DEF 14A of Apyx Medical Corp
Filed Jun 25, 2024 · FY20230000719135-24-000032
ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION The Governance and Nominating Committee of the Board has unanimously recommended to the Board, and the Board has unanimously nominated eight (8) persons consisting of Stavros Vizirgianakis, Charles D. Goodwin, Lawrence J. Waldman, Michael Geraghty, John Andres, Craig Swandal, Minnie Baylor-Henry and Wendy Levine, each a current Director, for re-election to the Board. Each director serves from the date of election until the next annual meeting of stockholders and until a successor is duly elected and qualified. The accompanying proxy card will be voted in favor of the persons named above to serve as directors, unless the stockholder indicates to the contrary on the proxy card. See “Information Regarding Executive Officers, Directors and Director Nominees” for biographical information as to each nominee. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL 1 TO ELECT AS DIRECTORS THE EIGHT NOMINEES PROPOSED BY THE GOVERNANCE AND NOMINATING COMMITTEE OF THE BOARD.
Information Regarding our Board
Information Regarding our Board Our Certificate of Incorporation and Bylaws provide for our Company to be managed by or under the direction of the Board. Under our Certificate of Incorporation and Bylaws, the number of directors is fixed from time to time by the Board. The maximum number of directors permitted pursuant to our Certificate of Incorporation and Bylaws is nine. Currently, the number of Board seats constituting the entire Board is fixed at eight, and the number of directors currently serving is eight, leaving no vacancies on the Board. The Board currently has seven members who have been determined to be “independent” as defined by the applicable rules of NASDAQ and the Securities and Exchange Commission. These “independent” directors are Stavros Vizirgianakis, Michael Geraghty, John Andres, Lawrence J. Waldman, Craig Swandal, Minnie Baylor-Henry, and Wendy Levine. Our common stock is listed on the Nasdaq Global Select Market under the symbol “APYX”. The primary responsibilities of our Board are to provide oversight, strategic guidance, counseling and direction to our management. Our Board meets on a regular basis and additionally as required. Written or electronic materials are distributed in advance of meetings as a general rule and our Board schedules meetings with, and presentations from, members of our senior management on a regular basis and as required. Directors are elected at the Annual Meeting and hold office until our next annual meeting of stockholders and until their successors are elected and qualified. Officers are appointed by the Board and serve at the pleasure of the Board. The Board held thirteen (13) meetings during the 2023 fiscal year. Throughout the year and from time-to-time the Board will hold informal meetings on an as needed basis. All of the directors attended 100% of the meetings of the Board and of the committees on which they served. While we encourage all members of the Board to attend Annual Meetings of Stockholders, there is no formal policy as to their attendance.
Legal Proceedings Involving Directors
Legal Proceedings Involving Directors There were no legal proceedings involving the nominees to the Board in the past ten years.
Board Leadership
Board Leadership On May 7, 2024, the Board appointed Stavros Vizirgianakis to serve as a director and non-executive Chairperson of the Board. The Board has no formal policy with respect to separation of the positions of Chairperson and CEO or with respect to whether the Chairperson should be a member of management or an independent director, and believes that these are matters that should be discussed and determined by the Board from time to time. We believe Mr. Vizirgianakis is best suited for leading discussions, at the Board level, regarding performance relative to our corporate strategy and these discussions account for a significant portion of the time devoted at our Board meetings. The Chief Executive Officer of the Company, Charles D. Goodwin, is tasked with the responsibility of implementing our corporate strategy. The independent directors appointed Lawrence J. Waldman as the Lead Independent Director. The Lead Independent Director is appointed by the Board and is responsible for coordinating the activities of the independent directors and coordinating with the Chief Executive Officer of the Company to set agendas for Board meetings and chair executive sessions of the independent directors. The Lead Independent Director is also responsible for meeting, from time to time, with the Company’s Compensation Committee to discuss the Chief Executive Officer’s performance. The Company’s Corporate Governance Policies also contain several features which the Company believes will ensure that the Board maintains effective and independent oversight of management, including the following: •Executive sessions without management and non-independent directors present are a standing Board agenda item. Executive sessions of the independent directors are held at any time requested by an independent director and, in any event, are held in connection with all regularly scheduled Board meetings. •The Board regularly meets in executive session with the CEO without other members of management present. •All Board committee members are independent directors. The committee chairs have authority to hold executive sessions without management and non-independent directors present.
Board Evaluations
Board Evaluations The Board has adopted a policy to evaluate its performance and effectiveness as well as that of the four standing committees on an annual basis. The purpose of the evaluation is to track progress in certain areas targeted for improvement from year to year and to identify ways to enhance the Board’s effectiveness. As part of the evaluation, each Director may complete a written questionnaire developed by the Governance and Nominating Committee to provide anonymous feedback on the effectiveness of the Board, the Committees, as well as each individual Director’s own contributions. The collective ratings and comments of the Directors are compiled and then presented to the Governance and Nominating Committee and to the full Board for discussion and action as necessary.
Risk Management
Risk Management The Board believes that risk management is an important component of the Company’s corporate strategy. While we assess specific risks at our committee levels, the Board, as a whole, oversees our risk management process, and discusses and reviews with management major policies with respect to risk assessment and risk management. The Board is regularly informed through its interactions with management and committee reports about risks we face in the course of our business. Our Audit Committee also takes an active role in risk assessment and risk management.
INFORMATION REGARDING EXECUTIVE OFFICERS, DIRECTORS AND DIRECTOR NOMINEES
INFORMATION REGARDING EXECUTIVE OFFICERS, DIRECTORS AND DIRECTOR NOMINEES The following table sets forth the names, ages and positions within the Company of each of our directors, director nominees, executive officers and key employees.
INFORMATION REGARDING EXECUTIVE OFFICERS, DIRECTORS AND DIRECTOR NOMINEES
| Name | Age | Position | Director Since | | Charles D. Goodwin | 58 | Chief Executive Officer and Director | December 2017 | | Matthew Hill | 55 | Chief Financial Officer, Treasurer and Secretary | N/A | | Todd Hornsby | 48 | Executive Vice President | N/A | | Moshe Citronowicz | 71 | Senior Vice President | N/A | | Stavros Vizirgianakis | 53 | Chairperson of the Board | May 2024 | | Lawrence J. Waldman | 77 | Lead Independent Director | March 2011 | | Michael Geraghty | 77 | Director | March 2011 | | John Andres | 66 | Vice-Chairperson of the Board | July 2014 | | Craig Swandal | 63 | Director | March 2018 | | Minnie Baylor-Henry | 76 | Director | August 2019 | | Wendy Levine | 51 | Director | August 2021 |
Board Diversity Matrix
Board Diversity Matrix The matrix below reflects our Board’s gender and racial characteristics and LGBTQ+ status, based on the self-identification of our directors. Each of the categories listed below has the meaning as it is used in Nasdaq Rule 5605(f).
Board Diversity Matrix
| Board Diversity Matrix (as of December 31, 2023 and 2022) | | | | | | | | | | | Total Number of Directors 8 | | | | | | | | | | | | | Makrides* | Goodwin | Waldman | Andres | Geraghty | Swandal | Baylor-Henry | Levine | | Gender Identity | | | | | | | | | | | | Male | X | X | X | X | X | X | | | | | Female | | | | | | | X | X | | | Non-Binary | | | | | | | | | | | Did Not Disclose Gender | | | | | | | | | | Demographic Background | | | | | | | | | | | | African American or Black | | | | | | | X | | | | Alaskan Native or Native American | | | | | | | | | | | Asian | | | | | | | | | | | Hispanic or Latinx | | | | | | | | | | | Native Hawaiian or Pacific Islander | | | | | | | | | | | White | X | X | X | X | X | X | | X | | | LGBTQ+ | | | | | | | | | | | Did Not Disclose Demographic Background | | | | | | | | |
Board Diversity Matrix
* Andrew Makrides announced his retirement as the Chairperson of the Board and as a director on May 7, 2024.
Knowledge, Skills and Experience Matrix
Knowledge, Skills and Experience Matrix The matrix below summarizes certain of the key experiences, qualifications, skills, and attributes that our directors bring to the Board to enable effective oversight. This matrix is intended only to provide a summary of our directors’ qualifications and is not a complete listing of each director’s strengths and contributions to the Board. Additional information on each director is set forth in their respective biography.
Knowledge, Skills and Experience Matrix
| Knowledge, Skills and Experience Matrix | | | | | | | | | | | | | Makrides* | Goodwin | Waldman | Andres | Geraghty | Swandal | Baylor-Henry | Levine | | | Public Company Board Experience | X | X | X | X | X | X | X | | | | Financial | | X | X | | | | X | | | | Risk Management | | X | X | | | | X | | | | Accounting | | | X | | | | | | | | Corporate Governance\Ethics | X | X | X | X | | | X | | | | Legal\Regulatory | X | X | | X | | | X | | | | HR\Compensation | X | X | X | | X | X | | | | | Executive Experience | X | X | X | X | X | X | X | X | | | Operations | X | X | | | | X | | | | | Strategic Planning\Oversight | X | X | X | X | X | X | X | X | | | Sales and Marketing | | X | | | X | | | X | | | Technology | X | | X | X | | X | | | | | Medical Device Industry | X | X | | X | X | X | X | |
Knowledge, Skills and Experience Matrix
* Andrew Makrides announced his retirement as the Chairperson of the Board and as a director on May 7, 2024. Stavros Vizirgianakis, age 53, Chairperson of the Board of Directors since May 2024, is an investor and strategic advisor to companies in the medical device field. He currently serves on the Board of Directors at the following healthcare companies: Tally Surgical, Inc.; Theragenics Corporation; Xtant Medical Holdings, Inc. (NYSE American: XTNT); and Medinotec, Inc. (OTCQX: MDNC). Mr. Vizirgianakis previously served on the Board of Directors at Bioventus Inc. (Nasdaq: BVS) and Tenaxis Medical. Mr. Vizirgianakis is the former Chief Executive Officer of medical device company, Misonix, Inc., which he led from 2016 through the company’s acquisition by Bioventus Inc. in 2021. He previously served as Managing Director of the Medical Devices business at Ascendis Health Limited (JSE: ASC) from 2014 to 2016. Mr. Vizirgianakis co-founded Surgical Innovations, one of the largest privately-owned medical device distributors in the African region, which later became part of Ascendis Health Limited. His career in the medical device industry also includes experience serving as Director of Sales for sub-Saharan Africa at United States Surgical Corporation and as General Manager of South Africa at Tyco Healthcare. Mr. Vizirgianakis holds a degree in Commerce from the University of South Africa. The Company believes Mr. Vizirgianakis is qualified to serve as the Chairperson of the Board and as a Director given his extensive experience in the medical device industry. Andrew Makrides, Esq., age 82, Chairperson of the Board of Directors from December 1982 Until May 2024, received a Bachelor of Arts degree in Psychology from Hofstra University and a Juris Doctor Degree from Brooklyn Law School. He is a member of the Bar of the State of New York and practiced law from 1968 until joining Apyx Medical Corporation as a co-founder and Executive Vice President and director in 1982. Mr. Makrides became President of the Company in 1985 and the CEO in December 1998 and served as such until March 18, 2011 at which point he relinquished his position as President, but remained CEO until December 2013. Mr. Makrides employment contract expired December 31, 2016. Mr. Makrides has over 30 years of executive experience in the medical device industry. Charles D. Goodwin, age 58, Chief Executive Officer and a Director of Apyx Medical since December 2017, is an accomplished senior executive with over 30 years of experience in the healthcare industry. Before joining Apyx Medical in December 2017, Mr. Goodwin was the Chief Executive Officer of MIS Implants Technologies, Inc., a privately held company specializing in dental implants. Prior to this position, Mr. Goodwin spent more than 11 years with Olympus/Gyrus ACMI in a variety of commercial and leadership roles of increasing responsibility. Mr. Goodwin began as a regional sales director for Gyrus in 2002 and was later promoted to Vice President of Sales, overseeing the Company’s strong commercial ramp and assisting Gyrus’ executive leadership team in the successful acquisition of American Cytoscope Makers, or “ACMI”, for $500 million in 2005. As President of Gyrus ACMI’s surgical division, Mr. Goodwin developed the company’s global distribution network and achieved average annual sales growth of 35% for three consecutive years, resulting in a promotion to President of Worldwide Sales in 2007. As President of Worldwide Sales for Gyrus ACMI, Mr. Goodwin was responsible for a global business with approximately 700 employees and was a key contributor to the successful sale of Gyrus ACMI to Olympus for $2.2 billion in 2008. Mr. Goodwin served as Group Vice President of Olympus Corporation’s global surgical energy group, where he was responsible for commercial strategy, R&D and operations for a business with more than 500 employees worldwide. Mr. Goodwin held this position for five years before joining MIS Implants Technologies, Inc. in 2014. In March, 2022 Mr. Goodwin joined the Board of ZSX Medical, LLC, a clinical stage medical device company improving minimally-invasive surgery. Mr. Goodwin holds a B.A. in Finance and Economics from Eastern Washington University. The Company believes Mr. Goodwin is qualified to serve as a Director given his over 30 years of experience in the medical device industry. Matthew Hill, age 55, Chief Financial Officer, Treasurer and Secretary since December 2023. Prior to joining Apyx Medical, Mr. Hill served as the Chief Financial Officer of PDS Biotechnology Corporation (Nasdaq: PDSB) (“PDS Biotech”), a clinical-stage immunotherapy company, where he led all aspects of the company’s budgeting, forecasting, financial management and reporting. Prior to joining PDS Biotech, he served as Chief Financial Officer of Strata Skin Sciences (Nasdaq: SSKN), a medical technology company developing, commercializing and marketing products for the treatment of dermatologic conditions, from 2018 to 2021. Prior to joining Strata Skin Sciences, Mr. Hill served as Chief Financial Officer at several companies, including Velcera, Inc., which developed pet medication for the companion animal health industry, and EP MedSystems, which developed and marketed cardiac electrophysiology products. He was also a Senior Manager at the international accounting and consulting firm, Grant Thornton LLP. Mr. Hill holds a Bachelor of Science in Accounting from Lehigh University. Todd Hornsby, age 48, Executive Vice President since January 2019, has responsibility for global Commercial operations. He is an accomplished Senior Executive with more than 20 years of success in the medical device and biotech industries. Throughout his career, Todd has held various leadership positions and has extensive experience in sales, sales management, and with building strong teams and launching new technologies. Since joining Apyx™ Medical in August 2014, Todd has focused primarily on the commercialization of Apyx’s Renuvion and J-Plasma advanced energy system. Prior to joining Apyx, Todd held roles of increasing seniority and responsibility at CryoLife, Inc. During his tenure, Todd directed the US Sales team, with a diversified product portfolio of biological heart valves and vascular grafts, surgical adhesives and hemostatic agents, dialysis access and CHF chronic heart failure products. Todd also directed successful integrations of three acquisitions into the US sales channel. Early in his medical device career, Todd held positions with Ethicon - Endo Surgery and Medex Medical. Todd holds a BA in Psychology from Hope College. He is also the recipient of many awards for sales achievement and growth. Moshe Citronowicz, age 71, Senior Vice President since 2012, came to the United States in 1978 and has worked in a variety of manufacturing and high technology industries. In October 1993, Mr. Citronowicz joined the Company as Vice President of Operations and served as our Chief Operating Officer until November 2011. Currently, he is serving as the Senior Vice President. Mr. Citronowicz’s employment contract extends to December 31, 2024.
Knowledge, Skills and Experience Matrix
Lawrence J. Waldman, CPA, age 77, Director since March 2011, Lead Independent Director, and Audit Committee Chairperson. Mr. Waldman has over 40 years of experience in public accounting. Mr. Waldman currently serves as a senior advisor to First Long Island Investors, LLC, an investment and wealth management firm since May 2016. Prior to that Mr. Waldman served as an advisor to the accounting firm of EisnerAmper LLP, where he was previously the Partner-in-Charge of Commercial Audit Practice Development for Long Island since September 2011. Prior to joining EisnerAmper LLP, Mr. Waldman was the Partner-in-Charge of Commercial Audit Practice Development for Holtz Rubenstein Reminick, LLP from July 2006 to August 2011. Mr. Waldman was the Managing Partner of the Long Island office of KPMG LLP from 1994 through 2006, the accounting firm where he began his career in 1972. Mr. Waldman was elected to the Board of Directors of Comtech Telecommunications Corp. in August of 2015 and since December 2015, serves as Chair of its Audit Committee, and since December 17, 2021 serves as its Lead Independent Director. In October 2016, Mr. Waldman was appointed and subsequently in December 2016 elected to the Board of Directors of CVD Equipment Corporation, and serves as the Chair of the Audit Committee and as Lead Independent Director. In January 2021, Mr. Waldman was appointed to serve as non-Executive Chairman of the Board of CVD Equipment Corporation. Mr. Waldman also served through October 2018 as a member of the Board of Directors of Northstar/ RXR Metro Income Fund, a non-traded Real Estate Investment Trust, where he also had served as a member of its Audit Committee starting in 2014. Mr. Waldman also served as a member of the State University of New York’s Board of Trustees and as Chair of its Audit Committee. He previously served as the Chairman of the Board of Trustees of the Long Island Power Authority and as Chair and a member of the Finance and Audit Committee of its Board of Trustees. Mr. Waldman meets the definition of a financial expert as defined by the SEC and The NASDAQ Stock Market LLC. The Company believes Mr. Waldman is qualified to serve as Director, Audit Committee Chairperson and Lead Independent Director because of his over 40 years of experience in public accounting and his positions on various boards, and broad business experience. Michael Geraghty, age 77, Director since March 2010 and Compensation Committee Chairperson. Mr. Geraghty was previously employed as the President of Global Sales at Optos, Inc., a developer and manufacturer of retinal imaging devices for screening, detection and diagnosis of eye related conditions. From 2005 through 2008, he was the President of International Sales at Gyrus Acmi where he first started in 2000 as Senior Vice President of Sales for Gyrus Medical. Prior to this, Mr. Geraghty was the Vice President of Sales and Marketing for Everest Medical, Inc. and before that was the Director of Marketing for Advanced Products at Arthrocare Corporation. Mr. Geraghty specializes in building independent direct sales teams in the medical device industry and has extensive domestic and international sales and marketing experience. He received his bachelor’s degree from St. Mary’s University and graduate degree in Executive Sales Management from the University of Minnesota. The Company believes Mr. Geraghty is qualified to serve as Director and Compensation Committee Chairperson because of his extensive domestic and international sales, marketing, and management experience. John Andres, age 66, Vice Chairperson of the Board of Directors and Governance and Nominating Committee Chairperson since July 2014, has over 30 years of experience in the medical device industry. Since April, 2004, Mr. Andres has been a private consultant, doing business through John C. Andres, LLC, specializing in patent/business strategy development and execution. He also is a partner of Hawk Healthcare, LLC, which provides strategic transaction management to private individuals and companies. From 2020 until 2024, Mr. Andres served on the Board of Directors of Adaptilens, LLC, which is developing an accommodating intraocular lens. In 2017, Mr. Andres joined the Board of Directors of Longeviti Neuro Solutions, LLC which develops and sells cranial implant products for cranial reconstruction. In 2004, Mr. Andres helped found K2M, Inc. (KTWO) and from 2004 until 2010 served as a member of the Board of Directors of K2M, Inc. Prior to 2004, Mr. Andres held various legal and strategic business development positions at the Surgical Division of Tyco Healthcare Group, LLP, now Medtronic (NYSE: MDT) and its predecessor, United States Surgical Corporation. Before joining U.S. Surgical, Mr. Andres worked at the New York law firm of Morgan & Finnegan. He received his Associate of Applied Science degree from Rochester Institute of Technology, his Bachelor of Arts degree from Lehigh University and his Juris Doctor from Pace University School of Law. The Company believes Mr. Andres is qualified to serve as a director because of his extensive experience in patent and business strategy development and execution in the medical device industry. Craig Swandal, age 63, Director since March 2018. Mr. Swandal has over 30 years of experience at public and privately-held medical technology and electronics manufacturing companies. He began his career in 1981 at Unisys Corporation, a manufacturer of main frame computer systems, where he held a variety of manufacturing positions of increasing responsibility. In 1995 he joined Silent Knight, a manufacturer of industrial fire and security systems, as a Manufacturing Manager and was promoted to Vice President of Operations. In 2001, Mr. Swandal joined Gyrus, a manufacturer of surgical devices, where he was responsible for the company’s manufacturing operations as Director of Operations and later Vice President of Operations. Following Gyrus’s acquisition of ACMI in 2005, Mr. Swandal was promoted to Senior Vice President and was responsible for the global operations of the combined company. He developed and executed Gyrus ACMI’s strategy to consolidate its manufacturing, distribution, customer service and service and repair operations and was a member of the leadership team that successfully sold the company to Olympus Corporation for $2.2 billion in 2008. Following the acquisition of Gyrus ACMI, Mr. Swandal served on the executive leadership teams of several companies, including ATS Medical, ACELL and Tendyne, where he was focused on operational development and currently holds a position. He is currently the Principal of Lead 2 Change Consulting, where he assists companies in identifying and implementing new manufacturing initiatives. Mr. Swandal serves as a member of the Board of Managers for Tiumed LLC a nontraded medical device start up. Mr. Swandal holds a Bachelor’s degree in Organizational Management and Communications from Concordia University, as well as a mini Master of Business Administration in Medical Technology from the University of St Thomas. The Company believes Mr. Swandal is qualified to serve as Director because of his extensive experience in manufacturing operations.
Knowledge, Skills and Experience Matrix
Minnie Baylor-Henry, age 76, Director and Regulatory Compliance Committee Chairperson since August 2019. Ms. Baylor-Henry has over 25 years of regulatory affairs experience. She is the President of B-Henry & Associates, LLC, a consulting firm that she founded to provide regulatory strategic support to life sciences companies. Prior to starting her consulting company, she held various executive level positions over a 15-year period at Johnson & Johnson (J&J). Before retiring from J&J in 2015, she was the Worldwide Vice President of Regulatory Affairs-Medical Devices. During her time at J&J, she also had served as the Vice President-Medical & Regulatory Affairs in the Over-the Counter Group, as well as Senior Director, Regulatory Affairs- Pharmaceuticals. Ms. Baylor-Henry also worked for Deloitte & Touche (2008-2010) as the National Director Regulatory Affairs- Life Sciences. Prior to joining the private sector, she worked for the US Food & Drug Administration (1991-1999) in many roles, including serving as the Director of the Division of Drug, Marketing, Advertising & Communications and the FDA’s National Health Fraud Coordinator. In 2018, Ms. Baylor-Henry joined the Board of Directors of scPharmaceuticals, a publicly-held company focused on developing technologies that enable subcutaneous administration of therapies and in 2021 she stepped down from the Board of Directors of PolarityTE, a publicly- held regenerative medicine company. She joined the Board of Directors of Paratek Pharmaceuticals, a publicly-held company focused on solutions for patients with infectious diseases, which was acquired by private equity in 2023. In March, 2022, she joined the Board of Directors of Lantheus Holdings, LLC, an innovative diagnostics and targeted therapeutics company. Ms. Baylor-Henry received her pharmacy degree from Howard University’s College of Pharmacy and a law degree from Catholic University’s Columbus School of Law. The Company believes Ms. Baylor-Henry is qualified to serve as Director and Regulatory and Compliance Committee Chairperson because of her extensive experience in global and regulatory management and compliance. Wendy Levine, age 51, Director, has over 25 years of healthcare marketing and advertising experience across the pharmaceutical, biotech, medical device and vaccine sectors. She is currently Group President and head of the advertising business at 21GRAMS, part of Real Chemistry, a global health innovation company that she founded with her partners in 2018. From 2003 to 2007, Ms. Levine worked at Johnson & Johnson, where she served as Group Product Director in the Specialty Pharmaceuticals Business Unit and then as Director, Stakeholder Marketing in the Medical Device Business Unit. From 2007 to 2009, Ms. Levine held the position of Senior Director of Marketing for the influenza portfolio at Novartis Vaccines. From 2009 to 2014, a love for advertising brought her to the agency world, where she rose through the ranks within account management at The Bloc. From 2014 to 2015, Ms. Levine held the role of EVP, Managing Director at McCann Health. From 2015 to 2017, she worked as Director of Client Services at GSW. Ms. Levine received her bachelor’s degree in interdisciplinary studies (economics and Western European culture) from the University of Pittsburgh and a master’s degree in education from Beaver College (Arcadia University). The Company believes Ms. Levine is qualified to serve as Director because of her extensive experience in marketing and advertising.
The Decision-Making Process
The Decision-Making Process The Role of the Compensation Committee. The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of independent, non-employee members of the Board. The Compensation Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’s executive compensation program throughout the year. Details of the Compensation Committee’s authority and responsibilities are specified in its charter, which may be accessed at apyxmedical.com. The Compensation Committee makes all final compensation and equity award decisions regarding our NEOs, except for the CEO, whose compensation is determined by the independent members of the full Board, based upon recommendations of the Compensation Committee. The Role of Management. Members of our management team attend regular meetings where executive compensation, Company and individual performance, and competitive compensation levels and practices are discussed and evaluated. Only the Compensation Committee members are allowed to vote on decisions regarding NEO compensation. The CEO reviews his recommendations pertaining to other executives (non-NEO) pay with the Compensation Committee providing transparency and oversight. Decisions on non-NEO pay are made by the CEO. The CEO does not participate in the deliberations of the Compensation Committee regarding his own compensation. Independent members of the Board make all final determinations regarding CEO compensation. The Role of the Independent Consultant. The Compensation Committee engages an independent compensation consultant to provide expertise on competitive pay practices, program design, and an objective assessment of any inherent risks of any programs. Pursuant to authority granted to it under its charter, the Compensation Committee has hired Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its independent consultant. Pearl Meyer reports directly to the Compensation Committee and does not provide any additional services to management. The Compensation Committee has conducted an independence assessment of Pearl Meyer in accordance with SEC rules. The Role of Peer Group Companies. The Compensation Committee strives to set a competitive level of total compensation for each NEO as compared with executive officers in similar positions at comparable companies, which we define as our compensation peer group. The Compensation Committee looks to its independent compensation consultant to provide and analyze competitive market data for each NEO, comparing each of their individual components of compensation and total compensation to market. In addition to the peer group, Pearl Meyer may reference industry-specific, size-adjusted market survey data where appropriate. We continue to consult with Pearl Meyer on our compensation strategy on an ongoing basis.
Performance Bonus
Performance Bonus The performance-based cash incentive bonus is designed to provide an opportunity for our senior executives, including our NEOs, to earn an annual incentive, paid in cash, based on the achievement of certain financial targets and/or strategic priorities. An executive’s incentive target is a percentage of their base salary. The Compensation Committee assessed our performance against certain financial metrics during 2023 with payouts measured on a scale of zero to 125% of target. The table below discloses the annual incentive targets for each NEO for 2023:
Performance Bonus
| Name | 2023 Base Salary ($) | Bonus Target (% of Base Salary) | Bonus at Target ($) | | Charles D. Goodwin | $482,500 | 85% | $410,125 | | Moshe Citronowicz | $311,500 | 30% | $93,450 | | Todd Hornsby | $368,000 | 55% | $202,400 | | Matthew Hill(1) | $32,692 | 50% | $16,346 | | Tara Semb(1) | $320,917 | 50% | $160,459 |
Performance Bonus
(1) Prorated based on time employed by the Company. In 2023, we used Total Revenue, Operating Income (Loss) and Cash and Cash Equivalents as the financial performance metrics for determining annual performance bonuses because we believe it is important to focus on driving our top line revenue growth, while focusing on continued improvements to our gross product margins and efficiently investing in our operations to drive towards long-term profitability. This ultimately results in our ability to maintain acceptable levels of cash burn, setting a path to potentially generating positive cash flow through our overall business performance. 2023 Annual Incentive Plan Payouts. Based on the actual financial performance results, the funding for performance bonuses was set at 74.7% of each NEO’s applicable target. The Committee retains discretion to further adjust the award upward or downward based on its assessment of individual performance. The following table lists the actual awards earned by the NEOs in 2023:
Performance Bonus
| Name | Bonus Target (% of Base Salary) | Bonus Target ($) | Actual Award Payout ($) | | Charles D. Goodwin | 85% | $410,125 | $306,363 | | Moshe Citronowicz | 30% | $93,450 | $69,807 | | Todd Hornsby | 55% | $202,400 | $151,193 | | Matthew Hill | 50% | $16,346 | $12,211 | | Tara Semb | 50% | $160,459 | $119,863 |
Equity Compensation
Equity Compensation We believe that equity ownership in our Company is important to provide our Executive Officers and key employees with long-term incentives to better align interests of executives with the interests of stockholders and build value for our stockholders. In addition, equity compensation is designed to attract and retain the executive management team and other key employees throughout the organization. In January 2023, the Board approved equity awards to the NEOs. These equity awards were granted using incentive stock options to the extent permitted by the IRS. Stock options are intended to align the interests of award recipients with those of stockholders, since options deliver value only if Apyx’s stock price appreciates after they are granted. This characteristic ensures that the Executive Officers and key employees have a meaningful portion of their compensation tied to future stock price increases and rewards management for long-term strategic planning through the resulting enhancement of the stock price. The 2023 awards for each NEO were as follows:
Equity Compensation
| Name | Stock Options (# of options) | | Charles D. Goodwin | 243,000 | | Moshe Citronowicz | 72,000 | | Todd Hornsby | 100,000 | | Matthew Hill(1) | — | | Tara Semb | 96,000 |
Equity Compensation
(1) Executive's employment agreement provides for 150,000 stock options to be granted in January 2024 with 50% vesting on December 4, 2024 and 50% vesting on December 4, 2025. The stock options vest one-third per year on the anniversary date of the grant over a 3-year period, expire on the 10th anniversary of the grant date, and have an exercise price of $2.50 per share. Stock options are subject to the award recipient’s continued employment through each vesting date. Stock option awards to Executive Officers and key employees are entirely discretionary. The CEO recommends to the Compensation Committee awards for individuals other than himself. The Compensation Committee considers this recommendation along with the prior contribution of these individuals and their expected future contributions to our growth. The Committee formulates and presents its recommended allocation of stock option awards to the Board of Directors for approval. The Compensation Committee then would make an independent determination on CEO stock option awards, again formulating and presenting its recommendation for the allocation of stock option awards to the Board of Directors for approval. The Board of Directors approves, rejects, or, if necessary, modifies the Committee’s recommendations.
Tax and Accounting Considerations
Tax and Accounting Considerations We regularly consider the various tax and accounting implications of our compensation plans. Section 162(m) of the Code generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the CEO and the other “covered employees” as defined in the rule. Under the tax laws in effect before 2018, compensation that qualified as “performance-based compensation” under Section 162(m) of the Code was deductible without regard to this limitation. Effective for tax years beginning after December 31, 2017, the Tax Cuts and Jobs Act of 2017 generally eliminated the performance-based exemption, subject to a special rule that grandfathers certain awards and agreements that were in effect on November 2, 2017. While considering tax deductibility as only one of several considerations in determining compensation, the Committee believes that the tax deduction limitation should not compromise its ability to structure compensation programs that provide benefits to the Company that outweigh the potential benefit of a tax deduction and, therefore, may approve compensation that is not deductible for tax purposes. Accounting considerations also play an important role in the design of our executive compensation program. Accounting rules, such as FASB ASC Topic 718-10-10, Share-Based Payment, require us to expense the cost of our stock option grants which reduces the amount of our reported profits. Because of option expensing and the impact of dilution on our stockholders, we pay close attention to the number and value of the shares underlying stock options we grant.
Compensation of Executive Officers
| Name and Principal Position | Year | Salary | Bonus ($) | Stock Awards ($) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation Earnings ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) (2) | Total ($) | | Charles D. Goodwin | 2023 | $482,500 | $306,363 | $— | $448,335 | $— | $— | $24,272 | $1,261,470 | | CEO and Director | 2022 | $482,500 | $— | $— | $1,664,793 | $— | $— | $22,943 | $2,170,236 | | Moshe Citronowicz | 2023 | $311,500 | $69,807 | $— | $132,840 | $— | $— | $24,162 | $538,309 | | Senior Vice President | 2022 | $311,500 | $— | $— | $493,272 | $— | $— | $21,444 | $826,216 | | Todd Hornsby | 2023 | $368,000 | $151,193 | $— | $184,500 | $— | $— | $42,576 | $746,269 | | Executive Vice President | 2022 | $368,000 | $— | $— | $685,100 | $— | $— | $26,778 | $1,079,878 | | Mathew Hill | 2023 | $32,646 | $12,211 | $— | $— | $— | $— | $— | $44,857 | | CFO, Treasurer and Secretary | 2022 | $— | $— | $— | $— | $— | $— | $— | $— | | Tara Semb | 2023 | $320,917 | $119,863 | $— | $177,120 | $— | $— | $361,701 | $979,601 | | CFO, Treasurer and Secretary | 2022 | $342,500 | $— | $— | $657,696 | $— | $— | $17,553 | $1,017,749 |
Pay vs Performance
Pay vs Performance This section is included to comply with the provisions of Item 402(v) of Regulation S-K. For a more comprehensive analysis of our compensation philosophy please see the General Compensation Philosophy section of this filing. In the table and footnotes below, “PEO” refers to our principal executive officer, Charles D. Goodwin.
Pay vs Performance
| Pay versus performance table | | | | | | | | (a) | (b) | (c) | (d) | (e) | (f) | (h) | | Year | Summary compensation table total for PEO | Compensation actually paid to PEO | Average summary compensation table total for non-PEO NEOs (1) | Average compensation actually paid to non-PEO NEOs (1) | Value of initial fixed $100 investment based on Total stockholder return | Net income (loss) (in thousands) | | 2023 | $1,261,470 | $1,413,487 | $769,679 | $734,407 | $36 | $(18,713) | | 2022 | $2,170,236 | $(653,639) | $974,614 | $(55,170) | $33 | $(23,184) | | 2021 | $1,594,394 | $3,153,022 | $776,134 | $1,383,313 | $178 | $(15,172) |
Pay vs Performance
(1)Reflects average compensation amounts for our non-PEO named executive officers for the respective years shown. Moshe Citronowicz, Todd Hornsby, Matthew Hill and Tara Semb are the non-PEO named executive officers for the 2023 year presented. Moshe Citronowicz, Todd Hornsby and Tara Semb are the non-PEO named executive officers for the 2022 and 2021 years presented. (2)The following table summarizes the adjustments from summary table total compensation to compensation actually paid:
Pay vs Performance
| | PEO | | | Non-PEO NEOs | | | | | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | | Summary compensation table total compensation | $1,261,470 | $2,170,236 | $1,594,394 | $769,679 | $974,614 | $776,134 | | Grant date fair value of awards granted during the year | (448,335) | (1,664,793) | (701,420) | (164,820) | (612,023) | (257,861) | | Fair value of awards granted during the year that are outstanding and unvested as of year-end | 493,290 | 255,114 | 1,001,366 | 116,387 | 93,787 | 368,129 | | Change in fair value from prior year-end to current year-end of awards granted in prior years that were outstanding and unvested as of year-end | 65,731 | (1,156,271) | 1,034,657 | 15,509 | (425,076) | 356,305 | | Change in fair value from prior year-end to vesting date of awards granted in prior years that vested during the year | 41,331 | (257,925) | 224,025 | 660 | (86,472) | 140,606 | | Fair value of awards granted during the year that vested during the year | — | — | — | 8,192 | — | — | | Prior year-end fair value of awards granted in prior years that were forfeited during the year | — | — | — | (11,200) | — | — | | Compensation actually paid | $1,413,487 | $(653,639) | $3,153,022 | $734,407 | $(55,170) | $1,383,313 |
Pay vs Performance
Stock option grant date fair values are calculated based on the Black-Scholes option pricing model as of the grant date. Adjustments have been made using stock option fair values as of each measurement date using the stock price as of the measurement date and updated assumptions (i.e., term, volatility, risk free rates) as of the measurement date. The change in stock price was the primary driver for the adjustments in the table above. The following table presents a comparison of our actual compensation paid to NEOs versus our total stockholder return, net losses:
Pay vs Performance
| (in thousands except per share data) | 2023 | 2022 | 2023 vs 2022 Change | 2021 | 2022 vs 2021 Change | | Total stockholder return (change in stock price) | $2.62 | $2.34 | 12.0% | $12.82 | -81.7% | | Net loss attributable to stockholders | $(18,713) | $(23,184) | 19.3% | $(15,172) | -52.8% | | Actual compensation paid to NEOs | $3,617 | $(819) | 541.6% | $7,303 | -111.2% |
Employment Agreements and Potential Payments Upon Termination or Change in Control
Employment Agreements and Potential Payments Upon Termination or Change in Control At December 31, 2023, we were obligated under four employment agreements.
Employment Agreements and Potential Payments Upon Termination or Change in Control
| Name | Contract Expiration Date | | Charles D. Goodwin | N/A(1) | | Matthew Hill | N/A(1) | | Todd Hornsby | N/A(1) | | Moshe Citronowicz | December 31, 2024 |
Employment Agreements and Potential Payments Upon Termination or Change in Control
(1)Employment contracts provide for the Executives to remain employed by the Company until such time as their employment is terminated pursuant to the terms of their Employment Agreement.
Outstanding Equity Awards
Outstanding Equity Awards The following table presents information with respect to each unexercised stock option held by our Executive Officers as of December 31, 2023:
Outstanding Equity Awards
| Name | # of Securities Underlying Unexercised Options (# Exercisable) | # of Securities Underlying Unexercised Options (# Unexercisable) | Weighted Average Option Exercise Price ($/Sh) | Option Expiration Range After Grant Date | | | | Charles D. Goodwin | 1,641,000 | 445,500 | $5.39 | 12/15/2027 | – | 1/11/2033 | | Moshe Citronowicz | 299,000 | 132,000 | $6.39 | 3/16/2026 | – | 1/11/2033 | | Todd Hornsby | 407,668 | 183,332 | $6.33 | 8/27/2024 | – | 1/11/2033 | | Matthew Hill | — | — | N/A | N/A | | | | Tara Semb | 305,000 | — | $8.28 | 12/4/2024 | | |
Outstanding Equity Awards
In July 2012, the Company’s stockholders approved the 2012 Share Incentive Plan covering a total of 750,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2023, options are no longer able to be granted from this plan. In July 2015, the Company’s stockholders approved the 2015 Executive and Employee Stock Option Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2023, approximately 70,000 are available to be issued in this plan. In August 2017, the Company’s stockholders approved the 2017 Executive and Employee Stock Option Plan covering a total of 3,000,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2023, approximately 10,000 are available to be issued in this plan. In August 2019, the Company’s stockholders approved the 2019 Share Incentive Plan covering a total of 2,000,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2023, approximately 360,000 are available to be issued in this plan. In August 2021, the Company’s stockholders approved the 2021 Share Incentive Plan covering a total of 1,375,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2023, approximately 250,000 are available to be issued in this plan. In August 2023, the Company’s stockholders approved the 2023 Share Incentive Plan covering a total of 1,600,000 shares of common stock issuable upon exercise of options to be granted under the plan. At December 31, 2023, all 1,600,000 are available to be issued in this plan.
Compensation of Non-Employee Directors
Compensation of Non-Employee Directors The following is a table showing the director compensation for the year ended December 31, 2023:
Compensation of Non-Employee Directors
| Name (a) | Fees Earned Or Paid in Cash ($) (b) | Stock Awards ($) (c) | Option Awards * ($) (d) (1) | Non-Equity Incentive Plan Compensation ($) (e) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) (g) | Total ($) (h) | | Andrew Makrides** | $70,000 | $— | $54,060 | $— | $— | $— | $124,060 | | Lawrence J. Waldman | 108,500 | — | 54,060 | — | — | — | 162,560 | | Michael Geraghty | 60,000 | — | 54,060 | — | — | — | 114,060 | | John Andres | 90,000 | — | 54,060 | — | — | — | 144,060 | | Craig Swandal | 52,500 | — | 54,060 | — | — | — | 106,560 | | Minnie Baylor-Henry | 62,500 | — | 54,060 | — | — | — | 116,560 | | Wendy Levine | 50,000 | — | 54,060 | — | — | — | 104,060 |
Compensation of Non-Employee Directors
* These columns represent the grant date fair value of the awards as calculated in accordance with FASB ASC 718 (Stock Compensation). ** Andrew Makrides announced his retirement as the Chairperson of the Board and as a director on May 7, 2024. On March 15, 2022, the Board approved the following compensation arrangement for the Corporation’s non-employee directors: