SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
CEL-SCI CORPORATION
------------------------------------
(Name of Registrant as Specified In Its Charter)
William T. Hart - Attorney for Registrant
-------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
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CEL-SCI CORPORATION
8229 Boone Blvd.
Suite 802
Vienna, Virginia 22l82
(703) 506-9460
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD May 11, 2015
To the Shareholders:
Notice is hereby given that the annual meeting of the shareholders of
CEL-SCI Corporation ("CEL-SCI") will be held at 4820-C Seton Drive, Baltimore,
MD 21215, on May 11, 2015 at 10:30 a.m. local time, for the following purposes:
(1) to elect the directors who shall constitute CEL-SCI's Board of
Directors for the ensuing year;
(2) to approve the adoption of CEL-SCI's 2015 Non-Qualified Stock Option
Plan which provides that up to 2,000,000 shares of common stock may be
issued upon the exercise of options granted pursuant to the
Non-Qualified Stock Option Plan;
(3) to approve the adoption of CEL-SCI's 2015 Stock Bonus Plan which
provides that up to 2,000,000 shares of common stock may be issued to
persons granted stock bonuses pursuant to the Stock Bonus Plan;
(4) to approve the adoption of CEL-SCI's 2015 Stock Compensation Plan which
provides for the issuance of up to 2,000,000 restricted shares of
common stock to CEL-SCI's directors, officers, employees and
consultants for services provided to CEL-SCI;
(5) to approve a proposal to extend our Shareholder Rights Plan;
(6) to ratify the appointment of BDO USA, LLP as CEL-SCI's independent
registered public accounting firm for the fiscal year ending September
30, 2015;
to transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
March 17, 2015 is the record date for the determination of shareholders
entitled to notice of and to vote at such meeting. Shareholders are entitled to
one vote for each share held. As of March __, 2015 there were _______________
outstanding shares of CEL-SCI's common stock.
CEL-SCI CORPORATION
April __, 2015 Geert R. Kersten,
Chief Executive Officer
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The Board of Directors solicits the enclosed proxy. Your vote is important no
matter how large or small your holdings. To assure your representation at the
meeting, please vote promptly.
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be held on May 11, 2015. This Proxy Statement and our
Form 10-K are available at: www.irdirect.net/cvm/sec_filings/
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If you need additional copies of this Proxy Statement or the enclosed
proxy card, or if you have other questions about the proposals
or how to vote your shares, you may contact our proxy solicitor:
ADVANTAGE PROXY
(877) 870-8565 (toll free) or (206) 870-8565
Or by email at: ksmith@advantageproxy.com
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ATTACHED PROXY CARD,
AND SIGN, DATE AND RETURN THE PROXY CARD, OR VOTE VIA THE INTERNET OR BY
TELEPHONE
TO SAVE THE COST OF FURTHER SOLICITATION,
PLEASE VOTE PROMPTLY
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CEL-SCI CORPORATION
8229 Boone Blvd.
Suite 802
Vienna, Virginia 22l82
(703) 506-9460
PROXY STATEMENT
The accompanying proxy is solicited by CEL-SCI's directors for voting at the
annual meeting of shareholders to be held on May 11, 2015, and at any and all
adjournments of such meeting. If the proxy is executed and returned, it will be
voted at the meeting in accordance with any instructions, and if no
specification is made, the proxy will be voted for the proposals set forth in
the accompanying notice of the annual meeting of shareholders. Shareholders who
execute proxies may revoke them at any time before they are voted, either by
writing to CEL-SCI at the address shown above or in person at the time of the
meeting. Additionally, any later dated proxy will revoke a previous proxy from
the same shareholder. This proxy statement was posted on the CEL-SCI's website
on or about April __, 2015.
There is one class of capital stock outstanding. Provided a quorum
consisting of one-third of the shares entitled to vote is present at the
meeting, the affirmative vote of a majority of the shares of common stock voting
in person or represented by proxy is required to elect directors. Cumulative
voting in the election of directors is not permitted. The other proposals to
come before the meeting will be adopted if votes cast in favor of the proposal
exceed the votes cast against the proposal.
Shares of CEL-SCI's common stock represented by properly executed proxies
that reflect abstentions or "broker non-votes" will be counted as present for
purposes of determining the presence of a quorum at the annual meeting. "Broker
non-votes" represent shares held by brokerage firms in "street-name" with
respect to which the broker has not received instructions from the customer or
otherwise does not have discretionary voting authority. Abstentions and broker
non-votes will not be counted as having voted against the proposals to be
considered at the meeting.
PRINCIPAL SHAREHOLDERS
The following table lists, as of March 17, 2015, information with respect to
the only persons owning beneficially 5% or more of CEL-SCI's outstanding common
stock and the number and percentage of outstanding shares owned by each director
and officer of CEL-SCI and by the officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
shares of common stock.
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Name and Address Number of Shares (1) Percent of Class
---------------- -------------------- ----------------
Maximilian de Clara 740,115 0.8
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland
Geert R. Kersten 10,096,362 (2) 10.9
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Patricia B. Prichep 3,685,879 4.0
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Eyal Talor, Ph.D. 3,555,203 3.9
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Daniel H. Zimmerman, Ph.D. 327,504 0.4
8229 Boone Blvd., Suite 802
Vienna, VA 22182
John Cipriano 1,718,100 1.9
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Alexander G. Esterhazy 294,549 0.3
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland
Peter R. Young, Ph.D. 311,943 0.3
208 Hewitt Drive, Suite
103-143
Waco, TX 76712
All Officers and Directors 20,729,655 21.7
as a Group (8 persons)
(1) Includes shares issuable prior to August 31, 2015 upon the exercise of
options or warrants granted to the following persons:
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Options or Warrants
Exercisable
Name Prior to August 31, 2015
----- ------------------------
Maximilian de Clara 714,992
Geert R. Kersten, Esq. 1,305,775(3)
Patricia B. Prichep 467,010
Eyal Talor, Ph.D. 387,052
Daniel Zimmerman, Ph.D. 262,567
John Cipriano 118,100
Alexander G. Esterhazy 271,233
Peter R. Young, Ph.D. 282,167(3)
(2) Amount includes shares held in trust for the benefit of Mr. Kersten's
children and securities held in a separate trust, for which Mr. Kersten is
the trustee and a beneficiary.
(3) Amount includes shares issuable upon the exercise of Series S warrants
which were purchased in the open market.
OFFICERS AND DIRECTORS
Information concerning CEL-SCI's officers and directors, as well as Bruno
Baillavoine, who is a nominee to the board of directors, follows:
Name Age Position Committees
------ --- -------- ----------
Maximilian de Clara 85 Director and President
Geert R. Kersten, Esq. 56 Director, Chief
Executive Officer and
Treasurer
Patricia B. Prichep 63 Senior Vice President
of Operations and
Corporate Secretary
Eyal Talor, Ph.D. 58 Chief Scientific
Officer
Daniel H. Zimmerman, Ph.D. 73 Senior Vice President
of Research, Cellular
Immunology
John Cipriano 72 Senior Vice President
of Regulatory Affairs
Alexander G. Esterhazy 73 Director, Independent Audit, Compensation,
and Nominating
Peter R. Young, Ph.D. (1) 70 Director, Independent Audit, Compensation,
and Nominating
Bruno Baillavoine 62 Nominee to the board
of directors
(1) Dr. Young is the chairman of the Audit, Compensation and Nominating
committees.
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The directors of CEL-SCI serve in such capacity until the next annual
meeting of CEL-SCI's shareholders and until their successors have been duly
elected and qualified. The officers of CEL-SCI serve at the discretion of
CEL-SCI's directors. CEL-SCI's officers devote substantially all of their time
to CEL-SCI's business.
Mr. Maximilian de Clara, by virtue of his position as an officer and
director of CEL-SCI, may be deemed to be the "parent" and "founder" of CEL-SCI
as those terms are defined under applicable rules and regulations of the SEC.
Maximilian de Clara has been a Director of CEL-SCI since its inception in
March l983, and has been President of CEL-SCI since July l983. Prior to his
affiliation with CEL-SCI, and since at least l978, Mr. de Clara was involved in
the management of his personal investments and personally funding research in
the fields of biotechnology and biomedicine. Mr. de Clara attended the medical
school of the University of Munich from l949 to l955, but left before he
received a medical degree. During the summers of l954 and l955, he worked as a
research assistant at the University of Istanbul in the field of cancer
research. For his efforts and dedication to research and development in the
fight against cancer and AIDS, Mr. de Clara was awarded the "Pour le Merit"
honorary medal of the Austrian Military Order "Merito Navale" as well as the
honor cross of the Austrian Albert Schweitzer Society. Based on Mr. de Clara's
background and more than 30 years of experience serving as the President of
CEL-SCI, CEL-SCI believes that he has the expertise necessary to continue to
serve on CEL-SCI's board of directors.
Geert Kersten has served in his current leadership role at CEL-SCI since
1995. Mr. Kersten has been with CEL-SCI from the early days of its inception
since 1987. He has been involved in the pioneering field of cancer immunotherapy
for over two decades and has successfully steered CEL-SCI through many
challenging cycles in the biotechnology industry. Mr. Kersten also provides
CEL-SCI with significant expertise in the fields of finance and law and has a
unique vision of how CEL-SCI's Multikine product could potentially change the
way cancer is treated. Prior to CEL-SCI, Mr. Kersten worked at the law firm of
Finley & Kumble and worked at Source Capital, an investment banking firm located
in McLean, VA. He is a native of Germany, graduated from Millfield School in
England, and completed his studies in the US. Mr. Kersten received his
Undergraduate Degree in Accounting and an M.B.A. from George Washington
University, and a law degree (J.D.) from American University in Washington, DC.
Mr. Kersten's experience overseeing the financing and research and development
of CEL-SCI for over 25 years qualifies him to continue to serve on CEL-SCI's
board of directors. Mr. Kersten is also the inventor of a patent on the
potential use of Multikine in managing cholesterol.
Patricia B. Prichep joined CEL-SCI in 1992 and has been CEL-SCI's Senior
Vice President of Operations since March 1994. Between December 1992 and March
1994, Ms. Prichep was CEL-SCI's Director of Operations. Ms. Prichep became
CEL-SCI's Corporate Secretary in May 2000. She is responsible for all day-to-day
operations of CEL-SCI, including human resources and is the liaison with
CEL-SCI's independent registered public accounting firm for financial reporting.
From June 1990 to December 1992, Ms. Prichep was the Manager of Quality and
Productivity for the NASD's Management, Systems and Support Department. She was
responsible for the internal auditing and work flow analysis of operations.
Between 1982 and 1990, Ms. Prichep was Vice President and Operations Manager for
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Source Capital, Ltd. She handled all operations and compliance for Source
Capital and was licensed as a securities broker. Ms. Prichep received her B.A.
from the University of Bridgeport in Connecticut.
Eyal Talor, Ph.D. joined CEL-SCI in October 1993. In October 2009, Dr.
Talor was promoted to Chief Scientific Officer. Between this promotion and March
of 1994 he was the Senior Vice President of Research and Manufacturing. He is a
clinical immunologist with over 19 years of hands-on management of clinical
research and drug development for immunotherapy application (pre-clinical to
Phase III), in the biopharmaceutical industry. His expertise includes;
biopharmaceutical R&D and Biologics product development, GMP (Good Manufacturing
Practices) manufacture, Quality Control testing, and the design and building of
GMP manufacturing and testing facilities. He served as Director of Clinical
Laboratories (certified by the State of Maryland) and has experience in the
design of clinical trials (Phase I - III) and GCP (Good Clinical Practices)
requirements. He also has broad experience in the different aspects of
biological assay development, analytical methods validation, raw material
specifications, and QC (Quality Control) tests development under FDA/GMP, USP,
and ICH guidelines. He has extensive experience in the preparation of
documentation for IND and other regulatory submissions. His scientific area of
expertise encompasses immune response assessment. He is the author of over 25
publications and has published a number of reviews on immune regulations in
relation to clinical immunology. Before coming to CEL-SCI, he was Director of
R&D and Clinical Development at CBL, Inc., Principal Scientist - Project
Director, and Clinical Laboratory Director at SRA Technologies, Inc. Prior to
that he was a full time faculty member at The Johns Hopkins University, Medical
Intuitions; School of Public Health. He has invented technologies which are
covered by two US patents; one on Multikine's composition of matter and method
of use in cancer, and one on a platform Peptide technology (`Adapt') for the
treatment of autoimmune diseases, asthma, allergy, and transplantation
rejection. He also is responsible for numerous product and process inventions as
well as a number of pending US and PCT patent applications. He received his
Ph.D. in Microbiology and Immunology from the University of Ottawa, Ottawa,
Ontario, Canada, and had post-doctoral training in clinical and cellular
immunology at The John Hopkins University, Baltimore, Maryland, USA. He holds an
Adjunct Associate teaching position at the Johns Hopkins University Medical
Institutions.
Daniel H. Zimmerman, Ph.D. was CEL-SCI's Senior Vice President of Cellular
Immunology between 1996 and December 2008 and again since November 2009. He
joined CEL-SCI in January 1996 as the Vice President of Research, Cellular
Immunology. Dr. Zimmerman founded CELL-MED, Inc. and was its president from
1987-1995. From 1973-1987, Dr. Zimmerman served in various positions at
Electronucleonics, Inc. His positions included: Scientist, Senior Scientist,
Technical Director and Program Manager. Dr Zimmerman held various teaching
positions at Montgomery College between 1987 and 1995. Dr. Zimmerman has
invented technologies which are covered by over a dozen US patents as well as
many foreign equivalent patents. He is the author of over 40 scientific
publications in the area of immunology and infectious diseases. He has been
awarded numerous grants from NIH and DOD. From 1969-1973, Dr. Zimmerman was a
Senior Staff Fellow at NIH. For the following 25 years, he continued on at NIH
as a guest worker. Dr. Zimmerman received a Ph.D. in Biochemistry in 1969, and a
Masters in Zoology in 1966 from the University of Florida as well as a B.S. in
Biology from Emory and Henry College in 1963.
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John Cipriano was CEL-SCI's Senior Vice President of Regulatory Affairs
between March 2004 and December 2008 and again since October 2009. Mr. Cipriano
brings to CEL-SCI over 30 years of experience with both biotech and
pharmaceutical companies. In addition, he held positions at the United States
Food and Drug Administration (FDA) as Deputy Director, Division of Biologics
Investigational New Drugs, Office of Biologics Research and Review and was the
Deputy Director, IND Branch, Division of Biologics Evaluation, Office of
Biologics. Mr. Cipriano completed his B.S. in Pharmacy from the Massachusetts
College of Pharmacy in Boston, Massachusetts and his M.S. in Pharmaceutical
Chemistry from Purdue University in West Lafayette, Indiana.
Alexander G. Esterhazy has been a Director of CEL-SCI since December 1999
and has been an independent financial advisor since November 1997. Between July
1991 and October 1997, Mr. Esterhazy was a senior partner of Corpofina S.A.
Geneva, a firm engaged in mergers, acquisitions and portfolio management.
Between January 1988 and July 1991, Mr. Esterhazy was a managing director of DG
Bank in Switzerland. During this period Mr. Esterhazy was in charge of the
Geneva, Switzerland branch of the DG Bank, founded and served as Vice President
of DG Finance (Paris) and was the President and Chief Executive Officer of
DG-Bourse, a securities brokerage firm. Mr. Esterhazy brings extensive financial
expertise that is valuable to CEL-SCI. His knowledge and experience with respect
to finance matters gives him the necessary qualifications to continue to serve
on CEL-SCI's board of directors, audit committee, nominating committee and
compensation committee.
Peter R. Young, Ph.D. has been a Director of CEL-SCI since August 2002.
Dr. Young has been a senior executive within the pharmaceutical industry in the
United States and Canada for most of his career. Over the last 20 years he has
primarily held positions of Chief Executive Officer or Chief Financial Officer
and has extensive experience with acquisitions and equity financings. Since
November 2001, Dr. Young has been the President of Agnus Dei, LLC, which acts as
a partner in an organization managing immune system clinics which treat patients
with diseases such as cancer, multiple sclerosis and hepatitis. Since January
2003, Dr. Young has been the President and Chief Executive Officer of SRL
Technology, Inc., a company involved in the development of pharmaceutical (drug)
delivery systems. Between 1998 and 2001, Dr. Young was the Chief Financial
Officer of Adams Laboratories, Inc. Dr. Young received his Ph.D. in Organic
Chemistry from the University of Bristol, England (1969), and his Bachelor's
degree in Honors Chemistry, Mathematics and Economics also from the University
of Bristol, England (1966). CEL-SCI believes Dr. Young's extensive knowledge of
the life sciences industry, coupled with his business acumen and financial
expertise, gives him the qualifications and skills to serve as a director, the
chair of the audit committee, the chair of the nominating committee and a member
of CEL-SCI's compensation committee.
Bruno Baillavoine is a nominee to CEL-SCI's board of directors. Since 2010,
Mr. Baillavoine has been a partner of Globomass Holdings Limited, a London,
England based developer of renewable energy projects from concept through final
operations. Since 2012 Mr. Baillavoine has been the Executive Chairman of
Globomass Holdings. Globomass Holdings has subsidiaries in Ireland, Bulgaria,
Croatia, Serbia, and has recently acquired a 20% stake in a US based renewable
energy company. Between 1978 and 1982 he was the marketing manager of Ravenhead
Ltd., a manufacturer of glass tableware, and part of United Distillers Group
(later acquired by Grand Metropolitan). During this time Mr. Baillavoine became
the UK Business Manager where he restored market share and profit for United
Distillers. From 1982 to 1986 Mr. Baillavoine was Group Corporate Planning and
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Group Marketing Director for Prontaprint where he expanded the number of shops
to 500 locations in four years. Mr. Baillavoine joined Grand Metropolitan Plc
between 1986-1988 (now Diageo Plc), an FTSE 100 beverage, food, hotel and
leisure company, as director in the Special Operations division. In this
capacity, he developed plans for Grand Met's trouble-shooting division for over
20,000 Grand Met retail outlets. From 1988-1991 he was the Managing Director of
Nutri Systems (UK) Ltd., a subsidiary of the US based provider of professionally
supervised weight loss programs. Between 1991 and 1995, Mr. Baillavoine was
Director of BET Group plc, a multinational business support services group, and
in 1992, was promoted to the Managing Director for the manufacturing businesses.
The (pound)2.3 billion turnaround of BET during his tenure is one of the most
successful turnarounds of a top 100 FTSE company. Since 1995, Mr. Baillavoine
has held a number of CEO positions across a wide range of industries and
geographical locations. Mr. Baillavoine has European and American educations (US
high school and University of Wisconsin Eau Claire 1972-1976).
CEL-SCI's nominating committee, consisting of Mr. Esterhazy and Dr. Young,
has nominated Maximum de Clara, Geert R. Kersten, Alexander G. Esterhazy, Peter
R. Young and Bruno Baillavoine to stand for election as directors at the annual
meeting. Unless the proxy contains contrary instructions, it is intended that
the proxies will be voted for the election of the nominees to the board of
directors. In case any nominee shall be unable or shall fail to act as a
director by virtue of an unexpected occurrence, the proxies may be voted for
such other person or persons as shall be determined by the persons acting under
the proxies in their discretion. All nominees to the board of directors have
consented to stand for election
CEL-SCI does not have any policy regarding the consideration of director
candidates recommended by shareholders since a shareholder has never recommended
a nominee to the Board of Directors and under Colorado law, any shareholder can
nominate a person for election as a director at the annual shareholders'
meeting. However, CEL-SCI's nominating committee will consider candidates
recommended by shareholders. To submit a candidate for the Board of Directors
the shareholder should send the name, address and telephone number of the
candidate, together with any relevant background or biographical information, to
Dr. Peter Young at the address shown on the cover page of this proxy statement.
CEL-SCI's nominating committee has not established any specific qualifications
or skills a nominee must meet to serve as a director. Although CEL-SCI does not
have any process for identifying and evaluating director nominees, CEL-SCI does
not believe there would be any differences in the manner in which CEL-SCI
evaluates nominees submitted by shareholders as opposed to nominees submitted by
any other person.
All nominees to the board of directors, with the exception of Mr.
Baillavoine, have served as directors for a significant period of time.
Consequently, their long-standing experience with CEL-SCI benefits both CEL-SCI
and its shareholders. In December 2014, Dr. Kinsolving passed away. He had been
a director since February 1999. Mr. Baillavoine has been nominated to serves as
Dr. Kinsolving's successor to the board of directors. CEL-SCI believes Mr.
Ballavoine is qualified to act as a director due to his extensive business
experience and success in the turnaround and growth of global businesses.
CEL-SCI's Board of Directors does not have a "leadership structure", as
such, since each director is entitled to introduce resolutions to be considered
7
by the Board and each director is entitled to one vote on any resolution
considered by the Board. CEL-SCI's Chief Executive Officer is not the Chairman
of CEL-SCI's Board of Directors.
CEL-SCI's Board of Directors has the ultimate responsibility to evaluate
and respond to risks facing CEL-SCI. CEL-SCI's Board of Directors fulfills its
obligations in this regard by meeting on a regular basis and communicating, when
necessary, with CEL-SCI's officers.
Alexander G. Esterhazy, Peter R. Young, Ph.D. and Bruno Baillavoine are
independent as that term is defined in section 803 of the listing standards of
the NYSE MKT.
CEL-SCI's Board of Directors met four times during the fiscal year ended
September 30, 2014. All of the Directors attended these meetings, either in
person or by telephone conference call, with the exception of Mr. de Clara who
was in attendance for three of these meetings. In addition, the Board of
Directors had a number of informal telephonic meetings during the course of the
year.
CEL-SCI has adopted a Code of Ethics which is applicable to CEL-SCI'S
principal executive, financial, and accounting officers and persons performing
similar functions. The Code of Ethics is available on CEL-SCI's website, located
at www.cel-sci.com.
If a violation of this code of ethics act is discovered or suspected, the
Senior Officer must (anonymously, if desired) send a detailed note, with
relevant documents, to CEL-SCI's Audit Committee, c/o Dr. Peter Young, 208
Hewitt Drive, Suite 103-143, Waco, TX 76712.
CEL-SCI does not have a policy with regard to Board member's attendance at
annual meetings. All Board members, with the exception of Maximilian de Clara
and Alexander Esterhazy, attended the last annual shareholder's meeting held on
July 22, 2014.
Holders of CEL-SCI's common stock can send written communications to
CEL-SCI's entire Board of Directors, or to one or more Board members, by
addressing the communication to "the Board of Directors" or to one or more
directors, specifying the director or directors by name, and sending the
communication to CEL-SCI's offices in Vienna, Virginia. Communications addressed
to the Board of Directors as whole will be delivered to each Board member.
Communications addressed to a specific director (or directors) will be delivered
to the director (or directors) specified.
Security holder communications sent to specified Board members or not sent
to the Board of Directors as a whole are not relayed to Board members.
Executive Compensation
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) outlines CEL-SCI's
compensation philosophy, objectives and process for its executive officers. This
CD&A includes information on how compensation decisions are made, the overall
objectives of CEL-SCI's compensation program, a description of the various
components of compensation that are provided, and additional information
pertinent to understanding CEL-SCI's executive officer compensation program.
The Compensation Committee determines the compensation of CEL-SCI's Chief
Executive Officer and President and delegates to the Chief Executive Officer the
responsibility to determine the base salaries of all other officers, other than
8
himself, under the constraints of an overall limitation on the total amount of
compensation to be paid to them.
Compensation Philosophy
CEL-SCI's compensation philosophy extends to all employees, including
executive officers, and is designed to align employee and shareholder interests.
The philosophy's objective is to pay fairly based upon the employee's position,
experience and individual performance. Employees may be rewarded through
additional compensation when CEL-SCI meets or exceeds targeted business
objectives. Generally, under CEL-SCI's compensation philosophy, as an employee's
level of responsibility increases, a greater portion of his or her total
potential compensation becomes contingent upon annual performance.
A substantial portion of an executive's compensation incorporates
performance criteria that support and reward achievement of CEL-SCI's long term
business goals.
The fundamental principles of CEL-SCI's compensation philosophy are
described below:
o Market-driven. Compensation programs are structured to be competitive
both in their design and in the total compensation that they offer.
o Performance-based. Certain officers have some portion of their
incentive compensation linked to CEL-SCI's performance. The
application of performance measures as well as the form of the reward
may vary depending on the employee's position and responsibilities.
Based on a review of its compensation programs, CEL-SCI does not believe
that such programs encourage any of its employees to take risks that would be
likely to have a material adverse effect on CEL-SCI. CEL-SCI reached this
conclusion based on the following:
o The salaries paid to employees are consistent with the employees'
duties and responsibilities.
o Employees who have high impact relative to the expectations of their
job duties and functions are rewarded.
o CEL-SCI retains employees who have skills critical to its long term
success.
Review of Executive Officer Compensation
CEL-SCI's current policy is that the various elements of the compensation
package are not interrelated in that gains or losses from past equity incentives
are not factored into the determination of other compensation. For instance, if
options that are granted in a previous year have an exercise price which is
below the market price of CEL-SCI's common stock, the Committee does not take
that circumstance into consideration in determining the amount of the options or
9
restricted stock to be granted the next year. Similarly, if the options or
restricted shares granted in a previous year become extremely valuable, the
Committee does not take that into consideration in determining the options or
restricted stock to be awarded for the next year.
CEL-SCI does not have a policy with regard to the adjustment or recovery
of awards or payments if relevant performance measures upon which they are based
are restated or otherwise adjusted in a manner that would reduce the size of an
award or payment.
Components of Compensation - Executive Officers
CEL-SCI's executive officers are compensated through the following three
components:
o Base Salary
o Long-Term Incentives ("LTIs") (stock options and/or grants of stock)
o Benefits
These components provide a balanced mix of base compensation and
compensation that is contingent upon each executive officer's individual
performance. A goal of the compensation program is to provide executive officers
with a reasonable level of security through base salary and benefits. CEL-SCI
wants to ensure that the compensation programs are appropriately designed to
encourage executive officer retention and motivation to create shareholder
value. The Compensation Committee believes that CEL-SCI's stockholders are best
served when CEL-SCI can attract and retain talented executives by providing
compensation packages that are competitive but fair. Below is a breakdown of how
the executive officers were paid in fiscal year 2014:
Cel-Sci Executive Officers:
Benefits - 1.43%
Base Salary - 18.39%
LTIs - 80.17%
In past years, base salaries, benefits and incentive compensation
opportunities were generally targeted near the median of general survey
market data derived from indices covering similar biotech/pharmaceutical
companies. The companies included Achillion Pharmaceuticals, Inc., Acura
Pharmaceutical, Inc., Alimera Sciences, Inc., Cortex Pharmaceuticals, Inc.,
IGI Laboratories Inc., StemCells, Inc., Psychemedics Corporation, Biota
Biopharmaceuticals, Inc., POZEN, Inc., Synta Pharmaceuticals, Ziopharm
Oncology, Sunesis Pharmaceuticals, CytRx Corporation, Novavax Inc., BioCryst
Pharmaceuticals, Galena Biopharma Inc., XOMA Ltd., Discovery Laboratories
Inc., and Targacept Inc.
10
CEL-SCI used a third party consultant to provide it with recommendations
for strategic long term incentive compensation for certain key executives. The
recommendation resulted in the formation of the 2014 Incentive Stock Bonus Plan
that was voted on and passed by the shareholders at the annual meeting on July
22, 2014.
Base Salaries
Base salaries generally have been targeted to be competitive when compared
to the salary levels of persons holding similar positions in other
pharmaceutical companies and other publicly traded companies of comparable size.
Each executive officer's respective responsibilities, experience, expertise and
individual performance are considered.
Long-Term Incentives
Stock grants and stock option grants help to align the interests of
CEL-SCI's employees with those of its shareholders. Stock options and stock
grants are made under CEL-SCI's Stock Option, Incentive Stock Bonus, Stock Bonus
and Stock Compensation Plans. Stock options are granted with exercise prices
equal to the closing price of CEL-SCI's common stock on the day immediately
preceding the date of grant, with pro rata vesting at the end of each of the
following three years. The vesting of the restricted stock granted under the
2014 Incentive Stock Bonus Plan is subject to service, performance and market
conditions.
CEL-SCI believes that grants of equity-based compensation:
o Enhance the link between the creation of shareholder value and
long-term executive incentive compensation;
o Provide focus, motivation and retention incentive; and
o Provide competitive levels of total compensation.
CEL-SCI's management believes that the pricing for biotechnology stocks is
highly inefficient until the time of product sales. As such, any long term
compensation tied to progress as measured by share price, i.e., stock options,
is not as efficient as it should be. The plan approved by the shareholders in
July 2014, which covers senior and mid-level employees, addressed this issue by
rewarding employees for meeting major operational milestones and significantly
improved share prices.
Benefits
In addition to cash and equity compensation programs, executive officers
participate in the health and welfare benefit programs available to other
employees. In a few limited circumstances, CEL-SCI provides other benefits to
certain executive officers, such as car allowances.
All executive officers are eligible to participate in CEL-SCI's 401(k)
plan on the same basis as its other employees. CEL-SCI matches 100% of each
employee's contribution up to the first 6% of his or her salary.
11
The following table sets forth in summary form the compensation received
by (i) the Chief Executive and Financial Officer of CEL-SCI and (ii) by each
other executive officer of CEL-SCI who received in excess of $100,000 during the
three fiscal years ended September 30, 2014.
Restricted All
Stock Option Other
Name and Fiscal Salary Bonus Awards Awards Compensa-
Principal Position Year (1) (2) (3) (4) tion (5) Total
------------------ ---- --- --- -------- ------ --------- -----
$ $ $ $ $ $
Maximilian de Clara, 2014 393,250 -- -- 298,648 73,183 765,081
President 2013 332,750 -- -- 306,863 40,000 679,613
2012 363,000 -- -- 200,863 102,591 666,454
Geert R. Kersten, 2014 584,621 -- 3,236,526 82,917 57,581 3,961,645
Chief Executive 2013 439,093 -- 15,225 1,516,692 53,514 2,024,524
Officer and Treasurer 2012 477,924 -- 14,925 332,027 56,935 881,811
Patricia B. Prichep, 2014 247,852 -- 1,735,938 55,278 6,531 2,045,599
Senior Vice President 2013 202,253 -- 13,941 485,634 5,531 707,359
of Operations and 2012 210,133 -- 12,968 156,715 6,031 385,847
Secretary
Eyal Talor, Ph.D., 2014 283,283 -- 1,731,290 55,278 6,031 2,075,882
Chief Scientific
Officer 2013 272,388 -- 9,600 460,255 6,031 748,274
2012 259,417 -- 9,600 140,564 6,031 415,612
Daniel Zimmerman,
Ph.D., 2014 213,231 -- 13,274 227,319 6,031 459,855
Senior Vice
President of 2013 205,030 -- 12,989 87,911 6,031 311,961
Research, Cellular 2012 199,058 -- 12,303 115,354 6,031 332,746
Immunology
John Cipriano, 2014 197,354 -- 888,614 41,549 31 1,127,458
Senior Vice
President of 2013 189,763 -- -- 47,968 31 237,762
Regulatory Affairs 2012 184,236 -- -- 76,515 31 260,782
(1) The dollar value of base salary (cash and non-cash) earned.
(2) The dollar value of bonus (cash and non-cash) earned.
(3) The fair value of the shares of restricted stock issued during the periods
covered by the table is shown as compensation for services to the persons
listed in the table. In the case of all persons listed in the table, the
shares were issued as CEL-SCI's contribution on behalf of the named officer
who participates in CEL-SCI's 401(k) retirement plan and, by far the
largest part, restricted shares issued from the 2014 Incentive Stock Bonus
Plan that was voted on and passed by the shareholders at the annual meeting
on July 22, 2014. At issuance, these shares were not vested and are held in
escrow. Even though the shares will only be earned upon the achievement of
certain milestones leading to the commercialization of CEL-SCI's Multikine
technology, or specified increases in the market price of CEL-SCI's common
stock, the value of the full award, including parts due for achieving
future milestones that may not ever be met, are shown as compensation in
the table above. If the performance or market criteria are not met as
specified in the Incentive Stock Bonus Plan, all or a portion of the
12
awarded shares will be forfeited. The value of all stock awarded during the
periods covered by the table is calculated according to ASC 718-10-30-3
which represented the grant date fair value.
(4) The fair value of all stock options granted during the periods covered by
the table are calculated on the grant date in accordance with ASC
718-10-30-3 which represented the grant date fair value.
(5) All other compensation received that CEL-SCI could not properly report in
any other column of the table including the dollar value of any insurance
premiums paid by, or on behalf of, CEL-SCI with respect to term life
insurance for the benefit of the named executive officer and car allowances
paid by CEL-SCI. Includes board of directors fees for Mr. de Clara and Mr.
Kersten.
Employee Pension, Profit Sharing or Other Retirement Plans
CEL-SCI has a defined contribution retirement plan, qualifying under
Section 401(k) of the Internal Revenue Code and covering substantially all
CEL-SCI's employees. CEL-SCI's contribution to the plan is made in shares of
CEL-SCI's common stock. Each participant's contribution is matched by CEL-SCI
with shares of common stock which have a value equal to 100% of the
participant's contribution, not to exceed the lesser of $1,000 or 6% of the
participant's total compensation. CEL-SCI's contribution of common stock is
valued each quarter based upon the closing price of its common stock. The fiscal
2014 expenses for this plan were $159,632. Other than the 401(k) Plan, CEL-SCI
does not have a defined benefit, pension plan, profit sharing or other
retirement plan.
Compensation of Directors During Year Ended September 30, 2014
Paid Stock Option
Name in Cash Awards (1) Awards (2) Total
---- ------- ---------- ---------- -----
Maximilian de Clara $ 40,000 -- $ 298,648 $ 338,648
Geert Kersten $ 40,000 $3,236,526 $ 82,917 $3,359,443
Alexander Esterhazy $ 45,000 -- $ 134,389 $ 179,389
C. Richard $ 45,000 -- $ 134,389 $ 179,389
Peter R. Young $ 50,000 -- $ 134,389 $ 184,389
(1) The fair value of stock issued for services. This stock is not vested, is
held in escrow, and will only be released to Mr. Kersten upon the
achievement of important shareholder approved Company milestones.
(2) The fair value of options granted computed in accordance with ASC
718-10-30-3 on the date of grant which represents their grant date fair
value.
Directors' fees paid to Maximilian de Clara and Geert Kersten are also
included in the Executive Compensation table.
13
Employment Contracts
Maximilian de Clara
In April 2005, CEL-SCI entered into a three-year employment agreement with
Maximilian de Clara, CEL-SCI's President. The employment agreement provided that
CEL-SCI would pay Mr. de Clara an annual salary of $363,000 during the term of
the agreement. On September 8, 2006 Mr. de Clara's employment agreement was
amended and extended to April 30, 2010. The terms of the amendment to Mr. de
Clara's employment agreement are referenced in a report on Form 8-K filed with
the Securities and Exchange Commission on September 8, 2006. On August 30, 2010,
Mr. de Clara's employment agreement, as amended on September 8, 2006, was
extended to August 30, 2013. On August 30, 2013, Mr. de Clara's employment
agreement, as amended on September 8, 2006, was extended again to August 30,
2016.
In the event that there is a material reduction in Mr. de Clara's
authority, duties or activities, or in the event there is a change in the
control of CEL-SCI, the agreement allows Mr. de Clara to resign from his
position at CEL-SCI and receive a lump-sum payment from CEL-SCI equal to 18
months of salary ($544,500) and the unvested portion of any stock options would
vest immediately ($297,880). For purposes of the employment agreement, a change
in the control of CEL-SCI means the sale of more than 50% of the outstanding
shares of CEL-SCI's common stock, or a change in a majority of CEL-SCI's
directors.
The employment agreement will also terminate upon the death of Mr. de
Clara, Mr. de Clara's physical or mental disability, the conviction of Mr. de
Clara for any crime involving fraud, moral turpitude, or CEL-SCI's property, or
a breach of the employment agreement by Mr. de Clara. If the employment
agreement is terminated for any of these reasons, Mr. de Clara, or his legal
representatives, as the case may be, will be paid the salary provided by the
employment agreement through the date of termination.
Geert Kersten
In September 1, 2003, CEL-SCI entered into a three-year employment
agreement with Mr. Kersten. On September 1, 2006, Mr. Kersten's employment
agreement was extended to September 1, 2011. On September 1, 2011, CEL-SCI
extended its employment agreement with Mr. Kersten to August 31, 2016. Mr.
Kersten will receive at least the same salary increases each year as do other
senior executives of CEL-SCI. Increases beyond those, if any, shall be made at
the sole discretion of CEL-SCI's directors.
During the employment term, Mr. Kersten will be entitled to receive any
other benefits which are provided to CEL-SCI's executive officers or other full
time employees in accordance with CEL-SCI's policies and practices and subject
to Mr. Kersten's satisfaction of any applicable condition of eligibility.
If Mr. Kersten resigns within ninety (90) days of the occurrence of any of
the following events: (i) a reduction in Mr. Kersten's salary (ii) a relocation
(or demand for relocation) of Mr. Kersten's place of employment to a location
more than thirty-five (35) miles from his current place of employment, (iii) a
significant and material reduction in Mr. Kersten's authority, job duties or
level of responsibility or the imposition of significant and material
14
limitations on the Mr. Kersten's autonomy in his position, or (iv) a Change in
Control, then the employment agreement will be terminated and Mr. Kersten will
be entitled to receive a lump-sum payment from CEL-SCI equal to 24 months of
salary ($1,043,786) and the unvested portion of any stock options would vest
immediately ($1,201,945). For purposes of the employment agreement a change in
control means: (1) the merger of CEL-SCI with another entity if after such
merger the shareholders of CEL-SCI do not own at least 50% of voting capital
stock of the surviving corporation; (2) the sale of substantially all of the
assets of CEL-SCI; (3) the acquisition by any person of more than 50% of
CEL-SCI's common stock; or (4) a change in a majority of CEL-SCI's directors
which has not been approved by the incumbent directors.
The employment agreement will also terminate upon the death of Mr.
Kersten, Mr. Kersten's physical or mental disability, willful misconduct, an act
of fraud against CEL-SCI, or a breach of the employment agreement by Mr.
Kersten.
If the employment agreement is terminated for any of the foregoing, Mr.
Kersten, or his legal representatives, as the case may be, will be paid the
salary provided by the employment agreement through the date of termination, any
options or bonus shares of CEL-SCI then held by Mr. Kersten will become fully
vested and the expiration date of any options which would expire during the four
year period following his termination of employment will be extended to the date
which is four years after his termination of employment.
On August 30, 2013, CEL-SCI amended certain sections of Mr. Kersten's
employment agreement so that it would correspond with similar sections of the
employment agreements with Ms. Prichep and Dr. Talor.
Patricia B. Prichep / Eyal Talor, Ph.D.
On August 30, 2010, CEL-SCI entered into a three-year employment agreement
with Patricia B. Prichep, CEL-SCI's Senior Vice President of Operations. On
August 30, 2013 the employment agreement with Ms. Prichep was extended to August
30, 2016.
On August 30, 2010, CEL-SCI also entered into a three-year employment
agreement with Eyal Talor, Ph.D., CEL-SCI's Chief Scientific Officer. On August
30, 2013, the employment agreement with Dr. Talor was extended to August 30,
2016.
If Ms. Prichep or Dr. Talor resigns within ninety (90) days of the
occurrence of any of the following events: (i) a relocation (or demand for
relocation) of the employee's place of employment to a location more than
thirty-five (35) miles from the employee's current place of employment, (ii) a
significant and material reduction in the employee's authority, job duties or
level of responsibility or (iii) the imposition of significant and material
limitations on the employee's autonomy in her or his position, the employment
agreement will be terminated and the employee will be paid the salary provided
by the employment agreement through the date of termination and the unvested
portion of any stock options held by the employee will vest immediately.
In the event there is a change in the control of CEL-SCI, the employment
agreements with Ms. Prichep and Dr. Talor allow Ms. Prichep and/or Dr. Talor (as
the case may be) to resign from her or his position at CEL-SCI and receive a
lump-sum payment from CEL-SCI equal to 18 months of salary ($344,198 and
15
$424,925 respectively). In addition, the unvested portion of any stock options
held by the employee will vest immediately ($463,406 and $463,406 respectively).
For purposes of the employment agreements, a change in control means: (1) the
merger of CEL-SCI with another entity if after such merger the shareholders of
CEL-SCI do not own at least 50% of voting capital stock of the surviving
corporation; (2) the sale of substantially all of the assets of CEL-SCI; (3) the
acquisition by any person of more than 50% of CEL-SCI's common stock; or (4) a
change in a majority of CEL-SCI's directors which has not been approved by the
incumbent directors.
The employment agreements with Ms. Prichep and Dr. Talor will also
terminate upon the death of the employee, the employee's physical or mental
disability, willful misconduct, an act of fraud against CEL-SCI, or a breach of
the employment agreement by the employee. If the employment agreement is
terminated for any of these reasons, the employee, or her or his legal
representatives, as the case may be, will be paid the salary provided by the
employment agreement through the date of termination.
Compensation Committee Interlocks and Insider Participation
During the year ended September 30, 2014, no director of CEL-SCI was also
an executive officer of another entity, which had an executive officer of
CEL-SCI serving as a director of such entity or as a member of the compensation
committee of such entity.
Loan from Officer and Director
During the financial crisis in 2009 CEL-SCI's President, and a director,
Maximilian de Clara, loaned CEL-SCI $1,104,057. The loan from Mr. de Clara bears
interest at 15% per year and is secured by a lien on substantially all of
CEL-SCI's assets. CEL-SCI cannot prepay the loan. In accordance with the loan
agreement, CEL-SCI issued Mr. de Clara warrants to purchase 164,824 shares of
CEL-SCI's common stock at a price of $4.00 per share. These warrants expired on
December 24, 2014. At Mr. de Clara's option, the loan may be converted into
shares of CEL-SCI's common stock. The number of shares which will be issued upon
any conversion will be determined by dividing the amount to be converted by
$4.00. In consideration for an extension of the due date, Mr. de Clara received
warrants to purchase 184,930 shares of CEL-SCI's common stock at a price of
$5.00 per share. These warrants expired on January 6, 2015. In consideration of
Mr. de Clara's agreement to subordinate his note to the convertible preferred
shares and convertible debt as part of a prior year settlement agreement,
CEL-SCI extended the maturity date of the note to July 6, 2015; however, Mr. de
Clara may demand payment upon giving CEL-SCI a minimum 10 day notice. In August
2014, the loan and warrants were transferred to a Trust, of which CEL-SCI's CEO,
Geert Kersten, is the trustee and a beneficiary. Mr. de Clara will continue to
receive the interest payments.
Stock Option, Bonus and Compensation Plans
CEL-SCI has Incentive Stock Option, Non-Qualified Stock Option, Stock
Bonus, and Stock Compensation Plans, as well as an Incentive Stock Bonus Plan. A
summary description of these Plans follows. In some cases these Plans are
collectively referred to as the "Plans".
16
Incentive Stock Option Plan. The Incentive Stock Option Plans authorize
the issuance of shares of CEL-SCI's common stock to persons who exercise options
granted pursuant to the Plans. Only CEL-SCI's employees may be granted options
pursuant to the Incentive Stock Option Plans.
Options may not be exercised until one year following the date of grant.
Options granted to an employee then owning more than 10% of the common stock of
CEL-SCI may not be exercisable by its terms after five years from the date of
grant. Any other option granted pursuant to the Plans may not be exercisable by
its terms after ten years from the date of grant.
The purchase price per share of common stock purchasable under an option
is determined by CEL-SCI's Compensation Committee but cannot be less than the
fair market value of the common stock on the date of the grant of the option (or
110% of the fair market value in the case of a person owning more than 10% of
CEL-SCI's outstanding shares).
Non-Qualified Stock Option Plans. The Non-Qualified Stock Option Plans
authorize the issuance of shares of CEL-SCI's common stock to persons that
exercise options granted pursuant to the Plans. CEL-SCI's employees, directors,
officers, consultants and advisors are eligible to be granted options pursuant
to the Plans, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with a
capital-raising transaction or promoting CEL-SCI's common stock. The option
exercise price is determined by CEL-SCI's Compensation Committee.
Stock Bonus Plan. Under the Stock Bonus Plans, shares of CEL-SCI's common
stock may be issued to CEL-SCI's employees, directors, officers, consultants and
advisors, provided however that bona fide services must be rendered by
consultants or advisors and such services must not be in connection with a
capital-raising transaction or promoting CEL-SCI's common stock.
Stock Compensation Plan. Under the Stock Compensation Plan, shares of
CEL-SCI's common stock may be issued to CEL-SCI's employees, directors,
officers, consultants and advisors in payment of salaries, fees and other
compensation owed to these persons. However, bona fide services must be rendered
by consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction or promoting
CEL-SCI's common stock.
Incentive Stock Bonus Plan. Under the 2014 Incentive Stock Bonus Plan,
shares of CEL-SCI's common stock may be issued to executive officers and other
employees who contribute significantly to the success of CEL-SCI, to participate
in its future success and to align their interests with those of the
shareholders. The purpose of the Plan is to provide long term incentives for
outstanding service to CEL-SCI and its shareholders and to assist in recruiting
and retaining people of outstanding ability and initiative in executive and
management positions.
Other Information Regarding the Plans. The Plans are administered by
CEL-SCI's Compensation Committee ("the Committee"), each member of which is a
director of CEL-SCI. The members of the Committee were selected by CEL-SCI's
Board of Directors and serve for a one-year tenure and until their successors
are elected. A member of the Committee may be removed at any time by action of
the Board of Directors. Any vacancies which may occur on the Committee will be
17
filled by the Board of Directors. The Committee is vested with the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Committee is empowered to select those persons to whom
shares or options are to be granted, to determine the number of shares subject
to each grant of a stock bonus or an option and to determine when, and upon what
conditions, shares or options granted under the Plans will vest or otherwise be
subject to forfeiture and cancellation.
In the discretion of the Committee, any option granted pursuant to the
Plans may include installment exercise terms such that the option becomes fully
exercisable in a series of cumulating portions. The Committee may also
accelerate the date upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plan or Stock
Compensation Plan and any options granted pursuant to the Incentive Stock Option
Plan or the Non-Qualified Stock Option Plans will be forfeited if the "vesting"
schedule established by the Committee administering the Plans at the time of the
grant is not met. For this purpose, vesting means the period during which the
employee must remain an employee of CEL-SCI or the period of time a non-employee
must provide services to CEL-SCI. At the time an employee ceases working for
CEL-SCI (or at the time a non-employee ceases to perform services for CEL-SCI),
any shares or options not fully vested will be forfeited and cancelled. At the
discretion of the Committee, payment for the shares of common stock underlying
options may be paid through the delivery of shares of CEL-SCI's common stock
having an aggregate fair market value equal to the option price, provided such
shares have been owned by the option holder for at least one year prior to such
exercise. A combination of cash and shares of common stock may also be permitted
at the discretion of the Committee.
Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plans will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Committee when the shares were issued.
The Board of Directors of CEL-SCI may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner it deems
appropriate, provided that such amendment, termination or suspension will not
adversely affect rights or obligations with respect to shares or options
previously granted.
Stock Options
The following tables show information concerning the options granted
during the fiscal year ended September 30, 2014, to the persons named below:
18
Options Granted
Price
Grant Options per Expiration
Name Date Granted Share Date
----- ----- ------- ----- -----------
Maximilian de Clara 2/26/2014 75,000 $1.09 2/25/2024
Maximilian de Clara 8/6/2014 100,000 $1.10 8/05/2024
Maximilian de Clara 8/26/2014 150,000 $1.08 8/25/2024
Geert Kersten 2/26/2014 90,000 $1.09 2/25/2024
Patricia Prichep 2/26/2014 60,000 $1.09 2/25/2024
Eyal Talor 2/26/2014 60,000 $1.09 2/25/2024
Daniel Zimmerman 2/26/2014 45,000 $1.09 2/25/2024
Daniel Zimmerman 8/6/2014 200,000 $1.10 8/05/2024
John Cipriano 2/26/2014 45,000 $1.09 2/25/2024
Alexander Esterhazy 2/26/2014 45,000 $1.09 2/25/2024
Alexander Esterhazy 8/6/2014 100,000 $1.10 8/05/2024
Peter Young 2/26/2014 45,000 $1.09 2/25/2024
Peter Young 8/6/2014 100,000 $1.10 8/05/2024
The following tables show information concerning the options cancelled and
exercised during the fiscal year ended September 30, 2014, to the persons named
below:
Options Cancelled
Weighted
Weighted Average
Average Remaining
Total Exercise Contractual
Name Options Price Term (Years)
---- ------- -------- ------------
None
Options Exercised
Date of Shares Acquired Value
Name Exercise On Exercise Realized
---- -------- -------------- --------
None
19
The following lists the outstanding options held by the persons named
below:
Shares underlying
unexercised
Option which are:
----------------------------- Exercise Expiration
Name Exercisable Unexercisable Price Date
----- ----------- ------------- ----- ----
Maximilian de
Clara 5,000 4.80 09/21/15
10,000 5.80 09/12/16
20,000 6.30 09/13/17
20,000 6.20 03/04/18
143,625 (1) 2.50 04/23/19
25,000 3.80 07/20/19
25,000 4.80 07/20/20
25,000 6.90 04/14/21
47,200 3.20 12/01/16
25,000 3.90 05/17/22
20,000 2.80 12/17/22
12,500 2.10 06/30/23
100,000 1.10 08/05/24
150,000 1.08 08/25/24
----------
628,325
50,000 (2) 3.80 07/06/19
12,500 3.90 05/17/22
80,000 2.80 12/17/22
25,000 2.10 06/30/23
75,000 1.09 02/25/24
----------
242,500
Geert R. Kersten 5,000 4.80 09/21/15
20,000 5.80 09/12/16
20,000 6.30 09/13/17
20,000 6.20 03/04/18
183,861 (1) 2.50 04/23/19
30,000 3.80 07/20/19
30,000 4.80 07/20/20
30,000 6.90 04/14/21
125,440 3.20 12/01/16
30,000 3.90 05/17/22
189,000 2.80 12/17/17
57,070 2.80 12/17/22
15,000 2.10 06/30/23
----------
755,371
400,000 (2) 3.80 07/06/19
15,000 3.90 05/17/22
442,930 2.80 12/17/22
30,000 2.10 06/30/23
90,000 1.09 02/25/24
----------
977,930
20
Shares underlying
unexercised
Option which are:
----------------------------- Exercise Expiration
Name Exercisable Unexercisable Price Date
----- ----------- ------------- ----- ----
Patricia B.
Prichep 5,000 3.30 04/26/15
3,000 4.80 09/21/15
9,000 5.80 09/12/16
10,000 6.30 09/13/17
10,000 6.20 03/04/18
71,710 (1) 2.50 04/23/19
15,000 3.80 07/20/19
15,000 4.80 07/20/20
15,000 6.90 04/14/21
38,520 3.20 12/01/16
20,000 3.90 05/17/22
58,000 2.80 12/17/17
23,390 2.80 12/17/22
10,000 2.10 06/30/23
----------
303,620
300,000 (2) 3.80 07/06/19
10,000 3.90 05/17/22
126,610 2.80 12/17/22
20,000 2.10 06/30/23
60,000 1.09 02/25/24
----------
516,610
Eyal Talor, Ph.D. 5,000 3.30 04/26/15
3,000 4.80 09/21/15
8,000 5.80 09/12/16
10,000 6.30 09/13/17
10,000 6.20 03/04/18
24,082 (1) 2.50 04/23/19
15,000 3.80 07/20/19
15,000 4.80 07/20/20
15,000 6.90 04/14/21
27,773 3.20 12/01/16
20,000 3.90 05/17/22
37,417 2.80 12/17/17
23,390 2.80 12/17/22
10,000 2.10 06/30/23
----------
223,662
300,000 (2) 3.80 07/06/19
10,000 3.90 05/17/22
126,610 2.80 12/17/22
20,000 2.10 06/30/23
60,000 1.09 02/25/24
----------
516,610
21
Shares underlying
unexercised
Option which are:
----------------------------- Exercise Expiration
Name Exercisable Unexercisable Price Date
----- ----------- ------------- ----- ----
Daniel Zimmerman, 5,000 3.30 04/16/15
Ph.D. 3,000 4.80 09/21/15
6,000 5.80 09/12/16
7,500 6.30 09/13/17
7,500 6.20 03/04/18
15,000 4.80 07/20/20
15,000 6.90 04/14/21
25,200 3.20 12/01/16
15,000 3.90 05/17/22
39,200 2.80 12/17/17
7,500 2.10 06/30/23
----------
145,900
7,500 3.90 05/17/22
15,000 2.10 06/30/23
45,000 1.09 02/25/24
200,000 1.10 08/05/24
----------
267,500
John Cipriano 3,000 4.80 09/21/15
6,000 5.80 09/12/16
7,500 6.30 09/13/17
7,500 6.20 03/04/18
15,000 4.80 07/20/20
15,000 6.90 04/14/21
1,600 3.20 12/01/16
10,000 2.50 09/30/19
15,000 3.90 05/17/22
7,500 2.10 06/30/23
----------
88,100
7,500 3.90 05/17/22
15,000 2.10 06/30/23
45,000 1.09 02/25/24
----------
67,500
(1) Options awarded to employees who did not collect a salary, or reduced or
deferred their salary between September 15, 2008 and June 30, 2009. For
example, Mr. de Clara, Mr. Kersten and Ms. Prichep did not collect any
salary between September 30, 2008 and June 30, 2009.
(2) Long-term performance options: The Board of Directors has identified the
successful Phase III clinical trial for Multikine to be the most important
corporate event to create shareholder value. Therefore, one third of the
options can be exercised when the first 400 patients are enrolled in
CEL-SCI's Phase III head and neck cancer clinical trial. One third of the
options can be exercised when all of the patients have been enrolled in the
Phase III clinical trial. One third of the options can be exercised when
the Phase III trial is completed. The grant-date fair value of these
options awarded to the senior management of CEL-SCI amounted to $3.3
million in total.
22
Summary. The following shows certain information as of March 17, 2015
concerning the stock options and stock bonuses granted by CEL-SCI. Each option
represents the right to purchase one share of CEL-SCI's common stock.
Shares
Total Reserved
Shares for Remaining
Reserved Outstanding Shares Options/Shares
Name of Plan Under Plans Options Issued Under Plans
------------- ----------- ----------- ------- --------------
Incentive Stock Option 1,960,000 1,708,331 N/A 5,969
Plans
Non-Qualified Stock Option 5,680,000 5,015,402 N/A 107,679
Plans
Bonus Plans 1,594,000 N/A 1,230,940 362,304
Stock Compensation Plan 1,350,000 N/A 1,316,949 0
Incentive Stock Bonus Plan 16,000,000 N/A 15,600,000 400,000
Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans, 531,671
shares were issued as part of CEL-SCI's contribution to its 401(k) plan.
The following table shows the weighted average exercise price of the
outstanding options granted pursuant to CEL-SCI's Incentive and Non-Qualified
Stock Option Plans as of September 30, 2014, CEL-SCI's most recent fiscal year
end. All of the plans in the table above have been approved by CEL-SCI's
shareholders.
Number of Weighted- Number of Securities
Securities to Average Remaining Available For
be Issued Upon Exercise Future Issuance Under
Exercise of Price of Equity Compensation
Outstanding Outstanding Plans, Excluding Securities
Plan category Options (a) Options Reflected in Column (a)
------------- ----------- -------------- --------------------------
Incentive Stock 1,710,997 $ 3.05 3,303
Option Plans
Non-Qualified Stock 5,120,152 $ 2.96 2,929
Option Plans
Compensation Committee
During the year ending September 30, 2014, CEL-SCI had a Compensation
Committee which was comprised of Alexander Esterhazy, C. Richard Kinsolving (now
deceased) and Peter Young. During the year ended September 30, 2014, the
Compensation Committee formerly met on one occasion to approve the 2014
Incentive Stock Bonus Plan.
The following is the report of the Compensation Committee:
The key components of CEL-SCI's executive compensation program include
annual base salaries and long-term incentive compensation consisting of stock
options. It is CEL-SCI's policy to target compensation (i.e., base salary, stock
option grants and other benefits) at approximately the median of comparable
23
companies in the biotechnology field. Accordingly, data on compensation
practices followed by other companies in the biotechnology industry is
considered.
CEL-SCI's long-term incentive program formerly consisted of periodic grants
of stock options with an exercise price equal to the fair market value of
CEL-SCI's common stock on the date of grant. To encourage retention, the ability
to exercise options granted under the program was subject to vesting
restrictions. Decisions made regarding the timing and size of option grants took
into account the performance of both CEL-SCI and the employee, "competitive
market" practices, and the size of the option grants made in prior years. The
weighting of these factors varied and was subjective.
Since share price and performance targets during the lengthy drug
development process are not always logically aligned, a major change in the long
term incentive plan for senior and middle management was introduced in 2014.
This substituted restricted shares issued from the 2014 Incentive Stock Bonus
Plan that was voted on and passed by the shareholders at the annual meeting on
July 22, 2014 for options. At issuance, these shares were not vested and are
held in escrow. The shares will only be earned upon the achievement of certain
milestones leading to the commercialization of CEL-SCI's Multikine technology,
or specified increases in the market price of CEL-SCI's stock. The first
milestone for the restricted stock was reached in January 2015. If the
performance or market criteria are not met as specified in the Incentive Stock
Bonus Plan, all or a portion of the awarded shares will be forfeited.
In April 2005 CEL-SCI entered into a three-year employment agreement with
Maximilian de Clara, CEL-SCI's President. The April 2005 employment agreement,
which is essentially the same as Mr. de Clara's two prior employment agreements,
provides that during the employment term CEL-SCI will pay Mr. de Clara a salary
of $363,000.
On September 8, 2006, Mr. de Clara's employment agreement was amended and
extended to April 30, 2010. Mr. de Clara's employment agreement continued on a
month to month basis from April 30, 2010 until August 30, 2010 when it was
extended until August 30, 2013. On August 30, 2013, Mr. de Clara's employment
agreement, as amended on September 8, 2006, was extended again to August 30,
2016. In extending Mr. de Clara's employment contract, CEL-SCI's Compensation
Committee considered various factors, including Mr. de Clara's performance in
his area of responsibility, Mr. de Clara's experience in his position, and Mr.
de Clara's length of service with the Company.
On September 1, 2003, CEL-SCI entered into a three-year employment
agreement with Mr. Kersten. On September 1, 2006, Mr. Kersten's employment
agreement was extended to September 1, 2011. On September 1, 2011, CEL-SCI
extended its employment agreement with Mr. Kersten to August 31, 2016.
Mr. Kersten will receive at least the same salary increases each year as
do other senior executives of CEL-SCI. Increases beyond those, if any, shall be
made at the sole discretion of CEL-SCI's directors. In renewing Mr. Kersten's
employment contract CEL-SCI's Compensation Committee considered various factors,
including Mr. Kersten's performance in his area of responsibility, Mr. Kersten's
experience in his position, and Mr. Kersten's length of service with CEL-SCI.
24
On August 30, 2010, CEL-SCI entered into a three-year employment agreement
with Patricia B. Prichep, CEL-SCI's Senior Vice President of Operations. On
August 30, 2013 the employment agreement with Ms. Prichep was extended to August
30, 2016. The employment agreement with Ms. Prichep provides that during the
term of the agreement CEL-SCI will pay Ms. Prichep an annual salary plus any
increases approved by the Board of Directors during the period of the employment
agreement.
On August 30, 2010, CEL-SCI also entered into a three-year employment
agreement with Eyal Talor, Ph.D., CEL-SCI's Chief Scientific Officer. On August
30, 2013, the employment agreement with Dr. Talor was extended to August 30,
2016. The employment agreement with Dr. Talor provides that during the term of
the agreement CEL-SCI will pay Dr. Talor an annual salary plus any increases
approved by the Board of Directors during the period of the employment
agreement.
During the year ending September 30, 2014, the compensation paid to
CEL-SCI's other executive officers was based on a variety of factors, including
the performance in the executive's area of responsibility, the executive's
individual performance, the executive's experience in his or her role, the
executive's length of service with CEL-SCI, the achievement of specific goals
established for CEL-SCI and its business, and, in certain instances, to the
achievement of individual goals.
Financial or stockholder value performance comparisons were not used to
determine the compensation of CEL-SCI's other executive officers since CEL-SCI's
financial performance and stockholder value are influenced to a substantial
degree by external factors and as a result comparing the compensation payable to
the other executive officers to CEL-SCI's financial or stock price performance
can be misleading.
During the year ended September 30, 2014, CEL-SCI granted options for the
purchase of 825,000 shares of CEL-SCI's common stock to CEL-SCI's executive
officers. In granting the options to CEL-SCI's executive officers, the Board of
Directors considered the same factors which were used to determine the cash
compensation paid to such officers.
Except as otherwise disclosed in this proxy statement, during the year
ended September 30, 2014, CEL-SCI did not issue any shares of its common stock
to CEL-SCI's officers or directors in return for services provided to CEL-SCI.
The foregoing report has been approved by the members of the Compensation
Committee:
Alexander Esterhazy
Peter Young
Audit Committee
During the year ended September 30, 2014, CEL-SCI had an Audit Committee
comprised of Alexander Esterhazy, C. Richard Kinsolving (now deceased) and Peter
Young. All members of the Audit Committee were independent as defined by Section
803 of the NYSE MKT Listing Standards. Dr. Young serves as the audit committee's
financial expert. The purpose of the Audit Committee is to review and approve
25
the selection of CEL-SCI's independent registered public accounting firm and
review CEL-SCI's financial statements with CEL-SCI's independent registered
public accounting firm.
During the fiscal year ended September 30, 2014, the Audit Committee met
four times. All members of the Audit Committee attended these meetings, with the
exception of C. Richard Kinsolving who was in attendance for two of these
meetings.
The following is the report of the Audit Committee:
(1) The Audit Committee reviewed and discussed CEL-SCI's audited financial
statements for the year ended September 30, 2014 with CEL-SCI's
management.
(2) The Audit Committee discussed with CEL-SCI's independent registered
public accounting firm the matters required to be discussed by PCAOB
(Public Company Accounting Oversight Board) Standard No. 16
"Communication with Audit Committees".
(3) The Audit Committee has received the written disclosures and the
letter from CEL-SCI's independent registered public accounting firm
required by PCAOB independence standards, and had discussed with
CEL-SCI's independent registered public accounting firm the
independent registered public accounting firm's independence; and
(4) Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in CEL-SCI's Annual Report on Form
10-K for the year ended September 30, 2014 for filing with the
Securities and Exchange Commission.
(5) During the year ended September 30, 2014, CEL-SCI paid BDO USA, LLP,
CEL-SCI's independent registered public accounting firm, fees for
professional services rendered for the audit of CEL-SCI's annual
financial statements and the reviews of the financial statements
included in CEL-SCI's 10-Q reports for the fiscal year and all
regulatory filings. The Audit Committee is of the opinion that these
fees are consistent with BDO USA, LLP maintaining its independence
from CEL-SCI.
The foregoing report has been approved by the members of the Audit
Committee:
Alexander G. Esterhazy
Peter Young
CEL-SCI's Board of Directors has adopted a written charter for the Audit
Committee, a copy of which was attached CEL-SCI's proxy statement relating to
its April 15, 2011 annual meeting of shareholders.
26
PROPOSAL TO APPROVE ADOPTION OF
2015 NON-QUALIFIED STOCK OPTION PLAN
Shareholders are being requested to approve the adoption of CEL-SCI's 2015
Non-Qualified Stock Option Plan. CEL-SCI's employees, directors and officers,
and consultants or advisors to CEL-SCI are eligible to be granted options
pursuant to the 2015 Non-Qualified Plan as may be determined by CEL-SCI's Board
of Directors or the Compensation Committee, provided however that bona fide
services must be rendered by such consultants or advisors and such services must
not be in connection with the offer or sale of securities in a capital-raising
transaction.
The 2015 Non-Qualified Plan authorizes the issuance of up to 2,000,000
shares of CEL-SCI's common stock to persons that exercise options granted
pursuant to the Plan. As of the date of this Proxy Statement, CEL-SCI had not
granted any options to purchase shares of common stock under the 2015
Non-Qualified Plan.
The 2015 Non-Qualified Plan will function and be administered in the same
manner as CEL-SCI's other Non-Qualified Plans. The Board of Directors recommends
that the shareholders of CEL-SCI approve the adoption of the 2015 Non-Qualified
Plan.
PROPOSAL TO ADOPT 2015 STOCK BONUS PLAN
Shareholders are being requested to approve the adoption of CEL-SCI's 2015
Stock Bonus Plan. The purpose of the 2015 Stock Bonus Plan is to furnish
additional compensation and incentives to CEL-SCI's employees, directors,
officers, consultants and advisors and to allow CEL-SCI to continue to make
contributions to its 401(k) plan with shares of its common stock instead of
cash.
Since 1993 CEL-SCI has maintained a defined contribution retirement plan
(also known as a 401(k) Plan) covering substantially all CEL-SCI's employees.
Since 1998 CEL-SCI's contribution to the plan has been made in shares of
CEL-SCI's common stock as opposed to cash. CEL-SCI's contribution of common
stock is made quarterly and is valued based upon the price of CEL-SCI's common
stock on the NYSE MKT. The Board of Directors is of the opinion that
contributions to the 401(k) plan with shares of CEL-SCI's common stock serves to
further align the interest of CEL-SCI's employees with CEL-SCI's shareholders.
The 2015 Stock Bonus Plan, if adopted, will authorize the issuance of up
to 2,000,000 shares of CEL-SCI's common stock to persons granted stock bonuses
pursuant to the plan. As of the date of this Proxy Statement, CEL-SCI had not
granted any stock bonuses pursuant to the 2015 Stock Bonus Plan.
The 2015 Stock Bonus Plan will function and be administered in the same
manner as CEL-SCI's existing Stock Bonus Plans. The Board of Directors
recommends that the shareholders of CEL-SCI approve the adoption of the 2015
Stock Bonus Plans.
27
PROPOSAL TO ADOPT CEL-SCI'S STOCK COMPENSATION PLAN
During the two years ended September 30, 2014 and 2013, CEL-SCI issued 0
shares of its common stock to its officers, directors and employees. During the
two years ended September 30, 2014 and 2013, CEL-SCI issued 409,968 and 50,000
shares to consultants for payment of services of $439,008 and $140,000,
respectively. To conserve cash, CEL-SCI expects that it may continue to offer
its officers, directors, employees and consultants the opportunity to receive
shares of CEL-SCI's common stock in payment of amounts owed by CEL-SCI for
services rendered.
To comply with the NYSE MKT requirements CEL-SCI adopted a Stock
Compensation Plan, which was approved by CEL-SCI's shareholders at the May 6,
2004 annual meeting, and which provided that shares of CEL-SCI'S common stock
would be available for issuance under the Plan. Shareholders subsequently
approved amendments to the Stock Compensation Plan which provided up to
1,350,000 shares would be available for issuance under the plan. The Stock
Compensation Plan expired on December 31, 2014.
So that CEL-SCI may continue to offer shares of its common stock in
payment of compensation owed, CEL-SCI's Board of Directors, subject to
shareholder approval, has adopted the 2015 Stock Compensation Plan. Up to
2,000,000 shares of restricted common stock would be available for issuance
under the Plan. The Board of Directors recommends that the shareholders of
CEL-SCI approve the adoption of the 2015 Stock Compensation Plan.
PROPOSAL TO EXTEND SHAREHOLDER RIGHTS PLAN
In November 2007 the Company's Board of Directors adopted a Shareholder
Rights Plan. The Shareholder Rights Plan involved the issuance of Series A and
Series B rights to holders of the Company's common stock.
The Rights become effective (the "Effective Date"):
(1) 15 business days following a public announcement that a person has
acquired beneficial ownership of 15% or more of the Company's common stock, or
(2) 15 business days following the commencement of a tender offer.
Each shareholder of record on November 9, 2007 received one Series A Right
and one Series B Right for each share which they owned. Each Series A Right
entitles the holder to purchase from the Company one share of common stock at a
price equal to 20% of the market price of the Company's common stock on the
Effective Date.
If, after the Effective Date, (i) the Company is acquired in a merger or
other business combination and the Company is not the surviving corporation,
(ii) any person consolidates or merges with the Company and all or part of the
Company's common shares are converted or exchanged for securities, cash or
property of any other person, or (iii) 50% or more of the Company's consolidated
assets or earning power are sold, each holder of a Series B Right will have the
right to receive, at the exercise price of $100, that number of shares of common
stock of the acquiring company which at the time of such transaction has a
market value of $200.
28
Shareholders of the Company did not receive separate certificates for the
Rights as the Rights are represented by the Company's common stock certificates.
Certificates for the Company's common stock carry a notation that indicates that
Rights are attached to the common shares and incorporate the terms of the
Shareholder Rights Plan. Prior to the Effective Date, the Rights transfer with
the common shares upon the sale or transfer of the Company's common stock.
Until the Effective Date, the Rights cannot be bought, sold or otherwise
traded separately from the common shares.
Separate certificates representing the Series A Series B Rights will be
distributed as soon as practicable after the Effective Date.
The Rights will not be effective with respect to any acquisition, tender
offer, merger or similar transaction approved by the Company's directors.
The Rights may be exercised at any time on or after the Effective Date,
but expire on October 30, 2015.
The purpose of the Shareholder Rights Plan is to ensure, to the extent
possible, that shareholders of the Company are treated fairly in connection with
any bid to acquire control of the Company. The Shareholder Rights Plan ensures
that, in the context of a bid for control of the Company through an acquisition
of shares of common stock of the Company, the Board has sufficient time to
explore and develop alternatives for maximizing shareholder value, to provide
adequate time for competing bids to emerge, to ensure that shareholders have an
equal opportunity and adequate time to participate in and properly assess the
bid and lessen the pressure to tender that is typically encountered by
shareholders of companies that are subject to takeover bids. The Shareholder
Rights Plan does not prohibit a takeover bid for the Company in a transaction
that is fair and in the best interests of all of the Company's shareholders. The
rights of shareholders to seek a change in the management of the Company, or to
influence or promote action of management in a particular manner, is not to be
affected by the Shareholder Rights Plan.
The Company's board of directors believes that it is in the best interests
of the Company shareholders is to extend the Shareholder Rights Plan to ensure
that the Company's shareholders are treated fairly in connection with any
attempt to acquire control of the Company.
Accordingly, the Company's directors recommend that the Company's
shareholders approve the extension of the Shareholder Rights Plan to October 30,
2020.
The full text of our Shareholder Rights Plan (officially named the
"Shareholder Rights Agreement"), is available on our website at www.cel-sci.com.
29
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has selected BDO USA, LLP, an independent
registered public accounting firm, to audit the books and records of CEL-SCI for
the fiscal year ending September 30, 2015. BDO USA, LLP served as CEL-SCI's
independent registered public accounting firm for the fiscal year ended
September 30, 2014. A representative of BDO USA, LLP is expected to be present
at the shareholders' meeting.
BDO USA, LLP served as CEL-SCI's auditors for the years ended September
30, 2014 and 2013. The following table shows the aggregate fees billed to
CEL-SCI during these years by BDO USA, LLP:
Year Ended September 30,
2014 2013
---- ----
Audit Fees $ 397,000 $ 236,000
Audit-Related Fees -- --
Tax Fees -- --
All Other Fees -- --
Audit fees represent amounts billed for professional services rendered for
the audit of the CEL-SCI's annual financial statements and the reviews of the
financial statements included in CEL-SCI's 10-Q reports for the fiscal year and
all regulatory filings. Before BDO USA, LLP was engaged by CEL-SCI to render
audit or non-audit services, the engagement was approved by CEL-SCI's audit
committee. CEL-SCI's Board of Directors is of the opinion that the Audit Related
Fees charged by BDO USA, LLP are consistent with BDO USA, LLP maintaining its
independence from CEL-SCI.
The Board of Directors recommends that the shareholders of CEL-SCI approve
its selection of BDO USA, LLP as CEL-SCI's independent public accounting firm to
audit the books and records of CEL-SCI for the year ending September 30, 2015.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
CEL-SCI's Annual Report on Form 10-K for the year ending September 30,
2014 will be sent to any shareholder of CEL-SCI upon request. Requests for a
copy of this report should be addressed to the Secretary of CEL-SCI at the
address provided on the first page of this proxy statement.
SHAREHOLDER PROPOSALS
Any shareholder proposal which may properly be included in the proxy
solicitation material for the annual meeting of shareholders following CEL-SCI's
fiscal year ending September 30, 2015 must be received by the Secretary of
CEL-SCI no later than January 31, 2016.
30
GENERAL
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement, and all other costs in connection with
solicitation of proxies will be paid by CEL-SCI including any additional
solicitation made by letter, telephone or telegraph. Failure of a quorum to be
present at the meeting will necessitate adjournment and will subject CEL-SCI to
additional expense. CEL-SCI's annual report, including financial statements for
the 2014 fiscal year, is available on CEL-SCI's website (www.cel-sci.com).
CEL-SCI's Board of Directors does not intend to present and does not have
reason to believe that others will present any other items of business at the
annual meeting. However, if other matters are properly presented to the meeting
for a vote, the proxies will be voted upon such matters in accordance with the
judgment of the persons acting under the proxies.
Please complete, sign and return the attached proxy promptly.
31
CEL-SCI CORPORATION PROXY
This Proxy is solicited by CEL-SCI's Board of Directors
The undersigned stockholder of CEL-SCI acknowledges receipt of the Notice of
the Annual Meeting of Stockholders to be held May 11, 2015, 10:30 a.m. local
time, at 4820-C Seton Drive, Baltimore, MD 21215, and hereby appoints
Maximilian de Clara and Geert R. Kersten with the power of substitution, as
Attorneys and Proxies to vote all the shares of the undersigned at said annual
meeting of stockholders and at all adjournments thereof, hereby ratifying and
confirming all that said Attorneys and Proxies may do or cause to be done by
virtue hereof. The above named Attorneys and Proxies are instructed to vote all
of the undersigned's shares as follows:
The Board of Directors recommends a vote FOR all the nominees listed below:
(1) To elect the persons who shall constitute CEL-SCI's Board of Directors for
the ensuing year.
[ ] FOR all nominees listed below (except as marked to the contrary
below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
Nominees: Maximilian de Clara Geert R. Kersten Alexander G. Esterhazy
Peter R. Young Bruno Baillavoine
The Board of Directors recommends you vote FOR the following proposals:
(2) To approve the adoption of CEL-SCI's 2015 Non-Qualified Stock Option Plan
which provides that up to 2,000,000 shares of common stock may be issued
upon the exercise of options granted pursuant to the Non-Qualified Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the adoption of CEL-SCI's 2015 Stock Bonus Plan which provides
that up to 2,000,000 shares of common stock may be issued pursuant to the
Stock Bonus Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To approve the adoption of CEL-SCI's 2015 Stock Compensation Plan which
provides that up to 2,000,000 restricted shares of CEL-SCI's common stock
may be issued pursuant to the Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To approve a proposal to extend our Shareholder Rights Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) To ratify the appointment of BDO USA, LLP as CEL-SCI's independent
registered public accounting firm for the fiscal year ending September 30,
2015.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To transact such other business as may properly come before the meeting or any
adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DISCRETION IS INDICATED, THIS PROXY WILL BE
VOTED IN FAVOR OF ALL NOMINEES TO THE BOARD OF DIRECTORS AND ITEMS 2 THROUGH 6.
Directions to the Annual Meeting can be found at www.cel-sci.com/annual_meeting
..html.
Dated this ____ day of _____, 2015.
--------------------
(Signature)
--------------------
(Signature)
Please sign your name exactly as it appears on your stock certificate. If shares
are held jointly, each holder should sign. Executors, trustees, and other
fiduciaries should so indicate when signing.
Please Sign, Date and Return this Proxy so that your shares may be voted at the
meeting.
Send the proxy statement by regular mail, email, or fax to:
CEL-SCI Corporation
Attn: Gavin de Windt
8229 Boone Blvd., #802
Vienna, VA 22182
Phone: 703-506-9460
Fax: 703-506-9471
Email: gdewindt@cel-sci.com
32
IMPORTANT ANNUAL STOCKHOLDERS' MEETING INFORMATION -- YOUR VOTE COUNTS!
Stockholder Meeting Notice
Important Notice Regarding the Availability of Proxy Materials for the
CEL-SCI Corporation Stockholder Meeting to be Held on May 11, 2015.
Under new Securities and Exchange Commission rules, you are receiving this
notice that the proxy materials for the annual stockholders' meeting are
available on the Internet. Follow the instructions below to view the materials
and vote online or request a copy. The items to be voted on and location of the
annual meeting are on the reverse side. Your vote is important!
This communication presents only an overview of the more complete proxy
materials that are available to you on the Internet. We encourage you to access
and review all of the important information contained in the proxy materials
before voting. The proxy statement, annual report and letter to shareholders are
available at:
www.envisionreports.com/CVM
Easy Online Access -- A Convenient Way to View Proxy Materials
and Vote
When you go online to view materials, you can also vote your
shares.
Step 1: Go to www.envisionreports.com/CVM to view the materials.
Step 2: Click on Cast Your Vote or Request Materials.
Step 3: Follow the instructions on the screen to log in.
Step 4: Make your selection as instructed on each screen to
select delivery preferences and vote.
When you go online, you can also help the environment by consenting to receive
electronic delivery of future materials.
Obtaining a Copy of the Proxy Materials - If you want to receive a paper or
e-mail copy of these documents, you must request one. There is no charge to
you for requesting a copy. Please make your request for a copy as
instructed on the reverse side on or before April __, 2015 to facilitate
timely delivery. 017EIB
33
Stockholder Meeting Notice
CEL-SCI Corporation's Annual Meeting of Stockholders will be held at
4820-C Seton Drive, Baltimore, MD 21215, on May 11, 2015, at 10:30
a.m. local time.
Proposals to be voted on at the meeting are listed below along with the Board of
Directors' recommendations.
The Board of Directors recommends that you vote FOR the following:
(1) To elect the persons who shall constitute CEL-SCI's Board of Directors
for the ensuing year.
The Board of Directors recommends you vote FOR the following proposals:
(2) To approve the adoption of CEL-SCI's 2015 Non-Qualified Stock Option
Plan which provides that up to 2,000,000 shares of common stock may be
issued upon the exercise of options granted pursuant to the
Non-Qualified Stock Option Plan.
(3) To approve the adoption of CEL-SCI's 2015 Stock Bonus Plan which
provides that up to 2,000,000 shares of common stock may be issued to
persons granted stock bonuses pursuant to the Stock Bonus Plan.
(4) To approve the adoption of CEL-SCI's 2015 Stock Compensation Plan
which provides that up to 2,000,000 restricted shares of CEL-SCI's
common stock may be issued pursuant to the plan.
(5) To approve a proposal to extend CEL-SCI's Shareholder Rights Plan.
(6) To ratify the appointment of BDO USA, LLP as CEL-SCI's independent
registered public accounting firm for the fiscal year ending September
30, 2015.
To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
PLEASE NOTE - YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you
must vote online or request a paper copy of the proxy materials to receive a
proxy card. If you wish to attend and vote at the meeting, please bring this
notice with you.
Directions to attend the meeting can be found on our website at
http://www.cel-sci.com/annual_meeting.html.
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Here's how to order a copy of the proxy materials and select a
future delivery preference:
Paper copies: Current and future paper delivery requests can be
submitted via the telephone, Internet or email options below.
Email copies: Current and future email delivery requests must be
submitted via the Internet following the instructions below.
If you request an email copy of current materials you will receive an
email with a link to the materials.
PLEASE NOTE: You must use the number in the shaded bar on the reverse
side when requesting a set of proxy materials.
_ Internet - Go to www.envisionreports.com/CVM. Click Cast Your
Vote or Request Materials. Follow the instructions to log in and
order a paper or email copy of the current meeting materials and
submit your preference for email or paper delivery of future
meeting materials.
_ Telephone - Call us free of charge at 1-866-641-4276 using a
touch-tone phone and follow the instructions to log in and order
a paper copy of the materials by mail for the current meeting.
You can also submit a preference to receive a paper copy for
future meetings.
_ Email - Send email to investorvote@computershare.com with "Proxy
Materials CEL-SCI Corporation" in the subject line. Include in
the message your full name and address, plus the number located
in the shaded bar on the reverse, and state in the email that
you want a paper copy of current meeting materials. You can also
state your preference to receive a paper copy for future
meetings.