SCHEDULE 14A (Rule
14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
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Check the appropriate box
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x
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-5(d) (2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
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FOOD TECHNOLOGY SERVICE, INC.
(Name of
Registrant as specified in its Charter)
(Name of
Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of filing fee (check the appropriate box):
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x
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-5(g) 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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(2)
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Aggregate number of securities to which transaction applies:
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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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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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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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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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FOOD TECHNOLOGY SERVICE, INC.
502 Prairie Mine Road
Mulberry, Florida 33860
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 17, 2013
TO THE SHAREHOLDERS OF FOOD TECHNOLOGY SERVICE, INC.:
NOTICE IS HEREBY GIVEN
that the 2013 Annual Meeting of the Shareholders of Food Technology Service, Inc., a
Florida corporation (the Company), will be held at the Mulberry Civic Center, 901 5
th
Street NE, Mulberry, Florida 33860, on May 17, 2013, at 9:00 a.m., local time, to act on the following matters:
1. To consider and vote upon the reinstatement of voting rights to certain control shares;
2. To consider and vote upon the election of six (6) persons to serve as Directors of the Company until the 2014 Annual Meeting of Shareholders and until their respective successors shall be duly
elected and qualified;
3. To provide a non-binding advisory vote on the compensation of our named executive officer
(say-on-pay);
4. To provide a non-binding advisory vote on the frequency of future non-binding advisory votes on
the compensation of our named executive officer (say-on-frequency).
5. To transact such other business as may
properly come before the meeting or any adjournment thereof.
Only Shareholders of record at 5:00 p.m., Eastern Standard Time,
on April 5, 2013, are entitled to receive notice of, and to vote at the Annual Meeting.
A Proxy Statement and form of
Proxy are enclosed.
We need your help to ensure we have a quorum for our annual meeting.
Although we have
approximately 2,500 shareholders, the majority of them own less than 500 shares. Those holding a few shares may think that their proxy is not important or wont be missed. This is not true.
Please help your Company by signing and dating the
accompanying proxy card and return it promptly in the enclosed postage-paid envelope.
Instructions are included with the proxy card. If you attend the Annual Meeting, you may vote in person if you wish. The proxy may be revoked at any time prior
to its exercise.
Notice of Internet Availability of Proxy Materials
This Notice, the attached Proxy Statement and our 2012 Annual Report to Shareholders are available on our website:
www.ftsi.us
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By Order of the Board of Directors
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Richard G. Hunter, Ph.D.
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President
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April 10, 2013
Mulberry, Florida
FOOD TECHNOLOGY SERVICE, INC.
502 Prairie Mine Road
Mulberry, Florida 33860
PROXY STATEMENT
2013 ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 17, 2013
GENERAL INFORMATION
This Proxy Statement is being furnished to the holders (Shareholders) of the shares of common stock, par
value $.01 per share (the Common Shares), of Food Technology Service, Inc., a Florida corporation (the Company), in connection with the 2013 Annual Meeting of Shareholders to be held on May 17, 2013, at 9:00 a.m. (the
Annual Meeting), and at any adjournment thereof. The Annual Meeting will be held at the Mulberry Civic Center, 901 5
th
Street NE, Mulberry, Florida 33860. This Proxy Statement is first being sent to Shareholders, together with the Notice
of Annual Meeting, on or about April 10, 2013.
At the Annual Meeting, Shareholders will be asked to consider and vote on
(i) to consider and vote upon the reinstatement of voting rights to certain control shares (ii) the election of six (6) persons to serve as Directors of the Company until the 2014 Annual Meeting of Shareholders and until their
respective successors shall be duly elected and qualified and (iii) to provide a non-binding advisory vote on the compensation of our named executive officer (say-on-pay);
A copy of the Companys Annual Report for 2012 is enclosed.
VOTING SECURITIES
The Board of Directors has fixed 5:00 p.m., Eastern
Standard Time, on April 5, 2013, as the record date (the Record Date) for the determination of the Shareholders of record entitled to receive notice of, and to vote at, the Annual Meeting or any adjournment thereof. On April 5,
2013, there were 2,835,451 issued and outstanding Common Shares of the Company, constituting the only class of stock outstanding. The presence of a majority of the outstanding Common Shares as of the Record Date, in person or represented by proxy,
will constitute a quorum at the Annual Meeting. The affirmative vote of a majority of those shares represented at the meeting is necessary for the election of the nominees as Directors and the affirmative vote by the holders of a majority of
disinterested shares present at the meeting is necessary for reinstatement of voting rights to certain control shares. The advisory vote on the compensation of the named executive officer for 2012 (say-on-pay) and the advisory vote on
the frequency of future non-binding advisory votes on the compensation of our named executive officer (say-on-frequency) are non-binding, but our Board of Directors will consider the input of shareholders based on the votes cast for the
say-on-pay and say-on-frequency proposals.
SOLICITATION COSTS
The Company will bear the costs of preparing, assembling and mailing the Proxy Statement and the 2012 Annual Report in connection with
the Annual Meeting.
PROPOSAL ONE
REINSTATEMENT OF VOTING RIGHTS TO CERTAIN CONTROL SHARES
Until August 28, 2012 the Company was operating under Chapter 607.0902 of the Florida Business Corporation Act (the Act) entitled Control-share acquisitions. This provision of
the Act was adopted to regulate the acquisition of corporate control of publicly owned corporations by denying voting rights to control shares acquired in a control-share acquisition, unless such acquisition is pre-approved by the Board of Directors
of the issuing company. If approval is not obtained, in order to reinstate the voting rights to such shares acquired, approval by the holders of a majority of the disinterested shares at a special or annual meeting must be obtained. On
August 28, 2012, the Company opted out of compliance with Chapter 607.0902.
The Act defines the term Control
Shares to mean any shares, that when added to all other shares of the issuing public corporation owned by a person, would entitle that person, immediately after the acquisition of the shares, directly or indirectly, alone or as a part of a
group, to exercise the voting power of the issuing public corporation in the election of directors within a specified threshold (20%, 331/3% and 50%). The Act further provides that all shares acquired within 90 days prior to the date of acquisition
of the beneficial ownership of shares which results in a control share acquisition shall be deemed to have been acquired in the same acquisition.
Fort Ashford Holdings, LLC (Fort Ashford), a California private equity firm, is the owner of 820,643 shares of the Companys Common Stock, which represents approximately 29% of the
Companys outstanding shares. As of September 1, 2011, Fort Ashford owned 536,511 shares. On September 2, 2011, it acquired an additional 28,350 shares, increasing its ownership to 564,861 shares, or 20.5% of the outstanding shares.
Following this acquisition, through June 12, 2012, Fort Ashford acquired an additional 133,956 shares, thereby increasing its ownership to 698,817 shares, or 24.7% of the outstanding shares. Fort Ashford was advised at that time that the shares
acquired on September 2, 2011, constituted a control share acquisition under Chapter 607.0902 of the Act. The effect was to deny voting rights to 235,500 of the Companys shares owned by Fort Ashford. This includes 73,194 shares acquired
prior to September 2, 2011. The balance of 121,826 shares acquired by Fort Ashford subsequent to August 28, 2012 were not affected.
Fort Ashford has requested that the Company place on the agenda for this meeting a proposal to reinstate the voting rights to the 235,500 shares. If voting rights are reinstated, it will increase the
number of voting shares owned by Fort Ashford from 585,143 shares, 20.6% of the outstanding shares, to 820,643 shares or 29.0%. A copy of their request is attached as Exhibit A to this proxy statement.
The Board of Directors recommends a vote FOR the reinstatement of voting rights to the 235,500 shares.
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PROPOSAL TWO
ELECTION OF DIRECTORS
The Company currently has six (6) Directors, each of whose term of office will expire at the Annual Meeting. All of the current members of the Board of Directors have been proposed for re-election to
serve until the 2014 Annual Meeting of Shareholders and until his successor has been duly elected and qualified.
Nominees for Director
Each Director of the Company serves as a Director for a term of one (1) year and until his successor is duly elected
and qualified. The following sets forth for each Nominee, his name and age, positions and/or offices held with the Company, the period during which each Nominee served in such positions and/or offices, a description of his business experience during
the past five (5) years or more, and other biographical information.
Richard G. Hunter
,
Ph.D.,
age 61, was
elected President, Chief Executive Officer and Director on September 11, 2001. Dr. Hunter was formerly Deputy State Health Officer of the Florida Department of Health from 1995 to September 2001 and Assistant State Health Officer from 1989
to 1995.
Douglas S. Bell,
Esq., age 43, was elected to serve as a Director of the Company in 2011. Mr. Bell is a
practicing attorney having earned his law degree in 1995 from Nova Southeastern Sheppard Broad Law School. He is currently a shareholder in the firm of Pennington P.A., Tallahassee, Florida. Mr. Bells law practice concentrates primarily
on government affairs and administrative law.
David Nicholds,
age 66, has served as a Director of the Company since
September 1998. He joined Nordion (Canada), Inc. in 1989 and served in various capacities until his retirement in October 2005, at which time, he was serving as Vice President, General Counsel and Corporate Secretary. Mr. Nicholds has served as
a director for a number of companies in North America and has been involved in corporate governance and the irradiation industry for many years.
John T. Sinnott, M.D., F.A.C.P.,
age 64, has served as a Director since May 14, 2002. Dr. Sinnott is the Associated Dean for International Affairs at the University of South Florida,
College of Medicine, the James A. Cullison Professor of Medicine and Director of the Division of Infectious Diseases and International Medicine. Dr. Sinnott is a distinguished member of the medical community and has been the recipient of local
and national awards. Dr. Sinnott has served on over 40 local, regional and national health care committees and has published over 180 abstracts, articles and textbook chapters. Most recently Dr. Sinnott was appointed as Senior Advisor to
the Secretary of Health as part of the State of Floridas Bioterrorism Initiative.
Ronald Thomas, Ph.D.,
age 61,
has served as a Director of the Company since September 21, 2004. Dr. Thomas is a professor in the Department of Packaging Science at Clemson University. He received his undergraduate degree from Gardner-Webb College and earned Masters and
Doctorate degrees at Clemson University. Dr. Thomas research interests include chemical and bio-chemical aspects of food. Dr. Thomas is a member of the Sigma Xi Honor Society, the Institute of Packaging Professionals and serves as
regional communicator for the Institute of Food Technologists.
Gary H. Lifshin,
age 57, has served as a Director of
the Company since May 30, 2008. He has been a financial manager with the University of South Florida since 2005. He has approximately thirty years of experience in a variety of financial management positions. These include acting as an
accounting consultant to small and mid-size businesses for the George S. May International Company and as controller of Evolutions Healthcare Systems, Inc. Mr. Lifshin earned a Bachelor of Science degree in Accountancy from Bentley College in
1978.
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There are no arrangements between any Nominee and any person pursuant to which he was,
or will be, selected as a Director.
Director Meetings
During the year ended December 31, 2012, the Board of Directors of the Company held a total of six (6) meetings. Each Director attended at least seventy-five percent (75%) of the board
meetings held. The Company presently complies with the director independence requirements of NASDAQ, as currently in effect and applicable to the Company.
Committees
Audit Committee
The Company has an Audit Committee consisting of Messrs. Thomas, Bell, and Lifshin. The Audit Committee met one time during 2012. Each of
the members of the Audit Committee is independent as such term is defined in the NASDAQ listing standards currently in effect and applicable to the Company. The background and experience of each of the Audit Committee members is more
fully disclosed in their biographies under Nominees for Director above. Mr. Lifshin serves as the audit committee financial expert as required by Sections 406 and 407 of the Sarbanes-Oxley Act of 2002.
The mission of the Companys Audit Committee is to ensure accurate and reliable financial reporting by the Company, and to promote
Shareholder confidence in the reliability of the Companys financial information. To this end, the Audit Committee independently reviews and oversees the Companys internal reporting process, and helps ensure that Management develops and
adheres to a sound system of internal controls. The Audit Committee also is responsible for retaining and overseeing the Companys independent auditors, and facilitates the auditors objective review and assessment of the Companys
financial statements and its internal reporting practices. The Audit Committee serves as a forum, separate from Management, within which the independent auditors, among others, can candidly address issues of concern. To specify and clarify the
duties of the Audit Committee, the Company has adopted a formal written charter. The Audit Committee reviews and reassesses the adequacy of its charter on an annual basis.
In connection with its duty to ensure the independence of the Companys auditors, and consistent with Independence Standards Board Standard No. 1, the Audit Committee obtained from
the Companys independent public accountants and carefully reviewed, a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors independence. Based on the written statement
of the accountants and the Audit Committees discussions with the same regarding certain relationships that may impact the auditors objectivity, the Audit Committee concluded that it was satisfied with respect to the auditors
independence. The Audit Committee also discussed with the independent public accountants the plans for the audit engagement, approved the services to be performed, determined the range of audit and non-audit fees, and reviewed the Companys
system of internal accounting and controls.
Following the completion of the auditors examination of the Companys
financial statements, the Audit Committee discussed and reviewed with the auditors all communications required to be addressed by generally accepted auditing standard, including those describe in Statement on Auditing Standards No. 61
Communications with Audit Committees. The Audit Committee and the independent auditors reviewed and discussed the results of the auditors examination of the financial statements. The Audit
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Committee also reviewed and discussed with the auditors and Management the audited financial statements for the year ended December 31, 2012. Based on the foregoing reviews and discussions,
the Audit Committee determined that the audited financial statements be included in the Companys Annual Report on Form 10-K for year ended December 31, 2012 for filing with the Securities and Exchange Commission.
The Audit Committee also recommended the reappointment of the independent auditors for the Companys year ending December 31,
2013 and the Board of Directors concurred in such recommendation.
Nominating Committee
The Company has a Nominating Committee consisting of Messrs. Thomas, Bell, and Lifshin. The purpose and responsibilities of the Nominating
Committee include the identification of individuals qualified to become board members, the recommendation to the Board of Directors of nominees to stand for election as directors at each election of directors, the development and recommendation to
the Board of Directors of a set of corporate governance principles applicable to the Company, the oversight of the selection and composition of Committees of the Board of Directors, and the oversight of the evaluations of the Board of Directors and
Management. The Nominating Committee will consider persons recommended by stockholders for inclusion as nominees for election to the Board of Directors if the names, biographical data, and qualifications of such persons are submitted in writing in a
timely manner addressed and delivered to the Companys secretary at the address listed herein. The Nominating Committee identifies and evaluates nominees for the Board of Directors, including nominees recommended by stockholders, based on
numerous factors it considers appropriate, some of which may include strength of character, mature judgment, career, diversity, and the extent to which the nominee would fill a present need on the Board of Directors.
Compensation Committee
The Company has a Compensation Committee consisting of Messrs. Thomas, Bell, and Lifshin, each independent members of the Board of Directors, to review and approve corporate goals and objectives relevant
to the compensation of the Chief Executive Officer, evaluate the performance of the Chief Executive Officer in light of those goals and objectives, and determine and approve the compensation level of the Chief Executive Officer based on this
evaluation. The Compensation Committee also acts as the Stock Option Committee to administer the Companys Stock Option Plan. The Compensation Committee makes every effort to ensure that the compensation plan is consistent with the
Companys values and is aligned with the Companys business strategy and goals.
Shareholder Communications
with Directors
The Board has adopted policies and procedures relating to Shareholder communications with the
Companys Directors. It provides that Shareholders and other interested parties wishing to contact any member (or all members) of the Board of Directors, any committee of the Board, or any chair of any such committee may do so by mail,
addressed, either by name or title, to the Board of Directors or to any such individual Directors or group or committee of Directors, and that all such correspondences should be sent to the Companys principal office.
Code of Ethics
The Company has a Code of Ethics which applies to its principal executive and financial officer. The Code of Ethics contains written standards that are reasonably designed to deter wrongdoing and to
promote:
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Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
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Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in
other public communications made by the registrant;
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Compliance with applicable governmental laws, rules and regulations;
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The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
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Accountability for adherence to the code.
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Directors Compensation
Until December 31, 2012 the Company had
in effect a compensation package for outside Directors whereby each outside Director, other than the Chairman, received annually options to purchase 1,500 Common Shares and $1,000 cash per Board Meeting. The Chairman of the
Board was entitled to receive an option to purchase 4,000 shares and $1,500 cash per meeting. The Chairman of the Audit Committee receives an annual fee of $1,250. The options, which expire five (5) years from the date of grant, are exercisable
at the fair market value on the date of grant. During the year ended December 31, 2012, the Company granted options to purchase 10,000 shares to the five outside directors. Such options are exercisable at $4.85 per share. Non-employee Directors
are also reimbursed for out-of-pocket expenses.
On January 24, 2013, upon recommendation by the Compensation Committee,
the Board of directors approved the replacement of the provision granting options annually to outside Board members with cash. Commencing with the year ending December 31, 2013, in lieu of options, each outside director
elected, other than the Chairman, will receive annually a one time cash amount of $1,000. The Chairman will receive $2,750.
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Summary Compensation
Table
2012
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Directors Name
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Fees Earned or
Paid in Cash ($)
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Options
Awards
($)
(1)
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Total ($)
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Douglas S. Bell
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$
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4,000
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$
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8,720
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$
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12,720
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Gary H. Lifshin
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$
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5,000
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8,720
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13,720
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David Nicholds
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$
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2,000
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8,720
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10,720
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John T. Sinnott
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$
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4,500
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8,720
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13,220
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Ronald Thomas
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$
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4,000
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8,720
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12,720
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(1)
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The Black-Scholes option-pricing model was used to determine the fair value of the option grants.
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Certain Relationships and Related Transactions
Until February 25, 2011, Nordion (Canada) Inc. (Nordion) owned 463,317 shares of the Companys common stock or approximately 16.8% of the Companys outstanding shares and had
representation on the Board of Directors. Nordion, in addition to being a substantial shareholder, has assisted the Company since its commencement of operations in
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1990. It aided in the design and construction of the irradiation facility, loaned money to the Company during the 1990s when we were not profitable and has been our supplier of Cobalt. In
addition, Nordion assisted the Company in obtaining a surety bond in the sum of $600,000 in order to meet the State of Florida facility permit bonding requirements. In connection therewith, the Company agreed to reimburse Nordion for any liability
and expense which Nordion may sustain as a result of its commitments to the bond issuer. On July 7, 2010, the Company obtained its own irrevocable standby letter of credit for $600,000 to satisfy the States requirements. Further, in June
2011, the Company installed an additional 300,000 curies of Cobalt purchased from Nordion at a cost of $795,000, plus delivery and installation costs.
Change in Control
According to reports filed with the Securities and Exchange Commission,
on February 25, 2011, Nordion sold its interest in the Company to Fort Ashford Holdings, LLC, a California private equity firm (Fort Ashford) for $1,667,941. Mr. Frank Kavanaugh and Mr. Gordon McGilton are managing
directors of Fort Ashford and share voting and dispository control over the Companys shares held by Fort Ashford. Messrs. Kavanaugh and McGilton disclaim beneficial ownership of such shares.
On September 26, 2012, the Company entered into an agreement with Fort Ashford Holdings, LLC whereby, among other things, the Board of Directors
acknowledge prior approval of the Board of the sale of 70,791 shares of the Companys common stock by Richard Hunter, president of the Company, to Fort Ashford. The Company also confirmed that the Board had taken all action necessary to opt out
of the Florida Control-share provision of Chapter 607.0902 of the Florida Business Compensation Act. Mr. Hunter consummated the sale on September 27, 2012. The effect of the sale was to increase Fort Ashfords holding to 769,608
shares which represented 27.4% of the outstanding shares. Fort Ashford subsequently purchased an additional 51,035 shares of the Companys common stock, thereby increasing its holdings to 820,643 shares, representing 29% of the Companys
outstanding shares.
EXECUTIVE OFFICERS COMPENSATION
The following table is a summary of the cash and non-cash compensation paid to or accrued for the past three (3) fiscal years for
the Companys Chief Executive Officer and Chief Financial Officer. There are no other officers or individuals whose compensation exceeded $100,000 for the year ended December 31, 2012.
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Summary Compensation
Table
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Name and Principal Position
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Fiscal
Year
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Salary ($)
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Bonus ($)
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Option
Awards ($)
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Total ($)
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Richard G. Hunter,
President/CEO/CFO
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2012
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(1)
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$
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123,600
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$
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36,000
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$
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159,000
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2011
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(2)
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120,000
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30,000
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150,000
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2010
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(3)
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118,450
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30,000
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148,450
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(1)
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On December 21, 2012, the Compensation Committee of the Board of Directors approved an increase in Dr. Hunters annual salary to
$127,308, which is a 3% salary increase. The Committee also approved a $39,000 year-end bonus to be paid in the 2013 calendar year.
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(2)
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On December 20, 2011, the Compensation Committee of the Board of Directors approved an increase in Dr. Hunters annual salary to
$123,600 and authorized a bonus of $36,000 payable during 2012. Beginning November 2011, Dr. Hunter obtains medical coverage through his military health insurance at no cost to FTSI, but is paid an additional compensation of one-half of the
monthly premium which equals $1053 monthly that the Company would incur under the existing health plan if Dr. Hunter participated.
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(3)
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On
December 3, 2010, the Compensation Committee of the Board of Directors approved an increase of Dr. Hunters annual salary to $120,000 and approved an extension of Dr. Hunters employment agreement, the term of which is
indefinite. His employment agreement provides that if he voluntarily terminates his employment for reasons other than the sale of the Company, he will be entitled to two weeks of current base salary for each full year of employment with the Company.
This, however, is contingent upon Dr. Hunter giving the Company six months notice prior to such voluntary termination. In addition, if for any reason other than for just cause, his employment should be terminated within the term of this
contract by the Company, he would be entitled to one years notice or one years base salary in lieu of notice. If the Company is sold (meaning that more than 50% of the outstanding stock of the Company is acquired by a third party), and
his employment does not continue for at least 3 months after the sale, whether at his choice or the Companys choice, he would be entitled to one years base salary.
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The following table presents information about options exercised by the Companys Chief Executive Officer during the year ended
December 31, 2012.
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Name
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Number of Shares
Acquired
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Value Realized
on Exercise
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Richard G. Hunter
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14,824
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$
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152,747
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The following table presents information regarding the number of Common Shares underlying
exercisable and unexercisable options at year-end held by the Companys Chief Executive Officer.
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Options Awards
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Name
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Exercisable
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Unexercisable
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Option
Exercise
Price
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Option
Expiration
Date
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Richard G. Hunter
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48,000
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12,000
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$
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0.95
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12-31-18
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The following table summarizes certain information about the Companys Stock Option Plans
as of December 31, 2012.
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Plan Category
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Number of Securities
to be Issued upon
Exercise of
Outstanding Options
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Weighted Average
Exercise Price of
Outstanding
Options
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Number
Remaining
Available
for Future Issuance
Under Equity
Compensation Plans
|
|
2000 Incentive and Non- Statutory Stock Option Plan
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|
|
122,500
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$
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3.72
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|
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-0-
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|
2009 Incentive and Non- Statutory Stock Option Plan
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|
|
11,500
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|
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$
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1.89
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|
|
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113,500
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8
PROPOSAL THREE
ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY)
The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our stockholders
to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the Securities and Exchange Commissions rules. Although the vote is not binding,
our Compensation Committee and Board of Directors value the opinions of the stockholders and will consider the outcome of the vote when making future compensation decisions.
We are asking our stockholders to indicate their support for the compensation paid to Mr. Richard Hunter, our chief executive officer, as described in this proxy statement. This proposal, commonly
known as a say-on-pay proposal, gives our stockholders the opportunity to express their views on our executive officers compensation. This vote is not intended to address any specific item of compensation, but rather the overall
compensation of Mr. Hunter. Accordingly, we ask that our stockholders vote FOR the following resolution:
RESOLVED, that the Companys stockholders approve, on an advisory basis, the compensation of Mr. Hunter, as disclosed in
the Companys Proxy Statement for the 2013 Annual Meeting of Stockholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the 2012 Summary Compensation Table and the other related tables and
disclosure.
Adoption of the above resolution, on an advisory basis, regarding the compensation of Mr. Hunter
requires the affirmative vote of a majority of the votes cast at the annual meeting.
The Board recommends a vote FOR the
approval of the compensation of our chief executive officer as disclosed in this proxy statement.
9
PROPOSAL FOUR
ADVISORY VOTE ON DETERMINING THE FREQUENCY OF SAY-ON-PAY
(SAY-ON-FREQUENCY)
Background
The Dodd-Frank Act enables our stockholders to indicate how frequently they believe we should seek an advisory vote on the compensation of
our named executive officers. Stockholders have the option of recommending a frequency vote every year, every two years, or every three years or abstaining from making a recommendation.
Summary and Board Recommendation
Our Board of Directors has considered the
advantages and disadvantages of the frequency of the say-on-pay vote. Due to the Company being a Smaller Reporting Company with one executive officer having an employment contract, our Board of Directors believes that a three advisory
vote on executive compensation would be the most meaningful for our Board of Directors and our Compensation Committee and best serve the interests of our company and its stockholders.
We will consider stockholders to have expressed a preference for the frequency that receives the largest number of favorable votes. Our
Board of Directors also may from time to time decide that it is in the best interests of our company and its stockholders to hold the frequency vote more or less frequently than the non-binding option preferred by our stockholders.
Our Board of Directors Unanimously Recommends That Stockholders Vote Three Year on the Proposal to Determine the Frequency
of Say-On-Pay.
10
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth as of April 5, 2013 the ownership of Common Stock of the Company of
(i)
all persons known by the Company to own beneficially five percent (5%) or more
of such Common Stock,
(ii)
each current and proposed Director and Officer of the Company
and (iii)
all current and proposed Directors and Officers as a group, together with their percentage holdings at such date. The address
of the holder of five percent (5%) or more of the Common Stock is included in the table.
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Name and Address of Beneficial Owner
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Amount
and
Nature of
Beneficial
Owner
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Percentage
of Class
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Fort Ashford Holdings, LLC 2532 Dupont Drive Irvine, California 92612
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820,643
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28.9
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%
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Richard G. Hunter, Ph.D.
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50,317
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(1)
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1.8
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Douglas S. Bell
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3,000
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(2)
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*
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Gary Lifshin
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6,512
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(3)
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*
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David Nicholds
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3,116
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(4)
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|
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*
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John Sinnott, M.D. F.A.C.P.
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23,369
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(5)
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|
|
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*
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Ronald Thomas, Ph.D.
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|
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8,324
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(6)
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*
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|
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|
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|
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All Directors and Officers as a group (6 persons)
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94,678
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(7)
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3.3
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%
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*
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Less than one percent (1%)
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1.
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Includes 48,000 shares underlying options which are currently exercisable or exercisable within the next sixty (60) days.
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2.
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Includes 3,000 shares underlying options which are currently exercisable or exercisable within the next sixty (60) days.
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3.
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Includes 4,500 shares underlying options which are currently exercisable or exercisable within the next sixty (60) days.
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4.
|
Includes 3,000 shares underlying options which are currently exercisable or exercisable within the next sixty (60) days.
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5.
|
Includes 20,000 shares underlying options which are currently exercisable or exercisable within the next sixty (60) days.
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6.
|
Includes 7,500 shares underlying options which are currently exercisable or exercisable within the next sixty (60) days.
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7.
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Includes shares underlying options which are currently exercisable or exercisable within the next sixty (60) days.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the 1934 Act requires our directors, certain officers and holders of 10% or more of any class of our stock to report to the SEC, by a specified date, initial reports of ownership and
reports of changes in ownership of our stock and other equity securities. To our knowledge based solely on a review of copies of reports filed under Section 16(a), the following persons filed late Form 4 Reports during the year ended
December 31, 2012: Dr. Hunter filed three Form 4 Reports late reflecting three transactions; Dr. Thomas filed one Form 4 Report late reflecting one transaction; and Mr. Nicholds filed one Form 4 Report late reflecting one
transaction.
11
SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors of the Company has selected the accounting firm of Ferlita, Walsh, Gonzalez &
Rodriguez, P.A., to serve as independent auditors of the Company for the year ended December 31, 2013. The auditing firm has advised the Company that neither it nor any of its members has any financial interest, direct or indirect, in the
Company in any capacity.
Fee Disclosure
The following is a summary of the fees billed to the Company by the Companys independent auditors for professional services rendered for the years ended December 31, 2012 and December 31,
2011:
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|
|
|
|
|
|
|
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Year Ended
December 31,
|
|
|
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2011
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|
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2012
|
|
|
|
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Audit Fees
(1)
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$
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37,000
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|
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$
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36,735
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|
|
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Tax Fees
(2)
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|
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1,300
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|
|
|
1,370
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|
|
|
|
|
|
|
|
|
|
|
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Total
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$
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38,300
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|
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$
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38,105
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|
(1)
|
Audit Fees
. These are fees for professional services for the audit of the Companys annual financial statements, and for the review of the financial
statements included in the Companys filings on Form 10-Q, and for services that are normally provided in connection with statutory and regulatory filings or engagements.
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(2)
|
Tax Fees
. These are fees for professional services with respect to tax compliance, tax advice, and tax planning.
|
The Audit Committee has considered whether (and has determined that) the services provided under Tax Fees by auditor area
compatible with maintaining the auditors independence from Management and the Company. In addition, all of the services rendered by the auditor were pre-approved by the Audit Committee.
A representative of Ferlita, Walsh, Gonzalez & Rodriguez, P.A. will be present at the Annual Meeting, will be given the
opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions.
The
Company has established formal pre-approval policies and procedures for future engagements of the Companys accountants. The new policies and procedures require detailing the particular service, require that the Board or an Audit Committee
thereof be informed of each service, and prohibit the delegation of pre-approval responsibilities to Management. The Companys new policy provides
(i)
for an annual pre-approval, by the Board or Audit Committee, of all audit,
audit-related and non-audit services proposed to be rendered by the independent auditor for the fiscal year, as specifically described in the auditors engagement letter,
and (ii)
that additional engagements of the auditor, which
were not approved in the annual pre-approval process, and engagements that are anticipated to exceed previously approved thresholds, be presented on a case-by-case basis, by the President or Chief Financial Officer, for pre-approval by the Board or
Audit Committee, before Management engages the auditors for any such purposes. The new policy and procedures authorize the Board or Audit Committee to delegate, to one or more of its members, the authority to pre-approve certain permitted services,
provided that the estimated fee for any such service does not exceed a specified dollar amount (to be determined). All pre-approvals are contingent on a finding, by the Board, Audit Committee, or delegate, as the case may be,
12
that the provision of the proposed services is compatible with the maintenance of the auditors independence in the conduct of its auditing functions. In no event shall any non-audit related
service be approved that would result in the independent auditor no longer being considered independent under the applicable rules and regulations of the Securities and Exchange Commission.
SHAREHOLDER PROPOSALS
Eligible Shareholders who wish to present proposals for action at the 2014 Annual Meeting of Shareholders should submit their proposals in writing to the President of the Company at the address of the
Company set forth on the first page of this Proxy Statement. Proposals must be received by the President no later than January 2, 2014 for inclusion in next years Proxy Statement and proxy card. A Shareholder is eligible to present
proposals if, at the time he or she submits a proposal or proposals, the Shareholder owns at least one percent (1%) or $1,000 in market value of Common Shares and has held such shares for at least one (1) year, and the Shareholder
continues to own such shares through the date of the 2014 Annual Meeting.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the Board of Directors of the Company had not been informed of any matters which
would be presented for action at the Annual Meeting, other than the proposals specifically set forth in the Notice of Annual Meeting of Shareholders and referred to herein.
|
By Order of the Board of Directors
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Richard G. Hunter, Ph.D.
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President
|
April 10, 2013
Mulberry, Florida
13
Exhibit A
[FORT ASHFORD LETTERHEAD]
March 4, 2013
Richard Hunter, President
Food Technology
Service, Inc.
502 Prairie Mine Road
Mulberry, FL 33860
Re:
|
Florida Control Share Act
|
Dear
Mr. Hunter:
I am writing this as a Managing Director of Fort Ashford Holdings LLC (Fort Ashford), the owner
of 820,643 shares of Common Stock of Food Technology Service, Inc. (the Company).
Fort Ashford has been advised
that certain of the shares owned by it were acquired in a control share acquisition as defined in Chapter 607.0902 of the Florida Business Corporation Act entitled Control-share acquisitions resulting in the denial of voting
rights to 235,500 of the 820,643 shares owned.
To reestablish voting rights to the 235,500 shares, the approval at a special
or annual meeting of a majority of all the votes entitled to be cast, excluding all interested shares, is required. Therefore, it is respectfully requested that at the forthcoming annual meeting of shareholders, the Company include on its agenda a
proposal to have the holders of the disinterested shares vote on reinstating the voting rights to the aforesaid 235,500 shares. In the event approval of the disinterested shareholders is obtained, Fort Ashford will have voting rights to all 820,643
shares which represents approximately 29.0% of the Companys outstanding shares. The control share acquisition falls within the 20% to 331/3% range as specified in Chapter 607.0902 of the Florida Business Corporation Act.
The undersigned and Mr. Gordon McGilton are Managing Directors of Fort Ashford and share voting and dispositive control over the
shares of common stock of the Company held by Fort Ashford. Both the undersigned and Mr. McGilton disclaim beneficial ownership of such shares.
This request is being made pursuant to Chapter 607.0902(6) of the Florida Business Corporation Act.
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Very truly yours,
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Fort Ashford Holding, LLC
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By:
|
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/s/ Frank Kavanaugh
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Frank Kavanaugh, Manager
|
FOOD TECHNOLOGY SERVICE, INC.
Annual Meeting of Shareholders May 17, 2013
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Shares of Food Technology Service, Inc., a corporation organized under the laws of the State of Florida, does hereby appoint Richard G. Hunter and John T. Sinnott, and
each of them, as due and lawful attorneys-in-fact (each of whom shall have full power of substitution), to represent and vote as designated below all of the Common Shares of Food Technology Service, Inc. that the undersigned held of record at 5:00
p.m., Eastern Standard Time, on April 5, 2013, at the Annual Meeting of Shareholders of Food Technology Service, Inc. to be held at the Mulberry Civic Center, 901 5
th
Street, N.E., Mulberry, Florida 33860, on May 17, 2013, at 9:00 a.m., local time, or any adjournment thereof, on
the following matters, and on such other business as may properly come before the meeting:
|
1.
|
REINSTATEMENT OF VOTING RIGHTS TO 235,500 SHARES OF COMMON STOCK
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¨
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For
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¨
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|
Against
|
|
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|
¨
|
|
Withhold
|
Richard G. Hunter, Ph.D., Douglas S. Bell, Gary H. Lifshin, David Nicholds, John T. Sinnott, M.D., F.A.C.P., and Ronald Thomas, Ph.D.
|
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¨
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|
FOR ALL NOMINEES LISTED ABOVE
|
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|
¨
|
|
WITHHOLD AUTHORITY TO VOTE
|
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|
(except as marked to the contrary below)
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|
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|
FOR ALL NOMINEES LISTED ABOVE
|
(Instructions: To withhold authority to vote for any individual nominee, write that Nominees name on
the space provided below.)
|
3.
|
TO PROVIDE A NON-BINDING ADVISORY VOTE ON THE COMPENSATION OF OUR CHIEF EXECUTIVE OFFICER
|
|
|
|
|
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|
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|
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¨
|
|
For
|
|
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|
¨
|
|
Against
|
|
|
|
¨
|
|
Withhold
|
|
4.
|
TO PROVIDE A NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF FUTURE NON-BINDING ADVISORY VOTES ON THE COMPENSATION OF OUR CHIEF EXECUTIVE OFFICER
|
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¨
|
|
1 Year
|
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¨
|
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2 Years
|
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¨
|
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3 Years
|
|
¨
|
|
Withhold
|
IN THEIR DISCRETION, ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Notice of Internet Availability of Proxy Materials
The Notice, the attached Proxy Statement and our 2012 Annual Report to Shareholders are available on our website:
www.ftsi.us
.
(Please Sign and Date on Reverse Side)
PLEASE SIGN AND RETURN PROMPTLY
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE REINSTATEMENT OF VOTING RIGHTS TO THE 235,500
SHARES, FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS.
(Please sign, date, and return this proxy card exactly as your name
or names appear below, whether or not you plan to attend the meeting.)
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I plan to attend the Annual Meeting.
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I do not plan to attend the Annual Meeting.
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Date:
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, 2013
|
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Signature(s):
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Title or Authority (if applicable)
|
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|
Please sign your name here exactly as it appears hereon. Joint owners should each sign. When signing as an attorney, executor, administrator, trustee, guardian,
corporate officer or other similar capacity, so indicate. If the owner is a corporation, an authorized officer should sign for the corporation and state his title. This Proxy shall be deemed valid for all shares held in all capacities that they are
held by the signatory.
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