Edgar Filing: FUELCELL ENERGY INC

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

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Filed by the Registrant

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Filed by a Party other than the Registrant

		Check the appropriate box:
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		☑				Definitive Proxy Statement
		☐				Definitive Additional Materials
		☐				Soliciting Material Pursuant to ss.240.14a-12

FuelCell Energy, Inc.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notice of 2019 Annual Meeting & Proxy Statement

APRIL 4, 2019 — NEW YORK, NY

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DEAR FELLOW FUELCELL ENERGY STOCKHOLDER

JAMES H. ENGLAND
CHAIRMAN OF THE BOARD
February 19, 2019

For the Board of Directors of FuelCell Energy, Inc., our senior management team and all of our employees, our 2018 fiscal year was a busy and productive year as we worked to win projects and drive policy initiatives that favor our solutions for the supply, recovery and storage of energy.

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We ended fiscal year 2018 with a record backlog of over $2 billion, over 83 megawatts (“MW”) of new projects to be built, and significant advancements in our carbon capture, hydrogen and storage solutions.

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We worked to restore the federal investment tax credit for stationary fuel cells and to expand the carbon sequestration credit.

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We delivered, commissioned and are now operating the 20 MW KOSPO project in Incheon, South Korea.

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We were awarded 22.2 MW of projects in the Connecticut competitive solicitation.

The Board, in conjunction with senior management, continues to focus on the Company’s strategy, business objectives, and risk management.

Following the results of last year’s Annual Meeting of Stockholders, we engaged in a thorough review of our corporate governance. As a result of this review, a number of actions were taken:

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We added Dr. Christina Lampe-Onnerud and Mr. Jason B. Few to our Board, bringing fresh ideas, insights and greater diversity, as well as a wealth of key relevant experience and expertise to our Board;

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We implemented a mandatory retirement age for Directors and set limits on Board tenure;

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We elected a new Chairman of the Board;

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We implemented mandatory accredited education for Directors; and

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We increased minimum share ownership requirements for the Chief Executive Officer, all named executive officers and Directors.

As we begin our 2019 fiscal year, we continue to evaluate ways in which we can improve our business and our governance and demonstrate our commitment to our stockholders. We will continue to review and evaluate our governance structure and will undertake a review of our compensation policies to ensure they are aligned with the best interest of our stockholders.

Our Board and management remain committed to our core values and to delivering on our vision for sustainable profitability. Thank you for your investment in FuelCell Energy, Inc.

Sincerely,

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DEAR FELLOW FUELCELL ENERGY STOCKHOLDER

ARTHUR A. “CHIP” BOTTONE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
February 19, 2019

On behalf of FuelCell Energy, Inc. (the “Company” or “FuelCell Energy”), I thank you for your ongoing interest and investment in the Company. We are committed to acting in the best long-term interests of our stockholders. For further information about our continuing commitment to maintaining good corporate governance practices, we encourage you to review the “Corporate Governance” section beginning on page 12 of this Proxy Statement.

We are pleased to invite you to FuelCell Energy’s 2019 Annual Meeting of Stockholders to be held on Thursday, April 4, 2019 at 10:00 AM Eastern Daylight Time at the Lotte New York Palace Hotel, 455 Madison Avenue, New York, New York. This booklet includes the Notice of Annual Meeting and the Proxy Statement.

The Proxy Statement fully describes the business we will conduct at the Annual Meeting and provides information about the Company that you should consider when voting your shares.

Your vote is very important and we request that you vote your shares as promptly as possible. We encourage you to vote your shares by proxy even if you do not plan to attend the Annual Meeting. The Board of Directors recommends the approval of the proposals being presented at the Annual Meeting as being in the best interest of the Company and its stockholders.

Sincerely,

“YOUR VOTE IS VERY IMPORTANT. WE ENCOURAGE YOU TO VOTE
YOUR SHARES BY PROXY EVEN IF YOU DO NOT
PLAN TO ATTEND THE MEETING.”

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NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

MEETING INFORMATION
THURSDAY, APRIL 4, 2019

10:00 a.m. Eastern Daylight Time

Lotte New York Palace Hotel
455 Madison Avenue
New York, NY

ITEMS OF BUSINESS

To elect six directors to serve until the 2020 Annual Meeting of Stockholders and until their successors are duly elected and qualified;

To ratify the selection of KPMG LLP as FuelCell Energy, Inc.’s independent registered public accounting firm for the fiscal year ending October 31, 2019;

To approve, on a non-binding advisory basis, the compensation of FuelCell Energy, Inc.’s named executive officers as set forth in the “Executive Compensation” section of the accompanying Proxy Statement;

To approve, in accordance with Nasdaq Marketplace Rule 5635(d), the issuance of shares of FuelCell Energy, Inc.’s common stock exceeding 19.9% of the number of shares outstanding on August 27, 2018, upon conversion of the Series D Convertible Preferred Stock issued in an underwritten offering in August 2018 (the “Nasdaq Marketplace Rule Proposal”);

To approve the amendment of the FuelCell Energy, Inc. Certificate of Incorporation, as amended, to increase the number of authorized shares of common stock of FuelCell Energy, Inc. from 225,000,000 shares to 335,000,000 shares (the “Increase Authorized Shares Proposal”);

To authorize the Board of Directors of FuelCell Energy, Inc. to effect a reverse stock split (such authorization to expire on April 4, 2020) through an amendment to the FuelCell Energy, Inc. Certificate of Incorporation, as amended (the “Reverse Stock Split Proposal”); provided that, in the event that the Increase Authorized Shares Proposal is also approved, such reverse stock split and amendment, if implemented by the Board of Directors, will become effective after the effectiveness of the Increase Authorized Shares Proposal;

To approve an adjournment of the Annual Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Nasdaq Marketplace Rule Proposal (the “Adjournment Proposal”); and

To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

RECORD DATE

Holders of record of our common stock on February 7, 2019, the record date, are entitled to notice of, and to vote at, the Annual Meeting; provided, however, that holders of shares of our common stock issued upon conversion of the Series D Convertible Preferred Stock prior to stockholder approval of Proposal 4 — the Nasdaq Marketplace Rule Proposal will not be permitted to vote such shares with respect to Proposal 4 — the Nasdaq Marketplace Rule Proposal.

MATERIALS TO REVIEW

This booklet contains our Notice of Annual Meeting and our Proxy Statement, which fully describes the business we will conduct at the Annual Meeting.

PROXY VOTING

It is important that your shares are represented and voted at the Annual Meeting. Please vote your shares according to the instructions under “How to Vote” in the Proxy Summary.

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NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

ADMISSION TO THE 2019 ANNUAL MEETING

To attend the 2019 Annual Meeting, please follow the “Meeting Attendance” instructions in the Proxy Summary.

By Order of the Board of Directors,

JENNIFER D. ARASIMOWICZ
Senior Vice President, General Counsel
and Corporate Secretary
February 19, 2019

REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:

INTERNET

BY TELEPHONE

BY MAIL

IN PERSON

Visit the website on your proxy card

Call the telephone number
on your proxy card

Sign, date and return your proxy card
in the enclosed envelope

Attend the annual meeting in New York, NY.
See page 6 for instructions on how to attend

Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on April 4, 2019: The Notice of Annual Meeting, Proxy Statement and Annual Report to Stockholders for the fiscal year ended October 31, 2018 are available at www.fuelcellenergy.com.

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	PROXY SUMMARY					6
	ELIGIBILITY TO VOTE					6
	HOW TO VOTE					6
	MEETING INFORMATION					6
	MEETING ATTENDANCE					6
	COMPANY PROFILE					6
	STOCKHOLDER VOTING MATTERS					7
	DIRECTOR NOMINEES					7
	PROXY STATEMENT					8
	PROPOSAL 1 ELECTION OF DIRECTORS					8
	CORPORATE GOVERNANCE					12
	THE ROLE OF THE BOARD					12
	BOARD LEADERSHIP STRUCTURE					12
	BOARD REFRESHMENT AND COMPOSITION					12
	DIRECTOR ORIENTATION					12
	MAJORITY VOTING STANDARD IN DIRECTOR ELECTIONS					13
	CONTINUING EDUCATION AND SELF-EVALUATION					13
	CORPORATE GOVERNANCE PRINCIPLES					13
	CODE OF ETHICS					13
	WHISTLEBLOWER POLICY					13
	ANTI-HEDGING POLICY					14
	COMPENSATION RECOVERY POLICY					14
	STOCK OWNERSHIP GUIDELINES AND HOLDING REQUIREMENTS					14
	RISK OVERSIGHT					15
	COMMUNICATING WITH DIRECTORS					15
	BOARD OF DIRECTORS AND COMMITTEES					16
	BIOGRAPHIES OF EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS					21
	EXECUTIVE COMPENSATION					22
	COMPENSATION COMMITTEE REPORT					22
	COMPENSATION DISCUSSION AND ANALYSIS					22
	FISCAL 2018 SUMMARY COMPENSATION TABLE					32
	FISCAL 2018 GRANTS OF PLAN-BASED AWARDS TABLE					32
	OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END TABLE					33
	FISCAL 2018 OPTION EXERCISES AND STOCK VESTED TABLE					34
	DIRECTOR COMPENSATION					40
	NEW BOARD MEMBERS					40
	ANNUAL DIRECTOR COMPENSATION					40
	DIRECTORS DEFERRED COMPENSATION PLAN					41
	REIMBURSEMENT OF EXPENSES					41
	FISCAL 2018 NON-EMPLOYEE DIRECTOR COMPENSATION					41
	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT					42
	SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE					43
	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS					43
	EQUITY COMPENSATION PLAN INFORMATION					45
	AUDIT AND FINANCE COMMITTEE REPORT					46
	OTHER PROPOSALS					48
	PROPOSAL 2 RATIFICATION OF SELECTION OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING OCTOBER 31, 2019					48
	PROPOSAL 3 ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS					48

FUELCELL ENERGY, INC. | PROXY STATEMENT3

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	PROPOSAL 4 THE NASDAQ MARKETPLACE RULE PROPOSAL					49
	PROPOSAL 5 THE INCREASE AUTHORIZED SHARES PROPOSAL					53
	PROPOSAL 6 THE REVERSE STOCK SPLIT PROPOSAL					56
	PROPOSAL 7 THE ADJOURNMENT PROPOSAL					64
	ADDITIONAL INFORMATION AND OTHER MATTERS					65
	GENERAL					65
	STOCKHOLDER PROPOSALS FOR THE 2020 ANNUAL MEETING					65
	HOUSEHOLDING					65
	QUORUM AND VOTE REQUIRED					66
	COUNTING VOTES					66
	VOTING BY PROXY					66
	ANNUAL REPORT AND FORM 10-K					67
	OTHER MATTERS					67
	INFORMATION ABOUT ADVANCE REGISTRATION FOR ATTENDING THE ANNUAL MEETING					67

4FUELCELL ENERGY, INC.PROXY STATEMENT

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FUELCELL ENERGY, INC.PROXY STATEMENT5

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Proxy Summary

This summary highlights selected information contained throughout this Proxy Statement. Please read the entire Proxy Statement before casting your vote. For information regarding FuelCell Energy’s fiscal year 2018 performance, please review our Annual Report to Stockholders for the fiscal year ended October 31, 2018. We are making this Proxy Statement available on February 19, 2019.

ELIGIBILITY TO VOTE

Holders of record of our common stock at the close of business on February 7, 2019, the record date, are entitled to vote at the 2019 Annual Meeting of Stockholders; provided, however, that holders of shares of our common stock issued upon conversion of the Series D Convertible Preferred Stock prior to stockholder approval of Proposal 4 — the Nasdaq Marketplace Rule Proposal will not be permitted to vote such shares with respect to Proposal 4 — the Nasdaq Marketplace Rule Proposal.

HOW TO VOTE

You may vote using any one of the following methods. In all cases, you should have your 16-Digit Control Number from your proxy card or Notice of Annual Meeting available and follow the instructions. Voting will be accepted until 11:59 p.m. (EDT) on April 3, 2019:

				Online at www.proxyvote.com						By telephone at 1-800-690-6903
				Online using your mobile device by scanning the QR Code						By mail by voting, signing and timely mailing your Proxy Card

MEETING INFORMATION

	Time and Date:			Thursday, April 4, 2019 at 10:00 a.m. (EDT)
	Place:			Lotte New York Palace Hotel, 455 Madison Avenue, New York, NY

MEETING ATTENDANCE

Meeting attendance requires advance registration. Please contact the office of the Corporate Secretary at corporatesecretary@fce.com to request an admission ticket. If you do not have an admission ticket, you must present proof of ownership in order to attend the meeting.

COMPANY PROFILE

FuelCell Energy, Inc. delivers state-of-the-art fuel cell power plants that provide environmentally responsible solutions for various applications such as utility-scale and on-site power generation, carbon capture, local hydrogen production for both transportation and industry, and long duration energy storage. Our systems cater to the needs of customers across several industries, including utility companies, municipalities, universities, government entities and a variety of industrial and commercial enterprises. With our megawatt-scale SureSource™ installations on three continents and with more than 8.0 million megawatt hours of ultra-clean power produced, FuelCell Energy is a global leader in designing, manufacturing, installing, operating and maintaining environmentally responsible fuel cell distributed power solutions. Visit us online at www.fuelcellenergy.com and follow us on Twitter @FuelCell_Energy.

6FUELCELL ENERGY, INC. | PROXY STATEMENT

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PROXY SUMMARY

STOCKHOLDER VOTING MATTERS

Management
Recommendation

Page Reference
(for more detail)

To elect six directors to serve until the 2020 Annual Meeting of Stockholders and until their successors are duly elected and qualified

FOR each
Director Nominee

To ratify the selection of KPMG LLP as FuelCell Energy, Inc.’s independent registered public accounting firm for the fiscal year ending October 31, 2019

FOR

To approve, in accordance with Nasdaq Marketplace Rule 5635(d), the issuance of shares of
FuelCell Energy, Inc.’s common stock exceeding 19.9% of the number of shares outstanding on
August 27, 2018, upon conversion of the Series D Convertible Preferred Stock issued in an
underwritten offering in August 2018 (the “Nasdaq Marketplace Rule Proposal”)

FOR

To authorize the Board of Directors of FuelCell Energy, Inc. to effect a reverse stock split (such
authorization to expire on April 4, 2020) through an amendment to the FuelCell Energy, Inc.
Certificate of Incorporation, as amended (the “Reverse Stock Split Proposal”); provided that, in
the event that the Increase Authorized Shares Proposal is also approved, such reverse stock
split and amendment, if implemented by the Board of Directors, will become effective after the
effectiveness of the Increase Authorized Shares Proposal

FOR

DIRECTOR NOMINEES

Name	Age	Director Since	Principal Occupation
Arthur A. Bottone	58	2011	President and Chief Executive Officer of FuelCell Energy, Inc.
James H. England*†	72	2008	Corporate Director
Jason B. Few*	52	2018	President of Sustayn Analytics LLC
Matthew F. Hilzinger*	56	2015	Executive Vice President and Chief Financial Officer of USG Corporation
Christina Lampe-Onnerud*	52	2018	Founder and Chief Executive Officer of Cadenza Innovation, Inc.
Natica von Althann*	68	2015	Former Financial Executive at Bank of America and Citigroup

Independent Director

†

Chairman of the Board of Directors

FUELCELL ENERGY, INC. | PROXY STATEMENT7

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Proxy Statement

FuelCell Energy, Inc. (referred to in this Proxy Statement as “we,” “FuelCell,” “FuelCell Energy” or the “Company”) is sending you this Proxy Statement in connection with the solicitation by FuelCell’s Board of Directors (the “Board”) of proxies to be voted at FuelCell’s 2019 Annual Meeting of Stockholders (the “Annual Meeting”) and at any adjournment thereof. The Annual Meeting is scheduled to be held at the Lotte New York Palace Hotel, 455 Madison Avenue, New York, NY on Thursday, April 4, 2019 at 10:00 a.m. Eastern Daylight Time. The Company is a Delaware corporation. The address of our principal executive office is 3 Great Pasture Road, Danbury, CT 06810.

The Board has set the close of business on February 7, 2019 as the record date for the determination of holders of the Company’s common stock, par value $0.0001 per share, who are entitled to notice of, and to vote at, the Annual Meeting.

As of February 7, 2019, there were 112,018,865 shares of common stock outstanding and entitled to vote at the Annual Meeting. Holders of common stock outstanding at the close of business on the record date will be entitled to one vote for each share held on the record date; provided, however, that holders of shares of our common stock issued upon conversion of the Series D Convertible Preferred Stock prior to stockholder approval of Proposal 4 — the Nasdaq Marketplace Rule Proposal will not be permitted to vote such shares with respect to Proposal 4 — the Nasdaq Marketplace Rule Proposal.

The approximate date on which this Proxy Statement and the accompanying proxy card are first being sent or given to stockholders is February 19, 2019.

Proposal 1

Election of Directors

FuelCell’s Directors (“Directors”) are elected annually to serve one-year terms. The Board has nominated each of the six Director nominees named below to serve until the 2020 Annual Meeting of Stockholders and until his or her successor is elected and qualified or until his or her earlier resignation or removal. All of the Director nominees are currently Directors of the Company, and all of the Director nominees except Mr. Few and Dr. Lampe-Onnerud were elected by the stockholders at the 2018 Annual Meeting of Stockholders of the Company (the “2018 Annual Meeting”). Mr. Few and Dr. Lampe-Onnerud were appointed by the Board after the 2018 Annual Meeting and after the end of the Company’s 2018 fiscal year. It is the intention of the persons named as proxies to vote, if authorized, for the election of the six Director nominees named below as Directors. Each nominee has indicated his or her willingness to serve, if elected.

DIRECTOR QUALIFICATIONS AND BIOGRAPHIES

The Nominating and Corporate Governance Committee regularly assesses the performance and attributes of each Director to ensure that the Board as a governing body encompasses a broad range of perspectives, experience, diversity, integrity and commitment, in order to effectively conduct the Company’s global business while representing the long-term interests of its stockholders.

Pursuant to the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the following six candidates for election as Directors and have concluded that each of these incumbent Directors should be nominated for election based on their extensive senior leadership backgrounds, competencies and other qualifications identified below:

		Director Nominee Key Characteristics and Experience include:
		■ Technology Commercialization ■ Corporate & International Finance ■ Financial Management ■ Global Power Project Development			■ Government Affairs ■ Energy & Utility Sectors ■ Project Finance ■ Leadership			■ Manufacturing ■ Regulatory ■ Risk Management ■ Strategic Planning

Five of the six Director nominees are considered “Independent Directors” as such term is defined in Nasdaq Rule 5605(a)(2).

Further information about the Company’s corporate governance practices, the responsibilities and functions of the Board and its committees, Director compensation and related party transactions can be found in this Proxy Statement.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO ELECT EACH OF THE SIX NOMINEES LISTED BELOW AS DIRECTORS OF THE COMPANY TO SERVE UNTIL THE 2020 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.

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PROXY STATEMENT

DIRECTOR NOMINEES

ARTHUR A. BOTTONE
Age 58 Director since: 2011
	BIOGRAPHY: Mr. Bottone joined FuelCell Energy in February 2010 as Senior Vice President and Chief Commercial Officer and was promoted to President and Chief Executive Officer in February 2011 and is a named executive officer. Mr. Bottone’s focus is to accelerate and diversify global revenue growth to achieve sustainable profitability by capitalizing on heightened global demand for clean and renewable energy. Mr. Bottone has broad experience in the energy field including traditional power generation and alternative energy. Prior to joining FuelCell Energy, Mr. Bottone spent 25 years at Ingersoll Rand, a diversified global industrial company, including as President of the Energy Systems business. Mr. Bottone received an undergraduate degree in Mechanical Engineering from Georgia Institute of Technology in 1983, and received a Certificate of Professional Development from The Wharton School, University of Pennsylvania in 2004.
	SKILLS AND QUALIFICATIONS INCLUDE: ■ Extensive Global Business Development ■ Technology Commercialization ■ Power Generation Project Development ■ Mergers, Acquisitions and Integration ■ Capital Raising	PRINCIPAL OCCUPATION: ■ President and Chief Executive Officer of FuelCell Energy

JAMES H. ENGLAND
Age 72 Director since: 2008 INDEPENDENT Chairman of the Board of Directors since 2018
	BIOGRAPHY: Mr. England is a Corporate Director and has been the CEO of Stahlman-England Irrigation, Inc. since 2000. Prior to that, Mr. England spent 4 years as Chairman, President and CEO of Sweet Ripe Drinks, Ltd., a fruit beverage company. Prior to that, he spent 18 years at John Labatt Ltd. and served as that company’s CFO from 1990 — 1993, during which time John Labatt Ltd. was a public company with a market capitalization of over $5 billion. Mr. England started his career with Arthur Andersen & Co. in Toronto after serving in the Canadian infantry. Mr. England is a director of Enbridge Inc. and is a past member of the board of directors of John Labatt, Ltd., Canada Malting Co., Ltd., and the St. Clair Paint and Wallpaper Corporation.
	SKILLS AND QUALIFICATIONS INCLUDE: ■ Board and Executive Level Leadership ■ Broad International Exposure ■ High Level of Financial Expertise ■ Extensive Energy Industry Experience ■ Extensive Knowledge of the Company	PRINCIPAL OCCUPATION: ■ Corporate Director

JASON B. FEW
Age 52 Director since: 2018 INDEPENDENT
	BIOGRAPHY: Mr. Few has been the President of Sustayn Analytics LLC, a cloud-based software waste and recycling optimization company, since 2018. Mr. Few has over 30 years of experience increasing enterprise value for Global Fortune 500 and privately held technology, telecommunication, and energy firms. Mr. Few has overseen transformational opportunities across the technology and industrial energy sectors, including as the Founder and Senior Managing Director of BJF Partners, LLC, a privately held strategic transformation consulting firm, where he has served since 2016, with Continuum Energy, an energy products and services company, where Mr. Few served as President and Chief Executive Officer from 2013 to 2016, NRG Energy, an integrated energy company, where he served in various roles including Executive Vice President and Chief Customer Officer from 2009 to 2012 and President Reliant Energy, a retail electricity provider, where he also served as Senior Vice President, Smart Energy from 2008 to 2009. Mr. Few also serves as a Senior Advisor to Verve Industrial, an industrial cybersecurity software company. Mr. Few is active in his community serving on the boards of Memorial Hermann Hospital, the American Heart Association, and the St. John’s School Investment Committee. He earned a bachelor’s degree in computer systems in business from Ohio University. He received an MBA from Northwestern University’s J.L. Kellogg Graduate School of Management.
	SKILLS AND QUALIFICATIONS INCLUDE: ■ Executive Leadership ■ Broad Understanding of Advanced Technologies ■ Extensive Energy Industry Experience ■ Experience with Global Publicly Traded Companies ■ Risk Management/Oversight ■ Cybersecurity	PRINCIPAL OCCUPATION: ■ President of Sustayn Analytics LLC

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PROXY STATEMENT

MATTHEW F. HILZINGER
Age 56 Director since: 2015 INDEPENDENT
	BIOGRAPHY: Mr. Hilzinger is Executive Vice President and Chief Financial Officer for USG Corporation, an international building products company, where he oversees all financial activities as well as strategic planning, a position he has held since 2012. From March 2002 to 2012, Mr. Hilzinger was with Exelon Corporation, where he served as Chief Financial Officer from 2008 to 2012 responsible for finance and risk management, and as Corporate Controller from 2002 to 2008. Prior to joining Exelon, Mr. Hilzinger was Chief Financial Officer at Credit Acceptance Corporation in 2001. From 1997 to 2001, Mr. Hilzinger was at Kmart Corporation, where he last served as Vice President, Corporate Controller. From 1990 to 1997, Mr. Hilzinger was at Handleman Company, where he last served as Vice President, International Operations. Mr. Hilzinger started his career at Arthur Andersen & Co. from 1985 to 1990. Mr. Hilzinger is a graduate of the University of Michigan, with a BBA in accounting.
	SKILLS AND QUALIFICATIONS INCLUDE: ■ Executive Leadership ■ High Level of Financial Expertise ■ Extensive Energy Industry Experience ■ Experience with Global Publicly Traded Companies ■ Risk Management/Oversight	PRINCIPAL OCCUPATION: ■ Executive Vice President and Chief Financial Officer of USG Corporation

CHRISTINA LAMPE-ONNERUD
Age 52 Director since: 2018 INDEPENDENT
	BIOGRAPHY: Dr. Lampe-Onnerud is presently Founder and Chief Executive Officer of Cadenza Innovation, Inc., a startup she formed in 2012 to bring higher energy density, lower cost, safer and environmentally sustainable batteries to the electric vehicle, grid storage and industrial markets via licensing to global manufacturers. Previously, Dr. Lampe-Onnerud served as Founder, Chief Executive Officer and International Chairman of Boston-Power, Inc. from 2004 – 2011, where she grew the company into a global organization backed by more than $360 million in investment. She held an executive position at Bridgewater Associates and was a partner at Arthur D. Little. She has been named a two-time Technology Pioneer by the World Economic Forum and is a member of the Royal Swedish Academy of Sciences. Dr. Lampe-Onnerud holds a Ph.D. in inorganic chemistry from Uppsala University in Sweden, and conducted post-doctoral work at MIT in Cambridge, Massachusetts.
	SKILLS AND QUALIFICATIONS INCLUDE: ■ Executive Leadership ■ Extensive Technological Knowledge ■ Extensive Energy Project Finance and Structuring Experience ■ Extensive Energy Industry Experience	PRINCIPAL OCCUPATION: ■ Founder and Chief Executive Officer of Cadenza Innovation, Inc.

NATICA VON ALTHANN
Age 68 Director since: 2015 INDEPENDENT
	BIOGRAPHY: Ms. von Althann has served as a Director of PPL Corporation, one of the largest investor-owned utilities in the U.S. with approximately 18,000 megawatts of power generation, since December 1, 2009 and as a Director of TD Bank US Holding Company and its two bank subsidiaries, TD Bank, N.A. and TD Bank USA, N.A. since 2009. She was a founding partner of C&A Advisors, a consulting firm for financial services and risk management from 2009 to 2013, following her retirement in 2008 as the Senior Credit Risk Management Executive for Bank of America and Chief Credit Officer of U.S. Trust, an investment management company owned by Bank of America. Previously, she spent 26 years with Citigroup in various leadership roles, including Division Executive – Latin America for the Citigroup Private Bank, Managing Director and Global Retail Industry Head, and Managing Director and co-head of the U.S. Telecommunications — Technology group for Citicorp Securities.
	SKILLS AND QUALIFICATIONS INCLUDE: ■ Board and Executive Level Leadership Experience ■ High Level of Banking and Financial Expertise ■ Broad International Exposure ■ Risk Management/Oversight ■ Exposure to Energy and Utility Sectors ■ Strong Focus on Strategy Development and Implementation	PRINCIPAL OCCUPATION: ■ Former Financial Executive at Bank of America and Citigroup

10FUELCELL ENERGY, INC. | PROXY STATEMENT

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PROXY STATEMENT

A summary of the attributes of each of our Director nominees follows.

FUELCELL ENERGY, INC. | PROXY STATEMENT11

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Corporate Governance

THE ROLE OF THE BOARD

The business affairs of the Company are managed by and under the direction of the Board. The Board and committees of the Board regularly engage with senior management to ensure management accountability, review management succession planning, review and approve the Company’s strategy and mission, execute the Company’s financial and strategic goals, oversee risk management and review and approve executive compensation.

BOARD LEADERSHIP STRUCTURE

The Board regularly evaluates its leadership structure in order to ensure that the Company effectively represents the interests of its stockholders. Our amended and restated by-laws provide the Board flexibility in determining its leadership structure. Currently, the Board maintains separate roles for the CEO and the Chairman of the Board. The Company’s President and CEO (Mr. Arthur A. Bottone) is responsible for the general supervision of the affairs of the Company and is accountable for achieving the Company’s strategic goals. The Board’s independent Chairman (Mr. James H. England) serves as the principal representative of the Board and as such, presides at all Board meetings. The Board believes that this leadership structure, which separates the Chairman and Chief Executive Officer roles, is optimal at this time because it allows Mr. Bottone to focus on operating and managing our company, while Mr. England focuses on the leadership of the Board and other strategic business activities. We believe that our governance practices ensure that skilled and experienced independent directors provide independent leadership. Our Board also periodically evaluates our leadership structure to determine if it remains in our best interests based on circumstances existing at the time. In evaluating our leadership structure, our Board seeks to implement a leadership structure that will allow the Board to effectively carry out its responsibilities and best represent our stockholders’ interests, and considers various factors, including our specific business needs, our operating and financial performance, industry conditions, the economic and regulatory environment, Board and committee annual self-evaluations, advantages and disadvantages of alternative leadership structures and our corporate governance practices.

BOARD REFRESHMENT AND COMPOSITION

The Board understands the importance of adding diverse, experienced talent to the Board in order to establish an array of experience and strategic views. The Nominating and Corporate Governance Committee adheres to vigorous board refreshment efforts by thoroughly evaluating the backgrounds of potential Board candidates in addition to regularly assessing the contributions and qualifications of current Directors, to ensure that the composition of the Board and each of its committees encompasses a wide range of perspectives and knowledge. The Nominating and Corporate Governance Committee routinely looks for candidates with skill sets that are relevant to the Company and align with our business strategy and goals.

Since 2015, we have added four new, currently serving, Directors to the Board, bringing an expansive mix of expertise, diversity and insight to the Board and its committees. We believe that this is a healthy level of turnover to ensure fresh views and new perspective balanced with the continuity and stability of our experienced Directors. We believe we have a healthy mix of longer-serving Directors and those that are newer to our Board. Our six Director nominees have an average of 4.7 years of service on our Board as of the date of the Annual Meeting.

One third of our Director nominees are women and one third of our Director nominees are ethnically diverse.

As part of the Company’s commitment to good corporate governance practices and principles and in furtherance of Board refreshment initiatives, in 2018, the Board adopted a mandatory director retirement age of 75 and set a director term limit of 12 years, subject to certain exceptions necessary to ensure an orderly transition of Board members and leadership positions.

DIRECTOR ORIENTATION

As part of our Director orientation process, each new Director is provided with orientation materials and a tour of the Company’s manufacturing facility.

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MAJORITY VOTING STANDARD IN DIRECTOR ELECTIONS

In 2016, the Board approved an amendment to the Company’s by-laws to, among other changes, adopt a majority voting standard in uncontested Director elections, providing that each Director shall be elected by a majority of votes cast. Under our amended and restated by-laws, a majority of the votes cast standard requires that the number of shares voted “for” a Director must exceed the number of votes cast “against” that Director’s election. “Abstentions” and “broker non-votes” are not counted as votes cast with respect to a Director’s election.

In addition, following certification of the stockholder vote in an uncontested election, if any incumbent Director receives a greater number of votes “against” his or her election than votes “for” his or her election, the Director shall promptly tender his or her resignation to the Chairman of the Board. The Nominating and Corporate Governance Committee shall promptly consider such resignation and recommend to the Board whether to accept the tendered resignation or reject it. In deciding upon its recommendation, the Nominating and Corporate Governance Committee shall consider all relevant factors including, without limitation, the length of service and qualifications of the Director and the Director’s contributions to the Company and the Board.

CONTINUING EDUCATION AND SELF-EVALUATION

The Board believes that continuing education by the Board and management is critical to supporting the Company’s commitment to enhancing its corporate governance practices. The Board and management are therefore regularly updated on corporate governance matters, including industry and regulatory developments, strategies, operations and external trends and other topics of importance. In addition, in 2018, the Board adopted a policy requiring mandatory participation in an accredited director education program. New directors are required to complete a minimum of four hours of accredited director education within the first 180 days of election to the Board and all directors are required to complete four hours of accredited director education per fiscal year.

As part of the Board’s commitment to improve its performance and effectiveness, self-assessments of the Board and each of its committees are conducted annually. Results of these self-assessments are reviewed by the Nominating and Corporate Governance Committee and the full Board. In 2016, the Board added individual Director self-assessments to the self-assessment process in an effort to assess individual Director effectiveness and his or her contribution to the Board. Results of these individual Director self-assessments are also reviewed by the Nominating and Corporate Governance Committee and the full Board.

CORPORATE GOVERNANCE PRINCIPLES

The Board has adopted Corporate Governance Principles (the “Principles”) which provide the structure for the governance and best practices of the Company, in accordance with applicable statutory and regulatory requirements. The Company is committed to the highest standards of business conduct and integrity in its relationships with employees, customers, suppliers and stockholders. The Principles are reviewed annually by the Nominating and Corporate Governance Committee and updated as needed. The Corporate Governance Principles can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com.

CODE OF ETHICS

The Company is committed to high standards of ethical, moral and legal business conduct and to the timely identification and resolution of all such issues that may adversely affect the Company or its customers, employees or stockholders.

The Board has adopted a Code of Ethics (the “Code of Ethics”), which applies to the Board, the named executive officers (“NEOs”), and all employees. The Code of Ethics provides a statement of certain fundamental principles and key policies and procedures that govern the conduct of the Company’s business. The Code of Ethics covers all major areas of professional conduct, including employment policies, conflicts of interest, intellectual property and the protection of confidential information, as well as strict adherence to all laws and regulations applicable to the conduct of our business. As required by the Sarbanes-Oxley Act of 2002, our Audit and Finance Committee has procedures to receive, retain, investigate and resolve complaints received regarding our accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Code of Ethics can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com.

WHISTLEBLOWER POLICY

The Company’s Whistleblower Policy covers reporting of suspected misconduct, illegal activities or fraud, including questionable accounting, financial control and auditing matters, federal securities violations or other violations of federal and state laws or of the Company’s Code of Ethics.

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We have established a written protocol with a third party vendor to ensure that all complaints received will be reported directly to the Company’s General Counsel and Vice President, Human Resources, who investigate and report as necessary directly to the Audit and Finance Committee of the Board.

The third party vendor offers anonymity to whistleblowers and assures those who identify themselves that their confidentiality will be maintained, to the extent possible, within the limits proscribed by law. No attempt will be made to identify a whistleblower who requests anonymity.

ANTI-HEDGING POLICY

Under the terms of the Company’s Insider Trading Policy, all key employees, including but not limited to the NEOs and Directors, are prohibited from engaging in any hedging transaction involving shares of the Company’s securities or the securities of the Company’s competitors, such as a put, call or short sale.

COMPENSATION RECOVERY POLICY

The Company has adopted an Executive Compensation Recovery Policy that allows the Board to seek recovery of any erroneously paid incentive compensation made to any current or former executive officer of the Company in the event of an accounting restatement that results in a recalculation of a financial metric applicable to an award if, in the opinion of the Board, such restatement is due to the misconduct by one or more of any current or former executive officers. The amount subject to recoupment will, at a minimum, be equal to the difference between what the executive received and what he or she would have received under the corrected financial metrics over the three-year period prior to the restatement. Under the policy, the Board will review all performance-based compensation awarded to or earned by the executive officer on the basis of performance during fiscal periods materially affected by the restatement. If, in the opinion of the Board, the Company’s financial results require restatement due to the misconduct by one or more of any current or former executive officers, the Board may seek recovery of all performance-based compensation awarded to or earned by the executive officer during fiscal periods materially affected by the restatement, to the extent permitted by applicable law.

The Executive Compensation Recovery Policy can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com.

STOCK OWNERSHIP GUIDELINES AND HOLDING REQUIREMENTS

In 2018, the Company increased its minimum stock ownership guidelines applicable to each of its non-employee independent Directors and NEOs. The increase represents a six-fold increase in the prior minimum stock ownership guidelines. Our new stock ownership guidelines are based on a fixed number of shares, as shown in the table below:

	Position			Ownership Guideline
	President and Chief Executive Officer			At least 150,000 shares
	All Other Section 16 Executive Officers			At least 75,000 shares
	Non-Employee Independent Directors			At least 25,000 shares

Executives subject to the guidelines must meet the ownership requirement within five years from the date they are appointed to a Section 16 Executive Officer position. The non-employee independent Directors are expected to achieve target ownership levels within five years of commencement of service as a Director. For purposes of meeting the applicable ownership guidelines, the following shares and awards may be counted:

■

FuelCell Energy common stock owned (i) directly by the executive officer or Director or his or her spouse, (ii) jointly by the executive officer or Director or his or her spouse, and (iii) indirectly by a trust, partnership, limited liability company or other entity for the benefit of the executive officer or Director or his or her spouse;

■

100% of restricted stock and restricted stock unit awards (vested and unvested) issued under the Company’s equity incentive plans;

■

100% of common stock issued under the Company’s Employee Stock Purchase Plan;

■

100% of unexercised Stock Options (vested and unvested) issued under the Company’s equity incentive plans; and

■

100% of deferred stock units issued under the Company’s Directors Deferred Compensation Plan.

Executive officers and Directors must maintain at least 50% of the stock received from equity awards (on a shares issued basis) until the specified minimum ownership requirement level is achieved.

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Once the stock ownership guideline has been achieved, executive officers will be required to maintain stock holding requirements for the duration of their employment with the Company and for Directors, until their cessation of service on the Board.

RISK OVERSIGHT

The Board has overall responsibility for the oversight of risk management at our Company. Day to day risk management is the responsibility of management, which has implemented processes to identify, assess, manage and monitor risks that face our Company. Our Board, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our Company, and the steps we take to monitor and control such exposures.

While our Board has general oversight responsibility for risk at our Company, the Board has delegated some of its risk oversight duties to the various Board committees. The Nominating and Corporate Governance Committee oversees risks related to corporate governance. The Audit and Finance Committee is responsible for generally reviewing and discussing the Company’s policies and guidelines with respect to risk assessment and enterprise risk management. The Audit and Finance Committee oversees the risk assessment and review of the financial internal controls environment and financial statement reporting compliance. The Audit and Finance Committee also considers financial risk management including risks relating to liquidity, access to capital and macroeconomic trends and risks. The Compensation Committee assists our Board in overseeing the management of risks arising from our compensation policies, and programs related to assessment, selection, succession planning, training and development of executives of the Company. Each of the Board committees reviews these risks and then discusses the process and results with the full Board.

COMMUNICATING WITH DIRECTORS

The Company has established a process by which stockholders or other interested parties can communicate with the Board or any of the Company’s individual Directors, by sending their communications to the following address:

FuelCell Energy, Inc. Board of Directors
c/o Corporate Secretary
3 Great Pasture Road
Danbury, CT 06810

Alternatively, communications can be submitted electronically via the Company website at www.fuelcellenergy.com.

Stockholder communications received by the Company’s Corporate Secretary will be delivered to one or more members of the Board or, in the case of communications sent to an individual Director, to such Director.

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BOARD OF DIRECTORS AND COMMITTEES

INDEPENDENT DIRECTORS AND MEETING ATTENDANCE

The Board currently consists of eight directors — Arthur A. Bottone, James H. England, Jason B. Few, Matthew F. Hilzinger, Christina Lampe-Onnerud, John A. Rolls, Christopher S. Sotos, and Natica von Althann. Mr. Rolls has elected to retire from the Board and therefore is not standing for re-election at the Annual Meeting, and Mr. Sotos has elected not to stand for re-election at the Annual Meeting. Accordingly, the size of the Board will be decreased to six Directors standing for election at the Annual Meeting.

The Board has determined that the following five of the six Director nominees are independent Directors, in accordance with the director independence standards of the Securities and Exchange Commission (“SEC”) and the Nasdaq Stock Market, including Nasdaq Rule 5605(a)(2): James H. England, Jason B. Few, Matthew F. Hilzinger, Christina Lampe-Onnerud, and Natica von Althann. The Board has also determined that John A. Rolls, who served on the Board through fiscal 2018 but has elected to retire from the Board and is not standing for re-election at the Annual Meeting, is an independent Director in accordance with the director independence standards of the SEC and the Nasdaq Stock Market, including Nasdaq Rule 5605(a)(2). Christopher S. Sotos, who served as a member of the Board during fiscal 2018 and has elected not to stand for re-election at the Annual Meeting, is not an independent Director under the director independence standards of the SEC and the Nasdaq Stock Market. Finally, the Board previously determined that Secretary Togo Dennis West, Jr., who served on the Board during early fiscal 2018, was an independent Director in accordance with the director independence standards of the SEC and the Nasdaq Stock Market, including Nasdaq Rule 5605(a)(2).

The Board and its committees meet regularly to review and discuss the Company’s progress, strategy and business. The Board meets regularly with management and outside advisors. The independent Directors also hold regular executive sessions without Mr. Bottone or other members of management. Board members are also kept apprised of Company progress and issues that arise between Board meetings.

All Directors serving at the time of the Company’s 2018 Annual Meeting were in attendance at the meeting, with the exception of Mr. England, who attended the Board meeting on the same day, but not the 2018 Annual Meeting. Regular attendance at Board meetings and annual stockholder meetings by each Board member is expected. The Board held 10 meetings in fiscal 2018. Each Director serving during fiscal 2018 attended more than 75% of the total number of Board and, if a Director served on a committee, committee meetings held during fiscal 2018.

BOARD COMMITTEES

The Board has four standing committees: the Audit and Finance Committee, the Compensation Committee, the Executive Committee and the Nominating and Corporate Governance Committee. These committees assist the Board in performing its responsibilities and making informed decisions.

The table below identifies the current members of these four standing committees:

Director

Audit and
Finance

Compensation

Executive

Nominating
and Corporate
Governance

Arthur A. Bottone

James H. England (Chairman of the Board)

Jason B. Few

Matthew F. Hilzinger

Christina Lampe-Onnerud

John A. Rolls(1)

Christopher S. Sotos(2)

Natica von Althann

(1)

Mr. Rolls has elected to retire from the Board and is therefore not standing for re-election to the Board at the Annual Meeting.

(2)

Mr. Sotos is a non-independent Director and therefore does not serve on any standing committees. Mr. Sotos has elected not to stand for re-election to the Board at the Annual Meeting.

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The Board believes it is more effective for the Board, as a whole, to monitor and oversee the Company’s government affairs strategy and initiatives, including federal and state legislative and regulatory proceedings, in addition to monitoring the Company’s ongoing relations with government agencies.

		Audit and Finance Committee
		■ Current Members: Matthew F. Hilzinger, James H. England, Jason B. Few and Natica von Althann Current Chair: Matthew F. Hilzinger Our Committee structure changed on November 8, 2018 with the election of Mr. Few and Dr. Lampe-Onnerud as Directors. The members of the Audit and Finance Committee in fiscal 2018 were James H. England, Matthew F. Hilzinger, John A. Rolls, and Natica von Althann. Mr. Hilzinger was Chair of the Audit and Finance Committee throughout fiscal 2018. Each of the current and fiscal 2018 Audit and Finance Committee members satisfies the definition of independent director and is financially literate under the applicable Nasdaq and SEC rules. In accordance with Section 407 of the Sarbanes-Oxley Act of 2002, the Board has designated Mr. Hilzinger and Mr. England as the Audit and Finance Committee’s “Audit Committee Financial Experts.” The Audit and Finance Committee represents and provides assistance to the Board with respect to matters involving the accounting, auditing, financial reporting, internal controls, and legal compliance functions of the Company and its subsidiaries, including assisting the Board in its oversight of the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, the qualifications, independence, and performance of the Company’s independent auditors, the performance of the Company’s service firm used to assist management in its assessment of internal controls, and effectiveness of the Company’s financial risk management.
		The Audit and Finance Committee routinely holds executive sessions with the Company’s independent registered public accounting firm without the presence of management. Responsibilities of the Audit and Finance Committee include: ■ Overseeing management’s conduct of the Company’s financial reporting process, including reviewing the financial reports and other financial information provided by the Company, and reviewing the Company’s systems of internal accounting and financial controls; ■ Overseeing the Company’s independent auditors’ qualifications and independence and the audit and non-audit services provided to the Company; ■ Overseeing the performance of the Company’s independent auditors as well as parties engaged to assist the Company with its assessment of internal controls; ■ Reviewing potential financing proposals and referring them to the Board as necessary; and ■ Overseeing the Company’s analysis and mitigation strategies for enterprise risk (reporting any findings to the Board as necessary). The Audit and Finance Committee held 10 meetings during fiscal 2018. The complete Audit and Finance Committee charter can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com. The Audit and Finance Committee’s report appears on page 46 of this Proxy Statement.

		Compensation Committee
		■ Current Members: Jason B. Few, Matthew F. Hilzinger, Christina Lampe-Onnerud and John A. Rolls Current Chair: Matthew F. Hilzinger Our Committee structure changed on November 8, 2018 with the election of Mr. Few and Dr. Lampe-Onnerud as Directors. The members of the Compensation Committee in fiscal 2018 were James H. England, Matthew F. Hilzinger, Togo D. West, Jr., and Natica von Althann. Mr. England was Chair of the Compensation Committee throughout fiscal 2018, prior to his election as Chairman of the Board. Each of the current and fiscal 2018 Compensation Committee members is an independent Director under applicable Nasdaq and SEC rules, and the Compensation Committee is governed by a Board-approved charter stating its responsibilities. Members of the Compensation Committee are appointed by the Board. The Compensation Committee is responsible for reviewing and approving the compensation plans, policies and programs of the Company to compensate the officers and Directors in a reasonable and cost-effective manner. The Compensation Committee’s overall objectives are to ensure the attraction and retention of superior talent, to motivate the performance of the executive officers in the achievement of the Company’s business objectives and to align the interests of the officers and Directors with the long-term interests of the Company’s stockholders. To that end, it is the responsibility of the Compensation Committee to develop, approve and periodically review a general compensation policy and salary structure for executive officers of

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		the Company, which considers business and financial objectives, industry and market pay practices and/or such other information as may be deemed appropriate.
		Responsibilities of the Compensation Committee include: ■ Reviewing and recommending for approval by the independent Directors of the Board the compensation (salary, bonus and other incentive compensation) of the Chief Executive Officer of the Company; ■ Reviewing and approving the compensation (salary, bonus and other incentive compensation) of the other executive officers of the Company; ■ Reviewing and approving milestones and strategic initiatives relevant to the compensation of executive officers of the Company and evaluating performance in light of those goals and objectives; ■ Reviewing and approving all employment, retention and severance agreements for executive officers of the Company; and ■ Reviewing the management succession program for the Chief Executive Officer, the NEOs and selected executives of the Company. The Compensation Committee acts on behalf of the Board in administering compensation plans approved by the Board in a manner consistent with the terms of such plans (including, as applicable, the granting of stock options, restricted stock, stock units and other awards, the review of performance goals established before the start of the relevant plan year, and the determination of performance compared to the goals at the end of the plan year). The Committee reviews and makes recommendations to the Board with respect to new compensation incentive plans and equity-based plans; reviews and recommends the compensation (annual retainer, committee fees and other compensation) of the Directors to the full Board for approval; and reviews and makes recommendations to the Board on changes in major benefit programs of the Company. Compensation Committee agendas are established in consultation with the committee chair. The Compensation Committee meets in executive session at each Committee meeting. The Compensation Committee held 7 meetings during fiscal 2018. The complete Compensation Committee charter can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com. The Compensation Committee’s report appears on page 22 of this Proxy Statement.

		Executive Committee
		■ Current Members: Arthur A. Bottone, James H. England and John A. Rolls Current Chair: Arthur A. Bottone
		During the intervals between Board meetings, the Executive Committee has and may exercise all the powers of the Board in the management of the business and affairs of the Company, in such manner as the Committee deems in the best interests of the Company, in all cases in which specific instructions have not been given by the Board. Mr. England and Mr. Rolls are independent directors under applicable Nasdaq rules. The current members of the Executive Committee were also members of the Executive Committee in fiscal 2018. Togo D. West was also a member of the Executive Committee in fiscal 2018.

		Nominating and Corporate Governance Committee
		■ Current Members: Natica von Althann, Matthew F. Hilzinger, John A. Rolls and Christina Lampe-Onnnerud Current Chair: Natica von Althann Our Committee structure changed on November 8, 2018 with the election of Mr. Few and Dr. Lampe-Onnerud as Directors. The members of the Nominating and Corporate Governance Committee in fiscal 2018 were Matthew F. Hilzinger, John A. Rolls and Natica von Althann. Ms. von Althann was Chair of the Compensation Committee throughout fiscal 2018. The current and fiscal 2018 members of the Nominating and Corporate Governance Committee are all independent directors under applicable Nasdaq rules. Members of the Nominating and Corporate Governance Committee are appointed by the Board. Responsibilities of the Nominating and Corporate Governance Committee include: ■ Identifying individuals qualified to become members of the Board and recommending the persons to be nominated by the Board for election as Directors at the annual meeting of stockholders or elected as Directors to fill vacancies; ■ Reviewing the Company’s corporate governance principles, assessing and recommending to the Board any changes deemed appropriate; ■ Periodically reviewing, discussing and assessing the performance of the Board and the committees of the Board; ■ Reviewing the Board’s committee structure and making recommendations to the full Board concerning the number and responsibilities of Board committees and committee assignments; and ■ Periodically reviewing and reporting to the Board any questions of possible conflicts of interest or related party transactions involving Board members or members of senior management of the Company. The Nominating and Corporate Governance Committee will consider nominees for the Board recommended by stockholders. Nominations by stockholders must be in writing, and must include the full name of the proposed nominee, a brief description of the

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proposed nominee’s business experience for at least the previous five years, and a representation that the nominating stockholder is a beneficial or record owner of the Company’s common stock.

Any such submission must also be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as Director if elected. All recommendations for nomination received by the Corporate Secretary that satisfy our amended and restated by-law requirements relating to such Director nominations will be presented to the Nominating and Corporate Governance Committee for its consideration. Stockholders must also satisfy the notification, timeliness, consent and information requirements set forth in our amended and restated by-laws. Nominations must be delivered to the Nominating and Corporate Governance Committee at the following address:

Nominating and Corporate Governance Committee

FuelCell Energy, Inc.

Office of the Corporate Secretary
3 Great Pasture Road
Danbury, CT 06810

The Nominating and Corporate Governance Committee weighs the characteristics, experience, independence and skills of potential candidates for election to the Board and recommends nominees for Director to the Board for election (without regard to whether a nominee has been recommended by stockholders). In considering candidates for the Board, the Nominating and Corporate Governance Committee also assesses the size, composition and combined expertise of the Board. As the application of these factors involves the exercise of judgment, the Nominating and Corporate Governance Committee does not have a standard set of fixed qualifications that is applicable to all Director candidates, although the Nominating and Corporate Governance Committee does at a minimum assess each candidate’s strength of character, mature judgment, industry knowledge or experience, ability to work collegially with the other members of the Board and ability to satisfy any applicable legal requirements or listing standards. The Nominating and Corporate Governance Committee is committed to actively seeking highly qualified individuals, and requires a diverse candidate pool, including individuals of diverse gender and ethnicity, from which Board nominees are selected. In identifying prospective Director candidates, the Nominating and Corporate Governance Committee may seek referrals from other members of the Board, management, stockholders and other sources. The Nominating and Corporate Governance Committee also may, but need not, retain a search firm in order to assist it in identifying candidates to serve as Directors of the Company. The Nominating and Corporate Governance Committee utilizes the same criteria for evaluating candidates regardless of the source of the referral. When considering Director candidates, the Nominating and Corporate Governance Committee seeks individuals with backgrounds and qualities that, when combined with those of our incumbent Directors, provide a blend of skills and experience to further enhance the Board’s effectiveness.

In fiscal 2018, the Nominating and Corporate Governance Committee retained the services of Egon Zhender to assist it in identifying qualified candidates to serve on the Board and vetting those candidates in accordance with the qualifications and attributes sought by the Committee. Egon Zhender identified and proposed Jason B. Few and Christina Lampe-Onnerud, both of whom were elected to the Board in November 2018.

In connection with its annual recommendation of a slate of Director nominees, the Nominating and Corporate Governance Committee may also assess the contributions of those Directors recommended for re-election in the context of the Board evaluation process and other perceived needs of the Board.

The Nominating and Corporate Governance Committee held 6 meetings during fiscal 2018. The complete Nominating and Corporate Governance Committee charter, which includes the general criteria for nomination as a Director, can be found in the Corporate Governance subsection of the section entitled “Investors” on our website at www.fuelcellenergy.com.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Committee was an officer or employee of the Company during the fiscal year ended October 31, 2018. During the fiscal year ended October 31, 2018, none of our executive officers served as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who served as members of our Board of Directors or our Compensation Committee. During the fiscal year ended October 31, 2018, no member of the Compensation Committee other than Mr. James H. England had a relationship with the Company that required disclosure under Item 404 of Regulation S-K.

NASDAQ LISTING RULES – COMPENSATION COMMITTEE MEMBERS

Upon assessing the independence of the Compensation Committee members in accordance with the Nasdaq Listing Rules, the Board has determined that each Compensation Committee member satisfies the following independence criteria, in addition to qualifying as an independent director under Nasdaq Rule 5605(a)(2):

■

No Compensation Committee member has received compensation from the Company for any consulting or advisory services nor has any Compensation Committee member received any other compensatory fees paid by the Company (other than Directors’ fees); and

■

No Compensation Committee member has an affiliate relationship with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company.

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NASDAQ LISTING RULES – COMPENSATION COMMITTEE ADVISOR

Upon assessing the independence of, and any potential conflicts of interest of, the Company’s Compensation Advisor, Compensia, Inc. (the “Advisor”), in accordance with the Nasdaq Listing Rules, the Compensation Committee has determined that the Advisor satisfies the following independence criteria:

■

The Advisor has not provided, in the last completed fiscal year ended October 31, 2018 or any subsequent interim period, any services to the Company or its affiliated companies, other than the Advisor’s work as a compensation advisor to the Company’s Compensation Committee;

■

Less than 1% of the Advisor’s total revenue was derived from fees paid by the Company in the last completed fiscal year ended October 31, 2018 and any subsequent interim period for work on behalf of the Company’s Compensation Committee;

■

The Advisor has implemented policies and procedures designed to prevent conflicts of interest;

■

Neither the Advisor nor any of its employees or their spouses has any business or personal relationships with any members of the Company’s Compensation Committee or any of the Company’s executive officers;

■

Neither the Advisor nor any of its employees or their immediate family members currently own any Company securities (other than through a mutual fund or similar externally-managed investment vehicle); and

■

The Advisor is unaware of any relationship not identified in the statements above that could create an actual or potential conflict of interest with the Company or its affiliated entities, any members of the Company’s Compensation Committee or any of the Company’s executive officers.

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BIOGRAPHIES OF EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

	MICHAEL S. BISHOP
				Mr. Bishop was appointed Senior Vice President, Chief Financial Officer, and Treasurer in June 2011. He has more than 20 years of experience in financial operations and management with public high growth technology companies with a focus on capital raising, project finance, debt/treasury management, investor relations, strategic planning, internal controls, and organizational development. Since joining the Company in 2003, Mr. Bishop has held a succession of financial leadership roles including Assistant Controller, Corporate Controller and Vice President and Controller. Prior to joining FuelCell Energy, Mr. Bishop held finance and accounting positions at TranSwitch Corporation, Cyberian Outpost, Inc. and United Technologies, Inc. He is a certified public accountant and began his professional career at McGladrey and Pullen, LLP. Mr. Bishop also served four years in the United States Marine Corps. Mr. Bishop received a Bachelor of Science in Accounting from Boston University in 1993 and a MBA from the University of Connecticut in 1999.
	Age 51			Principal Occupation: ■ Senior Vice President, Chief Financial Officer and Treasurer

	JENNIFER D. ARASIMOWICZ
	Age 47			Ms. Arasimowicz was appointed Senior Vice President, General Counsel and Corporate Secretary in April 2017. In this position, Ms. Arasimowicz, a licensed attorney in Connecticut, New York and Massachusetts, is the chief legal officer and chief compliance officer of the Company, having responsibility for oversight of all of the Company’s legal and government affairs, and providing leadership in all aspects of the Company’s business, including compliance, corporate governance and board activities. Ms. Arasimowicz joined the Company in 2012 as Associate Counsel and was promoted to Vice President in 2014. Prior to joining the Company, Ms. Arasimowicz served as General Counsel of Total Energy Corporation, a New York based diversified energy products and services company providing a broad range of specialized services to utilities and industrial companies. Previously, Ms. Arasimowicz was a partner at Shipman & Goodwin, LLP in Hartford, Connecticut chairing the Utility Law Practice Group and began her legal career as an associate at Murtha Cullina, LLP. Ms. Arasimowicz earned her Juris Doctor at Boston University School of Law and holds a bachelor’s degree in English from Boston University.
				Principal Occupation: ■ Senior Vice President, General Counsel and Corporate Secretary

	ANTHONY F. RAUSEO
				Mr. Rauseo was appointed Senior Vice President and Chief Operating Officer in July 2010. In this position, Mr. Rauseo has responsibility for closely integrating the manufacturing operations with the supply chain, product development and quality initiatives. Mr. Rauseo is an organizational leader with a strong record of achievement in product development, business development, manufacturing, operations, and customer support. Mr. Rauseo joined the Company in 2005 as Vice President of Engineering and Chief Engineer. Prior to joining the Company, Mr. Rauseo held a variety of key management positions in manufacturing, quality and engineering including five years with CiDRA Corporation. Prior to joining CiDRA, Mr. Rauseo was with Pratt and Whitney for 17 years where he held various leadership positions in product development, production and customer support of aircraft turbines. Mr. Rauseo received a Bachelor of Science in Mechanical Engineering from Rutgers University in 1983 and a Masters of Science in Mechanical Engineering from Rensselaer Polytechnic Institute in 1987.
	Age 59			Principal Occupation: ■ Senior Vice President and Chief Operating Officer

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COMPENSATION COMMITTEE REPORT					22
COMPENSATION DISCUSSION AND ANALYSIS					22
FISCAL 2018 SUMMARY COMPENSATION TABLE					32
FISCAL 2018 GRANTS OF PLAN-BASED AWARDS TABLE					32
OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END TABLE					33
FISCAL 2018 OPTION EXERCISES AND STOCK VESTED TABLE					34

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis as set forth in this Proxy Statement. Based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be incorporated by reference in the Company’s Annual Report on Form 10-K for its fiscal year ended October 31, 2018 and included in the Company’s 2019 Proxy Statement filed in connection with the Company’s 2019 Annual Meeting of Stockholders.

Respectfully submitted by the Compensation Committee of the Board of Directors.

Matthew F. Hilzinger (Chair)
Jason B. Few
Christina Lampe-Onnnerud
John A. Rolls

COMPENSATION DISCUSSION AND ANALYSIS

INTRODUCTION AND SUMMARY

This Compensation Discussion and Analysis describes the philosophy and objectives of the executive compensation program underlying the compensation which is reported in the executive compensation tables included in this Proxy Statement for the following executive officers (the “NEOs” or “named executive officers”):

	ARTHUR A. BOTTONE			President and Chief Executive Officer (the “CEO”);
	MICHAEL S. BISHOP			Senior Vice President, Chief Financial Officer and Treasurer (the “CFO”);
	JENNIFER D. ARASIMOWICZ			Senior Vice President, General Counsel and Corporate Secretary (the “GC”); and
	ANTHONY F. RAUSEO			Senior Vice President and Chief Operating Officer (the “COO”).

The total compensation of each NEO is reported in the Fiscal 2018 Summary Compensation Table presented on page 32 of this Proxy Statement. The individuals identified above as our NEOs are all of our executive officers, which is why we only provide compensation-related disclosure with respect to our CEO, CFO and next two most highly compensated executive officers.

Our compensation program is intended to motivate and incentivize our NEOs to achieve our corporate objectives and increase stockholder value. The Compensation Committee continues to evaluate how best to structure our compensation programs to ensure that our executives are being appropriately and competitively compensated while also maintaining compensation levels commensurate with our business performance.

During fiscal 2018, we continued to progress toward sustainable profitability with the development of our generation portfolio. We recognize that there is still more work to be done in order to reach our full potential. Fiscal 2018 was focused on the continued advancement of our business plan. Despite challenging industry and market conditions, our executives capitalized on opportunities and achieved favorable results on a number of important business initiatives, including but not limited to:

■

Lobbying for the restoration of the federal investment tax credit for stationary fuel cells and expansion of the carbon sequestration credit;

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■

Delivery, commissioning and operation of the 20 MW KOSPO project in Incheon, South Korea; and

■

Award of 22.2 MW of projects in the Connecticut Department of Energy and Environmental Protection competitive solicitation.

THE 2018 SAY-ON-PAY VOTE AND COMPENSATION HIGHLIGHTS

Our Compensation Committee pays close attention to the views of our stockholders when making determinations regarding executive compensation. At our 2018 Annual Meeting, only 65.57% of the votes cast on the advisory proposal regarding the compensation of our named executive officers were voted in favor of our 2018 executive compensation program. Although the stockholders approved the compensation program, we are concerned with the declining level of stockholder support for our executive compensation program. As we did with our corporate governance policies and practices, we undertook an evaluation of our executive compensation programs and practices to ensure that those programs and practices were, in fact, aligned with our business goals and the interests of our stockholders.

We believe that our continued efforts to grow our business, enhance liquidity, improve margins and grow revenue are positioning us to achieve sustainable profitability. Nevertheless, we understand stockholder discontent regarding our current stock price and financial performance. It is important to note that, although our NEOs delivered on a number of opportunities and strategic initiatives as outlined above, in light of our stock performance during the year, the Compensation Committee did not approve any cash bonuses for fiscal 2018.

As part of our review of our executive compensation program in fiscal 2018, we implemented a six-fold increase in our minimum stock ownership guidelines and made modifications to our peer group, both as discussed further below. The Compensation Committee is also considering additional ways to redesign some of the features of our executive compensation program for the future.

We are also endeavoring in this Proxy Statement to clarify certain elements of our executive compensation program so that our stockholders can better understand the reported versus realizable total compensation of our executives, how our current compensation program is structured, and why our compensation program is appropriate for our Company. In looking at these types of programs among our peer group companies (which are listed below under the heading “Competitive Positioning”), only 30% of our peer group companies grant performance-based shares, while 60% of our peer group companies grant restricted stock in line with the Company’s compensation program. The Compensation Committee hopes that our stockholders will consider these factors, as well as the positive momentum of our business and the attributes of our compensation program, when casting “say-on-pay” votes at the Annual Meeting.

The Compensation Committee will continue to consider the results of annual stockholder advisory votes on executive compensation in its ongoing evaluation of our programs and practices.

During fiscal 2018, we enhanced or maintained the following compensation-related governance policies and practices, including both policies and practices we have implemented to drive performance and policies and practices that either prohibit or minimize behaviors that we do not believe serve our stockholders’ long-term interests.

What We Do:

■

Maintain an Independent Compensation Committee – Our Compensation Committee consists solely of independent directors who establish our compensation practices.

■

Retain an Independent Compensation Advisor – Our Compensation Committee has engaged its own compensation consultant to provide information, analysis, and other advice on executive compensation independent of management.

■

Annual Executive Compensation Review – At least once a year, our Board conducts a review of our compensation strategy.

■

Compensation At-Risk – Our executive compensation program is designed so that a significant portion of our NEO’s compensation is “at risk” based on corporate performance, to align the interests of our NEOs and stockholders.

■

Stock Ownership Guidelines – We maintain minimum stock ownership guidelines and stock holding requirements applicable to the NEOs and the non-employee independent members of our Board. In December 2018, our Board approved a six-fold increase in the ownership guidelines; and, as of October 31, 2018, each of the NEOs satisfied the requirements of the minimum stock ownership policy.

■

Compensation Recovery (“Clawback”) Policy – We maintain an Executive Compensation Recovery Policy that enables our Board to seek recovery of any erroneously paid incentive compensation received by any current or former executive officer of the Company (who was actively employed as an executive officer of the Company on or after December 18, 2014, the date this policy was first adopted) in the event of an accounting restatement.

■

Conduct an Annual Stockholder Advisory Vote on NEO Compensation – We conduct an annual stockholder advisory vote on the compensation of our NEOs. Our Board considers the results of this advisory vote during the course of its deliberations on NEO compensation.

■

Compensation-Related Risk Assessment – We conduct regular risk assessments of our compensation programs and practices.

■

“Double-Trigger” Change in Control Arrangements – We have established “double-trigger” change-in-control severance agreements with each of the NEOs, with a payment equal to two times base salary plus the average of the bonuses paid since the effective date of his employment agreement (for Mr. Bottone) and payments of one times base salary plus the average of the bonuses paid since their appointment as executive officers of the Company (for Messrs. Bishop and Rauseo and Ms. Arasimowicz).

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What We Do Not Do:

■

No Guaranteed Bonuses – We do not provide guaranteed bonuses to our NEOs.

■

No Defined Benefit Retirement Plans – We do not currently offer, nor do we have plans to offer, defined benefit pension plans or any non-qualified deferred compensation plans or arrangements to our NEOs other than arrangements that are available generally to all employees. Our NEOs are eligible to participate in our 401(k) retirement plan on the same basis as our other employees.

■

Prohibition on Hedging and Pledging – We maintain a policy that prohibits our employees, including our NEOs and members of the Board, from hedging or pledging any Company securities.

■

No Perquisites or Tax Gross-Ups – We do not offer our NEOs any perquisites, executive class benefits, or tax “gross-ups.”

■

No Stock Option Re-pricing – We do not permit options to purchase shares of our common stock to be repriced to a lower exercise price without the approval of our stockholders.

“REPORTED” VS. “REALIZABLE” SHARE-BASED COMPENSATION

Following the “say-on-pay” voting results at the 2018 Annual Meeting, we wanted to provide a clearer understanding of how our equity-based compensation as reported in our proxy statements compares to the value actually paid to our NEOs in subsequent years and how this compensation structure is designed to be performance-based. This is commonly referred to as “reported” versus “realizable” pay. Reported pay refers to the compensation value reported in the compensation tables required under Item 402 of Regulation S-K, which we calculate based on applicable SEC rules and guidance. Realizable pay refers to the value of compensation received by our NEOs as of the applicable vesting dates.

We believe that it is important for our stockholders to understand, in reviewing the compensation information provided in this Proxy Statement, that all annual cash bonus and equity compensation are performance-based. Annual cash bonuses are dependent on achievement of the Company’s pre-established milestones and strategic initiatives. For fiscal 2018, the Company did not achieve the specific milestones and strategic initiatives that were established under the 2018 Management Incentive Plan. As a result of the Company’s performance, the stock price and the financial condition of the Company at fiscal year-end, our Compensation Committee determined that cash bonuses for fiscal 2018 were not earned. Annual equity awards are reported in the compensation tables at grant date fair value, which is not necessarily the actual compensation received by the NEOs at vesting. If our stock price declines over time, the NEO will receive less than the grant date fair value reported for those awards.

The table below compares the grant date fair values as reported in the proxy statements for the 2016, 2017, and 2018 Annual Meetings of the Stockholders to the fair market value of the shares on the applicable vesting dates. To calculate these fair market values, we multiplied the number of shares vesting by the closing price of our common stock on the applicable vesting dates. For shares not yet vested, we multiplied the number of unvested shares by the closing price of our common stock on December 31, 2018.

Name	Grant Date		Quantity Granted		Reported Grant Date Value			Aggregate Value Realized on Vesting(1)			% change from reported value
ARTHUR A. BOTTONE		4/2/2015		43,373		$	661,005		$	110,613	-83%
		4/7/2016		102,640		$	661,002		$	117,035	-82%
		4/6/2017		330,500		$	495,750		$	319,593	-36%
		4/5/2018		308,989		$	550,000		$	170,098	-69%
		4/5/2018		100,000		$	178,000		$	55,050	-69%
		Total		885,502		$	2,545,757		$	772,389	-70%
MICHAEL S. BISHOP		4/2/2015		16,405		$	250,012		$	41,834	-83%
		4/7/2016		54,348		$	350,001		$	61,970	-82%
		4/6/2017		175,000		$	262,500		$	169,225	-36%
		4/5/2018		168,539		$	299,999		$	92,781	-69%
		4/5/2018		100,000		$	178,000		$	55,050	-69%
		Total		514,292		$	1,340,513		$	420,860	-69%
JENNIFER D. ARASIMOWICZ		4/7/2016		9,473		$	61,006		$	12,746	-79%
		4/6/2017		200,000		$	300,000		$	176,364	-41%
		4/5/2018		168,539		$	299,999		$	92,781	-69%
		4/5/2018		100,000		$	178,000		$	55,050	-69%
		Total		478,012		$	839,006		$	336,940	-60%

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Name	Grant Date		Quantity Granted		Reported Grant Date Value			Aggregate Value Realized on Vesting(1)			% change from reported value
ANTHONY F. RAUSEO		4/2/2015		16,405		$	250,012		$	41,834	-83%
		4/7/2016		54,348		$	350,001		$	61,970	-82%
		4/6/2017		175,000		$	262,500		$	169,225	-36%
		4/5/2018		168,539		$	299,999		$	92,781	-69%
		4/5/2018		100,000		$	178,000		$	55,050	-69%
		Total		514,292		$	1,340,513		$	420,860	-69%

(1)

Aggregate value realized on vesting assumes all unvested shares vested in full on December 31, 2018. Does not take into account shares tendered back to the Company to cover applicable tax withholdings.

COMPENSATION PHILOSOPHY AND OBJECTIVES

The Compensation Committee is responsible for developing and reviewing executive compensation plans, policies and practices consistent with our compensation philosophy. Our compensation philosophy is designed around certain key objectives:

■

Attract and Retain Top Executive Talent – We have designed our compensation program to be competitive and cost-effective, while allowing us to attract and retain executives critical to our long-term success.

■

Pay for Performance – Our compensation program aligns compensation with Company and individual performance on both a short-term and long-term basis.

■

Significant Portion of Pay is in the Form of Variable Compensation – We have aligned NEO compensation with stockholder interests by tying a significant portion of total direct compensation to the achievement of performance goals or stock price appreciation. With variable compensation, the NEO will not realize value unless performance goals are met or our stock price appreciates.

To achieve these objectives, our executive compensation program:

■

must be competitive with compensation paid by companies in the same or similar markets for executive talent;

■

rewards performance by linking compensation to Company performance and achievment of individual performance goals;

■

drives long-term stockholder returns by delivering a significant portion of NEO compensation in the form of equity compensation, the value of which is directly linked to our stock price;

■

aligns NEO and stockholder interests by requiring NEOs to own and hold our stock for a specified period of time;

■

provides no NEO perquisites;

■

is comprised of a “fixed” component, which consists of base salary, health and welfare benefits and contributions to the Company’s Section 401(k) Retirement Savings plan (the “401(k) Plan”), which benefits and contributions are the same as those offered to all other employees; and

■

has a “variable” component, which consists of an annual performance-based incentive award (the target amount of which is expressed as a percentage of base salary) and a long-term incentive award linked to individual and Company performance.

COMPENSATION-SETTING PROCESS

The Compensation Committee reviews the base salary, target annual incentive award, long-term incentive award and target total direct compensation opportunity (which represents the sum of these three elements) for each of the NEOs annually. The CEO makes recommendations to the Compensation Committee for annual increases in base salary, the annual incentive award payments and long-term incentive awards for each of the NEOs (other than with respect to his own compensation). The Compensation Committee has the final authority to approve annual increases in base salary, annual incentive award payments and long-term equity incentive awards for the NEOs other than the CEO, whose compensation is approved by the independent members of our Board.

The Compensation Committee makes any necessary adjustments to base salaries effective in July of each year. More information regarding the fiscal 2018 base salary adjustments for the NEOs can be found on page 27 of this Proxy Statement.

Prior to the start of each fiscal year, the CEO develops operational milestones and strategic initiatives for the year for our salaried employees, including the NEOs. These operational milestones and strategic initiatives represent key performance objectives which are incorporated into the MIP, which is then submitted to the Compensation Committee for consideration and approval. After our fiscal year-end financial results are available, the annual incentive award pool for employees and individual annual incentive award payments for the NEOs for the just-completed fiscal year are approved by the Compensation Committee, except with respect to the CEO, whose annual incentive award payment is approved by the independent members of our Board.

The Compensation Committee formulates its compensation decisions for the NEOs with input from the CEO (other than with respect to his own compensation), considering such factors as each NEO’s professional experience, job scope, past performance, tenure and retention risk. The Compensation Committee also considers prior fiscal year adjustments to compensation, historical annual incentive award

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payments and long-term incentive awards. Finally, the Compensation Committee considers current market practices, based on its review of executive compensation data for comparable companies, as well as current compensation trends, to ensure that the compensation of the NEOs is both competitive and reasonable, while also maintaining compensation levels commensurate with our financial and stock performance.

Since 2010, the Compensation Committee has engaged Compensia, Inc., a national compensation consulting firm (the “Advisor”), to support its compensation planning activities. In fiscal 2018, the Advisor did not provide any other services to the Company and worked with management only on matters for which the Compensation Committee is responsible.

Based on its consideration of the various factors as set forth in the rules promulgated by the SEC and the Nasdaq Marketplace Rules, the Compensation Committee has determined that the work of the Advisor has not raised any conflict of interest.

COMPETITIVE POSITIONING

We periodically perform a competitive market analysis of our executive and Director compensation programs to ensure that the total compensation packages of our executive officers and the non-employee members of our Board are within a reasonably competitive range. In connection with its fiscal 2018 compensation actions and decisions, the Compensation Committee considered the competitive market analysis that was prepared by the Advisor in 2018, as described below.

COMPETITIVE MARKET ANALYSIS

In March 2018, the Advisor conducted a competitive market analysis that was used by the Compensation Committee in connection with its executive and non-employee Director compensation decisions for fiscal 2018. To develop an understanding of the competitive marketplace, the Compensation Committee reviewed the executive compensation practices of a group of publicly-traded companies (the “Peer Group”) based on compensation data gathered from publicly-available filings and as supplemented with additional data drawn from the Radford Global Technology Survey, based on data cuts for technology companies with revenues between $50 million and $200 million, and also between $200 million and $500 million.

The Advisor worked with the Compensation Committee to develop the Peer Group by screening an initial list of publicly-traded companies on the basis of industry focus, revenue, market capitalization, geographical location and revenue to market capitalization ratio. These companies were then narrowed by identifying companies whose revenue at the time ranged from approximately $35 million to $375 million compared to our trailing four fiscal quarters’ revenue of $96 million, and whose market capitalization ranged from approximately 0.2 to 5.8 times ($40 million to $650 million) our then-market capitalization of $123 million. The list was further refined by focusing on companies in the electrical equipment and components sectors and eliminating companies with headquarters outside of North America, as pay practices and disclosure requirements may vary significantly from those found in the United States.

The Compensation Committee and the Advisor also reviewed and considered other factors such as revenue growth, profitability, valuation (for example, market capitalization as a multiple of sales) and business model. The Peer Group was selected based on the subjective evaluation of all of these factors, and consisted of the following 20 companies (almost half of which are different than the peer companies we benchmarked in fiscal 2017):

	American Superconductor			Hydrogenics
	Amyris			Maxwell Technologies
	Ballard Power Systems			Park Electrochemical
	Broadwind Energy			Plug Power
	Capstone Turbine			Revolution Lighting Technologies
	CECO Environmental			Thermon Group Holdings
	Clean Energy Fuels			Vicor
	Digi International			Vishay Precision Group
	EMCORE			Vivint Solar
	Enphase Energy			Westport Fuel Systems

To complete the competitive market analysis of the executive compensation program, the Advisor then blended the Peer Group data with the Radford Global Technology Survey data (weighted equally) to compare the various market compensation levels for each of the NEO positions. Based on the foregoing approach, the analysis indicated the fiscal 2017 target total direct compensation opportunities of the NEOs approximated the 45th percentile of the competitive market, with significant variation for cash compensation among executives. In addition, the analysis showed that the fiscal 2017 equity awards granted to the NEOs approximated the 25th percentile of the competitive market, with only one executive near the median, and with little retention hold as most outstanding equity awards were substantially vested.

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The Compensation Committee uses the market analysis as a reference point to ensure that our executive compensation program is competitive with market practice. In the case of each NEO, the Compensation Committee compares the overall compensation of each individual against the compensation data developed through the market analysis, if his or her position is sufficiently similar to the positions identified in the data to make the comparison meaningful. However, the Compensation Committee does not target a particular percentile of the competitive market with respect to any portion of the NEOs’ pay. Ultimately, the Compensation Committee’s decisions with respect to each NEO’s total compensation, and each individual compensation element, are based in large part on its assessment of Company and individual performance as well as other factors, such as internal equity.

FIXED COMPENSATION

BASE SALARY

The purpose of base salary, from the perspective of the Compensation Committee, is to fairly and competitively compensate our NEOs with a fixed amount of cash for the jobs they perform. In addition, base salaries are used to recognize the experience, skills, knowledge and responsibilities required of our NEOs. Accordingly, we seek to ensure that base salary levels are competitive and consistent with industry practices.

FISCAL 2018 BASE SALARIES

In June 2018, the Compensation Committee reviewed the base salaries of the NEOs, taking into consideration their ongoing roles and responsibilities and the performance of the Company. The Compensation Committee also reviewed the competitive market analysis discussed in the preceding section of this Compensation Discussion and Analysis and the recommendations of the CEO (other than with respect to his own base salary). After considering the foregoing factors, including the competitive market analysis, and certain additional information, the Compensation Committee approved the base salaries for the NEOs (other than the CEO) set forth in the table below. The Compensation Committee determined that base salary increases were warranted to recognize the contributions that each individual had made during the preceding 12 months and to address its retention objectives. With respect to the CEO, after considering his performance during the preceding 12 months, including the significant progress that he had made on several of the Company’s longer-term initiatives and to recognize his strong leadership skills, the Compensation Committee recommended to the independent members of our Board the following base salary adjustment for the CEO (which recommendation was approved by the independent members of the Board). All base salary increases were effective July 2, 2018:

	Base Salary Changes Effective July 2, 2018
Name	2017 Base ($)		2018 Base ($)		Increase ($)		Increase %
Mr. Bottone		428,816		475,000		46,184	10.7%
Mr. Bishop		326,025		350,000		23,975	7.3%
Ms. Arasimowicz		300,000		330,000		30,000	10.0%
Mr. Rauseo		341,550		360,000		18,450	5.4%

BENEFITS

We offer medical and dental insurance to our NEOs, and pay a portion of the premiums for these benefits consistent with the arrangements for non-executive employees. We also provide the NEOs and other eligible employees, at our expense, with group life and accidental death and dismemberment insurance benefits; short-term and long-term disability insurance benefits; paid time off benefits; and other ancillary benefits (for example, flexible spending accounts and an employee assistance program). Further, we offer participation in the 401(k) Plan to our employees, including the NEOs, subject to the terms of the 401(k) Plan.

Contributions to the 401(k) Plan are limited to an annual maximum amount as determined by the Internal Revenue Service. For Plan Year 2018, the Compensation Committee approved a matching contribution equal to 25% of the first 8% of elective salary deferrals, not to exceed 2% of eligible earnings. These contributions to the retirement savings accounts of our employees are subject to a five year graded vesting schedule. Participants are not permitted to receive or purchase shares of our common stock through the 401(k) Plan.

The compensation program for the NEOs does not include any of the following pay practices:

■

Supplemental executive retirement benefits;

■

Supplemental health or insurance benefits; or

■

Perquisites or other personal benefits.

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VARIABLE COMPENSATION

Annual Incentive Compensation

All salaried exempt employees, including the NEOs, are eligible to participate in our annual cash bonus plan, which we refer to as the Management Incentive Plan or the “MIP.” The MIP is intended to motivate employee performance in, and align compensation levels with, the achievement of our annual business objectives.

The Compensation Committee periodically reviews and determines the target annual incentive award opportunities (expressed as a percentage of base salary) that each of the named executive officers may earn under the MIP. The target annual incentive award opportunities for each NEO (expressed as a percentage of base salary) were established in 2011 at 90% for Mr. Bottone and 50% for each of the other NEOs (except Ms. Arasimowicz), based on an assessment of the competitive market performed by the Advisor at that time. The target annual incentive award opportunity of Ms. Arasimowicz was set at 50% of her base salary at the time of her appointment as our Senior Vice President, General Counsel and Corporate Secretary in 2017. These target award opportunities remained unchanged in fiscal 2018.

The actual amount of annual cash compensation earned under the MIP each year for our NEOs may be more or less than the target amount depending on our performance against a set of pre-established Company operational milestones (which represent 75% of their target annual incentive award opportunity) and a set of pre-established Company strategic initiatives (which represent the remaining 25% of their target annual incentive award opportunity). In addition, the Compensation Committee retains the right to exercise its discretion to adjust the size of potential award payments as it deems appropriate to take into account factors that enhance or detract from results achieved relative to the Company operational milestones and strategic initiatives. In this way, the Compensation Committee does not confine itself to a purely quantitative approach and retains discretion in determining award payments based on its review and assessment of other results for the fiscal year. The Compensation Committee believes that linking the annual incentive awards for the NEOs to Company operational milestones and strategic initiatives creates a performance-based compensation opportunity that furthers stockholder interests, but by retaining some discretion, reduces the risk that executives will overemphasize performance on the pre-established objectives to the detriment of the Company’s overall performance.

The operational milestones and strategic initiatives on which the 2018 MIP awards were based, as well as our performance with respect to such milestones and initiatives, are discussed below.

FISCAL 2018 OPERATIONAL MILESTONES AND STRATEGIC INITIATIVES

The pre-established Company operational milestones for fiscal 2018 (and their respective weighting) involved:

(1)

achieving a specified level of total revenue for the fiscal year (20%);

(2)

securing new orders (40%);

(3)

achieving a specified gross margin for the fiscal year (20%);

(4)

controlling operating expenses (10%); and

(5)

enhancing fleet performance (10%).

The Compensation Committee developed target performance levels for each of these milestones that were consistent with our annual operating plan for fiscal 2018.

FISCAL 2018 STRATEGIC INITIATIVES

The pre-established Company strategic initiatives for fiscal 2018 (which were equally weighted) involved:

(a)

developing a new strategic business alliance and creating an appropriate corporate structure in Europe;

(b)

executing on specified regulatory initiatives;

(c)

growing the Advanced Technology business; and

(d)

executing specified project finance and legal initiatives.

Under the 2018 MIP, performance against each of the Company operational milestones was evaluated based on a range of pre-established performance levels to obtain scores ranging from 0% to a maximum of 125%.

PERFORMANCE RESULTS AND ANNUAL INCENTIVE AWARD PAYMENTS FOR FISCAL 2018

After the end of fiscal 2018, the Compensation Committee reviewed the Company’s actual performance as measured against the Company operational milestones and strategic initiatives, which resulted in an annual incentive award achievement percentage of 38% of the target award levels, determined as follows. Comparing the Company’s actual performance against the range of pre-established target levels for these operational milestones, the Compensation Committee calculated a weighted score for each milestone, the sum of which yielded a total weighted score. The Company’s overall performance with respect to the operational milestones for fiscal 2018 resulted in a calculated aggregate weighted score of 18%.

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With respect to the fiscal 2018 Company strategic initiatives, the Compensation Committee compared the Company’s actual performance against the pre-established target objectives for these initiatives, and calculated a weighted score for each strategic initiative, the sum of which yielded a total weighted score. Our overall performance with respect to the strategic initiatives for fiscal 2018 resulted in a calculated weighted score of 20%.

Applying the relative weighting of each performance category (75% for the operational milestones and 25% for the strategic initiatives), the Compensation Committee determined that the blended annual incentive award achievement percentage was equal to 38% of the target award levels.

After reviewing the blended annual incentive award achievement percentage and evaluating the Company’s performance, financial position and stock performance, and after considering the recommendations of the CEO, the Compensation Committee did not approve annual incentive award payments for the NEOs (other than our CEO) for fiscal 2018 and also recommended, and the independent members of the Board agreed, that no annual incentive award payment be made to the CEO.

FISCAL 2019 MANAGEMENT INCENTIVE PLAN

For fiscal 2019, Company operational milestones and strategic initiatives have been updated to further advance our business. The pre-established Company operational milestones for fiscal 2019 (and their respective weighting) are as follows: (1) achieve specified total revenue for the fiscal year (20%); (2) secure new orders (40%); (3) achieve a specified gross margin (20%); (4) control operating expenses (10%); and (5) enhance fleet performance (10%). The Compensation Committee has developed target performance levels for each of these milestones that are consistent with our fiscal 2019 annual operating plan.

The Compensation Committee has also established strategic initiatives for fiscal 2019 applicable to all participants including the NEOs. The pre-established Company strategic initiatives for fiscal 2019 (which are equally weighted) are as follows: (a) develop a new strategic partner; (b) execute on specified regulatory initiatives; (c) grow the Advanced Technology business; (d) develop project finance partners to support growth; and (e) transform the commercial development team.

LONG-TERM INCENTIVE COMPENSATION

ANNUAL RESTRICTED STOCK UNIT (RSU) GRANTS

Each of the NEOs is eligible to receive long-term incentive compensation in the form of RSUs under the 2018 Omnibus Incentive Plan (the “OIP”). These awards are intended to align a significant portion of the NEOs’ compensation with stockholders’ interests and the long-term success of the Company by providing a direct link to an NEO’s future earnings potential and the market value of our common stock. Our annual RSU grants typically vest over three years at a rate of 33.3% per year.

The Compensation Committee, in determining the value of equity awards to be granted to our employees, including the NEOs, considers relevant competitive market data as well as the recommendations of the CEO and other factors, including the individual’s job scope, past performance, expected future contributions, tenure and retention risk. The Compensation Committee approves all equity awards for the NEOs, except in the case of the CEO, whose award is approved by the independent members of our Board.

In April 2018, the Compensation Committee considered the relevant market data, the recommendations of the CEO for the equity awards to be granted to our executives (including the other NEOs), and the other factors described above. The Compensation Committee then approved the awards for the NEOs (other than the CEO) as recommended and set forth in the table below. In addition, the Compensation Committee considered and recommended to the independent members of our Board the grant of an equity award for the CEO. Its decisions (and, in the case of the CEO, its recommendation) were based on the factors described above, as well as the Company’s overall performance for fiscal 2017 and its retention objectives. Accordingly, the following equity awards were granted to the NEOs on April 5, 2018:

	2018 Long-Term Equity Incentive Awards
Name	# Shares/ Units		Grant Date Fair Value ($)			Vesting Period		Vesting Rate Per Year
Mr. Bottone		308,989		$	550,000		3 years	33.3%
Mr. Bishop		168,539		$	299,999		3 years	33.3%
Ms. Arasimowicz		168,539		$	299,999		3 years	33.3%
Mr. Rauseo		168,539		$	299,999		3 years	33.3%

The number of shares of our common stock subject to each RSU granted to each of the NEOs was based on the dollar value of the award approved for each individual by the Compensation Committee (or, in the case of the CEO, the independent members of our Board) divided by the closing market price of our common stock on the date of grant. As discussed on page 24 of this Proxy Statement, these equity awards are the “reported” equity award amounts and do not necessarily reflect the realizable award amounts.

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SPECIAL ONE-TIME EQUITY AWARDS

In conjunction with its consideration of the annual equity awards described above, the Compensation Committee also discussed with the CEO the grant of a special, one-time equity award to each of the other NEOs. In determining whether to grant such awards, the Compensation Committee considered its 2017 decision to reduce the size of future equity awards to the NEOs by 25% of the value of previous year’s awards and the resulting impact that such decision has had on the target total compensation opportunities of the NEOs, in the context of the highly competitive market for senior executive talent in the New England region and the Company’s desire to retain the continued services of the NEOs. After weighing these factors, the Compensation Committee determined that it was in the best interests of the Company and its stockholders to approve a special equity award of RSUs for each of the NEOs to retain their services in the competitive market environment, and recommend for approval by the independent Directors, a special equity award of RSUs for the CEO, valued in each case at $178,000, and subject to the following terms and conditions: (i) the RSUs vest 100% on the third anniversary of the grant date, provided that the executive remains in the continuous employment of the Company through such vesting date; and (ii) the awards are subject to the terms of the Company’s 2018 Omnibus Incentive Plan. As discussed on page 32 of this Proxy Statement, these special equity awards are “reported” in accordance with FASB Accounting Standards Codification (“ASC”) Topic 718 for all stock-based awards and do not necessarily reflect the realizable compensation amounts.

The annual restricted stock unit grant and the special one-time equity award granted to the NEOs in fiscal 2018 are both set forth in the Fiscal 2018 Summary Compensation Table and the Fiscal 2018 Grants of Plan-Based Awards Table on page 32 of this Proxy Statement.

COMPENSATION POLICIES

PROHIBITION ON OPTION RE-PRICING AND BACKDATING

The Compensation Committee does not re-price and has not re-priced options to purchase shares of our common stock, consistent with the OIP, which prohibits re-pricing of equity awards without stockholder approval. The grant date for each equity award is based on the date the award is approved by the Compensation Committee or the independent members of our Board, as applicable. Options to purchase shares of our common stock are granted with an exercise price equal to the closing market price of our common stock on the date of grant.

EQUITY AWARD GRANT POLICY

We maintain an Equity Award Grant Policy, which was most recently amended in December 2018. This policy includes the following key provisions: (a) all equity awards of more than 40,000 shares must be submitted to the Compensation Committee for approval; (b) all equity awards granted to executives at the level of vice president (or above) must be submitted to the Compensation Committee for approval; and (c) the Compensation Committee has authorized a pool of up to 100,000 shares from which the CEO may approve equity awards for special recognition or retention purposes, provided that such grants are limited to a grant date fair value of $40,000 or less, and further provided that no grants may be made from this pool to employees at the level of vice president or above.

COMPENSATION RECOVERY POLICY

We maintain an Executive Compensation Recovery Policy. A description of this policy can be found on page 14 of this Proxy Statement under “Corporate Governance.”

ANTI-HEDGING POLICY

A description of our anti-hedging policy can be found on page 12 of this Proxy Statement under “Corporate Governance.”

STOCK OWNERSHIP GUIDELINES

We maintain minimum stock ownership guidelines which were increased in December 2018. A description of these guidelines can be found on page 12 of this Proxy Statement under “Corporate Governance.”

TAX AND ACCOUNTING CONSIDERATIONS

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) generally prohibits public companies from taking a tax deduction for a taxable year for compensation in excess of $1 million paid to its covered executives. For compensation paid for the 2018 fiscal year, our covered executives were the chief executive officer and each of the other three most highly compensated executive officers (not including the chief financial officer) who were employed by a company as of the end of the year. For our 2018 fiscal year, qualifying “performance-based compensation” was not subject to the $1 million deduction limitation if specified requirements were met. The Compensation Committee has historically reviewed the potential consequences of Section 162(m) on the components of our executive compensation program, but has always reserved the discretion to grant or pay compensation that is not tax deductible as a result of the application of Section 162(m) if it believes that doing so is in the best interests of the Company and its stockholders.

As a result of changes made by the Tax Cuts and Jobs Act, starting with compensation paid in our 2019 fiscal year (the year beginning on November 1, 2018 and ending on October 31, 2019), Section 162(m) will limit us from deducting compensation, including performance-based compensation, in excess of $1 million paid to anyone who, starting with our 2018 fiscal year, serves as the chief executive officer or chief financial officer, or who is among the three most highly compensated executive officers for any fiscal year

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beginning with the 2018 fiscal year. Once an officer becomes a covered executive, the provisions of Section 162(m) will continue to apply, notwithstanding if such covered executive ceases to be an officer. The only exception to this rule is for compensation (including performance-based compensation) that is paid pursuant to a binding contract in effect on November 2, 2017, that would have otherwise been deductible under the prior Section 162(m) rules. Going forward, the Compensation Committee will retain full discretion to award compensation packages that best attract, retain, and reward successful executive officers. Therefore, the Compensation Committee may award compensation that is not fully deductible under Section 162(m) if the Compensation Committee believes it will contribute to the achievement of our business objectives.

We follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for all stock-based awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and full value stock awards, based on the aggregate grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables on pages 32 and 41 of this Proxy Statement. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award.

COMPENSATION RISK ASSESSMENT

In connection with its annual review of the executive compensation program, the Compensation Committee considers and assesses whether any aspects of the program encourage unnecessary or excessive risk-taking. This assessment examines the various compensation programs for all of our employees, including, but not limited to, the NEOs.

Based on its most recent review, the Compensation Committee has determined that the executive compensation program does not create risks that are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Compensation Committee considered the following:

■

Base salaries, which represent fixed compensation, do not encourage excessive risk-taking.

■

Annual incentive awards are capped at 125% of the target award opportunities and if actual performance falls below the threshold level of 50%, payment of an award is at the discretion of the Compensation Committee and the amount of the award could be zero, as it was for fiscal 2018. Moreover, the annual incentive award opportunity represents approximately 15% to 20% of each NEO’s target total direct compensation opportunity and, thus, is not likely to lead to excessive risk-taking. The Compensation Committee believes that the annual incentive award program is based on balanced, quantitative performance measures that promote disciplined progress towards longer-term goals and, as such, are well-aligned with the business strategy and stockholder interests.

■

The long-term incentive compensation in the form of equity awards granted to our executives helps to align their interests with those of our stockholders. The Compensation Committee has identified a number of factors that discourage excessive risk-taking including: (i) the relative size of the awards as compared to each executive’s target total direct compensation opportunity; (ii) the minimum vesting requirements for awards; and (iii) our policy which prohibits hedging transactions involving shares of our common stock and prevents our executives from insulating themselves from the effects of poor stock price performance. The Compensation Committee also noted that these awards do not encourage excessive-risk taking since their ultimate value is tied to our stock price, and they are granted on a staggered basis, subject to long-term vesting schedules, which help ensure that our executives have significant value tied to long-term stock price performance.

We have also historically granted equity awards to a significant number of employees. Like the equity awards granted to our executives, the relative size of these awards is modest compared to each employee’s target total compensation opportunity. All awards are subject to minimum vesting requirements and our policy which prohibits hedging transactions involving shares of our common stock is applicable to all grantees.

Further, the OIP, which governs the terms of such awards, includes several provisions designed to mitigate risk and protect stockholder interests, including, but not limited to, the following:

■

Options to purchase shares of our common stock and stock appreciation rights for shares of our common stock may not have an exercise or strike price that is less than the fair market value of our common stock on the date of grant;

■

With limited exceptions, no portion of any award granted uner the OIP may vest prior to the first anniversary of the award’s grant date;

■

The OIP was approved by stockholders at the 2018 Annual Meeting, and material amendments of the OIP, including an increase in the number of shares available thereunder, require stockholder approval; and

■

The OIP is administered by an independent committee of our Board.

The Compensation Committee has reviewed the compensation programs for our employees generally and has determined that these programs do not create risks that are reasonably likely to have a material adverse effect on the Company.

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FISCAL 2018 SUMMARY COMPENSATION TABLE

The following table presents summary information regarding the total compensation awarded to, earned by or paid to the NEOs for the fiscal years ended October 31, 2018, 2017, and 2016 (except for Ms. Arasimowicz for whom information is provided only with respect to the fiscal years ended October 31, 2018 and 2017).

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)(2)		All Other Compensation ($)		Total ($)
Arthur A. Bottone President and Chief Executive Officer	2018		443,026		—		728,000		—		3,141		1,174,167
	2017		428,816		—		495,750		282,000		3,016		1,209,582
	2016		426,414		—		661,000		192,967		4,026		1,284,406
Michael S. Bishop Senior Vice President, Chief Financial Officer and Treasurer	2018		333,402		—		478,000		—		10,076		821,478
	2017		318,392		—		262,500		125,520		4,572		710,894
	2016		307,904		—		350,000		78,750		4,255		740,909
Jennifer D. Arasimowicz(3) Senior Vice President, General Counsel and Corporate Secretary	2018		309,231		—		478,000		—		7,433		794,664
	2017		254,615		—		300,000		115,500		2,615		672,730
Anthony F. Rauseo Senior Vice President and Chief Operating Officer	2018		347,227		—		478,000		—		4,625		829,852
	2017		333,554		—		262,500		131,497		4,933		732,484
	2016		325,546		—		350,000		82,500		5,873		763,919

(1)

The amounts reported in the “Stock Awards” column reflect the aggregate grant date fair value of stock awards granted during each of the fiscal years 2018, 2017, and 2016, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“ASC Topic 718”). These values have been determined under the principles used to calculate the grant date fair value of equity awards for purposes of our financial statements. For a discussion of the assumptions and methodologies used to value the awards reported in this column, please see the discussion of stock awards contained in Note 16 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2018. These amounts represent the “reported” value of the awards, and do not necessarily represent the “realizable” value of the awards. See page 24 of this Proxy Statement for a discussion of reported versus realizable value of the awards.

(2)

The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent the value of the annual incentive award payment earned by each NEO for fiscal years 2018, 2017, and 2016 under our Management Incentive Plan. The amounts reported for fiscal years 2018, 2017, and 2016 were paid in cash.

(3)

Ms. Arasimowicz was appointed our Senior Vice President, General Counsel and Corporate Secretary on April 6, 2017.

FISCAL 2018 GRANTS OF PLAN-BASED AWARDS TABLE

The following table presents, for each of the NEOs, information with respect to the awards under the fiscal 2018 Management Incentive Plan and grants of long-term incentive compensation in the form of restricted stock unit awards made to the NEOs in fiscal 2018. For further information regarding the restricted stock unit awards included in the Fiscal 2018 Grants of Plan-Based Award Table, refer to the discussion of Long-Term Incentive Compensation on page 29 of this Proxy Statement. For further information concerning the reported value of these awards versus the realizable value of these awards, refer to the discussion on page 24 of this Proxy Statement.

	Estimated Future Payouts Under Incentive Compensation Awards(1)								All Other Stock Awards: Number of Units (#)(2)		Grant Date Fair Value of Stock and Option Awards ($)(3)
Name	Grant Date		Threshold Non-Equity Incentive Comp ($)		Target Non-Equity Incentive Comp ($)		Maximum Non-Equity Incentive Comp ($)		All Other Stock Awards: Number of Units (#)(2)		Grant Date Fair Value of Stock and Option Awards ($)(3)
Arthur A. Bottone
Annual Incentive Award for Fiscal 2018		—		213,750		427,500		534,375		—		—
Restricted Stock Unit Award (Special)		4/5/2018		—		—		—		100,000(4)		178,000
Restricted Stock Unit Award (Annual)		4/5/2018		—		—		—		308,989(5)		550,000
Michael S. Bishop
Annual Incentive Award for Fiscal 2018		—		87,500		175,000		218,750		—		—
Restricted Stock Unit Award (Special)		4/5/2018		—		—		—		100,000(4)		178,000
Restricted Stock Unit Award (Annual)		4/5/2018		—		—		—		168,539(5)		299,999

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	Estimated Future Payouts Under Incentive Compensation Awards(1)								All Other Stock Awards: Number of Units (#)(2)		Grant Date Fair Value of Stock and Option Awards ($)(3)
Name	Grant Date		Threshold Non-Equity Incentive Comp ($)		Target Non-Equity Incentive Comp ($)		Maximum Non-Equity Incentive Comp ($)		All Other Stock Awards: Number of Units (#)(2)		Grant Date Fair Value of Stock and Option Awards ($)(3)
Jennifer D. Arasimowicz
Annual Incentive Award for Fiscal 2018		—		82,500		165,000		206,250		—		—
Restricted Stock Unit Award (Special)		4/5/2018		—		—		—		100,000(4)		178,000
Restricted Stock Unit Award (Annual)		4/5/2018		—		—		—		168,539(5)		299,999
Anthony F. Rauseo
Annual Incentive Award for Fiscal 2018		—		90,000		180,000		225,000		—		—
Restricted Stock Unit Award (Special)		4/5/2018		—		—		—		100,000(4)		178,000
Restricted Stock Unit Award (Annual)		4/5/2018		—		—		—		168,539(5)		299,999

(1)

The amounts reported in the threshold, target and maximum columns reflect the range of potential payments of non-equity incentive compensation for fiscal 2018 that could have been made under the Management Incentive Plan in accordance with the performance measures established by the Compensation Committee. Threshold amounts represent the minimum amount payable of 50% of the target annual non-equity incentive award for each NEO. If actual performance falls below the minimum level required, then payment of an award is at the discretion of the Compensation Committee and could be zero. “Target” amounts assume achievement of 100% of our performance objectives for the fiscal year. The “maximum” amounts shown represent theoretical maximum payments that could be made, however, payout at the maximum has never been attained. The actual amount earned with respect to the fiscal 2018 annual non-equity incentive awards was zero, as reported in the Fiscal 2018 Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. For more information, see the explanation in the Compensation Discussion and Analysis under the sub-heading “Variable Compensation.”

(2)

Amounts reported in the “All Other Stock Awards” column represent the number of restricted stock units granted to each NEO under the 2018 Omnibus Incentive Plan. The number of restricted stock units was determined based upon the dollar value, as determined by the Compensation Committee (or, in the case of the CEO, the independent members of our Board), to be awarded to each NEO divided by the closing market price of our common stock on the date of grant. See discussion on page 24 of this Proxy Statement for a discussion of reported value versus realizable value for these awards.

(3)

Reflects the grant date fair value of the restricted stock units, calculated in accordance with ASC Topic 718 and utilizing the assumptions discussed in Note 16 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2018. See discussion on page 24 of this Proxy Statement for a discussion of reported value versus realizable value for these awards.

(4)

Reflects the one-time special RSU award, which vests 100% on the third anniversary of the grant date, provided that the executive remains in the continuous employment of the Company through such vesting date. Our Board may determine the effect on an award of the disability, death, retirement or other termination of employment of an NEO.

(5)

Reflects the annual RSU grant, which vests over three years at a rate of 33.3% per year beginning on the first anniversary of the date of grant. These awards were made on the same terms as the awards granted to all other eligible employees. Our Board may determine the effect on an award of the disability, death, retirement or other termination of employment of an NEO.

OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END TABLE

The following table presents, for each of the NEOs, information with respect to the outstanding equity awards held at October 31, 2018.

Option Awards

Stock Awards

Name

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Un-exercisable

Option
Exercise
Price
($)

Option Grant
Date

Option
Expiration
Date

Stock Award
Grant Date(1)

Number of
Shares or
Units of Stock
That Have
Not Vested
(#)

Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(2)

Arthur A. Bottone

4/02/2015

10,841

9,215

4/07/2016

51,320

43,622

4/06/2017

220,334

187,284

4/05/2018

308,989

262,641

4/05/2018

100,000

85,000

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	Option Awards					Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Un-exercisable	Option Exercise Price ($)	Option Grant Date	Option Expiration Date	Stock Award Grant Date(1)		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)(2)
Michael S. Bishop							4/02/2015		4,101		3,486
							4/07/2016		27,174		23,098
							4/06/2017		116,667		99,167
							4/05/2018		168,539		143,258
							4/05/2018		100,000		85,000
Jennifer D. Arasimowicz							4/07/2016		4,737		4,026
							4/06/2017		150,000		127,500
							4/05/2018		168,539		143,258
							4/05/2018		100,000		85,000
Anthony F. Rauseo							4/02/2015		4,101		3,486
							4/07/2016		27,174		23,098
							4/06/2017		116,667		99,167
							4/05/2018		168,539		143,258
							4/05/2018		100,000		85,000

(1)

In 2015 and 2016, we granted restricted stock awards which vest at a rate of 25% per year beginning on the first anniversary of the date of grant; in 2017 and 2018, the restricted stock unit awards granted to Messrs. Bottone, Bishop and Rauseo and Ms. Arasimowicz, vest at the rate of 33.3% per year beginning on the first anniversary of the date of grant except for the special awards consisting of 100,000 restricted stock units, which vest 100% on the third anniversary of the grant date.

(2)

The fair market value of unvested restricted stock and restricted stock unit awards is based on the per share closing market price of our common stock on October 31, 2018, which was $0.85. See discussion on page 24 of this Proxy Statement for a discussion of reported value versus realizable value for these awards.

FISCAL 2018 OPTION EXERCISES AND STOCK VESTED TABLE

The following table presents, for each of the NEOs, the number of shares of our common stock acquired upon the vesting of restricted stock awards and restricted stock units during fiscal 2018, and the aggregate value realized upon the vesting of such awards. Our NEOs did not exercise any options to purchase shares of our common stock during fiscal 2018. For purposes of this table, the value realized is based upon the fair market value of our common stock on each vesting date.

Option Awards

Stock Awards(1)

Name

Number of
Shares Acquired
on Exercise
(#)

Value Realized
on Exercise
($)

Number of
Shares Acquired
on Vesting
(#)

Value Realized
on Vesting
($)(2)

Arthur A. Bottone

N/A

149,897(3)

270,434

Michael S. Bishop

N/A

77,958(4)

140,756

Jennifer D. Arasimowicz

N/A

52,368(5)

94,404

Anthony F. Rauseo

N/A

78,387(6)

141,506

(1)

Represents the gross number of shares acquired and value received on the vesting of restricted stock and restricted stock unit awards, without reduction for the number of shares withheld to pay applicable withholding taxes. Shares and value net of withholding are discussed in the following footnotes.

(2)

The amount reported in the “Value Realized on Vesting” column is computed by multiplying the number of shares of our common stock that vested by the closing market price of our common stock on the applicable vesting date.

(3)

Represents the vesting of the first tranche (33%) of Mr. Bottone’s April 6, 2017 award of 330,500 restricted stock units; the vesting of the second tranche (25%) of his April 7, 2016 award of 102,640 shares of restricted stock; the vesting of the third tranche (25%) of his April 2, 2015 award of 43,373 shares of restricted stock; and the vesting of the fourth tranche (25%) of his March 27, 2014 award of 12,913 shares of restricted stock, in each case in accordance with the terms of the applicable award.

(4)

Represents the vesting of the first tranche (33%) of Mr. Bishop’s April 6, 2017 award of 175,000 restricted stock units; the vesting of the second tranche (25%) of his April 7, 2016 award of 54,348 shares of restricted stock; the vesting of the third tranche (25%) of his April 2, 2015 award of 16,405 shares of restricted stock; and the vesting of the fourth tranche (25%) of his March 27, 2014 award of 7,748 shares of restricted stock, in each case in accordance with the terms of the applicable award.

(5)

Represents the vesting of the first tranche (25%) of Ms. Arasimowicz’s April 6, 2017 award of 200,000 restricted stock units; and the vesting of the second tranche (25%) of her April 7, 2016 award of 9,473 shares of restricted stock, in each case in accordance with the terms of the applicable award.

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(6)

Represents the vesting of the first tranche (33%) of Mr. Rauseo’s April 6, 2017 award of 175,000 restricted stock units; the vesting of the second tranche (25%) of Mr. Rauseo’s April 7, 2016 award of 54,348 shares of restricted stock; the vesting of the third tranche (25%) of his April 2, 2015 award of 16,405 shares of restricted stock; and the vesting of the fourth tranche (25%) of his March 27, 2014 award of 9,470 shares of restricted stock, in each case in accordance with the terms of the applicable award.

EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL AND SEVERANCE

Each of the NEOs has an employment agreement with the Company, under which such NEO is eligible to receive certain severance payments and benefits in connection with a termination of employment under various circumstances, including following a change of control of the Company.

In reporting the estimated potential payments and benefits payable to each NEO in the event of termination of employment as of October 31, 2018, we assumed the terms of these agreements were applicable. The actual amounts that would be paid or distributed to the NEOs as a result of one of the termination events occurring in the future may be different than those presented below as many factors will affect the amount of any payments and benefits upon a termination of employment. For example, some of the factors that could affect the amounts payable include the NEO’s base salary and the market price of our common stock at the time of termination. In addition, although we have entered into written arrangements to provide severance payments and benefits to the NEOs in connection with a termination of employment under particular circumstances, we may mutually agree with the NEOs on severance terms that vary from those provided in these pre-existing agreements. Finally, in addition to the amounts presented below, each NEO would also be able to exercise any previously-vested options to purchase shares of our common stock that s/he held (if applicable). For more information about the NEOs’ outstanding equity awards as of October 31, 2018, see the Outstanding Equity Awards at 2018 Fiscal Year-End Table above.

In addition to the severance payments and benefits described in each NEO’s individual employment agreement, the NEOs are eligible to receive any benefits accrued under our broad-based benefit plans, such as accrued vacation pay, in accordance with those plans.

MR. BOTTONE

On February 8, 2011, we entered into an employment agreement with Mr. Bottone upon his promotion to President and Chief Executive Officer, which was subsequently amended effective as of January 1, 2012 (as amended, the “CEO Agreement”). The CEO Agreement specifies the reasons pursuant to which his employment may be terminated by our Board and provides him with certain compensation and benefits upon termination of employment (including in connection with a change in control of the Company). We believe that these provisions help ensure the Company’s long-term success. The CEO Agreement also sets forth the terms and conditions of employment for Mr. Bottone including his initial base salary, which is to be reviewed at least annually by our Board, and target annual incentive award opportunity. Mr. Bottone is also eligible to participate in the insurance plans and employee benefits generally available to our other employees. The CEO Agreement contains non-disclosure provisions that apply indefinitely and prohibit Mr. Bottone from competing with the Company and from soliciting our employees, in each case, during the term of his employment and for a period of two years thereafter.

In the event Mr. Bottone’s employment is terminated by the Company without cause or he resigns for good reason (as defined in the CEO Agreement), subject to his execution of a general release of claims against the Company, he is eligible to receive a severance payment in an amount equal to two times (i) his then-current annual base salary as of the date of termination plus (ii) the average of the bonuses paid to him since the effective date of his employment agreement, as well as payment for continued health insurance for 12 months (or 18 months if the termination (without cause or for good reason) occurs in connection with a change in control of the Company). In the event of termination of Mr. Bottone’s employment by the Company for any other reason (including death or disability), we will only pay Mr. Bottone any base salary and vacation accrued but as yet unpaid on the effective date of such termination and any vested and accrued benefits under our employee benefit plans. Mr. Bottone’s outstanding and unvested options to purchase shares of our common stock and restricted stock or restricted stock unit awards accelerate and immediately vest upon a change of control of the Company. Mr. Bottone’s CEO Agreement provides that, if he receives any payments in connection with a change of control of the Company that would constitute excess parachute payments that are subject to excise taxes under Section 4999 of the Code, (i) if such payments do not exceed four times his base amount (as defined in Section 280G of the Code), then such payments will be reduced to an amount that would not trigger any excise taxes and (ii) if such payments exceed four times his base amount and he is subject to excise taxes, the Company will provide a tax gross up payment for all income and excise taxes such that Mr. Bottone receives a net amount equal to such payments.

The following table sets forth the potential (estimated) payments and benefits that Mr. Bottone would be eligible to receive upon termination of employment (including in connection with a change in control of the Company), as specified under the CEO Agreement, assuming that the triggering event described below occurred on October 31, 2018.

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Executive Compensation

POTENTIAL PAYMENTS AND BENEFITS UPON A TERMINATION OF EMPLOYMENT OR A CHANGE IN CONTROL OF THE COMPANY FOR MR. BOTTONE

Executive Payments and Benefits(1)	Termination without Cause or Resignation for Good Reason ($)(2)		Death or Disability ($)(2)		Following Change in Control of the Company ($)(2)
Accelerated vesting:
Stock options(3)		—		—		—
Restricted Shares/Stock Units(3)(4)		—		—		587,761
Payment for annual incentive award		—		—		—
Continued Health Insurance Premiums(5)		29,687		—		44,531
Severance payment(6)		1,379,089		—		1,379,089
TOTAL		1,408,776		—		2,011,381

(1)

For purposes of this analysis, we have assumed that Mr. Bottone’s compensation is as follows: a base salary equal to $475,000, annual incentive award payments paid for fiscal 2011 in the amount of $161,500, for fiscal 2012 in the amount of $230,706, for fiscal 2013 in the amount of $247,212, for fiscal 2014 in the amount of $200,079, for fiscal 2015 in the amount of $187,347, for fiscal 2016 in the amount of $192,967, and for fiscal 2017 in the amount of $282,000, and outstanding restricted stock and stock unit awards as reflected in the Outstanding Equity Awards at 2018 Fiscal Year-End Table, on page 33 of this Proxy Statement. These amounts reflect the terms of his compensation arrangements as approved by the independent members of our Board, effective January 1, 2012.

(2)

Assumes Mr. Bottone’s date of termination of employment was October 31, 2018. The market price of our common stock on October 31, 2018 was $0.85 per share. In addition, we have assumed that the total payments and benefits to Mr. Bottone in connection with a change in control of the Company would not trigger any excise taxes under Section 4999 of the Code, and therefore, no tax gross up payment is due to Mr. Bottone and no reduction is required.

(3)

The CEO Agreement provides for accelerated vesting of Mr. Bottone’s outstanding and unvested options to purchase shares of our common stock, and restricted stock and restricted stock unit awards upon a change in control of the Company. Assuming a change in control occurred on October 31, 2018, Mr. Bottone would receive accelerated vesting of 691,484 shares of restricted stock and restricted stock units. As of October 31, 2018, Mr. Bottone had no options to purchase shares of our common stock outstanding.

(4)

The value of the restricted stock and restricted stock unit awards on October 31, 2018 is based on 691,484 shares and units outstanding at $0.85 per share that had not vested.

(5)

Mr. Bottone is eligible to receive payment of continued health insurance for a period of 12 months upon termination of employment without cause or resignation for good reason and 18 months if termination of employment without cause or resignation for good reason occurs in connection with a change in control of the Company. The value of continued health insurance is based on the medical and dental insurance rates in effect for all employees of the Company as of October 31, 2018.

(6)

Mr. Bottone is eligible to receive a severance payment equal to two times (i) his base salary plus (ii) a bonus payment for the severance period equal to the average of the bonuses awarded to him since his appointment as our President and Chief Executive Officer.

MR. BISHOP, MS. ARASIMOWICZ AND MR. RAUSEO

We entered into employment agreements (the “Other NEO Agreements”) with Messrs. Bishop and Rauseo (effective January 1, 2012) and with Ms. Arasimowicz (effective April 6, 2017), which specify the reasons pursuant to which their employment may be terminated and provide them with certain compensation and benefits upon termination of employment (including in connection with a change in control of the Company). We believe that these provisions help ensure the Company’s long-term success. The Other NEO Agreements set forth the terms and conditions of their employment including the initial annual base salary and target annual incentive award opportunity, which is equal to 50% of base salary and payable in accordance with the terms of the Management Incentive Plan described on page 29 of this Proxy Statement. Our NEOs are also eligible to participate in insurance plans and other employee benefits generally available to our other employees.

In the event Ms. Arasimowicz’s or Messrs. Bishop or Rauseo’s employment is terminated by the Company without cause, or any of them resigns for “good reason” (as defined in his/her applicable agreement), he/she is eligible to receive a severance payment in an amount equal to six months of his/her then-current annual base salary as of the date of termination, as well as payment for continued health insurance for six months. In the event that Mr. Bishop, Mr. Rauseo or Ms. Arasimowicz is terminated by the Company without cause or resigns for good reason in connection with a change in control of the Company, his/her outstanding and unvested options to purchase shares of our common stock and restricted stock and restricted stock unit awards accelerate and immediately vest. In addition, each of them is eligible to receive a severance payment in an amount equal to one year of his/her base salary as of the date of termination plus the average of the bonuses paid to him/her since his/her appointment as an executive officer of the Company as well as payment for continued health insurance for 12 months. In the event of termination of employment by the Company for any other reason (including death or disability), we will only be required to pay him/her any base salary and vacation accrued but unpaid as of the effective date of such termination.

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Executive Compensation

The following tables set forth the potential (estimated) payments and benefits which Ms. Arasimowicz and Messrs. Bishop and Rauseo would be eligible to receive upon termination of employment (including in connection with a change in control of the Company), as specified under the applicable Other NEO Agreements, assuming that the triggering event described below occurred on October 31, 2018.

POTENTIAL PAYMENTS AND BENEFITS UPON A TERMINATION OF EMPLOYMENT OR A CHANGE IN CONTROL OF THE COMPANY FOR MR. BISHOP

Executive Payments and Benefits(1)	Termination without Cause or Resignation for Good Reason ($)(2)		Death or Disability ($)(2)		Following Change in Control of the Company ($)(2)
Accelerated vesting:
Stock options(3)		—		—		—
Restricted Shares/Stock Units(3)(4)		—		—		354,009
Payment for annual incentive award		—		—		—
Continued Health Insurance Premiums(5)		12,952		—		25,904
Severance payment(6)		175,000		—		437,365
TOTAL		187,952		—		817,278

(1)

For purposes of this analysis, we have assumed that Mr. Bishop’s compensation is as follows: a base salary equal to $350,000, annual incentive award payments paid for fiscal 2011 in the amount of $59,850, for fiscal 2012 in the amount of $79,835, for fiscal 2013 in the amount of $89,670, for fiscal 2014 in the amount of $94,500, for fiscal 2015 in the amount of $83,430, for fiscal 2016 in the amount of $78,750, and for fiscal 2017 in the amount of $125,520, and outstanding restricted stock and restricted stock unit awards as reflected in the Outstanding Equity Awards at 2018 Fiscal Year-End Table, on page 33 of this Proxy Statement. These amounts reflect the terms of his compensation arrangements as approved by the Compensation Committee, effective January 1, 2012.

(2)

Assumes Mr. Bishop’s date of termination of employment was October 31, 2018. The market price of our common stock on October 31, 2018 was $0.85 per share.

(3)

Assuming termination of employment without cause or resignation for good reason in connection with a change in control of the Company, Mr. Bishop is to receive accelerated vesting of his outstanding and unvested options to purchase shares of our common stock and restricted stock and restricted stock unit awards. As of October 31, 2018, Mr. Bishop held 416,481 unvested shares of restricted stock and restricted stock units. As of October 31, 2018, Mr. Bishop held no options to purchase shares of our common stock outstanding.

(4)

The value of the restricted stock and restricted stock unit awards on October 31, 2018 is based on 416,481 shares and units at $0.85 per share that had not vested.

(5)

Mr. Bishop is eligible to receive payment of continued health insurance for a period of six months in the event his employment is terminated without cause or he resigns for good reason and 12 months if his employment is terminated without cause or he resigns for good reason in connection with a change in control of the Company. The value of continued health insurance is based on the medical and dental insurance rates in effect for all employees of the Company as of October 31, 2018.

(6)

In the event Mr. Bishop’s employment is terminated without cause or he resigns for good reason, he is eligible to receive a severance payment equal to six months of his base salary. In the event his employment is terminated without cause or he resigns for good reason in connection with a change in control of the Company, he is eligible for 12 months of his base salary plus a bonus payment for the severance period equal to the average of the bonuses awarded to him since his appointment as our Chief Financial Officer.

POTENTIAL PAYMENTS AND BENEFITS UPON A TERMINATION OF EMPLOYMENT OR A CHANGE IN CONTROL OF THE COMPANY FOR MS. ARASIMOWICZ

Executive Payments and Benefits(1)	Termination without Cause or Resignation for Good Reason ($)(2)		Death or Disability ($)(2)		Following Change in Control of the Company ($)(2)
Accelerated vesting:
Stock options(3)		—		—		—
Restricted Shares/Stock Units(3)(4)		—		—		359,785
Payment for annual incentive award
Continued Health Insurance Premiums(5)		14,844		—		29,687
Severance payment(6)		165,000		—		445,500
TOTAL		179,844		—		834,972

(1)

For purposes of this analysis, we have assumed that Ms. Arasimowicz’s compensation is as follows: a base salary equal to $330,000, annual incentive award payments paid for fiscal 2017 in the amount of $115,500, and outstanding restricted stock and restricted stock unit awards as reflected in the Outstanding Equity Awards at 2018 Fiscal Year-End Table, on page 33 of this Proxy Statement. These amounts reflect the terms of her compensation arrangements as approved by the Compensation Committee, effective April 6, 2017.

(2)

Assumes Ms. Arasimowicz’s date of termination of employment was October 31, 2018. The market price of our common stock on October 31, 2018 was $0.85 per share.

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(3)

Assuming termination of employment without cause or resignation for good reason in connection with a change in control of the Company, Ms. Arasimowicz is to receive accelerated vesting of her outstanding and unvested options to purchase shares of our common stock and restricted stock and restricted stock unit awards. As of October 31, 2018, Ms. Arasimowicz held 423,276 unvested shares of restricted stock and restricted stock units. As of October 31, 2018, Ms. Arasimowicz did not hold any options to purchase shares of our common stock.

(4)

The value of the restricted stock and restricted stock unit awards on October 31, 2018 is based on 423,276 shares and units at $0.85 per share that had not vested.

(5)

Ms. Arasimowicz is eligible to receive payment of continued health insurance for a period of six months in the event her employment is terminated without cause or she resigns for good reason and 12 months if her employment is terminated without cause or she resigns for good reason in connection with a change in control of the Company. The value of continued health insurance is based on the medical and dental insurance rates in effect for all employees of the Company as of October 31, 2018.

(6)

In the event Ms. Arasimowicz’s employment is terminated without cause or she resigns for good reason, she is eligible to receive a severance payment equal to six months of her base salary. In the event her employment is terminated without cause or she resigns for good reason in connection with a change in control of the Company, she is eligible for 12 months of her base salary plus a bonus payment for the severance period equal to the average of the bonuses awarded to her since her promotion to Senior Vice President, General Counsel and Corporate Secretary.

POTENTIAL PAYMENTS AND BENEFITS UPON A TERMINATION OF EMPLOYMENT OR A CHANGE IN CONTROL OF THE COMPANY FOR MR. RAUSEO

Executive Payments and Benefits(1)

Termination without
Cause or Resignation for
Good Reason
($)(2)

Death or
Disability
($)(2)

Following
Change in
Control of the
Company
($)(2)

Accelerated vesting: