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(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
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IRIDEX CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June18, 2024
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the annual meeting
of stockholders of IRIDEX Corporation, a Delaware corporation (the Company), will be held on June18, 2024 (the Annual
Meeting) at 9:00a.m., Pacific time, at the Companys principal executive offices located at 1212 Terra Bella Avenue,
Mountain View, California 94043, for the following purposes:
1.
To elect the five (5)directors named in the proxy statement to serve for the ensuing year or until their successors are elected
and qualified (ProposalOne);
2.
To ratify the appointment of BPM LLP as the Companys independent registered public accounting firm for fiscal year 2024 ending
December28, 2024 (ProposalTwo);
3.
To conduct an advisory vote to approve the compensation of the Companys named executive officers (ProposalThree);
and
4.
To transact such other business as may properly be brought before the meeting and any adjournment(s)or postponement(s)thereof.
Stockholders at the close of business on April25,
2024 shall be entitled to notice of and to vote at the Annual Meeting. The date of this proxy statement is April29, 2024 and the
Notice of Internet Availability (the Internet Notice) is being mailed on or about May8, 2024 to stockholders of record
as of April25, 2024.
All stockholders are cordially invited to attend
the meeting. The Internet Notice also provides instruction on how to vote via the Internet and includes instructions on how to receive
a paper copy of our proxy materials by mail. The proxy statement and our annual report can be accessed directly at
www.proxyvote.com
.
All you have to do is enter the control number located on your Internet Notice or proxy card. Any stockholder attending the Annual Meeting
may vote in person even if he, she or it has previously voted using the Internet, telephone or proxy card. If you wish to attend the Annual
Meeting to vote in person and need directions, please contact Investor Relations at (650)940-4700 or investors@iridex.com.
By Order of the Board of Directors of IRIDEX Corporation,
/s/ David I. Bruce
Mountain View, California
DavidI.Bruce
April29, 2024
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT
IN ORDER TO ENSURE YOUR REPRESENTATION AT
THE ANNUAL MEETING,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING WE URGE YOU TO
SUBMIT YOUR VOTE VIA THE INTERNET, TELEPHONE OR MAIL.
IRIDEX CORPORATION
1212 Terra Bella Avenue
Mountain View, CA94043
PROXY STATEMENT
FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The Board of Directors (the Board)
of IRIDEX Corporation, a Delaware corporation (the Company or IRIDEX), is furnishing this proxy statement
in connection with its solicitation of proxies for use at the annual meeting of stockholders (the Annual Meeting) to be
held at the principal executive offices of the Company located at 1212 Terra Bella Avenue, Mountain View, California 94043 on June18,
2024, at 9:00a.m., Pacific time, and at any adjournment(s)or postponement(s)thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Stockholders. The Companys telephone number is (650)940-4700.
The date of this proxy statement is April29,
2024 and the Notice of Internet Availability (the Internet Notice) is being mailed on or about May8, 2024 to stockholders
of record as of April25, 2024, and these proxy solicitation materials and the Annual Report on Form10-K, filed as of March29,
2024 for fiscal year 2023 ended December30, 2023, including the consolidated financial statements (the Form10-K),
were first made available to you on the Internet, on or about March29, 2024. We maintain a website at
www.iridex.com
. The
information on our website is not a part of this proxy statement.
Record Date and Share Ownership
Stockholders at the close of business on
April25, 2024 (the Record Date) are entitled to notice of and to vote at the meeting and at any
adjournment(s)or postponement(s)thereof. At the Record Date, 16,252,948 shares of the Companys common stock, par
value $0.01 per share (Common Stock), were issued and outstanding.
Internet Notice
Pursuant to the rules of the Securities and Exchange
Commission (the SEC), we have provided access to our proxy materials over the Internet. Accordingly, the Internet Notice
has been sent to our stockholders of record and beneficial owners as of the Record Date. Instructions on how to access the proxy materials
over the Internet or to request a printed copy by mail may be found on the Internet Notice. In addition, the Internet Notice provides
information on how stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing
basis.
By accessing the proxy materials on the Internet
or choosing to receive your future proxy materials by email, you will save us the cost of printing and mailing documents to you and will
reduce the impact of our annual stockholders meetings on the environment. If you choose to receive future proxy materials by email,
you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. If you
choose to receive future proxy materials by mail, you will receive a paper copy of those materials, including a proxy card. Your election
to receive proxy materials by mail or email will remain in effect until you notify us that you are terminating your request.
Voting
Each stockholder is entitled to one vote for each
share of Common Stock held by such stockholder. Holders of Common Stock are the only security holders of the Company entitled to vote
at the Annual Meeting. Stockholders may not cumulate votes in the election of directors.
Registered Stockholders.
If shares of
our Common Stock are registered directly in your name with our transfer agent, you are considered the stockholder of record with respect
to those shares, and the Internet Notice was provided to you directly by us. As the stockholder of record, you have the right to grant
your voting proxy directly to the individuals listed on the proxy card or to vote in person at the Annual Meeting. Throughout this proxy
statement, we refer to these registered stockholders as stockholders of record.
1
Street Name Stockholders.
If shares of
our Common Stock are held on your behalf in a brokerage account or by a bank or other nominee, you are considered to be the beneficial
owner of shares that are held in street name, and the Internet Notice was forwarded to you by that organization, who is
considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker,
bank or other nominee as to how to vote your shares. Beneficial owners are also invited to attend the Annual Meeting. However, since a
beneficial owner is not the stockholder of record, you may not vote your shares of our Common Stock in-person at the Annual Meeting unless
you follow your broker, bank or other nominees procedures for obtaining a legal proxy. If you request a printed copy of our proxy
materials by mail, your broker, bank or other nominee will provide a voting instruction form for you to use. Throughout this proxy statement,
we refer to stockholders who hold their shares through a broker, bank or other nominee as street name stockholders.
By mail
Stockholders
of record who received paper copies of our proxy materials may submit proxies by signing and dating their proxy cards and mailing them
in the accompanying pre-addressed envelopes. Proxy cards submitted by mail must be received by the time of the meeting in order for your
shares to be voted. Street name stockholders may vote by following the instructions provided by their brokers, banks or nominees.
By Internet
Stockholders
of record may submit proxies online by following the Vote by Internet instructions on their proxy cards or Internet Notice
until 11:59p.m., Eastern time, on June17, 2024. Street name stockholders may be able to vote by accessing the web site specified
in the voting instructions provided by their brokers, banks or nominees. Please check the voting instructions for Internet voting availability.
By telephone
Stockholders
of record who live in the UnitedStates or Canada may submit proxies by calling1-800-652-VOTE (8683)and following the
Vote by Telephone instructions on their proxy cards until11:59p.m., Eastern time, on June17, 2024. Street
name stockholders may be able to vote by phone by calling the number specified in the voting instructions provided by their brokers, banks
or nominees. Please check the voting instructions for telephone voting availability.
Revocability of Proxies
Any proxy given pursuant to this solicitation
may be revoked by the person giving it at any time before its use by (a)delivering to the Company at its principal offices to the
attention of the Companys Chief Executive Officer a written notice of revocation or a duly executed proxy bearing a later date
or (b)attending the meeting and voting in person by ballot.
Solicitation of Proxies
The cost of this solicitation will be borne by
the Company. The Company may reimburse brokerage firms and other persons representing street name stockholders for their expenses in forwarding
solicitation material to such street name stockholders. Proxies may also be solicited by certain of the Companys directors, officers
and regular employees, without additional compensation, personally or by telephone or other electronic means.
Quorum; Abstentions; Broker Non-Votes
Votes cast by a properly submitted proxy card,
by telephone, by the Internet or in person at the Annual Meeting will be tabulated by the Inspector of Elections (the Inspector).
Holders of a majority of the shares entitled to vote must be present at the meeting, represented by a properly submitted proxy card, voted
by telephone or voted by the Internet in order for a quorum to exist. The votes required for each proposal are as follows:
ProposalOne
will be decided by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote
on the subject matter; and
Proposals
Two and Three will be decided by the affirmative vote of a majority of the voting power of the shares present in person or represented
by proxy at the meeting and entitled to vote on the subject matter.
2
Shares that are timely voted by telephone, the
Internet or a properly dated, executed and returned proxy card will be voted at the Annual Meeting in accordance with the instructions
of the stockholder. If no specific instructions are given, the shares will be voted (i)FOR the election of the nominees for directors
set forth herein; (ii)FOR the ratification of the appointment of BPM LLP as the independent registered public accounting firm of
the Company for fiscal year 2024 ending December28, 2024; (iii)FOR the advisory vote to approve the compensation of the Companys
named executive officers; and (iv)in the proxy holders discretion, upon such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Pursuant to Delaware law, the Inspector will treat
shares that are voted FOR, AGAINST, WITHHELD or ABSTAIN as being present and entitled
to vote for purposes of determining the presence of a quorum and as shares entitled to vote on the subject matter at the Annual Meeting
with respect to such matter. With respect to broker non-votesand Proposals One, Two and Three, although broker non-voteswill
be counted for purposes of determining the presence or absence of a quorum for the transaction of business, broker non-voteswill
not be counted for purposes of determining the number of votes with respect to the particular proposal on which the broker has expressly
not voted and, accordingly, will not affect the outcome of the vote on such matter.
If you hold your shares through a broker, bank
or other nominee and you do not instruct them how to vote, that organization may not have authority to vote your shares on your behalf.
If you hold your Common Stock through a broker, bank or other nominee and you do not instruct it how to vote on Proposals One and Three,
it will not have discretion to vote on your behalf and no votes will be cast on your behalf with respect to such Proposal(s). Your broker,
bank or other nominee will continue to have discretion to vote any uninstructed shares on ProposalTwo, the ratification of the appointment
of the Companys independent registered public accounting firm.
Deadline for Receipt of Stockholder Proposals to be Presented
at the Next Annual Meeting
Stockholders of the Company may submit proposals
on matters appropriate for stockholder action at the 2025 annual meeting of stockholders and for inclusion in the Companys proxy
materials. Stockholder proposals intended for inclusion in the next years proxy statement pursuant to Rule14a-8 under the
Securities ExchangeActof1934, as amended (the ExchangeAct), must be directed to the Corporate Secretary,
IRIDEX Corporation, at 1212 Terra Bella Avenue, Mountain View, California 94043, and must be received by December30, 2024. The
Companys Amended and Restated Bylaws (which we refer to as our bylaws in this proxy statement) require that proposals
of stockholders made outside of Rule14a-8 under the ExchangeAct must be submitted, in accordance with the requirements of
the bylaws, not later than March20, 2025 and not earlier than February18, 2025.
Recommendation and Nomination of Director Candidates
You may propose director candidates for consideration
by our nominating and governance committee (the Nominating and Governance Committee). Any such recommendations should include
the nominees name and qualifications for membership on our Board and should be directed to our Secretary at the address set forth
above. For additional information regarding stockholder recommendations for director candidates, see Board CommitteesNominating
and Governance Committee.
In addition, our bylaws permit stockholders to
nominate directors for election at an annual meeting of stockholders. To nominate a director, the stockholder must provide the information
required by our bylaws. In addition, the stockholder must give timely notice to our Secretary in accordance with our bylaws, which, in
general, require that the notice be received by our Secretary within the time period described above under Deadline for Receipt
of Stockholder Proposals to be Presented at the Next Annual Meeting for stockholder proposals that are not intended to be included
in a proxy statement.
3
Stockholder Information
A copy of the Companys Annual Report on
Form10-K filed as of March29, 2024 for fiscal year 2023 ended December30, 2023, including the consolidated financial
statements, is available to you on the Internet at www.iridex.com. The information on our website is not a part of this proxy statement.
In compliance with Rule14a-3 promulgated under the ExchangeAct, the Company hereby undertakes to provide without charge to
each person, upon written request, a copy of the Companys Annual Report on Form10-K, filed as of March29, 2024 for
fiscal year 2023 ended December30, 2023, not including exhibits. If a stockholder prefers a copy of the Annual Report on Form10-K
filed as of March29, 2024, for fiscal year 2023 ended December30, 2023 including exhibits, the stockholder will be charged
a reasonable fee (which shall be limited to our reasonable expenses in furnishing such exhibits). Requests for such copies should be
directed to IRIDEX Corporation, 1212 Terra Bella Avenue, Mountain View, California 94043, Attention: Investor Relations.
If you share an address with another stockholder,
you may receive only one set of proxy materials (including our Annual Report on Form10-K and proxy statement) unless you have previously
provided contrary instructions. If you wish to receive a separate set of proxy materials, please request the additional copies by contacting
us as instructed in the previous paragraph, or by contacting our Investor Relations Department at (650)940-4700. Similarly, if you
share an address with another stockholder and have received multiple copies of our proxy materials, you may contact us at the address
or telephone number specified above to request that only a single copy of these materials be delivered to your address in the future.
The Internet Notice, these proxy solicitation
materials, and the Form10-K, are available at
www.edocumentview.com/irix
. You are encouraged to access and review all of
the important information contained in the proxy materials before voting.
4
CORPORATE GOVERNANCE MATTERS
Independence of the Board of Directors
The Board has determined that, with the exception
of Mr.Bruce, the Companys President and Chief Executive Officer, all of its members are independent directors
as defined in the listing standards of The Nasdaq Stock Market.
Board Leadership Structure and Oversight of Risk Management
Our Chief Executive Officer is responsible for
(i)setting the strategic direction for the Company and theday-to-day leadership and performance of the Company, (ii)assisting
the Board in its fundamental role of providing advice to and oversight of management, and (iii)together with the Chairperson of
the Board, setting the agenda for Board meetings.
Scott Shuda serves as the Chairperson of the Board.
The Board believes that maintaining a chairperson position held by an independent director ensures that our outside directors remain independent
of management and provide objective oversight of our business and strategy. The Chairperson oversees Board meetings. Other responsibilities
of the Chairperson include: preside at all Board meetings; provide input to the Chief Executive Officer, as is necessary or appropriate,
with respect to the agendas for meetings of the Board and its committees; call meetings of independent directors, as necessary; preside
at executive sessions of independent directors; communicate feedback from executive sessions of independent directors to management; advise
with respect to the quality, quantity and timeliness of the flow of information from Company management to the independent directors as
is necessary or appropriate for the independent directors to effectively and responsibly perform their duties; advise on the retention
of advisors and consultants who report directly to the Board; be available for consultation and communication with significant stockholders,
as reasonably requested; coordinate the assessment of Board Committee structure, organization, and charters, and evaluate the need for
any changes; receive messages from stockholders wishing to communicate directly with the non-management directors and facilitate an appropriate
response; participate in Board candidate interviews, as appropriate; facilitate discussions among independent directors on key issues
and concerns outside of Board meetings; and have such other duties as the Board may delegate to assist in meeting its responsibilities.
Our Board oversees an enterprise-wide approach
to risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term
organizational performance and enhance stockholder value. A fundamental part of risk management is not only understanding the risks a
company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for
the Company. The involvement of the full Board in setting the Companys business strategy is a key part of its assessment of managements
appetite for risk and also a determination of what constitutes an appropriate level of risk for the Company.
The Board continually monitors the material risks
we face, including financial risk, strategic risk, operational risk, and legal and compliance risk. The Board has established policies
and processes for assessing, identifying, and managing material risks from cybersecurity threats, and has integrated these processes into
our overall risk management systems.
While the Board has the ultimate oversight responsibility
for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the audit
committee of the Board (the Audit Committee) focuses on financial risk, including internal controls, and has oversight responsibility
for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement.
The Audit Committee reports its findings and recommendations to the Board for consideration. The compensation committee of the Board (the
Compensation Committee) strives to create incentives that encourage a level of risk-taking behavior consistent with the
Companys business strategy. The Nominating and Governance Committee oversees risks relating to our Board composition.
The Board, with assistance from the Compensation Committee
oversees the Companys human capital resources objectives, including identifying, recruiting, retaining, incentivizing and integrating
our existing and new employees, advisors and consultants. The Company continuously invests in our workforce by seeking to create a diverse,
inclusive, and safe environment where our employees can learn, innovate, and deliver their best.
5
Board Meetings and Committees
The Board held a total of eight meetings (including
regularly scheduled and special meetings) during fiscal year 2023 ended December30, 2023. No directors serving during fiscal 2023
attended fewer than 75% of the aggregate of all meetings of the Board and committees of the Board upon which such director served.
Board Committees
During fiscal year 2023, the Board had three standing
committees: the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. In April 2022, the Board approved
of the reconstitution of the committees.
Audit Committee.
The Audit Committee of
the Board currently consists of Mr.Ludlum, Ms. Devi, and Ms. Huss. Mr.Ludlum serves as the Chairperson of the Audit Committee.
The Audit Committee held five meetings during the last fiscal year. The Board has determined that each member of the Audit Committee is
independent as defined under the listing standards of The Nasdaq Stock Market and the rules of the SEC and that Mr.Ludlum is an
audit committee financial expert as defined in rules of the SEC.Among other things, the Audit Committee reviews and
advises the Board regarding the Companys accounting matters and is responsible for appointing and overseeing the work of the independent
registered public accounting firm, pre-approving audit and non-audit services to be provided by the independent registered public accounting
firm, and reviewing the Companys financial statements. The Audit Committee has adopted a written charter approved by the Board,
which was amended in May2020, a copy of which is available on our website at
www.iridex.com
.
Compensation Committee.
The
Compensation Committee of the Board currently consists of Ms. Huss, Mr.Shuda, and Dr.Grove. The Compensation Committee
held four meetings during the last fiscal year. The Board has determined that each member of the Compensation Committee is
independent as defined under the listing standards of The Nasdaq Stock Market and the rules of the SEC.Among other things, the
Compensation Committee reviews and advises the Board regarding all forms of compensation to be provided to the officers, employees,
directors and consultants of the Company. The Compensation Committee has adopted a written charter approved by the Board, which was
amended in March2020, a copy of which is available on our website at
www.iridex.com
.
Nominating and Governance Committee.
The
Nominating and Governance Committee of the Board currently consists of Mr.Ludlum, Dr.Grove, Mr.Shuda, and Ms. Devi.
Mr.Ludlum serves as the Chairperson of the Nominating and Governance Committee. The Nominating and Governance Committee held two
meetings during the last fiscal year. The Board has determined that each member of the Nominating and Governance Committee is independent
as defined under the listing standards of The Nasdaq Stock Market. Among other things, the Nominating and Governance Committee develops
general criteria regarding the qualifications and election of Board members. Our Board and Nominating and Governance Committee discuss
possible candidates for election. Following such discussion, the Nominating and Governance Committee considers and recommends candidates
for election to the Board. It is the policy of the Nominating and Governance Committee to consider nominees for the Board submitted by
the stockholders of the Company. For more information regarding the submission of nominees for the Board, see the discussion in Corporate
Governance MattersStockholder Recommendations for Nominations to the Board of Directors below. The Nominating
and Governance Committee has adopted a written charter approved by the Board, which was amended in March2020, a copy of which is
available on our website at
www.iridex.com
.
Attendance at Annual Stockholder Meetings by the Board of
Directors
The Company has adopted a formal policy regarding
attendance by members of the Board at the Companys annual meeting of stockholders as part of the Board Governance Guidelines. The
Companys policy is that it encourages, but does not require, directors to attend the Companys annual meeting of stockholders.
Mr.Bruce, Mr.Ludlum, Mr.Shuda, Ms. Huss, and Dr. Grove attended the Companys 2023 annual meeting of stockholders.
6
Board Diversity
In August2021, the SEC approved The Nasdaq
Stock Markets proposal to adopt new listing rules relating to board diversity and disclosure. As approved by the SEC, the new Nasdaq
listing rules require all Nasdaq-listed companies to disclose consistent, transparent diversity statistics regarding their boards of directors.
The rules also require most Nasdaq-listed companies to have, or explain why they do not have, at least two diverse directors, including
one who self-identifies as female and one who self-identifies as either female, an under-represented minority or LGBTQ+. The Company is
in compliance with Nasdaqs diversity requirement, as demonstrated by the Board Diversity Matrix below, which presents the Boards
diversity statistics in the format prescribed by the Nasdaq rules.
Board Diversity Matrix (as of April1, 2024)
Total Number of Directors
6
Female
Male
Didnotdisclose
gender
PartI:Gender Identity
Directors
2
4
PartII:Demographic Background
Asian
1
White
1
4
Did Not Disclose Demographic Background
Stockholder Recommendations for Nominations to the Board of Directors
The Nominating and Governance Committee is responsible
for, among other things, determining the criteria for membership to the Board and recommending candidates for election to the Board.
The Company seeks independent directors who represent
a mix of backgrounds and experiences that will enhance the quality of the Boards deliberations and decisions. Candidates should
have experience with one or more publicly traded national or multinational companies and should have achieved a high level of distinction
in their fields. The Nominating and Governance Committees general criteria and process for evaluating and identifying the candidates
that it recommends to the full Board for selection as director nominees are as follows:
In its evaluation of director candidates, including the members of the Board eligible for re-election, the Nominating and
Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and considers (1)the
current size and composition of the Board and the needs of the Board and the respective committees of the Board, (2)such
factors as character, integrity, judgment, diversity, age, independence, skills, education, expertise, business acumen, business
experience, length of service, understanding of the Companys business, other commitments and the like, and (3)such
other factors as the Nominating and Governance Committee may consider appropriate. Diversity with respect to professional
background, education, race, ethnicity, gender, age and geography, as well as other individual qualities and attributes that
contribute to the total mix of viewpoints and experience represented on the Board are some of the numerous criteria that the
Nominating and Governance Committee considers when reviewing potential candidates. For more information about how our Nominating and
Governance Committee reviews and assesses director criteria, please see the Nominating and Governance Committee Charter, a copy of
which is available on our website at
www.iridex.com
.
While the Nominating and Governance Committee has not established specific minimum qualifications for director candidates, the Nominating
and Governance Committee believes that candidates and nominees must reflect a Board that is comprised of directors who (1)are predominantly
independent, (2)are of high integrity, (3)have qualifications that will increase overall Board effectiveness, and (4)meet
other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to audit committee
members.
In evaluating and identifying candidates, the Nominating and Governance Committee has the authority to retain and terminate any third-party
search firm that is used to identify director candidates and has the authority to approve the fees and retention terms of any such firm.
7
With regard to candidates who are properly recommended by stockholders or by other means, the Nominating and Governance Committee may
do any of the following when considering a candidate for the Board: review the qualifications of any such candidate, which review may,
in the Nominating and Governance Committees discretion, include interviewing references for the candidate, direct interviews with
the candidate, or other actions that the Nominating and Governance Committee deems necessary or proper.
The Nominating and Governance Committee will apply these same principles when evaluating director candidates who may be elected initially
by the full Board to fill vacancies or newly created directorships prior to the next annual meeting of stockholders at which directors
are elected.
After such review and consideration, the Nominating and Governance Committee selects, or recommends that the Board select, the slate
of director nominees, either at a meeting of the Nominating and Governance Committee at which a quorum is present or by unanimous written
consent of the Nominating and Governance Committee.
Consistent with past practice, the Nominating
and Governance Committee and the Board will continue to monitor and assess the size and composition of the Board and will consider the
appointment of additional directors from time to time as appropriate to serve the best interests of the Company and its stockholders.
Communications with the Board of Directors
Any stockholder who desires to contact our Board
may do so electronically by sending an email to the following address:
BOD@iridex.com
. Alternatively, a stockholder can contact
our Board by writing to: Board of Directors, c/o Chairperson, IRIDEX Corporation, 1212 Terra Bella Avenue, Mountain View, CA94043.
Communications received electronically or in writing will be distributed to the Board as appropriate depending on the facts and circumstances
outlined in the communication received.
Corporate Governance
Guidelines
Our Board is committed to maintaining the highest
standards of board leadership and corporate governance at the Company. The Board has adopted Board Governance Guidelines based on the
recommendation of its Nominating and Governance Committee. The Board Governance Guidelines were adopted to further the Boards
goal of providing effective governance of the Companys business for the long-term benefit of the Companys stockholders,
employees, and customers. These Board Governance Guidelines set forth policies concerning overall governance practices for the Board
and address leadership, succession planning, director independence, committees, and other responsibilities.
Code of Business Conduct and Ethics
The Companys policy is to conduct its operations
in compliance with all applicable laws and regulations and to operate its business under the fundamental principles of honesty, integrity
and ethical behavior. This policy can be found in the Companys Code of Business Conduct and Ethics, which is applicable to all
of our directors, officers and employees. Such Code of Business Conduct and Ethics incorporates the Code of Ethics required by Section406
of the Sarbanes-Oxley Actof2002 and Item406 of RegulationS-K.The Code of Business Conduct and Ethics also
complies with the listing standards of The Nasdaq Stock Market.
The Code of Business Conduct and Ethics is designed
to promote honest and ethical conduct and compliance with all applicable laws, rules and regulations and to deter wrongdoing. The Code
of Business Conduct and Ethics is also aimed at ensuring that information we provide to the public (including our filings with and submissions
to the SEC) is accurate, complete, fair, relevant, timely and understandable. A copy of the formally adopted Code of Business Conduct
and Ethics is available on our website at
www.iridex.com
. We intend to disclose future amendments to certain provisions of the
Code of Business Conduct and Ethics, or waivers of such provisions granted to directors and executive officers, on our website at
www.iridex.com
pursuant
to applicable requirements of the SEC and The Nasdaq Stock Market.
8
PROPOSAL ONEELECTION OF
DIRECTORS
Composition of the Board
Our Board is currently comprised of six (6)members.
Our Board consists of a single class of directors, each with one-year terms. Following the Annual Meeting, our Board will include five
(5) members. Each director elected at the Annual Meeting will serve until the next annual meeting of stockholders or until such directors
successor has been elected and qualified.
Nominees
The Nominating and Governance Committee has nominated
five (5)individuals to be elected at the Annual Meeting, all of whom are presently directors of the Company. Each nominee has consented
to be named as a nominee in this Proxy Statement and to serve as a director if elected. Should any nominee become unable or decline to
serve as a director or should additional persons be nominated at the Annual Meeting, the proxy holders intend to vote all proxies received
by them in such a manner as will assure the election of as many nominees listed below as possible (or, if new nominees have been designated
by the Board, in such a manner as to elect such nominees) and the specific nominees to be voted for will be determined by the proxy holders.
The Company is not aware of any reason that any nominee will be unable or will decline to serve as a director or that any additional persons
will be nominated at the Annual Meeting.
The names of, and certain information regarding,
the nominees and the non-continuing director, as of April1, 2024, are set forth below.
Name of Nominee
Age
Principal Position at Company
Director Since
DavidI.Bruce
64
President and Chief Executive Officer
2018
Robert Grove, Ph.D.
(1)(4)(5)
75
Director
2018
Beverly A.Huss
(1)(2)(4)
64
Director
2022
Kenneth E.Ludlum
(1)(2)(3)(5)
70
Director
2019
Scott Shuda
(1)(4)(5)
58
Director
2019
Name of Non-Continuing Director
Nandini Devi
(2)(5)(6)
50
Director
2021
____________
(1)
The Board has made the affirmative determination that such nominee is independent as defined under the listing standards of The Nasdaq
Stock Market.
(2)
Member of the Audit Committee.
(3)
Audit Committee financial expert as defined in the rules of the SEC.
(4)
Member of the Compensation Committee.
(5)
Member of the Nominating and Governance Committee.
(6)
Ms. Devis term will expire at the Annual Meeting. Our Board thanks Ms. Devi for her distinguished service as a director.
9
Director Nominees
DavidI.Bruce
currently serves
as the President and Chief Executive Officer of the Company. He has served as a director of the Company since April2018 and as President
and Chief Executive Officer since May2019. Mr.Bruce served as the Chief Operating Officer of Catheter Robotics, Inc., a private
company focused on developing and manufacturing remote catheter systems from August2014 to May2016. From November2011
to May2014, Mr.Bruce served as President, Chief Executive Officer and director of Arstasis, Inc., a private company that manufactures
and distributes vascular closure devices for arterial closure in catheterization procedures. Prior to that, Mr.Bruce served as Chief
Executive Officer of EP MedSystems, a public medical device company specializing in electrophysiology systems and catheters and led the
company to 30% annual growth over twoyears culminating in its acquisition by St. Jude Medical. Mr.Bruce holds a B.S. in Mechanical
Engineering from the University of California, Berkeley, and an MBA degree from the Wharton School at the University of Pennsylvania.
Mr.Bruce has extensive experience in the
medical device industry. Mr.Bruces executive management and his past board service and consulting experience for the boards
of directors of emerging medical device companies on market penetration strategy and execution provide him with the necessary skills to
serve as our President and Chief Executive Officer and on our Board.
Robert Grove, Ph.D
. has served as a director
of the Company since October2018. Dr.Grove currently serves as a director or an advisor to two early-stage medical device
companies and was awarded a Presidential Citation at the 2019 annual meeting of the American Society for Laser Medicine and Surgery. Most
recently he served as Executive Chairperson for the start-up ON Light Sciences, a manufacturer of transparent gel patches for accelerated
tattoo removal that was acquired by Merz North America in 2016. He was a founder and President and Chief Executive Officer of Intellectual
Light, Inc. and Once Again Me, Inc., two startups focused on laser diode technology. Dr.Grove holds a Ph.D. in Instrumentation in
the field of laser applications and an M.S. degree in Aeronautics and Astronautics from MIT, as well as a B.S. degree in Engineering Physics
from Cornell University.
Dr.Grove is independent and has extensive
experience in the field of medical laser technology. His education and experience have provided him with the experience necessary to
serve on our Board.
Beverly A.Huss
has served as a director
of the Company since March2022. She has served as the Chief Executive Officer of Pagonia Medical, Inc. (Pagonia),
a private company focused on creating a novel non-invasive device for the preservation of tissue following a heart attack, stroke, traumatic
brain injury and other medical conditions from January2021 until June2022. From September2013 until January2021,
she served as President and Chief Executive Officer of Qool Therapeutics, Inc. (Qool), formerly Thermocure, Inc., a company
focused on temperature management therapies that underwent an assignment for the benefit of creditors under California law in November2020
as a result of the COVID-19 pandemic. Prior to joining Qool, Ms. Huss was President and Chief Executive Officer at a start-up medical
device company, Vibrynt, Inc., and held multiple senior level leadership positions at Guidant Corporation, including, President, Endovascular
Solutions, and Vice President, Global Marketing, Vascular Intervention, and Vice President of the Stent Business Unit. Ms. Huss currently
serves on the board of directors of Vicarious Surgical Inc., a publicly-held robotics company developing technology with a focus on abdominal
access and visualization through a single port, Accuray Incorporated, a publicly-held radiation oncology company (compensation chair),
and Ancora Heart, Inc., a privately-held medical device company developing heart failure treatments. Her prior public company board experience
includes Artes Medical, Inc., Coala-Life Group AB, Wright Medical Group N.V. and Dade Behring Holdings, Inc. Ms. Huss has been nominated
to join the board of directors of InfuSystem Holdings, Inc. (InfuSystem), a provider of services related to biomedical
equipment. Ms. Huss holds a B.S. in metallurgical engineering from the University of Illinois and a M.S. in technology management from
Pepperdine University.
Ms. Huss is independent and, as a former chief
executive officer with more than 25years of management experience in the medical device industry, and a current and former member
of several public and private company boards for two decades, Ms. Huss brings to the Board extensive experience in the medical device
industry, including experience in the areas of business operations, management and corporate governance. Her education and experience
make her qualified to serve on our Board.
10
Kenneth E.Ludlum
has served as a
director of the Company since April2019. Mr.Ludlum is a board member with medical technology and biotechnology companies.
He has served on the board of directors of a dozen companies. From 2002 to 2020, Mr.Ludlum served on the board of directors and
as chairperson of the audit committee at Natus Medical Incorporated, and as chairperson of the compensation committee from June2018
to June2019. Mr.Ludlum has served on the board of directors and as chairperson of the audit committee of Dermavant Sciences
Limited, a United Kingdom company, since 2019. Mr.Ludlum has also served on the board of directors, as chairperson of the audit
committee, and as a member of both the audit and compensation committees of Personalis Inc., a gene sequencing company from 2015 to 2023.
Mr. Ludlum joined the board of directors of DIH Holdings US, Inc., a public company, in 2024, and is chair of the audit committee. From
February2014 to April2016 Mr.Ludlum served as Chief Financial Officer at CareDx, a molecular diagnostics company, and
prior to that served as Chief Financial Officer for other publicly traded companies. Mr.Ludlum has worked for or with health care,
medical device, biotechnology or diagnostic companies since 1985. Mr.Ludlum holds a B.S. degree in Business Administration from
Lehigh University and a M.B.A. degree from Columbia University Graduate School of Business.
Mr.Ludlum is independent and his executive
management experience and past board services at several public companies have provided him with extensive financial and accounting experience,
and knowledge of accounting principles, financial reporting rules, and regulations and qualifies him as a financial expert. Mr.Ludlum
also has a background in investment banking, which, coupled with his experience in finance, board service and financial leadership, provides
him with the necessary skills and functional understanding to serve effectively on our Board.
Scott Shuda
has served as a director of
the Company since April2019. Mr.Shuda has been a member of the board of directors of InfuSystem, a provider of services related
to biomedical equipment, since September2016, and was elected chairperson on the board of InfuSystem in December2018. Mr.Shuda
is a Managing Director and Co-founder of Meridian OHC Partners, LP and BlueLine Partners, LLC, investment firms that focus on publicly
listed technology and healthcare companies. Mr.Shuda previously served on our Board, from December2012 to April2017.
Mr.Shuda holds both a Juris Doctor degree and a Masters of Business Administration degree from Georgetown University.
Mr.Shuda has extensive experience with the
medical devices industry. He brings more than 20years of professional experience in law, technology and entrepreneurial endeavors
in the industry, including transactions that range from initial public offerings and venture financings to mergers and acquisitions. Mr.Shudas
experience has given him the necessary skills and functional understanding to serve on our Board.
Non-Continuing Director
Nandini Devi
has been a director of
the Company since June2021, and due to the Companys desire to reduce the size of the Board, she has not been nominated
to stand for re-election at the Annual Meeting and will not continue as a director once her term expires at the Annual Meeting. Ms.
Devi is also currently the Founder and Chief Executive Officer of Mpowered Health LLC (Mpowered Health), a consumer
health company founded in 2019 that focuses on empowering consumers to make better healthcare choices while enabling payers,
providers and other healthcare organizations to acquire, engage and retain consumers more effectively. Prior to founding Mpowered
Health, she co-founded ZeOmega Inc. (ZeOmega) in 2001, and helped scale it to become one of the largest population
health companies in the UnitedStates. From January2005 until September2018, she served in various roles at
ZeOmega, including Executive Vice President, Chief Financial Officer and Chief Strategy Officer. During her tenure at ZeOmega, she
led its SeriesA and SeriesB equity financing rounds and its acquisition of HealthUnity Corporation. She served on the
board of directors of ZeOmega and its international subsidiaries from June2009 to June2019. She also served on
ZeOmegas audit committee and compensation committee from September2013 to September2018. Prior to ZeOmega, she
worked at Accenture plc in Corporate Strategy and Mergers and Acquisitions. Her work experience spans several industries including
travel, telecom, healthcare and pharmaceuticals. Ms. Devi holds an M.B.A. from the Wharton School at the University of Pennsylvania,
and a B.E. in Electronics Engineering from Bangalore University.
11
Required Vote
Directors are elected by a plurality of the votes
of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors at the Annual
Meeting. Abstentions and broker non-votes will have no effect on the outcome of the vote. Plurality means that the five
nominees who receive the largest number of votes cast For such nominees are elected as directors. As a result, any shares
not voted For a particular nominee (whether as a result of a withhold vote or a broker non-vote) will not be counted in
such nominees favor and will have no effect on the outcome of the election.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE FOR
EACH OF THE NOMINEES LISTED ABOVE
12
PROPOSAL TWORATIFICATION
OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Introduction
The Audit Committee has appointed BPM LLP (BPM),
an independent registered public accounting firm, to audit the consolidated financial statements of the Company for fiscal year 2024 ending
December28, 2024 and recommends that stockholders vote for ratification of such appointment. BPM also served as the Companys
independent registered public accounting firm for fiscal year 2023 ended December30, 2023. Representatives of BPM are expected to
be present at the meeting with the opportunity to make a statement if they desire to do so and are expected to be available to respond
to appropriate questions.
Although action by stockholders is not required
by law, the Board has determined that it is desirable to request ratification of this selection by the stockholders. Notwithstanding the
ratification of this selection by the stockholders, the Audit Committee, in its discretion, may direct the appointment of a new independent
registered public accounting firm at any time during the year, if the Audit Committee feels that such a change would be in the best interest
of the Company and its stockholders. In the event of a negative vote on ratification, the Audit Committee will reconsider its selection.
Fees Billed to the Company by the Companys Principal Independent
Registered Public Accounting Firm During the Previous Two FiscalYears
The following table presents fees (in thousands)
for professional audit services and other services rendered to the Company by its principal independent registered public accounting firm
for fiscal year 2023 ended December 30, 2023 and fiscal year 2022 ended December31, 2022.
Fiscal Year
2023
($)
Fiscal Year
2022
($)
Audit Fees
(1)
516
468
Audit-Related Fees
(2)
18
16
Tax Fees
All Other Fees
Total
534
484
____________
(1)
Audit Fees consisted of fees for professional services rendered for the audit of the Companys annual consolidated financial statements
included in the Companys Annual Reports on Form10-K and for the review of the consolidated financial statements included
in the Companys Quarterly Reports on Form10-Q, as well as reviews of regulatory and statutory filings.
(2)
This category consists of assurance and related services by the Companys independent registered public accounting firm that are
reasonably related to the performance of the audit or review of the Companys consolidated financial statements and are not reported
above under Audit Fees. Audit-Related Fees include the audit of the IRIDEX Corporation Profit Sharing 401(k)Plan
Trust.
Auditor Independence
For fiscal year 2023 ended December30, 2023,
there were no other professional services provided by BPM that would have required our Audit Committee to consider their compatibility
with maintaining the independence ofBPM.
Pre-Approval of Audit and Non-Audit Services
The Audit Committee has established a policy governing
the Companys use of its principal independent registered public accounting firm for non-audit services. Under the policy, management
may use its principal independent registered public accounting firm for non-audit services that are permitted under SEC rules and regulations,
provided that management obtains the Audit Committees approval before such services are rendered. BPM did not provide any non-audit
services for the Company in fiscalyears 2023 or 2022.
13
The Audit Committee pre-approved all of the services
and fees identified in the table above in accordance with its charter and applicable laws, rules and regulations.
Required Vote
If a quorum is present, the affirmative vote of
a majority of the voting power of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled
to vote on this proposal will be required to approve the ratification of the appointment of BPM.Abstentions will have the effect
of a vote against this proposal, and broker non-votes will have no effect.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF BPM LLP
14
PROPOSAL THREEADVISORY
VOTE TO APPROVE THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer
Protection Actof2010 (the Dodd-Frank Act) enables our stockholders to approve, on an advisory or non-binding
basis, the compensation of our named executive officers as disclosed pursuant to Section14A of the ExchangeAct. This proposal,
commonly known as a Say-on-Pay proposal, gives our stockholders the opportunity to express their views on our named executive
officers compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named
executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies and practices
described in this proxy statement.
The Say-on-Pay vote is advisory, and therefore
is not binding on us, our Compensation Committee or our Board. The Say-on-Pay vote will, however, provide information to us regarding
investor sentiment about our executive compensation philosophy, policies and practices, which our Compensation Committee will be able
to consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our Board and our Compensation
Committee value the opinions of our stockholders. To the extent there is any significant vote against the compensation of our named executive
officers as disclosed in this proxy statement, we will endeavor to communicate with stockholders to better understand the concerns that
influenced the vote and consider our stockholders concerns, and our Compensation Committee will evaluate whether any actions are
necessary to address those concerns.
We believe that the information provided in the
section titled Executive Compensation, and in particular the information discussed in the section titled Executive
CompensationExecutive Officer Compensation, demonstrates that our executive compensation program was designed
appropriately and is working to ensure managements interests are aligned with our stockholders interests to support long-term
value creation. Accordingly, we ask our stockholders to vote FOR the following resolution at the Annual Meeting:
RESOLVED, that the stockholders approve, on an advisory
basis, the compensation paid to our named executive officers, as disclosed in the proxy statement for the Annual Meeting pursuant to the
compensation disclosure rules of the SEC, including the compensation tables and narrative discussion and other related disclosure.
Vote Required
The approval, on an advisory basis, of the compensation
of our named executive officers requires the affirmative vote of a majority of the voting power of the shares of our Common Stock present
in person or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Abstentions will have the effect of a vote against
this proposal, and broker non-votes will have no effect.
As an advisory vote, the result of this proposal
is non-binding. Although the vote is non-binding, our Board and our Compensation Committee value the opinions of our stockholders and
will consider the outcome of the vote when making future compensation decisions for our named executive officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
15
AUDIT COMMITTEE REPORT
General
The Audit Committee is responsible for overseeing
the accounting and financial reporting processes of the Company and the audits of the Companys consolidated financial statements,
as well as assisting the Board with overseeing and monitoring the integrity of the Companys consolidated financial statements,
the Companys compliance with legal and regulatory requirements, the independent registered public accounting firms qualifications,
independence and performance, and the Companys internal accounting and financial controls.
Review with Management
The Audit Committee reviewed and discussed our
audited consolidated financial statements for fiscal year 2023 ended December30, 2023, together with the notes thereto, with management,
which has primary responsibility for the consolidated financial statements. BPM, our independent registered public accounting firm, is
responsible for expressing an opinion on the conformity of the Companys audited consolidated financial statements with accounting
principles generally accepted in the UnitedStates.
Review and Discussions with Independent Registered Public Accounting
Firm
The Audit Committee has reviewed with the independent
registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting
Oversight Board (PCAOB) and the Commission including a discussion with management and the independent registered public
accounting firm about the quality (and not merely the acceptability) of the Companys accounting principles, the reasonableness
of significant estimates and judgments and the transparency of disclosures in the Companys consolidated financial statements.
In addition, the Audit Committee reviewed and
discussed with BPM matters related to its independence, including a review of audit and non-audit fees and the written disclosures and
the letter from BPM to the Audit Committee required by applicable requirements of the PCAOB regarding the independent registered public
accounting firms communication with the Audit Committee concerning independence. The Audit Committee concluded that BPM is independent
from the Company and its management.
Conclusion
Based on the review and discussions referred to
above, the Audit Committee recommended to the Board that the Companys audited consolidated financial statements be included in
its Annual Report on Form10-K filed as of March29, 2024 for fiscal year 2023 ended December30, 2023 for filing with
the SEC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Kenneth E.Ludlum (Chairperson)
Nandini Devi
Beverly A.Huss
This report of the Audit Committee is required
by the SEC and, in accordance with the SECs rules, will not be deemed to be part of or incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under the Securities Act, or under the ExchangeAct, except
to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed soliciting material
or filed under the Securities Actor the ExchangeAct.
16
EXECUTIVE OFFICERS
The following table sets forth certain information
with respect to the Companys executive officers as of April1, 2024.
Name
Age
Position
DavidI.Bruce
64
President and Chief Executive Officer
Fuad Ahmad
54
Interim Chief Financial Officer
Patrick Mercer
52
Chief Operating Officer
For Mr.Bruces biography, see ProposalOneElection
of DirectorsNominees above.
Fuad Ahmad
has served as our Interim Chief
Financial Officer since November2020. Mr.Ahmad has been a partner at FLG Partners, LLC (FLG Partners) since
January2013 and has served as consulting Chief Financial Officer for multiple clients of FLG Partners, including Mitek Systems,
Inc., a software company that specializes in digital verification and mobile imaging processing using artificial intelligence, since February2023,
and Vazart, Inc., a biotechnology company focused on the discovery, development, and commercialization of oral recombinant vaccines, from
May2022 to December2022. From November2019 to August2020, Mr.Ahmad served as Interim Chief Financial Officer
of Cutera, Inc. Previously, Mr.Ahmad served on an FLG Partners assignment as Chief Financial Officer of Telenav, Inc., a formerly
listed enterprise software company focused on connected care and location-based services. From April2016 to June2018, Mr.Ahmad
served as Chief Financial Officer of Quantum Corporation, a listed company focused on enterprise data storage and software defined storage
workflows. From November2015 to March2016, Mr.Ahmad served on an FLG Partners assignment for Real Time Innovation, Inc.
(Real Time Innovation), a private enterprise IoT software company. At Real Time Innovation, Mr.Ahmad served as an
advisor to the board of directors and the chief executive officer as the company transitioned the business to subscription pricing. Prior
to Real Time Innovation, Mr.Ahmad served on an FLG Partners assignment as Chief Financial Officer for Ensighten, Inc. from February2013
until November2015. From June1996 to April2012, Mr.Ahmad served in various positions with both public and private
companies. Mr.Ahmad received a B.S. in Finance from Brigham Young University.
Patrick Mercer
has served as our Chief
Operating Officer since September2018. Prior to joining the Company, Mr.Mercer served as Chief Operating Officer at TrackNet
from May2017 until September2018, and as Vice President of Manufacturing at RODO Medical, Inc. from May2015 to May2017.
Mr.Mercer also held positions at Dfine, Inc., HemoSense Inc., Revivant Corporation (acquired by Zoll Medical Corp.), and Stryker
Corporation. Mr.Mercer earned his BS in Electrical Engineering and Computer Engineering from the University of Alabama.
17
EXECUTIVE COMPENSATION
Executive Compensation Program Philosophy and Process
IRIDEX believes that the skill, talent, judgment
and dedication of its executive officers are critical factors affecting the long-term value of our Company. Therefore, the goals for our
executive compensation program are to fairly compensate our executives, attract and retain qualified executives who are able to contribute
to our long-term success, encourage performance consistent with clearly defined corporate goals, and promote the closer alignment of our
executives long-term interests with those of our stockholders. The Company believes that its executive compensation program satisfies
these goals and is strongly aligned with the long-term interests of our stockholders. Moreover, we believe that the structure of our executive
compensation program, in rewarding the achievement of annual operating goals and emphasizing long-term stockholder value creation over
short-term operating results, has benefited our Company and our stockholders by focusing on growing our core business.
Compensation Objectives and Philosophy
The Companys compensation philosophy is
designed to attract, retain, motivate and reward highly qualified executives who contribute to the success of the Company and its stockholders.
To achieve these goals, the Company strives to provide a comprehensive compensation package for each of our named executive officers
that is competitive with those offered by companies of similar type and size, in the same geographical area and whose executives perform
functions similar to those performed by the executives of the Company. The Company also incorporates equity-based incentives into its
overall compensation strategy to align the financial interests of our executives with those of our stockholders.
Role and Authority of the Compensation Committee
The Compensation Committee of the Board establishes
the overall executive compensation strategies of the Company and approves compensation elements for the Companys Chief Executive
Officer and other executive officers. Among other things, the Compensation Committee reviews and advises the Board regarding all forms
of compensation to be provided to the officers, employees, directors and certain consultants of the Company. In addition, each named executive
officers individual compensation and eligibility for participation in the Companys annual cash bonus incentive program is
reviewed by the Compensation Committee and adjustments are made based upon an assessment of individual performance and potential to enhance
long-term stockholder value.
The Compensation Committee consists of Ms. Huss,
Mr.Shuda, and Dr.Grove. Ms. Huss serves as the Chairperson of the Compensation Committee. Each member of the Compensation
Committee is an independent member of the Board, and no members have interlocking relationships as defined by the SEC.
The Compensation Committee has available to it
such external compensation advice and data as the Compensation Committee deems appropriate to obtain. The Compensation Committee may delegate
any of its responsibilities to one or more of its members or to the Companys directors or to members of management, to the extent
permitted by applicable law and subject to such reporting to or ratification by the Compensation Committee as the Compensation Committee
deems necessary or appropriate.
Executive Officer Compensation
In order to achieve the objectives of our executive
officer compensation program to attract, retain, motivate and reward key personnel who possess the necessary leadership and management
skills, we provide compensation to our named executive officers generally in the form of base salary, annual cash bonus incentives, long-term
equity incentive compensation, and various benefits generally available to employees of the Company.
Our named executive officers for fiscal 2023,
consist of our principal executive officer, our chief operating officer, and our interim principal financial officer, as follows:
DavidI.Bruce, our Chief Executive Officer;
Patrick Mercer, our Chief Operating Officer; and
Fuad Ahmad, our Interim Chief Financial Officer.
18
Base Salary
Base salary levels for the Companys executive
officers are generally targeted to be competitive with companies in the same stage of development and in the same industry and geographic
area. In determining salaries of executive officers other than the Chief Executive Officer, the Compensation Committee also generally
takes into account the Chief Executive Officers recommendations, the individuals experience, contributions to corporate
goals, and the Companys performance. In March2023, the Compensation Committee reviewed the base salaries for the Companys
executive officers and increased Messrs. Bruces and Mercers base salary, effective April2023, by 3% from $381,924
to $393,382, and from $328,879 to $338,745, respectively. Approved by the Compensation Committee in March2024 and effective April2024,
each of Messrs. Bruces and Mercers base salary increased by 3% from $393,382 to $405,183 and from $338,745 to $348,908,
respectively. Mr.Ahmads cash compensation is determined as described further below.
Incentive Bonuses
The Compensation Committee believes that a cash
incentive bonus plan can serve to motivate the Companys named executive officers and management as a team to achieve annual performance
goals supporting the creation of stockholder value, using more immediate measures for performance than those reflected in the appreciation
in value of stock options or other equity awards that vest (and for which the value if any is realized) over multipleyears.
2023 Short-Term Incentive Plan
In March2023, upon recommendation and approval
by the Compensation Committee, the Board approved the Companys 2023 Short-Term Incentive Plan (the 2023 STI Plan).
Messrs. Bruce and Mercer participated in the 2023 STI Plan. Mr.Ahmad did not participate in the 2023 STI Plan and instead his compensation
was determined as described further below. The maximum amount payable under the 2023 STI Plan for each of Messrs. Bruce and Mercer was
$397,611 and $215,885, respectively. Mr.Bruces target bonus opportunity under the 2023 STI Plan is based entirely upon the
achievement of corporate objectives, including sales, revenue, and operational goals, which applied to all 2023 STI Plan participants,
and Mr.Mercers target bonus opportunity under the 2023 STI Plan is based both on the achievement of such corporate objectives
and certain individual management objectives (MBO) specific to Mr.Mercer. Each of Messrs. Bruces and Mercers
award under the 2023 STI Plan was subject to the Companys achievement of certain sales targets, as well as certain other financial-related
goals. Mr.Mercers award under the 2023 STI Plan was additionally subject to operations-related performance goals specific
to Mr.Mercer. The Company did not achieve its corporate objectives, which resulted in Messrs. Bruce and Mercer receiving a 0% on
both threshold performance and actual performance attained for such objectives.
The following table shows the target bonus opportunities
for our named executive officers who participated in the 2023 STI Plan:
Named Executive Officer
FY 2023 Target
Bonus
Opportunity
($)
FY 2023
Target
Bonus as
Percentage of
Base
Salary
(%)
DavidI.Bruce
255,698
65
Patrick Mercer
152,435
45
19
The following table provides information concerning
the target bonus payout under the 2023 STI Plan, as a percentage of each respective executive officers target bonus opportunity,
based on performance thresholds, for fiscal 2023:
Sales
Goals
(%)
Revenue
Goals
(%)
Operational
Goals
(%)
Individual
Goals
(%)
Total
(%)
Target Performance
Target
DavidI.Bruce
40.0
30.0
30.0
N/A
100.0
Patrick Mercer
30.0
22.5
22.5
25.0
100.0
Threshold Performance
Threshold
DavidI.Bruce
0.0
0.0
0.0
N/A
0.0
Patrick Mercer
0.0
0.0
0.0
12.5
12.5
Maximum Performance
Maximum
DavidI.Bruce
64.0
48.0
43.5
N/A
155.5
Patrick Mercer
48.0
36.0
32.6
25.0
141.6
Actual Performance Attained
Attained
DavidI.Bruce
0.0
0.0
0.0
N/A
0.0
Patrick Mercer
0.0
0.0
0.0
17.7
17.8
The corporate objectives for 2023 were weighted
at 100% of Mr.Bruces target bonus opportunity and at 75% of Mr.Mercers target bonus opportunity. Attainment
below the threshold performance would result in no payout for the portion allocated to a particular goal.
Mr.Mercers bonus opportunity for
2023 also required the achievement of certain individual goals. This individual, management by objectives (MBO)-based portion of the bonus
was weighted at 25% of Mr.Mercers target bonus opportunity. Each individual goal had a specified weighting and the portion
of the bonus allocated to such goal would become payable based on the extent to which such goal was achieved. In the event Mr.Mercer
did not meet or partially meets his individual objectives, the individual performance component amount would be reduced, as determined
by the Compensation Committee.
In March2024, the Compensation Committee
reviewed the extent of attainment of the corporate objectives for Messrs. Bruce and Mercer as well as, in the case of Mr.Mercer,
individual performance during the year. The 2023 corporate objectives were not achieved. This resulted in Mr. Bruce not receiving a bonus
award and Mr. Mercer receiving an overall bonus award based only on the achievement of his individual objectives equal to $27,075. Mr.
Mercers bonus award is expected to be paid in May 2024.
For fiscal year 2024, the Compensation Committee
approved the target bonus opportunity for each of Messrs. Bruce and Mercer to be 65% and 45% of base salary, respectively.
20
Stock Grants/Awards
We provide long-term incentives to executives
through a value-based grant of equity awards under the 2008 Equity Incentive Plan (the 2008 EIP).The Compensation
Committee (or in certain cases, the Board) determines the value of these equity awards after considering a number of factors, including
for example corporate performance, individual criticality, competitive market data, the number of unvested shares held at the time of
grant, the fixed total value for each executive, the available share reserve, and any other factors that the Compensation Committee (or
Board, as applicable) may deem relevant. Stock options, restricted stock units (RSUs) or other stock-based awards are granted
to executive officers and other employees under the 2008 EIP.These stock options, RSUs or other stock-based awards are intended
to focus the recipient on the Companys long-term performance to improve stockholder value and to retain the services of executive
officers in a competitive job market by providing significant long-term earning potential. To this end, stock options, RSUs and other
stock-based awards generally vest over a three-year period, based on the service providers continued employment with the Company.
Factors considered in granting stock options, RSUs and other stock-based awards to executive officers of the Company are the duties and
responsibilities of each individual, such individuals contributions to the success of the Company and any other factors deemed
relevant by the Compensation Committee. The Company views stock options, RSUs and other stock-based awards as an important component of
long-term compensation for executive officers because the Compensation Committee believes that these awards motivate executive officers
to manage the Company in a manner that is more closely aligned with the interests of stockholders. In 2023, the Compensation Committee
did not grant any stock options, RSUs, or any other stock-based awards to Mr. Bruce under the 2008 EIP.
2023 Awards
For 2023, the Board approved a grant to Mr.Mercer
of stock options covering 115,000 shares of our Common Stock, effective September 19, 2023, with time-based vesting.
No awards were granted to Mr. Bruce or Mr.Ahmad
in fiscal 2023. Mr. Ahmads fiscal 2023 compensation instead was determined as described further below.
Additional information regarding Mr. Mercers
RSU awards is set forth in the table below titled Outstanding Equity Awards at 2023 Fiscal Year-End.
2008 Equity Incentive Plan
We maintain the 2008 EIP, which provides for
the grant of the following types of equity awards: (i)stock options; (ii)restricted stock; (iii)RSUs; (iv)performance
shares; (v)performance units; (vi)stock appreciation rights; and (vii)other stock or cash awards. Our 2008 EIP was
most recently amended in 2023, as approved by our Board in March2023 and by our stockholders in June 2023. The Board, or our Compensation
Committee, or a committee of directors or of other individuals satisfying applicable laws and appointed by the Board may administer the
2008 EIP.
Other Benefits
Our named executive officers are eligible to participate
in our employee benefit plans generally available to our employees, such as medical, dental, vision, group life, disability, and accidental
death and dismemberment insurance, and our 401(k)Plan, in each case generally on the same basis as other employees, subject to the
terms of the plan and any applicable law.
401(k)Plan
The Company sponsors a 401(k)Plan under
which each eligible employee may contribute, on a pre-tax basis, up to 15% of the employees total annual income from the Company,
excluding bonuses, subject to certain IRS limitations. Employee pre-tax contributions to the 401(k)Plan are fully vested and not
forfeitable. The Company maintains a discretionary Company matching contribution of 50% of employee contributions, up to $150 per pay
period, to a maximum of $3,000 per year. All full-time employees who have attained age 18 are eligible to participate in the 401(k)Plan.
All contributions are allocated to the employees individual account and, at the employees election, are invested in one
or more investment funds available under the 401(k)Plan. All employee contributions are fully vested and not forfeitable. Employer
discretionary matching contributions are subject to a five-year graded vesting schedule.
21
Compensation Arrangement for Interim Chief Financial
Officer
In connection with Mr.Ahmads appointment
as the Companys Interim Chief Financial Officer in November2020, the Company amended its consulting agreement with FLG Partners
(the FLG Consulting Agreement). Pursuant to the FLG Consulting Agreement, the Company $440 per hour for actualhours
of service provided by Mr.Ahmad for 2023. The FLG Consulting Agreement has an indefinite term and is terminable by either party
upon 30days advance written notice. Given such arrangement, Mr.Ahmad did not participate in the Companys 2023
STI Plan or receive any Company equity awards for 2023.
Summary Compensation Table
The following table presents information concerning
the total compensation of our named executive officers, for services rendered to us in all capacities during fiscalyears ended 2023
and 2022.
Name and
Principal
Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
(1)
Option
Awards
($)
(1)
Non-Equity
Incentive Plan
Compensation
($)
(2)
All Other
Compensation
($)
(3)
Total
($)
David I. Bruce
2023
390,518
(4)
6,677
397,195
President and Chief Executive Officer
2022
368,106
(5)
136,184
170,275
87,583
(6)
3,617
765,765
Patrick Mercer
2023
336,281
(7)
152,225
27,057
(8)
2,510
518,073
Chief Operating Officer
2022
316,980
(9)
81,100
101,401
67,038
(10)
1,494
568,013
Fuad Ahmad
2023
356,835
356,835
Interim Chief Financial Officer
2022
424,900
(11)
424,900
(1)
Reflects the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic718. We discuss the assumptions
that we used to calculate these amounts in Note11 to our consolidated financial statements included in our Annual Report on Form10-K,
filed March29, 2024, for the fiscal year ended December30, 2023, and incorporated by reference herein. As required by SEC
rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.
(2)
Represents payments calculated in accordance with the terms of our 2023 STI Plan, as described under Executive Compensation.
(3)
All Other Compensation consists solely of the value of life insurance premiums paid and 401(k)matching contributions
made by the Company.
(4)
Includes $7,565 in salary earned in 2023 but paid in 2024. Mr.Bruces salary earned in 2023 reflects a pro-rated annual salary
of $393,382.
(5)
Includes $7,345 in salary earned in 2022 but paid in 2023. Mr.Bruces salary earned in 2022 reflects a pro-rated annual salary
of $381,924.
(6)
Mr.Bruces $87,583 of Nonequity Incentive Plan Compensation was earned in 2022 but paid in 2023.
(7)
Includes $6,514 in salary earned in 2023 but paid in 2024. Mr.Mercers salary earned in 2023 reflects a pro-rated annual
salary of $338,745.
(8)
Mr.Mercers $27,057 of Nonequity Incentive Plan Compensation was earned in 2023 but paid in 2024. For more information on
Mr.Mercers Nonequity Incentive Plan Compensation, please see the discussion in Executive CompensationExecutive
Officer Compensation2023 Short-Term Incentive Plan above.
(9)
Includes $6,325 in salary earned in 2022 but paid in 2023. Mr.Mercers salary earned in 2022 reflects a pro-rated annual
salary of $328,879.
(10)
Mr.Mercers $67,038 of Nonequity Incentive Plan Compensation was earned in 2022 but paid in 2023.
(11)
Includes $5,500 in cash compensation earned in 2022 but paid in 2023 in connection with the FLG Consulting Agreement. For more information
on Mr. Ahmads compensation arrangements, please see the discussion in Executive Compensation Executive Officer
CompensationCompensation Arrangement for Interim Chief Financial Officer.
22
Outstanding Equity Awards at 2023 Fiscal Year-End
The following table shows, with respect to each
of our named executive officers, the number of shares subject to options exercisable and unexercisable and the number of shares subject
to RSU awards that have not vested as of the end of fiscal 2023. Mr.Ahmad did not hold any stock options, RSUs or other stock-based
awards at the end of fiscal 2023.
Option Awards
Stock Awards
Name
Grant Date
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Option
Price
($)
(1)
Option
Expiration
Date
(2)
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
(3)
David I. Bruce
4/13/18
15,000
5.69
4/13/25
(4)
5/21/19
200,000
4.92
5/21/26
(4)
5/21/19
100,000
300,000
4.92
5/21/26
(5)
9/3/20
129,000
2.13
(6)
9/3/27
(4)
8/5/21
54,488
27,252
6.58
8/5/28
(7)
8/5/21
13,422
(8)
37,716
10/27/22
40,420
80,850
2.28
10/27/29
(9)
10/27/22
39,821
(10)
111,897
Patrick Mercer
9/18/18
30,000
6.00
9/18/28
(4)
6/6/19
40,000
5.04
6/6/29
(4)
10/22/19
19,000
2.25
(11)
10/22/26
(4)
9/3/20
69,000
2.13
(6)
9/3/27
(4)
8/5/21
23,671
11,839
6.58
8/5/28
(7)
8/5/21
5,831
(8)
16,385
10/27/22
24,071
48,147
2.28
10/27/29
(9)
10/27/22
23,714
(10)
66,636
9/19/23
115,000
2.13
9/19/30
(12)
____________
(1)
Unless otherwise indicated, options were granted at an exercise price per share equal to the fair market value of a share of Common Stock,
as determined by reference to the closing price reported on The Nasdaq Global Market on the grant date.
(2)
Options held by our named executive officers may terminate before their expiration dates if the executives status as a service
provider is terminated, including in connection with the executives death or disability.
(3)
This amount reflects the fair market value of our Common Stock of $2.81 per share as of December29, 2023 (the last businessday
of calendar year 2023), multiplied by the amount shown in the column for the Number of Shares or Unitsof Stock that have not vested.
(4)
The options listed are fully vested and may be exercised in full.
(5)
These performance-based stock options represent a contingent right to purchase shares of Common Stock. This performance-based
stock option award vests in 100,000share increments, upon the Companys stock price (measured based on the average,
trailing, 60-day closing price of a share of Common Stock) achieving the stock price performance goals of $6.55, $9.00, $12.00, and
$18.00 during the period from the awards grant date through December31, 2023, and subject to the executive continuing
as a service provider through the applicable date of certification of achievement. As of fiscal year ended December30, 2023,
the Company had only achieved the $6.55 stock price performance goal, and as a result, only 100,000 shares of the corresponding
stock option award vested.
(6)
This stock option was granted at an exercise price of $2.13 per share, which was equal to the average closing price of the Companys
Common Stock during the 30-day trading period preceding the date of grant.
(7)
One-third of the total number of shares subject to the option vested on July4, 2022, and each one-year anniversary thereafter,
subject to our named executive officer continuing as a service provider through each such date.
(8)
One-third of the total number of shares subject to the award of RSUs vested on July4, 2022, and each one-year anniversary thereafter,
in each case subject to our named executive officer continuing as a service provider through the applicable vesting date.
23
(9)
One-third of the total number of shares subject to the option vest on June30, 2023, and each one-year anniversary thereafter, in
each case subject to our named executive officer continuing as a service provider through the applicable vesting date.
(10)
One-third of the total number of shares subject to the award of RSUs vest on June30, 2023 and each one-year anniversary thereafter,
in each case subject to our named executive officer continuing as a service provider through the applicable vesting date.
(11)
This stock option was granted at an exercise price of $2.25 per share, which was equal to 120% of the average closing price of the Companys
Common Stock during the 10-day trading period preceding the date of grant.
(12)
Shares subject to the option vest as to one-third of the total number of shares on June 30, 2024 and
each one-year anniversary thereafter, in each case subject to Mr. Mercer continuing as a service provider through the applicable vesting
date.
Change in Control Severance Agreements with Messrs. Bruce
and Mercer
We entered into Change in Control Severance Agreements
with Messrs. Bruce and Mercer in 2019. It is expected that from time to time the Company will consider the possibility of an acquisition
by another company or other type of change in control. We recognize that such consideration can be a distraction to our named executive
officers and can cause them to consider alternative employment opportunities. We believe that it is imperative to provide such individuals
with severance benefits upon their termination of employment following a change in control to secure their continued dedication and objectivity,
notwithstanding the possibility, threat or occurrence of a change in control, provide such individuals with an incentive to continue employment
and motivate them to maximize our value upon a change in control for the benefit of stockholders, and provide such individuals with enhanced
financial security. The Change in Control Severance Agreements, and the potential severance benefits payable thereunder to our named executive
officers under specified circumstances, do not affect the Compensation Committees decisions regarding other elements of compensation.
The Change in Control Severance Agreements for Messrs. Bruce and Mercer are described in further detail below.
Termination Within the Change in Control Context
If, within twelvemonths following a Change
in Control (as defined below) or at any time prior to a Change in Control if such termination is effected at the request of any successor
to the Company, such executive terminates his employment with the Company for Good Reason (as defined below), or the Company terminates
such executives employment for a reason other than Cause (as defined below), death or disability, and, in each case, such executive
signs and does not revoke a standard release of claims with the Company, then such executive will receive the following severance from
the Company:
(i)
Cash Severance Payment
. In the case of Mr.Bruce, a lump sum cash payment equal to 150% of his annual base salary, and in
the case of Mr.Mercer, a lump sum cash payment equal to 100% of his annual base salary.
(ii)
Vesting Acceleration
. Accelerated vesting as to 100% of the then unvested portion of such executives outstanding Company
equity awards, assuming, with respect to Company equity awards subject to performance criteria, the performance criteria had been achieved
at target levels.
(iii)
Continued Employee Benefits
. Reimbursement from the Company for a period of up to twelvemonths for the premiums payable
for himself and/or his eligible dependents for coverage under the Companys benefit plans.
Definitions of Cause, Good Reason,
and Change in Control
For the purposes of the Change in Control Severance
Agreements, the following definitions generally apply.
Cause means: (i)an act of
dishonesty made by an executive in connection with such executives responsibilities as an employee; (ii)such executives
conviction of, or plea of nolo contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude,
or a material violation of federal or state law by such executive that the Board reasonably believes has had or will have a detrimental
effect on the Companys reputation or business; (iii)such executives gross misconduct; (iv)such executives
unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom such executive
owes an obligation of nondisclosure as a result of such executives relationship with the Company; (v)such executives
willful breach of any obligations under any written agreement or covenant with the Company; or (vi)such executives continued
failure to perform his employment duties after such executive has received a written demand of performance from the Company that specifically
sets forth the factual basis for the Companys belief that such executive has not substantially performed his duties and that the
executive has failed to cure such non-performance to the Companys satisfaction within ten (10)business days after receiving
such notice.
24
Good Reason means the occurrence
of one or more of the following events effected without an executives prior consent, provided that such executive terminates employment
with the Company within ninety (90)days following the expiration of the Companys Cure Period: (i)the assignment to
such executive of any duties or the reduction of such executives duties, either of which results in a material diminution in such
executives position or responsibilities with the Company; provided that, it being understood that the continuance of such executives
duties and responsibilities at the subsidiary or divisional level following a Change in Control, rather than at the parent, combined
or surviving company level following such Change in Control shall not be deemed Good Reason within the meaning of this clause (i); (ii)a
reduction by the Company in the base salary of such executive by fifteenpercent (15%) or more, unless similar such reductions occur
concurrently with and apply to the Companys senior management; (iii)a material change in the geographic location at which
such executive must perform services (for purposes of this Agreement, the relocation of such executive to a facility or a location less
than twenty-five(25)miles from such executives then-present location shall not be considered a material change in
geographic location); (iv)a material reduction of facilities, perquisites or in the kind or level of employee benefits to which
such executive is entitled, unless similar such reductions occur concurrently and apply to the Companys senior management; or
(v)any material breach by the Company of any material provision of the Change in Control Severance Agreement. Such executive will
not resign for Good Reason without first providing the Company with written notice of the acts or omissions constituting the grounds
for Good Reason within ninety (90)days of the initial existence of the grounds for Good Reason and
a reasonable cure period of thirty (30)days (Cure Period) following the date of such notice.
Change in Control means the occurrence
of any of the following events: (i) a change in the ownership of the Company which occurs on the date that any one person, or more than
one person acting as a group, (Person) acquires ownership of the stock of the Company that, together with the stock held
by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for purposes
of this subsection (i), the acquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting
power of the stock of the Company will not be considered a Change in Control; or (ii) a change in the effective control of the Company
which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment
or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes
of this clause (ii), if any Person is considered to effectively control the Company, the acquisition of additional control of the Company
by the same Person will not be considered a Change in Control; or (iii) a change in the ownership of a substantial portion of the Companys
assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more
than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions;
provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial
portion of the Companys assets: (A) a transfer to an entity that is controlled by the Companys stockholders immediately
after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer)
in exchange for or with respect to the Companys stock, (2) an entity, 50% or more of the total value or voting power of which
is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or
voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which
is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross
fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard
to any liabilities associated with such assets. For purposes of this definition of Change in Control, persons will be considered to be
acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Company. For the avoidance of any doubt, a transaction will not be deemed a Change in Control unless
the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from
time to time, and any proposed or final U.S. Treasury Department Regulations and U.S. Internal Revenue Service guidance that has been
promulgated or may be promulgated thereunder from time to time.
Tax and Accounting Considerations
The Compensation Committee considers tax and accounting
effects in administering the executive compensation program and aims to maintain compensation expenses for our most senior executive team
within reasonable levels based on relevant factors such as the Companys operations and financials and the prevailing market practices.
25
Prior to 2018, Section162(m)generally
limited the federal tax deductibility of compensation paid to our Chief Executive Officer and certain other executive officers of the
Company to $1million annually unless the compensation over $1million qualified as performance-based within the
meaning of Section162(m). As a result of the TCJA, the performance-based compensation exception under Section162(m)was
eliminated and the covered employees to whom Section162(m)would apply was expanded. Accordingly, for fiscal
year 2023, we generally are not able to take a deduction for any compensation paid to our named executive officers in excess of $1million
unless the compensation qualifies for the limited transition relief applicable to certain arrangements in place on November2, 2017.
The Company cannot guarantee that any compensation payable to our named executive officers will qualify for the transition relief or that
the compensation will be deductible, and the Company also may from time to time provide compensation to our named executive officers that
may not be deductible to the extent that the aggregate amount exceeds $1million. However, the Compensation Committee intends to
maintain an approach to executive compensation that strongly links pay to performance.
We account for equity-based awards in accordance
with ASC Topic718.
Pay Versus Performance
As required by Section953(a)of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item402(v)of RegulationS-K, we are providing the following
information about the relationship between compensation actually paid (Compensation Actually Paid) to our Principal Executive
Officer (the PEO) and the other named executive officers (the Non-PEO NEOs) and certain financial performance
metrics of the Company using a methodology that has been prescribed by the SEC.
26
Pay Versus Performance
Year
Summary
Compensation
TableTotal
forPEO
($)
(1)(2)
Compensation
ActuallyPaid
toPEO
($)
(1)(3)
Average
Summary
Compensation
TableTotal
forNon-PEO
NEOs
($)
(1)(2)
Average
Compensation
ActuallyPaid
toNon-PEO
NEOs
($)
(1)(3)
NEOs included in the above compensation columns reflect the following:
Year
PEO
Non-PEO NEOs
2023
David I. Bruce
Patrick Mercer and Fuad Ahmad
2022
David I. Bruce
Patrick Mercer and Fuad Ahmad
2021
David I. Bruce
Patrick Mercer and Fuad Ahmad
(2)
2023 Compensation Actually Paid to our PEO and the average Compensation Actually Paid to our Non-PEO NEOs reflect the following adjustments
from total compensation reported in the Summary Compensation Table:
PEO
($)
Average
Non-PEO
NEOs
($)
Total Reported in 2023 Summary Compensation Table (SCT)
397,195
437,454
Less, value of equity awards reported in SCT
76,073
Plus, year-end value of equity awards granted in fiscal year that are unvested and outstanding at fiscal year-end
107,059
Plus, change in fair value of equity awards granted in a prior year that are outstanding and unvested at fiscal year-end
69,910
19,273
Plus, fair value of equity awards granted in fiscal year and that vested in
fiscal year
Plus, change in fair value of equity awards granted in a prior year that vested in fiscal year
(60,908)
8,519
Less, fair value as of immediately prior year-end of equity awards granted in a prior year that failed to vest in fiscal year
Total adjustments
9,002
210,923
Compensation Actually Paid for fiscal year 2023
406,197
648,377
2022 Compensation Actually Paid to our PEO and the average Compensation
Actually Paid to our Non-PEO NEOs reflect the following adjustments from total compensation reported in the Summary Compensation Table:
27
PEO
($)
Average
Non-PEO
NEOs
($)
Total Reported in 2022 SCT
765,766
496,456
Less, value of equity awards reported in SCT
(306,460
)
(91,250
)
Plus, year-end value of equity awards granted in fiscal year that are unvested and outstanding at fiscal year-end
291,060
86,665
Plus, change in fair value of equity awards granted in a prior year that are outstanding and unvested at fiscal year-end
(1,304,163
)
(117,175
)
Plus, fair value of equity awards granted in fiscal year and that vested in
fiscal year
Plus, change in fair value of equity awards granted in a prior year that vested in fiscal year
(362,132
)
(103,894
)
Less, fair value as of immediately prior year-end of equity awards granted in a prior year that failed to vest in fiscal year
Total adjustments
(1,681,694
)
(225,655
)
Compensation Actually Paid for fiscal year 2022
(915,928
)
270,802
2021 Compensation Actually Paid to our PEO and the average Compensation
Actually Paid to our Non-PEO NEOs reflect the following adjustments from total compensation reported in the Summary Compensation Table:
PEO
($)
Average
Non-PEO
NEOs
($)
Total Reported in 2021 SCT
1,274,427
662,751
Less, value of equity awards reported in SCT
(573,357
)
(124,541
)
Plus, year-end value of equity awards granted in fiscal year that are unvested and outstanding at fiscal year-end
578,041
125,558
Plus, change in fair value of equity awards granted in a prior year that are outstanding and unvested at fiscal year-end
1,240,887
136,365
Plus, fair value of equity awards granted in fiscal year and that vested in
fiscal year
Plus, change in fair value of equity awards granted in a prior year that vested in fiscal year
798,782
145,897
Less, fair value of as of immediately prior year-end of equity awards granted in a prior year that failed to vest in fiscal year
Total adjustments
2,044,353
283,280
Compensation Actually Paid for fiscal year 2021
3,318,780
946,031
(3)
Fair value or change in fair value, as applicable, of equity awards in the Compensation Actually Paid columns was determined
by reference to (a)for RSU awards, closing price of a share of our Common Stock on applicable year-end date(s)or, in the
case of vesting dates, the closing price of a share of our Common Stock on the applicable vesting date (or if there was no closing price
on suchday, the lasttrading day immediately prior to the applicable vesting date), and (b)for stock options, a Black-Scholes value as of the applicable year-end or vesting date(s), determined based on the same methodology as used to determine grant date
fair value but using the closing price of a share of our Common Stock on the applicable revaluation date as the current market price
and with an expected life set equal to the remaining life of the award in the case of underwater stock options and, in the case of in-the-money
options, an expected life equal to the original ratio of expected life relative to the seven year contractual life multiplied by the
remaining life as of the applicable revaluation date, and in all cases based on volatility and risk free rates determined as of the revaluation
date based on the expected life period and based on an expected dividend rate of 0%.
(4)
Total Shareholder Return (TSR) illustrates the value, as of the lastday of each period indicated, of $100 invested
in the Common Stock of IRIDEX on December31, 2020, the lasttrading day in fiscal year 2020.
(5)
The dollar amounts reported are the Companys net income/loss reflected in the Companys audited financial statements.
28
Relationship Between Compensation Actually Paid and TSR
The following graph shows the relationship between
the Compensation Actually Paid to our PEO, the average Compensation Actually Paid to our Non-PEO NEOs, and the Companys TSR over
the three most recently completed fiscalyears.
Relationship Between Compensation Actually Paid and Net Income/Loss
The following graph shows the relationship between
the Compensation Actually Paid to our PEO, the average Compensation Actually Paid to our Non-PEO NEOs, and the Companys Net Loss
during the three most recently completed fiscalyears.
29
Director Compensation
We use a combination of cash and equity compensation
to attract and retain qualified candidates to serve on our Board.
The following table provides information concerning
the compensation paid by us to each of our non-employee directors for fiscal 2023. Subsequent to his appointment as Chief Executive Officer,
Mr.Bruce did not receive additional compensation for his services as a member of our Board. Because no new directors were added
to the Board in 2023, no directors were issued stock options to purchase 15,000shares of Common Stock, which is our standard equity
award for new directors. Additional information is discussed below in the section titled
Equity Compensation.
Director Compensation for 2023
Name
FeesEarnedor
PaidinCash
($)
Stock
Awards
($)
(1)(2)
Option
Awards
($)
(1)(2)
Total
($)
Beverly A.Huss
52,500
74,999
127,499
Nandini Devi
46,500
74,999
121,499
Robert Grove, Ph.D.
44,000
74,999
118,999
Kenneth E.Ludlum
59,500
74,999
134,499
Scott Shuda
79,000
74,999
153,999
____________
(1)
Reflects the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic718. We discuss the assumptions
that we used to calculate these amounts in Note11 to our financial statements included in our Annual Report on Form10-K,
filed as of March29, 2024 for the fiscal year ended December30, 2023, and incorporated by reference herein. As required by
SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.
(2)
As of December30, 2023, the aggregate number of shares underlying options and RSUs outstanding for each of our non-employee directors
was:
Pursuant to our non-employee director cash compensation
policy that was approved in June 2022, non-employee members of our Board received an annual retainer of $35,000. In addition, the chairperson
of the Audit Committee received an annual retainer of $15,000, the chairperson of the Nominating and Governance Committee received an
annual retainer of $9,500, the chairperson of the Compensation Committee received an annual retainer of $10,000, and the chairperson
of the Board received an annual retainer of $35,000. Each member (other than the chairperson) of the Audit Committee received an additional
annual retainer of $7,500, each member (other than the chairperson) of the Nominating and Governance Committee received an additional
annual retainer of $4,000, and each member (other than the chairperson) of the Compensation Committee received an additional annual retainer
of $5,000. These annual retainers are paid in quarterly installments in arrears. We reimburse members of the Board and Board committees
for reasonable out-of-pocket expenses incurred by them in attending such meetings.
30
Equity Compensation
Pursuant to our non-employee director equity compensation
policy, historically, on the date of each annual meeting of stockholders each non-employee director automatically received an RSU grant
equal to $75,000 worth of Common Stock (determined based upon the fair market value of the shares at the time such RSU award was granted)
under our 2008 EIP.Each such RSU grant vests in full on the earlier of the one-year anniversary of the date of grant or our next
annual meeting of stockholders, subject to the non-employee directors continued service as a Board member through the vesting date.
Newly appointed directors have historically been granted a stock option to purchase 15,000shares of Common Stock. In 2024, the Board
has decided to forego the regular equity compensation grants to non-employee directors at the Company's Annual Meeting.
Information on Compensation Risk Assessment
Management periodically reviews our incentive
compensation programs at all levels within the organization and reports to the Compensation Committee with respect to its findings. Employee
cash bonuses are based on company-wide and individual performance, and management discretion (with respect to our non-executive employees),
and our Compensation Committee and the Board have discretion to adjust bonus payouts. Equity awards for new hires are based on the employees
position, prior experience, qualifications, and the market for particular types of talent, and any additional grants are based on employee
performance and retention requirements. Equity awards have long-term vesting requirements to ensure that recipients focus is on
our long-term success.
Equity Compensation Plan Information
The following table summarizes our equity compensation
plan information as of December30, 2023. Information is included for equity compensation plans approved by our stockholders. We
do not have any equity compensation plans not approved by our stockholders.
Plan Category
Numberof
Securitiesto
beIssued
Upon
Exerciseof
Outstanding
Options,
Warrantsand
Rights
(#)
Weighted-
Average
Exercise
Priceof
Outstanding
Options,
Warrantsand
Rights
($)
Equity compensation plans approved by security holders
(1)
3,111,133
(2)
3.60
(3)
332,993
(4)
________________
(1)
Includes the 2008 EIP.
(2)
Includes 353,212 shares subject to RSUs that were outstanding as of December30, 2023, that were issued under the 2008 EIP.
(3)
RSUs, which do not have an exercise price, are excluded in the calculation of weighted-average exercise price.
(4)
Shares subject to awards of restricted stock, RSUs, performance shares or performance units issued under the 2008 EIP and
that are granted with a per share or unit purchase price less than 100% of the fair market value on the date of grant count against the
maximum aggregate number of shares that may be issued pursuant to awards as 1.5shares for every one share subject to such an award.
31
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information
known to the Company regarding the beneficial ownership of Common Stock as of April1, 2024, by (i)each person (or group of
affiliated persons) who is the beneficial owner of more than 5% of our Common Stock, (ii)each director and nominee for director,
(iii)each of the Companys executive officers named in the Summary Compensation Table appearing herein and (iv)all
of the Companys directors and executive officers as a group:
Individuals and entities related with Brent Alexander Roland
(6)
881,998
5.4
Directors
DavidI.Bruce
(7)
609,031
3.6
Nandini Devi
(8)
48,830
*
Robert Grove, Ph.D.
(9)
135,836
*
Beverly A.Huss
(10)
35,597
*
Kenneth E.Ludlum
(11)
77,444
*
Scott Shuda
(12)
83,799
*
Named Executive Officers
DavidI.Bruce
(7)
609,031
3.6
Patrick Mercer
(13)
255,635
1.6
Fuad Ahmad
*
All current directors and executive officers as a group (8 persons)
(14)
1,246,172
7.3
____________
*
Represents less than 1% of the total.
(1)
Unless otherwise indicated in the table, the address for each listed person is c/o IRIDEX Corporation, 1212 Terra Bella Avenue, Mountain
View, CA94043.
(2)
The number and percentage of shares beneficially owned is determined under rules of the SEC, and the information is not necessarily indicative
of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual
has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60days
of April1, 2024, through the exercise of any stock option or other right. Unless otherwise indicated in the footnotes, each person
has sole voting and investment power (or shares such powers with his or her spouse) with respect to the shares shown as beneficially
owned. Percentage beneficially owned is based on 16,252,813 shares of Common Stock outstanding on April 1, 2024.
(3)
Includes shares of Common Stock held directly by Topcon America Corporation. Topcon Corporation is the sole shareholder of Topcon America
Corporation. Each of Topcon America Corporation and Topcon Corporation may be deemed to be the beneficial owner of the shares of Common
Stock beneficially owned by Topcon America Corporation. Topcon America Corporation is located at 111 Bauer Drive, Oakland, New Jersey
07436. This information was obtained from a Form13D filed with the SEC on March23, 2021.
(4)
Stanley Manne Trust is located at 3737 North East 214
th
Street, Aventura, Florida 33180.
This information was obtained from a Schedule13G/A filed with the SEC on February14, 2018.
(5)
Represents 963,250shares of Common Stock held of record by Paragon Associates and Paragon AssociatesII Joint Venture (Paragon
JV). Bradbury DyerIII, as the authorized agent of Paragon JV, has the power to direct the vote and disposition of 963,250shares
of Common Stock held by Paragon JV.Paragon JV is located at 500 Crescent Court, Suite 260, Dallas, Texas 75201. This information
was obtained from a Schedule13D filed with the SEC on November23, 2022.
32
(6)
Includes shares owned by: Roland Family Support Trust; Brent Alexander Roland; Leigh Ann Roland; and Glenn Cuthbert Roland (Individuals
and entities related with Brent Alexander Roland). Individuals and entities affiliated with Brent Alexander Roland are located
at 7605 N Shadow Mountain Road, Paradise Valley, AZ85253. This information was obtained from a Schedule13D filed with the
SEC on September20, 2022.
(7)
Consists of (i)85,123 shares of Common Stock held by Mr.Bruce and (ii)523,908 shares of Common Stock subject to options
exercisable within 60days of April1, 2024.
(8)
Consists of (i)37,892 shares of Common Stock held by Ms. Devi and (ii)10,938 shares of Common Stock subject to options exercisable
within 60days of April1, 2024.
(9)
Consists of (i)120,836 shares of Common Stock held by Dr.Grove and (ii)15,000 shares of Common Stock subject to options
exercisable within 60days of April1, 2024.
(10)
Consists of (i)27,472 shares of Common Stock held by Ms. Huss and (ii)8,125 shares of Common Stock subject to options exercisable
within 60days of April1, 2024.
(11)
Consists of (i)62,444 shares of Common Stock held by Mr.Ludlum and (ii)15,000 shares of Common Stock subject to options
exercisable within 60days of April1, 2024.
(12)
Consists of (i)68,799 shares of Common Stock held by Mr.Shuda and (ii)15,000 shares of Common Stock subject to options
exercisable within 60days of April1, 2024.
(13)
Consists of (i)49,893 shares of Common Stock held by Mr.Mercer, and (ii)205,742 shares of Common Stock subject to options
exercisable within 60days of April1, 2024.
(14)
Includes (i)452,459 shares of Common Stock held by all current directors and executive officers as a group and (ii)793,713
shares of Common Stock subject to options exercisable within 60days of April1, 2024.
33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the compensation arrangements with
our directors and executive officers discussed above in the section titled Executive Compensation and except as described
below, there were no transactions in the last two fiscalyears or currently proposed transactions in which we have been a participant
and:
the amounts involved exceed the lesser of $120,000 or one percent of the average of our total assets at year end of the last two completed
fiscalyears; and
any of our directors, nominees for director, executive officers or holders of more than five percent of our outstanding capital stock,
or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct
or indirect material interest.
Indemnification Agreements
We have entered into agreements to indemnify our
directors and executive officers. These agreements will, among other things, require us to indemnify these individuals for certain expenses
(including attorneys fees), judgments, fines and settlement amounts reasonably incurred by any such person in any action or proceeding,
including any action by or in our right, on account of any services undertaken by such person on behalf of our Company or that persons
status as a member of our Board to the maximum extent allowed under Delaware law.
Transactions with Topcon Corporation
On March2, 2021, we entered into a series
of strategic transactions with Topcon Corporation (Topcon) Topcon America Corporation (the Investor) and Topcon
Medical Laser Systems, Inc., a subsidiary of Topcon (the Seller) (such transactions, the Topcon Transactions),
which included (i)an asset purchase agreement with the Seller, pursuant to which we acquired substantially all the assets (except
for cash and cash equivalents) of the Seller, including rights to the PASCAL product, (ii)a distribution agreement with Topcon dated
March2, 2021, pursuant to which we granted Topcon the exclusive right to distribute our retina and glaucoma products in certain
geographies outside the UnitedStates, and (iii)an investment agreement with Investor dated March2, 2021, pursuant to
which the Investor acquired 1,618,122shares of the our Common Stock for an aggregate purchase price of $10million.
Policies and Procedures for Related Party Transactions
Our written policies and procedures adopted by
the Board provide that, if any of our directors, officers or employees has a significant direct or indirect financial interest in a transaction
between us and a third party, subject to specified exceptions and other than those that involve compensation, such interest must be disclosed
to and approved by the Company. Our Audit Committee has the principal responsibility for reviewing and approving in advance any proposed
related party transactions pursuant to these policies and procedures.
34
OTHER MATTERS
Delinquent 16(a)Reports
Section16(a)of the ExchangeAct
requires that our executive officers and directors, and persons who own more than 10% of our Common Stock, file reports of ownership and
changes of ownership with the SEC.Such directors, executive officers and 10% stockholders are required by SEC regulation to furnish
us with copies of all Section16(a)forms they file.
SEC regulations require us to identify in this
proxy statement anyone who filed a required report late during the most recent fiscal year. Based on our review of forms filed with the
SEC, or written representations from reporting persons stating that they were not required to file these forms, we believe that during
our fiscal year ended December30, 2023, all Section16(a)filing requirements were satisfied on a timely basis.
The Board does not know of any other matters to
be presented at this meeting. If any other matters properly come before the meeting, it is the intention of the designated proxies to
vote the shares they represent as the Board may recommend.
THE BOARD OF DIRECTORS
Dated: April29, 2024
35
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You may vote online or by phone instead of mailing this card.
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GIof ntoo welwewct.reonnviicsivoontrienpgo,rts.com/IRIX or
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Annual Meeting Proxy Card
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A Proposals The Board of Directors recommends a vote FOR each of the nominees listed in Proposal 1, and FOR Proposals 2 and 3.
For Withhold For Withhold For Withhold +
1. Election of Directors:
01 - David I. Bruce
04 - Kenneth E. Ludlum
02 - Robert Grove, Ph.D. 03 - Beverly A. Huss
05 - Scott Shuda
2. To ratify the appointment of BPM LLP as the Companys independent registered public accounting firm for fiscal year
2024 ending December 28, 2024.
For Against Abstain For Against Abstain
3. To conduct an advisory vote to approve the compensation of the
Companys named executive officers.
In his discretion, the proxy and attorney-in-fact is authorized to vote upon such other matters which may properly come before the meeting and any adjournment(s) or postponement(s) thereof.
B Authorized Signatures This section must be completed for your vote to count. Please date and sign below.
This Proxy should be marked, dated, signed by the stockholder(s) exactly as his or her name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both should sign. If a corporation, please sign in full corporate name by authorized person. If a partnership, please sign in partnership name by authorized person.
Date (mm/dd/yyyy) Please print date below.
Signature 1 Please keep signature within the box. Signature 2 Please keep signature within the box.
03ZRWD
1 U P X +
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q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy IRIDEX Corporation +
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2024 ANNUAL MEETING OF STOCKHOLDERS June 18, 2024
The undersigned stockholder of IRIDEX Corporation, a Delaware corporation (IRIDEX), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated on or around May 8, 2024, and hereby appoints David I. Bruce and Scott Shuda, each of them, proxy and attorney-in-fact, with full power of substitution and re-substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2024
Annual Meeting of Stockholders of IRIDEX to be held on June 18, 2024, at 9:00 a.m., Pacific Time, at the principal offices of IRIDEX located at 1212 Terra Bella Avenue, Mountain View, California 94043, and at any adjournment(s) or postponement(s) thereof and to vote all shares of Common Stock of IRIDEX which the undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side of this Proxy.
This proxy will be voted as directed or, if no contrary direction is indicated, will be voted FOR the election of each of the director nominees listed, FOR ratification of the appointment of BPM LLP as the Companys independent registered public accounting firm for fiscal year 2024 ending December 28, 2024, FOR an advisory vote to approve the compensation of the Companys named executive officers, and as said proxies deem advisable on such other matters as may come before the meeting and any adjournment(s) or postponement(s) thereof. The Board of Directors unanimously recommends a vote FOR each of the director nominees listed in Proposal 1, FOR Proposal 2 and FOR Proposal 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
C Non-Voting Items
Change of Address Please print new address below.
+
TABLE OF CONTENTS
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR
WHICH
THE 13F WAS FILED.
FUND
NUMBER OF SHARES
VALUE ($)
PUT OR CALL
Directors of IRIDEX CORP - as per the
latest proxy Beta
(We are using algorithms to extract and display detailed data. This is a hard problem and we are working continuously to classify data in an accurate and useful manner.)
