UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.)

 

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Filed by a Party other than the Registrant ☐

 

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☐     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 Rule 14a-12

 

MRI Interventions, INC.
(Name of Registrant as Specified in Its Charter)

 

Not Applicable
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

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MRI Interventions, Inc.

One Commerce Square, Suite 2550

Memphis, Tennessee 38103

 

 

April 25, 2014

 

 

Dear Stockholder:

 

You are cordially invited to attend the Annual Meeting of Stockholders of MRI Interventions, Inc. to be held on Tuesday, June 3, 2014 at 8:30 a.m., Central Time, at our principal executive office, One Commerce Square, Suite 2550, Memphis, Tennessee 38103.

 

With this letter, we have enclosed a copy of our Annual Report on Form 10-K for the year ended December 31, 2013, Notice of Annual Meeting of Stockholders, Proxy Statement and Proxy Card. These materials provide further information about our Annual Meeting. If you would like another copy of the Annual Report, please send your request to our Investor Relations Department, MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103, and one will be mailed to you. It is also available on the Internet at www.cstproxy.com/mriinterventions/2014.

 

At this year’s Annual Meeting, the agenda includes: (1) the election of the nine directors named in the accompanying Proxy Statement; and (2) a proposal to ratify the appointment of our independent registered public accounting firm. The Board of Directors recommends that you vote FOR election of the nominees for directors and FOR ratification of appointment of the independent registered public accounting firm. Executive officers and members of the Board of Directors will be present at the Annual Meeting to answer appropriate questions you may have.

 

It is important that your shares be represented and voted at the Annual Meeting, regardless of the size of your holdings. Accordingly, please complete, sign and date the enclosed Proxy Card and return it promptly in the enclosed postage-prepaid envelope to ensure your shares will be represented. If you attend the Annual Meeting, you may, of course, withdraw your proxy should you wish to vote in person. Also, registered and most beneficial stockholders may vote by telephone or through the Internet. Instructions for using these convenient services are explained on the enclosed Proxy Card. Your vote is very important. We urge you to vote your proxy as soon as possible.

 

We look forward to seeing you at the Annual Meeting.

 

 

Very truly yours, 

 

 

 

Kimble L. Jenkins 

 

Chief Executive Officer, President and  

 

Chairman of Board of Directors 

 

 

 

 

Your Vote Is Important

Please mark, sign and date your Proxy Card and return it promptly in the enclosed envelope, whether or not you plan to attend the meeting. Registered and most beneficial stockholders may also vote via telephone or through the Internet. 

 

 
 

 

 

MRI Interventions, Inc.

One Commerce Square, Suite 2550

Memphis, Tennessee 38103

  

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 3, 2014

 

 

The regular Annual Meeting of Stockholders of MRI Interventions, Inc. will be held on Tuesday, June 3, 2014 at 8:30 a.m., Central Time, at our principal executive office, One Commerce Square, Suite 2550, Memphis, Tennessee 38103, for the following purposes:

 

 

1.

Election of Directors. To elect nine directors named in the accompanying Proxy Statement to serve until the 2015 Annual Meeting of Stockholders;

 

 

2.

Ratification of Auditors. To ratify the selection of Cherry Bekaert LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014; and

 

 

3.

Other Business. To transact such other business as may properly come before the meeting or any adjournment of the meeting.

 

Only those stockholders of record at the close of business on April 11, 2014 are entitled to notice of, and to vote at, the Annual Meeting and any adjournment thereof. On that day, 58,919,539 shares of common stock were outstanding. Each share entitles the holder to one vote.

 

The accompanying Proxy Statement is being sent, beginning approximately April 25, 2014, to all stockholders of record at the close of business on April 11, 2014, the record date fixed by our Board of Directors.  We have enclosed a copy of our Annual Report with the accompanying Proxy Statement. Although the Annual Report and Proxy Statement are being mailed together, the Annual Report is not incorporated into, and should not be deemed part of, the accompanying Proxy Statement.

 

 

 

By Order of the Board of Directors, 

 

 

 

 

Oscar L. Thomas

 

Vice President, Business Affairs and Secretary

 

 
 

 

 

TABLE OF CONTENTS

 

  Page No. 
   

General Information

1
   

Voting Matters

3
   

Proposal 1 — Election of Directors

7
   

Governance of the Company

12
   

Director Compensation

19
   

Proposal 2 — Ratification of the Appointment of our Independent Registered Public Accounting Firm

20
   

Report of the Audit Committee of the Board

22
   

Executive Officers

23
   

Executive Compensation

24
   
Summary Compensation Table

24

   
Outstanding Equity Awards at Fiscal Year-End

25

   
Option Exercises

26

   
Potential Payments Upon Termination or Change in Control

26

   

Equity Compensation Plan Information

29
   

Benefit Plans

29
   

Certain Relationships and Related Transactions

34
   

Security Ownership of Certain Beneficial Owners and Management

35
   

Section 16(a) Beneficial Ownership Reporting Compliance

37
   

Stockholder Proposals for 2015 Annual Meeting

37
   

Annual Report and Financial Information

38
   

Other Business

38

 

 
 

 

 

MRI Interventions, Inc.

One Commerce Square, Suite 2550

Memphis, Tennessee 38103

 

  


 

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS

 


 

 

Important notice regarding the availability of proxy materials for

the stockholders meeting to be held on TUESDAY, JUNE 3, 2014:

this proxy statement, THE proxy card and OUR 2013 annual report ON

FORM 10-K are ALSO available ON THE internet at

WWW.CSTPROXY.COM/MRIINTERVENTIONS/2014.

 

 

GENERAL INFORMATION

 

What is this document?

 

This document is the Proxy Statement of MRI Interventions, Inc. for the Annual Meeting of Stockholders to be held at 8:30 a.m., Central Time, on Tuesday, June 3, 2014. A proxy card is included. This document and the form of Proxy Card are first being mailed or given to stockholders on or about April 25, 2014.

 

We refer to MRI Interventions, Inc. throughout this document as “we,” “us” or the “Company.”

 

What is the date and time of the Annual Meeting?

 

The Annual Meeting is scheduled to be held on Tuesday, June 3, 2014, at 8:30 a.m. Central Time.

 

Where will the Annual Meeting be held?

 

The Annual Meeting is being held at our principal executive office, One Commerce Square, Suite 2550, Memphis, Tennessee 38103.

 

Why am I receiving this Proxy Statement?

 

You are receiving this Proxy Statement because you were one of our stockholders of record on April 11, 2014, the record date for our 2014 Annual Meeting. We are sending this Proxy Statement and the form of Proxy Card to solicit your proxy to vote upon certain matters at the Annual Meeting.

 

What is a proxy?

 

It is your legal designation of another person, called a “proxy,” to vote the stock you own. The document that designates someone as your proxy is also called a proxy or a Proxy Card.

 

Who is paying the costs to prepare this Proxy Statement and solicit my proxy?

 

We will pay all expenses of this solicitation, including the cost of preparing and mailing this Proxy Statement and the form of Proxy Card.

 

 
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Who is soliciting my proxy, and will anyone be compensated to solicit my proxy?

 

Your proxy is being solicited by and on behalf of our Board of Directors, or our “Board.” In addition to solicitation by use of the mails, proxies may be solicited by our officers and employees in person or by telephone, electronic mail, facsimile transmission or other means of communication. Our officers and employees will not be additionally compensated, but they may be reimbursed for out-of-pocket expenses in connection with any solicitation. We also may reimburse custodians, nominees and fiduciaries for their expenses in sending proxies and proxy material to beneficial owners. We may incur the fees and expenses of hiring the services of a solicitation agent in connection with this proxy solicitation to the extent we determine that engaging a solicitation agent is in the best interest of the Company.

 

What is MRI Interventions, Inc., and where is it located?

 

We are a medical device company that develops and commercializes innovative platforms for performing minimally invasive surgical procedures in the brain and heart under direct, intra-procedural magnetic resonance imaging, or “MRI,” guidance. We have two product platforms. Our ClearPoint system, which is in commercial use, is used to perform minimally invasive surgical procedures in the brain. We anticipate that the ClearTrace system, which is still in development, will be used to perform minimally invasive surgical procedures in the heart. Both systems utilize intra-procedural MRI to guide the procedures and are designed to work in a hospital’s existing MRI suite. Our principal executive office is located in Memphis, Tennessee, and we conduct our principal operations, including component processing, final assembly, packaging and distribution activities for our ClearPoint system, at a facility located in Irvine, California.

 

Where is our common stock traded?

 

Our common stock is traded in the over-the-counter market and is quoted on OTC Markets and the OTC Bulletin Board under the symbol “MRIC.”

 

Will the Company’s directors be in attendance at the Annual Meeting?

 

The Company encourages, but does not require, its directors to attend annual meetings of stockholders, recognizing that from time to time scheduling conflicts may occur that will prevent a director from attending. We expect that most of our Board members will attend the 2014 Annual Meeting of Stockholders, if possible.

 

 
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VOTING MATTERS

 

Who is entitled to attend and vote at the Annual Meeting?

 

Only stockholders of record at the close of business on the record date, April 11, 2014, are entitled to receive notice of the Annual Meeting and to vote the shares for which they are stockholders of record on that date at the Annual Meeting, or any postponement or adjournment of the Annual Meeting. A list of our stockholders will be open to the examination of any stockholder, for any purpose germane to the Annual Meeting, at our principal executive office for a period of ten days prior to the Annual Meeting. On April 11, 2014, we had 58,919,539 shares of common stock outstanding.

 

Stockholders of Record: Shares Registered in Your Name. If on April 11, 2014 your shares were registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to fill out and return the enclosed Proxy Card or vote by proxy over the telephone or on the Internet as instructed below, to ensure your vote is counted.

 

Beneficial Owner: Shares Registered in the Name of a Broker or Bank. If on April 11, 2014 your shares were held in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.

 

What am I voting on and what does the Board recommend?

 

You will be asked to vote on the following two items:

 

o     To elect the nine nominees named herein to serve on our Board of Directors until the 2015 Annual Meeting of Stockholders; and

 

o     To ratify the appointment of Cherry Bekaert LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014.

 

Our Board recommends that you vote:

 

o     “FOR” the election of each of the nine nominees named herein to serve on our Board of Directors; and

 

o     “FOR” the ratification of the appointment of Cherry Bekaert LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014.

 

May other matters be raised at the Annual Meeting? How will the meeting be conducted?

 

We currently are not aware of any business to be acted upon at the Annual Meeting other than the two matters described above. Under Delaware law and our governing documents, no other business aside from procedural matters may be raised at the Annual Meeting unless proper notice has been given to the Company by the stockholders. If other business is properly raised, your proxies have authority to vote as they think best, including to adjourn the meeting.

 

The Chairman has broad authority to conduct the Annual Meeting so that the business of the meeting is carried out in an orderly and timely manner. In doing so, he has broad discretion to establish reasonable rules for discussion, comments and questions during the meeting. The Chairman is also entitled to rely upon applicable law regarding disruptions or disorderly conduct to ensure that the Annual Meeting proceeds in a manner that is fair to all participants.

 

 
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How do I vote?

 

For Proposal No. 1, you may either vote “FOR” each nominee named herein to serve on the Board of Directors or you may withhold your vote for any nominee that you specify. For Proposal No. 2, you may vote “FOR” or “AGAINST”, or abstain from voting. The procedures for voting are as follows:

 

Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record, you may vote in person at the Annual Meeting, vote by proxy using the enclosed Proxy Card, vote by proxy over the telephone or vote by proxy on the Internet. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote in person even if you have already voted by proxy.

 

 

To vote in person, come to the Annual Meeting, and we will give you a ballot when you arrive.

 

 

To vote using the enclosed Proxy Card, simply complete, sign and date the enclosed Proxy Card and return it promptly in the postage paid envelope provided. If you return your signed Proxy Card to us before the Annual Meeting, we will vote your shares as you direct.

 

 

To vote over the telephone, call the toll-free number (for residents of the United States) listed on your Proxy Card and follow the instructions provided by the recorded message. Your vote must be received by 7:00 p.m. Eastern Time on June 2, 2014 to be counted.

 

 

You can choose to vote your shares at any time using the Internet site identified on your Proxy Card. This site will give you the opportunity to make your selections and confirm that your instructions have been followed. We have designed our Internet voting procedures to authenticate your identity by use of a unique control number found on the enclosed Proxy Card. To take advantage of the convenience of voting on the Internet, you must subscribe to one of the various commercial services that offer access to the Internet. Costs normally associated with electronic access, such as usage and telephone charges, will be borne by you. We do not charge any separate fees for access to the Internet voting site. Your vote must be received by 7:00 p.m. Eastern Time on June 2, 2014 to be counted.

 

Beneficial Owner: Shares Registered in the Name of a Broker or Bank. If you are a beneficial owner of shares registered in the name of your broker, bank or other nominee, you should have received a Proxy Card and voting instructions with these proxy materials from that organization, rather than from the Company. Simply complete and mail the Proxy Card to ensure that your vote is counted. Alternatively, you may vote by telephone or over the Internet as instructed by your broker or bank. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other nominee. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.

 

What if I return a Proxy Card but do not make specific choices?

 

Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record and return a signed and dated Proxy Card without marking any voting selections, your shares will be voted as follows:

 

 

“FOR” the election of each of the nine nominees named herein to serve on the Board of Directors; and

 

 

“FOR” the ratification of the appointment of Cherry Bekaert LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014.

 

If any other matter is properly presented at the Annual Meeting, your proxy (one of the individuals named on your Proxy Card) will vote your shares as recommended by our Board or, if no recommendation is given, will vote your shares using his best judgment.

 

 
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Beneficial Owner: Shares Registered in the Name of a Broker or Bank. If you are a beneficial owner of shares registered in the name of your broker, bank or other nominee and you do not provide the broker or other nominee that holds your shares with voting instructions, the broker or other nominee will determine if it has the discretionary authority to vote on the particular matter. On certain “routine” matters, brokerage firms have the discretionary authority to vote shares for which their customers do not provide voting instructions. Proposal No. 2, the ratification of the appointment of Cherry Bekaert LLP as our independent registered public accounting firm, is considered a routine matter for this purpose. Proposal No. 1, however, is not considered to be a routine matter, and, therefore, your shares will not be voted on Proposal No. 1 unless you instruct your brokerage firm to vote in a timely manner.

 

Can I change my mind and revoke my proxy?

 

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any of the following ways:

 

 

You may submit another properly completed proxy bearing a later date;

 

 

You may send a written notice that you are revoking your proxy to our Investor Relations Department, MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103; or

 

 

You may attend the Annual Meeting and notify the election officials at the Annual Meeting that you wish to revoke your proxy and vote in person. Simply attending the Annual Meeting will not, by itself, revoke your proxy.

 

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 to revoke your proxy.

 

What if I receive more than one Proxy Card?

 

Multiple Proxy Cards mean that you have more than one account with brokers or our transfer agent. Please vote all of your shares. We also recommend that you contact your broker or our transfer agent to consolidate as many accounts as possible under the same name and address. Our transfer agent is Continental Stock Transfer & Trust Company, 17 Battery Place, 8th Floor, New York, New York 10004, and it can be reached at (800) 509-5586.

 

How are votes counted?

 

Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count “FOR” and “WITHHOLD” votes and broker non-votes with respect to Proposal No. 1, and “FOR” and “AGAINST” votes and abstentions with respect to Proposal No. 2. A broker non-vote occurs when a nominee, such as a broker or bank, holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary authority to vote with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner. In the event that a broker, bank, custodian, nominee or other record holder of our common stock indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, then those shares will be treated as broker non-votes with respect to that proposal. Accordingly, if you own shares through a nominee, such as a broker or bank, please be sure to instruct your nominee how to vote to ensure that your vote is counted on each of the proposals.

 

Abstentions and broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the Annual Meeting. Abstentions will be counted towards the tabulation of shares present in person or represented by proxy and entitled to vote and will have the same effect as “AGAINST” votes on Proposal No. 2. Although broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum, broker non-votes will not be counted for purposes of determining the number of shares present in person or represented by proxy and entitled to vote with respect to Proposal No. 1. Thus, a broker non-vote will not affect the outcome of the vote on that proposal.

 

 
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What is the vote required for each proposal?

 

 

For Proposal No. 1, the election of directors, the nine nominees receiving the most “FOR” votes (among votes properly cast in person or by proxy) will be elected to serve on our Board.

 

 

To be approved, Proposal No. 2, the ratification of the appointment of Cherry Bekaert LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014, must receive a “FOR” vote from at least a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote. However, the Audit Committee is not bound by a vote either for or against the firm. The Audit Committee will consider a vote against the firm by the stockholders in selecting our independent registered public accounting firm in the future.

 

How many shares must be present to constitute a quorum for the Annual Meeting?

 

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares entitled to vote are represented by stockholders present at the Annual Meeting or by proxy. On April 11, 2014, the record date, there were 58,919,539 shares outstanding and entitled to vote. Thus, at least 29,459,770 shares must be represented by stockholders present at the Annual Meeting or by proxy to have a quorum.

 

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum. If there is no quorum, either the Chairman of the meeting or a majority of the votes present in person or represented by proxy at the Annual Meeting may adjourn the Annual Meeting to another date.

 

How many votes do I have and can I cumulate my votes?

 

You have one vote for every share of our common stock that you own. Cumulative voting is not allowed.

 

How can I find out the results of the voting at the Annual Meeting?

 

Preliminary voting results will be announced at the Annual Meeting. Final results are expected to be published in a current report on Form 8-K filed by the Company with the Securities and Exchange Commission, or the “SEC,” on or before the fourth business day following the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days following the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

 

 
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PROPOSAL 1 — ELECTION OF DIRECTORS

 

What is the structure of our Board?

 

Pursuant to Delaware law and our governing documents, the business and affairs of the Company are managed under the direction of our Board. The Board is the ultimate decision-making and oversight body of the Company, except with respect to matters reserved to the stockholders. The directors are charged with the responsibility of exercising their fiduciary duties to act in the best interest of the Company and our stockholders. The Board selects and oversees members of executive management who have the authority and responsibility for the conduct of the day-to-day operations of the business.

 

The number of directors that constitutes our Board is fixed from time to time by a resolution adopted by the affirmative vote of a majority of the authorized number of directors at any regular or special meeting of the Board. On an annual basis, the Corporate Governance and Nominating Committee will consider the size and composition of the Board and report to the Board the results of its review and any recommendations for change. Currently, our Board is fixed at nine directors. Our directors stand for election at each annual meeting of the stockholders and serve on our Board until the next annual meeting of the stockholders and until a successor has been duly elected and qualified or until such director’s earlier death, resignation, disqualification or removal.

 

How are nominees evaluated? What are the minimum qualifications?

 

The Corporate Governance and Nominating Committee is responsible for recommending to the Board the type of skills and qualifications required of directors, based on the needs of the Company from time to time. In evaluating candidates for director, the Corporate Governance and Nominating Committee may consider several factors, including relevant experience, intelligence, independence, commitment, compatibility with the Chief Executive Officer and the Board culture, prominence and understanding of the Company’s business, as well as any other factors it deems relevant. The Board will nominate individuals to serve on our Board only from director candidates screened and approved by the Corporate Governance and Nominating Committee and recommended to the Board.

 

The directors’ experiences, qualifications and skills that the Corporate Governance and Nominating Committee considered in their nomination are included in their individual biographies.

 

What role does diversity play in the selection of members of our Board?

 

In evaluating potential candidates for Board membership, the Corporate Governance and Nominating Committee considers, among other things, relevant experience, education, intelligence, independence and commitment. Our Board believes in a governing style that emphasizes respect for diversity in perspective and includes individuals from diverse backgrounds. Our Board believes that diversity is important because various points of view contribute to a more effective, engaged Board and a better decision-making process.

 

Who are the nominees this year?

 

Upon the recommendation of the Corporate Governance and Nominating Committee, our Board has nominated the following nine persons to serve as directors: Kimble L. Jenkins; Charles E. Koob; Michael A. Pietrangelo; Philip A. Pizzo; Timothy T. Richards; Andrew K. Rooke; Michael J. Ryan; Maria Sainz; and John N. Spencer, Jr. James K. Malernee, Jr. and Paul A. Bottomley resigned as directors, effective as of December 31, 2013 and March 10, 2014, respectively, and, therefore, have not been nominated for re-election at the Annual Meeting. Dr. Malernee’s and Dr. Bottomley’s resignations were not the result of any disagreement with the Company but instead were for the purpose of allowing two highly qualified director candidates an opportunity to serve on our Board. Accordingly, the Board elected Ms. Sainz and Mr. Richards as directors, effective as of January 1, 2014 and March 10, 2014, respectively, to fill the vacancies created by the resignations of Dr. Malernee and Dr. Bottomley.

 

 
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If elected, each nominee identified above will serve on our Board until the 2015 Annual Meeting of Stockholders or until his or her earlier death, resignation or removal. We anticipate that each of these nominees will be available for election, but if a situation arises in which he or she is unavailable, the proxy will be voted in accordance with the best judgment of the named proxies unless directed otherwise.

 

What are the backgrounds and qualifications of this year's nominees?

 

Information about the following nine individuals nominated as directors is provided below.

 

Director Nominees

 

Age

Kimble L. Jenkins

 

52

Charles E. Koob

 

69

Michael A. Pietrangelo

 

71

Philip A. Pizzo

 

69

Timothy T. Richards

 

56

Andrew K. Rooke

 

57

Michael J. Ryan

 

35

Maria Sainz

 

48

John N. Spencer, Jr.

 

73

 

Kimble L. Jenkins joined our Board in September 2002 and presently serves as our Chairman. Mr. Jenkins has served as our President since January 2003, and he has served as our Chief Executive Officer since September 2004. Mr. Jenkins served in those offices on a part-time basis until May 2008, at which time Mr. Jenkins began serving as our President and Chief Executive Officer on a full-time basis. Prior to May 2008, Mr. Jenkins was a Managing Director with the investment bank Morgan Keegan & Company, Inc., where he founded that firm’s Private Equity Group in 1998. Mr. Jenkins has over 20 years of experience building and working with growth stage companies. Mr. Jenkins holds a Bachelor of Arts from Brown University and a Juris Doctorate from Georgetown University Law Center. As our Chief Executive Officer, we believe Mr. Jenkins’ perspective into our business is an invaluable resource for our Board.

 

Charles E. Koob joined our Board in August 2008. From 1970 to 2008, Mr. Koob practiced competition, trade regulation and antitrust law at the law firm of Simpson Thacher & Bartlett and served as the co-head of the firm’s litigation department for a portion of his tenure. For much of his career, Mr. Koob served as a strategic advisor for the boards of directors of many public companies. Mr. Koob presently serves on the board of directors of MiMedx Group, Inc., a publicly traded biomedical products company, DemeRx, Inc., a privately held biotechnology company, and Stanford Hospital & Clinics, the major teaching hospital for Stanford University and its School of Medicine. As a byproduct of Mr. Koob’s sophisticated former legal practice, we believe Mr. Koob offers expertise in the areas of corporate governance and organizational and strategic leadership.

 

Michael A. Pietrangelo joined our Board in March 2010. From 1972 through 1989, Mr. Pietrangelo was employed by Schering-Plough Corporation in various capacities, including President of the Personal Care Products Group. From 1989 to 1990, he served as President and Chief Operating Officer of Western Publishing Company. From 1990 to 1994, Mr. Pietrangelo was the President and Chief Executive Officer of CLEO, Inc., a subsidiary of Gibson Greetings, Inc. From 1994 until 1998, he served as President of Johnson Products Company, a subsidiary of IVAX Corporation. Since 1998, Mr. Pietrangelo has practiced law at Pietrangelo Cook PLC. Mr. Pietrangelo previously served as a director of Medicis Pharmaceutical Corporation, a publicly traded pharmaceutical company, prior to its acquisition by Valeant Pharmaceuticals International, Inc. in December 2012. Mr. Pietrangelo currently serves on the board of directors of the American Parkinson Disease Association, a not-for-profit organization focused on serving the Parkinson’s community, and Universal Insurance Holdings, Inc., a publicly traded insurance holding company. Mr. Pietrangelo also serves as the managing partner of Theraplex Company LLC, a privately held skin care products company. As a result of his diverse professional background, we believe Mr. Pietrangelo offers a unique combination of legal expertise and operational acumen.

 

Philip A. Pizzo joined our Board in April 2013. Dr. Pizzo served as Dean of the Stanford School of Medicine from April 2001 to December 1, 2012, where he was also the Carl and Elizabeth Naumann Professor of Pediatrics and of Microbiology and Immunology. Dr. Pizzo has devoted much of his distinguished medical career to the diagnosis, management, prevention and treatment of childhood cancers and the infectious complications that occur in children whose immune systems are compromised by cancer and AIDS. He has also been a leader in academic medicine, championing programs and policies to improve the future of science, education and healthcare in the United States and beyond. Before joining Stanford, Dr. Pizzo was the physician-in-chief of Children’s Hospital in Boston and chair of the Department of Pediatrics at Harvard Medical School from 1996 to 2001. He is the author of more than 500 scientific articles and 16 books and monographs. Dr. Pizzo presently serves on the board of directors, or the equivalent governing body, of the University of Rochester, a private university, and Koc University, a private university located in Istanbul, Turkey. We believe Dr. Pizzo offers a deep understanding of medical sciences and innovation, as well as physicians and other healthcare providers who are central to the use and development of our products.

 

 
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Timothy T. Richards joined our Board in March 2014. Since October 2012, Mr. Richards has served as the Senior Vice President, Commercial Operations for Seventh Sense BioSystems, Inc., a venture capital-backed start-up with a focus on point-of-care diagnostic testing, where he was recruited to build and develop the company’s business development and commercial organization. Prior to joining Seventh Sense BioSystems, from October 2011 through August 2012, Mr. Richards served as President of Facet Technologies, LLC, a privately-held supplier to major diagnostic companies, where he led the company’s manufacturing and supply chain platform. From November 2008 until May 2010, Mr. Richards held executive-level positions within the Covidien organization, first as U.S. President of the Patient Care & Safety Products business unit, and subsequently as President of VNUS Medical Technologies following its acquisition by Covidien in 2009. From October 2003 through October 2008, Mr. Richards served as Senior Vice President, Chief Marketing Officer and a member of the Executive Board of B. Braun Medical Inc., a leader in infusion therapy and pain management. Before joining B. Braun Medical, he held a number of progressive leadership positions throughout the U.S. and Asia with Becton Dickinson and Company. We believe Mr. Richards brings to the Board extensive leadership experience and expertise in general management, operations, commercial management and strategy in the medical device field.

 

Andrew K. Rooke joined our Board in July 2011. Mr. Rooke owns and manages Rooke Fiduciary Management, a private trust company, which specializes in the investment management of publicly held securities and the oversight of a multitude of trust investments. Mr. Rooke is also President and a director of Withington Foundation, a private foundation. Over the years, he has acquired, managed and sold a number of private companies as well as commercial real estate properties. Mr. Rooke was also previously employed by the former securities firm Kidder, Peabody & Co. With significant experience in financing, analyzing, investing in and managing investments in public and private companies, we believe Mr. Rooke offers expertise in strategic and financial matters.

 

Michael J. Ryan joined our Board in May 2011. Mr. Ryan is Director of Corporate Business Development at Boston Scientific Corporation, where he leads business development activities in the fields of neuromodulation, gastroenterology, pulmonology, urology and gynecology. Prior to joining Boston Scientific in 2005, Mr. Ryan was a Senior Consultant at Decision Resources, providing management consulting services to the pharmaceutical and biotech industries. With his background, we believe Mr. Ryan offers insight into the medical device industry, particularly as it relates to neurological applications.

 

Maria Sainz joined our Board in January 2014. Since April 2012, Ms. Sainz has served as President and Chief Executive Officer of CardioKinetix, Inc., a privately-held medical device company based in Menlo Park, California that is pioneering a catheter-based treatment for heart failure. Beginning in April 2008, she served as President and Chief Executive Officer of Concentric Medical, Inc., a privately-held medical device company focused on developing endovascular devices for revascularizing stroke patients. Ms. Sainz held that position until October 2011, when Concentric Medical was acquired by Stryker Corporation, at which time she was named General Manager of the Stryker Neurovascular business unit, a position she held until April 2012. Prior to Concentric Medical, as an advisor to Boston Scientific Corporation’s Chief Operating Officer, Ms. Sainz led integration activities following Boston Scientific’s acquisition of Guidant Corporation. From February 2003 through June 2006, she served as President of Guidant Corporation’s Cardiac Surgery Division, during which time she successfully grew the multi-therapy division’s revenue from $90 million to $176 million. Prior to that, from January 2001 through February 2003, Ms. Sainz served as Vice President, Global Marketing for the Vascular Intervention Division of Guidant Corporation, where she was responsible for worldwide new product and market development activities. Ms. Sainz currently serves as a director of The Spectranetics Corporation and Orthofix International N.V., both publicly-traded medical device companies, as well as a director of CardioKinetix, Inc. Ms. Sainz brings to the Board over 20 years of experience in the medical device industry having held commercial and general management positions both in the United States and Europe.

 

 
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John N. Spencer, Jr. joined our Board in March 2010. Mr. Spencer is a certified public accountant and was a partner of Ernst & Young LLP where he spent more than 38 years until his retirement in 2000. Mr. Spencer serves on the board of directors of GeoVax Labs, Inc., a publicly traded biotechnology company, and until April 2009, served on the board of directors of Firstwave Technologies, Inc., formerly a publicly traded customer relationship management software company. In addition, he serves as a consultant to various companies, primarily relating to financial accounting and reporting matters. From November 2013 until February 2014, Mr. Spencer served as interim Chief Financial Officer of Applied Genetic Technologies Corporation, which is now a publicly traded biotechnology company, while such company was in registration with the SEC. By virtue of his experience at Ernst & Young, where he was the partner in charge of its life sciences practice for the southeastern United States, together with his continuing expertise as a director of, and a consultant to, other publicly traded and privately held companies, we believe Mr. Spencer offers expertise in accounting, finance and the medical device industry.

 

How are our directors compensated?

 

Board Fees

 

Directors who are our employees are not entitled to receive any fees for serving as directors. Directors who are not our employees receive the following Board and Committee fees:

 

Board of Directors:

       

Annual retainer per director

  $ 15,000  

Fee per meeting of the Board (in-person)

  $ 1,000  

Fee per meeting of the Board (telephonic)

  $ 500  
         

Audit Committee:

       

Annual retainer for chairperson

  $ 8,000  

Annual retainer for other members

  $ 4,000  

Fee per meeting

  $ 0  
         

Compensation Committee:

       

Annual retainer for chairperson

  $ 6,000  

Annual retainer for other members

  $ 3,000  

Fee per meeting

  $ 0  
         

Corporate Governance and Nominating Committee:

       

Annual retainer for chairperson

  $ 6,000  

Annual retainer for other members

  $ 3,000  

Fee per meeting

  $ 0  

 

The above retainers are paid in quarterly installments, in arrears.  Each director may elect to have the Company pay all or a portion of his or her fees in shares of our common stock, in lieu of cash, in accordance with the rules and procedures established from time to time by our Board.

 

We also reimburse each non-employee director for reasonable travel and other expenses in connection with attending Board meetings.

 

Stock Options

 

Upon an individual becoming a non-employee director for the first time, the new director will receive a stock option grant entitling him or her to purchase 45,000 shares of our common stock. Such options will vest in equal annual installments over three years.

 

Any individual who serves as a non-employee director on the day following an annual meeting of the Company’s stockholders will receive a stock option grant entitling him or her to purchase 20,000 shares of our common stock.  Such options will vest on the earlier of the first anniversary of the grant date or the day immediately preceding the next annual meeting of stockholders.

 

 
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The exercise price of all options granted to directors will equal the “fair market value” of our common stock on the date of grant.

 

Are there stock ownership guidelines for directors?

 

We currently do not have any stock ownership guidelines. The Board expects each director to develop a meaningful ownership position in the Company over time but does not believe it is appropriate to specify the level of stock ownership for individual directors.

 

Are there any family relationships between our directors and our executive officers?

 

There are no family relationships between or among any of our directors and executive officers.

 

How many votes are needed to elect directors?

 

The nine nominees receiving the most “FOR” votes among votes properly cast in person or by proxy at the Annual Meeting will be elected to serve on our Board (assuming a quorum of a majority of the outstanding shares of common stock is present).

 

What does the Board recommend?

 

THE BOARD RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES FOR DIRECTOR IDENTIFIED ABOVE.

 

 
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GOVERNANCE OF THE COMPANY

 

What is corporate governance and how do we implement it?

 

Corporate governance is a set of rules established by us to ensure that our directors, executive officers and employees conduct the Company’s business in a legal, impartial and ethical manner. Our Board has a strong commitment to sound and effective corporate governance practices. We are incorporated under the laws of the state of Delaware. We have not applied to list our securities on a national securities exchange or an inter-dealer quotation system which has requirements that a majority of our Board be independent. However, for purposes of determining independence, we have adopted the provisions of Nasdaq Marketplace Rule 5605. Our management and our Board have reviewed and continue to monitor our corporate governance practices in light of Delaware corporate law, U.S. federal securities laws and Nasdaq Marketplace Rule 5605.

 

What documents establish and implement our corporate governance practices?

 

We adopted the charters of our Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee, Code of Business Conduct and Ethics, Guidelines on Governance Issues, Guidelines for Corporate Disclosure, Related Party Transactions Policy, Securities Trading Policy and Whistleblower Policy for the purpose of increasing transparency in our governance practices as well as promoting honest and ethical conduct, promoting full, fair, accurate, timely and understandable disclosure in periodic reports required to be filed by us, and promoting compliance with all applicable rules and regulations that apply to us and our officers and directors.

 

Our Code of Business Conduct and Ethics applies to all of our employees, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) and directors. We intend to disclose future amendments to certain provisions of our Code of Business Conduct and Ethics, or waivers of such provisions, applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, persons performing similar functions or our directors on our website at www.mriinterventions.com. The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement.

 

Where can I access the Company’s corporate governance documents?

 

Our charters of our Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee, Code of Business Conduct and Ethics, Guidelines on Governance Issues, Guidelines for Corporate Disclosure, Related Party Transactions Policy, Securities Trading Policy and Whistleblower Policy may be accessed at the “Investors” tab of our website at www.mriinterventions.com. The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement. In addition, any stockholder or other interested party may request, without charge, a copy of the Company’s corporate governance documents by submitting a written request for any of such materials to our Investor Relations Department, MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103.

 

How often did our Board meet in 2013?

 

Our Board held four meetings during 2013. Directors are expected to attend each meeting of our Board and each meeting of those Committees on which they serve. In addition to meetings, our Board and its Committees review and act upon matters through written consent procedures. Except as noted below, all directors attended 75% or more of the total number of meetings of the Board and those Committees on which they served during 2013. Bruce C. Conway, who served on our Board during 2013 until his resignation effective April 12, 2013, was unable to attend the one meeting of our Board, and one of the two meetings of the Compensation Committee on which he served, which occurred prior to the effective date of his resignation. Mr. Conway did not attend the Compensation Committee meeting as it was held to address Mr. Conway’s pending resignation. In addition, James K. Malernee, Jr., who resigned from the Board effective December 31, 2013, did not attend one of the three meetings of the Corporate Governance and Nominating Committee on which he served. Dr. Malernee did not attend that meeting since the purpose of the meeting was to address the vacancy on the Board to be created upon Dr. Malernee’s resignation.

 

 
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Our 2013 Annual Meeting of Stockholders was held on June 13, 2013. We have a policy for attendance by members of our Board at our stockholder annual meetings that encourages directors, if practicable and time permitting, to attend our stockholder annual meetings. We expect that most of our Board members will attend the 2014 Annual Meeting of Stockholders, if possible.

 

Who are our independent directors?

 

We have not applied to list our securities on a national securities exchange or an inter-dealer quotation system which has requirements that a majority of our Board be independent. However, for purposes of determining director independence, we have adopted the provisions of Nasdaq Marketplace Rule 5605. Our Board undertook a review of the composition of our Board and its Committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that none of Dr. Pizzo, Ms. Sainz or Messrs. Koob, Pietrangelo, Richards, Ryan or Spencer, representing seven of our nine directors who are nominated for re-election at the Annual Meeting, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules. Furthermore, our Board previously determined that Mr. Bruce C. Conway, who served on our Board during 2013 until his resignation on April 12, 2013, and Drs. Malernee and Bottomley, who served on our Board throughout 2013 and until their resignations on December 31, 2013 and March 10, 2014, respectively, were “independent” directors under the Nasdaq Marketplace Rules during such periods of time. In making such determinations, our Board considered the relationships that each such director has with us and all other facts and circumstances the Board deemed relevant in determining independence, including the beneficial ownership of our capital stock by each director.

 

What is the leadership structure of the Board, and why is it appropriate for the Company?

 

Mr. Jenkins, our Chief Executive Officer, also serves as the Chairman of the Board. The Board does not have a fixed policy as to whether the role of the Chief Executive Officer and Chairman of the Board should be separate. When the Chairman of the Board is a member of Company management, the Chairman of the Corporate Governance and Nominating Committee, who is an independent director, acts ex officio as the Lead Independent Director of the Board, with the responsibility for coordinating the activities of the other independent directors and for performing the duties specified in our Guidelines on Governance Issues and such other duties as are assigned from time to time by the Board.

 

The Lead Independent Director has broad responsibility and authority, including, without limitation, to:

 

 

serve as the principal liaison on Board-wide issues between the independent members of the Board and the Chairman of the Board;

 

 

preside at all meetings of the Board at which the Chairman of the Board is not present, including executive sessions of the independent members of the Board; and

 

 

call meetings of the independent members of the Board.

 

Mr. Koob, as the Chairman of the Corporate Governance and Nominating Committee, served as the Lead Independent Director during 2013.

 

Our Board believes that this leadership structure—a combined Chairman of the Board and Chief Executive Officer and a Lead Independent Director—is the most appropriate structure for us at this time. Because the Chief Executive Officer has extensive knowledge of our business, our Board has concluded that he is in the best position to lead most effectively by serving in the key position of Chairman of the Board. In addition, the Chief Executive Officer is able to act as a conduit between the Board and management to plan and execute Board meetings, to provide updates between Board meetings, as necessary, and to efficiently execute Board directives. We believe that this leadership structure reduces the potential for confusion about leadership roles and duplication of efforts. Finally, this structure allows a single person to speak for and lead the Company and our Board, while also providing for effective oversight by an independent Board through a Lead Independent Director.

 

 
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What role does our Board play in the oversight of risk management?

 

Our Board implements its risk oversight function both as a whole and through its Committees.  Our Board and the Committees to which it has delegated responsibility conduct risk assessments and discuss identified risks and how to eliminate or mitigate such risks.

 

Our Board and its Committees oversee risks associated with their respective principal areas of focus, as summarized below. All Committees report to the full Board as appropriate, including when a matter rises to the level of a material risk.

 

Board/Committee

  

Primary Areas of Risk Oversight

Full Board

  

Strategic, financial and execution risks associated with annual operating and long-term strategic plans, major litigation and regulatory exposures and other current matters that may present material risk to our operations, plans, prospects or reputation.

 

 

Audit Committee

  

Risks relating to our financial statements, financial reporting process, accounting and legal matters.

 

 

Compensation Committee

  

Risks related to our compensation structure and benefits plan administration.

 

 

Corporate Governance and Nominating Committee

  

Risks relating to our corporate governance policies and programs and succession planning.

 

While our Board and its Committees oversee our risk management, our management is responsible for day-to-day risk management. Management communicates with our Board and its Committees on any material risks and how they are being managed.

 

How can you communicate with our Board?

 

Stockholders and other interested parties may send communications to our Board or any Committee of the Board by writing to the Board or the Committee, c/o MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103, Attention: Secretary. The Secretary will distribute all stockholder and other interested party communications to the intended recipients and/or distribute to the entire Board, as appropriate.

 

In addition, stockholders and other interested parties may also contact the Lead Independent Director or the non-management directors as a group by writing to the Lead Independent Director, c/o MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103, Attention: Secretary. The Secretary will forward all stockholder and other interested party communications to the Lead Independent Director who will review and, if addressed to the non-management directors, distribute all stockholder and other interested party communications to the non-management directors as a group.

 

What are our complaint procedures?

 

Complaints and concerns about our accounting, internal accounting controls or auditing matters may be submitted, confidentially and anonymously, to the Company’s compliance officer, Oscar Thomas, at MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103; Telephone No.: (901) 522-9344; Email: othomas@mriinterventions.com. Alternatively, complaints and concerns about our accounting, internal accounting controls or auditing matters may be submitted, confidentially and anonymously, by calling our Whistleblower Hotline at (877) 778-5463 or by using our confidential web-based service at www.reportit.net.

 

 
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What committees have been established by our Board?

 

Our Board currently has three standing Committees: the Audit Committee; the Compensation Committee; and the Corporate Governance and Nominating Committee.

 

What are the responsibilities of the Audit Committee?

 

Our Audit Committee currently consists of Messrs. Koob, Pietrangelo and Spencer. Mr. Spencer serves as the Chairman of the Audit Committee. The functions of the Audit Committee include:

 

 

overseeing the audit and other services of our independent registered public accounting firm and being directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm, who will report directly to the Audit Committee;

 

 

reviewing and pre-approving the engagement of our independent registered public accounting firm to perform audit services and any permissible non-audit services;

 

 

overseeing compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as required;

 

 

reviewing our annual and quarterly financial statements and reports and discussing the financial statements and reports with our independent registered public accounting firm and management;

 

 

reviewing and approving all related person transactions pursuant to our Related Party Transactions Policy;

 

 

reviewing with our independent registered public accounting firm and management significant issues that may arise regarding accounting principles and financial statement presentation, as well as matters concerning the scope, adequacy and effectiveness of our internal control over financial reporting;

 

 

establishing procedures for the receipt, retention and treatment of complaints received by us regarding internal control over financial reporting, accounting or auditing matters; and

 

 

preparing the Audit Committee report for inclusion in our proxy statement for our annual meeting.

 

Our Board has determined that, at this time, Mr. Spencer is an audit committee financial expert within the meaning of SEC rules. Furthermore, our Board has determined that all the members of the Audit Committee satisfy the independence, experience and other requirements established by the Nasdaq Marketplace Rules, which were adopted by the Company. Dr. Malernee, who resigned from our Board effective December 31, 2013, also satisfied the independence, experience and other requirements established by the Nasdaq Marketplace Rules during 2013 when he served as a member of our Audit Committee. Our Audit Committee met five times during 2013. Both our independent registered public accounting firm and management periodically meet privately with our Audit Committee. A copy of the charter for our Audit Committee is posted on our website at www.mriinterventions.com. The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement.

 

What are the responsibilities of the Compensation Committee?

 

Our Compensation Committee currently consists of Messrs. Pietrangelo and Spencer and Dr. Pizzo. Mr. Pietrangelo serves as the Chairman of our Compensation Committee. The functions of the Compensation Committee include:

 

 

determining the compensation and other terms of employment of our Chief Executive Officer and other executive officers and reviewing and approving our performance goals and objectives relevant to such compensation;

 

 
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administering and implementing our incentive compensation plans and equity-based plans, including approving option grants, restricted stock awards and other equity-based awards;

 

 

evaluating and recommending to our Board the equity incentive compensation plans, equity-based plans and similar programs advisable for us, as well as modifications or terminations of our existing plans and programs;

 

 

reviewing and approving the terms of any employment-related agreements, severance arrangements, change-in-control and similar agreements/provisions, and any amendments, supplements or waivers to the foregoing agreements, with our Chief Executive Officer and other executive officers;

 

 

to the extent required, reviewing and discussing the Compensation Discussion & Analysis for our annual report and proxy statement with management and determining whether to recommend to our Board the inclusion of the Compensation Discussion & Analysis in the annual report and proxy statement; and

 

 

to the extent required, preparing a report on executive compensation for inclusion in our proxy statement for our annual meeting.

 

Each member of our Compensation Committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, or the “Code.” Furthermore, our Board has determined that Messrs. Pietrangelo and Spencer and Dr. Pizzo each satisfy the independence standards for compensation committees established by the Nasdaq Marketplace Rules. Mr. Conway, who resigned from our Board effective April 12, 2013, also qualified as a non-employee director and an outside director and satisfied the independence standards under the Nasdaq Marketplace Rules during 2013 when he served as a member of our Compensation Committee. Likewise, Mr. Koob, who served as a member of the Compensation Committee throughout 2013 and until February 17, 2014, also qualified as a non-employee director and an outside director and satisfied the independence standards under the Nasdaq Marketplace Rules during 2013. Our Compensation Committee met six times during 2013. A copy of the charter for our Compensation Committee is posted on our website at www.mriinterventions.com. The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement.

 

With respect to director compensation, our Compensation Committee is responsible for reviewing the compensation paid to members of the Board and recommending modifications to Board compensation that the Compensation Committee determines are appropriate and advisable to the Board for its approval from time to time. In this regard, the Compensation Committee may request that management report to the Compensation Committee periodically on the status of the Board’s compensation in relation to other similarly situated companies.

 

In determining compensation for our executive officers, the Compensation Committee typically considers, but is not required to accept, the recommendations of our Chief Executive Officer regarding the performance and proposed base salary and bonus and equity awards for the other executive officers, as well as himself. The Compensation Committee may also request the assistance of our Chief Financial Officer in evaluating the financial, accounting and tax implications of various compensation awards paid to the executive officers. However, our Chief Financial Officer does not recommend or determine the amounts or types of compensation paid to the executive officers. Our Chief Executive Officer and certain of our other executive officers may attend Compensation Committee meetings, as requested by the Compensation Committee. None of our executive officers, including our Chief Executive Officer, attend any portion of the Compensation Committee meetings during which his or her compensation is established and approved.

 

During 2013, neither the Company nor the Compensation Committee retained any compensation consultant to advise the Compensation Committee on executive and/or director compensation. Rather, the Compensation Committee and our Chief Executive Officer applied subjective discretion to make compensation decisions. They did not use a specific formula or matrix to set compensation in relation to compensation paid by other medical device companies. Our Compensation Committee designed our executive compensation program based on the Compensation Committee’s general knowledge of compensation practices and the application of such knowledge to attract and retain our executive officers. During 2013, the Compensation Committee did not perform reviews of our compensation programs with those of similarly-situated companies, nor did it engage in benchmarking of compensation paid to our executive officers. Our historical approach has been to consider compensation practices and relevant factors rather than establishing compensation at specific benchmark percentiles. This has enabled us to respond to dynamics in the labor market and provided us with flexibility in maintaining and enhancing our executive officers’ engagement, focus, motivation and enthusiasm for our future. However, we expect to build some of these objective practices into our compensation approach over time.

 

 
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What are the responsibilities of the Corporate Governance and Nominating Committee?

 

Our Corporate Governance and Nominating Committee currently consists of Mr. Koob, Dr. Pizzo and Ms. Sainz. The functions of the Corporate Governance and Nominating Committee include:

 

 

evaluating director performance on the Board and applicable Committees of the Board;

 

 

interviewing, evaluating, nominating and recommending individuals for membership on our Board;

 

 

evaluating nominations by stockholders of candidates for election to our Board;

 

 

reviewing and recommending to our Board any amendments to our corporate governance documents; and

 

 

making recommendations to the Board regarding management succession planning.

 

Our Board has determined that Mr. Koob, Dr. Pizzo and Ms. Sainz each satisfy the independence standards for corporate governance and nominating committees established by the Nasdaq Marketplace Rules. Dr. Malernee, who resigned from our Board effective December 31, 2013, also satisfied the independence standards for the corporate governance and nominating committees established by the Nasdaq Marketplace Rules during 2013 when he served as a member of our Corporate Governance and Nominating Committee. Due to a warrant issued to Mr. Rooke in recognition of his long-standing support of the Company, the Board determined that Mr. Rooke is not independent under the Nasdaq Marketplace Rules, and as such, Mr. Rooke did not continue to serve as a member of our Corporate Governance and Nominating Committee after the committee was reconstituted in February 2014. The Corporate Governance and Nominating Committee met three times during 2013. A copy of the charter for our Corporate Governance and Nominating Committee is posted on our website at www.mriinterventions.com. The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement.

 

When evaluating director candidates, the Corporate Governance and Nominating Committee may consider several factors, including relevant experience, intelligence, independence, commitment, compatibility with the Chief Executive Officer and the Board culture, prominence and understanding of the Company’s business, as well as any other factors the Corporate Governance and Nominating Committee deems relevant at the time. The Corporate Governance and Nominating Committee makes a recommendation to the full Board as to any person it believes should be nominated by our Board, and our Board determines the nominees after considering the recommendation and report of the Corporate Governance and Nominating Committee. During 2013, the Corporate Governance and Nominating Committee did not engage any third party to assist it in identifying or evaluating nominees for election to our Board.

 

 
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Any director or executive officer of the Company may recommend a candidate to the Corporate Governance and Nominating Committee for its consideration. The Corporate Governance and Nominating Committee will also consider nominees to our Board recommended by stockholders if stockholders comply with the advance notice requirements in our bylaws. Our bylaws provide that a stockholder who wishes to nominate a person for election as a director at a meeting of stockholders must deliver timely written notice to our Secretary. This notice must contain, as to each nominee, all of the information relating to such person as would be required to be disclosed in a proxy statement meeting the requirements of Regulation 14A under the Exchange Act and certain other information, including the name and address of the stockholder delivering the notice as it appears on the Company’s books; the class and number of shares owned beneficially and of record by such stockholder; information about derivative instruments beneficially owned by such stockholder and any opportunity to profit or share in any profit derived from any increase or decrease in the value of the shares of our stock; any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder has a right to vote any shares of our stock; any short interest in any of our securities held by such stockholder; any rights to dividends on shares of our stock owned beneficially or of record by such stockholder that are separated or separable from the underlying shares of stock; any proportionate interest in shares of our stock or derivative instruments held by a general or limited partnership in which such stockholder is, or owns a beneficial interest in, the general partner; any performance-related fees that such stockholder is entitled to based on the value of our securities; any arrangement or understanding between such stockholder and proposed nominee; and whether such stockholder intends to deliver a solicitation notice, as more fully described in our bylaws. The foregoing summary does not include all requirements a stockholder must satisfy in order to nominate a candidate to the Board. Stockholders who wish to recommend a nominee to our Board should carefully read our bylaws, which are available at the “Investors” tab of our website at www.mriinterventions.com. The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement.

  

Stockholder nominations must be submitted in accordance with the deadlines set forth under the caption “STOCKHOLDER PROPOSALS FOR THE 2015 ANNUAL MEETING” located on page 37 of this Proxy Statement. Stockholder nominations should be sent to MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103, Attention: Secretary.

 

 
18

 

 

Director Compensation

 

The following table and accompanying footnotes set forth information with respect to the compensation of our non-employee directors in 2013.

 

Name

 

Fees Earned
or Paid in
Cash

($)

   

Option
Awards
($)(1)

   

All Other
Compensation
($)

   

Total
($)

 

Paul A. Bottomley(2)

  $ 17,500 (3)   $ 78,088 (4)     (5)     $ 95,588  

Bruce C. Conway(6)

    5,093       -     $ -       5,093  

Charles E. Koob

    26,500 (7)     9,600 (8)     -       36,100  

James K. Malernee, Jr.(9)

    24,000 (10)     9,600 (8)     -       33,600  

Michael A. Pietrangelo

    27,500 (11)     9,600 (8)     -       37,100  

Philip A. Pizzo(12)

    14,907 (13)     31,047 (14)     -       45,954  

Andrew K. Rooke

    20,000 (15)     9,600 (8)     -       29,600  

Michael J. Ryan

    17,500 (16)     9,600 (8)     -       27,100  

Maria Sainz (17)

    -       -       -       -  

John N. Spencer, Jr.

    25,500 (18)     9,600 (8)     -       35,100  

Timothy T. Richards (19)

    -       -       -       -  

 


(1)

These amounts do not represent cash compensation paid to the named individuals. These non-cash amounts represent the aggregate grant date fair value of option awards as computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification, or “ASC,” Topic 718. For a discussion of the assumptions made in the valuation of the awards, see the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Significant Judgments and Estimates–Share-based Compensation” and note 2 to the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013.

(2)

Dr. Bottomley resigned as a director of the Company as of March 10, 2014. Dr. Bottomley elected to step down from our Board simply to give another qualified director candidate, Mr. Timothy T. Richards, the opportunity to serve on the Board. Dr. Bottomley’s resignation was not the result of any disagreement with the Company, its management or its operations, policies or practices.

(3)

Under our Non-Employee Director Compensation Plan, Dr. Bottomley elected to receive 9,539 shares of our common stock in lieu cash fees totaling $11,667.

(4)

Includes the grant date fair value of Dr. Bottomley’s stock option grant following our 2013 Annual Meeting of Stockholders, which entitles him to purchase 20,000 shares of our common stock at an exercise price of $1.12 per share. Also includes the grant date fair value of a stock option to purchase 125,000 shares of our common stock at an exercise price of $1.75 per share, which option was awarded to Dr. Bottomley in December 2013.

(5)

We previously entered into consulting agreements with Dr. Bottomley as of May 1, 2009 and May 1, 2011, respectively. Both consulting agreements had two-year terms and provided for a consulting fee to Dr. Bottomley of $5,000 per month. In providing Dr. Bottomley’s compensation in prior filings with the SEC, we disclosed the compensation payable to Dr. Bottomley according to the terms of his consulting agreements. However, commencing September 2010 and continuing through April 2013, we accrued Dr. Bottomley’s monthly consulting fees but we did not pay those amounts to Dr. Bottomley. In total, we accrued consulting fees otherwise payable to Dr. Bottomley of $160,000. Subsequent to the expiration of his consulting agreement in April 2013, Dr. Bottomley agreed to accept the sum of $60,000, payable in 12 equal monthly installments, in full satisfaction of the accrued but unpaid amounts otherwise owed to him under his consulting agreements. We made the first monthly payment to Dr. Bottomley under that arrangement in October 2013.

(6)

Mr. Conway resigned as a director of the Company as of April 12, 2013. Mr. Conway elected to step down from our Board simply to give another qualified director candidate, Dr. Philip A. Pizzo, the opportunity to serve on the Board. Mr. Conway’s resignation was not the result of any disagreement with the Company, its management or its operations, policies or practices.

(7)

Under our Non-Employee Director Compensation Plan, Mr. Koob elected to receive 21,690 shares of our common stock in lieu cash fees totaling $26,500.

 

 
19

 

 

(8)

Represents the grant date fair value of a stock option grant following our 2013 Annual Meeting of Stockholders, which entitles the director to purchase 20,000 shares of our common stock at an exercise price of $1.12 per share.

(9)

Dr. Malernee resigned as a director of the Company as of December 31, 2013. Dr. Malernee elected to step down from our Board simply to give another qualified director candidate, Ms. Maria Sainz, the opportunity to serve on the Board. Dr. Malernee’s resignation was not the result of any disagreement with the Company, its management or its operations, policies or practices.

(10)

Under our Non-Employee Director Compensation Plan, Dr. Malernee elected to receive 13,063 shares of our common stock in lieu cash fees totaling $16,000.

(11)

Under our Non-Employee Director Compensation Plan, Mr. Pietrangelo elected to receive 22,510 shares of our common stock in lieu cash fees totaling $27,500.

(12)

Dr. Pizzo joined the Board on April 12, 2013.

(13)

Under our Non-Employee Director Compensation Plan, Dr. Pizzo elected to receive 7,790 shares of our common stock in lieu cash fees totaling $9,938.

(14)

Includes the grant date fair value of Dr. Pizzo’s stock option grant following our 2013 Annual Meeting of Stockholders, which entitles him to purchase 20,000 shares of our common stock at an exercise price of $1.12 per share. Also includes the grant date fair value of a stock option to purchase 45,000 shares of our common stock at an exercise price of $1.09 per share, which option was granted to Dr. Pizzo when he became a director in April 2013.

(15)

Under our Non-Employee Director Compensation Plan, Mr. Rooke elected to receive 16,416 shares of our common stock in lieu cash fees totaling $20,000.

(16)

Under our Non-Employee Director Compensation Plan, Mr. Ryan elected to receive 9,539 shares of our common stock in lieu cash fees totaling $11,667.

(17)

Ms. Sainz joined the Board on January 1, 2014.

(18)

Under our Non-Employee Director Compensation Plan, Mr. Spencer elected to receive 13,912 shares of our common stock in lieu cash fees totaling $17,000.

(19)

Mr. Richards joined the Board on March 10, 2014.

 

 

PROPOSAL 2 — RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Has the Audit Committee selected our independent registered public accounting firm for 2014?

 

The Audit Committee has reappointed Cherry Bekaert LLP as our independent registered public accounting firm to audit and certify our financial statements for the fiscal year ending December 31, 2014.

 

Is stockholder approval required for the appointment of the independent registered public accounting firm for 2014?

 

Stockholder ratification of the appointment of Cherry Bekaert LLP as our independent registered public accounting firm is not required by our bylaws or other governing documents. The Board is submitting the appointment of Cherry Bekaert LLP to our stockholders for ratification as a matter of good corporate governance. However, the Audit Committee is not bound by a vote either for or against the proposal. The Audit Committee will consider a vote against Cherry Bekaert LLP by our stockholders in selecting our independent registered public accounting firm in the future. Even if our stockholders do ratify the appointment, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it believes that such a change would be in the best interest of the Company and our stockholders.

 

Will representatives of Cherry Bekaert LLP attend the Annual Meeting?

 

Representatives of Cherry Bekaert LLP are not expected to be present at the Annual Meeting.

 

 
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What fees were paid to our independent registered public accounting firm in 2012 and 2013?

 

The following table shows the fees we paid or accrued for audit and other services provided by Cherry Bekaert LLP, our independent registered public accounting firm, for the years ended December 31, 2012 and 2013.

 

Year

 

Audit Fees(1)

   

Audit-Related Fees(2)

   

Tax Fees(3)

   

All Other Fees

   

Total Fees

 

2012

  $ 176,096       -       -       -     $ 176,096  

2013

  $ 134,500       -       -       -     $ 134,500  
  

(1)

“Audit Fees” consist of fees for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements. “Audit Fees” also include fees for services provided in connection with other statutory or regulatory filings or engagements, such as consents and review of documents filed with the SEC.

(2)

“Audit-Related Fees” consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported as “Audit Fees.”

(3)

“Tax Fees” consist of fees for professional services provided in connection with tax compliance, tax advice and tax planning, including tax return preparation.

 

How does the Audit Committee pre-approve services provided by the independent registered public accounting firm?

 

Applicable SEC rules require the Audit Committee to pre-approve audit and non-audit services provided by our independent registered public accounting firm. In 2010, our Audit Committee began pre-approving all services by our independent registered public accounting firm and has pre-approved all new services since that time, including, without limitation, all of the services referenced in the table above for 2012 and 2013. The Audit Committee does not delegate its responsibilities under the Exchange Act to our management. The Audit Committee has delegated to the Chairman of the Audit Committee the authority to grant pre-approvals of audit services of up to $25,000, provided that any such pre-approvals are required to be presented to the full Audit Committee at its next scheduled meeting.

 

How many votes are needed to ratify the appointment of our independent registered public accounting firm for 2014?

 

Approval of the proposal to ratify the appointment of Cherry Bekaert LLP requires the affirmative vote of a majority of the shares present and entitled to vote at the Annual Meeting (assuming a quorum of a majority of the outstanding shares of common stock is present). However, the Audit Committee is not bound by a vote either for or against the proposal.

 

What does the Board recommend?

 

THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF CHERRY BEKAERT LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2014.

 

 
21

 

  

Report of the Audit Committee of the Board(1)

 

The Audit Committee has obtained from the independent registered public accounting firm, Cherry Bekaert LLP, a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors’ independence, as required by Public Company Accounting Oversight Board, or “PCAOB,” Rule 3526, “Communication with Audit Committees Concerning Independence.” The Audit Committee also has discussed with the auditors any relationships that may affect their objectivity and independence, and it has considered the Company’s payment of fees to the auditors. The Audit Committee confirms that, based upon the foregoing, the registered public accounting firm is independent of the Company.

 

Management is responsible for: the preparation, presentation and integrity of the Company’s financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s financial statements in accordance with the standards of the PCAOB and to issue a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes.

 

In connection with these responsibilities, the Audit Committee met with management and the independent registered public accounting firm to review and discuss the audited financial statements, including a discussion of the quality and acceptability of the Company’s financial reporting and controls. The Audit Committee also discussed with the independent registered public accounting firm the matters required by Auditing Standard No. 16, “Communications with Audit Committees.”

 

Based upon the Audit Committee’s discussions with management and the independent registered public accounting firm and the Audit Committee’s review of the representations of management and the independent registered public accounting firm, subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the charter of the Audit Committee, the Audit Committee recommended that the Company’s Board include the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC. The Audit Committee has also recommended the reappointment of the independent registered public accounting firm, Cherry Bekaert LLP.

 

 

Audit Committee

 

John N. Spencer, Jr., Chairman 

 

Michael A. Pietrangelo 

 

Charles E. Koob 

 

 

(1)

The Report of the Audit Committee set forth in this Proxy Statement shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act. In addition, it shall not be deemed incorporated by reference by any statement that incorporates this Proxy Statement by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference.

 

 
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 EXECUTIVE OFFICERS

Our executive officers are elected annually by our Board of Directors and hold office until their successors are elected and duly qualified. The current executive officers of the Company are as follows:

 

Executive Officers

 

Age

 

Position(s)

Kimble L. Jenkins

 

52

 

Chief Executive Officer, President and Chairman of the Board of Directors

David W. Carlson

 

50

 

Chief Financial Officer

Peter G. Piferi

 

54

 

Chief Operating Officer

Robert C. Korn

 

48

 

Vice President, Global Sales & Marketing

Oscar L. Thomas

 

43

 

Vice President, Business Affairs and Secretary

 

Biographical information about Mr. Jenkins is provided in “Proposal No. 1 — Election of Directors.”

 

David W. Carlson joined us in February 2010 as Vice President, Finance and was promoted to Chief Financial Officer in April 2010. Mr. Carlson has 19 years of experience in financial leadership roles in the medical device industry. From 1999 to 2009, he served in various financial management positions as a Vice President of Finance and Senior Finance Director at Medtronic, Inc., a global leader in medical technologies. In these positions at Medtronic, he served as controller for the Spinal business, oversaw all financial and administrative functions of the Spinal business’ sales organization and also served in a role focused on optimizing global financial processes. Mr. Carlson was serving as the Corporate Controller of Sofamor Danek, Inc., a then publicly traded medical device company, when it was acquired by Medtronic, Inc. in 1999. Mr. Carlson is a certified public accountant, and was formerly an auditor for PricewaterhouseCoopers LLP.

 

Peter G. Piferi joined us in December 2006 as Chief Operating Officer. Mr. Piferi has over 20 years of experience in the areas of product development, operations, engineering and production in the medical device industry. From March 2003 to December 2006, Mr. Piferi served as Vice President, Endovascular Technologies for Edwards Lifesciences Corporation. In addition, Mr. Piferi has served as Vice President at Kriton Medical Inc. and Orbus Medical Technologies, Inc., and as Director of Advanced Engineering at Cordis Corporation.

 

Robert C. Korn joined us in November 2012 as Vice President, Global Sales & Marketing. Mr. Korn has over 20 years of experience in the health care industry focused in the medical device sales and marketing business. During his career, Mr. Korn gained experience in developing and implementing sales and marketing strategies for both Fortune 500 and startup companies. From May 2005 to November 2012, Mr. Korn served as a Regional Sales Director with Medtronic Surgical Technologies, the neurosurgery, ear, nose and throat (ENT) and advanced energy business of Medtronic, Inc. In that position, Mr. Korn managed a sales and clinical support team in the Midwest, and he was responsible for revenues in excess of $30 million per year. While at Medtronic, Mr. Korn also worked extensively on business development and acquisition opportunities. In 2010, Mr. Korn was named to the Medtronic Corporate Neuroscience Advisory Team. Prior to joining Medtronic, from April 2004 to April 2005, Mr. Korn served as Senior Vice President for Vassol, Inc., a private company, where he was responsible for the company’s sales and marketing functions. Prior to Vassol, Mr. Korn held various sales leadership positions with Codman, a Johnson & Johnson company, and he also held multiple sales and marketing positions with the Bayer Corporation’s Diagnostics Division.

 

Oscar L. Thomas joined us in April 2008 as Vice President, Business Affairs. In addition, Mr. Thomas serves as our Secretary. From January 2003 to April 2008, Mr. Thomas was a partner in the Corporate and Securities Practice Group of the law firm Bass, Berry & Sims PLC. Mr. Thomas spent 12 years in private practice representing clients in a broad range of transactions, including licensing transactions, development collaborations, joint ventures, merger and acquisition transactions, and debt and equity financings.

 

 
23

 

 

Executive Compensation

 

Summary Compensation Table

 

The following table shows the compensation awarded or paid to, or earned by, our Chief Executive Officer and our two other most highly compensated executive officers for the years ended December 31, 2013 and 2012. We refer to these executive officers as our “named executive officers.”

 

 

Name and Principal Position

 

Year

   

Salary

($)

   

Bonus

($)

   

Option

Awards

($)(1)

   

All Other

Compensation

($)(2)

   

Total

($)

 

Kimble L. Jenkins

 

2013

    $ 325,000     $ -     $ 58,888 (3)   $ 66,401 (4)   $ 450,289 (5)

Chief Executive Officer and President

 

2012

      325,000       -       265,320 (6)     33,188 (7)     623,508 (8)
                                                 

Peter G. Piferi

 

2013

      250,000       -       48,496 (9)     43,237 (10)     341,733 (11)

Chief Operating Officer

 

2012

      250,000       -       223,960 (12)     21,948 (13)     495,908 (14)
                                                 

Robert C. Korn

 

2013

      220,000       63,000 (15)     69,300 (16)     9,926       362,226 (17)

Vice President, Global Sales & Marketing

 

2012

      30,885       13,500 (18)     213,180 (19)     -       257,565 (20)

  


(1)

These amounts do not represent cash compensation paid to the named individual. These non-cash amounts represent only the aggregate grant date fair value of the option awards as computed in accordance with ASC Topic 718. For a discussion of the assumptions made in the valuation of the awards, see the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Significant Judgments and Estimates–Share-based Compensation” and note 2 to the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013.

(2)

Until otherwise noted, these amounts consist of the group medical, life and disability premiums that we paid.

(3)

Does not represent cash compensation. Represents only the grant date fair value in accordance with ASC Topic 718 of an option to purchase 85,000 shares of our common stock issued to Mr. Jenkins with an exercise price of $1.51 per share.

(4)

Of this amount, $56,875 represents payment of the remaining amount owed from the temporary salary reduction previously taken by Mr. Jenkins to conserve cash for our operations (also see note 7 below).

(5)

Of this amount, the cash compensation paid to Mr. Jenkins totaled only $381,875.

(6)

Does not represent cash compensation. Represents only the aggregate grant date fair value in accordance with ASC Topic 718 of options to purchase an aggregate of 603,000 shares of our common stock issued to Mr. Jenkins with an exercise price of $1.00 per share.

(7)

Of this amount, $24,375 represents payment of a portion of the amount owed from the temporary salary reduction previously taken by Mr. Jenkins to conserve cash for our operations.

(8)

Of this amount, the cash compensation paid to Mr. Jenkins totaled only $349,375.

(9)

Does not represent cash compensation. Represents only the grant date fair value in accordance with ASC Topic 718 of an option to purchase 70,000 shares of our common stock issued to Mr. Piferi with an exercise price of $1.51 per share.

(10)

Of this amount, $42,708 represents payment of the remaining amount owed from the temporary salary reduction previously taken by Mr. Piferi to conserve cash for our operations (also see note 13 below).

(11)

Of this amount, the cash compensation paid to Mr. Piferi totaled only $292,708.

(12)

Does not represent cash compensation. Represents only the aggregate grant date fair value in accordance with ASC Topic 718 of options to purchase an aggregate of 509,000 shares of our common stock issued to Mr. Piferi with an exercise price of $1.00 per share.

(13)

Of this amount, $17,708 represents payment of a portion of the amount owed from the temporary salary reduction previously taken by Mr. Piferi to conserve cash for our operations.

(14)

Of this amount, the cash compensation paid to Mr. Piferi totaled only $267,708.

(15)

Represents amounts paid pursuant to Mr. Korn’s sales incentive plan.

 

 
24

 

 

(16)

Does not represent cash compensation. Represents only the grant date fair value in accordance with ASC Topic 718 of an option to purchase 100,000 shares of our common stock issued to Mr. Korn with an exercise price of $1.51 per share.

(17)

Of this amount, the cash compensation paid to Mr. Korn totaled only $283,000.

(18)

Represents a signing bonus of $13,500 paid pursuant to Mr. Korn’s employment agreement.

(19)

Does not represent cash compensation. Represents only the aggregate grant date fair value in accordance with ASC Topic 718 of options to purchase an aggregate of 300,000 shares of our common stock issued to Mr. Korn with an exercise price of $1.63 per share.

(20)

Of this amount, the cash compensation paid to Mr. Korn totaled only $44,385.

 

Outstanding Equity Awards at December 31, 2013

 

The table below sets forth information regarding the outstanding equity awards held by our named executive officers at December 31, 2013.

 

   

Option Awards

Name  

Number of
Securities
Underlying
Unexercised
Options

(#)
Exercisable

   

Number of
Securities
Underlying
Unexercised
Options

(#)
Unexercisable

   

Option
Exercise
Price

($)

 

Option
Expiration Date

Kimble L. Jenkins

    5,000 (1)     (1)     3.20  

March 28, 2017

      2,500 (2)     (2)     9.64  

September 16, 2018

      2,500 (3)     (3)     9.64  

November 8, 2018

      2,500 (4)     (4)     9.64  

December 10, 2019

      509,200 (5)     (5)     1.80  

December 13, 2020

      160,800 (6)     (6)     1.80  

December 13, 2020

      100,000 (7)     200,000 (7)     1.00  

April 13, 2022

      101,000 (7)     202,000 (7)     1.00  

April 13, 2022

      (8)     85,000 (8)     1.51  

November 5, 2023

Peter G. Piferi

    429,400 (5)     (5)     1.80  

December 13, 2020

      135,600 (6)     (6)     1.80  

December 13, 2020

      100,000 (7)     200,000 (7)     1.00  

April 13, 2022

      69,667 (7)     139,333 (7)     1.00  

April 13, 2022

      (8)     70,000 (8)     1.51  

November 5, 2023

Robert C. Korn

    50,000 (9)     100,000 (9)     1.63  

November 10, 2022

      50,000 (9)     100,000 (9)     1.63  

November 10, 2022

      (8)     100,000 (8)     1.51  

November 5, 2023

 


(1)

The vesting of shares subject to this option occurred on the date of grant, March 28, 2007.

(2)

The vesting of shares subject to this option occurred on the date of grant, September 16, 2008.

(3)

The vesting of shares subject to this option occurred on the first anniversary of the date of grant, November 8, 2009.

(4)

The vesting of shares subject to this option occurred on April 22, 2010, which was the day immediately preceding the 2010 Annual Meeting of Stockholders.

(5)

One-third of the shares subject to this option vested on the first anniversary of the grant date, December 13, 2011. An additional one-third of the shares vested on the second anniversary of the grant date, December 13, 2012. The remaining shares subject to this option vested on the third anniversary of the grant date, December 13, 2013.

(6)

One-third of the shares subject to this option vested on July 3, 2012, which is the date we achieved a “target equity financing,” defined as one or more equity financing transactions that result in cumulative gross proceeds of at least $10 million. An additional one-third of the shares vested on the second anniversary of the option grant date, December 13, 2012. The remaining shares subject to this option vested on the third anniversary of the grant date, December 13, 2013.

 

 
25

 

 

(7)

One-third of the shares subject to this option vested on the first anniversary of the grant date, April 13, 2013. An additional one-third of the shares will vest on the second anniversary of the grant date, April 13, 2014. The remaining shares subject to this option vest on the third anniversary of the grant date, April 13, 2015.

(8)

The shares subject to this option vest ratably on the first, second and third anniversaries of the option grant date, November 5, 2014, November 5, 2015 and November 5, 2016.

(9)

One-third of the shares subject to this option vested on the first anniversary of the grant date, November 10, 2013. An additional one-third of the shares will vest on the second anniversary of the grant date, November 10, 2014. The remaining shares subject to this option vest on the third anniversary of the grant date, November 10, 2015.

 

Option Exercises

 

None of our named executive officers exercised stock options in 2013.

 

Potential Payments Upon Termination or Change in Control

 

Employment Agreements with Named Executive Officers

 

In June 2012, we entered into employment agreements with Messrs. Jenkins and Piferi. In November 2012, we entered into an employment agreement with Mr. Korn. The material terms of those employment agreements are summarized below.

 

Term. Under each of the employment agreements, the employment of the named executive officer may be terminated by either party upon written notice to the other party.      

 

Compensation. The base salaries of our named executive officers, as of March 31, 2014, were as follows:

 

Named Executive Officer

 

Base Salary(1)

   

Bonus

 

Kimble L. Jenkins

  $ 325,000     (2)  

Peter G. Piferi

  $ 250,000     (2)  

Robert C. Korn

  $ 220,000     (3)  

                


 

(1)

Each named executive officer’s salary is subject to adjustment at the discretion of the Compensation Committee, subject to certain limitations.

 

(2)

The individual is eligible for a cash bonus in an amount and upon terms and conditions determined by the Compensation Committee.

 

(3)

Mr. Korn is eligible for additional cash compensation under a sales incentive plan, which is targeted to yield an annual payout of at least $100,000 for reaching targeted sales levels. The actual payout under Mr. Korn’s sales incentive plan may be more or less than the targeted payout based on actual sales achieved.

 

In addition, each named executive officer is eligible for equity compensation in an amount and based upon goals and criteria determined by the Compensation Committee, provided that Mr. Korn’s employment agreement provides for scheduled option grants, with respect to an aggregate of 500,000 shares of our common stock, on the effective date of the agreement and on the first and second anniversaries of such effective date. Likewise, each named executive officer is entitled to participate in any benefit plan from time to time in effect for our executives and/or employees generally, subject to the eligibility provisions of that plan.

 

If we terminate the employment of Mr. Jenkins or Mr. Piferi without cause or if Mr. Jenkins or Mr. Piferi terminates his employment for good reason, as those terms are defined in each employment agreement, then he will be entitled to receive: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) an amount equal to his base salary in effect on the termination date; (iii) an amount equal to his average bonus for the previous two years, if any; (iv) $18,000; and (v) any unreimbursed business expenses to which he is entitled as of the termination date. In addition, if we terminate the employment of Mr. Jenkins or Mr. Piferi without cause or Mr. Jenkins or Mr. Piferi terminates his employment for good reason, any unvested stock options and restricted stock previously granted to him will become fully vested on the termination date and, in the case of stock options, will be exercisable until the earlier of three years after the termination date or the final expiration date provided for in the applicable award agreement.

 

 
26

 

 

If we terminate Mr. Korn’s employment without cause, then Mr. Korn will be entitled to receive: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) any unreimbursed business expenses to which he is entitled as of the termination date; and (iii) an amount equal to 25% of his base salary in effect on the termination date, which amount will be paid in six semi-monthly installments.

 

If we terminate the employment of a named executive officer with cause or if the named executive office terminates his employment voluntarily, as those terms are defined in each employment agreement, then the named executive officer will receive only: (i) any base salary and bonus compensation earned but unpaid as of the termination date; and (ii) any unreimbursed business expenses to which he is entitled as of the termination date.

 

Change in Control Payments. Upon a change of control involving a sale transaction, as those terms are defined in each employment agreement, any unvested stock options and restricted stock previously granted to the named executive officer will become fully vested. Upon a change of control involving a sale transaction, Messrs. Jenkins and Piferi will also receive a bonus in the following amount:

 

Named Executive Officer

 

Change of Control Sale Transaction Bonus

 

Kimble L. Jenkins

  $ 455,000  

Peter G. Piferi

  $ 350,000  

 

In addition, if we terminate the employment of Mr. Jenkins or Mr. Piferi without cause, or if Mr. Jenkins or Mr. Piferi terminates his employment for good reason, in either case within two months prior to or within 12 months following the sale transaction, then he will be entitled to receive a lump sum payment equal to: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) his COC Multiplier, which is set forth below, times his base salary in effect on the termination date; (iii) his COC Multiplier times the greater of the average of his highest two bonuses paid in the previous three years or his current year target bonus, if any; (iv) $18,000; and (v) any unreimbursed business expenses to which he is entitled as of the termination date.

 

The COC Multiplier for Messrs. Jenkins and Piferi is based on the value of the sale transaction and is determined as follows:

 

Value of Sale Transaction

 

COC Multiplier

 
Less than $30,000,000   0  
30,000,000 - 49,999,999   0.5  
50,000,000 - 69,999,999   0.75  
70,000,000 - 89,999,999   1.0  
90,000,000 - 109,999,999   1.25  
$110,000,000 or more   1.5  

 

If we terminate Mr. Korn’s employment without cause, or if Mr. Korn terminates his employment for good reason, in either case within two months prior to or within six months following the sale transaction, then he will be entitled to receive a lump sum payment equal to: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) his COC Multiplier, which is set forth below, times his base salary in effect on the termination date; (iii) $18,000; and (iv) any unreimbursed business expenses to which he is entitled as of the termination date.

 

 
27

 

 

 

Mr. Korn’s COC Multiplier is based on the value of the sale transaction and is determined as follows:

 

Value of Sale Transaction

 

COC Multiplier

 
Less than $60,000,000   0  

$60,000,000

- $99,999,999   0.5  

$100,000,000

- $139,999,999   0.75  

$140,000,000

- $179,999,999   1.0  

$180,000,000

- $219,999,999   1.25  
$220,000,000 or more   1.5  

 

Upon a change of control not involving a sale transaction, any unvested stock options and restricted stock previously granted to the named executive officer will become fully vested. In addition, if we terminate the employment of Mr. Jenkins or Mr. Piferi without cause, or if Mr. Jenkins or Mr. Piferi terminates his employment for good reason, in either case within two months prior to or within 12 months following the change of control, then he will be entitled to receive a lump sum payment equal to: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) two times his base salary in effect on the termination date; (iii) two times the greater of the average of his two highest bonuses paid in the previous three years or his current year target bonus, if any; (iv) $18,000; and (v) any unreimbursed business expenses to which he is entitled as of the termination date. Likewise, if we terminate Mr. Korn’s employment without cause, or if Mr. Korn terminates his employment for good reason, in either case within two months prior to or within six months following the change of control, then he will be entitled to receive a lump sum payment equal to: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) 50% of his base salary in effect on the termination date; (iii) $18,000; and (iv) any unreimbursed business expenses to which he is entitled as of the termination date.

 

For purposes of these benefits, a change of control is deemed to occur, in general, if there is: (1) a change in our ownership; (2) a change in our effective control; or (3) a change in the ownership of a substantial portion of our assets. For purposes of this definition, a change in our ownership will occur on the date on which any one person, or more than one person acting as a group, acquires ownership of our stock that, together with stock already held by such person or group, constitutes more than 50% of the total fair market value or total voting power of our stock. A change in our effective control will occur on the date on which either (i) a person, or more than one person acting as a group, acquires ownership of our stock possessing 30% or more of the total voting power of our stock, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of our Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of our Board prior to the date of the appointment or election. A change in the ownership of a substantial portion of our assets will occur on the date on which any one person, or more than one person acting as a group, other than a person or group of persons that is related to us, acquires assets from us that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of our assets immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.

 

Non-Competition; Non-Solicitation; Confidentiality; Assignment of Inventions

 

In connection with their employment agreements, each of the named executive officers also entered into a confidentiality agreement and non-compete agreement, which agreements impose on the named executive officer customary restrictive covenants prohibiting the disclosure of our confidential information, requiring the named executive officer to assign to the Company any invention discovered in the scope of his employment, prohibiting him from competing with us during the term of his employment and for one year following the termination of his employment, and prohibiting him from soliciting our employees, consultants and contractors during the term of his employment and for two years following the termination of his employment.

 

 
28

 

 

EQUITY COMPENSATION PLAN INFORMATION

 

Plan Category

 

Number of securities to be issued upon exercise of outstanding options, warrants and rights

   

Weighted-average exercise price of outstanding options, warrants and rights

   

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

 
                   
   

(a)

   

(b)

   

(c)

 

Equity compensation plans approved by stockholders (1)

    4,709,225     $ 1.29       300,500  
                         

Equity compensation plans not approved by stockholders (1)(2)(3)(4)(5)

    2,721,000     $ 1.79       570,000  
                         

Total

    7,430,225     $ 1.47       870,500  

 

(1)

The information presented in this table is as of December 31, 2013.

 

(2)

We adopted our 2010 Non-Qualified Stock Option Plan in December 2010. The plan provided for the issuance of non-qualified stock options to purchase up to 2,565,675 shares of our common stock. We ceased making awards under the plan upon the adoption of our 2012 Incentive Compensation Plan. As of December 31, 2013, options to purchase 2,371,000 shares of our common stock were outstanding under the 2010 Non-Qualified Stock Option Plan.

 

(3)

In November 2012, we entered into a written compensatory contract with Robert C. Korn, our Vice President, Global Sales & Marketing, pursuant to which we awarded Mr. Korn a non-qualified stock option to purchase 150,000 shares of our common stock.

 

(4)

In December 2013, we entered into written compensatory contracts with an employee and a non-employee director pursuant to which we awarded those individuals non-qualified stock options to purchase 75,000 shares and 125,000 shares, respectively, of our common stock.

 

(5)

We adopted our 2013 Non-Employee Director Equity Incentive Plan in December 2013. The plan provides for the issuance of awards with respect to an aggregate of 570,000 shares of our common stock. As of December 31, 2013, no awards had been made under the 2013 Non-Employee Director Equity Incentive Plan.

 

 

BENEFIT PLANS

 

1998 Stock Option Plan

 

We adopted the 1998 Stock Option Plan on June 24, 1998 to enable us to attract, retain and motivate our officers, directors, employees and consultants. Of the 375,000 shares of common stock that were eligible for issuance pursuant to awards made under this plan, 125,000 shares were subject to outstanding options as of March 31, 2014. As of such date, the outstanding options had a weighted average exercise price of $0.90 per share and had expiration dates of April 12, 2014 and October 21, 2014. We terminated this plan, effective June 24, 2008, with respect to future grants such that no new options may be awarded under the plan.

 

2007 Stock Incentive Plan

 

We adopted the 2007 Stock Incentive Plan on March 28, 2007 to enable us to attract, retain and motivate our officers, directors, employees and consultants. Of the 625,000 shares of common stock that were eligible for issuance pursuant to awards made under this plan, 93,625 shares were subject to options outstanding as of March 31, 2014. As of such date, the outstanding options had a weighted average exercise price of $6.04 per share and had expiration dates ranging from March 28, 2017 to December 10, 2019. Although this plan remains in effect and options under the plan remain outstanding, we ceased making awards under the plan upon the adoption of our 2010 Incentive Compensation Plan.

 

 
29

 

 

2010 Equity Plans

 

We adopted our 2010 Incentive Compensation Plan on April 23, 2010, and we adopted our 2010 Non-Qualified Stock Option Plan on December 13, 2010. The principal purpose of both plans was to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards. Of the 1,250,000 shares of common stock that were eligible for issuance pursuant to awards made under the 2010 Incentive Compensation Plan, 449,450 shares were subject to options outstanding as of March 31, 2014. As of such date, the outstanding options had an exercise price of $1.80 per share and an expiration date of December 13, 2020. Of the 2,565,675 shares of common stock that were eligible for issuance pursuant to awards made under the 2010 Non-Qualified Stock Option Plan, 2,371,000 shares were subject to options outstanding March 31, 2014. As of such date, the outstanding options had an exercise price of $1.80 per share and an expiration date of December 13, 2020. Although these plans remain in effect and options under the plans remain outstanding, we ceased making awards under these plans upon the adoption of our 2012 Incentive Compensation Plan.

 

2012 Incentive Compensation Plan

 

We adopted our 2012 Incentive Compensation Plan on February 10, 2012. The principal purpose of the plan was to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards. Of the 3,000,000 shares of common stock that were eligible for issuance pursuant to awards made under this plan, 2,916,650 shares were subject to options outstanding as of March 31, 2014. As of such date, the outstanding options had a weighted average exercise price of $1.04 per share and had expiration dates ranging from April 13, 2022 to May 30, 2023. Although this plan remains in effect and options under the plan remain outstanding, we ceased making awards under the plan upon stockholder approval of our 2013 Incentive Compensation Plan.

 

2013 Incentive Compensation Plan

 

The Board adopted our 2013 Incentive Compensation Plan, or the “2013 Plan,” in March 2013 and our stockholders approved the 2013 Plan at the 2013 Annual Meeting of Stockholders. The principal purpose of the 2013 Plan is to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards and cash-based performance bonus awards. The 2013 Plan is also designed to permit us to make cash-based awards and equity-based awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

 

Eligibility

 

Awards may be granted under the 2013 Plan to officers, directors (including non-employee directors) and other employees of the Company or any of our subsidiaries or other affiliates, and to any individual who is an advisor, consultant or other provider of services to us or any of our subsidiaries or other affiliates. Only our employees or those of any of our subsidiaries are eligible to receive incentive stock options.

 

Administration, Amendment and Termination

 

Our Compensation Committee has the power and authority to administer the 2013 Plan. The Compensation Committee has the authority to interpret the terms and intent of the 2013 Plan, determine eligibility for and terms of awards for participants and make all other determinations necessary or advisable for the administration of the 2013 Plan. To the extent permitted by law, our Compensation Committee may delegate authority under the 2013 Plan to our Chief Executive Officer or to our other executive officers under conditions and limitations the Compensation Committee may establish.

 

 
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The Compensation Committee may amend, suspend or terminate the 2013 Plan at any time with respect to any shares of common stock as to which awards have not been made. However, no amendment may be made without the approval of the Company’s stockholders if the amendment would increase the total number of shares reserved for the purposes of the 2013 Plan or change the maximum number of shares for which awards may be granted to any participant (which does not include adjustments made by the Compensation Committee in the event of certain changes in our capitalization, as described below).

 

Awards

 

Awards under the 2013 Plan may be made in the form of: options; stock appreciation rights; stock awards; restricted share units; cash bonuses; or other incentive awards granted under the 2013 Plan; whether singly, in combination, or in tandem. Any of the foregoing awards may be made subject to attainment of performance goals over any applicable performance period.

 

Shares Subject to the Plan 

 

The aggregate number of shares of our common stock that may be issued initially pursuant to awards under the 2013 Plan is 1,250,000 shares. The maximum number of shares that may be issued pursuant to the exercise of incentive stock options under the 2013 Plan is 1,250,000 shares. Shares issued under the 2013 Plan may be authorized but unissued shares or treasury shares. Any shares covered by an award, or portion of an award, granted under the 2013 Plan that is forfeited or canceled or expires will be deemed not to have been issued for purposes of determining the maximum number of shares available for issuance under the plan. Of the 1,250,000 shares of common stock that are eligible for issuance pursuant to awards made under the 2013 Plan, 949,500 shares of common stock were subject to options outstanding as of March 31, 2014. As of such date, the outstanding options had a weighted average exercise price of $1.38 per share and had expiration dates ranging from April 12, 2023 to November 5, 2023. No awards other than options were outstanding under the 2013 Plan as of March 31, 2014.

 

Adjustment of Shares Subject to 2013 Plan

 

In the event of certain changes in our capitalization, the Compensation Committee will adjust, among other award terms, the number and kind of shares or property that may be delivered in connection with awards and the exercise price, grant price or purchase price relating to any award in such manner as the Compensation Committee determines to be necessary to prevent dilution or enlargement of the rights of participants.

 

Effect of Change of Control

 

Upon the occurrence of a change of control, the Compensation Committee may:

 

 

accelerate, vest or cause the restrictions to lapse with respect to all or any portion of an award under the 2013 Plan;

 

 

cancel such awards for fair value (as determined by the Compensation Committee);

 

 

provide for the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards previously granted under the 2013 Plan, as determined by the Compensation Committee; or

 

 

provide that for a period of at least 10 days prior to the change of control, option awards will be exercisable as to all shares of common stock subject thereto and that upon the occurrence of the change of control, such awards will terminate and be of no further force or effect.

 

 
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Corporate Performance Objectives

 

Section 162(m) of the Code limits public companies to an annual deduction for federal income tax purposes of $1,000,000 for compensation paid to their Chief Executive Officer and, based on recent IRS interpretation, the three most highly compensated executive officers determined at the end of each year. Performance-based compensation is excluded from this limitation. The 2013 Plan is designed to permit the Compensation Committee to grant awards that qualify as performance-based compensation for purposes of satisfying the conditions of Section 162(m).

 

2013 Non-Employee Director Equity Incentive Plan

 

The Board adopted our 2013 Non-Employee Director Equity Incentive Plan, or the “Director Equity Plan,” in December 2013. The principal purpose of the Director Equity Plan is to aid the Company in recruiting, retaining and motivating non-employee directors of outstanding ability through the granting of stock-based awards.

 

Eligibility

 

Only our non-employee directors are eligible to receive awards under the Director Equity Plan.

 

Administration, Amendment and Termination

 

Our Compensation Committee has the power and authority to administer the Director Equity Plan. The Compensation Committee has the authority to interpret the terms and intent of the plan, determine the terms of awards for participants and make all other determinations necessary or advisable for the administration of the plan. The Compensation Committee may amend, suspend or terminate the Director Equity Plan at any time with respect to any shares of common stock as to which awards have not been made.

 

Awards

 

Awards under the Director Equity Plan may be made in the form of: options; stock appreciation rights; stock awards; or restricted share units; whether singly, in combination, or in tandem.

 

Shares Subject to the Plan 

 

The aggregate number of shares of our common stock that may be issued initially pursuant to awards under the Director Equity Plan is 570,000 shares. Shares issued under the Director Equity Plan may be authorized but unissued shares or treasury shares. Any shares covered by an award, or portion of an award, granted under the Director Equity Plan that is forfeited or canceled or expires will be deemed not to have been issued for purposes of determining the maximum number of shares available for issuance under the plan. Of the 570,000 shares of common stock that are eligible for issuance pursuant to awards made under the Director Equity Plan, 90,000 shares of common stock were subject to options outstanding as of March 31, 2014. As of such date, the outstanding options had a weighted average exercise price of $1.40 per share and had expiration dates of January 1, 2024 and March 10, 2024. No awards other than options were outstanding under the Director Equity Plan as of March 31, 2014.

 

Adjustment of Shares Subject to the Plan

 

In the event of certain changes in our capitalization, the Compensation Committee will adjust, among other award terms, the number and kind of shares or property that may be delivered in connection with awards and the exercise price, grant price or purchase price relating to any award in such manner as the Compensation Committee determines to be necessary to prevent dilution or enlargement of the rights of participants.

 

 
32

 

 

Effect of Change of Control

 

Upon the occurrence of a change of control, the Compensation Committee may:

 

 

accelerate, vest or cause the restrictions to lapse with respect to all or any portion of an award under the Director Equity Plan;

 

 

cancel such awards for fair value (as determined by the Compensation Committee);

 

 

provide for the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards previously granted under the Director Equity Plan, as determined by the Compensation Committee; or

 

 

provide that for a period of at least 10 days prior to the change of control, option awards will be exercisable as to all shares of common stock subject thereto and that upon the occurrence of the change of control, such awards will terminate and be of no further force or effect.

 

Key Personnel Incentive Program

 

We adopted Key Personnel Incentive Program, or the “KPIP,” to provide a consultant and an employee, who at the time of adoption of the KPIP were key to our development and licensing activities, with the opportunity to receive incentive bonus payments upon a consummation of a sale transaction, as defined in the KPIP. The Compensation Committee is responsible for administering the program, and the only participants in the program are Paul A. Bottomley and Parag Karmarkar. The program will terminate on the earlier of December 31, 2025 or the occurrence of a sale transaction.

 

In the event of a sale transaction, each of the participants will be entitled to receive a bonus payment under the program as of the date of the transaction. Mr. Karmarkar would receive a bonus equal to $1,000,000. Dr. Bottomley would receive a bonus equal to (i) $1,000,000, plus (ii) 1.4% of the amount by which the “net proceeds” from the sale transaction exceed $50,000,000, but not to exceed $700,000. For purposes of the KPIP, the “net proceeds” from a sale transaction will be the portion of the aggregate cash and non-cash consideration paid or payable in connection with the consummation of the sale transaction that is distributed, or otherwise available for distribution, to holders of our common stock.

 

Cardiac EP Business Participation Plan

 

In June 2010, we adopted the Cardiac EP Business Participation Plan, or the “EP Participation Plan,” to enable us to provide a key product development advisor and consultant with financial rewards in the event we sell our business operations relating to catheter-based MRI-guided cardiac ablation to treat cardiac arrhythmias, which we refer to as our cardiac EP business operations. The cardiac EP business operations include our operations relating to our ClearTrace system for MRI-guided cardiac ablation to treat cardiac arrhythmias, which system remains under development, but it does not include our operations relating to our ClearPoint system or any other product or product candidate. The sole participant in the EP Participation Plan is Dr. Nassir F. Marrouche.

 

In the event we sell our cardiac EP business operations, whether on a stand-alone basis or as part of the sale of our entire company, the participant will receive a payment under the EP Participation Plan equal to (i) the transaction value paid for or allocated to the cardiac EP business operations in the sale, multiplied by (ii) the participant’s “participation interest” at the time of the sale. The participant was initially awarded a participation interest of 6.6%. Pursuant to the terms of the EP Participation Plan, that percentage interest is equitably reduced from time to time to take into account equity financing transactions in which we issue shares of our common stock or securities convertible into shares of our common stock in exchange for cash proceeds. As of March 31, 2014, the participant’s participation interest was 3.1%. The plan will terminate on June 2, 2025.

 

401(k) Plan

 

We offer a 401(k) plan pursuant to Section 401(k) of the Code. All full-time United States employees are eligible to participate in the plan. The plan permits pretax contributions by participants not to exceed annual amounts allowable under the Code. Participants are fully vested in their contributions.

 

 
33

 

 

Certain relationships and related Transactions

 

Policies and Procedures for Related Person Transactions

 

We adopted a related person transactions policy, pursuant to which our executive officers, directors and principal stockholders, including their immediate family members, are not permitted to enter into a related person transaction with us without the consent of our Audit Committee. Any request for us to enter into a transaction with an executive officer, director, principal stockholder or any of such persons’ immediate family members, other than a transaction available to all employees generally or involving less than $5,000 when aggregated with similar transactions, must be presented to our Audit Committee for review, consideration and approval, unless the transaction involves an employment or other compensatory arrangement approved by our Compensation Committee. All of our directors, executive officers and employees are required to report to our Audit Committee any such related person transaction. In approving or rejecting the proposed agreement, our Audit Committee will take into account, among other factors it deems appropriate, whether the proposed related person transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, the extent of the person’s interest in the transaction and, if applicable, the impact on a director’s independence. After consideration of these and other factors, the Audit Committee may approve or reject the transaction. Consistent with the policy, if we should discover related person transactions that have not been approved, the Audit Committee will be notified and will determine the appropriate action, including ratification, rescission or amendment of the transaction.

 

Related Person Transactions

 

The following is a description of transactions since January 1, 2012 to which we have been a party, in which the amount involved in the transaction exceeds $67,000, which is 1% of the average of our total assets at year-end for our last two completed fiscal years, and in which any of our executive officers, directors and principal stockholders, including their immediate family members, had or will have a direct or indirect material interest.

 

On May 9, 2012, we issued an aggregate of 1,250,000 warrants to two non-employee directors, Bruce C. Conway and Andrew K. Rooke, in recognition of their long-standing support of the company.  The warrants were fully vested and exercisable upon issuance, have an exercise price of $1.00 per share and have a term of five years.

 

 In July 2012, we entered into securities purchase agreements with certain investors for the sale of shares of our common stock and warrants to purchase shares of our common stock in a private placement offering.  In the offering, we sold to the investors 5,454,523 shares of common stock, together with warrants to purchase 2,727,274 shares of common stock, for aggregate gross proceeds of $6.0 million. The warrants were fully vested and exercisable upon issuance, have a term of five years from the date of issuance and had an original exercise price of $1.45 per share. As a result of our January 2013 financing, described below, the exercise price of the warrants has been adjusted to $1.41 per share.  Four of our non-employee directors, Bruce C. Conway, James K. Malernee, Jr., Michael A. Pietrangelo and John N. Spencer, Jr., invested $269,980 in the offering and acquired, in the aggregate, 245,435 shares of our common stock and warrants to purchase 122,718 shares of our common stock.

 

In January 2013, we entered into a securities purchase agreement with certain investors for the sale of shares of our common stock and warrants to purchase shares of our common stock in a private placement offering.  In the offering, we sold to the investors 9,201,684 shares of common stock, together with warrants to purchase 4,600,842 shares of common stock, for aggregate gross proceeds of $11.0 million. The warrants were fully vested and exercisable upon issuance, have a term of five years from the date of issuance and have an exercise price of $1.75 per share. Four of our non-employee directors, Bruce C. Conway, James K. Malernee, Jr., Michael A. Pietrangelo and John N. Spencer, Jr., invested $402,000 in the offering and acquired, in the aggregate, 335,000 shares of our common stock and warrants to purchase 167,500 shares of our common stock.

 

In March 2014, we entered into securities purchase agreements with certain investors for the sale of 12% second-priority, secured non-convertible promissory notes due 2019 and warrants to purchase shares of our common stock in a private placement offering. In the offering, we sold to the investors notes in an aggregate principal amount of $3,725,000, together with warrants to purchase 1,117,500 shares of common stock, for aggregate gross proceeds of $3,725,000. The warrants were fully vested and exercisable upon issuance, have a term of five years from the date of issuance and have an exercise price of $1.75 per share. One of our directors, Michael A. Pietrangelo, and a trust for which another of our directors, Andrew K. Rooke, serves as trustee, invested $1,100,000 in the offering and acquired notes in a total aggregate principal amount of $1,100,000 and warrants to purchase 330,000 shares of our common stock. 

 

 
34

 

 

 In addition to the foregoing disclosure, please see the terms of our Key Personnel Incentive Program, which are described above in the section entitled “Benefit Plans—Key Personnel Incentive Program” in this Proxy Statement.

 

Indemnification Agreements

 

In addition to the indemnification provided for in our certificate of incorporation and bylaws, we have entered into separate indemnification agreements with each of our directors and executive officers. These indemnification agreements may require us, among other things, to indemnify our directors and officers for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding arising out of his or her service as one of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides services at our request. We believe that these provisions and agreements are necessary to attract and retain qualified individuals to serve as directors and officers. There is no pending litigation or proceeding involving any of our directors or officers to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth information as of March 31, 2014 regarding the beneficial ownership of our common stock by:

 

 

each person, or group of affiliated persons, who is known by us to own beneficially five percent or more of our common stock;

 

 

each of our directors;

 

 

each of our named executive officers; and

 

 

all of our directors and executive officers as a group.

 

Percentage ownership calculations for beneficial ownership are based on 58,919,539 shares outstanding as of March 31, 2014.

 

Except as otherwise indicated below, the address of each beneficial owner of our common stock is c/o MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, TN 38103.

 

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options and warrants that are either immediately exercisable or exercisable within 60 days of March 31, 2014. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them.

 

 
35

 

 

Beneficial Owner

 

Number of
Shares Owned

   

% of Shares
Outstanding

 
                 

5% Stockholders

               

Bruce C. Conway

    4,200,094 (1)     7.1  

5514 Wenonah Drive

               

Dallas, TX 75209

               
                 

Directors and Named Executive Officers

               

Kimble L. Jenkins

    2,086,469 (2)     3.5  

Charles E. Koob

    625,467 (3)     1.1  

Michael A. Pietrangelo

    710,284 (4)     1.2  

Philip A. Pizzo

    26,419 (5)     *  

Timothy T. Richards

    492        *  

Andrew K. Rooke

    6,671,710 (6)     11.1  

Michael J. Ryan

    46,259 (7)     *  

Maria Sainz

    3,010        *  

John N. Spencer, Jr.

    169,672 (8)     *  

Robert C. Korn

    100,000 (9)      *  

Peter G. Piferi

    993,619 (10)     1.7  

All directors and executive officers as a group (13 persons)

    12,910,638 (11)     20.1  

 


*

Represents beneficial ownership of less than 1% of our outstanding common stock.

 

(1)

Based on a Schedule 13D filed by Mr. Conway with the SEC on May 9, 2012. Includes 32,891 shares jointly held with his spouse, 260,000 shares held solely by his spouse, 350,000 shares that Mr. Conway has the right to acquire through the exercise of warrants, 45,000 shares that Mr. Conway has the right to acquire through the exercise of options and 1,410,000 shares in the aggregate owned by the Alden M. Conway Trust, the Chase T. Conway Trust, the Merritt Elizabeth Conway Trust, the Edna N. Conway Irrevocable Trust FBO Alden M. Conway, the Edna N. Conway Irrevocable Trust FBO Chase T. Conway, the Edna N. Conway Irrevocable Trust FBO Merritt Elizabeth Conway and the Conway Family GST Trust. Mr. Conway is the trustee of each of the aforementioned trusts and has voting and investment power of each trust’s shares, which are held in trust for the benefit of members of his family. Also includes 90,000 shares in the aggregate owned by the Gordon McShane Trust for Alden M. Conway, the Gordon McShane Trust for Chase T. Conway and the Gordon McShane Trust for Merritt E. Conway. Mr. Conway’s spouse serves as trustee for each such trust and has voting and investment power of each trust’s shares, which are held in trust for the benefit of Mr. Conway’s children. Also includes 30,000 shares owned by the BCC Life Insurance Trust, which shares are held in trust for the benefit of Mr. Conway’s children. A third party serves as trustee for such trust.

(2)

Includes 1,084,500 shares that Mr. Jenkins has the right to acquire through the exercise of options.

(3)

Includes 20,000 shares held jointly with his spouse and 88,750 shares that Mr. Koob has the right to acquire through the exercise of options.

(4)

Includes 137,500 shares that Mr. Pietrangelo has the right to acquire through the exercise of warrants and 80,000 shares that Mr. Pietrangelo has the right to acquire through the exercise of options.

(5)

Includes 11,419 shares held by a revocable trust for which Dr. Pizzo serves as co-trustee. Dr. Pizzo shares voting and investment power of the trust’s shares with his spouse. Also includes 15,000 shares that Dr. Pizzo has the right to acquire through the exercise of options.

(6)

Includes 500,000 shares owned by Payne Partners, LLC, 260,102 shares owned by Withington Foundation, 2,058,207 shares owned by Rooke Fiduciary Management, 1,000,000 shares that Mr. Rooke has the right to acquire through the exercise of warrants, 30,000 shares that Mr. Rooke has the right to acquire through the exercise of options and 300,000 shares that the Robert L. and Alice W. Rooke Trust, for which Mr. Rooke serves as trustee, has the right to acquire through the exercise of warrants. Mr. Rooke has voting and investment power over the shares owned by Payne Partners, LLC, Withington Foundation and Rooke Fiduciary Management, as well as any shares acquired by the Robert L. and Alice W. Rooke Trust through the exercise of warrants. Also includes 1,577,832 shares owned by 12 trusts established for the benefit of Mr. Rooke and his family members. Mr. Rooke is the trustee of each of those trusts and he has voting and investment power of each trust’s shares.

 

 
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(7)

Includes 30,000 shares that Mr. Ryan has the right to acquire through the exercise of options.

(8)

Includes 74,431 shares jointly held with his spouse, 1,500 shares held in his daughter’s IRA, 9,991 shares that Mr. Spencer and his spouse have the right to acquire through the exercise of warrants, and 80,000 shares that Mr. Spencer has the right to acquire through the exercise of options.

(9)

Includes 100,000 shares that Mr. Korn has the right to acquire through the exercise of options.

(10)

Includes 904,334 shares that Mr. Piferi has the right to acquire through the exercise of options.

(11)

Includes 2,818,309 shares owned by entities controlled by a director, 1,577,832 shares owned by trusts, 4,858,742 shares issuable upon the exercise of options and warrants held by directors and executive officers, and 300,000 shares issuable upon the exercise of warrants held by a trust.

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our directors and executive officers and the beneficial owners of greater than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the SEC. Directors and executive officers are required by SEC rules to furnish us with copies of these reports. With respect to the period from January 1, 2013 through December 31, 2013, we are not aware of any required Section 16(a) reports that were not filed on a timely basis, other than the Form 4 reports for the 2013 annual stock option grants on June 14, 2013, as provided by the terms of our Non-Employee Director Compensation Plan, to Drs. Bottomley, Malernee and Pizzo and Messrs. Koob, Pietrangelo, Rooke, Ryan and Spencer. Form 4 reports for such stock option grants were not filed until June 26, 2013.

 

Additionally, we are aware that the Form 4 report filed by Dr. Pizzo on October 1, 2013 reflected that Dr. Pizzo had acquired 2,634 shares of our common stock, rather than the 2,364 shares that Dr. Pizzo actually acquired. An amended Form 4 report was filed on October 3, 2013 to correct the inadvertent error.

 

Copies of the insider trading reports can be found at our corporate website at www.mriinterventions.com, on the “Investors” page, under the category “SEC Filings.” The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement.

 

 

Stockholder proposals for 2015 annual meeting

 

If you wish to submit a proposal to be included in our Proxy Statement for our 2015 Annual Meeting of Stockholders, proposals must be submitted by eligible stockholders who have complied with the relevant rules of the SEC and must be received no later than December 26, 2014. Stockholder proposals should be delivered to MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103, Attention: Secretary.

 

In addition, our bylaws contain an advance notice provision requiring that, if a stockholder’s proposal is to be brought before and considered at the 2015 Annual Meeting of Stockholders, such stockholder must provide timely written notice thereof to our Secretary. In order to be timely, the notice must be delivered to or mailed and received by our Secretary at our principal executive office not earlier than the close of business on December 26, 2014 and not later than the close of business on January 26, 2015; provided, however, that in the event the date of the 2015 Annual Meeting is more than 30 days before or more than 30 days after the anniversary of the 2014 Annual Meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to the date of such 2015 Annual Meeting and not later than the close of business on the later of the 60th day prior to the date of such 2015 Annual Meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made by us. In the event a stockholder proposal intended to be presented for action at the 2015 Annual Meeting is not received timely, then the persons designated as proxies in the proxies solicited by the Board in connection with the 2015 Annual Meeting will be permitted to use their discretionary voting authority with respect to the proposal, whether or not the proposal is discussed in the Proxy Statement for the 2015 Annual Meeting.

 

 
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Annual Report and Financial Information

 

A copy of our Annual Report on Form 10-K for the year ended December 31, 2013 and a list of all its exhibits will be supplied without charge to any stockholder upon written request sent to our principal executive office: MRI Interventions, Inc., One Commerce Square, Suite 2550, Memphis, Tennessee 38103, Attention: Investor Relations Department. Exhibits to the Annual Report on Form 10-K are available for a reasonable fee. You may also view our Annual Report on Form 10-K and its exhibits on-line at the SEC website at www.sec.gov, or at our website at www.mriinterventions.com. The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website into this Proxy Statement.

 

 

Other Business

 

Our Board knows of no matters other than those discussed in this Proxy Statement which will be presented at the 2014 Annual Meeting of Stockholders. However, if any other matters are properly brought before the meeting, any proxy given pursuant to this solicitation will be voted in accordance with the recommendations of management.

 

 

By Order of the Board, 

 

 

 

 

Oscar L. Thomas 

 

Vice President, Business Affairs and Secretary 

 

Memphis, Tennessee

April 25, 2014

 

 
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