UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by
the Registrant [X]
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))
[X] Definitive
Proxy Statement
[ ] Definitive
Additional Materials
[ ] Soliciting
Material Pursuant to §240.14a-12
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UNIVERSAL
DISPLAY CORPORATION
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(Name
of Registrant as Specified in Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
[X] No
fee required.
[ ] Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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1.
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Title
of each class of securities to which transaction
applies:
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________________________________________________________________________________________
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2.
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Aggregate
number of securities to which transaction
applies:
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________________________________________________________________________________________
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3.
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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):
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________________________________________________________________________________________
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4.
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Proposed
maximum aggregate value of
transaction:
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________________________________________________________________________________________
________________________________________________________________________________________
[ ] Fee
paid previously with preliminary materials.
[ ]
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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.
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1.
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Amount
previously paid:
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________________________________________________________________________________________
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2.
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Form,
Schedule or Registration Statement
No.:
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________________________________________________________________________________________
________________________________________________________________________________________
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UNIVERSAL
DISPLAY CORPORATION
375
Phillips Boulevard
Ewing,
New Jersey 08618
________________________
NOTICE
OF 2009 ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD JUNE 25, 2009
________________________
Dear
Shareholders:
You are
cordially invited to attend our 2009 Annual Meeting of Shareholders on Thursday,
June 25, 2009, at 4:00 p.m., Eastern Time, at the Crowne Plaza Hotel (formerly
the Holiday Inn on City Line Avenue), 4100 Presidential Boulevard, Philadelphia,
Pennsylvania 19131. We are holding the meeting to:
(1)
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Elect
seven members of our Board of Directors to hold one-year
terms;
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(2)
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Approve
our 2009 Employee Stock Purchase Plan;
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(3)
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Ratify
the appointment of KPMG LLP as our independent registered public
accounting firm for 2009; and
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(4)
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Transact
any other business that may properly come before the shareholders at the
meeting.
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If you
were the record owner of shares of our common stock at the close of business on
April 9, 2009, you may attend and vote at the meeting. If you cannot
attend the meeting, you may vote by returning the enclosed proxy card or, if you
hold your shares in “street name,” the enclosed voting instruction
form. Any shareholder of record may vote in person at the meeting,
even if he or she has already returned a proxy card. A list of all
shareholders of record will be made available for review by registered
shareholders both at the meeting and, during regular business hours, at our
headquarters in Ewing, New Jersey for 10 days prior to the meeting.
We look
forward to seeing you at the meeting.
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Sincerely,
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/s/ Sidney
D. Rosenblatt
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Sidney
D. Rosenblatt
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Executive
Vice President, Chief Financial Officer,
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Treasurer
and Secretary
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Ewing,
New Jersey
April 24,
2009
_____________________________________________________________________________________________
As
promptly as possible, please complete, sign, date and return the enclosed proxy
card or voting instruction form in the postage-paid return envelope
provided. Please fill out and return the proxy card or instruction
form whether or not you expect to attend the annual meeting in
person. If you are a shareholder of record and you attend the meeting
in person, you may revoke your proxy and vote your shares at that
time.
_____________________________________________________________________________________________
UNIVERSAL
DISPLAY CORPORATION
375
Phillips Boulevard
Ewing,
New Jersey 08618
________________________
PROXY
STATEMENT FOR 2009 ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD JUNE 25, 2009
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INFORMATION
CONCERNING THIS SOLICITATION
The Board
of Directors of Universal Display Corporation (we, us or the “Company”) is
soliciting proxies for the 2009 Annual Meeting of Shareholders to be held on
Thursday, June 25, 2009, at 4:00 p.m., Eastern Time, at the Crowne Plaza Hotel
(formerly the Holiday Inn on City Line Avenue), 4100 Presidential Boulevard,
Philadelphia, Pennsylvania 19131 (the “Annual Meeting”). This proxy
statement contains important information for shareholders to consider when
deciding how to vote on the matters brought before the Annual
Meeting. Please read it carefully.
At the
Annual Meeting, our
shareholders will be asked to vote upon:
(1)
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the
election of seven members of our Board of Directors to hold one-year
terms;
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(2)
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a
proposal to approve our 2009 Employee Stock Purchase
Plan;
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(3)
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a
proposal to ratify the appointment of KPMG LLP as our independent
registered public accounting firm for 2009; and
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(4)
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such
other business as may properly come before the shareholders at the Annual
Meeting.
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Voting
materials, which include the proxy statement, a proxy card and our 2008 Annual
Report to Shareholders, will be mailed to all registered shareholders beginning
on or about April 24, 2009. Shareholders holding their shares in
“street name” should receive the proxy statement and a voting instruction form
from their broker, bank or other custodian, nominee or fiduciary. We
will pay the expenses of these solicitations. In addition to
solicitation by mail, proxies may be solicited by telephone or in person by some
of our officers, directors and regular employees or independent contractors who
will not be specially engaged or compensated for such services.
Our
principal executive offices are located at 375 Phillips Boulevard, Ewing, New
Jersey 08618. Our general telephone number is (609)
671-0980.
VOTING
AT THE ANNUAL MEETING
Our Board
of Directors has set April 9, 2009 as the record date for the Annual Meeting
(the “Record Date”). As of the Record Date, we had outstanding
36,316,903 shares of common stock and 200,000 shares of Series A Nonconvertible
Preferred Stock. Each holder of our common stock or Series A
Nonconvertible Preferred Stock is entitled to one vote per share on all matters
to be voted on at the Annual Meeting. Holders of our common stock and
Series A Nonconvertible Preferred Stock vote together as a single class on all
matters.
Only
shareholders of record as of the close of business on the Record Date may attend
and vote at the Annual Meeting. The presence, in person or by proxy,
of shareholders entitled to cast at least a majority of the votes that all
shareholders are entitled to cast on a particular matter to be acted upon at the
Annual Meeting will constitute a quorum for purposes of that
matter. Shareholders of record who return a proxy card but abstain
from voting or fail to vote on a particular matter will be considered “present”
for quorum purposes with respect to the matter. In addition, shares
held by brokers or nominees who have notified us on a proxy card or otherwise in
accordance with industry practice that they have not received voting
instructions with respect to a particular matter and that they lack or have
declined to exercise voting authority with respect to such matter (referred to
in this proxy statement as “uninstructed shares”), will be considered “present”
for quorum purposes with respect to the matter. Votes not
cast
by
brokers or nominees with respect to uninstructed shares are referred to in this
proxy statement as “broker non-votes.”
The
persons named in the enclosed proxy will vote the shares represented by each
properly executed proxy as directed therein. In the absence of such
direction on a properly executed proxy card, the persons named in the enclosed
proxy will vote “FOR” the persons nominated by our Board of Directors for
election as directors and “FOR” the proposals to approve our 2009 Employee Stock
Purchase Plan and to ratify the appointment of KPMG LLP as our independent
registered public accounting firm. As to other items of business that
may properly be presented at the Annual Meeting for action, the persons named in
the enclosed proxy will vote the shares represented by the proxy in accordance
with their best judgment.
A
shareholder of record may revoke his or her proxy at any time before its
exercise by giving written notice of such revocation to our Corporate
Secretary. In addition, any shareholder of record may vote by ballot
at the Annual Meeting, even if he or she has already returned a proxy
card.
The
preliminary voting results will be announced at the Annual
Meeting. The final results will be published in our quarterly report
on Form 10-Q for the quarter ending June 30, 2009.
Your vote
is important. Please complete, sign and return the accompanying proxy
card or voting instruction form whether or not you plan to attend the Annual
Meeting. If you plan to attend the Annual Meeting to vote in person
and your shares are registered with our transfer agent in the name of a broker,
bank or other custodian, nominee or fiduciary, you must secure a proxy from that
person or entity assigning you the right to vote your shares of common
stock.
Important
Notice Regarding the Availability of
Proxy
Materials for the Annual Meeting of Shareholders to be Held on June 25,
2009
This
proxy statement and our 2008 Annual Report to Shareholders are available at
www.universaldisplay.com
in the “For Shareholders – SEC Documents” section.
PROPOSAL
1
ELECTION
OF DIRECTORS
Our Board
of Directors has fixed the number of directors at seven, all of whom are to be
elected at the Annual Meeting. Each director elected will serve until
our next annual meeting of shareholders and such time as a successor has been
selected and qualified, or until the director’s earlier death, resignation or
removal. Each nominee has consented to being nominated and to serve
if elected. If any nominee should subsequently decline or be unable
to serve, the persons named in the proxy will vote for the election of such
substitute nominee as shall be determined by them in accordance with their best
judgment.
Pursuant
to our Amended and Restated Articles of Incorporation, the holder of our Series
A Nonconvertible Preferred Stock is entitled to nominate and elect two of the
members of our Board of Directors. The holder of the Series A
Nonconvertible Preferred Stock has waived this right with respect to the
election of directors at the Annual Meeting.
All
nominees are presently members of our Board of Directors whose terms expire at
the Annual Meeting. The nominees for election are as
follows:
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NOMINEES
FOR ELECTION AS DIRECTORS
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Year
First Became Director,
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Name of Director
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Age
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Principal Occupations and Certain
Directorships
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Sherwin
I. Seligsohn
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73
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Mr.
Seligsohn is our Founder and has been the Chairman of our Board of
Directors since June 1995. He also served as our Chief Executive Officer
from June 1995 through December 2007, and as our President from
June 1995 through May 1996. Mr. Seligsohn serves as the
sole Director, President and Secretary of American Biomimetics
Corporation, International Multi-Media Corporation, and Wireless Unified
Network Systems Corporation. He is also Chairman of the Board of
Directors, President and Chief Executive Officer of Global Photonic Energy
Corporation. From June 1990 to October 1991, Mr. Seligsohn was
Chairman Emeritus of InterDigital Communications, Inc. (InterDigital),
formerly International Mobile Machines Corporation. He founded
InterDigital and from August 1972 to June 1990 served as its
Chairman of the Board of Directors. Mr. Seligsohn is a member of the
Industrial Advisory Board of the Princeton Institute for the Science and
Technology of Materials (PRISM) at Princeton
University.
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Steven
V. Abramson
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57
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Mr.
Abramson is our President and Chief Executive Officer, and has been a
member of our Board of Directors since May 1996. Mr. Abramson served
as our President and Chief Operating Officer from May 1996 through
December 2007. From March 1992 to May 1996,
Mr. Abramson was Vice President, General Counsel, Secretary and
Treasurer of Roy F. Weston, Inc., a worldwide environmental consulting and
engineering firm. From December 1982 to December 1991,
Mr. Abramson held various positions at InterDigital, including
General Counsel, Executive Vice President and General Manager of the
Technology Licensing Division.
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Sidney
D. Rosenblatt
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61
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Mr.
Rosenblatt has been our Executive Vice President, Chief Financial Officer,
Treasurer and Secretary since June 1995, and has been a member of our
Board of Directors since May 1996. Mr. Rosenblatt is the owner of and
served as the President of S. Zitner Company from August 1990 through
December 1998. From May 1982 to August 1990,
Mr. Rosenblatt served as the Senior Vice President, Chief Financial
Officer and Treasurer of
InterDigital.
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Year
First Became Director,
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Name of Director
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Age
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Principal Occupations and Certain
Directorships
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Leonard
Becker
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85
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Mr.
Becker has been a member of our Board of Directors since
February 2001. For the last 40 years, Mr. Becker has been a
general partner of Becker Associates, which is engaged in real estate
investments and management. He served on the Board of Directors of
American Business Financial Services, Inc. (OTCBB: “ABFIQ.PK”), as well as
on its compensation and audit committees, until March 2007. He also
previously served as a director of Eagle National Bank and Cabot Medical
Corporation.
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Elizabeth
H. Gemmill
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63
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Ms.
Gemmill has been a member of our Board of Directors since April 1997.
Since March 1999, she has been Managing Trustee and, more recently,
President of the Warwick Foundation. From February 1988 to
March 1999, Ms. Gemmill was Vice President and Secretary of
Tasty Baking Company. Ms. Gemmill is Chairman of the Board of
Philadelphia University and serves on the Board of Beneficial Mutual
Bancorp, Inc., the Philadelphia College of Osteopathic Medicine, and the
YMCA of Philadelphia and Vicinity. She previously served as a director of
American Water Works Company, Inc. (NYSE: “AWK”) until it was sold in
early 2003, and as a director of Philadelphia Consolidated Holdings
Corporation (NASDAQ: “PHLY”) until it was sold in December
2008.
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C.
Keith Hartley
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Mr.
Hartley has been a member of our Board of Directors since
September 2000. Since June 2000, he has been the President of Hartley
Capital Advisors, a merchant banking firm. From August 1995 to
May 2000, he was the managing partner of Forum Capital Markets LLC,
an investment banking company. In the past, Mr. Hartley held the
position of managing partner for Peers & Co. and Drexel Burnham
Lambert, Inc. He also serves as a director of Idera Pharmaceuticals, Inc.
(NASDAQ: “IDRA”) and Swisher International Group, Inc.
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Lawrence
Lacerte
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Mr.
Lacerte has been a member of our Board of Directors since
October 1999. Since July 1998, he has been Chairman of the Board of
Directors and Chief Executive Officer of Exponent Technologies, Inc., a
company specializing in technology and Internet-related ventures. Prior to
that time, he was the founder, Chairman of the Board of Directors and
Chief Executive Officer of Lacerte Software Corp., which was sold to
Intuit Corporation in
June 1998.
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Vote
Required and Recommendation of our Board of Directors
Directors
are elected by a plurality and the seven nominees who receive the most votes
will be elected. Shareholders may vote for or withhold their vote
from each nominee, or the entire group of nominees as a whole. Broker
non-votes are not considered “votes cast” with respect to this proposal and will
have no effect on the outcome of the election of
directors. Shareholders do not have cumulative voting rights with
regard to the election of members of our Board of Directors.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
EACH
OF THE NOMINEES FOR DIRECTOR.
Director
Independence
Our Board
of Directors has determined that a majority of its members are “independent
directors” within the meaning of applicable NASDAQ listing
requirements. Our independent directors are Mr. Becker, Ms. Gemmill,
Mr. Hartley and Mr. Lacerte. In addition, based on these listing
requirements, our Board of Directors has determined
that
Mr. Seligsohn, Mr. Abramson and Mr. Rosenblatt are not independent directors
because they are all officers of the Company.
Our
independent directors meet in executive session on a periodic basis in
connection with regularly-scheduled meetings of the full Board of Directors, as
well as in their capacity as members of our Audit Committee and Compensation
Committee.
Board
Meetings and Committees; Annual Meeting Attendance
In 2008,
our Board of Directors held eight meetings. Six of our incumbent
directors attended all of these meetings and one of our incumbent directors
attended seven of the meetings. Our Audit Committee held four
meetings in 2008, and each member of the Audit Committee attended all of these
meetings. Our Compensation Committee held eight meetings in
2008. Three members of the committee attended all of these meetings
and one member of the committee attended seven of the meetings.
All
incumbent directors and nominees for election as director are encouraged, but
not required, to attend our annual meetings of shareholders. All but
one of the current members of our Board of Directors attended our annual meeting
of shareholders in 2008.
Director
Nominations
Our Board
of Directors has not established a standing committee to nominate candidates for
election as directors. Instead, a majority of our independent
directors recommend, and our full Board of Directors selects, the candidates
that will be nominated to stand for election as directors at our annual meeting
of shareholders. Our Board of Directors believes that this process is
appropriate given the relatively small size of our Board of Directors and the
fact that each independent director already serves on both the Audit Committee
and the Compensation Committee. Since we do not have a nominating
committee, our Board of Directors has not adopted a nominating committee
charter.
In
nominating candidates for election as directors, both our independent directors
and our full Board of Directors consider the skills, experience, character,
commitment and diversity of background of each potential nominee, all in the
context of the requirements of our Board of Directors at that point in
time. Each candidate should be an individual who has demonstrated
integrity and ethics, has an understanding of the elements relevant to the
success of a publicly-traded company, and has established a record of
professional accomplishment in such candidate’s chosen field. Each
candidate also should be prepared to participate in all Board and committee
meetings that he or she attends, and should not have other personal or
professional commitments that might reasonably be expected to interfere with or
limit such candidate’s ability to do so. Additionally, in determining
whether to recommend a director for re-election, the director’s past attendance
at Board and committee meetings is considered.
Our Board
of Directors has no stated specific, minimum qualifications that must be met by
candidates for election as directors. However, in accordance with SEC
rules and applicable NASDAQ listing requirements, at least one member of our
Board of Directors is expected to meet the criteria for an “audit committee
financial expert” as defined by SEC rules, and a majority of the members of the
Board are expected to meet the definition of “independent director” within the
meaning of SEC rules and applicable NASDAQ listing requirements.
Any
shareholder of record entitled to vote in the election of directors at an annual
or special meeting of our shareholders may nominate one or more persons to stand
for election to the Board at such meeting in accordance with the requirements of
our Amended and Restated Bylaws. In order to be considered by our
Board of Directors in connection with the nominations process for our 2010
annual meeting of shareholders, all such director nominations must be received
by our Corporate Secretary at our principal executive offices by February 25,
2010. Each such submission must be in writing and must comply with
the notice, information and consent provisions contained in our Amended and
Restated Bylaws. In addition, each such submission must include any
other information required by Regulation 14A under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Submissions should be
addressed to our Corporate Secretary at the following address: Universal Display
Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618.
Our
independent directors and the full Board of Directors will consider all
candidates identified by shareholders through the processes described above, and
will evaluate each of them, including incumbent directors, based on the same
criteria. Although we have no formal policy regarding shareholder
nominees, our Board of Directors believes that shareholder nominees should be
viewed in substantially the same manner as other nominees. The
consideration of any
candidate for director will be based on an assessment of the individual’s
background, skills and abilities, together with an assessment of whether such
characteristics qualify the individual to fulfill the needs of our Board of
Directors at that time.
Audit
Committee
Our Board
of Directors has established a standing Audit Committee. The members
of our Audit Committee are Mr. Becker, Ms. Gemmill, Mr. Hartley and Mr.
Lacerte. Ms. Gemmill is the Chairperson of our Audit
Committee.
Our Audit
Committee operates pursuant to a written charter that complies with the
applicable provisions of the Sarbanes-Oxley Act of 2002 and related rules of the
Securities and Exchange Commission (the “SEC”) and NASDAQ listing
standards. The Audit Committee Charter was last reviewed and updated
by our Board of Directors on April 7, 2009, and a copy of the updated charter is
publicly available through the “For Investors” section of our website at www.universaldisplay.com.
According
to its charter, our Audit Committee is responsible for, among other
things:
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reviewing
our financial statements and discussing these statements and other
relevant financial matters with management and our independent registered
public accounting firm;
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selecting
and evaluating our independent registered public accounting firm and
approving all audit engagement fees and terms;
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pre-approving
all audit and non-audit services provided to us, including the scope of
such services, the procedures to be utilized and the compensation to be
paid;
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assessing
the effectiveness of our internal control system and discussing this
assessment with management and our independent registered public
accounting firm;
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reviewing
our financial reporting and accounting standards and principles,
significant changes in these standards and principles, or in their
application, and key accounting decisions affecting our financial
statements, including alternatives to, and the rationale for, these
decisions;
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discussing
with management and our independent registered public accounting firm, as
appropriate, our risk assessment and risk management policies, including
our major exposures to financial risk and the steps taken by management to
monitor and mitigate these exposures; and
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reviewing
and investigating any matters pertaining to the integrity of management,
including any actual or potential conflicts of interest or allegations of
fraud, and the adherence of management to our standards of business
conduct.
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Each
member of our Audit Committee meets the financial knowledge and independence
criteria of the NASDAQ listing requirements. Our Board of Directors
has determined that Ms. Gemmill is an “audit committee financial expert” as such
term is defined under SEC regulations, and that Ms. Gemmill meets the financial
sophistication and independence standards mandated by the NASDAQ listing
requirements.
Report
of the Audit Committee
The Audit
Committee has reviewed and discussed with Company management the audited
financial statements of the Company for the fiscal year ended December 31, 2008,
as well as management’s assessment of the Company’s internal control over
financial reporting as of December 31, 2008. In addition, the Audit
Committee has discussed with the Company’s independent registered public
accounting firm, KPMG LLP, the matters required to be
discussed
by Statement on Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1 AU § 380), as adopted by the Public Company Accounting
Oversight Board (PCAOB) in Rule 3200T, including the opinion regarding internal
control over financial reporting pursuant to PCAOB Auditing Standard No.
5. The Audit Committee also has received the written disclosures and
the letter from KPMG LLP required by the PCAOB, and has discussed the
independence of KPMG LLP with that firm. Based on the Audit
Committee’s review of the matters
noted above and its discussions with management and the Company’s independent
registered public accounting firm, the Audit Committee recommended to the
Company’s Board of Directors that the audited financial statements be included
in the Company’s Annual Report on Form 10-K for the period ended December 31,
2008.
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Respectfully
submitted by the Audit Committee
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Elizabeth
H. Gemmill (Chairperson)
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Leonard
Becker
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C.
Keith Hartley
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Lawrence
Lacerte
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Compensation
Committee
Our Board
of Directors has established a standing Compensation Committee. The
members of our Compensation Committee are Mr. Becker, Ms. Gemmill, Mr. Hartley
and Mr. Lacerte. Ms. Gemmill is the Chairperson of our Compensation
Committee.
Our
Compensation Committee, which does not operate pursuant to a written charter, is
responsible for, among other things:
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recommending
to the full Board of Directors the base salary, incentive compensation and
any other compensation for the Company’s Chief Executive Officer, Chief
Financial Officer, Chief Technical Officer and Founder;
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recommending
to the full Board of Directors the compensation for service as a member of
the Board of Directors or any Board committees;
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reviewing
and approving or ratifying management’s recommendations for equity
compensation awards to other employees and consultants of the
Company;
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administering
and discharging the duties imposed on the Committee under the terms of the
Company’s Equity Compensation Plan and, if approved by shareholders, the
Company’s Employee Stock Purchase Plan; and
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performing
such other functions and duties as are deemed appropriate by the full
Board of Directors.
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Our
Compensation Committee has historically determined the compensation for the
Company’s executive officers in two stages. Base salary adjustments
and perquisites and other benefits (life insurance coverage, automobile
allowance, etc.) have been approved mid-year, to coincide with the annual
employment anniversaries of these individuals with the
Company. Annual bonus equity compensation awards, long-term incentive
equity compensation awards, and any special cash or non-cash awards have been
granted at or shortly after year-end. This enables the Committee to
review the Company’s fiscal performance for the year in determining these
grants.
For 2008,
compensation for non-employee members of our Board of Directors was recommended
by our Compensation Committee and approved in December 2007. This
compensation was paid in quarterly installments shortly following the end of
each quarter during the year. No separate compensation is awarded for
committee service, and directors who are employees or officers of the Company do
not receive compensation for their service on the Board.
In order
to facilitate the Compensation Committee’s activities, Company management
recommends to the Committee compensation for the Company’s executive officers
and directors. However, the Committee exercises
independent
judgment in determining compensation for the Company’s executive officers and
directors, and in recommending this compensation to the full Board of Directors
for approval. As part of this process, the Committee meets in
executive session to review and ultimately finalize its
recommendations.
In 2007,
the Compensation Committee engaged Hay Group as consultants to assist the
Committee in evaluating whether to adopt a supplemental executive retirement
plan (SERP) for certain of the Company’s executive officers. Hay
Group provided the Committee with a report outlining various design alternatives
for the proposed plan, the prevalence of benefits offered by other companies
with similar plans, projected cost estimates for implementation of the plan and
a summary of other design and accounting considerations. The
Committee is still considering Hay Group’s report.
Compensation
Committee Interlocks and Insider Participation
Each
member of our Compensation Committee is an independent director under the NASDAQ
listing requirements. None of the members of our Compensation
Committee were officers or employees of the Company or its subsidiary during
2008, were formerly officers of the Company or its subsidiary, or had any
relationship with the Company since the beginning of 2008 that requires
disclosure under Item 404 of Regulation S-K. Nor have there
been, since the beginning of 2008, any compensation committee interlocks
involving our directors and executive officers that require disclosure under
Item 407 of Regulation S-K.
Report
of the Compensation Committee
The
Compensation Committee of the Company has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation
S-K with management and, based on such review and discussions, the Compensation
Committee recommended to the Board that the Compensation Discussion and Analysis
be included in this Proxy Statement.
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Respectfully
submitted by the Compensation Committee
|
|
|
|
|
|
Elizabeth
H. Gemmill (Chairperson)
|
|
Leonard
Becker
|
|
C.
Keith Hartley
|
|
Lawrence
Lacerte
|
Shareholder
Communications
Shareholders
may send communications to our Board of Directors, or to individual members of
our Board of Directors, care of our Corporate Secretary at the following
address: Universal Display Corporation, 375 Phillips Boulevard, Ewing, New
Jersey 08618. In general, all shareholder communications sent to our
Corporate Secretary for forwarding to our Board of Directors, or to specified
Board members, will be forwarded in accordance with the sender’s
instructions. However, our Corporate Secretary reserves the right to
not forward to members of our Board of Directors any abusive, threatening or
otherwise inappropriate materials. Information on how to submit
complaints to our Audit Committee regarding accounting, internal accounting
controls or auditing matters can be found on the “For Investors” section of our
website at www.universaldisplay.com. The
information on our website referenced in this proxy statement is not and should
not be considered a part of this proxy statement.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Compensation
Philosophy and Objectives
Compensation
and benefits programs are an important part of the relationship between our
Company and its executive officers. Compensation for our executive
officers is intended to be competitive, thereby allowing us to attract, motivate
and retain talented personnel. We also seek to reward our executive
officers for accomplishments and contributions to the Company’s long-term
strategic and short-term business goals.
How
We Determine Executive Compensation
Each
year, our Compensation Committee reviews and approves the compensation for our
executive officers. This process begins with a review of the
compensation paid to our executive officers in recent prior years. We
use prior compensation as a starting point because we believe, as a general
matter, that executive compensation should remain relatively consistent from
year-to-year. The market for our OLED technologies and materials is
still at an early stage, which poses risks for our business. By
keeping executive compensation relatively constant year-to-year, we provide a
stable pay environment for our executive officers while they work to grow our
business and revenues.
With
prior compensation as a baseline, we then consider the extent to which we have
achieved our business goals for the current year, including our goals for
revenue growth, expense management, balance sheet stability, technical progress,
new and expanded business relationships and increased shareholder
value. We also evaluate the individual performance of our executive
officers in relation to the achievement of our business goals. As
part of this process, we reassess our business goals in relation to the actual
growth of the OLED market over the past year. Since many of our
business goals depend on dynamic market factors outside of the control of our
executive officers, we want to ensure that we measure our Company’s and their
individual performance against goals that are realistic.
In
addition, we consider the expected contributions of each individual executive
officer to the future of our business. This helps us determine the
value of long-term incentive compensation awards to our executive officers, such
as shares of restricted stock. In determining these awards, we also
consider the level of compensation that would be appropriate for motivating each
individual executive officer to remain committed to our Company and its future
success. Since the OLED market is still at an early stage, our
executive officers face a risk that our business might not ultimately
succeed. We believe that long-term incentive compensation awards to
our executive officers help offset that risk.
Finally,
we consider other factors that may be relevant. With respect to 2008
compensation decisions, for example, we considered whether the downturn in the
general economy should have any impact on compensation decisions respecting our
executive officers.
Executive
management makes recommendations to our Compensation Committee regarding all
aspects of compensation for our executive officers. However, final
decisions on any major element of compensation, as well as total compensation
for our executive officers, are made by our Compensation
Committee. Awards to our executive officers are then approved by our
full Board of Directors. Our Chief Executive Officer does not
participate in Compensation Committee or Board deliberations regarding his
compensation. Also, meetings of our Compensation Committee are
scheduled well in advance of the proposed meeting date, and the Committee does
not establish equity grant dates in order to affect the value of any particular
award.
In making
compensation decisions, we consider publicly available information regarding the
compensation paid to executives at other companies. However, this
information is not tabulated or summarized, and we do not engage in any form of
compensation benchmarking. Instead, comparisons are more generally
based on industry norms and compensation packages as reported by the public news
media.
In
determining executive compensation, we consider the current value to our
executive officers of compensation paid or issued to them for prior
years. However, we have not focused on gains or losses from prior
option grants or other awards because we believe that those gains or losses are
not particularly significant in relation to overall compensation, and that gains
or losses from prior awards do not have a substantial effect on the future
performance
of our
executive officers. We also do not use tally sheets in determining
compensation for our executive officers, and in 2008 we did not utilize any
external consultants to assist us in determining executive
compensation.
Elements
of Compensation
For 2008,
total compensation to our executive officers consisted of the following
elements:
·
|
Base
salaries;
|
·
|
Annual
bonus equity compensation awards;
|
·
|
Long-term
incentive equity compensation awards;
|
·
|
Special
cash and non-cash awards; and
|
·
|
Perquisites
and other benefits.
|
Our
executive officers receive both cash and non-cash, or equity,
compensation. Equity compensation is further broken down into annual
bonus awards that vest immediately, long-term incentive awards that typically
vest with continued service over time, and special non-cash awards tied to
particular events. We utilize annual bonus awards and special cash
and non-cash awards to reward our executive officers for their performance
during the past year. We use long-term incentive awards that vest
over time largely to motivate our executive officers to perform in future
years. We believe that each of these components is an important and
necessary element of executive compensation.
Actual
compensation amounts are determined by our Compensation Committee in its
discretion. However, the mix of compensation components has remained
relatively consistent year-to-year, in large part because there are few
similarly situated companies with which we compare ourselves, and because our
executive officers have come to expect an element of consistency in their
compensation over time.
Should
unusual events or circumstances occur which have a material impact on our
Company, we would expect the Compensation Committee to consider them in deciding
whether to make any significant changes in executive
compensation. With respect to 2008, the Committee considered whether
general economic conditions should have any impact on our executive
compensation. Ultimately, the Committee determined that there is, at
present, a limited connection between the Company’s growth and development and
the current state of the overall economy.
Base
salaries
We
believe that there is a general expectation by our executive officers that their
base salaries will remain relatively consistent year-to-year, subject to limited
merit-based adjustments. We also believe that this relatively simple
approach is commonly used to determine the base salaries of executives at other
small companies. More substantial adjustments in the base salaries of
our executive officers may be warranted in the future when the market for our
OLED technologies and materials matures, or under circumstances different from
those in our current environment.
In 2008,
the base salaries of Mr. Seligsohn, Mr. Abramson and Mr. Rosenblatt were
moderately increased over the prior year. This was consistent with
prior year base salary increases for these executive officers, and with
increases in the base salaries of our other employees during
2008. The increases were primarily merit-based and intended to reward
our executive officers for their overall performance on behalf of the
Company. To a lesser extent, the increases were intended to offset
increases in the cost of living, although no actual survey of cost of living
indices was conducted. The base salaries of Mr. Seligsohn, Mr.
Abramson and Mr. Rosenblatt were adjusted effective as of July 1, 2008, the
annual employment anniversary date for each of these individuals.
In 2008,
the base salary of Dr. Brown was increased significantly over the prior year in
conjunction with Dr. Brown having been promoted to Senior Vice President and
Chief Technical Officer. This increase reflects the significance of
Dr. Brown’s role with the Company. Dr. Brown’s base salary was
adjusted effective as of June 22, 2008, her annual employment anniversary
date.
Ms. Mahon
became an executive officer of the Company effective January 1, 2008, which was
also her annual employment anniversary date. In conjunction with this
change in status, Ms. Mahon was given the additional title of General Manager of
Material Supply Business. Ms. Mahon’s base salary was adjusted
commensurate with her
receiving
this additional title and becoming an executive officer of the
Company. Thereafter during 2008, Ms. Mahon did not receive a base
salary adjustment.
Consistent
with previous years, all adjustments to the salaries of Mr. Seligsohn, Mr.
Abramson, Mr. Rosenblatt and Dr. Brown were recommended by executive management
and approved by our Compensation Committee at a meeting held on August 5,
2008.
As in the
past, each of Mr. Abramson and Mr. Rosenblatt received the same base salary in
2008. This reflects our historic practice of treating these two
individuals equally based on their longstanding dedication and commitment to the
Company, and the comparable value that each of them has provided and continues
to provide to our business success.
As in
prior years, Mr. Seligsohn’s base salary for 2008 was set taking into account
his shared duties and responsibilities for other companies that he previously
founded. Most notable in this regard is Global Photonic Energy
Corporation (GPEC), a privately-held corporation of which Mr. Seligsohn and his
family are the largest shareholders, and for which Mr. Seligsohn serves as
Chairman of the Board of Directors and Chief Executive Officer.
Annual bonus equity
compensation awards
Bonus
equity compensation awards are typically awarded to our executive officers on an
annual basis at or shortly after the end of each calendar year. These
awards have historically taken the form of immediately-vesting shares of our
common stock, and this practice continued with the awards made for
2008. The awards are determined based on both Company and individual
performance during the prior year. They are recommended by executive
management and approved by our Compensation Committee and full Board of
Directors.
Our
Compensation Committee did not set formal performance goals and corresponding
awards for the Company’s executive officers for 2008. As it had in
prior years, the Committee determined that the awards to the Company’s executive
officers for 2008 would be recommended by the Committee in its discretion,
taking into consideration the Company’s financial results, business performance
and other relevant factors, at year-end. The Committee concluded that
this approach was appropriate in light of the early stage of the OLED market and
the difficulty in assessing the Company’s performance by traditional financial
metrics.
Bonus
equity compensation awards to our executive officers for 2008 were recommended
by our Compensation Committee and approved by our full Board of Directors at
meetings held on January 6, 2009. On that date, the closing price of
our common stock on the NASDAQ Global Market was $10.12 per
share. The awards took the form of immediately vesting shares of our
common stock in the following amounts: Mr. Seligsohn – 19,762 shares;
Mr. Abramson – 34,584 shares; Mr. Rosenblatt – 34,584 shares; Dr. Brown – 22,727
shares; and Ms. Mahon – 8,399 shares. Portions of the shares awarded
were withheld in consideration of the Company’s payment of associated payroll
taxes on behalf of these individuals. The number of shares so
withheld were as follows: Mr. Seligsohn – 6,433 shares; Mr. Abramson
– 14,215 shares; Mr. Rosenblatt – 14,216 shares; Dr. Brown – 7,297 shares; and
Ms. Mahon – 3,530 shares.
Based on
the closing price of our common stock on each respective grant date, the bonus
equity compensation awards to Mr. Seligsohn, Mr. Abramson and Mr. Rosenblatt for
2008 were of the same value as corresponding awards that these individuals
received for 2007. Our executive management recommended, and the
Committee agreed, that this was appropriate given our current business and
financial situation. In recommending the awards, executive management
noted that the Company had accomplished many of its business goals for 2008, but
that not all of these business goals were achieved based mainly on slower than
expected growth of the OLED market.
The bonus
equity compensation awards to Dr. Brown and Ms. Mahon for 2008 were each
moderately increased over the prior year. Our executive management
recommended these increases based on Dr. Brown having been promoted to Senior
Vice President and Chief Technical Officer, and Ms. Mahon having become an
executive officer and received the additional title of General Manager of
Material Supply Business.
For the
reasons indicated earlier, Mr. Abramson and Mr. Rosenblatt again received the
same bonus equity compensation awards for 2008, and Mr. Seligsohn’s award was
set taking into account his shared duties and responsibilities for GPEC and
other companies.
Long-term incentive equity
compensation awards
Long-term
incentive equity compensation awards are typically granted to our executive
officers on an annual basis in conjunction with the grant of annual bonus equity
compensation awards to these individuals. These awards previously
were issued in the form of options to purchase shares of our common
stock. However, due to changes in the financial accounting rules
based on the adoption of FAS 123R, this practice was discontinued for years
after 2005. Since then, long-term incentive equity compensation
awards to our executive officers have taken the form of restricted shares of our
common stock. The shares vest over a period of time and vesting is
contingent on the officer continuing to be employed by us on the vesting
date.
We use
long-term incentive equity compensation awards to link the compensation paid to
our executive officers with their future performance and the future performance
of our common stock. We believe that this helps align the interests
of our executive officers with those of our shareholders. We also use
these awards to encourage our executive officers to remain with the Company
through the applicable vesting period. As with other compensation to
our executive officers, long-term incentive equity compensation awards are
recommended by executive management and approved by our Compensation Committee
and full Board of Directors.
Long-term
incentive equity compensation awards to our executive officers were approved at
meetings of our Compensation Committee and full Board of Directors on January 9,
2008. These awards took the form of restricted shares of our common
stock as follows: Mr. Seligsohn – 10,905 shares; Mr. Abramson –
16,357 shares; Mr. Rosenblatt – 16,357 shares; Dr. Brown – 10,905 shares; and
Ms. Mahon – 3,271 shares. The shares vest in equal increments of
one-third each on the next three anniversaries of the grant date, provided that
the officer is an employee of the Company on the applicable vesting
date. We consider one-third of these share awards to be compensation
to our executive officers for each of the years 2008, 2009 and
2010.
The first
one-third of the restricted share awards granted to our executive officers on
January 9, 2008 vested on January 9, 2009. This resulted in the
issuance of shares of common stock to our executive officers as
follows: Mr. Seligsohn – 3,635 shares; Mr. Abramson – 5,453 shares;
Mr. Rosenblatt – 5,453 shares; Dr. Brown – 3,635 shares; and Ms.
Mahon – 1,091 shares. The second one-third of restricted share awards
previously granted to our executive officers on January 9, 2007 also vested on
January 9, 2009. This resulted in the issuance of additional shares
of common stock to our executive officers as follows: Mr. Seligsohn –
4,563 shares; Mr. Abramson – 6,844 shares; Mr. Rosenblatt – 6,844
shares; Dr. Brown – 4,563 shares; and Ms. Mahon – 1,369
shares. As with other equity awards that we grant, portions of the
vesting shares were withheld in consideration of the Company’s payment of
associated payroll taxes on behalf of these officers. The number of
shares so withheld were as follows: Mr. Seligsohn – 2,419 shares; Mr.
Abramson – 4,859 shares; Mr. Rosenblatt – 4,859 shares; Dr. Brown – 2,419
shares; and Ms. Mahon – 888 shares.
As with
other compensation, Mr. Abramson and Mr. Rosenblatt received the same long-term
incentive equity compensation awards, and Mr. Seligsohn’s award was set taking
into account his shared duties and responsibilities for GPEC and other
companies.
Special cash and non-cash
awards
From time
to time, we issue special cash and non-cash awards to our employees, including
our executive officers. For example, we have historically awarded a
small amount of equity compensation to our employees in connection with the
filing and issuance of U.S. patents on which they are named
inventors. From time to time, we have also issued cash awards to our
employees in connection with their having achieved special recognition in their
field or in the industry. We believe that these awards are a small
but important component of compensation intended to recognize our employees for
special individual accomplishments that are likely to benefit us and our
business.
Our
executive management recommended, and our Compensation Committee approved, a
total of $2,000 in special non-cash awards to Dr. Brown during
2008. These awards were granted in recognition of the filing of four
U.S. patent applications on which Dr. Brown was a named inventor. For
each patent application, Dr. Brown received an
award of
$500. The actual number of shares was determined based on the closing
price of the common stock on the NASDAQ Global Market on the date of grant, with
any remaining amounts after the issuance of whole numbers of shares being paid
to Dr. Brown in cash. As with other equity awards, some of the shares
were withheld in consideration of the Company’s payment of associated payroll
taxes on behalf of Dr. Brown.
These
share awards to Dr. Brown were granted consistent with our historical practice
of awarding equity compensation based on the filing and issuance of U.S. patents
on which our employees are named inventors. We did not issue any
other special cash or non-cash awards to our executive officers in
2008.
Perquisites and other
benefits
We
provide benefits to all of our employees, including our executive
officers. These include paid time off, paid sick time,
Company-sponsored life, short-term and long-term disability insurance,
individual and family medical and dental insurance, 401(k) plan matching
contributions, and other similar benefits. We believe that these
benefits are an important factor in helping us maintain good relations with our
employees and in creating a positive work environment.
For some
of these employee benefits, the actual amount provided depends on the employee’s
salary, such that our higher-salaried employees, including our executive
officers, receive total benefits that are greater than those of other employees.
For example, matching contributions under our 401(k) plan were the maximum
permissible amount of $6,900 for each of our executive officers in
2008.
We also
made life and disability insurance premium payments on behalf of our executive
officers in 2008. Again, the actual amount of these payments depends
in part on the employee’s age and salary, such that payments made on behalf of
our older or higher-salaried employees, which includes our executive officers,
will be greater than those made on behalf of other employees. These
life insurance premium payments were also higher for our executive officers
because they are entitled to a benefit equal to two times their annual base
salary, as compared to our other employees who are entitled to a benefit equal
to their annual base salary. In addition, we made premium payments
for supplemental disability insurance coverage for Mr. Abramson and Mr.
Rosenblatt. However, the dollar value of all of these payments was
relatively small compared to the total compensation paid to our executive
officers for the year, and in any event we consider these type of benefits to be
standard components of executive compensation at most companies.
In 2008,
we provided an automobile allowance of $500 per month to each of Mr. Abramson
and Mr. Rosenblatt, and we attributed $517 in income to Mr. Seligsohn’s for his
use of a Company-owned automobile. In addition, we reimbursed Mr.
Seligsohn, Mr. Abramson and Mr. Rosenblatt for reasonable expenses associated
with the automobiles they used to commute to our offices in Ewing, New Jersey,
such as expenses for automobile repairs and insurance. All of these
individuals live a considerable distance from our offices in Ewing, New Jersey,
such that we believe it is appropriate to partially compensate them for their
work-related automobile usage. Again, we do not consider this
additional benefit to be a substantial component of executive
compensation.
Our
executive officers have been receiving the benefits described above for the past
several years. Our Compensation Committee approved continuation of
these benefits for our executive officers at a meeting held on August 5,
2008. This approval occurred in conjunction with the Committee’s
approval of annual base salary increases for our executive
officers.
Our
Compensation Committee is evaluating whether to adopt a supplemental executive
retirement plan (SERP) for certain of our executive officers. In
2007, the Committee engaged Hay Group to provide a report outlining various
design alternatives for the proposed plan, the prevalence of benefits offered by
other companies with similar plans, projected cost estimates for implementation
of the plan and a summary of other design and accounting
considerations. The Committee is considering Hay Group’s report as
part of its ongoing effort to evaluate design alternatives for the proposed
SERP.
Stock
Ownership Guidelines
We do not
have any stock ownership guidelines for our executive
officers. However, all of our executive officers are major
shareholders in the Company, and all have substantial holdings of outstanding
stock, vested stock options
and stock
purchase warrants. We believe that these current holdings are
sufficient to ensure that our executive officers remain committed to our Company
and its business.
Recovery
of Bonuses
We do not
have any formal policy respecting the recovery of bonuses or other amounts from
our executive officers due to the restatement or adjustment of any performance
measures on which they were based. Since bonus and other equity
compensation awards to our executive officers have not been based on any
specific or measurable performance objectives, we do not believe that such a
policy is appropriate at this time.
Change
in Control Payments
In April
2003, we entered into change in control agreements with our executive
officers. These agreements were amended and restated in November 2008
in order to bring them into compliance with the strict timing and documentary
requirements of Section 409A of the Internal Revenue Code of 1986, as amended,
and the regulations issued thereunder. Both the original agreements
and the amended and restated agreements were approved by our Board of
Directors.
The
change in control agreements provide for certain cash payments and other
benefits to our executive officers in the event that their employment is
terminated, or their responsibilities are substantially reduced, in connection
with a change in control of the Company. We believe that these
agreements help to reinforce and encourage the continued attention and
dedication of our executive officers to the Company in the event they are asked
to help facilitate a change in control.
Under the
change in control agreements, our executive officers would receive benefits
equal to two times their base salaries and annual bonuses, plus ancillary
benefits relating to life and disability insurance, medical and dental coverage
and employment outplacement services. The change in control
agreements utilize a “double-trigger” mechanism because we believe that our
executive officers should only receive these benefits if they suffer a reduction
in employment status associated with a change in control. The
agreements also include “gross-up” provisions that would compensate our
executive officers for any taxes they might owe in connection with receipt of
these benefits.
We
believe that the terms of the change in control agreements for our executive
officers are reasonable and appropriate for a small company with new and
exciting technologies such as ours. More detailed information about
these agreements and the specific benefits and compensation payable to our
executive officers in connection with a change in control are set forth
elsewhere in this proxy statement.
Tax
Consequences of Our Compensation Program
Internal Revenue Code
§162(m)
In
determining the total compensation payable to our executive officers, we
considered the potential impact of Section 162(m) of the Internal Revenue Code
(the “IRC”). Section 162(m) disallows any publicly-held corporation
from taking a tax deduction for compensation in excess of $1 million paid to its
executive officers in any taxable year, unless that compensation is
performance-based. Our policy is that executive compensation qualify
for deductibility under applicable tax laws to the extent consistent with our
overall compensation objectives. For 2008, Section 162(m) did not
limit the deductibility of the compensation paid to any of our executive
officers.
Internal Revenue Code
§409A
Section
409A of the IRC provides that nonqualified deferred compensation benefits are
includible in an employee’s income when vested, unless certain requirements are
met. If these requirements are not met, employees are also subject to
an additional income tax and interest. All of our compensation plans
and arrangements presently meet these requirements. Change in control
agreements with our executive officers were amended in November 2008 to ensure
compliance with these requirements. As a result, all of our executive
officers will be taxed when any deferred compensation is actually paid to them,
and we will be entitled to a tax deduction at that time.
Internal Revenue Code
§280G
Section
280G of the IRC disallows a company’s tax deduction for “excess parachute
payments.” Additionally, Section 4999 of the IRC imposes a 20% excise
tax on any person who receives excess parachute payments. Presently,
all of our executive officers are entitled to payments upon the termination of
their employment following a change in control of the Company, some of which may
qualify as “excess parachute payments.” Accordingly, our tax
deduction for any such excess parachute payments would be disallowed under
Section 280G of the IRC. Moreover, we are required to make additional
payments to these individuals to cover any excise taxes imposed on them by
reason of the payments they receive in connection with a change in
control. As previously indicated, we believe that this tax “gross-up”
obligation is reasonable and appropriate given our current size and
status.
Summary
Compensation Table
The
following table provides information on the compensation of our Chief Executive
Officer, our Chief Financial Officer and our other executive officers for
services in all capacities to the Company and its subsidiaries for 2008, 2007
and 2006. This group is referred to in this proxy statement as the
“Named Executive Officers.”
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
Awards ($)
|
Option Awards ($)
|
All
Other Compensation
($)
|
Total ($)
|
Sherwin
I. Seligsohn
Founder
and Chairman of the Board
(1)
|
2008
|
295,931
|
–––
|
331,989(2)
|
–––
|
20,573(3)
|
648,493
|
2007
|
279,404
|
–––
|
264,960(4)
|
–––
|
19,673(5)
|
564,037
|
2006
|
263,796
|
–––
|
200,000(6)
|
2,338(7)
|
20,564(8)
|
486,698
|
Steven
V. Abramson
President
and Chief Executive Officer(1)
|
2008
|
489,149
|
–––
|
547,982(2)
|
–––
|
25,303(9)
|
1,062,433
|
2007
|
461,829
|
–––
|
447,423(4)
|
–––
|
28,418(10)
|
937,670
|
2006
|
436,030
|
–––
|
350,000(6)
|
–––
|
23,185(11)
|
809,215
|
Sidney
D. Rosenblatt
Executive
Vice President and Chief Financial Officer
|
2008
|
489,149
|
–––
|
547,982(2)
|
–––
|
34,166(12)
|
1,071,296
|
2007
|
461,829
|
–––
|
447,423(4)
|
–––
|
32,984(13)
|
942,236
|
2006
|
436,030
|
–––
|
350,000(6)
|
–––
|
27,220(14)
|
813,250
|
Julia
J. Brown, Ph.D.
Senior
Vice President and Chief Technical Officer
|
2008
|
326,553
|
–––
|
361,995(2)(15)
|
–––
|
9,023(16)
|
697,572
|
2007
|
289,002
|
–––
|
289,957(4)
|
1,790(17)
|
8,283(18)
|
589,032
|
2006
|
272,657
|
25,000(19)
|
200,000(6)
|
2,239(20)
|
8,508(21)
|
508,404
|
Janice
K. Mahon
Vice
President of Technology Commercialization and General Manager of Material
Supply Business
|
2008
|
243,032
|
–––
|
124,591(2)
|
–––
|
9,106(22)
|
376,729
|
2007
|
–––
|
–––
|
–––
|
–––
|
–––
|
–––
|
2006
|
–––
|
–––
|
–––
|
–––
|
–––
|
–––
|
_______________
(1)
|
Effective
as of January 1, 2008, Mr. Seligsohn was appointed to the newly-created
officer position of Founder and Chairman of the Board, and Mr. Abramson
was named our President and Chief Executive Officer.
|
|
|
(2)
|
This
amount reflects the compensation expense recognized by the Company for
2008 with respect to all stock awards to the Named Executive Officers,
regardless of the date made or the compensation year to which they
relate. The amount includes the 2008 expense associated with
unrestricted shares of common stock granted to the Named Executive Officer
on January 6, 2009, and restricted shares of common stock granted to the
Named Executive Officer on January 9, 2007 and January 9, 2008,
portions of which grants vested on January 9, 2009. With
respect to all awards, shares of common stock were withheld for the
payment of associated payroll taxes. These awards are discussed
in greater detail in the section of this proxy statement entitled
“Compensation Discussion and Analysis,” under the headings “Annual bonus
equity compensation awards” and “Long-term incentive equity compensation
awards.”
|
|
|
(3)
|
Based
on (a) auto expense reimbursements and allowance of $1,064; (b) life and
disability insurance premium payments of $12,609; and (c) 401(k) plan
contributions of $6,900.
|
(4)
|
This
amount reflects the compensation expense recognized by the Company for
2007 with respect to all stock awards to the Named Executive Officers,
regardless of the date made or the compensation year to which they
relate. The amount includes the 2007 expense associated with
unrestricted shares of common stock granted to the Named Executive Officer
on January 9, 2008, and restricted shares of common stock granted to the
Named Executive Officer on January 9, 2007, portions of which grants
vested on January 9, 2008. With respect to all awards,
shares of common stock were withheld for the payment of associated payroll
taxes. These awards are discussed in greater detail in the
section of this proxy statement entitled “Compensation Discussion and
Analysis,” under the headings “Annual bonus equity compensation awards”
and “Long-term incentive equity compensation awards.”
|
|
|
(5)
|
Based
on (a) auto expense reimbursements and allowance of $919; (b) life and
disability insurance premium payments of $12,004; and (c) 401(k) plan
contributions of $6,750.
|
|
|
(6)
|
This
amount reflects the compensation expense recognized by the Company for
2006 with respect to all stock awards to the Named Executive Officers,
regardless of the date made or the compensation year to which they
relate. The amount includes the 2006 expense associated with
unrestricted shares of common stock granted to the Named Executive Officer
on January 9, 2007. With respect to all awards, shares of
common stock were withheld for the payment of associated payroll
taxes. These awards are discussed in greater detail in the
section of this proxy statement entitled “Compensation Discussion and
Analysis,” under the heading “Annual bonus equity compensation
awards.”
|
|
|
(7)
|
FAS
123R grant date value of 250 stock options, with an exercise price of
$12.40 per share, granted on June 20, 2006 as a bonus for the issuance of
a U.S. patent that was assigned to the Company.
|
|
|
(8)
|
Based
on (a) auto expense reimbursements of $570; (b) life and disability
insurance premium payments of $13,394; and (c) 401(k) plan contributions
of $6,600.
|
|
|
(9)
|
Based
on (a) auto expense reimbursements and allowance of $7,045; (b) life and
disability insurance premium payments of $11,358; and (c) 401(k) plan
contributions of $6,900.
|
|
|
(10)
|
Based
on (a) auto expense reimbursements and allowance of $7,927; (b) life and
disability insurance premium payments of $13,741; and (c) 401(k) plan
contributions of $6,750.
|
|
|
(11)
|
Based
on (a) auto expense reimbursements and allowance of $3,957; (b) life and
disability insurance premium payments of $12,628; and (c) 401(k) plan
contributions of $6,600.
|
|
|
(12)
|
Based
on (a) auto expense reimbursements and allowance of $7,559; (b) life and
disability insurance premium payments of $19,707; and (c) 401(k) plan
contributions of $6,900.
|
|
|
(13)
|
Based
on (a) auto expense reimbursements and allowance of $8,743; (b) life and
disability insurance premium payments of $17,491; and (c) 401(k) plan
contributions of $6,750.
|
|
|
(14)
|
Based
on (a) auto expense reimbursements and allowance of $2,983; (b) life and
disability insurance premium payments of $17,637; and (c) 401(k) plan
contributions of $6,600.
|
|
|
(15)
|
Also
based on (a) 24 shares of common stock granted on June 19, 2008 as a bonus
for the issuance of a U.S. patent application that was assigned to the
Company; (b) 64 shares of common stock granted on November 4, 2008 as a
bonus for the issuance of two U.S. patent applications that were assigned
to the Company; (c) 39 shares of common stock granted on December 18, 2008
as a bonus for the issuance of a U.S. patent application that was assigned
to the Company; and (d) 51 shares of common stock withheld for payment of
$569 in associated payroll taxes.
|
|
|
(16)
|
Based
on (a) life and disability insurance premium payments of $2,123; and (b)
401(k) plan contributions of $6,900.
|
|
|
(17)
|
FAS
123R grant date value of 250 stock options, with an exercise price of
$14.16 per share, granted on January 15, 2007 as a bonus for the
issuance of a U.S. patent that was assigned to the
Company.
|
|
|
(18)
|
Based
on (a) life and disability insurance premium payments of $1,533; and (b)
401(k) plan contributions of $6,750.
|
|
|
(19)
|
Cash
bonus in recognition of being named a Fellow of the Institute of
Electrical and Electronics Engineers.
|
|
|
(20)
|
FAS
123R grant date value of 250 stock options, with an exercise price of
$11.89 per share, granted on January 17, 2006 as a bonus for the
filing of a U.S. patent application that was assigned to the
Company.
|
(21)
|
Based
on (a) life insurance premium payments of $1,908; and (b) 401(k) plan
contributions of $6,600.
|
|
|
(22)
|
Based
on (a) life and disability insurance premium payments of $2,206; and (b)
401(k) plan contributions of
$6,900.
|
Compensation
to each of the named executive officers for 2008, 2007 and 2006 consisted of the
following:
·
|
Base
salary, paid in cash;
|
|
|
·
|
In
the case of Dr. Brown, a cash bonus for 2006 in recognition of her having
been named a Fellow of the Institute of Electrical and Electronics
Engineers;
|
|
|
·
|
Discretionary
awards of common stock granted as performance bonuses for 2008 on January
6, 2009, for 2007 on January 9, 2008, and for 2006 on January 9,
2007;
|
|
|
·
|
Discretionary
awards of restricted common stock granted as long-term incentive equity
compensation on January 9, 2008 and January 9, 2007, the portion of such
awards considered as compensation for 2007 having vested on
January 9, 2008, and the portion of such awards considered as
compensation for 2008 having vested on January 9,
2009;
|
|
|
·
|
In
the case of Mr. Seligsohn and Dr. Brown, unrestricted stock and/or stock
option awards granted as bonuses for the filing of U.S. patent
applications or the issuance of U.S. patents on which they are named
inventors, and with respect to which the Company is the assignee;
and
|
|
|
·
|
Perquisites
in the form of auto expense allowances and reimbursements, life and
disability insurance premium payments, and 401(k) plan matching
contributions.
|
Grants
of Plan-Based Awards Table
The
following table summarizes each grant of an award made to a Named Executive
Officers in 2008.
Name
|
Grant
Date
|
All
Other Stock Awards: Number of Shares of Stock (#)
|
All
Other Option Awards: Number of Securities Underlying Options (#)
|
Exercise
or Base Price of Option Awards ($/Share)
|
Grant
Date Fair Value of Stock and Option Awards
($)
|
Sherwin
I. Seligsohn
|
1/9/2008
|
21,810(1)
|
–––
|
–––
|
399,995
|
Steven
V. Abramson
|
1/9/2008
|
35,440(2)
|
–––
|
–––
|
649,970
|
Sidney
D. Rosenblatt
|
1/9/2008
|
35,440(2)
|
–––
|
–––
|
649,970
|
Julia
J. Brown, Ph.D
|
1/9/2008
|
23,173(3)
|
–––
|
–––
|
424,993
|
Janice
K. Mahon
|
1/9/2008
|
7,633(4)
|
–––
|
–––
|
139,989
|
Julia
J. Brown, Ph.D
|
6/19/2008
|
34(5)
|
–––
|
–––
|
490
|
Julia
J. Brown, Ph.D
|
11/4/2008
|
90(6)
|
–––
|
–––
|
989
|
Julia
J. Brown, Ph.D
|
12/18/2008
|
54(7)
|
–––
|
–––
|
500
|
_______________
|
Consists
of (a) an award of 10,905 immediately vesting shares of common stock, with
a certificate for 7,379 of these shares having been issued and the
remaining shares having been withheld for payment of associated payroll
taxes; and (b) an award of 10,905 shares of restricted common stock, which
shares vest in equal increments over the first three anniversaries of the
grant date, provided that the grantee is an employee of the Company at
such time.
|
(2)
|
Consists
of (a) an award of 19,083 immediately vesting shares of common stock, with
a certificate for 13,167 of these shares having been issued and the
remaining shares having been withheld for payment of associated payroll
taxes; and (b) an award of 16,357 shares of restricted common stock, which
shares vest in equal increments over the first three anniversaries of the
grant date, provided that the grantee is an employee of the Company at
such time.
|
|
|
(3)
|
Consists
of (a) an award of 12,268 immediately vesting shares of common stock, with
a certificate for 8,341 of these shares having been issued and the
remaining shares having been withheld for payment of associated payroll
taxes; and (b) an award of 10,905 shares of restricted common stock, which
shares vest in equal increments over the first three anniversaries of the
grant date, provided that the grantee is an employee of the Company at
such time.
|
|
|
(4)
|
Consists
of (a) an award of 4,362 immediately vesting shares of common stock, with
a certificate for 2,660 of these shares having been issued and the
remaining shares having been withheld for payment of associated payroll
taxes; and (b) an award of 3,271 shares of restricted common stock, which
shares vest in equal increments over the first three anniversaries of the
grant date, provided that the grantee is an employee of the Company at
such time.
|
|
|
(5)
|
Consists
of an award of 34 immediately vesting shares of common stock, with a
certificate for 24 of these shares having been issued and the remaining
shares having been withheld for payment of associated payroll
taxes.
|
|
|
(6)
|
Consists
of an award of 90 immediately vesting shares of common stock, with a
certificate for 64 of these shares having been issued and the remaining
shares having been withheld for payment of associated payroll
taxes.
|
|
|
(7)
|
Consists
of an award of 54 immediately vesting shares of common stock, with a
certificate for 39 of these shares having been issued and the remaining
shares having been withheld for payment of associated payroll
taxes.
|
Grants of
plan-based awards to each of the named executive officers in 2008 consisted of
the following:
·
|
Discretionary
awards of common stock granted as performance bonuses for
2007;
|
|
|
·
|
Discretionary
awards of restricted common stock granted as long-term incentive equity
compensation, with one-third of the award being considered compensation
for each of the years 2008, 2009 and 2010; and
|
|
|
·
|
In
the case of Dr. Brown, stock awards granted as bonuses for the filing of
U.S. patent applications on which she is a named inventor, and with
respect to which the Company is the
assignee.
|
Outstanding
Equity Awards at Fiscal Year-End Table
The
following table summarizes the outstanding equity awards to the Named Executive
Officers as of December 31, 2008.
Name
|
Option
Awards
|
Stock
Awards
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares of Stock that Have Not Vested
(#)
|
Market
Value of Shares of Stock that Have Not Vested ($)
|
Sherwin
I. Seligsohn
|
30,000
|
3.875
|
10/12/2009
|
|
|
|
15,000
|
9.4375
|
12/14/2010
|
|
|
|
20,000
|
10.3125
|
3/30/2011
|
|
|
|
40,250
|
8.56
|
12/17/2011
|
|
|
|
40,000
|
5.45
|
9/23/2012
|
|
|
|
250
|
6.65
|
1/24/2013
|
|
|
|
40,000
|
16.94
|
1/20/2014
|
|
|
|
50,000
|
8.14
|
1/18/2015
|
|
|
|
50,000
|
10.51
|
12/30/2015
|
|
|
|
250
|
12.40
|
6/20/2016
|
|
|
|
|
|
|
20,031
|
189,293
|
Name
|
Option
Awards
|
Stock
Awards
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares of Stock that Have Not Vested
(#)
|
Market
Value of Shares of Stock that Have Not Vested ($)
|
Steven
V. Abramson
|
30,000
|
3.875
|
10/12/2009
|
|
|
|
15,000
|
9.4375
|
12/14/2010
|
|
|
|
20,000
|
10.3125
|
3/30/2011
|
|
|
|
40,000
|
8.56
|
12/17/2011
|
|
|
|
40,000
|
5.45
|
9/23/2012
|
|
|
|
40,000
|
16.94
|
1/20/2014
|
|
|
|
50,000
|
8.14
|
1/18/2015
|
|
|
|
50,000
|
10.51
|
12/30/2015
|
|
|
|
|
|
|
30,045
|
283,925
|
|
|
|
|
|
|
Sidney
D. Rosenblatt
|
30,000
|
3.875
|
10/12/2009
|
|
|
|
15,000
|
9.4375
|
12/14/2010
|
|
|
|
20,000
|
10.3125
|
3/30/2011
|
|
|
|
40,000
|
8.56
|
12/17/2011
|
|
|
|
40,000
|
5.45
|
9/23/2012
|
|
|
|
40,000
|
16.94
|
1/20/2014
|
|
|
|
50,000
|
8.14
|
1/18/2015
|
|
|
|
50,000
|
10.51
|
12/30/2015
|
|
|
|
|
|
|
30,045
|
283,925
|
|
|
|
|
|
|
Julia
J. Brown, Ph.D
|
15,000
|
3.875
|
10/12/2009
|
|
|
|
90,000
|
16.75
|
4/18/2010
|
|
|
|
10,000
|
24.375
|
6/21/2010
|
|
|
|
10,000
|
9.4375
|
12/14/2010
|
|
|
|
250
|
10.375
|
2/15/2011
|
|
|
|
20,000
|
10.3125
|
3/30/2011
|
|
|
|
500
|
13.90
|
4/19/2011
|
|
|
|
30,000
|
8.56
|
12/17/2011
|
|
|
|
250
|
9.10
|
4/15/2012
|
|
|
|
30,000
|
5.45
|
9/23/2012
|
|
|
|
250
|
9.94
|
11/18/2012
|
|
|
|
250
|
9.60
|
6/16/2013
|
|
|
|
30,000
|
16.94
|
1/20/2014
|
|
|
|
500
|
13.28
|
4/20/2014
|
|
|
|
250
|
10.07
|
11/23/2014
|
|
|
|
40,250
|
8.14
|
1/18/2015
|
|
|
|
500
|
9.43
|
6/7/2015
|
|
|
|
40,000
|
10.51
|
12/30/2015
|
|
|
|
250
|
11.89
|
1/17/2016
|
|
|
|
250
|
14.16
|
1/15/2017
|
|
|
|
|
|
|
20,031
|
189,293
|
|
|
|
|
|
|
Janice
K. Mahon
|
7,500
|
3.875
|
10/12/2009
|
|
|
|
7,500(1)
|
9.4375
|
12/14/2010
|
|
|
|
15,000(1)
|
10.3125
|
3/30/2011
|
|
|
|
17,500
|
8.56
|
12/17/2011
|
|
|
|
17,500
|
5.45
|
9/23/2012
|
|
|
|
10,000
|
13.92
|
12/23/2013
|
|
|
|
15,000
|
8.14
|
1/18/2015
|
|
|
|
20,000
|
10.51
|
12/30/2015
|
|
|
|
|
|
|
6,008
|
56,776
|
(1)
|
Ms.
Mahon has a pecuniary interest in only one-half of these stock
options.
|
Option
Exercises and Stock Vested Table
The
following table summarizes the exercises of stock options, SARs and other
similar instruments, and the vesting of stock, including restricted stock,
restricted stock units and similar instruments, for the Named Executive Officers
during 2008.
Name
|
Number
of Shares Acquired on Exercise
(#)
|
Value
Realized on Exercise(1) ($)
|
Number
of Shares Acquired on Vesting
(#)
|
Value
Realized on Vesting(2) ($)
|
Sherwin
I. Seligsohn
|
20,000
|
85,000
|
4,563
|
83,685
|
Steven
V. Abramson
|
20,000
|
85,000
|
6,845
|
125,537
|
Sidney
D. Rosenblatt
|
20,000
|
85,000
|
6,845
|
125,537
|
Julia
J. Brown, Ph.D
|
40,000
|
278,868
|
4,563
|
83,685
|
Janice
K. Mahon
|
–––
|
–––
|
1,369
|
25,107
|
_______________
(1)
|
Based
on the difference between the closing price of our common stock on the
NASDAQ Global Market on the date of exercise and the exercise price of the
stock options or warrants exercised.
|
|
|
(2)
|
Based
on the closing price of our common stock on the NASDAQ Global Market on
the date of vesting.
|
Potential
Payments Upon Termination or Change-in-Control
In April
2003, the Company entered into Change in Control Agreements with the Named
Executive Officers (the “Original CIC Agreements”). These agreements
provided for certain cash payments and other benefits to the Named Executive
Officers in the event of an effective termination of these individuals’
employment in connection with a “Change in Control” of the Company.
In
November 2008, the Original CIC Agreements were amended and restated to bring
them into compliance with Section 409A of the Internal Revenue Code of 1986, as
amended, and regulations issued thereunder. At the same time, the
Original CIC Agreement with Ms. Mahon was amended to ensure that she would be
treated the same as our other Named Executive Officers in the event of a
termination of her employment for a Change in Control.
Under the
Amended and Restated CIC Agreements (the “Amended CIC Agreements”), the benefits
to which our Named Executive Officers would be entitled in the event of a
termination of employment for a Change in Control include the
following:
·
|
a
lump-sum payment equal to two times the sum of the average annual base
salary and the annual bonus to the individual, including any authorized
deferrals, salary reduction amounts and any car allowance, and including
the fair market dollar value equivalent of any bonus amounts paid in the
form of stock options, stock appreciation rights, warrants, stock awards
or performance units;
|
|
|
·
|
a
lump-sum payment equal to the estimated after-tax premium cost to the
individual of continuing any Company-sponsored life, travel or accident
insurance and disability insurance coverage for the individual (and where
applicable, his or her spouse and dependents), based on coverage levels in
effect immediately prior to the termination date (less any contributions
that would have been required by the individual), for two
years;
|
|
|
·
|
a
lump-sum payment equal to the Company-provided contributions to which the
individual would be entitled under the Company’s 401(k) savings and
retirement plans, assuming the individual continued working for the
Company for two years at his or her annual base salary;
|
|
|
·
|
effective
immediately preceding the Change in Control (but contingent upon the
consummation of the Change in Control), full vesting of all outstanding,
unvested equity awards held by the individual immediately preceding the
Change in Control that have not yet become vested (and exercisable to the
extent applicable), except that awards which vest based on the attainment
of performance criteria would not automatically vest but would instead be
governed by the terms of the plan or agreement evidencing the
award;
|
·
|
continued
group hospitalization, health and dental care coverage, at the level in
effect as of the termination date (or generally comparable coverage) for
the individual and, where applicable, the individual’s spouse and
dependents, for two years assuming the individual continued working for
the Company;
|
|
|
·
|
a
lump-sum payment equal to $10,000 for outplacement assistance services for
two years; and
|
|
|
·
|
an
additional payment to cover any excise tax imposed on the individual by
reason of the individual receiving the payments and benefits specified
above.
|
For each
of the Named Executive Officers, the estimated payments and benefits that would
be provided by the Company under the Amended CIC Agreements are set forth in the
following table, based on the assumption that a triggering event took place on
December 31, 2008.
Estimated
Payments and Benefits on Termination in Connection With a
Change-in-Control
|
Name
|
Lump Sum Payment of
Two Times Annual Base Salary(1) ($)
|
|
Lump Sum Payment of
Two Times Annual Bonus(2)
($)
|
|
Lump Sum Payment for
Accrued and Unused Paid Time Off and Sick Time
($)
|
|
Lump Sum Payment of
Estimated After-Tax Cost to Continue Life, Travel and Disability Insurance
for Two Years
($)
|
|
Lump Sum Payment of
Estimated Contribu-tions Under 401(k) Savings and Retirement Plans for
Two
Years($)
|
|
Estimated Value of
Ongoing Payments to Continue Group Hospitaliza-tion, Health and Dental
Coverage for Two Years
($)
|
|
Estimated Value of
Unvested Stock Options and Stock Awards Subject to Accelerated Vesting(3)
($)
|
|
Payment for
Outplace-ment Assistance Services
($)
|
|
Value of Tax
Reimburse-ment Payments on Account of Excise or Other Taxes
($)
|
|
Total Payments and
Benefits
($)
|
Sherwin
I. Seligsohn
|
571,511
|
|
1,224,135
|
|
69,571
|
|
25,168
|
|
14,700
|
|
10,539
|
|
189,293
|
|
10,000
|
|
–––
|
|
2,114,917
|
Steven
V. Abramson
|
1,008,601
|
|
1,524,135
|
|
114,994
|
|
26,770
|
|
14,700
|
|
32,249
|
|
283,925
|
|
10,000
|
|
–––
|
|
3,015,374
|
Sidney
D. Rosenblatt
|
1,008,601
|
|
1,524,135
|
|
68,996
|
|
37,502
|
|
14,700
|
|
32,249
|
|
283,925
|
|
10,000
|
|
–––
|
|
2,980,108
|
Julia
J. Brown, Ph.D.
|
700,000
|
|
1,059,308
|
|
80,770
|
|
4,691
|
|
14,700
|
|
24,751
|
|
189,293
|
|
10,000
|
|
732,728
|
|
2,816,241
|
Janice
K. Mahon
|
482,370
|
|
445,654
|
|
39,006
|
|
4,550
|
|
14,700
|
|
32,478
|
|
56,776
|
|
10,000
|
|
345,857
|
|
1,431,391
|
_______________
(1)
|
Under
the Amended CIC Agreements, this is to be based on the highest monthly
base salary paid or payable to the employee during the twenty-four (24)
months prior to December 31, 2008, including any amounts earned but
deferred. It is also to include any annual car
allowance. For purposes of this calculation, the employee’s
bi-weekly salary as of the payment period ended on December 19, 2008 was
utilized. Also, an annual car allowance of $6,000 is included
for each of Mr. Abramson and Mr. Rosenblatt.
|
|
|
(2)
|
Under
the Amended CIC Agreements, this is to be based on the highest annual
bonus to the employee for the last three full fiscal years prior to
December 31, 2008, and is to include the fair market dollar value
equivalent of any stock, restricted stock or stock options issued as bonus
consideration, determined as of the date of issuance and without regard to
any restrictions or vesting conditions. For purposes of this
calculation, the employee’s 2005 annual bonus was
utilized.
|
|
|
(3)
|
Assumes
all unvested or restricted stock options and stock awards automatically
vest on a Change of Control. Does not include restricted stock
bonuses awarded on January 6, 2009.
|
In
consideration of receiving these payments and benefits, each Named Executive
Officer has agreed not to compete with the Company for six months following his
or her termination in connection with a Change in Control. Each Named
Executive Officer has further agreed that, for two years following his or her
termination he or she will not knowingly (i) solicit or recruit any of the
Company’s employees to compete with the Company, or (ii) divert or unreasonably
interfere with the Company’s business relationships with any of its suppliers,
customers, partners or joint venturers with whom the individual had any
involvement. In addition, each Named Executive Officer is required to
execute a general release of all employment-related claims he or she may have
against the Company in order to receive the payments and benefits specified
under the Amended CIC Agreements.
As used
in the Amended CIC Agreements, a Change in Control of the Company would occur
if:
·
|
any
person first becomes the beneficial owner of securities of the Company
(not including securities previously owned by such persons or any
securities acquired directly from the Company) representing 30% or more of
the then-outstanding voting securities of the Company;
|
|
|
·
|
the
individuals who constitute our Board of Directors at the beginning of any
24-month period cease, for any reason other than death, to constitute at
least a majority of our Board of Directors;
|
|
|
·
|
the
Company consummates a merger or consolidation with any other corporation,
except where the voting securities of the Company outstanding immediately
prior to the merger or consolidation continue to represent at least 50% of
the voting securities of the Company (or the surviving entity of the
merger or consolidation or its parent), or where no person first becomes
the beneficial owner of securities of the Company representing 30% or more
of the then-outstanding voting securities of the
Company;
|
|
|
·
|
the
shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company, or an agreement is consummated for the sale or
disposition by the Company of all or substantially all of its assets,
excluding a sale or disposition by the Company of all or substantially all
of its assets to an entity, at least 50% of the voting securities of which
are owned by persons in substantially the same proportion as their
ownership of the Company immediately prior to the sale;
or
|
|
|
·
|
any
person consummates a tender offer or exchange for voting stock of the
Company and, directly or indirectly, becomes (in one or more transactions)
the “beneficial owner” of securities of the Company representing a
majority of the voting securities of the
Company.
|
As used
in the Amended CIC Agreements, a termination of a Named Executive Officer in
connection with a Change in Control of the Company would include a termination
of the individual’s employment:
·
|
by
the Company at the time of or within two years after a Change in Control,
other than for the individual’s death or incapacity for a period of 12
consecutive months, or for cause;
|
|
|
·
|
by
the individual within two years after a Change in Control for (i) the
Company’s breach of the Amended CIC Agreement or any other material
obligation of the Company to the individual, (ii) any significant
reduction by the Company of the individual’s authority, duties or
responsibilities, (iii) any demotion or removal of the individual from his
or her employment grade, compensation level or officer positions, or (iv)
a relocation by more than 50 miles of the offices of the Company at which
the individual principally works; and
|
|
|
·
|
by
either the Company or the individual during the one year period
immediately preceding a Change in Control, unless the Company establishes
by clear and convincing evidence that the termination was for good faith
business reasons not related to the Change in
Control.
|
Compensation
of Directors
The
following table provides information on the compensation of members of our Board
of Directors (who are not Named Executive Officers) for 2008.
Name
|
Fees
Earned or Paid in Cash
($)
|
Stock
Awards ($)
|
Option Awards(1) ($)
|
All
Other Compensation
($)
|
Total ($)
|
Leonard
Becker
|
44,310
|
94,764(2)
|
–––
|
–––
|
139,074
|
Elizabeth
H. Gemmill
|
44,310
|
94,764(2)
|
–––
|
–––
|
139,074
|
C.
Keith Hartley
|
44,310
|
94,764(2)
|
–––
|
–––
|
139,074
|
Lawrence
Lacerte
|
44,310
|
94,764(2)
|
–––
|
–––
|
139,074
|
_______________
(1)
|
The
aggregate numbers of shares issuable to each director upon the exercise of
options outstanding as of December 31, 2008 were as
follows: Mr. Becker – 105,000 shares; Ms. Gemmill – 140,000
shares; Mr. Hartley – 130,000 shares; and Mr. Lacerte – 0
shares. There were no restricted stock awards to any of our
directors outstanding as of December 31, 2008.
|
|
|
(2)
|
This
amount reflects the compensation expense recognized by the Company for
2008 with respect to all stock awards to the named director. The amount
includes the 2008 expense associated with unrestricted share awards to the
named director that were approved on December 18, 2007 and December 18,
2008.
|
Compensation
to each non-employee member of the Board of Directors for 2008 consisted of the
following:
·
|
Director
fees, paid in cash; and
|
|
|
·
|
Stock
awards recommended by the Compensation Committee and approved on December
18, 2007. These awards were granted in quarterly installments
at the end of each calendar quarter during
2008.
|
Committee
chairpersons did not receive any additional fees or other compensation for
service in this capacity. In addition to the foregoing amounts, we
reimbursed members of our Board of Directors for their reasonable travel
expenses to attend all Board and committee meetings in 2008.
PROPOSAL
2
APPROVAL
OF THE COMPANY’S 2009 EMPLOYEE STOCK PURCHASE PLAN
On April
7, 2009, our Board of Directors adopted the Universal Display Corporation 2009
Employee Stock Purchase Plan (the “Stock Purchase Plan”), subject to shareholder
approval. If approved by our shareholders, the Stock Purchase Plan
will be effective on June 25, 2009.
Our Board
of Directors believes it is in our best interests and the interests of our
shareholders to adopt the Stock Purchase Plan. The Stock Purchase
Plan is intended to encourage ownership in our common stock by eligible
employees and to provide an additional incentive for them to promote the success
of our business. Shareholder approval of the Stock Purchase Plan is
necessary in order for the Stock Purchase Plan to meet the requirements of
Section 423 of the Internal Revenue Code and to comply with the listing
maintenance standards of the NASDAQ Global Market.
Vote
Required and Recommendation of our Board of Directors
This
proposal will be approved if a majority of the votes cast by all shareholders,
voting as a single class, are FOR approval. Abstentions on this
proposal are not considered “votes cast” and will have no effect on the outcome
of the vote. Similarly, broker non-votes are not considered “votes
cast” with respect to this proposal and, therefore, will have no effect on the
outcome of the vote.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
ADOPTION
OF THIS PROPOSAL 2.
The
material terms of the Stock Purchase Plan are summarized below. A
copy of the full text of the Stock Purchase Plan is attached to this Proxy
Statement as Exhibit A. This summary of the Stock Purchase Plan is
not intended to be a complete description of the Stock Purchase Plan and is
qualified in its entirety by the actual text of the Stock Purchase Plan to which
reference is made.
Summary
of the 2009 Employee Stock Purchase Plan
The Stock
Purchase Plan allows employees of our Company and its subsidiaries to purchase
shares of our common stock at up to a 15% discount through payroll
deductions. The purpose of the Stock Purchase Plan is to provide
participating employees with the opportunity to acquire an ownership interest in
us. These ownership interests are designed to provide an incentive
for participants to help increase our success and provide an opportunity to
share in that success as we continue to shape the future of OLED technologies
and materials.
The Stock
Purchase Plan is administered by our Compensation Committee, or another
committee appointed by our Board of Directors for such purpose. This
committee will have full discretionary authority to interpret and construe any
provision of the Stock Purchase Plan and to adopt such rules and regulations for
administering the Stock Purchase Plan as it deems necessary. All
references in the Plan to the Plan Administrator refer to this
committee.
We have
reserved 1,000,000 shares of our common stock for issuance under the Stock
Purchase Plan, subject to adjustments in certain circumstances described
below. In the event of stock splits, stock dividends,
recapitalizations, combination of shares, exchange of shares and other events
affecting our common stock, the Plan Administrator shall make such adjustments
as it deems appropriate to the maximum number and class of securities issuable
under the Stock Purchase Plan, the maximum number and class of securities
purchasable per participant on any purchase date, and the number and class of
securities and the price per share in effect under each outstanding option, in
order to prevent the dilution or enlargement of benefits.
Each of
our employees and employees of our subsidiaries that adopt the Stock Purchase
Plan who are regularly scheduled to work more than 20 hours per week and for
more than five months per calendar year will be eligible to participate in the
Stock Purchase Plan. Under the requirements of the Internal Revenue
Code, an employee who owns 5% or more of the total combined voting power of all
classes of our stock is not eligible to participate. For purposes of
determining who is a 5% owner, attribution of ownership rules apply, and shares
of stock subject to outstanding options are taken into account.
Under the
Stock Purchase Plan, there will be a series of consecutive purchase
periods. The first purchase period will begin on July 1, 2009 and
will end on September 30, 2009, subject to shareholder approval of the Stock
Purchase Plan. Unless the Plan Administrator determines otherwise
prior to the beginning of a purchase period, each subsequent purchase period
will begin at three-month intervals on each January 1, April 1, July 1 and
October 1 and will last for three months, ending on March 31, June 30, September
30 or December 31, as the case may be.
Each
eligible employee who elects to participate in a purchase period will be granted
an option to purchase shares of our common stock on the first day of the
purchase period. The option will automatically be exercised on the
last day of the purchase period, which is the purchase date, based on the
employee’s accumulated contributions to the Stock Purchase Plan. The
purchase price of each share of our common stock under the Stock Purchase Plan
will be equal to 85% of the lesser of the price per share of our common stock on
the first day of the purchase period or the price of our common stock on the
last day of the purchase period. Participants will generally be
permitted to allocate up to 10% of their compensation to purchase our common
stock under the Stock Purchase Plan.
Participants
may stop their participation in the Stock Purchase Plan at any time during any
purchase period. A participant who elects to cease participation in
the Stock Purchase Plan for a particular purchase period may not rejoin that
purchase period at a later date. Participation ends automatically
upon termination of employment or if the participant ceases to be an eligible
employee for any reason (including death, disability or change in
status).
The
maximum number of shares that a participant may purchase on any purchase date
may not exceed 12,500 shares, subject to adjustment by the Plan Administrator
prior to the beginning of the purchase period and subject to share adjustments
as described above. In addition, no participant may purchase more
than $25,000 of our common stock during each calendar year under the Stock
Purchase Plan.
If we
experience a change of control while the Stock Purchase Plan is in effect, all
outstanding options under the Stock Purchase Plan will automatically be
exercised immediately prior to the effective date of the change of
control. The purchase price for each share of our common stock under
the Stock Purchase Plan on such purchase date will be equal to 85% of the lesser
of the price per share of our common stock on the first day of the purchase
period or the price per share of our stock immediately prior to the change of
control. If a change of control occurs, the limitation on the
aggregate number of shares that a participant may purchase on any given purchase
date will continue to apply.
In
general terms, a change of control under the Stock Purchase Plan means the
occurrence of any one of the following events:
·
|
As
a result of any transaction, any shareholder other than an existing
shareholder acquires more than 50% of our common stock or the combined
voting power of our then outstanding voting securities.
|
|
|
·
|
As
a result of a tender offer, stock purchase, other stock acquisition,
merger, consolidation, recapitalization, reverse split or sale or transfer
of assets, any person, entity or affiliated group other than an existing
shareholder acquires more than 30% of the combined voting power of our
then outstanding securities.
|
|
|
·
|
We
sell or dispose of all or substantially all of our
assets.
|
|
|
·
|
We
are liquidated or dissolved.
|
|
|
·
|
After
the date on which the Stock Purchase Plan is approved by our shareholders,
directors are elected to our Board of Directors such that a majority of
the members of our Board of Directors will have been members of our Board
of Directors for less than two years, unless the election or nomination of
each new director was approved by at least two-thirds of the directors
then in office at the beginning of the two-year
period.
|
Our Board
of Directors may amend or terminate the Stock Purchase Plan at any
time. Our Board of Directors may not amend the Stock Purchase Plan
without shareholder approval if such amendment increases the number of shares of
our common stock issuable under the Stock Purchase Plan, except for permissible
adjustments in the event of
changes
in our capitalization, alters the purchase price formula to reduce the purchase
price payable for shares purchasable under the Stock Purchase Plan, or modifies
the eligibility requirements under the Stock Purchase Plan.
Unless
sooner terminated by our Board of Directors, the Stock Purchase Plan will
terminate upon the earliest of (i) the date on which all shares available for
issuance under the Stock Purchase Plan have been issued; or (ii) the date on
which all options are exercised in connection with a change of
control.
No
options have been granted under the proposed Stock Purchase Plan. It
is not possible at present to predict the number of employees who will elect to
participate in the Stock Purchase Plan, or which employees will elect to
participate in the Stock Purchase Plan after the Annual Meeting.
The last
sales price of our common stock on April 9, 2009, was $10.13 per
share.
Federal
Income Tax Consequences of the Plan
The
following is a brief description of the U.S. federal income tax consequences
generally arising with respect to options that may be awarded under the Stock
Purchase Plan. The Stock Purchase Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Internal
Revenue Code. The Stock Purchase Plan is not intended to qualify
under Section 401 of the Internal Revenue Code and is not subject to the
requirements of the Employee Retirement Income Security Act of 1974, as
amended. This description of the federal income tax consequences of
the Stock Purchase Plan is not a complete description. There may be
different tax consequences under certain circumstances, and there may be federal
gift and estate tax consequences and state, local and foreign tax
consequences. All affected individuals should consult their own
advisors regarding their own situation. This discussion is intended
for the information of the shareholders considering how to vote at the Annual
Meeting and not as tax guidance to individuals who will participate in the Stock
Purchase Plan.
Under the
Internal Revenue Code as currently in effect, a participant in the Stock
Purchase Plan will not be deemed to have recognized income, nor will we be
entitled to a deduction, upon the participant’s purchase of our common stock
under the Stock Purchase Plan. Instead, a participant will recognize
income when he or she sells or otherwise disposes of our common stock or upon
his or her death.
If a
participant sells our common stock purchased under the Stock Purchase Plan more
than two years after the date on which the option to purchase our common stock
was granted and more than one year after the purchase of our common stock (the
holding period), a portion of the participant’s gain will be ordinary income and
a portion will be capital gain. The participant will be taxed at
ordinary income tax rates on the excess of the value of our common stock on the
date on which the option was granted (on the first day of the purchase period)
over the purchase price, or, if less, the entire gain on the
sale. The participant will have additional capital gain or loss equal
to the difference, if any, between the proceeds of the sale and the
participant’s basis in our common stock (the purchase price plus any ordinary
income realized). The capital gain rate will depend on how long our
common stock is held by the participant. We will not be entitled to
any tax deduction with respect to a sale by a participant after the holding
period.
If a
participant sells our common stock before the expiration of the holding period,
the participant generally will be taxed at ordinary income tax rates to the
extent that the value of our common stock on the purchase date exceeded the
purchase price. We will be entitled to a corresponding
deduction. The participant will have additional capital gain or loss
on the difference between the proceeds of the sale and the participant’s basis
in our common stock (the purchase price plus any ordinary income
realized). The capital gain rate will depend on how long our common
stock is held by the participant.
The
estate of a participant who dies while holding our common stock purchased under
the Stock Purchase Plan will recognize ordinary income in the year of the
participant’s death in an amount equal to the excess of the value of our common
stock on the date on which the option was granted over the purchase price, or,
if less, the amount by which the fair market value of our common stock on the
date of death exceeds the purchase price.
PROPOSAL
3
RATIFICATION
OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR 2009
At its
April 7, 2009 meeting, our Audit Committee recommended and approved the
appointment of KPMG LLP (“KPMG”) as the Company’s independent registered public
accounting firm to audit the consolidated financial statements of the Company
for the year ending December 31, 2009. KPMG has served in this
capacity since being engaged by us on July 30, 2002. We are seeking
the ratification of our appointment of KPMG as our independent registered public
accounting firm for 2009 at the Annual Meeting of Shareholders.
We expect
that a representative of KPMG will be present at the Annual Meeting and will be
available to respond to appropriate questions. If this representative
desires to do so, he or she will have the opportunity to make a statement at the
Annual Meeting.
Vote
Required and Recommendation of our Board of Directors
This
proposal will be approved if a majority of the votes cast by all shareholders,
voting as a single class, are FOR approval. Abstentions on this
proposal are not considered “votes cast” and will have no effect on the outcome
of the vote. Similarly, broker non-votes are not considered “votes
cast” with respect to this proposal and, therefore, will have no effect on the
outcome of the vote.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
ADOPTION
OF THIS PROPOSAL 3.
Fees
Billed by the Company’s Independent Auditors
The audit
and tax fees to us from KPMG for 2008 and 2007 are set forth in the table
below:
Fee Category
|
2008
|
2007
|
Audit
Fees
|
$220,000(1)
|
$258,450(1)
|
Audit-Related
Fees
|
–––
|
–––
|
Tax
Fees
|
–––
|
12,317(2)
|
All
Other Fees
|
–––
|
–––
|
_______________
(1)
|
Consisted
of fees relating to the audit of consolidated financial statements, the
audit of internal control over financial reporting, quarterly reviews, the
issuances of consents relating to registration statements filed with the
SEC, and a comfort letter issued in connection with a 2007 stock
offering.
|
|
|
(2)
|
Consisted
of fees relating to international tax services, including with respect to
the Company’s establishment of a corporate presence in Hong
Kong.
|
Audit
Committee Pre-Approval Policies and Procedures
Our Audit
Committee currently approves all engagements to provide both audit and non-audit
services, and has not established formal pre-approval policies or
procedures. During 2008, our Audit Committee did not approve any
non-audit services, as defined by Rule 2-01(c)(7)(i)(C) of Regulation
S-X.
EQUITY
COMPENSATION PLANS
The
following table includes information on our equity compensation plans (including
individual compensation arrangements), both those previously approved and not
approved by our shareholders, as of December 31, 2008:
Equity
Compensation Plan Information
Plan Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants and rights (#)
|
Weighted-average
exercise price of outstanding options, warrants and rights ($)
|
Number
of securities remaining available for future issuance under equity compensation plans(1) (#)
|
Equity
compensation plans approved by security holders
|
2,966,116
|
10.10
|
1,344,636
|
Equity
compensation plans not approved by security holders
|
867,207(2)
|
16.16
|
–––
|
Total
|
3,833,323
|
11.47
|
1,344,636
|
_______________
(1)
|
Excludes
securities reflected in the column entitled “Number of securities to be
issued upon exercise of outstanding options, warrants and
rights.”
|
|
|
(2)
|
Equity
compensation plan arrangements not approved by shareholders consist of
various warrants to purchase shares of our common stock. These
warrants were granted under written agreements containing substantially
similar terms. The material distinguishing features of each
such arrangement are identified in the table below. All grants
are fully vested.
|
Grantee(s)
|
Number
of
Unexercised
Shares (#)
|
Exercise
Price ($)
|
Grant Date
|
Expiration Date
|
Scientific
Advisory Board Member
|
93,994(a)
|
12.39(a)
|
2/17/2000
|
2/17/2010
|
Julia
J. Brown, Ph.D
|
90,000
|
16.75
|
4/18/2000
|
4/18/2010
|
PPG
Industries, Inc.
|
121,843
|
24.28
|
2/15/2002
|
2/15/2009
|
PPG
Industries, Inc.
|
61,024
|
10.14
|
2/15/2003
|
2/15/2010
|
PPG
Industries, Inc.
|
315,461
|
10.39
|
2/15/2004
|
2/15/2011
|
PPG
Industries, Inc.
|
184,885
|
24.28
|
2/15/2005
|
2/15/2012
|
Total
warrants and options not approved by security holders
|
867,207
|
|
|
|
_______________
(a)
|
As
adjusted, in accordance with anti-dilution provisions of the applicable
warrant agreement.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security
Ownership of Certain Beneficial Owners
The table
below sets forth certain information, as of the Record Date, with respect to
persons known by the Company to beneficially own more than five percent (5%) of
any class of our voting securities.
Title of Class
|
Name
and Address
of Beneficial Owner(1)
|
Number
of Shares
Beneficially Owned(2) (#)
|
Percentage
Ownership(2)
|
Common
Stock
|
|
|
|
|
Scott
Seligsohn(3)(4)
|
3,425,028
|
9.4%
|
|
Lori
S. Rubenstein(3)(5)
|
3,301,000
|
9.1%
|
|
Steven
G. Winters(3)(6)
|
3,176,000
|
8.7%
|
|
FMR
LLC(7)
|
3,921,145
|
10.8%
|
|
|
|
|
|
|
|
|
Series
A Preferred Stock
|
|
|
|
|
American
Biomimetics Corporation(6)(9)
|
200,000
|
100%
|
|
Sherwin
I. Seligsohn(9)
|
200,000
|
100%
|
_______________
(1)
|
Unless
otherwise indicated, the address of each beneficial owner is 375 Phillips
Boulevard, Ewing, New Jersey 08618.
|
|
|
(2)
|
Unless
otherwise indicated, we believe that all persons named in the table have
sole voting and investment power with respect to all shares of our common
stock and Series A Preferred Stock beneficially owned by
them. The percentage ownership for each beneficial owner listed
above is based on 36,316,903 shares of our common stock and 200,000 shares
of our Series A Preferred Stock outstanding as of the Record
Date. In accordance with SEC rules, options or warrants to
purchase shares of our common stock that were exercisable as of the Record
Date, or would become exercisable within 60 days thereafter, are deemed to
be outstanding and beneficially owned by the person holding such options
or warrants for the purpose of computing such person’s percentage
ownership, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
|
|
|
(3)
|
Includes
(i) 1,500,000 shares of our common stock owned by the Sherwin I. Seligsohn
Irrevocable Indenture of Trust dated July 29, 1993, FBO Lori S. Rubenstein
(the “Rubenstein Trust”), of which Lori S. Rubenstein, Scott Seligsohn and
Steven G. Winters are co-trustees; (ii) 1,500,000 shares of our common
stock owned by the Sherwin I. Seligsohn Irrevocable Indenture of Trust
dated July 29, 1993, FBO Scott Seligsohn (the “Seligsohn Trust”), of which
Lori S. Rubenstein, Scott Seligsohn and Steven G. Winters are co-trustees;
and (iii) 176,000 shares of our common stock owned by American Biomimetics
Corporation, of which the Rubenstein Trust and Seligsohn Trust are the
principal shareholders. Ms. Lori S. Rubenstein is Mr. Sherwin
I. Seligsohn’s adult daughter, and Mr. Scott Seligsohn is Mr. Sherwin I.
Seligsohn’s adult son.
|
|
|
(4)
|
Includes
38,250 options to purchase shares of our common stock and 210,778 shares
of our common stock owned directly by Mr. Scott
Seligsohn.
|
|
|
(5)
|
Includes
125,000 shares of our common stock owned directly by Ms.
Rubenstein.
|
|
|
(6)
|
The
address of these beneficial owners is c/o Cozen O'Connor, 1900 Market
Street, Philadelphia, PA 19103.
|
|
|
(7)
|
Based
solely on a Schedule 13G/A filed by FMR LLC and Edward C. Johnson 3d,
Chairman of FMR LLC, on February 17, 2009. These shares
are beneficially owned by Fidelity Management & Research Company
(“Fidelity”), a wholly-owned subsidiary of FMR LLC and a registered
investment advisor. The ownership of one investment company,
Fidelity Growth Company Fund, amounted to 3,595,445 of the
shares. Fidelity has sole power to dispose of or to direct the
disposition of all of the shares, but does not have sole or shared power
to vote or to direct the vote of any of the shares. Voting of
the shares occurs under written guidelines established by the Board of
Trustees for the various Fidelity funds that own the
shares. The reported address for each of Fidelity Management
& Research Company, FMR LLC, Fidelity Growth Company Fund and Edward
C. Johnson 3d is 82 Devonshire Street, Boston, Massachusetts
02109.
|
(8)
|
Mr.
Sherwin I. Seligsohn, our Founder and Chairman of the Board, is the sole
Director, Chairman, President and Secretary of American Biomimetics
Corporation, which owns all 200,000 shares of our Series A Preferred
Stock.
|
Security
Ownership of Management
The table
below sets forth certain information, as of the Record Date, with respect to the
beneficial ownership of any class of our equity securities beneficially owned by
all directors, nominees for director and Named Executive Officers of the
Company.
Title of Class
|
Name
and Address
of Beneficial Owner(1)
|
Number
of Shares Beneficially Owned (#)(2)
|
Percentage
Ownership(2)
|
Common
Stock
|
|
|
|
|
Sherwin
I. Seligsohn(3)
|
692,193
|
1.9%
|
|
Steven
V. Abramson
|
610,950
|
1.7%
|
|
Sidney
D. Rosenblatt
|
516,530
|
1.4%
|
|
Julia
J. Brown, Ph.D
|
402,365
|
1.1%
|
|
Janice
K. Mahon
|
108,727
|
*
|
|
Leonard
Becker
|
171,167
|
*
|
|
Elizabeth
H. Gemmill
|
179,667
|
*
|
|
C.
Keith Hartley(4)
|
192,895
|
*
|
|
Lawrence
Lacerte
|
872,710
|
2.4%
|
|
All
directors and executive officers
as
a group (9 persons)
|
3,747,204
|
9.9%
|
|
|
|
|
|
|
|
|
Series
A Preferred Stock
|
|
|
|
|
Sherwin
I. Seligsohn(5)
|
200,000
|
100%
|
_______________
*
|
Represents
less than 1% of our outstanding common stock.
|
|
|
(1)
|
Unless
otherwise indicated, the address of each beneficial owner is 375 Phillips
Boulevard, Ewing, New Jersey 08618.
|
|
|
(2)
|
Unless
otherwise indicated, we believe that all persons named in the table have
sole voting and investment power with respect to all shares of our common
stock beneficially owned by them. The percentage ownership for
each beneficial owner listed above is based on 36,316,903 shares of our
common stock and 200,000 shares of our Series A Preferred Stock
outstanding as of the Record Date. In accordance with SEC
rules, options or warrants to purchase shares of our common stock that
were exercisable as of the Record Date, or would become exercisable within
60 days thereafter, are deemed to be outstanding and beneficially owned by
the person holding such options or warrants for the purpose of computing
such person’s percentage ownership, but are not deemed to be outstanding
for the purpose of computing the percentage ownership of any other
person. The numbers of shares of common stock listed include
the following number of shares issuable upon the exercise of outstanding
warrants or options: Sherwin I. Seligsohn – 285,750; Steven V. Abramson –
285,000; Sidney D. Rosenblatt – 285,000; Julia J. Brown – 318,500; Janice
K. Mahon – 98,750; Leonard Becker – 105,000; Elizabeth H. Gemmill –
140,000; C. Keith Hartley – 130,000; and Lawrence Lacerte –
0.
|
|
|
(3)
|
Includes
176,000 shares of our common stock owned by American Biomimetics
Corporation, of which Mr. Sherwin I. Seligsohn is the sole Director,
Chairman, President and Secretary. Also includes 21,000 shares
of our common stock owned by The Seligsohn Foundation, of which Mr.
Sherwin I. Seligsohn is the sole trustee. Does not include (i)
1,500,000 shares of our common stock owned by the Rubenstein Trust; (ii)
1,500,000 shares of our common stock owned by the Seligsohn Trust; (iii)
125,000 shares of our common stock owned by Ms. Lori S. Rubenstein; and
(iv) 38,250 options to purchase shares of our common stock and 210,778
shares of our common stock owned by Mr. Scott Seligsohn, as to which in
each case Mr. Sherwin I. Seligsohn disclaims beneficial
ownership.
|
|
|
(4)
|
Includes
23,528 shares of our common stock owned by Mr. Hartley’s Defined Benefit
Pension Plan.
|
|
|
(5)
|
Mr.
Sherwin I. Seligsohn is the sole Director, Chairman, President and
Secretary of American Biomimetics Corporation, which owns all 200,000
shares of our Series A Preferred
Stock.
|
CERTAIN
TRANSACTIONS WITH RELATED PERSONS
Our
Relationship with Global Photonic Energy Corporation
Global
Photonic Energy Corporation (“GPEC”) is a private company that was formed by
Sherwin I. Seligsohn, our Founder and Chairman of the Board, at about the same
time we began operating in 1994. GPEC’s business focuses on organic
photovoltaic solar cell technologies. These technologies are related
to our organic light emitting device (OLED) technologies, in that similar
processes and materials used to emit light from an OLED may be useful for
converting solar energy into electricity in an organic photovoltaic
device.
Sherwin
I. Seligsohn currently serves as Chairman of the Board, Chief Executive Officer
and President of GPEC. Certain other of our employees who are not
directors or executive officers of the Company also are employed by and/or serve
on the Board of Directors of GPEC. Mr. Seligsohn and these other
individuals receive separate salaries, bonuses and other compensation from GPEC
for their work in these various capacities.
For the
first two months of 2008, we leased to GPEC approximately 556 square feet of
space (constituting three offices) at our Ewing, New Jersey
facility. We also permitted GPEC employees to reasonably access and
use other areas of our facility, and to utilize associated utilities and other
ancillary services (telephone services, computer printer services, photocopying
services, Internet access, computer backup, etc.) as required in connection with
GPEC’s occupancy of the leased office space. We charged GPEC $18.50
per square foot per year for use of the leased office space, plus an additional
$109.50 per month for associated utilities and other ancillary
services. For 2008, payments from GPEC for these purposes totaled
$1,933. This arrangement ended effective as of February 29,
2008, at which time GPEC relocated its offices to another building.
For many
years, we and GPEC have both funded research in the laboratories of Dr. Stephen
R. Forrest, formerly at Princeton University and now at the University of
Michigan, and Dr. Mark E. Thompson at the University of Southern
California. Our funded research relates to OLEDs and other organic
opto-electronic devices, and GPEC’s funded research relates to organic
photovoltaic solar cells. On occasion, inventions arising from this
funded research have application to both our and GPEC’s fields of
interest.
To
address this potential overlap of interest, we reached an understanding with
GPEC, memorialized in a letter dated June 4, 2004, that patent rights derived
from research funded under the research agreements after that date would be
licensed to each of the Company and GPEC exclusively in its respective field of
interest. For GPEC, this field is organic photovoltaic cell for solar
energy conversion. For us, this field is thin film organic
electronics for displays, lasers, lighting, organic tft’s, organic memories and
other thin-film organic devices, but not including thin film organic
photovoltaic cells for solar energy conversion. We and GPEC each pay
50% of the legal fees and other costs for patent filings claiming inventions
that have application to both parties’ fields of interest, which filings are
made in agreed upon countries. If only one of the parties wishes to
make a patent filing in a particular country, that party bears the entire cost
of the filing. Otherwise, the parties exchange no money or other
consideration on account of this arrangement.
Our
Relationship with Scott Seligsohn
We employ
Scott Seligsohn, son of Sherwin I. Seligsohn, as an executive assistant to
Sherwin I. Seligsohn in his capacity as our Founder and Chairman of the Board of
Directors. For 2008, we paid Scott Seligsohn base salary and bonus
compensation of $100,751.
Policies
and Procedures for Approval of Related Person Transactions
Consistent
with applicable NASDAQ listing requirements, the Audit Committee of our Board of
Directors is responsible for reviewing all transactions between us and related
persons for potential conflicts of interest on an ongoing basis, and for
approving all such transactions. Related persons include any of our
directors or nominees for
director,
any of our executive officers, any shareholders owning more than 5% of any class
of our equity securities, and immediate family members of any of these
persons.
To help
identify transactions with related persons, each year, we submit and require our
directors and executive officers to complete Director and Officer Questionnaires
identifying any transactions with us in which they or their family members have
an interest. Responses to these Director and Officer Questionnaires
are reviewed and transactions that might reasonably pose a conflict of interest
are brought to the attention of the Audit Committee for
consideration.
The
transactions with the related persons identified above were all reviewed with
our Audit Committee at a meeting on April 7, 2009. At this meeting,
the Audit Committee ratified each of these transactions following its
consideration of the potential conflicts of interest.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our executive officers and directors, as well
as persons beneficially owning more than 10% of any class of our equity
securities, to file with the SEC reports of beneficial ownership and reports of
changes in beneficial ownership of these equity securities. Based
solely on our review of these reports as furnished to us during or with respect
to 2008, we believe that our executive officers, directors and holders of more
than 10% of any class of our equity securities met all applicable filing
requirements, except for one Form 4 filing for each of Mr. Becker, Ms. Gemmill,
Mr. Hartley and Mr. Lacerte that was submitted one business day
late.
ETHICS
AND BUSINESS CONDUCT
Code
of Ethics and Code of Conduct for Employees
We have
adopted Corporate Policies and Procedures applicable to all of our officers and
other employees, which we last updated in December 2006 and which was ratified
by our Board of Directors on January 15, 2007. A portion of these
policies and procedures (our “Code of Conduct for Employees”) constitutes our
“code of ethics” for the Chief Executive Officer, Chief Financial Officer and
Controller within the meaning of applicable SEC rules. Our Code of
Conduct for Employees also serves as our “code of conduct” applicable to all
officers and employees of the Company as required by applicable NASDAQ listing
standards. In December 2008, all of our employees were asked to
review and affirm their knowledge and understanding of the Code of Conduct for
Employees. Our Code of Conduct for Employees is publicly available
through the “For Investors” section of our website at www.universaldisplay.com.
If we
make any further amendments to our Code of Conduct for Employees (other than
technical, administrative, or other non-substantive amendments), or if we grant
any waivers of the Code of Conduct for Employees (including implicit waivers) in
favor our Chief Executive Officer, Chief Financial Officer or Controller, we
will disclose the nature of the amendment or waiver, its effective date and to
whom it applies in that same location on our website, or in a current report on
Form 8-K that we file with the SEC. In addition, any waiver of our
Code of Conduct for Employees with respect to our executive officers must be
approved by our Board of Directors.
Code
of Conduct for Directors
Our Board
of Directors has adopted a “Code of Conduct for Directors” that serves as our
“code of conduct” applicable to all of our directors as required by applicable
NASDAQ listing requirements. The Code of Conduct for Directors was
last ratified by our Board of Directors at a meeting held on April 7,
2009. Our Code of Conduct for Directors is publicly available through
the “For Investors” section of our website at www.universaldisplay.com.
Any
waiver of our Code of Conduct for Directors must be approved by our Board of
Directors and will be disclosed as required under applicable
regulations.
SHAREHOLDER
PROPOSALS
Shareholders
may submit proposals to us on matters appropriate for shareholder action at our
next annual meeting of shareholders in accordance with regulations adopted by
the SEC. Proposals must be received by December 25, 2009, to be
considered for inclusion in the proxy statement and form of proxy for our next
annual meeting of shareholders. Shareholder proposals received by us
after March 10, 2010, will be deemed “untimely,” and proxy holders will
have the right to exercise discretionary voting authority with respect to such
proposals.
All
shareholder proposals must be in writing and must comply with the notice,
information and consent provisions contained in our Amended and Restated
Bylaws. Proposals should be directed to the attention of our
Corporate Secretary at Universal Display Corporation, 375 Phillips Boulevard,
Ewing, New Jersey 08618.
ANNUAL
REPORT TO SHAREHOLDERS
A copy of
our 2008 Annual Report to Shareholders, containing financial statements for the
year ended December 31, 2008, is being transmitted with this proxy
statement. A copy of our Annual Report on Form 10-K for the year
ended December 31, 2008, including the financial statements and any financial
statement schedules, may be obtained, without charge, by writing to us at
Universal Display Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618,
Attn: Corporate Secretary.
|
Sincerely,
|
|
|
|
/s/ Sidney
D. Rosenblatt
|
|
Sidney
D. Rosenblatt
|
|
Executive
Vice President, Chief Financial Officer,
|
|
Treasurer
and Secretary
|
Ewing,
New Jersey
April 24,
2009
Directions
to the Annual Meeting of Shareholders
From
New York, New Jersey, and all points East via I-95 South:
Take I-95
South to the NJ Turnpike South. Take the NJ Turnpike South to the PA
Turnpike (Exit 6). Take the PA Turnpike West to I-476 South (Exit
25A). Take I-476 South to I-76 East. Take I-76 to Exit
339, Rt. 1 South – City Avenue.*
From
Delaware, Maryland and all points South via I-95 North:
Take I-95
North to I-76 (Exit 11). Take I-76 across the George Platt
Bridge. After exiting the bridge, turn left onto I-76
West. Take I-76 West to Exit 339, Rt. 1 South – City
Avenue.*
From
Harrisburg, Hershey and all points West via the Pennsylvania
Turnpike:
Take the
PA Turnpike East to I-76 East (Exit 24 – Valley Forge). Take I-76
East to Exit 339, Rt. 1 South – City Avenue.*
* When
exiting I-76 onto City Avenue, stay in the far left lane and proceed through the
first traffic light. Turn left at the next light onto Presidential
Blvd. Make the first right into the Crowne Plaza Hotel parking
lot. If driving North on City Avenue, or if required to turn around,
there is an entrance to the Hotel between T.G.I. Friday’s and Commerce
Bank.
UNIVERSAL
DISPLAY CORPORATION
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON JUNE 25, 2009
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints Sherwin I. Seligsohn, Steven V. Abramson and Sidney
D. Rosenblatt, jointly and severally, as proxies, each with power to appoint a
substitute, and hereby authorizes them to represent and to vote, as designated
on the reverse side, all of the shares of common stock of Universal Display
Corporation held of record by the undersigned on April 9, 2009, at the Annual
Meeting of Shareholders to be held on June 25, 2009, or any adjournment
thereof.
PLEASE
COMPLETE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN YOUR PROXY
PROMPTLY
(Continued
and to be signed on the reverse side)
ANNUAL
MEETING OF SHAREHOLDERS OF
UNIVERSAL
DISPLAY CORPORATION
June
25, 2009
Important
Notice Regarding the Availability of
Proxy
Materials for the Annual Meeting of Shareholders to be Held on June 25,
2009
This
proxy statement and our 2008 Annual Report to Shareholders are available at
www.universaldisplay.com
in the
“For
Shareholders – SEC Documents” section.
Please
sign, date and mail your proxy card in the envelope provided as soon as
possible.
↓ Please detach along
perforated line and mail in the envelope provided. ↓
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE
ELECTION OF DIRECTORS AND “FOR” PROPOSAL 2 AND PROPOSAL 3.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1.
|
Election
of the seven directors proposed in the accompanying Proxy Statement, each
to serve for a one-year term and until a successor is selected and
qualified.
|
|
NOMINEES
|
[ ] FOR
ALL NOMINEES
|
□
|
Steven
V. Abramson
|
□
|
Leonard
Becker
|
[ ] WITHHOLD
AUTHORITY
FOR
ALL NOMINEES
|
□
|
Elizabeth
H. Gemmill
|
□
|
C.
Keith Hartley
|
[ ] FOR
ALL EXCEPT
(See
Instructions Below)
|
□
|
Lawrence
Lacerte
|
□
|
Sidney
D. Rosenblatt
|
|
□
|
Sherwin
I. Seligsohn
|
INSTRUCTION:
|
To
withhold authority to vote for any individual nominee(s), mark “FOR ALL
EXCEPT” and fill in the circle next to each nominee you wish to withhold,
as shown here: ▄
|
|
FOR
|
AGAINST
|
ABSTAIN
|
2.
Approval of the Company’s 2009 Employee Stock Purchase
Plan
|
□
|
□
|
□
|
3.
Ratification of the Appointment of KPMG LLP as the Company’s Independent
Registered Public Accounting Firm for 2009
|
□
|
□
|
□
|
The
shares represented by this proxy, if it is properly executed, will be voted in
the manner directed herein by the undersigned shareholder(s). If no
direction is made, the shares represented by this proxy will be voted “FOR” all
nominees for director and “FOR” Proposal 2 and Proposal 3. To the
extent permissible under applicable law, this proxy also delegates discretionary
authority to vote on any matter that may properly come before the meeting, or
any adjournment or postponement thereof.
To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please
note that changes to the registered name(s) on the account may not be
submitted via this method.
|
□
|
Signature
of Shareholder:______________________________ Date ______ Signature of
Shareholder:_____________________________ Date ______
Note:
|
Please
sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership
name by authorized person.
|
Appendix
A
UNIVERSAL
DISPLAY CORPORATION
2009
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
OF THE PLAN
The
Universal Display Corporation 2009 Employee Stock Purchase Plan is intended to
promote the interests of Universal Display Corporation by providing eligible
employees of a Participating Employer (as defined in Article 2) with the
opportunity to acquire a proprietary interest in the Company through
participation in a payroll deduction-based employee stock purchase plan designed
to qualify under section 423 of the Internal Revenue Code of 1986, as
amended. The Plan (as defined in Article 2) is not intended and shall
not be construed as constituting an “employee benefit plan,” within the meaning
of section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended.
The Board
(as defined in Article 2) has adopted the Plan to be effective as of June 25,
2009, subject to shareholder approval of the Plan. The Company
expects to submit the Plan to the shareholders of the Company for approval at
the Company’s 2009 annual meeting on June 25, 2009. If for any reason
the shareholders of the Company do not approve the Plan on or before September
30, 2009, the first Purchase Period shall terminate on a date specified by the
Board, the Plan shall immediately terminate, and no purchases of Common Stock
(as defined in Article 2) shall be made under the Plan.
2. DEFINITIONS
(a) “Board” shall mean the
Company’s Board of Directors.
(b) “Change of Control” shall be
deemed to have occurred if:
(i) As a
result of any transaction, any one shareholder, other than an existing
shareholder as of the Effective Date, becomes a “beneficial owner” (as defined
in Rule 13-d under the Exchange Act), directly or indirectly, of securities of
the Company representing more than 50% of the Common Stock or the combined
voting power of the Company’s then outstanding securities; or
(ii) A
liquidation or dissolution of or the sale of all or substantially all of the
Company’s assets occurs; or
(iii) After the
Effective Date:
(A) As a
result of a tender offer, stock purchase, other stock acquisition, merger,
consolidation, recapitalization, reverse split, or sale or transfer of assets
(but excluding any sale of the Company’s securities to the public pursuant to a
public offering), any person or group (as such terms are used in and under
Section 13(d) of the Exchange Act), other than an existing shareholder, becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing more than 30% of the combined voting power of the Company’s then
outstanding securities; or
(B) During
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company’s shareholders, of each new director was approved by a vote of at least
2/3 of the directors then still in office who were directors at the beginning of
the period.
(c) “Code” shall mean the Internal
Revenue Code of 1986, as amended.
(d) “Common Stock” shall mean the
common stock of the Company.
(e) “Company Affiliate” shall mean
any subsidiary corporation of the Company (as determined in accordance with Code
section 424), whether now existing or subsequently established.
(f) “Company” shall mean Universal
Display Corporation, and any corporate successor to all or substantially all of
the assets or voting stock of Universal Display Corporation that shall adopt the
Plan.
(g) “Compensation” shall mean the
regular base salary paid to a Participant by one or more Participating Employers
during the Participant’s period of participation in a Purchase Period under the
Plan. Such Compensation shall be calculated before deduction of (A)
any income or employment tax withholdings or (B) any contributions made by the
Participant to any Code section 401(k) salary deferral plan, any Code section
125 cafeteria benefit program or any Code section 132(f)(4) transportation
fringe benefit program now or hereafter established by the Company or any
Company Affiliate. However, Compensation shall not include any
contributions made by the Company or any Company Affiliate on the Participant’s
behalf to any employee benefit or welfare plan now or hereafter established
(other than Code section 401(k), Code section 125, or Code section 132(f)(4)
contributions deducted from such Compensation).
(h) “Effective Date” shall mean
June 25, 2009.
(i) “Eligible Employee” shall mean
any person who is employed by a Participating Employer as an employee on a basis
under which he or she is regularly expected to render more than 20 hours of
service per week and for more than five months per calendar year, for earnings
considered wages under Code section 3401(a). However, an “Eligible Employee” shall not
include any person who would, immediately after the grant of a purchase right
under this Plan, own (within the meaning of Code section 424(d)) or hold
outstanding options or other rights to purchase stock possessing 5% or more of
the total combined voting power or value of all classes of stock of the Company
or any Company Affiliate.
(j) “Entry Date” means the first
day of a Purchase Period.
(k) “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.
(l) “Fair Market Value” per share
of Common Stock on any relevant date shall be determined in accordance with the
following provisions:
(i) If the
Common Stock is at the time traded on the NASDAQ Global Market, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the
date in question, as such price is reported by the National Association of
Securities Dealers on the NASDAQ Global Market. If there is no
closing selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
(ii) If the
Common Stock is at the time not traded on the NASDAQ Global Market, or if
publicly traded, is not so reported, the Fair Market Value shall be determined
by the Plan Administrator on the basis of available prices for such Common Stock
or in such other manner as may be authorized by applicable regulations under the
Code.
(m) “Participant” shall mean any
Eligible Employee of a Participating Employer who is actively participating in
the Plan.
(n) “Participating Employer” shall
mean the Company, UDC, Inc. and such other Company Affiliates as may
be authorized from time to time by the Board to extend the benefits of the Plan
to their Eligible Employees.
(o) “Plan” shall mean the
Universal Display Corporation 2009 Employee Stock Purchase Plan, as set forth in
this document, and as amended from time to time.
(p) “Plan Administrator” shall
mean the committee appointed by the Board to administer the Plan.
(q) “Purchase Date” shall mean the
last business day of each Purchase Period. The initial Purchase Date
shall be September 30, 2009.
(r) “Purchase Period” shall mean
each three-month period beginning January 1, April 1, July 1 and October 1 (or
other period designated by the Plan Administrator before the beginning of the
Purchase Period), at the end of which shares of Common Stock shall be purchased
on behalf of each Participant.
3. PURCHASE
PERIODS
(a) Purchase
Periods. Shares of Common Stock shall be offered for purchase
under the Plan through a series of consecutive Purchase Periods until such time
as (i) the maximum number of shares of Common Stock available for issuance
under the Plan shall have been purchased or (ii) the Plan shall have been
sooner terminated.
(b) Duration of Purchase
Periods. Each Purchase Period shall be of such duration (not
to exceed 24 months) as shall be determined by the Plan Administrator prior to
the beginning of the Purchase Period. The first Purchase Period shall
begin on July 1, 2009 and shall end on September 30, 2009, subject to
shareholder approval of the Plan. On and after September 30, 2009,
each Purchase Period shall commence at a three-month interval on each January 1,
April 1, July 1 and October 1. The Plan Administrator may establish
different (shorter or longer) Purchase Periods, before the beginning of the
applicable Purchase Period, as the Plan Administrator deems
appropriate.
4. ELIGIBILITY
(a) Commencement of
Participation. Except as provided in Article 7, an Eligible
Employee who is employed by a Participating Employer on the Effective Date shall
be eligible to participate in the Plan as of the Effective
Date. Except as provided in Article 7, all other Eligible Employees
shall be eligible to participate in the Plan as of the Entry Date
coinciding with or next following the date on which the Eligible Employee
becomes an Eligible Employee.
(b) Enrollment
Forms. In order to participate in the Plan for a particular
Purchase Period, an Eligible Employee must complete enrollment forms prescribed
by the Plan Administrator (including a stock purchase agreement, a payroll
deduction authorization and a brokerage account authorization form) and must
file such forms with the Plan Administrator (or its designee) at such time
before the Entry Date for that Purchase Period as may be determined by the Plan
Administrator. An Eligible Employee who is actively participating in
the Plan shall automatically be enrolled as a Participant for the next Purchase
Period, unless the Eligible Employee elects otherwise at least seven days prior
to the beginning of the next Purchase Period (or by such other date as the Plan
Administrator determines) by filing the appropriate form with the Plan
Administrator (or its designee).
5. PAYROLL
DEDUCTIONS
(a) Elections. The
payroll deduction authorized by a Participant for purposes of acquiring shares
of Common Stock during a Purchase Period may be any multiple of 1% of the
Compensation paid to the Participant during the Purchase Period, up to a maximum
of 10% of
Compensation. The deduction rate so authorized shall continue in
effect throughout the Purchase Period, except to the extent such rate is changed
in accordance with the following guidelines:
(i) The
Participant may, at any time during the Purchase Period, reduce his or her rate
of payroll deduction, to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. The Participant may not
effect more than one such reduction per Purchase Period.
(ii) Prior to
the commencement of any new Purchase Period, a Participant may increase the rate
of his or her payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed 10% of
Compensation) shall become effective on the next Entry Date following the filing
of such form.
(b) Commencement. Payroll
deductions shall begin on the first pay day as of which commencement is
administratively feasible following the beginning of the Purchase Period and
shall (unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of the Purchase
Period. The amounts so collected shall be credited to a book account
established on the Company’s records for the Participant. No interest
shall be paid on the balance from time to time outstanding in such
account. The amounts collected from the Participant shall not be
required to be held in any segregated account or trust fund and may be
commingled with the general assets of the Company and used for general corporate
purposes.
(c) Cessation of Payroll
Deductions. Payroll deductions shall automatically cease upon
the termination of the Participant’s purchase right in accordance with the
Plan.
6. PURCHASE
RIGHTS
(a) Grant of Purchase
Rights. A Participant shall be granted a separate purchase
right for each Purchase Period in which the Participant enrolls. The
purchase right shall be granted on the Entry Date of the Purchase Period and
shall provide the Participant with the right to purchase shares of Common Stock,
at the end of that Purchase Period, upon the terms set forth
below. The Participant shall execute a stock purchase agreement
embodying such terms and such other provisions (not inconsistent with the Plan)
as the Plan Administrator may deem advisable.
(b) Exercise of the Purchase
Right. Each
purchase right shall be automatically exercised on the Purchase Date for the
Purchase Period, and shares of Common Stock shall accordingly be purchased on
behalf of each Participant on the Purchase Date. The purchase shall
be effected by applying the Participant’s payroll deductions for the Purchase
Period to the purchase of whole shares of Common Stock at the purchase price in
effect for the Participant for that Purchase Date. As promptly as
practicable after each Purchase Date, the Company shall arrange the delivery to
each Participant’s designated brokerage account, which accounts shall be
established at one or more brokerage firms as authorized by the Plan
Administrator (or its designee), of a certificate or book-entry deposit
representing the shares of Common Stock purchased by the Participant on the
Purchase Date.
(c) Purchase Price. Unless the Plan
Administrator determines otherwise prior to the beginning of the Purchase
Period, the purchase price per share at which Common Stock will be purchased on
the Participant’s behalf on the Purchase Date shall be equal to the lower of (i)
85% of the Fair Market Value per share of Common Stock on the Entry Date of the
Purchase Period or (ii) 85% of the Fair Market Value per share of Common Stock
on the Purchase Date. The Plan Administrator may change the purchase
price prior to the beginning of a Purchase Period, provided that the purchase
price may not be less than the purchase price derived from the formula described
in the preceding sentence.
(d) Number of Purchasable
Shares. The number of shares of Common Stock purchasable by a
Participant on the Purchase Date for a Purchase Period shall be the number of
whole shares obtained by dividing the amount collected from the Participant
through payroll deductions during the Purchase Period by the purchase price in
effect for the Participant for that Purchase Date. However, the
maximum number of shares of Common Stock that may be purchased by a Participant
on any Purchase Date shall not exceed 12,500 shares, subject to adjustment as
described in Section 9(b). The Plan Administrator shall have the
discretionary authority, exercisable prior to the start of any Purchase Period,
to increase or decrease the limitations to be in effect for the number of shares
purchasable per Participant for the Purchase Period.
(e) Excess Payroll
Deductions. Any payroll deductions that are not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date, unless the Participant
requests a
refund. Any
payroll deductions that are not applied to the purchase of Common Stock by
reason of the limitation on the maximum number of shares purchasable per
Participant as of a Purchase Date shall be promptly refunded.
(f) Suspension of Payroll
Deductions. In the event that a Participant is precluded from
purchasing additional shares of Common Stock on a Purchase Date by reason of the
accrual limitations in Article 7, then no further payroll deductions shall be
collected from the Participant with respect to that Purchase
Period.
(g) Withdrawal from Purchase
Period. The following provisions shall govern a Participant’s
withdrawal from a Purchase Period:
(i) A
Participant may withdraw from the Purchase Period in which he or she is enrolled
at least seven days prior to the Purchase Date (or by such other date as the
Plan Administrator determines) by filing the appropriate form with the Plan
Administrator (or its designee), and no further payroll deductions shall be
collected from the Participant with respect to that Purchase
Period. Any payroll deductions collected during the Purchase Period
in which such withdrawal occurs shall, at the Participant’s election, be
immediately refunded or held for the purchase of shares on the Purchase
Date. If no such election is made at the time of such withdrawal,
then the payroll deductions collected from the Participant during the Purchase
Period in which such withdrawal occurs shall be refunded as soon as
possible.
(ii) The
Participant’s withdrawal from a Purchase Period shall be irrevocable, and the
Participant may not subsequently rejoin that Purchase Period at a later
date. In order to resume participation in any subsequent Purchase
Period, the Participant must re-enroll in the Plan (by making a timely filing of
the prescribed enrollment forms) on or before the Entry Date of the subsequent
Purchase Period.
(h) Termination of Purchase
Right. If a Participant ceases to be an Eligible Employee for
any reason (including death, disability or change in status) while his or her
purchase right remains outstanding, the Participant’s purchase right shall
immediately terminate, and all of the Participant’s payroll deductions for the
Purchase Period in which the purchase right so terminates shall be immediately
refunded to the Participant.
(i) Change of
Control. Unless the Plan Administrator determines otherwise,
immediately prior to the effective date of any Change of Control of the Company
(as determined by the Plan Administrator), each outstanding purchase right shall
automatically be exercised by applying the payroll deductions of each
Participant for the Purchase Period in which the Change of Control occurs to the
purchase of whole shares of Common Stock at a purchase price per share equal to
the lower of (i) 85% of the Fair Market Value per share of Common Stock on the
first day of the Purchase Period or (ii) 85% of the Fair Market Value per share
of Common Stock immediately prior to the effective date of the Change of
Control, or such other purchase price formula as may be in effect for the
Purchase Period consistent with the Plan. The applicable limitation
on the number of shares of Common Stock purchasable per Participant shall
continue to apply to any such purchase.
(j) Proration of Purchase
Rights. If the total number of shares of Common Stock to be
purchased pursuant to outstanding purchase rights on any particular date exceeds
the number of shares then available for issuance under the Plan, the Plan
Administrator shall make a pro-rata allocation of the available shares on a
uniform and nondiscriminatory basis, and the payroll deductions of each
Participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such Participant, shall be refunded.
(k) Assignability. A
purchase right shall be exercisable only by the Participant and shall not be
assignable or transferable by the Participant.
(l) Shareholder
Rights. A Participant shall have no shareholder rights with
respect to the shares subject to his or her outstanding purchase right until the
shares are purchased on the Participant’s behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of the
purchased shares.
7. ACCRUAL
LIMITATIONS
(a) Dollar
Limitation. No Participant shall be entitled to accrue rights
to acquire Common Stock pursuant to any purchase right outstanding under this
Plan if and to the extent that such accrual, when aggregated with (i) rights to
purchase Common Stock accrued under any other purchase right granted under this
Plan and (ii) similar rights accrued under other employee stock purchase plans
(within the meaning of Code section 423) of the Company or any Company
Affiliate, would otherwise permit the Participant to purchase more than $25,000
worth of stock of the Company or any Company Affiliate (determined on the basis
of the Fair Market Value per share on the date or dates such rights are granted)
for each calendar year in which such rights are at any time
outstanding. For purposes of applying such accrual limitations to the
purchase rights granted under the Plan, the following provisions shall
apply:
(i) The right
to acquire Common Stock under each outstanding purchase right shall accrue on
each Purchase Date on which such right is outstanding and
exercisable.
(ii) No right
to acquire Common Stock under any outstanding purchase right shall accrue to the
extent the Participant has already accrued in the same calendar year the right
to acquire Common Stock under one or more other purchase rights at a rate equal
to $25,000 worth of Common Stock (determined on the basis of the Fair Market
Value per share on the date or dates of grant) for each calendar year in which
such rights were at any time outstanding.
(b) Refund. If by
reason of such accrual limitations, any purchase right of a Participant does not
accrue for a particular Purchase Period, then the payroll deductions that the
Participant made during that Purchase Period with respect to such purchase right
shall be promptly refunded.
8. ADMINISTRATION
OF THE PLAN
The Plan
Administrator shall have full discretionary authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code section 423. Decisions of the Plan Administrator
shall be final and binding on all parties having an interest in the
Plan. As a condition of participating in the Plan, all Participants
must acknowledge, in writing or by completing the enrollment forms to
participate in the Plan, that all decisions and determinations of the Plan
Administrator shall be final and binding on the Participant, his or her
beneficiaries and any other person having or claiming an interest under the Plan
on behalf of the Participant. The Plan Administrator may delegate its
ministerial duties to one or more subcommittees or to a third party
administrator, as it deems appropriate.
9. STOCK
SUBJECT TO PLAN
(a) Number of
Shares. Subject to adjustment as described below, the
aggregate number of shares of Common Stock of the Company that may be issued or
transferred under the Plan is 1,000,000 shares. The
stock purchasable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares of Common Stock purchased on the open
market.
(b) Adjustment. If any
change is made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Company’s receipt
of consideration, the Plan Administrator shall make appropriate adjustments to
(i) the maximum number and class of securities issuable under the Plan, (ii) the
maximum number and class of securities purchasable per Participant on any
Purchase Date, and (iii) the number and class of securities and the price per
share in effect under each outstanding purchase right, in order to prevent the
dilution or enlargement of benefits thereunder. In addition, the Plan
Administrator shall have discretion to make the foregoing equitable adjustments
in any circumstances in which an adjustment is not mandated by this subsection
(b) or applicable law. Any adjustments made by the Plan Administrator
shall be consistent with Code section 423 and shall be final, binding and
conclusive.
10. EFFECTIVE
DATE AND TERM OF THE PLAN
(a) Effective
Date. The Plan was adopted by the Board on April 7, 2009, and
shall become effective at the Effective Date, provided that no purchase rights
granted under the Plan shall be exercised, and no shares of Common Stock shall
be purchased hereunder, until (i) the Plan shall have been approved by the
shareholders of the Company and (ii) the Company shall have complied with all
applicable requirements of the Securities Act of 1933, as amended (including the
registration of the shares of Common Stock issuable under the Plan on a Form S-8
registration statement filed with the Securities and Exchange Commission), and
all applicable listing requirements of the NASDAQ Global Market (or other stock
exchange if applicable) and all other applicable requirements established by law
or regulation have been met. In the event such shareholder approval
is not obtained, or such compliance is not effected, within 12 months after the
date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and all sums collected from Participants during
the initial Purchase Period hereunder shall be refunded.
(b) Term. Unless
sooner terminated by the Board, the Plan shall terminate upon the earlier of (i)
the date on which all shares available for issuance under the Plan shall have
been sold pursuant to purchase rights exercised under the Plan or (ii) the date
on which all purchase rights are exercised in connection with a Change of
Control. No further purchase rights shall be granted or exercised,
and no further payroll deductions shall be collected, under the Plan following
such termination.
11. AMENDMENT
AND TERMINATION
(a) Amendment;
Termination. The Board may alter, amend, suspend or terminate
the Plan at any time. In the event of Plan termination, any
outstanding payroll deductions that are not used to purchase Common Stock on a
Purchase Date pursuant to the Plan shall be refunded to such Participants as
soon as administratively possible.
(b) Shareholder
Approval. In no event may the Board effect any of the
following amendments or revisions to the Plan without the approval of the
Company’s shareholders: (i) increase the number of shares of Common Stock
issuable under the Plan, except for permissible adjustments in the event of
certain changes in the Company’s capitalization, (ii) alter the purchase price
formula so as to reduce the purchase price payable for the shares of Common
Stock purchasable under the Plan or (iii) modify the eligibility requirements
for participation in the Plan.
12. GENERAL
PROVISIONS
(a) Expenses. All
costs and expenses incurred in the administration of the Plan shall be paid by
the Company; however, each Plan Participant shall bear all costs and expenses
incurred by such individual in the sale or other disposition of any shares
purchased under the Plan.
(b) No Right of
Employment. Nothing in the Plan shall confer upon the
Participant any right to continue in the employ of the Company or any Company
Affiliate or interfere with or otherwise restrict in any way the rights of the
Company or any Company Affiliate to terminate a Participant’s employment at any
time for any reason, with or without cause.
(c) Withholding. If
and to the extent that any stock purchases or sales under this Plan are subject
to Federal, state or local taxes, the Company is authorized to withhold all
applicable taxes from shares issuable under the Plan or from other compensation
payable to Participant.
(d) Governing Law. The
validity, construction, interpretation and effect of the Plan shall be governed
and construed by and determined in accordance with the laws of the Commonwealth
of Pennsylvania, without giving effect to the conflict of laws provisions
thereof.