UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐ Preliminary
Proxy Statement
☐
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive
Proxy Statement
☐ Definitive
Additional Materials
☐ Soliciting
Material Pursuant to § 240.14a-12
IntriCon
Corporation
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box)
☒ No
fee required.
☐ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title
of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
(3) Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed
maximum aggregate value of transaction:
(5) Total
fee paid:
☐ Fee
paid previously with preliminary materials.
☐ Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
(1) Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
(3) Filing
Party:
(4) Date
Filed:
INTRICON
CORPORATION
1260 Red Fox Road
Arden Hills, Minnesota 55112
March
16, 2018
Dear
Shareholder:
It
is my great pleasure to invite you to attend the 2018 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual
Meeting will be held on Thursday, April 26, 2018 at 11:30 a.m., local time, at the Best Western Plus located at 1000 Gramsie Road,
Shoreview, Minnesota 55126.
At
this year’s Annual Meeting our shareholders will vote on the following:
|
●
|
the
election of one director to hold office for a term of three years and until his successor
is duly elected and qualified;
|
|
●
|
an
advisory vote on executive compensation, referred to as “say-on-pay;” and
|
|
●
|
the
ratification of the appointment of Baker Tilly Virchow Krause, LLP, as IntriCon Corporation’s
independent registered public accounting firm for fiscal year 2018.
|
We
are furnishing our Proxy Statement and other proxy materials to our shareholders over the Internet. The proxy materials are available
at
https://materials.proxyvote.com/46121H
.
The
vote of every shareholder is important. Therefore, whether or not you expect to attend the meeting in person, I urge you to vote
in one of the following ways: (i)
over the Internet
: log on to
www.proxyvote.com
and follow the web site instructions;
once you have cast your vote, be sure to click on “Accept Vote”; (ii)
by telephone
: you may call toll-free
in the U.S. or Canada, 1-800-690-6903 on a touch-tone telephone; or (iii)
by proxy card
: sign and date the accompanying
proxy card and return it promptly in the envelope provided for that purpose. If you vote over the Internet or telephone, you do
not need to return your proxy card.
Thank
you for your continued interest in IntriCon Corporation. I look forward to seeing you at the Annual Meeting.
|
|
Sincerely,
|
|
|
|
|
|
|
|
|
|
|
|
Mark S. Gorder
|
|
|
President and Chief Executive Officer
|
INTRICON
CORPORATION
1260 Red Fox Road
Arden Hills, Minnesota 55112
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
be held April 26, 2018
The
2018 Annual Meeting of Shareholders (the “Annual Meeting”) of IntriCon Corporation (the “Corporation”)
will be held on Thursday, April 26, 2018 at 11:30 a.m., local time, at the Best Western Plus located at 1000 Gramsie Road, Shoreview,
Minnesota 55126 for the following purposes:
|
(1)
|
to
elect one director to hold office for a term of three years and until his successor is
duly elected and qualified;
|
|
(2)
|
to
hold an advisory vote on executive compensation, referred to as “say-on-pay”;
|
|
(3)
|
to
ratify the appointment of Baker Tilly Virchow Krause, LLP as the Corporation’s
independent registered public accounting firm for fiscal year 2018; and
|
|
(4)
|
to
transact such other business as may properly come before the Annual Meeting or any of
its adjournments or postponements.
|
The
Board of Directors has fixed the close of business on February 21, 2018 as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. If the Annual Meeting is adjourned
because of the absence of a quorum, those shareholders entitled to vote who attend the adjourned Annual Meeting, although constituting
less than a quorum as provided herein, shall nevertheless constitute a quorum for the purpose of electing directors. If the Annual
Meeting is adjourned for one or more periods aggregating at least 15 days because of the absence of a quorum, those shareholders
entitled to vote who attend the reconvened Annual Meeting, if less than a quorum as determined under applicable law, shall nevertheless
constitute a quorum for the purpose of acting upon any other matter set forth in this Notice of Annual Meeting.
All
shareholders are cordially invited to attend the meeting, but whether or not you expect to attend the meeting in person, we urge
you to vote promptly using one of the following methods to ensure your vote is counted:
|
●
|
over
the Internet
: log on to
www.proxyvote.com
and follow the web site instructions;
once you have cast your vote, be sure to click on “Accept Vote”;
|
|
●
|
by
telephone
: you may call toll-free in the U.S. or Canada, 1-800-690-6903 on a
touch-tone telephone;
|
|
●
|
by
proxy card
: sign and date the accompanying proxy card and return it promptly
in the envelope provided for that purpose; or
|
|
●
|
in
person
:
if you are a shareholder of record as of the close of business
on the Record Date, you may vote in person at the Annual Meeting and revoke any previously
granted proxy.
|
If
you vote over the Internet or by telephone, you will need your control number (your control number can be found on the Notice
of Internet Availability of Proxy Materials and your proxy card).
The deadline to vote over the Internet or by telephone is
Wednesday, April 25, 2018, 11:59 p.m., eastern daylight time.
If you vote over the Internet or by telephone, you do not need
to return your proxy card.
If
your shares are held in “street name” (that is, if your stock is registered in the name of your broker, bank, or other
nominee), please contact your broker, bank or nominee to determine whether you will be able to vote over the Internet or by telephone.
Important
Notice Regarding the Availability of Proxy Materials for
the
Annual Meeting of Shareholders to be held on April 26, 2018
In
accordance with the rules of the Securities and Exchange Commission, instead of mailing a printed copy of our proxy materials
to our shareholders, we have elected to furnish these materials by providing access to these documents over the Internet. Accordingly,
on or about March 16, 2018, we will send a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”)
to our shareholders of record and beneficial owners informing them of the availability of our proxy materials online. The Notice
of Internet Availability provides you with instructions regarding how to (i) view our proxy materials for the Annual Meeting on
the Internet; (ii) vote your shares after you have viewed our proxy materials; and (ii) request a printed copy of the proxy materials.
All shareholders have the ability to access this Proxy Statement, the proxy card and our Annual Report on Form 10-K at the following
website:
https://materials.proxyvote.com/46121H
.
Meeting
directions are available by calling our executive offices at (651) 636-9770.
|
|
By Order of the Board of
Directors
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. McKenna
|
|
|
Chairman of the Board
|
March
16, 2018
Arden
Hills, Minnesota
INTRICON
CORPORATION
1260 Red Fox Road
Arden Hills, Minnesota 55112
PROXY
STATEMENT
This
proxy statement and the accompanying proxy are being furnished to shareholders of IntriCon Corporation (the “Corporation”)
in conjunction with the solicitation of proxies by the Board of Directors of the Corporation for use at the 2018 Annual Meeting
of Shareholders (the “Annual Meeting”) to be held on Thursday, April 26, 2018 at the Best Western Plus located at
1000 Gramsie Road, Shoreview, Minnesota 55126, at 11:30 a.m., local time, and any adjournment or postponement of the Annual Meeting.
This Proxy Statement and accompanying form of proxy are first being made available to shareholders on or about March 16, 2018.
The
Board of Directors has fixed the close of business on February 21, 2018 as the record date for determination of the shareholders
entitled to notice of and to vote at the Annual Meeting. As of February 21, 2018, there were 6,933,547 shares of common stock
of the Corporation outstanding, each of which is entitled to one vote on all matters to be presented at the Annual Meeting.
Proxies
in the form provided, if properly executed and received in time for voting, and not revoked, will be voted as directed on the
proxies. If no directions to the contrary are indicated, the persons named in the proxy will vote all of your shares of common
stock “
for
” the election of one nominee for director, “
for
” the approval of the compensation
of our Named Executive Officers as described in this Proxy Statement and “
for
” the ratification of the appointment
of Baker Tilly Virchow Krause, LLP as the Corporation’s independent registered public accounting firm for fiscal year 2018.
With respect to any other matter that properly comes before the meeting, the proxy holders will vote the proxies in their discretion
in accordance with their best judgment.
You
may vote in one of the following ways:
|
●
|
over
the Internet
: log on to
www.proxyvote.com
and follow the web site instructions;
once you have cast your vote, be sure to click on “Accept Vote;
|
|
●
|
by
telephone
: you may call toll-free in the U.S. or Canada, 1-800-690-6903 on a
touch-tone telephone;
|
|
●
|
by
proxy card
: sign and date the accompanying proxy card and return it promptly
in the envelope provided for that purpose; or
|
|
●
|
in
person
:
if you are a shareholder of record as of the close of business
on the Record Date, you may vote in person at the Annual Meeting and revoke any previously
granted proxy.
|
If
you vote over the Internet or by telephone, you will need your control number (your control number can be found on the Notice
of Internet Availability of Proxy Materials and your proxy card).
The deadline to vote over the Internet or by telephone is
Wednesday, April 25, 2018, 11:59 p.m., eastern daylight time.
If you vote over the Internet or by telephone, you do not need
to return your proxy card.
Any
shareholder who submits a proxy may revoke it at any time before the proxy is voted at the Annual Meeting by delivering a later
dated proxy or by giving written notice to the Secretary of the Corporation or attending the Annual Meeting in person and so requesting.
If you vote over the Internet or by telephone, you may change your vote by following the procedures used to submit your initial
vote. The last vote received chronologically will supersede any prior votes. Attendance at the Annual Meeting will not by itself
revoke a previously granted proxy.
The
presence, in person or represented by proxy, of the holders of a majority of the outstanding shares of common stock will constitute
a quorum for the transaction of business at the Annual Meeting. All shares of common stock present in person or represented by
proxy (including “broker non-votes” described below) and entitled to vote at the Annual Meeting, no matter how they
are voted or whether they abstain from voting, will be counted in determining the presence of a quorum. If the Annual Meeting
is adjourned because of the absence of a quorum, those shareholders entitled to vote who attend the adjourned Annual Meeting,
although constituting less than a quorum as provided herein, shall nevertheless constitute a quorum for the purpose of electing
directors. If the Annual Meeting is adjourned for one or more periods aggregating at least 15 days because of the absence of a
quorum, those shareholders entitled to vote who attend the reconvened Annual Meeting, if less than a quorum as determined under
applicable law, shall nevertheless constitute a quorum for the purpose of acting upon any other matter set forth in the Notice
of Annual Meeting.
Each
share of common stock is entitled to one vote on each matter that may be brought before the Annual Meeting. Voting results will
be determined as follows:
|
●
|
Proposal
1
: the election of the director will be determined by a plurality vote and the nominees
receiving the highest number of “for” votes will be elected.
|
|
●
|
Proposal
2
: approval of the “say-on-pay” proposal will require the affirmative
vote of a majority of the shares entitled to vote and present in person or represented
by proxy at the Annual Meeting.
|
|
●
|
Proposal
3
: the ratification of the appointment of the independent registered public accounting
firm for fiscal year 2018 will require the affirmative vote of a majority of the shares
entitled to vote and present in person or represented by proxy at the Annual Meeting.
|
Any
other proposal will require the affirmative vote of a majority of the shares entitled to vote and present in person or represented
by proxy at the Annual Meeting.
Under
our Bylaws, an abstention will have the same legal effect as an “against” vote and will be counted in determining
whether the proposal has received the required shareholder vote; however, a broker non-vote will have no effect on whether the
proposal has received the required shareholder vote.
If
you are a beneficial owner whose shares are held of record by a broker, bank or other nominee, you must instruct the broker, bank
or other nominee how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal
on which the broker, bank or other nominee does not have discretionary authority to vote. This is called a “broker non-vote.”
In these cases, the broker, bank or other nominee can register your shares as being present at the Annual Meeting for
purposes
of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required.
Your broker, bank or other nominee does not have discretionary authority to vote on the election of directors or the “say-on-pay”
proposal without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on these
matters. Your broker, bank or other nominee does have discretionary voting authority to vote your shares on the ratification of
the independent registered public accounting firm, even if the broker, bank or other nominee does not receive voting instructions
from you.
In any event, it is particularly important that you instruct your broker as to how you wish to vote your shares.
The
cost of this solicitation will be borne by the Corporation. In addition to solicitation by mail, proxies may be solicited in person
or by telephone, telegraph or teletype by officers, directors or employees of the Corporation, without additional compensation.
Upon request, the Corporation will pay the reasonable expenses incurred by record holders of the Corporation’s shares of
common stock who are brokers, dealers, banks or voting trustees, or their nominees, for mailing proxy materials to the beneficial
owners of the shares they hold of record.
PROPOSAL
1
ELECTION
OF DIRECTORS
The
Board of Directors currently consists of five members divided into three classes. Each director serves a three-year term.
The
Board of Directors, based upon the recommendation of the Nominating and Corporate Governance Committee, has nominated Nicholas
A. Giordano for election as director at the Annual Meeting to serve until the 2021 annual meeting of shareholders and until his
successor has been duly elected and qualified. Mr. Giordano is a current director of the Corporation and previously has been elected
as a director by the Corporation’s shareholders. Mr. Giordano has indicated his willingness to continue serving as a director.
The Board of Directors knows of no reason why the nominee would be unable to serve as a director. If the nominee is unable to
serve for any reason, then the proxies will be voted for the election of such substitute nominee as the Board of Directors may
designate, unless the Board of Directors reduces the number of directors on the Board.
The
Board of Directors recommends that the shareholders vote “FOR” the election of Mr. Giordano as a director for a three
year term.
The
Board of Directors seeks to ensure that it is composed of members of high character and integrity and whose particular experience,
qualifications, attributes and skills, when taken together, will allow the Board of Directors to satisfy its oversight responsibilities
effectively. As discussed below under “—Director Nomination Process,” director candidates are nominated by the
Board of Directors upon recommendation by the Nominating and Corporate Governance Committee for election at the annual shareholders’
meeting each year. In considering whether to recommend a director candidate, the Nominating and Corporate Governance Committee
evaluates each individual in the context of the Board as a whole taking into account relevant factors including, among other things:
|
●
|
whether
the director candidate has significant leadership experience and outstanding achievement
in such director candidate’s career field;
|
|
●
|
whether
the director candidate has relevant expertise or experience and would be able to offer
advice and guidance to management based on that expertise or experience;
|
|
●
|
whether
the director candidate has the financial expertise or other professional, educational
or business experience relevant to understanding to the Corporation’s business;
|
|
●
|
whether
the director candidate has sufficient time available to devote to the Corporation;
|
|
●
|
whether
the director candidate has the ability to make independent, analytical inquiries and
challenge management;
|
|
●
|
whether
the director candidate will be committed to represent and advance the long-term interests
of the Corporation’s shareholders; and
|
|
●
|
whether
the director candidate meets the independence requirements of Nasdaq.
|
The
Nominating and Corporate Governance Committee does not have a formal policy regarding director diversity. The Nominating and Corporate
Governance Committee believes that the directors
should encompass a range of experience, viewpoints, qualifications, attributes
and skills in order to provide sound and prudent guidance on the Corporation’s operations. The Nominating and Corporate
Governance Committee does not assign specific weights to particular criteria and no particular criteria is necessarily applicable
to all prospective nominees.
Included
in the director nominee’s or current director’s biography are the particular experiences, qualifications, attributes
or skills that led the Board to the conclusion that each director nominee or director should serve as a director of the Corporation.
Each director brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and
experience. We believe all of our directors have integrity and honesty and adhere to high ethical standards. They have each demonstrated
business acumen and an ability to exercise sound judgment, as well as commitment of service to the Corporation and the Board.
The
following table sets forth certain information concerning the nominee and the persons whose terms as directors will continue after
the Annual Meeting.
Nominee for Election
|
|
|
|
|
|
|
|
|
|
Name,
Age (as of February 21, 2018) and Occupation
|
|
Director
Since
|
|
Term
Expires
|
|
|
|
|
|
Nicholas A. Giordano
(75) became a director
in December 2000. Mr. Giordano has been a business consultant and investor since 1997. Mr. Giordano was Interim President
of LaSalle University from July 1998 to June 1999. From 1981 to 1997, Mr. Giordano was President and Chief Executive Officer
of the Philadelphia Stock Exchange. Mr. Giordano serves as a trustee of Wilmington Funds, a mutual fund, and as a director
of Independence Blue Cross of Philadelphia, a health insurance company, and The RBB Fund, Inc., a mutual fund. Mr. Giordano
also served as a trustee of the Kalmar Pooled Investment Trust, mutual fund, from 2000 to 2017, and as a director of Commerce
Bancorp, Inc. in 2007-2008.
|
|
2000
|
|
2018
|
|
|
|
|
|
Mr. Giordano’s financial and investment
background provides the Corporation with perspective and guidance on accounting and financial matters. His service as an outside
director of other companies (including public companies) provides valuable insight on corporate governance and business matters.
He is the Board’s audit committee financial expert.
|
|
|
|
|
Continuing Directors
|
|
|
|
|
|
|
|
|
|
Name,
Age (as of February 21, 2018) and Occupation
|
|
Director
Since
|
|
Term
Expires
|
|
|
|
|
|
Mark S. Gorder
(71) became a director
in January 1996. Mr. Gorder has served as the President and Chief Executive Officer of the Corporation since April 2001; President
and Chief Operating Officer of the Corporation from December 2000 to April 2001; and Vice President of the Corporation from
1996 to December 2000. Mr. Gorder has been President and Chief Executive Officer of IntriCon, Inc., a subsidiary of the Corporation,
since 1983.
|
|
1996
|
|
2019
|
|
|
|
|
|
Mr. Gorder’s day to day leadership of
the Corporation, as Chief Executive Officer, provides him with intimate knowledge of the Corporation’s operations and
the markets in which the Corporation operates. Also, as co-founder of the Corporation’s subsidiary, IntriCon, Inc. he
provides strategic guidance. The Board believes that Mr. Gorder provides unique insights into the Corporation’s challenges,
opportunities and operations.
|
|
|
|
|
|
|
|
|
|
Michael J. McKenna
(83) became a director
in June 1998 and has served as Chairman of the Board of Directors of the Corporation since April 2001. In March 2001, Mr.
McKenna retired as the Vice Chairman and a Director of Crown, Cork & Seal Company, Inc. (now Crown Holdings, Inc.), a
manufacturing company. From 1995 to 1998, Mr. McKenna was the President and Chief Operating Officer and, prior to 1995, was
the Executive Vice President and President of the North American Division of Crown, Cork & Seal Company, Inc.
|
|
1998
|
|
2019
|
|
|
|
|
|
As the retired Vice Chairman, director and former
executive of Crown, Cork & Seal, Mr. McKenna brings a global business perspective from his leadership positions as well
as operational and sales experience. In addition, as the director with the longest tenure among the independent directors,
Mr. McKenna also has considerable knowledge about the operations and background of IntriCon.
|
|
|
|
|
|
|
|
|
|
Robert N. Masucci (80)
became a director
in February 2002. Mr. Masucci has served as the Chairman of the Board of Montgomery Capital Advisors, Inc., a consulting company,
since 1990 and Chairman of the Board of Barclay Brand Corporation, a distribution company, since 1996. Prior to 1990, Mr.
Masucci was President and Chief Executive Officer of Drexel Industries, Inc., a forklift manufacturer. Messrs. Masucci and
Giordano are first cousins.
|
|
2002
|
|
2020
|
|
|
|
|
|
As a former chief executive officer of a publicly
traded manufacturing company, Mr. Masucci provides IntriCon with guidance on business operations, strategic planning and accounting
and financial matters. Mr. Masucci also has mergers and acquisitions experience.
|
|
|
|
|
Continuing Directors (continued)
|
|
|
|
|
|
|
|
|
|
Name,
Age (as of February 21, 2018) and Occupation
|
|
Director
Since
|
|
Term
Expires
|
|
|
|
|
|
Philip Smith (50)
became a director in
April 2016. Mr. Smith has served as a managing director at the investment banking firm, Duff & Phelps beginning in March
2017, where he focuses on the healthcare industry. Prior to that, Mr. Smith was a managing director with the investment banking
firm, BMO Capital Markets (formerly Greene Holcomb Fisher). Prior to joining Greene Holcomb Fisher in 2011, Mr. Smith was
President and Chief Executive Officer of Angeion Corporation, now MGC Diagnostics, a global medical technology company. Earlier
experiences include being CEO of DGIMED Ortho, Executive Vice President of Business Development at Vital Images, and a healthcare
investment banker at Piper Jaffray.
|
|
2016
|
|
2020
|
|
|
|
|
|
Mr. Smith provides IntriCon more than 20 years
of experience in healthcare, including roles in mergers and acquisitions, finance and executive management.
|
|
|
|
|
Independence
of the Board of Directors
Under
our corporate governance guidelines, the Board, with the assistance of legal counsel and the Nominating and Corporate Governance
Committee, uses the current standards for “independence” established by the Nasdaq Stock Market, referred to in the
remainder of this proxy statement as “Nasdaq,” to determine director independence. The Board of Directors has determined
that the following directors, constituting a majority of the members of the Board, are independent as defined in the corporate
governance rules of Nasdaq: Messrs. Giordano, Masucci and McKenna.
The
independence standards of Nasdaq are composed of objective standards and subjective standards. Under the objective standards,
a director will not be deemed independent if he directly or indirectly receives payments for services (other than as a director)
in excess of certain thresholds or if certain described relationships exist. Under the subjective independence standard, a director
will not be deemed independent if he has a material relationship with the Corporation that, in the view of the Board, would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director. Under the Nasdaq rules, an independent
director must satisfy both the objective and the subjective standards.
In
evaluating the independence of Mr. McKenna, the Board considered that a partner of the law firm retained by the Corporation since
2002 is the son-in-law of Mr. McKenna. See “—Certain Relationships and Related Party Transactions.” The Board
determined that Mr. McKenna was independent under the objective Nasdaq standards because: (i) no payments were made to Mr. McKenna
or his son-in-law directly in exchange for the services provided to the Corporation by the law firm and (ii) the amounts paid
to the law firm did not exceed the thresholds contained in the Nasdaq independence standards. The Board also determined that Mr.
McKenna was independent under the subjective Nasdaq standard for the reasons discussed above and because Mr. McKenna’s son-in-law
was not personally involved in the law firm’s legal representation of the Corporation.
Board
Leadership Structure and Risk Oversight
We
separate the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles.
The Chief Executive Officer is responsible for setting the strategic direction for the Corporation and the day to day leadership
and performance of the Corporation, while the Chairman of the Board provides guidance and sets the agenda for Board meetings and
presides over meetings of the full Board. The Board believes that this structure ensures a greater role for the
independent directors
in the oversight of the Corporation and active participation of the independent directors in setting agendas and establishing
priorities and procedures that work for the Board. The Chairman of the Board also acts as a key liaison between the Board and
management.
The
Board of Directors as a whole is responsible for consideration and oversight of risks facing the Corporation, and is responsible
for ensuring that material risks are identified and managed appropriately. Certain risks are overseen by committees of the Board
of Directors and these committees make reports to the full Board of Directors, including reports on noteworthy risk-management
issues. Financial risks are overseen by the Audit Committee which meets with management to review the Corporation’s major
financial risk exposure and the steps management has taken to monitor and control such exposures. Compensation risks are overseen
by the Compensation Committee. Members of the Corporation’s senior management team periodically report to the full Board
about their areas of responsibility and a component of these reports is risk within the area of responsibility and the steps management
has taken to monitor and control such exposures. Additional review or reporting on risks is conducted as needed or as requested
by the Board or committee.
Communication
with the Board
Shareholders
may communicate with the Board of Directors, including any individual director, by sending a letter to the Board of Directors,
c/o Corporate Secretary, IntriCon Corporation, 1260 Red Fox Road, Arden Hills, Minnesota 55112. The Corporate Secretary has the
authority to disregard any inappropriate communications or to take other appropriate actions with respect to any such inappropriate
communications. If deemed an appropriate communication, the Corporate Secretary will submit your correspondence to the Chairman
of the Board or to any specific director to whom the correspondence is directed.
Meetings
of the Board and Committees
The
Corporation’s Board of Directors held seven meetings in 2017. During 2017, all directors of the Corporation attended at
least 75% of the total number of meetings of the Board of Directors of the Corporation and all committees of which they were members.
Attendance
at Annual Meeting of Shareholders
The
Board of Directors has adopted a policy that all of the directors should attend the annual meeting of shareholders, absent exceptional
cause. All of the directors attended the 2017 annual meeting of shareholders.
Code
of Ethics
The
Corporation has adopted a code of ethics that applies to its directors, officers and employees, including its chief executive
officer, chief financial officer, controller and persons performing similar functions. Copies of the Corporation’s code
of ethics are available without charge upon written request directed to Cari Sather, Director of Human Resources, IntriCon Corporation,
1260 Red Fox Road, Arden Hills, MN 55112. A copy of the code of ethics is also available on the Corporation’s website:
www.intricon.com
.
The Corporation intends to satisfy the disclosure requirement under Item 5.05 of SEC Form 8-K regarding any future amendments
to a provision of its code of ethics by posting such information on the Corporation’s website: www.intricon.com.
Director
Compensation for 2017
Each
non-employee director is entitled to a base annual retainer of $24,000. For their services in such capacities, the Chairman of
the Board is entitled to receive an additional annual retainer of $25,000, the Chairman of the Audit Committee is entitled to
receive an additional annual retainer of $10,000 and the Chairman of each of the Compensation Committee and the Nominating and
Corporate Governance Committee is entitled to receive an additional annual retainer of $5,000. All retainers are paid in quarterly
installments. Each non-employee director also receives $1,500 for each Board and committee meeting attended in person and $500
for each telephonic Board and committee meeting attended; however, no fee is payable for telephonic board and committee meetings
that last less than 30 minutes.
Directors
are eligible to receive awards under the 2015 Equity Incentive Plan. The Compensation Committee previously approved the automatic
grant of options to non-employee directors who are re-elected or continue as a non-employee director at each annual meeting of
shareholders as follows: Chairman of the Board - options to purchase 12,000 shares of common stock and each other non-employee
director - options to purchase 10,000 shares of common stock. Accordingly, following the 2017 annual meeting, Mr. McKenna, in
his capacity as Chairman of the Board, was granted an option to purchase 12,000 shares of common stock, while each of Messrs.
Giordano, Masucci and Smith was granted an option to purchase 10,000 shares of common stock, in each case at an exercise price
of $8.80 per share, the closing price of our common stock on the date of the grant. All director options vest in three equal annual
installments beginning one year after the date of grant, except that the options will become immediately exercisable upon a “change
in control” as defined in the 2015 Equity Incentive Plan or the death, disability or retirement of the recipient, and expire
ten years after the date of grant, unless terminated earlier by the terms of the option.
In
January 2018, the Nominating and Corporate Governance Committee recommended, and the Compensation Committee approved, the automatic
grant of restricted stock units (“RSUs”) to non-employee directors who are re-elected or continue as a non-employee
director at each annual meeting of shareholders, beginning with the 2018 Annual Meeting, as follows: the Chairman of the Board
will receive a number of RSUs (rounded to the nearest whole share) equal to $72,000 divided by the closing price of the common
stock on the date of the Annual Meeting and each other non-employee director will receive a number of RSUs (rounded to the nearest
whole share) equal to $60,000 divided by the closing price of the common stock on the date of the Annual Meeting. The RSUs will
vest in three equal annual installments beginning one year after the date of grant, except that they will become immediately exercisable
upon a “change in control” or the death, disability or retirement of the recipient, as provided in the 2015 Equity
Incentive Plan.
The
following table sets forth information concerning the compensation earned during the year ended December 31, 2017 by each of our
directors that was not also an employee.
Name
|
|
Fees
Earned or
Paid in Cash
($)
|
|
Stock
Awards (1)
($)
|
|
Option
Awards (2)
($)
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
Nicholas
A. Giordano
|
|
|
54,000
|
|
|
|
—
|
|
|
|
49,900
|
|
|
|
—
|
|
|
|
103,900
|
|
|
Robert
N. Masucci
|
|
|
49,000
|
|
|
|
—
|
|
|
|
49,900
|
|
|
|
—
|
|
|
|
98,900
|
|
|
Michael
J. McKenna
|
|
|
69,000
|
|
|
|
—
|
|
|
|
59,880
|
|
|
|
—
|
|
|
|
128,880
|
|
|
Philip
I. Smith
|
|
|
46,000
|
|
|
|
—
|
|
|
|
49,900
|
|
|
|
—
|
|
|
|
95,900
|
|
|
|
(1)
|
We
have not granted any stock awards to our directors. Under the Non-Employee Director and
Executive Officer Stock Purchase Program, directors may purchase shares of common stock
directly from the Corporation at the last reported sale price on the date that the election
to purchase is made.
|
|
(2)
|
The
amounts included in the “Option Awards” column represent the aggregate grant
date fair value of stock awards granted during 2017 computed in accordance with Financial
Accounting Standards Board’s Accounting Standards Codification Topic 718 (“FASB
Codification Topic 718”). These amounts do not necessarily correspond to the actual
value that may be recognized by the directors. For a discussion of valuation assumptions,
see Note 16 to our consolidated financial statements included in our annual report on
Form 10-K for the fiscal year ended December 31, 2017. A total of 150,681 options were
forfeited under equity plans during 2017. As of December 31, 2017, the number of stock
option awards held by our non-employee directors was: Mr. Giordano – 100,000; Mr.
Masucci – 100,000; Mr. McKenna – 120,000 and Mr. Smith– 20,000.
|
Director
Share Ownership Requirements
In
April 2006, the Nominating and Corporate Governance Committee adopted a policy that all directors must purchase and own shares
of common stock with a purchase price equal to at least one-year’s annual director fees. Under this policy, Mr. Smith, who
was appointed as director in April 2016, has a period of five years to comply. All other directors are in compliance with this
policy.
Committees
of the Board
The
Board of Directors of the Corporation has established an Audit Committee, a Compensation Committee and a Nominating and Corporate
Governance Committee.
Audit
Committee.
The Board of Directors of the Corporation has appointed a standing Audit Committee consisting of Messrs. Giordano
(Chairman), Masucci and McKenna. The Board of Directors has determined that each member of the Audit Committee is independent,
as defined in applicable Nasdaq corporate governance rules and SEC regulations. Mr. Smith, who was a member of the Audit Committee in 2017, was determined to be independent under applicable Nasdaq corporate
governance rules and SEC regulations. In addition, the Board of Directors has determined that Mr. Giordano
qualifies as an audit committee financial expert, as defined in applicable SEC rules. The Audit Committee held five meetings in
2017.
The
Audit Committee is governed by a written charter approved by the Board of Directors, a copy of which is available on our website
at
www.intricon.com
. The principal duties of the Audit Committee are to monitor the integrity of the financial statements
of the Corporation, the compliance by the Corporation with legal and regulatory requirements and the independence and performance
of the
Corporation’s independent auditors. The Audit Committee also approves all related party transactions and establishes
procedures for (i) the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters, and (ii) the confidential, anonymous submissions by the Corporation’s employees
of concerns regarding questionable accounting or auditing matters. In addition, the Committee selects the firm to be engaged as
the Corporation’s independent public accountants, and approves the engagement of the independent public accountants for
all non-audit activities permitted under the Sarbanes-Oxley Act of 2002. The report of the Audit Committee appears on page 34.
Compensation
Committee.
The Board of Directors of the Corporation has appointed a standing Compensation Committee currently consisting
of Messrs. Masucci (Chairman), Giordano and McKenna. The Board of Directors has determined that each member of the Compensation
Committee is independent, as defined in applicable Nasdaq corporate governance rules. Mr. Smith, who was a member of the Compensation
Committee in 2017, was determined to be independent under applicable
Nasdaq corporate governance rules and SEC regulations. The Compensation Committee reviews and makes recommendations
to the Board of Directors concerning officer compensation and officer and employee bonus programs and administers the Corporation’s
equity plans. The Compensation Committee met four times in 2017.
The
Compensation Committee is governed by a written charter approved by the Board of Directors, a copy of which is available on our
website at www.intricon.com. The principal duties of the Compensation Committee are to formulate, evaluate and approve the compensation
of the Corporation’s executive officers, oversee all compensation programs involving the issuance of the Corporation’s
stock and other equity securities of the Corporation, and, if required, review and discuss with the Corporation’s management
the Compensation Discussion and Analysis and preparing the Committee’s report thereon for inclusion in the Corporation’s
annual proxy statement in accordance with applicable rules and regulations.
A
discussion of the Compensation Committee’s processes and procedures for the consideration and determination of executive
compensation is included in “Executive Compensation — Processes and Procedures for the Determination of Executive
Officer and Director Compensation.”
Nominating
and Corporate Governance Committee.
The Board of Directors of the Corporation has appointed a standing Nominating and
Corporate Governance Committee currently consisting of Messrs. McKenna (Chairman), Giordano and Masucci. Mr. Smith, who was a
member of the Nominating and Corporate Governance Committee in 2017,
was determined to be independent under applicable Nasdaq corporate governance rules and SEC regulations.
The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is independent, as
defined in applicable Nasdaq corporate governance rules. The Nominating and Corporate Governance Committee met two times in 2017.
The
Nominating and Corporate Governance Committee is governed by a written charter approved by the Board of Directors, a copy of which
is available on our website at www.intricon.com. The principal duties of the Nominating and Corporate Governance Committee are
to identify individuals qualified to become members of the Board consistent with the criteria approved by the Committee, consider
nominees made by shareholders in accordance with the Corporation’s bylaws, select, or recommend to the Board, the director
nominees for each annual shareholders meeting, recommend to the Board the directors to be appointed to each Committee of the Board,
recommend to the Board whether to increase or decrease the size of the Board, develop and recommend to the Board corporate governance
principles and oversee the evaluations of the Board and senior management. This Committee also determines the compensation payable
to directors and members of committees of the Board.
Director
Nomination Process
Consideration
of Director Candidates Recommended by Shareholders
. The Nominating and Corporate Governance Committee will consider properly
submitted shareholder recommendations for director candidates. A shareholder who wishes to recommend a prospective director nominee
should send a signed and dated letter to the Chairman of the Nominating and Corporate Governance Committee, c/o Corporate Secretary,
IntriCon Corporation, 1260 Red Fox Road, Arden Hills, Minnesota 55112 with the following information:
|
●
|
the
name and address of the shareholder making the recommendation and of each recommended
nominee;
|
|
●
|
a
representation that the shareholder is a holder of record, and/or a beneficial owner,
of voting stock of the Corporation entitled to vote at the meeting and intends to appear
in person or by proxy at the meeting to vote for the person(s) recommended if nominated;
|
|
●
|
a
description of all arrangements and understandings between the shareholder and each recommended
nominee and any other person(s), naming such person(s), pursuant to which the recommendation
was submitted by the shareholder;
|
|
●
|
such
other information regarding each recommended nominee as would be required to be included
in a proxy statement filed pursuant to the proxy rules of the SEC had the nominee been
nominated by the Nominating and Corporate Governance Committee, including the principal
occupation of each recommended nominee; and
|
|
●
|
the
consent of each recommended nominee to serve as a director if so nominated and elected.
|
The
deadline for submitting the letter recommending a prospective director nominee for the 2019 annual meeting of shareholders is
November 16, 2018. All late or non-conforming recommendations will be rejected.
In
addition, under the Corporation’s bylaws, shareholders are permitted to nominate directors to be elected at a meeting of
shareholders by providing notice and the other required information specified in the bylaws. Although shareholders may nominate
directors, such nominees will not appear in the Corporation’s proxy statement or in the proxy solicited by the Board of
Directors. The Corporation’s amended and restated bylaws are available, at no cost, at the SEC’s website, www.sec.gov,
as Exhibit 3.1 to the Corporation’s Current Report on Form 8-K filed October 12, 2007 or upon the shareholder’s written
request directed to the Corporate Secretary at the address given above.
Director
Qualifications
. The Nominating and Corporate Governance Committee has the sole authority to select, or to recommend to
the Board of Directors, the Board of Director nominees to be considered for election as a director. The Nominating and Corporate
Governance Committee does not have any specific minimum qualifications that must be met by a nominee other than nominees for director
must be at least 21 years old. Nominees for director will be selected on the basis of outstanding achievement in their careers;
broad experience; education; independence under applicable Nasdaq and SEC rules; financial expertise; integrity; financial integrity;
ability to make independent, analytical inquiries; understanding of the business environment; and willingness to devote adequate
time to Board
and committee duties. The proposed nominee should have sufficient time to devote their energy and attention to the
diligent performance of the director’s duties, including attendance at Board and committee meetings and review of the Corporation’s
financial statements and reports, SEC filings and other materials. Finally, the proposed nominee should be free of conflicts of
interest that could prevent such nominee from acting in the best interest of shareholders.
Additional
special criteria apply to directors being considered to serve on a particular committee of the Board. For example, members of
the Audit Committee must meet additional standards of independence and have the ability to read and understand the Corporation’s
financial statements.
Identifying
and Evaluating Nominees for Director
. The Nominating and Corporate Governance Committee assesses the appropriate size
of the Board in accordance with the limits fixed by the Corporation’s charter and bylaws, whether any vacancies on the Board
are expected and what incumbent directors will stand for re-election at the next meeting of shareholders. If vacancies are anticipated,
or otherwise arise, the Nominating and Corporate Governance Committee considers candidates for director suggested by members of
the Nominating and Corporate Governance Committee and other Board members as well as management, shareholders and other parties.
The Nominating and Corporate Governance Committee also has the sole authority to retain a search firm to identify and evaluate
director candidates. Except for incumbent directors standing for re-election as described below, there are no differences in the
manner in which the Nominating and Corporate Governance Committee evaluates nominees for director, based on whether the nominee
is recommended by a shareholder or any other party.
In
the case of an incumbent director whose term of office expires, the Nominating and Corporate Governance Committee reviews such
director’s service to the Corporation during the past term, including, but not limited to, the number of Board and committee
meetings attended, as applicable, quality of participation and whether the candidate continues to meet the general qualifications
for a director outlined above, including the director’s independence, as well as any special qualifications required for
membership on any committees on which such director serves. When a member of the Nominating and Corporate Governance Committee
is an incumbent director eligible to stand for re-election, such director will not participate in that portion of the Nominating
and Corporate Governance Committee meeting at which such director’s potential nomination for election as a director is discussed
by the Nominating and Corporate Governance Committee.
In
the case of a new director candidate, the Nominating and Corporate Governance Committee will evaluate whether the nominee is independent,
as independence is defined under applicable Nasdaq corporate governance rules, and whether the nominee meets the qualifications
for director outlined above as well as any special qualifications applicable to membership on any committee on which the nominee
may be appointed to serve if elected. In connection with such evaluation, the Nominating and Corporate Governance Committee determines
whether the committee should interview the nominee, and if warranted, one or more members of the Nominating and Corporate Governance
Committee interviews the nominee in person or by telephone.
Upon
completing the evaluation, and the interview in case of a new candidate, the Nominating and Corporate Governance Committee makes
a decision as to whether to nominate the director candidate for election at the shareholders meeting.
SHARE
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND OFFICERS
The
following table sets forth certain information as of February 21, 2018, concerning beneficial ownership of the shares of common
stock by (i) persons or groups of persons shown by SEC records to own beneficially more than 5% of the shares of common stock,
(ii) directors and nominees, (iii) the executive officers named in the Summary Compensation Table, referred to as the Named Executive
Officers and (iv) all directors and executive officers as a group:
Name
|
|
Number
of
Shares
Beneficially Owned
(1) (2)
|
|
Percent
of
Class
|
|
|
|
|
|
|
|
|
|
Heartland
Advisors, Inc.
(3)
William
J. Nasgovitz
789
North Water Street
Milwaukee,
WI 53202
|
|
|
558,113
|
|
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Mark
S. Gorder
(5)
Director,
President and Chief Executive Officer
|
|
|
620,120
|
|
|
|
8.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. McKenna
Chairman of the Board of Directors
|
|
|
215,411
|
|
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas
A. Giordano
Director
|
|
|
147,336
|
|
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Robert
N. Masucci
Director
|
|
|
196,088
|
|
|
|
2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Philip
I. Smith
Director
|
|
|
3,333
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Michael
P. Geraci
Vice President, Sales and Marketing
|
|
|
108,702
|
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
L. Gonsior
Vice President, Global Operations
|
|
|
133,371
|
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Greg
Gruenhagen
Vice President, Quality and Regulatory Affairs
|
|
|
94,063
|
|
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Scott
Longval
Chief Financial Officer, Secretary, and Treasurer
|
|
|
110,365
|
|
|
|
1.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
All
Directors and Executive Officers as a Group (9 persons)
|
|
|
1,628,789
|
|
|
|
21.2
|
%
|
|
|
(1)
|
Unless
otherwise indicated, each person has sole voting and investment power with respect to
all such shares. The securities “beneficially owned” by a person are determined
in accordance with the definition of “beneficial ownership” set forth in
the regulations of the Securities and Exchange Commission. The information does not necessarily
indicate beneficial ownership for any other purpose. The same shares of common stock
may be beneficially owned by more than one person. Beneficial ownership, as set forth
in the regulations of the Securities and Exchange Commission, includes securities as
to which the person has or shares voting or investment power. Shares of common stock
issuable upon the exercise or conversion of securities currently exercisable or convertible
or exercisable or convertible within 60 days of February 21, 2018 are deemed outstanding
for computing the share ownership and percentage ownership of the person holding such
securities, but are not deemed outstanding for computing the percentage of any other
person. Beneficial ownership may be disclaimed as to certain of the securities.
|
|
(2)
|
In
the case of the Corporation’s directors and executive officers, includes the following
shares which such person has the right to acquire within 60 days of February 21, 2018
through the exercise of stock options:
|
Name
|
|
Number
of Shares
Subject
to Options
|
|
|
|
|
|
Mark S.
Gorder
|
|
|
147,500
|
|
Michael J. McKenna
|
|
|
96,000
|
|
Nicholas A. Giordano
|
|
|
70,000
|
|
Robert N. Masucci
|
|
|
80,000
|
|
Philip I. Smith
|
|
|
3,333
|
|
Michael P. Geraci
|
|
|
86,500
|
|
Dennis L. Gonsior
|
|
|
86,500
|
|
Greg Gruenhagen
|
|
|
86,500
|
|
Scott Longval
|
|
|
86,500
|
|
All Directors and Executive
Officers as a Group
|
|
|
742,833
|
|
|
(3)
|
Based
upon Schedule 13G/A filed with the SEC on February 2, 2018. According to the Schedule
13G, these shares may be deemed beneficially owned within the meaning of Rule 13d-3 of
the Exchange Act by (1) Heartland Advisors, Inc., an investment adviser registered with
the SEC, by virtue of its investment discretion and voting authority granted by certain
clients, which may be revoked at any time and (2) William J. Nasgovitz by virtue of his
control of Heartland Advisors, Inc.
|
|
(5)
|
Includes
5,000 shares of common stock owned by his spouse and 14,000 shares of common stock owned
by his adult children, as to all of which shares Mr. Gorder disclaims beneficial ownership.
Mr. Gorder’s business address is 1260 Red Fox Road, Arden Hills, MN 55112.1260
Red Fox Road, Arden Hills, MN 55112.
|
EXECUTIVE
COMPENSATION
Background
The
Compensation Committee of our Board of Directors administers our compensation program for executive officers. The objectives of
our compensation program are to attract and retain talented and dedicated executive officers and to align a significant portion
of their compensation with our business objectives and performance and the interests of our shareholders.
Elements
of Executive Compensation
Our
compensation program for executive officers consists of the following elements:
Base
Salary
. Base salary is designed to reward the performance of our executive officers in their daily fulfillment of their
responsibilities to us. The Compensation Committee determines the base salary of each of our executive officers by evaluating
their scope of responsibilities and experience, years of service with us, our performance and the performance of each of the executive
officers during the past year, the executive’s future potential and competitive salary practices. We believe that our base
salaries are competitive with other companies of our size.
Annual
Cash Incentive Compensation
.
The
Compensation Committee’s philosophy is that a significant portion of the total potential compensation of our executive officers
should depend upon the degree of our financial and strategic success in a particular year.
In
March 2012, the Compensation Committee adopted the Annual Incentive Plan for Executives and Key Employees. For more information,
see “Annual Incentive Plan.”
Long-Term
Incentive Compensation in the Form of Stock Awards
. In 2015, our Board of Directors and shareholders approved the 2015
Equity Incentive Plan, which replaced the 2006 Equity Incentive Plan. The 2015 Equity Incentive Plan is designed to:
|
●
|
promote
the long-term retention of our employees, directors and other persons who are in a position
to make significant contributions to our success;
|
|
●
|
further
reward these employees, directors and other persons for their contributions to our growth
and expansion;
|
|
●
|
provide
additional incentive to these employees, directors and other persons to continue to make
similar contributions in the future; and
|
|
●
|
further
align the interests of these employees, directors and other persons with those of our
shareholders.
|
To
achieve these purposes, the 2015 Equity Incentive Plan permits the Compensation Committee to make awards of stock options, stock
appreciation rights, restricted stock or unrestricted stock, deferred stock, restricted stock units or performance awards for
our shares of common stock. For more information concerning the 2015 Equity Incentive Plan, see “Equity Plans - 2015 Equity
Incentive Plan” below.
Stock
options are granted at the fair market value of our shares of common stock on the date of grant. Stock awards are granted based
on various factors, including the executive’s ability to contribute to our long-term growth and profitability.
Employee
Stock Purchase Plan
. All of our fulltime employees, including our executive officers (other than Mr. Gorder), are entitled
to participate in our Employee Stock Purchase Plan. Under this Plan, employees may purchase our shares of common stock at a discount
of up to 10% through payroll deductions.
Non-Employee
Director and Executive Officer Stock Purchase Program.
Under the Non-Employee Director and Executive Officer Stock Purchase
Program, directors and executive officers may purchase shares of common stock directly from the Corporation at the last reported
sale price on the date that the election to purchase is made. During 2017, no shares of common stock were purchased under this
program.
Other
Benefits
.
All of our fulltime employees, including our executive officers, are entitled to participate in our health
insurance, life insurance and 401(k) plans. We also maintain a disability insurance policy on behalf of certain of the members
of our senior management, including our executive officers, that is in addition to the disability benefits that we maintain for
our salaried employees.
Additional
Benefits Payable to the Chief Executive Officer
. Mr. Gorder, our Chief Executive Officer, receives additional benefits
under our employment agreement with him. Under the employment agreement, we are required to reimburse Mr. Gorder for his country
club membership fees. We are also required to provide Mr. Gorder with an automobile for use in connection with the performance
of his duties under the employment agreement and reimburse him for all expenses reasonably incurred by him for the maintenance
and operation, including fuel, of the automobile.
Processes
and Procedures for the Determination of Executive Officer and Director Compensation
Scope
of Authority of the Compensation Committee
. The scope of the Compensation Committee’s authority and responsibilities
is set forth in its charter, a copy of which is available on our website at www.intricon.com. The Compensation Committee’s
authority includes the authority to determine the following with respect to our executive officers: (i) the annual base salary
level, (ii) the annual incentive opportunity level, (iii) the long-term incentive opportunity level, (iv) employment agreements,
severance agreements, change in control agreements/provisions and other compensatory arrangements, in each case as, when and if
appropriate, and (v) any special or supplemental benefits, in each case subject to the terms of any existing applicable employment
agreement terms.
Delegation
of Authority
. As provided under the Compensation Committee’s charter, the Compensation Committee may delegate its
authority to special subcommittees of the Compensation Committee as the Compensation Committee deems appropriate, consistent with
applicable law and Nasdaq listing standards. Additionally, the 2015 Equity Incentive Plan permits the Compensation Committee,
subject to criteria, limitations and instructions as the Compensation Committee determines, to delegate to an appropriate officer
of the Corporation the authority to determine the individual participants under that Plan and amount and nature of the award to
be issued to such participants; provided, that no awards may be made pursuant to such delegation to a participant who is subject
to Section 16(b) of the Securities Exchange Act of 1934, as amended. To date, the Compensation Committee has not delegated its
responsibilities other than, from time to time, delegating to the Chief Executive Officer and Chief Financial Officer the authority
to grant a limited number of stock awards under the 2015 Equity Incentive Plan to non-executive employees.
Role
of Management in Determining or Recommending Executive Compensation
. Traditionally, the Compensation Committee reviews
our executive compensation program in December through February of each year, although decisions in connection with new hires
and promotions are made on an as-needed basis. Mr. Gorder, our President and Chief Executive Officer, makes recommendations concerning
the amount of compensation to be awarded to our executive officers, including himself, but does not participate in the Compensation
Committee’s deliberations or decisions. The Compensation Committee reviews the recommendations together with a “tally
sheet” showing all items of executive compensation. After a presentation by Mr. Gorder, the Committee meets in executive
session to discuss and consider the recommendations and makes a final determination.
Role
of Compensation Consultants in Determining or Recommending Executive Compensation
. Under its charter, the Compensation
Committee has authority to retain, at the Corporation’s expense, such counsel, consultants, experts and other professionals
as it deems necessary. In 2015, the Corporation engaged Verisight Compensation Consulting Group to conduct an assessment of whether
the compensation of our executive officers was competitive based on published survey date and a peer group analysis. Generally,
the Verisight analysis showed that the compensation of our executive officers was less than competitive when compared to published
survey data and peer groups.
Director
Compensation
. The Nominating and Corporate Governance committee determines the compensation payable to directors and members
of committees of the Board, including the Chairman of the Board and the Chairman of each committee, other than directors who are
our salaried employees.
Say-on-Pay
Vote
At
the 2017 annual meeting, we held a shareholder advisory vote on the compensation of our named executive officers, commonly referred
to as a say-on-pay vote. Our shareholders approved the compensation of our named executive officers at the 2017 annual meeting,
with an overwhelming majority of the votes entitled to be cast voting in favor of our say-on-pay resolution. As we evaluated our
compensation practices for 2018 we were aware of the strong support our shareholders expressed for our compensation philosophy.
As a result, following our annual review of our executive compensation philosophy, the Compensation Committee decided to retain
our general approach to executive compensation. We believe our executive compensation program for 2018 advances our goals of attracting
and retaining talented and dedicated executive officers and aligning a significant portion of their compensation with our business
objectives and performance and the interests of our shareholders.
Determination
of Executive Compensation
Base
Salary
. Typically, the Compensation Committee reviews and adjusts base salaries on an annual basis.
In
December 2017, the Compensation Committee increased the 2018 base salary of each of our executive officers by approximately 3%,
which the Committee believed consistent with inflation and overall market trends.
The
following table shows the base salaries of our current executive officers as in effect at January 1, 2018:
Name
and Principal Position
|
|
2018
Annual
Base
Salary
|
|
Mark
S. Gorder
|
|
$
|
430,500
|
|
|
President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
Scott Longval
|
|
$
|
256,500
|
|
|
Chief Financial Officer
and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
Michael
P. Geraci
|
|
$
|
252,600
|
|
|
Vice
President, Sales and Marketing
|
|
|
|
|
|
|
|
|
|
|
|
Dennis L. Gonsior
|
|
$
|
236,400
|
|
|
Vice President, Global
Operations
|
|
|
|
|
|
|
|
|
|
|
|
Greg
Gruenhagen
|
|
$
|
216,300
|
|
|
Vice
President, Quality and Regulatory Affairs
|
|
|
|
|
|
Annual
Cash Incentive Compensation
. In March 2012, the Compensation Committee adopted the Annual Incentive Plan for Executives
and Key Employees, referred to as the Annual Incentive Plan. The targets for the Annual Incentive Plan are adopted each by the
Compensation Committee.
In
February 2015, the Compensation Committee established the targets and bonus amounts for 2015 under the Annual Incentive Plan.
In February 2016, the Compensation Committee determined that the target for 2015 had been achieved at the 64% level and approved
a total payout under the 2015 Annual Incentive Plan of $255,000, of which a total of $77,405 was paid to the Named Executive Officers.
For more information, see “Summary Compensation Table
In
February 2016, the Compensation Committee established the targets and bonus amounts for 2016 under the Annual Incentive Plan.
In January 2017, the Compensation Committee determined that the plan target had not been met under the 2016 Annual Incentive Plan
and, accordingly, no cash bonuses were paid for 2016.
For
2017, the Annual Incentive Plan consisted of two components. The first component was financial, based on the Corporation’s
net income from continuing operations, and was payable in cash. The second component was strategic, based on the achievement of
specific 2017 strategic objectives, provided that a minimum financial target was met, and was payable in options to purchase IntriCon
common stock. In February 2017, the Compensation Committee established the targets and cash bonus amounts for 2017 under the Annual
Incentive Plan. In July 2017, the Compensation Committee established the 2017 strategic objectives and awarded a total of 81,000
stock options to the Named Executive Officers at an exercise price of $7.05 per share (the closing price of the common stock on
July 26, 2017, the date when the strategic component was approved and the options were granted). In March 2018, the Compensation
Committee determined that the financial component target for 2017 had been achieved at the 86% level and approved a total payout
under the 2017 Annual Incentive Plan of $377,208, of which a total of $66,819 was paid to the Named Executive Officers. Also,
in March 2018, the Compensation Committee determined to what extent the strategic component objectives for 2017 had
been achieved
and approved the vesting of a total of 63,750 stock options to the Named Executive Officers.
As
of the date of this Proxy Statement, the Compensation Committee had not established the targets and bonus amounts for 2018 under
the Annual Incentive Plan, but it is anticipated that the terms will be substantially similar to the 2017 Annual Incentive Plan.
Long-Term
Incentive Compensation in the Form of Stock Option Awards and Restricted Stock Units.
The Compensation Committee generally
makes awards on an annual basis but also makes awards in connection with new hires and promotions.
In
January 2016, the Compensation Committee awarded stock options to the Corporation’s executive officers under the 2015 Equity
Incentive Plan to purchase shares of common stock at an exercise price of $7.58 per share. Mr. Gorder was awarded options to purchase
20,000 shares of common stock and each of the other Named Executive Officers was awarded options to purchase 12,000 shares of
common stock.
In
January 2017, the Compensation Committee awarded stock options to the Corporation’s executive officers under the 2015 Equity
Incentive Plan to purchase shares of common stock at an exercise price of $6.90 per share. Mr. Gorder was awarded options to purchase
20,000 shares of common stock and each of the other Named Executive Officers was awarded options to purchase 12,000 shares of
common stock.
In
January 2018, the Compensation Committee awarded restricted stock units (“RSUs”) to the Corporation’s executive
officers under the 2015 Equity Incentive Plan for shares of common stock, which will vest in equal installments over a period
of three years. Mr. Gorder was awarded 12,000 RSUs and each of the other Named Executive Officers was awarded 7,500 RSUs.
Employment
Agreements and Change in Control Arrangements
We
have entered into employment agreements with Mark S. Gorder, our President and Chief Executive Officer, and the other Named Executive
Officers.
The
employment agreement with Mr. Gorder was based on his prior employment agreement and incorporated the provisions of the change
in control agreement that was then in effect. The employment agreements with the other executive officers also contain a similar
change in control provision. Among other things, each employment agreement provides for a fixed employment term, subject to annual
renewals, the executive’s base salary and the executive’s right to participate in our bonus plans, equity plans and
other employee benefits. In addition, in the event that (i) there occurs a “change in control” (as defined in the
agreements) or sale of our assets accounting for 90% of more of our sales and (ii) the executive’s employment is involuntarily
terminated within one year afterwards, the executive will be entitled to payment of his base salary for one year (two years for
Mr. Gorder) in a lump sum and continuation of his medical benefits for a period of one year.
The
change in control provisions that we use contain a “double trigger” requirement, meaning that for an executive to
receive a payment under the change of control provision, there must be both a change of control, as defined in the applicable
agreement, and an involuntary termination of the executive’s employment. The double trigger requirement was chosen to prevent
us from having to pay substantial payments in connection with a change in control where an executive had not suffered any adverse
employment consequences. However, all stock options will vest and become immediately exercisable upon a change of control, regardless
of whether the executive is involuntarily terminated.
We
believe that employment agreements and change in control protections are important to attract and retain talented executive officers
and to protect our executive officers from a termination or significant change in responsibilities arising after a change in control.
For more information, see “—Employment Agreements” and “—Potential Payments Upon Termination of
Employment or Change in Control.”
Accounting
and Tax Considerations
Under
our prior stock options plans, the Compensation Committee was limited to issuing stock options. The Compensation Committee considers
making awards using the other types of awards permitted under the 2015 Equity Incentive Plan in light of FASB ASC Topic 718 -
Stock Compensation. This accounting standard requires us to record as compensation expense the grant date fair value of a stock
option over the life of the option. The Compensation Committee considers the compensation expense of option and other equity grants
when making future awards; however, given that, traditionally, the Compensation Committee has not made large grants of option
awards to our executive officers and employees, we do not expect that the compensation expense associated with option grants will
have a material adverse effect on our reported earnings.
Generally,
Section 162(m) of the Internal Revenue Code of 1986, referred to as the “Internal Revenue Code,” and the Internal
Revenue Service, referred to as the “IRS,” regulations adopted under that section, which are referred to collectively
as “Section 162(m),” deny a deduction to any publicly held corporation, such as the Corporation, for certain compensation
exceeding $1,000,000 paid during each calendar year to each of the chief executive officer and the three other highest paid executive
officers whose compensation must be reported to shareholders in the proxy statement. However, before the effective date of the
2017 tax reform legislation, amounts in excess of $1,000,000 were deductible if they qualify as “performance-based compensation.”
With respect to stock awards made before the 2017 tax reform legislation, the Committee endeavored to structure the executive
compensation program so that each executive’s compensation generally would be fully deductible.
The
2017 tax reform legislation removed the “performance-based compensation” exception from Section 162(m). Accordingly,
awards made after November 2, 2017 generally are not eligible for the “performance-based compensation” exception and
will not be deductible to the extent that they cause the compensation of the affected executive officers to exceed $1,000,000
in any year. Awards that were made and subject to binding written contracts in effect on November 2, 2017, are “grandfathered”
under prior law and can still qualify as deductible “performance-based compensation,” even if paid in future years.
We
do not believe that Section 162(m) will have a material adverse effect on us in 2018.
Summary
Compensation Table
The
following table summarizes compensation earned during 2017, 2016 and 2015 by our chief executive officer, chief financial officer
and each of our other executive officers. We refer to these individuals throughout this proxy statement as the “Named Executive
Officers.”
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Stock
Awards
(1)
($)
|
|
Option
Awards (2)
($)
|
|
Non-Equity
Incentive Plan Compensation (3)
($)
|
|
All
Other Compensation (4)
($)
|
|
Total
($)
|
|
Mark S.
Gorder,
|
|
2017
|
|
|
418,000
|
|
|
—
|
|
|
166,540
|
|
|
22,468
|
|
|
38,712
|
|
645,720
|
|
President and Chief
Executive
|
|
2016
|
|
|
418,000
|
|
|
—
|
|
|
89,400
|
|
|
—
|
|
|
31,485
|
|
538,885
|
|
Officer (principal
executive officer)
|
|
2015
|
|
|
405,820
|
|
|
—
|
|
|
87,400
|
|
|
19,277
|
|
|
29,212
|
|
541,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Longval,
|
|
2017
|
|
|
249,000
|
|
|
—
|
|
|
97,440
|
|
|
11,828
|
|
|
1,360
|
|
359,628
|
|
Chief Financial Officer
and
|
|
2016
|
|
|
249,000
|
|
|
—
|
|
|
53,640
|
|
|
—
|
|
|
1,360
|
|
304,000
|
|
Treasurer (principal
financial officer)
|
|
2015
|
|
|
232,740
|
|
|
—
|
|
|
52,440
|
|
|
15,129
|
|
|
1,234
|
|
301,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Geraci,
|
|
2017
|
|
|
245,200
|
|
|
—
|
|
|
97,440
|
|
|
11,647
|
|
|
4,320
|
|
358,607
|
|
Vice President, Sales
and Marketing
|
|
2016
|
|
|
245,200
|
|
|
—
|
|
|
53,640
|
|
|
—
|
|
|
4,320
|
|
303,160
|
|
|
|
2015
|
|
|
238,033
|
|
|
—
|
|
|
52,440
|
|
|
15,474
|
|
|
4,176
|
|
310,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis L. Gonsior,
|
|
2017
|
|
|
229,500
|
|
|
—
|
|
|
97,440
|
|
|
10,901
|
|
|
3,746
|
|
341,587
|
|
Vice President, Global
Operations
|
|
2016
|
|
|
229,500
|
|
|
—
|
|
|
53,640
|
|
|
—
|
|
|
3,746
|
|
286,886
|
|
|
|
2015
|
|
|
222,789
|
|
|
—
|
|
|
52,440
|
|
|
14,482
|
|
|
3,612
|
|
293,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greg Gruenhagen,
|
|
2017
|
|
|
210,000
|
|
|
—
|
|
|
97,440
|
|
|
9,975
|
|
|
5,927
|
|
323,342
|
|
Vice President, Quality
and
|
|
2016
|
|
|
210,000
|
|
|
—
|
|
|
53,640
|
|
|
—
|
|
|
5,927
|
|
269,567
|
|
Regulatory Affairs
|
|
2015
|
|
|
200,658
|
|
|
—
|
|
|
52,440
|
|
|
13,043
|
|
|
5,602
|
|
271,743
|
|
|
(1)
|
We
did not grant any stock awards to our executive officers in 2017, 2016 or 2015. Under
the Non-Employee Director and Executive Officer Stock Purchase Program, executive officers
may purchase shares of common stock directly from the Corporation at the last reported
sale price on the date that the election to purchase is made.
|
|
(2)
|
The
amounts included in the “Option Awards” column represent the aggregate grant
date fair value of option awards granted during the year indicated, computed in accordance
with FASB Codification Topic 718. For the purposes of the performance stock options awarded
in 2017, the fair value of these awards was computed based on achievement of 100% of
the performance conditions. These amounts do not necessarily correspond to the actual
value that may be recognized by the named executive officers. For a discussion of valuation
assumptions, see Note 16 to our consolidated financial statements included in our annual
report on Form 10-K for the fiscal year ended December 31, 2017. A total of 150,681 options
were forfeited under equity plans during 2017.
|
|
(3)
|
Represents
amounts paid under the Annual Incentive Plan for services rendered in 2017 and 2015.
No amounts were payable under the Annual Incentive Plan for 2016 because the plan target
was not reached.
|
|
(4)
|
Consists
of payment of premiums for group term life insurance maintained for such executives and
disability policies maintained for certain executives. In the case of Mr. Gorder, such
amount also includes payment of country club membership dues and payment for his automobile
lease and related expenses.
|
Employment
Agreements
We
have entered into employment agreements with Mark S. Gorder, our President and Chief Executive Officer, and our executive officers.
The
employment agreements contain the following material terms:
|
●
|
a
current employment term expiring on April 30, 2017, subject to automatic renewal for
additional one year terms unless either party gives notice of non-renewal at least sixty
(60) days prior to the end of the then current employment term; and
|
|
●
|
a
base salary as determined by the Board of Directors or the Compensation Committee, but
in no event less than their base salaries in effect at the time of the agreement.
|
For
a discussion of the provisions relating to the termination of the employment of the executive officer under certain circumstances,
see “—Potential Payments Upon Termination of Employment or Change in Control.”
Annual
Incentive Plan
In
March 2012, the Compensation Committee adopted the Annual Incentive Plan for Executives and Key Employees, referred to as the
Annual Incentive Plan. Under the Annual Incentive Plan, our executive officers and key employees are eligible to receive incentive
compensation based on (i) the Corporation achieving a designated level of financial results, referred to as the “plan target,”
for a designated calendar year, referred to as a “plan year,” and (ii) if applicable, achievement of designated strategic
objectives. The plan targets and strategic objectives, if any, will be determined each year by the Compensation Committee. A participant
will receive incentive compensation only if the minimum plan target is achieved.
In
February 2016, the Compensation Committee determined that the target for 2015 had been achieved at the 64% level and approved
a total payout under the 2015 Annual Incentive Plan of $255,000, of which a total of $77,405 was paid to the Named Executive Officers.
In January 2017, the Compensation Committee determined that the plan target had not been met under the 2016 Annual Incentive Plan
and, accordingly, no cash bonuses were paid for 2016. In March 2018, the Compensation Committee determined that the financial
component target for 2017 had been achieved at the 86% level and approved a total payout under the 2017 Annual Incentive Plan
of $377,208, of which a total of $66,819 was paid to the Named Executive Officers. Also, in March 2018, the Compensation Committee
determined to what extent the strategic component objectives for 2017 had been achieved and approved the vesting of a total of
63,750 stock options to the Named Executive Officers as follows: Mr. Gorder – 15,750 options, Mr. Longval – 12,000
options, Mr. Geraci – 12,000 options, Mr. Gonsior - 12,000 options and Mr. Gruenhagen - 12,000 options.
As
of the date of this Proxy Statement, the Compensation Committee had not established the targets and bonus amounts for 2018 under
the Annual Incentive Plan, but it is anticipated that the terms will be substantially similar to the 2017 Annual Incentive Plan.
Equity
Plans
The
following descriptions summarize our equity plans pursuant to which eligible employees, including the Named Executive Officers,
and directors receive equity based awards. Our 2015 Equity Incentive Plan replaced our 2006 Equity Incentive Plan (described below).
No additional grants may be made under the 2006 Equity Incentive Plan. Outstanding grants under the 2006 Equity Incentive Plan
continue to be governed by their terms and the terms of the 2006 Equity Incentive Plan.
In
February 2014, the Board approved amendments to the 2006 Equity Incentive Plan and prior plans to permit “cashless”
exercises for all stock options issued under such plans, regardless of whether the form of option agreement or award contains
such a provision.
In
February 2015, the Board approved amendments to the 2006 Equity Incentive Plan and prior plans to provide that outstanding options
under such plans will vest and become fully exercisable, and will be exercisable for the balance of the original term of the option,
in the event of the termination of the participant from the Corporation due to death, disability or retirement, regardless of
any contrary provision in the form of option agreement.
2015
Equity Incentive Plan
Shareholders
approved the 2015 Equity Incentive Plan in April 2015. The 2015 Equity Incentive Plan permits grants of incentive stock options,
options not intended to qualify as incentive stock options, stock appreciation rights, restricted and unrestricted stock awards,
restricted stock units, deferred stock units, performance awards, supplemental cash awards and combinations of the foregoing.
The
2015 Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors. The Compensation Committee
determines the type of awards to be granted under the 2015 Equity Incentive Plan; selects award recipients and determines the
extent of their participation; determines the method or formula for establishing the fair market value of the shares of common
stock for various purposes under the 2015 Equity Incentive Plan; and establishes all other terms, conditions, restrictions and
limitations applicable to awards and the shares of common stock issued pursuant to awards, including, but not limited to, those
relating to a participant’s retirement, death, disability, leave of absence or termination of employment. The Compensation
Committee may accelerate or defer the vesting or payment of awards, cancel or modify outstanding awards, waive any conditions
or restrictions imposed with respect to awards or the shares of common stock issued pursuant to awards and make any and all other
interpretations and determinations which it deems necessary with respect to the administration of the 2015 Equity Incentive Plan,
other than a reduction of the exercise price of an option after the grant date and subject to the provisions of Section 162(m)
of the Internal Revenue Code with respect to “covered employees,” as defined in Section 162(m) of the Internal Revenue
Code, except that the Committee may not, without the consent of the holder of an award or unless specifically authorized by the
terms of the plan or an award, take any action with respect to such award if such action would adversely affect the rights of
such holder.
The
maximum total number of shares for which awards may be granted under the 2015 Equity Incentive Plan is 500,214 shares of common
stock, subject to appropriate adjustment in a manner determined by the Board of Directors to reflect changes in the Corporation’s
capitalization; however, such authorized share reserve will be increased from time to time by a number of shares equal to the
number of shares of common stock that are issuable pursuant to grants outstanding under the 2006 Equity Incentive Plan and certain
other plans as of April 24, 2015 that, but for the termination and/or suspension of the 2006 Equity Incentive Plan and such other
plans, would otherwise have reverted to the share reserve of the 2006 Equity Incentive Plan pursuant to the terms thereof as a
result of the expiration, termination, cancellation or forfeiture of such options.
As
of February 21, 2018:
|
●
|
options
to purchase 609,551 shares of common stock were outstanding under the 2015 Equity Incentive
Plan;
|
|
●
|
RSUs
for 87,000 shares of common stock were outstanding under the 2015 Equity Incentive Plan;
|
|
●
|
172,107
shares of common stock were available for new awards under the 2015 Equity Incentive
Plan, which includes shares surrendered for cashless exercises under the 2006 Equity
Inventive Plan; and
|
|
●
|
options
to purchase 887,341 shares of common stock were outstanding under the 2006 Equity Incentive
Plan, which shares will become available for new awards under the 2015 Equity Incentive
Plan in the event of the cancellation, expiration, forfeiture, cashless exercise or repurchase
of such awards.
|
The
maximum number of shares of common stock for which stock options may be granted to any person in any fiscal year and the maximum
number shares of common stock subject to SARs granted to any person in any fiscal year each is 50,000. The maximum number of shares
of common stock subject to other Awards granted to any person in any fiscal year is 50,000 shares.
2006
Equity Incentive Plan
Shareholders
approved the 2006 Equity Incentive Plan in April 2006 and, in April 2010 and May 2012, approved amendments to the 2006 Equity
Incentive Plan to, among other things, increase the number of shares of common stock authorized for issuance under that plan.
The 2006 Equity Incentive Plan was replaced by the 2015 Equity Incentive Plan in April 2015 and no new awards will be made under
the 2006 Equity Incentive Plan. The 2006 Equity Incentive Plan permitted the same types of equity awards as are permitted under
the 2015 Equity Incentive Plan. Awards outstanding under the 2006 Equity Incentive Plan will continue to be administered by the
Compensation Committee of the Board of Directors and governed by the terms of such Plan and the awards. As noted above, as of
February 21, 2018, options to purchase 887,341 shares of common stock were outstanding under the 2006 Equity Incentive Plan, which
shares will become available for new awards under the 2015 Equity Incentive Plan in the event of the cancellation, expiration,
forfeiture or repurchase of such awards.
Outstanding
Equity Awards at Fiscal Year-End
The
following table summarizes stock option awards held by our Named Executive Officers as of December 31, 2017. We did not have any
outstanding stock awards at December 31, 2017.
Name
|
|
Number
of Securities Underlying Unexercised
Options
(#)
Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
|
|
Option
Exercise Price
($)
|
|
Option
Expiration
Date
|
Mark S.
Gorder,
|
|
20,000
|
|
|
|
|
|
4.69
|
|
|
12/09/2018
|
|
President and Chief
Executive Officer
|
|
25,000
|
|
|
|
|
|
4.53
|
|
|
4/27/2021
|
|
(principal executive
officer)
|
|
25,000
|
|
|
|
|
|
6.26
|
|
|
1/2/2022
|
|
|
|
25,000
|
|
|
|
|
|
4.05
|
|
|
1/5/2023
|
|
|
|
12,500
|
|
|
|
|
|
3.85
|
|
|
1/2/2024
|
|
|
|
13,333
|
|
|
6,667
|
(1)
|
|
6.87
|
|
|
1/1/2025
|
|
|
|
6,667
|
|
|
13,333
|
(2)
|
|
7.58
|
|
|
1/3/2026
|
|
|
|
—
|
|
|
20,000
|
(3)
|
|
6.90
|
|
|
1/2/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Longval,
|
|
10,000
|
|
|
|
|
|
4.69
|
|
|
12/09/2018
|
|
Chief Financial Officer
and Treasurer
|
|
15,000
|
|
|
|
|
|
4.53
|
|
|
4/27/2021
|
|
(principal financial
officer)
|
|
15,000
|
|
|
|
|
|
6.26
|
|
|
1/2/2022
|
|
|
|
15,000
|
|
|
|
|
|
4.05
|
|
|
1/5/2023
|
|
|
|
7,500
|
|
|
|
|
|
3.85
|
|
|
1/2/2024
|
|
|
|
8,000
|
|
|
4,000
|
(1)
|
|
6.87
|
|
|
1/1/2025
|
|
|
|
4,000
|
|
|
8,000
|
(2)
|
|
7.58
|
|
|
1/3/2026
|
|
|
|
—
|
|
|
12,000
|
(3)
|
|
6.90
|
|
|
1/2/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Geraci,
|
|
10,000
|
|
|
|
|
|
4.69
|
|
|
12/09/2018
|
|
Vice President, Sales
and Marketing
|
|
15,000
|
|
|
|
|
|
4.53
|
|
|
4/27/2021
|
|
|
|
15,000
|
|
|
|
|
|
6.26
|
|
|
1/2/2022
|
|
|
|
15,000
|
|
|
|
|
|
4.05
|
|
|
1/5/2023
|
|
|
|
7,500
|
|
|
|
|
|
3.85
|
|
|
1/2/2024
|
|
|
|
8,000
|
|
|
4,000
|
(1)
|
|
6.87
|
|
|
1/1/2025
|
|
|
|
4,000
|
|
|
8,000
|
(2)
|
|
7.58
|
|
|
1/3/2026
|
|
|
|
—
|
|
|
12,000
|
(3)
|
|
6.90
|
|
|
1/2/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis L. Gonsior,
|
|
10,000
|
|
|
|
|
|
4.69
|
|
|
12/09/2018
|
|
Vice President, Global
Operations
|
|
15,000
|
|
|
|
|
|
4.53
|
|
|
4/27/2021
|
|
|
|
15,000
|
|
|
|
|
|
6.26
|
|
|
1/2/2022
|
|
|
|
15,000
|
|
|
|
|
|
4.05
|
|
|
1/5/2023
|
|
|
|
7,500
|
|
|
|
|
|
3.85
|
|
|
1/2/2024
|
|
|
|
8,000
|
|
|
4,000
|
(1)
|
|
6.87
|
|
|
1/1/2025
|
|
|
|
4,000
|
|
|
8,000
|
(2)
|
|
7.58
|
|
|
1/3/2026
|
|
|
|
—
|
|
|
12,000
|
(3)
|
|
6.90
|
|
|
1/2/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greg Gruenhagen,
|
|
10,000
|
|
|
|
|
|
4.69
|
|
|
12/09/2018
|
|
Vice President, Quality
and Regulatory
|
|
15,000
|
|
|
|
|
|
4.53
|
|
|
4/27/2021
|
|
Affairs
|
|
15,000
|
|
|
|
|
|
6.26
|
|
|
1/2/2022
|
|
|
|
15,000
|
|
|
|
|
|
4.05
|
|
|
1/5/2023
|
|
|
|
7,500
|
|
|
|
|
|
3.85
|
|
|
1/2/2024
|
|
|
|
8,000
|
|
|
4,000
|
(1)
|
|
6.87
|
|
|
1/1/2025
|
|
|
|
4,000
|
|
|
8,000
|
(2)
|
|
7.58
|
|
|
1/3/2026
|
|
|
|
—
|
|
|
12,000
|
(3)
|
|
6.90
|
|
|
1/2/2027
|
|
|
(1)
|
The
unvested balance of this option vests on January 1, 2018.
|
|
(2)
|
The
unvested balance of this option vests in two equal installments on each of January 3,
2018 and 2019.
|
|
(3)
|
The
unvested balance of this option vests in three equal installments on each of January
2, 2018, 2019 and 2020.
|
Potential
Payments Upon Termination of Employment or Change in Control
Our
employment agreements with our Named Executive Officers provide the following material terms in the event of the termination of
the employment of the executive under certain circumstances:
|
●
|
in
the event of the termination of the executive’s employment without cause, we are
required to pay the executive’s base salary and medical benefits for a severance
period equal to one year (two years in the case of Mr. Gorder with respect to salary);
provided that for any executive that has less than 12 years of continuous service with
us, the severance period will be equal to 30 days for each year of continuous full-time
employment, but in no event less than 90 days or more than one year. We are required
to pay the present value of the base salary in a lump sum, using a discount rate of 6%;
|
|
●
|
in
the event that (i) there occurs a change in control or sale of our assets accounting
for 90% of more of our sales and (ii) the executive’s employment is involuntarily
terminated within one year afterwards, we are required to pay the executive’s base
salary for one year (two years for Mr. Gorder) in a lump sum and to continue medical
benefits for a period of one year;
|
|
●
|
in
the sole and absolute discretion of the Board of Directors, in the event that the executive
is terminated without cause or there occurs a change of control followed by the executive’s
involuntary termination, we may elect to pay executive a prorated amount of the bonus
that executive would have been entitled to receive for the year in which he was terminated;
|
|
●
|
the
immediate vesting of all stock options and equity awards held by the executive in the
event of a change in control or in the event that the executive’s employment is
terminated (i) by us for any reason other than cause or (ii) by the executive under circumstances
that constitute an involuntary termination; and
|
|
●
|
a
one year non-competition covenant (or, if longer, for so long as the period with respect
to which executive is entitled to receive, or has received, payment of severance following
a termination by us without cause or change of control) and covenants concerning confidentiality
and inventions.
|
In
the event that we give a notice of non-renewal of the term of the agreement to the executive and, within 12 months after the date
of the non-renewal notice, the executive’s employment is terminated by us for any reason other than cause or the death or
disability of executive, then the executive will be entitled to the severance benefits described above with respect to a termination
without cause except that the severance period shall be reduced by the number of days between the date of the non-renewal notice
and the termination of executive’s employment.
As
defined in the employment agreements:
“Asset
Sale” means the sale of our assets (including the stock or assets of our subsidiaries) to which 90% or more of our consolidated
sales volume is attributable.
“Cause”
means the following, provided that, in the case of circumstances described in the fourth through sixth clauses below, we must
have first given written notice to executive, and executive must have failed to remedy the circumstances as determined in the
sole discretion of the Board of Directors within 30 days after such notice:
|
●
|
fraud
or dishonesty in connection with executive’s employment or theft, misappropriation
or embezzlement of our funds;
|
|
●
|
conviction
of any felony, crime involving fraud or knowing misrepresentation, or of any other crime
(whether or not such felony or crime is connected with his employment) the
|
|
|
effect
of which in the judgment of the Board of Directors is likely to adversely affect us or
our affiliates;
|
|
●
|
material
breach of executive’s obligations under the employment agreement;
|
|
●
|
repeated
and consistent failure of executive to be present at work during normal business hours
unless the absence is because of a disability as defined in the agreement;
|
|
●
|
willful
violation of any express direction or requirement established by the Board of Directors,
as determined by a majority of Board of Directors;
|
|
●
|
insubordination,
gross incompetence or misconduct in the performance of, or gross neglect of, executive’s
duties under the employment agreement, as determined by a majority of the Board of Directors;
or
|
|
●
|
use
of alcohol or other drugs which interfere with the performance by executive of his duties,
or use of any illegal drugs or narcotics.
|
“Change
of control” of means an “asset sale” or a “change in majority stock ownership.”
“Change
in majority stock ownership” means the acquisition by any “person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, referred to as the “Exchange Act”), including any affiliate or associate
as defined in Rule 12b-2 under the Exchange Act of such person, or any group of persons acting in concert, other than us, any
trustee or other fiduciary holding securities under an employee benefit plan of ours, or any corporation or other entity owned,
directly or indirectly, by our shareholders in substantially the same proportion as their ownership of capital stock of us, of
“beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of
the combined voting power of our then outstanding securities.
“Involuntarily
terminated” means:
|
●
|
any
termination of the employment of executive by us other than for cause, death or disability;
or
|
|
●
|
any
termination of employment of the executive by executive following:
|
|
○
|
a
material diminution in the executive’s base compensation;
|
|
○
|
a
material diminution in the executive’s authority, duties, or responsibilities;
|
|
○
|
a
material diminution in the authority, duties, or responsibilities of the supervisor to
whom the executive is required to report, including a requirement that an executive report
to a corporate officer or employee instead of reporting directly to the board of directors;
|
|
○
|
a
material diminution in the budget over which the executive retains authority;
|
|
○
|
a
material change in the geographic location at which the executive must perform the services;
or
|
|
○
|
any
other action or inaction that constitutes a material breach by us under the agreement.
|
Provided,
however, that with respect to any termination by executive pursuant to the foregoing, executive shall have first provided notice
to us of the existence of the condition proposed to be relied upon within 90 days of the initial existence of the condition, and
shall have given us a period of 30 days during which we may remedy the condition and we shall have failed to do so during such
period.
The
change in control provisions that we use contain a “double trigger” requirement, meaning that for an executive to
receive a payment under the change of control provision, there must be both a
change
of control, as defined in the applicable agreement, and an involuntary termination of the executive’s employment. The double
trigger requirement was chosen to prevent us from having to pay substantial payments in connection with a change in control where
an executive had not suffered any adverse employment consequences. However, all stock options will vest and become immediately
exercisable upon a change of control, regardless of whether the executive is involuntarily terminated.
Disability
Benefits for Certain Named Executive Officers
. We provide all of our full-time salaried employees with short-term disability
benefits for six months. We also maintain a disability insurance policy on behalf of certain members of our senior management,
including our Named Executive Officers, which is in addition to the disability benefits that we maintain for our salaried employees.
In the event that any of these executives became disabled, as provided in their respective policies, was unable to return to the
performance of their duties after six months and was terminated as an employee effective as of December 31, 2017, they would be
paid monthly benefits as follows: Mr. Gorder - $8,370 per month; Mr. Geraci - $6,450 per month; Mr. Gonsior - $5,860 per month;
Mr. Gruenhagen - $6,935 per month; and Mr. Longval $3,250 per month.
Equity
Plans
. Our Named Executive Officers hold unvested stock options and RSUs under our 2015 Equity Incentive Plan.
Under
our 2015 Equity Incentive Plan, all unvested options and RSUs will automatically accelerate and become vested upon the death,
disability, retirement of the holder or upon a change of control of us, as defined in that Plan. In addition, as described above,
under their employment agreements, unvested options held by a Named Executive Officer will automatically accelerate and become
vested upon the termination of employment by such executive under circumstances that constitute an involuntary termination.
Under
the 2015 Equity Incentive Plan, options and RSUs held by an employee whose employment is terminated for cause, as defined in those
plans, will terminate immediately. In addition, under the 2015 Equity Incentive Plan, the voluntary resignation of employment
by an employee, other than for retirement as defined, will not result in the acceleration of unvested options or RSUs.
Certain
Relationships and Related Party Transactions
Mr.
Gorder, our president, chief executive officer and a director, was a general partner (with a one-third interest) of Arden Partners
I, L.L.P., a Minnesota limited liability partnership, referred to as Arden, that owned and leased to us property under a lease
entered into in 1991, which we use as a manufacturing facility. Under the lease, we paid Arden a base monthly rent plus real estate
taxes and other charges. Arden sold the property to an unaffiliated third party on October 13, 2017. In 2017 and 2016, we paid
Arden approximately $252,000 and $484,000, respectively, for rent, real estate taxes and other charges. Mr. Gorder’s interest
in such payments was approximately $84,000 and $161,000 and 2017 and 2016, respectively.
We
use the law firm of Blank Rome LLP for legal services. A partner of that firm is the son-in-law of the Chairman of our Board of
Directors, Mr. McKenna; however, the legal services are provided by other attorneys at that firm and not by the son-in-law. In
2017 and 2016, we paid that firm approximately $140,000 and $406,000, respectively, for legal services and costs. The interest
of the son-in-law in such amounts is not determinable.
The
foregoing transactions were approved by the disinterested members of the Audit Committee pursuant to its written policy applicable
to related party transactions.
PROPOSAL
2
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
As
described in detail under the heading “Executive Compensation” beginning on page 18 of this Proxy Statement, our executive
compensation program is designed to attract and retain talented and dedicated executive officers and to align a significant portion
of their compensation with our business objectives and performance and the interests of our shareholders. We believe that our
program creates an environment of shared risk between our executive officers and our shareholders by including equity based awards
and cash compensation based on financial performance as part of our executive compensation program. We believe that our executive
compensation program should focus management’s attention on achieving both annual performance targets and profitable growth
over a longer time period. The program is designed to reward management for the achievement of both short and long term strategic
objectives as established by the Board of Directors. Additional details about our executive compensation programs, including information
about executive compensation for the fiscal year ended December 31, 2017, are described under the section entitled “Executive
Compensation” which begins on page 18 of this Proxy Statement.
Securities
laws require that we provide our shareholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation
of our Named Executives Officers as disclosed in this proxy statement at least once every three years, commonly known as a “say-on-pay”
proposal. In accordance with the shareholders’ advisory vote on the frequency of the say-on-pay vote that was held at the
2013 annual meeting of shareholders, the Board of Directors has determined to hold the say-on-pay vote on executive compensation
every year until we hold another advisory vote on the frequency of the say-on-pay vote.
We
are asking our shareholders to indicate their support for our Named Executive Officer compensation as described in this Proxy
Statement. This proposal gives our shareholders the opportunity to express their views on the compensation of our Named Executive
Officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named
Executive Officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, the following resolution
is submitted for shareholder vote at the Annual Meeting:
“RESOLVED,
that the shareholders of IntriCon Corporation hereby APPROVE, on an advisory basis, the compensation paid to its named executive
officers, as disclosed in the Proxy Statement for the 2017 annual meeting of shareholders pursuant to the compensation disclosure
rules of the Securities and Exchange Commission, including the compensation tables and the narrative discussion that accompany
the compensation tables.”
This
say-on-pay vote is advisory, and therefore not binding on the Corporation, the Compensation Committee or our Board of Directors.
Our Board and our Compensation Committee value the opinion of our shareholders and to the extent there is any significant vote
against the compensation of Named Executive Officers as disclosed in this Proxy Statement, we will consider our shareholders’
concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. Proxies submitted
without direction pursuant to this solicitation will be voted “for” approval of the compensation of our Named Executives
Officers as disclosed in this proxy statement.
The
Board of Directors recommends a vote “FOR” the approval of the compensation of our Named Executive Officers as disclosed
in this proxy statement.
PROPOSAL
3
RATIFICATION OF APPOINTMENT OF
auditor
The
Corporation’s independent registered public accounting firm for the fiscal year ended December 31, 2017 was the firm of
Baker Tilly Virchow Krause, LLP (previously known as Virchow, Krause & Company, LLP), referred to as “Baker Tilly.”
Baker Tilly was engaged as independent auditor beginning in August 2005. Services provided to the Corporation and its subsidiaries
by Baker Tilly in 2017 and 2016 are described below under “Independent Registered Public Accounting Firm.” The Audit
Committee of the Board of Directors has appointed Baker Tilly to serve as the independent registered public accounting firm for
the year ending December 31, 2018. Shareholders will be asked to ratify this appointment. Although action by the shareholders
on this matter is not required, the Audit Committee believes it is appropriate to seek shareholder ratification of the appointment
of the independent registered public accounting firm to provide a forum for shareholders to express their views with regard to
the Audit Committee’s appointment. If the shareholders do not ratify the appointment of Baker Tilly, the selection of independent
registered public accounting firm may be reconsidered by the Audit Committee; provided however, the Audit Committee retains the
right to continue to engage Baker Tilly. Notwithstanding the ratification of Baker Tilly as the Corporation’s independent
registered public accounting firm for the year ending December 31, 2018, the Audit Committee retains the right to replace Baker
Tilly at any time without shareholder approval. A representative of Baker Tilly is expected to be present at the Annual Meeting
and to be available to respond to appropriate questions. The representative will have the opportunity to make a statement if he
or she so desires.
Independent
Registered Public Accounting Fee Information
Fees
for professional services provided by Baker Tilly, the Corporation’s independent auditor, for the fiscal years ended December
31, 2017 and 2016 in each of the following categories were:
Services
Rendered (1)
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
248,167
|
|
|
$
|
211,065
|
|
Audit-Related Fees
|
|
|
11,500
|
|
|
|
43,100
|
|
Tax Fees
|
|
|
—
|
|
|
|
—
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
259,667
|
|
|
$
|
254,165
|
|
|
(1)
|
The
aggregate fees included in Audit Fees are fees billed
for
the fiscal years. The
aggregate fees included in each of the other categories are fees billed
in
the
fiscal years. Does not include: foreign statutory audit fees of $21,485 and $20,760 for
2017 and 2016 and foreign tax fees of $5,984 in 2017 and $6,228 in 2016, respectively
by Baker Tilly TFW, LLC, a firm that is also an independent member firm of Baker Tilly
International, for audits of the Corporation’s foreign subsidiaries.
|
Audit
Fees
. The audit fees for 2017 and 2016 include fees for professional services rendered for the audit of the Corporation’s
annual financial statements included in the Corporation’s Form 10-K Reports, the review of the financial statements included
in the Corporation’s Form 10-Q Reports, and professional services rendered for a required review of the Corporation’s
other SEC filings.
Audit-Related
Fees.
The audit-related fees for 2017 and 2016 include fees for audits of the Corporation’s employee benefit plan and
in 2016 included fees for the Corporation’s equity offering.
All
Other Fees.
There were no other fees billed for 2017 and 2016.
Tax
Fees
. We did not use Baker Tilly for domestic tax services in 2017 or 2016.
Auditor
Independence
The
Audit Committee has considered the nature of the above-listed services provided by Baker Tilly and determined that the provisions
of the services are compatible with Baker Tilly maintaining its independence.
Pre-Approval
Policy
The
Audit Committee has established pre-approval policies and procedures pursuant to which the Audit Committee pre-approved the foregoing
audit and permissible non-audit services provided by Baker Tilly in 2017.
Audit
Committee Report
The
Audit Committee has prepared the following report on its activities with respect to the Corporation’s audited consolidated
financial statements for the year ended December 31, 2017, which are referred to herein as the Corporation’s audited consolidated
financial statements:
|
●
|
The
Audit Committee has reviewed and discussed the audited consolidated financial statements
with management.
|
|
●
|
The
Audit Committee has discussed with Baker Tilly, the Corporation’s independent auditors,
the matters required to be discussed by Auditing Standard No. 1301, “Communications
with Audit Committees,” as issued by the Public Company Accounting Oversight Board.
|
|
●
|
The
Audit Committee has received the written disclosures and the letter from Baker Tilly
required by applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the Audit Committees
concerning independence, and has discussed with Baker Tilly their independence.
|
|
●
|
Based
on the review and discussions referred to above, the Audit Committee has recommended
to the Board of Directors that the audited consolidated financial statements be included
in the Corporation’s Annual Report on Form 10-K for the year ended December 31,
2017, for filing with the Securities and Exchange Commission.
|
|
The Audit
Committee:
|
|
|
|
|
Nicholas A. Giordano, Chairman
|
Robert N. Masucci
|
|
Michael J. McKenna
|
|
The
Board of Directors recommends that shareholders vote “FOR” ratification of the appointment of Baker Tilly as the Corporation’s
independent registered public accounting firm for 2018.
Section
16(
a
) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Corporation’s executive officers and directors and persons who
own more than ten percent of a registered class of the Corporation’s equity securities (collectively, the “reporting
persons”) to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish
the Corporation with copies of these reports.
Based
on the Corporation’s review of the copies of these reports received by it and written representations, if any, received
from reporting persons with respect to the filing of reports of Forms 3, 4 and 5, the Corporation believes that all filings required
to be made by the reporting persons for fiscal year 2017 were made on a timely basis.
Shareholder
Proposals for 2018 Annual Meeting
Under
the Corporation’s bylaws, shareholder proposals with respect to the 2019 Annual Meeting of Shareholders, including nominations
for directors, which have not been previously approved by the Board of Directors, must be submitted to the Secretary of the Corporation
no later than November 16, 2018. Any such proposals must be in writing and sent either by personal delivery, nationally recognized
express mail or United States mail, postage prepaid to Corporate Secretary, IntriCon Corporation, 1260 Red Fox Road, Arden Hills,
Minnesota 55112. Each nomination or proposal must include the information required by the bylaws. All late or nonconforming nominations
and proposals may be rejected by the officer presiding at the meeting.
Shareholder
proposals for the 2019 Annual Meeting of Shareholders must be submitted to the Corporation by November 16, 2018 to receive consideration
for inclusion in the Corporation’s Proxy Statement relating to the 2019 Annual Meeting of Shareholders. Any such proposal
must also comply with SEC proxy rules, including SEC Rule 14a-8, and any applicable requirements set forth in the bylaws.
In
addition, shareholders are notified that the deadline for providing the Corporation timely notice of any shareholder proposal
to be submitted outside of the Rule 14a-8 process for consideration at the Corporation’s 2019 Annual Meeting of Shareholders
is November 16, 2018. As to all such matters which the Corporation does not have notice on or prior to November 16, 2018, discretionary
authority shall be granted to the persons designated in the Corporation’s Proxy related to the 2019 Annual Meeting of shareholders
to vote on such proposal.
Annual
Report to Shareholders
A
copy of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed with the SEC is being
provided to each shareholder with this Proxy Statement.
The
Corporation files reports and other information with the Securities and Exchange Commission, referred to as the “SEC.”
Copies of these documents may be obtained at the SEC’s public reference room in Washington, D.C. The Corporation’s
SEC filings are also available on the SEC’s web site at http://www.sec.gov.
EACH
SHAREHOLDER CAN OBTAIN A COPY OF THE CORPORATION’S ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL
SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 2017 AS FILED WITH THE SEC, WITHOUT CHARGE EXCEPT FOR EXHIBITS TO THE REPORT, BY SENDING
A
WRITTEN
REQUEST TO: INTRICON CORPORATION, 1260 RED FOX ROAD, ARDEN HILLS, MINNESOTA 55112 ATTN: SCOTT LONGVAL.
HOUSEHOLDING
In
order to reduce printing costs and postage fees, the Corporation has adopted the process called “householding” for
mailing its annual report and proxy statement to “street name holders,” which refers to shareholders whose shares
are held in a stock brokerage account or by a bank or other nominee. This means that street name holders who share the same last
name and address will receive only one copy of the Corporation’s annual report and proxy statement, unless the Corporation
receives contrary instructions from a street name holder at that address. The Corporation will continue to mail a proxy card to
each shareholder of record who requests it.
The
Corporation will promptly deliver separate copies of the Corporation’s proxy statement and annual report upon written or
oral request. If you prefer to receive multiple copies of the Corporation’s proxy statement and annual report at the same
address, you may obtain additional copies by writing to IntriCon Corporation, Attention: Scott Longval, Chief Financial Officer,
1260 Red Fox Road, Arden Hills, Minnesota 55112 or by calling Mr. Longval at (651) 604-9526. Eligible shareholders of record receiving
multiple copies of the annual report and proxy statement can request householding by contacting the Corporation in the same manner.
Other
Matters
The
Corporation is not presently aware of any matters (other than procedural matters) that will be brought before the Meeting which
are not reflected in the attached Notice of the Meeting. The accompanying proxy confers discretionary authority to vote with respect
to any and all of the following matters that may come before the Meeting: (i) matters which the Corporation did not receive notice
by November 17, 2017 were to be presented at the Meeting; (ii) approval of the minutes of a prior meeting of shareholders, if
such approval does not amount to ratification of the action taken at the meeting; (iii) the election of any person to any office
for which a bona fide nominee named in this Proxy Statement is unable to serve or for good cause will not serve; (iv) any proposal
omitted from this Proxy Statement and the form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange Act of
1934; and (v) matters incident to the conduct of the Meeting. In connection with such matters, the persons named in the accompanying
proxy will vote in accordance with their best judgment.
|
Scott Longval
|
|
Chief Financial Officer, Treasurer
|
|
and Secretary
|
|
|
INTRICON CORPORATION
C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC.
P.O. BOX
1342
BRENTWOOD, NY 11717
|
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery of information up until 11:59 p.m. Eastern Daylight Time on April 25, 2018. Have your
proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic
voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred
by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using
the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59 p.m. Eastern Daylight Time on April 25, 2018. Have your proxy card in hand when you call
and then follow the instructions.
VOTE BY MAIL
Mark, sign
and date your proxy card and return it (for receipt by the day before the Annual Meeting) in the postage-paid envelope we have
provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
E36653-P00672
|
KEEP
THIS PORTION FOR YOUR RECORDS
|
|
THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
DETACH AND RETURN
THIS PORTION ONLY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTRICON CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
The Annual
Meeting of Shareholders of IntriCon Corporation has been called to consider and act upon the following matters:
The Board of Directors recommends you vote FOR
the following Nominee:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Election of Director
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominee:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1a. Nicholas A. Giordano
|
|
|
☐
|
☐
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends you vote FOR proposals 2 and 3.
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
An
advisory vote to approve executive compensation, as described in the Proxy Statement, referred to as “say-on-pay.”
|
☐
|
☐
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
To
ratify the appointment of Baker Tilly Virchow Krause, LLP as IntriCon Corporation’s independent registered public accounting
firm for fiscal year 2018.
|
☐
|
☐
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE:
In their discretion, the Proxies are authorized
to vote upon such other business as may properly come before the annual meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If the
Annual Meeting of Shareholders is adjourned because of the absence of a quorum, those shareholders entitled to vote who attend
the adjourned Annual Meeting, although constituting less than a quorum, shall nevertheless constitute a quorum for the purpose
of electing directors. If the Annual Meeting of Shareholders is adjourned for one or more periods aggregating at least 15
days because of the absence of a quorum, those shareholders entitled to vote who attend the reconvened Annual Meeting, if
less than a quorum as determined under applicable law, shall nevertheless constitute a quorum for the purpose of acting upon
any other matter set forth above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please sign exactly as your name(s) appear(s) hereon. When signing
as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally.
All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
Date
|
|
|
|
|
Signature (Joint Owners)
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Combined Annual Report and Notice and Proxy Statement
are available at
www.proxyvote.com
.
E36654-P00672
|
|
|
|
INTRICON CORPORATION
ARDEN HILLS, MINNESOTA 55112
This Proxy is Solicited on Behalf of the Board of Directors
The
undersigned, revoking all prior proxies, hereby appoints SCOTT LONGVAL and MICHAEL GERACI, and each of them, with full power of
substitution, as proxies and hereby authorizes them to represent and to vote all the Common Stock of IntriCon Corporation held
of record by the undersigned on February 21, 2018, at the annual meeting of shareholders to be held on April 26, 2018, or any
postponement or adjournment thereof.
All
proxy agents present and acting in person or by their substitutes (or, if only one is present and acting, then that one) may exercise
all of the powers conferred by this proxy. Discretionary authority is conferred by this proxy with respect to certain matters,
as described in IntriCon Corporation’s Proxy Statement.
The
shares represented by this proxy, duly executed, will be voted as instructed on the reverse side. If instructions are not given,
they will be voted: (1) for the election of the director nominee listed on the reverse side; (2) for the approval of the Corporation’s
executive compensation as described in the proxy statement; and (3) for the ratification of the appointment of Baker Tilly Virchow
Krause, LLP as the Corporation’s independent registered public accounting firm for fiscal year 2018. With respect to such
other business that may properly come before the annual meeting and any adjournments or postponements thereof, said proxies are
authorized to vote in accordance with his or her best judgment.
By
signing this proxy, you hereby acknowledge receipt of the 2017 Annual Report to Shareholders, Notice of the Corporation’s
2018 Annual Meeting of Shareholders and the Corporation’s Proxy Statement.
Continued
and to be signed on reverse side
|
|
|
|
|
|
|
|
Intricon (NASDAQ:IIN)
Historical Stock Chart
Von Mär 2024 bis Apr 2024
Intricon (NASDAQ:IIN)
Historical Stock Chart
Von Apr 2023 bis Apr 2024