UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No. )
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
¨
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Preliminary
Proxy Statement
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¨
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Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to §240.14a-12
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Reliv
International, Inc.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of filing fee (Check the appropriate box):
¨
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction
applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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4)
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Proposed
maximum aggregate value of
transaction:
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¨
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Fee
paid previously with preliminary
materials.
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement
No.:
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RELIV’
INTERNATIONAL, INC.
136
Chesterfield Industrial Boulevard
Chesterfield,
Missouri 63005
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD
ON MAY 20, 2010
To:
Stockholders of Reliv’ International,
Inc.
The
Annual Meeting of the Stockholders of Reliv’ International, Inc. will be held at
Reliv’ International, Inc., Corporate Headquarters, 136 Chesterfield Industrial
Boulevard, Chesterfield, Missouri 63005, on Thursday, May 20, 2010, at 9:00
a.m., Central Daylight Savings Time, for the following purposes:
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1.
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To
elect 9 directors to hold office during the year following the Annual
Meeting or until their successors are elected (Item No. 1 on proxy
card);
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2.
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To
ratify the appointment of Ernst & Young LLP as the independent
registered public accounting firm of the Company for 2010 (Item No. 2 on
proxy card); and
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3.
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To
transact such other business as may properly come before the
meeting.
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The close
of business on March 18, 2010, has been fixed as the record date for determining
the stockholders entitled to receive notice of and to vote at the Annual
Meeting.
BY ORDER
OF THE BOARD OF DIRECTORS
April 9,
2010
/s/ Stephen M. Merrick
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Stephen
M. Merrick, Secretary
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YOUR
VOTE IS IMPORTANT
It
is important that as many shares as possible be represented at the Annual
Meeting. Please read this Proxy Statement and submit your Proxy via the
Internet, or if you received a paper copy of your proxy materials, by using the
toll-free telephone number provided or by completing, signing, dating and
returning your Proxy in the pre-addressed envelope provided. Your Proxy
may be revoked by you at any time before it has been voted.
RELIV’
INTERNATIONAL, INC.
136
Chesterfield Industrial Boulevard
Chesterfield,
Missouri 63005
PROXY
STATEMENT
Information Concerning the
Solicitation
The Board of Directors of Reliv’
International, Inc. (the “Company”) is furnishing this Proxy Statement for the
solicitation of proxies from holders of the outstanding common stock of the
Company to be used at the 2010 annual stockholders meeting (the “Annual
Meeting”) of the Company which will be held on Thursday, May 20, 2010 at 9:00
a.m., Central Daylight Savings Time. The Company has elected to provide
access to these proxy materials over the Internet in accordance with
rules adopted by the Securities and Exchange Commission. On April 9,
2010 we mailed a Notice of Internet Availability of Proxy Materials to our
stockholders of record and beneficial owners. The Notice instructs you on
how you may access the proxy materials on the Internet. It also instructs
you on how you may vote your proxy. If you received a Notice by mail and
would like to receive a printed copy of our proxy materials, you should follow
the instructions for requesting printed materials included in the
Notice.
The cost
of preparing, assembling and furnishing the proxy material and of reimbursing
brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses of
transmitting copies of the proxy material to the beneficial owners of shares
held of record by such persons will be borne by the Company. The Company
does not intend to solicit proxies otherwise than pursuant to the Notice and,
where requested, mailing of proxy materials, but certain officers and regular
employees of the Company or its subsidiaries, without additional compensation,
may use their personal efforts, by telephone or otherwise, to obtain
proxies.
Your vote
is very important. Whether or not you plan to attend our Annual Meeting,
please take the time to vote either by the Internet or, if you requested a paper
copy of the proxy materials, by telephone using the instructions on the proxy
card or by completing and mailing the proxy card enclosed with the proxy
materials as soon as possible. If you elect to vote using the proxy card
in the proxy materials you requested be mailed to you, you must sign, date and
mail it and indicate how you want to vote. If you do not so indicate, your
proxy will be voted as recommended by the Board of Directors.
Quorum and
Voting
Only
stockholders of record at the close of business on March 18, 2010 are entitled
to vote at the Annual Meeting. On that day, there were 12,380,187 shares
of common stock outstanding. Each share has one vote. Stockholders
do not have cumulative voting rights in the election of directors. A
simple majority of the outstanding shares is required to be present in person or
by proxy at the meeting for there to be a quorum for purposes of proceeding with
the Annual Meeting. A simple majority of the shares present in person or
by proxy at the Annual Meeting, at which a quorum is present, is required to
elect directors and approve the appointment of the Company’s independent
registered public accounting firm. Abstentions and withheld votes have the
effect of votes against these matters. Broker non-votes (shares held of
record by a broker for which a proxy is not given) will be counted for purposes
of determining shares outstanding for purposes of a quorum, but will not be
counted as present for purposes of determining the vote on any matter considered
at the meeting.
If a
stockholder specifies how the proxy is to be voted with respect to any of the
proposals for which a choice is provided, the proxy will be voted in accordance
with such specifications. If a stockholder fails to so specify with
respect to such proposals, the proxy will be voted “FOR” the nominees for
directors contained in these proxy materials and “FOR” the appointment of the
Company’s independent registered public accounting firm. A stockholder
submitting a proxy prior to the Annual Meeting has the power to revoke it at any
time before the shares subject to it are voted by (i) sending a written
statement to that effect to the Secretary of the Company, (ii) submitting a
valid proxy having a later date, or (iii) voting in person at the Annual
Meeting.
Discretionary Voting
Power
The Board of Directors knows of no
other matters to be presented for stockholder action at the Annual
Meeting. On matters which may be raised at the Annual Meeting that are not
covered by this Proxy Statement, the persons named in the proxy will have full
discretionary authority to vote. If any nominee for election as a director
becomes unable to accept nomination or election, which we do not anticipate, the
persons named in the proxy will vote for the election of another person
recommended by the Board of Directors.
BENEFICIAL OWNERSHIP OF
SHARES BY MANAGEMENT AND
SIGNIFICANT
STOCKHOLDERS
The
following table provides information concerning the beneficial ownership of the
Company’s common stock by each director and nominee for director, certain
executive officers, all of the Company’s directors and officers as a group, and
the beneficial owners known to the Company to hold more than five percent of the
Company’s outstanding common stock as of March 18, 2010.
The
amounts and percentage of common stock beneficially owned are reported on the
basis of regulations of the Securities and Exchange Commission (“SEC”) governing
the determination of beneficial ownership of securities. Under the rules
of the SEC, a person is deemed to be a “beneficial owner” of a security if that
person has or shares “voting power,” which includes the power to vote or to
direct the voting of such security, or “investment power,” which includes the
power to dispose of or to direct the disposition of such security. A
person is also deemed to be a beneficial owner of any securities of which that
person has a right to acquire beneficial ownership within 60 days after March
18, 2010. Under these rules, more than one person may be deemed a
beneficial owner of the same securities and a person may be deemed a beneficial
owner of securities as to which he has no economic interest. Percentage of
class is based on 12,380,187 shares of common stock outstanding as of March 18,
2010.
Name of beneficial owner(1)
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Amount and nature of
beneficial ownership
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Percent of class
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Robert
L. Montgomery(2)
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3,597,506 |
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28.66 |
% |
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Carl
W. Hastings(3)
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627,614 |
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5.06 |
% |
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Stephen
M. Merrick(4)
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496,297 |
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3.99 |
% |
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Donald
L. McCain(5)
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370,557 |
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2.98 |
% |
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John
B. Akin(6)
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12,500 |
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* |
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Robert
M. Henry(7)
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12,250 |
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* |
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Denis
St. John(8)
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33,009 |
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* |
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Michael
D. Smith(9)
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4,750 |
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* |
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John
M. Klimek
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0 |
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* |
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R.
Scott Montgomery(10)
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123,177 |
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* |
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All
Directors, nominees and Executive Officers as a Group (10 persons)(11)
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5,277,660 |
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41.33 |
% |
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(footnotes
on following page)
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______________________
*
less than one percent
(1)
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Unless
otherwise indicated below, the person named in the table has sole voting
and investment power with respect to all shares beneficially owned,
subject to community property laws where applicable. Unless
otherwise indicated, the address for each person is c/o Reliv’
International, Inc., 136 Chesterfield Industrial Boulevard, Chesterfield,
Missouri 63005.
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(2)
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Includes
172,500 shares subject to options exercisable within 60 days after March
18, 2010, 1,938,965 shares held through the Montgomery Family Limited
Partnership, 477,141 shares held through Montgomery Enterprises, Ltd., for
which Mr. Montgomery has sole voting and investment power, and 125,920
shares held by Mr. Montgomery’s
spouse.
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(3)
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Includes
23,375 shares subject to options exercisable within 60 days after March
18, 2010.
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(4)
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Includes
52,750 shares subject to options exercisable within 60 days after March
18, 2010. Includes 443,547 shares held in the name of The Merrick
Company LLC.
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(5)
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Includes
52,000 shares subject to options exercisable within 60 days after March
18, 2010.
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(6)
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Includes
11,250 shares subject to options exercisable within 60 days after March
18, 2010.
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(7)
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Includes
11,250 shares subject to options exercisable within 60 days after March
18, 2010.
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(8)
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Includes
12,000 shares subject to options exercisable within 60 days after March
18, 2010 and 2,500 shares held in the name of Mr. St. John’s
spouse.
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(9)
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Includes
1,250 shares subject to options exercisable within 60 days after March 18,
2010.
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(10)
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Includes
53,375 shares subject to options exercisable within 60 days after March
18, 2010.
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(11)
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Includes
389,750 shares subject to options exercisable within 60 days after March
18, 2010.
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PROPOSAL
ONE - ELECTION OF
DIRECTORS
Nine
directors will be elected at the Annual Meeting to serve for terms of one year
expiring on the date of the Annual Meeting in 2011. Each director elected
will continue in office until a successor has been elected. If a nominee
is unable to serve, which the Board of Directors has no reason to expect, the
persons named in the proxy intend to vote for the balance of those named and, if
they deem it advisable, for a substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS THE
ELECTION OF ALL OF THE NOMINEES.
Information Concerning
Nominees
The
following is information concerning nominees for election to the Board of
Directors. Each of the following nominees, other than Mr. Klimek, is
presently a member of the Board of Directors.
Robert L. Montgomery, age
68, is the
Chairman of the Board, President and Chief Executive Officer.
Mr. Montgomery became Chairman of the Board of Directors and Chief
Executive Officer on February 15, 1985, and President on July 1, 1985.
Mr. Montgomery has been a director of the Company since 1985.
Mr. Montgomery is also the President and a director of Reliv’, Inc. and
President and a director of Reliv’ World Corporation, both wholly owned
subsidiaries of the Company. Mr. Montgomery received a B.A. degree in
Economics from the University of Missouri in Kansas City, Missouri in 1965.
Mr. Montgomery is the father of R. Scott Montgomery, the Company’s
Executive Vice President and Chief Operating Officer, and Ryan A. Montgomery,
the Company’s Executive Vice President, Worldwide Sales.
Stephen M. Merrick, age
68, has been the
Senior Vice President, Secretary, General Counsel and a member of the Board of
Directors since July 20, 1989. Mr. Merrick is Of Counsel to Vanasco
Genelly & Miller, which has served as counsel to the Company with
respect to certain matters, and has been engaged in the practice of law for over
40 years. Mr. Merrick is a principal of the law firm of Merrick &
Associates, P.C., which served as counsel to the Company with respect to certain
matters. Mr. Merrick has represented the Company since the Company’s
founding. Mr. Merrick received a Juris Doctor degree from Northwestern
University School of Law in 1966. He is also an officer and director of
CTI Industries Corporation (NASDAQ: CTIB).
Carl W. Hastings, age 68, was
appointed Vice Chairman and Chief Scientific Officer in April 2007. Prior
to his appointment in April 2007, he served as Vice President of the Company
since July 1, 1992. Dr. Hastings has been employed by the Company
since April 1991. Dr. Hastings was re-elected to the Board of Directors in
May 2005 and formerly served as a member of the Board of Directors from February
1990 until May 2004. Dr. Hastings holds B.S. and M.S. degrees and a Ph.D.
degree in Food Science from the University of Illinois. For more than the past
30 years, Dr. Hastings has been engaged in a variety of employment and
consulting capacities as a food scientist. Dr. Hastings is the father of
Steven G. Hastings, the Company’s Senior Vice President, North American Sales
and Brett M. Hastings, Vice President - Legal.
Donald L. McCain, age
66, has been a
member of the Board of Directors since July 20, 1989. Mr. McCain is
the Corporate Secretary and co-owner of The Baughan Group Inc., a supplier and
manufacturer of mining equipment and supplies with offices, plants and
distribution centers in the Midwest and Eastern United States and has been
associated with that company for more than ten years. He is also a part owner of
Baughan PTY, Ltd., a South African-based company which manufactures industrial
chain and rail car axles for worldwide distribution. Mr. McCain is the
father of Ronald McCain, Vice President – Sales Development who is also the
son-in-law of Robert L. Montgomery, the Chairman, President and Chief Executive
Officer.
John B. Akin, age 81, has been a member of
the Board of Directors since June 1986. Mr. Akin retired as Vice President,
A.G. Edwards & Sons and resident manager of the Decatur, Illinois
branch office in 1995. Mr. Akin had been associated with A.G.
Edwards & Sons as a stock broker, manager and officer since April 1973.
Mr. Akin holds a B.A. degree from the University of Northern Iowa, Cedar
Falls, Iowa.
Robert M. Henry, age 63, has been a member of
the Board of Directors since May 2004. Mr. Henry is a private investor and
business consultant. From December 2004 to 2008, Mr. Henry served as
Chairman and Chief Executive Officer of Arbonne International, Inc., a personal
care products company. From 2000 to 2003, he served as Chief Executive Officer
and board member for Mannatech, Incorporated, a public multi-level marketing
company that sells dietary supplements, wellness and weight-management products
to independent distributors. He received a B.S. degree in Accounting from
Hunter College in New York and a J.D. from Brooklyn Law School.
Mr. Henry has been a member of the New York State Bar since 1975 and
also served on the Direct Selling Association Board of Directors from 2002 to
2008.
Denis St. John, age 66, has been a member of
the Board of Directors since May 2004. Mr. St. John is the
chairman of Real Estate Development Strategies, LLC. Until his retirement
on October 31, 2007, Mr. St. John was a principal with Larson Allen, a regional
public accounting firm, in the Health Care Group. For 42 years,
Mr. St. John was associated with various accounting firms working
primarily in the financing and tax area, serving mid-size, closely held
companies. Mr. St. John graduated from the University of Missouri with
a Bachelor of Science in Business Administration with a major in
Accounting. Mr. St. John is Certified Public Accountant and a
member of the Missouri Society of CPAs and the American Institute of
CPAs.
Michael D. Smith, age 64, has
been a member of the Board of Directors since August 2006. Mr. Smith
served as Senior Vice President of Major Initiatives of Stampin' Up!, Inc.
from July 2006 to April 2009. Prior to that time, Mr. Smith was
employed by NuSkin Enterprises, Inc. for 17 years in various position including
General Counsel and Director of Legal Affairs, Regional Vice President and Vice
President of Global Industry and Government Relations. Mr.
Smith is a retired Colonel in the U.S. Army (JAG Corps), with 26 years of
active and reserve service, and he holds a Juris Doctorate Degree from the
University of Utah (1973).
John M. Klimek, age 51.
From August 2004 to the present, Mr. Klimek has been employed as a Managing
Director, Legal and Chief Compliance Officer of HFR Asset Management, LLC,
Chicago, Illinois, a hedge fund manager. From December 1999 to August
2004, Mr. Klimek was a partner of Merrick & Klimek, LLP, Chicago,
Illinois. Mr. Klimek has been a practicing attorney in Illinois since
1984. He holds a B.S. in Accountancy from the University of Illinois and
Juris Doctor Degree from the University of Illinois School of Law.
Executive Officers Other
Than Nominees
R. Scott Montgomery, age
40, was appointed
Executive Vice President and Chief Operating Officer in April 2007.
Mr. Montgomery joined the Company in 1993 and previously served as Senior
Vice President – Worldwide Operations from 2004 to 2007 and Vice President of
International Operations from 2001 to 2004. Mr. Montgomery graduated from
Southwest Missouri State University with a B.S. degree in Finance and
Investments.
Ryan A. Montgomery, age
36, was appointed
Executive Vice President, Worldwide Sales in April 2007. Previously, he
was Vice President, Sales from 2004 to 2007. Mr. Montgomery served as
corporate counsel from September 1999 to October 2004. Mr. Montgomery
received his B.A. degree in Economics from Vanderbilt University in 1995 and
graduated from Saint Louis University Law School in 1999.
Steven D. Albright, age
48, has been
Senior Vice President and Chief Financial Officer since March 2005.
Mr. Albright was the Vice President, Finance/Controller from 2002 to 2005
and was the Controller since 1992. Prior to his employment with the Company,
Mr. Albright was employed from 1987 to 1992 as Assistant Controller for
Kangaroos USA, Inc., an athletic shoe importer and distributor. For the period
from 1983 to 1987, he was employed by the public accounting firm of
Ernst & Young LLP. Mr. Albright received a B.S. degree in
Accountancy from the University of Illinois at Urbana-Champaign in May 1983 and
is a CPA.
Steven G. Hastings, age
44, was appointed
Senior Vice President, North American Sales in April 2007. He served as
Vice President, Sales from 2004 to 2007. Mr. Hastings was the Vice
President of International Marketing from 2002 to 2004 and the Director of
International Marketing from 1996 to 2002. Mr. Hastings started with the
Company in January 1993 as Director of Marketing. Mr. Hastings graduated
from the University of Illinois in 1987 with a Marketing degree and obtained his
Masters in Business from Butler University in Indianapolis in 1995.
Kurt C. Wulff, age 45, was
appointed Vice President, Marketing in 2005 and has been employed by the Company
in marketing positions since 1999. Previously, Mr. Wulff had over 10 years
of sales and marketing positions in a variety of industries. He graduated
in 1986 from the University of Missouri-Columbia with a B.S. Degree in
Journalism.
Brett M. Hastings, age 36,
was appointed Vice President, Legal in August 2007. He has been employed
by the Company since February 2005 and previously served as Associate General
Counsel. Prior to his employment by the Company, Mr. Hastings was employed
as a senior associate with the law firm of Doster Ullom, LLC from 2003 to 2005
and as an associate with Thompson Coburn, LLP from 1998 to 2005. Mr. Hastings
graduated from Ohio Northern University in 1995 with a B.S.B.A and received a
Juris Doctor degree from the University of Illinois School of Law in
1998.
Ronald W. McCain, age 44, was
named Vice President, Sales Development in August 2007. He has been
employed by the Company in various sales, marketing and customer service
capacities since 1996.
Joseph J. Wojcik, age 46, was
appointed as Vice President, International on September 1, 2008. Prior to
his employment with the Company, he was a principal and founder of Endurance
Business Solutions, a professional consulting firm advising companies on
strategic entry into foreign markets, and, for a period of 11 years, was
employed in various executive management positions at Herbalife
International.
Barry A. Murov, age 57, Vice
President, Corporate Communications. Mr. Murov has been employed by the
Company since June 2006. Previously, he was Senior Group Director of
Communications for Anheuser-Busch and Senior Vice President of
Fleishman-Hillard, Inc. He earned a B.S. in Journalism with Honors from
the University of Colorado, and an M.A. in Journalism from the University of
Missouri.
Debra P. Hellweg, age 38, was
appointed Vice President, Operations in June 2008. She has been employed
by the Company since 2004 and served as Director of Internal Audit from 2004 to
2008. Prior to her employment with the Company, Ms. Hellweg was a Manager
with Deloitte & Touche LLP and Vice President & Auditor of Southwest
Bank of St. Louis. Ms. Hellweg has a B.S.B.A. degree in Accounting from
the University of Missouri and an MBA from Webster University and is a
CIA.
CORPORATE
GOVERNANCE AND
THE
BOARD OF DIRECTORS
General
The
business and affairs of the Company are managed under the direction of the Board
of Directors in accordance with the General Corporation Law of the State of
Delaware and the Company’s Articles of Incorporation and Bylaws, as amended.
Members of the Board are kept informed of the Company’s business through
discussions with the Chairman and Chief Executive Officer and other officers, by
reviewing materials provided to them and by participating in meetings of the
Board of Directors and its committees.
During
2009, the Board of Directors had eight members. The Board met five times during
2009. During 2009, no director attended less than 75% of the combined
Board of Directors and Committee meetings. The Board has determined that
Messrs. Akin, Henry, Klimek, St. John and Smith are independent based on the
application of the rules and standards of the NASDAQ Stock Market.
Board Leadership
Structure
As is often common practice among
public companies of our size in the United States, our Board of Directors has
appointed the Company’s Chief Executive Officer to serve as Chairman of the
Board. In his position as Chief Executive Officer, Mr. Montgomery is
responsible for the direction and leadership of the Company and oversees the
development and execution of the Company’s strategic plans. In his role as
Chairman of the Board, he presides over the meetings of the Board of Directors
and communicates the decisions and directives of the Board to management. The
Board of Directors believes that the combination of these two roles provides the
most efficient and effective leadership model for the Company by enhancing the
Chairman and Chief Executive Officer’s ability to provide perspective and
direction with regard to business strategies and plans to both the Board and
management, allowing for unified leadership and focus.
Notwithstanding
the Board’s decision to appoint the Chief Executive Officer as Chairman of the
Board of Directors, the Company has no bylaw or policy in place that mandates
that the Chief Executive Officer serve as the Chairman of the Board. Our
Board of Directors recognizes that depending on the circumstances, other
leadership models, such as a separate independent Chairman of the Board, might
be appropriate. Accordingly, the Board of Directors periodically evaluates its
leadership structure.
The Board
of Directors has not appointed a lead independent director at this time.
The Board intends to evaluate whether appointing a lead independent director
facilitates the ability of the Company’s independent directors to carry out
their duties. The independent directors of the Board do attend regularly
scheduled executive sessions at which only independent directors are present and
at which the independent directors are free to discuss any aspect of the
Company’s business and risk management without the influence of interested
directors or management. In addition, all members of the Company’s Audit,
Nominating and Compensating committees have been determined by the Board of
Directors to be independent based on the application of the rules and standards
of the NASDAQ Stock Market.
Board Role in Risk
Oversight
The Board
of Directors plays an active role, as a whole and at the committee level, in
overseeing management of the Company’s risks. The Board regularly reviews
information regarding our credit, liquidity and operations, as well as the risks
associated with each. The Audit Committee oversees management of financial risks
through regular meetings with the Company’s independent registered public
accounting firm and the Company’s Chief Financial Officer and Manager of
Internal Audit. The Company’s Compensation Committee evaluates and addresses
risks relating to executive compensation, our incentive compensation plans and
other compensatory arrangements. The Nominating Committee manages risks
associated with the independence of the Board of Directors and potential
conflicts of interest. While each committee is responsible for evaluating
certain risks and overseeing the management of those risks, the entire Board of
Directors is regularly informed through committee reports and management
presentations to the full Board about these and other operational
risks.
Committees of the Board of
Directors
The Board
of Directors has standing Executive, Compensation, Nominating, Audit, Management
and Sales and Marketing and International Committees.
The
Executive Committee acts on various matters between meetings of the Board of
Directors. The Executive Committee consists of Messrs. Montgomery,
Merrick, Hastings and McCain. The Executive Committee met three times
during 2009.
The
Management/Sales and Marketing Committee reviews the Company’s operations and
policies on a regular basis. The Management Committee is composed of four
members of the Board of Directors, including Messrs. Montgomery, Hastings,
McCain and Merrick, as well as several other members of management. The
Management/Sales and Marketing Committee met ten times during 2009.
During
2008, the Company established an International Committee to review and advise
with respect to the international operations of the Company. The
International Committee consists of Messrs. Henry, Smith and Merrick and
includes several members of management. The International Committee met
five times in 2009.
Audit
Committee
Since
2000, the Company has had a standing Audit Committee, which is presently
composed of Messrs. St. John, Henry and Smith. Mr. St. John has been
designated and is the Company’s “Audit Committee Financial Expert” pursuant to
Item 401 of Regulation S-K of the Securities Exchange Act of 1934.
The Audit Committee held seven meetings during fiscal year 2009, including
quarterly meetings with management, the Company’s Vice President, Operations,
the Manager of Internal Audit and the independent registered public accounting
firm to discuss the Company’s financial statements and control systems.
Mr. St. John and each appointed member of the Committee satisfies the definition
of “independent” as that term is defined in the rules governing companies whose
stock is traded on the NASDAQ Stock Market. The Board of Directors has
adopted a written charter for the Audit Committee. A copy of the Audit Committee
Charter has been posted and can be viewed on the Company’s Internet website at
http://www.reliv.com under the section entitled “Investor Relations.” In
addition, the Audit Committee has adopted a complaint monitoring procedure to
enable confidential and anonymous reporting to the Audit Committee of concerns
regarding, among other things, questionable accounting or auditing
matters.
Report of the Audit
Committee
The Audit
Committee oversees the Company’s financial reporting process on behalf of the
Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed the audited financial statements in the Annual Report with
management and the Company’s independent registered public accounting firm,
Ernst & Young LLP, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, the clarity of disclosures in the financial statements and internal
controls.
The Audit
Committee reviewed with the independent registered public accounting firm, which
is responsible for expressing an opinion on the conformity of those audited
financial statements with U.S. generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company’s
application of accounting principles and such other matters as are required to
be discussed with the Audit Committee under generally accepted auditing
standards, including but not limited to those matters required to be discussed
by SAS 61 (Codification of Statements on Auditing Standards, AU §380, as
amended). In addition, the Audit Committee has discussed with the
independent registered public accounting firm their independence from management
and the Company including the matters in the written disclosures and the letter
from the independent registered public accounting firm required by applicable
requirements of the Public Company Accounting Oversight Board regarding its
communications with the Audit Committee concerning independence.
The Audit
Committee discussed with the Company’s independent registered public accounting
firm the overall scope and plans for their audit of the Company’s financial
statements and the effectiveness of internal controls over financial
reporting. The Audit Committee meets with the internal auditor and
independent registered public accounting firm, with and without management
present, to discuss the results of their examinations, their evaluations of the
Company’s internal controls and the overall quality of the Company’s financial
reporting.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2009 for filing with the Securities and Exchange
Commission. The Audit Committee and the Board of Directors have also
recommended, subject to stockholder approval, the selection of Ernst & Young
LLP as the Company’s independent registered public accounting firm.
Denis St.
John, Audit Committee Chair
Robert M.
Henry, Member
Michael
Smith, Member
Nominating
Committee
In May
2004, the Company established a Nominating Committee. The Nominating
Committee consists of two directors, Messrs. Akin and St. John. The
Nominating Committee does not have a charter. The Board of Directors has
determined that each of the members of the Nominating Committee is independent
as defined in the listing standards for the NASDAQ Stock Market.
The
Nominating Committee has not adopted a formal policy with regard to
consideration of director candidates recommended by security holders. The
Company believes that continuing service of qualified incumbent members of the
Board of Directors promotes stability and continuity at the Board level,
contributes to the Board’s ability to work as a collective body and provides the
benefit of familiarity and insight into the Company’s affairs.
Accordingly, the process of the Nominating Committee for identifying nominees
reflects the Company’s practice of re-nominating incumbent directors who
continue to satisfy the criteria for membership on the Board. For
vacancies which are anticipated on the Board of Directors, the Nominating
Committee intends to seek out and evaluate potential candidates from a variety
of sources that may include recommendations by security holders, members of
management and the Board of Directors, consultants and others. The minimum
qualifications for potential candidates for the Board of Directors include
demonstrated business experience, decision-making abilities, personal integrity
and a good reputation. While diversity is not a leading factor in the
Nominating Committee’s evaluation of potential candidates and there is no formal
policy for considering diversity when nominating a potential director, it is a
consideration that is evaluated along with other qualifications of potential
candidates. In light of the foregoing, it is believed that a formal policy
and procedure with regard to consideration of director candidates recommended by
security holders is not necessary in order for the Nominating Committee to
perform its duties.
The
Nominating Committee met once in 2009. All of the independent
directors of the Board of Directors participated in the nominating process and,
in separate session, voted in favor of recommending to the Board of Directors
the nomination of each of the nominees for election as directors. Mr.
Klimek’s nomination to the Board of Directors of the Company was recommended by
an executive officer other than the Chief Executive Officer.
Compensation
Committee
The
Compensation Committee consists of three directors: Messrs. St. John (Chairman),
Smith and Akin. The Board has determined that each of the members of
the Compensation Committee is independent as defined in the listing standards
for the NASDAQ Stock Market. The Compensation Committee reviews and
acts on the Company’s executive compensation and employee benefit and retirement
plans, including their establishment, modification and
administration. It also determines the compensation of the Chief
Executive Officer and certain other executive officers. The
Compensation Committee has a charter which has been posted and can be viewed on
the Company’s Internet website at http://www.reliv.com under the section
entitled “Investor Relations.” The Compensation Committee met seven
times in 2009.
EXECUTIVE
COMPENSATION
The Company is a “smaller reporting
company” under Item 10 of Regulation S-K promulgated under the Securities
Exchange Act of 1934 and has elected to comply with certain of the requirements
applicable to smaller reporting companies in connection with this proxy
statement.
SUMMARY COMPENSATION
TABLE
The
following table sets forth the annual and long-term compensation for the fiscal
years ended December 31, 2009 and 2008, respectively, of the Company’s Principal
Executive Officer and each of the two other most highly compensated executive
officers. These individuals, including the Chief Executive Officer,
are collectively referred to in this proxy statement as the Named Executive
Officers.
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Non-Equity
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All Other
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Option
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Incentive Plan
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Compensation
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Name and Principal Position
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Year
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Salary
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Awards (1)
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Compensation (2)
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(3, 4, 5, 6, 7, 8)
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Total
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Robert
L. Montgomery
|
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2009
|
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$ |
642,625 |
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$ |
42,842 |
|
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$ |
152,040 |
|
|
$ |
81,898 |
|
|
$ |
919,405 |
|
Chairman,
Chief Executive
|
|
2008
|
|
$ |
642,625 |
|
|
$ |
42,842 |
|
|
$ |
224,700 |
|
|
$ |
85,347 |
|
|
$ |
995,514 |
|
Officer
and President
|
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|
|
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|
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|
|
|
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|
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|
|
|
|
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|
|
|
|
|
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Carl
W. Hastings
|
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2009
|
|
$ |
360,000 |
|
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$ |
18,073 |
|
|
$ |
43,440 |
|
|
$ |
40,691 |
|
|
$ |
462,204 |
|
Vice
Chairman, Chief Scientific
|
|
2008
|
|
$ |
360,000 |
|
|
$ |
13,736 |
|
|
$ |
64,200 |
|
|
$ |
38,926 |
|
|
$ |
476,862 |
|
Officer
|
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R.
Scott Montgomery
|
|
2009
|
|
$ |
195,000 |
|
|
$ |
11,567 |
|
|
$ |
52,400 |
|
|
$ |
23,527 |
|
|
$ |
282,494 |
|
Executive
Vice President,
|
|
2008
|
|
$ |
195,000 |
|
|
$ |
11,567 |
|
|
$ |
107,000 |
|
|
$ |
16,237 |
|
|
$ |
329,804 |
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Chief
Operating Officer
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|
|
|
|
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|
|
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(footnotes
on following page)
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(1)
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Reflects
the compensation expense recognized in 2009 and 2008 for stock option
awards under FASB ASC Topic 718 as reported in the Company’s audited
financial statements. Refer to Note 7 to the Consolidated
Financial Statements included in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2009 for a discussion of the relevant
assumptions used in calculating the compensation
expense.
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(2)
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Amounts
determined solely under the Company’s Incentive Compensation
Plan.
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(3)
|
Amounts
for 2009 include matching 401(k) contributions as
follows: Robert L. Montgomery, $5,500; Carl W. Hastings,
$5,500; and R. Scott Montgomery,
$4,125.
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(4)
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Amounts
for 2009 include Company contributions to the Employee Stock Ownership
Plan of $13,002 for each Named Executive
Officer.
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(5)
|
Amounts
for 2009 include life insurance allowance paid for Robert L. Montgomery of
$30,000; Carl W. Hastings of $12,589; and R. Scott Montgomery of
$2,000.
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(6)
|
Amounts
for 2009 include value of automobile provided for Robert L. Montgomery of
$15,760 and automobile allowance provided to Carl W. Hastings of
$9,600.
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(7)
|
Amounts
for 2009 include a travel allowance paid to R. Scott Montgomery of
$4,400.
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(8)
|
All
Other Compensation amount for Robert L. Montgomery includes country club
dues of $9,652 and financial planning services of $7,984 paid in
2009.
|
Narrative Disclosure For
Summary Compensation Table
Employment
Agreements with Our Named Executive Officers
In June 2007, the Company entered into
an Employment Agreement with Robert L. Montgomery replacing a prior
agreement. The agreement, as amended, is for a term of employment
commencing on January 1, 2007 and expiring on December 31, 2009 with a provision
for automatic one-year renewal terms, and provides for Mr. Montgomery to receive
base annual compensation during the term of not less than
$600,000. Mr. Montgomery is also to participate in the Company’s
annual incentive compensation and the Company’s long-term equity incentive
compensation plans and such other compensation plans as the Company may from
time to time have for executives. In the event of Mr. Montgomery’s
death during the term of the agreement, payments equal to the total compensation
that would have been paid to Mr. Montgomery under the agreement, but for his
death, will be made to his heirs for a period of six months. The
agreement also allows Mr. Montgomery the option to reduce his level of service
to the Company by approximately one-half with a corresponding decrease in base
annual compensation and a reduction of 25% of his incentive
compensation. Mr. Montgomery also has the option to terminate his
active service and continue in a consulting capacity. The term of the
consulting period will be 15 years and Mr. Montgomery will receive approximately
30% of his prior average annual cash compensation over the five years
immediately preceding the earlier of (1) his election to terminate his
employment and continue to serve the Company as a consultant or (2) his election
to continue his employment at a reduced rate of service and
compensation. The agreement includes the obligation of Mr. Montgomery
to maintain the confidentiality of the Company’s confidential information and
contains a covenant of Mr. Montgomery not to compete with the
Company. In addition, for a period of at least 20 years following the
termination of the agreement, the Company has the right to continue its use of
Mr. Montgomery’s name and likeness in consideration of a $10,000 annual fee paid
to Mr. Montgomery or his heirs.
In July 2007, the Company entered into
an Employment Agreement with Dr. Hastings replacing a prior
agreement. The term of employment under the agreement, as amended, is
for a period commencing on July 1, 2006 and expiring on June 30, 2012, provided
that, for the period from July 1, 2010 through June 30, 2012, Dr. Hastings shall
be obligated to devote approximately one-half of his productive time
(approximately 85 hours per month) to his duties for the
Company. During the period from July 1, 2006 to June 30, 2010, the
Company is obligated to pay Dr. Hastings a basic salary at the rate of $30,000
per month and, for the period from July 1, 2010 to June 30, 2012, at the rate of
$22,500 per month. Dr. Hastings is also to participate in the
Company’s annual incentive compensation and the Company’s long-term equity
incentive compensation plans and such other compensation plans as the Company
may from time to time have for executives. Upon expiration of the
term of employment, Dr. Hastings will be retained to provide consulting services
to the Company for a term expiring on June 30, 2021. During the
consulting term, the Company will pay Dr. Hastings the sum of $12,000 per month,
such amount to be adjusted periodically based upon changes in the National
Consumer Price Index. In the event of Dr. Hastings’ death during the
term of the agreement, payments equal to the total compensation that would have
been paid to Dr. Hastings under the agreement, but for his death, will be made
to his heirs for a period of six months. During the term of the
agreement, and thereafter for a period of 20 years in consideration of the
payment of $10,000 annually, the Company will be entitled to use the name and
likeness of Dr. Hastings in connection with the Company’s promotional materials
and activities. The agreement also includes the obligation of Dr.
Hastings to maintain the confidentiality of the Company’s confidential
information and to hold any and all inventions made or conceived by him during
the term of the agreement as the Company’s fiduciary and a covenant of Dr.
Hastings not to compete with the Company.
In January 2008, the Company entered
into an Employment Agreement with R. Scott Montgomery under which Mr. Montgomery
was employed as an executive of the Company. The agreement is for a
term of one year with a provision for automatic one-year renewal terms, and
provides for base annual compensation of $195,000. Mr. Montgomery is
also to participate in the Company’s annual incentive compensation plan and such
other compensation plans as the Company may from time to time have for
executives. The agreement provides that, in the event of termination
(other than termination for default or permanent mental or physical disability),
Mr. Montgomery will receive a severance payment equal to $97,500, payable over a
12-month period. The agreement includes the obligations of Mr.
Montgomery to maintain the confidentiality of the Company’s confidential
information and hold certain inventions for the Company in his fiduciary
capacity, and contain a covenant not to solicit the Company’s distributors for a
period of two years after the date of termination of the agreement.
Base
Salaries
For 2009,
there was no adjustment to the base salary of any of the Named Executive
Officers.
Information
Relating to Cash Incentives and Stock and Option Awards
Effective
January 1, 2007, the Board of Directors, on the recommendation of the
Compensation Committee, adopted an Incentive Compensation Plan providing for
annual incentive compensation to be paid to executive and managerial employees
of the Company. Under the Plan, designated Named Executive Officers
and a number of other executive officers and managers receive incentive
compensation payments, determined on a quarterly and annual basis, which are
based upon the income from operations of the Company for the period if the
profits exceed a threshold amount of income from operations in the amount of
$500,000. The benefits under the Plan are divided into two Pools of
compensation. Pool I (representing the largest pool of incentive
compensation) covers senior executive officers who participate in the pool of
incentive compensation based upon a percentage allocation made by the
Compensation Committee each year. Pool II covers other executives and
managers who are selected to participate in proportions determined by
management. The Compensation Committee believes such incentive
compensation motivates participants to achieve strong profitability which is
viewed as the most significant element of corporate performance, provides
rewards for strong corporate performance and aligns the incentive with the
interests of the stockholders. Incentive compensation participation
levels are generally determined during the first quarter of each fiscal
year.
With respect to Pool I participants
(other than the Chief Executive Officer whose participation is determined solely
by the Compensation Committee and the Board of Directors), the Compensation
Committee in consultation with the Chief Executive Officer and the Chief
Operating Officer, determine the participants and their relative level of
participation during the first quarter of the year. In determining
participation and the level of participation each year, the Compensation
Committee considers the executive’s responsibilities and individual performance
during the prior year.
Long-Term
Equity Incentives
Prior to
May 2009, long-term incentive awards were granted to executives under the 2003
Stock Option Plan approved by the stockholders in May 2003. At the
Company’s Annual Meeting of Stockholders held in May 2009, the Company’s 2009
Incentive Stock Plan was approved by the stockholders. Upon approval
by the stockholders of the 2009 Incentive Stock Plan, the Board provided that no
further grants of option awards shall be made under the 2003 Stock Option
Plan. To date, there have been no grants of incentive awards under
the 2009 Incentive Stock Plan.
Stock
option grants are determined from time to time by the Compensation Committee in
consultation with management. The actual grant for each executive is
determined taking into consideration (i) individual performance, (ii) corporate
performance and (iii) prior grants to, or stock ownership of the Company by, the
executive. Generally, stock options are granted with an exercise
price equal to or greater than the closing price of the Company’s common stock
on the NASDAQ Global Select Market on the date of the grant.
In 2007,
the Company adopted a policy concerning the grant of stock options pursuant to
which, unless otherwise approved by the Board of Directors, the Compensation
Committee will only approve the grant of stock options during a period of time
that begins 3 business days after the earnings press release after the second
quarter of each fiscal year and ends at the 8th
business day after such second quarter earnings release.
During 2008, a grant of options to
purchase 16,500 shares of common stock at the price of $5.28 per share (the
closing price on the date of the grant) was made to Carl W. Hastings in
consideration of his performance in the development of new and unique products
for the Company. The option term is for a period of five
years. The options vest at the rate of 25% of the option shares on
each of August 28, 2010, August 28, 2011, August 28, 2012 and May 1, 2013 and
expire on August 28, 2013.
We view
participation by our executives in our Employee Stock Ownership Plan as a
component of long-term compensation. Shares purchased by the Plan, or
contributed to the Plan, are allocated among participants based upon relative
eligible compensation levels and subject to the vesting requirements of the
Plan.
Retirement
Benefits
The
Company maintains a 401(k) employee savings plan in which all salaried employees
are eligible to participate. The Company also maintains an Employee
Stock Ownership Plan, which was adopted by the Company on September 1,
2006. Both plans are tax qualified retirement plans.
Under the 401(k) Plan, employees may
contribute up to 15% of their eligible compensation to the Plan and the Company
will contribute a matching amount to the Plan each year. The
federal statutory limit for eligible compensation in 2009 was
$245,000. Participating employees may direct the investment of
individual and company contributions into one or more of the investment options
offered by the Plan, provided that, for new contributions, employees may not
invest more than 15% in common stock of the Company. During 2009, the
Company made matching contributions of 25% of the amount contributed by
employees to the Plan, subject to statutory limits and top-heavy plan
rules. The Company’s contributions to the 401(k) plan totaled
approximately $147,000 in 2009, which is allocated to participants subject to
the vesting requirements of the Plan.
Under the ESOP, all employees of the
Company are eligible to participate in the ESOP and interests in the ESOP are
allocated to participants based on relative eligible
compensation. All contributions to the ESOP are made by the Company
in the form of cash or stock and are discretionary. The maximum amount of
contribution which the Company can make is 25% of the annual eligible
compensation of employees after taking into account contributions to the 401(k)
Plan. During 2009, the Company contributed $465,000 to the
ESOP. Shares of stock purchased by, or contributed to the Plan, are
allocated to participants subject to the vesting requirements of the
Plan.
Other
Benefits
The Company provides certain general
employee benefits and health insurance plans of the type commonly offered by
other employers. These benefits form part of our compensation
philosophy because the Company believes they are necessary in order to attract,
motivate and retain talented executives.
Supplemental
Executive Retirement Plan
The Company sponsored a Supplemental
Executive Retirement Plan (SERP) that previously allowed certain executives to
defer a portion of their annual salary and bonus into a grantor
trust. A grantor trust was established to hold the assets of the
SERP. The Company funded the grantor trust by paying the amount
deferred by the participant into the trust at the time of
deferral. Investment earnings and losses accrue to the benefit or
detriment of the participants. The SERP also provided for a
discretionary matching contribution by the Company not to exceed 100% of the
participant’s annual contribution. The participants fully vested in
the deferred compensation three years from the date they entered the
SERP. The participants are not eligible to receive distributions
under the SERP until retirement, death, or disability of the
participant.
In 2006, the SERP was amended to
provide, among other things, that no new participants may be designated and no
new or additional salary deferrals may be made. Accordingly, none of
the named executive officers made a contribution to the SERP in 2009 and no
Company additions or matches were provided. Carl W. Hastings is the
only current executive officer of the Company who is a participant in the
SERP.
OUTSTANDING EQUITY AWARDS AT
DECEMBER 31, 2009
The following table sets forth all
outstanding equity awards to Named Executive Officers as of December 31,
2009. All awards are in the common stock of the Company.
|
|
Option Awards
|
|
|
|
Number of Securities Underlying
|
|
|
Option
|
|
Option
|
|
|
|
Unexercised Options (#)
|
|
|
Exercise
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
L. Montgomery
|
|
|
160,000 |
|
|
|
- |
|
|
$ |
7.92 |
|
1/5/2015
|
(1) |
|
|
|
12,500 |
|
|
|
37,500 |
|
|
|
9.74 |
|
8/7/2012
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carl
W. Hastings
|
|
|
20,000 |
|
|
|
- |
|
|
|
7.92 |
|
1/5/2015
|
(1) |
|
|
|
3,375 |
|
|
|
10,125 |
|
|
|
9.74 |
|
8/7/2012
|
(2) |
|
|
|
- |
|
|
|
16,500 |
|
|
|
5.28 |
|
8/28/2013
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.
Scott Montgomery
|
|
|
50,000 |
|
|
|
- |
|
|
|
7.92 |
|
1/5/2015
|
(1) |
|
|
|
3,375 |
|
|
|
10,125 |
|
|
|
9.74 |
|
8/7/2012
|
(2) |
|
(1)
|
Each
of the stock options granted to the named executive officers was
fully vested on the date of grant.
|
|
(2)
|
Each
of the stock options granted to the named executive
officers vests in one-quarter increments on each of August 7,
2009, August 7, 2010, August 7, 2011 and May 1,
2012.
|
|
(3)
|
Stock
option granted to the named executive officer vests in one-quarter
increments on each of August 28, 2010, August 28, 2011, August 28, 2012
and May 1, 2013.
|
The
Company did not issue any equity awards in 2009.
EQUITY COMPENSATION PLAN
INFORMATION
The following table sets forth the
common stock of the Company authorized for issuance under the Company’s equity
compensation plans as of December 31, 2009.
Plan Category
|
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
|
754,000 |
|
|
$ |
8.29 |
|
|
|
1,000,000 |
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
754,000 |
|
|
$ |
8.29 |
|
|
|
1,000,000 |
|
|
(1)
|
Includes
1,000,000 shares of common stock available for issuance under the
Company’s 2009 Incentive Stock
Plan.
|
Payments
upon Termination or Change of Control
The Company has no agreements with
Named Executives or other executives of the Company under which payments are to
be made in the event of change of control of the Company.
Under the Employment Agreement between
the Company and Robert L. Montgomery, Mr. Montgomery has the right, to reduce
his level of service to the Company by approximately one-half with a
corresponding decrease in position and base annual compensation and a 25%
decrease in incentive compensation. Mr. Montgomery also has the
option to terminate his active service and continue in a consulting
capacity. The term of the consulting period will be 15 years and Mr.
Montgomery will receive approximately 30% of his prior average annual
compensation over the previous five years or last five years of his full-time
employment as a consulting fee. In the event of Mr. Montgomery’s
death during the term of the agreement, payments equal to his total compensation
under the agreement will be made to his heirs for a period of six
months. In addition, for a period of 20 years following termination
of the agreement, the Company has the right to continue its use of Mr.
Montgomery’s name and likeness in consideration of a $10,000 annual fee payable
to Mr. Montgomery or his heirs.
Under the Employment Agreement between
the Company and Carl W. Hastings, upon expiration of the term of employment on
June 30, 2012, Dr. Hastings will be retained to provide consulting services to
the Company through June 30, 2021. During the consulting term, the
Company will pay Dr. Hastings the sum of $12,000 per month, such amount to be
adjusted periodically based upon changes in the National Consumer Price
Index. In the event of Dr. Hastings’ death during the term of the
agreement, payments equal to his total compensation under the agreement will be
made to his heirs for a period of six months. In addition, for a
period of 20 years following termination of the agreement, the Company has the
right to continue its use of Dr. Hastings’ name and likeness in consideration of
a $10,000 annual fee payable to Dr. Hastings or his heirs.
Under the Employment Agreement of R.
Scott Montgomery in the event of his termination for reasons other than an event
of default or permanent mental or physical disability, he will receive severance
of $97,500, payable in equal installments over a 12-month period. The
agreement includes the obligations of Mr. Montgomery to maintain the
confidentiality of the Company’s confidential information and hold certain
inventions for the Company in his fiduciary capacity, and contains a covenant
not to solicit the Company’s distributors for a period of two years after the
date of termination of the agreement.
DIRECTOR
COMPENSATION
Name
|
|
Fees Earned or
Paid in Cash ($)
|
|
|
Option Awards(1)
|
|
|
Non-Equity
Incentive Plan
Compensation ($)
|
|
|
All Other
Compensation ($)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
M. Merrick(2)
|
|
$ |
- |
|
|
$ |
9,425 |
|
|
$ |
36,200 |
|
|
$ |
235,500 |
|
|
$ |
281,125 |
|
Donald L.
McCain
|
|
|
72,000 |
|
|
|
6,855 |
|
|
|
- |
|
|
|
- |
|
|
|
78,855 |
|
Denis
St. John
|
|
|
63,000 |
|
|
|
6,855 |
|
|
|
- |
|
|
|
- |
|
|
|
69,855 |
|
Robert
M. Henry
|
|
|
66,500 |
|
|
|
4,284 |
|
|
|
- |
|
|
|
- |
|
|
|
70,784 |
|
John
B. Akin
|
|
|
55,500 |
|
|
|
4,284 |
|
|
|
- |
|
|
|
- |
|
|
|
59,784 |
|
Michael
Smith
|
|
|
69,000 |
|
|
|
4,284 |
|
|
|
- |
|
|
|
- |
|
|
|
73,284 |
|
Patrick
G. Doherty(3)
|
|
|
21,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21,500 |
|
|
(1)
|
Represents
the full grant date fair value of each equity-based award, computed in
accordance with FASB ASC Topic 718. At December 31, 2009, the
aggregate number of unexercised options held by each director was as
follows:
|
Name
|
|
Options
|
|
Stephen
M. Merrick
|
|
|
61,000 |
|
Donald L.
McCain
|
|
|
58,000 |
|
Denis
St. John
|
|
|
18,000 |
|
Robert
M. Henry
|
|
|
15,000 |
|
John
B. Akin
|
|
|
15,000 |
|
Michael
Smith
|
|
|
5,000 |
|
Patrick
G. Doherty
|
|
|
- |
|
|
(2)
|
Mr.
Merrick serves as Senior Vice President, General Counsel and Secretary to
the Company and received compensation totaling $281,125, including $36,200
under the Company’s Incentive Compensation
Plan.
|
|
(3)
|
Mr.
Doherty resigned as a Director effective May 27,
2009.
|
Narrative Description of
Director Compensation
Members of the Board of Directors who
are not employees receive a monthly fee of $2,500 and $1,500 per attendance at
meetings of the Board of Directors or any committees of the Board of
Directors. See footnote 2 to the Director Compensation Table for an
explanation of Mr. Merrick’s compensation.
Certain Relationships and
Related Transactions
The Chief Executive Officer, President
and Chairman of the Board, Robert L. Montgomery, is the father of R. Scott
Montgomery and Ryan A. Montgomery. Ryan A. Montgomery is the
Executive Vice-President, Worldwide Sales and as a result of serving in such
capacity, the Company paid him cash compensation of $235,160 in 2009 and
$266,300 in 2008. Ronald McCain is the son of Donald L. McCain, a
director, and Ronald McCain is the son-in-law of the Chief Executive Officer,
President and Chairman of the Board, Robert L. Montgomery. Ronald
McCain is Vice President – Sales Development and as a result of serving in such
capacity, the Company paid him cash compensation of $173,010 in 2009 and
$191,175 in 2008.
Vice Chairman, Chief Scientific Officer
and director, Dr. Carl W. Hastings, is the father of Steven G. Hastings and
Brett M. Hastings. Steven G. Hastings is Senior Vice President, North
American Sales and as a result of serving in such capacity, the Company paid him
cash compensation of $225,160 for 2009 and $256,300 for 2008. Brett
M. Hastings is Vice President-Legal and as a result of serving in such capacity,
the Company paid him cash compensation of $189,910 for 2009 and $199,425 for
2008.
During 2009, the Company purchased an
aggregate of 2,068,973 shares of its common stock from The Paul & Jane Meyer
Family Foundation, which at the time was a holder of in excess of 5% of the
outstanding shares of the Company, at an average price of $2.95 per share for
the aggregate purchase price of $6,106,919. During 2008, the Company purchased
an aggregate of 1,186,500 shares of its common stock from The Paul & Jane
Meyer Family Foundation at an average price of $5.83 per share for the aggregate
purchase price of $6,922,875.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Securities
Exchange Act of 1934 requires the Company’s officers and directors, and persons
who own more than ten percent of a registered class of the Company’s equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and with the NASDAQ Stock
Market. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of the copies
of such forms furnished to the Company, or written representations that no Form
5’s were required, the Company believes that during calendar year 2009, all of
the officers, directors and ten percent beneficial owners of the Company
complied with all applicable Section 16(a) filing requirements, except that on
seven occasions the Paul & Jane Meyer Family Foundation filed a nominally
late Form 4 for seven transactions and on one occasion Mr. Merrick filed a
nominally late Form 4 reflecting two transactions.
Code of
Ethics
The Company has adopted a code of
ethics that applies to senior executive and financial officers. The
Company’s Code of Ethics seeks to promote (1) honest and ethical conduct,
including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships, (2) full, fair, accurate,
timely and understandable disclosure of information to the Commission, (3)
compliance with applicable governmental laws, rules and regulations, (4) prompt
internal reporting of violations of the Code of Ethics to predesignated persons,
and (5) accountability for adherence to the Code of Ethics. A copy of
the Company’s Code of Ethics has been posted to and can be viewed on the
Company’s Internet website at http://www.reliv.com under the section entitled
“Investor Relations.”
PROPOSAL
TWO - SELECTION OF
AUDITORS
Ratification of Appointment
of Independent Registered Public Accounting Firm
The Board of Directors has selected and
approved Ernst & Young LLP as the independent registered public accounting
firm to audit the Company’s financial statements for 2010, subject to
ratification by the stockholders. It is expected that a
representative of the firm of Ernst & Young LLP will be present at the
Annual Meeting and will have an opportunity to make a statement if he or she so
desires and will be available to respond to appropriate
questions.
Fees Billed By Independent
Registered Public Accounting Firm
The following table sets forth the
amount of fees billed by Ernst & Young LLP for services rendered for the
years ended December 31, 2009 and 2008:
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Audit
Fees (1)
|
|
$ |
484,300 |
|
|
$ |
514,300 |
|
Audit-Related
Fees (2)
|
|
|
36,800 |
|
|
|
35,000 |
|
Tax
Fees (3)
|
|
|
172,200 |
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
Total
Fees
|
|
$ |
693,300 |
|
|
$ |
699,300 |
|
|
(1)
|
Includes
the annual consolidated financial statement audit, limited quarterly
reviews, reviews of registration statements and comfort letters, statutory
audits required internationally and the audit of internal
controls.
|
|
(2)
|
Represents
fees paid for the annual audit of the Company’s 401(k) Plan and Employee
Stock Ownership Plan.
|
|
(3)
|
Primarily
represents the preparation of tax returns and other tax compliance and
consulting services.
|
All audit, tax, and other services to
be performed by Ernst & Young LLP for the Company must be pre-approved by
the Audit Committee. The Audit Committee reviews the description of the services
and an estimate of the anticipated costs of performing those services. Services
not previously approved cannot commence until such approval has been granted.
Pre-approval is granted usually at regularly scheduled meetings. If
unanticipated items arise between meetings of the Audit Committee, the Audit
Committee has delegated approval authority to the chairman of the Audit
Committee, in which case the chairman communicates such pre-approvals to the
full committee at its next meeting. During 2009, all services
performed by Ernst & Young LLP were pre-approved by the Audit Committee in
accordance with this policy.
The Audit Committee reviews all
relationships with Ernst & Young LLP, including the provision of non-audit
services, which may relate to the independent registered public accounting
firm’s independence. The Audit Committee considered the effect of Ernst &
Young LLP’s non-audit services in assessing the independence of the independent
registered public accounting firm and concluded that the provision of such
services by Ernst & Young LLP was compatible with the maintenance of that
firm’s independence in the conduct of its auditing functions.
THE BOARD
OF DIRECTORS RECOMMENDS STOCKHOLDERS VOTE “FOR” SUCH RATIFICATION.
Stockholder Proposals for
2011 Proxy Statement
Proposals by stockholders for inclusion
in the Company’s Proxy Statement and form of Proxy relating to the 2011 Annual
Meeting of Stockholders, which is scheduled to be held on May 25, 2011, should
be addressed to the Secretary, Reliv’ International, Inc., P.O. Box 405,
Chesterfield, Missouri 63006, and must be received at such address no later than
December 31, 2010. Upon receipt of any such proposal, the Company
will determine whether or not to include such proposal in the Proxy Statement
and Proxy in accordance with applicable law. It is suggested that
such proposal be forwarded by certified mail, return receipt
requested.
Proxy
Statement and Annual Report Delivery
The SEC
has adopted rules that permit companies and intermediaries such as brokers to
satisfy delivery requirements for annual reports and proxy statements with
respect to two or more stockholders sharing the same address by delivering a
single annual report and/or proxy statement addressed to those stockholders.
This process, which is commonly referred to as “householding,” potentially
provides extra convenience for stockholders and cost savings for companies. The
Company and some brokers household annual reports and proxy materials,
delivering a single annual report and/or proxy statement to multiple
stockholders sharing an address unless contrary instructions have been received
from the affected stockholders.
Once you
have received notice from your broker or the Company that your broker or the
Company will be householding materials to your address, householding will
continue until you are notified otherwise or until you revoke your consent. If,
at any time, you no longer wish to participate in householding and would prefer
to receive a separate annual report and/or proxy statement in the future, please
notify your broker if your shares are held in a brokerage account or the Company
if you hold registered shares. If, at any time, you and another
stockholder sharing the same address wish to participate in householding and
prefer to receive a single copy of the Company’s annual report and/or proxy
statement, please notify your broker if your shares are held in a brokerage
account or the Company if you hold registered shares.
You may
request to receive at any time a separate copy of our annual report or proxy
statement, or notify the Company that you do or do not wish to participate in
householding by sending a written request to the Corporate Secretary at P.O. Box
405, Chesterfield, Missouri 63006 or by telephoning
(636) 537-9715.
Stockholder Communications
with the Board of Directors
Stockholders of the Company may
communicate with the Board of Directors in writing addressed to:
|
Board
of Directors
|
|
c/o
Corporate Secretary
|
|
Reliv’
International, Inc.
|
|
P.O.
Box 405
|
|
Chesterfield,
Missouri 63006
|
The Secretary will review each
communication from a stockholder. The Secretary will forward to the
members of the Board of Directors each communication that (1) concerns the
Company’s business or governance, (2) is not offensive and is legible in form
and reasonably understandable in content, and (3) does not relate to a personal
grievance against the Company or a Board member or further a personal interest
not shared by the other stockholders generally.
The Company strongly encourages each of
its directors to attend each Annual Meeting of the Company’s stockholders where
attendance does not unreasonably conflict with the director’s other business and
personal commitments. All of the members of the Board of Directors
attended the 2009 Annual Meeting of Stockholders.
|
BY
ORDER OF THE
|
|
BOARD
OF DIRECTORS
|
Dated: April
9, 2010
|
|
|
|
|
/s/
Stephen M. Merrick
|
|
|
Stephen
M. Merrick,
Secretary
|