Document
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.    )
 
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Definitive Proxy Statement
 
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Soliciting Material Pursuant to §240.14a-12
 

Mannatech, Incorporated
(Name of Registrant as Specified In Its Charter)
 
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http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12845054&doc=4
FLOWER MOUND, TEXAS


April 19, 2019


Dear Shareholder:

This letter extends to you a personal invitation to join us at our 2019 Annual Shareholders’ Meeting on Tuesday, June 11, 2019, at 9:00 a.m., Central Daylight Time, at the corporate offices of Mannatech, Incorporated, located at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028.

The purpose of this year’s meeting is to (i) elect three Class II directors, (ii) ratify the appointment of our independent registered public accounting firm, (iii) hold an advisory vote on executive compensation (“Say-on-Pay”), (iv) hold an advisory vote on the frequency of future advisory votes on executive compensation (“Say-on-Frequency”) and (v) approve an amendment to the 2017 Stock Incentive Plan to increase the number of shares of common stock subject to the plan by 120,000 shares.

We have enclosed with this letter an official notice of our 2019 Annual Shareholders’ Meeting and proxy statement, which contains further information about the items to be voted on and information about the meeting itself, including a description of the matters to be considered and acted on at our 2019 Annual Shareholders’ Meeting.

REMEMBER, regardless of the number of shares that you hold, your vote is very important to our business and to us. Whether or not you plan to attend our 2019 Annual Shareholders’ Meeting, we urge you to cast your vote by telephone or through the Internet by following the instructions included on the Notice of Internet Availability of Proxy Materials that you received, or if you received a paper copy of the proxy card, to mark, date, sign and return the proxy card in the envelope provided. You may still vote in person if you attend the meeting, even if you have previously given your proxy.

We want to thank you for your ongoing support and we hope to see you at our 2019 Annual Shareholders’ Meeting.

 
Sincerely,
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J. Stanley Fredrick
Chairman of the Board of Directors





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MANNATECH, INCORPORATED
NOTICE OF OUR 2019 ANNUAL SHAREHOLDERS’ MEETING
TO BE HELD ON JUNE 11, 2019

TO THE SHAREHOLDERS OF MANNATECH, INCORPORATED,


The 2019 Annual Shareholders’ Meeting of Mannatech, Incorporated will be held at the corporate offices of Mannatech, Incorporated, located at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028, on Tuesday, June 11, 2019, at 9:00 a.m., Central Daylight Time, for the following purposes:
Proposal 1 – To elect Messrs. J. Stanley Fredrick, Eric W. Schrier, and Tyler Rameson as Class II directors;
Proposal 2 – To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for the year ending December 31, 2019;
Proposal 3 – To hold an advisory vote on executive compensation (“Say-on-Pay”);
Proposal 4 – To hold an advisory vote on the frequency of future advisory votes on executive compensation (“Say-on-Frequency”);
Proposal 5 – To approve an amendment to the 2017 Stock Incentive Plan to increase the number of shares of common stock subject to the plan by 120,000 shares;
and
To act upon such other matters as may properly come before our annual meeting.

Our Board of Directors has set the close of business on April 12, 2019 as the record date for the determination of shareholders entitled to receive notice of and to vote at our 2019 Annual Shareholders’ Meeting or any adjournment(s) thereof.
By order of our Board of Directors,
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J. Stanley Fredrick
Chairman of the Board of Directors

Flower Mound, Texas
April 19, 2019


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IMPORTANT

Whether or not you expect to attend the 2019 Annual Shareholders’ Meeting, we strongly urge you to cast your vote by telephone or through the Internet by following the instructions included on the Notice of Internet Availability of Proxy Materials that you received, or if you received a paper copy of the proxy card, to mark, date, sign and return the proxy card in the envelope provided, prior to the meeting on June 11, 2019, to help ensure the presence of a quorum for the meeting and to save the expense and extra work of additional solicitation. Voting by proxy by any method prior to the meeting will not prevent you from attending the 2019 Annual Shareholders’ Meeting or revoking your prior vote and voting at the 2019 Annual Shareholders’ Meeting.

In accordance with rules promulgated by the SEC, we are providing access to our proxy materials, including this proxy statement and our annual report on Form 10-K, for the year ended December 31, 2018, over the Internet. As a result, we are mailing to many of our shareholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. The notice contains instructions on how to access those proxy materials over the Internet, as well as instructions on how to request a paper copy of our proxy materials. All shareholders who do not receive a notice will receive a paper copy of our proxy materials by mail. We believe that this process reduces the environmental impact and lowers the costs of printing and distributing our proxy materials.



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MANNATECH, INCORPORATED
1410 Lakeside Parkway, Suite 200
Flower Mound, Texas 75028
 
PROXY STATEMENT FOR OUR 2019 ANNUAL SHAREHOLDERS’ MEETING
TO BE HELD ON JUNE 11, 2019

GENERAL INFORMATION ABOUT OUR 2019 ANNUAL SHAREHOLDERS’ MEETING

General Information

Our Board of Directors (the “Board”) is soliciting the enclosed proxy for use at our 2019 Annual Shareholders’ Meeting to be held on June 11, 2019 at 9:00 a.m., Central Daylight Time, at the corporate offices of Mannatech, Incorporated located at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028. The Notice of Internet Availability of Proxy Materials is being mailed or delivered on or about April 19, 2019, to shareholders of record owning our common stock on the close of business on April 12, 2019. Paper copies of our proxy materials are being mailed or delivered on or about April 19, 2019, to shareholders of record who have previously requested to receive paper copies of proxy materials. The list of frequently asked questions is attached to this proxy statement as Appendix A. Unless otherwise stated, all references in this proxy statement to “Mannatech,” the “Company,” “us,” “our,” or “we” are to Mannatech, Incorporated, a Texas corporation.

Shareholders Entitled to Vote

Shareholders who owned our common stock as of the close of business on April 12, 2019, the record date, are called “shareholders of record” and are entitled to vote at the 2019 Annual Shareholders’ Meeting. As of April 12, 2019, we had 2,395,655 outstanding shares of our common stock, $0.0001 par value per share, which is our only class of outstanding voting securities. As of April 12, 2019, we had 1,275 shareholders of record. Each share of our common stock entitles a shareholder to one vote. A complete list of direct shareholders entitled to vote at the 2019 Annual Shareholders’ Meeting will be available for examination by shareholders for purposes pertaining to the 2019 Annual Shareholders’ Meeting at our corporate office in Flower Mound, Texas during normal business hours from May 31, 2019 until June 10, 2019. The shareholder list will also be available for review prior to and during the 2019 Annual Shareholders’ Meeting to be held on June 11, 2019. A shareholder who wants to examine the list prior to our Annual Shareholders’ Meeting should arrange an appointment by contacting our Investor Relations department at (972) 471-6512.

Voting in Person

If you are a shareholder of record and plan to attend the 2019 Annual Shareholders’ Meeting, you may deliver your completed and signed proxy card in person. If a broker or bank holds your Mannatech shares in street name, and you wish to vote in person at the 2019 Annual Shareholders’ Meeting, you will need to obtain a legal proxy form from your broker or bank that holds your shares of record and you must bring that document to the 2019 Annual Shareholders’ Meeting.

Voting by Proxy

The proxy process is the means by which shareholders can exercise their rights to vote for the election of directors and other strategic corporate proposals. The notice of meeting and this proxy statement provide notice of a scheduled shareholder meeting, describe the proposals to be voted on by shareholders at the meeting and include other information required to be disclosed to shareholders. Shareholders may vote by telephone, through the Internet, or by returning a proxy card, without having to attend the shareholder meeting in person.

By executing a proxy, you authorize Gerald Gilbert to act as your proxy to vote your shares in the manner that you specify. The proxy voting mechanism is vitally important to us. In order for us to obtain the necessary shareholder approval of proposals, a “quorum” of shareholders (a majority of the issued and outstanding shares of common stock as of the record date entitled to vote) must be represented at the meeting in person or by proxy. Since few shareholders can spend the time or money to attend shareholder meetings in person, voting by proxy is necessary to obtain a quorum and complete the shareholder vote. It is important that you attend the meeting in person or grant a proxy to vote your shares to assure a quorum

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is present so corporate business may be transacted. If a quorum is not present, we must postpone the meeting and solicit additional proxies; this is an expensive and time-consuming process that is not in the best interest of the Company or our shareholders.

Properly executed votes by proxy received prior to or at the 2019 Annual Shareholders’ Meeting on June 11, 2019, or at any adjournment(s) or postponement(s) thereof, will be counted by Broadridge Financial Solutions, Inc., our Inspector of Elections. If a shareholder specifies how such shareholder’s proxy-vote is to be cast on any business to come before the meeting, such proxy-vote will be voted in accordance with such specifications. If no specification is made on a properly executed proxy card, the shareholder’s vote by proxy will be voted “FOR” Proposals 1, 2, 3 and 5, and “ONE YEAR” for Proposal 4, consistent with the recommendations made by the Board and as the proxy holder may determine in his discretion with respect to any other matters properly presented for a vote at the 2019 Annual Shareholders’ Meeting. Other than the proposals described in this proxy statement, we are not aware of any other matters to be presented at the 2019 Annual Shareholders’ Meeting.

Revoking or Changing a Proxy

A shareholder may revoke a vote by proxy at any time prior to the 2019 Annual Shareholders’ Meeting. If you are a shareholder of record with direct ownership over your Mannatech common stock, your proxy can be revoked by (i) timely delivery of a written revocation delivered to Erin K. Barta, General Counsel and Corporate Secretary, Mannatech, Incorporated, 1410 Lakeside Parkway, Suite 200, Flower Mound Texas 75028; (ii) submission of another valid proxy bearing a later date; or (iii) attendance at the 2019 Annual Shareholders’ Meeting in person and notice to the Inspector of Elections that you intend to vote your shares in person. If your Mannatech shares are held in street name by a broker or bank (“broker”), you must contact your broker in order to revoke your proxy, but generally, you may change your vote by submitting new voting instructions to your broker, trustee or nominee, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the 2019 Annual Shareholders’ Meeting and voting in person.

Effects of Not Voting

The effect of not voting depends on how you own your shares. If you own shares directly, as a holder of record, rather than indirectly through a broker of record, your unvoted shares will not be represented at our meeting and will not count toward the quorum requirement. Assuming a quorum is obtained, your unvoted shares will not affect whether a proposal is approved or rejected. If you own shares through a broker and do not vote, your broker may represent your shares at the meeting for purposes of obtaining a quorum. As described below, if you own your shares through a broker and you do not vote, your broker may or may not vote your shares, depending upon the proposal.

If you own your shares through a broker and you do not vote, your broker may vote your shares at its discretion on “routine matters.” However, with respect to other proposals, a broker may not vote a non-voting shareholder’s shares. With respect to proposals on which a broker may not vote a non-voting shareholder’s shares, the aggregate number of non-voted shares is reported as “broker non-votes” (shares held by brokers or nominees for which they have no discretionary power to vote on a particular matter and have received no instructions from the beneficial owners or persons entitled to vote) and counted only for purposes of determining a quorum.

If you do not vote your shares on Proposal 1 (Election of Directors), Proposal 3 (“Say-on-Pay” Advisory Vote), Proposal 4 (“Say-on-Frequency”), and Proposal 5 (Amendment to 2017 Stock Incentive Plan), your brokerage firm cannot vote them for you and they will remain unvoted. Therefore, it is very important that you vote your shares for all proposals. Proposal 2 (Ratification of Auditors) set forth in this proxy statement is a routine matter on which brokers will be permitted to vote your shares at the broker’s discretion if you do not provide your broker with instructions on how to vote on this matter.


Direct Ownership

For the purpose of determining how to vote your shares at the 2019 Annual Shareholders’ Meeting, registered holders of record are deemed to have “direct ownership” over their Mannatech shares if they hold their shares directly in their name. This is typically evidenced by the receipt of our mailings directly from us or from our transfer agent, Computershare.


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Beneficial Ownership

For the purposes of determining how to vote your shares at the 2019 Annual Shareholders’ Meeting, you are deemed to have “beneficial ownership” over your Mannatech shares if you: (i) previously deposited your stock certificates with a broker; (ii) purchased your shares directly through a broker; or (iii) sent your stock certificates to a broker to be deposited into your brokerage account. Beneficial ownership is typically evidenced by a shareholder’s receipt of our mailings either from a broker or through a solicitor, which is usually Broadridge Financial Solutions, Inc.

As a beneficial owner, a shareholder still holds Mannatech shares, but neither we nor our transfer agent has access to any list of individual shareholders’ names from the various brokers of record. The only information our transfer agent has concerning shareholders who own stock through a broker is the broker’s name, the aggregate total number of shares held by each broker on behalf of their clients, and the aggregate number of votes cast for any of our proposals.

WE CAUTION OUR SHAREHOLDERS THAT each brokerage firm has a unique set of voting instructions. As a result, a shareholder should always read all the information provided in each of the proxy information packets received and follow the specific voting instructions enclosed in each packet with respect to applicable telephone numbers, Internet addresses, mailing addresses, and attending or voting at the 2019 Annual Shareholders’ Meeting.

If a shareholder receives more than one proxy information packet, such shareholder’s shares are registered in more than one account. Again, remember that each proxy information packet may have different voting instructions, account or control numbers, mailing addresses, Internet addresses, and telephone numbers. As a result, each shareholder should be cautioned to use only the set of voting instructions, account and control numbers, addresses, and telephone numbers provided in such shareholder’s proxy information packet to ensure such shareholder’s vote for all of its owned shares is properly included in the tabulation of votes for our meeting.

Beneficial shareholders are also instructed to read their proxy-voting card instructions given to them by their brokers or their brokers’ solicitors prior to the meeting in order to obtain instructions on how to vote at the meeting. If a beneficial shareholder does not follow the brokers’ specific instructions, our Inspector of Elections is not allowed to count such beneficial shareholder’s vote by ballot at the 2019 Annual Shareholders’ Meeting.

Solicitation of Proxy-Votes

We may solicit proxy-votes through the mail, in person, and by telecommunications. We will bear all expenses in preparing, printing, and mailing the proxy materials to our shareholders.

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Tabulating the Votes

A representative from Broadridge Financial Solutions, Inc., which will act as our Inspector of Elections, is responsible for tabulating the votes for the 2019 Annual Shareholders’ Meeting. The presence, in person or by proxy, of the holders of at least a majority of the shares of our common stock outstanding as of April 12, 2019, our record date, is necessary to establish a quorum for the 2019 Annual Shareholders’ Meeting. Abstentions and “broker non-votes,” if any, will be counted as shares present and entitled to vote for purposes of determining a quorum for the 2019 Annual Shareholders’ Meeting. A “broker non-vote” occurs when brokers holding shares in “street name” have not received voting instructions from the beneficial owner and either chooses not to vote those shares on a routine matter at the 2019 Annual Shareholders’ Meeting or is not permitted to vote those shares on a non-routine matter. If a proxy-voting card is signed by the shareholder but submitted without specific voting instructions, the shareholder’s vote will automatically be counted as a vote “FOR ALL” on Proposal 1 (Election of Directors), “FOR” on Proposal 2 (Ratification of Auditors), “FOR” on Proposal 3 (“Say-on-Pay” Advisory Vote), "FOR" on Proposal 5 (Amendment to 2017 Stock Incentive Plan), and “ONE YEAR” on Proposal 4 (“Say-on-Frequency”). If your shares are held in “street name” and you do not provide specific voting instructions to your broker, then your shares will not be included in the vote for Proposal 1 (Election of Directors), Proposal 3 (“Say-on-Pay” Advisory Vote), Proposal 4 (“Say-on-Frequency”), or Proposal 5 (Amendment to 2017 Stock Incentive Plan), but will be voted at the discretion of your broker with respect to Proposal 2 (Ratification of Auditors).

For Proposal 1 (Election of Directors) — Assuming a quorum is obtained, our Class II directors will be elected by a plurality of the shares represented, in person or by proxy, at the 2019 Annual Shareholders’ Meeting and entitled to vote. This means that the three nominees receiving the highest number of affirmative votes at the meeting will be elected as our three Class II directors. Votes marked “FOR ALL” will be counted in favor of all three nominees. Votes marked “WITHHOLD ALL” will be counted against all three nominees. To specify differently, a shareholder must check the “FOR ALL EXCEPT” box and then write the names of the nominees for whom the shareholder wishes to vote against. Votes marked “WITHHOLD ALL” have no effect on the vote since a plurality of the votes is required for the election of each nominee. Shareholders may not abstain from voting with respect to the election of directors.

A shareholder cannot write-in the names of additional nominees when voting by proxy. However, at the meeting, shareholders of record will be allowed to write-in additional names of nominee(s) on the ballot. To write-in a nominee on the ballot, the shareholder will need to check the “FOR ALL EXCEPT” box and identify each of the nominees for which the shareholder does not wish to vote in the space provided. The shareholder will then be allowed to write-in only as many nominees as the shareholder has withheld votes from. For example, if there are a total of three nominees listed on the ballot and the shareholder wishes to withhold its vote for one of the three nominees, the shareholder should list the name of the one nominee for whom the vote is withheld and write-in one additional name for nominee to the Board.

(THE BOARD RECOMMENDS A VOTE “FOR ALL” PROPOSAL 1.)

For Proposal 2 (Ratification of Auditors) — If a quorum is obtained, and a majority of the shares represented, in person or by proxy, at the 2019 Annual Shareholders’ Meeting and entitled to vote, are in favor of Proposal 2, the ratification of the appointment of our independent registered public accounting firm for the year ended December 31, 2019, will be approved. Votes marked “FOR” Proposal 2 will be counted in favor of the ratification of the appointment of our independent registered public accounting firm for the year ending December 31, 2019. An abstention from voting on Proposal 2 will not be voted on that item, although it will be counted for purposes of determining the number of shares represented and entitled to vote. Accordingly, an “ABSTENTION” will have the same effect as a vote “AGAINST” Proposal 2.

(THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 2.)

For Proposal 3 (“Say-on-Pay” Advisory Vote) — If a quorum is obtained, and a majority of shares represented, in person or by proxy, at the 2019 Annual Shareholders’ Meeting and entitled to vote, are in favor of Proposal 3, the current executive compensation program will be approved by shareholders on an advisory basis. Votes marked “FOR” Proposal 3 will be counted in favor of the current executive compensation program. An abstention from voting on Proposal 3 will not be voted on that item, although it will be counted for purposes of determining the number of shares represented and entitled to vote. Accordingly, an “ABSTENTION” will have the same effect as a vote “AGAINST” Proposal 3. “Broker non-votes”

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are not considered shares entitled to vote for purposes of Proposal 3 and thus will have no effect on the outcome of the approval, on an advisory basis, of our executive compensation program.

(THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 3.)

For Proposal 4 (“Say-on-Frequency” Advisory Vote) - If a quorum is obtained, the selection of the frequency of a shareholder advisory vote on executive compensation will be chosen by a plurality of the shares represented, in person or by proxy, at the 2019 Annual Shareholders’ Meeting and entitled to vote.  This means the frequency receiving the highest number of affirmative votes at the meeting will be the frequency of future “Say-on-Pay” shareholder advisory votes that has been selected by our shareholders.  For purposes of the vote on Proposal 4, “ABSTENTION” and “broker non-votes” will have no effect on the outcome of the selection, on an advisory basis, of the frequency for an advisory vote on executive compensation.

(THE BOARD RECOMMENDS SHAREHOLDERS VOTE FOR CONDUCTING FUTURE VOTES ON EXECUTIVE COMPENSATION EVERY “ONE YEAR”.)

For Proposal 5 (Amendment to 2017 Stock Incentive Plan) - If a quorum is obtained, and a majority of shares represented, in person or by proxy, at the 2019 Annual Shareholders' Meeting and entitled to vote, are in favor of Proposal 5, the amendment to the 2017 Stock Incentive Plan, our 2017 Stock Incentive Plan will be amended to increase the number of shares of common stock subject to the plan by 120,000 shares. Votes marked “FOR” Proposal 5 will be counted in favor of the amendment of the 2017 Stock Incentive Plan.  An abstention from voting on Proposal 5 will not be voted on that proposal, although it will be counted for purposes of determining the number of shares represented and entitled to vote. Accordingly, an “ABSTENTION” will have the same effect as a vote “AGAINST” Proposal 5. “Broker non-votes” are not considered shares entitled to vote for purposes of Proposal 5 and thus will have no effect on the outcome of the approval of the amendment to the 2017 Stock Incentive Plan.

(THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 5.)

Admission and Voting at Our 2019 Annual Shareholders’ Meeting

Voting at the 2019 Annual Shareholders’ Meeting is limited to shareholders of record having evidence of ownership as of the record date, April 12, 2019. If your shares are NOT held in your name, we may require you to show evidence of your ownership at our meeting. Evidence typically includes your proxy-voting card or your brokerage statement showing proof of stock ownership as of the close of business on April 12, 2019, such as your May 2019 brokerage statement or a printout of shares held at the close of April 12, 2019. At our 2019 Annual Shareholders’ Meeting, shareholders of record will receive a ballot upon verification of stock ownership.

We will not allow any cameras or recording equipment in the meeting room. As a courtesy and as time permits, we will provide a brief question and answer period for our shareholders of record.

Shareholders of record will be given ballots upon verification of stock ownership. REMEMBER that beneficial shareholders must obtain a power of attorney form or legal proxy from their brokers prior to the meeting in order for their votes by ballot to be counted since their brokers may have already reported their shares as “broker non-votes”. Prior to our June 11, 2019 meeting, beneficial shareholders are strongly urged to read their proxy-voting card instructions on how to vote at our 2019 Annual Shareholders’ Meeting. They should also contact their brokers by the Monday prior to our 2019 Annual Shareholders’ Meeting to ensure they obtain the proper paperwork in order to vote at our meeting. If a beneficial shareholder does not follow its broker’s instructions, our Inspector of Elections will not count such shareholder’s vote by ballot at the 2019 Annual Shareholders’ Meeting. The instructions are usually located on the back of each proxy-voting card.

Shareholder Procedures for Nominating Board Members or Introducing Proposals

Requirements for Shareholder Proposals to Be Considered for Inclusion in the Company’s Proxy Materials. Proposals that a shareholder intends to present at the 2020 Annual Shareholders’ Meeting and wishes to be considered for inclusion in the proxy statement and form of proxy relating to the 2020 Annual Shareholders’ Meeting must be received no later than December 21, 2019. All proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934, as

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amended (the “Exchange Act”), which lists the requirements for the inclusion of shareholder proposals in company-sponsored proxy materials. Shareholder proposals must be delivered to the Company’s Corporate Secretary by mail at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028.
Requirements for Other Shareholder Proposals to Be Brought Before the 2020 Annual Shareholders’ Meeting and Director Nominations. Notice of any proposal that a shareholder intends to present at the 2020 Annual Shareholders’ Meeting, but does not intend to have included in the proxy statement and form of proxy relating to the 2020 Annual Shareholders’ Meeting, as well as any director nominations, must be delivered to the Company’s Corporate Secretary by mail at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028, not earlier than the opening of business on February 12, 2020, and not later than the close of business March 13, 2020. The notice must be submitted by a shareholder of record and must set forth the information required by our Fifth Amended and Restated Bylaws, dated August 25, 2014 (our “Bylaws”), with respect to each director nomination or other proposal that the shareholder intends to present at the 2020 Annual Shareholders’ Meeting. If you are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder of record.

A copy of our Bylaws is published on our corporate website or may be obtained upon written request to our General Counsel at our United States headquarters located at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028. In addition, our Bylaws were filed as Exhibit 3.1 to our Form 8-K filed with the SEC on August 27, 2014.


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PROPOSAL 1ELECTION OF DIRECTORS

Our Bylaws provide for a classified Board, divided into three staggered classes – I, II, and III. The terms of office for each of these classes are scheduled to expire on the date of our annual shareholders’ meeting in 2019, 2020, and 2021, respectively. Class II is comprised of three directors with all three Class II board seats being up for election at the 2019 Annual Shareholders’ Meeting.

Nominees. The Board has nominated Messrs. J. Stanley Fredrick, Eric W. Schrier, and Tyler Rameson as nominees for election as our Class II directors. Once elected, our Class II directors’ term will expire on the earlier of the date of our 2022 Annual Shareholders’ Meeting or the date of such director’s disqualification, resignation, death, or removal. Each nominee’s biographical information is as follows:

J. Stanley Fredrick has served as a Class II director since September 2001. From November 2003 through January 2009, Mr. Fredrick served as the Lead Director for the Board. In January 2009, Mr. Fredrick was elected to serve as the Chairman of the Board of Directors. In 2003, Mr. Fredrick was a founding board member of Professional Bank in Dallas, Texas, a boutique bank that provided certain financial resources to its customers. He co-founded Cameo Couture, Inc., which operated as Colesce Couture, a distributor of intimate apparel, and Colony House, Inc., a private label cookware company, both of which operated through direct selling channels. Mr. Fredrick also co-founded Irving National Bank Shares, a commercial bank holding company, and served as a consultant to the bank from 1994 until it was sold in 2000. He currently serves on the board of Wine Shop at Home, a party planning company in Napa, California. Mr. Fredrick has been actively involved for more than 40 years in the Direct Selling Association, a national trade association of leading firms that manufacture and distribute goods and services directly to consumers. He has served on the Direct Selling Association’s Board of Directors and various committees thereof. From 1987 to 1988, Mr. Fredrick served as Chairman of the Direct Selling Association and from 1988 to 1990, he served as Chairman of the Direct Selling Education Foundation. He has been inducted into the Direct Selling Association’s highest honor, the “Hall of Fame,” as well as into the Direct Selling Education Foundation “Circle of Honor.” Mr. Fredrick received a B.A. in English from Central State University, in Edmond, Oklahoma.

Eric W. Schrier was appointed to the Board as a Class II director in October 2014. He also serves on the Company’s Audit Committee, Compensation and Stock Option Plan Committee, and is Chairman of the Science and Marketing Committee. His term as director expires in 2019. Mr. Schrier served as President and CEO of The Reader’s Digest Association where he was responsible for $2.4 billion in revenue, 4,500 employees, and more than 100 million customers in 70 countries during his tenure from January 2006 to March 2007. He currently is Chairman of the Board of Trusted Media Brands Inc. (since April 2014). Previously he served as Chairman of Willow House, a décor and jewelry direct sales company (from July 2009 to December 2013); and Chairman of Edible Communities Inc., a multi-platform media company in the farm-to-table food space (from March 2013 to September 2018). He also was on the Board of The Enthusiast Network (from January 2011 to September 2018); MeQuilibrium (from October 2011 to August 2018); the American Chemical Society (from June 2012 to May 2016); Demdex Corp (from July 2009 to January 2011); and Bonnier USA (from September 2007 to July 2009). Since January 2009, he has advised media corporations to help them create and pursue their digital strategies and diversify their revenue streams. Mr. Schrier earned a Bachelor’s Degree in Human Biology from Brown University in 1973 and a Masters in Journalism from U.C. Berkeley in 1977.

Tyler Rameson was appointed to the Board as a Class II director on June 6, 2018. He is the managing member of Jade Capital LLC, a private investment firm. From 2008 to 2014, Mr. Rameson was a managing member of Gray Whale Capital LLC, a worldwide proprietary trading firm. In this capacity, Mr. Rameson oversaw the development of numerous proprietary trading strategies and systems. From 2002 to 2007, Mr. Rameson was employed by Jane Street Capital LLC, a proprietary trading firm. Mr. Rameson received an MBA with an emphasis on Financial Engineering from the Massachusetts Institute of Technology (MIT), as well as a Masters of Engineering in Logistics from MIT and a Bachelor of Arts degree in Business Economics from The University of California, Santa Barbara.


(THE BOARD RECOMMENDS A VOTE “FOR ALL” TO ELECT ALL THREE OF THE NOMINEES.)

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PROPOSAL 2 — RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Neither our Articles of Incorporation, Bylaws, nor any other applicable legal requirements require shareholder ratification of the selection of our independent registered public accounting firm. However, the Board, as a matter of good corporate governance, has always sought shareholder ratification of the appointment of our independent registered public accounting firm. The Board is seeking shareholder ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019. In the event our shareholders do not ratify our appointment of BDO USA, LLP, the Audit Committee and the Board will reconsider the appointment.

Our Audit Committee appoints our independent registered public accounting firm on an annual basis. The decision is based on a number of factors including the scope of the audit, the independence of the auditors, the estimated audit fees, and any non-auditing services that are performed by the independent registered public accounting firm.

Representatives from BDO USA, LLP will attend the 2019 Annual Shareholders’ Meeting and will have the opportunity to make a statement, if they so desire. They will also be available to respond to any appropriate questions from our shareholders.

Pre-Approval Policies and Procedures

Our Audit Committee must preapprove all services provided by our independent registered public accounting firm. The non-audit services, specified in Section 10A(g) of the Exchange Act may not be provided by our independent registered public accounting firm.

Each year, the approval of the estimated annual audit, audit-related services, and routine tax services takes place at an Audit Committee meeting. In addition, during the course of the year, requests for unforeseen or additional allowable services to be provided by our independent registered public accounting firm must be preapproved by our Audit Committee, except for those qualifying for the “de minimis exception.” The de minimis exception provides that the pre-approval requirements for certain non-audit services may be waived if:
the aggregate amount of such non-audit services provided constitutes not more than 5% of the total fees paid to our independent registered public accounting firm in the calendar year that such non-audit services are provided;
such services were recognized as non-audit services at the time they were provided; and
such services are promptly brought to the attention of our Audit Committee.

Our Audit Committee may delegate to its Chairman the authority to grant pre-approvals. In such event, the decisions of the Chairman of the Audit Committee regarding pre-approvals will then be presented to our full Audit Committee at the next scheduled meeting.

Our independent registered public accounting firm provides a revised estimate for the year, by project, for all planned and approved services to our Chief Financial Officer prior to each Audit Committee annual planning meeting. The revised estimate is then reviewed at our Audit Committee annual planning meeting.


10



Fees Paid to Our Independent Registered Public Accounting Firm

For the years ended December 31, 2018 and 2017, we were billed the following fees by our current independent registered public accounting firm, BDO USA, LLP as follows:
Type of Service
2018
 
2017

(in thousands)
Audit Fees, including the audit of our consolidated financial statements and annual report on Form 10-K, review of our quarterly financial statements and quarterly reports filed on Form 10-Q, and international statutory audits
$
683


$
781

Audit-Related Fees, including fees related to the annual audit of employee 401(k) benefit plan
17


15

Tax Fees, including fees for tax services, tax advice, transfer pricing, state, and international tax consultation
15


12

All Other Fees, related to all other services including expatriation issues and miscellaneous consulting and advisory services



Total Fees
$
715


$
808


The “de minimis exception” described above was not used for any fees paid to BDO USA, LLP in 2018 and 2017. All fees were pre-approved by our Audit Committee. As of March 4, 2019, we were advised by BDO USA, LLP that neither the firm, nor any member of its firm, had any direct or indirect financial interest in any capacity in our Company. The members of our Audit Committee believe the payment of all fees set forth above did not prohibit BDO USA, LLP from maintaining its independence.

(THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED ACCOUNTING FIRM.)

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PROPOSAL 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”)

In accordance with Section 14A(a)(1) of the Exchange Act implementing Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are submitting to our shareholders the opportunity to vote on a non-binding advisory resolution to approve the compensation program for our Named Executive Officers, which is described in the section titled “Executive Compensation” in this Proxy Statement. Accordingly, the following resolution is submitted for a shareholder advisory vote at the 2019 Annual Shareholders’ Meeting:

“RESOLVED, that the shareholders of Mannatech, Incorporated approve, on an advisory basis, the overall compensation of the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K of the regulations promulgated by the SEC, including the section entitled “Executive Compensation,” and the accompanying compensation tables and the corresponding narrative discussion and footnotes set forth in the Proxy Statement for the 2019 Annual Shareholders’ Meeting.”

As described in the section titled “Executive Compensation” our executive compensation program is designed to provide a competitive level of compensation necessary to attract, motivate, and retain talented and experienced executives and to motivate them to achieve short-term and long-term objectives that enhance shareholder value.

This vote is merely advisory and will not be binding upon the Company and the Board. However, the Compensation and Stock Option Plan Committee, which is responsible for designing and administering the Company’s executive compensation program, values constructive dialogue on executive compensation and other important governance topics with the Company’s shareholders and encourages all shareholders to vote their shares on this matter.

(OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS “SAY-ON-PAY”.)


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PROPOSAL 4 - ADVISORY VOTE ON THE FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION (“SAY-ON-FREQUENCY”)

In accordance with Section 14A(a)(1) of the Exchange Act implementing Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are providing our shareholders the opportunity to cast a non-binding advisory vote on whether future non-binding advisory votes on the compensation of the Company’s Named Executive Officers should occur every one, two, or three years.  The Board recommends that shareholders vote to hold an advisory vote on executive compensation every ONE year, or an annual vote.
 
You may cast your vote by choosing one year, two years, or three years when you vote for the resolution set forth below.
 
“RESOLVED, that the highest number of votes cast by the shareholders of Mannatech, Incorporated for the following options will determine the preferred frequency with which Mannatech, Incorporated is to hold a stockholder vote to approve, on a non-binding basis, the executive compensation of its Named Executive Officers included in the Proxy Statement: (a) every year, or (b) every two years, or (c) every three years.”
 
After careful consideration, the Board believes that an annual, non-binding advisory vote complements our goal to create a compensation program that enhances long-term shareholder value.  As described in the section titled “Executive Compensation,” our executive compensation program is designed to motivate executives to achieve short-term and long-term corporate goals that enhance shareholder value.  An annual vote will provide shareholders the ability to compare the Company’s compensation program to the long-term performance of the Company.  One year is sufficient time for the Compensation Committee to fully analyze the Company’s compensation program (as compared to the Company’s performance over the same period) and to implement necessary changes.
 
This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Company and the Board.  Notwithstanding the Board’s recommendation and the outcome of the shareholder advisory vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussion with shareholders and the adoption of material changes to compensation programs.
 
(OUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR CONDUCTING FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY “ONE YEAR”)


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PROPOSAL 5 — APPROVAL OF AMENDMENT TO THE 2017 STOCK INCENTIVE PLAN

The Mannatech, Incorporated 2017 Stock Incentive Plan (the “Plan”) was originally adopted by our Board on April 17, 2017, and approved by our shareholders on June 8, 2017. The Board has adopted, subject to the approval of our shareholders, an amendment to the Plan to increase the number of shares of common stock reserved for issuance under the Plan by 120,000 shares (hereinafter called the “Amendment”). We are asking our shareholders to approve the Amendment at the 2019 Annual Shareholders Meeting.

The Plan provides a means by which we may promote the success and enhance the value of the Company by linking the personal interests of employees, directors and consultants of us and our affiliates to those of our shareholders and by providing such individuals with an incentive for outstanding performance. The Plan is designed to provide flexibility in our ability to motivate, attract and retain the services of the types of employees, directors and consultants who will contribute to our long term success.

The Plan is our only active plan for providing equity-based compensation to eligible employees, directors and consultants, and the limited number of shares remaining available under the Plan restricts the Company’s ability to grant equity awards. As of June 8, 2017, 250,000 shares of our common stock were authorized for issuance under the Plan, 210,998 of which have been issued or are subject to outstanding awards as of April 12, 2019, leaving 39,002 shares currently available for future awards under the Plan. With the approval of the Amendment, we will be able to continue to use a variety of equity-based compensation alternatives in structuring compensation arrangements for our personnel. While the Board is aware of the potential dilutive effect of compensatory stock awards, it also recognizes the significant motivational and performance benefits that are achieved from making such awards.

For a discussion of the philosophy behind the various equity and cash incentive awards under the Plan, please see the discussion in the Compensation Discussion & Analysis section in this proxy statement.

Equity Compensation Plan Information

The following table summarizes information regarding our equity compensation plans as of December 31, 2018. These plans use shares of our common stock. We do not have any equity compensation plans not approved by security holders.

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 first column)
Equity compensation plans approved by security holders
 
420,818
 
$16.64
 
39,002
Equity compensation plans not approved by security holders
 
 
 
Total
 
420,818
 
 
 
39,002

Summary of the 2017 Stock Incentive Plan

The following is a brief description of the material features of the Plan, as amended by the Amendment. Copies of the Plan and the Amendment are attached as Appendix B and Appendix C to this proxy statement, respectively, and the following description is qualified in its entirety by reference to the Plan as amended.

Administration. The Plan is administered by our Compensation and Stock Option Plan Committee (the “Compensation and Stock Option Plan Committee” or the “Committee”), which has full and final authority to select persons to receive awards, establish the terms of awards, and administer and interpret the Plan in its sole discretion unless authority is specifically reserved to the Board under the Plan, our certificate of incorporation or bylaws, or applicable law. The Committee may delegate certain responsibilities to our officers as set forth in the Plan.


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Eligibility. Officers, employees, directors and consultants who perform services for us or our affiliates are eligible to participate in the Plan, but only employees of us and our corporate subsidiaries are eligible to receive incentive stock options.

Effective Date and Termination. The Plan became effective April 17, 2017, and will terminate on April 16, 2027, unless otherwise terminated earlier by the Board. The Amendment was effective March 20, 2019, the date of its adoption by the Board, subject to shareholder approval. No awards may be granted under the Plan after its termination date, but awards granted prior thereto will continue to be effective in accordance with their respective terms and conditions

Share Reserve. Subject to adjustments for certain changes in corporate capitalization, the maximum aggregate number of shares of our common stock that may be issued under the Plan is 370,000, all of which may be used for incentive stock options. This amount consists of 250,000 previously authorized shares and 120,000 newly available shares. Unissued shares of common stock allocable to a forfeited, expired, canceled, or otherwise terminated portion of an option or stock appreciation right will revert to the Plan and again be available for awards. However, any shares withheld for payment of the exercise price or withholding of taxes will not be available again for grant under the Plan.

Maximum Employee Awards. Subject to adjustment for certain changes in corporate capitalization, no employee may be granted options, stock appreciation rights or performance awards during any fiscal year covering in the aggregate more than 50,000 shares of common stock.

Maximum Non-Employee Director Compensation. The maximum aggregate dollar value of awards and cash compensation that may be granted under the Plan or otherwise during any calendar year to any non-employee director is $500,000, rounded up to the nearest full share of common stock and subject to adjustment for certain changes in corporate capitalization.

Awards under the 2017 Stock Incentive Plan

Options. The Committee may grant either incentive stock options intended to comply with Section 422 of the Code or “nonqualified” options that are not intended to qualify as incentive stock options. Incentive stock options may be granted only to employees of the Company and its corporate subsidiaries. The exercise price per share for options may vary, but will be no less than the market value of a share of common stock on the date of grant. Options under the Plan generally have a term of 10 years. However, if an incentive stock option is granted to an employee who owns (or is deemed to own) more than 10% of the combined voting power of all classes of our stock (or of stock of any parent or subsidiary), the term may not exceed five years and the exercise price must be at least 110% of our common stock’s market value on the grant date. The Committee determines the methods and form of payment for the exercise price per share on exercise of an option. Vested options generally remain exercisable for three months after a participant’s termination of employment or service other than for cause, as defined in the Plan, or for one year after a participant’s death or disability. Both vested and unvested options held by a participant who is terminated by us due to cause will immediately be forfeited and no longer exercisable.

Restricted Stock Awards. A restricted stock award is a grant of shares of common stock subject to a risk of forfeiture, restrictions on transferability, and any other restrictions imposed by the Committee in its discretion. Restrictions may lapse at such times and under such circumstances as determined by the Committee. A participant granted restricted stock will have the shareholder rights set forth in the award agreement, including the right to vote the shares of restricted stock. However, any dividends paid with respect to shares of restricted stock will be held by us and subject to the same terms and restrictions as the restricted stock. Unless otherwise waived by the Committee, restricted stock that is subject to forfeiture restrictions will be forfeited, along with any dividends held in escrow, upon termination of employment or service and the shares will again be available for grant under the Plan.

Restricted Stock Units. A restricted stock unit (an “RSU”), is a right to receive one share of common stock, or its cash value, at the end of a specified period. The Committee may subject RSUs to a risk of forfeiture and other restrictions to be specified in the award agreement, which restrictions may lapse at such times determined by the Committee. RSUs may be satisfied by delivery of common stock, cash equal to the fair market value of the specified number of shares of common stock covered by the RSUs, or any combination thereof determined

15



by the Committee at the grant date or thereafter. Except as otherwise provided by the Committee in the award agreement, RSUs subject to forfeiture restrictions will be forfeited upon termination of a participant’s employment or service before the end of the specified period. Until all restrictions on an RSU award have lapsed, the participant will have none of the rights of a shareholder. However, at the Committee’s discretion, an RSU award may include dividend equivalents under which the participant will be credited with the amount of any cash dividends paid on our common stock during the restriction period. Any dividend equivalents will be subject to the same restrictions as the RSUs. Unless otherwise waived by the Committee, unvested RSUs will be forfeited upon termination of employment or service, along with any dividend equivalents, and the underlying shares will again be available for grant under the Plan.

Performance Awards. The Committee may grant performance awards that vest only on the attainment of specified performance goals. Performance awards may be granted in the form of performance stock or performance stock units, in each case subject to performance goals and a performance period established by the Committee in its sole discretion. Performance goals generally are based on a pre-established objective formula or standard that specifies the manner of determining the number of shares of common stock or the amount of cash that will be issued or vest if the performance goal is attained. The Plan permits the Committee to base performance goals on such business criteria and other performance measures as it deems appropriate, including business criteria listed in the Plan.

Stock Appreciation Rights. A stock appreciation right (an “SAR”), is the right to receive an amount equal to the excess of the fair market value of our common stock on the exercise date over the strike price of the award as determined by the Committee, for the number of shares for which the SAR is exercised. The strike price for a SAR award generally will be the fair market value of a share of stock on the date of grant. The Committee determines the vesting schedule and term, which will not exceed 10 years, for each SAR, and whether the SAR will be settled by delivery of common stock or cash.

Other Provisions of the 2017 Stock Incentive Plan

Change in Control, Merger, Consolidation or Similar Transaction. If there is a change in control of the Company, as defined in the Plan, or other similar corporate transaction or series of transactions, the Committee has discretion to provide for any of the following:

the continuation of outstanding awards, if the Company is the surviving entity;
the assumption of the Plan and outstanding awards by the surviving entity or its parent;
the substitution by the surviving entity or its parent of awards with substantially the same terms for outstanding awards, including an award to acquire the same consideration paid to the shareholders in the transaction (subject to the equitable adjustment as appropriate);
the cancellation of outstanding awards in exchange for a payment equal to the excess, if any, of the sale or transaction price per share of common stock and the exercise price of the award, to the extent vested; or
the cancellation of outstanding awards without payment of any consideration. If vested options or SARs are canceled without consideration, participants will be given a limited period to exercise such awards before their cancellation.

Capitalization Adjustments. If the Committee determines that a change in our corporate capitalization, such as a stock split, stock dividend or other recapitalization, will result in dilution or enlargement of participant rights under the Plan, the Committee will adjust, as appropriate, the number or class of securities reserved for awards under the Plan, including incentive stock options; the number and class of securities covered by each outstanding award; the maximum number of shares of stock that may be granted to any employee in one year; and the exercise price or strike price for any option or SAR.

Tax Withholding. We may deduct or withhold, or require a participant to remit, an amount sufficient to satisfy any taxes required by law or regulation to be withheld with respect to any award under the Plan. This includes the authority to withhold or receive common stock or other property and to make cash payments or require a participants to make cash payments in satisfaction of participant tax obligations.

Amendments and Termination. The Board may amend or terminate the Plan at any time, subject to the approval of our shareholders, if required by any law or securities exchange listing requirements.

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The Committee may amend awards granted under the Plan, but may not “reprice” any option or SAR, such as by reducing the exercise price, without the approval of our shareholders. In addition, no amendment of the Plan or any award may impair the rights or increase the obligations of any participant under any previously granted award without the participant’s consent.

Limited Acceleration of Vesting. The Committee may accelerate the exercisability or vesting of an award granted under the Plan only on a participant’s death or disability or in the event of a change in control under which the award will not be continued, assumed or substituted by the surviving entity or its parent.

Clawback or Recoupment. Awards granted under the Plan are subject to any clawback policy adopted by the Company or imposed by any law or securities exchange listing requirement.

Award Transferability. Participants are not permitted to transfer any award granted under the Plan other than by will or by the laws of descent and distribution, and any option will be exercisable during the participant’s lifetime only by the participant or his or her guardian or legal representative. However, the Committee may permit awards other than incentive stock options to be transferred to the participant’s immediate family members, to a trust solely for the benefit of such immediate family members or to a partnership in which such family members or trusts are the only partners.

U.S. Federal Income Tax Consequences of Awards under the 2017 Stock Incentive Plan

The following is a brief summary of certain federal income tax consequences relating to awards granted under the Plan. This summary does not purport to address all aspects of federal income taxation and does not describe state, local, or foreign tax consequences. This discussion is based upon provisions of the Code and the treasury regulations issued thereunder, and judicial and administrative interpretations under the Code and regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation.

Options. Options may be intended to qualify as incentive stock options under Code section 422 or may be nonqualified stock options governed by Code section 83. A participant generally will not recognize any taxable income, and we will not be entitled to a tax deduction, on the grant of an option. On exercise of a nonqualified stock option a participant generally will recognize ordinary taxable income equal to the excess of the fair market value of the acquired common stock on the exercise date over the exercise price paid for those shares. Subject to satisfying applicable reporting requirements and certain deduction limitations under section 162(m) or 280G of the Code for certain individuals (discussed below), we should be entitled to a corresponding federal income tax deduction. A participant generally will not recognize taxable income on exercise of an incentive stock option and we will not be entitled to a deduction. However, the excess of the fair market value of the acquired common stock on the exercise date over the exercise price for those shares could result in alternative minimum tax liability for the participant. A participant’s disposition of shares acquired on exercise of any option will ordinarily result in capital gain or loss. However, a disposition of shares acquired on exercise of an incentive stock option less than two years after the grant date or one year after the exercise date (referred to as a “disqualifying disposition”) generally will result in ordinary taxable income equal to the excess of the fair market value of the acquired common stock on the exercise date and the exercise price for those shares, with any excess of the amount received by the participant over the fair market value of the stock on the exercise date being treated as capital gain. We may be entitled to a deduction corresponding to the participant’s ordinary taxable income in the case of such a disqualifying disposition.

Restricted Stock Awards. A participant who receives a restricted stock or performance stock award generally will recognize ordinary income when the shares are no longer subject to forfeiture or restrictions, equal to the excess, if any, of the fair market value of the shares of restricted stock over the amount paid, if any, by the participant for such shares. However, a participant who receives a restricted stock award may make an election under section 83(b) of the Code at the time of transfer of the shares of restricted stock to recognize ordinary income on the transfer date equal to the excess of the fair market value of such shares (determined without regard to the restrictions on such shares) over the purchase price, if any, of such shares. If a participant does not make an election under section 83(b) of the Code, then the participant will recognize as ordinary income any dividends received with respect to shares of restricted stock. Subject to satisfying applicable income reporting requirements and any applicable deduction limitation under the Code, we should be entitled to an income tax deduction in the same amount and at the same time as the participant recognizes ordinary income. When the participant sells such shares, any gain or loss realized by the participant will be treated as either short-term or long-term capital gain (or loss)

17



depending on the holding period. For purposes of determining any gain or loss realized, the participant’s tax basis will be the amount previously taxable as ordinary income plus the purchase price paid by the participant, if any, for such shares.

Stock Appreciation Rights. A participant generally will not recognize income on the grant or vesting of a SAR. When the participant exercises the SAR, he or she will have ordinary taxable income equal to the fair market value of the stock or cash received. Subject to satisfying applicable income reporting requirements and any deduction limitations under the Code, we should be entitled to an income tax deduction in the same amount and at the same time as the participant recognizes ordinary income.

Restricted Stock Units. In the case of an award of RSUs or performance stock units, the participant generally will recognize ordinary income in an amount equal to any cash received and the fair market value of any shares received on the date of payment or delivery. Subject to satisfying applicable income reporting requirements and any deduction limitations under the Code, we should be entitled to a federal income tax deduction in the same amount and at the same time as the ordinary income which the participant has recognized.

Million Dollar Deduction Limit and Other Tax Matters.

Section 162(m) of the Code generally prohibits us from deducting compensation of more than $1 million per person to our CEO and other “covered employees” as defined in section 162(m). Prior to 2018, an exception to this deduction limit was available for certain compensation, including qualified “performance based compensation,” which required compliance with requirements under Code section 162(m) and the regulations issued thereunder. As a result of tax legislation that went into effect at the end of 2017, this exception is no longer available for tax years beginning after December 31, 2017, unless such compensation qualifies for transition relief for written binding contracts in effect as of November 2, 2017. Although the Plan was designed to satisfy the requirements for qualified performance based compensation, no performance awards were granted under the Plan before November 2, 2017, so as to qualify for transition relief. Accordingly, compensation paid to “covered employees” pursuant to awards granted under the Plan is not expected to be deductible by the Company to the extent such compensation exceeds the Code section 162(m) deduction limitation.

If an individual’s rights under the Plan are accelerated as a result of a change in control and the individual is a “disqualified individual” under Code section 280G, the value of such accelerated rights received by such individual may be included in determining whether or not such individual has received an “excess parachute payment” under Code section 280G, which could result in both the imposition of a 20% federal excise tax (in addition to federal income tax) payable by the individual on the value of such accelerated rights, and the loss by the Company of a compensation deduction.

New Plan Benefits

Because all grants and awards under the Plan are entirely within the discretion of the Committee, the total benefits allocable under the Plan in the future are not determinable. Therefore, we have omitted the tabular disclosure of the benefits or amounts allocated under the Plan. No grants or awards have been made under the Plan beyond the current share reserve, and no grants or awards will be made under the Plan beyond the Plan’s existing share reserve unless and until the Amendment is approved by the shareholders.

Board Recommendation

The Board believes that approval of the Amendment is in the best interests of the Company and our shareholders. For the reasons stated above, the shareholders are being asked to approve this proposal.

(THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 5.)


18



CORPORATE GOVERNANCE

Overview

We are committed to maintaining the highest standards of business conduct and corporate governance, which we believe are essential to running our business efficiently and maintaining our integrity in the marketplace. We have adopted a code of business conduct and ethics for our directors, officers, and employees, which, in conjunction with our Articles of Incorporation, Bylaws, and Board of Directors committee charters, form the framework for our corporate governance. All of these documents are available on our corporate website at www.mannatech.com.

Summary of All Directors and Executive Officers

The following table sets forth certain information regarding our executive officers and directors, including their ages as of April 19, 2019:
Name
Age
Position
Alfredo (Al) Bala
58
Chief Executive Officer and President
Erin K. Barta
49
General Counsel and Corporate Secretary
Joel Bikman
46
Chief Operating and Marketing Officer
Landen Fredrick
46
Chief Global Sales Officer and President, North America
David A. Johnson
48
Chief Financial Officer
Ronald D. Norman
60
Senior Vice President, Treasurer
Christopher J. Simons
56
Regional President EMEAA, Central and South America
J. Stanley Fredrick
80
Chairman of the Board of Directors
Linda K. Ferrell, Ph.D. (1)
59
Independent Board Member
Gerald E. Gilbert
85
Independent Board Member
Larry A. Jobe
79
Independent Board Member
Tyler Rameson
45
Independent Board Member
Kevin Robbins
51
Non-employee Board Member
Eric W. Schrier
67
Independent Board Member
Robert Toth (2)
66
Vice Chairman of the Board of Directors and an Independent Board Member
(1)
Dr. Ferrell resigned her position as a Class III director of the Board effective March 31, 2019. The Board will not be naming a successor, leaving seven total Directors.
(2)
Mr. Toth resigned from his position as Vice Chairman of the Board effective April 1, 2019. He remains a Class III director of the Board. The Board opted to not appoint a replacement at its March 20, 2019 meeting.

The following biographical information about our directors and executive officers listed above is in alphabetical order:

Alfredo (Al) Bala joined Mannatech in October 2007 as Senior Vice President, Global Sales. He was then named Executive Vice President, Sales in June 2011. Due to his involvement in Mannatech’s global sales and marketing efforts, in January 2012, Mr. Bala was named Executive Vice President, Sales & Marketing. Mr. Bala was promoted in February 2014 to serve as President International, Executive Vice President, Chief Sales & Marketing Officer. Mr. Bala was named President of the Company in May 2014. In August 2015, he was promoted to CEO. Mr. Bala served as Chief Operating Officer of Britt Worldwide, LLC, one of the largest independent Amway network marketing organizations, from 1992 to 2006. While with Britt Worldwide, his main focus was providing motivation, training and tools for Associates in the field in more than 65 countries across the globe. Mr. Bala was also heavily involved in the launch and re-launch of over 60 international markets, including BRICS markets (Brazil, Russia, India, China and South Africa), which propelled the Britt Worldwide international sales volume to more than $500 million. Mr. Bala served as manufacturing plant manager for Bose Corporation from 1983 to 1992. He is conversant and/or fluent in more than 13 languages. In addition to more than 20 years of domestic and international experience in network marketing, Mr. Bala’s proven record includes growing a major direct sales organization to $750 million, reaching more than one million people in 60 countries. Mr. Bala received an Associate Degree in Electrical Engineering from the Community College of Rhode Island.

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Erin K. Barta joined Mannatech in November 2006 as Senior Corporate Counsel. She was named Assistant General Counsel in March 2009 and was named General Counsel and Corporate Secretary in August 2013. Ms. Barta is responsible for overseeing the Legal and Business Ethics teams and our Regulatory group. Prior to joining Mannatech, Ms. Barta served as Corporate Counsel and later Senior Corporate Counsel for Metromedia Restaurant Group, a subsidiary of Metromedia Company. She has a B.S. from Texas Woman’s University and received her J.D. from Texas Wesleyan University, now the Texas A&M University School of Law.
Joel Bikman, Chief Operating and Marketing Officer, joined Mannatech in 2014 and provides the Company with significant experience within the direct selling, nutrition and personal care industries. He is responsible for overseeing Supply Chain, Logistics, Facilities, R&D and Marketing in order to provide a consistently excellent experience to each customer and independent Associate. Prior to joining Mannatech, Mr. Bikman held senior sales and marketing roles with Isagenix, FreeLife and TriVita and business development and account management positions within the advertising industry. He holds a BA in Communications and an MBA from Brigham Young University.
J. Stanley Fredrick has served as a Class II director since September 2001. His current term as director expires in 2019. From November 2003 through January 2009, Mr. Fredrick served as the Lead Director for the Board. In January 2009, Mr. Fredrick was elected to serve as the Chairman of the Board of Directors. In 2003, Mr. Fredrick was a founding board member of Professional Bank in Dallas, Texas, a boutique bank that provided certain financial resources to its customers. He co-founded Cameo Couture, Inc., which operated as Colesce Couture, a distributor of intimate apparel, and Colony House, Inc., a private label cookware company, both of which operated through direct selling channels. Mr. Fredrick also co-founded Irving National Bank Shares, a commercial bank holding company, and served as a consultant to the bank from 1994 until it was sold in 2000. He currently serves on the board of Wine Shop at Home, a party planning company in Napa, California. Mr. Fredrick has been actively involved for more than 40 years in the Direct Selling Association, a national trade association of leading firms that manufacture and distribute goods and services directly to consumers. He has served on the Direct Selling Association’s Board of Directors and various committees thereof. From 1987 to 1988, Mr. Fredrick served as Chairman of the Direct Selling Association and from 1988 to 1990, he served as Chairman of the Direct Selling Education Foundation. He has been inducted into the Direct Selling Association’s highest honor, the “Hall of Fame,” as well as into the Direct Selling Education Foundation “Circle of Honor.” Mr. Fredrick received a B.A. in English from Central State University, in Edmond, Oklahoma.
Landen Fredrick is the Chief Global Sales Officer and President, North America. Mr. Fredrick coordinates worldwide sales activity and has P&L responsibility for all sales activity in the United States and Canada.  Mr. Fredrick has been a part of Mannatech since 2006, Mr. Fredrick has played a key role in developing and driving systems to create efficiencies and manage scale for the Company. Mr. Fredrick is also the chairman of the M5M Foundation, a non-profit organization benefitting children in need. Mr. Fredrick also is a member of the Board of Directors of the Direct Selling Association.  Mr. Fredrick owned a web and advertising business, Killian Fredrick, from 2001 to 2006. Mr. Fredrick earned a BA from Abilene Christian University in 1995 and his MBA from Amber University in 1997.
Gerald E. Gilbert has served as a Class I director since June 2003 and he is the Chairman of the Nomination/Governance and Compliance Committee. He also serves on the Audit Committee, the Compensation and Stock Option Plan Committee, Associate Compliance Committee and the Science and Marketing Committee. His current term as director expires in 2021. A former Assistant U.S. Attorney, from 1968 until his retirement in December 2002, Mr. Gilbert practiced law with the international law firm of Hogan and Hartson L.L.P., now known as Hogan Lovells L.L.P. His legal and business expertise includes international trade, national trade associations, and various areas of consumer products. From 1968 to 1999, Mr. Gilbert served as General Counsel to the Direct Selling Association. Mr. Gilbert was the recipient of the “Hall of Fame Award,” which is the Direct Selling Association’s highest honor. He also served as General Counsel to the World Federation of Direct Selling Associations and the Tropical Forest Foundation. Mr. Gilbert served in the U.S. Naval Reserve from 1956 to 1992 and was promoted to Rear Admiral (Two Stars), the top ranking officer in the Naval Reserve JAG Corps. During his distinguished military service, Mr. Gilbert received numerous awards, including the “Legion of Merit.” He is also a Past National President of the Federal Bar Association. He received a B.A. degree in English from Denison University, in Granville, Ohio and a Juris Doctor from the University of Virginia School of Law, in Charlottesville, Virginia. Mr. Gilbert is a member of the State Bars of Virginia and the District of Columbia and is admitted to practice before the United States Supreme Court.

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Larry A. Jobe has served as a Class I director since January 4, 2006. His current term as director expires in 2021. In February 2007, Mr. Jobe began serving as Chairman of our Audit Committee. Mr. Jobe also serves on the Nominating/Governance and Compliance Committee, Compensation and Stock Option Plan Committee and Marketing Committee. Mr. Jobe serves as Chairman of Legal Network, Ltd., a firm he founded that provides staffing and litigation support to law firms and corporate legal departments. He also serves as the President and founder of P 1 Resources, LLC, which has provided engineering and light industrial staffing services to the construction industry since 1994. From 1991 to 1994, Mr. Jobe was Chairman and founder of Mitchell Jobe & Company, a provider of professional staffing services for government and industry. He is also a founder and Board Member of Peloton College, a for-profit accredited career school, since October 2005. From 1973 to 1991, he served in various capacities, including as member of the Executive Committee and Chairman of the Strategic Planning Committee with the accounting firm Grant Thornton LLP. In 1969, he was appointed by President Richard Nixon to serve as the Assistant Secretary of Commerce for Administration at the United States Commerce Department. Mr. Jobe previously served as the Chairman of Independent Bank of Texas and Chairman of the Audit Committee for U.S. Home Systems, Inc. In addition, Mr. Jobe served as Chairman of the Audit Committee and a member of the Board of Directors of SWS Group, Inc., a Dallas-based New York Stock Exchange member from July 2005 through December 2014. He is a member of the Board of the Dallas Seminary Foundation. He received a B.B.A. degree in Accounting from the University of North Texas, in Denton, Texas. Mr. Jobe maintained an active Certified Public Accounting (CPA) license from 1962 to 2002 and currently maintains his license on an inactive or retired status.
David A. Johnson joined Mannatech in July 2013 as ControllerHe was named Chief Accounting Officer in July 2015 and Chief Financial Officer in May 2016. He brings to Mannatech more than 23 years of experience in reporting financial results to investors, creditors and management with a focus on improving the financial operations of the enterprise by financial planning and analysis, and working capital management. He leads the company’s accounting, finance and treasury teams. Prior to Mannatech, Mr. Johnson has held several financial management positions, including manager of accounting at Safety-Kleen and financial controller at Copart. He has four years of experience in public accounting. He is a Certified Public Accountant and holds a BA and MA in Economics from Florida State University and a MA in Accounting from The University of Texas at Dallas. 
Ronald D. Norman joined Mannatech in May 1996 and was named Senior Vice President and Treasurer in February 2014. Prior to his current position, he was promoted to Senior Vice President International in June 2011 and previously served for several years as Vice President of International Operations. From 1996 to 2005, he held various positions within Mannatech’s finance department. Prior to joining Mannatech, Mr. Norman had 15 years of experience in public accounting, focusing on providing tax, accounting, finance and general business consulting services to entrepreneurial and growth stage companies with an emphasis on preparing these companies for entry into the public markets or preparing them for international expansion. Mr. Norman received both his B.S. and M.S. degrees from Baylor University. He is a Certified Public Accountant licensed in the State of Texas and is a member of the American Institute of Certified Public Accounts and Dallas Chapter of the Texas Society of Certified Public Accountants. He and his family are volunteers for events sponsored by the Special Olympics and various other autism and special needs advocacy groups. 
Kevin Robbins, son of Mannatech co-founder Ray Robbins, was appointed to the Board in December 2016 as a Class I director. His current term as director expires in 2021. He also serves on the Science and Marketing Committee. He began his part time career as an independent Associate for the Company in 1994. By 1996, Mr. Robbins was able to dedicate his career as an independent Associate for the Company on a full-time basis. In 2003, he was awarded as the global recipient of the Ray Robbins Giving Spirit Award. In 2000, Mr. Robbins was elected to represent the Company’s North America field as part of the North American Advisory Council. He originally served five years on the advisory council, and was later re-elected for another three-year term. As part of the advisory council, Mr. Robbins served as Chairman for five years where he worked closely with the Company to develop new compensation plans, new incentive trips, and training programs with respect to Associates in North America. In 2012, he was recognized as one of the Top Global Business Builders of the Year by the Company. Prior to joining Mannatech, Mr. Robbins worked as a Realtor for Coldwell Banker. He earned Rookie of the Year and Top Listing agent for his branch. He was introduced to the direct sales industry when he was just 20 years old as a sales representative of Cutco and later as Area Sales Manager. Mr. Robbins earned a Bachelor of Business Administration in Marketing at The University of Texas at Arlington.
Christopher J. Simons, Regional President EMEAA, Central and South America, joined Mannatech in 2008 as Director of Sales, South Africa. Since joining Mannatech, Mr. Simons has provided pivotal leadership in several markets

21



helping the Company's independent Associates advance their business and personal development. Prior to his time at Mannatech, Mr. Simons spent 19 years in the direct sales industry as a field leader and business manager for one of the largest independent networks of direct sellers in the world. Throughout his career, he has played an integral role in leading company launches in a variety of global markets. He has overseen the deployment of global systems incorporating events and business education platforms that have resulted in more than $1 billion in revenues in those specific markets. Mr. Simons is known for working very closely with his field leaders, and creating a market where those leaders have the freedom and support to thrive, while also building an operation that is set up for ongoing, sustainable business.
Eric W. Schrier was appointed to the Board as a Class II director in October 2014. He also serves on the Company’s Audit Committee, Compensation and Stock Option Plan Committee and is Chairman of the Science and Marketing Committee. His term as director expires in 2019. Mr. Schrier served as President and CEO of The Reader’s Digest Association where he was responsible for $2.4 billion in revenue, 4,500 employees, and more than 100 million customers in 70 countries during his tenure from January 2006 to March 2007. He currently serves as Chairman of the Board of Directors for Edible Media, a multi-platform media company in the farm-to-table food space. He also is a member of the Board of Directors for TEN (The Enthusiast Network) (since January 2011), American Chemical Society (since June 2012), Reader’s Digest Association (since April 2014), and MeQuilibrium (since October 2011). He has previously served on the boards of Willow House (from July 2009 to December 2013), Demdex Corp (from July 2009 to January 2011), and Bonnier USA (from September 2007 to July 2009). Since January 2009, he has consulted with large media corporations to help them create and pursue their digital strategies and diversify their revenue streams. Mr. Schrier earned a Bachelor’s Degree in Human Biology from Brown University in 1973 and a Masters in Journalism from U.C. Berkeley in 1977.
Robert A. Toth has served as a Class III director since March 2008. His current term as director expires in 2020. Mr. Toth is the Chairman of the Compensation and Stock Option Plan Committee. He also serves on the Audit Committee, the Nominating/Governance and Compliance Committee and the Science and Marketing Committee and from August 2014 to March 2019, Vice Chairman of the Board. Mr. Toth was the Co-founder, and until May 2015, was the Chairman of Tatra Spring LLC, a supply chain services company based in Poland and founded in September 2008. He is a director of the Knowtions Company, a performance support systems software firm based in New Jersey. Since 2006, he has worked in venture capital as a private investor focused on new business startups in the technology sector. He has more recently served as a consultant to the direct selling industry. Mr. Toth has over 38 years of direct selling experience. As President of Avon International from 2004 to 2005, his operations included over 120 countries with annual revenues in excess of $5.5 billion. Mr. Toth began his Avon career in customer service in 1978, then moved to U.S. sales and operations and was promoted to U.S. Director of Sales in 1989. He transitioned to Avon International in 1991 as Director of New Business Development, where he played a lead role in Avon’s market entry plan for Russia. He was based in Warsaw from 1993 to 1997 as Avon’s President of Central and Eastern Europe, where he established and led Avon Poland. From 1997 to 2004, Mr. Toth was based in London where he held a number of senior management positions including Group Vice President, Eastern Europe, Middle East and Africa (1997-1999), Senior Vice President, Europe, Middle East and Africa (1999-2002) and Executive Vice President for Asia-Pacific, Europe, Middle East and Africa (2002-2003). Mr. Toth graduated from LaSalle University in 1974 with a B.A. in Business Administration and was an officer in the U.S. Marine Corps from 1975 to 1978.
Tyler Rameson has served as a Class II director since June 6, 2018. He is the managing member of Jade Capital LLC, a private investment firm. From 2008 to 2014, Mr. Rameson was a managing member of Gray Whale Capital LLC, a worldwide proprietary trading firm. In this capacity, Mr. Rameson oversaw the development of numerous proprietary trading strategies and systems. From 2002 to 2007, Mr. Rameson was employed by Jane Street Capital LLC, a proprietary trading firm. Mr. Rameson received an MBA with an emphasis on Financial Engineering from the Massachusetts Institute of Technology (MIT), as well as a Masters of Engineering in Logistics from MIT and a Bachelor of Arts degree in Business Economics from The University of California, Santa Barbara.
(1) Mr. Toth resigned from his position as Vice Chairman of the Board effective April 1, 2019. He remains a Class III director of the Board. The Board opted to not appoint a replacement at its March 20, 2019 meeting. 

Director Qualifications
The Board respects its responsibility to provide oversight, counseling and direction to the management in the interest, and for the benefit of, our shareholders. Accordingly, it seeks to be comprised of directors with diverse skills, experience and

22



qualifications. It is critical that our directors understand the direct selling industry. It is equally important that, collectively, our directors have successful experience in each of the primary aspects of our business, including network marketing, direct sales, finance and audit, product strategy and development, independent Associate relations, supply chain management, and sales and marketing.

J. Stanley Fredrick, our Chairman and largest shareholder, brings to the Board many years of direct selling experience as well as broad operational and marketing expertise as a co-founder of two direct selling companies. Mr. Fredrick also has significant experience serving on other company boards of directors, as well as the Direct Selling Association’s board and its various committees. Mr. Fredrick’s professional background provides him with a vast understanding of our Company, associate field leadership, and sales techniques.

Gerald E. Gilbert brings to the Board extensive legal and business experience in international trade and various areas of consumer products. Mr. Gilbert served as General Counsel to the Direct Selling Association and as General Counsel to the World Federation of Direct Selling Associations. Mr. Gilbert’s legal expertise in the direct selling industry makes him a valued member of the Board.

Larry A. Jobe brings to the Board extensive experience in management, finance and auditing. Mr. Jobe also has significant experience serving on other public company boards. Mr. Jobe’s considerable experience in public accounting and in evaluating financial statements makes him particularly well-suited to serve as chair of the Audit Committee. Mr. Jobe maintained an active CPA license from 1962 to 2002.

Kevin Robbins is a high-level independent Associate in our global downline network marketing system. Mr. Robbins brings to the Board more than 20 years of experience as an independent Associate of the Company. Mr. Robbins’ vast understanding of the Company’s independent Associate field leadership and the critical issues contributing to the building of a successful business with the Company make him a valued member of the Board.

Eric W. Schrier brings to the Board experience in marketing and digital publishing. Mr. Schrier has significant experience in leading and advising companies on strategies including The Reader’s Digest Association. From July 2009 to December 2013, he served on the board of Willow House, a party plan company. Mr. Schrier’s knowledge of marketing, digital publishing, and leading a large multi-national company makes him a valuable addition to the Board.

Robert A. Toth brings to the Board extensive experience in senior management and as a venture capitalist. Mr. Toth has over 38 years of direct selling experience, principally with Avon Products, Inc. Mr. Toth’s considerable experience with international markets makes him a valuable member of the Board, as international expansion has been, and continues to be, an important part of our long-term strategic plan. Having served in various leadership positions of Avon International, Mr. Toth has an in-depth understanding of the direct selling industry.

Tyler Rameson, our second largest shareholder, brings to the Board extensive financial experience. Mr. Rameson previously worked for Jane Street Capital, one of the largest proprietary trading firms in the world. At Jane Street, Mr. Rameson was a member of the American Stock Exchange where he executed several proprietary trading strategies. In 2008, Mr. Rameson co-founded Gray Whale Capital, an SEC registered investment company that executed proprietary investment strategies worldwide. Mr. Rameson's extensive analytical and financial background make him a valued member of the Board.
 
Consideration of Director Nominees

Under our Bylaws, the Nominating/Governance and Compliance Committee of our Board of Directors recommends to the Board all candidates for election by our shareholders at each annual meeting of shareholders. Although the Board has not formally established criteria for Board membership, the Board does consider several factors before recommending a candidate for Board membership. These factors include the following:

the experience level, mix of skills and other business qualities a potential nominee may possess;
the general experience and skill levels of current Board members;
the potential nominee’s experience with accounting rules and practices;
the verification of background, work, and education of a potential nominee; and

23



other factors as the Nominating/Governance and Compliance Committee may deem in the best interests of our shareholders.

In addition, the Nominating/Governance and Compliance Committee will recommend director candidates in order to ensure that:

a majority of the Board of Directors are “independent” as defined by Nasdaq and SEC rules;
each of the Audit, Compensation and Stock Option Plan, and Nominating/Governance and Compliance Committees are comprised entirely of independent directors; and
at least one member of the Audit Committee has the experience, education and qualifications necessary to qualify as an “audit committee financial expert” as defined by the SEC.

The Nominating/Governance and Compliance Committee may solicit recommendations for director nominees from any or all of the following sources: non-management directors, executive officers, third-party search firms or any other source it deems appropriate. The Nominating/Governance and Compliance Committee will review and evaluate the qualifications of any proposed director candidate that it is considering or that has been properly recommended to it by a shareholder and conduct inquiries it deems appropriate into the background of these proposed director candidates. When nominating a director for re-election, the Nominating/Governance and Compliance Committee will also consider the director’s past performance on the Board. The Nominating/Governance and Compliance Committee will evaluate all proposed director candidates based on the same criteria, with no regard to the source of the initial recommendation of the proposed director candidate.

The Nominating/Governance and Compliance Committee does not have a formal policy with respect to diversity; however, the Board and the Nominating/Governance and Compliance Committee believe it is important that Board members represent diverse viewpoints. In considering candidates, the Nominating/Governance and Compliance Committee considers the entirety of each candidate’s credentials, including such candidate’s diverse skills, experience and qualifications.

If a shareholder would like our Nominating/Governance and Compliance Committee to consider specific candidates for nomination to the Board, a shareholder should deliver written notice to our Corporate Secretary at our corporate office, located at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028, or by fax at (972) 471-1571. As required by our Bylaws, written notice of such proposed candidates for director should be delivered no later than December 31, 2019 to allow the Board time to consider such persons for nomination at our 2020 Annual Shareholders’ Meeting. The written notice should include the candidates’ full name, age, biographical background, and qualifications. If a shareholder intends to present a director nomination at the 2019 Annual Shareholders’ Meeting, the shareholder should follow the procedures described on page 7 of this proxy statement.

Board Leadership Structure and Role in Risk Oversight

Meetings of the Board are presided over by the Chairman of the Board, currently Mr. J. Stanley Fredrick. Our Bylaws do not require that the Chairman be independent. However, the Board believes in the separation of the Chairman and CEO roles. Most important among the considerations to keep these roles separate was that the separation of the Chairman and CEO positions allows our CEO to focus on operational issues and the Chairman to focus on governance and other related issues.

In addition, we believe that the effectiveness of the Board is enhanced by having separate Chairman and CEO positions.

It is management’s responsibility to manage risk and bring to the Board’s attention any material risks facing the Company. The Board, as a whole and through its committees, regularly reviews various areas of significant risk, and advises and directs management on the scope and implementation of policies, strategic initiatives and other actions designed to mitigate various types of risks. Specific examples of risks primarily overseen by the full Board include competition risks, industry risks, economic risks, liquidity risks, business operations risks, cybersecurity and data privacy risks, regulatory risks, and risks posed by significant litigation matters. Our Audit Committee regularly discusses with management and the independent auditors significant financial risk exposures and the processes management has implemented to monitor, control and report such exposures. Specific examples of risks primarily overseen by the Audit Committee include risks related to the

24



preparation of the Company’s financial statements, disclosure controls and procedures, internal controls and procedures required by the Sarbanes-Oxley Act of 2002, accounting, financial and auditing risks, matters reported to the Audit Committee through the internal audit department and through anonymous reporting procedures.

Classes of Our Board of Directors

Seven directors currently serve on the Board, which is divided into three classes serving staggered three-year terms, which expire on the day of our Annual Shareholders’ Meeting. The Board has determined that five of our directors are independent. The members of each of the classes and the expiration dates of their terms as of April 20, 2018, are as follows:
Class
Term
Expiration
Directors
Class I
2021
Gerald E. Gilbert*, Larry A. Jobe*, and Kevin Robbins
Class II
2019
J. Stanley Fredrick(1) Eric W. Schrier*, and Tyler Rameson*
Class III
2020
Robert A. Toth

*
Independent Board Member
(1)
Chairman of the Board of Directors

The Board held four regular meetings and one special meeting during 2018. Except for Mr. Fredrick, all of our directors attended all of the regular meetings of the Board. Mr. Fredrick missed the March board meetings and the 2018 Annual Shareholders' meeting held on June 6, 2018. Although we do not have a formal policy regarding attendance by directors at our Annual Shareholders’ Meeting, we encourage and expect all of our directors to attend our Annual Shareholders’ Meeting. We anticipate that all of our directors will attend our 2019 Annual Shareholders’ Meeting to be held on June 11, 2019.


Director Independence

The Board has determined that each of Messrs. Gilbert, Jobe, Schrier, Rameson, and Toth qualify as “independent” as defined by applicable Nasdaq and SEC rules. In making this determination, the Board has concluded that none of these members has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

25





Committees of Our Board of Directors

During 2018, the Board had five committees with various functions. All committee members attended all of their regularly scheduled committee meetings. During 2018, the committees held the following number of meetings:

Audit Committee: 4 regular meetings and 7 special meetings;
Compensation and Stock Option Plan Committee: 4 regular meetings;
Nominating/Governance and Compliance Committee: 4 regular meetings;
Science and Marketing Committee: 4 regular meetings; and
Associate Compliance Committee: 4 regular meetings.(1)

(1) The Board opted to dissolve the Associate Compliance Committee at its March 2019 meeting. The Nominating/Governance and Compliance Committee will have oversight over management's responsibilities regarding the Company's compliance with legal and regulatory requirements related to the marketing, distribution, and sale of the Company's products by the Company's independent distributors ("Associates").

As of April 19, 2019, the Board has four committees. The committee membership is as follows:
Director’s Name


Audit
Committee

Compensation and
Stock Option Plan
Committee
Nominating/
Governance, and Compliance
Committee

Science and Marketing
Committee
Non-Employee Independent Directors:
 
 
 
 
Gerald E. Gilbert
X
X
C
X
Larry A. Jobe
C
X
X
X
Eric W. Schrier
X
X
 
C
Robert A. Toth
X
C
X
X
Tyler Rameson
X
X
 
X
Non-Employee Directors:
 
 
 
 
J. Stanley Fredrick(1)
 
 
 
 
Kevin Robbins
 
 
 
X

X    Member
C    Committee Chairman
(1)    Chairman of the Board of Directors


The committees and their functions are as follows:

1.
Audit Committee. Our Audit Committee consists of Messrs. Gilbert, Jobe, Rameson, Schrier, and Toth and is chaired by Mr. Jobe. The Board has determined that each member of our Audit Committee meets the independence and financial literacy requirements for purposes of serving on such committee under applicable Nasdaq and SEC rules and that Mr. Jobe qualifies as an “audit committee financial expert” as defined by the SEC. Our Audit Committee is primarily responsible for approving all services provided by our independent registered public accounting firm, reviewing our annual audit results, and meeting with our independent registered public accounting firm to periodically review our internal controls, internal control over financial reporting, and financial management practices. Our Audit Committee’s responsibilities are stated more fully in its amended and restated charter, which is posted on our corporate website at ir.mannatech.com. Our Audit Committee’s report appears in this proxy statement on page 43 of this proxy statement.

2.
Compensation and Stock Option Plan Committee. Our Compensation and Stock Option Plan Committee consists of Messrs. Gilbert, Jobe, Rameson, Schrier, and Toth and is chaired by Mr. Toth. The Board has determined that each member of our Compensation and Stock Option Plan Committee meets the independence requirements for purposes of serving on such committee under applicable Nasdaq and SEC rules. None of our executive officers serves as a member of any board of directors or as a member of any other compensation committee for any other entity that has or has had one or more of their executive officers serving as a member of the Board or on our

26



Compensation and Stock Option Plan Committee. Our Compensation and Stock Option Plan Committee is primarily responsible for establishing all compensation for our executive officers and directors including salaries, bonuses, stock option grants, and stock option plan administration. Our Compensation and Stock Option Plan Committee may ask members of management or others whose advice and counsel are relevant to the issues then being considered by the Committee to attend any meetings and to provide such pertinent information as the Committee may request. Our Compensation and Stock Option Plan Committee’s responsibilities are stated more fully in its revised charter, which is posted on our corporate website at ir.mannatech.com.

3.
Nominating/Governance, and Compliance Committee. Our Nominating/Governance and Compliance Committee consists of Messrs. Gilbert, Jobe, and Toth and is chaired by Mr. Gilbert. The Board has determined that each member of the Nominating/Governance and Compliance Committee meets the independence requirements for purposes of serving on such committee under applicable Nasdaq and SEC rules. Our Nominating/Governance and Compliance Committee is primarily responsible for reviewing and recommending nominees to the Board, developing plans regarding the size and composition of the Board, developing management succession planning, and establishing and maintaining policies and procedures to handle and investigate complaints, including whistleblower or other confidential complaints. Our Nominating/Governance and Compliance Committee is also responsible for directing the investigation of complaints including advising the Board about the outcome of any complaints or any other legal matters. Additionally, at its March 2019 meeting, the Board reassigned to the Nominating/Governance and Compliance Committee the responsibility for oversight of management's responsibilities regarding the Company's compliance with legal and regulatory requirements relating to the marketing, distribution and sale of the Company's products by the Company's independent Associates. For information on criteria for director nominees, see “Consideration of Director Nominees”, beginning on page 23 of this proxy statement. Our Nominating/Governance and Compliance Committee’s responsibilities are stated more fully in its charter that is posted on our corporate website at ir.mannatech.com. For additional information on nominating nominees to the Board see “Shareholder Procedures for Nominating Board Members or Introducing Proposals,” beginning on page 7 of this proxy statement.

4.
Science and Marketing Committee. Our Science and Marketing Committee was formed in June 2003 and consists of Messrs. Gilbert, Schrier, Rameson, Robbins, Jobe, and Toth. The Board elected Mr. Schrier as Chairman of the Science and Marketing Committee. Our Science and Marketing Committee is primarily responsible for overseeing all aspects of our product development and setting the overall direction of our product research and development and the marketing of our innovative products. The committee also oversees management’s implementation and maintenance of the Company’s Global Scientific Advisory Board to aid the Company in driving the development of innovative products for its global markets. The Science and Marketing Committee’s responsibilities are stated more fully in its charter that is posted on our corporate website at ir.mannatech.com.
 
Shareholder Communication with Our Board of Directors

We request that any shareholders interested in communicating directly with individual directors or with our entire Board submit such correspondence in writing. To submit written correspondence to the Board, fax such correspondence to (972) 471-1571, or send by email to BoardofDirectors@mannatech.com, or mail to Mannatech, Incorporated, Attention Corporate Secretary, “For Mannatech’s Board of Directors,” 1410 Lakeside Parkway, Flower Mound, Texas 75028. Upon receipt, a copy of such correspondence will be given to J. Stanley Fredrick, our Chairman of the Board. All correspondence to specific Board members will be delivered directly to the individual Board member. A voice message can be left for the Board at (972) 471-6512. Our Executive Officers and designated officials may be given access to such shareholder communications with the Board, except in instances in which the charters of our committees require anonymity.

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Code of Ethics

In order to help promote the highest levels of business ethics, the Board adopted a Code of Ethics for our executive officers and directors in 2003. The Code of Ethics was amended in April 2006 and is published on our corporate website at ir.mannatech.com. Any change in or waiver from and the grounds for such change in or waiver from our Code of Ethics shall be promptly disclosed by publishing such change or waiver on our corporate website at ir.mannatech.com. Our Code of Ethics applies to all of our executive officers and directors. Our Code of Ethics was designed to ensure that our business is conducted in a consistent legal and ethical manner and sets forth guidelines for all areas of professional conduct, including conflicts of interest, employment policies, protection of confidential information, and fiduciary duties.

Compensation of Directors

We compensate our non-employee directors for serving and participating on the Board, for chairing committees, and for attending Board and Board committee meetings. Our Nominating/Governance and Compliance Committee reviews the compensation of our non-employee directors and recommends to the Compensation and Stock Option Plan Committee any changes to director compensation that the Nominating/Governance and Compliance Committee deems appropriate. Our Compensation and Stock Option Plan Committee then reviews such recommendations and after due deliberation and consideration approves any such changes it deems appropriate and recommends them to the Board. The Board then reviews such recommendations and after due deliberation and consideration approves any such changes it deems appropriate. Non-employee director fees during 2018 were as follows:
 
Board
Member
 
Audit
Committee
 
Compensation
and Stock
Option Plan
Committee
 
Nominating/
Governance and Compliance
Committee
 
Associate Compliance Committee
 
Science and Marketing
Committee
Chairman fee(1)
$
372,910


$
20,000


$
18,000


$
12,500


$
7,500


$
7,500

Vice Chairman fee(1)
$
100,000


$


$


$


$


$

Independent director retainer(1)
$
70,000


$


$


$


$


$

 

















Telephonic meeting fee
$
500


$
500


$
500


$
500


$
500


$
500

Re-elected Board members(2)
$


$


$


$


$


$


(1)
The Chairman fee, Vice Chairman fee, and director retainer are paid monthly during the calendar year. Mr. Toth resigned as Vice Chairman effective April 1, 2019. The Board opted to not fill that vacancy. Mr. Toth will remain an independent, non-employee director. Effective April 1, 2019, the Chairman fee was reduced to $300,000.
(2)
Each non-employee director re-elected to the Board by our shareholders was granted 5,000 stock options. The stock options are priced on the date of grant and expire in ten years. One-third of the stock options vest on the date of grant, another one-third of the stock options vest on the first anniversary date of grant, and the remaining one-third of the stock options vest on the second anniversary of the date of grant.

All directors are reimbursed for any reasonable out-of-pocket travel expenses in connection with their travel to and attendance at any of the Board’s meetings or committee meetings.

For fiscal year 2018, the annual retainer for independent directors was $70,000. Directors received a $500 fee for attending telephonic board and committee meetings. The directors did not receive any fees for attending in-person board or committee meetings. In addition to the cash retainer, each director received $35,000 in equity stock grant, using the closing stock price on January 2, 2018, all of which fully vested upon grant.

For fiscal year 2019, the annual retainer for independent directors will remain at $70,000 and the telephonic Board and telephonic committee meeting fees and vice chairman, and committee chairman fees will remain at the 2018 levels. In addition to the cash retainer, each director received $35,000 in equity stock grant, using the closing stock price on the first trading day of 2019, all of which fully vested upon grant. Effective April, 1, 2019, the Chairman fee was reduced to $300,000. Mr. Toth resigned as Vice Chairman effective April 1, 2019. The Board opted to not fill that vacancy at this time and may reassess the fee upon appointment of a new vice chairman.



28



2018 Director Compensation Table

The table below summarizes the compensation paid during 2018 to our non-employee directors. Our non-employee directors do not receive non-equity incentive plan compensation, or nonqualified deferred compensation.
Director 
 
Fees Earned
or Paid in Cash
(1)
 
Stock
Awards(2)
 
Option
Awards
 
All Other
Compensation
 
Total
J. Stanley Fredrick

$
355,582


$
35,000


$


$
9,680

 (4) 
$
400,262

Gerald E. Gilbert

$
84,500


$
35,000


$
42,920

 (3) 
$


$
162,420

Larry A. Jobe

$
92,000


$
35,000


$
42,920

 (3) 
$


$
169,920

Kevin Robbins

$
70,500


$
35,000


$
42,920

 (3) 
$
240,475

(5) 
$
388,895

Eric W. Schrier

$
79,500


$
35,000


$


0


$
114,500

Linda K. Ferrell, Ph.D. (6)

$
78,000


$
35,000


$


$


$
113,000

Robert A. Toth

$
190,000


$
35,000


$


$
12,666

 (4) 
$
237,666

Tyler Rameson

$
35,000


$
35,000


$
14,309

 (3) 
$
2,195

 (4) 
$
86,504


(1)
The amounts reported in this column represent the aggregate dollar amount of annual retainer fees, committee and/or chairmanship fees, and meeting fees, as described in the table above. The Chairman fee is $372,910, and Mr. Fredrick reimburses the company $17,328 for his health insurance.
(2)
As part of the equity component to the director compensation package, which was approved at the December 2017 Board meeting, each director received an unrestricted grant of 1,821 shares of stock. The grant was effective on January 2, 2019 and the price per share was $19.22.
(3)
The amounts reported in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 “Stock Compensation”. Mr. Gerald Gilbert, Mr. Larry Jobe and Mr. Kevin Robbins were awarded stock options in connection with their re-election to the Board at the 2018 Annual Shareholders’ Meeting. Mr. Gerald Gilbert, Mr.Larry Jobe and Mr. Kevin Robbins each received a grant of 5,000 stock options with an exercise price of $21.00 pursuant to our policy that each non-employee director re-elected to the Board by our shareholders is granted 5,000 stock options. For the aforementioned grants to re-elected Directors, one-third of the stock options vest on the date of grant, another one-third of the stock options vest on the first anniversary date of the grant, and the remaining one-third of the stock options vest on the second anniversary of the date of grant. Mr. Tyler Rameson received a grant of 1,667 stock options with an exercise price of $21.00 for his appointment as a director at the June 2018 meeting. Mr. Rameson's option grant vested on the date of grant. The stock options are priced on the date of grant. See table below titled “Directors’ Stock Options Outstanding” for aggregate options outstanding at year-end.
(4)
Included in other compensation is our payment for Mr. Fredrick's travel of $9,680, Mr. Toth's travel of $12,666 and Mr. Rameson's travel of $2,195.
(5)
Mr. Robbins holds positions in our associate global downline network marketing system and we paid him commissions of $190,975 in connection therewith. Included in other compensation are our payments for Mr. Robbins' consulting fees of $49,500 in connection with the associate commission plan.
(6)
Dr. Ferrell resigned from the Board effective March 31, 2019.


29



Directors’ Stock Options Outstanding

The table below summarizes the outstanding stock options of our non-employee directors as of December 31, 2018:
Director
 
Grant Date
 
Aggregate Number of
Shares Underlying
Outstanding Stock
Options
 
Exercise
Price
Per Share
 
Grant Date Fair
Value of Option
Awards
 
Calculated Fair
Value Price Per
Share
 
Fair Value of
Option Awards
Recognized in
2018
(a)
J. Stanley Fredrick
 
June 10, 2010
 
6,976

 
$
23.70

 
$
82,317

 
$
11.80

 
$

 
 
February 21, 2013
 
5,000

 
$
5.72

 
$
17,850

 
$
3.57

 
$

 
 
June 5, 2013
 
5,000

 
$
9.89

 
$
30,350

 
$
6.07

 
$

 
 
February 20, 2014
 
8,000

 
$
19.60

 
$
97,660

 
$
12.21

 
$

 
 
June 22, 2016
 
5,000

 
$
21.18

 
$
63,205

 
$
12.64

 
$
9,986

 
 
 
 
29,976

 
 
 
$
291,382

 
 
 
$
9,986

 
 
 
 
 
 
 
 
 
 
 
 
 
Linda K. Ferrell, Ph.D. (b)
 
April 1, 2015
 
5,000

 
$
18.55

 
$
55,421

 
$
11.08

 
$
0

 
 
June 8, 2017
 
5,000

 
$
14.18

 
$
29,332

 
$
5.87

 
$
9,777

 
 
 
 
10,000

 
 
 
$
84,753

 
 
 
$
9,777

 
 
 
 
 
 
 
 
 
 
 
 
 
Gerald E. Gilbert
 
November 20, 2008
 
1,000

 
$
25.00

 
$
10,300

 
$
10.30

 
$

 
 
June 10, 2009
 
5,000

 
$
30.00

 
$
72,000

 
$
14.40

 
$

 
 
August 16, 2010
 
2,315

 
$
24.60

 
$
32,421

 
$
14.00

 
$

 
 
February 20, 2014
 
5,000

 
$
19.60

 
$
61,037

 
$
12.21

 
$

 
 
May 28, 2015
 
5,000

 
$
20.95

 
$
62,740

 
$
12.55

 
$
0

 
 
June 6, 2018
 
5,000

 
$
21.00

 
$
42,920

 
$
8.58

 
$
22,464

 
 
 
 
23,315

 
 
 
$
281,418

 
 
 
$
22,464

 
 
 
 
 
 
 
 
 
 
 
 
 
Larry A. Jobe
 
November 20, 2008
 
1,000

 
$
25.00

 
$
10,300

 
$
10.30

 
$

 
 
June 10, 2009
 
5,000

 
$
30.00

 
$
72,000

 
$
14.40

 
$

 
 
August 16, 2010
 
1,410

 
$
24.60

 
$
19,740

 
$
14.00

 
$

 
 
February 20, 2014
 
5,000

 
$
19.60

 
$
61,037

 
$
12.21

 
$

 
 
May 28, 2015
 
5,000

 
$
20.95

 
$
62,740

 
$
12.55

 
$
0

 
 
June 6, 2018
 
5,000

 
$
21.00

 
$
42,920

 
$
8.58

 
$
22,464

 
 
 
 
22,410

 
 
 
$
268,737

 
 
 
$
22,464

 
 
 
 
 
 
 
 
 
 
 
 
 
Kevin Robbins
 
December 7, 2016
 
5,000

 
$
17.28

 
$
38,877

 
$
7.78

 
$
12,107

 
 
June 6, 2018
 
5,000

 
$
21.00

 
$
42,920

 
$
8.58

 
$
22,464

 
 
 
 
10,000

 
 
 
$
81,797

 
 
 
$
34,571

 
 
 
 
 
 
 
 
 
 
 
 
 
Eric W. Schrier
 
October 29, 2014
 
5,000

 
$
14.19

 
$
42,545

 
$
8.51

 
$

 
 
June 22, 2016
 
5,000

 
$
21.18

 
$
63,205

 
$
12.64

 
$
9,986

 
 
 
 
10,000

 
 
 
$
105,750

 
 
 
$
9,986

 
 
 
 
 
 
 
 
 
 
 
 
 
Robert A. Toth
 
August 16, 2010
 
2,410

 
$
24.60

 
$
33,751

 
$
14.00

 
$

 
 
June 9, 2011
 
13,157

 
$
11.40

 
$
84,211

 
$
6.40

 
$

 
 
February 21, 2013
 
5,000

 
$
5.72

 
$
17,850

 
$
3.57

 
$

 
 
February 20, 2014
 
5,000

 
$
19.60

 
$
61,037

 
$
12.21

 
$

 
 
May 28, 2014
 
5,000

 
$
14.68

 
$
45,092

 
$
9.02

 
$

 
 
June 8, 2017
 
5,000

 
$
14.18

 
$
29,332

 
$
5.87

 
$
9,777

 
 
 
 
35,567

 
 
 
$
271,273

 
 
 
$
9,777

 
 
 
 
 
 
 
 
 
 
 
 
 
Tyler Rameson
 
June 6, 2018
 
1,667

 
$
21.00

 
$
14,309

 
$
8.58

 
$
14,309

 
 
 
 
1,667

 
 
 
14,309

 
 
 
14,309

 
 
 
 
 
 
 
 
 
 
 
 
 

(a)
Represents the calculated stock-based compensation expense recognized in our consolidated financial statements for the fair value of the option awards in accordance with FASB ASC Topic 718 “Stock Compensation”. Assumptions made in the calculation of these amounts are included in Note 10 to our audited consolidated financial statements for the fiscal year ended December 31, 2018, included in our Annual Report on Form 10-K filed with the SEC on March 11, 2019.
(b)
Dr. Ferrell resigned from the Board effective March 31, 2019.


30



Directors’ Stock Ownership Guidelines

We encourage our non-employee directors to own shares of our common stock equal to three times the value of a director’s annual board retainer in order to demonstrate to our shareholders and the investment community that our directors are personally committed to our success. However, we do not have a formal policy requiring our directors to own any specific number of shares.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of March 31, 2019, concerning beneficial ownership of shares of our common stock by (a) each person known by us to beneficially own 5% or more of our outstanding shares of common stock, (b) each of our directors and “Named Executive Officers,” and (c) all of our current directors and executive officers as a group.
Name
 
Number of
Outstanding
Shares
 
Number of
Shares
Underlying
Options
(1)
 
Total Number of
Outstanding Shares
and Shares Underlying
Options
(1) (2)
 
% of Class
Outstanding
(1)
Beneficial Owners of 5% or More
 
 
 
 
 
 
 
 
Michael Challen(3)
 
199,997




199,997


8.3
%
Directors and Named Executive Officers
 
 
 
 
 
 
 
 
J. Stanley Fredrick(4)
 
331,388

(5) 
29,976


361,364


15.1
%
Robert A. Toth
 
63,722


35,567


99,289


4.1
%
Larry A. Jobe
 
60,000


22,410


82,410


3.4
%
Gerald E. Gilbert
 
29,722


18,315


48,037


2.0
%
Eric W. Schrier
 
9,222


10,000


19,222


0.8
%
Linda K. Ferrell, Ph.D. (6)
 
9,722


10,000


19,722


0.8
%
Kevin A. Robbins
 
10,728


10,000


20,728


0.9
%
Alfredo (Al) Bala
 
6,980


30,667


37,647


1.6
%
Joel R. Bikman
 
1,900


29,000


30,900


1.3
%
Landen G. Fredrick
 
1,975


31,575


33,550


1.4
%
Tyler Rameson (7)
 
270,569


1,667


272,236


11.4
%
All 15 executive officers and directors as a group 
 
796,958


293,769


1,090,727


45.5
%

(1)
Shares of our common stock subject to stock options, warrants, or any other convertible security currently exercisable or convertible, or exercisable or convertible within 60 days of March 31, 2019, are deemed outstanding for computing the percentage of the person or entity holding such securities, but are not outstanding for computing the percentage of any other person or entity.
(2)
The information contained in this table with respect to beneficial ownership reflects “beneficial ownership” as defined in Rule 13d-3 under the Exchange Act. All information with respect to the beneficial ownership of any shareholder has been furnished by such shareholder and, except as otherwise indicated or pursuant to community property laws, each shareholder has sole voting and investment power with respect to shares listed as beneficially owned by such shareholder.
(3)
The information regarding the beneficial ownership of Michael Challen is based on the Schedule 13G/A filed with the SEC by Mr. Challen on February 12, 2019, in which Mr. Challen indicated he had sole power to vote and dispose of all such shares. The address for Mr. Challen is 2786 Puesta Del Sol, Santa Barbara, CA 93105.
(4)
Mr. Fredrick beneficially owns more than 5% of our common stock. Mr.  Fredrick maintains offices at 1410 Lakeside Parkway, Suite 200, Flower Mound, TX 75028.
(5)
The number of shares owned by Mr. Fredrick includes 197,307 shares of our common stock directly held by Mr. Fredrick and 125,000 shares of our common stock held through JSF Resources LTD Partnership. JSF Resources LTD is a limited partnership that is owned by FSJ Secure Trust, of which Mr. Fredrick is the sole beneficiary. Mr. Fredrick pledged 40,000 shares he holds individually as collateral for a loan.
(6) Dr. Ferrell resigned from the Board effective March 31, 2019.
(7) Mr. Rameson beneficially owns more than 5% of our common stock. Mr. Rameson maintains offices at 1805 Jelinda Drive, Santa Barbara, CA
93101.

Section 16(a) Beneficial Ownership Reporting Compliance


31



Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our common stock to file initial reports of ownership and reports of changes in their beneficial ownership of our common stock with the SEC. Such persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.

Based solely upon a review of such reports or written representations furnished to us that no other reports were required, we believe that during the year ended December 31, 2018, except as noted below, all of our executive officers and greater than 10% beneficial owners complied with all applicable Section 16(a) filing requirements.


32



EXECUTIVE COMPENSATION

This executive compensation discussion describes our compensation program for the year ended December 31, 2018 for our Named Executive Officers listed below, which we refer to collectively as our “Named Executive Officers.”
Alfredo (Al) Bala – CEO and President
Yong Jae (Patrick) Park – Former Regional President Asia; Mr. Park resigned on November 19, 2018.
Joel Bikman – Chief Operating Officer and Chief Marketing Officer
Landen Fredrick - Global Chief Sales Officer, President North America

Alfredo (Al) Bala is a Named Executive Officer based on his position, while the other individuals listed above were Named Executive Officers based on compensation earned in 2018.

We compensate our executive officers through our executive compensation program that is designed to maintain a fair, equitable, and competitive compensation package that allows the Company to attract and retain top executive talent. Based on recommendations made by our Compensation and Stock Option Plan Committee, the Board approves all compensation related to our executive officers, including our Named Executive Officers. The Compensation and Stock Option Plan Committee annually reviews each executive officer’s responsibilities and performance. In general, our executive compensation program for executive officers, including our Named Executive Officers, consists of payment of an annual base salary; participation in our Management Non-Equity Incentive Bonus Plan; stock option awards; and certain other benefits and perquisites.

Summary Compensation Table (2018 & 2017)

The following table summarizes the total compensation awarded to our Named Executive Officers for the fiscal years ended December 31, 2018 and 2017:
Name & Principal Position
Year
 
Salary(1)
 
Bonus
 
Option Award (2)
 
Non-Equity Incentive Plan Compensation (3)
 
All Other Compensation (4)
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alfredo (Al) Bala
CEO and President
2018
 
$
420,000

 
$
37,692

 
$
171,919

 
$

 
$
22,163

 
$
651,775

2017
 
$
400,000

 
$
5,000

 
$

 
$

 
$
22,368

 
$
427,368

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Yong Jae (Patrick) Park (5)
Former Regional President Asia
2018
 
$
364,000

 
$
91,000

 
$
128,940

 
$

 
$
44,277

 
$
628,217

2017
 
$
310,562

 
$
89,000

 
$

 
$

 
$
48,657

 
$
448,219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joel Bikman
Chief Operating and Marketing Officer
2018
 
$
314,615

 
$
34,375

 
$
128,940

 
$

 
$
20,727

 
$
498,657

2017
 
$
295,000

 
$
5,000

 
$

 
$

 
$
20,270

 
$
320,270

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Landen Fredrick
Global Chief Sales Officer
President North America
2018
 
$
275,000

 
$
33,654

 
$
128,940

 
$

 
$
17,907

 
$
455,500

2017
 
$
250,000

 
$
5,000

 
$

 
$

 
$
24,879

 
$
279,880

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
The amounts reported in this column represent the total amount paid to the executive during the year as a result of the executive’s annual base salary and the number of payroll periods in the respective year.
(2)
The amounts reported in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 "Stock Compensation" for option awards granted in 2018 and 2017, respectively. Assumptions made in the calculation of these amounts are included in Note 10 to our audited financial statements for the fiscal year ended December 31, 2018, included in our Annual Report of Form 10-K filed with the Securities and Exchange Commission on March 11, 2019.
(3)
The amounts reported in this column represent non-equity incentive plan compensation under our Management Non-Equity Incentive Bonus Plan with respect to prior year performance.
(4)
The amounts reported in this column include, among other items, an automobile allowance or automobile lease payments, matching contributions to our 401(k) plan, life insurance coverage, and statutory pension and insurance paid on behalf of each Named Executive Officer, and are detailed in the “All Other Compensation” table included below.
(5)
Mr. Park’s compensation is denominated in Korean Won except for the Non-Equity Incentive Plan Compensation, which is denominated in United States Dollars. The Company has converted the compensation denominated in Korean Won to United States Dollars using the average daily exchange rate for the period from January 1 through December 31 of the respective year. Using this methodology, the conversion rate for 2018 is 1,098.90 Korean Won per United States Dollar and the conversion rate for 2017 is 1,123.60 Korean Won per United States Dollar. Mr. Park resigned on November 19, 2018.
    


33



All Other Compensation Table (2017 and 2018)

The amounts included in the “All Other Compensation” column of the Summary Compensation Table above are broken down as follows:
 
 
 
Automobile Lease Payments
 
Company Matching 401(k) Contribution
 

Life Insurance
 
Statutory Pension and Insurance(1)
 
Total All Other Compensation
Name
Yr.
 
($)
 
($)
 
($)
 
($)
 
($)
 
 
 
 
 
 
 
 
 
 
 
 
Alfredo (Al) Bala
2018

12,000

8,250


1,913




22,163
2017

12,000

8,562


1,806




22,368















Yong Jae (Patrick) Park (2)
2018

31,035



3,514


9,728


44,277
 
2017

24,471



3,789


20,397


48,657















Joel Bikman
2018

12,000

8,250


477




20,727
 
2017

12,000

7,829


441




20,270
 
 
 
 
 
 
 
 
 
 
 
 
Landen Fredrick
2018

12,000

5,500


407




17,907
2017

20,000

4,519


360




24,879
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) The amounts reported in this column reflect Korean statutory pension and insurance for Mr. Park.
(2) Mr. Park resigned on November 19, 2018.

Executive Employment Agreements

We enter into employment agreements with certain executive officers, including our Named Executive Officers. Pursuant to the terms of the employment agreements, some of our executive officers are entitled to severance in certain events of early termination. These provisions are described in the section titled “Potential Payments Upon Termination or Change in Control” appearing later in this Proxy Statement. In the employment agreements, we have agreed to pay relocation expenses for newly hired executives, provide a leased vehicle or pay a monthly automobile allowance, and allow our executives to participate in our Management Non-Equity Incentive Bonus Plan and in all of our other employee benefit plans. In addition, the employment agreements contain covenants regarding (i) confidentiality and non-disparagement that apply to the executive both during and after employment and (ii) non-competition and non-solicitation that apply to the executive during employment and for one year after termination. The following table describes the other material terms of the employment agreements with our Named Executive Officers as of December 31, 2018. Mr. Park resigned from the Company effective November 19, 2018; however, he received his salary through December 31, 2018.
Named Executive Officer
 
Position
 
Effective Date of Agreement
 
Expiration
Date
 
2017
Annual
Base
Salary
 
2018
Annual
Base
Salary
 
2019
Annual
Base
Salary
 
Alfredo (Al) Bala
 
CEO
 
October 2007
 
September 2019
(1) 
$
400,000

 
$
420,000

 
$
440,000

 
Yong Jae (Patrick) Park
 
Former Regional President Asia
 
October 2009
 
September 2018
(2) 
$
283,800

(3) 
$
355,900

(3) 

 

(1)
The employment agreement for Mr. Bala had an initial term of two years with automatic renewals for successive one-year periods unless terminated pursuant to the terms of the contract.
(2)
The employment agreement for Mr. Park had an initial term of one year with automatic renewals for successive one-year periods unless terminated pursuant to the terms of the contract.
(3)
Mr. Park’s annual base salary was ₩330,000,000 for 2017 and ₩400,000,000 for 2018 converted to United States Dollars using an exchange rate of ₩1,163 per $1 for 2017 and ₩1,124 per $1 for 2018. Mr. Park resigned on November 19, 2018. Please refer to page 40 for a description of the separation payments to Mr. Park.

In his role as Executive Vice President, Sales & Marketing, we entered into a two-year employment agreement, with automatic renewals for successive one-year periods, with Mr. Bala in October 2007. Pursuant to the terms of the employment agreement, we agreed to pay Mr. Bala an annual base salary of $275,000. In accordance with the terms of the employment agreement allowing increases to base salary, the Board and the Compensation and Stock Option Plan Committee review Mr. Bala’s base salary annually in accordance with their annual review of salaries for our Named Executive Officers and make any adjustments they deem appropriate. In 2008, we increased Mr. Bala’s annual base salary to $290,000. Effective

34



for 2012, we increased Mr. Bala’s annual base salary to $300,000 in connection with his promotion to Executive Vice President, Sales & Marketing. In February 2014, we increased Mr. Bala’s annual base salary to $324,000 in connection with his performance evaluation and to align with the compensation levels of our competitors. In May 2014, he was named President, and in August 2015, he was promoted to CEO. His annual base salary was increased to $400,000 as of August 2015. Effective for 2018, his base salary was increased to $420,000. In November 2018, his base salary was increased to $440,000.

In October 2009, we entered into a one-year employment agreement, with automatic renewals for successive one-year periods, with Mr. Park, our former Regional President Asia. Pursuant to the terms of the employment agreement, we agreed to pay Mr. Park an annual base salary of approximately $117,000 (₩123,000,000 at ₩1,052.88 per $1). In accordance with the terms of the employment agreement allowing increases to base salary, the Board and the Compensation and Stock Option Plan Committee reviewed Mr. Park’s base salary annually in accordance with their annual review of salaries and made any adjustments they deemed appropriate. In 2011, we increased Mr. Park’s annual base salary to approximately $139,000 (₩146,324,375 using aforementioned exchange rate). Effective for 2012, we increased Mr. Park’s annual base salary to approximately $175,000 (₩184,500,000 using aforementioned exchange rate). Effective for 2013, we increased Mr. Park’s annual base salary to approximately $227,000 (₩238,978,500 using aforementioned exchange rate). In November 2013, we increased Mr. Park’s annual base salary to approximately $247,000 (₩260,486,560 using aforementioned exchange rate). In November 2014, we increased Mr. Park’s annual base salary to approximately $285,000 (₩300,000,000 using aforementioned exchange rate) in connection with his performance evaluation and to align with the compensation levels of our competitors. In 2016, Mr. Park’s annual base salary was increased to (₩330,000,000) and in 2018, his annual base salary was increased to (₩400,000,000). Mr. Park resigned on November 19, 2018. As consideration for cooperating during the transition of the business, Mr. Park was paid his salary through December 31, 2018. Please refer to page 40 for a description of the separation payments to Mr. Park.


2018 Grants of Plan Based Awards

We granted the following stock options to our Named Executive Officers in 2018.

Name
Grant Date
 
Number of Securities Underlying Options (#)
 
Exercise Price of Option Awards ($/Sh) (a)
 
Grant Date Fair Value of Option Awards (b)
Al Bala
4/2/2018
 
24,000
 
$
15.70

 
$
171,919

Joel Bikman
4/2/2018
 
18,000
 
$
15.70

 
$
128,940

Landen Fredrick
4/2/2018
 
18,000
 
$
15.70

 
$
128,940

Yong Jae (Patrick) Park (c)
4/2/2018
 
18,000
 
$
15.70

 
$
128,940

 
 
 
 
 
 
 
 
(a)
The exercise price was set at the closing price on the trading day before the grant date.
(b)
Represents the fair value of the option awards in accordance with FASB ASC Topic 718 “Stock Compensation”. Assumptions made in the calculation of these amounts are included in Note 10 to our audited consolidated financial statements for the fiscal year ended December 31, 2018, included in our Annual Report on Form 10-K filed with the SEC on March 11, 2019.
(c)
Mr. Park resigned on November 19, 2018.


Equity Compensation Plan Information

We use stock option plans to encourage investment by our officers, employees, and non-employee directors in shares of our common stock so they will have an increased vested interest in and greater concern for Mannatech’s welfare.

The Board and a majority of our shareholders approved the Plan at the 2017 Annual Shareholders’ Meeting in June 2017. The Plan replaced the Mannatech, Incorporated 2008 Stock Incentive Plan (the "Prior Plan”) and enables us to attract and retain employees, consultants and directors who will contribute to our long-term success and aligns the interests of those individuals with the interests of our shareholders. Awards of stock options, including incentive and non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units may be issued under the Plan. The Compensation and Stock Option Plan Committee administers the Plan. The Plan is our only equity compensation plan in effect as of December 31, 2018, although outstanding awards granted under the Prior Plan are governed by the terms of the Prior Plan.


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There are 250,000 shares of our common stock currently reserved for issuance under the Plan, which includes certain shares available for issuance under our predecessor stock plan. In the event of certain changes to our common stock, including due to a merger, consolidation, reorganization, reincorporation, stock dividend, non-cash dividend, stock split, liquidation, combination, stock exchange, or change in corporate structure, we may adjust the number of shares subject to the Plan and to any outstanding awards.

Generally, the exercise price with respect to stock options or stock appreciation rights granted pursuant to the Plan cannot be less than 100% of the fair market value per share of our common stock on the date of grant. Unless the Compensation and Stock Option Plan Committee specifies otherwise, in general, stock options and stock appreciation rights vest annually over a two- or three- year period and have a ten-year term.

Participants in the Plan may pay the exercise price for stock options in cash, shares of common stock, via a broker-assisted cashless exercise method or in any other form of legal consideration that the Compensation and Stock Option Plan Committee approves. Stock appreciation rights may be settled in shares of our common stock or in cash, as determined by the Compensation and Stock Option Plan Committee.

The Plan also permits awards of restricted shares of our common stock, or restricted stock, and restricted units. The Compensation and Stock Option Plan Committee determines the vesting schedule for such awards.

If we undergo a change in control or certain other significant corporate transactions, the Plan provides that we may provide for the assumption, continuation, substitution for, or cancellation (with or without payment for consideration) of any outstanding awards. For purposes of the Plan, a “change in control” generally means (a) the sale of at least 40% of the properties or assets of the Company based on gross fair market value, (b) a change in the Board resulting in the current directors (along with any directors nominated for election or appointed by at least 2/3 vote of the directors) ceasing to comprise at least a majority of the Board, (c) shareholder approval of the liquidation or dissolution of the Company, or (d) the acquisition of beneficial ownership of more than 50% of the voting power of the Company.

In the event that any award under the Plan is determined to be nonqualified deferred compensation subject to Section 409A of the Code, the award will have to comply with certain technical tax limitations with respect to when awards may be exercised or paid for.

The Plan will terminate automatically on April 16, 2027, unless the Board terminates it sooner. At its March 2019 meeting, the Board approved the Amendment to the Plan to increase the number of shares of common stock subject to the Plan by 120,000 shares.

The following table provides information, as of April 19, 2019, about our common stock that may be issued upon the exercise of stock options under the Plan and the prior Plan.

Plan Category
 
Number of securities to be issued upon exercise of outstanding options, warrants, and rights
(a)
 
Weighted-average
exercise price of
outstanding options, warrants, and rights
(b)
 
Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities reflected in column (a))
(c)
Equity compensation plan approved by shareholders
 
420,818

 
$
16.64

 
39,002

Equity compensation plans not approved by shareholders
 

 

 

Total
 
420,818

 
 
 
39,002


Non-Equity Incentive Plan


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We award annual cash bonuses under our Management Non-Equity Incentive Bonus Plan for achievement of specified performance objectives within a specific performance period, which is typically one year or less. We make awards from an established incentive pool. The Compensation and Stock Option Plan Committee determines the total size of our incentive pool by taking into account our financial performance. We believe this pool-based bonus system helps foster teamwork and ensures that all executives work collectively to improve our performance.

The following table represents the 2018 Operating Profit targets and bonus opportunities:

2018 Operating Profit Targets – Annual Bonus
 
1st Target
2nd Target
3rd Target
4th Target
Operating Profit Target (1)
$6.0 million
$8.0 million
$10.0 million
$12.0 million
Senior Executive Bonus Opportunity (2)
25%
50%
75%
100%
Executive Bonus Opportunity (3)
12.50%
25%
—%
—%
(1) After accrual of Annual Bonus Opportunity
(2) Messrs. Bala, Bikman, L. Fredrick, Johnson, and Simons are eligible for the Senior Executive tier of the 2018 Mannatech Management Bonus Plan.
(3) This bonus tier is reserved for other members of senior management as designated by the Compensation and Stock Option Plan Committee.
For the year ending December 31, 2018, the Company had $0.1 million in operating loss, and the 1st Operating Profit target was not achieved.
For the year ending December 31, 2019, members of the senior executive team and executive team are eligible to earn a bonus based on the Company achieving certain operating profit targets for 2019. Bonuses are earned and payable after the Audit Committee has accepted the financial statements for full-year 2019.

401(k) Plan

On May 9, 1997, we adopted a 401(k) Pre-tax Savings Plan (the “401(k) Plan”). All full time employees, including our Named Executive Officers, who have completed three months of service and are at least 21 years of age are eligible to participate in our 401(k) Plan. During 2017, employees were allowed to contribute to our 401(k) Plan up to the maximum annual limit of their current annual compensation, as statutorily prescribed. The 401(k) plan permits matching employer contributions in the amount of $0.50 for each $1.00 contributed by a participating employee up to a maximum of 6% of the participant’s annual salary. The 401(k) Plan also allows us to make discretionary profit-sharing contributions each year based upon our profit. Employee contributions and our matching contributions are paid to a corporate trustee and are invested as directed by the participant. Our contributions to our 401(k) Plan vest over five years or earlier if the participant retires at age 65, becomes disabled, or dies. Distributions to participants may be made in the case of financial hardship, and distributions may be made in a lump sum. Our 401(k) Plan is intended to qualify under Section 401(a) of the Code, so that contributions made by employees or by us to our 401(k) Plan, and income earned on these contributions, are not taxable to our employees until withdrawn from the 401(k) Plan.



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2018 Outstanding Equity Awards at Fiscal Year End Table

The following table sets forth certain information about outstanding equity awards held by our Named Executive Officers at December 31, 2018:
 
 
Option Awards
 
Stock Awards
Named Executive 
Officer
 
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
($/Sh)
 
Option
Expiration
Date
 
Number of
shares or
units of
stock that have
not vested (#)
 
Market value
of shares of
units of stock
that have not
vested ($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alfredo (Al) Bala
 
 
 
 
 
 
 
 
 
 
 
 
 
 
February 21, 2013
 
1,667



 


$
5.72

 
February 21, 2023





February 20, 2014
 
5,000



 


$
19.60

 
February 20, 2024





August 26, 2015(1)
 



 


$

 


2,500


$
42.375

April 2, 2018 (2)
 
8,000


16,000




$
15.70


April 2, 2028





 
 
14,667


16,000

 




 






 
 





 




 






Joel R. Bikman
 





 




 






April 28, 2014
 
5,000



 


$
17.10

 
April 28, 2024





August 26, 2015
 
6,000


0

 


$
16.95

 
August 26, 2025





April 2, 2018 (2)
 
6,000


12,000




$
15.70


April 2, 2028





 
 
17,000


12,000

 




 






 
 





 




 






Yong Jae (Patrick) Park
 





 




 






October 28, 2014
 
4,500



 


$
14.33

 
November 19, 2019





April 2, 2018 (3)
 
6,000






$
15.70


November 19, 2019

(3) 



 
 
10,500



 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Landen Fredrick
 
 
 
 
 
 
 
 
 
 
 
 
 
 
February 24, 2010
 
2,500






$
35.60


February 24, 2020




February 21, 2013
 
2,000






$
5.72


February 21, 2023




February 20, 2014
 
3,000






$
19.60


February 20, 2024




August 26, 2015
 
6,000






$
16.95


August 26, 2025




April 2, 2018 (2)
 
6,000


12,000




$
15.70


April 2, 2028




 
 
19,500


12,000












(1)
On August 26, 2015, the Board granted Mr. Bala 10,000 shares at $16.95 per share of restricted stock that vests as follows: 2,500 on August 26, 2016, 2,500 on August 26, 2017, 2,500 on August 26, 2018, and 2,500 on August 26, 2019
(2)
The options vest as follows: one third immediately, one third one year following the grant date, and the remaining one third two years following the grant date.
(3)
Mr. Park resigned on November 19, 2018. The expiration date of Mr. Park's options accelerated to one year following his resignation date.

Retirement Benefits and Non-Qualified Deferred Compensation

Our Named Executive Officers do not participate in any retirement plans, pension plans (other than the 401(k) Plan) or non-qualified deferred compensation plans.

Option Exercises and Stock Vested

No stock options were exercised for any Named Executive Officers during 2018. During 2018, 2,500 shares of restricted stock awarded to Mr. Bala on August 26, 2015 vested.


Potential Payments Upon Termination or Change in Control

Mr. Bala and Mr. Park are the only Named Executive Officers who have employment agreements with the Company. Each employment agreement provides for certain payments and benefits in the event of early termination. However, none of these employment agreements requires payment upon a change in control of the Company. The Plan does, however, provide for accelerated vesting of options in the event of a change in control or other event for which the Board determines such accelerated vesting would be equitable under the circumstances. In addition, the Plan provides that

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upon termination of employment for cause, all outstanding options, whether vested or unvested, will immediately be forfeited. If employment is terminated for any other reason, the executive officer may, for a limited time period, exercise those options that were exercisable immediately prior to his or her termination of employment. For purposes of the Plan, the term “cause” will be the same as defined in an executive’s employment agreement and absent such agreement, the term “cause” means (i) the commission of a felony or crime involving moral turpitude or other act of willful malfeasance or material fiduciary breach, (ii) conduct tending to bring the Company into substantial public disgrace, or disrepute, (iii) gross negligence or willful misconduct with respect to the Company or (iv) a material violation of state or federal securities laws. Under the Plan, a “change of control” means (a) the sale of at least 40% of the properties or assets of the Company based on gross fair market value, (b) a change in the Board resulting in the current directors (along with any directors nominated for election or appointed by at least 2/3 vote of the directors) ceasing to comprise at least a majority of the Board, (c) shareholder approval of the liquidation or dissolution of the Company, or (d) the acquisition of beneficial ownership of more than 50% of the voting power of the Company. The following discussion summarizes our payment obligations to our Named Executive Officers upon termination or change in control (as defined under “Equity Compensation Plan Information” above) assuming such termination or change in control occurred on December 31, 2018:

Alfredo (Al) Bala – CEO and President:

Under the terms of his employment agreement, if Mr. Bala resigns for good reason or we terminate Mr. Bala without cause or due to disability, he will continue to receive his base salary through the end of the agreement term or for a period of twelve months from his last day of employment, whichever is longer. Notwithstanding the statement above, if Mr. Bala’s employment is terminated for cause, if he resigns without good reason, or is terminated due to his death, he is entitled to (i) any remaining base salary earned and not yet paid through the termination date; (ii) any annual bonus, or portion thereof, that is earned through the termination date; (iii) all reimbursable expenses due but not yet paid through the termination date; and (iv) all earned or vested benefits (or an amount equivalent to the value of such benefits) payable under our benefit plans or arrangements through the termination date. Under the agreement, a termination for “cause” means (A) we have determined that Mr. Bala has neglected, failed, or refused to render the services or to perform any other of his duties or obligations under the agreement, (B) Mr. Bala’s violation of any provision or obligation under the agreement, (C) Mr. Bala’s indictment for, or plea of no contest with respect to, any crime that adversely affects the utility of his services to us, or (D) any other act or omission of Mr. Bala involving fraud, theft, dishonesty, disloyalty, or illegality that harms or embarrasses us. The agreement defines a resignation for “good reason” as (W) any denial of compensation due and owing to Mr. Bala under the agreement, (X) any requirement that Mr. Bala be based anywhere other than Dallas County, Texas, except for travel incident to our business, (Y) our demotion of Mr. Bala in title or pay, or our removal of a material portion of Mr. Bala’s significant duties or responsibilities without Mr. Bala’s consent, or (Z) our material breach of the agreement. For purposes of the agreement, the term “disability” means Mr. Bala becomes incapacitated by accident, sickness, or other circumstances that, in the reasonable judgment of the Board renders or is expected to render Mr. Bala mentally or physically incapable of performing the essential duties and services required of him under the agreement, with or without reasonable accommodation, for a period of at least 90 consecutive calendar days. As of December 31, 2018, Mr. Bala’s annual base salary was $440,000. Mr. Bala’s employment agreement will renew automatically for a one-year period on September 30 of each year unless terminated pursuant to its terms.

The following table shows the potential payments upon termination of Mr. Bala’s employment under the circumstances described above or the occurrence of a change in control assuming such termination or change in control occurred on December 31, 2018.
Termination Event
 
Cash Severance
 
Acceleration of 
Equity Awards
 
Total Termination
Payments
Termination With Cause
 
$

 
$

 
$

Termination Without Cause
 
$
440,000

 
$

 
$
440,000

Resignation for Good Reason
 
$
440,000

 
$

 
$
440,000

Resignation without Good Reason
 
$

 
$

 
$

Disability
 
$
440,000

 
$

 
$
440,000

Death
 
$

 
$

 
$

Non-Renewal of his Employment Agreement
 
$

 
$

 
$

Change in Control
 
$

 
$

 
$






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Yong Jae (Patrick) Park – Regional President, Asia:

Mr. Park resigned on November 19, 2018. Under the terms of his employment agreement with Mannatech Korea, Ltd., a subsidiary of the Company, Mr. Park was entitled to receive an end of service payment, regardless of the reason for termination of employment, which accrued at the rate of forty-five days base salary for each consecutive year of service. The end of service payment was ₩456,986,301 ($406,718). As consideration for cooperation during the transition of the business and other valuable consideration, the Company paid Mr. Park one month of base salary equal to ₩33,333,333 ($29,667) and a separation payment of ₩173,455,772 ($154,376).


Named Executive Officers Stock Ownership Guidelines

We do not have stock ownership guidelines for our Named Executive Officers.

$1 Million Pay Deductibility Cap