foregoing
provisions.
Duration of Plan. The Plan will expire by its terms on June
21, 2027.
U.S. Federal Income Tax Consequences
The following is a general summary of the material U.S. federal
income tax consequences of the grant and exercise and vesting of
Awards under the Plan and the disposition of shares acquired
pursuant to the exercise of such Awards. This summary is intended
to reflect the current provisions of the Code and the regulations
thereunder. However, this summary is not intended to be a complete
statement of applicable law, nor does it address foreign, state,
local and payroll tax considerations. Moreover, the U.S. federal
income tax consequences to any particular participant may differ
from those described herein by reason of, among other things, the
particular circumstances of such participant.
PARTICANTS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE PARTICULAR FEDERAL INCOME TAX CONSEQUENCES TO THEM OF
PARTICIPATING IN THE PLAN, AS WELL AS WITH RESPECT TO ANY
APPLICABLE STATE OR LOCAL INCOME TAX OR OTHER TAX
CONSIDERATIONS.
Options. There are a number of requirements that must be
met for a particular Option to be treated as an ISO. One such
requirement is that common stock acquired through the exercise of
an ISO cannot be disposed of before the later of (i) two years from
the date of grant of the Option, or (ii) one year from the date of
its exercise. Holders of ISOs will generally incur no federal
income tax liability at the time of grant or upon exercise of those
Options. However, the spread at exercise will be an “item of
tax preference,” which may give rise to “alternative
minimum tax” liability for the taxable year in which the
exercise occurs. If the holder does not dispose of the shares
before the later of two years following the date of grant and one
year following the date of exercise, the difference between the
exercise price and the amount realized upon disposition of the
shares will constitute long-term capital gain or loss, as the case
may be. Assuming both holding periods are satisfied, no deduction
will be allowed to the Company for federal income tax purposes in
connection with the grant or exercise of the ISO. If, within two
years following the date of grant or within one year following the
date of exercise, the holder of shares acquired through the
exercise of an ISO disposes of those shares, the participant will
generally realize taxable compensation at the time of such
disposition equal to the difference between the exercise price and
the lesser of the fair market value of the share on the date of
exercise or the amount realized on the subsequent disposition of
the shares, and that amount will generally be deductible by the
Company for federal income tax purposes. Finally, if an otherwise
ISO becomes first exercisable in any one year for shares having an
aggregate value in excess of $100,000 (based on the date of grant
value), the portion of the ISO in respect of those excess shares
will be treated as a NQSO.
No income will be realized by a participant upon grant of a NQSO.
Upon the exercise of a NQSO, the participant will recognize
ordinary compensation income in an amount equal to the excess, if
any, of the fair market value of the underlying exercised shares
over the Option exercise price paid at the time of exercise. Such
income will be subject to income tax withholdings, and the
participant will be required to pay to the Company the amount of
any required withholding taxes in respect to such income. The
Company will generally be able to deduct this same amount for U.S.
federal income tax purposes.
Restricted Stock. A participant
will not be subject to tax upon the grant of an Award of restricted
stock unless the participant otherwise elects to be taxed at the
time of grant pursuant to Section 83(b) of the Code. On the date an
Award of restricted stock becomes transferable or is no longer
subject to a substantial risk of forfeiture, the participant will
recognize ordinary compensation income equal to the difference
between the fair market value of the shares on that date over the
amount the participant paid for such shares, if any. Such income
will be subject to income tax withholdings, and the participant
will be required to pay to the Company the amount of any required
withholding taxes in
respect to such income. If the participant made an election under
Section 83(b) of the Code, the participant will recognize ordinary
compensation income at the time of grant equal to the difference
between the fair market value of the shares on the date of grant
over the amount the participant paid for such shares, if any, and
any subsequent appreciation in the value of the shares will be
treated as a capital gain upon sale of the shares. Special rules
apply to the receipt and disposition of restricted shares received
by officers and directors who are subject to Section 16(b) of the
Exchange Act. The Company will generally be able to deduct, at the
same time as it is recognized by the participant, the amount of
taxable compensation to the participant for U.S. federal income tax
purposes.
Restricted Stock Units. A
participant will not be subject to tax upon the grant of a RSU
Award. Rather, upon the delivery of shares or cash pursuant to a
RSU Award, the participant will recognize ordinary compensation
income equal to the fair market value of the number of shares (or
the amount of cash) the participant actually receives with respect
to the Award. Such income will be subject to income tax
withholdings, and the participant will be required to pay to the
Company the amount of any required withholding taxes in respect to
such income. The Company will generally be able to deduct the
amount of taxable compensation recognized by the participant for
U.S. federal income tax purposes.
Performance Awards. A participant recognizes no taxable income
and our Company is not entitled to a deduction when Performance
Awards are awarded. When Performance Awards vest and become payable
upon the achievement of the performance goals, the participant will
recognize ordinary income equal to the fair market value of the
shares received minus any amount paid for the shares, and our
Company will generally be entitled to a corresponding deduction. A
participant’s tax basis in shares of common stock received
upon vesting will be equal to the fair market value of such shares
when the participant receives them. Upon sale of the shares, the
participant will recognize short-term or long-term capital gain or
loss, depending upon whether the shares have been held for more
than one year at the time of sale. Such gain or loss will be equal
to the difference between the amount realized upon the sale of the
shares and the tax basis of the shares in the participant’s
hands.
Stock Appreciation Rights. A participant recognizes no taxable income
and our Company is not entitled to a deduction when a SAR is
granted. Upon exercising a SAR, a participant will recognize
ordinary income in an amount equal to the cash and/or the fair
market value of the shares received minus any amount paid for the
shares, and our Company will generally be entitled to a
corresponding deduction. A participant’s tax basis in the
shares of common stock received upon exercise of a SAR will be
equal to the fair market value of such shares on the exercise date,
and the participant’s holding period for such shares will
begin at that time. Upon sale of the shares of common stock
received upon exercise of a SAR, the participant will recognize
short-term or long-term capital gain or loss, depending upon
whether the shares have been held for more than one year. The
amount of such gain or loss will be equal to the difference between
the amount realized in connection with the sale of the shares and
the participant’s tax basis in such
shares.
Section 162(m). In general,
Section 162(m) of the Code denies a publicly held corporation a
deduction for U.S. federal income tax purposes for compensation in
excess of $1,000,000 per year per person paid to certain executive
officers.
New Plan Benefits
Future grants under the Plan will be made at the discretion of the
Committee and, accordingly, are not yet determinable. In addition,
the value of the Awards granted under the Plan will depend on a
number of factors, including the fair market value of the shares of
common stock on future dates, the exercise decisions made by the
participants and/or the extent to which any applicable performance
goals necessary for vesting or payment are achieved. Consequently,
it is not possible to determine the benefits that might be received
by directors, executive officers and other employees under the
Plan, receiving discretionary grants under the Plan.
On April 30, 2021, the closing
market price per share of our common stock was $28.21, as reported by the Nasdaq Global
Market
Interests of Directors or Officers
The Company’s directors may grant Awards under the Plan to
themselves as well as to the Company’s officers and other
employees.
Vote Required for Approval
The affirmative vote of the holders of a majority of the shares
present or represented by proxy and entitled to vote at the Annual
Meeting is required to approve the Amendment to the Lakeland
Industries, Inc. 2017 Equity Incentive Plan.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THIS PROPOSAL
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following tables set forth certain information regarding the
beneficial ownership of the Company’s outstanding common
stock as of April 19, 2021, the record date, including shares as to
which a right to acquire ownership within 60 days of the record
date exists within the meaning of Rule 13d-3(d)(1) under the
Exchange Act, by: (i) each of the named executive officers of the
Company; (ii) each director and nominee for director of the
Company; (iii) all directors and executive officers of the Company
as a group and (iv) each person who is known by the Company to
beneficially own more than 5% of the Common Stock.
Except
as otherwise noted, the persons named in the table have sole voting
and investment power with respect to their shares of Common Stock
shown as beneficially owned by them and the address for each
beneficial owner, unless otherwise noted, is c/o Lakeland
Industries, Inc., 202 Pride Lane SW, Decatur, AL
35603.
Directors and
Officers
Name
|
Amount and
Nature of
Beneficial
Ownership (1)
|
|
Christopher J.
Ryan
|
90,204(2)
|
1.1%
|
A. John
Kreft
|
44,517(3)
|
*
|
Thomas
McAteer
|
35,337(4)
|
*
|
James M.
Jenkins
|
9,807(5)
|
*
|
Jeffrey
Schlarbaum
|
3,583(6)
|
*
|
Nikki L.
Hamblin
|
-----
|
-----
|
Charles D.
Roberson
|
37,913(7)
|
*
|
Allen E.
Dillard
|
14,054(8)
|
*
|
Steven L.
Harvey
|
-----
|
-----
|
All officers and
directors as a group (8 persons)
|
235,415(9)
|
2.9%
|
* Less
than 1%
(1)
Table does not
include performance-based restricted stock grants under the
Company’s 2017 Equity Incentive Plan (performance vesting at
end of three years, date of grants April 2020 and December 2019) at
minimum, target or maximum, as the number of restricted shares to
be awarded is not determinable at the time of grant and the
recipients do not have the right to vote or other elements of
beneficial ownership until vesting.
(2)
Includes 3,278
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a three-year vesting period from the date of
grant, subject to continued services as a director.
(3)
Includes 2,717
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a two-year vesting period from the date of grant
and 1,064 restricted shares subject to a three-year vesting period
from the date of grant, in each case subject to continued services
as a director.
(4)
Includes 1,064
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a three-year vesting period from the date of
grant, subject to continued services as a director.
(5)
Includes 4,575
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a two-year vesting period from the date of grant,
and 1,064 restricted shares subject to a three-year vesting period
from the date of grant, in each case subject to continued services
as a director.
(6)
Includes 1,064
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a three-year vesting period from the date of
grant, subject to continued services as a director.
(7)
Includes 3,010
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a three-year vesting period from the date of
grant, and 14,000 restricted shares subject to a one-year vesting
period from the date of grant, in each case subject to continued
services as an officer.
(8)
Includes 2,357
restricted shares issued pursuant to the 2017 Equity Incentive
Plan, subject to a three-year vesting period from the date of
grant, and 7,000 restricted shares subject to a one-year vesting
period from the date of grant, in each case subject to continued
services as an officer. Excludes 16,600 shares underlying stock
options that do not vest within three months of the date of April
19, 2021.
(9)
Includes an
aggregate of 41,193 restricted shares.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Name and Address
of Certain Beneficial Owners
|
Amount and
Nature of Beneficial Ownership
|
|
Renaissance
Technologies LLC
800
Third Avenue
New
York, NY 10022
|
746,002(10)
|
9.3%
|
|
|
|
Wellington
Management Group LLP
280 Congress
Street
Boston, MA
02210
|
732,843(11)
|
9.1%
|
|
|
|
Dimensional Fund
Advisors LP
6300
Bee Cave Road, Bldg. #1
Austin,
Texas 78746
|
562,152(12)
|
7.0%
|
|
|
|
The Vanguard
Group
100 Vanguard
Blvd.
Malvern, PA
19355
|
424,244(13)
|
5.3%
|
|
|
|
Blackrock,
Inc.
55 East
52nd
Street
New York, N.Y.
10055
|
566,288(14)
|
7.1%
|
(10)
Based
on the Schedule 13G/A filed with the Securities and Exchange
Commission on February 11, 2021 by Renaissance Technologies LLC and
its majority owner, Renaissance Technologies Holdings
Corporation.
(11)
Based on the
Schedule 13G filed with the Securities and Exchange Commission on
February 4, 2021 by Wellington Trust Company, NA, National
Association Multiple Trust Funds Trust, Micro Cap Equity
Portfolio.
(12)
Information
obtained from a Schedule 13G/A filed with the SEC on February 12,
2021 by Dimensional Fund Advisors LP. According to the Schedule
13G/A, Dimensional Fund Advisors LP, an investment adviser,
furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment
manager or sub-adviser to certain other commingled funds, group
trusts and separate accounts (such investment companies, trusts and
accounts, collectively referred to as the “Funds”). In
certain cases, subsidiaries of Dimensional Fund Advisors LP may act
as an adviser or sub-adviser to certain Funds. In its role as
investment advisor, sub-adviser and/or manager, Dimensional Fund
Advisors LP or its subsidiaries (collectively,
“Dimensional”) may possess voting and/or investment
power over the securities of Lakeland that are owned by the Funds
and may be deemed to be the beneficial owner of the shares of
Lakeland held by the Funds. However, all such securities are owned
by the Funds. Dimensional disclaims beneficial ownership of such
securities.
(13)
Based on the
Schedule 13G filed with the Securities and Exchange Commission on
February 10, 2021 by The Vanguard Group.
(14)
Based on the
Schedule 13G filed with the Securities and Exchange Commission on
February 2, 2021 by Blackrock, Inc.
DELINQUENT SECTION 16(A) REPORTS
Section
16(a) of the Exchange Act requires the Company’s directors,
officers and beneficial owners of more than 10% of the Common Stock
(“Reporting Persons”) to file with the SEC initial
reports of ownership of the Company’s equity securities and
to file subsequent reports when there are changes in such
ownership. Based solely upon our review of the copies of all Forms
3, 4 and 5 and amendments to these forms that have been filed with
the SEC, we believe that all Reporting Persons complied on a timely
basis with all filing requirements applicable to them with respect
to our fiscal year ended January 31, 2021, except that each of
Thomas McAteer, A. John Kreft and James M. Jenkins filed a late
Form 4. Thomas McAteer and A. John Kreft each had three
transactions that were not reported on a timely basis and James M.
Jenkins had two transactions that were not reported on a timely
basis, in all cases relating to the withholding of shares for tax
purposes for previous, timely reported grants of restricted
stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
It is
the Company’s policy that any material transaction involving
our directors, executive officers and any other person that is a
“related person” within the meaning of SEC regulations
is required to be reported to our Chief Executive Officer. In
addition, pursuant to NASDAQ Rule 5630(a), all related party
transactions are required to be reported to the Audit Committee,
which, with the assistance of legal counsel and such other advisors
as it deems appropriate, is responsible for reviewing, approving or
ratifying any such related party transaction. The Audit Committee
shall approve only those related party transactions that it
believes are in, or not inconsistent with, the best interests of
the Company. A written policy to this effect has been adopted by
our Board.
In
addition, the Audit Committee generally conducts an annual review
of all such transactions. In addition, every quarter, a report
maintained by the Company’s accounting staff is reviewed and
approved by the Chief Executive Officer and Chief Financial
Officer.
There
were no related party transactions entered into, for either fiscal
year ended January 31, 2021 or January 31, 2020, and there are no
currently proposed related party transactions.
STOCKHOLDER PROPOSALS-2022 ANNUAL MEETING
The
submission deadline for stockholder proposals to be included in our
proxy materials for the 2022 annual meeting of stockholders (the
“2022 Annual Meeting”) pursuant to Rule 14a-8 of the
Exchange Act is January 3, 2022. All proposals must be received by
the Secretary at Lakeland Industries, Inc., 202 Pride Lane SW,
Decatur, AL 35603 by the required deadline and must comply with all
other applicable legal requirements in order to be considered for
inclusion in the Company’s 2022 Annual Meeting proxy
materials. Any such proposal should be submitted by certified mail,
return receipt requested, or other means, including electronic
means, that allow the stockholder to prove the date of
delivery.
In
addition, our Bylaws require that we be given advance notice of
stockholder nominations for election to the Board and of other
matters which stockholders wish to present for action at an annual
meeting of stockholders. The required notice must be delivered to
the Secretary of the Company at our principal offices not less than
90 days and not more than 120 days prior to the anniversary date of
the immediately preceding annual meeting of stockholders. These
requirements are separate from and in addition to the SEC
requirements that a stockholder must meet to have a stockholder
proposal included in our proxy statement.
Pursuant
to our Bylaws, if notice of any stockholder proposal is received
prior to February 16, 2022 or after March 18, 2022, the notice will
be considered untimely and we are not required to present such
proposal at the 2022 Annual Meeting. If the Board chooses to
present a proposal submitted prior to February 16, 2022 or after
March 18, 2022 at the 2022 Annual Meeting, then the persons named
in proxies solicited by the Board for the 2022 Annual Meeting may
exercise discretionary voting power with respect to such
proposal.
OTHER MATTERS
The
Board knows of no matters other than those described above that
have been submitted for consideration at this Annual Meeting. As to
other matters, if any, that properly may come before the Annual
Meeting, the Board intends that the proxy cards will be voted in
respect thereof in accordance with the judgment of the person or
persons named thereon.
QUESTIONS
For
information about your record holding, call Computershare at
(800) 368-5948. We also invite you to
visit Lakeland’s Internet site at www.lakeland.com,
under the heading “Investor Relations-View SEC Filings and
Reports, Press Releases, and Upcoming Investor Events.”
Internet site materials are for your information and are not part
of this proxy solicitation. If your shares are held by your broker
or bank as a nominee or agent, you should follow the instructions
provided by your broker or bank.
If you
have questions or need more information about the Annual Meeting
write to be address below. Any written
notice of revocation, or later dated proxy card, should be
delivered to Lakeland Industries, Inc., 202 Pride Lane SW,
Decatur, AL 35603, Attn:
Secretary.
Lakeland
makes available, free of charge on its website, all of its filings
that are made electronically with the SEC, including Forms 10-K,
10-Q and 8-K. These filings are also available on the SEC’s
website (www.sec.gov).
To access these filings, go to our website (www.lakeland.com)
and click on the heading
“Investor Relations-View SEC Filings and Reports.”
Copies of Lakeland’s Annual Report on Form 10-K for the
fiscal year ended January 31, 2021, including financial statements
and schedules thereto, filed with the SEC, are also available
without charge to stockholders upon written request addressed to
the Secretary, Lakeland Industries, Inc., 202 Pride Lane SW,
Decatur, AL 35603.
|
By
Order of the Board of Directors,
|
|
|
|
Charles
D. Roberson
Secretary
|
May 3, 2021
AMENDMENT NO. 1
TO THE
LAKELAND INDUSTRIES, INC.
2017 EQUITY INCENTIVE PLAN
In accordance with the resolutions adopted by the
Board of Directors and stockholders of Lakeland Industries, Inc. a
Delaware corporation, the Lakeland Industries, Inc. 2017
Equity Incentive Plan (the “Plan”) is hereby amended as follows:
1.
The first sentence
of Section 3(a) of the Plan is hereby amended and restated in its
entirety to increase the number of Shares issuable in respect of
Awards under the Plan from 360,000 to 840,000 as
follows:
“Shares Subject to the Plan.
Subject to adjustment as provided in Section 3(c) of the Plan, the
maximum number of Shares that may be issued in respect of Awards
under the Plan is 840,000 Shares, all of which Shares may be
granted as Incentive Stock Options.”
2.
Capitalized
terms used herein without definition shall have the meanings
ascribed to such terms in the Plan.
3.
Except as expressly
amended by this Amendment, all terms and conditions of the Plan
shall remain in full force and effect.
4.
This Amendment No.
1 to the Plan is effective as of June 16, 2021.
IN
WITNESS WHEREOF, the Company, by its duly authorized officer, has
executed this Amendment No. 1 to the Lakeland Industries, Inc. 2017
Equity Incentive Plan, effective as of the effective date set forth
above.
LAKELAND
INDUSTRIES, INC.
By:
/s/ Charles D.
Roberson
Charles
D. Roberson
Chief Executive Officer, President & Secretary
LAKELAND INDUSTRIES, INC.
2017 EQUITY INCENTIVE PLAN
SECTION 1.
Purpose;
Definitions. The
purposes of the Lakeland Industries, Inc. 2017 Equity Incentive
Plan (the “Plan”) are to: (a) enable
Lakeland Industries, Inc. (the “Company”) and its
affiliated companies to recruit and retain highly qualified
employees and directors; (b) provide those employees and directors
with an incentive for productivity; and (c) provide those employees
and directors with an opportunity to share in the growth and value
of the Company.
For
purposes of the Plan, the following terms will have the meanings
defined below, unless the context clearly requires a different
meaning:
(a) “Affiliate”
means, with respect to a Person, a Person that directly or
indirectly controls, is controlled by, or is under common control
with such Person.
(b) “Applicable
Law” means the legal requirements relating to the
administration of and issuance of securities under stock incentive
plans, including, without limitation, the requirements of state
corporations law, federal, state and foreign securities law,
federal, state and foreign tax law, and the requirements of any
stock exchange or quotation system upon which the Shares may then
be listed or quoted.
(c) “Award”
means an award of Options, Restricted Stock, Restricted Stock
Units, Performance Awards, or Stock Appreciation Rights made under
this Plan.
(d) “Award
Agreement” means, with respect to any particular
Award, the written document that sets forth the terms of that
particular Award.
(e)
“Base
Price” means the price used as the basis for
determining the Spread upon the exercise of Stock Appreciation
Right.
(f) “Board”
means the Board of Directors of the Company, as constituted from
time to time.
(g) “Cause”
means with respect to any Participant, unless otherwise defined in
the Participant’s employment agreement, Award Agreement, or
signed offer letter: (i) the Participant’s habitual
intoxication or drug addiction; (ii) the Participant’s
violation of the Company’s written policies, procedures or
codes including, without limitation, those with respect to
harassment (sexual or otherwise) and ethics; (iii) the
Participant’s refusal or willful failure by the Participant
to perform such duties as may reasonably be delegated or assigned
to him or her, consistent with his or her position; (iv) the
Participant’s willful refusal or willful failure to comply
with any requirement of the Securities and Exchange Commission or
any securities exchange or self-regulatory organization then
applicable to the Company; (v) the Participant’s willful
or wanton misconduct in connection with the performance of his or
her duties including, without limitation, breach of fiduciary
duties; (vi) the Participant’s breach (whether due to
inattention, neglect, or knowing conduct) of any of the material
provisions of his or her employment agreement, if any;
(vii) the Participant’s conviction of, guilty, no
contest or nolo contendere
plea to, or admission or confession to any felony or any act of
fraud, misappropriation, embezzlement or any misdemeanor involving
moral turpitude; (viii) the Participant’s dishonesty
detrimental to the best interest of the Company; (ix) the
Participant’s involvement in any matter which, in the opinion
of the Company’s Chief Executive Officer (or, in the case of
the Chief Executive Officer, the Board), is reasonably likely to
cause material prejudice or embarrassment to the Company’s
business; or (x) solely in the case of a Non-Employee
Director, any other action by the Participant which the Board
determines constitutes “cause.” Notwithstanding the
foregoing, if a Participant and the Company (or any of its
Affiliates) have entered into an employment agreement or other
similar agreement that specifically defines “cause,”
then with respect to such Participant, “Cause” shall
have the meaning defined in such other agreement.
(h) “Change
in Control” shall mean the occurrence of any of the
following events: (i) any “person” (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
a “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the total power to vote for the
election of directors of the Company; (ii) during any twelve month
period, individuals who at the beginning of such period constitute
the Board and any new director (other than a director designated by
a person who has entered into an agreement with the Company to
effect a transaction described in Section 1(g)(i), Section 1(g)(iii), Section 1(g)(iv) or
Section 1(g)(v)
hereof) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least
a majority of the directors then still in office who either were
directors at the beginning of the period of whose election or
nomination for election was previously approved, cease for any
reason to constitute a majority thereof; (iii) the merger or
consolidation of the Company with another corporation where the
stockholders of the Company, immediately prior to the merger or
consolidation, will not beneficially own, immediately after the
merger or consolidation, shares entitling such stockholders to 50%
or more of all votes to which all stockholders of the surviving
corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect
directors by a separate class vote); (iv) the sale or other
disposition of all or substantially all of the assets of the
Company; (v) a liquidation or dissolution of the Company or (vi)
acceptance by stockholders of the Company of shares in a share
exchange if the stockholders of the Company immediately before such
share exchange do not or will not own directly or indirectly
immediately following such share exchange more than fifty percent
(50%) of the combined voting power of the outstanding voting
securities of the entity resulting from or surviving such share
exchange in substantially the same proportion as their ownership of
the voting securities outstanding immediately before such share
exchange. In no event shall a Change in Control be deemed to occur
upon (A) an announcement or commencement of a tender offer, (B) a
“potential” takeover, or (C) stockholder approval of a
merger or other transaction.
With
respect to any Award that constitutes a nonqualified deferred
compensation plan within the meaning of Section 409A of the Code
and provides for accelerated payment in connection with a change in
control (whether or not in conjunction with a termination of
employment), “Change in Control” for purposes of such
accelerated payment shall mean a Change in Control as described
above in this Section that is also a “change in the ownership
of a corporation,” a “change in the effective control
of a corporation” or a “change in the ownership of a
substantial portion of a corporation” within the meaning of
Section 409A of the Code.
(i) “Code”
means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(j) “Committee”
means the Compensation Committee of the Board or such other Board
committee designated by the Board to administer the Plan. The
Committee shall have at least two members and each member of the
Committee shall be a Non-Employee Director and an Outside
Director.
(k) “Director”
means a member of the Board.
(l) “Disability”
shall mean permanent and total disability as defined by Section
22(e)(3) of the Code. Notwithstanding the foregoing, to the extent
required for exemption from or compliance with Section 409A of the
Code, “Disability” shall have the meaning given such
term by Section 409A of the Code, which generally provides that
“Disability” of a Participant means either (i) the
Participant is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, or (ii) the Participant is, by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits
for a period of not less than three months under an accident and
health plan covering the employees of the Participant's
employer.
(m) “Effective
Date” is defined in Section 20 hereof.
(n) “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
(o) “Fair
Market Value” means, as of any date, the value of a
Share determined as follows: (i) if the Shares are listed on
any established stock exchange or a national market system,
including, without limitation, the Nasdaq Global Market, the Fair
Market Value of a Share will be the closing sales price for such
stock as quoted on that system or exchange (or the system or
exchange with the greatest volume of trading in Shares) at the
close of regular hours trading on the day of determination;
(ii) if the Shares are regularly quoted by recognized
securities dealers but selling prices are not reported, the Fair
Market Value of a Share will be the mean between the high bid and
low asked prices for Shares at the close of regular hours trading
on the day of determination; or (iii) if Shares are not traded
as set forth above, the Fair Market Value will be determined in
good faith by the Committee taking into consideration such factors
as the Committee considers appropriate, such determination by the
Committee to be final, conclusive and binding. Notwithstanding the
foregoing, in connection with a Change in Control, Fair Market
Value shall be determined in good faith by the Committee, such
determination by the Committee to be final conclusive and
binding.
(p) “Incentive
Stock Option” means any Option intended to be an
“Incentive Stock Option” within the meaning of
Section 422 of the Code.
(q) “Non-Employee
Director” will have the meaning set forth in
Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange
Commission under the Exchange Act, or any successor definition
adopted by the Securities and Exchange Commission.
(r) “Non-Qualified
Stock Option” means any Option that is not intended to
qualify as an Incentive Stock Option.
(s)
“Outside
Director” means a Director who meets the definition of
an “outside director” under Section 162(m) of the
Code.
(t)
“Option” means any option
to purchase Shares (including an option to purchase Restricted
Stock, if the Committee so determines) granted pursuant to
Section 5
hereof.
(u) “Participant”
means an employee or Director of the Company or any of its
respective Affiliates to whom an Award is granted.
(v) “Performance
Award” means any Award that, pursuant to Section 9, is granted, vested
and/or settled upon the achievement of specified performance
conditions.
(w)
“Performance
Goals” shall mean the performance goals or objectives
established by the Committee pursuant to the Plan for Awards which
are intended to be “qualified performance-based
compensation” within the meaning of Section 162(m) of the
Code. Performance Goals may be measured on an absolute or relative
basis. Performance Goals shall be limited to specified levels of or
increases in the Company’s or Subsidiary’s return on
equity, diluted earnings per share, total earnings, earnings
growth, return on capital, return on assets, earnings before
interest and taxes (“EBIT”), earnings before interest,
taxes, depreciation and amortization (“EBITDA”), sales,
sales growth, gross margin, return on investment, increase in the
fair market value of the each Share, Share price (including but not
limited to, growth measures and total stockholder return), net
earnings, cash flow (including, but not limited to, operating cash
flow and free cash flow), cash flow return on investment (which
equals net cash flow divided by total capital), inventory turns,
financial return ratios, total return to stockholders, market
share, earnings measures/ratios, economic value added
(“EVA”), balance sheet measurements such as receivable
turnover, internal rate of return, increase in net present value or
expense targets, working capital measurements (such as average
working capital divided by sales), customer satisfaction surveys
and productivity. The Committee may provide in an Award Agreement
that the Performance Goals for the Award may be adjusted as
provided in Section
9(b).
(x) “Person”
means an individual, partnership, corporation, limited liability
company, trust, joint venture, unincorporated association, or other
entity or association.
(y) “Plan”
means the Lakeland Industries, Inc. 2017 Equity Incentive Plan
herein set forth, as amended from time to time.
(z) “Prior
Plans” means, collectively, the Lakeland Industries,
Inc. 2012 Stock Incentive Plan and Lakeland Industries, Inc. 2015
Stock Plan.
(aa)
“Restricted
Stock” means Shares that are subject to restrictions
pursuant to Section
7 hereof.
(bb)
“Restricted Stock
Unit” means an Award that is valued by reference to a
Share, which value may be paid to the Participant by delivery of
Shares, cash, or other forms of payment, or any combination
thereof, as the Committee shall determine and that are issued
subject to certain restrictions pursuant to Section 8 hereof.
(cc) “Restriction
Period” means the period of time during which an Award
is subject to forfeiture.
(dd) “Shares”
means shares of the Company’s common stock, par value $0.01
per share, subject to substitution or adjustment as provided in
Section 3(c)
hereof.
(ee) “Spread”
means, in the case of a Stock Appreciation Right, the amount by
which the Fair Market Value on the date when any such right is
exercised exceeds the Base Price specified in such
right.
(ff) “Stock
Appreciate Right” means a right granted under
Section 10
hereof.
(gg) “Subsidiary”
means, in respect of the Company, a subsidiary company as defined
in Sections 424(f) and (g) of the Code.
SECTION 2.
Administration.
The Plan shall be administered by the Committee; provided, however,
that with respect to Non-Employee Directors, the Plan shall be
administered by the full Board and all references in the Plan to
the Committee shall be deemed to refer to the Board. Any action of
the Committee in administering the Plan shall be final, conclusive
and binding on all persons, including the Company, its
Subsidiaries, Affiliates, their respect employees, the
Participants, persons claiming rights from or through Participants
and stockholders of the Company.
The
Committee will have full authority to grant Awards under this Plan
and determine the terms of such Awards. Such authority will include
the right to:
(a) select
the individuals to whom Awards are granted (consistent with the
eligibility conditions set forth in Section 4 hereof);
(b) determine
the type of Award to be granted;
(c) determine
the number of Shares, if any, to be covered by each
Award;
(d) establish
the terms and conditions of each Award;
(e) subject
to Section 9,
establish the performance conditions and/or Performance Goals
relevant to any Award and certify whether such performance
conditions and/or Performance Goals have been
satisfied;
(f) approving
forms of agreements (including Award Agreements) for use under the
Plan;
(g) determine
whether and under what circumstances an Option may be exercised
without a payment of cash under Section 5(d);
(h) modify
or amend each Award, subject to Sections 11 and
12;
(i) extend
the period of time for which an Option is to remain exercisable
following a Participant’s termination of service to the
Company from the limited period otherwise in effect for that Option
to such greater period of time as the Committee deems appropriate,
but in no event beyond the expiration of the term of the Option;
and
(j) with
respect to any employee who resides or works outside of the United
States, the Committee may, in its sole and absolute discretion,
amend or supplement the terms of the Plan or Awards with respect to
such employee as necessary or appropriate to accommodate the
differences in local law, tax policy, or custom so long as no such
amendments or supplements include any provisions that are
inconsistent with the terms of the Plan, as then in effect, unless
the Plan could have been amended to eliminate such inconsistency
without the further approval by the stockholders of the
Company.
The
Committee will have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan
as it, from time to time, deems advisable; to establish the terms
and form of each Award Agreement; to interpret the terms and
provisions of the Plan and any Award issued under the Plan (and any
Award Agreement); and to otherwise supervise the administration of
the Plan. The Committee may correct any defect, supply any omission
or reconcile any inconsistency in the Plan or in any Award
Agreement in the manner and to the extent it deems necessary to
carry out the intent of the Plan.
The
Committee may delegate to one or more officers of the Company the
authority to grant Awards to Participants who are not subject to
the requirements of Section 16 of the Exchange Act or Section
162(m) of the Code and the rules and regulations thereunder,
provided that the Committee shall have fixed the total number of
Shares subject to such delegation. Any such delegation shall be
subject to the applicable state and corporate laws. The Committee
may revoke any such allocation or delegation at any time for any
reason with or without prior notice.
SECTION 3.
Shares
Subject to the Plan.
(a)
Shares Subject to the
Plan. Subject to adjustment as provided in Section 3(c) of the Plan, the
maximum number of Shares that may be issued in respect of Awards
under the Plan is 360,000 Shares, all of which Shares may be
granted as Incentive Stock Options. As of the Effective Date, no
further awards shall be granted pursuant to the Prior Plans, but
may be awarded under this Plan as provided in Section 3(b) hereof. The
aggregate grant date fair market value of Awards granted, together
with cash paid, to a Non-Employee Director for services during any
fiscal year shall not exceed $300,000. Any Shares issued hereunder
may consist, in whole or in part, of authorized and unissued Shares
or treasury Shares. Any Shares issued by the Company through the
assumption or substitution of outstanding grants in connection with
the acquisition of another entity shall not reduce the maximum
number of Shares available for delivery under the Plan. In
accordance with the requirements under Section 162(m) of the Code,
the maximum number of Shares underlying or subject to Awards
(including Options, Restricted Stock, Restricted Stock Units,
Performance Awards, and Stock Appreciation Rights) that may be
granted during any calendar year to any individual Participant
shall be fifty percent (50%) of the maximum number of Shares that
may be issued in respect of Awards under the Plan.
(b)
Effect of the Expiration
or Termination of Awards. If and to the extent that any
Award expires or terminates, or is canceled or forfeited for any
reason prior to issuance of the Shares subject thereto, or such
Award is settled in cash in lieu of Shares, then the unissued
Shares associated with that Award will again become available for
grant under the Plan. Any Shares that are covered under the terms
of a Prior Plan award which would otherwise become available for
reuse under the terms of a Prior Plan shall instead become
available for issuance under the Plan. Except for expired,
forfeited or cancelled Shares, the Plan is intended to restrict the
“recycling” of Shares back into the Plan; this means
(i) Shares used or withheld in settlement of a tax withholding
obligation associated with an Award, (ii) Shares tendered or held
back upon the exercise of an Option in satisfaction of the exercise
price payable upon exercise of an Option, or (iii) Shares subject
to a Stock Appreciation Right that are not issued or delivered as a
result of the net stock settlement of an outstanding Stock
Appreciation Right, will not become available for grant under the
Plan.
(c)
Other Adjustment.
In the event of any corporate event or transaction such as a
merger, consolidation, reorganization, recapitalization, stock
split, reverse stock split, split up, spin-off, combination of
shares, exchange of shares, stock dividend, dividend in kind, or
other like change in capital structure (other than ordinary cash
dividends) to stockholders of the Company, or other similar
corporate event or transaction affecting the Shares, the Committee,
to prevent dilution or enlargement of Participants’ rights
under the Plan, shall, in such manner as it may deem equitable,
substitute or adjust, in its sole discretion, the number and kind
of shares that may be issued under the Plan or under any
outstanding Awards, the number and kind of shares subject to
outstanding Awards, the exercise price, grant price or purchase
price applicable to outstanding Awards, and/or any other affected
terms and conditions of this Plan or outstanding Awards. The
Committee shall not make any adjustment that would adversely affect
the status of any Award that is “performance-based
compensation” under Section 162(m) of the Code.
(d) Change
in Control. Notwithstanding anything to the contrary set
forth in the Plan, upon any Change in Control, the Committee may,
in its sole and absolute discretion and without the need for the
consent of any Participant, take one or more of the following
actions contingent upon the occurrence of that Change in
Control:
(i) cause
any or all outstanding Awards to become vested and immediately
exercisable (as applicable), in whole or in part;
(ii)
cancel any unvested Award or unvested portion thereof, with or
without consideration;
(iii)
cancel any Award in exchange for a substitute award;
(iv)
redeem any Restricted Stock or Restricted Stock Unit for cash
and/or other substitute consideration with value equal to fair
market value of an unrestricted Share on the date of the Change in
Control;
(v) cancel
any Option in exchange for cash and/or other substitute
consideration with a value equal to: (A) the number of Shares
subject to that Option, multiplied by (B) the difference, if
any, between the fair market value per Share on the date of the
Change in Control and the exercise price of that Option;
provided, that if the fair
market value per Share on the date of the Change in Control does
not exceed the exercise price of any such Option, the Committee may
cancel that Option without any payment of consideration
therefor;
(vi) take
such other action as the Committee shall determine to be reasonable
under the circumstances; and/or
(vii) notwithstanding
any provision of this Section 3(d), in the case of
any Award subject to Section 409A of the Code, such Award shall
vest and be distributed only in accordance with the terms of the
applicable Award Agreement and the Committee shall only be
permitted to use discretion to the extent that such discretion
would be permitted under Section 409A of the Code.
In the
discretion of the Committee, any cash or substitute consideration
payable upon cancellation of an Award may be subjected to
(i) vesting terms substantially identical to those that
applied to the cancelled Award immediately prior to the Change in
Control, or (ii) earn-out, escrow, holdback or similar
arrangements, to the extent such arrangements are applicable to any
consideration paid to stockholders in connection with the Change in
Control.
SECTION 4.
Eligibility.
Employees and Directors of the Company or its Affiliates are
eligible to be granted Awards under the Plan; provided, however, that only employees
of the Company or a Subsidiary are eligible to be granted Incentive
Stock Options.
SECTION 5.
Options.
Options granted under the Plan may be of two types:
(i) Incentive Stock Options or (ii) Non-Qualified Stock
Options. The Award Agreement shall state whether such grant is an
Incentive Stock Option or a Non-Qualified Stock Option. Any Option
granted under the Plan will be in such form as the Committee may at
the time of such grant approve.
The
Award Agreement evidencing any Option will incorporate the
following terms and conditions and will contain such additional
terms and conditions, not inconsistent with the terms of the Plan,
as the Committee deems appropriate in its sole and absolute
discretion:
(a) Option
Price. The exercise price per Share under an Option will be
determined by the Committee and will not be less than 100% of the
Fair Market Value of a Share on the date of the grant. However, any
Incentive Stock Option granted to any Participant who, at the time
the Option is granted, owns, either directly and/or within the
meaning of the attribution rules contained in Section 424(d)
of the Code, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, will have an
exercise price per Share of not less than 110% of Fair Market Value
per Share on the date of the grant except as may be required or
otherwise be deemed advisable by the Committee in connection with
the Options granted through the assumption of, or substitution for,
outstanding awards previously granted by a company acquired by the
Company or any Affiliate with which the Company or any Affiliate
combines.
(b) Option
Term. The term of each Option will be fixed by the
Committee, but no Option will be exercisable more than 10 years
after the date the Option is granted. However, any Incentive Stock
Option granted to any Participant who, at the time such Option is
granted, owns, either directly and/or within the meaning of the
attribution rules contained in Section 424(d) of the Code,
stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company, may not have a term of more
than 5 years. No Option may be exercised by any Person after
expiration of the term of the Option.
(c) Exercisability.
Options shall not vest for at least one year after the date the
Option is granted, except as (i) the Committee may determine or
permit otherwise in the event of a Change in Control, or (ii) may
be required or otherwise be deemed advisable by the Committee in
connection with Options granted through the assumption of, or
substitution for, outstanding awards previously granted by a
company acquired by the Company or any Affiliate or with which the
Company or any Affiliate combines.
(d) Method
of Exercise. Subject to the terms of the applicable Award
Agreement, the exercisability provisions of Section 5(c) and the
termination provisions of Section 6(a), Options may
be exercised in whole or in part from time to time during their
term by the delivery of written notice to the Company specifying
the number of Shares to be purchased. Such notice will be
accompanied by payment in full of the purchase price, either by
certified or bank check, or such other means as the Committee may
accept. The Committee may, in its sole discretion, permit payment
of the exercise price of an Option in the form of previously
acquired Shares based on the fair market value of the Shares on the
date the Option is exercised or through means of a “net
settlement,” whereby the Option exercise price will not be
due in cash and where the number of Shares issued upon such
exercise will be equal to: (A) the product of (i) the
number of Shares as to which the Option is then being exercised,
and (ii) the excess, if any, of (a) the then current fair
market value per Share over (b) the Option exercise price,
divided by (B) the then current fair market value per
Share.
No
Shares will be issued upon exercise of an Option until full payment
therefor has been made. A Participant will not have the right to
distributions or dividends or any other rights of a stockholder
with respect to Shares subject to the Option until the Participant
has given written notice of exercise, has paid in full for such
Shares, if requested, has given the representation described in
Section 18(a)
hereof and fulfills such other conditions as may be set forth in
the applicable Award Agreement.
(e) Incentive
Stock Option Limitations. In the case of an Incentive Stock
Option, the aggregate Fair Market Value (determined as of the time
of grant) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Participant
during any calendar year under the Plan and/or any other plan of
the Company or any Subsidiary will not exceed $100,000. For
purposes of applying the foregoing limitation, Incentive Stock
Options will be taken into account in the order granted. To the
extent any Option does not meet such limitation, that Option will
be treated for all purposes as a Non-Qualified Stock
Option.
(f) Termination
of Service. Unless otherwise specified in the applicable
Award Agreement or as otherwise provided by the Committee at or
after the time of grant, Options will be subject to the terms of
Section 6(a)
with respect to exercise upon or following termination of
employment or other service.
SECTION 6. Termination of
Service.
(a) Options.
Unless otherwise specified with respect to a particular Option in
the applicable Award Agreement or otherwise determined by the
Committee, any portion of an Option that is not exercisable upon
termination of service will expire immediately and automatically
upon such termination and any portion of an Option that is
exercisable upon termination of service will expire on the date it
ceases to be exercisable in accordance with this Section 6(a).
(i) Termination
by Reason of Death. If a Participant’s service with
the Company or any Affiliate terminates by reason of death, any
Option held by such Participant may thereafter be exercised, to the
extent it was exercisable at the time of his or her death or on
such accelerated basis as the Committee may determine at or after
grant, by the legal representative of the estate or by the legatee
of the Participant, for a period expiring (i) at such time as
may be specified by the Committee at or after grant, or
(ii) if not specified by the Committee, then 12 months from
the date of death, or (iii) if sooner than the applicable
period specified under (i) or (ii) above, upon the
expiration of the stated term of such Option.
(ii) Termination
by Reason of Disability. If a Participant’s service
with the Company or any Affiliate terminates by reason of
Disability, any Option held by such Participant may thereafter be
exercised by the Participant or his personal representative, to the
extent it was exercisable at the time of termination, or on such
accelerated basis as the Committee may determine at or after grant,
for a period expiring (i) at such time as may be specified by
the Committee at or after grant, or (ii) if not specified by
the Committee, then 12 months from the date of termination of
service, or (iii) if sooner than the applicable period
specified under (i) or (ii) above, upon the expiration of the
stated term of such Option.
(iii) Cause.
If a Participant’s service with the Company or any Affiliate
is terminated for Cause: (i) any Option, or portion thereof,
not already exercised will be immediately and automatically
forfeited as of the date of such termination, and (ii) any
Shares for which the Company has not yet delivered share
certificates will be immediately and automatically forfeited and
the Company will refund to the Participant the Option exercise
price paid for such Shares, if any.
(iv) Other
Termination. If a Participant’s service with the
Company or any Affiliate terminates for any reason other than
death, Disability or Cause, any Option held by such Participant may
thereafter be exercised by the Participant, to the extent it was
exercisable at the time of such termination, or on such accelerated
basis as the Committee may determine at or after grant, for a
period expiring (i) at such time as may be specified by the
Committee at or after grant, or (ii) if not specified by the
Committee, then 90 days from the date of termination of service, or
(iii) if sooner than the applicable period specified under (i)
or (ii) above, upon the expiration of the stated term of such
Option.
(b) Other
Awards. In the event of termination of employment by reason
of death or Disability of a Participant who holds any Restricted
Stock, Restricted Stock Units, Performance Awards, or Stock
Appreciation Rights, as to which such Award has not been fully
vested, the Committee may, in its sole discretion, take any action
that it deems to be equitable under the circumstances or in the
best interests of the Company, including without limitation waiving
or modifying any limitation, requirement, performance condition, or
Performance Goal with respect to any such Award; provided that, the
amount of Shares or cash obtained by virtue of any accelerated
vesting shall not exceed the number determined by multiplying the
number of Shares underlying the Award/or cash value by a fraction,
the numerator of which is the number of full months during the
Restriction Period during all of which the participant was an
employee of the Company or its Subsidiaries and the denominator of
which is the number of full calendar months in the Restriction
Period; and provided further that, in the case of any Award subject
to Section 409A of the Code, the Committee shall not take any
action pursuant to this Section 6(b) unless such action is
permissible under Section 409A of the Code.
SECTION 7.
Restricted
Stock.
(a) Issuance.
Restricted Stock may be issued either alone or in conjunction with
other Awards. The Committee will determine the time or times within
which Restricted Stock may be subject to forfeiture, and all other
conditions of such Awards. The purchase price for Restricted Stock
may, but need not, be zero. The prospective recipient of an Award
of Restricted Stock will not have any rights with respect to such
Award, unless and until such recipient has delivered to the Company
an executed Award Agreement and has otherwise complied with the
applicable terms and conditions of such Award.
(b)
Certificates. Upon
the Award of Restricted Stock, the Committee may direct that a
certificate or certificates representing the number of shares of
Common Stock subject to such Award be issued to the Participant or
placed in a restricted stock account (including an electronic
account) with the transfer agent and in either case designating the
Participant as the registered owner. The certificate(s)
representing such Shares shall be physically or electronically
legended, as applicable, as to sale, transfer, assignment, pledge
or other encumbrances during the Restriction Period and if issued
to the Participant, returned to the Company, to be held in escrow
during the Restriction Period. As a condition to any Award of
Restricted Stock, the Participant may be required to deliver to the
Company a share power, endorsed in blank, relating to the Shares
covered by such Award.
(c) Restrictions
and Conditions. The Award Agreement evidencing the grant of
any Restricted Stock will incorporate the following terms and
conditions and such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee deems
appropriate in its sole and absolute discretion:
(i) During
the Restriction Period, the Participant will not be permitted to
sell, transfer, pledge, assign or otherwise encumber Restricted
Stock awarded under the Plan. The Committee may condition the lapse
of restrictions on Restricted Stock upon the continued employment
or service of the recipient, the attainment of specified individual
or corporate performance goals, or such other factors as the
Committee may determine, in its sole and absolute
discretion.
(ii) While
any Shares of Restricted Stock remain subject to restriction, at
the discretion of the Committee, the Participant will have, with
respect to the Restricted Stock, the right to vote the Shares, but
will not have the right to receive any cash distributions or
dividends prior to the lapse of the Restriction Period underlying
such Shares. If any cash distributions or dividends are payable
with respect to the Restricted Stock, the Committee shall require
the cash distributions or dividends to be subjected to the same
Restriction Period as is applicable to the Restricted Stock with
respect to which such amounts are paid. A Participant shall not be
entitled to interest with respect to any dividends or distributions
subjected to the Restriction Period. Any distributions or dividends
paid in the form of securities with respect to Restricted Stock
will be subject to the same terms and conditions as the Restricted
Stock with respect to which they were paid, including, without
limitation, the same Restriction Period.
(iii) The
Restriction Period shall be for a minimum of one year, except as
(i) the Committee may determine or permit otherwise in the event of
a Change in Control, or (ii) may be required or otherwise be deemed
advisable by the Committee in connection with Restricted Stock
granted through the assumption of, or substitution for, outstanding
awards previously granted by a company acquired by the Company or
any Affiliate or with which the Company or any Affiliate
combines.
(iv) Subject
to the provisions of Section 6(b) hereof, or the
applicable Award Agreement, or as otherwise determined by the
Committee, if a Participant’s service with the Company and
its Affiliates terminates prior to the expiration of the applicable
Restriction Period, the Participant’s Restricted Stock that
then remains subject to forfeiture will then be forfeited
automatically.
SECTION 8.
Restricted Stock
Units. Subject to the
other terms of the Plan, the Committee may grant Restricted Stock
Units to eligible individuals and may, in its sole and absolute
discretion, impose conditions on such units as it may deem
appropriate, including, without limitation, continued employment or
service of the recipient or the attainment of specified individual
or corporate performance goals. Each Restricted Stock Unit shall be
evidenced by an Award Agreement in the form that is approved by the
Committee and that is not inconsistent with the terms and
conditions of the Plan. Each Restricted Stock Unit will represent a
right to receive from the Company, upon fulfillment of any
applicable conditions, one Share for each unit or, at the sole
discretion of the Committee, an amount in cash equal to the fair
market value, at the time of distribution, of one Share for each
unit. Distributions may be made in Shares. All other terms
governing Restricted Stock Units, such as vesting, time and form of
payment and termination of units shall be set forth in the
applicable Award Agreement; provided, however, the period
commencing with the date of an Award of Restricted Stock Units and
ending at such time or times as specified by the Committee shall be
for a minimum of one year, except as (i) the Committee may
determine or permit otherwise in the event of a Change in Control,
or (ii) may be required or otherwise be deemed advisable by the
Committee in connection with Restricted Stock Units granted through
the assumption of, or substitution for, outstanding awards
previously granted by a company acquired by the Company or any
Affiliate or with which the Company or any Affiliate combines. The
Participant receiving Restricted Stock Units shall not have any
voting rights, nor the right to receive cash dividends, with
respect to the Shares subject to a Restricted Stock Unit Award
until, if applicable, that Award vests and the Shares are actually
issued thereunder. Subject to the provisions Section 6(b) hereof, or the
applicable Award Agreement, or as otherwise determined by the
Committee, if a Participant’s service with the Company
terminates prior to the Restricted Stock Unit Award vesting, the
Participant’s Restricted Stock Units that then remain subject
to forfeiture will then be forfeited automatically.
SECTION 9.
Performance Based
Awards.
(a) Performance
Awards Generally. The Committee may grant Performance Awards
in accordance with this Section 9. Performance
Awards may be denominated as a number of Shares or specified number of other
Awards, which may be earned upon achievement or satisfaction of
such Performance Goals as may be specified by the Committee. In
addition, the Committee may specify that any other Award shall
constitute a Performance Award by conditioning the vesting or
settlement of the Award upon the achievement or satisfaction of
such Performance Goals as may be specified by the
Committee.
(b) Adjustments
to Performance Goals. The Committee may provide in an Award
Agreement that the Performance Goals or performance conditions for
the Award be adjusted to include or exclude the impact of items
such as realized investment gains and losses, extraordinary,
unusual, non-recurring or infrequently recurring items, asset
write-downs, effects of accounting changes, currency fluctuations,
acquisitions, divestitures, reserve-strengthening and other
non-operating items, or any other item, event or circumstance that
would not cause an Award to fail to qualify as
“performance-based compensation” under
Section 162(m) of the Code to the extent such Award is
intended to qualify as “performance-based
compensation.”
(c) Other
Terms of Performance Awards. Subject to Section 9(d) below, the
Committee may specify other terms pertinent to a Performance Award
in the applicable Award Agreement, including terms relating to the
treatment of that Award in the event of a Change in Control prior
to the end of the applicable performance period. The Participant
shall not have any stockholder rights with respect to the Shares
subject to a Performance Award until the Shares are actually issued
thereunder. Subject to the provisions of Section 6(b) hereof, or the
applicable Award Agreement, or as otherwise determined by the
Committee, if a Participant’s service with the Company
terminates prior to the Performance Award vesting, the
Participant’s Performance Award or portion thereof that then
remains subject to forfeiture will then be forfeited
automatically.
(d) Minimum
Vesting Period. The vesting period in respect of any
Performance Award shall be for a minimum of one year, except as (i)
the Committee may determine or permit otherwise in the event of a
Change in Control, or (ii) may be required or otherwise be deemed
advisable by the Committee in connection with Performance Awards
granted through the assumption of, or substitution for, outstanding
awards previously granted by a company acquired by the Company or
any Affiliate or with which the Company or any Affiliate
combines.
(e) For
the avoidance of doubt, nothing in the Plan prohibits the Committee
from granting to any Participant any Award subject to performance
vesting conditions which is not intended to be
“performance-based compensation” under Section 162(m)
of the Code.
SECTION
10. Stock Appreciation
Rights. The Committee
may also authorize grants to Participants of Stock Appreciation
Rights. A Stock Appreciation Right is the right of the Participant
to receive from the Company an amount which shall be determined by
the Committee and shall be expressed as a percentage (not exceeding
100 percent) of the Spread at the time of the exercise of such
right. Any grant of Stock Appreciation Rights shall be upon such
terms and conditions as the Committee may determine in accordance
with the following provisions:
(a)
Payment. Any amount
payable upon the exercise of a Stock Appreciation Right shall be
paid by the Company in cash, in Shares valued at Fair Market Value,
or any combination thereof, as determined by the Committee. Any
fractional Share shall be payable in cash. Any grant may specify
that the number of Shares payable upon the exercise of a Stock
Appreciation Right shall not exceed a maximum number of Shares
specified by the Committee on the date of grant.
(b)
Vesting Period. The
Committee shall determine, on the date of grant or thereafter, the
time or times at which, and the circumstances under which, a Stock
Appreciation Right may vest, in whole or in part, including based
on achievement of performance conditions or Performance Goals
and/or future employment or service requirements. A grant may
specify that a Stock Appreciation Right may be exercised only in
the event of a Change in Control or other similar transaction or
event. Notwithstanding anything in the Plan to the contrary, no
Stock Appreciation Right shall be granted with a vesting period
that is shorter than one year, except as (i) the Committee may
determine or permit otherwise in the event of a Change in Control,
or (ii) may be required or otherwise be deemed advisable by the
Committee in connection with Stock Appreciation Rights granted
through the assumption of, or substitution for, outstanding awards
previously granted by a company acquired by the Company or any
Affiliate or with which the Company or any Affiliate
combines.
(c)
Exercise Period.
Any grant may specify a waiting period or periods before Stock
Appreciation Rights shall become exercisable and permissible dates
or periods on or during which Stock Appreciation Rights shall be
exercisable; provided that no Stock Appreciation Right granted may
be exercised more than ten years after the date of
grant.
(d)
Base Price. Each
grant shall specify in respect of each Stock Appreciation Right a
Base Price per Share, which shall be equal to or greater than the
Fair Market Value of such Share on the Grant Date.
(e)
Deemed Exercise.
The Committee may provide that a Stock Appreciation Right shall be
deemed to be exercised at the close of business on the scheduled
expiration date of such Stock Appreciation Right if at such time
the Stock Appreciation Right by its terms remains exercisable and,
if so exercised, would result in a payment pursuant to Section 10(a) hereof to the
holder of such Stock Appreciation Right.
SECTION
11. Amendments and
Termination. Subject
to Sections 3 and
12, the Board may, at any time, may, at any time, alter,
amend, suspend, discontinue or terminate the Plan in whole or in
part at any time; provided, however, that no such action shall
adversely affect the rights of Participants to Awards previously
granted hereunder and, provided further, however, that any
stockholder approval necessary or desirable in order to comply with
tax, securities, or other Applicable Laws or regulations,
including, but not limited to, the listing requirements of the
Nasdaq Global Market or such other principal securities market on
which the Shares are then traded, shall be obtained in the manner
required therein.
SECTION
12. Prohibition on
Repricing Programs. Neither the Committee nor the Board
shall (i) implement any cancellation/re-grant program pursuant
to which outstanding Options or Stock Appreciation Rights under the
Plan are cancelled and new Options or Stock Appreciation Rights are
granted in replacement with a lower exercise price or Base Price
per Share, (ii) cancel outstanding Options or Stock
Appreciation Rights under the Plan with exercise prices or Base
Prices per Share in excess of the then-current Fair Market Value
per Share for consideration payable in equity securities of the
Company, (iii) otherwise reduce the exercise price or Base
Price in effect for outstanding Options or Stock Appreciation
Rights under the Plan, without in each such instance obtaining
stockholder approval, or (iv) take any other action that would be
treated as a repricing for U.S. generally accepted accounting
principles.
SECTION
13. Conditions Upon
Grant of Awards and Issuance of Shares.
(a) The
implementation of the Plan, the grant of any Award and the issuance
of Shares in connection with the issuance, exercise or vesting of
any Award made under the Plan shall be subject to the
Company’s procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the
Awards made under the Plan and the Shares issuable pursuant to
those Awards.
(b) No
Shares or other assets shall be issued or delivered under the Plan
unless and until there shall have been compliance with all
applicable requirements of Applicable Law, including the filing and
effectiveness of the Form S-8 registration statement for the
Shares issuable under the Plan, and all applicable listing
requirements of any stock exchange on which Shares are then listed
for trading.
SECTION
14. Limits on
Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged,
encumbered, or hypothecated to, or in favor of, or subject to any
lien, obligation, or liability of such Participant to, any party,
other than the Company, any Subsidiary or Affiliate, or assigned or
transferred by such Participant otherwise than by will or the laws
of descent and distribution, and such Awards and rights shall be
exercisable during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative.
Notwithstanding the foregoing, the Committee may, in its
discretion, provide that Awards or other rights or interests of a
Participant granted pursuant to the Plan (other than an Incentive
Stock Option) be transferable, without consideration, to immediate
family members (i.e., children, grandchildren or spouse), to trusts
for the benefit of such immediate family members and to
partnerships in which such family members are the only partners.
The Committee may attach to such transferability feature such terms
and conditions as it deems advisable. In addition, a Participant
may, in the manner established by the Committee, designate a
beneficiary (which may be a person or a trust) to exercise the
rights of the Participant, and to receive any distribution, with
respect to any Award upon the death of the Participant. A
beneficiary, guardian, legal representative or other person
claiming any rights under the Plan from or through any Participant
shall be subject to all terms and conditions of the Plan and any
Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional restrictions
deemed necessary or appropriate by the Committee.
SECTION
15. Withholding.
No later than the date as of which an amount first becomes
includible in the gross income of the Participant for federal
income tax purposes with respect to any Award under the Plan, the
Participant will pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal,
state or local taxes of any kind required by law to be withheld
with respect to such amount. The Committee may, in its sole
discretion, permit a Participant to satisfy the minimum required
withholding obligations (or such higher amount that would not have
an adverse accounting effect) with Shares, including Shares that
are part of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan will be
conditioned on such payment or arrangements and the Company will
have the right to deduct any such taxes from any payment of any
kind otherwise due to the Participant.
SECTION
16. Liability of
Company.
(a) Inability
to Obtain Authority. If the Company cannot, by the exercise
of commercially reasonable efforts, obtain authority from any
regulatory body having jurisdiction for the sale of any Shares
under this Plan, and such authority is deemed by the
Company’s counsel to be necessary to the lawful issuance of
those Shares, the Company will be relieved of any liability for
failing to issue or sell those Shares.
(b) Grants
Exceeding Allotted Shares. If Shares subject to an Award
exceed, as of the date of grant, the number of Shares which may be
issued under the Plan without additional stockholder approval, that
Award will be contingent with respect to such excess Shares, on the
effectiveness under Applicable Law of a sufficient increase in the
number of Shares subject to this Plan.
(c) Rights
of Participants and Beneficiaries. The Company will pay all
amounts payable under this Plan only to the applicable Participant,
or beneficiaries entitled thereto pursuant to this Plan. The
Company will not be liable for the debts, contracts, or engagements
of any Participant or his or her beneficiaries, and rights to cash
payments under this Plan may not be taken in execution by
attachment or garnishment, or by any other legal or equitable
proceeding while in the hands of the Company.
SECTION
17. Adjustment;
Repayment of Incentive Bonuses. All Awards made under the Plan
(whether vested or unvested) are subject to rescission,
cancellation or recoupment, in whole or in part, under any current
or future “clawback” or similar policy or the Company
that is applicable to the Participant.
SECTION
18. General
Provisions.
(a) The
Board may require each Participant to represent to and agree with
the Company in writing that the Participant is acquiring securities
of the Company for investment purposes and without a view to
distribution thereof and as to such other matters as the Board
believes are appropriate.
(b) All
certificates for Shares or other securities delivered under the
Plan will be subject to such share-transfer orders and other
restrictions as the Board may deem advisable under the rules,
regulations and other requirements of the Securities Act of 1933,
as amended, the Exchange Act, any stock exchange upon which the
Shares are then listed, and any other Applicable Law, and the Board
may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(c) Nothing
contained in the Plan will prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder
approval if such approval is required.
(d) Neither
the adoption of the Plan nor the execution of any document in
connection with the Plan will: (i) confer upon any employee of
the Company or an Affiliate any right to continued employment with
the Company or such Affiliate, or (ii) interfere in any way
with the right of the Company or such Affiliate to terminate the
employment of any of its employees at any time.
SECTION
19. Electronic Delivery
and Signatures. Any
reference in the Plan or an Award Agreement to a written document
includes without limitation any document delivered electronically
or posted on the Company’s intranet or other shared
electronic medium controlled by the Company, a Subsidiary or any
agent of the Company or a Subsidiary. The Committee and any
Participant may use facsimile and PDF signatures in signing any
Award Agreement, in exercising any Option, or in any other written
document in connection with the Plan’s administration. The
Committee and each Participant are bound by facsimile and PDF
signatures, and acknowledge that the other party relies on
facsimile and PDF signatures.
SECTION
20. Effective Date of
Plan. The Plan was
adopted by the Board on April 25, 2017 and shall be effective on
June 21, 2017 (the “Effective date”), the date on which
the Plan was approved by the stockholders of the
Company.
SECTION
21. Term of
Plan. Unless the Plan
shall theretofore have been terminated in accordance with
Section 11, the
Plan shall terminate on June 21, 2027, the 10-year anniversary of
the Effective Date, and no Awards under the Plan shall thereafter
be granted; provided, however, that such expiration shall not
affect Awards then outstanding, and the terms and conditions of the
Plan shall continue to apply to such Awards.
SECTION
22. Invalid
Provisions. In the
event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any Applicable Law, such invalidity
or unenforceability will not be construed as rendering any other
provisions contained herein as invalid or unenforceable, and all
such other provisions will be given full force and effect to the
same extent as though the invalid or unenforceable provision was
not contained herein.
SECTION
23. Governing
Law. The Plan and all
Awards granted hereunder will be governed by and construed in
accordance with the laws of the State of Delaware, without regard
to the application of the principles of conflicts of
laws.
SECTION
24. Notices.
Any notice to be given to the Company pursuant to the provisions of
this Plan must be given in writing and addressed, if to the
Company, to its principal executive office to the attention of its
Chief Executive Officer (or such other Person as the Company may
designate in writing from time to time), and, if to a Participant,
to the address contained in the Company’s personnel files, or
at such other address as that Participant may hereafter designate
in writing to the Company. Any such notice will be deemed duly
given: if delivered personally or via recognized overnight delivery
service, on the date and at the time so delivered; if sent via
telecopier or email, on the date and at the time telecopied or
emailed with confirmation of delivery; or, if mailed, five (5) days
after the date of mailing by registered or certified
mail.
SECTION
25. Indemnification of
the Board. No
Director shall be liable for any action taken or omitted to be
taken or any determination made in good faith with respect to the
Plan or any Award hereunder. To the fullest extent permitted by
Applicable Law, the Company shall indemnify and hold harmless each
Director made or threatened to be made a party to any civil or
criminal action or proceeding by reason of the fact that such
Director is or was a Director of the Company, to the extent such
criminal or civil action or proceeding relates to the Plan or any
Award.
SECTION
26. No Guarantee of Tax
Consequences.
Notwithstanding any other provision of this Plan, no Person
connected with this Plan in any capacity, including, but not
limited to, the Company and its directors, officers, agents, and
employees, makes any representation, commitment, or guarantee that
any tax treatment, including, but not limited to, federal, state,
and local income, estate and gift tax treatment, shall be
applicable with respect to the tax treatment of any Award, any
amounts deferred under this Plan, or paid to or for the benefit of
a Participant under this Plan, or that such tax treatment shall
apply to or be available to a Participant on account of
participation in this Plan, or that any of the foregoing amounts
shall not be subject to a penalty tax and interest under Section
409A of the Code.