LOOP INDUSTRIES, INC.
10-Ks and 10-Qs
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(RULE 14a-101)
SCHEDULE 14A INFORMATION
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Pursuant to § 240.14a-12
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LOOP INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
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Registrant)
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Loop Industries, Inc.
480 Fernand-Poitras Street
Terrebonne, Québec, Canada, J6Y 1Y4
__________________
NOTICE OF THE 2020 ANNUAL MEETING OF STOCKHOLDERS
Dear
Stockholders:
Due to
continued public health precautions and to comply with
government-issued orders and guidelines regarding in-person
gatherings given a novel strain of coronavirus (COVID-19) pandemic
and to ensure the health and safety of Loop Industries,
Inc.’s shareholders, employees, directors and officers, and
communities, the format of our 2020 Annual Meeting of Stockholders
(the “2020 Annual Meeting”) will be a virtual-only
meeting, instead of an in-person meeting, on June 29, 2020 10:00
a.m. local time, for the purpose of considering and acting upon the
following proposals:
(1)
To elect four
members of the Board of Directors to hold office until the next
annual meeting of stockholders or until their respective successors
have been elected and qualified;
(2)
To ratify the
appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the fiscal year ending
February 28, 2021;
(3)
To hold an advisory
vote on executive compensation; and
(4)
To transact such
other business as may properly come before the meeting or any
postponement or adjournment thereof.
Shareholders will
not be able to attend the 2020 Annual Meeting physically in person.
The virtual meeting and live audio webcast can be accessed at
www.virtualshareholdermeeting.com/LOOP2020
.
To vote
or submit questions during the virtual meeting, shareholders must
enter the 16-digit control number included on the proxy card,
voting instruction form, notice or email that they previously
received. Online access to the audio webcast will open shortly
prior to the start of the 2020 Annual Meeting. Guests without a
control number may also attend the meeting but will not have the
option to vote shares or ask questions.
All
shareholders, whether or not planning to attend the Annual Meeting,
are encouraged to vote promptly in advance of the meeting by using
one of the methods described in the proxy materials for the Annual
Meeting.
We will
be using the U.S. Securities and Exchange Commission rules that
allow issuers to furnish proxy materials to their stockholders via
the Internet. Pursuant to these rules, instead of mailing a printed
copy of our proxy materials to each stockholder we have elected to
provide access to our proxy materials over the Internet.
Accordingly, with the exception of certain requesting stockholders
who will receive printed copies of our proxy materials by mail,
stockholders of record will receive a Notice of Internet
Availability of Proxy Materials and may vote at the 2020 Annual
Meeting and any postponements or adjournments of the meeting. We
expect to mail the Notice of Internet Availability of Proxy
Materials on or about May 8, 2020.
The
Board of Directors has fixed the close of business on May 1, 2020
as the record date for determination of stockholders entitled to
receive notice of, and to vote at, the 2020 Annual Meeting and at
any postponements or adjournments thereof. A list of stockholders
entitled to vote at the 2020 Annual Meeting will be available at
the meeting being held via live webcast and for ten days prior to
the 2020 Annual Meeting.
Our
Annual Report on Form 10-K for the fiscal year ended February 29,
2020 accompanies this Notice of Annual Meeting of Stockholders and
Proxy Statement. These documents may also be accessed on the
Broadridge Financial hosted site
www.proxyvote.com
.
Please
refer to the Proxy Statement for further information with respect
to the business to be transacted at the 2020 Annual
Meeting.
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By
Order of the Board of Directors,
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(s) Michel Megelas
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Michel
Megelas
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Chief
Legal Officer and Corporate Secretary
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Terrebonne,
Québec
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PROXY STATEMENT
_____________________
ANNUAL MEETING OF STOCKHOLDERS
June 29, 2020
_____________________
This
Proxy Statement is furnished in connection with the solicitation by
Loop Industries, Inc. (the “Company”) on behalf of the
Board of Directors (the “Board” or the “Board of
Directors”) of proxies for use at our 2020 Annual Meeting of
Stockholders to be held on June 29, 2020 via live webcast (the
“2020 Annual Meeting”). We intend to mail and make
available this Proxy Statement and the accompanying form of proxy
to stockholders on or about May 15, 2020.
EXPLANATORY
NOTES
All
monetary amounts shown in this Proxy Statement are expressed in
United States dollars, unless otherwise expressly noted. Canadian
dollars are referred to as “CAD”. In various places
throughout this proxy, we have assumed an exchange rate to convert
any Canadian dollars into U.S. dollars of $1.00 CAD = $0.7544 U.S.,
which was the average exchange rate for fiscal 2020. We make no
representation that the Canadian dollar or U.S. dollar amounts
referred to in this proxy could have been converted into U.S.
dollars or Canadian dollars, as the case may be, at any particular
rate or at all.
TABLE OF CONTENTS
Page
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VOTING RIGHTS
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1
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RECORD DATE AND SHARE OWNERSHIP
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1
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PROXIES
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1
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STOCKHOLDER PROPOSALS
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1
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PROXY SOLICITATION COSTS
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1
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PROPOSAL ONE: ELECTION OF DIRECTORS
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2
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Information
Regarding Director to Be Elected by Holder of Our Series A
Preferred Stock
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2
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Information
Regarding the Nominees for Election as Directors
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3
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Information
Regarding Directors Not Standing for Re-election
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4
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Required
Vote & Recommendation of the Board
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4
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CORPORATE GOVERNANCE
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5
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Board
of Director Meetings and Committees
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5
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Controlled
Company Status
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5
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Board
Independence
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6
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The
Board’s Leadership Structure
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6
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Committees
of the Board of Directors
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6
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Consideration
of Director Nominees
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9
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Annual
Meeting Attendance
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10
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Stockholder
Communications with the Board of Directors
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10
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Code
of Ethics
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11
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Indemnification
Agreements
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11
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Rule
10b5-1 Trading Plans
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11
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Board’s
Role in Risk Oversight
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11
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Compensation
of Non-Employee Directors
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12
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Fiscal
2020 Non-Employee Director Compensation Table
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13
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EXECUTIVE OFFICERS
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14
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EXECUTIVE COMPENSATION
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14
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Summary
Compensation
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25
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TRANSACTIONS WITH RELATED PERSONS
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32
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Transactions
and Relationships with Directors, Director Nominees, Executive
Officers and Five Percent Stockholders
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32
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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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33
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Audit Fees During Fiscal Years 2019 and 2018
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33
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Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Registered Public Accounting
Firm
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34
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Required
Vote & Recommendation of the Board
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34
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AUDIT COMMITTEE REPORT
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35
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
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36
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PROPOSAL THREE: ADVISORY VOTE ON EXECUTIVE
COMPENSATION
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38
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Required
Vote & Recommendation of the Board
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38
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OTHER MATTERS
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39
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DELINQUENT SECTION 16(A) REPORTS
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39
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HOUSEHOLDING OF ANNUAL MEETING MATERIALS
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39
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
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39
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ANNUAL REPORT ON FORM 10-K
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39
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COST OF SOLICITATION
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40
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NON-SOLICITATION MATERIALS
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40
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i
VOTING RIGHTS
Each
share of our common stock, par value $0.0001 per share (the
“Common Stock”), entitles the holder thereof to one
vote on matters to be acted upon at the 2020 Annual Meeting,
including the election of directors. Votes cast in person or by
proxy at the 2020 Annual Meeting will be tabulated by Broadridge
Financial Solutions, Inc., the Inspector of Elections. Any proxy
that is returned using the form of proxy enclosed or voted by
Internet according to the instructions included on the proxy card
will be voted in accordance with the instructions thereon, and if
no instructions are given, will be voted: (i) “FOR” the
election of all of the director nominees as described in Proposal
One; (ii) “FOR” ratification of the appointment of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm as described in Proposal Two; (iii)
“FOR” the approval of the advisory resolution relating
to our executive compensation as described in Proposal Three; and
(iv) if any other business is properly brought before the 2020
Annual Meeting, shares subject to proxies will be voted, to the
extent permitted by the rules and regulations of the Securities and
Exchange Commission, in accordance with the discretion of the
persons voting such proxies. A stockholder may indicate on the
enclosed proxy or its substitute that it is abstaining from voting
on a particular matter (an “abstention”). A broker may
indicate on the enclosed proxy or its substitute that it does not
have discretionary authority as to certain shares to vote on a
particular matter (a “broker non-vote”). Abstentions
and broker non-votes are each tabulated separately.
The
Inspector of Elections will determine whether or not a quorum is
present at the 2020 Annual Meeting. In general, Nevada law and our
By-laws provide that a majority of the shares issued and
outstanding and entitled to vote, present in person or represented
by proxy, constitutes a quorum. Abstentions and broker non-votes of
shares that are entitled to vote are treated as shares that are
present in person or represented by proxy for purposes of
determining the presence of a quorum.
In
determining whether a proposal has been approved, abstentions are
treated as present in person or represented by proxy and entitled
to vote, but not as voting for such proposal, and hence have the
same effect as votes against such proposal, while broker non-votes
are not treated as present in person or represented by proxy but
not entitled to vote, and hence have no effect on the vote for such
proposal.
RECORD DATE AND SHARE OWNERSHIP
Holders
of record of Common Stock as of the close of business on May 1,
2020 have the right to receive notice of and to vote at the 2020
Annual Meeting. On May 1, 2020, we had issued and outstanding
39,916,905 shares of Common Stock.
PROXIES
Proxies
for use at the 2020 Annual Meeting are being solicited by the
Company from our stockholders. Any person giving a proxy in the
form accompanying this Proxy Statement has the power to revoke it
at any time before its exercise by (i) filing with the Secretary of
the Company a signed written statement revoking his or her proxy or
(ii) submitting an executed proxy bearing a date later than that of
the proxy being revoked. A proxy may also be revoked by attendance
at the 2020 Annual Meeting and the election to vote in person.
Attendance at the 2020 Annual Meeting will not by itself constitute
the revocation of a proxy.
STOCKHOLDER PROPOSALS
Proposals of
stockholders that are intended to be presented at our 2021 Annual
Meeting of Stockholders must comply with the requirements of SEC
Rule 14a-8 and must be received by us no later than Friday, January
8, 2021 in order to be included in our proxy statement and form of
proxy relating to the meeting. A stockholder proposal or a
nomination for director for our 2021 Annual Meeting of Stockholders
that is not to be included in our proxy statement and form of proxy
relating to the meeting must be received by us no earlier than
Thursday, February 18, 2021 and no later than Saturday, March 20,
2021. Our By-laws require that certain information and
acknowledgements with respect to the proposal or nomination be set
forth in the stockholder’s notice. A copy of the relevant
bylaw provision is available upon written request to Loop
Industries, Inc., 480 Fernand-Poitras Terrebonne, Quebec, Canada
J6Y 1Y4, Attention: Chief Legal Officer. Further, our Amended and
Restated By-laws dated as of April 4, 2018 (the
“By-laws”) were filed as Exhibit 3.1 to our Current
Report on Form 8-K, filed with the Securities and Exchange
Commission (the “SEC”) on April 10, 2018 and may be
accessed through the SEC’s website at www.sec.gov/edgar.
Information contained on, or that can be accessed through, our
website is not intended to be incorporated by reference into this
proxy statement and references to our website address in this proxy
statement are inactive textual references only.
PROXY SOLICITATION COSTS
The
expense of solicitation of proxies will be borne by the Company. In
addition to solicitation of proxies by mail, certain officers,
directors and Company employees, who will receive no additional
compensation for their services, may solicit proxies by telephone
or in person. We are required to request brokers and nominees who
hold stock in their name to furnish this proxy material to
beneficial owners of the stock and will reimburse such brokers and
nominees for their reasonable out-of-pocket expenses in so
doing.
1
PROPOSAL ONE
ELECTION OF DIRECTORS
At the
2020 Annual Meeting, four directors will be elected to the Board by
the common stockholders. The Board of Directors has approved Peter
S. Kezios, Andrew Lapham, Laurence Sellyn and Jay Stubina as
nominees for election at the 2020 Annual Meeting. Sidney Horn, a
current director and chairman of the Nominating and Corporate
Governance Committee of the Board, will not stand for re-election
to the Board at the Annual Meeting and will retire from the Board
at the end of his term as director. Immediately prior to the 2020
Annual Meeting, we also expect that Daniel Solomita will be elected
to the Board upon the affirmative vote of the sole holder of our
Series A Preferred Stock, resulting in a total of five directors.
Except as set forth below, unless otherwise instructed, the persons
appointed in the accompanying form of proxy will vote the proxies
received by them FOR the nominees named below, all of whom are
presently directors of the Company, with the exception of Mr. Peter
S. Kezios who is up for election for the first time. The term of
office of each person elected as a director will continue until the
next Annual Meeting of Stockholders or until a successor has been
elected and qualified.
The
following table sets forth, as of February 29, 2020, the names and
ages of our directors and the principal offices and positions held
by each person:
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Name
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Age
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Title
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Daniel
Solomita
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44
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Chairman
of the Board of Directors, Chief Executive Officer, and
President
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Sidney
Horn
(1)
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69
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Director,
Chairman of the Nominating and Corporate Governance
Committee
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Andrew
Lapham
(2)
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47
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Director,
Chairman of the Compensation Committee
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Laurence
Sellyn
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70
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Lead
Independent Director, Chairman of the Audit Committee
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Jay
Stubina
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58
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Director
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____________
(1)
Mr. Horn will not
stand for re-election to our Board at the 2020 Annual
Meeting.
(2)
Mr. Lapham was
appointed as a director on June 28, 2019.
Information Regarding Director to Be Elected by Holder of Our
Series A Preferred Stock
Daniel Solomita
, 44, has served as
President and Chief Executive Officer and Chairman of the Board of
Directors of Loop Industries since 2015. Mr. Solomita is also the
Founder of the Company and the chief architect of the
Company’s growth strategy and mission to disrupt the global
plastics industry. As such, the Board of Directors considers Mr.
Solomita as fully qualified to sit as Chairman of the Board of
Directors. Mr. Solomita also served as the President, Secretary,
Treasurer and sole Director of Loop Holdings, Inc., a wholly-owned
subsidiary, from 2014 to March 2017, when Loop Holdings, Inc.
merged with and into our Company. Prior to founding Loop, Mr.
Solomita focused his business career on the circular economy,
developing Polyamide landfill remediation projects across North
America. From 2010 until 2014, Mr. Solomita served as board member
and as President of Dragon Polymers, a company which operated as a
nylon recycling business (currently doing business as Lead
Innovation Corporation, OTC:LEIC). Mr. Solomita is a director and
President of 8198381 Canada Inc., a company which also operated a
nylon recycling business and is no longer operational. Mr. Solomita
attended Dawson College, in Quebec, Canada, where he obtained a
Diploma of College Studies in Business Administration in 1996. Mr.
Solomita also has held a certification as a Microsoft
Certified Solutions expert since 1998.
2
Information Regarding the Nominees for Election as
Directors
Laurence Sellyn
, 70, has served as a
member of our Board of Directors since April 2018. Mr. Sellyn
retired at the end of 2015 from a career in leadership roles in the
management of public companies and is now active as a corporate
director and as an advisor and consultant to entrepreneurial CEOs.
He provides consulting services through his consulting firm, Par
Seven Advisors Inc. Mr. Sellyn was Executive Vice-President, Chief
Financial and Administrative Officer of Gildan Activewear Inc. from
April 1999 until August 2015. From 1992 until 1999 he was Chief
Financial Officer and Senior Vice President of Finance and
Corporate Development of Wajax Inc. Previously Mr. Sellyn held
successive positions of increasing responsibility at Domtar Inc.,
including serving as Corporate Controller from 1987 until 1991.
Since 2013, Mr. Sellyn has served on the Board of Cascades Inc.
(TSX: CAS), where he was Chair of the Corporate Governance and
Nominating Committee and was a member of the Audit and Finance
Committee. Mr. Sellyn will not be standing for re-election to the
Board of Cascades Inc. at their annual general meeting of
shareholders scheduled for June 25, 2020. He served as a Director
and Lead Independent Director of Noble Iron Inc. (TSXV: NIR) from
August 4, 2014 to August 11, 2016. Mr. Sellyn is a U.K. Chartered
Accountant and holds a Master’s degree in Modern Languages
and Literature from Oxford University. Mr. Sellyn has also been
active on charitable and not-for- profit boards. Mr. Sellyn was
elected as Lead Independent Director of Loop on April 4, 2018. Mr.
Sellyn is considered by the Board to be fully qualified for this
role due to his experience in corporate finance and corporate
governance as a senior executive and director of public companies
and his history working with founding entrepreneurs.
Peter Kezios,
61, is nominated to the
Board for the first time this year. Mr. Kezios is specialized in
the field of polymer research, development, and is a technology
expert who has been employed in numerous executive, director,
leadership and professional positions within the polyester industry
for over 33 years. Over the course of his career, Mr. Kezios has
been providing vision, leadership and direction to organizations
engaged in research, development, and technology commercialization
via innovative and collaborative application of chemical/polymer
engineering fundamentals to develop solutions to new product and
process opportunities. Mr. Kezios holds a Ph.D. in Chemical
Engineering from Princeton University and currently acts as a
research and development consultant in the fields PET Resin &
Fibers and Sustainable & Specialty Polyesters. Prior to Mr.
Kezios’ work as a research and development consultant since
2017, he held, over the span of 18 years, various senior executive
positions with DAK Americas LLC (formerly DuPont-Akra Polyester
LLC), one of the largest integrated producers of PET resins in the
world and the main producer of polyester staple fibers in the
Americas. We believe Mr. Kezios’ extensive industry
experience makes him qualified to be on the Board.
Andrew Lapham,
47, has served as a
member of our Board of Directors since June 2019. Mr. Lapham has
had a successful career as a financial professional with experience
covering plastic manufacturing. In 2013 Mr. Lapham co-founded and
continues to serve as the Global and Canadian Chair of Northern
Private Capital Inc., a private investment firm. Mr. Lapham
previously served as the Chairman of Blackstone Canada, an
alternative asset manager, which focused primarily on sourcing and
evaluating the firm’s investment opportunities in Canada. Mr.
Lapham also served as the senior investment professional at Onex
Corporation, headquartered in Toronto. Mr. Lapham holds a Bachelor
of Arts degree with a major in History from Princeton
University.
Mr.
Lapham’s understanding of the economics and strategic
elements of business, and his expertise in corporate finance make
him qualified be on the Board.
Jay Stubina
, 58, has served as a member
of our Board of Directors since 2016. In 1998, Mr. Stubina
co-founded Continent8 Technologies, where he is currently
responsible for company operations and sales. Continent8
Technologies operates data centers in Europe, North America and
Asia. Mr. Stubina holds a Bachelor of Commerce degree, with a major
in Accountancy, from Concordia University, of Montreal, Canada. Mr.
Stubina obtained a Chartered Accountant certificate from McGill
University, and maintains a Chartered Professional Accountant
license in Canada. Mr. Stubina serves on our Audit and Compensation
Committees. His experience running a business from 1998 to the
present gives him the experience to be a valuable member of our
Compensation Committee, and his experience serving as CFO of a real
estate company from 1989-1998 gives him the experience necessary to
be a valuable member of our Audit Committee. Mr. Stubina’s
knowledge of and experience in finance, technology implementation
in businesses and data management led to our conclusion that he is
qualified to serve as a director in light of our business and
structure.
3
Information Regarding Directors Not Standing for
Re-election
Sidney M. Horn
, 69, Director and
Chairman of the Nominating and Corporate Governance Committee, will
not stand for re-election to the Board at the 2020 Annual Meeting.
He has served as a member of our Board of Directors since December
2018. Mr. Horn is currently a senior counsel at Stikeman Elliott
LLP, where he was a partner until May 2017. Mr. Horn has been a
member of the board of directors of Genworth MI Canada Inc. since
July 2009 where he provides guidance on executive compensation and
board governance matters. Mr. Horn holds a Bachelor of Arts degree,
with a major in Economics from McGill University, an MBA degree
from Columbia University, a Bachelor of Civil Law degree from
McGill University and a Bachelor of Laws degree from McGill
University. We wish to thank Mr. Horn for his valuable counsel and
contribution to the Board of Directors and the
Company.
Required Vote & Recommendation of the Board
The
nominees receiving a greater number of affirmative votes FOR his
election than votes AGAINST his election shall be elected as
directors. Unless marked to the contrary, proxies received will be
voted “FOR” for each of the Board’s nominees.
Abstentions and broker non-votes will not affect the outcome of the
vote.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE “FOR” FOR EACH OF THE BOARD’S NOMINEES ON
THE ELECTION OF THE FOREGOING NOMINEES TO SERVE AS DIRECTORS UNTIL
THE NEXT ANNUAL MEETING OF STOCKHOLDERS.
4
CORPORATE GOVERNANCE
Board of Director Meetings and Committees
The
Board has established the following three (3) committees, each with
its own written charter: the Audit Committee, the Nominating and
Corporate Governance Committee, and the Compensation Committee. The
following table sets forth the attendance of the current Directors
at the Board and Committee meetings held during the fiscal year
ended February 29, 2020:
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Board of
Directors
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Audit
Committee
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Nominating and
Corporate Governance Committee
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Compensation
Committee
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Total
Attendance
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Director
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Number
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%
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Number
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%
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Number
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%
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Number
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%
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%
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Daniel Solomita
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10/10
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100%
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--
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--
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--
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--
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--
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--
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100%
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Sidney Horn
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9/10
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90%
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--
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--
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3/4
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75%
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--
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--
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86%
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Andrew Lapham
(1)
|
8/8
|
100%
|
3/3
|
100%
|
--
|
--
|
4/4
|
100%
|
100%
|
|
Laurence Sellyn
|
9/10
|
90%
|
4/4
|
100%
|
4/4
|
100%
|
6/6
|
100%
|
96%
|
|
Jay Stubina
|
10/10
|
100%
|
4/4
|
100%
|
4/4
|
100%
|
6/6
|
100%
|
100%
|
_____________
(1)
Mr.
Andrew Lapham was elected to the Board of Directors and appointed
member of the Audit Committee and Chair of the Compensation
Committee on June 28, 2019.
Controlled Company Status
Our
shares of Common Stock are listed on the Nasdaq Stock Market.
Nasdaq requires all of its listed companies to be in compliance
with Nasdaq’s standards of corporate governance set forth in
the Nasdaq Marketplace Rules (the “Nasdaq CG Rules”),
with certain exceptions. Companies that qualify as a
“controlled company” within the meaning of the Nasdaq
CG Rules can elect not to comply with certain Nasdaq CG Rules, or
can choose to comply with these rules despite the presence of an
exemption. Under Nasdaq CG Rules, “controlled
companies” may elect not to comply with certain Nasdaq CG
Rules, including:
●
requirements
relating to oversight of director nominations, including having a
nominating committee be composed entirely of independent
directors;
●
requirements
relating to oversight of executive compensation, including that
having a compensation committee that is composed entirely of
independent directors; and
●
the requirement
that a majority of the members of the Board be
independent.
As of
February 29, 2020, Mr. Daniel Solomita controls more than 50% of
the voting power for the election of directors. Therefore, we
qualify as a “controlled company” within the meaning of
the Nasdaq CG Rules, and are not required to follow any of the
above three Nasdaq CG Rules. We do not currently utilize the second
and third exemptions, and we did not utilize them at any point in
fiscal year 2020. We utilized the first of these exemptions until
May of 2018, when we formed a Nominating and Corporate Governance
Committee comprised entirely of Independent Directors that meet the
applicable Nasdaq and SEC independence standards. Therefore, we did
not utilize any of these exemptions at any time after May of 2018
and we do not anticipate utilizing any of these exemptions for
fiscal year 2021. The “controlled company” exception
does not modify audit committee requirements of Rule 10A-3 under
the Exchange Act and Nasdaq CG Rules or the requirement to have
regularly scheduled Board meetings at which only independent
Directors attend.
5
Board Independence
The
Board of Directors has determined the following directors are
independent: Peter Kezios, Andrew Lapham, Laurence Sellyn and Jay
Stubina. We evaluated independence in accordance with the
applicable Nasdaq Stock Market rules.
The Board’s Leadership Structure
The
Board currently combines the role of Chairman of the Board and
Chief Executive Officer. This is because of the unique role played
by Daniel Solomita as the Founder, Chief Executive Officer and
controlling shareholder of the Company. The Board believes that Mr.
Solomita is best situated to serve as Chairman because he is the
director most familiar with our business and industry and is
therefore best able to identify the strategic priorities to be
discussed by the Board. The Board believes that combining the role
of Chairman and Chief Executive Officer, in the current
circumstances of the Company, facilitates information flow between
management and the Board and fosters strategic development and
execution. The Board has appointed Laurence Sellyn as the lead
independent director. The lead independent director serves as the
focal point for independent directors, coordinating feedback to the
Chief Executive Officer on behalf of the independent directors
regarding business issues and board management. The lead
independent director and the other independent directors meet
regularly without the Chief Executive Officer
present.
Committees of the Board of Directors
The
Board of Directors has three standing committees: an Audit
Committee, a Nominating and Corporate Governance Committee and a
Compensation Committee. These committees meet regularly throughout
the year and also hold special meetings or act by written consent
from time to time as appropriate. The Board has delegated various
responsibilities and authority to its committees as generally
described below. The committees regularly report on their
activities and actions to the Board. Each of these committees has
adopted a written charter, which is reviewed annually. All members
of the committees are appointed by the Board of Directors and meet
the independence requirements of the respective committees on which
they serve. The Nomination and Corporate Governance Committee
recommends the composition of the Audit Committee and the
Compensation Committees after the election of directors is approved
by the shareholders, for approval by the Board.
Audit Committee
The
Audit Committee consists of Mr. Sellyn (Chair), Mr. Lapham and Mr.
Stubina, each of whom is independent within the meaning of the
requirements of the Sarbanes-Oxley Act of 2002, applicable SEC
rules and the listing standards of the Nasdaq Stock Market. The
Audit Committee held four meetings during the fiscal year ended
February 29, 2020. Following the annual meeting of shareholders,
Mr. Sellyn (Chair), Mr. Lapham and Mr. Stubina will serve on the
Audit Committee, each of whom is independent within the meaning of
the requirements of the Sarbanes-Oxley Act of 2002, applicable SEC
rules and the listing standards of the Nasdaq Stock
Market.
The
Board of Directors has determined that Mr. Sellyn is an audit
committee financial expert as defined by Item 407(d)(5)(ii) of
Regulation S-K of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Mr. Sellyn’s relevant
experience includes 23 years of service as a Chief Financial
Officer, first at Wajax Inc. from 1992 until 1999, and then at
Gildan Activewear Inc. from 1999 until his retirement in 2015. He
is also a U.K. Chartered Accountant.
6
The
Audit Committee oversees our accounting and financial reporting
process and the audit of our financial statements and also assists
the Board in monitoring our financial systems and legal and
regulatory compliance. In accordance with the written Audit
Committee Charter, the responsibilities of the Audit Committee
include, among other things:
●
appointing,
determining the compensation of, retaining and overseeing the work
of our registered public accounting firm engaged for the purpose of
preparing or issuing an audit report or performing other audit,
review, or attest services for us;
●
pre-approval of
auditing and permissible non-audit services, and the terms of such
services, to be provided by the independent registered public
accounting firm;
●
evaluating the
independence, qualifications and performance of our registered
public accounting firm, including an annual review of a written
report by our independent registered public accounting firm
regarding the independent registered public accounting firm’s
internal quality control procedures and various issues relating
thereto;
●
reviewing our
financial statements, including meeting with management and our
independent registered public accounting firm to review and discuss
our annual audited financial statements, quarterly financial
statements, and related disclosures;
●
reviewing,
approving, and monitoring related party transactions involving
directors or executive officers;
●
addressing
complaints received by us regarding accounting, internal accounting
controls or auditing matters and procedures for the confidential,
anonymous submission by our employees of concerns regarding
questionable account or auditing matters;
●
periodically
reviewing and meeting with management and the independent auditor
to discuss the overall adequacy and effectiveness of our legal,
regulatory and ethical compliance programs and reports regarding
compliance with applicable laws, regulations and internal
compliance programs;
●
meeting with
management and, as appropriate, the independent auditors, to
discuss the adequacy and effectiveness of our policies and
practices regarding information technology risk management and the
internal controls related to cybersecurity;
●
overseeing
management’s processes for identifying, monitoring and
addressing enterprise risks; and
●
reporting to the
Board, including, among other things, any issues that arise with
respect to the quality or integrity of our financial statements,
compliance with legal or regulatory requirements, the performance
and independence of the independent auditors, and the performance
of the Audit Committee itself.
The
Audit Committee Report is included in this proxy statement. In
addition, the Board adopted a Charter for the Audit Committee, a
copy of which is available under Corporate Governance Documents in
the Investors section of our website, and via the following
hyperlink:
http://www.loopindustries.com/assets/docs/loop_audit_committee_charter.pdf
Compensation Committee
The
Compensation Committee consists of Mr. Lapham (Chair), Mr. Sellyn
and Mr. Stubina. The Compensation Committee held six meetings
during the fiscal year ended February 29, 2020. Following the
annual meeting of shareholders, Mr. Lapham (Chair), Mr. Kezios and
Mr. Stubina will serve on the Compensation Committee, each of whom
is (i) independent within the meaning of the listing standards of
the Nasdaq Stock Market, (ii) a non-employee director within the
meaning of Section 16 of the Exchange Act.
7
The
Compensation Committee oversees our compensation policies, plans
and programs. The Compensation Committee is responsible for, among
other things:
●
establishing and
periodically reviewing a general compensation strategy for the
Company and its subsidiaries and overseeing the development and
implementation of our compensation plans to ensure they are
consistent with the general compensation strategy;
●
reviewing and
discussing with management the risks arising from our compensation
policies and practices for all employees that are reasonably likely
to have a material adverse effect on the Company;
●
administering our
equity-based plans;
●
periodically
reviewing and recommending the compensation of our chief executive
officer and other executive officers to the Board for its
approval;
●
periodically
reviewing and recommending the compensation to be paid for service
on the Board and Board committees and for service as a chairperson
of a Board committee and as lead independent director;
●
periodically
reviewing and approving corporate goals and objectives relevant to
compensation of our chief executive officer and other executive
officers;
●
periodically
evaluating the performance of our chief executive officer in light
of such corporate goals;
●
oversight of
regulatory compliance with respect to compensation matters
affecting us;
●
conducting and
presenting to the Board an annual self-performance evaluation of
the Compensation Committee; and
●
reviewing and
recommending to the Board our submissions to stockholders on
executive compensation matters and considering the results of
stockholder advisory votes on executive compensation matters and
the changes, if any, to our executive compensation policies,
practices and plans that may be warranted as a result of any such
vote.
The
Board adopted a written charter for the Compensation Committee, a
copy of which is available under Corporate Governance Documents in
the Investors section of our website, and via the following
hyperlink:
http://www.loopindustries.com/assets/docs/LoopCompensationCommittee.pdf
.
Nominating and Corporate Governance Committee
The
Nominating and Corporate Governance Committee consists of Mr. Horn
(Chair), Mr. Sellyn, and Mr. Stubina. The Nominating and Corporate
Governance Committee held four meetings during the fiscal year
ended February 29, 2020. Following the annual meeting of
shareholders, Mr. Sellyn (Chair) and Mr. Stubina will serve on the
Nominating and Corporate Governance Committee, each of whom is
independent within the meaning of the requirements of the
Sarbanes-Oxley Act of 2002, applicable SEC rules and the listing
standards of the Nasdaq Stock Market.
8
The
Nominating and Corporate Governance Committee considers and
periodically reports to the full Board on matters relating to the
governance of the Board. The Nominating and Corporate Governance
Committee is responsible for, among other things:
●
reviewing the
qualifications of, and recommending to the Board, proposed nominees
for election to the Board, Board composition, and appointment to
committees of the Board, consistent with criteria approved by the
Board and subject to any commitments made by the Corporation by
contract or in its certificate of incorporation;
●
developing,
evaluating and recommending to the Board corporate governance
practices applicable to the Company;
●
leading the Board
in its annual performance review of the Board, its committees and
their respective effectiveness; and
●
assisting
management to organize appropriate orientation for new
directors.
The
Board of Directors adopted a written charter for the Nominating and
Corporate Governance Committee in May 2018, a copy of which is
available under Corporate Governance Documents in the Investors
section of our website, and via the following hyperlink:
http://www.loopindustries.com/assets/docs/Nominating-and-Corporate-Governance-Committee-Charter.pdf
Consideration of Director Nominees
Stockholder Nominees
The
Nominating and Corporate Governance Committee will consider
properly submitted stockholder nominations for candidates for
membership on the Board of Directors as well as candidates
recommended for consideration by the Nominating and Corporate
Governance Committee as described below under “Identifying
and Evaluating Nominees for Directors.” Any stockholder
nominations must comply with the requirements of our By-laws and
should include disclosure about whether the nominating shareholder
or any member of a nominating shareholder group has been involved
in any legal proceeding during the past ten years, as specified in
Item 401(f) of Regulation S-K, all information relating to such
nominee as would be required to be disclosed in solicitations of
proxies for the election of such nominee as a director pursuant to
Regulation 14A under the Exchange Act, such nominee’s written
consent to be named in the proxy statement as a nominee and to
serve as a director if elected, as well as a written statement
executed by such nominee acknowledging that as a director of the
Company, such nominee will owe a fiduciary duty under the Nevada
Revised Statutes exclusively to the Company and its stockholders.
In addition, stockholder nominations should be submitted within the
time frame as specified under “Stockholder Proposals”
above and addressed to: Loop Industries, Inc., Attention: Chief
Legal Officer, 480 Fernand-Poitras, Terrebonne, Quebec, Canada J6Y
1Y4.
A
stockholder that instead desires to merely recommend a candidate
for consideration by the Nominating and Corporate Governance
Committee shall direct the recommendation in writing to Loop
Industries, Inc., Attention: Chief Legal Officer, 480
Fernand-Poitras Terrebonne, Quebec, Canada J6Y 1Y4, and must
include the candidate’s name, home and business contact
information, detailed biographical data and qualifications,
information regarding any relationships between the candidate and
the Company within the last three years and evidence of the
nominating person’s ownership of our Common
Stock.
Director Qualifications
In
discharging its responsibilities to nominate candidates for
election to the Board of Directors, the Nominating and Corporate
Governance Committee has not specified any minimum qualifications
for serving on the Board of Directors. We believe that our
directors should have the highest professional and personal ethics
and values, consistent with our values and standards. They should
have broad experience at the policy-making level in business or
banking. They should be committed to enhancing stockholder value
and should have sufficient time to carry out their duties and to
provide insight and practical wisdom based on experience. Their
service on other boards of public companies should be limited to a
number that permits them, given their individual circumstances, to
perform responsibly all director duties for us. Each director must
represent the interests of all stockholders. When considering
potential director candidates, the Nominating and Corporate
Governance Committee also considers the candidate’s
character, judgment, diversity, age and skills, including financial
literacy and experience in the context of our needs and the needs
of the Board.
9
Identifying and Evaluating Nominees for Directors
Under
the Nasdaq CG Rules, we are not required to maintain a nominating
committee. Instead, our entire Board was responsible for
recommending director candidates for election until we formed a
Nominating and Corporate Governance Committee in May 2018. This was
appropriate, in the opinion of the Board, because we are a
“controlled company” under Nasdaq CG Rules, as a single
investor, Daniel Solomita, holds 47.1% of our outstanding Common
Stock and the sole outstanding share of our Series A Preferred
Stock and effectively controls the election of our directors
through his effective voting control of the Company and his ability
to designate a majority of the directors nominated to serve on our
Board. Our Series A Preferred Stock has special rights that are set
forth in our 10-K for fiscal year 2020, filed with the SEC on May
8, 2019. Prior to having a nominating committee, our Board
authorized and directed all of the independent directors to search
for and evaluate qualified individuals to become nominees for
director and board committee members. The independent directors
recommend candidates for nomination for election or re-election for
each annual meeting of stockholders and, as necessary, to fill
vacancies and newly created directorships, and evaluate candidates
for appointment to and removal from committees. The independent
directors operate in this capacity under authority granted by
resolution of the Board, rather than by charter.
Prior
to the formation of the Nominating and Corporate Governance
Committee in May 2018, the Board had been identifying and
evaluating nominees for our Board. The Nominating and Corporate
Governance Committee utilizes a variety of methods for identifying
and evaluating director nominees. Candidates may come to the
attention of the Nominating and Corporate Governance Committee
through current members of the Board of Directors, professional
search firms, stockholders or other persons. These candidates are
evaluated at regular or special meetings of the Nominating and
Corporate Governance Committee and may be considered at any point
during the year. As described above, the Nominating and Corporate
Governance Committee will review properly submitted stockholder
nominations and recommendations for candidates for the Board of
Directors. Following verification of the stockholder status of
persons proposing candidates, nominations and recommendations are
aggregated and considered by the Nominating and Corporate
Governance Committee. If any materials are provided by a
stockholder in connection with the nomination or recommendation of
a director candidate, such materials are forwarded to the
Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee also reviews materials provided by
professional search firms or other parties in connection with a
nominee who is not proposed by a stockholder.
Annual Meeting Attendance
Although we do not
have a formal policy regarding attendance by members of the Board
of Directors at our annual meetings of stockholders, directors are
encouraged to attend our annual meetings. We held our annual
meeting on June 27, 2019 (the “2019 annual meeting”)
and all of our directors attended the meeting. At the 2019 annual
meeting, our stockholders took the following actions: (1)
appointed, ratified, and confirmed Sidney Horn, Laurence Sellyn and
Jay Stubina to serve as members of the Board; (2) ratified the
appointment of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm for fiscal year 2020;
(3) approved the amendment to the 2017 Equity Incentive Plan to
increase the share reserve; (4) approved the proposal for advisory
approval of the Company’s 2019 executive compensation, the
say-on-pay vote; and (5) approved an annual advisory vote regarding
the frequency of the say-on-pay vote. We filed a Definitive
Information Statement on Schedule 14A with the SEC on May 10, 2019
and a Current Report on Form 8-K on July 1, 2019 to document these
actions.
Stockholder Communications with the Board of Directors
We have
not implemented a formal policy or procedure by which our
stockholders can communicate directly with our Board of Directors.
Nevertheless, every effort has been made to ensure that the views
of our stockholders are heard by the Board of Directors or
individual directors, as applicable, and that appropriate responses
are provided to our stockholders in a timely manner. We believe
that we are responsive to stockholder communications, and therefore
have not considered it necessary to adopt a formal process for
stockholder communications with our Board. During the upcoming
year, our Board will continue to monitor whether it would be
appropriate to adopt such a process.
10
Code of Ethics
On
January 25, 2017, our Board approved and adopted a Code of Ethics
(the “Code of Ethics”) that applies to all of our
directors, officers, and employees, including our principal
executive officer and principal financial officer. The Code of
Ethics addresses such individuals’ conduct with respect to,
among other things, conflicts of interests; compliance with
applicable laws, rules, and regulations; full, fair, accurate,
timely, and understandable disclosure by us; competition and fair
dealing; corporate opportunities; confidentiality; insider trading;
protection and proper use of our assets; fair treatment; and
reporting suspected illegal or unethical behavior. A copy of our
Code of Ethics is available under Corporate Overview in the
Investors section of our website, and via the following hyperlink:
http://www.loopindustries.com/assets/docs/Code_of_Ethics.pdf
.
We will disclose on our website any amendments to or waivers from
any provision of the Code of Ethics that applies to any of our
directors or executive officers.
Indemnification Agreements
Each of
our executive officers and directors has entered into an
indemnification agreement, pursuant to which we have agreed to
indemnify each such person for claims against each of them that may
arise in connection with the performance of their respective duties
as an officer or a director.
Rule 10b5-1 Trading Plans
Although no
officers of the Company currently have a Rule 10b5-1 stock trading
plan in place, officers may choose to enter into such plans from
time to time in the future. These plans allow executives to adopt
predetermined plans for trading shares of our Common Stock in
advance of learning any material non-public information. The use of
these trading plans permits diversification, retirement and tax
planning activities. The transactions under the plans will be
disclosed publicly through Form 4 filings with the
SEC.
Board’s Role in Risk Oversight
The
Board, and in particular the Audit Committee, has an active role,
as a whole and also at the committee level, in overseeing
management of Company risk. This role is one of informed oversight
rather than direct management of risk. The Board regularly reviews
and consults with management on strategic direction, challenges and
risks that we face. The Board also reviews and discusses with
management quarterly financial results and forecasts. The Audit
Committee of the Board oversees management of financial risks,
including investment and foreign currency fluctuation risk
mitigation policies. The Compensation Committee of the Board is
responsible for overseeing the management of risks relating to and
arising from our compensation plans and arrangements. The
Nominating and Corporate Governance Committee periodically reviews
the risks arising from our corporate governance policies and
practices, including the structure and performance of the Board,
its committees and individual directors. The Nominating and
Corporate Governance Committee also reviews and oversees the
Company’s succession planning process for executive officers.
These committees provide regular reports—generally on a
quarterly basis—to the full Board.
Management has
responsibility for the direct management and oversight of legal,
financial and commercial compliance matters, which includes
identifying areas of risk and implementing policies, procedures and
practices to mitigate the identified risks. Additionally, the Chief
Financial Officer and General Counsel provide regular reports to
the Audit Committee concerning financial, tax and compliance
related risks. Management also provides the Audit Committee with
periodic reports on our compliance programs and efforts, investment
policy and practices, and compliance with debt covenants.
Management and any compensation consultant, if so retained, provide
analysis of risks related to our compensation programs and
practices to the Compensation Committee.
11
Compensation of Non-Employee Directors
The
Board approved our Outside Director Compensation Policy in October
2017, which was amended and restated on April 4, 2018, May 11, 2018
and May 2, 2019, to compensate each non-employee director for his
or her service (the “Amended and Restated Outside Director
Compensation Policy”). Our Board has the discretion to revise
non-employee director compensation as it deems necessary or
appropriate. Under our Amended and Restated Outside Director
Compensation Policy, non-employee directors will receive
compensation in the form of equity and cash, as described
below:
Cash Compensation.
All non-employee
directors will be entitled to receive the following cash
compensation for their services:
●
$15,000 per year
for service as chairman of the audit committee;
●
$15,000 per year
for service as chairman of the compensation committee;
●
$15,000 per year
for service as chairman of the nominating and governance
committee;
●
$30,000 per year
for service as the lead independent director.
Each
annual cash retainer under this Policy will be paid quarterly in
arrears on a prorated basis to each non-employee director who has
served in the relevant capacity at any point during the immediately
preceding fiscal quarter, and such payment shall be made no later
than thirty (30) days following the end of such immediately
preceding fiscal quarter.
Equity Compensation.
Nondiscretionary,
automatic grants of restricted stock units (“RSUs”)
will be made to our non-employee directors on an annual basis as
described below:
Annual Awards
. Subject to
Section 11 of the Company’s 2017 Equity Incentive Plan, each
non-employee director automatically will be granted a Restricted
Stock Unit Award (an “
Annual
Award
”) with a Value of $150,000, provided that the
number of Shares covered by each Annual Award will be rounded down
to the nearest whole Share, which grant will be effective on the
date of each annual meeting of stockholders (each, an
“
Annual
Meeting
”), beginning with the first Annual Meeting
following October 16, 2017; provided that any non-employee director
who is not continuing as a Director following the applicable Annual
Meeting will not receive an Annual Award with respect to such
Annual Meeting. On May 2, 2019, we amended our Amended and Restated
Outside Director Compensation Policy so that, subject to Section 5
of the Amended and Restated Outside Director Compensation Policy
and Section 14 of the Company’s 2017 Equity Incentive Plan,
Each Annual Award will vest as to 100% of the Shares subject
thereto upon the earlier of the one (1) year anniversary of the
grant date or on the day prior to our next Annual Meeting occurring
after the grant date, in each case, provided that the non-employee
director continues to serve as a non-employee director through the
applicable vesting date. On February 27, 2020, the Board resolved
to further amend the Amended and Restated Outside Director
Compensation Policy in order to reduce the amount of the Annual
Award to $90,000. The reduction was deemed appropriate given the
size and composition of the Board, the maturity of the Company and
the executive team now in place all of which contributed to
allowing the Board to concentrate on its strategic advisory role
and focus less on oversight of legal, financial and commercial
compliance matters which is more of Management’s role. This
change will come into effect with the 2021 Annual Award which will
be effective at the 2020 Annual Meeting.
Consistent with the
previous paragraph, an Annual Award was granted on June 27, 2019 to
each non-employee director for 2020 (the “
2020 Annual Award
”). The 2020
Annual Award will vest as to 100% of the Shares on June 26, 2020,
provided that the non-employee director continues to serve as such
through the applicable vesting date. “
Value
” for this purpose means,
with respect to a full value award, the average of the closing
trading prices of a Share for the 30-trading days ending on the
trading day prior to the grant date.
Travel Expenses.
Each non-employee
director’s reasonable, customary and properly documented
travel expenses to attend Board meetings will be reimbursed by the
Company.
12
Fiscal 2020 Non-Employee Director Compensation Table
The
following table sets forth a summary of the compensation received
by our non-employee directors who received compensation during our
fiscal year ended February 29, 2020:
|
Name
and Principal Position
|
Fees
earned or paid in cash
($)
|
Stock Awards
(1)
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other Compensation
($)
|
Total
($)
|
|
Sidney
Horn
|
7,500
|
150,000
|
-
|
-
|
-
|
-
|
157,500
|
|
Andrew
Lapham
(2)
|
11,250
|
149,590
|
-
|
-
|
-
|
-
|
160,840
|
|
Laurence
Sellyn
|
56,250
|
150,000
|
-
|
-
|
-
|
-
|
206,250
|
|
Jay
Stubina
|
-
|
150,000
|
-
|
-
|
-
|
-
|
150,000
|
_____________
(1)
The
amounts reported in this column represent the aggregate grant date
fair value of the restricted stock units, or RSUs, granted, as
computed in accordance with Financial Accounting Standards Board,
or FASB, Accounting Standards Codification Topic 718,
Compensation—Stock Compensation, or ASC Topic
718.
(2)
Mr.
Lapham joined our Board of Directors on June 28, 2019 and received
a prorated annual grant under our Amended and Restated Outside
Director Compensation Policy.
Directors who are
also our employees receive no additional compensation for their
service as directors. During fiscal year 2020, Daniel Solomita, one
of our directors, also has been serving as one of our employees.
See “Executive Compensation — Fiscal 2020 Summary
Compensation Table” for additional information about the
compensation for Mr. Solomita.
Our
non-employee directors held the following outstanding RSU awards as
of February 29, 2020. The table excludes Mr. Solomita, whose
outstanding awards are reflected in the section entitled
“Executive Compensation – Outstanding Equity Awards at
Fiscal Year-End.”
|
Name
|
# of
Outstanding
Options
(in
shares)
|
# of
Outstanding
RSUs
(in
shares)
|
|
Sidney
Horn
|
-
|
18,305
|
|
Andrew
Lapham
|
-
|
18,033
|
|
Laurence
Sellyn
|
-
|
56,647
|
|
Jay
Stubina
|
-
|
31,647
|
13
EXECUTIVE OFFICERS
The
following table identifies certain information about our executive
officers as of February 29, 2020. Our executive officers are
appointed by, and serve at the discretion of, our Board. Each of
our executive officers holds office until his successor is duly
elected and qualified or until his earlier resignation or removal
in accordance with our By-laws, absent an employment agreement.
There are no family relationships among any of our directors or
executive officers.
|
Name
|
|
Age
|
|
Title
|
|
Daniel
Solomita
|
|
44
|
|
Chairman
of the Board, President, and Chief Executive Officer
|
|
Nelson
Gentiletti
|
|
58
|
|
Chief
Operating Officer, Chief Financial Officer, and
Treasurer
|
|
Michel
Megelas
(1)
|
|
50
|
|
Chief
Legal Officer, and Secretary
|
_____________
(1)
On June
25, 2019, Michel Megelas joined the Company as Chief Legal Officer
and Secretary.
Daniel Solomita
,
please see biography of
Mr. Solomita on page 3 of this proxy statement.
Nelson Gentiletti,
58, is a CPA and has
served as our Chief Operating and Chief Financial Officer since
January 1, 2019. Mr. Gentiletti has finance, accounting and
strategic planning experience, most recently serving as the Chief
Financial and Development Officer of Transcontinental Inc., where
he worked from November 2011 until December 2018. Mr. Gentiletti
also serves on the board of directors of Sportscene Group, Inc.
since 2006 and Cascades Inc. since October 2019. Mr. Gentiletti
received his Bachelor of Commerce degree from Concordia University
in 1983 and his Graduate Diploma in Public Accountancy from McGill
University in 1985.
Michel Megelas
, 50, is a lawyer and was
appointed as our Chief Legal Officer in June 2019. Mr. Megelas has
extensive experience in the areas of commercial, corporate and
securities law; more specifically, he has national and
international experience in mergers, acquisitions
and divestiture transactions,
corporate reorganizations and corporate financing, as well as key
customer, supplier and partner contracts. Prior to joining the
Company, Mr. Megelas was Senior Legal Counsel for Ovivo Inc., a
global provider of equipment, technology and systems producing the
purest water and treating the most challenging wastewater in the
industry.
Mr. Megelas
received his Law degree from Université de Montréal in
1993 and was called to the Québec Bar in February
1995.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This
Compensation Discussion and Analysis highlights the objectives and
philosophy of our executive compensation program, describes each
component of our executive compensation program, and explains the
decisions of the Board and the Compensation Committee in designing
our executive compensation program for fiscal 2020.
In
fiscal 2020, our named executive officers were:
●
Daniel Solomita,
our Chairman of the Board, Chief Executive Officer and
President;
●
Nelson Gentiletti,
our Chief Operating Officer, Chief Financial Officer and
Treasurer;
●
Michel Megelas, our
Chief Legal Officer and Secretary.
●
Nelson Switzer, our
former Chief Growth Officer;
14
Executive Changes
Mr.
Switzer resigned on June 14, 2019.
Executive Compensation Governance and Practices
As an
emerging, pre-revenue company that is in the process of
commercializing our products, key talent attraction, retention and
motivation are critical. This is reflected in the design of our
executive compensation program, which emphasizes performance-based
award opportunities with, generally, conservative cash award
opportunities and highly motivating long-term equity-based award
opportunities. Due to our growth and evolving needs for highly
qualified executives, we have had changes in the executive team
that assist our Chief Executive Officer in executing the
Company’s strategy. Recruitment pay packages have varied and
been customized to successfully recruit talent, which has required
some inducement award opportunities (to make up for lost award
opportunities at an executive’s prior employer) along with a
market-based annualized pay package.
Our
executive compensation program is based on a pay-for-performance
philosophy that rewards our named executive officers for achieving
specified performance goals and typically ties the majority of the
total target compensation to the value of our stock price (coupled
with multi-year vesting, this provides long-term alignment to
stockholder value). Our executive compensation program also
incorporates sound governance principles. In fiscal 2020, the
following policies and practices were in place:
What we do:
●
The Compensation
Committee consists entirely of independent directors.
●
A significant
portion of the compensation opportunity of each continuing named
executive officer is tied to the achievement of specified
performance goals and/or has underlying value tied directly to our
stock price, and is therefore at-risk.
●
Executive officers
are required to provide service to us over a period of at least
three years in order to fully vest in time-based equity
awards.
What we do not do:
●
We do not provide
any “single trigger” change in control payments or
benefits to our named executive officers that remain with
us.
●
We do not provide
any post-employment retirement or pension benefits to our executive
officers that are not available to our employees
generally.
●
We do not provide
tax gross-ups for payments or benefits paid in connection with a
change in control.
●
We do not permit
short sales, hedging, or pledging of stock ownership positions and
transactions involving derivatives of our common
stock.
Executive Compensation Philosophy and Objectives
The
development of our business and the marketing of our prospective
products will continue to place a significant strain on our limited
personnel, management, and other resources. Our future success
depends upon the continued services of our executive officers who
are developing our business, and on our ability to identify and
retain competent consultants and employees with the skills required
to execute our business objectives. The loss of the services of Mr.
Daniel Solomita or our failure to timely identify and retain
competent personnel could negatively impact our ability to develop
our business which could adversely affect our financial results and
impair our growth.
15
We must
be able to develop commercial products, scale our manufacturing
processes while maintaining high product quality and reliability,
improve production processes and services, and introduce new
products and services. To achieve these objectives, we need a
highly talented and seasoned team of technical, marketing,
operations, and other business professionals.
We
compete with other companies in our industry located in Canada, the
U.S. and other regions, including other companies in the Greater
Montreal area in the biotechnology, chemical, and technology
markets to attract and retain a skilled management team. The Board
and the Compensation Committee recognize that the Company needs to
provide market competitive compensation packages to attract and
retain qualified executives and motivate their achievement of
critical goals, in order to increase long-term shareholder value.
At the same time, the Board and the Compensation Committee
recognize the need to conserve cash, in light of the fact that we
have never generated revenue.
The
specific philosophy of our executive compensation program is
to:
●
Employ executives
who are primarily motivated by creating long-term
value;
●
Employ executives
who believe in, and live up to, our core values;
●
Motivate and reward
behavior consistent with company and individual performance
objectives; and
●
Design pay programs
that are directly linked to our performance and the creation of
long-term stockholder value and conserve cash when
possible.
Impact of 2019 Say-on-Pay Vote
We
conducted a vote to approve, on an advisory or non-binding basis,
the compensation of our named executive officers (commonly known as
a “Say-on-Pay” vote) at our 2019 Annual Meeting of
Stockholders. 97.6% of the votes cast by stockholders were in favor
of approving the compensation of our named executive officers.
While evaluating our executive compensation program for fiscal
2020, the Compensation Committee considered the results and
maintained the compensation philosophy and objectives and general
approach to executive compensation from the prior
year.
Executive Compensation Program Design
Our
executive compensation program for fiscal 2020 reflected our stage
of development as a pre-revenue publicly traded company.
Accordingly, we designed our executive compensation program to
provide market-competitive compensation in the form of base salary,
cash or equity-based short-term incentive compensation, long-term
incentive equity awards (including performance-based RSUs,
time-based RSUs, performance-based stock options and time-based
stock options), as well as certain employee health and welfare
benefits. We believe our executive compensation program is
appropriate for a company of our size, in our industry, and in our
stage of growth. As the company matures, we will continue to
evaluate our executive compensation program and governance
practices.
We
offer cash compensation in the form of base salaries and short-term
cash or equity incentive compensation. We have structured our
short-term incentive compensation to focus on the achievement of
specific short-term financial and operational objectives that will
further our longer-term growth objectives. In an effort to continue
to motivate our named executive officers to further these
objectives, the Board or the Compensation Committee, when possible,
sets a range of performance achievement levels, including above
target levels, to reflect disciplined execution of our growth
objectives.
Additionally,
long-term equity awards for shares of our common stock serve as a
key component of our executive compensation program. Currently, we
grant (i) stock options to ensure that the recipient receives value
only through driving stockholder value; and (ii) full value awards,
or awards without a purchase price, including RSUs, to provide
appropriate levels of compensation, to facilitate retention, to
provide more direct alignment to our stockholders and to promote
stockholder value creation given that the value of a
recipient’s shares increases only as stockholder value
increases. In the future, we may introduce other forms of equity
awards, as we deem appropriate, that further our objective of
providing long-term incentives to our named executive officers
while promoting stockholder value creation. On a case-by-case basis
there may be a need to provide an up-front incentive to attract a
qualified candidate. Such awards will typically be in the form of
stock options and RSUs and will vest rateably over multiple years
or with deferred cliff vesting after a specified number of
years.
16
Finally, we offer
our executive officers standard health and welfare benefits that
are generally available to our other employees, including medical,
dental, vision, short-term disability, long-term disability, and
life insurance plans.
Our
senior executive pay philosophy and framework includes guidelines
for allocating compensation between short-term and long-term
incentive compensation that provide for a large portion of
incentive compensation to be tied to performance objectives. We use
competitive market data to develop a general framework for
establishing the appropriate pay levels and mix. Within this
overall framework, the Compensation Committee reviews each
component of executive compensation separately and also takes into
consideration the value of each named executive officer’s
compensation package as a whole and its relative value in
comparison to our other named executive officers.
The
Board and the Compensation Committee evaluate our compensation
philosophy and executive compensation program as circumstances
require and review executive compensation annually. The Board and
the Compensation Committee apply our philosophy and the objectives
outlined above, together with consideration for the levels of
compensation that we would be willing to pay to ensure that our
executive compensation remains competitive for highly-qualified
talent and that we meet our recruiting and retention objectives, as
well as the cost to us if we were required to find a replacement
for a key executive officer.
Compensation-Setting Process
Role of Our Compensation Committee
Compensation
decisions for our named executive officers generally are
recommended by the Compensation Committee and approved by the
Board. Currently, the Compensation Committee is responsible for
reviewing, and evaluating the compensation arrangements, plans,
policies, and practices for our named executive
officers.
The
Compensation Committee periodically reviews our executive
compensation program, including base salary, short-term incentive
compensation and long-term equity compensation, to determine
whether they are appropriate, properly coordinated, and achieve
their intended purposes, and to make any modifications to existing
plans and arrangements or to adopt new plans or arrangements. In
connection with such review and the hiring of executive officers,
the Compensation Committee, after consulting with our management
team and any compensation consultant that the Compensation
Committee may engage and reviewing any market data provided by such
compensation consultant, makes recommendations to the Board with
respect to any base salary adjustments, target incentive amounts
and compensation framework. With respect to our short-term and
long-term incentive compensation, the Compensation Committee
recommends to the Board for approval of the applicable target
performance levels for each performance objective used for the
financial period following the Board’s approval of our annual
plan.
Role of Management
In
carrying out its responsibilities, the Compensation Committee works
with members of our management team, including our Chief Executive
Officer and Chief Operating and Chief Financial Officer. Our
management team and a compensation consultant, if one is retained,
assist the Compensation Committee in the execution of its
responsibilities by providing information on corporate and
individual performance, market data, and management’s
perspective and recommendations on compensation
matters.
Except
with respect to his own compensation, our Chief Executive Officer
will make recommendations to the Compensation Committee regarding
compensation matters, including the compensation of our executive
officers. Our Chief Executive Officer also participates in meetings
of the Compensation Committee, except with respect to discussions
involving his own compensation, in which case the Committee meets
in executive session without the Chief Executive Officer
present.
While
the Compensation Committee solicits the recommendations and
proposals of our Chief Executive Officer with respect to
compensation-related matters, these recommendations and proposals
are only one factor in the Compensation Committee’s
decision-making process.
17
Role of Compensation Consultant
The
Compensation Committee has the authority to retain the services of
external advisors, including compensation consultants, legal
counsel and other advisors, from time to time, as it sees fit in
connection with carrying out its duties.
In
fiscal 2020, the Compensation Committee elected not to retain the
services of a compensation consultant.
Use of Competitive Data
To
assess the competitiveness of our executive compensation program
and to assist in setting compensation levels, we refer to industry
surveys, including the Willis Towers Watson Survey Report on Top
Management Compensation.
Competitive Positioning
With
respect to setting fiscal 2020 pay opportunities, the Compensation
Committee continued to compare and analyze our executive
compensation with that of a peer group of companies and published,
public survey data.
In the
context of our initial review and structuring of executive
compensation, in fiscal 2018 the Compensation Committee approved a
compensation peer group of publicly traded technology companies
that met some or all of the following criteria at the
time:
●
Headquartered in
the U.S. or Canada;
●
Listed on a major
stock exchange in either the U.S. or Canada;
●
Have a primary
industry classification generally in one of the following areas:
(i) biotechnology, (ii) commodity chemicals, (iii) environmental
and facilities services, (iv) life sciences, or (v) specialty
chemicals;
●
Similar market
capitalization;
●
Have innovative
technologies, products that promote sustainability, or provide
renewable plastic products;
●
Recently went
public with an initial public offering.
The
following publicly traded companies made up our compensation peer
group that was drawn up by the compensation consultant hired in
fiscal 2018 and approved by the Compensation
Committee:
|
Compensation Peer Group
|
||||
|
Abeona
Therapeutics Inc.
|
|
Calgon
Carbon Corporation
|
|
NanoString
Technologies, Inc.
|
|
AgroFresh
Solutions, Inc.
|
|
Ceapro
Inc.
|
|
Rayonier
Advanced Materials
|
|
AnaptysBio,
Inc.
|
|
Clementia
Pharmaceuticals Inc.
|
|
Theratechnologies
Inc.
|
|
Aqua
Metals, Inc.
|
|
EcoSynthetix
Inc.
|
|
Tyme
Technologies, Inc.
|
|
Audentes
Therapeutics, Inc.
|
|
FutureFuel
Corp.
|
|
|
|
Aurinia
Pharmaceuticals Inc.
|
|
KMG
Chemicals, Inc.
|
|
|
The
Compensation Committee uses the market data for the companies in
our compensation peer group as one reference point in determining
the compensation of our executives. We continued to look at the
compensation of executives in this compensation peer group during
fiscal 2020. The Compensation Committee generally sets salaries
near the market median and target incentive award multiples (as a
percent of salary) will generally be set at or above market median,
reflecting the higher weighting on equity awards and inclusion of
performance goals for much of the long-term incentive opportunity.
Incentive compensation is provided primarily in the form of equity
awards, with recent executive hires receiving performance-based
RSUs and cash for annual incentive awards, and long-term incentive
opportunities provided in performance-based stock options,
time-based stock options, performance-based RSUs or time-based
RSUs.
18
Our
Compensation Committee considers other factors in setting the
target pay package and determining actual compensation. Such
factors include the overall competitive market for our executives,
the alignment between the market-based positions and the actual
responsibilities of our executives, each executive’s
performance, internal parity, the value of each executive’s
position and the value of each executive’s unvested equity
holdings.
Fiscal 2020 Executive Compensation Program Components
Overview
For
fiscal 2020, the Compensation Committee reviewed the base salary,
short-term incentive compensation opportunity, and long-term
incentive compensation opportunity for all named executive officers
with the exception of Mr. Switzer who resigned as the
Company’s Chief Growth Officer in June 2019. The Compensation
Committee also considered the pay levels of Messrs. Solomita,
Gentiletti, and Megelas as compared to the compensation provided to
executives in comparable positions by members of our peer group and
the overall market, their performance , and the continued
competition for experienced leadership in our
industry.
The
following describes each component of our executive compensation
program, the rationale for each, and how the compensation amounts
and awards were determined for fiscal 2020.
Base Salary
Base
salary is the primary fixed component of our executive compensation
program. We use base salary to compensate our named executive
officers for services rendered during the fiscal year and to ensure
that we remain competitive in attracting and retaining executive
talent. Generally, we establish the initial base salaries of our
executive officers through arm’s-length negotiation at the
time we hire the individual executive officer, taking into account
his or her position, qualifications, experience, salary
expectations, market compensation data and the base salaries of our
other executive officers.
Thereafter, the
Compensation Committee periodically reviews the base salaries of
each named executive officer and makes adjustments as it determines
to be reasonable and necessary to reflect our performance, the
scope of a named executive officer’s performance,
contributions, responsibilities, experience, current salary level,
position (in the case of a promotion), and market pay positioning,
as appropriate.
In
connection with the amendment and restatement of Mr.
Solomita’s employment agreement in fiscal 2019, the
Compensation Committee reviewed his compensation package, including
his base salary. In addition to the market-based study provided by
Pay Governance, the Compensation Committee also considered other
relevant factors, including, among others, Mr. Solomita’s
criticality to the Company’s success, performance and
contributions, and the continued competition for experienced
leadership in our industry. Based on this review, in June 2018, the
Compensation Committee recommended, and the Board approved, an
updated compensation package for Mr. Solomita, including an
increase in his base salary from $180,000 to $598,905 CAD,
effective as of March 1, 2018 (the first day of the Company’s
2018 fiscal year).
Mr.
Gentiletti’s base salary was set at $535,000 CAD upon his
hire in December 2018, and Mr. Megelas’ base salary was set
at $190,000 CAD upon his hire in June 2019. The base salary for
each of these named executive officers was approved by the
Compensation Committee and the Board and determined based on
arm’s-length negotiations between the named executive officer
and our Chief Executive Officer and Chief Operating
Officer.
In
fiscal 2020, we did not make any adjustments to the base salaries
of our named executive officers.
The
base salaries paid to our named executive officers in fiscal 2020
are set forth in the section entitled “
Summary Compensation Table
”
below.
19
Short-Term Incentive Compensation
We use
short-term incentive compensation to motivate our named executive
officers to achieve our annual financial and operational
objectives, while making progress towards our longer-term strategic
and growth goals. Our short-term incentive program allows the
Compensation Committee to provide cash or equity incentive awards
to the executive officers, which are based upon performance goals
established by the Board and the Compensation
Committee.
The
short-term incentive compensation provided to our named executive
officers in fiscal 2020 is described in the immediately following
paragraphs and set forth in the sections entitled “Summary
Compensation Table” and “Grants of Plan-Based Awards
for Fiscal 2020” below.
Daniel Solomita and Nelson Gentiletti
The
compensation package for Mr. Solomita that the Compensation
Committee recommended, and the Board approved, in June 2018 in
connection with the amendment and restatement of his employment
agreement includes an annual bonus opportunity for fiscal 2020 that
provides for a payment equal to 25% of his base salary at threshold
performance, 50% of his base salary at target performance, or 100%
of his base salary at maximum performance.
Mr.
Gentiletti’s employment agreement provides for a short-term
incentive compensation opportunity in the form of cash (or, at his
option, in RSUs or stock options), with payment equal to 25% of his
base salary at threshold performance, 50% of his base salary at
target performance, or 100% of his base salary at maximum
performance. Mr. Gentiletti’s short-term incentive
compensation opportunity was determined based on arm’s-length
negotiations between him and our Chief Executive Officer and
evaluated relative to an analysis of competitive compensation
practices.
In July
2019, the Compensation Committee approved the performance goals for
Mr. Solomita and Mr. Gentiletti’s fiscal 2020 annual bonus
listed in the table below. For any scalable performance goal, if
actual achievement falls between the specified minimum, target, or
maximum performance levels, the amount payable with respect to the
performance goal will be determined by straight-line interpolation.
For any performance goal that is not scalable, the threshold and
target levels must be achieved for the maximum amount to become
payable with respect to the performance goal. In either case, if
the threshold level for a particular performance goal is not
achieved, no amount will be payable with respect to the performance
goal.
The
achievement of these performance goals (as indicated in the table
below) was determined to be at 55% of target (27.5% of base
salary), resulting in an annual bonus for Mr. Solomita’s for
fiscal 2020 of $164,699 CAD, and an annual bonus for Mr.
Gentiletti’s for fiscal year 2020 of $147,125
CAD.
|
Weighting
|
|
Performance
Goals
|
|
10%
|
|
Financing
milestones
|
|
15%
|
|
Technology-related
goals
|
|
15%
|
|
Developmental
goals for greenfield facilities
|
|
15%
|
|
Operational
related goals
|
|
20%
|
|
Supply
chain related goals
|
|
25%
|
|
Strategic
goals related to the Indorama Loop Technologies joint
venture
|
Michel Megelas
Mr.
Megelas’ employment agreement provides for a short-term
incentive compensation in the form of cash, with payment equal to
10% of his base salary at threshold performance, 20% of his base
salary at target performance, or 30% of his base salary at maximum
performance. If performance relative to the specified goals is
below threshold performance, there would be no award. For scalable
goals, interpolation can be applied between award levels;
otherwise, goals will be binary and cumulative.
20
Pursuant to his
employment agreement with the Company, Mr. Megelas received a
minimum bonus for fiscal 2020 in the amount of $20,000 CAD, which
represented 10.5% of his base salary.
Nelson Switzer
Mr.
Switzer
did not receive
any short-term incentive compensation prior to his resignation in
June 2019.
Long-Term Incentive Compensation
We
grant long-term equity awards as a component of our executive
compensation program in order to align our named executive
officers’ long-term interests with our stockholders’
interests. Our long-term incentive program allows the Compensation
Committee to provide equity incentive awards to the executive
officers, which are based upon performance goals established by the
Board and the Compensation Committee. The Company has elected to
use equity-based awards in order to provide direct alignment to
stockholder value, as reflected by the price of our common
stock.
In
determining the composition of these equity awards, the
Compensation Committee decided to offer some new hires a choice of
100% performance-based or an equal split of time-based and
performance-based equity awards, which helped to maximize the
executive’s perceived value of the inducement award
opportunity.
The
size of the equity awards granted to our named executive officers
in connection with their hire is determined through
arm’s-length negotiation, taking into consideration factors
such as the named executive officer’s role and
responsibilities, the named executive officer’s compensation
provided by the prior employer and new target cash compensation,
the equity award’s potential retention and incentive value,
market data on the size of new-hire awards provided by similar
companies to similarly situated employees, and prevailing market
conditions.
The
long-term equity awards granted to our named executive officers in
fiscal 2020 are described in the immediately following paragraphs
and set forth in the sections entitled “Summary Compensation
Table” and “Grants of Plan-Based Awards for Fiscal
2020” below.
Daniel Solomita
Mr.
Solomita’s amended and restated employment agreement made no
change to the equity incentive arrangement described in his prior
employment agreement, which provided for an award of 4,000,000 RSUs
that had not yet been granted. In June 2018, the Board approved the
grant of these RSUs which became effective with the approval by the
Company’s stockholders at the Company’s 2019 annual
meeting of an increase in the number of shares available for
issuance under the Company’s 2017 Equity Incentive Plan. In
April 2020, the Board clarified and updated the milestones
consistent with the shift in our business from the production of
terephthalate (“PTA”) to the production of dimethyl
terephthalate (“DMT”), another proven monomer of PET
plastic that is far simpler to purify. One-quarter of the RSUs vest
upon the achievement of each of following four performance
milestones: (i) the Company’s securities are listed an
exchange or the OTCQX tier of the OTC Markets Group platform. (ii)
the Company executes a contract for a minimum quantity of 25,000
metric tons of DMT and Monoethylene Glycol (“MEG”) or
PET. (iii) the Company’s first full-scale production
facility is in commercial operation. and (iv) the Company’s
second full-scale production facility is in commercial operation.
For these purposes, “commercial operation” means the
full-scale production facility produces 10 metric tons per hour of
DMT and MEG combined, for a term of not less than 6 months. Once
vested in accordance with the milestones, one-fifth of the RSUs
will be settled annually, generally commencing on the first
settlement date following the date of vesting. As the first
performance milestone has already been achieved, 1,000,000 RSUs
have vested of which 200,000 RSUs were settled on October 15, 2019.
The remaining 800,000 RSUs will be settled equally on each of the
following four anniversaries.
Nelson Gentiletti
Mr.
Gentiletti’s employment agreement provides for a fiscal 2020
long-term incentive compensation opportunity in the form of
time-based RSUs with an intended value equal to 35% of his base
salary and performance-based RSUs with an intended value equal to
17.5% of his base salary at threshold performance, 35% of his base
salary at target performance, or 70% of his base salary at maximum
performance. For grants based on a percentage of his base salary,
the number of long-term incentive RSUs was to be determined by
converting the intended dollar value of the RSUs to U.S. dollars
using the currency exchange rate on the date the Board approved the
RSUs and then dividing the converted value by the Company’s
closing stock price on such date.
21
In
fiscal 2020, the Board approved the following equity award grants
to Mr. Gentiletti: (i) in March 2019, 14,422 time-based long-term
incentive RSUs, and (ii) in July 2019, performance-based long-term
incentive RSUs that become eligible to vest based on achievement of
the performance goals described below (up to a maximum of 15,880
RSUs). These equity awards are scheduled to vest as follows,
subject to continued service through each vesting date: (i) the
time-based long-term incentive RSUs will vest in 1/3rd increments
on the first three anniversaries of the grant date, and
(ii) any of the performance-based long-term incentive RSUs
that become eligible to vest will vest in
1/3rd increments
on the first three anniversaries of March 1 following the fiscal
year in which the applicable performance goals were
achieved.
In July
2019, the Board approved the performance goals for Mr.
Gentiletti’s fiscal 2020 performance-based long-term
incentive RSUs listed in the table below. For any scalable
performance goal, if actual achievement falls between the specified
minimum, target and maximum levels, the number of performance-based
long-term incentive RSUs that will become eligible to vest with
respect to the performance goal will be determined by straight-line
interpolation. For any performance goal that is not scalable, the
threshold and target levels must be achieved for the maximum number
of RSUs to become eligible to vest with respect to the performance
goal. In either case, if the threshold level for a particular
performance goal is not achieved, no performance-based RSUs will
become eligible to vest with respect to the goal.
Based
on the actual level of achievement of these performance goals (as
indicated in the table below), the number of such RSUs that became
eligible to vest was 8,734, which was 55% of target being 19.25% of
base salary.
|
Weighting
|
|
Performance
Goals
|
|
10%
|
|
Financing
milestones
|
|
15%
|
|
Technology-related
goals
|
|
15%
|
|
Developmental
goals for greenfield facilities
|
|
15%
|
|
Operational
related goals
|
|
20%
|
|
Supply
chain related goals
|
|
25%
|
|
Strategic
goals related to the Indorama Loop Technologies joint
venture
|
Michel Megelas
Mr.
Megelas was not eligible for any long-term equity awards for the
fiscal year ended February 29, 2020.
Nelson Switzer
Mr.
Switzer did not receive any long-term equity awards prior to his
resignation.
Change in Control and Severance Benefits
We have
entered into employment agreements with our named executive
officers that provide for certain payments and benefits upon the
termination of their employment under certain circumstances. We
believe that these employment agreements provide retention value by
encouraging our named executive officers to continue service with
us and increase stockholder value by reducing any potential
distractions caused by the possibility of involuntary termination
or a potential change in control, allowing our named executive
officers to focus on their duties and responsibilities. For a
summary of the material terms and conditions of these employment
arrangements, see the section below entitled “
Potential Payments upon Termination or Change
in Control.
”
Other Compensation and Benefits
We
provide employee benefits to all eligible employees, including our
named executive officers. As discussed above, these benefits
include medical, dental and vision insurance, life and disability
insurance, and other plans and programs.
22
Stock Trading Practices; Hedging and Pledging Policy
We
maintain an Insider Trading Policy that, among other things,
prohibits our employees, including our named executive officers,
from trading during quarterly and special blackout periods. In
addition, we prohibit short sales, hedging and similar transactions
designed to decrease the risks associated with holding our
securities, as well as pledging the company’s securities as
collateral for loans and transactions involving derivative
securities relating to our common stock.
Our
Insider Trading Policy requires that all directors and officers,
including our named executive officers, pre-clear with our legal
department any proposed open market transactions. Further, we have
adopted Rule 10b5-1 trading plan guidelines that permit our
directors and employees, including our named executive officers, to
adopt Rule 10b5-1 trading plans. Under these guidelines, Rule
10b5-1 trading plans may only be adopted or modified during an open
trading window under our Insider Trading Policy and only when such
individual does not otherwise possess material nonpublic
information about the company. These guidelines also provide for a
cooling-off period before the first trade may occur under a Rule
10b5-1 trading plan.
Executive Pay Program Risk Assessment
The
Compensation Committee and management discuss and evaluate our
compensation program and policies for our employees (including our
named executive officers) to determine whether they encourage
excessive risk-taking and to assess policies and practices that
could mitigate such risks. In addition, the Compensation Committee
had previously engaged Pay Governance to independently review our
executive compensation program. Based on these reviews, the
Compensation Committee designs our executive compensation program
to encourage our named executive officers to focus on our
short-term and long-term success, and for the following reasons,
the Compensation Committee believes that any risks arising from
compensation program and policies are not reasonably likely to have
a material adverse effect on the Company:
●
Company’s
pay-performance philosophy
●
Use of a mix of
cash and equity-based awards
●
Generally
conservative annual cash compensation with an emphasis on
performance-based equity awards that does not fully vest for
several years
●
Inclusion of
relevant milestones or other metrics (recognizing our emerging
status currently makes it challenging to set multi-year performance
goals)
●
Structure of the
Chief Executive Officer’s RSU award which necessitates
achieving critical milestones on our road to product
commercialization
●
Significant
outright equity ownership by our Chief Executive
Officer
Tax and Accounting Considerations
Deductibility of Executive Compensation
Section
162(m) of the Internal Revenue Code, or Section 162(m), generally
limits the amount we may deduct from our federal income taxes for
compensation paid to our chief executive officer and certain other
executive officers to $1 million per executive officer per year,
subject to certain exceptions. Neither the Compensation Committee
nor its authorized committee has adopted a policy that all equity
or other compensation must be deductible.
23
Taxation of “Parachute Payments” and Deferred
Compensation
If
certain service providers receive payments or benefits in
connection with a change in control that exceeds certain prescribed
limits, they may be subject to an excise tax under Section 4999 of
the Internal Revenue Code, and we may lose the ability to deduct
the amounts subject to this excise tax under Section 280G of the
Internal Revenue Code. Section 409A of the Internal Revenue Code,
or Section 409A, imposes significant additional taxes on service
providers that receive “deferred compensation” that
does not meet the requirements of Section 409A. In fiscal 2020, we
did not provide (and did not have any agreements or obligations to
provide) any of our named executive officers with a
“gross-up” payment or other reimbursement for any
excise tax liability that he or she might owe under Section 4999 or
for any additional tax that he or she might owe under Section
409A.
Accounting Considerations
We
follow the authoritative accounting guidance under ASC Topic 718
for our share-based awards. ASC Topic 718 requires companies to
measure the compensation expense for all share-based awards made to
employees (including named executive officers) and directors based
on the grant date “fair value” of these awards. ASC
Topic 718 also requires companies to recognize the compensation
cost of share-based awards in their income statements over the
periods that the employees or directors are required to render
service in order to vest in the awards.
The
grant date “fair value” of the awards granted to our
named executive officers have been calculated for accounting
purposes and reported in the tables above, even though our named
executive officers may never realize any value from those
awards.
Compensation Committee Report
The
Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this proxy
statement.
The Compensation Committee
|
|
Andrew
Lapham (Chair)
Lawrence
Sellyn
Jay
Stubina
|
The information contained in the Compensation Committee Report
shall not be deemed to be soliciting material or to be filed with
the SEC, nor shall such information be incorporated by reference
into any future filing under the Securities Act or the Exchange
Act, except to the extent that the Company specifically
incorporates it by reference in such filing.
24
COMPENSATION TABLES
Summary Compensation Table
The
following table presents summary information regarding the
compensation reportable for our named executive officers for fiscal
2020, as determined under SEC rules.
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock Awards
(1)
($)
|
Option Awards
(1)
($)
|
Non-Equity Incentive Plan Compensation
($)
|
All Other Compensation
($)
|
Total
($)
|
|
Daniel Solomita
(2)
|
2020
|
451,814
|
-
|
3,200,000
|
-
|
124,249
|
12,000
|
3,788,063
|
|
Chief
Executive Officer
|
2019
|
457,692
|
-
|
-
|
-
|
343,269
|
12,000
|
812,961
|
|
|
2018
|
189,540
|
-
|
-
|
-
|
-
|
13,000
|
202,540
|
|
Nelson Gentiletti
(3)
|
2020
|
403,604
|
-
|
217,904
|
-
|
110,991
|
-
|
732,499
|
|
Chief
Operating and Chief Financial Officer
|
2019
|
66,089
|
-
|
2,056,727
|
-
|
19,827
|
-
|
2,142,642
|
|
|
2018
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Michel Megelas
(4)
|
2020
|
98,299
|
-
|
40,000
|
-
|
15,088
|
-
|
153,387
|
|
Chief Legal
Officer
|
2019
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
2018
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Nelson Switzer
(5)
|
2020
|
86,885
|
-
|
105,000
|
-
|
-
|
150,000
|
341,885
|
|
Chief Growth
Officer
|
2019
|
241,644
|
-
|
357,315
|
213,459
|
-
|
-
|
812,418
|
|
|
2018
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
The
amounts reported in this column do not reflect the compensation
actually received by the Named Executive Officer. For valuation
purposes, the dollar amount shown represents the aggregate award
date fair value of awards made in fiscal years ended February 29,
2020, February 28, 2019 and 2018, computed in accordance with FASB
ASC Topic 718, ‘‘Stock-Based
Compensation’’.
(2)
On July
13, 2018, the Company and Mr. Solomita entered into an amendment
and restatement of the employment agreement. The amended and
restated employment agreement provides for an increase in Mr.
Solomita’s base salary and eligibility to participate in an
annual cash bonus subject to performance measures. Mr.
Solomita’s base salary and bonus opportunity are deemed to be
retroactive effective to March 1, 2018.
(3)
Began
serving as Chief Financial Officer on January 1, 2019.
(4)
Began
serving as Chief Legal Officer on June 25, 2019.
(5)
Served
as Chief Growth Officer from May 10, 2018 to June 14,
2019.
Grants of Plan-Based Awards for Fiscal 2020
The
following table presents, for each of our named executive officers,
information concerning grants of plan-based awards made during
fiscal 2020. This information supplements the information about
these awards set forth in the Summary Compensation
Table.
|
|
|
Date of Board
Action to
|
Estimated Future
Payouts Under Non-Equity Incentive Plan Awards
|
All Other Stock
Awards: Number of Shares of Stock or
|
All Other Option
Awards: Number of Securities Underlying
|
Exercise or Base
Price of Option
|
Grant Date Fair
Value of Stock
|
||
|
|
Grant
Date
|
Grant
the
Award
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Units
(#)
|
Options
(#)
|
Awards
($/sh)
|
Awards
($)
|
|
Daniel Solomita
|
|
|
|
|
|
|
|
|
|
|
Short-term
incentive
|
July 8,
2019
|
July 8,
2019
|
112,953
|
225,907
|
451,814
|
-
|
-
|
-
|
-
|
|
Milestone RSU
grant
|
June 27,
2019
|
July 13,
2018
|
-
|
-
|
-
|
4,000,000
|
-
|
-
|
3,200,000
|
|
Nelson
Gentiletti
|
|
|
|
|
|
|
|
|
|
|
Short-term
incentive
|
July 8,
2019
|
July 8,
2019
|
100,901
|
201,802
|
403,604
|
-
|
-
|
-
|
-
|
|
Time-based
RSUs
|
March 1,
2019
|
March 4,
2019
|
-
|
-
|
-
|
14,422
|
-
|
-
|
141,214
|
|
Performance-based
RSUs
|
July
8, 2019
|
July
8, 2019
|
-
|
-
|
-
|
8,734
|
-
|
-
|
76,690
|
|
Michel Megelas
|
|
|
|
|
|
|
|
|
|
|
Short-term
incentive
|
June 28,
2019
|
June 28,
2019
|
15,088
|
15,088
|
15,088
|
-
|
-
|
-
|
-
|
|
New hire
RSUs
|
June 28,
2019
|
June 28,
2019
|
-
|
-
|
-
|
4,044
|
-
|
-
|
40,000
|
25
Outstanding Equity Awards at Fiscal Year-End
The
following table sets forth all outstanding equity awards held by
each Named Executive Officer as at February 29, 2020. For purposes
of valuing the outstanding awards, the amounts below are based on a
per share price of $8.78 for our common stock, which was the
closing market price of the common stock as reported on the Nasdaq
Global Select Market on February 29, 2020, the last business day of
the fiscal year.
|
|
Option Awards
|
Stock Awards
|
|||||||
|
|
Number of
Securities Underlying Unexercised Options Exercisable
(#)
|
Number of
Securities Underlying Unexercised Options Un-Exercisable
(#)
|
Equity incentive
plan awards: Number of Securities Underlying Unexercised Unearned
Options (#)
|
Option Exercise
Price ($)
|
Option
Expiration date
|
Number of shares
or units of stock that have not vested (#)
|
Market Value of
shares or units of stock that have not vested
($)
|
Equity incentive
plan awards: Number of Unearned shares, Units or Other Rights that
have not vested (#)
|
Equity incentive
plan awards: Market or payout value of unearned shares, Units or
Other Rights that have not vested ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
Solomita
|
-
|
-
|
-
|
-
|
-
|
3,000,000
|
26,340,000
|
-
|
-
|
|
Nelson
Gentiletti
|
-
|
-
|
-
|
-
|
-
|
286,430
|
2,514,855
|
-
|
-
|
|
Michel
Megelas
|
-
|
-
|
-
|
-
|
-
|
4,044
|
35,506
|
-
|
-
|
Equity Compensation Plan Information in Fiscal 2020
As at
February 29, 2020, there were 1,587,081 shares of our common stock
subject to issuance upon the exercise of outstanding stock options
and RSUs under all of our equity compensation plans referred to in
the table below. As at February 28, 2019, there were 1,300,518
shares of our common stock available for issuance under our equity
compensation plan.
|
|
Number of Securities to be Issued Upon Exercise of
Options(#)
|
Weighted Average Exercise Price of Outstanding
Options($)
|
Weighted Average Remaining Term of Outstanding
Options(years)
|
Number of Securities to be Issued Upon Vesting of Restricted Stock
Units(#)
|
Weighted Average Issuance Price of Restricted Stock
Units($)
|
Number of Securities Remaining
Available for Future Issuance Under Equity Compensation Plans
(Excluding Securities Reflected in Column
(a))(#)
|
|
|
||||||
|
Equity
compensation plans approved by shareholders
|
700,000
|
12.00
|
7.54
|
4,218,802
|
1.60
|
1,300,518
|
|
Equity
compensation not approved by shareholders
|
887,081
|
2.71
|
6.50
|
-
|
-
|
-
|
|
Total
equity compensation plans
|
1,587,081
|
1.51
|
3.63
|
4,218,802
|
1.60
|
1,300,518
|
26
Option Exercises and Stock Vested in Fiscal 2020
The
following table provides information on vesting of RSUs during
fiscal 2020.
|
|
Option
Awards
|
Stock
Awards
|
||
|
|
Number of Shares
Acquired on Exercise
(#)
|
Value Realized on
Exercise
($)
|
Number of Shares
Acquired on Vesting
(#)
|
Value Realized on
Vesting
($)
|
|
Daniel
Solomita
(1)
|
-
|
-
|
200,000
|
2,092,000
(2)
|
|
Nelson
Gentiletti
|
-
|
-
|
952
|
9,425
(3)
|
|
Michel
Megelas
|
-
|
-
|
-
|
-
|
|
Nelson
Switzer
|
-
|
-
|
7,043
|
49,160
(4)
|
_____________
(1)
Mr.
Solomita received an award of 4,000,000 RSUs which became effective
upon shareholder approval of an increase in the number of shares
available for grant under the Plan at the Company’s 2019
Annual Meeting. The RSUs vest upon the occurrence of certain
milestones and once vested, one-fifth of the RSUs will be settled
annually. The first performance milestone has already been reached
and consequently, 1,000,000 RSUs have vested effective June 27,
2019, of which the first installment of 200,000 RSUs was settled on
October 15, 2019.
(2)
Based
on the stock price of $10.46 which is the closing price of the
Company’s common stock on the Nasdaq Stock Market at the
close of business on the settlement date, being October 15,
2019.
(3)
Based
on the stock price of $9.90 which is the closing price of the
Company’s common stock on the Nasdaq Stock Market at the
close of business on the day prior to the vesting and settlement
date, being December 31, 2019, as the vesting and settlement date
of January 1, 2020 was a holiday.
(4)
Based
on the stock price of $6.98 which is the closing price of the
Company’s common stock on the Nasdaq Stock Market at the
close of business on the vesting and settlement date, being May 17,
2019.
Pension Benefits and Nonqualified Deferred
Compensation
We do
not provide a pension plan for our employees, and none of our named
executive officers participated in a nonqualified deferred
compensation plan during fiscal 2020.
Potential Payments upon Termination or Change in
Control
Mr. Daniel Solomita
On July
13, 2018, we entered into an amended and restated employment
agreement, with no term, with Daniel Solomita, our President and
Chief Executive Officer, such agreement referred to as the Solomita
Amended and Restated Employment Agreement.
Pursuant to the
Solomita Amended and Restated Employment Agreement, Mr. Solomita
received an award of 4,000,000 RSUs, subject to the terms of our
2017 Equity Incentive Plan and a Restricted Stock Unit Agreement
thereunder. Such grant became effective upon shareholder approval
of an increase in the number of shares available for grant under
the Plan at the Company’s 2019 Annual Meeting. The RSUs will
vest upon the occurrence of certain milestones as
follows:
●
1,000,000 RSUs will
vest when the Company’s securities are listed an exchange or
the OTCQX tier of the OTC Markets;
●
1,000,000 RSUs will
vest when the Company executes a contract for a minimum quantity of
25,000 M/T of DMT/MEG or PET;
●
1,000,000 RSUs will
vest when the Company’s first full-scale production facility
is in commercial operation; and
●
1,000,000 RSUs will
vest when the Company’s second full-scale production facility
is in commercial operation.
27
For
these purposes, “commercial operation” means the
full-scale production facility produces 10 metric tons per hour of
DMT and MEG combined, for a term of not less than 6 months. Once
vested in accordance with the milestones, one-fifth of the RSUs
will be settled annually, generally commencing on the first
settlement date following the date of vesting.
The
first performance milestone has been reached and consequently,
1,000,000 RSUs have vested effective June 27, 2019, of which the
first installment of 200,000 RSUs was settled on October 15,
2019.
If Mr.
Solomita’s employment is involuntarily terminated by the
Company without Cause prior to a Change of Control or more than 24
months following a Change of Control (as such terms are defined in
the Solomita Amended and Restated Employment Agreement), Mr.
Solomita will receive: (i) continued payment of his base salary for
a period equal to 24 months, (ii) payments by the Company for the
full cost of his medical benefits provided by the Company under
which he is covered as of the date of his termination of employment
for up to 24 months, (iii) if he is eligible as of the date that
his employment is terminated to participate in a formal cash annual
incentive plan as the Company may make available to its
similarly-situated employees, a lump-sum payment equal to a
pro-rated portion of the incentive payment payable to him under
such cash annual incentive plan based on actual performance at the
end of the performance period, (iv) accelerated vesting of 50% of
the then-unvested portion of his outstanding equity compensation,
(v) reimbursement for up to $10,000 of expenses incurred in
obtaining new employment.
If Mr.
Solomita’s employment is terminated by the Company without
Cause or by his Resignation for Good Reason (as defined in the
Solomita Amended and Restated Employment Agreement) within 24
months after a Change in Control, Mr. Solomita will receive
following severance benefits: (i) a lump sum payment equal to
24 months of his base salary, (ii) payments by the Company for
the full cost of his medical benefits provided by the Company under
which he is covered as of the date of his termination of employment
for up to 24 months, (iii) if he is eligible as of the date that
his employment is terminated to participate in a formal cash annual
incentive plan as the Company may make available to its
similarly-situated employees, a lump-sum payment equal to a
pro-rated portion of the incentive payment payable to him under
such cash annual incentive plan based on actual performance as of
the date his employment is terminated and as soon as reasonably
practicable following such date (or if such performance is not
determinable at such time, based on target performance) and a
lump-sum payment equal to two times the target incentive payment
payable under the applicable cash annual incentive plan,
(iv) accelerated vesting of 100% of the 4,000,000 RSUs
described above, (v) reimbursement for up to $20,000 of expenses
incurred in obtaining new employment.
The
receipt of the severance benefits described above are subject to
Mr. Solomita’s timely executing and not revoking a release of
claims and his continued compliance with his proprietary
information and inventions agreement with the Company and the
post-employment non-competition, non-solicitation, and
non-disparagement covenants in the Solomita Amended and Restated
Employment Agreement.
The
Solomita Amended and Restated Employment Agreement also provides
that in the event any amounts in the agreement or otherwise payable
to him constitute “parachute payments” within the
meaning of Section 280G of the Internal Revenue Code of 1986,
as amended (the “Code”), and could be subject to the
related excise tax, he would be entitled to receive either full
payment of benefits or such lesser amount that would result in no
portion of the benefits being subject to an excise tax, whichever
results in the greater amount of after-tax benefits to
him.
For the
purposes of the Solomita Employment Agreement, “Cause”
means any grounds entitling the Board to summarily dismiss Mr.
Solomita.
For
purposes of the Solomita Amended and Restated Employment Agreement,
“Resignation for Good Reason” generally means, Mr.
Solomita’s resignation as a result of, and within 30 days
following, (i) a change in Mr. Solomita’s position such that
he is not a corporate officer of the Company (or a successor
company in the event of a Change of Control), (ii) a significant
and substantial reduction in Mr. Solomita’s job, duties, or
responsibilities in a manner that is substantially and materially
inconsistent with the position, duties, or responsibilities held by
Mr. Solomita immediately before such reduction, (iii) any reduction
in Mr. Solomita’s base salary other than in connection with
and consistent with a general reduction of all officer base
salaries; or (iv) a relocation of Mr. Solomita’s work
location to a location more than 50 kilometers away from the
current location provided such change increases Mr.
Solomita’s commute by 25 kilometers or 30
minutes.
28
The
Solomita Amended and Restated Employment Agreement prohibits Mr.
Solomita from engaging in certain activities which compete with our
business, seeking to recruit our employees or disclosing any of our
trade secrets or otherwise confidential information. The foregoing
description of the Solomita Amended and Restated Employment
Agreement is a summary and is qualified in its entirety by the text
of the Solomita Amended and Restated Employment Agreement, as
amended, a copy of which is as an exhibit to our Form 8-K filed
with the Securities and Exchange Commission on July 13,
2018.
Mr. Nelson Gentiletti
On
December 18, 2018, our wholly-owned subsidiary, Loop Canada Inc.,
entered into an employment agreement with no term commencing on
January 1, 2019 with Nelson Gentiletti, our Chief Operating and
Chief Financial Officer, such agreement referred to as the
Gentiletti Employment Agreement.
Pursuant to the
Gentiletti Employment Agreement, if Mr. Gentiletti’s
employment is terminated by the Company without Serious Reason or
by Mr. Gentiletti’s Resignation for Good Reason (as such
terms are defined in the Gentiletti Employment Agreement), Mr.
Gentiletti will receive the following severance benefits, subject
to his timely executing a release of claims and his continued
compliance with the post-employment covenants his proprietary
information and inventions agreement with the Company and his
non-solicitation and non-disparagement agreement with the
Company:
(i) his
annual short-term incentive award prorated to the date of
termination based on actual performance, payable in one lump-sum
within the later of 30 days of termination for time based awards or
shortly after performance is determined at the end of the next
quarterly reporting period for performance awards; (ii) continued
payment of his base salary for a period equal to (A) 24 months, if
the termination of employment occurs before March 1, 2022, (B) 18
months, if the termination of employment occurs between March 1,
2022, and February 28, 2023, or (C) 12 months, if the termination
of employment occurs after February 28, 2023; (iii) any long-term
incentive award vested as of the previous annual vesting date will
be granted (at a value equal to the closing price of the
Company’s common stock on the Nasdaq Stock Market at the
close of business on the date of termination or the vesting date,
as applicable) and will be paid in one lump sum within 30 days
of termination for time-based long-term incentive awards or shortly
after performance is determined at the end of the next quarterly
reporting period for performance-based long-term incentive awards;
and (iv) his new hire RSU award will be paid as if vested ratably
over a period of five years from the date he commenced employment
with the Company, with any such RSUs that are vested as of the date
of termination to be paid in one lump sum within 30 days of
termination.
In
addition, if Mr. Gentiletti’s employment is terminated by the
Company without Serious Reason or Resignation for Good Reason
within two years of a Change of Control (as defined in the
Gentiletti Employment Agreement), all of Mr. Gentiletti’s
unvested options, shares or other equity shall immediately
vest.
For the
purposes of the Gentiletti Employment Agreement, “Serious
Reason” means a serious reason pursuant to Article 2094 of
the Civil Code of Quebec and includes, without limitation, (i) Mr.
Gentiletti’s breach of a material term of the Gentiletti
Employment Agreement; (ii) Mr. Gentiletti’s conviction of a
criminal offense involving fraud or dishonesty, or which otherwise
adversely impacts the reputation of the Company;
(iii) Mr. Gentiletti directly or indirectly making
personal profit out of or in connection with a transaction or
business opportunity to which the Company is involved or otherwise
associated with, without making disclosure to and seeking the prior
written consent of the Company; (iv) Mr. Gentiletti’s failure
to comply with any Company rules or policies of a material nature;
(v) Mr. Gentiletti’s continued failure to substantially
perform his job duties; (vi) any actions or omissions on Mr.
Gentiletti’s part constituting gross misconduct or negligence
in connection with the business of the Company.
For
purposes of the Gentiletti Employment Agreement, “Resignation
for Good Reason” means, Mr. Gentiletti’s resignation as
a result of: (i) a significant and substantial reduction in Mr.
Gentiletti’s job, duties, or responsibilities in a manner
that is substantially and materially inconsistent with the
position, duties, or responsibilities held by Mr. Gentiletti
immediately before such reduction, (ii) any reduction in Mr.
Gentiletti’s base salary other than in connection with and
consistent with a general reduction of all officer base salaries;
or (iii) a relocation of Mr. Gentiletti’s work location to a
location more than 50 kilometers away from the current location
provided such change increases Mr. Gentiletti’s commute by 25
kilometers or 30 minutes. In each case, Mr. Gentiletti must give
written notice to us of such event and allow us a reasonable period
to cure such event.
29
As
required by the Gentiletti Employment Agreement, Mr. Gentiletti has
signed and agreed to be bound by a Non-Competition,
Non-Solicitation and Non-Disparagement Agreement. The foregoing
description of the Gentiletti Employment Agreement is a summary and
is qualified in its entirety by the text of the Gentiletti
Employment Agreement, a copy of which is an exhibit to our Form
10-K filed with the Securities and Exchange Commission on May 8,
2019.
Mr. Michel Megelas
On May
28, 2019, our wholly-owned subsidiary, Loop Canada Inc., entered
into an employment agreement with no term, to commence on June 25,
2019, with Mr. Michel Megelas, our Chief Legal Officer, such
agreement referred to as the Megelas Employment
Agreement.
Pursuant to the
Megelas Employment Agreement, if Mr. Megelas’ employment is
terminated by the Company without Serious Reason or by Mr.
Megelas’ Resignation for Good Reason (as such terms are
defined in the Megelas Employment Agreement), Mr. Megelas will
receive the following severance benefits, subject to his timely
executing a release of claims and his continued compliance with the
post-employment covenants his proprietary information and
inventions agreement with the Company and his non-solicitation and
non-disparagement agreement with the Company:
(i) his
annual short-term incentive award prorated to the date of
termination based on actual performance, payable in one lump-sum
within the later of 30 days of termination for time-based awards or
shortly after performance is determined at the end of the next
quarterly reporting period for performance awards; (ii) a lump-sum
payment equal to three months of his then-current base salary plus
one month for each additional year of service, up to a maximum
total of nine months; (iii) any long-term incentive award vested as
of the previous annual vesting date will be granted (at a value
equal to the closing price of the Company’s common stock on
the Nasdaq Stock Market at the close of business on the date of
termination or the vesting date, as applicable) and will be paid in
one lump sum within 30 days of termination for time-based long-term
incentive awards or shortly after performance is determined at the
end of the next quarterly reporting period for performance-based
long-term incentive awards; and (iv) his new hire RSU award will be
paid as if vested ratably over a period of five years from the date
he commenced employment with the Company, with any such RSUs that
are vested as of the date of termination to be paid in one lump sum
within 30 days of termination.
In
addition, if Mr. Megelas’ employment is terminated by the
Company without Serious Reason or Resignation for Good Reason
within two years of a Change of Control (as defined in the Megelas
Employment Agreement), all of Mr. Megelas’ unvested options,
shares or other equity shall immediately vest.
For the
purposes of the Megelas Employment Agreement, “Serious
Reason” means a serious reason pursuant to Article 2094 of
the Civil Code of Quebec and includes, without limitation, (i) Mr.
Megelas’ breach of a material term of the Megelas Employment
Agreement; (ii) Mr. Megelas’ conviction of a criminal offence
involving fraud or dishonesty, or which otherwise adversely impacts
the reputation of the Company; (iii) Mr. Megelas’ directly or
indirectly making personal profit out of or in connection with a
transaction or business opportunity to which the Company is
involved or otherwise associated with, without making disclosure to
and seeking the prior written consent of the Company; (iv) Mr.
Megelas’ failure to comply with any Company rules or policies
of a material nature; (v) Mr. Megelas’ continued failure to
substantially perform his job duties; (vi) any actions or omissions
on Mr. Megelas’ part constituting gross misconduct or
negligence in connection with the business of the
Company.
For
purposes of the Megelas Employment Agreement, “Resignation
for Good Reason” means, Mr. Megelas’ resignation as a
result of: (i) a significant and substantial reduction in Mr.
Megelas’ job, duties, or responsibilities in a manner that is
substantially and materially inconsistent with the position,
duties, or responsibilities held by Mr. Megelas immediately before
such reduction, or (ii) any reduction in Mr. Megelas’ base
salary other than in connection with and consistent with a general
reduction of all officer base salaries. In each case, Mr. Megelas
must give written notice to us of such event and allow us a
reasonable period to cure such event.
30
As
required by the Megelas Employment Agreement, Mr. Megelas has
signed and agreed to be bound by a Non-Competition,
Non-Solicitation and Non-Disparagement Agreement.
Mr. Nelson Switzer
On
April 10, 2018, our wholly-owned subsidiary, Loop Canada Inc.,
entered into an employment agreement with no term, to commence on
May 14, 2018, with Mr. Nelson Switzer, our Chief Growth Officer,
such agreement referred to as the Switzer Employment Agreement. Mr.
Switzer resigned from the Company on June 14, 2019.
Estimated Payments Upon Termination or Change in
Control
The
following table provides an estimate of the payments and benefits
that would be provided in the circumstances described above for
each of the named executive officers, assuming the triggering event
took place on February 29, 2020 (the last business day of fiscal
2020) and based on the $8.78 closing price per share of our common
stock on the Nasdaq Stock Market on February 29, 2020. A number of
factors may affect the nature and amount of any potential payments
or benefits, and as a result, the payments and benefits actually
paid (if any) may be different. For example, a triggering event may
occur on a date other than February 29, 2020, the price per share
of our common stock on the date of the triggering event may be
higher or lower than $8.78 or the assumptions relied upon in the
estimate of potential payments and benefits below may not reflect
the actual circumstances of the triggering event. Accordingly,
there is no guarantee that a triggering event would produce the
same or similar results as those estimated below.
|
Name
|
Termination
Without Cause or Resignation for Good Reason
($)
|
Termination
Without Cause or Resignation for Good Reason in Connection with a
Change in Control($)
|
|
Daniel
Solomita
|
|
|
|
Base salary
|
903,628
|
903,628
|
|
Cash incentive compensation
|
124,249
|
576,063
|
|
Equity incentive
compensation
(1)
|
16,682,000
|
33,364,000
|
|
Total potential payment
|
17,709,877
|
34,843,691
|
|
Nelson
Gentiletti
|
|
|
|
Base salary
|
807,208
|
807,208
|
|
Cash incentive compensation
|
110,991
|
110,991
|
|
Equity incentive compensation
(2)
|
465,498
|
2,514,855
|
|
Total potential payment
|
1,383,697
|
3,433,055
|
|
Michel
Megelas
|
|
|
|
Base salary
|
35,834
|
35,834
|
|
Cash incentive compensation
|
15,088
|
15,088
|
|
Equity incentive
compensation
(2)
|
4,870
|
35,506
|
|
Total potential payment
|
55,792
|
86,428
|
_____________
(1)
In June
2018, the Board approved the grant of an award of 4,000,000 RSUs to
Mr. Solomita, which became effective upon approval by the
Company’s stockholders at the Company’s 2019 Annual
Meeting of an increase in the number of shares available for
issuance under the Company’s 2017 Equity Incentive Plan.
Since the Company’s stockholders approved Proposal Three, the
grant of this RSU award to Mr. Solomita became effective, and the
vesting acceleration provisions in the Solomita Amended and
Restated Employment Agreement (described above in the section above
entitled “
Potential Payments
upon Termination or Change in Control
”) apply to the
RSU award.
(2)
The
amounts listed represent the value of the vesting acceleration
benefits described above in the section above entitled
“
Potential Payments upon
Termination or Change in Control
” as of February 29,
2020. For RSUs, the value of such vesting acceleration is computed
by multiplying (i) the number of shares of our common stock subject
to the RSUs that are being accelerated by (ii) the closing sales
price per share of our common stock on February 29, 2020
($8.78).
31
TRANSACTIONS WITH RELATED PERSONS
Our
Board of Directors has adopted a written related party transactions
policy. All transactions required to be reported pursuant to Item
404 of Regulation S-K are subject to approval by the Audit
Committee of our Board of Directors. In furtherance of relevant
Nasdaq rules and our commitment to corporate governance, the
charter of the Audit Committee provides that the Audit Committee
shall review and approve any proposed related party transactions
including, transactions required to be reported pursuant to Item
404 of Regulation S-K. The Company is also required by Nasdaq Rule
5250(b)(3) to disclose all agreements and arrangements between any
director or nominee for director, and any person or entity other
than the Company, relating to compensation or other payment in
connection with such person’s candidacy or service as a
director of the Company. The Company is not aware of any such
agreements.
In
evaluating transactions with related parties, our Audit Committee
considers all of the available material facts and circumstances of
a related person transaction, including: the direct and indirect
interests of the related persons; in the event the related person
is a director or nominee for director (or immediate family member
of a director or an entity with which a director is affiliated),
the impact that the transaction will have on a director’s or
nominee for director’s independence; the risks, costs and
benefits of the transaction to us; and whether the transaction is
on terms no less favorable than terms generally available to an
unaffiliated third-party under the same or similar
circumstances.
Transactions and Relationships with Directors, Director Nominees,
Executive Officers and Five Percent Stockholders
We
believe that there have not been any transaction or series of
transactions during fiscal 2020 to which we were or are to be a
participant in which the amount involved exceeds $120,000 and in
which any director, nominee for director, executive officer or
holder of more than five percent of our Common Stock, or members of
any such person’s immediate family, had or will have a direct
or indirect material interest, other than compensation described in
this section and the sections titled “Executive Compensation,
Management and Other Information,” or “Director
Compensation” elsewhere in this proxy statement.
Mr.
Daniel Solomita, our controlling stockholder and Chief Executive
Officer, or companies controlled by him, previously made advances
to the Company which were unsecured, non-interest bearing with no
formal terms of repayment. As of May 4, 2018, we do not owe any
money to Mr. Solomita or entities controlled by him.
32
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
On
August 16, 2017, the Audit Committee approved the appointment of
PricewaterhouseCoopers LLP (“PwC”) as our independent
registered public accounting firm. The selection and engagement of
PwC as our independent registered public accounting firm was
approved by the Board on August 16, 2017, effective as at August
16, 2017. On June 27, 2019, at the 2019 Annual Meeting of
Shareholders, the appointment of PricewaterhouseCoopers LLP as the
Company’s independent registered public accounting firm for
fiscal year 2020 was ratified by shareholders.
A
representative of PwC may be present at the 2020 Annual Meeting to
make a statement if he or she desires to do so, and such
representative is expected to be available to respond to
appropriate questions. The stockholders are being asked to ratify
the appointment of PwC as our independent registered public
accounting firm for the fiscal year ending February 28,
2021.
Audit Fees During Fiscal Years 2020 and 2019
The
following table sets forth the approximate aggregate fees paid by
us to our independent registered public accounting firms during the
fiscal year ended February 29, 2020 and February 28,
2019.
|
|
Fiscal
2020
|
Fiscal 2019
|
|
Audit Fees
(1)
|
167,466
|
182,771
|
|
Audit-Related Fees
(2)
|
67,383
|
52,793
|
|
Tax Fees
(3)
|
-
|
26,716
|
|
All Other Fees
(4)
|
1,800
|
1,800
|
|
Total
Fees
|
236,650
|
264,080
|
_____________
(1)
Audit Fees.
This category represents
fees billed for professional services rendered by the principal
accountant for the audits of the registrant’s annual
financial statements and internal controls over financial
reporting, review of the interim financial statements included in
the registrant’s quarterly reports on Form 10-Q, and services
that are normally provided by the accountant in connection with
statutory audits and other SEC filings or engagements. Fees paid to
PwC in Fiscal years 2020 and 2019 amounted to $157,966 and
$173,271, respectively. Fees paid to Weinberg & Company
(“Weinberg”) our previous independent registered
accounting firm in fiscal years 2020 and 2019 amounted to $9,500
for each year.
(2)
Audit-Related Fees.
This category
represents fees billed for assurance and related services by the
principal accountant that are reasonably related to the performance
of the audit or review of registrant’s financial statements,
primarily related to accounting consultations and related to
accounting, financial reporting or disclosure matters not
classified as “Audit Fees.” Fees paid to PwC in Fiscal
years 2020 and 2019 amounted to $37,883 and $25,293, respectively.
Fees paid to Weinberg in Fiscal years 2020 and 2019 amounted to
$29,500 and $27,500, respectively.
(3)
Tax Fees.
This category represents fees
billed for professional services rendered by the principal
accountant for tax compliance in certain international
jurisdictions, tax advice and tax planning. Fees paid to PwC in
Fiscal years 2020 and 2019 amounted to nil and $26,716,
respectively. Fees paid to Weinberg in fiscal years 2020 and 2019
amounted to nil for each year.
(4)
All Other Fees.
This category
represents the aggregate fees billed for any other products and
services provided by the principal accountant.
33
Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Registered Public Accounting
Firm
The
Sarbanes-Oxley Act of 2002 and the auditor independence rules of
the SEC require all independent registered public accounting firms
that audit issuers to obtain pre-approval from their respective
audit committees in order to provide professional services without
impairing independence. As such, our Audit Committee has a policy
and has established procedures by which it pre-approves all audit
and other permitted professional services to be provided by our
independent registered public accounting firm.
Our
audit committee’s policy is to pre-approve all audit and
permissible non-audit services provided by the independent
accountants. These services may include audit services,
audit-related services, tax services and other services. Our audit
committee generally pre-approves particular services or categories
of services on a case-by-case basis. The independent registered
public accounting firm and management are required to periodically
report to our audit committee regarding the extent of services
provided by the independent registered public accounting firm in
accordance with these pre-approvals, and the fees for the services
performed to date. On January 9, 2018, the Audit Committee approved
the Audit and Non-Audit Services Pre-Approval Policy
(“Pre-Approval Policy”) effective for the fiscal year
ended February 28, 2018 and subsequent fiscal years. Of the fees
paid in fiscal year 2020, 96% were approved by the Audit Committee
using the pre-approval policies and procedures described herein. Of
the fees paid in fiscal year 2019, 96% were approved by the Audit
Committee using the pre-approval policies and procedures described
herein.
Required Vote & Recommendation of the Board
Unless
marked to the contrary, proxies received will be voted
“FOR” approval of the ratification of the appointment
of PwC as our independent registered public accounting firm for the
fiscal year ending February 28, 2021. Abstentions and broker
non-votes will not affect the outcome of the vote. No determination
has been made as to what action the Board of Directors would take
if the shareholders do not ratify the appointment.
THE LOOP BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
LOOP
STOCKHOLDERS VOTE “FOR” RATIFICATION OF APPOINTMENT
OF
PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
34
AUDIT COMMITTEE REPORT
The
Audit Committee of the Board of Directors is responsible for
providing an independent, objective review of our accounting
functions and internal controls. The Audit Committee is comprised
of Mr. Sellyn, Mr. Lapham and Mr. Stubina, each of whom is
independent within the meaning of the listing standards of the
Nasdaq Stock Market, and was governed by a written charter first
adopted and approved by the Board of Directors, and who reviewed
the Audit Committee Report for the fiscal year ended February 29,
2020. As of the date of this meeting and for fiscal year ending
February 28, 2021, the Audit Committee will be comprised of Mr.
Sellyn (Chair), Mr. Lapham and Mr. Stubina. A copy of our Audit
Committee Charter is available on our website at
http://www.loopindustries.com/assets/docs/Audit_Committee_Charter.pdf.
The Audit Committee met five times during fiscal 2020.
In
connection with our audited financial statements for the fiscal
year ended February 29, 2020, on April 30, 2020, the Audit
Committee (1) reviewed and discussed the audited financial
statements with management, (2) discussed with the independent
registered public accounting firm the matters required to be
discussed by Auditing Standard No. 16, Communications with Audit
Committees, as currently in effect and as adopted by the Public
Company Accounting Oversight Board (“PCAOB”), and (3)
received the written disclosures and the letter from the
independent registered public accounting firm required by
applicable requirements of the PCAOB regarding the independent
accountants communications with the audit committee concerning
independence and discussed the independent registered public
accounting firm’s independence with the independent
registered public accounting firm.
The
Audit Committee has considered and determined that the provision of
the services other than audit services referenced above is
compatible with maintenance of the auditor’s independence.
Based upon these reviews and discussions, the Audit Committee
recommended to the Board of Directors, and the Board of Directors
approved, that our audited financial statements be included in our
Annual Report on Form 10-K for the fiscal year ended
February 29, 2020 for filing with the SEC.
|
|
The
Audit Committee:
|
|
|
Laurence
Sellyn, Chairman
|
|
|
Andrew
Lapham
|
|
|
Jay
Stubina
|
35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth certain information with respect to the
beneficial ownership of our Common Stock and Series A Preferred
Stock as at May 1, 2020, as to (1) each person (or group of
affiliated persons) who is known by us to own beneficially more
than 5% of our Common Stock; (2) each of our directors and
nominees; (3) each Named Executive Officer; and (4) all of our
directors and executive officers as a group.
The
amounts and percentages of our Common Stock and Series A Preferred
Stock beneficially owned are reported on the basis of the
regulations of the SEC governing the determination of beneficial
ownership of securities. Under these rules, a person is deemed to
be a beneficial owner of a security if that person has or shares
voting power, which includes the power to vote or to direct the
voting of such security, or investment power, which includes the
power to dispose of or to direct the disposition of such security.
A person is also deemed to be a beneficial owner of any securities
of which that person has the right to acquire beneficial ownership
within 60 days.
Holders
of our Common Stock and Series A Preferred Stock vote together as a
single class. The one share of Series A Preferred Stock issued to
Mr. Solomita affords him a majority of the total voting power so
long as Mr. Solomita holds not less than 7.5% of the issued and
outstanding shares of our common stock, assuring that Mr. Solomita
retains control with his presently-held 47.1% of the issued and
outstanding shares of our common stock.
Subject
to the paragraph above, percentage ownership of outstanding shares
is based on 39,916,905 shares of Common Stock outstanding and one
share of Series A Preferred Stock outstanding as of May 1,
2020.
|
Name and Address
of Beneficial Owner
|
Shares of Common
Stock
(1)
(#)
|
Percent of
Common Stock
(%)
|
Shares of Series
A Preferred Stock
(#)
|
Percent of
Preferred Stock
(%)
|
Combined Voting
Shares
(#)
|
Combined Voting
Power
(%)
|
|
Daniel Solomita
(2)
|
18,800,000
|
47.10
|
1
|
100
|
74,131,395
|
77.83
|
|
Nelson
Gentiletti
|
7,083
|
*
|
-
|
-
|
7,083
|
*
|
|
Michel Megelas
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Jay
Stubina
(3)
|
116,207
|
*
|
-
|
-
|
116,207
|
*
|
|
Laurence Sellyn
(4)
|
43,342
|
*
|
-
|
-
|
43,342
|
*
|
|
Andrew Lapham
(5)
|
18,033
|
*
|
-
|
-
|
18,033
|
*
|
|
Sidney Horn
(6)
|
23,510
|
*
|
-
|
-
|
23,510
|
*
|
|
Nelson Switzer
(7)
|
7,043
|
-
|
-
|
-
|
7,043
|
*
|
|
All
Directors and Executive Officers as a Group (8
persons)
|
19,015,218
|
47.64
|
1
|
100
|
74,346,613
|
78.06
|
_____________
*
Represents
beneficial ownership of less than one percent of the outstanding
shares of our common stock.
(1)
These
units represent shares of common stock owned by the beneficial
owner as well as any equity grant that vests within 60 days of the
record date May 1, 2020, including any equity grants granted during
the 2020 Annual Meeting.
(2)
Mr.
Solomita received an award of 4,000,000 RSUs which became effective
upon shareholder approval of an increase in the number of shares
available for grant under the 2017 Equity Incentive Plan at the
Company’s 2019 Annual Meeting. The RSUs vest upon the
occurrence of certain milestones and once vested, one-fifth of the
RSUs will be settled annually. The first performance milestone has
already been reached and consequently, 1,000,000 RSUs have vested
effective June 27, 2019, of which the first installment of 200,000
RSUs was settled on October 15, 2019. The remaining 800,000 vested
RSUs will be settled in equal installments over the next four
years. If those shares are added to Mr. Solomita’s holdings,
his ownership percentage of common stock would increase to 48.14%
and his combined voting power would increase to 78.01%. For so long
as Mr. Solomita holds not less than 7.5% of the issued and
outstanding shares of our common stock, the share of Series A
Preferred Stock shall have a majority of the voting power which is
equal to 55,331,395 voting shares as at May 1, 2020.
36
(3)
Comprised of 75,000
shares of our common stock held 6337708 Canada Inc., a corporation
duly formed and existing under the laws of Canada and controlled by
Jay Stubina, and 31,647 restricted stock units granted to Mr.
Stubina in his functions as Director, and 9,560 shares of common
stock resulting from the settlement of RSUs which vested in May
2018. The balance of RSUs will vest on June 26, 2020.
(4)
Comprised of 1,695
shares of our common stock and 41,647 restricted stock units
granted to Mr. Sellyn in his functions as Director of which the
settlement of 23,342 RSUs has been deferred until Mr.
Sellyn’s retirement from the Board and 18,305 RSU’s
will vest within 60 days of the record date of May 1,
2020.
(5)
These
units represent restricted stock units granted to Mr. Lapham which
fully vest within 60 days of the record date of May 1,
2020.
(6)
Comprised of 5,205
shares of our common stock and 18,305 restricted stock units
granted to Mr. Horn in his functions as Director and which will
vest within 60 days of the record date of May 1, 2020.
(7)
Mr.
Switzer resigned in June 2019.
37
PROPOSAL THREE
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant to Section
14A of the Exchange Act, which was put in place by the Dodd-Frank
Act, we are providing shareholders with a vote to approve, on an
advisory basis, the compensation of our Named Executive Officers as
disclosed in this Proxy Statement in accordance with SEC rules. The
advisory vote on executive compensation described in this proposal
is commonly referred to as a “say-on-pay” vote. As a
result of the vote of our shareholders to Proposal Five at our 2019
Annual Meeting, we are required to provide our shareholders the
opportunity to vote to approve, on an advisory basis, the
compensation of our Named Executive Officers every
year.
The
principal objectives of our executive compensation program
are:
●
To attract and
retain executive officers with the skills, experience and
motivation to enable us to achieve our stated
objectives;
●
To provide a mix of
current, short-term and long-term compensation to achieve a balance
between current income and long-term incentive opportunity and
promote focus on both annual and multi-year business
objectives;
●
To align total
compensation with the performance commitments we seek for our
shareholders, including, long-term growth in revenue and
EPS;
●
To allow executive
officers who demonstrate consistent performance over a multi-year
period to earn above-average compensation when we achieve
above-average long-term performance;
●
To be affordable
and appropriate in light of our size, strategy and anticipated
performance; and
●
To be
straightforward and transparent in its design, so that shareholders
and other interested parties can clearly understand all elements of
our compensation programs, individually and in the
aggregate.
This
proposal gives our shareholders the opportunity to express their
views on the overall compensation of our Named Executive Officers
and the philosophy, policies and practices described in this Proxy
Statement. For the reasons discussed above, we are asking our
shareholders to indicate their support for our executive
compensation by voting FOR, on an advisory basis, the compensation
of our Named Executive Officers, as disclosed in this Proxy
Statement pursuant to the compensation disclosure rules of the
Securities and Exchange Commission (which disclosure includes the
Summary Compensation Table and the other related tables and
disclosure).
The
say-on-pay vote is an advisory vote only, and therefore it will not
bind us or our Board of Directors or our Compensation Committee.
However, the Board of Directors and the Compensation Committee will
consider the voting results as appropriate when making future
decisions regarding executive compensation.
Required Vote & Recommendation of the Board
If a
quorum is present, in order to approve the advisory vote on
executive compensation, the number of votes cast “FOR”
the proposal must exceed the number of votes cast
“AGAINST” the proposal. Abstentions and broker
non-votes are counted for purposes of determining whether a quorum
exists at the Annual Meeting but will have no effect on the
determination of the outcome of this proposal.
THE LOOP BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
LOOP
STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADVISORY
RESOLUTION RELATING
TO THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
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OTHER MATTERS
As of
the date of this proxy, management knows of no business or
nominations that will be presented for consideration at the 2020
Annual Meeting other than as stated in the Notice of Meeting. If
any other business is properly brought before the 2020 Annual
Meeting, shares subject to proxies will be voted, to the extent
permitted by the rules and regulations of the Securities and
Exchange Commission, in accordance with the discretion of the
persons voting such proxies.
DELINQUENT SECTION 16(A) REPORTS
Section
16(a) of the Exchange Act and the rules of the SEC thereunder
require our executive officers, directors and certain stockholders
who beneficially own more than 10% of our common stock to file
reports of ownership and changes in ownership of our Common Stock
with the SEC. Based solely on a review of the copies of such
reports furnished to us and representations that no other reports
were required, we believe that all required reports were filed on
time with the a Form 4 filed by Nelson Gentiletti, related to a
grant of RSUs was filed late on March 21, 2019, a Form 4 filed by
Nelson Switzer, related to a grant of RSUs and a grant of options
to purchase Common Stock was filed late on March 21, 2019, a Form 3
filed by
Michel Megelas,
related to his being subject to Section 16 was filed late on July
8, 2019, a Form 4 filed by
Michel Megelas, related to a grant
of RSUs was filed late on July 8, 2019, a Form 3 filed
by
CFFI Ventures Inc.,
related to a securities purchase agreement was filed late on July
8, 2019, a Form 3 filed by
John Carter Risley, related to a
securities purchase agreement was filed late on July 8, 2019, a
Form 3 filed by
Northern
Private Capital Ltd., related to a securities purchase agreement
was filed late on July 8, 2019, a Form 4 filed by Andrew Lapham,
related to shares delivered in payment of a finder’s fee was
filed late on November 8, 2019, a Form 4 filed by Daniel Solomita,
related to share purchase agreements was filed late on November 27,
2019, a Form 3 filed by 10036552 Canada Inc., related to a share
transfer was filed late on November 27, 2019.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some
banks, brokers and other nominee record holders may participate in
the practice of “householding” proxy statements and
their accompanying documents. This means that only one copy of our
annual report, proxy statement or Notice of Internet Availability
of Proxy Materials is sent to multiple stockholders in your
household. We will promptly deliver a separate copy of these
documents without charge to you upon written request to Loop
Industries, Inc., 480 Fernand-Poitras, Terrebonne, Québec,
Canada J6Y 1Y4 or upon telephonic request to (450) 951-8555, Attn:
Chief Financial Officer. If you want to receive separate copies of
our proxy statements in the future, or if you are receiving
multiple copies and would like to receive only one copy per
household, you should contact your bank, broker or other nominee
record holder, or you may contact us at the above address and phone
number.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you
receive your proxy materials by mail, we encourage you to elect to
receive future copies of our proxy materials by e-mail. To enroll
in this program, follow the instructions included on your Notice of
Internet Availability of Proxy Materials or in the proxy materials
provided by your bank or broker. Enrollment in the online program
will remain in effect for as long as your brokerage account is
active or until enrollment is canceled. Enrolling to receive proxy
materials online will save us the cost of printing and mailing
documents and will reduce the environmental impact of our annual
meetings.
ANNUAL REPORT ON FORM 10-K
We
filed our Annual Report on Form 10-K for the fiscal year ended
February 29, 2020 with the SEC on May 4, 2020. We will mail without
charge, upon written request, a copy of our Annual Report on Form
10-K, excluding exhibits. Please send a written request to Investor
Relations, Loop Industries, Inc., 480 Fernand-Poitras Terrebonne,
Québec, Canada J6Y 1Y4 or access the report from the
“Investors” section of our website at
http://www.loopindustries.com/en/investors/home
.
The Annual Report is not incorporated into this proxy statement and
is not considered proxy-soliciting material.
39
COST OF SOLICITATION
The
cost of soliciting proxies will be borne by the Company. Officers,
other employees and directors may solicit proxies personally or by
telephone without any addition to their regular compensation. Upon
request, we will reimburse the reasonable costs incurred by
brokers, banks, or other nominees for mailing proxy materials and
annual shareholder reports to the beneficial owners of the shares
they hold of record.
NON-SOLICITATION MATERIALS
The
information contained in this Proxy Statement under the caption
“Audit Committee Report” shall not be deemed to be
”soliciting material” or to be “filed” with
the SEC, nor will such information be incorporated by reference
into any future filing under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent that we
specifically incorporate it by reference in such
filing.
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