UG United Guardian Inc

PROPOSAL ONE

ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION

Nominees for Election as Directors

Six (6) directors are to be elected at the Annual Meeting to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Set forth in the table below are the names of all persons nominated for election as directors (all of whom are currently directors) by a majority of the Company’s independent directors, the principal occupation or employment of each nominee for at least the past five years, their present positions with the Company, their qualifications to serve as a director, other public company directorships, and the year they were first elected as a director of the Company.

⁽¹⁾ Member of Audit Committee

⁽²⁾ Member of Compensation Committee

There are no family relationships between any director and/or officer of the Company.

The Board recommends a vote “FOR” the election of the six (6) nominees named for election as directors.

Board Diversity Matrix

The matrix below reflects our Board’s gender and racial characteristics and LGBTQ+ status, based on the self-identification of our directors. Each of the categories below has the meaning as it is used in Nasdaq Rule 5605(f).

Legal Proceeding Involving Directors

There were no legal proceedings involving the nominees to the Board in the past ten years.

Board Leadership Structure

The Company is currently led by Beatriz Blanco. Formerly, the Company was led by Ken Globus, who served as President from 1988 through October 2022. Mr. Globus has been Chairman of the Board since September 2009. The Board is composed of Beatriz Blanco, Ken Globus and four independent directors. The Board has two standing committees composed solely of independent directors: the Audit Committee and the Compensation Committee. The Board also has a Compensation Committee. Historically, only the Audit Committee has a chairman.

The Board does not have a lead director as all of the independent directors have an established knowledge of Company operations and have held leadership positions in their respective professions, both past and present. The independent directors meet in executive session at least twice per year in accordance with NASDAQ guidelines. The Company maintained this leadership structure since its founding in 1942, except that the committees were not established until the 1990s. The Board believes that this leadership structure remains effective for the Company considering its size and its resources, and similar leadership structures are commonly utilized by other small public companies in the United States.

Affirmative Determinations Regarding Director Independence

The Company’s Board has considered the independence of the nominees for election at the Annual Meeting and has affirmatively determined that four of the five non-employee nominees for director: Lawrence Maietta, Arthur Dresner, Andrew Boccone, and S. Ari Papoulias, do not have any material business, family or other relationship with the Company other than as a director, and for that reason qualify as independent under the corporate governance rules of NASDAQ. Ken Globus does not qualify as independent under the corporate governance rules of NASDAQ, due to his former employment with the Company. The NASDAQ corporate governance rules stipulate that a majority of the Board of Directors must be composed of independent directors, and the Company complies with this rule. Lawrence Maietta does receive compensation as an outside accounting consultant in addition to the fees he receives as a director, which disqualifies him from serving on the Audit Committee. However, the Board has determined that the additional compensation is not material and falls well below the thresholds established by NASDAQ and the SEC for determining director independence for purposes other than serving on the Audit Committee. Beatriz Blanco is not independent due to her status as President of the Company and not due to any other transactions or relationships.

Role of the Board in Risk Oversight

The Board views risk management as a process designed to identify, manage, and control risks that may adversely affect the Company, so that they are appropriate considering the Company’s size, operations and business objectives. The Company’s risk management policies enable the Company to manage risk within acceptable limits and provide reasonable assurance of optimum corporate performance in the area of risk/return. The Board has ultimate responsibility for oversight of the Company’s risk management processes, and discharges this responsibility through regular reports received from, and discussions with, senior management on all areas of material risk exposure to the Company. These reports and discussions include, among other things, operational, financial, legal and regulatory, and strategic risks. The full Board engages with the appropriate members of senior management to enable its members to understand and provide input to, and oversight of, risk identification, risk management and risk mitigation strategies. In addition, the Company’s Audit Committee is responsible for evaluating and monitoring financial risks and meets regularly in executive session without management present to, among other things, discuss the Company’s risk management culture and processes. While the Board oversees the Company’s risk management, the Company’s senior management is responsible for day-to-day risk management processes.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the Company’s officers, directors and persons who own more than 10% of a class of the Company’s equity securities to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based on (i) a review of copies of Forms 3, 4, and 5 and any amendments thereto furnished to the Company during and with respect to the fiscal year ended December 31, 2022 and (ii) any written representations signed by reporting persons that no Form 5 is required, the Company believes that all persons subject to the reporting requirements pursuant to Section 16(a) filed the required reports on a timely basis during and with respect to the fiscal year ended December 31, 2022, with the exception of a Form 3 for Beatriz Blanco (disclosing no transaction) that was inadvertently filed late.

Directors Meetings

During the fiscal year ended December 31, 2022, the Board held four regular meetings. Five directors participated in all four regular directors’ meetings as well as the Annual Meeting of Stockholders. Beatriz Blanco, who was appointed President and Chief Executive Officer in November of 2022, participated in one of the regular meetings. Although we have no formal policy about director attendance at the Annual Meeting, the Board’s attendance is encouraged.

The Board has a separately designated standing Audit Committee, established in accordance with Section 3(a)(58)(A) of the Exchange Act, to oversee the accounting and financial reporting processes of the Company and to meet and review with the Company’s independent auditors the plan, scope and results of its audits. Members of the Audit Committee in 2022 were Messrs. Arthur M. Dresner (the Chairman), Andrew A. Boccone, and S. Ari Papoulias. All of the Audit Committee members are independent as that term is defined in the listing standards of NASDAQ, the Company’s stock exchange since March 16, 2009. Under NASDAQ rules, the Board is required to make certain findings about the independence and qualifications of the members of the Audit Committee of the Board. In addition to assessing the independence of the members under NASDAQ rules, the Board also considered the requirements of Section 10A(m)(3) and Rule 10a-3 under the Exchange Act. As a result of its review, the Board determined that the Audit Committee does not have a financial expert. However, S. Ari Papoulias is considered “financially sophisticated” as that term is defined by NASDAQ. Lawrence F. Maietta, a Certified Public Accountant and former member of the Audit Committee, acts as an advisor to the Audit Committee. Mr. Maietta would not be deemed independent for purposes of membership on the Audit Committee. The reason for the absence of a financial expert is that the Board determined that the expense involved did not justify recruiting one, considering Mr. Maietta’s presence as an advisor, and the “financially sophisticated” status of Mr. Papoulias. There were four meetings of the Audit Committee held during the fiscal year ended December 31, 2022. All four members of the Audit Committee attended all four meetings; Ken Globus attended three of the meetings as the management representative; and Beatriz Blanco attended one meeting as the management representative. A copy of the Audit Committee Charter is available on the Company’s website at www.u-g.com/corporate.

During the fiscal year ended December 31, 2022, the directors who were independent directors of the Company, Messrs. Lawrence F. Maietta, Arthur M. Dresner, Andrew A. Boccone, and S. Ari Papoulias, held two meetings in executive session without the presence of non-independent directors and management in accordance with NASDAQ rules. All of the independent directors were present at both of the meetings.

The Board has a Compensation Committee which was formed in 1999 for the purpose of recommending to the Board the compensation of corporate officers and key employees for the ensuing year. Members of the Compensation Committee are Messrs. Lawrence F. Maietta, Arthur M. Dresner, and Andrew A. Boccone. Beatriz Blanco currently acts as advisor to the Committee representing management. During 2022, Ken Globus acted as advisor to the Committee representing management. The Committee held one meeting in 2022. The Compensation Committee does not have a charter. Neither management nor the Committee has engaged a consultant to provide advice on compensation.

The Compensation Committee meets in March of each year for the purpose of determining the amount, if any, to be paid in bonuses to the Company’s employees in April of each year. The bonuses are based on the Company’s financial results for the previous fiscal year and are determined either by (a) specifying a bonus pool that is allocated to non-manager employees on a pay-to-pay formula, or (b) specifying a percentage increase or decrease to the previous year’s bonuses. Bonuses to managers are determined on an individual basis, based on both individual performance as well as the prior year’s financial results. In addition, the Committee determines the amount of any cost-of-living increase for all employees based upon U.S. Department of Labor statistics for the prior year. The bonuses are paid as a single cash payment.

The Compensation Committee does not set the compensation of the Board of Directors. Instead, the full Board acts on recommendations made by the independent directors. In its review of director compensation, the Board considers various factors, such as the compensation of directors in other public companies of a similar size, the time spent by Board and Committee members in their service to the Company, and recent changes that may result in an increase or decrease in the responsibilities or time commitment of a Board and/or Committee member.

The Board does not have a standing Nominating Committee. The full Board fulfills the role of a nominating committee. Final selections are made by a majority of the independent directors. It is the position of the Board that it is appropriate for the Company not to have a separate nominating committee because the size, composition and collective independence of the Board enables it to adequately fulfill the functions of a standing committee. NASDAQ does not require the Company to have a separate nominating committee but does require that Board nominees be selected by either a nominating committee composed solely of independent directors or by a majority of the independent directors. The Board does not have a formal diversity policy, but evaluates the diverse professional and personal backgrounds of individuals when considering potential candidates.

The Board identifies director candidates through a combination of referrals, including by management, existing Board members, and stockholders. Once a candidate has been identified, the Board reviews the individual’s experience and background, and may discuss the proposed nominee with the source of the recommendation. If the independent directors believe it to be appropriate, such directors may meet with the proposed nominee before making a final determination on whether to include the proposed nominee as a member of management’s slate of director nominees submitted to the stockholders for election to the Board. The Board will evaluate stockholder-nominated candidates under the same criteria as director-nominated candidates. Stockholders wishing to refer director candidates to the Board should do so in writing and they should be delivered to the Board of Directors c/o Corporate Secretary, United-Guardian, Inc., P.O. Box 18050, Hauppauge, NY 11788. The Board has adopted a corporate resolution with regard to the nominating process as discussed above. The Board has no charter for the nominating process.