Blueprint
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
 
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.   )
 
Filed by the Registrant  [X]
 
Filed by a party other than the Registrant  [  ]
 
Check the appropriate box:
[   ]
Preliminary Proxy Statement
[   ]
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X]
Definitive Proxy Statement
[   ]
Definitive Additional Materials
[   ]
Soliciting Material under §240.14a-12
 
CHROMADEX CORPORATION
(Name of Registrant as Specified In Its Charter)
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
[X]
No fee required.
[  ]
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:

___________________________________________________________
(2)
Aggregate number of securities to which transaction applies:
 
___________________________________________________________
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
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(4)
Proposed maximum aggregate value of transaction:
 
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(5)
Total fee paid:
 
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[  ]
Fee paid previously with preliminary materials.
[  ]
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
 
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(2)
Form, Schedule or Registration Statement No.:
 
___________________________________________________________
(3)
Filing Party:
 
___________________________________________________________
(4)
Date Filed:
 
___________________________________________________________
 
 

 
 
 
 
ChromaDex Corporation
10005 Muirlands Blvd, Suite G
Irvine, CA 92618
 
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 2018
 
April 27, 2018
 
To the stockholders of ChromaDex Corporation:
 
You are cordially invited to attend the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) of ChromaDex Corporation, a Delaware corporation (the “Company”), which will be held on June 22, 2018, at 2:00 p.m. local time, at the Company’s office located at 10900 Wilshire Blvd, Suite 650, Los Angeles, CA 90024, for the following purposes, as more fully described in the accompanying proxy statement (the “Proxy Statement”):
 
(1)
To elect the eight nominees for director named herein;
 
(2)
To approve an amendment to the 2017 Equity Incentive Plan to, among other things, increase the number of authorized shares for issuance under such plan by 6 million shares;
 
(3)
To ratify the appointment of Marcum LLP as the Company's independent registered public accounting firm for the year ending December 31, 2018;
 
(4)
To approve, on an advisory basis, the compensation of the Company's named executive officers, as disclosed in this Proxy Statement; and
 
(5)
To transact other business that may properly come before the meeting and any postponement(s) or adjournment(s) thereof.
 
Pursuant to the bylaws of the Company, the Board of Directors has fixed the close of business on April 23, 2018 as the record date (the “Record Date”) for determination of stockholders entitled to notice and to vote at the Annual Meeting and any adjournment thereof. Holders of the Company’s Common Stock are entitled to vote at the Annual Meeting. 
 
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide our beneficial owners and stockholders of record access to our proxy materials over the Internet. Beneficial owners are stockholders whose shares are held in the name of a broker, bank or other agent (i.e., in “street name”). Accordingly, a Notice of Internet Availability of Proxy Materials (the “Notice”) will be mailed on or about May 2, 2018 to our beneficial owners and stockholders of record who owned our Common Stock at the close of business on April 23, 2018. Beneficial owners and stockholders of record will have the ability to access the proxy materials on a website referred to in the Notice or request a printed set of the proxy materials be sent to them by following the instructions in the Notice. Beneficial owners and stockholders of record who have previously requested to receive paper copies of our proxy materials will receive paper copies of the proxy materials instead of a Notice.
 
 
 
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Stephen Allen
Chairman of the Board
 
You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the proxy mailed to you, or vote over the telephone or the internet as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) has been provided for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
 
 
 
 
 
ChromaDex Corporation
10005 Muirlands Blvd, Suite G
Irvine, CA 92618
 
PROXY STATEMENT
FOR
2018 ANNUAL MEETING OF STOCKHOLDERS
JUNE 22, 2018
 
The enclosed proxy is solicited by the Board of Directors (“Board of Directors” or “Board”) of ChromaDex Corporation (the “Company”), in connection with the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) of the Company, to be held on June 22, 2018, at 2:00 p.m. local time, at the Company’s office located at 10900 Wilshire Blvd, Suite 650, Los Angeles, CA 90024.
 
At the Annual Meeting, you will be asked to consider and vote upon the following matters:
 
(1)
To elect the eight nominees for director named herein;
 
(2)
To approve an amendment to the 2017 Equity Incentive Plan to, among other things, increase the number of authorized shares for issuance under such plan by 6 million shares;
 
(3)
To ratify the appointment of Marcum LLP as the Company's independent registered public accounting firm for the year ending December 31, 2018;
 
(4)
To approve, on an advisory basis, the compensation of the Company's named executive officers, as disclosed in this Proxy Statement; and
 
(5)
To transact other business that may properly come before the meeting and any postponement(s) or adjournment(s) thereof.
 
The Board of Directors has fixed the close of business on April 23, 2018 as the record date (the “Record Date”) for determining stockholders entitled to notice of and to vote at the Annual Meeting and any adjournment thereof.
 
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide our beneficial owners and stockholders of record access to our proxy materials over the Internet. Beneficial owners are stockholders whose shares are held in the name of a broker, bank or other agent (i.e., in “street name”). Accordingly, a Notice of Internet Availability of Proxy Materials (the “Notice”) will be mailed on or about May 2, 2018 to our beneficial owners and stockholders of record who owned our Common Stock at the close of business on April 23, 2018. Beneficial owners and stockholders of record will have the ability to access the proxy materials on a website referred to in the Notice or request a printed set of the proxy materials be sent to them by following the instructions in the Notice. Beneficial owners and stockholders of record who have previously requested to receive paper copies of our proxy materials will receive paper copies of the proxy materials instead of a Notice.
 
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON JUNE 22, 2018: THE NOTICE, PROXY STATEMENT, PROXY CARD AND THE ANNUAL REPORT ARE AVAILABLE AT WWW.CHROMADEX.COM, INVESTOR RELATIONS SECTION.
 
 
 
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QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
 
Why did I receive in the mail a Notice of Internet Availability of Proxy Materials this year instead of a full set of Proxy Materials?
 
We are pleased to take advantage of the SEC rule that allows companies to furnish their proxy materials over the Internet. Accordingly, we have sent to our beneficial owners and stockholders of record a Notice of Internet Availability of Proxy Materials. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. Our stockholders may request to receive proxy materials in printed form by mail or electronically on an ongoing basis. A stockholder’s election to receive proxy materials by mail or electronically by email will remain in effect until the stockholder terminates its election.
 
We intend to mail the Notice on or about May 2, 2018 to all stockholders of record entitled to vote at the annual meeting.
 
Will I receive any other proxy materials by mail?
 
We may send you a proxy card, along with a second Notice, on or after May 14, 2018. 
 
How do I attend the annual meeting?
 
The meeting will be held on Friday, June 22, 2018 at 2:00 p.m. local time at the Company’s office located at 10900 Wilshire Blvd, Suite 650, Los Angeles, CA 90024. Directions to the annual meeting may be found at www.chromadex.com. Information on how to vote in person at the annual meeting is discussed below. 
  
Who can vote at the annual meeting?
 
Only stockholders of record at the close of business on April 23, 2018 will be entitled to vote at the annual meeting. On this record date, there were 54,866,512 shares of common stock outstanding and entitled to vote.
 
Stockholder of Record: Shares Registered in Your Name
 
If on April 23, 2018 your shares were registered directly in your name with the Company’s transfer agent, Equity Stock Transfer, LLC, then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted.
 
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
 
If on April 23, 2018 your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.
 
What am I voting on?
 
There are four matters scheduled for a vote:
 
To elect the eight nominees for director named herein;
To approve an amendment of the 2017 Equity Incentive Plan to, among other things, increase the number of authorized shares for issuance under such plan by 6 million shares;
To ratify the appointment of Marcum LLP as the Company's independent registered public accounting firm for the year ending December 31, 2018;
To approve, on an advisory basis, the compensation of the Company's named executive officers, as disclosed in this Proxy Statement.
 
 
 
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What if another matter is properly brought before the meeting?
 
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
 
Who May Attend the Meeting?
 
Record holders and beneficial owners may attend the Annual Meeting.  If your shares are held in street name, you will need to bring a copy of a brokerage statement or other documentation reflecting your stock ownership as of the Record Date.
 
How Do I Vote?
 
You may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote “For” or “Against” or abstain from voting.
 
The procedures for voting are fairly simple:
 
Stockholder of Record: Shares Registered in Your Name
 
If you are a stockholder of record, you may vote in person at the annual meeting, vote by proxy over the telephone, vote by proxy through the internet or vote by proxy using a proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already voted by proxy.
 
To vote in person, come to the annual meeting and we will give you a ballot when you arrive.
To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered and return it promptly in the envelope provided. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct.
To vote over the telephone, dial toll-free 1-855-557-4647 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice. Your telephone vote must be received by 6:00 p.m., Eastern Time on June 21, 2018 to be counted.
 
To vote through the internet, go to http://www.equitystock.com to complete an electronic proxy card. You will be asked to provide the company number and control number from the Notice. Your internet vote must be received by 6:00 p.m., Eastern Time on June 21, 2018 to be counted.
 
Beneficial Owner: Shares Registered in the Name of Broker or Bank
 
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting instructions from that organization rather than from the Company. Simply follow the voting instructions in the Notice to ensure that your vote is counted. To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
 
How many votes do I have?
 
On each matter to be voted upon, you have one vote for each share of common stock you own as of April 23, 2018.
 
 
 
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What happens if I do not vote?
 
Stockholder of Record: Shares Registered in Your Name
 
If you are a stockholder of record and do not vote by completing your proxy card, by telephone, through the internet or in person at the annual meeting, your shares will not be voted.
 
Beneficial Owner: Shares Registered in the Name of Broker or Bank
 
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (“NYSE”) deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposals 1, 2, or 4 without your instructions, but may vote your shares on Proposal 3 even in the absence of your instruction.
 
What if I return a proxy card or otherwise vote but do not make specific choices?
 
If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” the election of all eight nominees for director, and “For” the proposals to approve an amendment of the 2017 Equity Incentive Plan to, among other things, increase the number of authorized shares for issuance under such plan by 6 million shares, to ratify the appointment of Marcum LLP as the Company's independent registered public accounting firm for the year ending December 31, 2018 and to approve, on an advisory basis, the compensation of the Company's named executive officers. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
 
Who is paying for this proxy solicitation?
 
We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
 
What does it mean if I receive more than one Notice?
 
If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.
 
Can I change my vote after submitting my proxy?
 
Stockholder of Record: Shares Registered in Your Name
 
Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
 
You may submit another properly completed proxy card with a later date. 
You may send a timely written notice that you are revoking your proxy to the Company’s Secretary at 10900 Wilshire Blvd. Suite 650, Los Angeles, CA 90024. 
You may attend the annual meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.
 
Your most current proxy card or telephone or internet proxy is the one that is counted.
 
Beneficial Owner: Shares Registered in the Name of Broker or Bank
 
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
 
 
 
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When are stockholder proposals and director nominations due for next year’s Annual Meeting?
 
To be considered for inclusion in the Company’s proxy materials for next year’s annual meeting, your proposal must be submitted in writing by January 2, 2019, to ChromaDex Corporation, Attn: Secretary, at 10900 Wilshire Blvd. Suite 650, Los Angeles, CA 90024. If you wish to submit a proposal (including a director nomination) at the annual meeting that is not to be included in the Company’s proxy materials for next year’s annual meeting, such proposal must be received no earlier than the close of business on March 24, 2019 nor later than the close of business on April 23, 2019. You are also advised to review the Company’s Bylaws, which contain additional requirements relating to advance notice of stockholder proposals and director nominations.
 
How are votes counted?
 
Votes will be counted by the inspector of election appointed for the meeting, who will separately count, for the proposal to elect directors, votes “For,” “Withhold” and broker non-votes; and, with respect to other proposals, votes “For” and “Against,” abstentions and, if applicable, broker non-votes. Abstentions will be counted towards the vote total for each of Proposals 2, 3 and 4 and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
 
What are “broker non-votes”?
 
As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed by the NYSE to be “non-routine,” the broker or nominee cannot vote the shares. These unvoted shares are counted as “broker non-votes.”
 
How Many Votes Are Needed for Each Proposal to Pass?
 
Proposal
 
Vote Required for Approval
 
Effect of Abstention
 
Effect of Broker Non-Vote
 
 
 
 
 
 
 
Election of eight (8) members to our Board of Directors
 
 
Plurality of the votes cast (the eight directors receiving the most “For” votes)
 
 
None.
 
None.
Approval of an amendment to the 2017 Equity Incentive Plan to, among other things, increase the number of authorized shares for issuance under such plan by 6 million shares
 
 
“For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter
 
 
Against.
 
None.
Ratification of the Appointment of Marcum LLP as our Independent Registered Public Accounting Firm for our Fiscal Year Ending December 31, 2018
 
 
“For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter
 
 
Against.
 
None.
Approval, on an advisory basis, the compensation of the Company's named executive officers
 
“For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote on the matter
 
 
Against.
 
None.
What Constitutes a Quorum?
 
To carry on business at the Annual Meeting, we must have a quorum. A quorum is present when a majority of the shares entitled to vote, as of the Record Date, are represented in person or by proxy. Thus, holders representing at least 27,433,257 votes must be represented in person or by proxy to have a quorum. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. Shares owned by us are not considered outstanding or considered to be present at the Annual Meeting. If there is not a quorum at the Annual Meeting, our stockholders may adjourn the meeting.
 
How can I find out the Results of the Voting at the Annual Meeting?
 
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K, which we will file within four business days of the meeting.
 
 
 
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PROPOSAL 1:
ELECTION OF DIRECTORS
 
Each director to be elected at the Annual Meeting will serve until the next annual meeting of stockholders and until his or her successor is elected, or, if sooner, until such director’s death, resignation or removal. The Board of Directors presently has nine members, but Stephen Allen has elected not to stand for re-election at the Annual Meeting, and the authorized size of the Board of Directors will be reduced to eight members immediately following the Annual Meeting. Unless otherwise instructed, the persons named in the accompanying proxy intend to vote the shares represented by the Proxy for the election of the eight nominees listed below. Although it is not contemplated that any nominee will decline or be unable to serve as a director, in such event, proxies will be voted by the proxy holder for such other persons as may be designated by the Board of Directors, unless the Board of Directors reduces the number of Directors to be elected. Election of a director to the Board of Directors requires a plurality of the votes cast at the Annual Meeting.
 
The current Board of Directors consists of Frank Jaksch, Jr., Stephen Block, Stephen Allen, Jeff Baxter, Robert Fried, Kurt Gustafson, Steven Rubin, Wendy Yu and Tony Lau. The Board of Directors has determined that a majority of its members, being Stephen Allen, Stephen Block, Jeff Baxter, Kurt Gustafson, Steven Rubin, Wendy Yu and Tony Lau are independent directors within the meaning of the applicable NASDAQ rules. Stephen Allen has elected not to stand for re-election at the Annual Meeting.
  
The following table sets forth the director nominees. It also provides certain information about the nominees as of the Record Date.
 
Nominees for Election to Board of Directors
 
 
 
 
 
Director
Name
 
Age
 
Since
Frank Jaksch, Jr.
 
49
 
2000
Stephen A. Block
 
73
 
2007
Jeff Baxter
 
56
 
2015
Robert Fried
 
58
 
2015
Kurt Gustafson
 
50
 
2016
Steven Rubin
 
57
 
2017
Wendy Yu
 
42
 
2017
Tony Lau
 
29
 
2017
 
Frank L. Jaksch Jr., 49 is a co-founder of the Company and has served as a member of Board since February 2000. Mr. Jaksch served as Chairman of the Board from May 2010 to October 2011 and was its Co-Chairman from February 2000 to May 2010. Mr. Jaksch currently serves as the Chief Executive Officer. In April 2018, the Board of Directors approved a future transition of Mr. Jaksch whereby Mr. Jaksch will transition from his role as Chief Executive Officer, effective as of the conclusion of the Annual Meeting, to serve as Executive Chairman of the Company, contingent and effective upon Mr. Jaksch’s re-election at the Annual Meeting. Mr. Jaksch brought the Company public in June 2008, listing the Company on NASDAQ in April 2016. Under his leadership, ChromaDex has focused on developing a comprehensive natural products chemistry business, expanded into international markets and built an impressive roster of Fortune 500 customers. Prior to founding ChromaDex, Mr. Jaksch served as the International Subsidiaries Manager of Phenomenex, an analytical chemistry consumables company, where he managed the company’s international subsidiary and international business development divisions. While at Phenomenex, Mr. Jaksch established strategic business offices in Australia, England, Germany and New Zealand. His broad expertise includes analytical chemistry, biochemistry, processes and product development for natural products, legal and regulatory practices, agriculture and botany. Additionally, he has more than 20 years of management, sales, marketing and business development experience. Mr. Jaksch holds a Bachelor of Science degree in Chemistry and Biology from Valparaiso University in Valparaiso, Indiana. He is a member of the American Chemistry Society, the American Herbal Products Association, the American Botanical Council and the NSF Joint Committee for Dietary Supplements. He also serves on the board of directors for the Natural Products Association (NPA), where he also serves as the Treasurer. Mr. Jaksch was the co-editor of Current Opinion in Biotechnology: Analytical Biotechnology in February 2014, which highlighted new technologies for quantitative analysis of natural products. He also co-authored “The Handbook of Analytical Methods for Dietary Supplements” with Drs. Mark Roman and Mingfu Wang, which was published by the American Pharmacists Association in June 2005. The Nominating and Corporate Governance Committee believes that Mr. Jaksch’s years of experience working in chemistry-related industries, his extensive sales and marketing background, and his knowledge of international business bring an understanding of the industries in which the Company operates as well as scientific expertise to the Board.
 
 
 
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Stephen A. Block, 73, has been a director of the Company since October 2007 and Chair of the Compensation Committee and a member of the Audit Committee since October 2007. From May 2010 to October 2011, Mr. Block served as Lead Independent Director to the Board. Mr. Block is also a director and chair of the nominating and corporate governance committee and a member of the audit committee of Senomyx, Inc. (NASDAQ:SNMX), where he has served on the board of directors since 2005. He also is, and since September 2015 has been, a director of myLAB Box, Inc., a privately held company. Until December 2011, he also served as the chairman of the board of directors of Blue Pacific Flavors and Fragrances, Inc., and, until March 2012, as a director of Allylix, Inc. He served on the boards of directors of these privately held companies since 2008, and 2007, respectively. Mr. Block retired as senior vice president, general counsel and secretary of International Flavors and Fragrances Inc., a leading creator, manufacturer and seller of flavors and fragrances (IFF) in December 2003, having been IFF’s chief legal officer since 1992. During his eleven years at IFF he also led the company’s Regulatory Affairs Department. Prior to 1992, Mr. Block served as senior vice president, general counsel, secretary and director of GAF Corporation, a company specializing in specialty chemicals and building materials, and its publicly traded subsidiary International Specialty Products Inc., held various management positions with Celanese Corporation, a company specializing in synthetic fibers, chemicals and plastics, and practiced law with the New York firm of Stroock & Stroock & Lavan. Mr. Block currently serves as an industry consultant and as a Venture Partner of K5 Venture Partners, LLC, an Orange County early stage venture firm. He is also a Managing Director of K5 Venture Partner, LLC’s affiliated accelerator K5 Launch and a member of the executive committee of the Orange County network of Tech Coast Angels, a leading investing group. Mr. Block received his B.A. cum laude in Russian Studies from Yale University and his law degree from Harvard Law School. The Nominating and Corporate Governance Committee believes that Mr. Block’s experience as the chief legal officer of one of the world’s leading flavor and fragrance companies contributes to the Board’s understanding of the flavor industry, including the Board’s perspective on the strategic interests of potential collaborators, the regulation of the industry, and the viability of various commercial strategies. In addition, Mr. Block’s experience in the area of corporate governance and public company financial reporting is especially valuable to the Board in his capacity as a member of both the Audit Committee and the Compensation Committee.
 
Jeff Baxter, 56, has served as a director of the Company since April 2015 and has served as a member of the Audit Committee and the Nominating and Corporate Governance Committee since April 2015. Mr. Baxter has served as President and CEO and a Director of VBI Vaccines, Inc. (NASDAQ:VBIV) since 2009. Previously, he was managing partner for the venture capital firm, The Column Group, where he played a pivotal role in the creation of several biotech companies including Immune Design Corp., a vaccine company based on the Lentiviral vector platform and TLR adjuvant technologies. Until July of 2006, Mr. Baxter was SVP, R&D Finance and Operations, of GlaxoSmithKline (GSK). In his 19 years of pharma experience at GSK, he has held line management roles in R&D, commercial, manufacturing, Finance and The Office of the CEO. His most recent position in the global R&D organization included responsibility for finance, pipeline resource planning and allocation, business development deal structuring and SROne (GSK's in-house $125 million venture capital fund). He also chaired GSK's R&D Operating Board. Prior to GSK, he worked at Unilever and British American Tobacco. Mr. Baxter was educated at Thames Valley University and is a Fellow of the Chartered Institute of Management Accountants (FCMA). The Nominating and Corporate Governance Committee believes that Mr. Baxter’s past experience in the pharmaceutical industry bring financial expertise, industry knowledge, and research and development experience to the Board.
 
Robert Fried, 58, has served as a director of the Company since July 2015 and has served as a member of the Nominating and Corporate Governance Committee from July 2015 to March 2017. Mr. Fried was appointed President and Chief Strategy Officer of the Company in March 2017 (which Chief Strategy Officer title he held until March 2018) and also became its Chief Operating Officer in January 2018. In April 2018, the Board of Directors approved a future transition of Mr. Fried whereby Mr. Fried will transition from his role as President and Chief Operating Officer to serve as Chief Executive Officer of the Company, each effective as of the conclusion of the Annual Meeting. Mr. Fried served as Chairman of the Board of Directors of IDI, Inc. (formerly Tiger Media, Inc.), an information solutions provider focused on the data fusion market and formerly a Chinese advertising company prior to its merger with the parent company of Interactive Data, LLC, from 2011 until June 2015. From 2007 through 2009, he was the president, Chief Executive Officer and a director of Ideation Acquisition Corporation, a special purpose acquisition company. Mr. Fried is the founder and Chief Executive Officer of Feeln, a subscription streaming video service, which was acquired by Hallmark Cards Inc. in 2012. Since then, Mr. Fried manages digital businesses for Hallmark including Feeln, Hallmark e-cards, and Hallmark Print on Demand. Mr. Fried is also an Academy Award winning motion picture producer whose credits include Rudy, Collateral, Boondock Saints, So I Married an Axe Murderer, Godzilla, and numerous others. From December 1994 until June 1996, he was President and Chief Executive Officer of Savoy Pictures, a unit of Savoy Pictures Entertainment, Inc., which was sold in 1996 to Silver King Communications, which is now a part of InterActive Corp. Mr. Fried has also held several executive positions including Executive Vice President in charge of Production for Columbia Pictures, Director of Film Finance and Special Projects for Columbia Pictures, and Director of Business Development at Twentieth Century Fox. Mr. Fried holds an M.S. from Cornell University and an M.B.A. from the Columbia University Graduate School of Business. The Nominating and Corporate Governance Committee believes that Mr. Fried’s past experience as Chairman of the Board of Directors of another public company bring financial expertise and industry knowledge to the Board.
 
 
 
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Kurt A. Gustafson, 50, has been a director of the Company and Chair of the Audit Committee since October 2016 and a member of the Compensation Committee since March 2017. In April 2018, the Board of Directors appointed Mr. Gustafson as lead independent director of the Board of Directors, contingent and effective upon Mr. Gustafson’s re-election at the Annual Meeting. Mr. Gustafson has more than 25 years of diverse experience in corporate finance. He currently serves as chief financial officer, principal accounting officer and executive vice president of Spectrum Pharmaceuticals, Inc. (Nasdaq: SPPI). From 2009 to 2013, he served as the chief financial officer of Halozyme Therapeutics, Inc. (Nasdaq: HALO). From 1991 to 2009, Mr. Gustafson worked at Amgen (Nasdaq: AMGN), holding various financial roles as vice president finance, chief financial officer of Amgen International and treasurer. Prior to joining Amgen, he worked in public accounting as staff auditor at Laventhol & Horwath in Chicago. Mr. Gustafson is currently a member of the Board of Directors of Xencor, Inc. (Nasdaq: XNCR), a clinical-stage biopharmaceutical company focused on discovering and developing engineered monoclonal antibodies to treat severe and life-threatening diseases with unmet medical needs. Mr. Gustafson serves as Chair of Xencor’s Audit Committee. Mr. Gustafson holds a Bachelors of Arts degree in Accounting from North Park University in Chicago and a Masters in Business Administration from University of California, Los Angeles. The Nominating and Corporate Governance Committee believes that Mr. Gustafson’s past experience as chief financial officer of a public company and his extensive experience pharmaceutical industry qualify him to chair the Audit Committee and that Mr. Gustafson brings financial, merger and acquisition experience, and a background working with public marketplaces to the Board.
 
Steven D. Rubin, 57, has been a director of the Company and a member of the Nominating and Corporate Governance Committee since March 2017 and Chair of Nominating and Corporate Governance Committee since March 2018. Mr. Rubin has served as OPKO Health, Inc.’s (NASDAQ: OPK) Executive Vice President – Administration since May 2007 and as a director since February 2007. Mr. Rubin is a member of The Frost Group, LLC, a private investment firm. He has extensive experience as a practicing lawyer, and as general counsel and board member to multiple public companies. Mr. Rubin currently serves on the board of directors for the following companies: VBI Vaccines Inc. (NASDAQ:VBIV), a commercial-stage biopharmaceutical company developing a next generation of vaccines; Kidville, Inc. (OTCBB:KVIL), an operator of large, upscale facilities, catering to newborns through five-year-old children and their families and offers a wide range of developmental classes for newborns to five-year-olds; Non-Invasive Monitoring Systems, Inc. (OTCBB:NIMU), a medical device company; Cocrystal Pharma, Inc. (OTCBB:COCP), a biotechnology company developing new treatments for viral diseases; Eloxx Pharmaceuticals (OTCMKTS: ELOX), a company committed to treating patients suffering from rare and ultra-rare diseases caused by premature termination codon (PTC) nonsense mutations, prior to its merger with Sevion Therapeutics in December 2017; Castle Brands, Inc. (NYSE:ROX), a developer and marketer of premium brand spirits; and, Neovasc, Inc. (NASDAQ:NVCN), a company developing and marketing medical specialty vascular devices. Mr. Rubin previously served as the Senior Vice President, General Counsel and Secretary of IVAX from August 2001 until September 2006. Mr. Rubin previously served as a director of the following companies: Dreams, Inc. (NYSE MKT: DRJ), a vertically integrated sports licensing and products company; Safestitch Medical, Inc. prior to its merger with TransEnterix, Inc.; and, PROLOR Biotech, Inc., prior to its acquisition by the Company in August 2013; and Cognit, Inc. (NASDAQ:COGT), a data and analytics company providing cloud-based mission-critical information and performance marketing solutions. The Nominating and Corporate Governance Committee believes that Mr. Rubin’s past experience as general counsel and board member of multiple public companies bring financial expertise, industry knowledge, and a background working with public marketplaces to the Board.
 
Wendy Yu, 42, has been a director of the Company since August 2017 and a member of the Nominating and Corporate Governance Committee since March 2018. Since 2012, Ms. Yu has served as the Chief Digital Officer of Horizons Digital Group Limited (affiliate of Horizons Ventures Limited, a Hong Kong based investment firm), overseeing the Asia expansion of Horizons’ portfolio companies and directing public relations, communications, marketing and events. Ms. Yu graduated from University of Toronto, majoring in Commerce and Psychology. Ms. Yu serves as the director nominated by Pioneer Step Holdings Limited pursuant to rights granted to Pioneer Step Holdings Limited pursuant to that certain Securities Purchase Agreement, dated April 26, 2017, by and among the Company and the certain purchasers named therein (the “April 2017 Purchase Agreement”). The Nominating and Corporate Governance Committee believes that Ms. Yu’s experience in management, marketing and communications bring valuable expertise to the Board.
 
Tony Lau, 29, has been a director of the Company since August 2017 and a member of the Compensation Committee since March 2018. Since September 2014, Mr. Lau has been with Horizons Ventures Limited, building the consumer and retail segment and China market of the Hong Kong based investment firm. Prior to joining Horizons Ventures Limited, Mr. Lau was with Goldman Sachs Asia from June 2011 to August 2014. Mr. Lau has a Bachelor of Arts degree in Finance from the Guanghua School of Management in Peking, China. Mr. Lau serves as the director nominated by Champion River Ventures Limited pursuant to rights granted to Champion River Ventures Limited pursuant to the April 2017 Purchase Agreement. The Nominating and Corporate Governance Committee believes that Mr. Lau’s experience in the finance and consumer products industry bring valuable experience to the Board.
 
 
 
 
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Family Relationships
 
There are no family relationships between any of our directors and executive officers.
 
Involvement in Certain Legal Proceedings
 
During the past ten years, none of our officers, directors, promoters or control persons have been involved in any legal proceedings as described in Item 401(f) of Regulation S-K.
 
VOTE REQUIRED
 
Under applicable Delaware law, the election of each nominee requires the affirmative vote by a plurality of the voting power of the shares present and entitled to vote on the election of directors at the Annual Meeting at which a quorum is present.
 
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED ABOVE AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
 
 
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MANAGEMENT AND CORPORATE GOVERNANCE
 
Executive Officers
 
The names of our executive officers and their ages, positions, and biographies are set forth below. Frank Jaksch’s and Robert Fried's backgrounds are discussed under the section Nominees for Election to Board of Directors. Thomas Varvaro served as Chief Financial Officer until October 5, 2017. Kevin Farr began serving as Chief Financial Officer on October 5, 2017. Mark Friedman began serving as General Counsel and Corporate Secretary on January 22, 2018.
 
Name
 
Age
 
Positions with Company During Fiscal Year 2017
Frank Jaksch, Jr.
 
49
 
Chief Executive Officer and Director
Robert Fried
 
58
 
President, Chief Strategy Officer and Director
Kevin Farr
 
60
 
Chief Financial Officer
Troy Rhonemus
 
45
 
Chief Operating Officer
Thomas Varvaro
 
48
 
Chief Financial Officer
 
The persons listed below are our executive officers as of the date hereof:
 
Name
 
Age
 
Positions with Company as of April 23, 2018
Frank Jaksch, Jr. (1)
 
49
 
Chief Executive Officer and Director
Robert Fried (2)
 
58
 
President, Chief Operating Officer and Director
Kevin Farr
 
60
 
Chief Financial Officer
Mark Friedman
 
60
 
General Counsel and Corporate Secretary
Troy Rhonemus
 
45
 
Executive Vice President
 
(1)
In April 2018, the Board of Directors approved a future transition of Mr. Jaksch whereby Mr. Jaksch will transition from his role as Chief Executive Officer, effective as of the conclusion of the Annual Meeting, to serve as Executive Chairman of the Company, contingent and effective upon Mr. Jaksch’s re-election at the Annual Meeting.
(2)
In April 2018, the Board of Directors approved a future transition of Mr. Fried whereby Mr. Fried will transition from his role as President and Chief Operating Officer to serve as Chief Executive Officer of the Company, each effective as of the conclusion of the Annual Meeting.
 
Kevin Farr, 60, has served as the Company’s Chief Financial Officer since October 2017. From February 2000 through September 2017, Mr. Farr was Chief Financial Officer of Mattel, Inc. (NASDAQ: MAT), and prior to that held multiple leadership roles at Mattel since 1991. Before joining Mattel, Mr. Farr spent 10 years at PricewaterhouseCoopers. Mr. Farr serves on the Corporate Advisory Board of the Marshall School of Business at the University of Southern California, and as a board member of Polaris Industries Inc. (NYSE:PII) Mr. Farr received his Master of Business Administration from Northwestern University's J. L. Kellogg Graduate School of Business, and his B.S. in Accounting from Michigan State University.
 
Mark Friedman, 60, has served as the Company’s General Counsel and Corporate Secretary since January 2018. From 2013 to 2018, Mr. Friedman held various positions at Herbalife Ltd. (NYSE:HLF) including Executive Vice President, General Counsel and Counsel to the Executive Chairman. Mr. Friedman served as General Counsel and Senior Vice President of Business Development and Human Resources at Pinkberry from 2008 to 2013, Senior Vice President and General Counsel at American Golf Corporation from 2003 to 2008 and Senior Counsel and Associate Corporate Secretary for BP (NYSE: BP) and Atlantic Richfield Company from 1994 to 2003. Mr. Friedman received his Juris Doctor degree from the University of Southern California and his Bachelor of Arts degree from the University of California, Davis.
 
 
 
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Troy Rhonemus, 45, has served as the Company’s Executive Vice President since January 2018, Chief Operating Officer from March 2014 to January 2018 and Director of New Technology and Supply Chain from January 2013 to February 2014. Mr. Rhonemus has served on the board of directors of Mazza Innovation Ltd., a Canadian company specializing in the extraction of plant-based ingredients, since 2016. Mr. Rhonemus is responsible for overseeing all of the Company’s operations including all aspects of sales, marketing, supply chain management, distribution, and new technology development. Mr. Rhonemus also consults with customers to improve the supply chain management of raw materials to meet government regulations, which includes developing supply chain strategies, auditing manufacturers and developing an understanding of how to manage supplies from countries outside the Unites States. Mr. Rhonemus has extensive experience in managing operations and supply chain, business strategies, and the roll-out of new processes, technologies and products. From 2006 to 2012, Mr. Rhonemus held several positions at Cargill, Inc. As Truvia® Business Process Manager, he served as the product line lead for managing the operations and supply chain of the Truvia® enterprise from leaf to consumer products. As Technology Manger, Mr. Rhonemus served as technical lead for process and product development for Truvia® consumer products and ingredient business. From 2004 to 2006, Mr. Rhonemus served as Principal Research Scientist at E&J Gallo Winery, where he developed experimental designs to ensure that all project work was statistically valid in the lab, pilot and production wineries. From 1998 to 2004, Mr. Rhonemus served as Senior Research Scientist and as Process Technology Manager at Cargill, Inc. In these positions, Mr. Rhonemus solved technical problems and implemented new technologies into production. He identified potential tolling facilities, coordinated tolling efforts, directly supervised and developed new processes and solved technical issues in existing business units in Cargill. Mr. Rhonemus earned a M.A. in Chemistry and a B.S. in Chemistry from Ball State University.
 
Code of Business Conduct and Ethics
 
The Board has established a corporate Code of Business Conduct and Ethics that applies to all officers, directors and employees and which is intended to qualify as a “code of ethics” as defined by Item 406 of Regulation S-K of the Exchange Act. The Code of Business Conduct and Ethics is available on the Company’s website at www.chromadex.com. If the Company makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.
 
Public Availability of Corporate Governance Documents
 
Our key corporate governance documents, including our Code of Conduct and the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are:
 
available on our corporate website at www.chromadex.com; and
available in print to any stockholder who requests them from our corporate secretary.
 
Director Attendance
 
The Board held 14 meetings during 2017. Each director attended at least 75% of Board meetings and meetings of the committees on which he or she served.
 
Board Qualification and Selection Process
 
The Nominating and Corporate Governance Committee does not have a specific written policy or process regarding the nominations of directors, nor does it maintain minimum standards for director nominees or consider diversity in identifying nominees for director. However, the Nominating and Corporate Governance Committee does consider the knowledge, experience, integrity and judgment of potential candidates for nominations to the Board. The Nominating and Corporate Governance Committee will consider persons recommended by stockholders for nomination for election as directors. The Nominating and Corporate Governance Committee will consider and evaluate a director candidate recommended by a stockholder in the same manner as a committee-recommended nominee. Stockholders wishing to recommend director candidates must follow the prior notice requirements as described herein.
 
Board Leadership Structure and Risk Oversight
 
The leadership of the Board of Directors is currently structured so that it is led by a non-executive Chairman, Stephen Allen, who has authority, among other things, to call and preside over meetings of the Board of Directors, including meetings of the independent directors, to set meeting agendas and to determine materials to be distributed to the Board of Directors.  Mr. Allen has informed the Company that he will retire from the Board of Directors at the end of his current term and will not stand for re-election at the Annual Meeting.
 
 
 
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In April 2018, the Board of Directors approved the appointment of Mr. Jaksch as Executive Chairman, contingent and effective upon Mr. Jaksch’s re-election to the Board of Directors at the Annual Meeting, and of Mr. Gustafson as lead independent director, contingent and effective upon Mr. Gustafson’s re-election to the Board of Directors at the Annual Meeting. As Executive Chairman, Mr. Jaksch will serve as Chairman of the Board and will continue to serve as an employee and executive officer of the Company. The Board of Directors has determined that the future leadership structure, in which there is an Executive Chairman and an independent director acting as lead independent director, ensures that the appropriate level of oversight, independence, and responsibility is applied to all Board decisions, including risk oversight, and is in the best interests of the Company and those of the Company’s stockholders. The lead independent director will serve as the liaison between the Executive Chairman and the independent directors and his responsibilities will, among other things, include facilitating communication with the Board and presiding over regularly conducted executive sessions of the independent directors and establishing the agenda for meetings of the independent directors. The Board of Directors believes that its strong corporate governance policies and practices, including the substantial percentage of independent directors on the Board of Directors, and the robust duties that will be delegated to the lead independent director, will empower the Board of Directors to effectively oversee the Company’s Chief Executive Officer and Executive Chairman and provide an effective and appropriately balanced Board of Directors governance structure.
 
The entire Board of Directors, as well as through various committees, is responsible for oversight of our Company’s risk management process.  Management furnishes information regarding risk to the Board of Directors as requested.  The Audit Committee discusses risk management with the Company’s management and independent public accountants as set forth in the Audit Committee’s charter.  The Compensation Committee reviews the compensation programs of the Company to make sure economic incentives are tied to the long-term interests of the stockholders.  The Company believes that innovation and the building of long-term stockholder value are impossible without taking risks. We recognize that imprudent acceptance of risk and the failure to identify risks could be a detriment to stockholder value.  The executive officers of the Company are responsible for assessing these risks on a day-to-day basis and for how to best identify, manage and mitigate significant risks that the Company may face.
 
Board Committees
 
The Board has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Other committees may be established by the Board from time to time. The following table provides membership and meeting information for the fiscal year ended December 30, 2017 for each of our Board committees: 
 
Name
 
Audit
 
Compensation
 
Nominating and Corporate Governance
Stephen Allen (1)
 
 
 
X
 
X(7)
Jeff Baxter
 
X
 
 
 
X
Stephen Block
 
X
 
X(7)
 
 
Robert Fried (2)
 
 
 
 
 
X
Kurt Gustafson (3)
 
X(7)
 
X
 
 
Tony Lau (4)
 
 
 
 
 
 
Steven Rubin (5)
 
 
 
 
 
X
Wendy Yu (6)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total meetings in fiscal year ended December 30, 2017
 
4
 
1
 
1
 
(1)
Mr. Allen will not stand for re-election at the Annual Meeting. Mr. Allen served as members of the Compensation Committee and Nominating and Corporate Governance Committee until March 13, 2018.
(2)
On March 12, 2017, Mr. Fried was appointed as President and Chief Strategy Officer of the Company and resigned as a member of the Nominating and Corporate Governance Committee.
(3)
On March 14, 2017, the Board appointed Mr. Gustafson as a member of the Compensation Committee.
(4)
On March 13, 2018, Mr. Lau was appointed as a member of the Compensation Committee.
(5)
On March 16, 2018, the Board appointed Mr. Rubin as Chairperson of the Nominating and Corporate Governance Committee.
(6)
On March 13, 2018, Ms. Yu was appointed as a member of the Nominating and Corporate Governance Committee.
(7)
Committee Chairperson.
 
 
 
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The following is a description of each of the committees and their composition:
 
Audit Committee
 
The Audit Committee of the Board of Directors was established by the Board of Directors in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to oversee the Company’s corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, the Audit Committee performs several functions, including, among other things:
 
evaluates the performance of and assesses the qualifications of the independent auditors;
determines and approves the engagement of the independent auditors;
determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors;
reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services;
monitors the rotation of partners of the independent auditors on the Company’s audit engagement team as required by law;
reviews and approves or rejects transactions between the company and any related persons;
confers with management and the independent auditors regarding the effectiveness of internal control over financial reporting;
establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and
meets to review the Company’s annual audited financial statements and quarterly financial statements with management and the independent auditor, including a review of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
The Audit Committee currently consists of three directors: Kurt Gustafson (chairman), Stephen Block and Jeff Baxter. The Audit Committee met four times during the fiscal year. The Board of Directors has adopted a written Audit Committee charter that is available to stockholders on the Company’s website at www.chromadex.com. The information on our website is not incorporated by reference into this Proxy Statement or our Annual Report for fiscal year 2017.
 
The Board of Directors reviews the NASDAQ listing standards definition of independence for Audit Committee members on an annual basis and has determined that all members of the Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A) of the NASDAQ listing standards and Rule 10A-3 of the Exchange Act).
 
The Board of Directors has also determined that Mr. Gustafson also qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. The Board made a qualitative assessment of Mr. Gustafson’s level of knowledge and experience based on a number of factors, including his formal education and experience as a chief financial officer for public reporting companies.
 
Report of the Audit Committee of the Board of Directors
 
This report of the audit committee is required by the SEC and, in accordance with the SEC's rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act, or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed "soliciting material" or "filed" under either the Securities Act or the Exchange Act.
 
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 30, 2017 with management of the Company. The Audit Committee has discussed with the Company’s independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2017.
 
             
Submitted by:
 
The Audit Committee of
                
 The Board of Directors
 
                    Kurt Gustafson (Chairman)
                   Stephen Block
                   Jeff Baxter
 
 
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Compensation Committee
 
Our Compensation Committee currently consists of three directors: Stephen Block (chairman), Kurt Gustafson and Tony Lau.  Stephen Allen served on the Compensation Committee until March 13, 2018. All members of the Compensation Committee are independent (as independence is currently defined in Rule 5605(d)(2) of the NASDAQ listing standards. The Compensation Committee met one time during fiscal year 2017. The Board has adopted a written Compensation Committee charter that is available to stockholders on the Company’s website at www.chromadex.com. The information on our website is not incorporated by reference into this Proxy Statement or our Annual Report for fiscal year 2017.
 
The Compensation Committee acts on behalf of the Board to review, modify (as needed) and approve the Company’s compensation strategy, policies, plans and programs. For this purpose, the Compensation Committee performs several functions, including, among other things:
 
establishment of corporate and individual performance objectives relevant to the compensation of the Company’s executive officers and evaluation of performance in light of these stated objectives;
review and approval (or recommend to the Board of Directors for approval) of the compensation and other terms of employment or service, including severance and change-in-control arrangements, of the Company’s Chief Executive Officer, other executive officers and non-employee directors; and
administration of the Company’s equity compensation plans, pension and profit-sharing plans, deferred compensation plans and other similar plan and programs.
 
Each year, the Compensation Committee reviews with management the Company’s Compensation Discussion and Analysis and considers whether to recommend that it be included in proxy statements and other filings.
 
The Compensation Committee has the sole authority to retain, in its sole discretion, compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. In March 2018, the Compensation Committee retained a consulting firm, Exequity LLP (“Exequity”) directly, although in carrying out assignments, the consulting firm may interact with Company management when necessary and appropriate. Exequity is a nationally recognized provider of executive compensation advisory services and was deemed independent pursuant to SEC rules.
 
The Compensation Committee generally does not have a specific target amount of compensation for individual executive officers relative to a peer group of companies, but it considers peer data for purposes of assessing the competitiveness of the executive compensation program. An individual executive officer may earn more or less than the market median depending on factors described below, including the individual’s experience and background, role, and past and future performance.
 
The Company paid cash bonuses to its executive officers in 2018 for 2017 performance based upon achievements of certain goals. For additional information regarding the performance bonus amounts, see “Executive Compensation.”
 
Compensation Committee Interlocks and Insider Participation
 
None of the members of the Compensation Committee is an officer or employee of the Company. None of the executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on the Board or Compensation Committee.
 
Compensation Committee Report
 
This report of the Compensation Committee is required by the SEC and, in accordance with the SEC's rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (“Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed "soliciting material" or "filed" under either the Securities Act or the Exchange Act.
 
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2017.
 
Submitted by:
 
The Compensation Committee of
The Board of Directors
 
  Stephen Block, Chairman
  Kurt Gustafson
  Tony Lau
 
 
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Nominating and Corporate Governance Committee
 
The Nominating and Corporate Governance Committee currently consists of three directors: Steven Rubin (chairman), Jeff Baxter and Wendy Yu. Stephen Allen served on the Nominating and Corporate Governance Committee during fiscal year 2017, but stepped down from the Nominating and Corporate Governance Committee in March 2018 in connection with his decision to not stand for re-election at the Annual Meeting. All members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ listing standards. The Nominating and Corporate Governance Committee met one time during the last fiscal year. The Board has adopted a written Nominating and Corporate Governance Committee charter that is available to stockholders on the Company’s website at www.chromadex.com. The information on the website is not incorporated by reference into this Proxy Statement or the Annual Report for fiscal year 2017.
 
The Nominating and Corporate Governance Committee is responsible for identifying, reviewing and evaluating candidates to serve as directors of the Company consistent with criteria approved by the Board of Directors, reviewing and evaluating incumbent directors, selecting or recommending to the Board of Directors for selection candidates for election to the Board of Directors, making recommendations to the Board of Directors regarding the membership of the committees of the Board of Directors, assessing the performance of the Board of Directors, and developing a set of corporate governance principles for the Company.
 
The Nominating and Corporate Governance Committee believes that candidates for director nominees should have certain minimum qualifications, including the ability to read and understand basic financial statements and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of the Company’s stockholders. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the Board of Directors, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee typically considers diversity, age, skills and such other factors as it deems appropriate, given the current needs of the Board of Directors and the Company, to maintain a balance of knowledge, experience and capability.
 
In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for NASDAQ purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board of Directors. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee by majority vote which we expect will typically be recommended to the full Board.
 
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board of Directors may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the following address: ChromaDex Corporation, Attn: Secretary, at 10900 Wilshire Blvd. Suite 650, Los Angeles, CA 90024, no later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting. Submissions must include the name and address of the Company stockholder on whose behalf the submission is made; the number of Company shares that are owned beneficially by such stockholder as of the date of the submission; the full name of the proposed candidate; a description of the proposed candidate’s business experience for at least the previous five years; complete biographical information for the proposed candidate; and a description of the proposed.
 
 
 
-15-
 
 
Stockholder Communication
 
Any stockholder may communicate in writing by mail at any time with the entire Board of Directors or any individual director (addressed to “Board of Directors” or to a named director), c/o ChromaDex Corporation, ATTN: Secretary, 10900 Wilshire Blvd. Suite 650, Los Angeles, CA 90024. All communications will be compiled by the Secretary of the Company and promptly submitted to the Board of Directors or the individual directors on a periodic basis.
 
Policy Regarding Attendance at Annual Meetings of Stockholders
 
The Company does not have a policy with regard to Board members’ attendance at annual meetings. Seven directors attended the Company’s most recent annual meeting of stockholders held on June 20, 2017.
 
Director Independence
 
As required under the NASDAQ Stock Market listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the Board of Directors. The Board of Directors consults with the Company’s counsel to ensure that its determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of NASDAQ, as in effect from time to time.
 
Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and the Company, its senior management and its independent auditors, the Board of Directors has affirmatively determined that the following directors are independent directors within the meaning of the applicable NASDAQ listing standards: Stephen Allen, Stephen Block, Jeff Baxter, Kurt Gustafson, Steven Rubin, Wendy Yu and Tony Lau. Mr. Allen has elected not to stand for re-election at the Annual Meeting. Frank L. Jaksch Jr. and Robert Fried do not meet the independence standards because of their employment with the Company.
 
Please see “Proposal 1: Election of Directors” for more information regarding our Board of Directors.
 
 
EXECUTIVE COMPENSATION
 
Compensation Discussion and Analysis
 
The following discussion and analysis of compensation arrangements of our named executive officers for 2017 should be read together with the compensation tables and related disclosures set forth below.
 
We believe our success depends on the continued contributions of our named executive officers. Personal relationships and experience are very important in our industry. Our named executive officers are primarily responsible for many of our critical business development relationships. The maintenance of these relationships is critical to ensuring our future success as is experience in managing these relationships. Therefore, it is important to our success that we retain the services of these individuals.
 
General Philosophy
 
Our overall compensation philosophy is to provide an executive compensation package that enables us to attract, retain and motivate executive officers to achieve our short-term and long-term business goals. Our compensation philosophy also provides that compensation for executive officers should be structured such that between base salary and cash incentives, a meaningful portion of the executive officer's total cash compensation is at risk. The goals of our compensation program are to align remuneration with business objectives and performance, and to enable us to retain and competitively reward executive officers who contribute to the long-term success of the Company. We attempt to pay our executive officers competitively in order that we will be able to retain the most capable people in the industry. In making executive compensation and other employment compensation decisions, the Compensation Committee considers achievement of certain criteria, some of which relate to our performance and others of which relate to the performance of the individual employee. Awards to executive officers are based on achievement of Company and individual performance criteria.
 
The Compensation Committee will evaluate our compensation policies on an ongoing basis to determine whether they enable us to attract, retain and motivate key personnel. To meet these objectives, the Compensation Committee may from time to time increase salaries, award additional stock grants or provide other short and long-term incentive compensation to executive officers and other employees.
 
 
 
-16-
 
 
Results of Most Recent Stockholder Advisory Vote on Executive Compensation
 
Over 96% of the votes cast in the stockholder advisory vote on the compensation of our named executive officers in 2015 approved our executive compensation and recommended a three-year frequency with which the Company should conduct future stockholder advisory votes on named executive officer compensation, as described in our 2015 proxy statement. The Compensation Committee considered the result of the stockholder advisory vote as an endorsement of its compensation policies, practices and philosophy for our named executive officers. Accordingly, the Compensation Committee determined not to make any significant changes as a result of the vote. In addition, in part based on the support shown by the vote, the Compensation Committee has maintained a consistent approach in making compensation decisions.
 
The Compensation Committee considers the results of the say-on-pay vote on our executive compensation program as part of its annual executive compensation review. Our Board of Directors values the opinions of our stockholders, and the Compensation Committee will continue to consider the outcome of future say-on-pay votes, as well as any feedback received, when making compensation decisions for the named executive officers.
 
Compensation Program and Forms of Compensation
 
We provide our executive officers with a compensation package consisting of base salary, annual bonus, equity incentives and participation in benefit plans generally available to other employees. In setting total compensation, the Compensation Committee considers individual and company performance, as well as market information regarding compensation paid by other companies in our industry.  All executive officers have employment agreements that establish their initial base salaries and set pre-approved goals -- and minimum and maximum opportunities -- for the bonuses and equity incentive awards. Both the Compensation Committee and the Board have approved these agreements.
 
Base Salary. Base salary is designed to provide predictable level of compensation and provides a competitive level of pay that reflects the executive's experience, role and responsibilities. Base salaries for our executive officers are initially set based on negotiation with individual executive officers at the time of recruitment and with reference to salaries for comparable positions in the industry for individuals of similar education and background to the executive officers being recruited. We also consider the individual’s experience, reputation in his or her industry and expected contributions to the Company. Base salary is regularly evaluated by competitive pay and individual job performance. In each case, we take into account the results achieved by the executive, his or her future potential, scope of responsibilities and experience, and competitive salary practices.
 
Bonuses. We design our bonus programs to be both affordable and competitive in relation to the market. Our bonus program is designed to motivate employees to typically achieve overall corporate annual goals. Our programs are designed to avoid entitlements, to align actual payouts with the actual results achieved and to be easy to understand and administer.  The Compensation Committee and the executive officer, with input from the other executive officers, work together to identify targets and goals for the executive officer; however, the targets and goals themselves are established after deliberation by the Compensation Committee alone. Upon completion of the fiscal year, the Compensation Committee assesses the Company’s performance and, with input from management and the Board, determines the amount to be awarded to each of the executive officers based on the achievement of the financial goals that were set earlier in the year.
 
In 2018, we paid bonuses of $75,480, $163,945, $24,378 and $47,940, respectively to our executive officers Frank Jaksch, Jr., Robert Fried, Kevin Farr and Troy Rhonemus for services performed during 2017. Other than Mr. Fried, the 2017 bonus amounts were calculated based upon achievements of two goals, (i) Net sales target and (ii) the Company’s Earnings Before Interest, Taxes, Depreciation, Amortization and Share-based compensation (“EBITDAS’) target. Tables below illustrate how the bonus amounts were calculated for Mr. Jaksch, Mr. Farr and Mr. Rhonemus.
 
 
-17-
 
 
Bonus calculation for Mr. Jaksch – for fiscal year 2017, paid in 2018
 
Metric
 
Target
(in 1,000s)
 
 
Actual
(in 1,000’s)
 
 
Achievement % (1)
 
 
Target Bonus
% (2)
 
 
 
Other Factors (3)
 
 
Payout Bonus
% (4)
 
 
Base
Salary
 
 
Bonus
Payment (5)
 
Net Sales
 $22,497 
 $21,201 
  94%
  25%
  60%
  14.1%
 $370,000 
 $52,170 
EBITDAS
 $(3,726)
 $(5,879)
  42%
  25%
  60%
  6.3%
 $370,000 
 $23,310 
 
    
    
    
    
    
    
 
Total
 
 $75,480 
 
Bonus calculation for Mr. Farr – for fiscal year 2017, paid in 2018
 
Metric
 
Target
(in 1,000s)
 
 
Actual
(in 1,000’s)
 
 
Achievement % (1)
 
 
Target Bonus
% (2)
 
 
 
Other Factors (3)
 
 
Payout Bonus
% (4)
 
 
Base
Salary
 
 
Bonus
Payment (5)
 
Net Sales
 $22,497 
 $21,201 
  94%
  25%
  23.9%
  5.62%
 $300,000 
 $16,850 
EBITDAS
 $(3,726)
 $(5,879)
  42%
  25%
  23.9%
  2.51%
 $300,000 
 $7,528 
 
    
    
    
    
    
    
 
Total
 
 $24,378 
 
Bonus calculation for Mr. Rhonemus – for fiscal year 2017, paid in 2018
 
Metric
 
Target
(in 1,000s)
 
 
Actual
(in 1,000’s)
 
 
Achievement % (1)
 
 
Target Bonus
% (2)
 
 
 
Other Factors (3)
 
 
Payout Bonus
% (4)
 
 
Base
Salary
 
 
Bonus
Payment (5)
 
Net Sales
 $22,497 
 $21,201 
  94%
  15%
  100%
  14.1%
 $235,000 
 $33,135 
EBITDAS
 $(3,726)
 $(5,879)
  42%
  15%
  100%
  6.3%
 $235,000 
 $14,805 
 
    
    
    
    
    
    
 
Total
 
 $47,940 
 
(1)
Achievement % for EBITDAS calculated as 100% minus variance %.
(2)
Maximum bonuses for Mr. Jaksch, Mr. Farr and Mr. Rhonemus are 50%, 50% and 30% of base salary, respectively. 50% weight was allocated to each of the metric.
(3)
Consideration by the Compensation Committee based on numerous factors. For Kevin Farr, 23.9% proration factor was used since Mr. Farr began serving as Chief Financial Officer on October 5, 2017.
(4)
Payout bonus % is calculated based on the achievement % multiplied by the target bonus % multiplied by the other factors %.
(5)
Bonus payment is calculated by multiplying payout bonus % to base salary.
 
Tables below illustrates how the bonus amount was calculated for Mr. Fried pursuant to the terms of his employment agreement dated March 12, 2017.
 
Metric
 
Actual
(in 1,000’s)
 
 
Bonus
%
 
 
Bonus
Payment
 
1% of Consumer Product Net Sales
 $5,465 
  1%
 $54,648 
Additional 2% of Consumer Product Net Sales that exceeds the Prior Year
 $5,465 
  2%
 $109,297 
1% of the Gross Profit from NIAGEN sales that exceeds the Prior Year
 $0 
  1%
 $0 
 
    
 
Total
 
 $163,945 
 
 
 
-18-
 
 
In 2017, we paid bonuses of $122,562, $79,500 and $46,706, respectively to our executive officers Frank Jaksch, Jr., Thomas Varvaro and Troy Rhonemus for services performed during 2016. Also in 2017, Mr. Jaksch, Mr. Varvaro and Mr. Rhonemus received $27,500, $18,000 and $11,400, respectively, which are 50% of the earned bonus for services performed during 2015. The 2016 bonus amounts were calculated based upon achievements of four goals, (i) the Company’s EBITDAS targets for 2016; (ii) Net Income for 2016; (iii) Investigational New Drug (“IND”) and EU regulatory filings for NR; and (iv) Net sales of $30 Million. Tables below illustrate how the bonus amounts were calculated for Mr. Jaksch, Mr. Varvaro and Mr. Rhonemus
 
Bonus calculation for Mr. Jaksch – for fiscal year 2016, paid in 2017
 
Metric
 
Floor
(in 1,000s)
 
 
Target
(in 1,000s)
 
 
Actual
(in 1,000’s)
 
 
Achievement % from Floor to Target (1)
 
 
Target Bonus
% (2)
 
 
Payout Bonus
% (3)
 
 
Base
Salary
 
 
Bonus
Payment (4)
 
EBITDAS
  N/A 
  0 
 $(945)
  50%
  6.25%
  3.125%
 $370,000 
 $11,563 
Net Income
 
Positive
 
 
Positive
 
 $(2,928)
  0%
  3.5%
  0%
 $370,000 
 $0 
IND & EU Filings
  N/A 
  N/A 
  N/A 
  50%
  15.25%
  7.625%
 $370,000 
 $28,212 
Net Sales
  0 
 $30,000 
 $26,811 
  89.5%
  25%
  22.375%
 $370,000 
 $82,787 
 
    
    
    
    
    
    
 
Total
 
 $122,562 
 
Bonus calculation for Mr. Varvaro – for fiscal year 2016, paid in 2017
 
Metric
 
Floor
(in 1,000s)
 
 
Target
(in 1,000s)
 
 
Actual
(in 1,000’s)
 
 
Achievement % from Floor to Target (1)
 
 
Target Bonus
% (2)
 
 
Payout Bonus
% (3)
 
 
Base
Salary
 
 
Bonus
Payment (4)
 
EBITDAS
  N/A 
  0 
 $(945)
  50%
  5%
  2.5%
 $300,000 
 $7,500 
Net Income
 
Positive
 
 
Positive
 
 $(2,928)
  0%
  2.8%
  0%
 $300,000 
 $0 
IND & EU Filings
  N/A 
  N/A 
  N/A 
  50%
  12.2%
  6.1%
 $300,000 
 $18,300 
Net Sales
  0 
 $30,000 
 $26,811 
  89.5%
  20%
  17.9%
 $300,000 
 $53,700 
 
    
    
    
    
    
    
 
Total
 
 $79,500 
 
Bonus calculation for Mr. Rhonemus – for fiscal year 2016, paid in 2017
 
Metric
 
Floor
(in 1,000s)
 
 
Target
(in 1,000s)
 
 
Actual
(in 1,000’s)
 
 
Achievement % from Floor to Target (1)
 
 
Target Bonus
% (2)
 
 
Payout Bonus
% (3)
 
 
Base
Salary
 
 
Bonus
Payment (4)
 
EBITDAS
  N/A 
  0 
 $(945)
  50%
  3.75%
  1.875%
 $235,000 
 $4,406 
Net Income
 
Positive
 
 
Positive
 
 $(2,928)
  0%
  2.1%
  0%
 $235,000 
 $0 
IND & EU Filings
  N/A 
  N/A 
  N/A 
  50%
  9.15%
  4.575%
 $235,000 
 $10,751 
Net Sales
  0 
 $30,000 
 $26,811 
  89.5%
  15%
  13.425%
 $235,000 
 $31,549 
 
    
    
    
    
    
    
 
Total
 
 $46,706 
 
(1)
The Compensation Committee subjectively determined the achievement % for EBITDAS and IND & EU Filings goals based on numerous factors.
(2)
Per employment agreement, Mr. Jaksch, Mr. Varvaro and Mr. Rhonemus are entitled to receive a bonus up to 50%, 40% and 30% of base salary, respectively. The allocation of the total bonus % to each goal was determined by the Board.
(3)
Payout bonus % is calculated by multiplying achievement % to target bonus %.
(4)
Bonus payment is calculated by multiplying payout bonus % to base salary.
 
 
 
-19-
 
 
Equity-Based Rewards
 
We design our equity programs to be both affordable and competitive in relation to the market. We monitor the market and applicable accounting, corporate, securities and tax laws and regulations and adjust our equity programs as needed. Currently, our long term incentive plan is entirely stock-based to facilitate ownership and to align executive interests with those of our stockholders. Stock options and other forms of equity compensation are designed to reflect and reward a high level of sustained individual performance over time. Stock options provide strong incentives to grow shareholder value since our executive officers can realize value only if our stock price appreciates over the exercise price, which is the closing market price on the date of grant.
 
During the year ended December 30, 2017, the Company granted to Robert Fried 500,000 shares of restricted stock, which vested during the year ended December 30, 2017. During the year ended December 30, 2017, the Company's former Chief Financial Officer, Thomas Varvaro entered into a transition and separation agreement and received vesting of his unvested restricted stock of 166,668 shares effective January 27, 2018. 83,334 of these shares were awarded in 2012 and the remaining 83,334 shares were awarded in 2014.
 
Timing of Equity Awards
 
Only the Board may approve stock option grants to our executive officers, which grants are recommended to it by the Compensation Committee. Stock options to employees, including our executive officers, are generally granted once a year at predetermined meetings of the Board. The compensation committee and the Board take the material non-public information into account when determining the timing of awards and generally grant stock options when material non-public information is least present. On limited occasions, grants may occur upon unanimous written consent of the Board, which occurs primarily for the purpose of approving a compensation package for a newly hired or promoted executive under an employment agreement with the executive. The exercise price of a newly granted option is the closing market price of our Common Stock on the date of grant.
 
Benefits Programs
 
We design our benefits programs to be both affordable and competitive in relation to the market while conforming to local laws and practices. We monitor the market, local laws and practices and adjust our benefits programs as needed. We design our benefits programs to provide an element of core benefits, and to the extent possible, offer options for additional benefits, be tax-effective for employees in each country and balance costs and cost sharing between us and our employees. One of the benefits programs we offer is a broad-based 401(k) plan to which we make contributions in cash. The Company matches 50% of employee contributions for the first 6% of salary that an employee contributes.
 
Performance-Based Compensation and Financial Restatement
 
We have implemented a policy regarding retroactive adjustments to any cash or equity-based incentive compensation paid to our executives where such payments were predicated upon the achievement of certain financial results that were subsequently the subject of a financial restatement and have included this policy in the employment contracts with our executives.
 
Tax and Accounting Considerations
 
As a result of the Tax Cuts and Jobs Act, for taxable years beginning January 1, 2018 and except for certain grandfathered arrangements, under Section 162(m) of the Code, any compensation over $1,000,000 paid to the covered employees is not deductible by the Company and the limitation on deductibility generally was expanded to include all NEOs. The Committee will be assessing the impact of the amendments to Section 162(m) to determine what adjustments to our executive compensation practices, if any, it considers appropriate.
 
Severance and Change in Control Arrangements
 
Several of our executives have employment and other agreements that provide for severance payment arrangements and/or acceleration of stock option and stock award vesting in the event of an acquisition or other change in control of our company. See “Employment and Consulting Agreements” below for a description of the severance and change in control arrangements for our named executive officers.
 
Role of Executives in Executive Compensation Decisions
 
The Board and our Compensation Committee generally seek input from our executive officers when discussing the performance of, and compensation levels for, executives. The Compensation Committee also works with our Chief Executive Officer, President and our Chief Financial Officer to evaluate the financial, accounting, tax and retention implications of our various compensation programs. None of our other executives participates in deliberations relating to his or her own compensation.
 
 
 
-20-
 
 
Hedging Policy
 
The Company has established an Insider Trading Policy, which, among other things, prohibits trading in securities with material non-public information including through hedging activities. Engaging any transactions relating to our common stock must be pre-cleared by our Trading Compliance Officer.
 
Summary Compensation Table
 
The following table sets forth information concerning the annual and long-term compensation earned by our Chief Executive Officer (the principal executive officer), President and Chief Operating Officer, Chief Financial Officer (the principal financial officer), and Executive Vice President, each of whom served during the year ended December 30, 2017 as our executive officers. Thomas Varvaro served as Chief Financial Officer until October 5, 2017. Kevin Farr began serving as Chief Financial Officer on October 5, 2017.
 
Name
 
Year
 
 
  Salary
 
 
  Bonus
 
 
  Stock Awards (1)
 
 
  Option Awards (2)
 
 
  All Other Compensation (3)
 
 
 
Total
($)
 
Frank L. Jaksch Jr.
2017
 $370,000 
 $75,480 
  - 
  - 
 $8,100 
 $453,580 

2016
 $344,231 
 $122,562 
  - 
 $216,980(4)
 $7,258 
 $691,031 

2015
 $275,000 
 $55,000 
  - 
 $114,857(5)
 $8,642 
 $453,499 
Robert N. Fried
2017
 $230,769(6)
 $163,945 
 $2,539,999(7)
 $876,014(8)
  - 
 $3,810,727 

2016
  - 
  - 
  - 
  - 
  - 
  - 

2015
  - 
  - 
  - 
  - 
  - 
  - 
Kevin M. Farr
2017
 $60,000(9)
 $24,378 
  - 
 $3,040,183(10)
  - 
 $3,124,561 

2016
  - 
  - 
  - 
  - 
  - 
  - 

2015
  - 
  - 
  - 
  - 
  - 
  - 
Troy A. Rhonemus
2017
 $235,000 
 $47,940 
  - 
  - 
 $8,100 
 $291,040 

2016
 $222,692 
 $46,706 
    
 $127,635(11)
 $7,023 
 $404,056 

2015
 $186,962 
 $22,800 
  - 
 $76,091(12)
 $6,642 
 $292,495 
Thomas C. Varvaro
2017
 $300,000 
 $120,000(13)
  - 
  - 
 $8,100 
 $428,100 

2016
 $278,846 
 $79,500 
  - 
 $178,689(14)
 $7,463 
 $544,498 

2015
 $225,000 
 $36,000 
  - 
 $96,229(15)
 $8,437 
 $365,666 
 
(1)
 The amounts in the column titled “Stock Awards” above reflect the aggregate award date fair value of restricted stock awards.
 
(2)
The amounts in the column titled “Option Awards” above reflect the aggregate grant date fair value of stock option awards for the fiscal years ended December 30, 2017, December 31, 2016 and January 2, 2016. See Note 11 of the ChromaDex Corporation Consolidated Financial Report included in the Form 10-K for the year ended December 30, 2017, filed with the SEC on March 15, 2018, for a description of certain assumptions in the calculation of the fair value of the Company’s stock options.
 
(3)
The amounts in this column titled “All Other Compensation” above reflect matching 401(k) contributions.
 
(4)
On August 15, 2016, Frank Jaksch was granted options to purchase 85,000 shares of ChromaDex common stock at an exercise price of $4.04. These options expire on August 15, 2026 and 25% of the options vest on August 15, 2017 and the remaining 75% vest 2.083% monthly thereafter.
 
(5)
On July 6, 2015, Frank Jaksch was granted options to purchase 50,000 shares of ChromaDex common stock at an exercise price of $3.66. These options expire on July 6, 2025 and 25% of the options vested on July 6, 2016 and the remaining 75% vest 2.083% monthly thereafter.
 
(6)
Robert Fried began serving as President and Chief Strategy Officer on March 12, 2017.
 
(7)
On March 12, 2017, Robert Fried was awarded 166,667 shares of restricted Common Stock, which vested on December 20, 2017 in connection with an amendment to his employment agreement. In addition, Mr. Fried received 333,333 shares of restricted stock on December 20, 2017, which were fully vested.
 
(8)
On March 12, 2017, Robert Fried was granted options to purchase 500,000 shares of ChromaDex common stock at an exercise price of $2.715. These options expire on March 12, 2027 and 2.78% of the options vest monthly from the grant date.
 
 
 
-21-
 
 
(9)
Kevin Farr began serving as Chief Financial Officer on October 5, 2017.
 
(10)
On October 5, 2017, Kevin Farr was granted options to purchase 1,000,000 shares of ChromaDex common stock at an exercise price of $4.24. These options expire on October 4, 2027 and 2.78% of the options vest monthly from the grant date.
 
(11)
On August 15, 2016, Troy Rhonemus was granted options to purchase 50,000 shares of ChromaDex common stock at an exercise price of $4.04. These options expire on August 15, 2026 and 25% of the options vest on August 15, 2017 and the remaining 75% vest 2.083% monthly thereafter.
 
(12)
On July 6, 2015, Troy Rhonemus was granted options to purchase 33,334 shares of ChromaDex common stock at an exercise price of $3.66. These options expire on July 6, 2025 and 25% of the options vest on July 6, 2016 and the remaining 75% vest 2.083% monthly thereafter.
 
(13)
The Company plans to pay a bonus of $120,000 to Thomas Varvaro pursuant to a transition and separation agreement we entered into with Mr. Varvaro on December 15, 2017.
 
(14)
On August 15, 2016, Thomas Varvaro was granted options to purchase 70,000 shares of ChromaDex common stock at an exercise price of $4.04. These options fully vested on January 27, 2018 pursuant to a transition and separation agreement we entered into with Mr. Varvaro on December 15, 2017.
 
(15)
On July 6, 2015, Thomas Varvaro was granted options to purchase 41,667 shares of ChromaDex common stock at an exercise price of $3.66. These options fully vested on January 27, 2018 pursuant to a transition and separation agreement we entered into with Mr. Varvaro on December 15, 2017.
 
Employment and Consulting Agreements
 
The material terms of employment agreements with the named executive officers previously entered into by the Company are described below.
 
Employment Agreement with Frank L. Jaksch Jr.
 
On April 19, 2010, the Company entered into an Amended and Restated Employment Agreement (the “Jaksch Agreement”) with Frank L. Jaksch Jr. The Jaksch Agreement automatically renews unless terminated in accordance with its terms. On January 2, 2014, the Board approved raising the annual base salary of Mr. Jaksch to $275,000 per year and setting the annual cash bonus target up to 50% of his base salary. On March 14, 2016, the Board increased the base salary of Mr. Jaksch to $320,000. On April 25, 2016, Mr. Jaksch’s base salary increased to $370,000 as the Company’s common stock was listed on Nasdaq Stock Market.
 
If Mr. Jaksch is terminated without cause, Mr. Jaksch is entitled to eight weeks of base salary. If Mr. Jaksch is terminated without cause, subject to executing a release, or if Mr. Jaksch resigns for good reason, he is entitled to (i) continued payment of his current base salary for 24 months; (ii) a cash bonus equal to the maximum bonus he would have otherwise been eligible to receive; (iii) payment of COBRA premiums for 24 months; and (iv) acceleration of vesting of all outstanding equity awards previously granted to Mr. Jaksch.
 
Employment Agreement with Robert N. Fried
 
On March 12, 2017, the Company entered into an Employment Agreement (the "Fried Agreement") with Robert Fried. Pursuant to the Fried Agreement, Mr. Fried is entitled to: (i) an annual base salary of $300,000; (ii) an annual cash bonus equal to (a) 1% of net direct-to-consumer sales of products with nicotinamide riboside as a lead ingredient by the Company plus (b) 2% of direct to consumer net sales of products with nicotinamide riboside as a lead ingredient for the portion of such sales that exceeded prior year sales plus (c) 1% of the gross profit derived from nicotinamide riboside ingredient sales to dietary supplement producers; (iii) an option to purchase up to 500,000 shares of Common Stock under the 2007 Plan, subject to monthly vesting over a three-year period, which option grant Mr. Fried received on March 12, 2017; and (iv) 166,667 shares of restricted Common Stock, which vested on December 20, 2017 in connection with an amendment to the Fried Agreement (the "Fried Amendment") by and between the Company and Mr. Fried, dated December 20, 2017. In addition, Mr. Fried received 333,333 shares of restricted stock on December 20, 2017, which were immediately vested in connection with the Fried Amendment.
 
 
 
-22-
 
 
Subject to Mr. Fried’s continuous service through such date, Mr. Fried is also eligible to receive up to 500,000 shares of fully-vested restricted Common Stock that will be granted upon the achievement of certain performance goals. The Fried Amendment also provides that Mr. Fried will be granted these shares of performance-based restricted Common Stock immediately prior to the consummation of a change in control of the Company, subject to Mr. Fried's continuous service through such change in control.
 
Any unvested options or shares of restricted stock will vest in full upon (a) a change in control of the Company, (b) Mr. Fried’s death, (c) Mr. Fried’s disability, (d) termination by the Company of Mr. Fried’s employment without cause or (e) Mr. Fried’s resignation for good reason, subject in each case to Mr. Fried’s continuous service as an employee or consultant of the Company or any of its subsidiaries though such event.
 
The severance terms of the Fried Agreement provide that if (i) Mr. Fried’s employment is terminated by the Company without cause, for death or disability, or Mr. Fried resigns for good reason, or (ii) (a) a change in control of the Company occurs and (b) within one month prior to the date of such change in control or twelve months after the date of such change in control Mr. Fried’s employment is terminated by the Company other than for cause, then, subject to executing a release, Mr. Fried will receive (w) continuation of his base salary for 12 months, (x) health care continuation coverage payments premiums for 12 months, (y) a prorated annual cash bonus earned for the fiscal year in which such termination or resignation occurs, and (z) an extended exercise period for his options.
 
Employment Agreement with Kevin M. Farr
 
On October 5, 2017, the Company entered into an Employee Agreement (the "Farr Agreement") with Kevin M. Farr who was appointed by the Board to serve as Chief Financial Officer, principal accounting officer and principal financial officer. Mr. Farr is entitled to receive certain severance payments per the terms of the Farr Agreement. The key terms of the Farr Agreement, including the severance terms are as follows:
 
Mr. Farr is entitled to: (i) an annual base salary of $300,000 and (ii) a discretionary annual bonus based on the achievement of certain performance goals to be determined by the Board. Pursuant to the Farr Agreement, Mr. Farr also received an option to purchase up to 1,000,000 shares of ChromaDex common stock under the ChromaDex 2017 Equity Incentive Plan, subject to monthly vesting over a three-year period, with an exercise price equal to $4.24 per share. Any unvested options will vest in full (a) upon a change of control of the Company, subject to Mr. Farr’s continuous service through such change of control, (b) on the date (the “Price Threshold Date”) that the unweighted average closing price of the Company’s common stock as quoted on the Nasdaq Capital Market (or such similar established stock exchange) over the previous 20 trading days (including the date such calculation is measured) first equals or exceeds $10.00 per share, subject to Mr. Farr’s continuous service through such Price Threshold Date, or (c) if Mr. Farr is terminated by the Company without cause or if Mr. Farr resigns for good reason within 90 days prior to such change of control or Price Threshold Date.
 
If Mr. Farr’s employment is terminated by the Company without cause or Mr. Farr resigns for good reason, then, subject to executing a release, Mr. Farr will receive (i) continuation of his base salary for 12 months, (ii) COBRA premiums for 12 months, (iii) a prorated annual cash bonus, based on the good faith determination of the Board of the actual results and period of employment during the year of such termination, (iv) accelerated vesting of time-based equity that would have otherwise become vested by the one year anniversary of such termination date and (v) an extended exercise period for his options.
 
Employment Agreement with Troy A. Rhonemus
 
On March 6, 2014, the Company entered into an Employment Agreement (the “Rhonemus Agreement”) with Mr. Troy Rhonemus pursuant to which Mr. Rhonemus was appointed to serve as the Chief Operating Officer of the Company. On March 17, 2015, the Board increased the base salary to $190,000. The Rhonemus Agreement provides for an annual cash bonus (based on performance targets) of up to 30% of his base salary. On March 14, 2016, the Board increased the base salary of Mr. Rhonemus to $210,000. On April 25, 2016, Mr. Rhonemus’ base salary increased to $235,000 as the Company’s common stock was listed on Nasdaq Stock Market. On February 1, 2018, the Compensation Committee increased the base salary of Mr. Rhonemus to $250,000.
 
In the event of a termination, Mr. Rhonemus will be entitled to any accrued but unpaid base salary and any accrued but unpaid welfare and retirement benefits up to the termination date. In addition, if Mr. Rhonemus leaves the Company for “Good Reason” (as defined in the Rhonemus Agreement), he will also be entitled to severance equal to two weeks of base salary for each full year of service to a maximum of eight weeks of the base salary.
 
In the event the Company terminates Mr. Rhonemus’ employment without "Cause,” (as defined in the Rhonemus Agreement) Mr. Rhonemus will be entitled to severance equal to two weeks of base salary for each full year of service to a maximum of eight weeks of the base salary, or, if Mr. Rhonemus enters into a standard separation agreement, Mr. Rhonemus will receive continuation of base salary and health benefits, together with applicable fringe benefits as provided until the expiration of the term or renewal term then in effect, however, that in the case of medical and dental insurance, until the expiration of 12 months from the date of termination.
 
 
 
-23-
 
 
Transition and Separation Agreement with Thomas C. Varvaro
 
On December 15, 2017, the Company entered into a transition and separation agreement with Mr. Varvaro (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Varvaro resigned from the Company effective January 19, 2018 (the “Separation Date”), and will provide certain consulting services to the Company for three months following the Separation Date, upon the Company’s specific request and up to a maximum of 24 hours per month. Pursuant to the Separation Agreement, Mr. Varvaro is entitled to receive the following compensation and other benefits: (i) continued payment of his current base salary for 24 months following the Separation Date; (ii) a cash bonus equal to the maximum bonus he would have otherwise been eligible to receive for fiscal year 2017; (iii) payment of COBRA premiums through the earlier of 24 months following the Separation Date or the date upon which he becomes ineligible for continued coverage under COBRA, and payment of long-term disability and life insurance premiums through 24 months following the Separation Date; and (iv) acceleration of vesting of all outstanding options or other equity awards previously granted to Mr. Varvaro.
 
2017 Director Compensation
 
On November 8, 2016, the Company adopted a Non-Employee Director Compensation Policy, effective July 3, 2016, after evaluating the recommendations from a compensation consultant, Barney and Barney, a Marsh McLennan Agency. Pursuant to this policy, non-employee directors receive cash compensation and grant of options to buy our common stock. In 2017, the options were granted under the Amended 2017 Equity Incentive Plan.
 
Amended and Restated Director Compensation Policy
 
Under our Non-Employee Director Compensation Policy, each of our current non-employee directors is eligible to receive an annual retainer of $30,000 for serving on the Board and, if applicable, an additional annual retainer of $30,000 for serving as the Chairman of the Board. The chairpersons of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee receive an additional $20,000, $15,000, and $10,000, respectively, per year for service as chairperson for such committee. Members of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee each receive an additional $10,000, $7,500 and $5,000, respectively, per year for service on such committee.
 
Any non-employee director who is first elected to the Board will be granted an option to purchase 40,000 shares of our common stock on the date of his or her initial election to the Board. In addition, on the date of each annual meeting, each person who continues to serve as a non-employee member of the Board following such annual meeting will be granted a stock option to purchase 20,000 shares of our common stock. All option grants will have an exercise price per share equal to the fair market value of our common stock on the date of grant. Each initial grant for a non-employee director will vest over a three year period, and each annual grant for a non-employee director will vest over a one year period, in each case subject to the director’s continuing service on our Board.
 
The following table provides information concerning compensation of our non-employee directors who were directors during the fiscal year ended December 30, 2017. The compensation reported is for services as directors for the fiscal year ended December 30, 2017.
 
 
 
-24-
 
 
Director Compensation Table
 
Name
 
Fees
Earned or
Paid in
Cash ($)
 
 
Stock
Awards ($)
 
 
Option
Awards ($)(1)
 
 
Non-Equity
Incentive Plan Compensation ($)
 
 
Non-Qualified Deferred Compensation Earnings ($)
 
 
All Other Compensation ($)
 
 
Total
($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stephen Allen (2)
  77,500 
  - 
  43,991 
  - 
  - 
  - 
  121,491 
Stephen Block (3)
  55,000 
  - 
  43,991 
  - 
  - 
  - 
  98,991 
Jeff Baxter (4)
  45,000 
  - 
  43,991 
  - 
  - 
  - 
  88,991 
Robert Fried (5)
  6,827 
  - 
  - 
  - 
  - 
  - 
  6,827 
Kurt Gustafson (6)
  56,016 
  - 
  43,991 
  - 
  - 
  - 
  100,007 
Steven Rubin (7)(8)
  26,827 
  - 
  110,735 
  - 
  - 
  - 
  137,562 
Wendy Yu (9)
  11,129 
  - 
  84,968 
  - 
  - 
  - 
  96,097 
Tony Lau (10)
  11,129 
  - 
  84,968 
  - 
  - 
  - 
  96,097 
 
(1)
The amounts in the column titled “Option Awards” above reflect the aggregate grant date fair value of stock option awards for the fiscal year ended December 30, 2017. See Note 11 of the ChromaDex Corporation Consolidated Financial Report included in the Form 10-K for the year ended December 30, 2017, filed with the SEC on March 15, 2018, for a description of certain assumptions in the calculation of the fair value of the Company’s stock options. Except as stated below with respect to options awarded to Steven Rubin on April 6, 2017 and Wendy Yu and Tony Lau on August 18, 2017, the options have an exercise price of $3.59 and vest 100% on June 20, 2018.
 
(2)
On June 20, 2017, Stephen Allen was awarded the option to purchase 20,000 shares of the Company’s common stock. Mr. Allen will not stand for re-election at the Annual Meeting.
 
(3)
On June 20, 2017, Stephen Block was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(4)
On June 20, 2017, Jeff Baxter was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(5)
Robert Fried earned $6,827 as a Board member prior to appointment as President and Chief Strategy Officer.
 
(6)
On June 20, 2017, Kurt Gustafson was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(7)
On April 6, 2017, Mr. Rubin was awarded the option to purchase 40,000 shares of the Company’s common stock. The option has an exercise price of $2.58, vested 33% on April 6, 2018 and will vest 33% on April 6, 2019 and 34% on April 6, 2020.
 
(8)
On June 20, 2017, Mr. Rubin was awarded the option to purchase 20,000 shares of the Company’s common stock.
 
(9)
On August 18, 2017, Ms. Yu was awarded the option to purchase 40,000 shares of the Company’s common stock. The option has an exercise price of $3.28 and vests 33% on August 18, 2018, 33% on August 18, 2019 and 34% on August 18, 2020.
 
(10)
On August 18, 2017, Mr. Lau was awarded the option to purchase 40,000 shares of the Company’s common stock. The option has an exercise price of $3.28 and vests 33% on August 18, 2018, 33% on August 18, 2019 and 34% on August 18, 2020.
 
 
 
-25-
 
 
Grants of Plan-Based Awards
 
The following table summarizes the stock option awards granted to our named executive officers during the year ended December 30, 2017:
 
   Name
 Grant Date
 All Other Option Awards: Number of Securities Underlying Options
 Exercise or Base Price of Option Awards ($/Share)
 
Grant Date Fair Value of Stock and Option Awards ($)(1)
 
Frank L. Jaksch, Jr.
- 
  - 
  - 
  - 
Robert N. Fried
3/12/2017
  500,000 
 $2.715(2)
 $876,014 
Kevin M. Farr
 
10/5/2017
 
  1,000,000 
 $4.24(3)
 $3,040,183 
Troy A. Rhonemus
- 
  - 
  - 
  - 
Thomas C. Varvaro
- 
  - 
  - 
  - 
 
(1)
Based upon the aggregate grant date fair value of stock option awards. See Note 11 of the ChromaDex Corporation Consolidated Financial Report included in the Form 10-K for the year ended December 30, 2017, filed with the SEC on March 15, 2018, for a description of certain assumptions in the calculation of the fair value of the Company’s stock options.
 
(2)
The exercise price of the stock options awarded was determined in accordance with our Second Amended and Restated 2007 Equity Incentive Plan, which provides that the exercise price for an option granted be the average of the highest and lowest trading prices of our common stock on the date of grant.
 
(3)
The exercise price of the stock options awarded was determined in accordance with our Amended 2017 Equity Incentive Plan, which provides that the exercise price for an option granted be the closing price of our common stock on the date of grant.
 
The following table summarizes the restricted stock awards granted to our named executive officers during the year ended December 30, 2017:
 
Name
 
Grant Date
 
 
All Other Stock Awards: Number of Shares of Stock or Units
 
 

Grant Date Fair Value of Stock and Option Awards ($)(1)
 
 
Frank L. Jaksch, Jr.
-
  - 
  - 
Robert N. Fried
3/12/2017

  166,667(2)
 $453,334 
Robert N. Fried
12/20/2017

  333,333(3)
 $2,086,665 
Kevin M. Farr
-
  - 
  - 
Troy A. Rhonemus
-
  - 
  - 
Thomas C. Varvaro
-
  - 
  - 
 
(1)
Based on the closing price of our common stock on the date of grant.
 
(2)
Awarded under our Second Amended and Restated 2007 Equity Incentive Plan.
 
(3)
Awarded under our Amended 2017 Equity Incentive Plan.
 
 
 
-26-
 
 
Option Exercises and Stock Vested
 
The following table summarizes, with respect to our named executive officers, all options that were exercised and restricted
stock vested during the year ended December 30, 2017:
 
 
 
Option Awards
 
 
Restricted Stock
 
Name
 
Number of Shares Acquired on Exercise (#)
 
 
Value Realized
on Exercise ($)
 
 
Number of Shares
Vested (#)
 
 
Value Realized
on Vesting ($)
 
Frank L. Jaksch Jr.
  58,400 
 $98,893 
  - 
 $- 
Robert N. Fried
  - 
 $- 
  500,000 
 $3,130,000 
Kevin M. Farr
  - 
 $- 
  - 
 $- 
Troy A. Rhonemus
  - 
 $- 
  - 
 $- 
Thomas C. Varvaro
  634,742 
 $1,901,819 
  - 
 $- 
 
Outstanding Equity Awards at Fiscal Year End
 
The following table sets forth certain information regarding stock options and restricted stock granted to our named executive officers outstanding as of December 30, 2017.
 
Outstanding Stock Options at 2017 Fiscal Year-End
 
Name
 
Number of Securities Underlying Unexercised Options (#) Exercisable
 
 
Number of Securities Underlying Unexercised Options (#) Unexercisable
 
 
 
 
 
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
 
 
Option Exercise Price ($)
 
 
Option Expiration Date
 
Frank L. Jaksch Jr.
  174,934 
   
 
   
  4.50 
4/21/2018
 
  50,000 
   
 
   
  4.50 
4/21/2018
 
  33,334 
   
 
   
  1.50 
5/13/2019
 
  33,334 
   
 
   
  5.10 
5/20/2020
 
  41,667 
   
 
   
  4.62 
5/10/2021
 
  83,334 
   
 
   
  1.92 
8/28/2022
 
  633,810 
   
 
   
  2.835 
9/15/2022
 
  43,750 
  6,250 
(1)
   
  3.75 
6/18/2024
 
  30,208 
  19,793 
(2)
   
  3.66 
7/6/2025
 
  28,333 
  56,667 
(3)
   
  4.04 
8/15/2026
Robert N. Fried
  66,667 
   
       
   
  3.30 
7/30/2025
 
  20,000 
   
       
   
  2.605 
11/16/2026
 
  125,000 
  375,000 
(4)
   
  2.715 
3/12/2027
Kevin M. Farr
  55,556 
  944,444 
(5)
   
  4.24 
10/5/2027
Troy A. Rhonemus
  133,335 
   
       
   
  1.89 
1/25/2023
 
  83,334 
   
       
   
  5.25 
2/21/2024
 
  21,875 
  3,126 
(6)
   
  3.75 
6/18/2024
 
  20,139 
  13,195 
(7)
   
  3.66 
7/6/2025
 
  16,667 
  33,333 
(8)
   
  4.04 
8/15/2026
Thomas C. Varvaro
  868 
  5,206 
(9)
   
  3.75 
5/19/2018
 
  868 
  16,491 
(9)
   
  3.66 
5/19/2018
 
  1,459 
  45,208 
(9)
   
  4.04 
5/19/2018
  
 
(1)
1,042 of Mr. Jaksch’s options vest on 18 th of every month through June 18, 2018.
(2)
1,042 of Mr. Jaksch’s options vest on 6 th of every month through July 6, 2019.
(3)
1,771 of Mr. Jaksch’s options vest on 15 th of every month through August 15, 2020.
(4)
13,889 of Mr. Fried’s options vest on 12 th of every month through March 12, 2020.
(5)
27,778 of Mr. Farr’s options vest on 5 th of every month through October 5, 2020.
(6)
521 of Mr. Rhonemus’ options vest on 18 th of every month through June 18, 2018.
(7)
694 of Mr. Rhonemus’ options vest on 6 th of every month through July 6, 2019.
(8)
1,042 of Mr. Rhonemus’ options vest on 15 th of every month through August 15, 2020.
(9)
Mr. Varvaro's outstanding options vested on January 27, 2018.
 
 
 
-27-
 
 
Outstanding Restricted Stock at 2017 Fiscal Year-End
 
Name
 
Number of Shares or Units of Stock That Have Not Vested (#)
 
 
Market Value of Shares of Units of Stock That Have Not Vested ($)
 
 
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) (1)
 
 
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) (2)
 
Frank L. Jaksch Jr.
   
   
  166,668 
 $980,008 
Robert N. Fried
   
   
   
 $ 
Kevin M. Farr
   
   
   
 $ 
Troy A. Rhonemus
   
   
   
 $ 
Thomas C. Varvaro
   
   
  166,668 
 $980,008 
 
(1)
On June 6, 2012, Frank L. Jaksch Jr. and Thomas C. Varvaro were each awarded 83,334 shares of restricted stock. In addition, on January 2, 2014, Mr. Jaksch and Mr. Varvaro were each awarded 83,334 shares each of restricted stock. These shares were to originally vest upon the earlier to occur of the following: (i) the market price of the Company’s stock exceeds a certain price, or (ii) one of other certain triggering events, including the termination of the officers and members of the board of directors without cause for any reason. On March 7, 2016, the Company and each of the executives amended the restricted stock awards to provide that the awards shall not vest upon the market price of the Company’s stock exceeding a certain price or listing of the Company’s stock on a national securities exchange. On January 27, 2018, Mr. Varvaro resigned and his 166,668 shares of restricted stock fully vested.
 
(2)
The amounts in the column titled “Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested” above reflect the aggregate market value based on the closing market price of the Company’s stock on December 30, 2017.
 
Equity Compensation Plan Information
 
The following table provides information about our equity compensation plans as of December 30, 2017:
 
 
    A 
 
 
    B 
 
 
    C 
 
Plan Category
 
Number of securities to be issued upon exercise of outstanding options,warrants and rights
 
 
Weighted-average exercise price of outstanding options, warrants and rights
 
 
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A))
 
 
    
    
    
Equity compensation plans approved by security holders
  6,534,167 
 $3.59 
  1,392,211 
 
    
    
    
Equity compensation plans not approved by security holders
  - 
  - 
  - 
 
    
    
    
Total
  6,534,167 
 $3.59 
  1,392,211 
 
 
 
-28-
 
 
Chief Executive Officer Pay Ratio
 
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the related SEC rule (the “Rule”), the Company is required to provide to its shareholders specified disclosure regarding the relationship of CEO total compensation to the total compensation of its median employee, referred to as “pay-ratio” disclosure.
 
For fiscal 2017,
 
the median of the annual total compensation of all employees of the Company (other than the CEO) was $74,806 and
the annual total compensation of the CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was $453,580.
Based on this information, the ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 6.1 to 1.
 
Set forth below is a description of the methodology the Company used to identify the median employee for purposes of the Rule.
 
To determine the Company’s total population of employees as of December 30, 2017, the Company included all of its full-time and part-time employees, including employees of consolidated subsidiaries. To identify the “median employee” from the Company’s employee population as determined above, the Company compared the aggregate amount of each employee’s 2017 base salary, incentive bonus paid, equity awards granted in 2017 and matching 401(k) contributions. In making this determination, the Company annualized the compensation of employees who were employed by the Company for less than the entire fiscal year. This compensation measure was consistently applied to all employees included in the calculation and reasonably reflects the annual compensation of employees.
 
Using this approach, the Company selected the employee at the median of its employee population. The Company then calculated annual total compensation for this employee using the same methodology used to calculate annual total compensation for the named executive officers as set forth in the Summary Compensation Table. The Company determined that the employee’s annual total compensation for the fiscal year ended December 30, 2017 was $74,806.
 
 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file initial reports of ownership and reports of changes in ownership with the SEC and to furnish us with copies of such reports. To our knowledge, and based solely on our review of the copies of such forms furnished to us and written representations that no other reports were required, we believe that all Section 16(a) filing requirements applicable to our executive officers, directors and 10% stockholders were met during the year ended December 30, 2017 except as follows: Stephen Allen, Stephen A. Block, Jeff Baxter, Kurt A. Gustafson and Steven Rubin were each late filing a Form 4 for option grants received on June 20, 2017.
 
 
 
-29-
 
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
Transactions with Related Persons
 
The following is a description of transactions since January 1, 2017 to which the Company has been a party, in which the amount involved exceeded or will exceed $120,000, and in which any of the Company’s executive officers, directors or holders of more than 5% of its common stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest, other than compensation, termination and change of control arrangements, which are described under "Executive Compensation."
 
Asset acquisition
 
On March 12, 2017, the Company acquired all of the outstanding equity interests of Healthspan Research LLC ("Healthspan") from Robert Fried, Jeffrey Allen and Dr. Charles Brenner (the "Sellers"). At the time of the acquisition, Robert Fried was a member of the Board, a position he has held since July 2015.
 
Upon the closing of, and as consideration for, the acquisition, the Company issued an aggregate of 367,648 shares of the Company’s common stock to the Sellers. The fair value of these shares was approximately $1.0 million based on the closing price of $2.72 per share on March 12, 2017. Also on March 12, 2017, the Company appointed Robert Fried as President and Chief Strategy Officer, effective immediately. Mr. Fried continues to serve as a member of the Board, but resigned as a member of the Nominating and Corporate Governance Committee of the Board.
 
Healthspan was formed in August 2015 to offer and sell finished bottle product TRU NIAGEN® directly to consumers through internet-based selling platforms. TRU NIAGEN® is currently the Company's leading product. Prior to the acquisition, the Company has supplied certain amount of NIAGEN® to Healthspan as a raw material inventory in exchange for a 4% equity interest in Healthspan. An additional 5% equity interest was received for granting certain exclusive rights to resell NIAGEN® prior to the total acquisition on March 12, 2017.
 
In cancellation of a loan owed by Healthspan to Mr. Fried prior to the acquisition, the Company repaid $32,500 to Mr. Fried on March 13, 2017 and also repaid $100,000 on March 9, 2018. No interest was paid for the $100,000 repaid on March 9, 2018.
 
Sale of consumer products
 
During July 2017, the Company entered into an exclusivity agreement (the "Watsons Agreement") with A.S. Watson Retail (HK) Limited (“Watsons”), whereby the Company agreed to exclusively sell its TRU NIAGEN® dietary supplement product to Watsons in certain territories in Asia. During the year ended December 30, 2017, the Company sold approximately $4.1 million of TRU NIAGEN® dietary supplement product pursuant to the Watsons Agreement. As of December 30, 2017, the trade receivable from Watsons was approximately $1.0 million.
 
Li Ka Shing, who beneficially owns more than 10% of the Company's common stock, beneficially owns approximately 30% of an entity that beneficially owns approximately 75% of Watsons. In accordance with the Company's Related-Person Transactions Policy, the Audit Committee ratified the terms of the Watsons Agreement.
 
Financings
 
In April 2017, the Company entered into a Securities Purchase Agreement with certain purchasers named therein, pursuant to which the Company agreed to sell and issue up to $25.0 million of its common stock at a purchase price of $2.60 per share in three tranches of approximately $3.5 million, $16.4 million and $5.1 million, respectively. The following table sets forth the number of shares of common stock purchased by holders of more than 5% of the Company’s common stock or entities affiliated with them:
 
Name
 
Shares of Common Stock
 
Champion River Ventures Limited
  5,769,230 
Pioneer Step Holdings Limited
  3,846,155 
 
 
 
-30-
 
 
 
In November 2017, the Company entered into a Securities Purchase Agreement with certain purchasers named therein, pursuant to which the Company agreed to sell and issue up to $23.0 million of its common stock at a purchase price of $4.10 per share. The following table sets forth the number of shares of common stock purchased by holders of more than 5% of the Company’s common stock or entities affiliated with them:
 
 
Name
 
Shares of Common Stock
 
Champion River Ventures Limited
  731,707 
Pioneer Step Holdings Limited
  487,805 
Winsave Resources Limited
  1,219,512 
 
Employment Arrangements
 
The Company currently maintains written employment agreements with several of its named executive officers, as described in "Executive Compensation."
 
Equity Granted to Executive Officers and Directors
 
The Company has granted equity to its executive officers and directors, as more fully described in "Executive Compensation."
 
Indemnification Agreements
 
The Company has entered, and intends to continue to enter, into indemnification agreements with its directors and executive officers, in addition to the indemnification provided for in the Company’s bylaws. These agreements, among other things, require the Company to indemnify directors and executive officers for certain expenses incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers.
 
Review, approval or ratification of transactions with related persons.
 
On an ongoing basis, the Audit Committee reviews all “related party transactions” (those transactions that are required to be disclosed by SEC Regulation S-K, Item 404 and under NASDAQ rules), if any, for potential conflicts of interest and all such transactions must be approved by the Audit Committee. In November 2016, the Company adopted a written Related-Person Transactions Policy that sets forth the Company’s policies and procedures regarding the identification, review, consideration and approval or ratification of “related-persons transactions.” For purposes of the Company’s policy only, a “related-person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company and any “related person” are participants involving an amount that exceeds $120,000. Transactions involving compensation for services provided to the Company as an employee, director, consultant or similar capacity by a related person are not covered by this policy. A related person is any executive officer, director, or more than 5% stockholder of the Company, including any of their immediate family members, and any entity owned or controlled by such persons. Under the policy, where a transaction has been identified as a related-person transaction, management must present information regarding the proposed related-person transaction to the Audit Committee (or, where Audit Committee approval would be inappropriate, to another independent body of the Board of Directors) for consideration and approval or ratification.
 
 
 
-31-
 
 
PROPOSAL 2:
APPROVAL OF AN AMENDMENT TO THE 2017 EQUITY INCENTIVE PLAN
 
Overview
 
On April 24, 2018, our Board of Directors amended the ChromaDex Corporation 2017 Equity Incentive Plan, as amended (the “2017 Plan”), subject to stockholder approval, to among other things, increase the number of shares of common stock authorized for issuance under the 2017 Plan by 6 million shares. We refer to the 2017 Plan, as amended on April 24, 2018, as the “Amended 2017 Plan” throughout this proxy statement. References in this proposal to our Board of Directors include the Compensation Committee of the Board, where applicable.
 
A description of the material terms of the Amended 2017 Plan are summarized below. The key differences between the terms of the 2017 Plan and the Amended 2017 Plan are as follows:
 
● 
The Amended 2017 Plan provides that an additional 6 million shares may be issued pursuant to stock awards granted under the Amended 2017 Plan.
 
● 
The Amended 2017 Plan eliminates references to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Amended 2017 Plan eliminates individual grant limits that applied under the 2017 Plan to awards that were intended to comply with the exemption for “performance-based compensation” under Code Section 162(m).
 
● 
The Amended 2017 Plan eliminates references to performance cash awards, because those awards were included in the 2017 Plan in order to allow the Company to comply with the exemption for “performance-based compensation” under Section 162(m), which has been repealed, effective for taxable years beginning after December 31, 2017.
 
In this Proposal 2, our Board of Directors is requesting stockholder approval of the Amended 2017 Plan, including the increase to the number of shares of common stock authorized for issuance under the Amended 2017 Plan by 6 million shares. The Board of Directors believes that the Amended 2017 Plan is an integral part of our long-term compensation philosophy and the Amended 2017 Plan is necessary to continue providing the appropriate levels and types of equity compensation for our employees.
 
Equity Awards Are an Integral Component of Our Compensation Program
 
Equity awards have been historically and, we believe, will continue to be an integral component of our overall compensation program for our employees and directors. Approval of the Amended 2017 Plan will allow us to continue to grant stock options and other equity awards at levels we determine to be appropriate in order to attract new employees and directors, retain our existing employees and to provide incentives for such persons to exert maximum efforts for the Company’s success and ultimately increase stockholder value. The Amended 2017 Plan allows the Company to utilize a broad array of equity incentives with flexibility in designing such incentives, including traditional option grants, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, and other stock awards.
 
At March 31, 2018, stock awards covering an aggregate of 7,520,804 shares were outstanding under our 2007 Equity Incentive Plan (the “2007 Plan”) and the 2017 Plan. In addition, 922,862 shares remained available for future grant under the 2017 Plan as of such date.
 
The following table provides certain additional information regarding our equity incentive program.
 
 
 
As of 
March 31, 2018
 
Total number of shares of common stock subject to outstanding stock options 
  7,520,804 
Weighted-average exercise price of outstanding stock options 
 $3.87 
Weighted-average remaining term of outstanding stock options 
 7.1 years     
Total number of shares of common stock subject to outstanding full value awards
  183,335 
Total number of shares of common stock available for grant under the 2017 Plan
  922,862 
Total number of shares of common stock available for grant under other equity incentive plans
  0 
Total number of shares of common stock outstanding 
  54,840,210 
Per-share closing price of common stock as reported on NASDAQ Global Select Market
 $4.20 
 
 
 
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The Size of Our Share Reserve Increase Request Is Reasonable
 
If our request to increase the share reserve of the Amended 2017 Plan by 6 million shares is approved, we will have approximately 6.5 million shares available for grant after our Annual Meeting, which we anticipate being a sufficient amount of equity for attracting, retaining, and motivating employees for at least the two next years. We anticipate seeking approval from our stockholders in 2020 of an additional increase to the share reserve under the Amended 2017 Plan.
 
The size of our request is also reasonable in light of the equity granted to our employees and directors over the last three years.
 
We Manage Our Equity Incentive Award Use Carefully, and Dilution Is Reasonable
 
We continue to believe that equity awards such as stock options and other types of stock awards are a vital part of our overall compensation program. Our compensation philosophy reflects broad-based eligibility for equity incentive awards, and we grant awards to substantially all of our employees. However, we recognize that equity awards dilute existing stockholders, and, therefore, we must responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring our equity compensation share reserve, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate number of equity incentive awards necessary to attract, reward, and retain employees.
 
The following table shows our historical dilution and burn rate percentages for fiscal years 2015, 2016 and 2017.
 
As of End of Fiscal Year
 
2017
 
 
2016
 
 
2015
 
Full Dilution (1) 
  13.1%
  14.7%
  15.6%
Gross Burn Rate (2) 
  6.2%
  2.1%
  2.0%
 
(1)
Full dilution is calculated as (shares available for grant + shares subject to outstanding equity incentive awards)/(common stock outstanding + shares available for grant + shares subject to outstanding equity incentive awards).
(2)
Gross Burn Rate is calculated as (shares subject to options granted + shares subject to other equity incentive awards granted)/weighted average common shares outstanding.
 
Burn Rate
 
The following table provides detailed information regarding the activity related to our equity incentive plans for fiscal years 2015, 2016 and 2017.
 
Fiscal Year
 
2017
 
 
2016
 
 
2015
 
Total number of shares of common stock subject to stock options granted
  2,285,404 
  782,485 
  730,562 
Total number of shares of common stock subject to full value awards granted
  500,000 
  - 
  - 
Weighted-average number of shares of common stock outstanding
  44,598,879 
  37,294,321 
  35,877,341 
Burn Rate 
  6.2%
  2.1%
  2.0%
 
The approval of the Amended 2017 Plan will allow us to continue to grant stock options, and would allow us to grant other awards described below, at levels determined appropriate by our Board of Directors or its delegate. The Amended 2017 Plan will continue to provide us with flexibility in designing equity incentives in an environment where a number of companies have moved from traditional option grants to other stock-based awards, including stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards and other stock awards. To date, we have never made any awards other than stock option grants and restricted stock awards; however, at the discretion of the Board of Directors or its delegate, we may do so in the future. The Amended 2017 Plan allows us to utilize multiple types of equity incentives in order to secure and retain the services of our employees, consultants and directors, and to provide long-term incentives that align the interests of our employees, consultants and directors with the interests of our stockholders.
 
 
 
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Important Aspects of Our Amended 2017 Plan Designed to Protect Our Stockholders’ Interests
 
The Amended 2017 Plan includes certain provisions that are designed to protect our stockholders’ interests and to reflect corporate governance best practices including:
 
Stockholder approval is required for additional shares. The Amended 2017 Plan does not contain an annual “evergreen” provision. Thus, stockholder approval is required each time we need to increase the share reserve allowing our stockholders the ability to have a say on our equity compensation programs.
 
Repricing is not allowed. The Amended 2017 Plan prohibits the repricing of outstanding equity awards and the cancelation of any outstanding equity awards that have an exercise price or strike price greater than the current fair market value of our common stock in exchange for cash or other stock awards under the Amended 2017 Plan.
 
Submission of amendments to Amended 2017 Plan to stockholders. The Amended 2017 Plan requires stockholder approval for material amendments to the Amended 2017 Plan, including as noted above, any increase in the number of shares reserved for issuance under the Amended 2017 Plan.
 
Flexibility in designing equity compensation scheme. The Amended 2017 Plan allows us to provide a broad array of equity incentives, including traditional option grants, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, and other stock awards. By providing this flexibility we can quickly and effectively react to trends in compensation practices and continue to offer competitive compensation arrangements to attract and retain the talent necessary for the success of our business.
 
Restrictions on dividends. The Amended 2017 Plan provides that (i) no dividends or dividend equivalents may be paid with respect to any shares of our common stock subject to an award before the date such shares have vested, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of the applicable award agreement (including any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to us on the date such shares are forfeited to or repurchased by us due to a failure to vest.
 
Director Compensation Limit. The Amended 2017 Plan contains a limit on the total annual compensation that may be paid or granted to any non-employee director for service as a director.
 
No liberal change in control definition. The change in control definition in the 2018 Plan is not a “liberal” definition. A change in control transaction must actually occur in order for the change in control provisions in the 2018 Plan to be triggered.
 
No discounted stock options or stock appreciation rights. All stock options and stock appreciation rights granted under the 2018 Plan must have an exercise or strike price equal to or greater than the fair market value of our common stock on the date the stock option or stock appreciation right is granted.
 
Administration by independent committee. The 2018 Plan will be administered by the members of our Compensation Committee, all of whom are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and “independent” within the meaning of the NASDAQ listing standards.
 
General 2017 Plan Information
 
Our 2017 Plan was adopted by the Board of Directors on April 6, 2017 and approved by our stockholders on June 20, 2017. The 2017 Plan was the successor to and continuation of the 2007 Plan. All outstanding stock awards granted under the 2007 Plan and the 2000 Plan (collectively, the “Prior Plans”) continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the applicable Prior Plan; provided, however, that any shares subject to outstanding stock awards granted under a Prior Plan that expire or terminate for any reason prior to exercise become available for issuance pursuant to stock awards granted under the Amended 2017 Plan. Following June 20, 2017, the effective date of the 2017 Plan, no additional stock awards have been granted under the Prior Plans. As of June 20, 2017, the share reserve of the 2017 Plan consisted of 3,000,000 new shares and up to 5,793,960 shares subject to stock awards under the Prior Plans that may become available for issuance pursuant to stock awards under the 2017 Plan. In January 2018, our Board of Directors adopted an amendment to the 2017 Plan to increase the number of shares reserved for issuance under the 2017 Plan by 500,000 shares (the “Inducement Shares”). The Inducement Shares were not subject to stockholder approval and may be used for stock awards (“Inducement Awards”) only for persons not previously an employee of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.
 
 
 
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In this Proposal 2, stockholders are requested to approve the Amended 2017 Plan. The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on this matter at the Annual Meeting will be required to approve the adoption of the Amended 2017 Plan. Abstentions will be counted toward the tabulation of votes cast on Proposal 2 and will have the same effect as negative votes. Broker non-votes are counted toward a quorum, but are not counted for any purpose in determining whether this matter has been approved.
 
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
 
Description of the Amended 2017 Plan
 
The material features of the Amended 2017 Plan are outlined below. This summary is qualified in its entirety by reference to the complete text of the Amended 2017 Plan. Stockholders are urged to read the actual text of the Amended 2017 Plan in its entirety, which is appended to this proxy statement as Appendix A and may be accessed from the SEC’s website at www.sec.gov.
 
Background
 
The terms of the Amended 2017 Plan provide for the grant of both nonstatutory stock options (“NSOs”) and incentive stock options (“ISOs”), restricted stock, restricted stock units, stock appreciation rights, performance stock awards, and other stock awards. Inducement Awards may be in the form of any of the above-mentioned types of stock awards, other than incentive stock options.
 
Shares Available for Awards
 
If this Proposal 2 is approved, the total number of shares of our common stock reserved for issuance under the Amended 2017 Plan will consist of:
 
● 
the number of shares that are subject to stock awards outstanding under the 2000 Plan and the 2007 Plan, as of June 20, 2017, that subsequently terminate prior to exercise or are reacquired, withheld or not issued to satisfy a tax withholding obligation in connection with an award other than a stock option or stock appreciation right; plus
 
● 
3,000,000 new shares that were added to the 2017 Plan on June 20, 2017; plus
 
● 
500,000 Inducement Shares that were added to the 2017 Plan on January 21, 2018; plus
 
● 
6,000,000 shares being added under this Proposal 2.
 
We call this aggregate number the “Share Reserve”. The Share Reserve under the Amended 2017 Plan may be exceeded so long as the number of shares of common stock actually issued upon the vesting or exercise of equity awards made under the Amended 2017 Plan does not exceed the Share Reserve.
 
As of March 31, 2018, there were 922,862 shares of common stock (plus any shares that might in the future be returned to the plan as a result of cancellation or expiration of options) available for future grant under the 2017 Plan. In addition, as of such date, options covering an aggregate of 7,520,804 shares, collectively, and 183,335 shares of restricted stock were outstanding under the Prior Plans and the 2017 Plan. The weighted average exercise price of all options outstanding as of March 31, 2018 was approximately $3.87 and the weighted average remaining term of such options was approximately 7.1 years. A total of 54,840,210 shares of our common stock were outstanding as of March 31, 2018.
 
If a stock award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such stock award having been issued, or (ii) is settled in cash, such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of common stock that may be issued under the Amended 2017 Plan. If we issue common stock pursuant to a stock award and the common stock is later forfeited, then the forfeited shares will become available for issuance under the Amended 2017 Plan. Any shares we reacquire pursuant to our withholding obligations and any shares we reacquire as consideration for the exercise of an option or stock appreciation right also become available for issuance under the Amended 2017 Plan.
 
Eligibility
 
All of our approximately 90 employees, approximately 5 consultants and our 7 non-employee directors are eligible to participate in the Amended 2017 Plan and may receive all types of awards; provided that (i) incentive stock options may be granted under the Amended 2017 Plan only to our employees in the United States, and (ii) Inducement Awards may be granted under the Amended 2017 Plan only to persons not previously employed by us, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.
 
 
 
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Limit on Non-Employee Director Compensation
 
Under the Amended 2017 Plan, the following limit on compensation will apply to non-employee directors. The aggregate value of all compensation granted or paid, as applicable, to any individual for service as a non-employee director with respect to any period commencing on the date of the Company’s Annual Meeting of Stockholders for a particular year and ending on the day immediately prior to the date of the Company’s Annual Meeting of Stockholders for the next subsequent year, including awards granted and cash fees paid by the Company to such non-employee director, will not exceed (i) $600,000 in total value or (ii) in the event such non-employee director is first appointed or elected to the Board during such period, $900,000 in total value, in each case calculating the value of any awards based on the grant date fair value of such awards for financial reporting purposes.
 
Administration
 
The Amended 2017 Plan is administered by our Board of Directors, which may in turn delegate authority to administer the plan to a committee. Our Board of Directors has delegated administration of the Amended 2017 Plan to our Compensation Committee and an additional Non-Officer Stock Option Committee created by the Board that has separate but concurrent jurisdiction with the Compensation Committee to make certain discretionary equity awards under the Amended 2017 Plan to all eligible employees other than executive management. Subject to the terms of the Amended 2017 Plan, our Compensation Committee may determine the recipients, numbers and types of stock awards to be granted, and terms and conditions of the stock awards, including the period of their exercisability and vesting. Subject to the terms of the Amended 2017 Plan and limitations on the size of individual and aggregate grants that are set quarterly by our Board of Directors, our Non-Officer Stock Option Committee may determine the recipients and numbers of stock options to be granted, provided that the terms and conditions of the option awards conform to pre-approved standards regarding the period of their exercisability and vesting. The fair market value applicable to a stock award and the exercise price of options granted under the Amended 2017 Plan is determined in accordance with the terms of the Amended 2017 Plan.
 
At the discretion of our Board of Directors, the Compensation Committee may consist solely of two or more “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act. Our Compensation Committee has the authority to delegate certain administrative powers to a subcommittee of one or more members. As used herein, except as explicitly stated otherwise, with respect to the Amended 2017 Plan, the “Board” refers to any committee the Board of Directors appoints (including the Compensation Committee and the Non-Officer Stock Option Committee) or, if applicable, any subcommittee, as well as to the Board of Directors itself.
 
Inducement Awards may be granted only by an “inducement committee” that consists of the majority of the Company’s independent directors, or that consists of the Company’s independent compensation committee under applicable NASDAQ listing rules.
 
Repricing
 
Under the Amended 2017 Plan, the Board does not have the authority to reprice any outstanding equity awards by reducing the exercise price of the stock award or cancelling any outstanding stock awards in exchange for cash or other stock awards under the plan without the approval of our stockholders (which approval must be obtained within 12 months prior to the repricing event).
 
Dividends and Dividend Equivalents
 
The Amended 2017 Plan provides that dividends or dividend equivalents may be paid or credited with respect to any shares of our common stock subject to an award (other than a stock option or stock appreciation right), as determined by the Board and contained in the applicable award agreement; provided, however, that (i) no dividends or dividend equivalents may be paid with respect to any such shares before the date such shares have vested, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of the applicable award agreement (including any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to us on the date such shares are forfeited to or repurchased by us due to a failure to vest.
 
Options
 
Options may be granted under the Amended 2017 Plan pursuant to stock option agreements. The Amended 2017 Plan permits the grant of options that qualify as incentive stock options, or ISOs, and nonstatutory stock options, or NSOs. Individual stock option agreements may be more restrictive as to any or all of the permissible terms described in this section.
 
The exercise price of NSOs may not be less than 100% of the fair market value of the common stock subject to the option on the date of grant. The exercise price of ISOs may not be less than 100% of the fair market value of the common stock subject to the option on the date of grant and, in some cases (see “Limitations” below), may not be less than 110% of such fair market value.
 
 
 
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The term of stock options granted under the Amended 2017 Plan may not exceed ten years. Unless the terms of an option holder’s stock option agreement provide for earlier or later termination, if an option holder’s service relationship with us, or any affiliate of ours, ceases due to (i) disability, the option holder may exercise any vested options for up to 12 months after the date the service relationship ends or (ii) death, the option holder’s beneficiary, may exercise any vested options for up to 18 months after the date the service relationship ends. Except as explicitly provided otherwise in an option holder’s award agreement, if an option holder’s service relationship with us is terminated for “cause” as defined in the Amended 2017 Plan, all options terminate upon the service termination date, and the option holder is prohibited from exercising any option from the time of such termination. If an option holder’s service relationship with us ceases for any reason other than for cause or upon disability or death, the option holder may exercise any vested options for up to three months after the date the service relationship ends, unless the terms of the stock option agreement provide for a longer or shorter period to exercise the option. In no event may an option be exercised after its expiration date. Under the Amended 2017 Plan, the option term may be extended in the event that exercise of the option following termination of service is prohibited by applicable securities laws or if the sale of stock received upon exercise of an option would violate our insider trading policy. In no event, however, may any option be exercised beyond the expiration of its term.
 
Acceptable forms of consideration for the purchase of our common stock issued under the Amended 2017 Plan will be determined by our Board and may include cash, check, bank draft or money order made payable to us, common stock previously owned by the option holder, payment through a broker assisted exercise or, for NSOs only, a net exercise feature, or other legal consideration approved by our Board.
 
Options granted under the Amended 2017 Plan may become exercisable in cumulative increments, or “vest”, as determined by our Board at the rate specified in the option agreement. Shares covered by different options granted under the Amended 2017 Plan may be subject to different vesting schedules as our Board may determine. Vesting can be time-based or performance-based or can be a hybrid of performance- and time-based vesting. Our Board also has flexibility to provide for accelerated vesting of equity awards in certain events. Our Board and Compensation Committee intend to continue to grant stock options to our officers with accelerated vesting, subject to additional conditions, in the event of a change of control of the Company as defined in the Amended 2017 Plan.
 
Generally, an option holder may not transfer a stock option other than by will or the laws of descent and distribution or a domestic relations order. However, an option holder may designate a beneficiary who may exercise the option following the option holder’s death.
 
Limitations
 
The aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to ISOs that are exercisable for the first time by a participant during any calendar year under all of our stock plans may not exceed $100,000. The options or portions of options that exceed this limit are treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any affiliate unless the following conditions are satisfied:
 
● 
the option exercise price must be at least 110% of the fair market value of the stock subject to the option on the date of grant; and
 
● 
the term of any ISO must not exceed five years from the date of grant.
 
The aggregate maximum number of shares of common stock that may be issued pursuant to the exercise of ISOs will be 17.6 million under the Amended 2017 Plan. In addition, no employee may be granted options, stock appreciation rights, or other stock awards under the Amended 2017 Plan covering more than two million shares of our common stock in any calendar year.
 
Restricted Stock Awards
 
Restricted stock awards may be granted pursuant to restricted stock award agreements. A restricted stock award may be granted in consideration for cash, check, bank draft or money order payable to us, the recipient’s past or future services performed for us or an affiliate of ours, or any other form of legal consideration acceptable to the Board. Shares of our common stock acquired under a restricted stock award may be subject to forfeiture to us in accordance with a vesting schedule to be determined by our Board. Rights to acquire shares of our common stock under a restricted stock award may be transferred only upon such terms and conditions as are set forth in the restricted stock award agreement.
 
 
 
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Restricted Stock Unit Awards
 
Restricted stock unit awards may be granted pursuant to restricted stock unit award agreements. Payment of any purchase price may be made in any legal form acceptable to the Board. We will settle a payment due to a recipient of a restricted stock unit award by delivery of shares of our common stock, by cash, by a combination of cash and stock as deemed appropriate by our Board, or in any other form of consideration determined by our Board and set forth in the restricted stock unit award agreement. Dividend equivalents may be credited in respect of shares of our common stock covered by a restricted stock unit award. Restricted stock unit awards may be subject to vesting in accordance with a vesting schedule to be determined by our Board. Except as otherwise provided in the applicable restricted stock unit award agreement, restricted stock units that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.
 
Stock Appreciation Rights
 
Stock appreciation rights may be granted pursuant to a stock appreciation right agreement. Each stock appreciation right is denominated in common stock share equivalents. The strike price of each stock appreciation right will be determined by our Board, but shall in no event be less than 100% of the fair market value of the stock subject to the stock appreciation right at the time of grant. Our Board may also impose restrictions or conditions upon the vesting of stock appreciation rights that it deems appropriate. Stock appreciation rights may be paid in our common stock, in cash, in any combination of the two, or any other form of legal consideration approved by our Board and contained in the stock appreciation right agreement. Stock appreciation rights shall be subject to the same conditions upon termination and restrictions on transfer as stock options under the Amended 2017 Plan.
 
Performance Stock Awards
 
The Amended 2017 Plan provides for the grant of performance stock awards. Performance awards may be granted, may vest or may be exercised based upon the attainment during a certain period of time of certain performance goals. The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained shall be determined by the Board.
 
Performance goals under the Amended 2017 Plan shall be determined by a committee of the Board composed solely of outside directors members, based on any one or more of the following performance criteria: (i) cash flow; (ii) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, earnings before interest, taxes and depreciation and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholder equity; (vii) total stockholder return or growth in total stockholder return either directly or in relation to a comparative group; (viii) return on capital; (ix) return on assets or net assets; (x) revenue, growth in revenue or return on sales; (xi) income or net income; (xii) operating income, (xiii) net operating income or net operating income after tax; (xiv) operating profit or net operating profit; (xv) operating margin; (xvi) return on operating revenue or return on operating profit; (xvii) regulatory filings; (xviii) regulatory approvals, litigation or regulatory resolution goals; (xix) other operational, regulatory or departmental objectives; (xx) budget comparisons; (xxi) growth in stockholder value relative to established indexes, or another peer group or peer group index; (xxiii) development and implementation of strategic plans and/or organizational restructuring goals; (xxiv) development and implementation of risk and crisis management programs; (xxv) improvement in workforce diversity; (xxvi) compliance requirements and compliance relief; (xxvii) safety goals; (xxviii) productivity goals; (xxix) workforce management and succession planning goals; (xxx) economic value added (including typical adjustments consistently applied from generally accepted accounting principles required to determine economic value added performance measures); (xxxi) measures of customer satisfaction, employee satisfaction or staff development; (xxxii) development or marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Company’s revenue or profitability or enhance its customer base; (xxxiii) merger and acquisitions; (xxxiv) implementation or completion of projects or processes (including, without limitation, clinical trial initiation, clinical trial enrollment and dates, clinical trial results, regulatory filing submissions, regulatory filing acceptances, regulatory or advisory committee interactions, regulatory approvals, new and supplemental indications for existing products, and product supply); (xxxv) initiation of phases of clinical trials and/or studies by specific dates; (xxxvi) acquisition of new customers, including institutional accounts; (xxxvii) customer retention and/or repeat order rate; (xxxviii) number of institutional customer accounts (xxxix) budget management; (xl) improvements in sample and test processing times; (xli) regulatory milestones; (xlii) progress of internal research or clinical programs; (xliii) progress of partnered programs; (xliv) partner satisfaction; (xlv) milestones related to samples received and/or tests run; (xlvi) expansion of sales in additional geographies or markets; (xlvii) research progress, including the development of programs; (xlviii) submission to, or approval by, a regulatory body (including, but not limited to the U.S. Food and Drug Administration) of an applicable filing or a product; (xlix) timely completion of clinical trials; (l) milestones related to samples received and/or tests or panels run; (li) expansion of sales in additional geographies or markets; (lii) research progress, including the development of programs; (liii) patient samples processed and billed; (liv) sample processing operating metrics (including, without limitation, failure rate maximums and reduction of repeat rates); (lv) strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property; (lvi) and other similar criteria consistent with the foregoing; and (lvii) other measures of performance selected by the Board. These performance criteria can be calculated under generally accepted accounting principles (“GAAP”) or can be calculated using non-GAAP results as predetermined when establishing the performance goals.
 
 
 
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Other Stock Awards
 
Other forms of stock awards valued in whole or in part with reference to our common stock may be granted either alone or in addition to other stock awards under the Amended 2017 Plan. Our Board will have sole and complete authority to determine the persons to whom and the time or times at which such other stock awards will be granted, the number of shares of our common stock to be granted and all other conditions of such other stock awards. Other forms of stock awards may be subject to vesting in accordance with a vesting schedule to be determined by our Board.
 
Changes to Capital Structure
 
In the event that there is a specified type of change in our capital structure not involving the receipt of consideration by us, such as a stock split or stock dividend, the class and number of shares reserved under the Amended 2017 Plan (including share limits) and the class and number of shares and exercise price or strike price, if applicable, of all outstanding stock awards will be appropriately adjusted.
 
Corporate Transactions
 
In the event of certain significant corporate transactions, our Board has the discretion to take one or more of the following actions with respect to outstanding stock awards under the Amended 2017 Plan:
 
● 
arrange for assumption, continuation, or substitution of a stock award by a surviving or acquiring entity (or its parent company);
 
● 
arrange for the assignment of any reacquisition or repurchase rights applicable to any shares of our common stock issued pursuant to a stock award to the surviving or acquiring corporation (or its parent company);
 
● 
accelerate the vesting and exercisability of a stock award followed by the termination of the stock award;
 
● 
arrange for the lapse of any reacquisition or repurchase rights applicable to any shares of our common stock issued pursuant to a stock award;
 
● 
cancel or arrange for the cancellation of a stock award, to the extent not vested or not exercised prior to the effective date of the corporate transaction, in exchange for cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and
 
● 
arrange for the surrender of a stock award in exchange for a payment equal to the excess of (a) the value of the property the holder of the stock award would have received upon the exercise of the stock award, over (b) any exercise price payable by such holder in connection with such exercise.
 
The Board need not take the same action for each stock award.
 
For purposes of the Amended 2017 Plan, a corporate transaction will be deemed to occur in the event of the consummation of (i) a sale of all or substantially all of our consolidated assets, (ii) a sale of at least 50% of our outstanding securities, (iii) a merger or consolidation in which we are not the surviving corporation, or (iv) a merger or consolidation in which we are the surviving corporation but shares of our outstanding common stock are converted into other property by virtue of the transaction.
 
A stock award may be subject to additional acceleration of vesting and exercisability upon or after a change in control, as provided in the stock award agreement or in any other written agreement between us and the participant, but in the absence of such provision, no acceleration shall occur.
 
Plan Amendments
 
Our Board will continue to have the authority to amend or terminate the Amended 2017 Plan. However, no amendment, including the one put forth in this Proposal 2, or termination of the plan will adversely affect any rights under awards already granted to a participant unless agreed to by the affected participant. We will obtain stockholder approval of any amendment to the Amended 2017 Plan as required by applicable law.
 
U.S. Federal Income Tax Consequences
 
The information set forth below is a summary only and does not purport to be complete. The information is based upon current federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any recipient may depend on his or her particular situation, each recipient should consult the recipient’s tax adviser regarding the federal, state, local, and other tax consequences of the grant or exercise of an award or the disposition of stock acquired as a result of an award. The Amended 2017 Plan is not qualified under the provisions of Section 401(a) of the Code, and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligations.
 
 
 
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Nonstatutory Stock Options
 
Generally, there is no taxation upon the grant of an NSO where the option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. On exercise, an option holder will recognize ordinary income equal to the excess, if any, of the fair market value on the date of exercise of the stock over the exercise price. If the option holder is employed by us, that income will be subject to withholding tax. The option holder’s tax basis in those shares will be equal to their fair market value on the date of exercise of the option, and the option holder’s capital gain holding period for those shares will begin on that date.
 
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the option holder.
 
Incentive Stock Options
 
The Amended 2017 Plan provides for the grant of stock options that qualify as “incentive stock options”, as defined in Section 422 of the Code. Under the Code, an option holder generally is not subject to ordinary income tax upon the grant or exercise of an ISO, subject to alternative minimum tax obligations upon exercise of an ISO. If the option holder holds a share received on exercise of an ISO for more than two years from the date the stock option was granted and more than one year from the date the stock option was exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the holder’s tax basis in that share will be long-term capital gain or loss.
 
If, however, an option holder disposes of a share acquired on exercise of an ISO before the end of the required holding period, which is referred to as a disqualifying disposition, the option holder generally will recognize ordinary income in the year of the disqualifying disposition equal to the excess, if any, of the fair market value of the share on the date the ISO was exercised over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the stock option, the amount of ordinary income recognized by the option holder will not exceed the gain, if any, realized on the sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the stock option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year.
 
For purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired on exercise of an ISO exceeds the exercise price of that stock option generally will be an adjustment included in the option holder’s alternative minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying disposition of the share in the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired on exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the stock option is exercised.  
 
We are not allowed an income tax deduction with respect to the grant or exercise of an ISO or the disposition of a share acquired on exercise of an ISO after the required holding period. If there is a disqualifying disposition of a share, however, we are allowed a deduction in an amount equal to the ordinary income includible in income by the option holder, subject to Section 162(m) of the Code and provided that amount constitutes an ordinary and necessary business expense for us and is reasonable in amount, and either the employee includes that amount in income or we timely satisfy our reporting requirements with respect to that amount.
 
Restricted Stock Awards
 
Generally, the recipient of a restricted stock award will recognize ordinary compensation income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary compensation income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days of his or her receipt of the stock award, to recognize ordinary compensation income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient in exchange for the stock.
 
The recipient’s tax basis for the determination of gain or loss upon the subsequent disposition of shares acquired from stock awards will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested.
 
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock award.
 
 
 
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Stock Appreciation Rights
 
We may grant under the Amended 2017 Plan stock appreciation rights separate from any other award or in tandem with other awards under the Amended 2017 Plan.
 
Where the rights are granted with a strike price equal to the fair market value of the underlying stock on the grant date and where the recipient may only receive the appreciation inherent in the stock appreciation rights in shares of our common stock, the recipient will recognize ordinary compensation income equal to the fair market value of the stock received upon such exercise. If the recipient may receive the appreciation inherent in the stock appreciation rights in cash or other property and the stock appreciation right has been structured to conform to the requirements of Section 409A of the Code, then the cash will be taxable as ordinary compensation income to the recipient at the time that the cash is received.
 
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock appreciation right.
 
Restricted Stock Units
 
Generally, the recipient of a stock unit structured to conform to the requirements of Section 409A of the Code or an exception to Section 409A of the Code will recognize ordinary compensation income at the time the stock is delivered equal to the excess, if any, of the fair market value of the shares of our common stock received over any amount paid by the recipient in exchange for the shares of our common stock. To conform to the requirements of Section 409A of the Code, the shares of our common stock subject to a stock unit award may generally only be delivered upon one of the following events: a fixed calendar date (or dates), separation from service, death, disability or a change in control. If delivery occurs on another date, unless the stock units otherwise comply with or qualify for an exception to the requirements of Section 409A of the Code, in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any taxes owed.
 
The recipient’s tax basis for the determination of gain or loss upon the subsequent disposition of shares acquired from stock units will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.
 
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock award.
 
Section 162 Limitations
 
Compensation of persons who are “covered employees” of the Company is subject to the tax deduction limits of Section 162(m) of the Code. The exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered employees in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
 
Interest of Certain Persons in the Amended 2017 Plan
 
Stockholders should understand that our directors, executive officers and other employees may be considered as having an interest in the approval of the Amended 2017 Plan because they may, in the future, receive awards under it. If approved, the annual grants made to our non-employee directors in connection with our Annual Meeting, beginning with the 2018 Annual Meeting of Stockholders, would be issued under the Amended 2017 Plan. This would include an option for 20,000 shares for each non-employee director. The Board believes that it is important to our growth and long-term success to be able to continue to offer these incentives.
 
 
 
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New Plan Benefits
 
Amended 2017 Plan
 
Name and position (1)
 
Number of units
 
Frank Jaksch, Jr., Chief Executive Officer(2) 
   
Robert Fried, President and Chief Operating Officer(3) 
   
Kevin Farr, Chief Financial Officer 
   
Mark Friedman, General Counsel and Secretary 
   
Troy Rhonemus, Executive Vice President 
   
All Current Executive Officers as a group 
   
All Current Non-Employee Directors as a group(4) 
  120,000(5)
All Current Employees as a group (excluding all current executive officers) 
  100,000 
 
(1)
Except as listed in the table, no other awards that may be made under the Amended 2017 Plan are currently determinable, as there are no guaranteed or contractually required awards. Future grants are subject to approval of our Board or the applicable committee.
 
(2)
In April 2018, the Board of Directors approved a future transition of Mr. Jaksch whereby Mr. Jaksch will transition from his role as Chief Executive Officer, effective as of the conclusion of the Annual Meeting, to serve as Executive Chairman of the Company, contingent and effective upon Mr. Jaksch’s re-election at the Annual Meeting.
 
(3)
In April 2018, the Board of Directors approved a future transition of Mr. Fried whereby Mr. Fried will transition from his role as President and Chief Operating Officer to serve as Chief Executive Officer of the Company, each effective as of the conclusion of the Annual Meeting.
   
(4)
Includes the 6 nominees for re-election at the Annual Meeting.
   
(5)
As described in the paragraph preceding the table, this amount reflects the NSO grants to be made pursuant to our non-employee director compensation plan at the Annual Meeting as described under “Director Compensation” below.
 
 
 
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2017 Equity Incentive Plan Benefits
 
The following table shows, for each of the named executive officers and the various groups indicated, the number of stock awards underlying shares of the Company’s common stock that have been granted (even if not currently outstanding) under the Amended 2017 Plan since its approval by the stockholders in 2017 and through March 31, 2018.
 
 
2017 Equity Incentive Plan, as Amended
 
 
 
 
 
 
 
Number of shares
 
Name and position
 
subject to grant (#)
 
Frank Jaksch, Jr., Chief Executive Officer and Director(1)
  50,000 
Robert Fried, President, Chief Operating Officer and Director(2)
  633,333 
Kevin Farr, Chief Financial Officer
  1,000,000 
Mark Friedman, General Counsel and Secretary
  500,000 
Troy Rhonemus, Executive Vice President
  120,000 
All Current Executive Officers as a Group
  2,303,333 
All Current Non-Executive Directors as a Group
  220,000 
All Current Employees as a Group (including all current non-executive officers)
  2,892,405 
Nominee for Director
    
Frank Jaksch Jr., Chief Executive Officer and Director(1)
  50,000 
Robert Fried, President, Chief Operating Officer and Director(2)
  633,333 
Stephen Block, Non-Executive Director
  20,000 
Jeff Baxter, Non-Executive Director
  20,000 
Kurt Gustafson, Non-Executive Director
  20,000 
Steven Rubin, Non-Executive Director
  60,000 
Wendy Yu, Non-Executive Director
  40,000 
Tony Lau, Non-Executive Director
  40,000 
 
(1) 
In April 2018, the Board of Directors approved a future transition of Mr. Jaksch whereby Mr. Jaksch will transition from his role as Chief Executive Officer, effective as of the conclusion of the Annual Meeting, to serve as Executive Chairman of the Company, contingent and effective upon Mr. Jaksch’s re-election at the Annual Meeting.
 
(2) 
In April 2018, the Board of Directors approved a future transition of Mr. Fried whereby Mr. Fried will transition from his role as President and Chief Operating Officer to serve as Chief Executive Officer of the Company, each effective as of the conclusion of the Annual Meeting.
 
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE CHROMADEX CORPORATION AMENDED 2017 EQUITY INCENTIVE PLAN.
 
 
 
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PROPOSAL 3:
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
The Audit Committee has appointed Marcum LLP (“Marcum”), to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2018 and our Board of Directors has further directed that management submit the selection of its independent registered public accountant firm for ratification by the stockholders at the Annual Meeting. Marcum has audited the Company’s financial statements since 2013. Representatives of Marcum are not expected to be present at the Annual Meeting.
 
Stockholder ratification of the selection of Marcum as the Company’s independent registered public accountants is not required by Delaware law, the Company’s certificate of incorporation, or the Company’s bylaws. However, the Audit Committee is submitting the selection of Marcum to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of different independent registered public accountants at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.
 
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to ratify the selection of Marcum. Abstentions will be counted toward the tabulation of votes cast on Proposal 3 and will have the same effect as negative votes. Broker non-votes will be counted towards a quorum, but will not be counted for any purpose in determining whether Proposal 3 has been approved.
 
Audit Fees
 
The following table sets forth aggregate fees billed to us by Marcum LLP, our independent registered public accounting firm during the fiscal years ended December 30, 2017 and December 31, 2016.
 
 
 
Fiscal Year Ended
 
Marcum, LLP
 
December 30, 2017
 
 
December 31, 2016
 
Audit Fees (1)
 $435,000 
 $331,000 
Audit-Related Fees
 $ 
 $ 
Tax Fees
 $ 
 $ 
All Other Fees