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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or 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:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
---------------------------------------------------------------
CEL-SCI CORPORATION
8229 Boone Blvd.
Suite 802
Vienna, Virginia 22l82
(703) 506-9460
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD April 15, 2011
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, on April 15,
2011, 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 2011 Incentive 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 Incentive Stock Option Plan;
(3) to approve the adoption of CEL-SCI's 2011 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;
(4) to approve the adoption of CEL-SCI's 2011 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;
(5) to approve an amendment to CEL-SCI's Stock Compensation Plan to provide
for the issuance of up to 2,000,000 additional restricted shares of common stock
to CEL-SCI's directors, officers, employees and consultants for services
provided to the Company;
(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, 2011;
(7) to approve on an advisory basis, compensation of CEL-SCI's executive
officers;
(8) to approve on an advisory basis, the frequency of advisory votes on the
compensation of CEL-SCI's executive officers and
to transact such other business as may properly come before the meeting.
February 22, 2011 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 February 22, 2011, there were 207,087,157
outstanding shares of CEL-SCI's common stock.
CEL-SCI CORPORATION
February 25, 2011 Geert R. Kersten, Chief Executive Officer
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
2
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 April 15, 2011, 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 mailed to shareholders of record
on or about March 4, 2011.
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 adoption of the other
proposals to come before the meeting will require the approval of a majority of
votes cast at the meeting.
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 February 22, 2011, the shareholdings of
(i) each person owning beneficially 5% or more of CEL-SCI's common stock (ii)
each officer who received compensation in excess of $100,000 during CEL-SCI's
most recent fiscal year and (iii) all officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
shares of common stock.
3
Name and Address Number of Shares (1) Percent of Class (3)
---------------- ---------------- ----------------
Maximilian de Clara 6,508,356 3.1%
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland
Geert R. Kersten 9,427,002(2) 4.4%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Patricia B. Prichep 3,029,217 1.4%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Eyal Talor, Ph.D. 1,823,381 0.9%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Daniel H. Zimmerman, Ph.D. 1,535,093 0.7%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
John Cipriano 480,027 0.2%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Alexander G. Esterhazy 841,489 0.4%
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland
C. Richard Kinsolving, Ph.D. 1,017,247 0.5%
P.O. Box 20193
Bradenton, FL 34204-0193
Peter R. Young, Ph.D. 842,757 0.4%
5458 Beacon Hill Drive
Frisco, TX 75034
All Officers and Directors 25,504,569 11.3%
as a Group (9 persons)
(1) Includes shares issuable prior to June 30, 2011 upon the exercise of
options or warrants granted to the following persons:
4
Options or Warrants Exercisable
Name Prior to February 28, 2011
---- -------------------------------
Maximilian de Clara 6,157,122
Geert R. Kersten 6,046,609
Patricia B. Prichep 2,198,596
Eyal Talor, Ph.D. 1,372,152
Daniel Zimmerman 1,197,000
John Cipriano 293,334
Alexander G. Esterhazy 608,332
C. Richard Kinsolving, Ph.D. 715,000
Peter R. Young, Ph.D. 594,999
(2) Amount includes shares held in trust for the benefit of Mr. Kersten's minor
children. Geert R. Kersten is the stepson of Maximilian de Clara.
(3) Amount includes shares referred to in (1) above but excludes shares which
may be issued upon the exercise or conversion of other options, warrants
and other convertible securities previously issued by CEL-SCI.
ELECTION OF DIRECTORS
Unless the proxy contains contrary instructions, it is intended that the
proxies will be voted for the election of the current directors listed below to
serve as members of the Board of Directors until the next annual meeting of
shareholders and until their successors shall be elected and shall qualify.
All current directors have consented to stand for re-election. 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 of CEL-SCI's directors have served as directors for a significant
period of time. Consequently, their long-standing experience with CEL-SCI
qualifies them to be directors.
Information concerning CEL-SCI's officers and directors follows:
Name Age Position
---- --- --------
Maximilian de Clara 81 President and Chairman of the Board of Directors
Geert R. Kersten, Esq. 52 Chief Executive Officer, Treasurer and a
Director
Patricia B. Prichep 60 Senior Vice President of Operations and
Secretary
Dr. Eyal Talor 55 Chief Scientific Officer
Dr. Daniel H. Zimmerman 70 Senior Vice President of Research, Cellular
Immunology
John Cipriano 69 Senior Vice President of Regulatory Affairs
5
Name Age Position
---- --- --------
Alexander G. Esterhazy 69 Director
Dr. C. Richard Kinsolving 75 Director
Dr. Peter R. Young 66 Director
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.
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.
The principal occupations of CEL-SCI's officers and directors, during the
past several years, are as follows:
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.
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 almost 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 the company's Multikine product will 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 completed his
Undergraduate Degree in Accounting, received an M.B.A. from George Washington
University, and a law degree (J.D.) from American University in Washington, DC.
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 the Company, 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
6
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
Source Capital, Ltd. She handled all operations and compliance for the company
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. Prior to this promotion he was
the Senior Vice president of Research and Manufacturing since March of 1994. 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 holds 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 has 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., has been 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 holds 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
7
Zimmerman received a Ph.D. in Biochemistry in 1969, a Masters in Zoology in 1966
from the University of Florida and a B.S. in Biology from Emory and Henry
College in 1963.
John Cipriano, has been 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 in 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.
C. Richard Kinsolving, Ph.D. has been a Director of CEL-SCI since April
2001. Since February 1999, Dr. Kinsolving has been the Chief Executive Officer
of BioPharmacon, a pharmaceutical development company. Between December 1992 and
February 1999, Dr. Kinsolving was the President of Immuno-Rx, Inc., a company
engaged in immuno-pharmaceutical development. Between December 1991 and
September 1995, Dr. Kinsolving was President of Bestechnology, Inc. a nonmedical
research and development company producing bacterial preparations for industrial
use. Dr. Kinsolving received his Ph.D. in Pharmacology from Emory University
(1970), his Masters degree in Physiology/Chemistry from Vanderbilt University
(1962), and his Bachelor's degree in Chemistry from Tennessee Tech. University
(1957).
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).
8
All of CEL-SCI's officers devote substantially all of their time to
CEL-SCI's business.
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
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, Dr. C. Richard Kinsolving and Dr. Peter R. Young
are independent directors as that term is defined in section 803 of the listing
standards of the NYSE Amex.
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, 5458
Beacon Hill Drive, Frisco, Texas 75034.
CEL-SCI's Board of Directors met two times during the fiscal year ended
September 30, 2010. All of the Directors attended both of these meetings, either
in person or by telephone conference call, with the exception of Maximilian de
Clara. In addition, the Board of Directors had a number of informal telephonic
meetings during the course of the year.
For purposes of electing directors at its annual meeting CEL-SCI does not
have a nominating committee or a committee performing similar functions.
CEL-SCI's Board of Directors does not believe a nominating committee is
necessary since CEL-SCI's Board of Directors is small and the Board of Directors
as a whole performs this function. The nominees to the Board of Directors are
selected by a majority vote of CEL-SCI's independent directors.
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 of a director at the annual shareholders'
meeting. However, CEL-SCI's Board of Directors 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
CEL-SCI's Chief Executive Officer, at the address shown on the cover page of
this proxy statement. The Board has not established any specific qualifications
or skills a nominee must meet to serve as a director. Although the Board does
not have any process for identifying and evaluating director nominees, the Board
does not believe there would be any differences in the manner in which the Board
evaluates nominees submitted by shareholders as opposed to nominees submitted by
any other person.
9
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 16, 2010.
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 not sent to the Board of Directors as a
whole or to specified Board members 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 officers other than 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.
10
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 become underwater the next year, the
Committee does not take that into consideration in determining the amount of the
options or 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 our 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 (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
11
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.
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., Amorfix Life Sciences Ltd., Antigenics, Inc., ARCA
biopharma (ARCA Discovery), ARYx Therapeutics, Inc., Avanir Pharmaceuticals,
Bellus Health, Inc., Cadence Pharmaceuticals, Inc. ,Capstone Therapeutics,
Chelsea Therapeutics, Inc., Cortex Pharmaceuticals, Inc., EpiCept Corp., EXACT
Sciences Corp., Helix BioPharma, IGI Laboratories Inc., Inhibitex, Inc.,
Isotechnika Pharma Inc., Medicis Technologies Corp., NeurogesX, Inc., Novavax,
Inc., Orbus Pharma Inc., Orexigen Therapeutics Inc., OXiGENE, Inc.,
Pharmacyclics, Inc., Quest PharmaTech Inc., Reata Pharmaceuticals, Inc.,
Resverlogix Corp., SCOLR Pharma, Inc., StemCells, Inc. and Threshold
Pharmaceuticals, Inc. CEL-SCI has not used third party consultants to provide it
with recommendations or reports.
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.
A further consideration in establishing compensation for the senior
employees is their long term history with CEL-SCI. Taken into consideration are
factors that have helped CEL-SCI survive in times when it was financially
extremely weak, such as: willingness to accept salary cuts, willingness not to
be paid at all for extended time periods, and in general an attitude that helped
CEL-SCI survive during financially difficult times. For example, Geert
Kersten, Maximilian de Clara and Patricia Prichep were without any salary
between September 2008 and June 2009. Other senior members took substantial
salary cuts, all geared towards helping CEL-SCI survive. In all of these cases
the officers continued to work without any guarantee of payment.
Long-Term Incentives
Stock grants and option grants help to align the interests of CEL-SCI's
employees with those of its shareholders. Options and stock grants are made
under CEL-SCI's Stock Option, Stock Bonus and Stock Compensation Plans. 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.
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.
12
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 is not as efficient as
it should be. However, CEL-SCI's Compensation Committee has not been able to
substitute a better measurement and therefore continues to believe that stock
grants and option grants best align the needs of the corporation and the
employee with those of the shareholders.
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.
The following table sets forth in summary form the compensation received by
(i) the Chief Executive 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, 2010.
All
Other
Restric- Annual
ted Stock Option Compen-
Name and Princi- Fiscal Salary Bonus Awards Awards sation
pal Position Year (1) (2) (3) (4) (5) Total
---------------- ----- ------ ------- ------- --------- -------- -----
Maximilian de Clara, 2010 363,000 -- 124,000 107,424 102,219 696,643
President 2009 334,720 -- 267,000 380,121 83,274 1,065,114
2008 363,000 -- 543,174 103,320 89,268 1,098,762
Geert R. Kersten, 2010 454,009 220,995 124,000 128,909 983,222
Chief Executive 2009 408,691 -- 81,700 526,366 34,892 1,051,649
Officer and 2008 404,900 -- 156,674 103,320 39,901 704,795
Treasurer
Patricia B. Prichep 2010 199,898 -- 62,000 64,455 6,027 332,380
Senior Vice President2009 174,913 -- 41,603 235,467 4,225 456,208
of Operations and 2008 185,780 -- 82,558 51,660 4,225 324,223
Secretary
Eyal Talor, Ph.D. 2010 239,868 -- 62,000 64,455 6,027 372,350
Chief Scientific 2009 212,265 -- 36,627 137,878 4,225 390,994
Officer 2008 229,353 -- 81,187 51,660 4,225 366,425
13
Daniel Zimmerman,
Ph.D. 2010 165,800 -- 31,000 64,455 5,027 266,282
Senior Vice
President of 2009 47,124 -- 16,892 -- 875 64,890
Research, Cellular 2008 175,988 -- 46,186 38,745 4,225 265,144
Immunology (6)
John Cipriano 2010 175,952 -- 31,000 240,711 27 447,690
Senior Vice
President 2009 48,594 -- 15,840 -- 25 64,458
of Regulatory
Affairs (7) 2008 171,028 -- 45,893 38,745 25 255,691
(1) The dollar value of base salary (cash and non-cash) earned. During three
years ended September 30, 2010, $0.00, $0.00 and $18,730, respectively, of
the total salaries paid to the persons shown in the table were paid in
restricted shares of CEL-SCI's common stock.
Information concerning the issuance of these restricted shares is shown in
the following table:
Date Shares Number of Price
Issued Shares Issued Per Share
---------------------------------------------------
01/15/2008 36,020 $0.52
On January 15, 2008 the amount of compensation satisfied through the
issuance of shares was determined by multiplying the number of shares issued by
the price per share. The price per share was equal to the closing price of
CEL-SCI's common stock on the date prior to the date the shares were issued.
(2) The dollar value of bonus (cash and non-cash) earned.
(3) During the periods covered by the table, the value of the shares of
restricted stock issued as compensation for services to the persons listed
in the table. In the case of Mr. de Clara, during three years ended
September 30, 2010, $0.00, $200,000 and $400,000, respectively, were paid in
restricted shares of CEL-SCI's common stock which cannot be sold in the
public market for a period of three years after the date of issuance. In the
case of all other persons listed in the table, the shares were issued as
CEL-SCI's contribution on behalf of the named officer to CEL-SCI's 401(k)
retirement plan and restricted shares issued at the market price from the
Stock Compensation Plan. The value of all stock awarded during the periods
covered by the table are calculated according to ASC 718-10-30-3 which
represents the grant date fair value.
(4) The greatest part of the value in FY 2009 was derived from 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. 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.
14
(5) All other compensation received that CEL-SCI could not properly report in
any other column of the table including annual contributions or other
allocations to vested and unvested defined contribution plans, and 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 the full dollar value of the remainder of the premiums paid by,
or on behalf of, CEL-SCI. Includes board of directors fees for Mr. de Clara
and Mr. Kersten.
(6) Dr. Zimmerman was CEL-SCI's Senior Vice President of Research, Cellular
Immunology between January 1996 and December 2008 and since November 2009.
(7) Mr. Cipriano was CEL-SCI's Senior Vice President of Regulatory Affairs
between March 2004 and December 2008 and since October 2009.
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
2010 expenses for this plan were $123,500. 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, 2010
Stock Option
Name Paid in Cash Awards (1) Awards (2) Total
---- ------------ ---------- ---------- ---------
Maximilian de Clara $ 40,000 - $ 107,424 $ 147,424
Geert Kersten $ 40,000 - $ 128,909 $ 168,909
Alexander Esterhazy $ 41,000 - $ 64,455 $ 105,455
C. Richard Kinsolving $ 41,000 - $ 64,455 $ 105,455
Peter R. Young $ 41,000 - $ 64,455 $ 105,455
(1) The fair value of stock issued for services.
(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.
15
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.
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 salary ($544,500) and the unvested portion of any stock options would
vest immediately ($284,794). 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
Effective September 1, 2003, CEL-SCI entered into a three-year employment
agreement with Mr. Kersten. The employment agreement provides that during the
term of the employment agreement CEL-SCI will pay Mr. Kersten an annual salary
of $370,585 plus any increases approved by the Board of Directors during the
period of the employment agreement. In the event there is a change in the
control of CEL-SCI, the agreement allows Mr. Kersten to resign from his position
at CEL-SCI and receive a lump-sum payment from CEL-SCI equal to 24 months salary
($883,818) and the unvested portion of any stock options would vest immediately
($1,172,265). For purposes of the employment agreement a change in the control
of CEL-SCI 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. Effective September 1,
2006, Mr. Kersten's employment agreement was extended to September 1, 2011.
16
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 these reasons 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.
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. The
employment agreement with Ms. Prichep provides that during the term of the
agreement CEL-SCI will pay Ms. Prichep an annual salary of $194,298 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. The
employment agreement with Dr. Talor provides that during the term of the
agreement CEL-SCI will pay Dr. Talor an annual salary of $239,868 plus any
increases approved by the Board of Directors during the period of the employment
agreement.
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 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 salary ($291,447 and $359,802
respectively). In addition, the unvested portion of any stock options held by
the employee will vest immediately ($830,817 and $830,062 respectively). For
purposes of the employment agreements, a change in the control of CEL-SCI 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
17
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
CEL-SCI has a compensation committee comprised of Alexander Esterhazy, Dr.
C. Richard Kinsolving and Dr. Peter Young, all of who are outside directors.
During the year ended September 30, 2010, 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
Between December 2008 and June 2009, Maximilian de Clara, CEL-SCI's
President and a director, loaned CEL-SCI $1,104,057. The loan was initially
payable at the end of March 2009, but was extended to the end of June 2009. At
the time the loan was due, and in accordance with the loan agreement, CEL-SCI
issued Mr. de Clara a warrant which entitles Mr. de Clara to purchase 1,648,244
shares of CEL-SCI's common stock at a price of $0.40 per share. The warrant is
exercisable at any time prior to December 24, 2014. Although the loan was to be
repaid from the proceeds of CEL-SCI's recent financing, CEL-SCI's Directors
deemed it beneficial not to repay the loan and negotiated a second extension of
the loan with Mr. de Clara on terms similar to the June 2009 financing. Pursuant
to the terms of the second extension the note is now due on July 6, 2014, but,
at Mr. de Clara's option, the loan can 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 $0.40. As further
consideration for the second extension, Mr. de Clara received warrants which
allow Mr. de Clara to purchase 1,849,295 shares of CEL-SCI's common stock at a
price of $0.50 per share at any time prior to January 6, 2015. 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 does not have the right to prepay
the loan without Mr. de Clara's consent.
Stock Option, Bonus and Compensation Plans
CEL-SCI has Incentive Stock Option Plans, Non-Qualified Stock Option, Stock
Bonus and Stock Compensation Plans. All Stock Option, Bonus and Compensation
Plans have been approved by the stockholders. A summary description of these
Plans follows. In some cases these Plans are collectively referred to as the
"Plans".
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 Plan. Only CEL-SCI's employees may be granted options
pursuant to the Incentive Stock Option Plan.
18
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 Plan 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 the 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 the
offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by CEL-SCI's Board of Directors.
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 the
offer or sale of securities in a capital-raising transaction.
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.
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
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
19
Compensation Plan and any options granted pursuant to the Incentive Stock Option
Plan or the Non-Qualified Stock Option Plan will be forfeited if the "vesting"
schedule established by the Committee administering the Plan 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 Plan 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 they deem
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, 2010, to the persons named below.
Options Granted
---------------
Exercise
Grant Options Price Per Expiration
Name Date Granted Share Date
---- ------- ------- -------- -----------
Maximilian de Clara 7/21/10 250,000 $ 0.48 7/20/20
Geert Kersten 7/21/10 300,000 $ 0.48 7/20/20
Patricia B. Prichep 7/21/10 150,000 $ 0.48 7/20/20
Eyal Talor, Ph.D. 7/21/10 150,000 $ 0.48 7/20/20
Daniel Zimmerman, Ph.D. 7/21/10 150,000 $ 0.48 7/20/20
John Cipriano 7/21/10 150,000 $ 0.48 7/20/20
20
Options Exercised
-----------------
Shares
Date of Acquired On Value
Name Exercise Exercise Realized
---- -------- ----------- --------
Daniel Zimmerman 12/1/09 18,000 $18,900
The following lists the outstanding options held by the persons named
below:
Shares Underlying Unexercised
Options Which are: Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ----------- ------------- ------- -----------
Maximilian de Clara 23,333 2.87 07/31/13
95,000 (1) 1.94 08/31/13
70,000 1.05 09/25/12
56,666 1.05 05/01/13
50,000 1.05 05/01/13
50,000 1.05 04/12/12
60,000 1.05 04/19/13
60,000 1.38 03/22/14
75,000 0.54 03/14/12
50,000 0.61 09/02/14
50,000 0.48 09/21/15
100,000 0.58 09/12/16
200,000 0.63 09/13/17
133,334 0.62 03/04/18
1,436,250 (2) 0.25 04/23/19
83,334 0.38 07/20/19
------
2,592,917
66,666 0.62 03/04/18
500,000 (3) 0.38 07/06/19
166,666 0.38 07/20/19
250,000 0.48 07/20/20
-------
983,332
-------------------------------------------------------------------------------
Geert R. Kersten 50,000 1.05 11/01/13
14,000 1.05 10/31/13
50,000 1.05 07/31/13
224,000 (1) 1.05 06/10/13
50,000 1.05 09/25/12
21
Shares Underlying Unexercised
Options Which are: Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ----------- ------------- ------- -----------
Geert R. Kersten 150,000 1.05 05/01/13
(cont'd) 50,000 1.05 05/01/13
50,000 1.05 04/12/12
95,000 (1) 1.94 08/31/13
60,000 1.05 04/19/13
60,000 1.38 03/22/14
560,000 (1) 1.05 10/16/13
105,000 0.54 03/14/12
1,890,000 0.22 04/01/13
50,000 0.61 09/02/14
50,000 0.48 09/21/15
200,000 0.58 09/12/16
200,000 0.63 09/13/17
133,334 0.62 03/04/18
1,838,609 (2) 0.25 04/23/19
100,000 0.38 07/20/19
-------
5,979,943
66,666 0.62 03/04/18
4,000,000 (3) 0.38 07/06/19
200,000 0.38 07/20/19
300,000 0.48 07/20/20
-------
4,566,666
--------------------------------------------------------------------------------
Patricia B. Prichep 6,000 1.05 12/01/13
10,000 1.05 11/30/13
9,500 1.05 07/31/13
3,000 1.05 12/31/12
35,000 1.05 03/01/13
17,000 1.05 12/01/13
15,000 1.05 04/12/12
47,500 (1) 1.94 08/31/13
23,000 1.05 02/02/13
25,000 1.18 12/08/13
30,000 1.00 12/03/14
200,000 (1) 1.05 10/16/13
10,500 0.54 03/14/12
50,000 0.33 04/26/12
243,000 0.22 04/01/13
337,000 0.22 04/01/13
50,000 0.61 09/02/14
30,000 0.48 09/21/15
90,000 0.58 09/12/16
100,000 0.63 09/13/17
66,667 0.62 03/04/18
717,096 (2) 0.25 04/23/19
22
Shares Underlying Unexercised
Options Which are: Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ----------- ------------- ------- -----------
Patricia B. Prichep 50,000 0.38 07/20/19
------
(cont'd) 2,165,263
33,333 0.62 03/04/18
3,000,000 (3) 0.38 07/06/19
100,000 0.38 07/20/19
150,000 0.48 07/20/20
-------
3,283,333
-------------------------------------------------------------------------------
Eyal Talor, Ph.D. 15,500 1.05 07/31/13
16,666 1.05 03/16/13
15,000 1.05 08/03/13
10,000 (1) 1.94 08/31/13
20,000 1.05 08/02/12
25,000 1.76 11/10/13
35,000 1.00 12/03/14
160,000 (1) 1.05 10/16/13
50,000 0.33 04/26/12
374,166 0.22 04/01/13
50,000 0.61 09/02/14
30,000 0.48 09/21/15
80,000 0.58 09/12/16
100,000 0.63 09/13/17
66,667 0.62 03/04/18
240,820 (2) 0.25 04/23/19
50,000 0.38 07/20/19
------
1,338,819
33,333 0.62 03/04/18
3,000,000 (3) 0.38 07/06/19
100,000 0.38 07/20/19
150,000 0.48 07/20/20
-------
3,283,333
-------------------------------------------------------------------------------
Daniel Zimmerman, Ph.D.12,000 1.05 12/31/13
7,000 1.05 06/19/13
15,000 1.05 02/19/13
30,000 (1) 1.94 08/31/13
20,000 1.05 02/02/13
20,000 1.85 01/26/14
120,000 (1) 1.05 10/16/13
41,000 0.54 03/14/12
50,000 0.33 04/16/12
23
Shares Underlying Unexercised
Options Which are: Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ----------- ------------- ------- -----------
Daniel Zimmerman,
Ph.D. 392,000 0.22 04/01/13
(cont'd) 50,000 0.61 09/02/14
30,000 0.48 09/21/15
60,000 0.58 09/12/16
75,000 0.63 09/13/17
75,000 0.62 03/04/18
200,000 (4) 0.38 07/15/14
-----------
1,197,000
150,000 0.48 07/20/20
-------
150,000
-------------------------------------------------------------------------------
John Cipriano
20,000 0.61 09/02/14
30,000 0.48 09/21/15
60,000 0.58 09/12/16
75,000 0.63 09/13/17
75,000 0.62 03/04/18
33,334 1.93 09/30/19
------
293,334
66,666 1.93 09/30/19
150,000 0.48 07/20/20
-------
216,666
(1) Options purchased by Employee through the Salary Reduction Plan.
(2) 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.
(3) 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.
(4) Options awarded to employee during the period that he was a consultant to
CEL-SCI.
Summary. The following shows certain information as of February 22, 2011
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.
24
Total Shares
Shares Reserved for Shares Remaining
Reserved Outstanding Issued as Options/Shares
Name of Plan Under Plans Options Stock Bonus Under Plans
------------ ----------- ---------- ----------- ----------
Incentive Stock Option Plans 17,100,000 10,593,041 N/A 5,920,225
Non-Qualified Stock Option
Plans 33,760,000 21,705,940 N/A 8,451,642
Stock Bonus Plans 11,940,000 N/A 7,441,480 4,496,761
Stock Compensation Plan 9,500,000 N/A 5,386,531 4,113,469
Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans 1,495,103
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, 2010, CEL-SCI's most recent fiscal year
end. CEL-SCI's Incentive and Non-Qualified Stock Option Plans have been approved
by CEL-SCI's shareholders.
Number of Securities
Number Remaining Available
of Securities For Future Issuance
to be Issued Weighted-Average Under Equity
Upon Exercise Exercise Price of Compensation Plans,
of Outstanding of Outstanding Excluding Securities
Plan category Options (a) Options Reflected in Column (a)
----------------------------------------------------------------------------------------
Incentive Stock Option Plans 10,593,041 $ 0.40 5,920,225
Non-Qualified Stock Option
Plans 21,720,414 $ 0.50 8,468,436
Compensation Committee
During the year ending September 30, 2010 CEL-SCI had a Compensation
Committee which was comprised of Alexander Esterhazy, C. Richard Kinsolving and
Peter Young. During the year ended September 30, 2010 the Compensation Committee
did not formerly meet as a separate committee, but rather held its meetings in
conjunction with CEL-SCI's Board of Director's meetings.
During the year ended September 30, 2010, 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.
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
25
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
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 consists exclusively 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 is subject to vesting
restrictions. Decisions made regarding the timing and size of option grants take
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 varies and is subjective. Current option holdings are
not considered when granting options.
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 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. 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. During the
fiscal year ending September 30, 2010 the compensation paid to Mr. de Clara was
based on his employment contract.
In August 2003, CEL-SCI entered into a three-year employment agreement with
Geert R. Kersten. The employment agreement, which is essentially the same as Mr.
Kersten's prior employment agreement, provides that during the term of the
agreement CEL-SCI will pay Mr. Kersten an annual salary of $370,585. Effective
September 1, 2006 Mr. Kersten's employment agreement was extended to September
1, 2011. 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. During the fiscal year ending
September 30, 2010 the compensation paid to Mr. Kersten was based on his
employment contract.
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. The
employment agreement with Ms. Prichep provides that during the term of the
agreement CEL-SCI will pay Ms. Prichep an annual salary of $194,298 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. The
employment agreement with Dr. Talor provides that during the term of the
26
agreement CEL-SCI will pay Dr. Talor an annual salary of $239,868 plus any
increases approved by the Board of Directors during the period of the employment
agreement.
During the year ending September 30, 2010, 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' 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, 2010 CEL-SCI granted options for the
purchase of 1,250,000 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, 2010 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
C. Richard Kinsolving
Peter Young
Audit Committee
During the year ended September 30, 2010 CEL-SCI had an Audit Committee
comprised of Alexander Esterhazy, C. Richard Kinsolving and Peter Young. All
members of the Audit Committee are independent as independence is defined by
Section 803 of the NYSE Amex's Listing Standards. Dr. Peter Young serves as the
audit committee's financial expert. The purpose of the Audit Committee is to
review and approve 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, 2010, the Audit Committee met 5
times. All members of the Audit Committee attended two of these meetings.
Alexander Esterhazy did not attend 3 of the meetings.
27
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, 2010 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
Statement on Accounting Standards (SAS) No. 114 "The Auditor's
Communication With Those Charged With Governance".
(3) The Audit Committee has received the written disclosures and the
letter from CEL-SCI's independent registered public accounting firm
required by PCAOB (Public Company Accounting Oversight Board)
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, 2010 for filing with the
Securities and Exchange Commission.
(5) During the year ended September 30, 2010 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 maintaining its independence from CEL-SCI.
The foregoing report has been approved by the members of the Audit
Committee:
Alexander G. Esterhazy
C. Richard Kinsolving
Peter Young
CEL-SCI's Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached to this proxy statement.
PROPOSAL TO ADOPT 2011 INCENTIVE STOCK OPTION PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2011
Incentive Stock Option Plan. The purpose of the 2011 Incentive Stock Option Plan
is to furnish additional compensation and incentives to CEL-SCI's officers and
employees.
The 2011 Incentive Stock Option Plan, if adopted, will authorize 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 pursuant to this plan.
28
Any options under the 2011 Incentive Stock Option Plan must be granted
before January 31, 2021. If adopted, the 2011 Incentive Stock Option Plan will
function and be administered in the same manner as CEL-SCI's other Incentive
Stock Option Plans. The Board of Directors recommends that the shareholders of
CEL-SCI approve the adoption of the 2011 Incentive Stock Option Plan.
PROPOSAL TO ADOPT 2011 NON-QUALIFIED STOCK OPTION PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2011
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 2011 Non-Qualified Plan as may be determined by CEL-SCI's Board
of Directors, 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 2011 Non-Qualified Plan, if adopted, will authorize 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 under the 2011 Non-Qualified Plan.
The 2011 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 2011 Non-Qualified
Plan.
PROPOSAL TO ADOPT 2011 STOCK BONUS PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2011
Stock Bonus Plan. The purpose of the 2011 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 American Stock Exchange. 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 shareholder's interest with that of CEL-SCI's
employees.
The 2011 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 2011 Stock Bonus Plan.
29
The 2011 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 2011
Stock Bonus Plans.
PROPOSAL TO AMEND CEL-SCI'S STOCK COMPENSATION PLAN
During the two years ended September 30, 2010 CEL-SCI issued 1,324,385
shares of its common stock to its officers, directors and employees in payment
of $312,016 in salaries, fees and other compensation owed to these persons. To
conserve cash, CEL-SCI expects that it may continue to offer its officers,
directors and employees the opportunity to receive shares of CEL-SCI's common
stock in payment of amounts owed by CEL-SCI for services rendered.
CEL-SCI's common stock trades on the NYSE Amex. NYSE Amex-listed
corporations must obtain shareholder approval for arrangements which permit
officers, directors, employees or consultants to receive a listed corporation's
shares in payment of compensation.
To comply with the NYSE Amex requirements in this regard 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
9,500,000 shares would be available for issuance under the plan.
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 approved an amendment to the Stock Compensation Plan so that an
additional 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 amendment to the Stock Compensation Plan.
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, 2011. BDO USA served as CEL-SCI's independent
registered public accounting firm for the fiscal year ended September 30, 2010.
A representative of BDO USA is expected to be present at the shareholders'
meeting.
BDO USA, LLP served as CEL-SCI's auditors for the years ended September 30,
2010 and 2009. The following table shows the aggregate fees billed to CEL-SCI
during these years by BDO USA, LLP:
30
Year Ended September 30,
2010 2009
---- ----
Audit Fees $232,725 $219,675
Audit-Related Fees -- --
Tax Fees 44,126 --
All Other Fees -- --
Audit fees represent amounts billed 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. Tax Fees represent amounts paid to BDO USA, LLP for
their work on an application for the Section 48D grant applied for by CEL-SCI.
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 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, 2011.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010, or the Dodd-Frank Act, enables CEL-SCI's shareholders to vote to
approve, on a nonbinding advisory basis, the compensation of CEL-SCI's executive
officers.
Accordingly, CEL-SCI will ask shareholders to vote for the following
resolution at the annual meeting:
"RESOLVED, that CEL-SCI's shareholders approve, on a nonbinding
advisory basis, the compensation of CEL-SCI's executive officers, as
disclosed in CEL-SCI's Proxy Statement for the 2011 Annual Meeting of
Shareholders pursuant to the compensation disclosure rules of the
Securities and Exchange Commission, including the Summary Compensation
Table and the other related tables and narrative disclosure in
CEL-SCI's proxy statement."
To the extent there is any significant vote against the named executive
officer compensation as disclosed in this proxy statement, CEL-SCI's Board of
Directors and its Compensation Committee will consider shareholders' concerns
and the Compensation Committee will evaluate whether any actions are necessary
to address those concerns.
The Board of Directors recommends that the shareholders approve on a
nonbinding advisory basis the aforementioned resolution approving the
compensation of CEL-SCI's executive officers set forth in this proxy statement.
31
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON
EXECUTIVE COMPENSATION
The Dodd-Frank Act also enables CEL-SCI's shareholders to indicate how
frequently CEL-SCI should seek an advisory vote on the compensation of CEL-SCI's
executive officers. Shareholders, may indicate on a nonbinding advisory basis
whether an advisory vote on compensation of CEL-SCI's executive officers is held
every one, two, or three years.
The option of one year, two years or three years that receives the highest
number of votes cast by the shareholders will be the frequency for the advisory
vote on executive compensation that has been selected by the shareholders.
However, because this vote is advisory and not binding on CEL-SCI in any way,
CEL-SCI's Board of Directors may decide that it is in the best interests of
CEL-SCI's shareholders and CEL-SCI to hold an advisory vote on executive
compensation more or less frequently than the option approved by the
shareholders.
The Board of Directors recommends that the shareholders of CEL-SCI cast a
vote of "3 Years" on the frequency of holding an advisory vote on executive
compensation.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
CEL-SCI's Annual Report on Form 10-K for the year ending September 30,
2010 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
year ending September 30, 2011 must be received by the Secretary of CEL-SCI no
later than February 28, 2012.
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 2010 fiscal year, is included in this mailing.
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.
32
CEL-SCI Corporation
Audit Committee Charter
Adopted by the Company's Board of Directors on May 22, 2002, as amended May
6, 2004.
Statement of Purpose
The Audit Committee (Committee) is a committee of the Board of Directors.
Its primary function is to assist the Board in fulfilling its oversight
responsibilities by overseeing the accounting, internal control and financial
reporting processes and the audit process of the Company.
The Company's management is responsible for preparing the Company's
financial statements and the Company's independent auditors are responsible for
auditing those financial statements. The Committee is responsible for overseeing
the conduct of these activities by the Company's management and the independent
auditors.
Committee Membership
The Committee shall consist of no fewer than three members. The members of
the Committee shall meet the independence and experience requirements of the
American Stock Exchange and the Securities and Exchange Commission (SEC). In
particular, all members shall have sufficient financial experience and ability
to enable them to read and understand financial statements, including the
Company's balance sheet, income statement, and cash flow statement. At least one
member shall be a financial expert as defined under the rules and regulations of
the SEC.
The members of the Committee shall be elected by the Board of Directors at
each annual meeting of the Board of Directors or until their successors shall be
duly elected and qualified. Unless a chair is elected by the full Board of
Directors, the members of the Committee may designate a chair by majority vote
of the full Committee.
Committee Authority and Responsibilities
In carrying out its intended purpose, the Committee shall have the powers,
duties and responsibilities delegated to it by the Board of Directors. The
Committee shall:
o Have the sole authority to appoint, evaluate and if necessary replace
the independent auditor, and shall pre-approve all audit engagement
fees and terms and all non-audit service engagements with the
independent auditor.
33
o Oversee the work performed by the Company's independent auditors.
Such Independent auditors shall report directly to the Committee,
although they shall remain accountable to the entire Board of
Directors as well as to the Committee.
o Have a clear understanding with management and the independent
auditors that the independent auditors are ultimately accountable to
the Board of Directors and the Committee, as representative of the
Company's shareholders.
o Review annually the selection of the Company's independent auditors.
o Review and discuss with the auditors their independence from the
Company and actively engage the auditors in a dialogue with respect
to any disclosed relationship or services that may impact their
objectivity and independence.
o Meet with management and the independent auditor in separate
executive sessions periodically.
o Make regular reports to the Board.
o Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the board for approval.
o Assess its performance of the duties specified in this charter
annually and report its findings to the board of directors.
In keeping with the foregoing statements, the Committee shall have the
following authority and responsibilities:
Financial Statement and Disclosure Matters
1. Review and discuss with management and the independent auditor the annual
audited financial statements and quarterly financial statements, including
disclosures made in management's discussion and analysis and all matters
required to be reviewed under applicable legal, regulatory and American
Stock Exchange requirements.
2. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the company's annual proxy statement.
3. Discuss with management the company's major financial risk exposures and
the steps management has taken to monitor and control such exposures,
including the company's risk assessment and risk management policies.
4. Discuss with management and the independent auditor any difficulties
encountered in the course of the audit work, including any restrictions on
the scope of activities or access to requested information, and any
significant disagreements with management.
34
Oversight of the Company's Relationship with the Independent Auditor
1. Obtain and review a report from the independent auditor at least annually
regarding (a) the auditor's internal quality-control procedures, (b) any
material issues raised by the most recent quality-control review, or peer
review, of the firm, (c) any steps taken to deal with any such issues, and
(d) all relationships between the independent auditor and the company.
2. Evaluate the qualifications, performance and independence of the
independent auditor, including considering whether the auditor's quality
controls are adequate and the provision of non-audit services is
compatible with maintaining the auditor's independence, and taking into
account the opinions of management. The Committee shall present its
conclusions to the board of directors and, if so determined by the
Committee, recommend that the board take additional action to satisfy
itself of the qualifications, performance and independence of the auditor.
Oversight of the Company's Internal Audit Function
1. Review the appointment and replacement of the senior internal auditing
executive or, in the event that the internal audit function is provided by
an outside vendor, the firm providing internal audit services.
2. Review the significant reports to management prepared by the internal
auditing function and management's responses.
3. Discuss with the chief executive officer and the chief financial officer
of the company, all significant deficiencies in the design or operation of
internal controls which could adversely affect the company's ability to
record, process, summarize, and report financial data and any fraud,
whether or not material, that involves management or other employees who
have a significant role in the company's internal controls.
Compliance Oversight Responsibilities
1. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934, certain audit requirements and required
responses to audit discoveries, has not been implicated.
2. Review any matters relating to the integrity of management, including
conflicts of interest, and adherence to the company's Code of Business
Conduct and Ethics. In connection with these reviews, the Committee will
meet, as appropriate, with the general counsel and other company officers
and employees.
Limitation of Committee's Role
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the company's financial statements and disclosures are complete
35
and accurate and are in accordance with generally accepted accounting principles
and applicable rules and regulations. These are the responsibilities of
management and the independent auditor.
Meetings
The Committee will meet at least four times annually, or more often as it
deems necessary or appropriate, in its judgment, either in person or
telephonically, and at such times and places as the Committee determines. The
Chairman of the Board of Directors, any member of the Committee or the Secretary
of the Company may call meetings of the Committee. In its sole discretion, the
Committee may decide to hold separate meetings with management or the
independent auditors. The majority of the members of the Committee shall
constitute a quorum for Committee meetings and, unless otherwise required by
this Charter, action may be taken by majority vote of the members present at
such meetings. Minutes shall be maintained of each meeting.
36
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 April 15, 2011, 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, FOR
Proposals 2-7 and for three years on Proposal 8.
(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 C. Richard Kinsolving Peter R. Young
(2) To approve the adoption of CEL-SCI's 2011 Incentive Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the adoption of CEL-SCI's 2011 Non-Qualified Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To approve the adoption of CEL-SCI's 2011 Stock Bonus Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To approve an amendment to CEL-SCI's Stock Compensation Plan so that an
additional 2,000,000 restricted shares of CEL-SCI's common stock are
available for issuance under the 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,
2011.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) To approve, on an advisory basis, compensation of CEL-SCI's executive
officers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(8) To approve, on an advisory basis, the frequency of advisory votes on the
compensation of CEL-SCI's executive officers.
[ ] 1 YEAR [ ] 2 YEARS [ ] 3 YEARS
[ ] ABSTAIN
To transact such other business as may properly come before the meeting.
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 ITEMS 1 THROUGH 7, AND FOR THE THREE YEAR OPTION WITH RESPECT TO
ITEM 8.
Dated this __ day of _________ 2011.
-----------------------------------
(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
CEL-SCI
Empowering Immune Defense
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 April 15, 2011
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 5, 2011 to facilitate
timely delivery.
Stockholder Meeting Notice
CEL-SCI Corporation's Annual Meeting of Stockholders will be held at
4820-C Seton Drive, Baltimore, Maryland on April 15, 2011, 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 proposals:
1. To elect the persons who shall constitute CEL-SCI's Board of Directors for
the ensuing year. Nominees:
01 - Maximilian de Clara, 02 - Geert R. Kersten, 03 - Alexander G.Esterhazy,
04 - C. Richard Kinsolving, 05 - Peter R. Young
2. To approve the adoption of CEL-SCI's 2011 Incentive Stock Option Plan.
3. To approve the adoption of CEL-SCI's 2011 Non-Qualified Stock Option Plan.
4. To approve the adoption of CEL-SCI's 2011 Stock Bonus Plan.
5. To approve an amendment to CEL-SCI's Stock Compensation Plan so that an
additional 2,000,000 restricted shares of CEL-SCI's common stock are
available for issuance under the 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,
2011.
7. To approve on an advisory basis, the compensation of CEL-SCI's executive
officers.
8. To approve on an advisory basis, the frequency of advisory votes on
the compensation of CEL-SCI's executive officers.
To transact such other business as may properly come before the meeting.
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.
-------------------------------------------------------------------------------
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.
To facilitate timely delivery, all requests for a paper copy of the proxy
materials must be received by April 5, 2011.