(RULE 14a-101)

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

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Filed by a Party other than the Registrant ☐

 

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☐ Preliminary Proxy Statement

☒ Definitive Proxy Statement

☐ Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☐ Definitive Additional Materials

☐ Soliciting Material Pursuant to § 240.14a-12

LOOP INDUSTRIES, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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Loop Industries, Inc.

480 Fernand-Poitras Street

Terrebonne, Québec, Canada, J6Y 1Y4

__________________

 

NOTICE OF THE 2020 ANNUAL MEETING OF STOCKHOLDERS

 

Dear Stockholders:

 

Due to continued public health precautions and to comply with government-issued orders and guidelines regarding in-person gatherings given a novel strain of coronavirus (COVID-19) pandemic and to ensure the health and safety of Loop Industries, Inc.’s shareholders, employees, directors and officers, and communities, the format of our 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”) will be a virtual-only meeting, instead of an in-person meeting, on June 29, 2020 10:00 a.m. local time, for the purpose of considering and acting upon the following proposals:

 

 

 

 

 

Shareholders will not be able to attend the 2020 Annual Meeting physically in person. The virtual meeting and live audio webcast can be accessed at www.virtualshareholdermeeting.com/LOOP2020.

 

To vote or submit questions during the virtual meeting, shareholders must enter the 16-digit control number included on the proxy card, voting instruction form, notice or email that they previously received. Online access to the audio webcast will open shortly prior to the start of the 2020 Annual Meeting. Guests without a control number may also attend the meeting but will not have the option to vote shares or ask questions.

 

All shareholders, whether or not planning to attend the Annual Meeting, are encouraged to vote promptly in advance of the meeting by using one of the methods described in the proxy materials for the Annual Meeting.

 

We will be using the U.S. Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders via the Internet. Pursuant to these rules, instead of mailing a printed copy of our proxy materials to each stockholder we have elected to provide access to our proxy materials over the Internet. Accordingly, with the exception of certain requesting stockholders who will receive printed copies of our proxy materials by mail, stockholders of record will receive a Notice of Internet Availability of Proxy Materials and may vote at the 2020 Annual Meeting and any postponements or adjournments of the meeting. We expect to mail the Notice of Internet Availability of Proxy Materials on or about May 8, 2020.

 

The Board of Directors has fixed the close of business on May 1, 2020 as the record date for determination of stockholders entitled to receive notice of, and to vote at, the 2020 Annual Meeting and at any postponements or adjournments thereof. A list of stockholders entitled to vote at the 2020 Annual Meeting will be available at the meeting being held via live webcast and for ten days prior to the 2020 Annual Meeting.

 

 

Our Annual Report on Form 10-K for the fiscal year ended February 29, 2020 accompanies this Notice of Annual Meeting of Stockholders and Proxy Statement. These documents may also be accessed on the Broadridge Financial hosted site www.proxyvote.com.

 

Please refer to the Proxy Statement for further information with respect to the business to be transacted at the 2020 Annual Meeting.

 

	By Order of the Board of Directors,
	(s) Michel Megelas
	Michel Megelas
	Chief Legal Officer and Corporate Secretary
	Terrebonne, Québec

 

  

 

 

 

 

 

 

 

PROXY STATEMENT

 _____________________

 

ANNUAL MEETING OF STOCKHOLDERS

June 29, 2020

 _____________________

 

This Proxy Statement is furnished in connection with the solicitation by Loop Industries, Inc. (the “Company”) on behalf of the Board of Directors (the “Board” or the “Board of Directors”) of proxies for use at our 2020 Annual Meeting of Stockholders to be held on June 29, 2020 via live webcast (the “2020 Annual Meeting”). We intend to mail and make available this Proxy Statement and the accompanying form of proxy to stockholders on or about May 15, 2020.

 

EXPLANATORY NOTES

 

All monetary amounts shown in this Proxy Statement are expressed in United States dollars, unless otherwise expressly noted. Canadian dollars are referred to as “CAD”. In various places throughout this proxy, we have assumed an exchange rate to convert any Canadian dollars into U.S. dollars of $1.00 CAD = $0.7544 U.S., which was the average exchange rate for fiscal 2020. We make no representation that the Canadian dollar or U.S. dollar amounts referred to in this proxy could have been converted into U.S. dollars or Canadian dollars, as the case may be, at any particular rate or at all.

 

  

 

 

 

 

 

TABLE OF CONTENTS

Page

VOTING RIGHTS	1
RECORD DATE AND SHARE OWNERSHIP	1
PROXIES	1
STOCKHOLDER PROPOSALS	1
PROXY SOLICITATION COSTS	1
PROPOSAL ONE: ELECTION OF DIRECTORS	2
Information Regarding Director to Be Elected by Holder of Our Series A Preferred Stock	2
Information Regarding the Nominees for Election as Directors	3
Information Regarding Directors Not Standing for Re-election	4
Required Vote & Recommendation of the Board	4
CORPORATE GOVERNANCE	5
Board of Director Meetings and Committees	5
Controlled Company Status	5
Board Independence	6
The Board’s Leadership Structure	6
Committees of the Board of Directors	6
Consideration of Director Nominees	9
Annual Meeting Attendance	10
Stockholder Communications with the Board of Directors	10
Code of Ethics	11
Indemnification Agreements	11
Rule 10b5-1 Trading Plans	11
Board’s Role in Risk Oversight	11
Compensation of Non-Employee Directors	12
Fiscal 2020 Non-Employee Director Compensation Table	13
EXECUTIVE OFFICERS	14
EXECUTIVE COMPENSATION	14
Summary Compensation	25
TRANSACTIONS WITH RELATED PERSONS	32
Transactions and Relationships with Directors, Director Nominees, Executive Officers and Five Percent Stockholders	32
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	33
Audit Fees During Fiscal Years 2019 and 2018	33
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm	34
Required Vote & Recommendation of the Board	34
AUDIT COMMITTEE REPORT	35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	36
PROPOSAL THREE: ADVISORY VOTE ON EXECUTIVE COMPENSATION	38
Required Vote & Recommendation of the Board	38
OTHER MATTERS	39
DELINQUENT SECTION 16(A) REPORTS	39
HOUSEHOLDING OF ANNUAL MEETING MATERIALS	39
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS	39
ANNUAL REPORT ON FORM 10-K	39
COST OF SOLICITATION	40
NON-SOLICITATION MATERIALS	40

 

 

VOTING RIGHTS

 

Each share of our common stock, par value $0.0001 per share (the “Common Stock”), entitles the holder thereof to one vote on matters to be acted upon at the 2020 Annual Meeting, including the election of directors. Votes cast in person or by proxy at the 2020 Annual Meeting will be tabulated by Broadridge Financial Solutions, Inc., the Inspector of Elections. Any proxy that is returned using the form of proxy enclosed or voted by Internet according to the instructions included on the proxy card will be voted in accordance with the instructions thereon, and if no instructions are given, will be voted: (i) “FOR” the election of all of the director nominees as described in Proposal One; (ii) “FOR” ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm as described in Proposal Two; (iii) “FOR” the approval of the advisory resolution relating to our executive compensation as described in Proposal Three; and (iv) if any other business is properly brought before the 2020 Annual Meeting, shares subject to proxies will be voted, to the extent permitted by the rules and regulations of the Securities and Exchange Commission, in accordance with the discretion of the persons voting such proxies. A stockholder may indicate on the enclosed proxy or its substitute that it is abstaining from voting on a particular matter (an “abstention”). A broker may indicate on the enclosed proxy or its substitute that it does not have discretionary authority as to certain shares to vote on a particular matter (a “broker non-vote”). Abstentions and broker non-votes are each tabulated separately.

 

The Inspector of Elections will determine whether or not a quorum is present at the 2020 Annual Meeting. In general, Nevada law and our By-laws provide that a majority of the shares issued and outstanding and entitled to vote, present in person or represented by proxy, constitutes a quorum. Abstentions and broker non-votes of shares that are entitled to vote are treated as shares that are present in person or represented by proxy for purposes of determining the presence of a quorum.

 

In determining whether a proposal has been approved, abstentions are treated as present in person or represented by proxy and entitled to vote, but not as voting for such proposal, and hence have the same effect as votes against such proposal, while broker non-votes are not treated as present in person or represented by proxy but not entitled to vote, and hence have no effect on the vote for such proposal.

 

RECORD DATE AND SHARE OWNERSHIP

 

Holders of record of Common Stock as of the close of business on May 1, 2020 have the right to receive notice of and to vote at the 2020 Annual Meeting. On May 1, 2020, we had issued and outstanding 39,916,905 shares of Common Stock.

 

PROXIES

 

Proxies for use at the 2020 Annual Meeting are being solicited by the Company from our stockholders. Any person giving a proxy in the form accompanying this Proxy Statement has the power to revoke it at any time before its exercise by (i) filing with the Secretary of the Company a signed written statement revoking his or her proxy or (ii) submitting an executed proxy bearing a date later than that of the proxy being revoked. A proxy may also be revoked by attendance at the 2020 Annual Meeting and the election to vote in person. Attendance at the 2020 Annual Meeting will not by itself constitute the revocation of a proxy.

  

STOCKHOLDER PROPOSALS

 

Proposals of stockholders that are intended to be presented at our 2021 Annual Meeting of Stockholders must comply with the requirements of SEC Rule 14a-8 and must be received by us no later than Friday, January 8, 2021 in order to be included in our proxy statement and form of proxy relating to the meeting. A stockholder proposal or a nomination for director for our 2021 Annual Meeting of Stockholders that is not to be included in our proxy statement and form of proxy relating to the meeting must be received by us no earlier than Thursday, February 18, 2021 and no later than Saturday, March 20, 2021. Our By-laws require that certain information and acknowledgements with respect to the proposal or nomination be set forth in the stockholder’s notice. A copy of the relevant bylaw provision is available upon written request to Loop Industries, Inc., 480 Fernand-Poitras Terrebonne, Quebec, Canada J6Y 1Y4, Attention: Chief Legal Officer. Further, our Amended and Restated By-laws dated as of April 4, 2018 (the “By-laws”) were filed as Exhibit 3.1 to our Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on April 10, 2018 and may be accessed through the SEC’s website at www.sec.gov/edgar. Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement and references to our website address in this proxy statement are inactive textual references only.

 

PROXY SOLICITATION COSTS

 

The expense of solicitation of proxies will be borne by the Company. In addition to solicitation of proxies by mail, certain officers, directors and Company employees, who will receive no additional compensation for their services, may solicit proxies by telephone or in person. We are required to request brokers and nominees who hold stock in their name to furnish this proxy material to beneficial owners of the stock and will reimburse such brokers and nominees for their reasonable out-of-pocket expenses in so doing.

  

 

PROPOSAL ONE

 

ELECTION OF DIRECTORS

 

At the 2020 Annual Meeting, four directors will be elected to the Board by the common stockholders. The Board of Directors has approved Peter S. Kezios, Andrew Lapham, Laurence Sellyn and Jay Stubina as nominees for election at the 2020 Annual Meeting. Sidney Horn, a current director and chairman of the Nominating and Corporate Governance Committee of the Board, will not stand for re-election to the Board at the Annual Meeting and will retire from the Board at the end of his term as director. Immediately prior to the 2020 Annual Meeting, we also expect that Daniel Solomita will be elected to the Board upon the affirmative vote of the sole holder of our Series A Preferred Stock, resulting in a total of five directors. Except as set forth below, unless otherwise instructed, the persons appointed in the accompanying form of proxy will vote the proxies received by them FOR the nominees named below, all of whom are presently directors of the Company, with the exception of Mr. Peter S. Kezios who is up for election for the first time. The term of office of each person elected as a director will continue until the next Annual Meeting of Stockholders or until a successor has been elected and qualified.

 

The following table sets forth, as of February 29, 2020, the names and ages of our directors and the principal offices and positions held by each person:

 

Name		Age		Title
Daniel Solomita		44		Chairman of the Board of Directors, Chief Executive Officer, and President
Sidney Horn(1)		69		Director, Chairman of the Nominating and Corporate Governance Committee
Andrew Lapham(2)		47		Director, Chairman of the Compensation Committee
Laurence Sellyn		70		Lead Independent Director, Chairman of the Audit Committee
Jay Stubina		58		Director

____________ 

 

Information Regarding Director to Be Elected by Holder of Our Series A Preferred Stock

 

Daniel Solomita, 44, has served as President and Chief Executive Officer and Chairman of the Board of Directors of Loop Industries since 2015. Mr. Solomita is also the Founder of the Company and the chief architect of the Company’s growth strategy and mission to disrupt the global plastics industry. As such, the Board of Directors considers Mr. Solomita as fully qualified to sit as Chairman of the Board of Directors. Mr. Solomita also served as the President, Secretary, Treasurer and sole Director of Loop Holdings, Inc., a wholly-owned subsidiary, from 2014 to March 2017, when Loop Holdings, Inc. merged with and into our Company. Prior to founding Loop, Mr. Solomita focused his business career on the circular economy, developing Polyamide landfill remediation projects across North America. From 2010 until 2014, Mr. Solomita served as board member and as President of Dragon Polymers, a company which operated as a nylon recycling business (currently doing business as Lead Innovation Corporation, OTC:LEIC). Mr. Solomita is a director and President of 8198381 Canada Inc., a company which also operated a nylon recycling business and is no longer operational. Mr. Solomita attended Dawson College, in Quebec, Canada, where he obtained a Diploma of College Studies in Business Administration in 1996. Mr. Solomita also has held a certification as a Microsoft Certified Solutions expert since 1998. 

 

 

Information Regarding the Nominees for Election as Directors

 

Laurence Sellyn, 70, has served as a member of our Board of Directors since April 2018. Mr. Sellyn retired at the end of 2015 from a career in leadership roles in the management of public companies and is now active as a corporate director and as an advisor and consultant to entrepreneurial CEOs. He provides consulting services through his consulting firm, Par Seven Advisors Inc. Mr. Sellyn was Executive Vice-President, Chief Financial and Administrative Officer of Gildan Activewear Inc. from April 1999 until August 2015. From 1992 until 1999 he was Chief Financial Officer and Senior Vice President of Finance and Corporate Development of Wajax Inc. Previously Mr. Sellyn held successive positions of increasing responsibility at Domtar Inc., including serving as Corporate Controller from 1987 until 1991. Since 2013, Mr. Sellyn has served on the Board of Cascades Inc. (TSX: CAS), where he was Chair of the Corporate Governance and Nominating Committee and was a member of the Audit and Finance Committee. Mr. Sellyn will not be standing for re-election to the Board of Cascades Inc. at their annual general meeting of shareholders scheduled for June 25, 2020. He served as a Director and Lead Independent Director of Noble Iron Inc. (TSXV: NIR) from August 4, 2014 to August 11, 2016. Mr. Sellyn is a U.K. Chartered Accountant and holds a Master’s degree in Modern Languages and Literature from Oxford University. Mr. Sellyn has also been active on charitable and not-for- profit boards. Mr. Sellyn was elected as Lead Independent Director of Loop on April 4, 2018. Mr. Sellyn is considered by the Board to be fully qualified for this role due to his experience in corporate finance and corporate governance as a senior executive and director of public companies and his history working with founding entrepreneurs.

 

Peter Kezios, 61, is nominated to the Board for the first time this year. Mr. Kezios is specialized in the field of polymer research, development, and is a technology expert who has been employed in numerous executive, director, leadership and professional positions within the polyester industry for over 33 years. Over the course of his career, Mr. Kezios has been providing vision, leadership and direction to organizations engaged in research, development, and technology commercialization via innovative and collaborative application of chemical/polymer engineering fundamentals to develop solutions to new product and process opportunities. Mr. Kezios holds a Ph.D. in Chemical Engineering from Princeton University and currently acts as a research and development consultant in the fields PET Resin & Fibers and Sustainable & Specialty Polyesters. Prior to Mr. Kezios’ work as a research and development consultant since 2017, he held, over the span of 18 years, various senior executive positions with DAK Americas LLC (formerly DuPont-Akra Polyester LLC), one of the largest integrated producers of PET resins in the world and the main producer of polyester staple fibers in the Americas. We believe Mr. Kezios’ extensive industry experience makes him qualified to be on the Board.

 

Andrew Lapham, 47, has served as a member of our Board of Directors since June 2019. Mr. Lapham has had a successful career as a financial professional with experience covering plastic manufacturing. In 2013 Mr. Lapham co-founded and continues to serve as the Global and Canadian Chair of Northern Private Capital Inc., a private investment firm. Mr. Lapham previously served as the Chairman of Blackstone Canada, an alternative asset manager, which focused primarily on sourcing and evaluating the firm’s investment opportunities in Canada. Mr. Lapham also served as the senior investment professional at Onex Corporation, headquartered in Toronto. Mr. Lapham holds a Bachelor of Arts degree with a major in History from Princeton University. Mr. Lapham’s understanding of the economics and strategic elements of business, and his expertise in corporate finance make him qualified be on the Board.

 

Jay Stubina, 58, has served as a member of our Board of Directors since 2016. In 1998, Mr. Stubina co-founded Continent8 Technologies, where he is currently responsible for company operations and sales. Continent8 Technologies operates data centers in Europe, North America and Asia. Mr. Stubina holds a Bachelor of Commerce degree, with a major in Accountancy, from Concordia University, of Montreal, Canada. Mr. Stubina obtained a Chartered Accountant certificate from McGill University, and maintains a Chartered Professional Accountant license in Canada. Mr. Stubina serves on our Audit and Compensation Committees. His experience running a business from 1998 to the present gives him the experience to be a valuable member of our Compensation Committee, and his experience serving as CFO of a real estate company from 1989-1998 gives him the experience necessary to be a valuable member of our Audit Committee. Mr. Stubina’s knowledge of and experience in finance, technology implementation in businesses and data management led to our conclusion that he is qualified to serve as a director in light of our business and structure.

 

 

Information Regarding Directors Not Standing for Re-election

 

Sidney M. Horn, 69, Director and Chairman of the Nominating and Corporate Governance Committee, will not stand for re-election to the Board at the 2020 Annual Meeting. He has served as a member of our Board of Directors since December 2018. Mr. Horn is currently a senior counsel at Stikeman Elliott LLP, where he was a partner until May 2017. Mr. Horn has been a member of the board of directors of Genworth MI Canada Inc. since July 2009 where he provides guidance on executive compensation and board governance matters. Mr. Horn holds a Bachelor of Arts degree, with a major in Economics from McGill University, an MBA degree from Columbia University, a Bachelor of Civil Law degree from McGill University and a Bachelor of Laws degree from McGill University. We wish to thank Mr. Horn for his valuable counsel and contribution to the Board of Directors and the Company.

 

Required Vote & Recommendation of the Board

 

The nominees receiving a greater number of affirmative votes FOR his election than votes AGAINST his election shall be elected as directors. Unless marked to the contrary, proxies received will be voted “FOR” for each of the Board’s nominees. Abstentions and broker non-votes will not affect the outcome of the vote.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” FOR EACH OF THE BOARD’S NOMINEES ON THE ELECTION OF THE FOREGOING NOMINEES TO SERVE AS DIRECTORS UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS.

 

 

 

 

CORPORATE GOVERNANCE

 

Board of Director Meetings and Committees

 

The Board has established the following three (3) committees, each with its own written charter: the Audit Committee, the Nominating and Corporate Governance Committee, and the Compensation Committee. The following table sets forth the attendance of the current Directors at the Board and Committee meetings held during the fiscal year ended February 29, 2020:

 

	Board of Directors		Audit Committee		Nominating and Corporate Governance Committee		Compensation Committee		Total Attendance
Director	Number	%	Number	%	Number	%	Number	%	%
Daniel Solomita	10/10	100%	--	--	--	--	--	--	100%
Sidney Horn	9/10	90%	--	--	3/4	75%	--	--	86%
Andrew Lapham(1)	8/8	100%	3/3	100%	--	--	4/4	100%	100%
Laurence Sellyn	9/10	90%	4/4	100%	4/4	100%	6/6	100%	96%
Jay Stubina	10/10	100%	4/4	100%	4/4	100%	6/6	100%	100%

_____________ 

 

Controlled Company Status

 

Our shares of Common Stock are listed on the Nasdaq Stock Market. Nasdaq requires all of its listed companies to be in compliance with Nasdaq’s standards of corporate governance set forth in the Nasdaq Marketplace Rules (the “Nasdaq CG Rules”), with certain exceptions. Companies that qualify as a “controlled company” within the meaning of the Nasdaq CG Rules can elect not to comply with certain Nasdaq CG Rules, or can choose to comply with these rules despite the presence of an exemption. Under Nasdaq CG Rules, “controlled companies” may elect not to comply with certain Nasdaq CG Rules, including:

 

 

 

 

As of February 29, 2020, Mr. Daniel Solomita controls more than 50% of the voting power for the election of directors. Therefore, we qualify as a “controlled company” within the meaning of the Nasdaq CG Rules, and are not required to follow any of the above three Nasdaq CG Rules. We do not currently utilize the second and third exemptions, and we did not utilize them at any point in fiscal year 2020. We utilized the first of these exemptions until May of 2018, when we formed a Nominating and Corporate Governance Committee comprised entirely of Independent Directors that meet the applicable Nasdaq and SEC independence standards. Therefore, we did not utilize any of these exemptions at any time after May of 2018 and we do not anticipate utilizing any of these exemptions for fiscal year 2021. The “controlled company” exception does not modify audit committee requirements of Rule 10A-3 under the Exchange Act and Nasdaq CG Rules or the requirement to have regularly scheduled Board meetings at which only independent Directors attend.

  

 

Board Independence

 

The Board of Directors has determined the following directors are independent: Peter Kezios, Andrew Lapham, Laurence Sellyn and Jay Stubina. We evaluated independence in accordance with the applicable Nasdaq Stock Market rules.

 

The Board’s Leadership Structure

 

The Board currently combines the role of Chairman of the Board and Chief Executive Officer. This is because of the unique role played by Daniel Solomita as the Founder, Chief Executive Officer and controlling shareholder of the Company. The Board believes that Mr. Solomita is best situated to serve as Chairman because he is the director most familiar with our business and industry and is therefore best able to identify the strategic priorities to be discussed by the Board. The Board believes that combining the role of Chairman and Chief Executive Officer, in the current circumstances of the Company, facilitates information flow between management and the Board and fosters strategic development and execution. The Board has appointed Laurence Sellyn as the lead independent director. The lead independent director serves as the focal point for independent directors, coordinating feedback to the Chief Executive Officer on behalf of the independent directors regarding business issues and board management. The lead independent director and the other independent directors meet regularly without the Chief Executive Officer present. 

 

Committees of the Board of Directors

 

The Board of Directors has three standing committees: an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee. These committees meet regularly throughout the year and also hold special meetings or act by written consent from time to time as appropriate. The Board has delegated various responsibilities and authority to its committees as generally described below. The committees regularly report on their activities and actions to the Board. Each of these committees has adopted a written charter, which is reviewed annually. All members of the committees are appointed by the Board of Directors and meet the independence requirements of the respective committees on which they serve. The Nomination and Corporate Governance Committee recommends the composition of the Audit Committee and the Compensation Committees after the election of directors is approved by the shareholders, for approval by the Board.

 

Audit Committee

 

The Audit Committee consists of Mr. Sellyn (Chair), Mr. Lapham and Mr. Stubina, each of whom is independent within the meaning of the requirements of the Sarbanes-Oxley Act of 2002, applicable SEC rules and the listing standards of the Nasdaq Stock Market. The Audit Committee held four meetings during the fiscal year ended February 29, 2020. Following the annual meeting of shareholders, Mr. Sellyn (Chair), Mr. Lapham and Mr. Stubina will serve on the Audit Committee, each of whom is independent within the meaning of the requirements of the Sarbanes-Oxley Act of 2002, applicable SEC rules and the listing standards of the Nasdaq Stock Market.

 

The Board of Directors has determined that Mr. Sellyn is an audit committee financial expert as defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Mr. Sellyn’s relevant experience includes 23 years of service as a Chief Financial Officer, first at Wajax Inc. from 1992 until 1999, and then at Gildan Activewear Inc. from 1999 until his retirement in 2015. He is also a U.K. Chartered Accountant.

 

 

The Audit Committee oversees our accounting and financial reporting process and the audit of our financial statements and also assists the Board in monitoring our financial systems and legal and regulatory compliance. In accordance with the written Audit Committee Charter, the responsibilities of the Audit Committee include, among other things:

 

 

 

 

 

 

 

 

 

 

 

The Audit Committee Report is included in this proxy statement. In addition, the Board adopted a Charter for the Audit Committee, a copy of which is available under Corporate Governance Documents in the Investors section of our website, and via the following hyperlink:

http://www.loopindustries.com/assets/docs/loop_audit_committee_charter.pdf

 

Compensation Committee

 

The Compensation Committee consists of Mr. Lapham (Chair), Mr. Sellyn and Mr. Stubina. The Compensation Committee held six meetings during the fiscal year ended February 29, 2020. Following the annual meeting of shareholders, Mr. Lapham (Chair), Mr. Kezios and Mr. Stubina will serve on the Compensation Committee, each of whom is (i) independent within the meaning of the listing standards of the Nasdaq Stock Market, (ii) a non-employee director within the meaning of Section 16 of the Exchange Act.

  

 

The Compensation Committee oversees our compensation policies, plans and programs. The Compensation Committee is responsible for, among other things:

 

 

 

 

 

 

 

 

 

 

 

The Board adopted a written charter for the Compensation Committee, a copy of which is available under Corporate Governance Documents in the Investors section of our website, and via the following hyperlink:

http://www.loopindustries.com/assets/docs/LoopCompensationCommittee.pdf.

 

Nominating and Corporate Governance Committee

 

The Nominating and Corporate Governance Committee consists of Mr. Horn (Chair), Mr. Sellyn, and Mr. Stubina. The Nominating and Corporate Governance Committee held four meetings during the fiscal year ended February 29, 2020. Following the annual meeting of shareholders, Mr. Sellyn (Chair) and Mr. Stubina will serve on the Nominating and Corporate Governance Committee, each of whom is independent within the meaning of the requirements of the Sarbanes-Oxley Act of 2002, applicable SEC rules and the listing standards of the Nasdaq Stock Market.

  

 

The Nominating and Corporate Governance Committee considers and periodically reports to the full Board on matters relating to the governance of the Board. The Nominating and Corporate Governance Committee is responsible for, among other things:

 

 

 

 

 

The Board of Directors adopted a written charter for the Nominating and Corporate Governance Committee in May 2018, a copy of which is available under Corporate Governance Documents in the Investors section of our website, and via the following hyperlink: http://www.loopindustries.com/assets/docs/Nominating-and-Corporate-Governance-Committee-Charter.pdf

 

Consideration of Director Nominees

 

Stockholder Nominees

 

The Nominating and Corporate Governance Committee will consider properly submitted stockholder nominations for candidates for membership on the Board of Directors as well as candidates recommended for consideration by the Nominating and Corporate Governance Committee as described below under “Identifying and Evaluating Nominees for Directors.” Any stockholder nominations must comply with the requirements of our By-laws and should include disclosure about whether the nominating shareholder or any member of a nominating shareholder group has been involved in any legal proceeding during the past ten years, as specified in Item 401(f) of Regulation S-K, all information relating to such nominee as would be required to be disclosed in solicitations of proxies for the election of such nominee as a director pursuant to Regulation 14A under the Exchange Act, such nominee’s written consent to be named in the proxy statement as a nominee and to serve as a director if elected, as well as a written statement executed by such nominee acknowledging that as a director of the Company, such nominee will owe a fiduciary duty under the Nevada Revised Statutes exclusively to the Company and its stockholders. In addition, stockholder nominations should be submitted within the time frame as specified under “Stockholder Proposals” above and addressed to: Loop Industries, Inc., Attention: Chief Legal Officer, 480 Fernand-Poitras, Terrebonne, Quebec, Canada J6Y 1Y4.

 

A stockholder that instead desires to merely recommend a candidate for consideration by the Nominating and Corporate Governance Committee shall direct the recommendation in writing to Loop Industries, Inc., Attention: Chief Legal Officer, 480 Fernand-Poitras Terrebonne, Quebec, Canada J6Y 1Y4, and must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and the Company within the last three years and evidence of the nominating person’s ownership of our Common Stock.

 

Director Qualifications

 

In discharging its responsibilities to nominate candidates for election to the Board of Directors, the Nominating and Corporate Governance Committee has not specified any minimum qualifications for serving on the Board of Directors. We believe that our directors should have the highest professional and personal ethics and values, consistent with our values and standards. They should have broad experience at the policy-making level in business or banking. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties for us. Each director must represent the interests of all stockholders. When considering potential director candidates, the Nominating and Corporate Governance Committee also considers the candidate’s character, judgment, diversity, age and skills, including financial literacy and experience in the context of our needs and the needs of the Board.

 

 

Identifying and Evaluating Nominees for Directors

 

Under the Nasdaq CG Rules, we are not required to maintain a nominating committee. Instead, our entire Board was responsible for recommending director candidates for election until we formed a Nominating and Corporate Governance Committee in May 2018. This was appropriate, in the opinion of the Board, because we are a “controlled company” under Nasdaq CG Rules, as a single investor, Daniel Solomita, holds 47.1% of our outstanding Common Stock and the sole outstanding share of our Series A Preferred Stock and effectively controls the election of our directors through his effective voting control of the Company and his ability to designate a majority of the directors nominated to serve on our Board. Our Series A Preferred Stock has special rights that are set forth in our 10-K for fiscal year 2020, filed with the SEC on May 8, 2019. Prior to having a nominating committee, our Board authorized and directed all of the independent directors to search for and evaluate qualified individuals to become nominees for director and board committee members. The independent directors recommend candidates for nomination for election or re-election for each annual meeting of stockholders and, as necessary, to fill vacancies and newly created directorships, and evaluate candidates for appointment to and removal from committees. The independent directors operate in this capacity under authority granted by resolution of the Board, rather than by charter.

 

Prior to the formation of the Nominating and Corporate Governance Committee in May 2018, the Board had been identifying and evaluating nominees for our Board. The Nominating and Corporate Governance Committee utilizes a variety of methods for identifying and evaluating director nominees. Candidates may come to the attention of the Nominating and Corporate Governance Committee through current members of the Board of Directors, professional search firms, stockholders or other persons. These candidates are evaluated at regular or special meetings of the Nominating and Corporate Governance Committee and may be considered at any point during the year. As described above, the Nominating and Corporate Governance Committee will review properly submitted stockholder nominations and recommendations for candidates for the Board of Directors. Following verification of the stockholder status of persons proposing candidates, nominations and recommendations are aggregated and considered by the Nominating and Corporate Governance Committee. If any materials are provided by a stockholder in connection with the nomination or recommendation of a director candidate, such materials are forwarded to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee also reviews materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder.

 

Annual Meeting Attendance

 

Although we do not have a formal policy regarding attendance by members of the Board of Directors at our annual meetings of stockholders, directors are encouraged to attend our annual meetings. We held our annual meeting on June 27, 2019 (the “2019 annual meeting”) and all of our directors attended the meeting. At the 2019 annual meeting, our stockholders took the following actions: (1) appointed, ratified, and confirmed Sidney Horn, Laurence Sellyn and Jay Stubina to serve as members of the Board; (2) ratified the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2020; (3) approved the amendment to the 2017 Equity Incentive Plan to increase the share reserve; (4) approved the proposal for advisory approval of the Company’s 2019 executive compensation, the say-on-pay vote; and (5) approved an annual advisory vote regarding the frequency of the say-on-pay vote. We filed a Definitive Information Statement on Schedule 14A with the SEC on May 10, 2019 and a Current Report on Form 8-K on July 1, 2019 to document these actions.

 

Stockholder Communications with the Board of Directors

 

We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors. Nevertheless, every effort has been made to ensure that the views of our stockholders are heard by the Board of Directors or individual directors, as applicable, and that appropriate responses are provided to our stockholders in a timely manner. We believe that we are responsive to stockholder communications, and therefore have not considered it necessary to adopt a formal process for stockholder communications with our Board. During the upcoming year, our Board will continue to monitor whether it would be appropriate to adopt such a process.

  

 

Code of Ethics

 

On January 25, 2017, our Board approved and adopted a Code of Ethics (the “Code of Ethics”) that applies to all of our directors, officers, and employees, including our principal executive officer and principal financial officer. The Code of Ethics addresses such individuals’ conduct with respect to, among other things, conflicts of interests; compliance with applicable laws, rules, and regulations; full, fair, accurate, timely, and understandable disclosure by us; competition and fair dealing; corporate opportunities; confidentiality; insider trading; protection and proper use of our assets; fair treatment; and reporting suspected illegal or unethical behavior. A copy of our Code of Ethics is available under Corporate Overview in the Investors section of our website, and via the following hyperlink: http://www.loopindustries.com/assets/docs/Code_of_Ethics.pdf. We will disclose on our website any amendments to or waivers from any provision of the Code of Ethics that applies to any of our directors or executive officers.

 

Indemnification Agreements

 

Each of our executive officers and directors has entered into an indemnification agreement, pursuant to which we have agreed to indemnify each such person for claims against each of them that may arise in connection with the performance of their respective duties as an officer or a director.

 

Rule 10b5-1 Trading Plans

 

Although no officers of the Company currently have a Rule 10b5-1 stock trading plan in place, officers may choose to enter into such plans from time to time in the future. These plans allow executives to adopt predetermined plans for trading shares of our Common Stock in advance of learning any material non-public information. The use of these trading plans permits diversification, retirement and tax planning activities. The transactions under the plans will be disclosed publicly through Form 4 filings with the SEC.

 

Board’s Role in Risk Oversight

 

The Board, and in particular the Audit Committee, has an active role, as a whole and also at the committee level, in overseeing management of Company risk. This role is one of informed oversight rather than direct management of risk. The Board regularly reviews and consults with management on strategic direction, challenges and risks that we face. The Board also reviews and discusses with management quarterly financial results and forecasts. The Audit Committee of the Board oversees management of financial risks, including investment and foreign currency fluctuation risk mitigation policies. The Compensation Committee of the Board is responsible for overseeing the management of risks relating to and arising from our compensation plans and arrangements. The Nominating and Corporate Governance Committee periodically reviews the risks arising from our corporate governance policies and practices, including the structure and performance of the Board, its committees and individual directors. The Nominating and Corporate Governance Committee also reviews and oversees the Company’s succession planning process for executive officers. These committees provide regular reports—generally on a quarterly basis—to the full Board.

 

Management has responsibility for the direct management and oversight of legal, financial and commercial compliance matters, which includes identifying areas of risk and implementing policies, procedures and practices to mitigate the identified risks. Additionally, the Chief Financial Officer and General Counsel provide regular reports to the Audit Committee concerning financial, tax and compliance related risks. Management also provides the Audit Committee with periodic reports on our compliance programs and efforts, investment policy and practices, and compliance with debt covenants. Management and any compensation consultant, if so retained, provide analysis of risks related to our compensation programs and practices to the Compensation Committee.

  

 

Compensation of Non-Employee Directors

 

The Board approved our Outside Director Compensation Policy in October 2017, which was amended and restated on April 4, 2018, May 11, 2018 and May 2, 2019, to compensate each non-employee director for his or her service (the “Amended and Restated Outside Director Compensation Policy”). Our Board has the discretion to revise non-employee director compensation as it deems necessary or appropriate. Under our Amended and Restated Outside Director Compensation Policy, non-employee directors will receive compensation in the form of equity and cash, as described below:

 

Cash Compensation. All non-employee directors will be entitled to receive the following cash compensation for their services:

 

 

 

 

 

Each annual cash retainer under this Policy will be paid quarterly in arrears on a prorated basis to each non-employee director who has served in the relevant capacity at any point during the immediately preceding fiscal quarter, and such payment shall be made no later than thirty (30) days following the end of such immediately preceding fiscal quarter.

 

Equity Compensation. Nondiscretionary, automatic grants of restricted stock units (“RSUs”) will be made to our non-employee directors on an annual basis as described below:

 

Annual Awards. Subject to Section 11 of the Company’s 2017 Equity Incentive Plan, each non-employee director automatically will be granted a Restricted Stock Unit Award (an “Annual Award”) with a Value of $150,000, provided that the number of Shares covered by each Annual Award will be rounded down to the nearest whole Share, which grant will be effective on the date of each annual meeting of stockholders (each, an “Annual Meeting”), beginning with the first Annual Meeting following October 16, 2017; provided that any non-employee director who is not continuing as a Director following the applicable Annual Meeting will not receive an Annual Award with respect to such Annual Meeting. On May 2, 2019, we amended our Amended and Restated Outside Director Compensation Policy so that, subject to Section 5 of the Amended and Restated Outside Director Compensation Policy and Section 14 of the Company’s 2017 Equity Incentive Plan, Each Annual Award will vest as to 100% of the Shares subject thereto upon the earlier of the one (1) year anniversary of the grant date or on the day prior to our next Annual Meeting occurring after the grant date, in each case, provided that the non-employee director continues to serve as a non-employee director through the applicable vesting date. On February 27, 2020, the Board resolved to further amend the Amended and Restated Outside Director Compensation Policy in order to reduce the amount of the Annual Award to $90,000. The reduction was deemed appropriate given the size and composition of the Board, the maturity of the Company and the executive team now in place all of which contributed to allowing the Board to concentrate on its strategic advisory role and focus less on oversight of legal, financial and commercial compliance matters which is more of Management’s role. This change will come into effect with the 2021 Annual Award which will be effective at the 2020 Annual Meeting.

 

Consistent with the previous paragraph, an Annual Award was granted on June 27, 2019 to each non-employee director for 2020 (the “2020 Annual Award”). The 2020 Annual Award will vest as to 100% of the Shares on June 26, 2020, provided that the non-employee director continues to serve as such through the applicable vesting date. “Value” for this purpose means, with respect to a full value award, the average of the closing trading prices of a Share for the 30-trading days ending on the trading day prior to the grant date.

 

Travel Expenses. Each non-employee director’s reasonable, customary and properly documented travel expenses to attend Board meetings will be reimbursed by the Company.

 

 

Fiscal 2020 Non-Employee Director Compensation Table

 

The following table sets forth a summary of the compensation received by our non-employee directors who received compensation during our fiscal year ended February 29, 2020:

 

Name and Principal Position	Fees earned or paid in cash ($)	Stock Awards(1) ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Sidney Horn	7,500	150,000	-	-	-	-	157,500
Andrew Lapham(2)	11,250	149,590	-	-	-	-	160,840
Laurence Sellyn	56,250	150,000	-	-	-	-	206,250
Jay Stubina	-	150,000	-	-	-	-	150,000

_____________ 

 

 

Directors who are also our employees receive no additional compensation for their service as directors. During fiscal year 2020, Daniel Solomita, one of our directors, also has been serving as one of our employees. See “Executive Compensation — Fiscal 2020 Summary Compensation Table” for additional information about the compensation for Mr. Solomita.

 

Our non-employee directors held the following outstanding RSU awards as of February 29, 2020. The table excludes Mr. Solomita, whose outstanding awards are reflected in the section entitled “Executive Compensation – Outstanding Equity Awards at Fiscal Year-End.”

 

Name	# of Outstanding Options (in shares)	# of Outstanding RSUs (in shares)
Sidney Horn	-	18,305
Andrew Lapham	-	18,033
Laurence Sellyn	-	56,647
Jay Stubina	-	31,647

 

 

EXECUTIVE OFFICERS

 

The following table identifies certain information about our executive officers as of February 29, 2020. Our executive officers are appointed by, and serve at the discretion of, our Board. Each of our executive officers holds office until his successor is duly elected and qualified or until his earlier resignation or removal in accordance with our By-laws, absent an employment agreement. There are no family relationships among any of our directors or executive officers.

 

Name		Age		Title
Daniel Solomita		44		Chairman of the Board, President, and Chief Executive Officer
Nelson Gentiletti		58		Chief Operating Officer, Chief Financial Officer, and Treasurer
Michel Megelas(1)		50		Chief Legal Officer, and Secretary

_____________ 

  

Daniel Solomita, please see biography of Mr. Solomita on page 3 of this proxy statement.

 

Nelson Gentiletti, 58, is a CPA and has served as our Chief Operating and Chief Financial Officer since January 1, 2019. Mr. Gentiletti has finance, accounting and strategic planning experience, most recently serving as the Chief Financial and Development Officer of Transcontinental Inc., where he worked from November 2011 until December 2018. Mr. Gentiletti also serves on the board of directors of Sportscene Group, Inc. since 2006 and Cascades Inc. since October 2019. Mr. Gentiletti received his Bachelor of Commerce degree from Concordia University in 1983 and his Graduate Diploma in Public Accountancy from McGill University in 1985.

 

Michel Megelas, 50, is a lawyer and was appointed as our Chief Legal Officer in June 2019. Mr. Megelas has extensive experience in the areas of commercial, corporate and securities law; more specifically, he has national and international experience in mergers, acquisitions and divestiture transactions, corporate reorganizations and corporate financing, as well as key customer, supplier and partner contracts. Prior to joining the Company, Mr. Megelas was Senior Legal Counsel for Ovivo Inc., a global provider of equipment, technology and systems producing the purest water and treating the most challenging wastewater in the industry. Mr. Megelas received his Law degree from Université de Montréal in 1993 and was called to the Québec Bar in February 1995.

 

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis highlights the objectives and philosophy of our executive compensation program, describes each component of our executive compensation program, and explains the decisions of the Board and the Compensation Committee in designing our executive compensation program for fiscal 2020.

 

In fiscal 2020, our named executive officers were:

 

 

 

 

 

 

Executive Changes

 

Mr. Switzer resigned on June 14, 2019.

 

Executive Compensation Governance and Practices

 

As an emerging, pre-revenue company that is in the process of commercializing our products, key talent attraction, retention and motivation are critical. This is reflected in the design of our executive compensation program, which emphasizes performance-based award opportunities with, generally, conservative cash award opportunities and highly motivating long-term equity-based award opportunities. Due to our growth and evolving needs for highly qualified executives, we have had changes in the executive team that assist our Chief Executive Officer in executing the Company’s strategy. Recruitment pay packages have varied and been customized to successfully recruit talent, which has required some inducement award opportunities (to make up for lost award opportunities at an executive’s prior employer) along with a market-based annualized pay package.

 

Our executive compensation program is based on a pay-for-performance philosophy that rewards our named executive officers for achieving specified performance goals and typically ties the majority of the total target compensation to the value of our stock price (coupled with multi-year vesting, this provides long-term alignment to stockholder value). Our executive compensation program also incorporates sound governance principles. In fiscal 2020, the following policies and practices were in place:

 

What we do:

 

 

 

 

What we do not do:

 

 

 

 

 

Executive Compensation Philosophy and Objectives

 

The development of our business and the marketing of our prospective products will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officers who are developing our business, and on our ability to identify and retain competent consultants and employees with the skills required to execute our business objectives. The loss of the services of Mr. Daniel Solomita or our failure to timely identify and retain competent personnel could negatively impact our ability to develop our business which could adversely affect our financial results and impair our growth.

 

 

We must be able to develop commercial products, scale our manufacturing processes while maintaining high product quality and reliability, improve production processes and services, and introduce new products and services. To achieve these objectives, we need a highly talented and seasoned team of technical, marketing, operations, and other business professionals.

 

We compete with other companies in our industry located in Canada, the U.S. and other regions, including other companies in the Greater Montreal area in the biotechnology, chemical, and technology markets to attract and retain a skilled management team. The Board and the Compensation Committee recognize that the Company needs to provide market competitive compensation packages to attract and retain qualified executives and motivate their achievement of critical goals, in order to increase long-term shareholder value. At the same time, the Board and the Compensation Committee recognize the need to conserve cash, in light of the fact that we have never generated revenue.

 

The specific philosophy of our executive compensation program is to:

 

 

 

 

 

Impact of 2019 Say-on-Pay Vote

 

We conducted a vote to approve, on an advisory or non-binding basis, the compensation of our named executive officers (commonly known as a “Say-on-Pay” vote) at our 2019 Annual Meeting of Stockholders. 97.6% of the votes cast by stockholders were in favor of approving the compensation of our named executive officers. While evaluating our executive compensation program for fiscal 2020, the Compensation Committee considered the results and maintained the compensation philosophy and objectives and general approach to executive compensation from the prior year.

 

Executive Compensation Program Design

 

Our executive compensation program for fiscal 2020 reflected our stage of development as a pre-revenue publicly traded company. Accordingly, we designed our executive compensation program to provide market-competitive compensation in the form of base salary, cash or equity-based short-term incentive compensation, long-term incentive equity awards (including performance-based RSUs, time-based RSUs, performance-based stock options and time-based stock options), as well as certain employee health and welfare benefits. We believe our executive compensation program is appropriate for a company of our size, in our industry, and in our stage of growth. As the company matures, we will continue to evaluate our executive compensation program and governance practices.

 

We offer cash compensation in the form of base salaries and short-term cash or equity incentive compensation. We have structured our short-term incentive compensation to focus on the achievement of specific short-term financial and operational objectives that will further our longer-term growth objectives. In an effort to continue to motivate our named executive officers to further these objectives, the Board or the Compensation Committee, when possible, sets a range of performance achievement levels, including above target levels, to reflect disciplined execution of our growth objectives.

 

Additionally, long-term equity awards for shares of our common stock serve as a key component of our executive compensation program. Currently, we grant (i) stock options to ensure that the recipient receives value only through driving stockholder value; and (ii) full value awards, or awards without a purchase price, including RSUs, to provide appropriate levels of compensation, to facilitate retention, to provide more direct alignment to our stockholders and to promote stockholder value creation given that the value of a recipient’s shares increases only as stockholder value increases. In the future, we may introduce other forms of equity awards, as we deem appropriate, that further our objective of providing long-term incentives to our named executive officers while promoting stockholder value creation. On a case-by-case basis there may be a need to provide an up-front incentive to attract a qualified candidate. Such awards will typically be in the form of stock options and RSUs and will vest rateably over multiple years or with deferred cliff vesting after a specified number of years.

 

 

Finally, we offer our executive officers standard health and welfare benefits that are generally available to our other employees, including medical, dental, vision, short-term disability, long-term disability, and life insurance plans.

 

Our senior executive pay philosophy and framework includes guidelines for allocating compensation between short-term and long-term incentive compensation that provide for a large portion of incentive compensation to be tied to performance objectives. We use competitive market data to develop a general framework for establishing the appropriate pay levels and mix. Within this overall framework, the Compensation Committee reviews each component of executive compensation separately and also takes into consideration the value of each named executive officer’s compensation package as a whole and its relative value in comparison to our other named executive officers.

 

The Board and the Compensation Committee evaluate our compensation philosophy and executive compensation program as circumstances require and review executive compensation annually. The Board and the Compensation Committee apply our philosophy and the objectives outlined above, together with consideration for the levels of compensation that we would be willing to pay to ensure that our executive compensation remains competitive for highly-qualified talent and that we meet our recruiting and retention objectives, as well as the cost to us if we were required to find a replacement for a key executive officer.

 

Compensation-Setting Process

 

Role of Our Compensation Committee

 

Compensation decisions for our named executive officers generally are recommended by the Compensation Committee and approved by the Board. Currently, the Compensation Committee is responsible for reviewing, and evaluating the compensation arrangements, plans, policies, and practices for our named executive officers.

 

The Compensation Committee periodically reviews our executive compensation program, including base salary, short-term incentive compensation and long-term equity compensation, to determine whether they are appropriate, properly coordinated, and achieve their intended purposes, and to make any modifications to existing plans and arrangements or to adopt new plans or arrangements. In connection with such review and the hiring of executive officers, the Compensation Committee, after consulting with our management team and any compensation consultant that the Compensation Committee may engage and reviewing any market data provided by such compensation consultant, makes recommendations to the Board with respect to any base salary adjustments, target incentive amounts and compensation framework. With respect to our short-term and long-term incentive compensation, the Compensation Committee recommends to the Board for approval of the applicable target performance levels for each performance objective used for the financial period following the Board’s approval of our annual plan.

 

Role of Management

 

In carrying out its responsibilities, the Compensation Committee works with members of our management team, including our Chief Executive Officer and Chief Operating and Chief Financial Officer. Our management team and a compensation consultant, if one is retained, assist the Compensation Committee in the execution of its responsibilities by providing information on corporate and individual performance, market data, and management’s perspective and recommendations on compensation matters.

 

Except with respect to his own compensation, our Chief Executive Officer will make recommendations to the Compensation Committee regarding compensation matters, including the compensation of our executive officers. Our Chief Executive Officer also participates in meetings of the Compensation Committee, except with respect to discussions involving his own compensation, in which case the Committee meets in executive session without the Chief Executive Officer present.

 

While the Compensation Committee solicits the recommendations and proposals of our Chief Executive Officer with respect to compensation-related matters, these recommendations and proposals are only one factor in the Compensation Committee’s decision-making process.

 

 

Role of Compensation Consultant

 

The Compensation Committee has the authority to retain the services of external advisors, including compensation consultants, legal counsel and other advisors, from time to time, as it sees fit in connection with carrying out its duties.

 

In fiscal 2020, the Compensation Committee elected not to retain the services of a compensation consultant.

 

Use of Competitive Data

 

To assess the competitiveness of our executive compensation program and to assist in setting compensation levels, we refer to industry surveys, including the Willis Towers Watson Survey Report on Top Management Compensation.

 

Competitive Positioning

 

With respect to setting fiscal 2020 pay opportunities, the Compensation Committee continued to compare and analyze our executive compensation with that of a peer group of companies and published, public survey data. 

 

In the context of our initial review and structuring of executive compensation, in fiscal 2018 the Compensation Committee approved a compensation peer group of publicly traded technology companies that met some or all of the following criteria at the time:

 

 

 

 

 

 

  

The following publicly traded companies made up our compensation peer group that was drawn up by the compensation consultant hired in fiscal 2018 and approved by the Compensation Committee:

 

Compensation Peer Group
Abeona Therapeutics Inc.		Calgon Carbon Corporation		NanoString Technologies, Inc.
AgroFresh Solutions, Inc.		Ceapro Inc.		Rayonier Advanced Materials
AnaptysBio, Inc.		Clementia Pharmaceuticals Inc.		Theratechnologies Inc.
Aqua Metals, Inc.		EcoSynthetix Inc.		Tyme Technologies, Inc.
Audentes Therapeutics, Inc.		FutureFuel Corp.
Aurinia Pharmaceuticals Inc.		KMG Chemicals, Inc.

 

The Compensation Committee uses the market data for the companies in our compensation peer group as one reference point in determining the compensation of our executives. We continued to look at the compensation of executives in this compensation peer group during fiscal 2020. The Compensation Committee generally sets salaries near the market median and target incentive award multiples (as a percent of salary) will generally be set at or above market median, reflecting the higher weighting on equity awards and inclusion of performance goals for much of the long-term incentive opportunity. Incentive compensation is provided primarily in the form of equity awards, with recent executive hires receiving performance-based RSUs and cash for annual incentive awards, and long-term incentive opportunities provided in performance-based stock options, time-based stock options, performance-based RSUs or time-based RSUs.

 

 

Our Compensation Committee considers other factors in setting the target pay package and determining actual compensation. Such factors include the overall competitive market for our executives, the alignment between the market-based positions and the actual responsibilities of our executives, each executive’s performance, internal parity, the value of each executive’s position and the value of each executive’s unvested equity holdings.

 

Fiscal 2020 Executive Compensation Program Components

 

Overview

 

For fiscal 2020, the Compensation Committee reviewed the base salary, short-term incentive compensation opportunity, and long-term incentive compensation opportunity for all named executive officers with the exception of Mr. Switzer who resigned as the Company’s Chief Growth Officer in June 2019. The Compensation Committee also considered the pay levels of Messrs. Solomita, Gentiletti, and Megelas as compared to the compensation provided to executives in comparable positions by members of our peer group and the overall market, their performance , and the continued competition for experienced leadership in our industry.

 

The following describes each component of our executive compensation program, the rationale for each, and how the compensation amounts and awards were determined for fiscal 2020.

 

Base Salary

 

Base salary is the primary fixed component of our executive compensation program. We use base salary to compensate our named executive officers for services rendered during the fiscal year and to ensure that we remain competitive in attracting and retaining executive talent. Generally, we establish the initial base salaries of our executive officers through arm’s-length negotiation at the time we hire the individual executive officer, taking into account his or her position, qualifications, experience, salary expectations, market compensation data and the base salaries of our other executive officers.

 

Thereafter, the Compensation Committee periodically reviews the base salaries of each named executive officer and makes adjustments as it determines to be reasonable and necessary to reflect our performance, the scope of a named executive officer’s performance, contributions, responsibilities, experience, current salary level, position (in the case of a promotion), and market pay positioning, as appropriate.

 

In connection with the amendment and restatement of Mr. Solomita’s employment agreement in fiscal 2019, the Compensation Committee reviewed his compensation package, including his base salary. In addition to the market-based study provided by Pay Governance, the Compensation Committee also considered other relevant factors, including, among others, Mr. Solomita’s criticality to the Company’s success, performance and contributions, and the continued competition for experienced leadership in our industry. Based on this review, in June 2018, the Compensation Committee recommended, and the Board approved, an updated compensation package for Mr. Solomita, including an increase in his base salary from $180,000 to $598,905 CAD, effective as of March 1, 2018 (the first day of the Company’s 2018 fiscal year).

 

Mr. Gentiletti’s base salary was set at $535,000 CAD upon his hire in December 2018, and Mr. Megelas’ base salary was set at $190,000 CAD upon his hire in June 2019. The base salary for each of these named executive officers was approved by the Compensation Committee and the Board and determined based on arm’s-length negotiations between the named executive officer and our Chief Executive Officer and Chief Operating Officer.

 

In fiscal 2020, we did not make any adjustments to the base salaries of our named executive officers.

 

The base salaries paid to our named executive officers in fiscal 2020 are set forth in the section entitled “Summary Compensation Table” below.

 

 

Short-Term Incentive Compensation

 

We use short-term incentive compensation to motivate our named executive officers to achieve our annual financial and operational objectives, while making progress towards our longer-term strategic and growth goals. Our short-term incentive program allows the Compensation Committee to provide cash or equity incentive awards to the executive officers, which are based upon performance goals established by the Board and the Compensation Committee.

 

The short-term incentive compensation provided to our named executive officers in fiscal 2020 is described in the immediately following paragraphs and set forth in the sections entitled “Summary Compensation Table” and “Grants of Plan-Based Awards for Fiscal 2020” below.

 

Daniel Solomita and Nelson Gentiletti

 

The compensation package for Mr. Solomita that the Compensation Committee recommended, and the Board approved, in June 2018 in connection with the amendment and restatement of his employment agreement includes an annual bonus opportunity for fiscal 2020 that provides for a payment equal to 25% of his base salary at threshold performance, 50% of his base salary at target performance, or 100% of his base salary at maximum performance.

 

Mr. Gentiletti’s employment agreement provides for a short-term incentive compensation opportunity in the form of cash (or, at his option, in RSUs or stock options), with payment equal to 25% of his base salary at threshold performance, 50% of his base salary at target performance, or 100% of his base salary at maximum performance. Mr. Gentiletti’s short-term incentive compensation opportunity was determined based on arm’s-length negotiations between him and our Chief Executive Officer and evaluated relative to an analysis of competitive compensation practices.

 

In July 2019, the Compensation Committee approved the performance goals for Mr. Solomita and Mr. Gentiletti’s fiscal 2020 annual bonus listed in the table below. For any scalable performance goal, if actual achievement falls between the specified minimum, target, or maximum performance levels, the amount payable with respect to the performance goal will be determined by straight-line interpolation. For any performance goal that is not scalable, the threshold and target levels must be achieved for the maximum amount to become payable with respect to the performance goal. In either case, if the threshold level for a particular performance goal is not achieved, no amount will be payable with respect to the performance goal.

 

The achievement of these performance goals (as indicated in the table below) was determined to be at 55% of target (27.5% of base salary), resulting in an annual bonus for Mr. Solomita’s for fiscal 2020 of $164,699 CAD, and an annual bonus for Mr. Gentiletti’s for fiscal year 2020 of $147,125 CAD.

  

Weighting		Performance Goals
10%		Financing milestones
15%		Technology-related goals
15%		Developmental goals for greenfield facilities
15%		Operational related goals
20%		Supply chain related goals
25%		Strategic goals related to the Indorama Loop Technologies joint venture

 

Michel Megelas

 

Mr. Megelas’ employment agreement provides for a short-term incentive compensation in the form of cash, with payment equal to 10% of his base salary at threshold performance, 20% of his base salary at target performance, or 30% of his base salary at maximum performance. If performance relative to the specified goals is below threshold performance, there would be no award. For scalable goals, interpolation can be applied between award levels; otherwise, goals will be binary and cumulative.

 

 

Pursuant to his employment agreement with the Company, Mr. Megelas received a minimum bonus for fiscal 2020 in the amount of $20,000 CAD, which represented 10.5% of his base salary.

 

Nelson Switzer

 

Mr. Switzer did not receive any short-term incentive compensation prior to his resignation in June 2019.

 

Long-Term Incentive Compensation

 

We grant long-term equity awards as a component of our executive compensation program in order to align our named executive officers’ long-term interests with our stockholders’ interests. Our long-term incentive program allows the Compensation Committee to provide equity incentive awards to the executive officers, which are based upon performance goals established by the Board and the Compensation Committee. The Company has elected to use equity-based awards in order to provide direct alignment to stockholder value, as reflected by the price of our common stock.

 

In determining the composition of these equity awards, the Compensation Committee decided to offer some new hires a choice of 100% performance-based or an equal split of time-based and performance-based equity awards, which helped to maximize the executive’s perceived value of the inducement award opportunity.

 

The size of the equity awards granted to our named executive officers in connection with their hire is determined through arm’s-length negotiation, taking into consideration factors such as the named executive officer’s role and responsibilities, the named executive officer’s compensation provided by the prior employer and new target cash compensation, the equity award’s potential retention and incentive value, market data on the size of new-hire awards provided by similar companies to similarly situated employees, and prevailing market conditions.

 

The long-term equity awards granted to our named executive officers in fiscal 2020 are described in the immediately following paragraphs and set forth in the sections entitled “Summary Compensation Table” and “Grants of Plan-Based Awards for Fiscal 2020” below.

 

Daniel Solomita

 

Mr. Solomita’s amended and restated employment agreement made no change to the equity incentive arrangement described in his prior employment agreement, which provided for an award of 4,000,000 RSUs that had not yet been granted. In June 2018, the Board approved the grant of these RSUs which became effective with the approval by the Company’s stockholders at the Company’s 2019 annual meeting of an increase in the number of shares available for issuance under the Company’s 2017 Equity Incentive Plan. In April 2020, the Board clarified and updated the milestones consistent with the shift in our business from the production of terephthalate (“PTA”) to the production of dimethyl terephthalate (“DMT”), another proven monomer of PET plastic that is far simpler to purify. One-quarter of the RSUs vest upon the achievement of each of following four performance milestones: (i) the Company’s securities are listed an exchange or the OTCQX tier of the OTC Markets Group platform. (ii) the Company executes a contract for a minimum quantity of 25,000 metric tons of DMT and Monoethylene Glycol (“MEG”) or PET. (iii) the Company’s first full-scale production facility is in commercial operation. and (iv) the Company’s second full-scale production facility is in commercial operation. For these purposes, “commercial operation” means the full-scale production facility produces 10 metric tons per hour of DMT and MEG combined, for a term of not less than 6 months. Once vested in accordance with the milestones, one-fifth of the RSUs will be settled annually, generally commencing on the first settlement date following the date of vesting. As the first performance milestone has already been achieved, 1,000,000 RSUs have vested of which 200,000 RSUs were settled on October 15, 2019. The remaining 800,000 RSUs will be settled equally on each of the following four anniversaries.

 

Nelson Gentiletti

 

Mr. Gentiletti’s employment agreement provides for a fiscal 2020 long-term incentive compensation opportunity in the form of time-based RSUs with an intended value equal to 35% of his base salary and performance-based RSUs with an intended value equal to 17.5% of his base salary at threshold performance, 35% of his base salary at target performance, or 70% of his base salary at maximum performance. For grants based on a percentage of his base salary, the number of long-term incentive RSUs was to be determined by converting the intended dollar value of the RSUs to U.S. dollars using the currency exchange rate on the date the Board approved the RSUs and then dividing the converted value by the Company’s closing stock price on such date.

 

 

In fiscal 2020, the Board approved the following equity award grants to Mr. Gentiletti: (i) in March 2019, 14,422 time-based long-term incentive RSUs, and (ii) in July 2019, performance-based long-term incentive RSUs that become eligible to vest based on achievement of the performance goals described below (up to a maximum of 15,880 RSUs). These equity awards are scheduled to vest as follows, subject to continued service through each vesting date: (i) the time-based long-term incentive RSUs will vest in 1/3rd increments on the first three anniversaries of the grant date, and (ii) any of the performance-based long-term incentive RSUs that become eligible to vest will vest in 1/3rd increments on the first three anniversaries of March 1 following the fiscal year in which the applicable performance goals were achieved.

 

In July 2019, the Board approved the performance goals for Mr. Gentiletti’s fiscal 2020 performance-based long-term incentive RSUs listed in the table below. For any scalable performance goal, if actual achievement falls between the specified minimum, target and maximum levels, the number of performance-based long-term incentive RSUs that will become eligible to vest with respect to the performance goal will be determined by straight-line interpolation. For any performance goal that is not scalable, the threshold and target levels must be achieved for the maximum number of RSUs to become eligible to vest with respect to the performance goal. In either case, if the threshold level for a particular performance goal is not achieved, no performance-based RSUs will become eligible to vest with respect to the goal.

 

Based on the actual level of achievement of these performance goals (as indicated in the table below), the number of such RSUs that became eligible to vest was 8,734, which was 55% of target being 19.25% of base salary.

 

Weighting		Performance Goals
10%		Financing milestones
15%		Technology-related goals
15%		Developmental goals for greenfield facilities
15%		Operational related goals
20%		Supply chain related goals
25%		Strategic goals related to the Indorama Loop Technologies joint venture

 

Michel Megelas

 

Mr. Megelas was not eligible for any long-term equity awards for the fiscal year ended February 29, 2020.

 

Nelson Switzer

 

Mr. Switzer did not receive any long-term equity awards prior to his resignation.

 

Change in Control and Severance Benefits

 

We have entered into employment agreements with our named executive officers that provide for certain payments and benefits upon the termination of their employment under certain circumstances. We believe that these employment agreements provide retention value by encouraging our named executive officers to continue service with us and increase stockholder value by reducing any potential distractions caused by the possibility of involuntary termination or a potential change in control, allowing our named executive officers to focus on their duties and responsibilities. For a summary of the material terms and conditions of these employment arrangements, see the section below entitled “Potential Payments upon Termination or Change in Control.”

 

Other Compensation and Benefits

 

We provide employee benefits to all eligible employees, including our named executive officers. As discussed above, these benefits include medical, dental and vision insurance, life and disability insurance, and other plans and programs.

 

 

Stock Trading Practices; Hedging and Pledging Policy

 

We maintain an Insider Trading Policy that, among other things, prohibits our employees, including our named executive officers, from trading during quarterly and special blackout periods. In addition, we prohibit short sales, hedging and similar transactions designed to decrease the risks associated with holding our securities, as well as pledging the company’s securities as collateral for loans and transactions involving derivative securities relating to our common stock.

 

Our Insider Trading Policy requires that all directors and officers, including our named executive officers, pre-clear with our legal department any proposed open market transactions. Further, we have adopted Rule 10b5-1 trading plan guidelines that permit our directors and employees, including our named executive officers, to adopt Rule 10b5-1 trading plans. Under these guidelines, Rule 10b5-1 trading plans may only be adopted or modified during an open trading window under our Insider Trading Policy and only when such individual does not otherwise possess material nonpublic information about the company. These guidelines also provide for a cooling-off period before the first trade may occur under a Rule 10b5-1 trading plan.

 

Executive Pay Program Risk Assessment

 

The Compensation Committee and management discuss and evaluate our compensation program and policies for our employees (including our named executive officers) to determine whether they encourage excessive risk-taking and to assess policies and practices that could mitigate such risks. In addition, the Compensation Committee had previously engaged Pay Governance to independently review our executive compensation program. Based on these reviews, the Compensation Committee designs our executive compensation program to encourage our named executive officers to focus on our short-term and long-term success, and for the following reasons, the Compensation Committee believes that any risks arising from compensation program and policies are not reasonably likely to have a material adverse effect on the Company:

 

 

 

 

 

 

  

Tax and Accounting Considerations

 

Deductibility of Executive Compensation

 

Section 162(m) of the Internal Revenue Code, or Section 162(m), generally limits the amount we may deduct from our federal income taxes for compensation paid to our chief executive officer and certain other executive officers to $1 million per executive officer per year, subject to certain exceptions. Neither the Compensation Committee nor its authorized committee has adopted a policy that all equity or other compensation must be deductible.

 

 

Taxation of “Parachute Payments” and Deferred Compensation

 

If certain service providers receive payments or benefits in connection with a change in control that exceeds certain prescribed limits, they may be subject to an excise tax under Section 4999 of the Internal Revenue Code, and we may lose the ability to deduct the amounts subject to this excise tax under Section 280G of the Internal Revenue Code. Section 409A of the Internal Revenue Code, or Section 409A, imposes significant additional taxes on service providers that receive “deferred compensation” that does not meet the requirements of Section 409A. In fiscal 2020, we did not provide (and did not have any agreements or obligations to provide) any of our named executive officers with a “gross-up” payment or other reimbursement for any excise tax liability that he or she might owe under Section 4999 or for any additional tax that he or she might owe under Section 409A.

 

Accounting Considerations

 

We follow the authoritative accounting guidance under ASC Topic 718 for our share-based awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based awards made to employees (including named executive officers) and directors based on the grant date “fair value” of these awards. ASC Topic 718 also requires companies to recognize the compensation cost of share-based awards in their income statements over the periods that the employees or directors are required to render service in order to vest in the awards.

  

The grant date “fair value” of the awards granted to our named executive officers have been calculated for accounting purposes and reported in the tables above, even though our named executive officers may never realize any value from those awards.

 

Compensation Committee Report

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

 

The Compensation Committee

 

Andrew Lapham (Chair) Lawrence Sellyn Jay Stubina

The information contained in the Compensation Committee Report shall not be deemed to be soliciting material or to be filed with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference in such filing.

 

COMPENSATION TABLES

Summary Compensation Table

 

The following table presents summary information regarding the compensation reportable for our named executive officers for fiscal 2020, as determined under SEC rules.

 

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards(1) ($)	Option Awards(1) ($)	Non-Equity Incentive Plan Compensation ($)	All Other Compensation ($)	Total ($)
Daniel Solomita(2)	2020	451,814	-	3,200,000	-	124,249	12,000	3,788,063
Chief Executive Officer	2019	457,692	-	-	-	343,269	12,000	812,961
	2018	189,540	-	-	-	-	13,000	202,540
Nelson Gentiletti(3)	2020	403,604	-	217,904	-	110,991	-	732,499
Chief Operating and Chief Financial Officer	2019	66,089	-	2,056,727	-	19,827	-	2,142,642
	2018	-	-	-	-	-	-	-
Michel Megelas(4)	2020	98,299	-	40,000	-	15,088	-	153,387
Chief Legal Officer	2019	-	-	-	-	-	-	-
	2018	-	-	-	-	-	-	-
Nelson Switzer(5)	2020	86,885	-	105,000	-	-	150,000	341,885
Chief Growth Officer	2019	241,644	-	357,315	213,459	-	-	812,418
	2018	-	-	-	-	-	-	-

 

Grants of Plan-Based Awards for Fiscal 2020

The following table presents, for each of our named executive officers, information concerning grants of plan-based awards made during fiscal 2020. This information supplements the information about these awards set forth in the Summary Compensation Table.

 

		Date of Board Action to	Estimated Future Payouts Under Non-Equity Incentive Plan Awards			All Other Stock Awards: Number of Shares of Stock or	All Other Option Awards: Number of Securities Underlying	Exercise or Base Price of Option	Grant Date Fair Value of Stock
	Grant Date	Grant the Award	Threshold ($)	Target ($)	Maximum ($)	Units  (#)	Options (#)	Awards ($/sh)	Awards ($)
Daniel Solomita
Short-term incentive	July 8, 2019	July 8, 2019	112,953	225,907	451,814	-	-	-	-
Milestone RSU grant	June 27, 2019	July 13, 2018	-	-	-	4,000,000	-	-	3,200,000
Nelson Gentiletti
Short-term incentive	July 8, 2019	July 8, 2019	100,901	201,802	403,604	-	-	-	-
Time-based RSUs	March 1, 2019	March 4, 2019	-	-	-	14,422	-	-	141,214
Performance-based RSUs	July 8, 2019	July 8, 2019	-	-	-	8,734	-	-	76,690
Michel Megelas
Short-term incentive	June 28, 2019	June 28, 2019	15,088	15,088	15,088	-	-	-	-
New hire RSUs	June 28, 2019	June 28, 2019	-	-	-	4,044	-	-	40,000

 

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table sets forth all outstanding equity awards held by each Named Executive Officer as at February 29, 2020. For purposes of valuing the outstanding awards, the amounts below are based on a per share price of $8.78 for our common stock, which was the closing market price of the common stock as reported on the Nasdaq Global Select Market on February 29, 2020, the last business day of the fiscal year.

 

	Option Awards					Stock Awards
	Number of Securities Underlying Unexercised Options Exercisable (#)	Number of Securities Underlying Unexercised Options Un-Exercisable (#)	Equity incentive plan awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration date	Number of shares or units of stock that have not vested (#)	Market Value of shares or units of stock that have not vested ($)	Equity incentive plan awards: Number of Unearned shares, Units or Other Rights that have not vested (#)	Equity incentive plan awards: Market or payout value of unearned shares, Units or Other Rights that have not vested ($)
Daniel Solomita	-	-	-	-	-	3,000,000	26,340,000	-	-
Nelson Gentiletti	-	-	-	-	-	286,430	2,514,855	-	-
Michel Megelas	-	-	-	-	-	4,044	35,506	-	-

 

Equity Compensation Plan Information in Fiscal 2020

 

As at February 29, 2020, there were 1,587,081 shares of our common stock subject to issuance upon the exercise of outstanding stock options and RSUs under all of our equity compensation plans referred to in the table below. As at February 28, 2019, there were 1,300,518 shares of our common stock available for issuance under our equity compensation plan.

 

	Number of Securities to be Issued Upon Exercise of Options(#)	Weighted Average Exercise Price of Outstanding Options($)	Weighted Average Remaining Term of Outstanding Options(years)	Number of Securities to be Issued Upon Vesting of Restricted Stock Units(#)	Weighted Average Issuance Price of Restricted Stock Units($)	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(#)
Equity compensation plans approved by shareholders	700,000	12.00	7.54	4,218,802	1.60	1,300,518
Equity compensation not approved by shareholders	887,081	2.71	6.50	-	-	-
Total equity compensation plans	1,587,081	1.51	3.63	4,218,802	1.60	1,300,518

 

 

Option Exercises and Stock Vested in Fiscal 2020

 

The following table provides information on vesting of RSUs during fiscal 2020. 

 

	Option Awards		Stock Awards
	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)	Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)
Daniel Solomita(1)	-	-	200,000	2,092,000(2)
Nelson Gentiletti	-	-	952	9,425(3)
Michel Megelas	-	-	-	-
Nelson Switzer	-	-	7,043	49,160(4)

 

Pension Benefits and Nonqualified Deferred Compensation

 

We do not provide a pension plan for our employees, and none of our named executive officers participated in a nonqualified deferred compensation plan during fiscal 2020.

 

Potential Payments upon Termination or Change in Control

 

Mr. Daniel Solomita

 

On July 13, 2018, we entered into an amended and restated employment agreement, with no term, with Daniel Solomita, our President and Chief Executive Officer, such agreement referred to as the Solomita Amended and Restated Employment Agreement.

 

Pursuant to the Solomita Amended and Restated Employment Agreement, Mr. Solomita received an award of 4,000,000 RSUs, subject to the terms of our 2017 Equity Incentive Plan and a Restricted Stock Unit Agreement thereunder. Such grant became effective upon shareholder approval of an increase in the number of shares available for grant under the Plan at the Company’s 2019 Annual Meeting. The RSUs will vest upon the occurrence of certain milestones as follows:

 

 

 

 

 

 

For these purposes, “commercial operation” means the full-scale production facility produces 10 metric tons per hour of DMT and MEG combined, for a term of not less than 6 months. Once vested in accordance with the milestones, one-fifth of the RSUs will be settled annually, generally commencing on the first settlement date following the date of vesting.

 

The first performance milestone has been reached and consequently, 1,000,000 RSUs have vested effective June 27, 2019, of which the first installment of 200,000 RSUs was settled on October 15, 2019.

 

If Mr. Solomita’s employment is involuntarily terminated by the Company without Cause prior to a Change of Control or more than 24 months following a Change of Control (as such terms are defined in the Solomita Amended and Restated Employment Agreement), Mr. Solomita will receive: (i) continued payment of his base salary for a period equal to 24 months, (ii) payments by the Company for the full cost of his medical benefits provided by the Company under which he is covered as of the date of his termination of employment for up to 24 months, (iii) if he is eligible as of the date that his employment is terminated to participate in a formal cash annual incentive plan as the Company may make available to its similarly-situated employees, a lump-sum payment equal to a pro-rated portion of the incentive payment payable to him under such cash annual incentive plan based on actual performance at the end of the performance period, (iv) accelerated vesting of 50% of the then-unvested portion of his outstanding equity compensation, (v) reimbursement for up to $10,000 of expenses incurred in obtaining new employment.

 

If Mr. Solomita’s employment is terminated by the Company without Cause or by his Resignation for Good Reason (as defined in the Solomita Amended and Restated Employment Agreement) within 24 months after a Change in Control, Mr. Solomita will receive following severance benefits: (i) a lump sum payment equal to 24 months of his base salary, (ii) payments by the Company for the full cost of his medical benefits provided by the Company under which he is covered as of the date of his termination of employment for up to 24 months, (iii) if he is eligible as of the date that his employment is terminated to participate in a formal cash annual incentive plan as the Company may make available to its similarly-situated employees, a lump-sum payment equal to a pro-rated portion of the incentive payment payable to him under such cash annual incentive plan based on actual performance as of the date his employment is terminated and as soon as reasonably practicable following such date (or if such performance is not determinable at such time, based on target performance) and a lump-sum payment equal to two times the target incentive payment payable under the applicable cash annual incentive plan, (iv) accelerated vesting of 100% of the 4,000,000 RSUs described above, (v) reimbursement for up to $20,000 of expenses incurred in obtaining new employment.

 

The receipt of the severance benefits described above are subject to Mr. Solomita’s timely executing and not revoking a release of claims and his continued compliance with his proprietary information and inventions agreement with the Company and the post-employment non-competition, non-solicitation, and non-disparagement covenants in the Solomita Amended and Restated Employment Agreement.

 

The Solomita Amended and Restated Employment Agreement also provides that in the event any amounts in the agreement or otherwise payable to him constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and could be subject to the related excise tax, he would be entitled to receive either full payment of benefits or such lesser amount that would result in no portion of the benefits being subject to an excise tax, whichever results in the greater amount of after-tax benefits to him.

 

For the purposes of the Solomita Employment Agreement, “Cause” means any grounds entitling the Board to summarily dismiss Mr. Solomita.

 

For purposes of the Solomita Amended and Restated Employment Agreement, “Resignation for Good Reason” generally means, Mr. Solomita’s resignation as a result of, and within 30 days following, (i) a change in Mr. Solomita’s position such that he is not a corporate officer of the Company (or a successor company in the event of a Change of Control), (ii) a significant and substantial reduction in Mr. Solomita’s job, duties, or responsibilities in a manner that is substantially and materially inconsistent with the position, duties, or responsibilities held by Mr. Solomita immediately before such reduction, (iii) any reduction in Mr. Solomita’s base salary other than in connection with and consistent with a general reduction of all officer base salaries; or (iv) a relocation of Mr. Solomita’s work location to a location more than 50 kilometers away from the current location provided such change increases Mr. Solomita’s commute by 25 kilometers or 30 minutes.

 

 

The Solomita Amended and Restated Employment Agreement prohibits Mr. Solomita from engaging in certain activities which compete with our business, seeking to recruit our employees or disclosing any of our trade secrets or otherwise confidential information. The foregoing description of the Solomita Amended and Restated Employment Agreement is a summary and is qualified in its entirety by the text of the Solomita Amended and Restated Employment Agreement, as amended, a copy of which is as an exhibit to our Form 8-K filed with the Securities and Exchange Commission on July 13, 2018.

 

Mr. Nelson Gentiletti

 

On December 18, 2018, our wholly-owned subsidiary, Loop Canada Inc., entered into an employment agreement with no term commencing on January 1, 2019 with Nelson Gentiletti, our Chief Operating and Chief Financial Officer, such agreement referred to as the Gentiletti Employment Agreement.

 

Pursuant to the Gentiletti Employment Agreement, if Mr. Gentiletti’s employment is terminated by the Company without Serious Reason or by Mr. Gentiletti’s Resignation for Good Reason (as such terms are defined in the Gentiletti Employment Agreement), Mr. Gentiletti will receive the following severance benefits, subject to his timely executing a release of claims and his continued compliance with the post-employment covenants his proprietary information and inventions agreement with the Company and his non-solicitation and non-disparagement agreement with the Company:

 

(i) his annual short-term incentive award prorated to the date of termination based on actual performance, payable in one lump-sum within the later of 30 days of termination for time based awards or shortly after performance is determined at the end of the next quarterly reporting period for performance awards; (ii) continued payment of his base salary for a period equal to (A) 24 months, if the termination of employment occurs before March 1, 2022, (B) 18 months, if the termination of employment occurs between March 1, 2022, and February 28, 2023, or (C) 12 months, if the termination of employment occurs after February 28, 2023; (iii) any long-term incentive award vested as of the previous annual vesting date will be granted (at a value equal to the closing price of the Company’s common stock on the Nasdaq Stock Market at the close of business on the date of termination or the vesting date, as applicable) and will be paid in one lump sum within 30 days of termination for time-based long-term incentive awards or shortly after performance is determined at the end of the next quarterly reporting period for performance-based long-term incentive awards; and (iv) his new hire RSU award will be paid as if vested ratably over a period of five years from the date he commenced employment with the Company, with any such RSUs that are vested as of the date of termination to be paid in one lump sum within 30 days of termination.

 

In addition, if Mr. Gentiletti’s employment is terminated by the Company without Serious Reason or Resignation for Good Reason within two years of a Change of Control (as defined in the Gentiletti Employment Agreement), all of Mr. Gentiletti’s unvested options, shares or other equity shall immediately vest.

 

For the purposes of the Gentiletti Employment Agreement, “Serious Reason” means a serious reason pursuant to Article 2094 of the Civil Code of Quebec and includes, without limitation, (i) Mr. Gentiletti’s breach of a material term of the Gentiletti Employment Agreement; (ii) Mr. Gentiletti’s conviction of a criminal offense involving fraud or dishonesty, or which otherwise adversely impacts the reputation of the Company; (iii) Mr. Gentiletti directly or indirectly making personal profit out of or in connection with a transaction or business opportunity to which the Company is involved or otherwise associated with, without making disclosure to and seeking the prior written consent of the Company; (iv) Mr. Gentiletti’s failure to comply with any Company rules or policies of a material nature; (v) Mr. Gentiletti’s continued failure to substantially perform his job duties; (vi) any actions or omissions on Mr. Gentiletti’s part constituting gross misconduct or negligence in connection with the business of the Company.

 

For purposes of the Gentiletti Employment Agreement, “Resignation for Good Reason” means, Mr. Gentiletti’s resignation as a result of: (i) a significant and substantial reduction in Mr. Gentiletti’s job, duties, or responsibilities in a manner that is substantially and materially inconsistent with the position, duties, or responsibilities held by Mr. Gentiletti immediately before such reduction, (ii) any reduction in Mr. Gentiletti’s base salary other than in connection with and consistent with a general reduction of all officer base salaries; or (iii) a relocation of Mr. Gentiletti’s work location to a location more than 50 kilometers away from the current location provided such change increases Mr. Gentiletti’s commute by 25 kilometers or 30 minutes. In each case, Mr. Gentiletti must give written notice to us of such event and allow us a reasonable period to cure such event.

 

 

As required by the Gentiletti Employment Agreement, Mr. Gentiletti has signed and agreed to be bound by a Non-Competition, Non-Solicitation and Non-Disparagement Agreement. The foregoing description of the Gentiletti Employment Agreement is a summary and is qualified in its entirety by the text of the Gentiletti Employment Agreement, a copy of which is an exhibit to our Form 10-K filed with the Securities and Exchange Commission on May 8, 2019.

 

Mr. Michel Megelas

 

On May 28, 2019, our wholly-owned subsidiary, Loop Canada Inc., entered into an employment agreement with no term, to commence on June 25, 2019, with Mr. Michel Megelas, our Chief Legal Officer, such agreement referred to as the Megelas Employment Agreement.

 

Pursuant to the Megelas Employment Agreement, if Mr. Megelas’ employment is terminated by the Company without Serious Reason or by Mr. Megelas’ Resignation for Good Reason (as such terms are defined in the Megelas Employment Agreement), Mr. Megelas will receive the following severance benefits, subject to his timely executing a release of claims and his continued compliance with the post-employment covenants his proprietary information and inventions agreement with the Company and his non-solicitation and non-disparagement agreement with the Company:

 

(i) his annual short-term incentive award prorated to the date of termination based on actual performance, payable in one lump-sum within the later of 30 days of termination for time-based awards or shortly after performance is determined at the end of the next quarterly reporting period for performance awards; (ii) a lump-sum payment equal to three months of his then-current base salary plus one month for each additional year of service, up to a maximum total of nine months; (iii) any long-term incentive award vested as of the previous annual vesting date will be granted (at a value equal to the closing price of the Company’s common stock on the Nasdaq Stock Market at the close of business on the date of termination or the vesting date, as applicable) and will be paid in one lump sum within 30 days of termination for time-based long-term incentive awards or shortly after performance is determined at the end of the next quarterly reporting period for performance-based long-term incentive awards; and (iv) his new hire RSU award will be paid as if vested ratably over a period of five years from the date he commenced employment with the Company, with any such RSUs that are vested as of the date of termination to be paid in one lump sum within 30 days of termination.

 

In addition, if Mr. Megelas’ employment is terminated by the Company without Serious Reason or Resignation for Good Reason within two years of a Change of Control (as defined in the Megelas Employment Agreement), all of Mr. Megelas’ unvested options, shares or other equity shall immediately vest.

 

For the purposes of the Megelas Employment Agreement, “Serious Reason” means a serious reason pursuant to Article 2094 of the Civil Code of Quebec and includes, without limitation, (i) Mr. Megelas’ breach of a material term of the Megelas Employment Agreement; (ii) Mr. Megelas’ conviction of a criminal offence involving fraud or dishonesty, or which otherwise adversely impacts the reputation of the Company; (iii) Mr. Megelas’ directly or indirectly making personal profit out of or in connection with a transaction or business opportunity to which the Company is involved or otherwise associated with, without making disclosure to and seeking the prior written consent of the Company; (iv) Mr. Megelas’ failure to comply with any Company rules or policies of a material nature; (v) Mr. Megelas’ continued failure to substantially perform his job duties; (vi) any actions or omissions on Mr. Megelas’ part constituting gross misconduct or negligence in connection with the business of the Company.

 

For purposes of the Megelas Employment Agreement, “Resignation for Good Reason” means, Mr. Megelas’ resignation as a result of: (i) a significant and substantial reduction in Mr. Megelas’ job, duties, or responsibilities in a manner that is substantially and materially inconsistent with the position, duties, or responsibilities held by Mr. Megelas immediately before such reduction, or (ii) any reduction in Mr. Megelas’ base salary other than in connection with and consistent with a general reduction of all officer base salaries. In each case, Mr. Megelas must give written notice to us of such event and allow us a reasonable period to cure such event.

 

 

As required by the Megelas Employment Agreement, Mr. Megelas has signed and agreed to be bound by a Non-Competition, Non-Solicitation and Non-Disparagement Agreement.

 

Mr. Nelson Switzer

 

On April 10, 2018, our wholly-owned subsidiary, Loop Canada Inc., entered into an employment agreement with no term, to commence on May 14, 2018, with Mr. Nelson Switzer, our Chief Growth Officer, such agreement referred to as the Switzer Employment Agreement. Mr. Switzer resigned from the Company on June 14, 2019.

 

Estimated Payments Upon Termination or Change in Control

 

The following table provides an estimate of the payments and benefits that would be provided in the circumstances described above for each of the named executive officers, assuming the triggering event took place on February 29, 2020 (the last business day of fiscal 2020) and based on the $8.78 closing price per share of our common stock on the Nasdaq Stock Market on February 29, 2020. A number of factors may affect the nature and amount of any potential payments or benefits, and as a result, the payments and benefits actually paid (if any) may be different. For example, a triggering event may occur on a date other than February 29, 2020, the price per share of our common stock on the date of the triggering event may be higher or lower than $8.78 or the assumptions relied upon in the estimate of potential payments and benefits below may not reflect the actual circumstances of the triggering event. Accordingly, there is no guarantee that a triggering event would produce the same or similar results as those estimated below.

 

Name	Termination Without Cause or Resignation for Good Reason ($)	Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control($)
Daniel Solomita
Base salary	903,628	903,628
Cash incentive compensation	124,249	576,063
Equity incentive compensation(1)	16,682,000	33,364,000
Total potential payment	17,709,877	34,843,691
Nelson Gentiletti
Base salary	807,208	807,208
Cash incentive compensation	110,991	110,991
Equity incentive compensation(2)	465,498	2,514,855
Total potential payment	1,383,697	3,433,055
Michel Megelas
Base salary	35,834	35,834
Cash incentive compensation	15,088	15,088
Equity incentive compensation(2)	4,870	35,506
Total potential payment	55,792	86,428

_____________ 

 

 

TRANSACTIONS WITH RELATED PERSONS

 

Our Board of Directors has adopted a written related party transactions policy. All transactions required to be reported pursuant to Item 404 of Regulation S-K are subject to approval by the Audit Committee of our Board of Directors. In furtherance of relevant Nasdaq rules and our commitment to corporate governance, the charter of the Audit Committee provides that the Audit Committee shall review and approve any proposed related party transactions including, transactions required to be reported pursuant to Item 404 of Regulation S-K. The Company is also required by Nasdaq Rule 5250(b)(3) to disclose all agreements and arrangements between any director or nominee for director, and any person or entity other than the Company, relating to compensation or other payment in connection with such person’s candidacy or service as a director of the Company. The Company is not aware of any such agreements.

 

In evaluating transactions with related parties, our Audit Committee considers all of the available material facts and circumstances of a related person transaction, including: the direct and indirect interests of the related persons; in the event the related person is a director or nominee for director (or immediate family member of a director or an entity with which a director is affiliated), the impact that the transaction will have on a director’s or nominee for director’s independence; the risks, costs and benefits of the transaction to us; and whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances.

 

Transactions and Relationships with Directors, Director Nominees, Executive Officers and Five Percent Stockholders

 

We believe that there have not been any transaction or series of transactions during fiscal 2020 to which we were or are to be a participant in which the amount involved exceeds $120,000 and in which any director, nominee for director, executive officer or holder of more than five percent of our Common Stock, or members of any such person’s immediate family, had or will have a direct or indirect material interest, other than compensation described in this section and the sections titled “Executive Compensation, Management and Other Information,” or “Director Compensation” elsewhere in this proxy statement.

 

Mr. Daniel Solomita, our controlling stockholder and Chief Executive Officer, or companies controlled by him, previously made advances to the Company which were unsecured, non-interest bearing with no formal terms of repayment. As of May 4, 2018, we do not owe any money to Mr. Solomita or entities controlled by him.

 

 

 

 

 

PROPOSAL TWO

 

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

On August 16, 2017, the Audit Committee approved the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm. The selection and engagement of PwC as our independent registered public accounting firm was approved by the Board on August 16, 2017, effective as at August 16, 2017. On June 27, 2019, at the 2019 Annual Meeting of Shareholders, the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2020 was ratified by shareholders. 

 

A representative of PwC may be present at the 2020 Annual Meeting to make a statement if he or she desires to do so, and such representative is expected to be available to respond to appropriate questions. The stockholders are being asked to ratify the appointment of PwC as our independent registered public accounting firm for the fiscal year ending February 28, 2021.

 

Audit Fees During Fiscal Years 2020 and 2019

 

The following table sets forth the approximate aggregate fees paid by us to our independent registered public accounting firms during the fiscal year ended February 29, 2020 and February 28, 2019.

 

	Fiscal 2020	Fiscal 2019
Audit Fees(1)	167,466	182,771
Audit-Related Fees(2)	67,383	52,793
Tax Fees(3)	-	26,716
All Other Fees(4)	1,800	1,800
Total Fees	236,650	264,080

_____________ 

 

 

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

 

The Sarbanes-Oxley Act of 2002 and the auditor independence rules of the SEC require all independent registered public accounting firms that audit issuers to obtain pre-approval from their respective audit committees in order to provide professional services without impairing independence. As such, our Audit Committee has a policy and has established procedures by which it pre-approves all audit and other permitted professional services to be provided by our independent registered public accounting firm.

 

Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent accountants. These services may include audit services, audit-related services, tax services and other services. Our audit committee generally pre-approves particular services or categories of services on a case-by-case basis. The independent registered public accounting firm and management are required to periodically report to our audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with these pre-approvals, and the fees for the services performed to date. On January 9, 2018, the Audit Committee approved the Audit and Non-Audit Services Pre-Approval Policy (“Pre-Approval Policy”) effective for the fiscal year ended February 28, 2018 and subsequent fiscal years. Of the fees paid in fiscal year 2020, 96% were approved by the Audit Committee using the pre-approval policies and procedures described herein. Of the fees paid in fiscal year 2019, 96% were approved by the Audit Committee using the pre-approval policies and procedures described herein.

 

Required Vote & Recommendation of the Board

 

Unless marked to the contrary, proxies received will be voted “FOR” approval of the ratification of the appointment of PwC as our independent registered public accounting firm for the fiscal year ending February 28, 2021. Abstentions and broker non-votes will not affect the outcome of the vote. No determination has been made as to what action the Board of Directors would take if the shareholders do not ratify the appointment.

 

THE LOOP BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT LOOP

STOCKHOLDERS VOTE “FOR” RATIFICATION OF APPOINTMENT OF

PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM.

 

 

 

AUDIT COMMITTEE REPORT

 

The Audit Committee of the Board of Directors is responsible for providing an independent, objective review of our accounting functions and internal controls. The Audit Committee is comprised of Mr. Sellyn, Mr. Lapham and Mr. Stubina, each of whom is independent within the meaning of the listing standards of the Nasdaq Stock Market, and was governed by a written charter first adopted and approved by the Board of Directors, and who reviewed the Audit Committee Report for the fiscal year ended February 29, 2020. As of the date of this meeting and for fiscal year ending February 28, 2021, the Audit Committee will be comprised of Mr. Sellyn (Chair), Mr. Lapham and Mr. Stubina. A copy of our Audit Committee Charter is available on our website at http://www.loopindustries.com/assets/docs/Audit_Committee_Charter.pdf. The Audit Committee met five times during fiscal 2020.

 

In connection with our audited financial statements for the fiscal year ended February 29, 2020, on April 30, 2020, the Audit Committee (1) reviewed and discussed the audited financial statements with management, (2) discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as currently in effect and as adopted by the Public Company Accounting Oversight Board (“PCAOB”), and (3) 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 discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm.

 

The Audit Committee has considered and determined that the provision of the services other than audit services referenced above is compatible with maintenance of the auditor’s independence. Based upon these reviews and discussions, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, that our audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020 for filing with the SEC.

 

	The Audit Committee:
	Laurence Sellyn, Chairman
	Andrew Lapham
	Jay Stubina

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information with respect to the beneficial ownership of our Common Stock and Series A Preferred Stock as at May 1, 2020, as to (1) each person (or group of affiliated persons) who is known by us to own beneficially more than 5% of our Common Stock; (2) each of our directors and nominees; (3) each Named Executive Officer; and (4) all of our directors and executive officers as a group.

 

The amounts and percentages of our Common Stock and Series A Preferred Stock beneficially owned are reported on the basis of the regulations of the SEC governing the determination of beneficial ownership of securities. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60 days.

 

Holders of our Common Stock and Series A Preferred Stock vote together as a single class. The one share of Series A Preferred Stock issued to Mr. Solomita affords him a majority of the total voting power so long as Mr. Solomita holds not less than 7.5% of the issued and outstanding shares of our common stock, assuring that Mr. Solomita retains control with his presently-held 47.1% of the issued and outstanding shares of our common stock.

 

Subject to the paragraph above, percentage ownership of outstanding shares is based on 39,916,905 shares of Common Stock outstanding and one share of Series A Preferred Stock outstanding as of May 1, 2020.

 

Name and Address of Beneficial Owner	Shares of Common Stock(1) (#)	Percent of Common Stock (%)	Shares of Series A Preferred Stock (#)	Percent of Preferred Stock (%)	Combined Voting Shares (#)	Combined Voting Power (%)
Daniel Solomita(2)	18,800,000	47.10	1	100	74,131,395	77.83
Nelson Gentiletti	7,083	*	-	-	7,083	*
Michel Megelas	-	-	-	-	-	-
Jay Stubina(3)	116,207	*	-	-	116,207	*
Laurence Sellyn(4)	43,342	*	-	-	43,342	*
Andrew Lapham(5)	18,033	*	-	-	18,033	*
Sidney Horn(6)	23,510	*	-	-	23,510	*
Nelson Switzer(7)	7,043	-	-	-	7,043	*
All Directors and Executive Officers as a Group (8 persons)	19,015,218	47.64	1	100	74,346,613	78.06

 

_____________ 

* Represents beneficial ownership of less than one percent of the outstanding shares of our common stock.

 

 

  

 

 

 

 

 

 

 

 

 

PROPOSAL THREE

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

Pursuant to Section 14A of the Exchange Act, which was put in place by the Dodd-Frank Act, we are providing shareholders with a vote to approve, on an advisory basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with SEC rules. The advisory vote on executive compensation described in this proposal is commonly referred to as a “say-on-pay” vote. As a result of the vote of our shareholders to Proposal Five at our 2019 Annual Meeting, we are required to provide our shareholders the opportunity to vote to approve, on an advisory basis, the compensation of our Named Executive Officers every year.

 

The principal objectives of our executive compensation program are:

 

 

 

 

 

 

 

This proposal gives our shareholders the opportunity to express their views on the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. For the reasons discussed above, we are asking our shareholders to indicate their support for our executive compensation by voting FOR, on an advisory basis, the compensation of our Named Executive Officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Summary Compensation Table and the other related tables and disclosure).

 

The say-on-pay vote is an advisory vote only, and therefore it will not bind us or our Board of Directors or our Compensation Committee. However, the Board of Directors and the Compensation Committee will consider the voting results as appropriate when making future decisions regarding executive compensation.

 

Required Vote & Recommendation of the Board

 

If a quorum is present, in order to approve the advisory vote on executive compensation, the number of votes cast “FOR” the proposal must exceed the number of votes cast “AGAINST” the proposal. Abstentions and broker non-votes are counted for purposes of determining whether a quorum exists at the Annual Meeting but will have no effect on the determination of the outcome of this proposal.

 

THE LOOP BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT LOOP

STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADVISORY RESOLUTION RELATING

TO THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

 

OTHER MATTERS

 

As of the date of this proxy, management knows of no business or nominations that will be presented for consideration at the 2020 Annual Meeting other than as stated in the Notice of Meeting. If any other business is properly brought before the 2020 Annual Meeting, shares subject to proxies will be voted, to the extent permitted by the rules and regulations of the Securities and Exchange Commission, in accordance with the discretion of the persons voting such proxies.

 

DELINQUENT SECTION 16(A) REPORTS

 

Section 16(a) of the Exchange Act and the rules of the SEC thereunder require our executive officers, directors and certain stockholders who beneficially own more than 10% of our common stock to file reports of ownership and changes in ownership of our Common Stock with the SEC. Based solely on a review of the copies of such reports furnished to us and representations that no other reports were required, we believe that all required reports were filed on time with the a Form 4 filed by Nelson Gentiletti, related to a grant of RSUs was filed late on March 21, 2019, a Form 4 filed by Nelson Switzer, related to a grant of RSUs and a grant of options to purchase Common Stock was filed late on March 21, 2019, a Form 3 filed by Michel Megelas, related to his being subject to Section 16 was filed late on July 8, 2019, a Form 4 filed by Michel Megelas, related to a grant of RSUs was filed late on July 8, 2019, a Form 3 filed by CFFI Ventures Inc., related to a securities purchase agreement was filed late on July 8, 2019, a Form 3 filed by John Carter Risley, related to a securities purchase agreement was filed late on July 8, 2019, a Form 3 filed by Northern Private Capital Ltd., related to a securities purchase agreement was filed late on July 8, 2019, a Form 4 filed by Andrew Lapham, related to shares delivered in payment of a finder’s fee was filed late on November 8, 2019, a Form 4 filed by Daniel Solomita, related to share purchase agreements was filed late on November 27, 2019, a Form 3 filed by 10036552 Canada Inc., related to a share transfer was filed late on November 27, 2019.

 

HOUSEHOLDING OF ANNUAL MEETING MATERIALS

 

Some banks, brokers and other nominee record holders may participate in the practice of “householding” proxy statements and their accompanying documents. This means that only one copy of our annual report, proxy statement or Notice of Internet Availability of Proxy Materials is sent to multiple stockholders in your household. We will promptly deliver a separate copy of these documents without charge to you upon written request to Loop Industries, Inc., 480 Fernand-Poitras, Terrebonne, Québec, Canada J6Y 1Y4 or upon telephonic request to (450) 951-8555, Attn: Chief Financial Officer. If you want to receive separate copies of our proxy statements in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and phone number.

 

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

 

If you receive your proxy materials by mail, we encourage you to elect to receive future copies of our proxy materials by e-mail. To enroll in this program, follow the instructions included on your Notice of Internet Availability of Proxy Materials or in the proxy materials provided by your bank or broker. Enrollment in the online program will remain in effect for as long as your brokerage account is active or until enrollment is canceled. Enrolling to receive proxy materials online will save us the cost of printing and mailing documents and will reduce the environmental impact of our annual meetings.

 

ANNUAL REPORT ON FORM 10-K

 

We filed our Annual Report on Form 10-K for the fiscal year ended February 29, 2020 with the SEC on May 4, 2020. We will mail without charge, upon written request, a copy of our Annual Report on Form 10-K, excluding exhibits. Please send a written request to Investor Relations, Loop Industries, Inc., 480 Fernand-Poitras Terrebonne, Québec, Canada J6Y 1Y4 or access the report from the “Investors” section of our website at http://www.loopindustries.com/en/investors/home. The Annual Report is not incorporated into this proxy statement and is not considered proxy-soliciting material.

 

 

COST OF SOLICITATION

 

The cost of soliciting proxies will be borne by the Company. Officers, other employees and directors may solicit proxies personally or by telephone without any addition to their regular compensation. Upon request, we will reimburse the reasonable costs incurred by brokers, banks, or other nominees for mailing proxy materials and annual shareholder reports to the beneficial owners of the shares they hold of record.

  

NON-SOLICITATION MATERIALS

 

The information contained in this Proxy Statement under the caption “Audit Committee Report” shall not be deemed to be ”soliciting material” or to be “filed” with the SEC, nor will such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate it by reference in such filing.