Form DEF 14A ChromaDex Corp. For: Jun 17
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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A
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Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment
No. )
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Filed by the Registrant [X]
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Filed by a party other than the Registrant [
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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[X]
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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CHROMADEX 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):
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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-6(i)(1) 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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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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ChromaDex Corporation
10900 Wilshire Blvd, Suite 600
Los Angeles, CA 90024
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE
17, 2021
April 21, 2021
To the stockholders of ChromaDex Corporation:
Notice is hereby given that the 2021 Annual Meeting of Stockholders
(the “Annual Meeting”) of ChromaDex Corporation, a
Delaware corporation (“we,” “us,”
“our,” “ChromaDex,” or the
“Company”), will be held on June 17, 2021, at 3:00 p.m.
Pacific Time. You are being asked to vote on the following
matters:
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(1)
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To elect the eight nominees for director named herein;
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(2)
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To ratify the appointment of Marcum LLP as the Company’s
independent registered public accounting firm for the year ending
December 31, 2021
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(3)
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To approve, on an advisory basis, the compensation of the Company's
named executive officers, as
disclosed in this Proxy Statement;
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(4)
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To indicate, on an advisory basis, the preferred frequency of
stockholder advisory votes on the compensation of the
Company’s named executive officers; and
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(5)
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To
transact other business that may properly come before the meeting
and any postponement(s) or adjournment(s) thereof.
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The accompanying proxy statement contains additional information
and should be carefully reviewed by stockholders.
Because
of the COVID-19 pandemic, the Annual Meeting will be a completely
virtual meeting of stockholders, conducted solely online via live
webcast. You will be able to attend and participate in the Annual
Meeting online and vote your shares electronically by visiting:
www.meetingcenter.io/241643867 at the meeting date and time
described in the accompanying proxy statement. The password for the
meeting is CDXC2021. There is no physical location for the Annual
Meeting. We are utilizing the latest technology to provide safe
access for our stockholders. Hosting a virtual meeting will enable
greater stockholder attendance and participation from any location.
Questions related to the Annual
Meeting or voting matters can be submitted by email to
[email protected].
We encourage you to attend online and participate. We recommend
that you log in a few minutes before the Annual Meeting start time
of 3:00 p.m. Pacific Time on June 17, 2021, to ensure you are
logged in when the Annual Meeting begins.
Pursuant to the bylaws of the Company, the Board of Directors has
fixed the close of business on April 20, 2021 as the record date
(the “Record Date”) for determination of stockholders
entitled to notice and to vote at the Annual Meeting and any
adjournment thereof. Holders of the Company’s Common Stock
are entitled to vote at the Annual Meeting.
In accordance with rules and regulations adopted by the U.S.
Securities and Exchange Commission (the “SEC”), we have
elected to provide our beneficial owners and stockholders of record
access to our proxy materials over the Internet. Beneficial owners
are stockholders whose shares are held in the name of a broker,
bank or other agent (i.e., in “street name”).
Accordingly, a Notice of Internet Availability of Proxy Materials
(the “Notice”) will be mailed on or about April 27,
2021 to our beneficial owners and stockholders of record who owned
our Common Stock at the close of business on April 20, 2021.
Beneficial owners and stockholders of record will have the ability
to access the proxy materials on a website referred to in the
Notice or request a printed set of the proxy materials be sent to
them by following the instructions in the Notice. Beneficial owners
and stockholders of record who have previously requested to receive
paper copies of our proxy materials will receive paper copies of
the proxy materials instead of a Notice.
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BY
ORDER OF THE BOARD OF DIRECTORS
/s/ Frank L. Jaksch Jr.
Executive
Chairman of the Board
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Whether or not you expect to attend the Annual Meeting, please
complete, date, sign and return the proxy mailed to you, or vote
over the telephone or the internet as instructed in these
materials, as promptly as possible in order to ensure your
representation at the meeting. A return envelope (which is postage
prepaid if mailed in the United States) has been provided for your
convenience. Even if you have voted by proxy, you may still vote if
you attend the Annual Meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the Annual Meeting, you must obtain a proxy
issued in your name from that record holder.
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TABLE OF CONTENTS
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11
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Proposal
4: Advisory vote on the frequency of solicitation of advisory
shareholder approval of executive compensation
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ChromaDex Corporation
10900 Wilshire Blvd, Suite 600
Los Angeles, CA 90024
PROXY STATEMENT
FOR
2021 ANNUAL MEETING OF STOCKHOLDERS
JUNE 17, 2021
INTRODUCTION
The enclosed proxy is solicited by the Board of Directors
(“Board of Directors” or “Board”) of
ChromaDex Corporation (the “Company”), in connection
with the 2021 Annual Meeting of Stockholders (the “Annual
Meeting”) of the Company, to be held on June 17, 2021, at
3:00 p.m. Pacific Time via live webcast at
www.meetingcenter.io/241643867 due to the public health impact of the COVID-19
pandemic and to support the health and well-being of our
stockholders, employees, management and
directors.
At the Annual Meeting, you will be asked to consider and vote upon
the following matters:
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(1)
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To elect the eight nominees for director named herein;
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(2)
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To ratify the appointment of Marcum LLP as the Company's
independent registered public accounting firm for the year ending
December 31, 2021;
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(3)
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To approve, on an advisory basis, the compensation of the Company's
named executive officers, as
disclosed in this Proxy Statement;
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(4)4)
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To indicate, on an advisory basis, the preferred frequency of
stockholder advisory votes on the compensation of the
Company’s named executive officers; and
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(5)
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To transact other business that may properly come before the
meeting and any postponement(s) or adjournment(s)
thereof.
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The Board of Directors has fixed the close of business on April 20,
2021 as the record date (the “Record Date”) for
determining stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof.
In accordance with rules and regulations adopted by the U.S.
Securities and Exchange Commission (the “SEC”), we have
elected to provide our beneficial owners and stockholders of record
access to our proxy materials over the Internet. Beneficial owners
are stockholders whose shares are held in the name of a broker,
bank or other agent (i.e., in “street name”).
Accordingly, a Notice of Internet Availability of Proxy Materials
(the “Notice”) will be mailed on or about April 27,
2021 to our beneficial owners and stockholders of record who owned
our Common Stock at the close of business on April 20, 2021.
Beneficial owners and stockholders of record will have the ability
to access the proxy materials on a website referred to in the
Notice or request a printed set of the proxy materials be sent to
them by following the instructions in the Notice. Beneficial owners
and stockholders of record who have previously requested to receive
paper copies of our proxy materials will receive paper copies of
the proxy materials instead of a Notice.
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD
ON JUNE 17, 2021: THE NOTICE, PROXY STATEMENT, PROXY CARD AND THE
ANNUAL REPORT ARE AVAILABLE AT WWW.CHROMADEX.COM,
INVESTOR RELATIONS SECTION.
QUESTIONS AND ANSWERS ABOUT THESE PROXY
MATERIALS AND VOTING
Why did I receive in the mail a Notice of Internet Availability of
Proxy Materials this year instead of a full set of Proxy
Materials?
We are pleased to take advantage of the SEC rule that allows
companies to furnish their proxy materials over the Internet.
Accordingly, we have sent to our beneficial owners and stockholders
of record a Notice of Internet Availability of Proxy Materials.
Instructions on how to access the proxy materials over the Internet
or to request a paper copy may be found in the Notice. Our
stockholders may request to receive proxy materials in printed form
by mail or electronically on an ongoing basis. A
stockholder’s election to receive proxy materials by mail or
electronically by email will remain in effect until the stockholder
terminates its election.
We
intend to mail the Notice on or about April 27, 2021 to all stockholders of
record entitled to vote at the Annual Meeting.
Will I receive any other proxy materials by mail?
We may send you a proxy card, along with a second Notice, on
or after May 7,
2021.
How can I attend the Annual Meeting?
In light of the COVID-19 pandemic, to support the health and
well-being of our stockholders, employees and directors, and taking
into account recent federal, state and local guidance, the Annual
Meeting will be a completely virtual meeting of stockholders, which
will be conducted exclusively by webcast. You are entitled to
participate in the Annual Meeting only if you were a stockholder of
the Company as of the close of business on the Record Date, or if
you hold a valid proxy for the Annual Meeting. No physical meeting
will be held. You will be able to attend the Annual Meeting online
by visiting www.meetingcenter.io/241643867. You also will be able
to vote your shares online by attending the Annual Meeting by
webcast. Questions related to the Annual Meeting or voting matters
can be submitted by email to
[email protected].
To participate in the Annual Meeting, you will need to review the
information included on your Notice, on your proxy card or on the
instructions that accompanied your proxy materials. The password
for the meeting is CDXC2021. If you hold your shares through an
intermediary, such as a bank or broker, you must register in
advance using the instructions below.
The online meeting will begin promptly at 3:00 p.m., Pacific Time.
We encourage you to access the meeting prior to the start time
leaving ample time for the check in. Please follow the registration
instructions as outlined in this proxy statement.
How do I register to attend the Annual Meeting virtually on the
Internet?
If you are a registered stockholder (i.e., you hold your shares
through our transfer agent, Computershare Trust Company, N.A.), you
do not need to register to attend the Annual Meeting virtually on
the Internet. Please follow the instructions on the notice or proxy
card that you received. Registered stockholders can attend
the meeting by accessing the meeting site at
www.meetingcenter.io/241643867 and entering the 15-digit control
number that can be found on your Notice or proxy card mailed with
the proxy materials and the meeting password,
CDXC2021.
If you hold your shares through an intermediary, such as a bank or
broker, you must register in advance to attend the Annual Meeting
virtually on the Internet. To register to attend the Annual Meeting
online by webcast you must submit proof of your proxy power (legal
proxy) reflecting your ChromaDex Corporation holdings along with
your name and email address to Computershare. Requests for
registration must be labeled as “Legal Proxy” and be
received no later than 5:00 p.m., Eastern Time, on June 10, 2021.
You will receive a confirmation of your registration by email after
we receive your registration materials.
Requests for registration should be directed to us at the
following:
By email
Forward the email from your broker, or attach an image of your
legal proxy, to [email protected]
By mail
Computershare
ChromaDex Corporation Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Who can vote at the Annual Meeting?
Only
stockholders of record at the close of business on April 20, 2021 will be entitled to vote at
the Annual Meeting. On this record date, there were 67,932,548
shares of common stock outstanding and
entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on
April 20, 2021 your shares were
registered directly in your name with the Company’s transfer agent,
Computershare Trust Company,
N.A., then you are a stockholder of record. As a stockholder
of record, you may vote at the meeting or vote by proxy. Whether or
not you plan to attend the meeting, we urge you to fill out and
return the enclosed proxy card to ensure your vote is counted.
Registered stockholders can attend the meeting by accessing the
meeting site at www.meetingcenter.io/241643867 and entering the
15-digit control number that can be found on your Notice or proxy
card mailed with the proxy materials and the meeting password,
CDXC2021.
Beneficial Owner: Shares Registered in the Name of a Broker or
Bank
If on
April 20, 2021 your shares were held, not in your name, but rather
in an account at a brokerage firm, bank, dealer or other similar
organization, then you are the beneficial owner of shares held in
“street name” and the Notice is being forwarded to you
by that organization. The organization holding your account is
considered to be the stockholder of record for purposes of voting
at the Annual Meeting. As a beneficial owner, you have the right to
direct your broker or other agent regarding how to vote the shares
in your account. You are also invited to attend the Annual Meeting.
However, since you are not the stockholder of record, you may not
vote your shares at the meeting unless you request and
obtain a
valid proxy from your broker or other agent.
What am I voting on?
There
are four matters scheduled for a vote:
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To elect the eight nominees for director named
herein;
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To ratify the appointment of Marcum LLP as the
Company's independent registered public accounting firm for the
year ending December 31, 2021;
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To approve, on an advisory basis, the compensation
of the Company's named executive officers, as disclosed in this Proxy Statement;
and
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To
indicate, on an advisory basis, the preferred frequency of
stockholder advisory votes on the compensation of the
Company’s named executive officers
What if another matter is properly brought before the
meeting?
The
Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are
properly brought before the meeting, it is the intention of the
persons named in the accompanying proxy to vote on those matters in
accordance with their best judgment.
How Do I Vote?
You may
either vote “For” all the nominees to the Board of
Directors or you may “Withhold” your vote for any
nominee you specify. For each of the other matters to be voted on,
you may vote “For” or “Against” or abstain
from voting.
The
procedures for voting are fairly simple:
Stockholder of Record: Shares Registered in Your Name
If you
are a stockholder of record, you may vote at the Annual Meeting or
vote by proxy using the enclosed proxy card. Alternatively, you may
vote by proxy either by telephone or on the Internet. Whether or
not you plan to attend the meeting, we urge you to vote by proxy to
ensure your vote is counted. You may still attend the meeting and
vote even if you have already voted by proxy.
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To vote using the
proxy card, simply complete, sign and date the proxy card that may
be delivered and return
it promptly in the envelope provided. If you return your signed
proxy card to us before the Annual Meeting, we will vote your
shares as you direct.
●
To vote over the
telephone, dial toll-free 1-800-652-VOTE (8683) using a touch-tone
phone and follow the recorded instructions. You will be asked to
provide the company number and control number from the Notice. Your
telephone vote must be received by 5:00 p.m., Eastern Time on June 16, 2021 to be counted.
●
To vote through the
internet, go to www.envisionreports.com/CDXC to complete an
electronic proxy card. You will be asked to provide the company
number and control number from the Notice. Your internet vote must
be received by 4:00 p.m.,
Eastern Time on June 17, 2021 to be counted.
●
To
vote during the Annual Meeting, follow the instructions posted
at www.meetingcenter.io/241643867.
Beneficial Owner: Shares Registered in the Name of Broker or
Bank
If you
are a beneficial owner of shares registered in the name of your
broker, bank, or other agent, you should have received a Notice
containing voting instructions from that organization rather than
from the Company. Simply follow
the voting instructions in the Notice to ensure that your vote is
counted. To vote at the Annual Meeting, you must obtain a valid
proxy from your broker, bank or other agent. Follow the
instructions from your broker or bank
included with these proxy materials, or contact your broker or bank
to request a proxy form.
What if I have technical difficulties or trouble accessing the
virtual Annual Meeting?
The
virtual meeting platform is fully supported across browsers (MS
Edge, Firefox, Chrome and Safari) and devices (desktops, laptops,
tablets and cell phones) running the most up-to-date version of
applicable software and plugins. Participants should ensure that
they have a strong WiFi connection wherever they intend to
participate in the meeting. We encourage you to access the meeting
prior to the start time. A link on the meeting page will provide
further assistance should you need it or you may call
1-888-724-2416.
How many votes do I have?
On each
matter to be voted upon, you have one vote for each share of common
stock you own as of April 20,
2021.
What happens if I do not vote?
Stockholder of Record: Shares Registered in Your Name
If you
are a stockholder of record and do not vote by completing your
proxy card, by telephone, through the internet or at the Annual Meeting, your
shares will not be voted.
Beneficial Owner: Shares Registered in the Name of Broker or
Bank
If you
are a beneficial owner and do not instruct your broker, bank, or
other agent how to vote your shares, the question of whether your
broker or nominee will still be able to vote your shares depends on
whether the New York Stock Exchange (“NYSE”) deems the
particular proposal to be a “routine” matter. Brokers
and nominees can use their discretion to vote
“uninstructed” shares with respect to matters that are
considered to be “routine,” but not with respect to
“non-routine” matters. Under the rules and
interpretations of the NYSE, “non-routine” matters are
matters that may substantially affect the rights or privileges of
stockholders, such as mergers, stockholder proposals, elections of
directors (even if not contested), executive compensation
(including any advisory stockholder votes on executive compensation
and on the frequency of stockholder votes on executive
compensation), and certain corporate governance proposals, even if
management-supported. Accordingly, your broker or nominee may not
vote your shares on Proposal 1, Proposal 3 or Proposal 4 without
your instructions, but may vote your shares on Proposal 2 even in
the absence of your instruction.
What if I return a proxy card or otherwise vote but do not make
specific choices?
If you
return a signed and dated proxy card or otherwise vote without
marking voting selections, your shares will be voted, as
applicable, “For” the election of all eight nominees for director, “For” the proposal to ratify the
appointment of Marcum LLP as the Company's independent registered
public accounting firm for the year ending December 31, 2021,
“For” to approve the compensation of named executive
officers and for “One Year” as the preferred frequency
of advisory votes to approve executive compensation. If any
other matter is properly presented at the meeting, your proxyholder
(one of the individuals named on your proxy card) will vote your
shares using his or her best judgment.
Who is paying for this proxy solicitation?
We will
pay for the entire cost of soliciting proxies. In addition to these
proxy materials, our directors and employees may also solicit
proxies in person, by telephone, or by other means of
communication. Directors and employees will not be paid any
additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks
and other agents for the cost of forwarding proxy materials to
beneficial owners.
What does it mean if I receive more than one Notice?
If you
receive more than one Notice, your shares may be registered in more
than one name or in different accounts. Please follow the voting
instructions on the Notices to ensure that all of your shares are
voted.
Can I change my vote after submitting my proxy?
Stockholder of Record: Shares Registered in Your Name
Yes.
You can revoke your proxy at any time before the final vote at the
meeting. If you are the record holder of your shares, you may
revoke your proxy in any one of the following ways:
●
You may submit
another properly completed proxy card with a later
date.
●
You may grant a
subsequent proxy by telephone or through the internet.
●
You may send a
timely written notice that you are revoking your proxy to
the Company’s Secretary
at 10900 Wilshire Blvd. Suite 600, Los Angeles, CA
90024.
●
You may vote during
the Annual Meeting which will be hosted via the
Internet.
Your
most current proxy card or telephone or internet proxy is the one
that is counted.
Beneficial Owner: Shares Registered in the Name of Broker or
Bank
If your
shares are held by your broker or bank as a nominee or agent, you
should follow the instructions provided by your broker or
bank.
When are stockholder proposals and director nominations due for
next year’s Annual Meeting?
To be
considered for inclusion in the Company’s proxy materials for
next year’s annual meeting, your proposal must be submitted
in writing by December 28, 2021, to ChromaDex Corporation, Attn:
Secretary, at 10900 Wilshire Blvd. Suite 600, Los Angeles, CA
90024. If you wish to submit a proposal (including a director
nomination) at the annual meeting that is not to be included in the
Company’s proxy materials for next year’s annual
meeting, such proposal must be received no earlier than the close
of business on March 21, 2022 nor later than the close of business
on April 20, 2022. You are also advised to review the
Company’s Bylaws, which contain additional requirements
relating to advance notice of stockholder proposals and director
nominations.
How are votes counted?
Votes
will be counted by the inspector of election appointed for the
meeting, who will separately count, for the proposal to elect
directors, votes “For,” “Withhold” and
broker non-votes; and, with respect to Proposal 2 and Proposal 3,
votes “For” and “Against,” and abstentions.
Abstentions will be counted towards
the vote total for Proposal 2 and Proposal 3 and will have the same
effect as “Against” votes. Broker non-votes have
no effect and will not be counted towards the vote total for any
proposal.
What are “broker non-votes”?
As
discussed above, when a beneficial owner of shares held in
“street name” does not give instructions to the broker
or nominee holding the shares as to how to vote on matters deemed
by the NYSE to be “non-routine,” the broker or nominee
cannot vote the shares. These unvoted shares are counted as
“broker non-votes.”
How Many Votes Are Needed for Each Proposal to Pass?
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Proposal
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Vote Required for Approval
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Effect of Abstention
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Effect of Broker Non-Vote
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Election of eight members to our Board of
Directors
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Plurality of the votes cast (the eight directors receiving the most
“For” votes)
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None.
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None.
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Ratification of the Appointment of Marcum LLP as our Independent
Registered Public Accounting Firm for our Fiscal Year Ending
December 31, 2021
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“For” votes from the holders of a majority of shares
present in person or represented by proxy and entitled to vote on
the matter
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Against.
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Not applicable(1).
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Approval, on an advisory basis, the compensation of the Company's
named executive officers
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“For” votes from the holders of a majority of shares
present in person or represented by proxy and entitled to vote on
the matter
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Against.
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None.
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Advisory vote on the frequency of shareholder advisory votes on
executive compensation
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The frequency receiving the votes from the holders of a majority of
shares present in person or represented by proxy and entitled to
vote on the matter; however, in the event that no frequency
receives a majority, we will consider whichever frequency receives
a plurality of the votes to be the frequency preferred by the
stockholders
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Against.
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None.
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(1)
This
proposal is considered to be a “routine” matter under
NYSE rules. Accordingly, if you hold your shares in street name and
do not provide voting instructions to your broker, bank or other
agent that holds your shares, your broker, bank or other agent has
discretionary authority under NYSE rules to vote your shares on
this proposal.
Vote cast online during the virtual Annual Meeting will constitute
votes cast in person at the Annual Meeting for purposes of the
votes.
What Constitutes a Quorum?
To carry on business at the Annual Meeting, we must have a
quorum. A quorum is present when a majority of the shares
entitled to vote, as of the Record Date, are represented in person
or by proxy. Virtual attendance at the Annual Meeting
constitutes presence in person for purposes of a quorum at the
meeting. Thus, holders representing at least 33,966,274
votes must be represented in person or
by proxy to have a quorum. Your shares will be counted towards
the quorum only if you submit a valid proxy (or one is submitted on
your behalf by your broker, bank or other nominee) or if you vote
at the Annual Meeting. Abstentions and broker non-votes will
be counted towards the quorum requirement. Shares owned by us
are not considered outstanding or considered to be present at the
Annual Meeting. If there is not a quorum at the Annual
Meeting, our stockholders may adjourn the
meeting.
How can I find out the Results of the Voting at the Annual
Meeting?
Preliminary voting results will be announced at the Annual Meeting.
Final voting results will be published in a Current Report on
Form 8-K, which we will file within four business days of the
meeting.
PROPOSAL 1:
ELECTION OF DIRECTORS
Each director to be elected at the Annual Meeting will serve until
the next annual meeting of stockholders and until his or her
successor is elected, or, if sooner, until such director’s
death, resignation or removal. Unless
otherwise instructed, the persons named in the accompanying proxy
intend to vote the shares represented by the proxy for the election
of the eight nominees listed below. Although it is not contemplated
that any nominee will decline or be unable to serve as a director,
in such event, proxies will be voted by the proxy holder for such
other persons as may be designated by the Board of Directors,
unless the Board of Directors reduces the number of Directors to be
elected. Election of a director to the Board of Directors requires
a plurality of the votes cast at the Annual
Meeting.
The current Board of Directors consists of Frank Jaksch, Jr.,
Stephen Block, Jeff Baxter, Robert Fried, Kurt Gustafson, Steven
Rubin, Wendy Yu and Tony Lau. The Board of Directors has determined
that a majority of its members, including Stephen Block, Jeff
Baxter, Kurt Gustafson, Steven Rubin, Wendy Yu and Tony Lau are
independent directors within the meaning of the applicable Nasdaq
rules.
The following table sets forth the director nominees. It also
provides certain information about the nominees as of the Record
Date.
Nominees for Election to Board of Directors
|
|
|
|
|
Director
|
|
Name
|
|
Age
|
|
Since
|
|
Frank
Jaksch, Jr.
|
|
52
|
|
2000
|
|
Stephen
A. Block
|
|
76
|
|
2007
|
|
Jeff
Baxter
|
|
59
|
|
2015
|
|
Robert
Fried
|
|
61
|
|
2015
|
|
Kurt
Gustafson
|
|
53
|
|
2016
|
|
Steven
Rubin
|
|
60
|
|
2017
|
|
Wendy
Yu
|
|
45
|
|
2017
|
|
Tony
Lau
|
|
32
|
|
2017
|
Frank L. Jaksch Jr., 52,
is a Co-Founder of the Company and has
served as a member of the Board since February 2000. Mr. Jaksch
served as Chairman of the Board from May 2010 to October 2011 and
was its Co-Chairman from February 2000 to May 2010. In June 2018,
Mr. Jaksch transitioned from Chief Executive Officer to Executive
Chairman of the Board. Mr. Jaksch oversees research, strategy and
operations for the Company with a focus on scientific and novel
products for pharmaceutical and nutraceutical markets. From 1993 to
1999, Mr. Jaksch served as International Subsidiaries Manager of
Phenomenex, a life science supply company where he managed the
international subsidiary and international business development
divisions. Mr. Jaksch earned a B.S. in Chemistry and Biology from
Valparaiso University. The Nominating and Corporate Governance
Committee believes that Mr. Jaksch’s years of experience
working in chemistry-related industries, his extensive sales and
marketing background, and his knowledge of international business
bring an understanding of the industries in which the Company
operates as well as scientific expertise to the
Board.
Stephen A. Block, 76, has been a director of the
Company since October 2007 and Chair of the Compensation Committee
and a member of the Audit Committee since October 2007. From May
2010 to October 2011, Mr. Block served as Lead Independent Director
to the Board. Until November 2018, when Senomyx, Inc. was sold to
Firmenich, Inc., an unaffiliated third party, Mr. Block was a
director and chair of the nominating and corporate governance
committee and a member of the audit committee of Senomyx, Inc.,
where he had served on the board of directors since 2005. He also
is, and since September 2015 has been, a director of myLAB Box,
Inc., a privately held company. Until December 2011, he also served
as the chairman of the board of directors of Blue Pacific Flavors
and Fragrances, Inc., and, until March 2012, as a director of
Allylix, Inc. He served on the boards of directors of these
privately held companies since 2008, and 2007, respectively. Mr.
Block retired as senior vice president, general counsel and
secretary of International Flavors and Fragrances Inc., a leading
creator, manufacturer and seller of flavors and fragrances
(“IFF”) in December 2003, having been IFF’s chief
legal officer since 1992. During his eleven years at IFF he also
led the company’s Regulatory Affairs Department. Prior to
1992, Mr. Block served as senior vice president, general counsel,
secretary and director of GAF Corporation, a company specializing
in specialty chemicals and building materials, and its publicly
traded subsidiary International Specialty Products Inc., held
various management positions with Celanese Corporation, a company
specializing in synthetic fibers, chemicals and plastics, and
practiced law with the New York firm of Stroock & Stroock &
Lavan. Mr. Block received his B.A. cum laude in Russian Studies
from Yale University and his law degree from Harvard Law School.
The Nominating and Corporate Governance Committee believes that Mr.
Block’s experience as the chief legal officer of one of the
world’s leading flavor and fragrance companies contributes to
the Board’s understanding of the flavor industry, including
the Board’s perspective on the strategic interests of
potential collaborators, the regulation of the industry, and the
viability of various commercial strategies. In addition, Mr.
Block’s experience in the area of corporate governance and
public company financial reporting is especially valuable to the
Board in his capacity as a member of both the Audit Committee and
the Compensation Committee.
Jeff Baxter, 59, has been a
director of the Company since April 2015 and a member of the Audit
Committee and the Nominating and Corporate Governance Committee
since April 2015. Mr. Baxter has served as President and CEO and a
Director of VBI Vaccines, Inc. (NASDAQ:VBIV) since 2009.
Previously, he was managing partner for the venture capital firm,
The Column Group, where he played a pivotal role in the creation of
several biotech companies including Immune Design Corp., a vaccine
company based on the Lentiviral vector platform and TLR adjuvant
technologies. Until July 2006, Mr. Baxter was SVP, R&D Finance
and Operations, of GlaxoSmithKline (GSK). In his 19 years of pharma
experience at GSK, he has held line management roles in R&D,
commercial, manufacturing, finance and the office of the CEO. His
most recent position in the global R&D organization included
responsibility for finance, pipeline resource planning and
allocation, business development deal structuring and SROne (GSK's
in-house venture capital fund). He also chaired GSK's R&D
Operating Board. Prior to GSK, he worked at Unilever and British
American Tobacco. Mr. Baxter was educated at Thames Valley
University and is a Fellow of the Chartered Institute of Management
Accountants. The Nominating and Corporate Governance Committee
believes that Mr. Baxter’s past experience in the
pharmaceutical industry bring financial expertise, industry
knowledge, and research and development experience to the
Board.
Robert Fried, 61, became Chief
Executive Officer since June of 2018. He has served as a director
of the Company since July 2015, President and Chief Operating
Officer from January to June 2018 and President and Chief Strategy
Officer from March 2017 to January 2018. Mr. Fried also served as a
member of the Nominating and Corporate Governance Committee from
July 2015 to March 2017. Mr. Fried has served as Chairman of the
Board of Directors of Tiger Media, Inc., which is now Fluent, Inc.
(NASDAQ: FLNT), an information solutions provider focused on
data-driven digital marketing services, from 2011 until June 2015.
From 2007 to 2017, Mr. Fried was the founder and Chief Executive
Officer of Spiritclips LLC, now called Hallmark Movies Now, a
subscription streaming video service, which was acquired by
Hallmark Cards Inc. in 2012. Mr. Fried is an Academy Award winning
motion picture producer whose credits include Rudy, Collateral,
Boondock Saints, So I Married an Axe Murderer, Godzilla, and
numerous others. From December 1994 until June 1996, he was
President and Chief Executive Officer of Savoy Pictures, a unit of
Savoy Pictures Entertainment, Inc. Mr. Fried has also held several
executive positions including Executive Vice President in charge of
Production for Columbia Pictures, Director of Film Finance and
Special Projects for Columbia Pictures, and Director of Business
Development at Twentieth Century Fox. Mr. Fried holds an M.S. from
Cornell University and an M.B.A. from the Columbia University
Graduate School of Business. The Nominating and Corporate
Governance Committee believes that Mr. Fried’s past
experience as Chairman of the Board of Directors of another public
company brings financial expertise and industry knowledge to the
Board.
Kurt A. Gustafson, 53, has been
a director of the Company and Chair of the Audit Committee since
October 2016 and a member of the Compensation Committee since March
2017. In April 2018, the Board of Directors appointed Mr. Gustafson
as lead independent director of the Board of Directors. Mr.
Gustafson has 30 years of diverse experience in corporate finance.
He currently serves as chief financial officer, principal
accounting officer and executive vice president of Spectrum
Pharmaceuticals, Inc. (NASDAQ: SPPI). From 2009 to 2013, he served
as the chief financial officer of Halozyme Therapeutics, Inc.
(NASDAQ: HALO). From 1991 to 2009, Mr. Gustafson worked at Amgen
Inc. (NASDAQ: AMGN), holding various financial roles as vice
president finance, chief financial officer of Amgen International
and treasurer. Prior to joining Amgen Inc., he worked in public
accounting as staff auditor at Laventhol & Horwath in Chicago.
Mr. Gustafson is currently a member of the Board of Directors of
Xencor, Inc. (NASDAQ: XNCR), a clinical-stage biopharmaceutical
company. Mr. Gustafson serves as Chair of Xencor, Inc.’s
Audit Committee. Mr. Gustafson holds a B.A. degree in Accounting
from North Park University in Chicago and an M.B.A. from University
of California, Los Angeles. The Nominating and Corporate Governance
Committee believes that Mr. Gustafson’s past experience as
chief financial officer of a public company and his extensive
experience pharmaceutical industry qualify him to chair the Audit
Committee and that Mr. Gustafson brings financial, merger and
acquisition experience, and a background working with public
marketplaces to the Board.
Steven D. Rubin, 60, has been a director of the Company and
a member of the Nominating and Corporate Governance Committee since
March 2017 and Chair of Nominating and Corporate Governance
Committee since March 2018. Mr. Rubin currently serves as OPKO
Health, Inc.’s (NASDAQ: OPK) Executive Vice President –
Administration since May 2007 and as a director since February
2007. He has extensive experience as a practicing lawyer, and as
general counsel and board member to multiple public companies. Mr.
Rubin currently serves on the board of directors for the following
companies: Non-Invasive Monitoring Systems, Inc. (OTCBB:NIMU), a
medical device company; Cocrystal Pharma, Inc. (NASDAQ:COCP), a
biotechnology company developing new treatments for viral diseases;
Eloxx Pharmaceuticals (OTCMKTS: ELOX), a company committed to
treating patients suffering from rare and ultra-rare diseases
caused by premature termination codon nonsense mutations, prior to
its merger with Sevion Therapeutics in December 2017; Neovasc, Inc.
(NASDAQ:NVCN), a company developing and marketing medical specialty
vascular devices; and Red Violet, Inc., a software and services
company that specializes in big data analysis providing cloud-based
mission-critical information solutions to enterprises in a variety
of industries. Red Violet, Inc. (NASDAQ:RDVT)serves customers in
the United States. Mr. Rubin previously served as the Senior Vice
President, General Counsel and Secretary of IVAX from August 2001
until September 2006. Mr. Rubin previously served as a director of
the following companies: Castle Brands, Inc. (NYSE:ROX), a
developer and marketer of premium brand spirits; Kidville, Inc.
(OTCBB:KVIL), an operator of large, upscale facilities, catering to
newborns through five-year-old children and their families and
offers a wide range of developmental classes for newborns to
five-year-olds; VBI Vaccines Inc. (NASDAQ CM: VBIV), a
commercial-stage biopharmaceutical company developing a next
generation of vaccines; Dreams, Inc. (NYSE MKT: DRJ), a vertically
integrated sports licensing and products company; Safestitch
Medical, Inc. prior to its merger with TransEnterix, Inc.; and,
PROLOR Biotech, Inc., prior to its acquisition by the Company in
August 2013; and Cognit, Inc. (NASDAQ:COGT), a data and analytics
company providing cloud-based mission-critical information and
performance marketing solutions. Mr. Rubin holds a B.A. degree from
Tulane University and a Juris Doctor from University of Florida.
The Nominating and Corporate
Governance Committee believes that Mr. Rubin’s past
experience as general counsel and board member of multiple public
companies bring financial expertise, industry knowledge, and a
background working with public marketplaces to the
Board.
Wendy Yu, 45, has been a
director of the Company since August 2017 and a member of the
Nominating and Corporate Governance Committee since March 2018.
Since 2012, Ms. Yu has served as the Chief Digital Officer of
Horizons Digital Group Limited (affiliate of Horizons Ventures
Limited, a Hong Kong based investment firm), overseeing the Asia
expansion of Horizons’ portfolio companies and directing
public relations, communications, marketing and events. Ms. Yu
graduated from University of Toronto, majoring in Commerce and
Psychology. Ms. Yu serves as the director nominated by Pioneer Step
Holdings Limited pursuant to rights granted to Pioneer Step
Holdings Limited pursuant to that certain Securities Purchase
Agreement, dated April 26, 2017, by and among the Company and the
certain purchasers named therein (the “April 2017 Purchase
Agreement”). The Nominating and Corporate Governance
Committee believes that Ms. Yu’s experience in management,
marketing and communications bring valuable expertise to the
Board.
Tony Lau, 31, has been a
director of the Company since August 2017 and a member of the
Compensation Committee since March 2018. Since September 2014, Mr.
Lau has been with Horizons Ventures Limited, building the consumer
and retail segment and China market of the Hong Kong based
investment firm. Prior to joining Horizons Ventures Limited, Mr.
Lau was with Goldman Sachs Asia from June 2011 to August 2014. Mr.
Lau currently serves on the board of directors of Celsius Holdings,
Inc. as co-chairman. Mr. Lau has a Bachelor of Arts degree in
Finance from the Guanghua School of Management in Peking, China.
Mr. Lau serves as the director nominated by Champion River Ventures
Limited pursuant to rights granted to Champion River Ventures
Limited pursuant to the April 2017 Purchase Agreement.. The
Nominating and Corporate Governance Committee believes that Mr.
Lau’s experience in the finance and consumer products
industry bring valuable experience to the
Board.
2020 Director Compensation
Amended and Restated Director Compensation Policy
Under
our Non-Employee Director Compensation Policy, each of our current
non-employee directors is eligible to receive an annual retainer of
$40,000 for serving on the Board and, if applicable, an additional
annual retainer of $30,000 for serving as the Lead Independent
Director. The chairpersons of the Audit Committee, the Compensation
Committee, and the Nominating and Corporate Governance Committee
receive an additional $20,000, $15,000, and $10,000, respectively,
per year for service as chairperson for such committee. Members of
the Audit Committee, the Compensation Committee, and the Nominating
and Corporate Governance Committee each receive an additional
$10,000, $7,500 and $5,000, respectively, per year for service on
such committee.
Any
non-employee director who is first elected to the Board will be
granted an option to purchase 40,000 shares of our common stock on
the date of his or her initial election to the Board. In addition,
on the date of each annual meeting, each person who continues to
serve as a non-employee member of the Board following such annual
meeting will be granted a stock option to purchase 20,000 shares of
our common stock. All option grants will have an exercise price per
share equal to the fair market value of our common stock on the
date of grant. Each initial grant for a non-employee director will
vest over a three year period, and each annual grant for a
non-employee director will vest over a one year period, in each
case subject to the director’s continuing service on our
Board.
The
following table provides information concerning compensation of our
non-employee directors who were directors during the fiscal year
ended December 31, 2020. The compensation reported is for services
as directors for the fiscal year ended December 31,
2020.
Director Compensation Table
|
Name
|
Fees
Earned or
Paid in
Cash ($)
|
Stock Awards ($)
|
Option Awards ($)(1)
|
Non-Equity Incentive Plan Compensation ($)
|
Non-Qualified Deferred Compensation Earnings ($)
|
All Other Compensation ($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
Stephen
Block (2)
|
65,000
|
-
|
53,775
|
-
|
-
|
-
|
118,775
|
|
Jeff
Baxter (3)
|
55,000
|
-
|
53,775
|
-
|
-
|
-
|
108,775
|
|
Kurt
Gustafson (4)
|
97,500
|
-
|
53,775
|
-
|
-
|
-
|
151,275
|
|
Steven
Rubin (5)
|
50,000
|
-
|
53,775
|
-
|
-
|
-
|
103,775
|
|
Wendy
Yu (6)
|
45,000
|
-
|
53,775
|
-
|
-
|
-
|
98,775
|
|
Tony
Lau (7)
|
47,500
|
-
|
53,775
|
-
|
-
|
-
|
101,275
|
(1) The
amounts in the column titled “Option Awards” above
reflect the aggregate grant date fair value of stock option awards
for the fiscal year ended December 31, 2020. See Note 13 of the
ChromaDex Corporation Consolidated Financial Report included in the
Annual Report on Form 10-K for the year ended December 31, 2020,
filed with the SEC on March 12, 2021, for a description of certain
assumptions in the calculation of the fair value of the
Company’s stock options. The options have an exercise price of $4.67 and vest
100% on June 19, 2021.
(2) On June 19, 2020, Mr. Block was awarded the option to purchase
20,000 shares of the Company’s common stock.
(3) On June 19, 2020, Mr. Baxter was awarded the option to purchase
20,000 shares of the Company’s common stock.
(4) On June 19, 2020, Mr. Gustafson was awarded the option to
purchase 20,000 shares of the Company’s common
stock.
(5) On June 19, 2020, Mr. Rubin was awarded the option to purchase
20,000 shares of the Company’s common stock.
(6) On June 19, 2020, Ms. Yu was awarded the option to purchase
20,000 shares of the Company’s common stock.
(7) On June 19, 2020, Mr. Lau was awarded the option to purchase
20,000 shares of the Company’s common stock.
Family Relationships
There are no family relationships between any of our directors and
executive officers.
Involvement in Certain Legal Proceedings
During the past ten years, none of our officers, directors,
promoters or control persons have been involved in any legal
proceedings as described in Item 401(f) of Regulation
S-K.
VOTE REQUIRED
Under applicable Delaware law, the election of each nominee
requires the affirmative vote by a plurality of the voting power of
the shares present and entitled to vote on the election of
directors at the Annual Meeting at which a quorum is
present.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED
ABOVE AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE
VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE
ON THE PROXY.
INFORMATION REGARDING THE BOARD OF
DIRECTORS AND CORPORATE GOVERNANCE
Code of Business Conduct and Ethics
The Board has established a corporate Code of Business Conduct and
Ethics that applies to all officers, directors and employees and
which is intended to qualify as a “code of ethics” as
defined by Item 406 of Regulation S-K of the Exchange Act. The Code
of Business Conduct and Ethics is available on the Investor
Relations section of the Company’s website at
www.chromadex.com. If the Company makes any substantive amendments
to the Code of Business Conduct and Ethics or grants any waiver
from a provision of the Code to any executive officer or director,
the Company will promptly disclose the nature of the amendment or
waiver on its website.
Public Availability of Corporate Governance Documents
Our key corporate governance documents, including our Code of
Conduct and the charters of our Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee
are:
●
available
on the Investor Relations section of our corporate website at
www.chromadex.com; and
●
available
in print to any stockholder who requests them from our corporate
secretary.
Director Attendance
The Board held four meetings during 2020. Each director attended at
least 75% of Board meetings and meetings of the committees on which
he or she served.
Board Qualification and Selection Process
The Nominating and Corporate Governance Committee does not have a
specific written policy or process regarding the nominations of
directors, nor does it maintain minimum standards for director
nominees or consider diversity in identifying nominees for
director. However, the Nominating and Corporate Governance
Committee does consider the knowledge, experience, integrity and
judgment of potential candidates for nominations to the
Board. The Nominating and Corporate Governance Committee will
consider persons recommended by stockholders for nomination for
election as directors. The Nominating and Corporate Governance
Committee will consider and evaluate a director candidate
recommended by a stockholder in the same manner as a
committee-recommended nominee. Stockholders wishing to recommend
director candidates must follow the prior notice requirements as
described herein.
Board Leadership Structure and Risk Oversight
The leadership of the Board of Directors is currently structured so
that it is led by an Executive Chairman, Frank Jaksch, who
has authority, among other things, to call and preside over
meetings of the Board of Directors, to set meeting agendas and to
determine materials to be distributed to the Board of
Directors. As Executive Chairman,
Mr. Jaksch will serve as Chairman of the Board and will continue to
serve as an employee and executive officer of the Company. Kurt
Gustafson serves as lead independent director.
The Board of Directors has determined that the leadership
structure, in which there is an Executive Chairman and an
independent director acting as lead independent director, ensures
that the appropriate level of oversight, independence, and
responsibility is applied to all Board decisions, including risk
oversight, and is in the best interests of the Company and those of
the Company’s stockholders. The lead independent director
serves as the liaison between the Executive Chairman and the
independent directors and his responsibilities, among other things,
include facilitating communication with the Board and presiding
over regularly conducted executive sessions of the independent
directors and establishing the agenda for meetings of the
independent directors. The Board of Directors believes that its
strong corporate governance policies and practices, including the
substantial percentage of independent directors on the Board of
Directors, and the robust duties that will be delegated to the lead
independent director, empower the Board of Directors to effectively
oversee the Company’s Chief Executive Officer and Executive
Chairman and provide an effective and appropriately balanced Board
of Directors governance structure.
The entire Board of Directors, as well as through its various
committees, is responsible for oversight of our Company’s
risk management process. Management furnishes
information regarding risk to the Board of Directors as
requested. The Audit Committee discusses risk management
with the Company’s management and independent public
accountants as set forth in the Audit Committee’s
charter. The Compensation Committee reviews the
compensation programs of the Company to make sure economic
incentives are tied to the long-term interests of the
stockholders. The Company believes that innovation and
the building of long-term stockholder value are impossible without
taking risks. We recognize that imprudent acceptance of risk and
the failure to identify risks could be a detriment to stockholder
value. The executive officers of the Company are
responsible for assessing these risks on a day-to-day basis and for
how to best identify, manage and mitigate significant risks that
the Company may face.
Board Committees
The Board has established an Audit Committee, a Compensation
Committee and a Nominating and Corporate Governance Committee.
Other committees may be established by the Board from time to time.
The following table provides membership and meeting information for
the fiscal year ended December 31, 2020 for each of our Board
committees:
|
Name
|
|
Audit
|
|
Compensation
|
|
Nominating and Corporate Governance
|
|
Jeff
Baxter
|
|
X
|
|
|
|
X
|
|
Stephen
Block
|
|
X
|
|
X(1)
|
|
|
|
Kurt
Gustafson
|
|
X(1)
|
|
X
|
|
|
|
Tony
Lau
|
|
|
|
X
|
|
|
|
Steven
Rubin
|
|
|
|
|
|
X(1)
|
|
Wendy
Yu
|
|
|
|
|
|
X
|
|
Total
meetings in fiscal year ended December 31, 2020
|
|
6
|
|
5
|
|
2
|
(1)
Committee
Chairperson.
The following is a description of each of the committees and their
composition:
Audit Committee
The Audit Committee of the Board of Directors was established by
the Board of Directors in accordance with Section 3(a)(58)(A) of
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), to oversee the Company’s
corporate accounting and financial reporting processes and audits
of its financial statements. For this purpose, the Audit Committee
performs several functions, including, among other
things:
●
evaluates
the performance of and assesses the qualifications of the
independent auditors;
●
determines
and approves the engagement of the independent
auditors;
●
determines
whether to retain or terminate the existing independent auditors or
to appoint and engage new independent auditors;
●
reviews
and approves the retention of the independent auditors to perform
any proposed permissible non-audit services;
●
monitors
the rotation of partners of the independent auditors on the
Company’s audit engagement team as required by
law;
●
reviews
and approves or rejects transactions between the company and any
related persons;
●
confers
with management and the independent auditors regarding the
effectiveness of internal control over financial
reporting;
●
establishes
procedures, as required under applicable law, for the receipt,
retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing
matters and the confidential and anonymous submission by employees
of concerns regarding questionable accounting or auditing matters;
and
●
meets
to review the Company’s annual audited financial statements
and quarterly financial statements with management and the
independent auditor, including a review of the Company’s
disclosures under “Management’s Discussion and Analysis
of Financial Condition and Results of
Operations.”
The Audit Committee currently consists of three directors: Kurt
Gustafson (chairman), Stephen Block and Jeff Baxter.
The Audit Committee met six times
during the last fiscal year. The Board of Directors has adopted a
written Audit Committee charter that is available to stockholders
on the Investor Relations section of the Company’s website
at www.chromadex.com.
The information on our website is not incorporated by reference
into this Proxy Statement or our Annual Report for fiscal year
2020.
The Board of Directors reviews the Nasdaq listing standards
definition of independence for Audit Committee members on an annual
basis and has determined that all members of the Audit Committee
are independent (as independence is currently defined in Rule
5605(c)(2)(A) of the Nasdaq listing standards and Rule 10A-3 of the
Exchange Act).
The Board of Directors has also determined that Mr. Gustafson also
qualifies as an “audit committee financial expert,” as
defined in applicable SEC rules. The Board made a qualitative
assessment of Mr. Gustafson’s level of knowledge and
experience based on a number of factors, including his formal
education and experience as a chief financial officer for public
reporting companies.
Report of the Audit Committee of the Board of
Directors
This report of the audit committee is required by the SEC and, in
accordance with the SEC's rules, will not be deemed to be part of
or incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the
Securities Act, or under the Exchange Act, except to the extent
that we specifically incorporate this information by reference, and
will not otherwise be deemed "soliciting material" or "filed" under
either the Securities Act or the Exchange Act.
The Audit Committee has reviewed and discussed the audited
financial statements for the fiscal year ended December 31, 2020
with management of the Company. The Audit Committee has discussed
with the Company’s independent registered public accounting
firm the matters required to be discussed by the applicable
requirements of the Public Company Accounting Oversight Board
(“PCAOB”) and the SEC. The Audit Committee has also
received the written disclosures and the letter from the
independent registered public accounting firm required by
applicable requirements of the PCAOB regarding the independent
accountants’ communications with the audit committee
concerning independence, and has discussed with the independent
registered public accounting firm the accounting firm’s
independence. Based on the foregoing, the Audit Committee has
recommended to the Board of Directors that the audited financial
statements be included in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2020.
Submitted by:
The Audit Committee of
The Board of Directors
Kurt Gustafson (Chairman)
Stephen Block
Jeff Baxter
Compensation Committee
Our Compensation Committee currently consists of three directors:
Stephen Block (chairman), Kurt Gustafson and Tony Lau. All
members of the Compensation Committee are independent (as
independence is currently defined in Rule 5605(d)(2) of the Nasdaq
listing standards. The Compensation Committee met five times during
fiscal year 2020. The Board has adopted a written Compensation
Committee charter that is available to stockholders on the Investor
Relations section of the Company’s website at
www.chromadex.com. The
information on our website is not incorporated by reference into
this Proxy Statement or our Annual Report for fiscal year
2020.
The Compensation Committee acts on behalf of the Board to review,
modify (as needed) and approve the Company’s compensation
strategy, policies, plans and programs. For this purpose, the
Compensation Committee performs several functions, including, among
other things:
●
establishment
of corporate and individual performance objectives relevant to the
compensation of the Company’s executive officers and
evaluation of performance in light of these stated
objectives;
●
review
and approval (or recommend to the Board of Directors for approval)
of the compensation and other terms of employment or service,
including severance and change-in-control arrangements, of the
Company’s Chief Executive Officer, other executive officers
and non-employee directors; and
●
administration
of the Company’s equity compensation plans, pension and
profit-sharing plans, deferred compensation plans and other similar
plan and programs.
If applicable, the Compensation Committee will review with
management the Company’s Compensation Discussion and Analysis
and will consider whether to recommend that it be included in proxy
statements and other filings.
The
Compensation Committee has the authority to retain, in its sole
discretion, compensation consultants to assist in its evaluation of
executive and director compensation, including the authority to
approve the consultant’s reasonable fees and other retention
terms. In March 2018, the Compensation Committee retained a
consulting firm, Exequity LLP (“Exequity”) directly,
although in carrying out assignments, the consulting firm may
interact with Company management when necessary and appropriate.
Exequity is a nationally recognized provider of executive
compensation advisory services and was deemed independent pursuant
to SEC rules.
The
Compensation Committee generally does not have a specific target
amount of compensation for individual executive officers relative
to a peer group of companies, but it considers peer data for
purposes of assessing the competitiveness of the executive
compensation program. An individual executive officer may earn more
or less than the market median depending on factors described
below, including the individual’s experience and background,
role, and past and future performance.
The
Company has paid cash bonuses to its executive officers in 2021 for
2020 performance based upon achievements of certain goals. For
additional information regarding the performance bonus amounts, see
“Executive Officers and Management
Compensation.”
Compensation Committee Interlocks and Insider
Participation
None of
the members of the Compensation Committee is an officer or employee
of the Company. None of the executive officers currently serves, or
in the past year has served, as a member of the board of directors
or compensation committee of any entity that has one or more
executive officers serving on the Board or Compensation
Committee.
Compensation Committee Report
This report of the Compensation Committee is required by the SEC
and, in accordance with the SEC's rules, will not be deemed to be
part of or incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing
under the Securities Act of 1933, as amended (“Securities
Act”), or under the Exchange Act, except to the extent that
we specifically incorporate this information by reference, and will
not otherwise be deemed "soliciting material" or "filed" under
either the Securities Act or the Exchange Act.
The
Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis contained in this proxy statement with
management. Based on this review and discussion, the Compensation
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this proxy
statement and incorporated into the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31,
2020.
Submitted
by:
The
Compensation Committee of
The
Board of Directors
Stephen Block, Chairman
Kurt Gustafson
Tony Lau
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee currently
consists of three directors: Steven Rubin (chairman), Jeff Baxter
and Wendy Yu. All members of the Nominating and Corporate
Governance Committee are independent (as independence is currently
defined in Rule 5605(a)(2) of the Nasdaq listing standards). The
Nominating and Corporate Governance Committee met twice during the
last fiscal year. The Board has adopted a written Nominating and
Corporate Governance Committee charter that is available to
stockholders on the Investor Relations section of the
Company’s website at www.chromadex.com. The information on the website is not incorporated
by reference into this Proxy Statement or the Annual Report for
fiscal year 2020.
The Nominating and Corporate Governance Committee is responsible
for identifying, reviewing and evaluating candidates to serve as
directors of the Company consistent with criteria approved by the
Board of Directors, reviewing and evaluating incumbent directors,
selecting or recommending to the Board of Directors for selection
candidates for election to the Board of Directors, making
recommendations to the Board of Directors regarding the membership
of the committees of the Board of Directors, assessing the
performance of the Board of Directors, and developing a set of
corporate governance principles for the Company.
The Nominating and Corporate Governance Committee believes that
candidates for director nominees should have certain minimum
qualifications, including the ability to read and understand basic
financial statements and having the highest personal integrity and
ethics. The Nominating and Corporate Governance Committee also
intends to consider such factors as possessing relevant expertise
upon which to be able to offer advice and guidance to management,
having sufficient time to devote to the affairs of the Company,
demonstrated excellence in his or her field, having the ability to
exercise sound business judgment and having the commitment to
rigorously represent the long-term interests of the Company’s
stockholders. However, the Nominating and Corporate Governance
Committee retains the right to modify these qualifications from
time to time. Candidates for director nominees are reviewed in the
context of the current composition of the Board of Directors, the
operating requirements of the Company and the long-term interests
of stockholders. In conducting this assessment, the Nominating and
Corporate Governance Committee typically considers diversity, age,
skills and such other factors as it deems appropriate, given the
current needs of the Board of Directors and the Company, to
maintain a balance of knowledge, experience and
capability.
In the case of incumbent directors whose terms of office are set to
expire, the Nominating and Corporate Governance Committee reviews
these directors’ overall service to the Company during their
terms, including the number of meetings attended, level of
participation, quality of performance and any other relationships
and transactions that might impair the directors’
independence. In the case of new director candidates, the
Nominating and Corporate Governance Committee also determines
whether the nominee is independent for Nasdaq purposes, which
determination is based upon applicable Nasdaq listing standards,
applicable SEC rules and regulations and the advice of counsel, if
necessary. The Nominating and Corporate Governance Committee then
uses its network of contacts to compile a list of potential
candidates, but may also engage, if it deems appropriate, a
professional search firm. The Nominating and Corporate Governance
Committee conducts any appropriate and necessary inquiries into the
backgrounds and qualifications of possible candidates after
considering the function and needs of the Board of Directors. The
Nominating and Corporate Governance Committee meets to discuss and
consider the candidates’ qualifications and then selects a
nominee by majority vote which we expect will typically be
recommended to the full Board.
The Nominating and Corporate Governance Committee will consider
director candidates recommended by stockholders. The Nominating and
Corporate Governance Committee does not intend to alter the manner
in which it evaluates candidates, including the minimum criteria
set forth above, based on whether or not the candidate was
recommended by a stockholder. Stockholders who wish to recommend
individuals for consideration by the Nominating and Corporate
Governance Committee to become nominees for election to the Board
of Directors may do so by delivering a written recommendation to
the Nominating and Corporate Governance Committee at the following
address: ChromaDex Corporation, Attn: Secretary, at 10900
Wilshire Blvd. Suite 600, Los Angeles, CA 90024, no later than the close of business on the 60th
day nor earlier than the close of business on the 90th day prior to
the first anniversary of the preceding year’s annual meeting.
Submissions must include the name and address of the Company
stockholder on whose behalf the submission is made; the number of
Company shares that are owned beneficially by such stockholder as
of the date of the submission; the full name of the proposed
candidate; a description of the proposed candidate’s business
experience for at least the previous five years; complete
biographical information for the proposed candidate; and a
description of the proposed.
Stockholder Communication
Any stockholder may communicate in writing by mail at any time with
the entire Board of Directors or any individual director (addressed
to “Board of Directors” or to a named director), c/o
ChromaDex Corporation, ATTN: Secretary, 10900 Wilshire Blvd. Suite
600, Los Angeles, CA 90024. All communications will be compiled by
the Secretary of the Company and promptly submitted to the Board of
Directors or the individual directors on a periodic
basis.
Policy Regarding Attendance at Annual Meetings of
Stockholders
The Company does not have a policy with regard to Board
members’ attendance at annual meetings. Seven directors
attended the Company’s most recent annual meeting of
stockholders held on June 19, 2020.
Director Independence
As required under the Nasdaq Stock Market listing standards, a
majority of the members of a listed company’s board of
directors must qualify as “independent,” as
affirmatively determined by the Board of Directors. The Board of
Directors consults with the Company’s counsel to ensure that
its determinations are consistent with relevant securities and
other laws and regulations regarding the definition of
“independent,” including those set forth in pertinent
listing standards of Nasdaq, as in effect from time to
time.
Consistent with these considerations, after review of all relevant
identified transactions or relationships between each director, or
any of his or her family members, and the Company, its senior
management and its independent auditors, the Board of Directors has
affirmatively determined that the following directors are
independent directors within the meaning of the applicable Nasdaq
listing standards: Stephen Block, Jeff Baxter, Kurt Gustafson,
Steven Rubin, Wendy Yu and Tony Lau. Frank L. Jaksch Jr. and Robert
Fried do not meet the independence standards because of their
employment with the Company.
PROPOSAL 2:
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Marcum LLP
(“Marcum”), to serve as our independent registered
public accounting firm for the fiscal year ending December 31,
2021 and our Board of Directors has further directed that
management submit the selection of its independent registered
public accountant firm for ratification by the stockholders at the
Annual Meeting. Marcum has audited the Company’s financial
statements since 2013. Representatives of Marcum are not expected
to be present at the Annual Meeting.
Stockholder
ratification of the selection of Marcum as the Company’s
independent registered public accountants is not required by
Delaware law, the Company’s certificate of incorporation, or
the Company’s bylaws. However, the Audit Committee is
submitting the selection of Marcum to the stockholders for
ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee will
reconsider whether to retain that firm. Even if the selection is
ratified, the Audit Committee in its discretion may direct the
appointment of different independent registered public accountants
at any time during the year if the Audit Committee determines that
such a change would be in the best interests of the Company and its
stockholders.
The
affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the
annual meeting will be required to ratify the selection of Marcum.
Abstentions will be counted toward the tabulation of votes cast on
Proposal 2 and will have the same effect as negative votes. Broker
non-votes will be counted towards a quorum, but will not be counted
for any purpose in determining whether Proposal 2 has been
approved.
Audit Fees
The following table sets forth aggregate fees billed to us by
Marcum LLP, our independent registered public accounting firm
during the fiscal years ended December 31, 2020 and December 31,
2019.
|
|
Fiscal Year Ended
|
|
|
Marcum, LLP
|
December 31, 2020
|
December 31, 2019
|
|
Audit
Fees (1)
|
$374,000
|
$434,000
|
|
Audit-Related
Fees
|
$—
|
$—
|
|
Tax
Fees
|
$—
|
$—
|
|
All
Other Fees
|
$—
|
$—
|
(1)
Audit
fees consist of fees billed for professional services rendered by
Marcum in connection with the audit of the Company’s annual
financial statements and internal control over financial reporting
and quarterly review of financial statements included in the
Company’s Quarterly Reports on Form 10-Q, review of our
registration statements and related services that are normally
provided in connection with statutory and regulatory filings or
engagements.
All fees described above were pre-approved by the Audit Committee.
In connection with the audit of the financial statements for the
fiscal year ended December 31, 2020, the Company entered into an
engagement agreement with Marcum that sets forth the terms by which
Marcum will perform audit services for the Company.
Policy for Pre-Approval of Independent Auditor
Services
The Audit Committee’s policy is to pre-approve all audit and
permissible non-audit services provided by Marcum. These services
may include audit services, audit-related services, tax services
and other services. Pre-approval is generally provided for up to
one year and any pre-approval is detailed as to the specific
service or category of service and is generally subject to a
specific budget. The independent auditor and management are
required to periodically communicate to the Audit Committee
regarding the extent of services provided by the independent
auditor in accordance with this pre-approval, and the fees for the
services performed to date. The Audit Committee may also
pre-approve particular services on a case-by-case
basis.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF MARCUM LLP AS INDEPENDENT PUBLIC ACCOUNTANT, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A
STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL 3:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 and Section 14A of the Exchange Act entitle the
Company’s stockholders to vote to approve, on an advisory
basis, the compensation of the Company’s named executive
officers as disclosed in this Proxy Statement (including the
compensation tables, and the narrative disclosures that accompany
the compensation tables) pursuant to the SEC’s rules. At the
Company’s 2015 Annual Meeting of Stockholders, the
stockholders indicated their preference that the Company solicit a
non-binding advisory vote on the compensation of the named
executive officers, commonly referred to as a “say-on-pay
vote,” every three years. The Board of Directors has adopted
a policy that is consistent with that preference. In accordance
with that policy, this year, the Company is again asking the
stockholders to approve, on an advisory basis, the compensation of
the Company’s named executive officers as disclosed in this
Proxy Statement in accordance with SEC rules.
The Company’s executive compensation programs are designed to
(1) motivate and retain executive officers, (2) reward
the achievement the Company’s short-term and long-term
performance goals, (3) establish an appropriate relationship
between executive pay and short-term and long-term performance and
(4) align executive officers’ interests with those of
the Company’s stockholders. Under these programs, the
Company’s executive officers are rewarded for the achievement
of specific financial operating goals established by the
Compensation Committee and the realization of increased stockholder
value. Please read the section herein entitled “Executive
Compensation” for additional details about the
Company’s executive compensation programs, including
information about the fiscal year 2020 compensation of the
Company’s named executive officers.
The Compensation Committee continually reviews the compensation
programs for the Company’s executive officers to ensure they
achieve the desired goals of aligning the Company’s executive
compensation structure with the Company’s stockholders’
interests and current market practices.
The Company is asking its stockholders to indicate their support
for the Company’s named executive officer compensation as
disclosed in this Proxy Statement. This proposal, commonly known as
a “say-on-pay” proposal, gives the Company’s
stockholders the opportunity to express their views on the
Company’s executive compensation. This vote is not intended
to address any specific item of compensation, but rather the
overall compensation of the Company’s named executive
officers described in this Proxy Statement. Accordingly, the
Company will ask its stockholders to vote “FOR” the
following resolution at the Annual Meeting:
“RESOLVED, that the compensation paid to ChromaDex
Corporation’s named executive officers, as disclosed in the
Company’s Proxy Statement for the 2021 Annual Meeting of
Stockholders pursuant to Item 402 of Regulation S-K,
including the Compensation Discussion and Analysis, compensation
tables and narrative discussion, is hereby
APPROVED.”
The say-on-pay vote is advisory, and therefore not binding on the
Company, the Compensation Committee or the Company’s Board of
Directors. The Company’s Board of Directors
and Compensation Committee value the opinions of the
Company’s stockholders and to the extent there is any
significant vote against the named executive officer compensation
as disclosed in this Proxy Statement, the Company will consider its
concerns and the Compensation Committee will evaluate whether any
actions are necessary to address those concerns. Unless the Board
of Directors decides to modify its policy regarding the frequency
of soliciting advisory votes on the compensation of the
Company’s named executives, and depending on the results of
the vote for Proposal 4 at the Annual Meeting the next scheduled
say-on-pay vote will be at the 2022 Annual Meeting of
Stockholders.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS, AS
STATED IN THE ABOVE NON-BINDING RESOLUTION, AND PROXIES SOLICITED
BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER
HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL 4:
ADVISORY VOTE ON THE FREQUENCY OF SOLICITATION OF
ADVISORY SHAREHOLDER APPROVAL OF EXECUTIVE
COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act, and
Section 14A of the Exchange Act also enable the Company’s
stockholders, at least once every six years, to indicate their
preference regarding how frequently the Company should solicit a
non-binding advisory vote on the compensation of the
Company’s named executive officers as disclosed in the
Company’s proxy statement. Currently, consistent with the
preference expressed by the stockholders at the Company’s
2015 Annual Meeting of Stockholders, the policy of the Board is to
solicit a non-binding advisory vote on the compensation of the
named executive officers every three years. Accordingly, the
Company is again asking stockholders to indicate whether they would
prefer an advisory vote every year, every other year or every three
years. Alternatively, stockholders may abstain from casting a vote.
For the reasons described below, the Board recommends that the
stockholders select a frequency of every year.
The Board is asking stockholders to indicate their preferred voting
frequency by voting for one, two or three years or abstaining from
voting on this proposal. While the Board believes that its
recommendation is appropriate at this time, the stockholders are
not voting to approve or disapprove that recommendation, but are
instead asked to indicate their preferences, on an advisory basis,
as to whether the non-binding advisory vote on the approval of the
Company’s executive officer compensation practices should be
held every year, every other year or every three years. The option
among those choices that receives votes from the holders of a
majority of shares present in person or represented by proxy and
entitled to vote on this matter at the Annual Meeting will be
deemed to be the frequency preferred by the stockholders; however,
in the event that no frequency receives a majority, the Board will
consider whichever frequency receives a plurality of the votes to
be the frequency preferred by the stockholders. Abstentions will
have the same effect as votes “Against” each of the
proposed voting frequencies. Broker non-votes will have no
effect.
The Board and the Compensation Committee value the opinions of the
stockholders in this matter, and the Board intends to hold
say-on-pay votes in the future in accordance with the alternative
that receives the most stockholder support, even if that
alternative does not receive the support of a majority of the
shares present and entitled to vote. However, because this vote is
advisory and, therefore, not binding on the Board of Directors or
the Company, the Board may decide that it is in the best interests
of the stockholders that the Company hold an advisory vote on
executive compensation more or less frequently than the option
preferred by the stockholders. The vote will not be construed to
create or imply any change or addition to the fiduciary duties of
the Company or the Board.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF “ONE
YEAR” ON PROPOSAL 4.
EXECUTIVE OFFICERS
Executive Officers
The names of our executive officers and their ages, positions, and
biographies are set forth below. Frank Jaksch’s and Robert
Fried's backgrounds are discussed under the section Nominees for
Election to Board of Directors. The persons listed below served as
our executive officers during 2020:
|
Name
|
|
Age
|
|
Position
|
|
Frank Jaksch, Jr.
|
|
52
|
|
Executive Chairman of the Board
|
|
Robert Fried
|
|
61
|
|
Chief Executive Officer and Director
|
|
Kevin Farr
|
|
63
|
|
Chief Financial Officer
|
|
Mark Friedman (1)
|
|
63
|
|
Former Chief Legal Officer, General Counsel and Corporate
Secretary
|
|
Megan Jordan (2)
|
|
51
|
|
Former Chief Communications Officer and Senior Vice President of
Global Marketing
|
(1)
Mr.
Friedman served as General Counsel and Corporate Secretary until
December 2, 2020 and as Chief Legal Officer until his retirement
effective March 12, 2021.
(2)
Ms.
Jordan served as Chief Communications
Officer and Senior Vice President of Global Marketing until her
resignation effective January 4,2021.
The
persons listed below are our executive officers as of the date
hereof:
|
Name
|
|
Age
|
|
Position
|
|
Frank Jaksch, Jr.
|
|
52
|
|
Executive Chairman of the Board
|
|
Robert Fried
|
|
61
|
|
Chief Executive Officer and Director
|
|
Kevin Farr
|
|
63
|
|
Chief Financial Officer
|
|
Lisa Hatton Harrington (1)
|
|
53
|
|
General Counsel and Corporate Secretary
|
(1) Ms. Harrington joined the Company in December 2020 and was
appointed an executive officer in March 2021.
Kevin Farr, 63, has served as
Chief Financial Officer since October 2017. Mr. Farr previously
served as the Chief Financial Officer of Mattel, Inc. (NASDAQ:MAT)
from February 2000 through September 2017, and prior to that served
in multiple leadership roles at Mattel since 1991. Before joining
Mattel, Mr. Farr spent 10 years at PricewaterhouseCoopers. Mr. Farr
serves on the Corporate Advisory Board of the Marshall School of
Business at the University of Southern California, the Westside Los
Angeles Ronald McDonald House Charities and as a board member of
Polaris Industries Inc. Mr. Farr received his M.B.A. Administration
from Northwestern University J. L. Kellogg Graduate School of
Business, and his B.S. in Accounting from Michigan State
University.
Lisa Hatton Harrington,
53, joined ChromaDex, Inc. in December 2020 as General
Counsel and Corporate Secretary. Before joining ChromaDex, she was
previously Special Counsel at the global law firm Cooley LLP acting
as outside general counsel to a wide variety of clients from
September 2018 to December 2020. Ms. Harrington has held General
Counsel positions at ASICS Americas (September 2016 through
September 2018), Surf Airlines (2015 through 2016),
NBCUniversal/Comcast’s digital division (including Fandango,
from 2006 through 2015), and Unum Group’s Western Division
(2000 through 2005). Ms. Harrington has also served as chief
compliance officer, chief privacy officer, head of risk management,
and she has held internal audit, ESG, procurement, and investment
committee positions throughout her legal career. Ms. Harrington
serves on the corporate advisory board of the Gould School of Law
at the University of Southern California. Ms. Harrington received
her B.A. in 1990 from University of California, Los Angeles and her
J.D. in 1993 from University of Southern California Gould School of
Law.
EXECUTIVE OFFICERS AND MANAGEMENT
COMPENSATION
Compensation Discussion and Analysis
The following discussion and analysis of compensation arrangements
of our named executive officers for 2020 should be read together
with the compensation tables and related disclosures set forth
below.
We
believe our success is driven by the leadership of our named
executive officers. Our named executive officers are primarily
responsible for many of our important business development
relationships. The growth and maintenance of these relationships is
critical to ensuring our future success, as is experience in
managing these relationships. Therefore, it is important to our
success that we retain the services of these individuals. Our Board
believes that our current executive compensation program properly
aligns the interests of our executive officers with those of our
stockholders.
General Philosophy
Our
overall compensation philosophy is to provide an executive
compensation package that enables us to attract, retain and
motivate executive officers to achieve our near-term and long-term
business objectives. We also believe that a meaningful portion of
the executive officer's total cash compensation should be at risk
and dependent upon the achievement of our objectives. Among other
things, our compensation philosophy aims to reward strong
performance with competitive pay and thus better enable us to
retain executive officers who contribute to the long-term success
of the Company.
We
attempt to pay our executive officers competitively in order to
retain the most capable people in the industry. In making executive
and employee compensation decisions, the Compensation Committee
considers achievement of certain goals and criteria, some of which
relate to the Company’s performance and others to the
performance of the individual employee.
The
Compensation Committee periodically evaluates our compensation
policies to determine whether we remain competitive among industry
peers and continue to attract, retain and motivate key personnel.
To meet these objectives, the Compensation Committee may from time
to time increase salaries, award additional equity grants or
provide other short and long-term incentive compensation. Our Board
of Directors values the perspective of our stockholders, and the
Compensation Committee will continue to consider the outcome of
future say-on-pay votes, as well as any other stockholder feedback,
when making compensation decisions for the named executive
officers.
The
Compensation Committee generally seeks input from our executive
officers when discussing the performance and compensation levels
for executives and other Company leadership. The Compensation
Committee also works with our Chief Executive Officer and Chief
Financial Officer to evaluate the financial, accounting, tax and
retention implications of our various compensation programs. No
executive participates in deliberations relating to his or her own
compensation. Additionally, Exequity, the independent consultant
engaged by the Compensation Committee provides input on best
practices, the potential impact of various alternatives, and other
advisory matters.
Results of Most Recent Stockholder Advisory Vote on Executive
Compensation
Over 92% of the votes cast in the stockholder advisory vote on the
compensation of our named executive officers in 2018 approved our
executive compensation. At the Company’s 2015 Annual Meeting
of Stockholders, the stockholders recommended a three-year
frequency with which the Company should conduct future stockholder
advisory votes on named executive officer compensation, as
described in our 2015 proxy statement. The Compensation Committee
considered the result of the stockholder advisory vote as an
endorsement of its compensation policies, practices and philosophy
for our named executive officers. Accordingly, the Compensation
Committee determined not to make any significant changes as a
result of the vote. In addition, in part based on the support shown
by the vote, the Compensation Committee has maintained a consistent
approach in making compensation decisions.
The Compensation Committee considers the results of the say-on-pay
vote on our executive compensation program as part of its annual
executive compensation review. Our Board of Directors values the
opinions of our stockholders, and the Compensation Committee will
continue to consider the outcome of future say-on-pay votes, as
well as any feedback received, when making compensation decisions
for the named executive officers.
Compensation Program and Forms of Compensation
We
provide our executive officers with a compensation package
consisting of base salary, annual bonus, equity incentives and
participation in benefit plans generally available to other
employees. In establishing total compensation, the Compensation
Committee considers individual and company performance, as well as
market information regarding compensation paid by other companies
in our peer group.
Base
salaries are calculated to be competitive within our industry and
to reflect the capabilities and experience of our executives. The
annual bonus is intended to motivate and reward our executives for
the achievement of certain strategic and measurable objectives. The
equity awards incentivize executives to deliver long-term
stockholder value, while serving as a retention vehicle for our
executive talent.
The
Compensation Committee conducts a thorough risk assessment of the
Company’s compensation practices to analyze whether they
encourage employees to take excessive or inappropriate risks. After
completing the review, the Compensation Committee has concluded
that the Company’s compensation programs are, on balance,
consistent with market practices and do not present material risks
to the Company.
Base Salary
Base
salary is designed to provide a predictable level of compensation
and provide a competitive level of pay that reflects the
executive's experience, role and responsibilities. Base salaries
for our executive officers are initially set based on negotiation
with individual executive officers at the time of recruitment and
with reference to salaries for comparable positions in the industry
for individuals of similar background to the executive officers
being recruited. We also consider the individual’s
experience, reputation in his or her industry and expected
contributions to the Company. In each case, we take into account
the results achieved by the executive, his or her future potential,
scope of responsibilities and experience, and competitive salary
practices.
Short-Term Incentives
We
design our bonus programs to be competitive in relation to the
market. Our goal is to instill a “pay for performance”
culture throughout the Company. These bonus programs are designed
to avoid entitlements, to align actual payouts with the actual
results achieved and to be easy to understand and administer. Upon
completion of the fiscal year, the Compensation Committee assesses
the Company’s performance and determines the amount to be
awarded to each of the executive officers based on the achievement
of the financial and strategic goals that were set earlier in the
year. Our compensation plan is reviewed on at least an annual basis
to determine that it is operating as intended.
2020 Annual Incentives
In
2021, we paid incentive bonuses of $290,304, $149,507, $184,392,
$149,507 and $90,000, respectively, to our executive officers
Robert Fried, Kevin Farr, Frank Jaksch Jr., Mark Friedman, and
Megan Jordan for services performed during 2020. For 2020, the
bonus goals for named executive officers mainly consisted of three
categories, (i) net sales, (ii) operating income / (loss) with
certain adjustments and (iii) qualitative corporate goals.
Qualitative corporate goals consisted of (i) continuing to build
TRU NIAGEN as a Global Brand, (ii) continuing to build ChromaDex as
a Corporate brand, (iii) developing key channels and territories,
and (iv) developing the product pipeline. The Compensation
Committee determined that 90% of these qualitative corporate goals
were achieved. The weight factor of the goals, the threshold,
target and maximum threshold and the actual incentive bonus payouts
were as follows:
|
Executive Bonus Targets
|
Weight
Factor
|
2020
Threshold
|
2020
Target
|
2020
Max-out
|
2020
Actual
|
Payout
%
|
Base
Salary
|
Target
Bonus %
|
Bonus
Payment
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Fried, Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
Total
Company - Net Sales
|
45%
|
$48,871
|
$65,161
|
$81,451
|
$59,257
|
41%
|
$500,000
|
60%
|
$122,419
|
|
Total
Company - Operating Income / (Loss)
|
25%
|
(27,881)
|
(22,305)
|
(16,729)
|
(18,770)
|
29%
|
500,000
|
60%
|
86,885
|
|
Qualitative
Corporate Goals
|
30%
|
N/A
|
N/A
|
N/A
|
90%
|
27%
|
500,000
|
60%
|
81,000
|
|
Total
|
100%
|
|
|
|
|
96.9%
|
|
|
$290,304
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Farr, Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
Total
Company - Net Sales
|
45.0%
|
48,871
|
65,161
|
81,451
|
59,257
|
41%
|
309,000
|
50%
|
63,046
|
|
Total
Company - Operating Income / (Loss)
|
25.0%
|
(27,881)
|
(22,305)
|
(16,729)
|
(18,770)
|
29%
|
309,000
|
50%
|
44,746
|
|
Qualitative
Corporate Goals
|
30.0%
|
N/A
|
N/A
|
N/A
|
90%
|
27%
|
309,000
|
50%
|
41,715
|
|
Total
|
100%
|
|
|
|
|
96.9%
|
|
|
$149,507
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank Jaksch, Executive Chairman
|
|
|
|
|
|
|
|
|
|
|
Total
Company - Net Sales
|
45.0%
|
48,871
|
65,161
|
81,451
|
59,257
|
41%
|
381,100
|
50%
|
77,756
|
|
Total
Company - Operating Income / (Loss)
|
25.0%
|
(27,881)
|
(22,305)
|
(16,729)
|
(18,770)
|
29%
|
381,100
|
50%
|
55,187
|
|
Qualitative
Corporate Goals
|
30.0%
|
N/A
|
N/A
|
N/A
|
90%
|
27%
|
381,100
|
50%
|
51,449
|
|
Total
|
100%
|
|
|
|
|
96.9%
|
|
|
$184,392
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Friedman, General Counsel
|
|
|
|
|
|
|
|
|
|
|
Total
Company - Net Sales
|
45.0%
|
48,871
|
65,161
|
81,451
|
59,257
|
41%
|
309,000
|
50%
|
63,046
|
|
Total
Company - Operating Income / (Loss)
|
25.0%
|
(27,881)
|
(22,305)
|
(16,729)
|
(18,770)
|
29%
|
309,000
|
50%
|
44,746
|
|
Qualitative
Corporate Goals
|
30.0%
|
N/A
|
N/A
|
N/A
|
90%
|
27%
|
309,000
|
50%
|
41,715
|
|
Total
|
100%
|
|
|
|
|
96.9%
|
|
|
$149,507
|
|
|
|
|
|
|
|
|
|
|
|
|
Megan Jordan, Chief Communications Officer & SVP of Global
Marketing
|
|
|
|
|
|
|
|
|
|
|
Total
Company - Net Sales
|
45.0%
|
48,871
|
65,161
|
81,451
|
26,659
|
41%
|
300,000
|
40%
|
49,107
|
|
Total
Company - Operating Income / (Loss)
|
25.0%
|
(27,881)
|
(22,305)
|
(16,729)
|
1,691
|
29%
|
300,000
|
40%
|
34,754
|
|
Qualitative
Corporate Goals
|
30.0%
|
N/A
|
N/A
|
N/A
|
17%
|
5.2%
|
300,000
|
40%
|
6,139
|
|
Total
|
100%
|
|
|
|
|
75.1%
|
|
|
$90,000
|
Long-Term Incentives
We
design our equity programs to be competitive in relation to the
market and industry peer group. We monitor the market and
applicable accounting, corporate, securities and tax laws and
regulations and adjust our equity programs as appropriate.
Currently, our long-term incentive plan is entirely equity-based to
facilitate ownership and to align executive interests with those of
our stockholders. Stock options and other forms of equity
compensation are designed to reward strong, individual performance
over a clearly defined timeline. Stock options provide incentives
to grow stockholder value since our executive officers can realize
value only if our stock price appreciates over the exercise price,
which is the closing market price on the date of
grant.
Timing of Equity Awards
Only
the Compensation Committee of the Board of Directors may approve
stock option grants to our executive officers. Stock
options to employees, including our executive officers, are
generally granted once a year at predetermined meetings of the
Compensation Committee. On limited occasions, grants may occur upon
unanimous written consent of the Compensation Committee, which
occurs primarily for the purpose of approving a compensation
package for a newly hired or promoted executive under an employment
agreement with the executive. The exercise price of a newly granted
option is the closing market price of our Common Stock on the date
of grant. Our officers received stock option awards during 2020,
details of which are summarized below under Grants of Plan-Based
Awards.
Benefits Programs
We
design our benefits programs to be both affordable and competitive
in relation to the market and our peer group while conforming to
local laws and practices. We monitor the market, local laws and
practices and adjust our benefits programs as appropriate. We
design our benefits programs to provide an element of core
benefits, and to the extent possible, offer alternatives for
additional benefits, be tax-effective for employees in each country
and balance costs and cost sharing between us and our employees.
For our retirement program, we sponsor a 401(k) plan for our
employees. The 401(k) plan is a retirement savings defined
contribution plan established in accordance with the Internal
Revenue Code that provides each of our eligible employees with the
opportunity to defer a portion of his or her eligible compensation
on statutorily prescribed annual limits, and to have this amount
contributed to an account under the 401(k) plan in his or her name.
Other than the benefits and compensation disclosed herein, the
Company does not otherwise provide perquisites to its executive
officers.
Severance and Change in Control Arrangements
Several
of our executives have employment and other agreements that provide
for severance payment arrangements and/or acceleration of stock
option and stock award vesting in the event of an acquisition or
other change in control of our company. These agreements are aimed
to reduce distractions by letting our executives focus on the
business, and are described in greater detail below under the
heading “Employment Agreements”.
Clawback Policy
The
Company has established a Clawback Policy, which, among other
things, permits the Compensation Committee to require forfeiture or
reimbursement of certain cash and equity award that was paid,
granted, or vested based upon the achievement of financial results
that, when recalculated to include the impact of a material
financial restatement, were not achieved, whether or not fraud or
misconduct was involved. The Clawback policy is applicable to all
current or former officer of the Company who is or was designated
as an “officer” for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended.
Hedging Policy
The
Company has established an Insider Trading Policy, which, among
other things, prohibits trading in securities with material
nonpublic information including through hedging activities.
Further, none of the Company’s employees, directors,
consultants and contractors may trade in options, warrants, puts
and calls or similar instruments on our securities or sell our
securities “short”. Engaging in any transactions
relating to our common stock must be pre-cleared by our Chief
Financial Officer.
Stock Ownership Policy
The
Company has established a Stock Ownership Policy, which, among
other things, aligns the interests of the Chief Executive Officer,
other named executive officers and the members of the Board, with
the interests of the Company’s stockholders and to further
promote the Company’s commitment to sound corporate
governance. The stock ownership guidelines are determined as a
multiple of each person’s base salary/retainer as
follows:
|
Title
|
Ownership
Guideline
|
|
Chief
Executive Officer
|
Six
times annual base salary
|
|
All
other Named Executive Officers
|
Three
times annual base salary
|
|
Members
of the Board
|
Two
times annual base retainer
|
Subject
to potential extension, the Chief Executive Officer, other named
executive officers and the members of the Board are required to
achieve the applicable level of ownership by the fifth year from
the date of his or her appointment.
Tax and Accounting Considerations
Limitation on Deductibility of Executive Compensation
Under
Section 162(m) of the Internal Revenue Code (“Section
162(m)”), compensation paid to any publicly held
corporation’s “covered employees” that exceeds $1
million per taxable year for any covered employee is generally
non-deductible, unless the
compensation qualifies for certain grandfathered exceptions
(including the “performance-based compensation”
exception) for certain compensation paid pursuant to a written
binding contract in effect on November 2, 2017 and not materially
modified on or after such date.
Although the Compensation Committee will continue to consider tax
implications as one factor in determining executive compensation,
the Compensation Committee also looks at other factors in making
its decisions and retains the flexibility to provide compensation
for the Company’s named executive officers in a manner
consistent with the goals of the Company’s executive
compensation program and the best interests of the Company and its
stockholders, which may include providing for compensation that is
not deductible by the Company due to the deduction limit under
Section 162(m). The Compensation Committee also retains the
flexibility to modify compensation that was initially intended to
be exempt from the deduction limit under Section 162(m) if it
determines that such modifications are consistent with the
Company’s business needs.
Accounting Treatment
Under
Financial Accounting Standard Board ASC Topic 718, or ASC 718, the
Company is required to estimate and record an expense for each
award of equity compensation over the vesting period of the award.
We record share-based compensation expense on an ongoing basis
according to ASC 718. The accounting impact of our compensation
programs are one of many factors that the Compensation Committee
considers in determining the structure and size of our executive
compensation programs.
Summary Compensation Table
The
following table sets forth information concerning the annual and
long-term compensation earned by our Chief Executive Officer (the
principal executive officer), Chief Financial Officer (the
principal financial officer), Executive Chairman, Former Chief
Legal Officer and General Counsel and Corporate Secretary, and
Former Chief Marketing Officer, each of whom served during the year
ended December 31, 2020 as our named executive
officers.
|
Name
|
Year
|
Salary
|
Non-Equity Incentive Plan
|
Stock Awards
(1)
|
Option Awards (2)
|
All Other Compensation
(3)
|
Total ($)
|
|
Robert
Fried
|
2020
|
$519,231
|
$290,304
|
-
|
$316,414(8)
|
$736
|
$1,126,685
|
|
|
2019
|
$486,537
|
$190,404
|
$653,331(4)
|
$381,622(5)
|
-
|
$1,711,894
|
|
2018
|
$379,121
|
$468,330
|
$1,255,003(6)
|
$3,057,990(7)
|
-
|
$5,160,444
|
|
|
Kevin
Farr
|
2020
|
$320,884
|
$149,507
|
-
|
$209,217(9)
|
$9,208
|
$688,816
|
|
2019
|
$306,577
|
$98,058
|
-
|
$210,450(10)
|
$6,418
|
$621,503
|
|
|
2018
|
$300,000
|
$93,600
|
-
|
-
|
-
|
$393,600
|
|
|
Frank
Jaksch, Jr.
|
2020
|
$398,758
|
$184,392
|
-
|
$142,253(11)
|
$9,275
|
$734,678
|
|
2019
|
$378,111
|
$120,938
|
-
|
$129,329(12)
|
$8,400
|
$636,778
|
|
|
2018
|
$370,000
|
$100,000
|
-
|
$188,960(13)
|
$8,650
|
$667,610
|
|
|
Mark
Friedman
|
2020
|
$311,971
|
$149,507
|
-
|
$209,217(14)
|
$8,072
|
$678,767
|
|
2019
|
$306,577
|
$98,058
|
-
|
$210,450(15)
|
$7,012
|
$622,097
|
|
|
2018
|
$281,967(16)
|
$87,974
|
-
|
$1,768,274(17)
|
$6,231
|
$2,144,446
|
|
|
Megan
Jordan
|
2020
|
$311,538(19)
|
$90,000
|
-
|
$370,988(18)
|
$1,670
|
$774,196
|
(1)
The
amounts in the column titled “Stock Awards” above
reflect the aggregate award date fair value of restricted stock
awards.
(2)
The
amounts in the column titled “Option Awards” above
reflect the aggregate grant date fair value of stock option awards
for the fiscal years ended December 31, 2020, December 31, 2019 and
December 30, 2018. See Note 13 of the ChromaDex Corporation
Consolidated Financial Report included in the Annual Report on Form
10-K for the year ended December 31, 2020, filed with the SEC on
March 12, 2021, for a description of certain assumptions in the
calculation of the fair value of the Company’s stock
options.
(3)
The
amount in this column titled “All Other Compensation”
above reflect matching 401(k) contributions and life insurance
premiums paid by the company.
(4)
166,666 shares of Common Stock were awarded on
March 13, 2019 pursuant to Mr. Fried’s employment agreement
in connection with the acquisition of Healthspan Research LLC in
2017, which provided the stock grant upon the achievement of
certain performance goals.
(5)
On February 21, 2019, Robert Fried was granted
options to purchase 162,569 shares of ChromaDex common stock at an
exercise price of $3.84. These options expire on February 21, 2029
and 1/3rd
of the options vested on February 21,
2020 and the remaining shares vest in a series of 24 equal monthly
installments thereafter.
(6)
166,667 shares of Common Stock were awarded on
each of June 22, 2018 and November 7, 2018 pursuant to Mr.
Fried’s employment agreement in connection with the
acquisition of Healthspan Research LLC in 2017, which
provided the stock grant upon the achievement of certain
performance goals.
(7)
On January 21, 2018, Robert Fried was granted
options to purchase 300,000 shares of ChromaDex common stock at an
exercise price of $5.85. These options expire on January 21, 2028
and 10/36th
of the options vested on January 21,
2018 and thereafter 1/36th
vest on 12th
of each month for the next 26 months.
Also, on June 22, 2018, Mr. Fried was granted options to purchase
744,097 shares at an exercise price of $3.83. These options expire
on June 22, 2028 and 1/3rd
of the options vested on June 22, 2019
and the remaining options vest in a series of 24 equal monthly
installments thereafter.
(8)
On February 25, 2020, Robert Fried was granted
options to purchase 165,155 shares of ChromaDex common stock at an
exercise price of $3.27. These options expire on February 24, 2030
and 1/3rd
of the options vested on February 25,
2021 and the remaining shares vest in a series of 24 equal monthly
installments thereafter.
(9)
On February 25, 2020, Kevin Farr was granted
options to purchase 109,054 shares of ChromaDex common stock at an
exercise price of $3.27. These options expire on February 24, 2030
and 1/3rd
of the options vested on February 25,
2021 and the remaining shares vest in a series of 24 equal monthly
installments thereafter.
(10)
On February 21, 2019, Kevin Farr was granted
options to purchase 89,254 shares of ChromaDex common stock at an
exercise price of $3.84. These options expire on February 21, 2029
and 1/3rd
of the options vested on February 21,
2020 and the remaining shares vest in a series of 24 equal monthly
installments thereafter.
(11)
On February 25, 2020, Frank Jaksch, Jr. was
granted options to purchase 74,048 shares of ChromaDex common stock
at an exercise price of $3.27. These options expire on February 24,
2030 and 1/3rd
of the options vested on February 25,
2021 and the remaining shares vest in a series of 24 equal monthly
installments thereafter.
(12)
On February 21, 2019, Frank Jaksch, Jr. was
granted options to purchase 55,040 shares of ChromaDex common stock
at an exercise price of $3.84. These options expire on February 21,
2029 and 1/3rd
of the options vested on February 21,
2020 and the remaining shares vest in a series of 24 equal monthly
installments thereafter.
(13)
On January 21, 2018, Frank Jaksch, Jr. was granted
options to purchase 50,000 shares of ChromaDex common stock at an
exercise price of $5.85. These options expire on January 21, 2028
and 1/4th
of the options vested on January 21,
2029 and the remaining shares vest in a series of 36 equal monthly
installments thereafter.
(14)
On
February 25, 2020, Mark Friedman. was granted options to purchase
109,054 shares of ChromaDex common stock at an exercise price of
$3.27. These options expire on February 24, 2030 and 1/3rd of the
options vested on February 25, 2021 and the remaining shares vest
in a series of 24 equal monthly installments
thereafter.
(15)
On February 21, 2019, Mark Friedman was granted
options to purchase 89,254 shares of ChromaDex common stock at an
exercise price of $3.84. These options expire on February 21, 2029
and 1/3rd
of the options vested on February 21,
2020 and the remaining shares vest in a series of 24 equal monthly
installments thereafter.
(16)
Mark
Friedman began serving as General Counsel and Corporate Secretary
on January 22, 2018.
(17)
On January 22, 2018, Mark Friedman was granted
options to purchase 500,000 shares of ChromaDex common stock at an
exercise price of $5.65. These options expire on January 22, 2028
and 1/3rd
of the options vested on January 22,
2019 and the remaining shares vest in a series of 24 equal monthly
installments thereafter.
(18)
On January 27, 2020, Megan Jordan was granted
options to purchase 150,000 shares of ChromaDex common stock at an
exercise price of $4.18. 1/3rd
of Ms. Jordan’s options vested
on January 27, 2021. Ms. Jordan resigned effective January 4, 2021.
As a result of her separation, all unvested shares as of January
31st,
2021 were forfeited. All remaining vested shares issued to Ms.
Jordan were subject to a 90-day expiration period beginning on
January 31, 2021.
(19)
Megan
Jordan joined the Company in August 2019 but was appointed as an
executive officer in March 2020.
Employment Agreements
The material terms of employment agreements with the named
executive officers previously entered into by the Company are
described below.
Employment Agreement with Robert Fried
On June 22, 2018, the Company and Robert Fried, entered into an
Amended and Restated Executive Employment Agreement (the
“Fried Agreement”). The Fried Agreement amends the
Executive Employment Agreement by and between the Company and Mr.
Fried, dated March 12, 2017, as amended on December 20, 2017.
Pursuant to the Fried Agreement, Mr. Fried is entitled to: (i) an
annual base salary of $450,000; (ii) starting in fiscal year 2019,
an increased annual base salary of $500,000; (iii) an annual cash
bonus for fiscal year 2018 based on direct-to-customer net sales
for 2018 and the Company’s gross profit for 2018; (iv)
starting in fiscal year 2019, an annual cash bonus based on the
achievement of individual and corporate performance targets and
metrics to be determined by the Board of Directors of the Company
or the Compensation Committee thereof after reasonable consultation
with Mr. Fried (the “Performance Bonus”), with such
Performance Bonus set at (a) a target of 60% of base salary (based
on a performance achievement of 100%), (b) a threshold Performance
Bonus of 30% of base salary (based on a performance achievement of
75%) and (c) a maximum Performance Bonus of 90% (based on a
performance achievement of 150%); (v) an option to purchase up to
744,097 shares of Company common stock under the Amended 2017 Plan
(the “Option”); (vi) up to 333,333 shares of
fully-vested restricted Company common stock that will be granted
upon the achievement of certain performance goals and (vii)
starting in fiscal year 2019, annual equity grants in amounts
commensurate with Mr. Fried’s position with the Company, in
the discretion of the Company’s Board of Directors. In 2019,
the Compensation Committee determined that the payout structure of
Mr. Fried’s Performance Bonus will be aligned with the rest
of the executive officers, which the minimum achievement threshold
is 50% target and the maximum achievement threshold is 150% of the
target, with a target of 60% of base salary.
Any unvested shares subject to the Option will vest in full upon
termination by the Company of Mr. Fried’s employment without
cause (and other than as a result of Mr. Fried’s death or
disability) or Mr. Fried’s resignation for good reason. If
Mr. Fried’s employment is terminated by the Company without
cause (and other than as a result of Mr. Fried’s death or
disability) or Mr. Fried resigns for good reason, then subject to
executing a release, Mr. Fried will receive (i) continuation of his
base salary for 18 months, (ii) COBRA premiums for 12 months, (iii)
accelerated vesting of any unvested time-based vesting equity
awards that would have otherwise become vested had Mr. Fried
performed continuous service through the one year anniversary of
such termination date (provided that vesting for the Option shall
accelerate as described above), (iv) an extended exercise period
for his options and stock appreciation rights and (v) a prorated
Performance Bonus. In the case of Mr. Fried’s death or
disability, Mr. Fried will be eligible to receive a prorated
Performance Bonus.
Employment Agreement with Kevin Farr
On October 5, 2017, the Company entered into an Employee Agreement
(the "Farr Agreement") with Kevin M. Farr who was appointed by the
Board to serve as Chief Financial Officer, Secretary, principal
accounting officer and principal financial officer. Mr. Farr is
entitled to receive certain severance payments per the terms of the
Farr Agreement. The key terms of the Farr Agreement, including the
severance terms are as follows:
Mr. Farr is entitled to: (i) an annual base salary of $300,000 and
(ii) a discretionary annual bonus based on the achievement of
certain performance goals to be determined by the Board. Pursuant
to the Farr Agreement, Mr. Farr also received an option to purchase
up to 1,000,000 shares of ChromaDex common stock under the
ChromaDex 2017 Equity Incentive Plan, subject to vesting in a
series of 36 equal monthly installments over a three-year period,
with an exercise price equal to $4.24 per share. The options will
fully vest if the Company's stock price equals or exceeds $10 per
share for over the previous 20 trading days. On March 24, 2019, Mr.
Farr’s base salary increased to $309,000.
If Mr. Farr’s employment is terminated by the Company without
cause or Mr. Farr resigns for good reason, then, subject to
executing a release, Mr. Farr will receive (i) continuation of his
base salary for 12 months, (ii) COBRA premiums for 12 months, (iii)
a prorated annual cash bonus, based on the good faith determination
of the Board of the actual results and period of employment during
the year of such termination, (iv) accelerated vesting of
time-based equity that would have otherwise become vested by the
one year anniversary of such termination date and (v) an extended
exercise period for his options.
Employment Agreement with Frank Jaksch, Jr.
On June 22, 2018, ChromaDex, Inc. and Frank L. Jaksch, Jr. entered
into an amendment (the “Jaksch Amendment”) to the
Amended and Restated Employment Agreement, dated April 19, 2010, by
and between ChromaDex, Inc. and Mr. Jaksch (the “Jaksch
Agreement”). The Jaksch Amendment provides that Mr. Jaksch
shall serve as Executive Chairman and shall perform such duties as
are customarily associated with the position of Executive Chairman.
The Jaksch Agreement automatically renews unless terminated in
accordance with its terms. On January 2, 2014, the Board approved
raising the annual base salary of Mr. Jaksch to $275,000 per year
and the annual cash bonus target up to 50% of his base salary. On
March 14, 2016, the Board increased the base salary of Mr. Jaksch
to $320,000. On April 25, 2016, Mr. Jaksch’s base salary
increased to $370,000 as the Company’s common stock was
listed on Nasdaq Stock Market. On March 24, 2019, Mr.
Jaksch’s base salary increased to $381,100.
The severance terms provide that in the event Mr. Jaksch’s
employment with the Company is terminated voluntarily, he will be
entitled to any accrued but unpaid base salary, any stock vested
through the date of his termination and a pro-rated portion of 50%
of his salary for the bonus. In addition, if Mr. Jaksch leaves the
Company for “Good Reason”, (as defined in Jaksch
Agreement), he will also be entitled to severance equal to 50% of
his salary, and he will be deemed to have been employed for the
entirety of such year. Severance will then consist of 16 weeks of
paid salary, unless Mr. Jaksch signs a release, in which case he
will receive compensation up to 12 months paid salary.
In the event the Company terminates Mr. Jaksch’s employment
“without Cause” (as defined in the Jaksch Agreement),
Mr. Jaksch will be entitled to severance in the form of any stock
vested through the date of his termination and continuation of his
base salary for a period of eight weeks, or, if Mr. Jaksch enters
into a standard separation agreement, Mr. Jaksch will receive
continuation of base salary and health benefits, together with
applicable fringe benefits until 24 months from the date of
termination (the “Severance Period”), and he will
receive a bonus of 50% of his base salary as well as the full
vesting of any otherwise unvested stock awards.
Agreements with Mark Friedman
On January 22, 2018, the Company entered into an Employee Agreement
(the "Friedman Agreement") with Mark Friedman, who was appointed by
the Board to serve as General Counsel and Corporate Secretary.
.. On
March 9, 2021, Mr. Friedman notified the Company that he intended
to retire, effective March 12, 2021 (the “Retirement
Date”). Mr. Friedman was
entitled to receive certain severance payments per the terms of the
Friedman Agreement. The key terms of the Friedman Agreement,
including the severance terms, are as follows:
Mr. Friedman was entitled to: (i) an annual base salary of $300,000
and (ii) a discretionary annual bonus based on the achievement of
certain performance goals to be determined by the Board. Pursuant
to the Friedman Agreement, Mr. Friedman also received an option to
purchase up to 500,000 shares of ChromaDex common stock under the
ChromaDex 2017 Equity Incentive Plan, which one-third of the shares
vested on the one year anniversary and the remaining shares will
vest in a series of 24 equal monthly installments thereafter, with
an exercise price equal to $5.65 per share. Any unvested options
will vest in full upon a change of control of the Company, subject
to Mr. Friedman’s continuous service through such change of
control or upon termination by the Company of Mr. Friedman’s
employment without cause or Mr. Friedman’s resignation for
good reason within 90 days before the change of control. On March
24, 2019, Mr. Friedman’s base salary increased to
$309,000.
If Mr. Friedman’s employment was terminated by the Company
without cause or Mr. Friedman resigns for good reason, then,
subject to executing a release, Mr. Friedman would have received
(i) continuation of his base salary for 12 months, (ii) COBRA
premiums for 12 months, (iii) a prorated annual cash bonus, based
on the good faith determination of the Board of the actual results
and period of employment during the year of such termination, (iv)
accelerated vesting of time-based equity that would have otherwise
become vested by the one year anniversary of such termination date
and (v) an extended exercise period for his options.
In connection with his retirement, Mr. Friedman and the Company
entered into a consultant agreement (the “Consulting
Agreement”) whereby Mr. Friedman will provide certain
advisory services to the Company for a period of 90 days following
the Retirement Date in exchange for a cash payment of $12,000 per
month. The services provided pursuant to the Consulting Agreement
will constitute continuous service with the Company with respect to
Mr. Friedman’s outstanding option awards. The
Consulting Agreement may be renewed for additional one-month terms
upon written agreement by both parties, and may be terminated by
either party upon 30 days’ written notice.
Employment Agreement with Megan Jordan
On July 23, 2019, the Company entered into an Employee Agreement
(the "Jordan Agreement") with Megan Jordan, who was hired by the
Company to serve as Senior Vice President of Corporate Affairs
& Chief Communications Officer. Ms. Jordan resigned effective
January 4, 2021. Ms. Jordan was entitled to receive certain
severance payments per the terms of the Jordan Agreement. The key
terms of the Jordan Agreement, including the severance terms, are
as follows:
Ms. Jordan was entitled to an annual base salary of $300,000 and a
discretionary annual bonus calculated and paid commensurate with
other executive officers of the Company. Pursuant to the Jordan
Agreement, Ms. Jordan also received an option to purchase up to
320,000 shares of ChromaDex common stock under the ChromaDex 2017
Equity Incentive Plan, which one-third of the shares will vest on
the on year anniversary and the remaining shares will vest in a
series of 24 equal monthly installments thereafter, with an
exercise price equal to $4.47 per share. Any unvested options will
vest in full upon a change of control of the Company, subject to
Ms. Jordan’s continuous service through such change of
control.
If Ms. Jordan’s employment was terminated by the Company
without cause or Ms. Jordan resigned for good reason, then, subject
to executing a release, Ms. Jordan would have received (i)
continuation of her base salary for 12 months, (ii) COBRA premiums
for 12 months, (iii) a prorated annual cash bonus, based on the
good faith determination of the Board of the actual results and
period of employment during the year of such termination, (iv)
accelerated vesting of time-based equity that would have otherwise
become vested by the one year anniversary of such termination date
and (v) an extended exercise period for her options. As a result of
Ms. Jordan’s voluntary resignation on January
4th,
2021 these termination benefits were not
applicable.
Potential Payments Upon Termination or Change of
Control
Following table describes and quantifies the severance and other
benefits potentially payable to our named executive officers as of
December 31, 2020.
Potential Payments Upon Termination Table*
|
Name
|
Severance
($) (1)
|
Accrued
Compensation ($) (2)
|
Option
Awards ($) (3)
|
Restricted
Stock Awards ($) (4)
|
Medical
($) (5)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
Robert
Fried
|
$750,000
|
$68,750
|
$326,738
|
$-
|
$-
|
$1,145,488
|
|
Kevin
Farr
|
$309,000
|
$42,488
|
$130,527
|
$-
|
$-
|
$482,015
|
|
Frank
Jaksch, Jr.
|
$768,358
|
$59,730
|
$133,841
|
$800,006
|
$45,648
|
$1,807,583
|
|
Mark
Friedman (6)
|
$309,000
|
$42,112
|
$130,527
|
$-
|
$22,824
|
$504,463
|
|
Megan
Jordan (6)
|
$300,000
|
$18,505
|
$94,617
|
$-
|
$26,820
|
$439,942
|
*Reflects a termination without cause, or in the case of
resignation for good reason, not in connection with a change in
control.
(1)
Continuation
of base salary for 24 months for Frank Jaksch, Jr., 18 months for
Rob Fried and 12 months for Kevin Farr, Mark Friedman and Megan
Jordan. The amount for Mr. Jaksch includes additional
bonus.
(2)
Accrued
compensation is comprised of any earned or accrued base salary,
vacation pay and other payments and benefits earned and payable by
law.
(3)
The
amounts in this column represent the intrinsic value of
“in-the-money” unvested options as of December 31, 2020
that would vest in accordance with the executive officer’s
employment agreement. Values were derived using the closing price
of the Company’s common stock on December 31, 2020 of
$4.80.
(4)
The
amount in this column represent the value of unvested restricted
stock award as of December 31, 2020. Value was derived using the
closing price of the Company’s common stock on December 31,
2020 of $4.80.
(5)
Medical
is comprised of health insurance premiums for the period specified
in each executive officer's employment agreement.
(6)
Mr.
Friedman and Ms. Jordan both resigned from the Company subsequent
to December 31, 2020.
Potential Payments Upon Change in Control Table*
|
Name
|
Severance
($) (1)
|
Accrued
Compensation ($) (2)
|
Option
Awards ($) (3)
|
Restricted
Stock Awards ($) (4)
|
Medical
($) (5)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
Robert
Fried
|
$750,000
|
$68,750
|
$326,738
|
$-
|
$-
|
$1,145,488
|
|
Kevin
Farr
|
$309,000
|
$42,488
|
$200,174
|
$-
|
$-
|
$551,662
|
|
Frank
Jaksch, Jr.
|
$768,358
|
$59,730
|
$133,841
|
$800,006
|
$45,648
|
$1,807,584
|
|
Mark
Friedman (6)
|
$309,000
|
$42,112
|
$200,174
|
$-
|
$22,824
|
$574,110
|
|
Megan
Jordan (6)
|
$300,000
|
$18,505
|
$151,667
|
$-
|
$26,820
|
$496,992
|
*Reflects involuntary termination benefits in the event of a
termination without cause or resignation for good reason in
connection with a change in control.
(1)
Continuation
of base salary for 24 months for Frank Jaksch, Jr., 18 months for
Rob Fried and 12 months for Kevin Farr, Mark Friedman and Megan
Jordan. The amount for Mr. Jaksch includes additional
bonus.
(2)
Accrued
compensation is comprised of any earned or accrued base salary,
vacation pay and other payments and benefits earned and payable by
law.
(3)
The
amounts in this column represent the intrinsic value of
“in-the-money” unvested options as of December 31, 2020
that would vest in accordance with the executive officer’s
employment agreement. Values were derived using the closing price
of the Company’s common stock on December 31, 2020 of
$4.80.
(4)
The
amount in this column represent the value of unvested restricted
stock award as of December 31, 2020. Value was derived using the
closing price of the Company’s common stock on December 31,
2019 of $4.80.
(5)
Medical
is comprised of health insurance premiums for the period specified
in each executive officer's employment agreement.
(6)
Mr.
Friedman and Ms. Jordan both resigned from the Company subsequent
to December 31, 2020.
Grants of Plan-Based Awards
The
following table summarizes the stock option awards granted to our
named executive officers during the year ended December
31, 2020:
|
Name
|
Grant
Date
|
All
Other Option Awards: Number of Securities Underlying
Options
|
Exercise
or Base Price of Option Awards ($/Share)(1)
|
Grant
DateFair Value of Stock and Option Awards ($)(2)
|
|
|
|
|
|
|
|
Robert
Fried
|
2/25/2020
|
165,155
|
$3.27
|
$316,414
|
|
Kevin
Farr
|
2/25/2020
|
109,054
|
$3.27
|
$209,217
|
|
Frank
Jaksch, Jr.
|
2/25/2020
|
74,048
|
$3.27
|
$142,253
|
|
Mark
Friedman
|
2/25/2020
|
109,054
|
$3.27
|
$209,217
|
|
Megan
Jordan
|
1/27/2020
|
150,000
|
$4.18
|
$370,988
|
(1)
The exercise price of the stock options awarded
was determined in accordance with our Amended 2017 Equity
Incentive Plan, which provides that the exercise price for an
option granted be the closing price of our common stock on the date
of grant.
(2)
Based upon the aggregate grant date fair value of
stock option awards. See Note 13 of the ChromaDex Corporation Consolidated
Financial Report included in the Annual Report on Form 10-K for the
year ended December 31, 2020, filed with the SEC on March 12, 2021,
for a description of certain assumptions in the calculation of the
fair value of the Company’s stock
options.
There
were no restricted stock awards granted to our named executive
officers during the year ended December 31, 2020.
Option Exercises and Stock Vested
The
following table summarizes, with respect to our named executive
officers, all options that were exercised and restricted stock
vested during the year ended December 31, 2020:
|
|
Option
Awards
|
Restricted
Stock Awards
|
||
|
Name
|
Number
of Shares Acquired on Exercise(#)
|
Value
Realized
on
Exercise ($)
|
Number
of Shares Vested (#)
|
Value
Realized
on
Vesting ($)
|
|
Robert
Fried
|
-
|
$-
|
-
|
$-
|
|
Kevin
Farr
|
-
|
$-
|
-
|
$-
|
|
Frank Jaksch,
Jr.
|
41,667
|
$24,584
|
-
|
$-
|
|
Mark
Friedman
|
-
|
$-
|
-
|
$-
|
|
Megan
Jordan
|
-
|
$-
|
-
|
$-
|
Outstanding Equity Awards at Fiscal Year End
The following table sets forth certain information regarding stock
options and restricted stock granted to our named executive
officers outstanding as of December 31, 2020.
Outstanding Stock Options at 2020 Fiscal Year-End
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
Equity Incentive
Plan Awards: Number of Securities Underlying Unexercised Unearned
Options (#)
|
Option Exercise
Price ($)
|
Option
Expiration Date
|
|
Robert
Fried
|
66,667
|
—
|
|
—
|
3.30
|
7/30/2025
|
|
|
20,000
|
—
|
|
—
|
2.605
|
11/16/2026
|
|
|
500,000
|
—
|
|
—
|
2.715
|
3/12/2027
|
|
|
300,000
|
—
|
|
—
|
5.85
|
1/21/2028
|
|
|
620,081
|
124,016
|
(1)
|
—
|
3.83
|
6/22/2028
|
|
|
99,348
|
63,221
|
(2)
|
—
|
3.84
|
2/21/2029
|
|
|
—
|
165,155
|
(3)
|
—
|
3.27
|
2/24/2030
|
|
Kevin
Farr
|
1,000,000
|
—
|
|
—
|
4.24
|
10/4/2027
|
|
|
54,544
|
34,710
|
(4)
|
—
|
3.84
|
2/21/2029
|
|
|
—
|
109,054
|
(5)
|
—
|
3.27
|
2/24/2030
|
|
Frank Jaksch,
Jr.
|
83,334
|
—
|
|
—
|
1.92
|
8/28/2022
|
|
|
633,810
|
—
|
|
—
|
2.835
|
9/15/2022
|
|
|
50,000
|
—
|
|
—
|
3.75
|
6/18/2024
|
|
|
50,001
|
—
|
|
—
|
3.66
|
7/6/2025
|
|
|
85,000
|
—
|
|
—
|
4.04
|
8/15/2026
|
|
|
36,458
|
13,542
|
(6)
|
—
|
5.85
|
1/21/2028
|
|
|
33,636
|
21,404
|
(7)
|
—
|
3.84
|
2/21/2029
|
|
|
—
|
74,048
|
(8)
|
—
|
3.27
|
2/24/2030
|
|
Mark
Friedman
|
486,111
|
13,889
|
(9)
|
—
|
5.65
|
1/22/2028
|
|
|
54,544
|
34,710
|
(10)
|
—
|
3.84
|
2/21/2029
|
|
|
—
|
109,054
|
(11)
|
—
|
3.27
|
2/24/2030
|
|
Megan
Jordan
|
30,000
|
—
|
(12)
|
—
|
4.12
|
5/1/2021
|
|
|
142,222
|
177,778
|
(12)
|
—
|
4.47
|
5/1/2021
|
|
|
—
|
150,000
|
(13)
|
—
|
4.18
|
5/1/2021
|
(1)
1/3 rd
of Mr. Fried’s options vested on
June 22, 2019 and the remaining options vest in a series of 24
equal monthly installments thereafter.
(2)
1/3 rd
of Mr. Fried’s options vested on
February 21, 2020 and the remaining options vest in a series of 24
equal monthly installments thereafter.
(3)
1/3 rd
of Mr. Fried’s options vested on
February 25, 2021 and the remaining options vest in a series of 24
equal monthly installments thereafter.
(4)
1/3 rd
of Mr. Farr’s options vested on
February 21, 2020 and the remaining options vest in a series of 24
equal monthly installments thereafter.
(5)
1/3 rd
of Mr. Farr’s options vested on
February 25, 2021 and the remaining options vest in a series of 24
equal monthly installments thereafter.
(6)
¼th of Mr.
Jaksch’s options vested on January 21, 2019 and the remaining options vest in a series of 36 equal
monthly installments thereafter.
(7)
1/3rd of Mr.
Jaksch’s options vested on February 21, 2020 and the remaining options vest in a series of 24 equal
monthly installments thereafter.
(8)
1/3 rd
of Mr. Jaksch’s options vested
on February 25, 2021 and the remaining options vest in a series of
24 equal monthly installments thereafter.
(9)
1/3 rd
of Mr. Friedman’s options vested
on January 22, 2019 and the remaining options vest in a series of
24 equal monthly installments thereafter.
(10)
1/3 rd
of Mr. Friedman’s options vested
on February 21, 2020 and the remaining options vest in a series of
24 equal monthly installments thereafter.
(11)
1/3 rd
of Mr. Friedman’s options vested
on February 25, 2021 and the remaining options vest in a series of
24 equal monthly installments thereafter.
(12)
Ms. Jordan terminated her employment with the
Company effective January 4, 2021. As a result of her termination,
all unvested shares as of January 31 st,
2021 were forfeited. All remaining vested shares issued to Ms.
Jordan were subject to a 90 day expiration period beginning on
January 31, 2021.
(13)
1/3 rd
of Ms. Jordan’s options vested
on January 27, 2021. Ms. Jordan terminated her employment with the
Company effective January 4, 2021. As a result of her termination,
all unvested shares as of January 31st,
2021 were forfeited. All remaining vested shares issued to Ms.
Jordan were subject to a 90 day expiration period beginning on
January 31, 2021.
Outstanding Restricted Stock at 2020 Fiscal Year-End
|
Name
|
Number of Shares or
Units of Stock
That Have Not Vested (#)
|
Market Value of Shares
of Units of Stock That Have Not Vested ($)
|
Equity incentive plan
awards: Number of unearned shares, units or other rights
thathave not vested (#) (1)
|
Equity incentive plan
awards: Market or payout value of unearned shares, units
or other rights that have not vested ($) (2)
|
|
Robert
Fried
|
—
|
—
|
—
|
$—
|
|
Kevin
Farr
|
—
|
—
|
—
|
$—
|
|
Frank Jaksch,
Jr.
|
—
|
—
|
166,668
|
$800,006
|
|
Mark
Friedman
|
—
|
—
|
—
|
$—
|
|
Megan
Jordan
|
—
|
—
|
—
|
$—
|
(1)
Frank
L. Jaksch Jr. was awarded 83,334 shares of restricted stock on June
6, 2012. Mr. Jaksch was awarded additional 83,334 shares of
restricted stock on January 2, 2014. These shares were to
originally vest upon the earlier to occur of the following: (i) the
market price of the Company’s stock exceeds a certain price,
or (ii) one of other certain triggering events, including the
termination of the officers and members of the board of directors
without cause for any reason. On March 7, 2016, the Company and Mr.
Jaksch amended the restricted stock awards to provide that the
awards shall not vest upon the market price of the Company’s
stock exceeding a certain price or listing of the Company’s
stock on a national securities exchange.
(2)
The
amounts in the column titled “Equity incentive plan awards:
Market or payout value of unearned shares, units or other rights
that have not vested” above reflect the aggregate market
value based on the closing market price of the Company’s
stock on December 31, 2020.
Equity Compensation Plan Information
The following table provides information about our equity
compensation plans as of December 31, 2020:
|
|
A
|
B
|
C
|
|
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 (excluding securities reflected in column
(A))
|
|
|
|
|
|
|
Equity compensation
plans approved by security holders (1)
|
11,414,080
|
$3.92
|
5,934,367
|
|
|
|
|
|
|
Equity compensation
plans not approved by security holders (2)
|
500,000
|
$5.65
|
-
|
|
|
|
|
|
|
Total
|
11,914,080
|
$3.99
|
5,934,367
|
(1)
Includes the
2017 Equity Incentive Plan, as amended.
(2)
The Board of
Directors approved an inducement grant to our Former General
Counsel and Corporate Secretary as an inducement material to
entering into employment with the Company pursuant to Rule
5635(c)(4) of the NASDAQ Listing Rules. The inducement grant
consists of a stock option to purchase up to 500,000 shares of our
common stock with a per share exercise price or $5.65, which was
the adjusted closing price of our common stock on the January 22,
2018 grant date. The inducement grant vests over three years, with
one-third of the underlying shares vesting on the first anniversary
of the date of grant, and the remaining shares will vest monthly
thereafter, at the rate of 1/36th of the shares subject to the
option, until fully vested.
Chief Executive Officer Pay Ratio
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
and the related SEC rule (the “Rule”), the Company is
required to provide to its shareholders specified disclosure
regarding the relationship of CEO total compensation to the total
compensation of its median employee, referred to as
“pay-ratio” disclosure.
For fiscal 2020,
●
the median of the annual total compensation of all employees
of the Company (other than the CEO) was $127,200 and
●
the annual total compensation of the CEO, as reported in the
Summary Compensation Table included in this Proxy Statement, was
$1,126,685.
●
Based on this information, the ratio of the annual total
compensation of the CEO to the median of the annual total
compensation of all employees was approximately 9 to
1.
Set
forth below is a description of the methodology the Company used to
identify the median employee for purposes of the Rule.
To
determine the Company’s total population of employees as of
December 31, 2020, the Company included all of its full-time and
part-time employees, including employees of consolidated
subsidiaries. To identify the “median employee” from
the Company’s employee population as determined above, the
Company compared the aggregate amount of each employee’s 2020
base salary, 2020 incentive bonus, equity awards granted in 2020
and matching 401(k) contributions. In making this determination,
the Company annualized the compensation of employees who were
employed by the Company for less than the entire fiscal year. This
compensation measure was consistently applied to all employees
included in the calculation and reasonably reflects the annual
compensation of employees.
Using
this approach, the Company selected the employee at the median of
its employee population. The Company then calculated annual
total compensation for this employee using the same methodology
used to calculate annual total compensation for the named executive
officers as set forth in the Summary Compensation Table. The
Company determined that the employee’s annual total
compensation for the fiscal year ended December 31, 2020 was
$127,200.
DELINQUENT SECTION 16(a)
REPORTS
Section
16(a) of the Exchange Act requires our executive officers,
directors and persons who own more than 10% of a registered class
of our equity securities to file initial reports of ownership and
reports of changes in ownership with the SEC and to furnish us with
copies of such reports. To our knowledge, and based solely on our
review of the copies of such forms furnished to us and written
representations that no other reports were required, we believe
that all Section 16(a) filing requirements applicable to our
executive officers, directors and 10% stockholders were met during
the year ended December 31, 2020 except as follows: Robert Fried
was late filing one Form 4 for stock transferred to two trusts
under the control of his immediate family.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Transactions with Related Persons
The
following is a description of transactions since January 1,
2019 to which the Company has been a party, in which the amount
involved exceeded or will exceed the lesser of $120,000 or one
percent of the average of the Company’s total assets at
year-end for the last two completed fiscal years, and in which any
of the Company’s executive officers, directors or holders of
more than 5% of its common stock, or an affiliate or immediate
family member thereof, had or will have a direct or indirect
material interest, other than compensation, termination and change
of control arrangements, which are described under "Executive
Compensation."
Sale of consumer products
During July 2017, the Company entered into an exclusivity agreement
(the "Watsons Agreement") with A.S. Watson Retail (HK) Limited
(“Watsons”), whereby the Company agreed to exclusively
sell its TRU NIAGEN® dietary supplement product to Watsons in
certain territories in Asia. During the years ended December 31,
2019 and December 31, 2020, the Company sold approximately $7.3
million and $7.7 million, respectively, of TRU NIAGEN® dietary
supplement product pursuant to the Watsons Agreement. As of
December 31, 2019 and December 31, 2020, the trade receivable from
Watsons were approximately $0.8 million and $0.9 million,
respectively.
Li Ka Shing, who beneficially owns more than 10% of the Company's
common stock, beneficially owns approximately 30% of an entity that
beneficially owns approximately 75% of Watsons. In accordance with
the Company's Related-Person Transactions Policy, the Audit
Committee ratified the terms of the Watsons Agreement.
During the year ended December 31, 2020, an entity affiliated with
Li Ka Shing purchased $1.6 million of TRU NIAGEN® dietary
supplement product to donate to healthcare workers in Hong Kong
hospitals.
Financing
In April 2020, the Company entered into a Securities Purchase
Agreement with related parties pursuant to which the Company agreed
to sell and issue approximately 1.2 million shares for $5.0
million, or $4.08 per share. The selling price was determined by
the average closing price over the ten trading days immediately
preceding the date of the Securities Purchase Agreement. On May 7,
2020, the Company closed the transaction and received proceeds of
$4.9 million, net of offering costs.
The following table sets forth the number of shares of common stock
that were issued to holders of more than 5% of the Company’s
common stock or entities affiliated with them in relation to the
Securities Purchase Agreement:
|
Name
|
Shares of Common Stock
|
|
Pioneer
Step Holdings Limited
|
490,196
|
|
Winsave
Resources Limited
|
735,294
|
In May 2019, the Company closed a financing transaction and issued
convertible promissory notes (the “Notes”) in the
aggregate principal amount of $10.0 million to Winsave Resources
Limited and Pioneer Step Holdings Limited. The maturity date of the
Notes was originally July 1, 2019 and was subsequently extended to
August 15, 2019. The Notes accrued interest at a rate of 5.0% per
annum for a total of approximately $123,000 through the maturity
date. On the maturity date, the Notes automatically converted into
approximately 2.3 million shares of the Company’s common
stock at a price of $4.465 per share.
The following table sets forth the number of shares of common stock
that were issued to holders of more than 5% of the Company’s
common stock or entities affiliated with them in relation to the
Notes:
|
Name
|
Shares of Common Stock
|
|
Pioneer
Step Holdings Limited
|
1,133,627
|
|
Winsave
Resources Limited
|
1,133,627
|
In addition, Ms. Yu serves as the director nominated by Pioneer
Step Holdings Limited pursuant to rights granted to Pioneer Step
Holdings Limited pursuant to that certain Securities Purchase
Agreement, dated April 26, 2017, by and among the Company and the
certain purchasers named therein.
Employment Arrangements
The
Company currently maintains written employment agreements with its
named executive officers, as described in "Executive
Compensation."
Equity Granted to Executive Officers and Directors
The
Company has granted equity to its named executive officers and
directors, as more fully described in "Executive
Compensation."
Indemnification Agreements
The
Company has entered, and intends to continue to enter, into
indemnification agreements with its directors and executive
officers, in addition to the indemnification provided for in the
Company’s bylaws. These agreements, among other things,
require the Company to indemnify directors and executive officers
for certain expenses incurred by a director or executive officer in
any action or proceeding arising out of their services as one of
the Company’s directors or executive officers.
Review, approval or ratification of transactions with related
persons.
On an ongoing basis, the Audit Committee reviews all “related
party transactions” (those transactions that are required to
be disclosed by SEC Regulation S-K, Item 404 and under Nasdaq
rules), if any, for potential conflicts of interest and all such
transactions must be approved by the Audit Committee. In
November 2016, the Company adopted a written Related-Person
Transactions Policy that sets forth the Company’s policies
and procedures regarding the identification, review, consideration
and approval or ratification of “related-persons
transactions.” For purposes of the Company’s policy
only, a “related-person transaction” is a transaction,
arrangement or relationship (or any series of similar transactions,
arrangements or relationships) in which the Company and any
“related person” are participants involving an amount
that exceeds $120,000. Transactions involving compensation for
services provided to the Company as an employee, director,
consultant or similar capacity by a related person are not covered
by this policy. A related person is any executive officer,
director, or more than 5% stockholder of the Company, including any
of their immediate family members, and any entity owned or
controlled by such persons. Under the policy, where a transaction
has been identified as a related-person transaction, management
must present information regarding the proposed related-person
transaction to the Audit Committee (or, where Audit Committee
approval would be inappropriate, to another independent body of the
Board of Directors) for consideration and approval or
ratification.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of April 21, 2021, there were approximately 67,932,548
shares of our Common Stock
outstanding. The following table sets forth
certain information regarding the ownership of our Common Stock as
of April 21, 2021 by: each person known to us to beneficially own
more than 5% of our Common Stock; each director; each of our named
executive officers; and all directors and executive officers as a
group. We calculated beneficial ownership according to
Rule 13d-3 of the Exchange Act as of that date. Shares
issuable upon exercise of options or warrants that are exercisable
or convertible within 60 days after April 21, 2021 are included as
beneficially owned by the holder. Beneficial ownership
generally includes voting and dispositive power with respect to
securities. Unless otherwise indicated below, the
persons and entities named in the table have sole voting and sole
dispositive power with respect to all shares beneficially owned.
This table is based upon information supplied by officers,
directors and principal stockholders and Schedules 13D and 13G
filed with the SEC. Unless otherwise indicated, the address for the
following stockholders is c/o ChromaDex Corporation, 10900 Wilshire
Blvd., Suite 600, Los Angeles, CA 90024.
|
Name of Beneficial Owner (1)
|
Shares of Common Stock Beneficially Owned (2)
|
Aggregate Percentage Ownership
|
|
|
|
|
|
Champion
River Ventures (3)
|
6,500,937
|
9.57%
|
|
Li
Ka Shing (Global) Foundation (4)
|
3,467,778
|
5.10%
|
|
Chau
Hoi Shuen Solina Holly (5)
|
6,377,783
|
9.39%
|
|
Young
Rong (HK) Asset Management Limited (6)
|
6,669,802
|
9.82%
|
|
Directors
|
|
|
|
Stephen
Block (7)
|
257,496
|
*
|
|
Jeff
Baxter (8)
|
189,167
|
*
|
|
Kurt
Gustafson (9)
|
120,000
|
*
|
|
Steven
Rubin (10)
|
120,000
|
*
|
|
Wendy
Yu (11)
|
100,000
|
*
|
|
Tony
Lau (12)
|
100,000
|
*
|
|
Frank
L. Jaksch Jr. (13)
|
3,315,336
|
4.81%
|
|
Robert
Fried (14)
|
3,258,897
|
4.67%
|
|
Named Executive
Officers
|
|
|
|
Frank
L. Jaksch Jr.
|
(See above)
|
|
|
Robert
Fried
|
(See above)
|
|
|
Kevin
Farr (15)
|
1,154,005
|
1.67%
|
|
Lisa
H. Harrington
|
-
|
*
|
|
Mark
Friedman (16)
|
-
|
*
|
|
Megan
Jordan (16)
|
-
|
*
|
|
All directors and current executive officers as a
group
|
|
|
|
(10 persons)
(17)
|
|
|
|
|
8,614,900
|
11.84%
|
*
Represents less
than 1%.
(1)
Addresses
for the beneficial owners listed are: Champion River Ventures, 7/F,
Cheung Kong Center, 2 Queen's Road Central, Hong Kong; Li Ka Shing
(Global) Foundation: PO Box 309, Ugland House, Grand Cayman,
KYI-1104, Cayman Islands; Chau Hoi Shuen Solina Holly, 29th Floor,
Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong; Yong Rong (HK)
Asset Management Limited: Suite 3008, 30/F, Two Exchange Square, 8
Connaught Place, Central, Hong Kong
(2)
Beneficial
ownership is determined in accordance with the rules of the SEC and
includes voting or dispositive power with respect to shares
beneficially owned. Unless otherwise specified, reported ownership
refers to both voting and dispositive power. Shares of Common Stock
issuable upon the conversion of stock options or the exercise of
warrants within the next 60 days are deemed to be converted and
beneficially owned by the individual or group identified in the
Aggregate Percentage Ownership column.
(3)
Based
on
beneficial ownership reported on Schedule 13D/A filed with SEC on
November 21, 2017, (i) Champion River Ventures Limited
(“Champion River”) beneficially owned and had sole
voting and dispositive power with respect to 6,500,937 shares (the
“Champion Shares”), (ii) Prime Tech Global Limited
(“Prime Tech”), by virtue of being the sole shareholder
of Champion River, may be deemed to beneficially own and have sole
voting and dispositive power with respect to the Champion Shares,
(iii) Mayspin Management Limited (“Mayspin”), by virtue
of being the sole shareholder of Prime Tech, may be deemed to
beneficially own and have sole voting and dispositive power with
respect to the Champion Shares, and (iv) Li Ka Shing, by virtue of
being the sole shareholder of Mayspin, may be deemed to
beneficially own and have sole voting and dispositive power with
respect to the Champion Shares. Champion River has exercised its
right to designate for appointment one director to our Board of
Directors and has designated, and our Board of Directors has
appointed, Tony Lau to fill such seat. In addition, Mr. Li is one
of 14 directors of Li Ka Shing (Overseas) Foundation
(“LKSOF”), which is the sole stockholder of Winsave
Resources Limited (“Winsave”), which holds 2,353,139
shares of common stock. However, Mr. Li does not report as having
Section 13(d) beneficial ownership over any of the shares owned by
Winsave. Investment decisions by LKSOF are made by the majority
vote of a board of directors currently consisting of 14 persons, of
which Li Ka Shing (“Mr. Li”) is the Chairman.
Investment decisions by Winsave are made by the majority vote of a
board of directors currently consisting of five persons. Mr. Li is
not a director or officer of Winsave. The registered office address
for Champion River and Mayspin is Vistra Corporate Services Centre,
Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands
and the registered office address for PrimeTech is P.O. Box 901,
East Asia Chambers, Road Town, Tortola, British Virgin Islands, and
the correspondence address for each of Champion River, PrimeTech,
and Mayspin is c/o 7/F, Cheung Kong Center, 2 Queen’s Road
Central, Hong Kong.
(4)
Based
on beneficial ownership reported on Schedule 13G filed with SEC on
February 9, 2021, (i) Winsave Resources
Limited(“Winsave”) beneficially owned and had sole
voting and dispositive power with respect to 3,088,433 shares (the
“Winsave Shares”), (ii) Radiant Treasure Limited
(“Radiant Treasure”) beneficially owned and had sole
voting dispositive power with respect to 379,345 shares (the
“Radiant Treasure Shares”), and (iii) Li Ka Shing
(Global) Foundation (the “Foundation”), by virtue of
being the sole shareholder of Winsave and Radiant Treasure, may be
deemed to beneficially own and have sole voting and dispositive
power with respect to the Winsave Shares and Radiant Treasure
Shares.
(5)
Based
on beneficial ownership reported on Schedule 13D/A filed with SEC
on April 29, 2020, (i) Pioneer Step Holdings Limited
(“Pioneer Step”) beneficially owned and had sole voting
and dispositive power with respect to 5,957,783 shares (the
“Pioneer Shares”), (ii) Dvorak International Limited
(“Dvorak International”) beneficially owned and had
sole voting dispositive power with respect to 420,000 shares (the
“Dvorak Shares”), and (iii) Chau Hoi Shuen Solina Holly
(“Solina Chau”), by virtue of being the sole
shareholder of Pioneer Step and Dvorak International, may be deemed
to beneficially own and have sole voting and dispositive power with
respect to the Pioneer Shares and Dvorak Shares. Pioneer Step has
exercised its right to designate for appointment one director to
our board of directors and has designated, and our board of
directors has appointed, Wendy Yu to fill such seat. The registered
office address for Pioneer Step is Vistra Corporate Services
Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin
Islands and its correspondence address is c/o Suites PT. 2909 &
2910, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong. The
business address of Solina Chau is c/o Suites PT. 2909 & 2910,
Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong.
(6)
Based
on beneficial ownership reported on Schedule 13G/A filed with SEC
on April 9, 2021, (i) EverFund beneficially owns and has sole
voting and dispositive power with respect to 3,846,153 shares, (ii)
Yong Rong Global Excellence Fund (“YRGE”) beneficially
owns and holds sole voting and dispositive power for 285,164 share
and holds 1,688,485 shares of the Company in underlying swaps, and
(iii) Bayroad Holdings Limited (“Bayroad”) beneficially
owns and has sole voting and dispositive power with respect to
850,000 shares. Yong Rong (HK) Asset Management Limited is the
investment manager of EverFund, YRGE and Bayroad. CAI Xiaoxiao, by
virtue of being the Portfolio Manager of EverFund, may be deemed to
beneficially own and have voting and dispositive power with respect
to the shares held by EverFund. HUANG Yong, by virtue of being the
Portfolio Manager of YRGE and Bayroad, may be deemed to
beneficially own and have voting and dispositive power with respect
to the shares held and underlying swaps by YRGE and Bayroad. The
registered office of EverFund and YRGE is PO Box 309, Ugland House,
Grand Cayman, KY1-1104, Cayman Islands (c/o Yong Rong (HK) Asset
Management Ltd, the Investment Manager to EverFund, at Suite 3008,
30/F, Two Exchange Square, 8 Connaught Place, Central, Hong Kong).
The registered office of Bayroad is Room 1305, 13F Tower A, New
Mandarin Plaza. 14 Science Museum Road, Tsim Sha Tsui, Kowloon,
Hong Kong.
(7)
Includes
16,667 shares of common stock directly owned by
Mr. Block. Includes 240,829 stock options exercisable within
60days of April 21,
2021.
(8)
Includes
189,167 stock options exercisable within 60 days of April 21,
2021.
(9)
Includes
120,000 stock options exercisable within 60 days of April 21,
2021.
(10)
Includes
120,000 stock options exercisable within 60 days of April 21,
2021.
(11)
Includes
100,000 stock options exercisable within 60 days of April 21,
2021.
(12)
Includes
100,000 stock options exercisable within 60 days of April 21,
2021.
(13)
Includes
2,075,052 shares owned by Black Sheep, FLP beneficially owned by
Mr. Jaksch because he has shared voting power and shared
dispositive power for such shares. Includes 224,339 shares directly
owned by Mr. Jaksch. Includes 1,015,945 stock options exercisable
within 60 days of April 21, 2021.
(14)
Includes 882,561
shares of common stock directly owned by Mr. Fried. Includes
250,000 shares owned by The Benjamin A. Fried 2020 Irrevocable
Trust beneficially owned by Mr. Fried because he has shared voting
power and shared dispositive power for such shares. Includes
250,000 shares owned by The Jeremy W. Fried 2020 Irrevocable Trust
beneficially owned by Mr. Fried because he has shared voting power
and shared dispositive power for such shares. Includes 53,001
shares of common stock held by Fried-Travis Revocable Trust U/A
dated June 2, 1999, beneficially owned by Mr. Fried because he has
shared voting power and shared dispositive power for such shares.
Includes 9,753 shares indirectly held Mr. Fried in the name of
Fried Films Profit Sharing. Includes 6,745 shares held by Jeremy
Fried and 6,001 shares held by Benjamin Fried, who are both sons of
Robert Fried. Includes 1,800,836 stock options exercisable within
60 days of April 21,
2021.
(15)
Includes
41,625 shares of common stock directly owned by Mr. Farr. Includes
1,112,380 stock options exercisable within 60 days of April 21,
2021, of which 498,166 are exercisable at the sole discretion of
Kristina Farr pursuant to the terms of a marital settlement
agreement.
(16)
Mr.
Friedman and Ms. Jordan both resigned from the Company subsequent
to December 31, 2020.
(17)
Includes
the shares and stock options included above in footnotes (7)
through (16).
HOUSEHOLDING OF PROXY
MATERIALS
The SEC
has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements Notices of Internet
Availability of Proxy Materials or other Annual Meeting materials
with respect to two or more stockholders sharing the same address
by delivering a single Notice of Internet Availability of Proxy
Materials or other Annual Meeting materials addressed to those
stockholders. This process, which is commonly referred to as
“householding,” potentially means extra convenience
for stockholders and cost savings for
companies.
This
year, a number of brokers with account holders who are Company
stockholders will be “householding” the Company’s
proxy materials. A single Notice of Internet Availability of Proxy
Materials will be delivered to multiple stockholders sharing an
address unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your
broker that they will be “householding” communications
to your address, “householding” will continue until you
are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in
“householding” and would prefer to receive a separate
Notice of Internet Availability of Proxy Materials, please notify
your broker or the Company. Direct your written request to
ChromaDex Corporation, ATTN: Secretary, 10900 Wilshire Blvd. Suite
600, Los Angeles, CA 90024 or contact the Secretary at
310-388-6706. Stockholders who currently receive multiple copies of
the Notices of Internet Availability of Proxy Materials at their
addresses and would like to request “householding” of
their communications should contact their brokers.
OTHER BUSINESS
As of the date of this Proxy Statement, the management of the
Company has no knowledge of any business that may be presented for
consideration at the Annual Meeting, other than that described
above. As to other business, if any, that may properly come before
the Annual Meeting, or any adjournment thereof, it is intended that
the Proxy hereby solicited will be voted in respect of such
business in accordance with the judgment of the Proxy
holders.
BY
ORDER OF THE BOARD OF DIRECTORS
/s/ Frank Jaksch
Executive
Chairman of the Board
April
21, 2021
PROXY CARD
-46-
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