UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION
 
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

Check the appropriate box:

DERMA SCIENCES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

214 Carnegie Center
Suite 300
Princeton, New Jersey 08540

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 2015

To the Stockholders of Derma Sciences, Inc.:

The Annual Meeting of Stockholders (the “Meeting”) of Derma Sciences, Inc., a Delaware corporation (the “Company”), will be held on May 27, 2015, at 3:30 pm, at the offices of the Company, 214 Carnegie Center, Suite 300, Princeton, New Jersey, for the following purposes:

Only stockholders of record at the close of business on March 30, 2015, are entitled to notice of and to vote at the Meeting and at any adjournments or postponements of the Meeting.

All stockholders are cordially invited to attend the Meeting in person. Whether or not you plan to attend the Meeting, your vote is important. In an effort to facilitate the voting process, we are pleased to avail ourselves of Securities and Exchange Commission rules that allow proxy materials to be furnished to stockholders on the Internet. You can vote by proxy over the Internet by following the instructions provided in the Notice of Internet Availability of Proxy Materials that was mailed to you on or about April 9, 2015, or, if you request printed copies of the proxy materials by mail, you can also vote by mail or by telephone. Your promptness in voting by proxy will assist in its expeditious and orderly processing and will assure that you are represented at the Meeting. Proxies are being solicited on behalf of the Board of Directors. If you vote by proxy, you may nevertheless attend the Meeting and vote your shares in person.

TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO READ THIS PROXY STATEMENT AND SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE BY FOLLOWING THE INSTRUCTIONS IN THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS, WHICH WAS MAILED TO YOU ON OR ABOUT APRIL 9, 2015, OR, IF YOU REQUEST PRINTED COPIES OF THE PROXY MATERIALS BY MAIL, YOU CAN ALSO VOTE BY MAIL OR BY TELEPHONE.

By Order of the Board of Directors,
DERMA SCIENCES, INC.
/s/ Edward J. Quilty
Chairman of the Board, President and
Chief Executive Officer

DERMA SCIENCES, INC.
214 Carnegie Center
Suite 300
Princeton, New Jersey 08540
 
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 2015
 
PROXY STATEMENT

The Board of Directors (the “Board” or the “Board of Directors”) of Derma Sciences, Inc. (the “Company,” “Derma Sciences,” “we,” “us” or “our”) has made these materials available to you on the Internet, or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies for use at its Annual Meeting of Stockholders (the “Meeting”) to be held at 3:30 pm, on Wednesday, May 27, 2015, at the offices of the Company, 214 Carnegie Center, Suite 300, Princeton, New Jersey, 08540, and at any adjournments thereof. The purpose of the Meeting and the matters to be acted upon are set forth under the headings Proposal 1 — Election of Directors, Proposal 2 — Advisory Vote on the Compensation of Our Named Executive Officers and Proposal 3 — Ratification of Appointment of Independent Registered Public Accounting Firm below and in the Notice of Annual Meeting of Stockholders. Stockholders are requested to promptly vote by proxy over the Internet by following the instructions provided in the Notice of Internet Availability of Proxy Materials, which was mailed to you on or about April 9, 2015. If you request printed copies of the proxy materials by mail, you can also vote by mail or by telephone.

The close of business on March 30, 2015, has been fixed as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the Meeting. On the Record Date, the Company had the following shares issued, outstanding and entitled to vote:

The foregoing shares of Common Stock and Preferred Stock are collectively referred to herein as the “Shares.” Holders of the Shares are entitled to one vote for each share held of record. The Shares are the only voting securities of the Company.

The presence at the Meeting, in person or by proxy, of the holders of 12,890,495 Shares (a majority of the aggregate number of shares of Common Stock and Preferred Stock issued and outstanding and entitled to vote as of the Record Date) is necessary to constitute a quorum to transact business. Proxies marked “ABSTAIN” and Broker Non-Votes (as defined below), if any, will be counted in determining the presence of a quorum.

If the on-line or paper form of proxy is executed properly and submitted, Shares represented by it will be voted at the Meeting in accordance with the instructions on the proxy. However, if no instructions are specified, Shares will be voted “FOR” the election as directors of those nominees named in the proxy, “FOR” the compensation of our named executive officers and “FOR” ratification of the selection of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2015. The Board knows of no matters which are to be presented for consideration at the Meeting other than those specifically described herein and in the Notice of Annual Meeting of Stockholders, but if other matters are properly presented, it is the intention of the persons designated as proxies to vote on them in accordance with their judgment.

If your Shares are held in street name and you do not provide voting instructions to the broker or other nominee that holds your Shares, the broker or other nominee has the authority, even if it does not receive instructions from you, to vote your unvoted Shares for Proposal No. 3, the ratification of our independent public accountant, but does not have authority to vote your unvoted Shares for Proposal No. 1, the election of directors or Proposal No. 2, the advisory vote on the compensation of our named executive officers. We

encourage you to provide voting instructions. This ensures your Shares will be voted at the Meeting in the manner you desire. If your broker cannot vote your Shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority, this is referred to as a broker non-vote (“Broker Non-Votes”).

A proxy may be revoked at any time prior to the time it is voted by written notice to the Secretary of the Company at the above address or by submission of a proxy bearing a later date. Any stockholder may attend the Meeting and vote in person whether or not a proxy was previously submitted.

For Proposal No. 1, the nominees for director who receive the most votes (also known as a plurality) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any one of the nominees. Votes that are withheld will not be included in the vote tally for the election of directors. Abstentions and Broker Non-Votes, if any, will not be counted as having been voted and will have no effect on the election of directors, except to the extent the failure to vote for a nominee results in another nominee receiving a larger number of votes.

Adoption of Proposal No. 2 requires that the votes cast in favor of the proposal exceed the votes cast against the proposal. Abstentions and Broker Non-Votes will not be counted as either votes cast for or against this proposal.

Adoption of Proposal No. 3 requires the affirmative vote of a majority of the total number of votes cast for this proposal. In determining whether Proposal No. 3 has received the requisite number of affirmative votes, abstentions will be counted and will have the same effect as a vote against the proposals, and Broker Non-Votes, if any, will have no effect on the votes for the proposal.

The Notice of Annual Meeting, this proxy statement (this “Proxy Statement”), the accompanying proxy card and our Annual Report on Form 10-K are being made available on the Internet at https://materials.proxyvote.com/249827 through the notice and access process and, upon request, mailed to our stockholders on or about April 9, 2015. The expense of solicitation will be borne by the Company. The solicitation of proxies will be largely by mail, but may include telephonic, telegraphic or oral communications by officers or other representatives of the Company. The Company will also reimburse brokers or other persons holding Shares in their names or in the names of their nominees for reasonable out-of-pocket expenses in connection with forwarding proxies and proxy materials to the beneficial owners of such Shares.

PROPOSAL 1 — ELECTION OF DIRECTORS

A board of eight directors will be elected at the Meeting by the stockholders of the Company to hold office until their successors have been elected and qualified. C. Richard Stafford, Esq., a current member of the Board, will not stand for re-election at the Meeting when his term expires. Therefore, effective upon election of the Board at the Meeting, Mr. Stafford will no longer be a member of the Board of Directors or any committee thereof. Samuel E. Navarro was recommended for nomination by Broadfin Capital, LLC, one of our major stockholders, as approved by the Nominating and Corporate Governance Committee. Mr. Navarro was nominated for election by the full Board to serve as a director effective May 2015.

It is intended that, unless authorization to do so is withheld, the proxies will be voted “FOR” the election of the director nominees named below. Each nominee has consented to be named in this Proxy Statement and to serve as a director if elected. However, if any nominee becomes unable to stand for election as a director at the Meeting, an event not now anticipated by the Board, the proxy will be voted for a substitute designated by the Board.

The nominees are listed below with brief statements of their principal occupation and other information:

Name of Nominee

Age

Director Since

Principal Occupation

Edward J. Quilty

64

March 1996

Chairman of the Board, President and Chief Executive Officer of the Company

Srini Conjeevaram(1)(3)

56

May 1998

Director, Managing Director of SC Capital Management, LLC

Stephen T. Wills, CPA, MST(2)(3)

58

May 2000

Lead Director, Executive Vice President, Chief Financial Officer and Chief Operating Officer of Palatin Technologies, Inc.

Robert G. Moussa(4)(5)

68

May 2005

Director, President and Chief Executive Officer of Dilon Technologies, Inc.

Bruce F. Wesson(1)(6)

72

May 2006

Vice Lead Director, Galen Partners Founder and Senior Advisor

Brett D. Hewlett

52

February 2010

Director, Chief Executive Officer of Comvita Limited

Amy Paul(3)(5)

63

May 2013

Director, Former Group Vice President – International of C.R. Bard, Inc.

Samuel E. Navarro

59

—

Director, Managing Partner at Gravitas Healthcare

Information Relative to Directors and Nominees

Edward J. Quilty has served as our Chief Executive Officer since November 1998, Chairman of the Board since May 1996 and as a director since March 1996. In September 2013, Mr. Quilty was appointed as a director of Comvita Limited (“Comvita”), a publicly listed natural products and life sciences company headquartered in New Zealand (NZSX:CVT). Mr. Quilty was the Chairman of the Board of Palatin Technologies, Inc., a publicly traded biopharmaceutical company specializing in peptide drug design for diagnostic and therapeutic agents, from November 1995 until May 2000. During the period November 1998 through May 2000, Mr. Quilty held the Chief Executive Officer positions at both Derma Sciences and Palatin Technologies, Inc. From July 1994 through November 1995, he was President and Chief Executive Officer of MedChem Products, Inc., a publicly traded developer and manufacturer of specialty medical products which was acquired by C. R. Bard, Inc. in November 1995. From March 1992 through July 1994, Mr. Quilty served

as President and Chief Executive Officer of Life Medical Sciences, Inc., a publicly traded developer and manufacturer of specialty medical products including wound healing agents. The assets of Life Medical Sciences were purchased by MedChem Products, Inc. During the period January 1987 through September 1991 Mr. Quilty served as Vice President — Sales and Marketing, and later as Executive Vice President (in which capacity he shared the office of the President), with McGaw Laboratories, a pharmaceutical and medical device company. Previously, he served from 1974 in a variety of sales, marketing and management positions with Baxter/American Hospital Supply Corporation. Mr. Quilty has over 40 years of experience in the healthcare industry primarily in strategic planning, management and sales and marketing. He earned a Bachelor of Science degree from Missouri State University, Springfield, Missouri in 1973 and a Master of Business Administration degree from Ohio University, Athens, Ohio in 1987.

We believe that Mr. Quilty’s qualifications to serve on our Board of Directors include his over fifteen years of industry and management experience with our Company and his extensive expertise in the wound care and specialty medical products industry.

Srini Conjeevaram has served as a director of Derma Sciences since May 1998. Mr. Conjeevaram is Vice President of Hospital Partnerships at Penumbra, Inc., a neurovascular medical device company. Mr. Conjeevaram is also Managing Director of SC Capital Management, LLC, a management company that manages growth-equity fund investments in privately-held healthcare companies. From 1991 through March 2006, he was with Galen Associates, focusing on growth equity healthcare investments, becoming a General Partner in 1996. Prior to his affiliation with Galen Associates, he was an Associate in Corporate Finance at Smith Barney from 1989 to 1990 and a Senior Project Engineer for General Motors Corporation from 1982 to 1987. Mr. Conjeevaram earned a Bachelor of Science degree in Mechanical Engineering from Madras University, India, a Master of Science degree in Mechanical Engineering from Stanford University, and a Master of Business Administration from Indiana University.

We believe that Mr. Conjeevaram’s qualifications to serve on our Board of Directors include his many years of experience with financing and growth planning for healthcare companies.

Stephen T. Wills, CPA, MST has served as lead director and a director of Derma Sciences since July 2008 and May 2000, respectively. He also served as our Chief Financial Officer from July 1997 and Vice President from November 1997 until his resignation from these positions in July 2000. Mr. Wills currently serves as Executive Vice President, Chief Financial Officer and Chief Operating Officer of Palatin Technologies, Inc., a publicly traded biopharmaceutical company. Mr. Wills is a member of the American Institute of Certified Public Accountants, New Jersey Society of Certified Public Accountants and Pennsylvania Institute of Certified Public Accountants. He earned a Bachelor of Science degree in Accounting from West Chester University, West Chester, Pennsylvania in 1979 and a Master of Science in Taxation from Temple University, Philadelphia, Pennsylvania in 1994.

We believe that Mr. Wills’ qualifications to serve on our Board of Directors include his extensive and varied financial, operational and management experience, his substantial experience with our Company and his strong technological background within the biopharmaceutical industry.

Robert G. Moussa has served as a director of Derma Sciences since May 2005. Mr. Moussa is the Chairman, President and Chief Executive Officer of Dilon Technologies, Inc., makers of a gamma imaging system for early breast cancer detection, a position he has held since February 2008. Before joining Dilon Technologies, Inc., Mr. Moussa served as President and Chief Executive Officer of Robert Moussa & Associates, a consulting firm serving the pharmaceutical, biotechnology and healthcare industries. Prior to founding this firm, he served in a variety of executive positions with Mallinckrodt, Inc., St. Louis, Missouri, a $2.4 billion healthcare and chemical company. Mr. Moussa’s most recent assignment at Mallinckrodt, Inc. was President — International, a position he held from 1995 through 1997. Previously, he served from 1992 to 1996 as President and Chief Executive Officer of Mallinckrodt Medical, Inc., Mallinckrodt, Inc.’s largest business unit with over $1 billion in revenues. Before joining Mallinckrodt Medical, Inc., Mr. Moussa served during the period 1978 through 1992 as Mallinckrodt, Inc.’s Group Vice President — International Medical Products, Vice President and General Manager — Medical Products Europe, General Manager —  Critical Care, Director of Business Operations and General Sales Manager. Prior to joining Mallinckrodt, Inc., Mr. Moussa held a number of positions during the period from 1969 through 1976 with Sherwood Medical,

United Kingdom, most recently as Director of Marketing. Mr. Moussa received his Baccalaureate from the Collége du Sacre-Cœur, Beirut, Lebanon, in 1966 and his Bachelor of Science in Business Administration from Ealing University, London, England, in 1969. He has also completed executive seminars at the University of California at Berkeley, the Aspen Institute, the Wharton Executive School and the Center for Creative Leadership.

We believe that Mr. Moussa’s qualifications to serve on our Board of Directors include his many years of experience as senior and chief executive with leading companies in the pharmaceutical and healthcare industries.

Bruce F. Wesson has served as vice lead director and a director of Derma Sciences since July 2008 and May 2006, respectively. He is Founding Partner Emeritus and Senior Advisor at Galen Management, a health care venture capital firm. Prior to founding Galen Partners, L.P., Mr. Wesson served for over twenty three years with the Corporate Finance Division of Smith Barney, Harris Upham & Co. Inc., most recently as Senior Vice President and Managing Director. While at Smith Barney, Mr. Wesson headed the Major Account Group which was responsible for many of the firm’s largest accounts. He also chaired Smith Barney’s Valuation and Opinion Committee in which capacity he maintained responsibility for the firm’s valuations and fairness opinions. Mr. Wesson currently serves as a director and is a member of the Compensation Committee and the Audit Committee of Acura Pharmaceuticals, Inc., a specialty pharmaceutical company. He also serves as Vice Chairman, director and Chairman of the Audit Committee of MedAssets, Inc., a provider of technology-enabled products and services to the healthcare industry, and serves as a director of several private companies. Mr. Wesson earned a Bachelor of Arts degree from Colgate University, Hamilton, New York, in 1964 and a Master of Business Administration degree from Columbia University, New York, New York, in 1967.

We believe that Mr. Wesson’s qualifications to serve on our Board of Directors include his expertise and years of experience with financing and growth planning for healthcare companies.

Brett D. Hewlett has served as a director of Derma Sciences since February 2010. Mr. Hewlett has served since 2005 as the Chief Executive Officer of Comvita. Prior to his affiliation with Comvita, Mr. Hewlett served for fifteen years with Tetra Pak, a world-leading food packaging company, in the capacities of Managing Director for Eastern Mediterranean markets and Commercial Director for Saudi Arabia. He has organized and managed his own consulting company and has been an active angel investor supporting start-up companies in New Zealand. Mr. Hewlett earned a Bachelor of Food Technology degree from Massey University, New Zealand, in 1987 and a Masters of Business Administration degree from International Institute for Management Development, Switzerland, in 1993.

We believe that Mr. Hewlett’s qualifications to serve on our Board of Directors include his extensive wound care expertise, his many years of global management experience and his strong technological background in the natural healthcare industry.

Comvita is a stockholder of Derma Sciences and we conduct significant business with Comvita. We are also a shareholder of Comvita. In 2013 and 2014, we purchased 2,802,277 common shares in the capital of Comvita for $8,483,693. At December 31, 2014 this investment represented 7.1% of Comvita’s outstanding common shares. For further details of our dealings with Comvita, please refer to the discussion under the heading Certain Relationships and Related Transactions. Mr. Hewlett was initially appointed to the Board of Directors, pursuant to that certain nominating agreement dated February 18, 2010 between our Company and Comvita Limited, an affiliate of Comvita. For further details concerning the nominating agreement, please refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2010.

Amy Paul has served as a director of Derma Sciences since May 2013. Ms. Paul retired in 2008 following a 26-year career with C.R. Bard, Inc., a medical device company, most recently serving as the Group Vice President-International since 2003. She served in various positions at C.R. Bard, Inc. from 1982 to 2003, including President of Bard Access Systems, Inc., President of Bard Endoscopic Technologies, Vice President and Business Manager of Bard Ventures, Vice President of Marketing of Bard Cardiopulmonary Division, Marketing Manager for Davol Inc., and Senior Product Manager for Davol Inc. Ms. Paul was a

director of Viking Systems, Inc., a publicly traded company, until October 2012 when it was acquired by Conmed Corporation, was a commissioner of the Northwest Commission on Colleges and Universities from 2010 through 2013, and was a Director of Theraclion from 2010 through 2012, a privately held company in Paris, France. Ms. Paul currently serves on the President’s Innovation Network at Westminster College and is a director of Wright Medical Technologies, a publicly traded company, for which she chairs the Nominating, Governance and Compliance Committee. Ms. Paul earned a Bachelor of Arts degree in English from Boston University in 1973 and an MBA from Boston University in 1978.

We believe that Ms. Paul’s qualifications to serve on our Board of Directors include over three decades of experience in the medical device industry, having served in executive roles in marketing and sales functions, and her significant public and private company board experience.

Samuel E. Navarro was nominated for a position on our Board of Directors in March 2015. Mr. Navarro is currently Managing Partner at Gravitas Healthcare, LLC, a strategic advisory firm based in Greenwich, CT. Mr. Navarro was previously Managing Director of Cowen & Co., an investment banking and financial advisory firm, in New York City and head of its Medical Technology Investment Banking initiatives. Before Cowen & Co., Mr. Navarro spent more than four years at The Galleon Group, a hedge fund management firm, running the Galleon Healthcare Fund as a Senior Portfolio Manager. He was responsible for health care investments across all sectors, including pharmaceuticals/biopharmaceutical industries, medical technology and hospital supplies, and all areas of healthcare services. Mr. Navarro also spent time at ING Barings as the Global Head of Healthcare Investment Banking. Mr. Navarro currently serves on the boards of directors of Cardica, Inc. and MELA Sciences, Inc. Mr. Navarro earned a Bachelor of Science degree in Engineering from The University of Texas at Austin, a Master of Science degree in Engineering from Stanford University and an MBA degree in Finance from The Wharton School at the University of Pennsylvania.

We believe that Mr. Navarro’s qualifications to serve on our Board of Directors include his extensive investment management experience in the medical device industry.

Compensation of Directors

Compensation Program

Upon election or appointment, outside directors receive 10,000 restricted stock units, which vest as to 25% of the grant on the first, second, third and fourth anniversaries of the grant date, so long as the grantee remains a director of the Company. For each year of service after election or appointment, outside directors, except for the lead director, receive a grant of restricted stock units having a value equal to an amount in the range of $65,000 – $75,000, which vest on the first anniversary of the grant date, so long as the grantee remains a director of the Company. For each year of service after election or appointment, the lead director receives a grant of restricted stock units having a value equal to an amount in the range of $100,000 – $120,000, which vest on the first anniversary of the grant date, so long as the grantee remains a director of the Company. For each year of service, each outside director also receives a $40,000 annual cash payment, payable quarterly in equal amounts, except for the lead director, who receives an $85,000 annual cash payment, payable quarterly in equal amounts. In addition, the chairperson of the Audit Committee, the chairperson of the Compensation Committee and the chairperson of the Nominating and Corporate Governance Committee receive additional annual compensation of $12,000, $12,000 and $7,500, respectively, payable quarterly in equal amounts, and each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee receive additional annual compensation of $4,000, $4,000 and $2,500, respectively, payable quarterly in equal amounts. In connection with special committees that the Board of Directors may form from time to time in connection with various transactions or undertakings, the Board of Directors may award compensation to the directors, in its discretion, for membership on such special committees. The Board of Directors may, from time to time, grant additional merit-based cash or equity compensation to non-employee directors for extraordinary service. All directors are reimbursed for expenses incurred in connection with each Board and committee meeting attended. Inside directors receive no compensation for their services as directors.

Director Compensation Table

The following table sets forth information regarding all forms of compensation that were both earned by and paid to our directors during the year ended December 31, 2014:

Name		Fees Earned or Paid in Cash				Stock Awards(1)				Option Awards(1)				Total
Edward J. Quilty			—				—				—				—
Stephen T. Wills, CPA, MST(2)		$	116,833			$	117,780			$	57,600			$	292,213
Srini Conjeevaram(3)		$	44,417			$	70,215				—			$	114,632
C. Richard Stafford, Esq.(4)		$	44,417			$	70,215				—			$	114,632
Robert G. Moussa(5)		$	52,417			$	70,215				—			$	122,632
Bruce F. Wesson(6)		$	48,792			$	70,215				—			$	119,007
Brett D. Hewlett(7)		$	39,583			$	70,215				—			$	109,798
Amy Paul(8)		$	41,917			$	70,215				—			$	112,132
Paul Gilbert(9)		$	10,375				—				—			$	10,375

BOARD OF DIRECTOR AND CORPORATE GOVERNANCE STANDARDS AND POLICIES

General

The Board of Directors is the ultimate decision-making body of the Company, except with respect to those matters to be decided by the stockholders. It selects the Chief Executive Officer and other members of the senior management team, which is charged with the conduct of the Company’s day to day business. The Board acts as an advisor and counselor to senior management and ultimately monitors its performance. The function of the Board to monitor the performance of senior management is facilitated by the presence of non-employee directors of stature who have substantive knowledge of the Company’s business.

Conduct of Board Meetings

The Chief Executive Officer, with approval from the Lead Director, sets the agenda for Board meetings with the understanding that the Board is responsible for providing suggestions for agenda items that are aligned with the advisory and monitoring functions of the Board. Agenda items that fall within the scope of responsibilities of a Board Committee are reviewed with the chair of that Committee. Any member of the Board may request that an item be included on the agenda. Board materials related to agenda items are provided to Board members sufficiently in advance of Board meetings to allow the directors to prepare for discussion of the items at the meeting. At the invitation of the Board, members of senior management recommended by the Chief Executive Officer attend Board meetings or portions thereof for the purpose of participating in discussions. Generally, presentations of matters to be considered by the Board are made by the manager responsible for that area of the Company’s operations.

Meeting Attendance

While we strongly encourage attendance by our Board of Directors at our annual stockholders’ meetings, we do not have a formal policy with respect to attendance. All eight directors attended last year’s annual stockholders’ meeting. In fiscal year 2014, there were a total of four meetings of the Board of Directors and the various committees of the Board of Directors met a total of 10 times. No director attended fewer than 75% of the total number of meetings of the Board of Directors and of committees of the Board of Directors on which he or she served during fiscal year 2014.

Qualifications of Directors

The Nominating and Corporate Governance Committee has not established specific criteria or minimum qualifications that must be met by committee-nominated or stockholder-nominated nominees for director. Regardless of the source of a given nominee’s nomination, the Nominating and Corporate Governance Committee believes each nominee should be evaluated based solely upon his/her educational attainments, relevant experience and professional stature. We seek board candidates with a broad diversity of experience, professions, skills, geographic representation, backgrounds and commitment necessary to make a significant contribution to our Company. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. Experience in the healthcare industry, while not a prerequisite for nomination, is a positive factor in the selection process.

Our Board believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board of Directors to fulfill its responsibilities. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law. The Nominating and Corporate Governance Committee has not set either term limits or a mandatory retirement age for members of the Board, believing that the Company’s interests are best served by members of the Board with substantial experience and knowledge of the Company’s business and that age is generally not a barrier to effective performance as a member of the Board.

In connection with the selection of nominees for director, consideration will be given to the Board’s overall balance of diversity of perspectives, backgrounds and experiences; however, the Board has not adopted a formal diversity policy. The Nominating and Corporate Governance Committee will evaluate potential nominees, including stockholder nominees, by reviewing qualifications, considering references, conducting

interviews and reviewing such other information as committee members may deem relevant. The Nominating and Corporate Governance Committee primarily seeks nominations for director from institutional security holders, members of the investment banking community and current directors. We have not employed consultants to help us identify or screen prospective directors in the past, but may do so at the discretion of the Nominating and Corporate Governance Committee.

Board of Directors Leadership

The Board of Directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board understands that the right Board of Directors leadership structure may vary as circumstances warrant. Consistent with this understanding, it is the Company’s policy that non-employee directors consider the Board of Directors’ leadership structure on an annual basis.

The Board has determined that the optimal Board of Directors leadership structure for us is served by the role of Chairman of the Board being held by our Chief Executive Officer, Edward J. Quilty. Mr. Quilty possesses detailed and in-depth knowledge of the issues, opportunities and challenges we face, and is thus best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical matters.

Our non-employee directors have also determined that it is optimal for the Board to have an independent “lead director,” whose responsibilities include, among others, (i) serving as primary intermediary between non-employee directors and management; (ii) formulating, in consultation with the Chairman of the Board, the agenda and meeting schedules for the Board; (iii) advising the Chairman of the Board as to the quality, quantity and timeliness of the information submitted by management to directors; (iv) recommending to the Chairman of the Board the retention of advisors and consultants who report directly to the Board; (v) calling meetings of non-employee directors; (vi) serving as liaison for consultation and communication with stockholders; and (vii) serving as Chairman of the Executive Committee of the Board if, and when, the same shall be established. Our lead director is Stephen T. Wills.

The Board of Directors has determined that this leadership structure is optimal for us because it believes that having one leader serving as both the Chairman and Chief Executive Officer provides decisive, consistent and effective leadership, as well as clear accountability. This also enhances our ability to communicate our message and strategy clearly and consistently to our stockholders, employees, customers and suppliers, particularly during times of turbulent economic and industry conditions.

Although we believe that the combination of the Chairman and Chief Executive Officer roles is appropriate in the current circumstances, we will continue to review this issue periodically to determine whether, based on the relevant facts and circumstances, separation of these offices would serve our best interests and the best interests of our stockholders.

Role of the Board of Directors in Risk Oversight

Our executive officers are responsible for the day-to-day management of risks the Company faces, while our Board of Directors has responsibility, as a whole and also at the committee level, for the oversight of the Company’s risk management. The Board of Directors regularly reviews the Company’s long-term business strategy, including industry trends and their potential impact on the Company, our competitive positioning, potential acquisitions and divestitures, as well as the Company’s technology and market direction. The Board of Directors also reviews information regarding the Company’s actual and planned financial position and operational performance, as well as the risks associated with each. The Company’s Compensation Committee is responsible for overseeing the management of risks relating to the Company’s executive compensation and the Company’s incentive, equity award and other benefit plans. The Audit Committee oversees management of financial risks, including but not limited to accounting matters, tax positions, insurance coverage and security of the Company’s cash reserves. The Nominating and Corporate Governance Committee manages risks associated with the independence and remuneration of the Board of Directors and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is regularly informed about such risks by committee reports as well as advice and counsel from expert advisors.

Director Independence

It is the policy of the Company that the Board consist of a majority of independent Directors. The Nominating and Corporate Governance Committee of the Board has established Director Qualification Standards to assist it in determining Director independence, which either meet or exceed the independence requirements of NASDAQ Marketplace Rule 5605(a)(2). The Board will consider all relevant facts and circumstances in making an independence determination, and not merely from the standpoint of the Director, but also from that of persons or organizations with which the Director has an affiliation. The Board has reviewed the materiality of any relationship that each of our directors has with the Company. Based upon this review, the Board has determined that all director nominees, with the exception of Edward J. Quilty and Brett Hewlett, are “independent” as defined in NASDAQ Marketplace Rule 5605(a)(2). The term of office of each person elected as director will continue until our next annual meeting of stockholders or until his successor has been duly elected and qualified.

Board of Director Committees

It is the general policy of the Company that all major decisions be considered by the Board as a whole. As a consequence, the Committee structure of the Board is limited to those Committees considered to be basic to, or required or appropriate for, the operation of the Company. Currently, these Committees are the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. The members and chairs of these Committees are recommended to the Board by the Nominating and Corporate Governance Committee. The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are made up of only independent Directors.

Audit Committee

We maintain an Audit Committee that is currently composed of Stephen T. Wills, CPA, MST, Chairman, Srini Conjeevaram, C. Richard Stafford, Esq. and Bruce F. Wesson. Messrs. Wills, Conjeevaram, Stafford and Wesson are considered to be “independent” as defined in NASDAQ Marketplace Rule 5605(a)(2). The Audit Committee reviews the results and scope of the audit and the financial recommendations provided by our independent registered public accounting firm. The Audit Committee operates under a written charter, a copy of which may be viewed on the Company’s website at http://www.dermasciences.com under the heading “Corporate Governance” in the Investor Relations section. The Audit Committee held five meetings in 2014. Details relative to the Audit Committee’s financial expert, together with the Audit Committee Report, are set forth on page 36 of this Proxy Statement under the heading Additional Information.

Compensation Committee

We maintain a Compensation Committee that is currently composed of Robert G. Moussa, Chairman, Srini Conjeevaram, Stephen T. Wills, CPA, MST and Amy Paul. Messrs. Moussa, Conjeevaram and Wills and Ms. Paul are considered to be “independent” as defined in NASDAQ Marketplace Rule 5605(a)(2). The Compensation Committee reviews the compensation of management and recommends to the Board the amounts and types of cash and equity incentives to be offered to management. The Compensation Committee operates under a written charter, a copy of which may be viewed on the Company’s website at http://www.dermasciences.com under the heading “Corporate Governance” in the Investor Relations section. The Compensation Committee held three meetings in 2014. The Compensation Committee Report is set forth in the Compensation Discussion and Analysis beginning on page 16 of this Proxy Statement.

Nominating and Corporate Governance Committee

We maintain a Nominating and Corporate Governance Committee that is currently composed of Bruce F. Wesson, Chairman, Robert G. Moussa, C. Richard Stafford, Esq. and Amy Paul. Messrs. Wesson, Moussa and Stafford and Ms. Paul are considered to be “independent” as defined in NASDAQ Marketplace Rule 5605(a)(2). The Nominating and Corporate Governance Committee reviews the qualifications of prospective directors for consideration by the Board as management’s nominees for directors. The Nominating and Corporate Governance Committee operates under a written charter, a copy of which may be viewed on the Company’s website at http://www.dermasciences.com under the heading “Corporate Governance” in the Investor Relations section. The Nominating and Corporate Governance Committee held two meetings in 2014.

We will consider nominations for directors submitted by stockholders. Stockholder nominations for election to the Board must be made by written notification received by the chairperson of the Board not later than sixty days prior to the anniversary date of the preceding annual meeting of stockholders. Such notification shall contain, at a minimum, the following information:

The Nominating and Corporate Governance Committee will return, without consideration, any notice of proposed nomination which does not contain the foregoing information.

The director nominees for the Meeting were recommended by the Nominating and Corporate Governance Committee and unanimously approved by the Board.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED ABOVE.

PROPOSAL 2 — ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we included a stockholder vote on the frequency of future votes on named executive officer compensation in our 2013 proxy statement which was advisory and nonbinding. Our stockholders approved the frequency of future votes on the recommendation of our Board of Directors to hold future say-on-pay votes on an annual basis. The next stockholder vote on the frequency of future votes on named executive officer compensation will occur at our 2019 annual meeting of stockholders.

As a result, our stockholders are entitled to vote at the Annual Meeting to approve the compensation of our named executive officers (referred to herein as the “NEOs”) listed in the Summary Compensation Table in the “Compensation Discussion and Analysis” section of this Proxy Statement (commonly referred to as a “say on pay” vote). Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the stockholder vote on executive compensation is an advisory vote only, and it is not binding on the Company or the Board of Directors.

Our executive compensation programs are based on three core principles that are designed to motivate our NEOs to achieve annual financial and strategic objectives to enhance the profitability of the Company and create long-term stockholder value. The fiscal year 2014 compensation of our NEOs reflected these core principles:

We believe that our compensation programs and policies for the fiscal year ended December 31, 2014 were consistent with our core compensation principles, an effective incentive for the achievement of positive results, aligned with stockholders’ interests, supported by strong compensation governance practices and worthy of continued stockholder support. Accordingly, we ask for our stockholders to indicate their support for the compensation paid to our NEOs by voting FOR the following non-binding resolution at the Meeting:

“RESOLVED, that the Company’s stockholders approve the compensation of the named executive officers for fiscal year 2014 listed in the Summary Compensation Table in the ‘Compensation Discussion and Analysis’ section of the proxy statement, as disclosed pursuant to Item 402 of Regulation S-K.”

Approval of this proposal requires that votes cast in favor of the proposal exceed the votes cast against the proposal. Abstentions and Broker Non-Votes will not be counted as having been voted for purposes of this proposal. Because your vote is advisory, the result will not be binding upon the Company. Although not binding, our Compensation Committee and the Board value the opinions of our stockholders and will consider the outcome of the vote, along with other relevant factors, when making future compensation decisions for NEOs.

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF THE NEOs, AS STATED IN THE ABOVE NON-BINDING RESOLUTION.

PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed KPMG LLP (“KPMG”), an independent registered public accounting firm, to perform an integrated audit of our financial statements for the fiscal year ending December 31, 2015 and internal controls over financial reporting as of December 31, 2015. The Board proposes that the stockholders ratify this appointment. We expect that representatives of KPMG will be present at the Meeting, will be able to make a statement if they so desire, and will be available to respond to appropriate questions.

Independent Registered Public Accounting Firm Fees

Fees for professional services provided by the Company’s independent registered public accounting firm for the years ended December 31, 2014 and 2013 are as follows:

		2014				2013
Audit fees		$	644,500			$	650,000
Audit related fees		$	228,405			$	24,210
Tax fees		$	166,626			$	283,085
Other fees			—				—
Totals		$	1,039,531			$	957,295

All of the foregoing fees were, in each case, pre-approved by the Company’s Audit Committee.

Fee Analysis and Pre-Approval Policy

Audit Fees

Audit fees consist of fees relative to the audit of the Company’s year-end financial statements and review of the Company’s quarterly reports on Form 10-Q, and the auditor’s opinion related to internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002.

Audit Related Fees

Audit related fees principally involve services relative to securities registration statements and related comfort letter procedures.

Tax Fees

Tax fees principally involve services relative to assisting the Company in compliance with its tax filing requirements and tax consulting services.

Audit Committee Pre-Approval Policy

It is the policy of the Company’s Audit Committee to approve all engagements of the Company’s independent registered public accounting firm to render audit or non-audit services prior to the initiation of such services. Our procedures for the pre-approval by the Audit Committee of all services provided by the Company’s independent registered public accounting firm comply with SEC regulations regarding pre-approval of services. Services subject to these SEC requirements include audit services, audit-related services, tax services and other services. The audit engagement is specifically approved and the auditors are retained by the Audit Committee.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE SELECTION OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2015.

EXECUTIVE OFFICERS

The executive officers of the Company are:

Name

Age

Position with the Company

Executive Officer of the Company Since

Edward J. Quilty

64

Chairman of the Board, President and Chief Executive Officer

November, 1998

John E. Yetter, CPA

62

Executive Vice President, Finance and Chief Financial Officer

August, 2000

Robert C. Cole

62

Group President, Traditional Wound Care and Corporate Accounts

January, 2003

Frederic Eigner

65

Executive Vice President of Operations and General Manager, Derma Sciences Canada Inc.

March, 2005

Barry J. Wolfenson

48

Group President, Advanced Wound Care

March, 2006

John Caminis, M.D.

55

Chief Medical Officer

March, 2015

John E. Yetter, CPA has served as our Executive Vice President, Finance and Chief Financial Officer since January 2013, and previously, as our Vice President and Chief Financial Officer beginning in August 2000. Prior to joining us, Mr. Yetter held a variety of senior financial positions with Bristol-Myers Squibb Company. Before his association with Bristol-Myers Squibb, he held several supervisory financial positions with Cooper Industries, Inc., Price Waterhouse and Hulse Manufacturing Company. Mr. Yetter is a member of the American Institute of Certified Public Accountants and the New York Society of Certified Public Accountants. He earned a Bachelor of Science in Accounting, magna cum laude, from Boston College School of Management, Boston, Massachusetts in 1975.

Robert C. Cole has served as our Group President, Traditional Wound Care and Corporate Accounts since January 2013, and previously as our Executive Vice President for Sales beginning in May 2006. Prior to his position as Executive Vice President for Sales, he served as our Vice President — Sales and Marketing from January 2003 through April 2006. Prior to joining us, Mr. Cole held a variety of executive sales positions with B. Braun Medical and predecessor firms beginning in 1974, most recently as Vice President, Sales, Eastern Zone. Mr. Cole earned his Bachelor of Science degree in Biology, cum laude, from St. Vincent’s College, Latrobe, Pennsylvania, in 1974.

Frederic Eigner has served as our Executive Vice President, Operations and General Manager of our Canadian subsidiary, Derma Sciences Canada Inc., since March 2005. Previously, beginning in August 2002, he served as Vice President for Operations of Derma Sciences Canada Inc. Prior to its acquisition by us, he held several positions with Dumex Medical Inc. during the period 1992 until August 2002, most recently as Executive Vice President. Prior to his association with Dumex Medical Inc., Mr. Eigner held a variety of executive manufacturing positions with The Kendall Company during the period from 1980 through 1992, most recently as Director of Manufacturing. He earned a Bachelor of Science degree in Industrial Engineering from the High Technical School of Kranj, Slovenia, in 1975, a Master of Science degree in Chemical Engineering from the University of Maribor, Slovenia, in 1980, and a Master of Business Administration degree from the University of Toronto, Ontario, Canada, in 2000.

Barry J. Wolfenson has served as our Group President, Advanced Wound Care and Pharmaceutical Development since January 2013. Effective March 9, 2015, Mr. Wolfenson’s title was changed to Group President, Advanced Wound Care. Mr. Wolfenson previously served as our Executive Vice President, Global Business Development and Marketing from March 2010 through December 2012; our Vice President for Marketing and Business Development from March 2006 through February 2010; and our Director of Marketing from February 2004 through February 2006. Prior to joining us, Mr. Wolfenson held a variety of sales and marketing positions with Bristol-Myers Squibb beginning in 2001, most recently as Marketing Manager with the Bristol-Myers Squibb ConvaTec division. Before his association with Bristol-Myers Squibb, he operated a successful entrepreneurial venture and served as an account executive with Andersen Consulting. Mr. Wolfenson earned a Bachelor of Science degree in Economics from Franklin and Marshall College, Lancaster, Pennsylvania, in 1989 and a Master of Business Administration degree, cum laude (Beta Gamma Sigma) from the University of Michigan, Ann Arbor, Michigan, in 2001.

John Caminis, M.D. has served as our Chief Medical Officer since March 9, 2015. Prior to joining us, Dr. Caminis served as senior medical director in the immunology, and later in the bone patient value unit, at UCB Biosciences Inc., a global biopharmaceutical company. Prior to UCB he was vice president, clinical development at Warner Chilcott, LLC (now Actavis plc), where he supported the integration of clinical development functions subsequent to that company’s acquisition of Proctor & Gamble Co.’s pharmaceuticals business. At Warner Chilcott he planned, designed, developed and oversaw clinical development programs in therapeutic areas such as bone metabolism, urology, dermatology and infectious disease. Earlier in his career, Dr. Caminis had roles of increasing responsibility in clinical development and medical affairs programs at small as well as large companies like NPS Pharmaceuticals, Inc., Novartis Pharmaceuticals Corporation and Roche Laboratories, Inc. While at NPS, he had a pivotal role in the execution and development of key assets for patients with rare diseases. Dr. Caminis earned a Bachelor of Science degree in Biological Sciences from Concordia University in Montreal, Quebec, a Doctor of Medicine degree from the University of Athens School of Medicine in Athens, Greece and a Masters Certification in Project Management from the George Washington University School of Business/ESI International.

Executive officers are appointed by, and serve at the discretion of, the Board of Directors.

COMPENSATION DISCUSSION AND ANALYSIS

The following discussion relates to compensation arrangements on behalf of, and compensation paid by our Company to, each of our named executive officers who include:

Name		Position
Edward J. Quilty		Chief Executive Officer
John E. Yetter		Executive Vice President, Finance and Chief Financial Officer
Robert C. Cole		Group President, Traditional Wound Care and Corporate Accounts
Frederic Eigner		Executive Vice President, Operations and General Manager of Derma Sciences Canada Inc.
Barry J. Wolfenson(1)		Group President, Advanced Wound Care and Pharmaceutical Development

Section 1: Executive Summary

Compensation Objectives

The objectives of our compensation programs are as follows:

Objective		Description
Pay-For-Performance		Our compensation program emphasizes performance-based compensation in order to motivate our executives to achieve strong financial, operational and individual performance in line with the Company’s corporate strategies, business objectives and the long-term interests of the Company’s stockholders.
Talent Retention		In order to attract and retain qualified executive leadership, the Company must offer compensation which is comparable to similarly situated companies and which provides the potential for substantial rewards if the Company is successful over the long-term. The Company seeks to pay base salary, annual bonus and long-term incentive compensation at levels competitive with other medical device companies.
Alignment with Stockholder Interests		Our compensation program aligns our executives’ interests with those of our stockholders by making stock-based incentives a core element of our executives’ compensation.

Pay-For-Performance

We are committed to a pay-for-performance philosophy. As described below, the variable components of our compensation program are short-term incentives (“STI”) and long-term incentives (“LTI”). Our STI opportunities are provided under an annual cash bonus plan, the payout of which is dependent on the achievement of certain financial, operational or technological objectives. Our LTI opportunities are provided through performance and time-based stock options and performance-based restricted share unit (“RSU”) awards.

As a result of our pay-for-performance commitment, a meaningful portion of our named executive officers’ total direct compensation, which consists of base salary and target STI and LTI opportunities, is variable. For 2014, approximately 74% of the total direct compensation opportunity (assuming target performance) for Mr. Quilty and approximately 81% of the total direct compensation opportunity (assuming target performance) for our other named executive officers was provided in the form of STI and LTI opportunities.

Compensation Policies and Practices

The Compensation Committee has implemented a number of compensation policies and practices that are intended to further our compensation objectives. The following are some key features of our executive compensation program.

Our Compensation Policies and Practices

Section 2: Elements of Compensation

The following is an overview of our compensation program which consists of base salary, STI opportunity, and LTI opportunity.

Base Salary

The employment agreement with each named executive officer sets an initial base salary in accordance with industry norms and the named executive officer’s experience and qualifications. The Compensation Committee annually reviews each executive officer’s base salary. Among the factors taken into consideration are: (i) individual and corporate performance, (ii) levels of responsibility, (iii) prior experience, (iv) breadth of knowledge of the industry and (v) competitive pay practices. If salaries at comparable companies have increased, the Compensation Committee normally recommends similar increases. However, increases will be recommended only if the executive’s historical performance warrants an increase and if the increase is prudent in view of the Company’s financial condition.

Based on the above factors, the base salaries of the named executive officers were increased in 2014 as follows:

Name		2013 Base Salary				2014 Base Salary				% Change
Mr. Quilty		$	450,000			$	500,000				11	%
Mr. Yetter		$	260,000			$	270,000				4	%
Mr. Cole		$	240,000			$	250,000				4	%
Mr. Eigner(1)		$	252,427			$	244,388				4	%
Mr. Wolfenson		$	280,000			$	300,000				7	%

Effective January 1, 2015, the base salaries for the named executive officers were increased by 3% in order to reflect a cost of living adjustment. This 3% increase represented the same range of base salary increase applicable to all of the Company’s employees.

Short-Term Incentive Compensation

In addition to base salary, the Company seeks to reward executives each year for the achievement of specific goals through short-term incentives.

For 2014, the Compensation Committee did not adjust the target STI opportunity, which is expressed as a percentage of base salary, for the named executive officers because the levels were already competitively positioned. The target levels for the named executive officers are set forth in the table which follows.

Name		Target STI Opportunity
Mr. Quilty			50	%
Mr. Yetter			30	%
Mr. Cole			30	%
Mr. Eigner			30	%
Mr. Wolfenson			35	%

Performance Goals

For 2014, the performance goals for the STI opportunity for each named executive officer was allocated (i) 75% to financial goals which were tied to the 2014 financial and operational budget and (ii) 25% to strategic and personal goals. The R&D financial goal was primarily based on the DSC127 Phase 3 development program and included both financial spend and patient enrollment target numbers. The financial goals and actual performance results were as follows:

Financial Goals		Weight % Target				Budget ($ millions)				Actual ($ millions)				Weight % Achieved
Net Sales			30	%		$	93.603			$	83.746				15	%
Gross Profit			15	%		$	35.243			$	30.067				8	%
R&D			10	%		$	28.542			$	19.283				4	%
EBITDA (Excluding R&D)			20	%			($8.203	)			($11.591	)			10	%
TOTAL			75	%			—				—				37	%

The 2014 strategic and personal goals were as follows:

Name		Strategic and Personal Goals
Mr. Quilty		•   Strategic:  Present and implement strategic 3-year plan; Efficiently execute the Phase 3 clinical trial program for DSC127, including targeted patient enrollment numbers; Evaluate and present multiple comprehensive strategic opportunities to grow the Company’s business related to acquisitions or product licensing to the Board for consideration; Complete at least one of these opportunities, if appropriate; Oversee succession planning initiatives; Lead an effective investor and analyst relationship program.
		•   Personal:  Exhibit leadership and communication skills.
Mr. Yetter		•   Strategic:  Provide business and financial analysis in support of key management operating decisions; Optimize operational cash flow; Implement new business management software in Canada; Complete integration of equity administration and reporting software; Lead international tax planning study.
		•   Personal:  Exhibit financial, risk management and personnel management skills; Exhibit leadership and communication skills.

Name		Strategic and Personal Goals
Mr. Cole		•   Strategic:  Successfully enhance the Company’s position in the retail private label industry; Recruit and hire certain key personnel for sales and distribution in target market; Assist in securing contracts that will support the purchase of equipment for form, fill and seal; Support Amnio family of products and corporate accounts.
		•   Personal:  Motivate Traditional Wound Care personnel towards higher achievement; Foster cooperation with Advanced Wound Care and corporate accounts personnel.
Mr. Eigner		•   Strategic:  Implement certain cost reduction initiatives; Oversee manufacturing relocations and improvement of certain manufacturing sites; Implement leasehold improvements at certain manufacturing facilities; Spearhead successful outcome of Regulatory Audit.
		•   Personal:  Motivate Canadian employees towards higher achievement and ensure manufacturing plant safety; Exhibit leadership and communication skills.
Mr. Wolfenson		•   Strategic:  Improve international sales and production efficiencies; Efficiently execute the Phase 3 clinical trial program for DSC127, including targeted patient enrollment numbers; Complete outstanding product development agreements and initiate launch of certain products; Achieve annual growth of 30% for Advanced Wound Care product line; Initiate development of zip-line cast system; Launch new corporate identity campaign; Oversee and promote effective partner and alliance management.
		•   Personal:  Motivate Advanced Wound Care personnel towards higher achievement; Foster cooperation with Traditional Wound Care and corporate accounts personnel; Exhibit leadership and communication skills.

Payouts

The Compensation Committee determined the payouts under the 2014 STI program, based on aggregate performance. The weighted-average achievement and payout levels for the named executive officers under the 2014 STI program are set forth below.

Name(1)		Financial Goals Achievement Level (75%)				Strategic and Personal Goals Achievement Level (25%)				Weighted Average Achievement Level				Target STI Opportunity				Payout
Mr. Quilty			49	%			50	%			49	%		$	250,000			$	123,000
Mr. Yetter			49	%			80	%			57	%		$	81,000			$	46,000
Mr. Cole			49	%			88	%			59	%		$	75,000			$	44,000
Mr. Eigner			49	%			80	%			57	%		$	73,316			$	41,637	(2)
Mr. Wolfenson			49	%			60	%			52	%		$	105,000			$	54,000

For 2014, an additional cash bonus was awarded to Mr. Quilty of $30,000 and Mr. Wolfenson of $20,000 due to their extraordinary efforts in managing a successful equity raise of $86 million.

Long-Term Incentive Compensation

The Company’s long-term incentives for named executive officers consist of stock options and RSUs awarded pursuant to the Company’s 2012 Equity Incentive Plan. The Compensation Committee determines the number and terms of recommended option and RSU grants to the Company’s named executive officers based on practices at comparable companies in the medical device industry and the Company’s policy of linking long-term incentives to performance.

2014 Annual Grants

On February 14, 2014, the Compensation Committee granted performance-based RSUs and time-based and performance-based stock options to the named executive officers. The time-based stock options vest 25% upon the date of grant and 25% annually thereafter. The performance-based stock options and performance-based RSUs are to vest, if at all, to the extent the Company achieves the financial, strategic and personal goals as set forth in the STI program. The number of performance-based RSUs and stock options granted to each named executive officer as part of the 2014 annual grant are set forth below.

Name		Performance-Based RSUs				Stock Options
						Performance-Based				Time-Based
Mr. Quilty			12,200				41,000				24,000
Mr. Yetter			4,700				15,000				12,000
Mr. Cole			4,700				15,000				12,000
Mr. Eigner			4,700				15,000				12,000
Mr. Wolfenson			6,200				22,000				16,000

On February 12, 2015, the Compensation Committee determined the vesting under the 2014 LTI program, based on the weighted average achievement level of the financial, strategic and personal goals under the STI program, for the year ended December 31, 2014.

Name(1)		Weighted Average Achievement Level				Performance-Based RSUs								Performance-Based Stock Options
						Granted (2014)				Vested (2015)				Granted (2014)				Vested (2015)
Mr. Quilty			49	%			12,200				6,000				41,000				20,100
Mr. Yetter			57	%			4,700				2,700				15,000				8,500
Mr. Cole			59	%			4,700				2,700				15,000				8,800
Mr. Eigner			57	%			4,700				2,700				15,000				8,500
Mr. Wolfenson			52	%			6,200				3,200				22,000				11,300

2014 Special Equity Bonus

The Compensation Committee also awarded a special equity bonus of 12,000 stock options to Mr. Quilty and 7,500 stock options to Mr. Wolfenson due to their extraordinary efforts in managing a successful equity raise of $86 million. The stock option awards are time-based and will vest 25% upon the date of grant and 25% annually thereafter.

Section 3: Determining Compensation

Compensation Committee

The Compensation Committee is charged with the following responsibilities: (i) recommendations to the Board of Directors relative to the compensation of executive officers, (ii) administration of the equity incentive plan and recommendations to the Board relative to the grant of equity awards to employees, directors and consultants of the Company, (iii) review of, and recommendations to the Board concerning, proposed employment agreements with executive officers, and (iv) evaluation of the performance of, and determination of compensation policies for, executive officers.

The Compensation Committee meets several times per year in order to: (i) review the effectiveness of the Company’s executive compensation policy in advancing the Company’s objectives, (ii) make recommendations to the Board for any adjustments, and (iii) recommend annual compensation for the coming year.

Compensation Consultant

The Compensation Committee directly retains the Hay Group to assist in developing and reviewing our executive compensation strategy and program. The Hay Group reports directly to the Compensation Committee and does not perform any other services for the Company other than as an adviser to the Board of Directors on its director compensation program. The Compensation Committee has assessed the independence of the Hay Group pursuant to SEC rules and NASDAQ listing standards and concluded that no conflict of interest exists that would prevent the consulting firm from independently advising the Compensation Committee.

Peer Group

For 2014, the companies comprising the Company’s compensation peer group remained the same as in 2013 and were as follows:

2014 Compensation Peer Group
Allied Healthcare Products Inc.		Lannett Co., Inc.
Anika Therapeutics		Repligen Corp.
Atricure, Inc.		Span-America Medical Systems Inc.
Atrion Corp.		SurModics, Inc.
Cumberland Pharmaceuticals		Synergetics
Cutera Inc.		Utah Medical Products
Iridex Corp.		Vascular Solutions Inc.

In 2015, the Compensation Committee engaged the Hay Group to identify a peer group and for evaluation of the market competitiveness of cash and equity compensation for the Company’s executive officers. As a result of this evaluation, a new peer group was identified effective January 1, 2015. These changes include (a) the removal of Allied Healthcare Products Inc., Cumberland Pharmaceuticals and Lannett Company, Inc. and (b) the addition of Endologix Inc., Osiris Therapeutics, Inc. and STAAR Surgical Company.

Section 4: Additional Compensation Matters

Employment Arrangements

The key terms of the employment agreements with each of our named executive officers are set forth below.

Edward J. Quilty

We employ Edward J. Quilty, our Chairman, President and Chief Executive Officer, pursuant to an employment agreement (as amended effective as of December 20, 2012, March 31, 2013 and March 9, 2015), expiring March 31, 2017, providing for an annual base salary and incentive compensation in the discretion of the Board of Directors. The agreement further provides that, upon the Company’s failure to renew the agreement or termination of employment, each without cause (each, a “Severance Event”), Mr. Quilty is entitled to (i) payment of severance compensation in the amount of two-years’ base salary, to be paid in twenty-four equal monthly installments, (ii) at the Company’s expense, the same health care benefits provided to the Company’s active employees for twenty four months following such Severance Event and (iii) an extension of the period to exercise any options to purchase securities of the Company to the earlier to occur of (a) the expiration thereof, as set forth in the option instrument, or (b) the tenth anniversary of the original grant date of the option instrument (an “Option Exercise Extension”). Mr. Quilty’s receipt of severance benefits and an Option Exercise Extension under his employment agreement is further conditioned upon his release of any claims against our Company. Mr. Quilty’s employment agreement also contains a “claw back” provision pursuant to which the Company will recoup incentive compensation from him in the event of a financial restatement or other serious issue that results in a downward adjustment of the revenues, profits or other financial criteria upon which incentive-based compensation was predicated (a “Claw-Back Provision”).

John E. Yetter, CPA

We employ John E. Yetter, CPA, our Executive Vice President, Finance and Chief Financial Officer, pursuant to an employment agreement (as amended effective as of December 20, 2012, March 31, 2013 and March 9, 2015), expiring March 31, 2017, providing for an annual base salary and incentive compensation in the discretion of the Board of Directors. The agreement further provides that, upon a Severance Event, Mr. Yetter is entitled to (i) payment of severance compensation in the amount of one-year’s base salary, to be paid in twelve equal monthly installments, (ii) at the Company’s expense, the same health care benefits provided to the Company’s active employees for twelve months following such Severance Event and (iii) an Option Exercise Extension. Mr. Yetter’s receipt of severance benefits and an Option Exercise Extension under his employment agreement is further conditioned upon his release of any claims against our Company. Mr. Yetter’s employment agreement also contains a Claw-Back Provision.

Robert C. Cole

We employ Robert C. Cole, our Group President, Traditional Wound Care and Corporate Accounts, pursuant to an employment agreement (as amended effective as of December 20, 2012, March 31, 2013, and March 9, 2015), expiring March 31, 2017, providing for an annual base salary and incentive compensation in the discretion of the Board of Directors. The agreement further provides that, upon a Severance Event, Mr. Cole is entitled to (i) payment of severance compensation in the amount of one-year’s base salary, to be paid in twelve equal monthly installments, (ii) at the Company’s expense, the same health care benefits provided to the Company’s active employees for twelve months following such Severance Event and (iii) an Option Exercise Extension. Mr. Cole’s receipt of severance benefits and an Option Exercise Extension under his employment agreement is further conditioned upon his release of any claims against our Company. Mr. Cole’s employment agreement also contains a Claw-Back Provision.

Frederic Eigner

We employ Frederic Eigner, our Executive Vice President, Operations and General Manager of Derma Sciences Canada Inc., pursuant to an employment agreement (as amended effective as of December 20, 2012, March 31, 2013 and March 9, 2015), expiring March 31, 2017, providing for an annual base salary and incentive compensation in the discretion of the Board of Directors. The agreement further provides that, upon a Severance Event, Mr. Eigner is entitled to (i) payment of severance compensation in the amount of the greater of (a) one-year’s base salary, to be paid in twelve equal monthly installments and (b) the amount specified by the laws of Ontario, Canada, to be paid in monthly installments, (ii) at Derma Canada’s expense, for twelve months following such Severance Event, the health care benefits required by the laws of Ontario, Canada, and reimbursement for the cost of health care benefits obtained by Mr. Eigner to the extent comparable benefits and cost coverage is provided to Derma Canada’s active employees and (iii) an Option Exercise Extension. Mr. Eigner’s receipt of severance benefits and an Option Exercise Extension under his employment agreement is further conditioned upon his release of any claims against our Company. Mr. Eigner’s employment agreement also contains a Claw-Back Provision.

Barry J. Wolfenson

We employ Barry J. Wolfenson, our Group President, Advanced Wound Care, pursuant to an employment agreement (as amended effective as of December 20, 2012, March 31, 2013 and March 9, 2015), expiring March 31, 2017, providing for an annual base salary and incentive compensation in the discretion of the Board of Directors. The agreement further provides that, upon a Severance Event, Mr. Wolfenson is entitled to (i) payment of severance compensation in the amount of one-year’s base salary, to be paid in twelve equal monthly installments, (ii) at the Company’s expense, the same health care benefits provided to the Company’s active employees for twelve months following such Severance Event and (iii) an Option Exercise Extension. Mr. Wolfenson’s receipt of severance benefits and an Option Exercise Extension under his employment agreement is further conditioned upon his release of any claims against our Company. Mr. Wolfenson’s employment agreement also contains a Claw-Back Provision.

Risk Assessment

The Company believes that its compensation policies and practices for all employees, including executive officers, do not create risks that are reasonably likely to have a material adverse effect on the Company. Although a significant portion of our executive compensation program is performance-based, we have focused on aligning our compensation policies with the long-term interests of our stockholders and avoiding rewards that could create excessive or inappropriate risks to the Company.

COMPENSATION COMMITTEE REPORT

The Compensation Committee, comprised of independent directors, reviewed and discussed the above Compensation Discussion and Analysis with the Company’s management. Based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Compensation Committee Members

Robert G. Moussa, Chairman
Srini Conjeevaram
Stephen T. Wills, CPA, MST
Amy Paul

Summary Compensation Table

The following table presents information regarding the compensation earned by our Chief Executive Officer, Chief Financial Officer and the next three highest paid executive officers in the years ended December 31, 2014, 2013 and 2012. We sometimes refer to these individuals collectively as our “named executive officers.”

Name and Principal Position		Year				Salary				Bonus(1)				Stock Awards(2)				Option Awards(2)				Non-Equity Incentive Plan Compensation(3)				All Other Compensation(4)				Total
Edward J. Quilty Chief Executive Officer			2014			$	500,000			$	30,000			$	163,358			$	591,360			$	123,000			$	13,938			$	1,421,656
			2013			$	450,000				—			$	108,704			$	450,185			$	196,000			$	12,390			$	1,217,279
			2012			$	400,000				—			$	1,611,252			$	198,560			$	160,000			$	16,935			$	2,386,747
John E. Yetter, CPA Executive Vice President, Finance and Chief Financial Officer			2014			$	270,000				—			$	62,933			$	207,360			$	46,000			$	12,795			$	599,088
			2013			$	260,000				—			$	52,288			$	213,010			$	68,000			$	12,390			$	605,688
			2012			$	250,000				—			$	784,026			$	119,136			$	63,000			$	12,190			$	1,228,352
Robert C. Cole Group President, Traditional Wound Care and Corporate Accounts			2014			$	250,000				—			$	62,933			$	207,360			$	44,000			$	20,021			$	584,314
			2013			$	240,000				—			$	53,664			$	215,695			$	65,000			$	17,790			$	592,149
			2012			$	218,000				—			$	784,026			$	119,136			$	55,000			$	17,747			$	1,193,909
Frederic Eigner(5) Executive Vice President, Operations and General Manager, Derma Sciences Canada Inc.			2014			$	244,388				—			$	62,933			$	207,360			$	41,637			$	13,122			$	569,440
			2013			$	252,403				—			$	50,912			$	210,325			$	64,071			$	15,122			$	592,833
			2012			$	250,000				—			$	784,026			$	119,136			$	63,000			$	15,495			$	1,231,657
Barry J. Wolfenson Group President, Advanced Wound Care and Pharmaceutical Development			2014			$	300,000			$	20,000			$	83,018			$	349,440			$	54,000			$	8,625			$	815,083
			2013			$	280,000				—			$	61,920			$	281,925			$	85,000			$	9,190			$	718,035
			2012			$	235,000				—			$	1,010,932			$	119,136			$	80,000			$	9,240			$	1,454,308

Other Compensation		Quilty				Yetter				Cole				Eigner(a)				Wolfenson
401(k) Matching Contribution		$	6,253			$	10,370			$	10,400			$	10,984	(b)		$	6,200
Executive Health Services		$	2,380			$	2,190			$	2,186			$	2,000			$	2,190
Disability Insurance		$	5,305			$	235			$	235			$	138			$	235
Car Allowance		$	0			$	0			$	7,200			$	0			$	0

Grants Of Plan-Based Awards

The following table sets forth information relating to plan-based incentives, stock options and RSUs granted to our named executive officers in 2014.

Name		Grant Date				Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) Target ($)				Estimated Future Payouts Under Equity Incentive Plan Awards(2) Target (#)				All Other Option Awards: Number of Securities Underlying Options(3) (#)				Exercise or Base Price of Option Awards(4) ($/Sh)				Grant Date Fair Value of Stock and Option Awards(5)
Edward J. Quilty
Short-Term Cash Incentive			2/14/2014				250,000
Special Cash Award			2/14/2014				30,000
Special Stock Option			2/14/2014												12,000				13.39				92,160
Time-Based Option			2/14/2014												24,000				13.39				184,320
Performance-Based Option			2/14/2014								41,000								13.39				314,880
Performance-Based RSU			2/14/2014								12,200								—				163,358
John E. Yetter, CPA
Short-Term Cash Incentive			2/14/2014				81,000
Time-Based Option			2/14/2014												12,000				13.39				92,160
Performance-Based Option			2/14/2014								15,000								13.39				115,200
Performance-Based RSU			2/14/2014								4,700								—				62,933
Robert C. Cole
Short-Term Cash Incentive			2/14/2014				75,000
Time-Based Option			2/14/2014												12,000				13.39				92,160
Performance-Based Option			2/14/2014								15,000								13.39				115,200
Performance-Based RSU			2/14/2014								4,700								—				62,933
Frederic Eigner(6)
Short-Term Cash Incentive			2/14/2014				73,316
Time-Based Option			2/14/2014												12,000				13.39				92,160
Performance-Based Option			2/14/2014								15,000								13.39				115,200
Performance-Based RSU			2/14/2014								4,700								—				62,933
Barry J. Wolfenson
Short-Term Cash Incentive			2/14/2014				105,000
Special Cash Award			2/14/2014				20,000
Special Stock Option			2/14/2014												7,500				13.39				57,600
Time-Based Option			2/14/2014												16,000				13.39				122,880
Performance-Based Option			2/14/2014								22,000								13.39				168,960
Performance-Based RSU			2/14/2014								6,200								—				83,018

2012 Equity Incentive Plan

The Company’s 2012 Equity Incentive Plan authorizes the Company to grant equity-based and cash-based incentive compensation in the form of stock options, stock appreciation rights (or “SARs”), restricted shares, restricted share units, other share-based awards and cash-based awards, for the purpose of providing the Company’s employees, officers, consultants and non-employee directors with incentives and rewards for performance. See the “Compensation Discussion and Analysis” section for complete description of performance goals on which payments were based.

Outstanding Equity Awards at Year-End

The following table sets forth information regarding the outstanding option and stock awards held by the named executive officers as of December 31, 2014:

		Option Awards																				Stock Awards
Name		Number of Securities Underlying Unexercised Options # (Exercisable)				Number of Securities Underlying Unexercised Options # (Unexercisable)				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options #				Option Exercise Price $				Option Expiration Date				Number of Shares or Units of Stock That Have Not Vested #				Market Value of Shares or Units of Stock That Have Not Vested $				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested #				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested $
Edward J. Quilty																															12,200				113,582	(10)
																							32,500				302,575	(11)
																															120,000				1,117,200	(12)
			9,000				27,000	(1)			41,000	(1)		$	13.39				02/14/2024
			38,300				12,000	(2)						$	11.97				02/13/2023
			30,000				4,000	(3)						$	8.75				02/16/2022
			25,000											$	8.00				08/31/2021
			27,000				—							$	4.95				01/20/2021
			15,000				—							$	5.10				03/04/2020
			24,688				—							$	3.12				02/25/2019
			25,000				—							$	4.80				11/29/2017
			18,750				—							$	6.40				02/22/2017
			24,219				—							$	4.00				03/01/2015
John E. Yetter, CPA																															4,700				43,757	(10)
																							15,000				139,650	(11)
																															60,000				558,600	(12)
			3,000				9,000	(4)			15,000	(4)		$	13.39				02/14/2023
			17,800				6,000	(5)						$	11.97				02/13/2023
			18,000				2,400	(6)						$	8.75				02/16/2022
			15,000				—							$	8.00				08/31/2021
			16,500				—							$	4.95				01/20/2021
			8,000				—							$	5.10				03/04/2020
			13,282				—							$	3.12				02/25/2019
			12,500				—							$	4.80				11/29/2017
			9,375				—							$	6.40				02/22/2017
			14,532				—							$	4.00				03/01/2015
Robert C. Cole																															4,700				43,757	(10)
																							15,000				139,650	(11)
																															60,000				558,600	(12)
			3,000				9,000	(7)			15,000	(7)		$	13.39				02/14/2024
			18,100				6,000	(5)						$	11.97				02/13/2023
			18,000				2,400	(6)						$	8.75				02/16/2022
			15,000				—							$	8.00				08/31/2021
			16,500				—							$	4.95				01/20/2021
			8,000				—							$	5.10				03/04/2020
			13,282				—							$	3.12				02/25/2019
			12,500				—							$	4.80				11/29/2017
			9,375				—							$	6.40				02/22/2017
			14,532				—							$	4.00				03/01/2015

Option Exercises and Stock Vested

The following table sets forth certain information concerning the exercise of option awards and the vesting of time-based and performance-based RSUs held by our named executive officers during 2014.

		Option Awards								Stock Awards
Name		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise ($)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)(1)
Edward J. Quilty			6,250				5,000				24,150				249,230
John E. Yetter			3,125				2,500				11,300				117,060
Robert C. Cole			3,125				2,500				11,400				118,380
Frederic Eigner			3,750				3,000				11,200				115,740
Barry J. Wolfenson			8,750				19,338				15,750				170,925

Pension Benefits

We do not sponsor or maintain any pension plans for our named executive officers.

Nonqualified Deferred Compensation

We have not adopted any non-qualified deferred contribution plans or other deferred compensation plans for our named executive officers.

Potential Payments Upon Termination or Change in Control

The Company has entered into agreements and maintains plans and arrangements that require it to pay or provide compensation and benefits to the named executive officers in the event of certain terminations of employment or a change in control. The estimated amount payable or provided to each of these executives in each situation is summarized below. These estimates are based on the assumption that the various triggering events occurred on the last day of 2014, along with other material assumptions noted below. The actual amounts that would be paid to these executives upon termination or a change in control can only be determined at the time the actual triggering event occurs.

The amount of compensation and benefits described below does not take into account compensation and benefits that a named executive officer has earned prior to the applicable triggering event, such as the 2014 annual incentive payouts, equity awards that had previously vested in accordance with their terms, or vested benefits otherwise payable under the retirement plans and programs (unless those benefits are enhanced or accelerated). Please refer to the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the amount of the 2014 annual incentive payout and the Outstanding Equity Awards at Year-End table for a summary of each named executive officer’s vested equity awards. Please see the Summary Compensation Table for the annual incentive earned by our named executive officers in 2014.

Name and Triggering Event		Cash Severance ($)(1)				Welfare and Other Benefits ($)(2)				Stock Awards ($)(3)				Total ($)(4)
Mr. Quilty
•   Voluntary termination			0				0				0				0
•   Involuntary termination without cause			1,000,000				23,146				0				1,023,146
•   CIC			0				0				945,896				945,896
•   Death			0				0				0				0
•   Disability			0				0				0				0
•   Retirement			0				0				0				0
Mr. Yetter
•   Voluntary termination			0				0				0				0
•   Involuntary termination without cause			270,000				16,486				0				286,486
•   CIC			0				0				405,916				405,916
•   Death			0				0				0				0
•   Disability			0				0				0				0
•   Retirement			0				0				0				0
Mr. Cole
•   Voluntary termination			0				0				0				0
•   Involuntary termination without cause			250,000				11,573				0				261,573
•   CIC			0				0				408,709				408,709
•   Death			0				0				0				0
•   Disability			0				0				0				0
•   Retirement			0				0				0				0
Mr. Eigner
•   Voluntary termination			0				0				0				0
•   Involuntary termination without cause			244,388				2,250				0				246,638
•   CIC			0				0				405,916				405,916
•   Death			0				0				0				0
•   Disability			0				0				0				0
•   Retirement			0				0				0				0
Mr. Wolfenson
•   Voluntary termination			0				0				0				0
•   Involuntary termination without cause			300,000				16,791				0				316,791
•   CIC			0				0				582,108				582,108
•   Death			0				0				0				0
•   Disability			0				0				0				0
•   Retirement			0				0				0				0

2012 RSU Retention Grant

On December 20, 2012, the Company made a one-time grant of time-based RSUs. The RSUs will vest as to 25% of the RSUs granted on the first, second, third and fourth anniversaries of the date of grant, so long as the NEO is employed by the Company on such dates. Any unvested RSUs will vest immediately upon termination of the named executive officer without cause or upon a change in control of the Company while the named executive officer remains employed.

2012 Performance-Based RSU Retention Grant

On December 20, 2012, the Company made a one-time grant of performance-based RSUs. Vesting of the performance-based RSUs will be contingent upon achievement and maintenance prior to December 20, 2015, for a period of sixty (60) consecutive trading days, of a Common Stock closing price per share equal to or greater than one or more of the prices as follows:

Restricted Share Units — Performance-Based Vesting
Name		Total Awarded (#)				Vested $15.00/share (#)				Vested $17.50/share (#)				Vested $20.00/share (#)
Edward J. Quilty			120,000				30,000				40,000				50,000
John E. Yetter			60,000				15,000				20,000				25,000
Robert C. Cole			60,000				15,000				20,000				25,000
Frederic Eigner			60,000				15,000				20,000				25,000
Barry J. Wolfenson			75,000				20,000				25,000				30,000

In the event of a change in control, the performance objective will be determined by the Compensation Committee based upon the higher of (i) the per share of Common Stock consideration paid to stockholders of the Company in the change in control transaction, or (ii) the highest closing price per share of Common Stock maintained for any sixty (60) consecutive trading days during the period beginning on the date of grant and ending on the date of the change in control. To the extent, if any, that the performance-based RSUs are earned in accordance with the foregoing, such performance-based RSUs shall vest on December 20, 2015, so long as the named executive officer remains employed with the Company on such date. Notwithstanding the foregoing, to the extent, if any, that the Compensation Committee determines that the stock price performance goal has been achieved while the NEO remains employed by the Company, then the resulting performance-based RSUs shall vest immediately if (i) the named executive officer dies; (ii) the Company terminates the officer’s employment without cause; or (iii) a change in control of the Company occurs while the officer remains employed with the Company. This award is not anticipated to vest upon a change in control.