Edgar Filing: HESKA CORP

Document

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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Check the appropriate box:

[X] Preliminary Proxy Statement

[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

[_] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to §240 Rule 14a-12

HESKA CORPORATION

(Name of Registrant as Specified in Its Charter)

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

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March [•], 2019

Dear Heska Corporation Stockholder:

I am pleased to invite you to attend the 2019 Annual Meeting of Stockholders of Heska Corporation. The meeting is to be held on Thursday, May 2, 2019, at 9:00 a.m., local time, at the Heska Corporation corporate headquarters located at 3760 Rocky Mountain Ave, Loveland, CO 80538.

We encourage you to indicate your voting preferences as soon as possible as described in the enclosed proxy statement if you do not plan to attend the Annual Meeting.

Details regarding the Annual Meeting and the business to be conducted are more fully described in the accompanying Notice of 2019 Annual Meeting and Proxy Statement. This notice and all proxy materials in connection with this Annual Meeting are also available on our Internet website at https://www.heska.com/proxyvote.

Your vote is important, so please act at your first opportunity. Whether or not you plan to attend the Annual Meeting, I hope you will indicate your voting preferences as soon as possible. You may vote by proxy or in person at the Annual Meeting. Please review the instructions in the Proxy Statement and on the proxy card regarding your voting options.

Thank you for your ongoing support of, and continued interest in, Heska Corporation.

Sincerely,

Scott W. Humphrey

Chair of the Board of Directors,

Heska Corporation

Loveland, Colorado

YOUR VOTE IS IMPORTANT

___________________

In order to ensure your representation at the Annual Meeting if you will not attend, please follow the corresponding instructions on any enclosed proxy card to indicate your voting preferences.

NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS



TIME	9:00 a.m., local time, on Thursday, May 2, 2019
PLACE	Heska Corporation 3760 Rocky Mountain Ave Loveland, CO 80538
ITEMS OF BUSINESS	1.	To approve amendments to our Restated Certificate of Incorporation, as amended, and our Amended and Restated Bylaws to declassify our Board of Directors.
	2.	To elect a Director.
	3.	To amend and restate our Stock Incentive Plan, as amended and restated (the "Stock Plan") to add a non-employee director compensation limit and expand the types of awards available for grant thereunder.
	4.	To ratify the appointment of Plante & Moran PLLC as our independent registered public accounting firm.
	5.	To approve our executive compensation in a non-binding advisory vote.
	6.	To conduct a non-binding advisory vote on frequency of an advisory vote on executive compensation.
	7.	To obtain your preference, in a non-binding advisory vote, that our proxyholders should consider other unanticipated business that may be in the interest of our stockholders, and vote accordingly if such business properly comes before the Annual Meeting.
RECORD DATE	You can vote if you were an eligible stockholder at the close of business on March 13, 2019.
VOTING BY PROXY	If you do not plan to attend the Annual Meeting, please submit a proxy card appointing a proxy as soon as possible so that your shares can be voted at the Annual Meeting in accordance with your instructions. For specific instructions on voting, please refer to the instructions on the proxy card or the enclosed materials.



March [•], 2019	By Order of the Board of Directors

	Eleanor F. Baker Vice President, General Counsel and Secretary Heska Corporation

TABLE OF CONTENTS



PROXY STATEMENT	1
ABOUT THE ANNUAL MEETING	1
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING	1
BOARD STRUCTURE AND COMMITTEES	9
DIRECTOR COMPENSATION	12
PROPOSAL NO. 1	16
PROPOSAL NO. 2	19
PROPOSAL NO. 3	22
PROPOSAL NO. 4	31
PROPOSAL NO. 5	32
PROPOSAL NO. 6	33
POTENTIAL VOTE NO. 7	34
OTHER MATTERS	35
OTHER INFORMATION	35
OWNERSHIP OF SECURITIES - COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	36
OPTION TABLES	38
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE	39
EQUITY COMPENSATION PLAN INFORMATION	40
SIGNIFICANT RELATIONSHIPS AND TRANSACTIONS WITH DIRECTORS, OFFICERS OR PRINCIPAL STOCKHOLDERS	40
EXECUTIVE COMPENSATION	44
COMPENSATION COMMITTEE REPORT	63
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION	64
PAY RATIO DISCLOSURE	64
EXECUTIVE OWNERSHIP GUIDELINES	64
AUDITOR FEES AND SERVICES	65
REPORT OF OUR AUDIT COMMITTEE	66

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WHERE YOU CAN FIND MORE INFORMATION	68
APPENDIX A: Form of Certificate of Amendment to the Restated Certificate of Incorporation, as amended	A-1
APPENDIX B: Proposed Bylaws, as amended and restated	B-1
APPENDIX C: Stock Incentive Plan	C-1

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PRELIMINARY COPY

PROXY STATEMENT

ABOUT THE ANNUAL MEETING

This proxy statement is being furnished to holders of all classes of common stock, $0.01 par value per share, of Heska Corporation ("Heska" or the "Company"). Proxies are being solicited on behalf of the Board of Directors of the Company (the "Board") to be used at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at Heska Corporation, 3760 Rocky Mountain Ave, Loveland, CO 80538 on Thursday, May 2, 2019, at 9:00 a.m., local time.

At the Annual Meeting, you will be asked to (1) approve, amendments to our Restated Certificate of Incorporation, as amended (the "Charter"), and Amended and Restated Bylaws (the "Bylaws"), to declassify our Board of Directors, (2) elect a Director, (3) approve an amendment and restatement of our Stock Incentive Plan, as amended and restated, to add a non-employee director compensation limit and expand the types of awards available for grant thereunder, (4) ratify the appointment of Plante & Moran, PLLC as our independent registered public accounting firm, (5) approve our executive compensation in a non-binding advisory vote, (6) to conduct an advisory vote on frequency of an advisory vote on executive compensation, and (7) consider such other business as may properly come before the Annual Meeting, including, if practicable, an advisory vote with respect to discretionary voting by proxyholders if, and only if, such other business properly comes before the Annual Meeting.

This proxy statement and the accompanying proxy card are being provided to our stockholders of record entitled to vote at the Annual Meeting on or about March 28, 2019.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on Thursday, May 2, 2019:

______________

The proxy statement and proxy card are available at https://www.heska.com/proxyvote.

The Company's website address above is not intended to function as a hyperlink, and the information on the Company's website is not and should not be considered part of this proxy statement and is not incorporated herein by reference.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS

AND THE 2019 ANNUAL MEETING


Q:	Why am I receiving these materials?


A:	The Board is providing these proxy materials for you in connection with Heska’s upcoming 2019 Annual Meeting. Eligible stockholders of record as of the close of business on March 13, 2019 (the “Record Date”), are invited to attend the Annual Meeting and are entitled and requested to vote on the items of business to be conducted at the Annual Meeting.

Q: When and where is the Annual Meeting?


A:	The Annual Meeting will be held at Heska Corporation, 3760 Rocky Mountain Ave, Loveland, CO 80538 on Thursday, May 2, 2019, at 9:00 a.m., local time.


Q:	What information is contained in these materials?


A:	The information included in this proxy statement relates to the proposals to be voted on at the 2019 Annual Meeting, the voting

process, the compensation of our Directors and most highly paid Executive Officers, and certain other required information. Our annual report on Form 10-K for the year ended December 31, 2018 (our "2018 Form 10-K"), as filed with the Securities and Exchange Commission (the "SEC"), is also enclosed.


Q:	What items of business will be voted on at the Annual Meeting?


A:	The items of business scheduled to be voted on at the Annual Meeting are:


(1)	To approve an amendment to our Charter and our Bylaws to declassify our Board of Directors (resulting in the "Restated Charter" and the "Updated Bylaws");


(2)	The election of a Director nominee to serve on our Board of Directors;


(3)	To amend and restate our Stock Incentive Plan, as amended and restated (the "Stock Plan") to add a non-employee Director compensation limit and expand the types of awards available for grant thereunder (the "Restated Plan");


(4)	To ratify the appointment of Plante & Moran, PLLC as our independent registered public accounting firm for the fiscal year ending December 31, 2019;


(5)	The offering of approval of our executive compensation in a non-binding advisory vote; and


(6)	A non-binding advisory vote on frequency of an advisory vote on executive compensation.

We will also consider other business that properly comes before the 2019 Annual Meeting, including, if practicable, conducting an advisory vote with respect to discretionary voting by proxyholders if, and only if, such other business properly comes before the 2019 Annual Meeting.


Q:	How does the Board recommend I vote on the proposals?


A:	The Board recommends that you vote FOR the amendments to the Charter and the Bylaws to declassify our Board, FOR the election of a

Director nominee, FOR the Restated Plan, FOR the ratification of Plante & Moran, PLLC as the Company's independent registered public accounting firm, FOR the offering of approval of the Company's executive compensation policies, FOR one year as the frequency of the advisory vote on executive compensation, FOR your preference being that the proxyholders exercise their voting discretion in a manner they determine to be in the best interest of the Company's stockholders, if other business properly comes before the 2019 Annual Meeting and you are voting by proxy.


Q:	What classes of stock does Heska's Charter authorize?

Our Charter authorizes three classes of stock. First, our Charter authorizes a class of Traditional Common Stock and defines it as the "Original Common Stock". We will refer to this class of stock in these proxy materials as the "Original Common Stock". Second, our Charter authorizes a class of Public Common Stock and defines it as the "Common Stock" or the "NOL Restricted Common Stock". We will refer to this class of stock in these proxy materials as the "Public Common Stock" or the "NOL Restricted Common Stock". Third, our Charter authorizes a class of Preferred Stock. We shall refer to this class of stock in these proxy materials as "Preferred Stock". For the purpose of these proxy materials, "Common Stock" shall mean collectively Original Common Stock and Public Common Stock.


Q:	Who is an eligible stockholder entitled to vote at the Annual Meeting?

Stockholders holding Common Stock registered with Computershare Trust Company, N.A. ("Computershare"), our registrar and transfer agent ("Registrar Listed Shares"), as of the close of business on March 13, 2019 (including shares legally issued but not yet processed by Computershare, if any), the Record Date, are eligible and entitled to vote at the Annual Meeting. Each stockholder is entitled to one

vote for each share of Common Stock held on the Record Date. As of the Record Date, 7,742,222 shares of our Common Stock were issued and outstanding; and no shares of Preferred Stock were issued and outstanding. A list of stockholders entitled to vote at the Annual Meeting will be available at the Annual Meeting and for ten days prior to the meeting during normal business hours at our offices at 3760 Rocky Mountain Avenue, Loveland, Colorado 80538. You may review the list when it becomes available by contacting our Secretary as outlined under "Who can help answer my questions?" below.


Q:	How do I know if I hold Registrar Listed Shares?

In general, there are two ways in which you may hold Common Stock registered with Computershare: Physical Certificate and "Direct" Registration. With a Physical Certificate, there is an actual, hard copy stock certificate representing your ownership of Common Stock which is registered with Computershare. With Direct Registration, there is no paper certificate but your shares are registered with Computershare. Either way, you would have an account with Computershare and Computershare would have sent you these proxy materials.

If someone other than Computershare sent you these proxy materials, it is likely you do not hold Registrar Listed Shares in an affiliated account. A large portion of our Registrar Listed Shares are held by Cede & Co., a nominee of Depository Trust Company ("DTC Shares") - as we believe is typical for publicly traded companies. We believe DTC Shares are more conveniently publicly traded than other Registrar Listed Shares and thus represent most of our daily trading volume. If a broker buys a position in DTC Shares from another broker, we believe the identity of the parties is typically not reported to Computershare or us. We believe Depository Trust Company maintains records of the DTC Shares allocated to different entities, such as brokers and banks, and in the case of a broker buying a position in DTC Shares from another broker will record

an increase in the number of DTC Shares allocated to the purchasing broker equal to the number of shares involved as well as a corresponding decrease in the number of shares allocated to the selling broker. DTC Shares allocated to a given broker in this way may represent many client accounts for which the broker or the broker's agent maintains internal records, which we do not believe are generally shared with Depository Trust Company or Computershare.

If your shares are held through a broker, bank or other nominee and are not registered in your name with Computershare, such shares are herein referred to as being held in "Street Name", and you probably received these materials through such broker, bank or other nominee. We believe over 90% of our shares are held in Street Name. Computershare will generally not be able to identify the holders of shares held in Street Name as stockholders entitled to vote at the Annual Meeting without further arrangements by the corresponding broker, bank or other nominee.


Q:	How can I vote at the Annual Meeting if my shares are held in Street Name?


A:	If you wish to vote shares held in Street Name at the Annual Meeting, you must contact your broker, bank or other nominee to obtain the proper documentation - which should be documentation entitling you to vote a certain number of Registrar Listed Shares at the Annual Meeting which we can verify as legitimate - and bring it with you to the Annual Meeting.


Q:	Can eligible stockholders who are unable or unwilling to attend the Annual Meeting vote?


A:	Yes, such stockholders may vote by proxy.


Q:	How can I direct a vote by proxy?


A:	If you hold Registrar Listed Shares you may: (a) indicate your voting preferences, sign and date each proxy card by following the corresponding instructions on each proxy card you receive and return each such proxy card in the postage prepaid envelope or by other

means acceptable to Computershare; (b) indicate your voting preferences via the telephone by following the corresponding instructions; (c) indicate your voting preferences via the internet by following the corresponding instructions; or (d) bring a proxy card you have completed, including your voting preferences, signature and dated as of the Annual Meeting if necessary, to the Annual Meeting along with a copy of proper identification, if required, to the Annual Meeting.

If you have shares held in Street Name, you should indicate your vote for the shares via any procedure(s) adopted by your broker, bank or other nominee. These may include directing proxy votes by mail, telephone via a touch tone dialpad or the internet. Proxy solicitors, including any proxy solicitor(s) we may engage, may make arrangements with certain brokers, banks and other nominees where you may be able to direct proxy votes on a taped telephone call.


Q:	How can I change my proxy vote or revoke my proxy?

For Registrar Listed Shares, you have the right to revoke your proxy and change your voting instructions at any time before the meeting by notifying our Secretary, or returning a later-dated proxy card, updating your vote via the telephone by following the corresponding instructions or updating your vote via the internet by following the corresponding instructions. You may also revoke your proxy and change your vote by voting by proxy or in person at the Annual Meeting.

For shares held in Street Name, you should follow any corresponding procedure(s) adopted by your broker, bank or other nominee. These may include procedures as simple as a later vote via telephone or the internet to change your vote.


Q:	Who can help answer my questions?


A:	If you have any questions about the Annual Meeting or how to vote or revoke your proxy, you should contact:

Heska Corporation

Attn: Secretary

3760 Rocky Mountain Avenue

Loveland, Colorado 80538

(970) 493-7272

If you need additional copies of this proxy statement or voting materials, please contact our Secretary as described above.


Q:	What does it mean if I get more than one proxy card?


A:	It probably means that you hold shares of Common Stock in more than one account. Direct your votes on all proxies to ensure that all of your shares are voted if you do not plan to attend the Annual Meeting.


Q:	Who will serve as inspector of elections?


A:	The inspector of elections will be a representative of Computershare, our registrar and transfer agent.


Q:	How do you expect votes will be counted for quorum and other purposes?


A:	We intend to count shares underlying proxies containing directions indicating a “for”, “withhold”, “against”, or “abstain” vote, as well as any legitimate proxies without any voting instructions as “present” for purposes of determining a quorum.

We intend to consider an abstention or a non-vote on a given matter, including indicated via proxy, to be a forfeiture of the right to vote on that matter and a forfeiture of the voting power present at the 2019 Annual Meeting underlying the forfeited votes regarding that matter. Accordingly, if you, at the Annual Meeting or indicated via proxy, abstain or do not indicate a vote on a given matter, your shares will not be voted "for" or "against" that matter and will not be considered as present and entitled to vote on that matter. However, you may abstain on a given matter for a certain portion of your shares and vote on the same matter with the remaining portion of your shares without forfeiting the votes underlying the shares you choose to vote. For

example, a stockholder who has two accounts with 50 shares in each account may choose to abstain on a proposal with 50 shares and vote for the same proposal with the other 50 shares. In this case, the stockholder would forfeit his right to vote 50 shares on the proposal and would have his other 50 votes count for the proposal. In addition, an abstention or a non-vote on any matter will not affect your ability to vote on any other matter.

The underlying broker, bank or other nominee of shares held in Street Name may report consolidated proxy vote totals to Computershare. The underlying broker, bank or other nominee of shares held in Street Name may not treat voting preferences such as non-votes in their proxy voting materials in the same manner we intend to. For example, if you do not indicate a vote on a given matter, the underlying broker, bank or other nominee may be permitted by law, rule and policy to exercise voting discretion on this matter and may direct a vote for the corresponding shares accordingly. Similarly, if you do not indicate a vote on a given matter, the underlying broker, bank or other nominee may be permitted by law, rule and policy not to direct a vote for the underlying shares on any matter and may not direct a vote for the corresponding shares at all, including on other matters for which you may have indicated a voting preference.

If you hold shares in Street Name through a broker, bank or other nominee, your broker, bank or nominee may not be permitted by law, rule or policy to exercise voting discretion with respect to certain matters to be acted upon. If you do not give your broker, bank or nominee specific instructions, your underlying shares may not be voted on those matters, potentially resulting in so-called "broker non-votes," and, if so, will not be considered as present and entitled to vote with respect to those matters. In some cases, your broker, bank or other nominee may not be permitted by law, rule or policy to exercise voting discretion with respect to any matters to be acted upon and, in the absence of specific instructions from you, may not vote or submit a proxy card to anyone at all regarding these

matters. In such a circumstance, your underlying shares will not be considered present at the Annual Meeting in person or by proxy and will not be voted on any matters to be acted upon therein.

We suggest you clearly indicate your voting preferences on all matters to help ensure your voting preferences are accurately recorded.


Q:	What are the quorum and voting requirements for the Annual Meeting?


A:	The holders of a majority of the outstanding shares of our Common Stock, present in person or represented by proxy at the Annual Meeting, will constitute a quorum for the transaction of business at the Annual Meeting. Based on the number of shares of Common Stock outstanding as of the Record Date, a quorum requires 3,871,112 shares.

The amendments to the Charter and Bylaws presented in Proposal No. 1 is to be approved by the affirmative vote of at least 66-2/3% of our outstanding shares of Common Stock (a "Two-thirds Supermajority"), or a minimum of 5,161,485 shares.

The election of a Director presented in Proposal No. 2 is to be determined by a plurality of the votes of the shares of Common Stock having voting power present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter (a "Plurality Vote")

The Restated Plan presented in Proposal No. 3 is to be approved by both (1) the vote of the majority of the shares of our Common Stock having voting power present in person or by proxy, and entitled to vote on the subject matter at the Annual Meeting, and (2) a minimum affirmative vote of a majority of our quorum requirement (with a vote meeting both criteria (1) and (2) being defined as a "Quorum Majority"). Based on the number of shares of Common Stock outstanding as of the Record Date, the affirmative vote of a minimum of 1,935,557 shares will be required to achieve a Quorum Majority.

The ratification of the selection of our independent registered public accounting firm for fiscal 2019 in Proposal No. 4 is to be approved by the vote of a majority of the shares of our Common Stock having voting power present in person or by proxy, and entitled to vote on the subject matter (a "Voting Majority").

An offer of approval of our executive compensation in a non-binding advisory vote in Proposal No. 5 is to be obtained by the vote of a Voting Majority.

All other business which may properly come before the Annual Meeting, including Proposal No. 6, is to be determined by a Quorum Majority, unless the matter is one upon which by express provision of law, or our Charter or our Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such matter.


Q:	What happens if additional matters are presented at the 2019 Annual Meeting?

Other than the six specific items of business described in this proxy statement, we are not aware of any other business to be acted upon at the 2019 Annual Meeting. If other business properly comes before the Annual Meeting, we intend to try to conduct an advisory vote of stockholders who have granted the persons named below as proxyholders a proxy regarding the preference of these stockholders' regarding the manner in which the below persons named as proxyholders exercise their voting discretion or otherwise communicate any related information in this regard to such proxyholders, and then proceed to consideration of the other business which has properly come before the Annual Meeting. If you grant a proxy, the persons named as proxyholders - Eleanor F. Baker, our Vice President, General Counsel and Secretary, Catherine I. Grassman, our Vice President, Chief Accounting Officer and Controller, and Christopher D. Sveen, our Vice President, General Counsel - will have the discretion to vote your shares on any additional matters presented for a vote at the meeting. It is

important to note that while the proxyholders may consider any advisory vote or related information in such a circumstance, the proxyholders retain full discretion to vote as they may determine regardless of outcome of any advisory vote or related information.


Q:	What happens if the nominee for Director is unable to stand for election?


A:	If for any unforeseen reason our nominee is not available as a candidate for Director, the persons named as proxyholders - Ms. Baker, Ms. Grassman, and Mr. Sveen - expect to vote your proxy for such other candidate or candidates who may be nominated by the Board, although the proxyholders retain full discretion to vote as they may determine.


Q:	Where can I find the voting results of the meeting?

We intend to announce preliminary voting results at the Annual Meeting, and publish final voting results in a Current Report on Form 8-K (a "Form 8-K") to be filed with the SEC within four business days after the Annual Meeting. If final voting results are not available within four business days after the Annual Meeting, we intend to publish preliminary voting results in a Form 8-K to be filed with the SEC on the fourth business day following the Annual Meeting and then publish final voting results in a Form 8-K to be filed with the SEC within four business days following the final voting results becoming known.


Q:	Who bears the costs of soliciting votes for the Annual Meeting?

Heska is making this solicitation and will pay the entire cost of preparing, printing, assembling and mailing these proxy materials. In addition to the mailing of these proxy materials, certain of our directors and employees may solicit proxies on our behalf in person, by mail, telephone, email, facsimile or other means. No additional compensation will be paid to these people for such solicitation. We have engaged Morrow Sodali LLC, 470 West Ave., Stamford, CT 06902 ("Morrow

Sodali") to solicit proxies on our behalf for a fee of $12,500, which may increase based on Morrow Sodali's solicitation activities with non-objecting beneficial owners of our Common Stock, plus reimbursement of certain disbursements. We believe our engagement with Morrow Sodali is consistent with customary terms and conditions for soliciting proxies. Charges under the engagement may increase if we direct Morrow Sodali to engage in activities not currently contemplated. We may enlist the assistance of brokerage firms, fiduciaries, custodians and other third party solicitation firms in soliciting proxies. If we elect to engage any such assistance, we expect our arrangements with the solicitation firm(s) will be on customary terms and conditions, the cost of which is not anticipated to be material to us. Upon request, we will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders.


Q:	Is a corporate 2018 Annual Report available?

A corporate 2018 Annual Report was posted to the investor relations portion of our Corporate website on or about March 20, 2019. We have not mailed physical copies of our corporate 2018 Annual Report with this mailing in order to reduce the cost of conducting the Annual Meeting as compared to comparable costs in previous years. If you wish to obtain a hardcopy of our corporate 2018 Annual Report, please contact our Secretary as follows:

Heska Corporation

Attn: Secretary

3760 Rocky Mountain Avenue

Loveland, Colorado 80538

(970) 493-7272.


Q:	May I propose actions for consideration at next year's Annual Meeting or nominate individuals to serve as Directors?


A:	Yes. You may submit proposals, including Director nominations, for consideration at future stockholder meetings. All proposals or nominations should be addressed to: Secretary,

Heska Corporation, 3760 Rocky Mountain Avenue, Loveland, Colorado 80538.

Stockholder Proposals: For a stockholder proposal to be considered for inclusion in our proxy statement for the annual meeting next year, the written proposal must be received by our Secretary at our principal executive offices under either (1) Rule 14a-8 (a "Rule 14 Proposal") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or (2) the Bylaws of Heska (a "Bylaws Proposal"). A Rule 14 Proposal must be received by our Secretary at our principal executive offices no later than November 25, 2019. If the date of next year's annual meeting is moved more than 30 days before or after the anniversary date of this year's annual meeting, the deadline for inclusion of proposals in our proxy statement is instead a reasonable period of time before we begin to print and mail our proxy materials. Such proposals will also need to comply with Rule 14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in company-sponsored proxy materials. For a Bylaws Proposal, the stockholder must deliver a written notice of intent to propose such action in accordance with our Bylaws, which in general require that the notice be received by us not less than 60 days nor more than 90 days prior to the first anniversary of the date on which notice of the prior year's annual meeting was mailed to stockholders. These proxy materials for the Annual Meeting are to be mailed on or about March 28, 2019. This means that for the 2019 annual meeting of stockholders, any such proposal must be received no earlier than December 28, 2019 and no later than January 27, 2020.

Director Nominees: You may propose Director candidates for consideration by the Board's Corporate Governance Committee. Any such recommendations should be directed to our Secretary at our principal executive offices. In addition, you may nominate a Director for consideration by Heska's stockholders if you give timely and adequate notice to our Secretary of your intention to

make such nomination in accordance with our Bylaws, which require that the notice be received by the Secretary within the time periods described above under "Stockholder Proposals" and with the detail regarding your nomination as is required by our Bylaws.

Copy of Bylaw Provisions: You may contact our Secretary at our principal executive offices for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating Director candidates. A copy of our current Bylaws has also been filed with the SEC and is included as an exhibit with our 2018 Form 10-K for the year ended December 31, 2018. This document is accessible at the website of the SEC at www.sec.gov.

BOARD STRUCTURE AND COMMITTEES

Our Board has three standing Committees, each of which is chaired by an independent Director: (1) Audit (the "Audit Committee"), (2) Compensation (the "Compensation Committee") and (3) Corporate Governance (the "Corporate Governance Committee"). The membership during 2018 and the function of each Committee are described below. Our Board held twelve meetings during 2018. Our Board currently has eight (8) Directors, arranged into three classes with overlapping three-year terms of service: Scott W. Humphrey, Chair (term set to expire in 2021), Mark F. Furlong (term set to expire in 2019), G. Irwin Gordon (term set to expire in 2019), Sharon J. Larson (term set to expire in 2021), David E. Sveen, Ph.D. (term set to expire in 2020), Bonnie J. Trowbridge (term set to expire in 2021), Kevin S. Wilson (term set to expire in 2020) and Carol A. Wrenn (term set to expire in 2019). At the time of our Annual Meeting, our Board is to be reduced to six (6) members. We encourage our directors to attend each Annual Meeting and all of our Directors attended our last annual meeting of stockholders in May 2018. With the exception of Mr. Furlong, who joined our Board in March 2019, all Board members have attended at least 75% of all Board and applicable Committee meetings during 2018.

Board Leadership Structure

We currently have separated the role of Chair of the Board and Chief Executive Officer with Mr. Humphrey serving as Chair of our Board and Kevin S. Wilson serving as our Chief Executive Officer. In considering the separation of the Chair and Chief Executive Officer roles, the Board considered corporate governance, potential conflict of interest and time management questions.

Board Risk Oversight

Our business, including risk oversight, is conducted with the advice, counsel and direction of our Board. The formal channel for risk-related information to be communicated to our Board is through our Chief Executive Officer. Our Chief Executive Officer periodically conveys the Company's risks, including credit risks, liquidity risks and operational risks to the Board at Board meetings and through other forms of communication, as appropriate. Our Board may also discuss the Company's risks with other members of management as directed by our Chief Executive Officer or as part of another Board function. For example, our Chief Accounting Officer has discussed credit risk with directors during Audit Committee meetings primarily focused on accounting determinations.

Board Independence

Our Board has determined that the Director standing for election, Mr. Furlong, has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) and meets the requirements of "independence" as set forth in the rules and regulations promulgated by the SEC and the Nasdaq Stock Market listing standards (the "Nasdaq Listing Standards"). Furthermore, the Board has determined that, with the exception of Mr. Wilson, Heska's Chief Executive Officer and President, all current members of the Board meet the definition of "independence" as set forth in the rules and regulations promulgated by the SEC and the Nasdaq Listing Standards.

Audit Committee

Our Audit Committee has the following responsibilities:


•	appoint and replace our independent auditor;


•	compensate and oversee the work of our independent auditor;


•	oversee the integrity of our annual and quarterly financial statements;


•	discuss with management and our independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements, including critical accounting policies and practices;


•	oversee the qualifications, independence and performance of our independent auditors;


•	oversee our internal accounting and financial controls; and


•	provide the results of examinations and recommendations derived therefrom to the Board.

During 2018, our Audit Committee met five times. Our Audit Committee consisted of Ms. Trowbridge, as Chair, Mr. Humphrey, Ms. Larson and Ms. Wrenn from June 12, 2017 to March 8, 2019, and Ms. Trowbridge, as Chair, Mr. Furlong, Mr. Humphrey, Ms. Larson and Ms. Wrenn thereafter. Immediately following our 2019 Annual Meeting our Audit Committee is to consist of Ms. Trowbridge, as Chair, Mr. Furlong, Mr. Humphrey and Ms. Larson.

Our Board has determined that each of the current members of our Audit Committee meets the requirements of "independence" as set forth in Section 10A(m)(3) of the Exchange Act, the rules and regulations promulgated by the SEC and the Nasdaq Listing Standards. Our Board has also determined that each of Mark F. Furlong, Scott W. Humphrey and Bonnie J. Trowbridge is qualified as an audit committee financial expert within the meaning of the rules and regulations promulgated by the SEC and each has accounting and related financial management expertise within the meaning of the Nasdaq Listing Standards.

Our Audit Committee has a written charter, which is available on our website at www.heska.com (under the tabs — Company — Investors — Corporate Governance). The Company's website address provided above is not intended to function as a hyperlink, and the information on the Company's website is not and should not be considered part of this proxy statement and is not incorporated by reference herein.

Compensation Committee

Our Compensation Committee has the following responsibilities:


•	discharge the Board's responsibilities relating to compensation of our Executive Officers, including our Chief Executive Officer;


•	oversee all compensation programs involving the use of our Common Stock; and


•	produce an annual report on executive compensation for inclusion in our proxy statement for our annual meeting of stockholders.

During 2018, our Compensation Committee met seven times. Our Compensation Committee consisted of Mr. Gordon, as Chair, Mr. Humphrey, Dr. Sveen and Ms. Wrenn from June 12, 2017 to February 8, 2018, Mr. Humphrey, as Chair, Mr. Gordon, Dr. Sveen and Ms. Wrenn from February 8, 2018 to November 1, 2018 and Ms. Larson, as Chair, Mr. Gordon, Mr. Humphrey, Dr. Sveen and Ms. Trowbridge thereafter. Immediately following our 2019 Annual Meeting our Compensation Committee is to consist of Ms. Larson, as Chair, Dr. Sveen and Ms. Trowbridge.

Our Board has determined that each of the current members of our Compensation Committee meets the requirements of "independence" as set forth in the rules and regulations promulgated by the SEC and the

Nasdaq Listing Standards.

Our Compensation Committee has a written charter, which is available on our website at www.heska.com (under the tabs — Company — Investors — Corporate Governance). The Company's website address provided above is not intended to function as a hyperlink, and the information on the Company's website is not and should not be considered part of this proxy statement and is not incorporated by reference herein.

Corporate Governance Committee

Our Corporate Governance Committee has the following responsibilities:


•	assist our Board by identifying qualified candidates for Director, and recommend to the Board the Director nominees for each annual meeting of stockholders;


•	lead our Board in its review of our Board's performance;


•	recommend Director nominees to our Board for each Board Committee and the Chair of such Committees;


•	develop and recommend to our Board the corporate governance principles applicable to the Company; and


•	review and advise the Board on Director compensation matters.

During 2018, our Corporate Governance Committee met six times. Our Corporate Governance Committee consisted of Ms. Larson, as Chair, Mr. Gordon, Dr. Sveen and Ms. Trowbridge from February 6, 2015 to November 1, 2018, Dr. Sveen, as Chair, Mr. Gordon and Ms. Wrenn from November 1, 2018 to March 8, 2019 and Dr. Sveen, as Chair, Mr. Furlong, Mr. Gordon and Ms. Wrenn thereafter. Immediately following our 2019 Annual Meeting, our Corporate Governance Committee is to consist of Dr. Sveen, as Chair, Mr. Furlong and Mr. Humphrey.

Our Board has determined that each of the current members of our Corporate Governance Committee meets the requirements of "independence" as set forth in the rules and regulations promulgated by the SEC and the Nasdaq Listing Standards.

Our Corporate Governance Committee has a written charter, which is available on our website at www.heska.com. In addition, our Corporate Governance Committee prepared, and our full Board has approved, Corporate Governance Guidelines outlining the qualifications, responsibilities and other issues related to our Board's governance role and functions. The document is also available on our website at www.heska.com (under the tabs — Company — Investors — Corporate Governance). The references to the Company's website address provided above is not intended to function as a hyperlink, and the information on the Company's website is not and should not be considered part of this proxy statement and is not incorporated by reference herein.

Director Qualification and Nomination

Service on our Board varies from less than a month to eighteen years. All of our Directors have gained Company and industry specific knowledge as a result. The experience, qualifications, attributes or skills that qualify our Directors to serve on our Board are discussed on a Director-by-Director basis in the "Election of Directors" section of this document as well as in this "Board Structure and Committees" section. None of our directors is serving as a result of one specific qualification. It is the breadth of their individual experiences and the manner in which they complement each other as a group that make them individually and collectively attractive Directors.

Our Corporate Governance Committee does not have an established policy for minimum qualifications of Director nominees or appointees. However, pursuant to our Corporate Governance Committee Charter, we believe that it is in the best interests of the Corporation and its stockholders to obtain highly qualified candidates for the Board. Our Corporate Governance Committee seeks candidates with excellent decision-making ability, business experience, relevant experience, personal integrity and reputation as candidates for nomination and appointment.

Our Corporate Governance Committee does not have an established policy for diversity of Director nominees or appointees. However, we believe diversity is inherent in our approach of seeking high quality individuals with complementary skills to create a group dynamic and decision making process that is even stronger than would be obtained by the mere summation of its individual contributors in isolation.

Our Corporate Governance Committee does not have a formalized process for identifying and evaluating nominees or appointees for Director. Our Corporate Governance Committee determines desired Board member skills and attributes and conducts searches for prospective Director candidates whose skills and attributes reflect those desired. This analysis may start with a Board evaluation, including determination of areas of strength and areas for improvement. Particular skills and experience may be desired in areas of improvement. Our Corporate Governance Committee may determine guidelines and parameters for a search for an individual with the desired skills and experience. Our Corporate Governance Committee will evaluate candidates identified by its own initiative as well as candidates referred to it by other members of the Board, by the Company's management, or by external sources. Our Corporate Governance Committee has utilized a third-party executive search firm in the past to identify candidates as well as other sources. Our Corporate Governance Committee has adopted a policy stating it will not consider unsolicited applications for Board membership.

Our Corporate Governance Committee will also consider nominees recommended by stockholders provided such recommendations are made in accordance with our Bylaws and the procedures described in this proxy statement under "Questions and Answers About the Proxy Materials and the 2019 Annual Meeting". Although to date no stockholder has presented any candidate for Board membership to us, it is expected that recommendations from stockholders would generally be considered in the same manner as recommendations by a Director or an Officer of the Company.

Stockholder Communication with our Board

Stockholders can contact our Board, any Committee thereof, or any Director in particular, by writing to them, c/o Heska Corporation, 3760 Rocky Mountain Avenue, Loveland, Colorado 80538, Attn: Secretary. We will forward any correspondence sent in the foregoing manner to the appropriate addressee without review by management.

DIRECTOR COMPENSATION

The form and amount of compensation paid to the non-employee directors is reviewed from time to time by our Corporate Governance Committee. Any revisions to our Director Compensation policy have been recommended by our Corporate Governance Committee and approved by our Board.

In 2018, our employee Director did not receive any separate compensation for Board activities.

Non-Employee Director Compensation

On each date of our Annual Meeting, each non-employee Director elected and each other continuing non-employee Director who was a Director immediately prior to the Annual Meeting is to receive

automatically shares of our Common Stock valued at $60,000 (the "New Value"), subject to a maximum grant of 5,000 shares (the "Share Cap") of our Common Stock. These grants are to vest (the "Vesting Time") in full on the latter of (i) the one year anniversary of the date of grant and (ii) the Company’s Annual Meeting of Stockholders for the year following the year of grant for the award (the "Vesting Meeting"), subject to (i) the non-employee director's continued service to the Company through the Vesting Time, unless the non-employee director’s current term expires at the Vesting Meeting in which case vesting is subject to the non-employee director’s service to the Vesting Meeting and (ii) the non-employee director not engaging in “competition”, as defined in a restricted stock agreement to be executed by the non-employee director, to the Vesting Time. Any new non-employee Director appointed or elected to our Board between Annual Meetings is to be automatically granted shares of our Common Stock with New Value and Share Cap adjusted pro rata for the time until the next Annual Meeting and which vest at the corresponding Vesting Time.

Each non-employee Director is also entitled to an annual cash retainer in the amount of $40,000. The Company pays the annual retainer in advance, in quarterly installments on the first business day of each calendar quarter, subject to the non-employee director's continued service to the Company as a non-employee Director on such date.

Other cash compensation, payable in advance in quarterly installments on the first business day of each calendar quarter, subject to the non-employee Director's continued service in such role on such date, is as set forth below (directors are not to be paid a Chair and member-based fee for serving on the same Committee):



Board Chair	$	20,000
Lead Director	$	10,000
Audit Chair	$	20,000
Compensation Chair	$	12,000
Corporate Governance Chair	$	7,500
Audit Member	$	10,000
Compensation Member	$	6,000
Corporate Governance Member	$	3,000

Non–employee Directors will also continue to be reimbursed for customary and usual travel and other expenses.

Director Compensation Table

The following table provides information for fiscal 2018 compensation for non-employee Directors who served during fiscal 2018.

The following table represents compensation recognized for financial reporting purposes for each of our non-employee Directors for the fiscal year ended December 31, 2018.

"Stock Awards" and "Option Awards" in the following table represent the grant date value for all stock awards and option awards, respectively, granted to a given individual in 2018.

Director Compensation (1)



Name	Fees Earned Or Paid in Cash ($)	Stock Awards ($) (2) (3)	Option Awards ($) (2) (3)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings	All Other Compensation ($)	Total ($)
G. Irwin Gordon	50,500	59,988	—	—	—	—	110,488
Scott W. Humphrey	60,500	59,988	—	—	—	—	120,488
Sharon J. Larson	77,500	59,988	—	—	—	—	137,488
David E. Sveen, Ph.D.	49,000	59,988	—	—	—	—	108,988
Bonnie J. Trowbridge	63,000	59,988	—	—	—	—	122,988
Carol A. Wrenn	56,000	59,988	—	—	—	—	115,988


(1)	Reimbursed travel expenses incurred in connection with Board and Board Committee meeting attendance are not included.

(2)

Grant date fair value of option awards are based on valuation techniques required by current accounting guidance which we use in preparing our financial statements ("Option Accounting Rules"). Like any estimate prepared in good faith, the underlying assumptions we use under Option Accounting Rules may vary from our actual future results. The option valuations used for accounting and/or financial reporting purposes do not necessarily represent the value any individual recipient would place on an option award. In addition, Option Accounting Rules prohibit some valuation techniques which may be useful in certain circumstances. A more detailed description of our option valuation techniques and assumptions can be found in our 2018 Form 10-K in our Note 11 of the Notes to Consolidated Financial Statements.


(3)	Represents grant date fair value.

2018 Equity Grants to Directors



Name	Grant Date	Number of Shares	Grant Date Closing Share Price ($)	Stock Value of Stock Award ($)
G. Irwin Gordon	5/3/2018	705	85.09	59,988
Scott W. Humphrey	5/3/2018	705	85.09	59,988
Sharon J. Larson	5/3/2018	705	85.09	59,988
David E. Sveen, Ph.D.	5/3/2018	705	85.09	59,988
Bonnie J. Trowbridge	5/3/2018	705	85.09	59,988
Carol A. Wrenn	5/3/2018	705	85.09	59,988

Non-Employee Director Stock Ownership Guidelines

On February 23, 2017, following the recommendation of our Corporate Governance Committee, our Board voted to adopt non-employee Director Stock Ownership guidelines effective at our Annual Meeting on May 1, 2017 under which non-employee Directors are to hold shares of Company common stock at least equal in value to three times (3x) the annual cash retainer for Board service (the "Director Ownership Guideline"). Non-employee Directors are to achieve this level of ownership on or before the fifth anniversary of the later of (i) the date such Director became a member of the Company’s Board and (ii) May 1, 2017.

For purposes of Heska’s stock ownership guidelines, a non-employee Director’s stock ownership shall include all shares of Heska’s common stock owned outright by the Director and by his or her immediate family members (spouse and dependent children), and any shares held in trust for the benefit of the Director and/or his or her immediate family members. Shares of common stock issued upon exercise of stock options and vested restricted common stock shall be included, but unvested restricted common stock and unexercised stock options shall be excluded from the calculation of stock ownership.

Compliance with these deadlines will be determined on an annual basis by the Corporate Governance Committee based on information provided by the Secretary.

As the Company’s current cash retainer for non-employee Directors is $40,000, the Director Ownership Guideline is at least $120,000 in shares of Heska Common Stock.

Director Ownership Guideline Information (1)



Name	Shares Owned (2)	Value ($)	Initial Board Service Date	Date of Stock Ownership Compliance	Guideline-required Compliance Date
Mark F. Furlong	—	—	03/08/19	—	3/8/2024
G. Irwin Gordon	25,074	2,006,171	05/18/01	05/01/17	—
Scott W. Humphrey	567	45,366	06/12/17	—	06/12/22
Sharon J. Larson	3,294	263,553	07/01/11	05/01/17	—
David E. Sveen, Ph.D.	7,768 (3)	621,518	11/21/13	05/01/17	—
Bonnie J. Trowbridge	544	43,525	01/27/15	—	05/01/22
Carol A. Wrenn	4,544	363,565	01/01/13	05/01/17	—


(1)	As of March 13, 2019. Value is based on a value per share of $80.01, the closing market price per share of Heska stock on March 13, 2019.


(2)	To our knowledge and unless otherwise noted, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown in the column, which shares of common stock are not subject to any vesting restriction, subject to community property laws where applicable.


(3)	Excludes 14,285 shares held by Bethany Creek Partners, LP and 7,143 shares held by Lindberg Capital Partners, LP. Dr. Sveen is a general partner of, and an investor in, both Bethany Creek Partners, LP and Lindberg Capital Partners, LP.

Non-Employee Director Equity Position as of December 31, 2018



Name	Shares Owned (1)	Unvested Shares (2)	Outstanding Options (3)	Outstanding Option Price Range (4)	Outstanding Option Average Price (5)	Weighted Average Remaining Contractual Life (6)
G. Irwin Gordon	25,074	705	—	—	—	—
Scott W. Humphrey	567	705	—	—	—	—
Sharon J. Larson	3,294	705	8,571	$28.41-$39.56	$33.06	6.77
David E. Sveen, Ph.D.	29,196 (7)	705	8,571	$28.41-$39.56	$33.06	6.77
Bonnie J. Trowbridge	544	705	4,917	$18.36-$39.56	$33.76	7.01
Carol A. Wrenn	4,544	705	18,571	$8.34-$39.56	$20.59	5.73
All Directors (6 persons)	63,219	4,230	40,630	$8.34-$39.56	$27.44	6.32


(1)	To our knowledge and unless otherwise noted, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown in the column, which shares of common stock are not subject to any vesting restriction, subject to community property laws where applicable.


(2)	To our knowledge and unless otherwise noted, the persons named in the table have sole voting power with respect to all shares of common stock shown in the column, which shares of common stock are subject to vesting restrictions, subject to community property laws, where applicable.


(3)	Represents shares of common stock issuable upon exercise of stock options outstanding on December 31, 2018.


(4)	Represents the lowest and highest strike price for stock options outstanding on December 31, 2018.


(5)	Represents the average strike price for stock options outstanding on December 31, 2018.


(6)	Represents the weighted average remaining contractual life, in years, for stock options outstanding on December 31, 2018.


(7)	Includes 14,285 shares held by Bethany Creek Partners, LP and 7,143 shares held by Lindberg Capital Partners, LP. Dr. Sveen is a general partner of, and an investor in, both Bethany Creek Partners, LP and Lindberg Capital Partners, LP.

PROPOSALS TO BE VOTED ON

PROPOSAL NO. 1

AMENDMENTS TO CHARTER AND BYLAWS TO DECLASSIFY

THE BOARD OF DIRECTORS

After careful consideration, in March 2019, our Board voted unanimously to approve, and to recommend that our stockholders approve at the Annual Meeting, an amendment to our Charter and Bylaws to reclassify first into two classes, and then declassify fully, the Board, with the effect that the Board will be fully declassified at the Annual Meeting of Stockholders to be held in 2020. This will allow our stockholders beginning next year to vote on the election of our entire board of directors each year, rather than on a staggered basis as with our current classified board structure.

In order to effect the orderly and incremental transition to a fully declassified Board in 2020 from the current three class Board, the Board is recommending the Board first be divided into two classes at this Annual Meeting, designated Class I and Class II, as nearly equal in number as possible, with the term of office of each of the Class I directors expiring at the next Annual Meeting of Stockholders in 2020, and in all cases as to each director when such director’s successor shall have been elected and qualified or upon such director’s earlier resignation, removal from office, death or incapacity. The initial term of office of each of the Class II directors shall be set to expire at the 2021 Annual Meeting of Stockholders, and in all cases as to each director when such director’s successor shall be elected and shall qualify or upon such director’s earlier resignation, removal from office, death or incapacity. The successor or successors of the directors who, immediately prior to the Annual Meeting, were members of Class I shall be elected to Class I; the directors who, immediately prior to the 2019 Annual Meeting, were members of Class II of the Board shall become members of Class I (resulting in there being three Class I directors); and the three directors who, immediately prior to the Annual Meeting, were members of Class III shall become members of Class II, with a term expiring at the 2021 Annual Meeting of Stockholders.

In furtherance of the foregoing and in connection with the Board's approval of this proposal, each of our Class II directors created by the approval of this proposal and whose term is not set to expire at the 2020 Annual Meeting of Stockholders has tendered his or her resignation, contingent upon stockholder approval of this Proposal No. 1 at the Annual Meeting, effective as of immediately prior to the 2020 Annual Meeting of Stockholders, to allow for the early commencement of the fully declassified Board. If our stockholders do not approve this Proposal 1, our Board will remain classified in three classes, the contingent resignations will be ineffective, and our stockholders will instead be asked to elect the one Class I director at the Annual Meeting for a three year term ending in 2022.

Current Classified Board Structure

Immediately prior to the election of directors at the Annual Meeting, the Board was divided into three classes, designated Class I, Class II and Class III, as nearly equal in number as possible, with the term of office of directors of one class expiring at each annual meeting of stockholders, and in all cases as to each director when such director’s successor shall have been elected and qualified or upon such director’s earlier resignation, removal from office, death or incapacity. The term of office of directors: of Class I was set to expire at the 2019 annual meeting of stockholders; of Class II was set to expire at the 2020 annual meeting of stockholders; and of Class III was set to expire at the annual meeting in 2021, and in all cases as to each director when such director’s successor shall have been elected and qualified or upon such director’s earlier resignation, removal from office, death or incapacity. At each annual meeting of stockholders, the number of directors equal to the number of directors of the class whose term expires at the time of such meeting (or, if

less, the number of directors properly nominated and qualified for election) were to be elected to hold office until the third succeeding annual meeting of stockholders after their election.

Rationale for Ultimate Declassification

In determining whether to propose declassifying the Board to our stockholders, the Board considered the arguments in favor of and against continuation of the classified Board structure and determined that it would be in the best interests of the Company and our stockholders to amend our Charter and Bylaws to declassify the Board.

The Board recognized that a classified board structure may offer several advantages, such as promoting board continuity and stability, encouraging directors to take a long-term perspective, and ensuring that a majority of the Board will always have prior experience with the Company, and that classified boards provide effective protection against unwanted takeovers and proxy contests as they make it difficult for a substantial stockholder to gain control of the board without the cooperation or approval of incumbent directors who are motivated to protect stockholder value, including in the face of an unsolicited takeover attempt.

The Board also recognized that a classified board structure may appear to reduce directors' accountability to stockholders, since such a structure does not enable stockholders to express a view on each director's performance by means of an annual vote, and that many institutional investors believe that the election of directors is the primary means for stockholders to influence corporate governance policies and to hold management accountable for implementing those policies.

Proposed Declassification of the Board

Declassification of the Board requires several changes to our Charter and Bylaws, all by a Two-thirds Supermajority vote of our stockholders. Specifically, Articles VI and VIII of our Charter, and Sections 2.2, 3.1, 3.2, 3.3 and 8.2 of the Bylaws, must be amended to provide first for the reclassification of the Board from three classes to two and then to nullify altogether the provisions concerning a classified Board structure, as well as to delete the Two-thirds Supermajority voting requirement of the stockholders to eliminate the staggered classes of the Board, which higher voting requirement was included in the Charter and Bylaws to make it more difficult to eliminate the staggered Board structure and is therefore no longer necessary for that purpose. The text of the revised Articles of the Charter and Sections of the Bylaws are attached as Appendix A and Appendix B, respectively, to this proxy statement, with the proposed Bylaws deletions resulting from the proposed amendments indicated by strike-outs and proposed Bylaws additions resulting from the proposed amendments indicated by underlining.

If approved by our stockholders, the amendments to our Charter will become effective upon the filing of a certificate of amendment with the Secretary of State of the State of Delaware (which would occur during the Annual Meeting and prior to consideration of the proposal to elect directors), and the Bylaws upon the effective time of the amendment to our Charter amendment. Our Board will then be classified into two classes until the 2020 Annual Meeting of Stockholders, at which meeting it will be declassified immediately and automatically without any further action by any person, so that every director will stand for election at the 2020 Annual Meeting of Stockholders and thereafter for a one-year term.

Vote Required; Recommendation of the Board of Directors

Approval of this proposal requires the affirmative vote of a Two-thirds Supermajority. Based on the number of shares of Common Stock outstanding as of the Record Date, this requires the affirmative vote of a minimum of 5,161,485 shares.

The Board unanimously recommends a vote "FOR" the amendments to the Charter and Bylaws to first reclassify and then declassify the Board.

PROPOSAL NO. 2

ELECTION OF DIRECTOR

We are to elect one (1) Director at our 2019 Annual Meeting. Mark F. Furlong is a continuing Director whose term is scheduled to expire at our 2019 Annual Meeting and who has been nominated by our Board, upon the recommendation of our Corporate Governance Committee, to stand for election to our Board at our 2019 Annual Meeting.

At the time of our Annual Meeting, our Board will be reduced from eight (8) members to six (6) members. If Proposal No. 1, passes and our Board continues to consist of six (6) members, we will have two classes of Directors - one with a term expiring at the 2020 Annual Meeting and the other with a term expiring at the 2021 Annual Meeting. In this case, Mr. Furlong is to be elected to a term to end at the 2020 Annual Meeting and join Dr. Sveen and Mr. Wilson, whose terms are currently to end at the 2020 Annual Meeting as well. If Proposal No. 1 does not pass, our current three class Board form will continue, Mr. Furlong is to be elected to a term ending at the 2022 Annual Meeting and our Board may decide to place one of our Board members with a term currently set to expire at the 2021 Annual Meeting into a Board class with Mr. Furlong so that our Board will consist of three classes of Directors with two (2) Directors in each class.

In either case, any Director elected at our 2019 Annual Meeting will continue to hold office until their respective successor is elected and qualified or until their earlier death, resignation or removal.

Nominees for Election

Mark F. Furlong, age 61, has served us as a Director since March 2019. Mr. Furlong retired as President and Chief Executive Officer of BMO Harris Bank, N.A. in June 2015, a role he assumed upon the close of the acquisition of Marshall & Ilsley Corporation by BMO Financial Group in 2011. He joined Marshall & Ilsley in 2001 as Chief Financial Officer, was elected President in 2004, Chief Executive Officer in 2007, and Chairman in 2010. Prior to joining Marshall & Ilsley, he was Chief Financial Officer of Old Kent Financial Corp.; First Vice President, Corporate Development, for H. F. Ahmanson & Company; and an audit partner for Deloitte & Touche LLP. Mr. Furlong also is a member of the boards of directors of Boston Private Financial Holding, Inc., Kforce Inc. and Antares Capital. Mr. Furlong is also active in numerous civic and charitable activities. He is the immediate past-Chair of Chicago United, the largest Chicago-based organization focused solely on businesses, addressing diversity in boards of directors, management, and supplier relationships and is a member of the Chicago Board of Education.

If Mr. Furlong, or any alternative nominee, is unable or declines to serve as Director at the time of the 2019 Annual Meeting, the proxyholders intend to vote for such other candidate or candidates who may be nominated by the Board.

Vote Required; Recommendation of our Board of Directors

A Plurality Vote is required to elect the director. If no such Plurality Vote is obtained for the Director position, Mr. Furlong will continue to serve as director until a respective successor is elected and qualified, or until his earlier death, resignation or removal.

Our Board recommends a vote FOR the election of its nominee, Mr. Furlong, as our director.

Heska's directors listed below whose terms are not expiring at the Annual Meeting will continue in office for the remainder of their terms in accordance with our Charter and Bylaws. Information regarding the business experience and education of each of such Director is provided below.

Directors Whose Term Will Expire in 2021

Scott W. Humphrey, age 48, has served us as a Director since June 2017 and as our Board Chair from October 2018 to the present. Scott Humphrey is a retired executive, having spent the first chapter of his professional life as an investment banker and the second chapter in the non-profit arena. Most recently, he served as the President & CEO of One Hope United (OHU), a diversified, multi-state social services provider, a position he held from August 2015 to February 2018. At the time of his retirement from investment banking in 2015, Scott was a Senior Advisor/Vice Chair for BMO Capital Markets (BMO), the US investment banking business of the Bank of Montreal, where he was responsible for corporate board relationship development and high-profile advisory assignments. Scott joined BMO in 2007 as the Head of U.S. Mergers & Acquisitions and, in early 2012, was asked to expand his responsibility to include the Industrial Investment Banking business. He was the only executive in the US to simultaneously run two groups which accounted for more than 40% of US investment banking revenue. Prior to joining BMO Capital Markets, he spent almost ten years with Deutsche Bank as a Managing Director focusing on global mergers and acquisitions. Mr. Humphrey holds a BS in Finance and Economics from the University of Arizona and expects to receive a Masters in Public Policy and Administration in December 2019.

Sharon J. Larson, age 58, has served us as a Director since July 2011 and as our Board Chair from October 2015 to the October 2018. Ms. Larson was also our Lead Director from May 2014 to October 2015. Ms. Larson currently serves as Principal and CEO of SLR Associates, LLC, a healthcare consulting firm. Ms. Larson served as Chief Executive Officer UT Southwestern University Hospitals and Vice President for University Hospitals, UT Southwestern Medical Center from 2004 to 2010. From 2000 to 2004 she was the COO at Anne Arundel Health System in Annapolis, Maryland. She held various jobs (Associate Administrator, COO and Corporate Vice President) during her employment in the Nebraska Health System from 1995 to 2000. From 1990 to 1995 she was an Assistant Administrator in the Inova Health System in Virginia. Prior to 1990 she was with Brackenridge Hospital in Austin, Texas and the Good Samaritan Hospital and Health Center in Dayton, Ohio. Ms. Larson currently serves as an Advisor to DigiWorksCorp, and as a member of the Innovation Council of Anthello Healthcare Solutions, Inc. She has also served on various boards and been involved with several community projects. Ms. Larson holds BBA (Business Administration) and MA (Hospital and Health Administration) degrees from the University of Iowa.

Bonnie J. Trowbridge, age 72, has served us as a Director since January 2015. Ms. Trowbridge is Chair of the Heska Audit Committee from May 2015 to the present and a member of the Compensation Committee from November 2018 to the present. Ms. Trowbridge served as Vice President, Chief Audit Executive and Risk Officer of Apollo Education Group, a publicly traded company, from 2007 to 2014. She is a retired Pricewaterhouse Coopers Audit Partner, having served with Pricewaterhouse Coopers from 1985 to 2007. Ms. Trowbridge is Chairman of the Board of Directors and treasurer of Camelot Therapeutic Horsemanship. She is a Certified Public Accountant in Arizona and California and is a member of the American Institute of Certified Public Accountants and the Arizona Society of CPA's. Ms. Trowbridge holds a Master of Science in Accountancy from Southern Oregon State University, a Master's Degree from San Jose State University and a Bachelor's degree from Washington State University.

Directors Whose Term Will Expire in 2020

David E. Sveen, Ph.D., age 62, has served us as a Director since November 2013. He is the President of Cedarstone, an accounting and consulting practice for nonprofit organizations, which he founded in 1993. His professional background includes 13 years in senior management with investment banking firm Griffin,

Kubik, Stephens and Thompson, as well as an adjunct assistant professorship of Christian Formation and Ministry at Wheaton College since 1995. Dr. Sveen holds a Ph.D. degree from Trinity Evangelical Divinity School, an MBA from DePaul University, an MA from Wheaton Graduate School, and a B.S. degree from Northern Illinois University. Dr. Sveen is the father of Christopher D. Sveen.

Kevin S. Wilson, age 47, has been our Chief Executive Officer and President since March 31, 2014. He previously served as our President and Chief Operating Officer since February 2013. Mr. Wilson is a founder, member and officer of Cuattro, LLC. Since 2008, he has been involved in developing technologies for radiographic imaging with Cuattro, LLC and including as a founder of Cuattro Software, LLC, Cuattro Medical, LLC and Cuattro Veterinary, LLC. Mr. Wilson served on the board of various private, non-profit, and educational organizations from 2005 to 2011. He was a founder of Sound Technologies, Inc., a diagnostic imaging company, in 1996. After Sound Technologies, Inc. was sold to VCA Antech, Inc. in 2004, Mr. Wilson served as Chief Strategy Officer for VCA Antech, Inc. until 2006. Mr. Wilson attended Saddleback College.

Directors Whose Term Will Expire at the 2019 Annual Meeting

G. Irwin Gordon, age 68, has served us as a Director since May 2001. Mr. Gordon is the former Executive Vice President and Chief Revenue Officer of Invitation Homes (NYSE: INVH), which owns and leases almost 85,000 single family residences in the USA, a position he held from June 2016 to December 2017. Mr. Gordon is also the Managing Partner of Trion LLC, a consulting firm he founded in 2000. From September 2012 to May 2015, Mr. Gordon served as the CEO of Landes Foods, LLC, a Dallas-based food manufacturer. From July 2000 until August 2001, Mr. Gordon served as President and Chief Executive Officer of Gruma Corporation, a food manufacturer. He also served as President and Chief Operating Officer of Suiza Foods Corporation, a food manufacturer and distributor, from February 1998 to October 1999. Mr. Gordon joined Suiza in August 1997 as its Executive Vice President and Chief Marketing Officer. Prior to joining Suiza, Mr. Gordon held various positions with subsidiaries of PepsiCo, Inc. ("PepsiCo"), including most recently as Senior Vice President Global Branding for Frito-Lay, Inc., from May 1996 to August 1997. From 1983 to 1992, Mr. Gordon served as President and General Manager of several international Frito-Lay companies before becoming Senior Vice President Marketing, Sales and Technology for Frito-Lay International from 1992 to 1996. Prior to joining PepsiCo in 1983, Mr. Gordon served in various capacities at the Kellogg Company. Mr. Gordon holds an Education degree from the University of British Columbia and a Management Certificate from Stanford University.

Carol A. Wrenn, age 58, has served us as a Director since January 2013. She is the owner of Aurora Borealis Enterprises LLC and serves as President of that entity since April 2018. She is also owner of Whitewater Advisors, LLC and has served as President of that company since June 2017. She founded Sky River Helicopters, LLC in 2010 and served as President of that company from 2010 until its sale in 2015. She served as an Executive Vice President and the President of the Animal Health Division at Alpharma Inc. from 2001 to 2009. Ms. Wrenn also held the position of Chairman of the Animal Health Institute from 2007 to 2009 and was a member of the board of directors of the International Federation of Animal Health from 2002 to 2009. Prior to joining Alpharma, Ms. Wrenn held various executive positions at Honeywell International Inc. (formerly, AlliedSignal Inc.) from 1984 to 2001. She served as Business Director of Honeywell's Refrigerants, Fluorine Products Division from 2000 to 2001 and was the Commercial Director and Managing Director of Honeywell's European Fluorochemical operations from 1997 to 2000. Ms. Wrenn also held a number of positions in sales, marketing, business development and finance during her tenure with AlliedSignal. Ms. Wrenn serves as a Director of Phibro Animal Health Corporation and sits on both the Audit and Compensation Committees. She holds a bachelor’s degree from Union College, an MBA from Lehigh University, and a DBA from California Southern University.

PROPOSAL NO. 3

APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE STOCK PLAN

TO ADD A NON-EMPLOYEE DIRECTOR COMPENSATION LIMIT AND EXPAND THE TYPES OF AWARDS AVAILABLE FOR GRANT THEREUNDER

We currently maintain the Stock Plan (formerly known as the Heska Corporation 1997 Stock Incentive Plan) for the purpose of making equity compensation grants to employees, directors and consultants. The Stock Plan has served as an important part of our overall compensation program since its initial adoption, and continuing through several amendments and restatements. The Stock Plan, as proposed to be restated pursuant to this proposal (the “Restated Plan”), will allow the Compensation Committee to grant a wider variety of types of equity awards to participants and will impose a limit of $300,000 per calendar year on cash and equity compensation paid to each outside director of the Company. On March 14, 2019, the Compensation Committee recommended, and the Board adopted, subject to the approval of our stockholders, the Restated Plan. The Restated Plan is intended to replace the Stock Plan. If stockholders do not approve the Restated Plan, then it will not be effective and no grants will be made under it. In such event, the Stock Plan will remain in effect. The following is only a summary of the Restated Plan, if approved, and is qualified in its entirety by reference to its full text, a copy of which is attached hereto as Appendix C.

In order to allow us the flexibility to make different types of equity compensation grants that serve as incentives to recruit and retain key employees, directors and consultants, and to continue aligning the interests of our employees, directors and consultants with stockholders, the Board recommends that the Restated Plan be approved by stockholders.

Background

Our Stock Plan was originally adopted by our Board and approved by our stockholders in 1997. It was amended and/or restated as of March 6, 2007, May 5, 2009, February 22, 2012, March 25, 2014, May 6, 2014, March 28, 2016, March 7, 2018, May 3, 2018 and December 19, 2018. The stated purpose of the Stock Plan is to promote the long-term success of the Company and the creation of stockholder value by: (a) encouraging employees, outside directors and consultants to focus on critical long-range objectives; (b) encouraging the attraction and retention of employees, outside directors and consultants with exceptional qualifications; and (c) linking employees, outside directors and consultants directly to stockholder interests through increased stock ownership. The amendment and restatement of the Stock Plan that was adopted by our Board on December 19, 2018 effectuated certain non-material revisions thereto, including, among other things, (i) updating the name of the Stock Plan to the “Heska Corporation Stock Incentive Plan”, (ii) expanding the one-year minimum vesting requirement to apply to all awards granted under the Stock Plan, with certain exceptions, (iii) providing that any dividends declared on awards of restricted shares will be accumulated and paid at the time and to the extent that the underlying awards vest, and (iv) allowing for tax withholding of shares at up to the maximum statutory rate.

The Restated Plan retains the purpose of the Stock Plan and does not increase the number of shares available for issuance pursuant to future awards. The Restated Plan is different from the Stock Plan in some respects, however, including:


•	Awards of restricted stock units, stock appreciation rights, other stock-based awards, and other cash-based awards may now be granted under the Restated Plan, in addition to awards of options and restricted shares that were previously allowed under the Stock Plan (subject to the same per-participant annual limits that were in place under the Stock Plan); and


•	Cash and equity compensation paid to any outside director in one calendar year shall not exceed $300,000 per fiscal year in respect of his or her service as an outside director.

A summary of the material features of the Restated Plan appears below and is qualified in its entirety by reference to the full text of the Restated Plan as set forth in Appendix C, which should be referred to for a complete description of its provisions.

Plan Highlights

Effective Date and Expiration

The Restated Plan will be effective as of May 2, 2019, if approved by stockholders. It has no predetermined expiration date, although incentive stock options may not be granted after the tenth anniversary of its most recent amendment or restatement. Awards made prior to any termination or suspension of the Restated Plan may extend beyond that date.

Administration

The Restated Plan will be administered by a committee of two or more directors appointed by the Board (the "Committee"). The Committee has full authority to interpret the Restated Plan and to establish rules for its administration.

Eligibility for Awards

Awards can be made to any employee, outside Director or consultant. Only employees, however, are eligible to receive incentive stock options.

Determination of Amount and Form of Award

The amount of individual awards will be determined by the Committee, subject to the limitations of the Restated Plan. In determining the amount and form of an award, consideration will be given to the functions and responsibilities of the employee, his or her potential contributions to our success, and other factors deemed relevant by the Committee.

Shares Subject to the Plan; Other Limitations on Awards

Subject to certain adjustments, the maximum number of shares of our Common Stock that may be issued pursuant to new awards under the Restated Plan is 2,885,130, as approved by stockholders pursuant to the May 3, 2018 amendment and restatement of the Stock Plan. Shares subject to an award under the Restated Plan which is canceled or terminated without having been exercised or paid will again be available for future awards. On the other hand, in no event will shares of our stock that are (i) tendered in payment of the exercise price of options or (ii) withheld from any award to satisfy a participant's tax withholding obligations be available for future awards under the Restated Plan.

Awards made under the Restated Plan are subject to the following per-participant annual limits:


•	A maximum of 50,000 shares underlying options and/or stock appreciation rights in the aggregate may be issued in one year to any one participant (except that shares underlying options and/or stock appreciation rights granted to a new employee in the first fiscal year of their employment may be a maximum of 100,000 shares in the aggregate).


•	A maximum of 45,000 shares (or, in the case of a new employee in the first fiscal year of their employment, a maximum of 75,000 shares) may be awarded in the form of restricted shares,

restricted stock units, and/or other stock-based awards in the aggregate in one year to any one participant.


•	No more than $500,000 may be paid in the form of other cash-based awards to any single participant per calendar year.

In addition, the Restated Plan limits compensation paid to each outside director, including cash fees and incentive equity awards (based on their grant date fair value for financial reporting purposes), to a maximum of $300,000 per fiscal year in respect of his or her service as an outside director.

Minimum Vesting Provision

Awards under the Restated Plan are subject to a minimum vesting period of one year. However, the Committee may (a) permit acceleration of vesting of an award in the event of a participant’s death, disability, or retirement, or the occurrence of a change in control, and (b) grant awards covering 5% or fewer of the total number of shares authorized for issuance under the Restated Plan without regard to the minimum vesting requirement. Awards made to outside directors will be deemed to satisfy the minimum vesting requirement to the extent that they vest on the earlier of the one-year anniversary of the date of grant and the next regular annual meeting of the Company’s stockholders that is at least 50 weeks after the immediately preceding year’s annual meeting.

Types of Awards

Awards of stock options, restricted shares, restricted stock units, stock appreciation rights, other stock-based awards and other cash-based awards may be granted to eligible individuals under the Restated Plan.

Stock Options

The Committee may grant non-qualified options and options qualifying as "incentive stock options" under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee generally determines the terms and conditions of all options granted, subject to the terms of the Restated Plan. Options vest in accordance with a vesting schedule determined by the Committee, and the Committee may impose additional conditions, restrictions or terms on the vesting of any option, including the full or partial attainment of performance goals. The term of an incentive stock option cannot exceed ten years from the date of grant. The exercise price of an option must be not less than 100% of the fair market value of a share of our stock on the date of grant.

The option price may be paid in cash, with shares of our stock, through a broker-assisted "cashless" exercise procedure, a “net exercise” or with such other acceptable form of valid consideration and method of payment as may be determined by the Committee.

Stock options may not be repriced. This means that the Committee may not take any of the following actions:


•	Amend a stock option to reduce its option price;


•	Cancel a stock option in exchange for cash, other awards or the re-grant of a new stock option with a lower option price than the original option price of the cancelled stock option; or


•	Take any other action (whether in the form of an amendment, cancellation or replacement grant) that has the effect of repricing a stock option without stockholder approval.

Restricted Shares

The Committee may also issue or transfer shares of our Common Stock to a participant under a restricted share award. Restricted share awards are subject to certain conditions and restrictions during a specific period of time, such as the participant remaining in the employment of the Company and/or the attainment by the Company of certain pre-established performance goals, as discussed below. The shares cannot be transferred by the participant prior to the lapse of the restriction period or the attainment of the performance goals. In the case of restricted shares, the participant is entitled to vote the shares during the restriction period. Unless otherwise provided in the award agreement, restricted shares will receive dividends; provided, that to the extent restricted shares are entitled to receive dividends, any dividends declared will be accumulated and paid at the time (and to the extent) that the underlying restricted shares vest.

Restricted Stock Units

A restricted stock unit is a right to receive shares of common stock (or their cash equivalent) at a specified date in the future, subject to forfeiture of such right. If the restricted stock unit has not been forfeited, then on the date specified in the restricted stock unit grant, the Company must deliver to the holder of the restricted stock unit unrestricted shares of common stock (or their cash equivalent). In the Committee’s discretion, holders of restricted stock units may be entitled to receive dividend equivalents; provided, that to the extent restricted stock units are entitled to receive dividend equivalents, any dividend equivalents with respect to dividends declared will be accumulated and paid at the time (and to the extent) that the underlying restricted stock units vest. A participant holding restricted stock units will have no rights as a stockholder with respect to the shares subject to the restricted stock units until all restrictions have been lifted and the shares have been issued to the participant.

Stock Appreciation Rights

A stock appreciation right entitles the holder to receive an amount equal to the difference between the fair market value of a share of common stock on the exercise date and the exercise price of the stock appreciation right (which may not be less than 100% of the fair market value of a share of our common stock on the grant date), multiplied by the number of shares of common stock subject to the stock appreciation right (as determined by the Committee).

Other Stock-Based Awards

Under the Restated Plan, we may grant or sell to any participant unrestricted common stock, dividend equivalent rights and/or other awards denominated in or valued by reference to our common stock. A dividend equivalent is a right to receive payments, based on dividends with respect to shares of our common stock.

Other Cash-Based Awards

We may grant cash awards under the Restated Plan, including cash awards as a bonus or based upon the attainment of certain performance goals.

Performance Goals

The Restated Plan contains provisions intended to enable compensation paid to those executive officers whose compensation is subject to the deduction limitations of Section 162(m) of the Code to qualify as "performance-based compensation" that will be fully deductible by us for grants made prior to November 2, 2017. Prior to recent U.S. federal income tax law changes and prior to or during the beginning of a

performance period, the Committee could establish performance goals for the Company and our various operating units which could qualify the award subject to those goals for deductibility without regard to the limitations of Section 162(m). The goals were to be comprised of specified levels of one or more of the following performance criteria as the Committee deemed appropriate:


1)	operating income or operating profit (including but not limited to operating income and any affiliated growth measure);


2)	net earnings or net income (before or after taxes, including but not limited to deferred taxes, and any affiliated growth measure);


3)	basic or diluted earnings per share (before or after taxes, including but not limited to deferred taxes, and any affiliated growth measure);


4)	revenues (including but not limited to revenue, gross revenue, net revenue, and any affiliated growth measure);


5)	gross profit or gross profit growth;


6)	return on assets, capital, invested capital, equity or sales;


7)	cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital);


8)	earnings before or after taxes, interest, depreciation and/or amortization (including but not limited to changes in this measure);


9)	improvements or changes in capital structure (including but not limited to debt balances or debt issuance);


10)	budget management;


11)	productivity targets;


12)	economic value added or other value added measurements;


13)	share price (including, but not limited to, growth measures and total shareholder return);


14)	expense targets;


15)	margins (including but not limited to gross or operating margins);


16)	efficiency measurements (including but not limited to availability measurements, call wait times, call, meeting, shipping or other volume measurements, turnaround times and error rates);


17)	working capital targets (including but not limited to items reported on the Company's balance sheet and time-based or similar measures such as days inventory, days receivable and days payable);


18)	equity or market value measures;


19)	enterprise or adjusted market value measures;


20)	safety record;


21)	completion of business acquisition, divestment or expansion;


22)	book value or changes in book value (including but not limited to tangible book value and net asset measures);


23)	assets or changes in assets;


24)	cash position or changes in cash position;


25)	employee retention or recruiting measures;


26)	milestones related to filings with government entities or related approvals (including but not limited to filings with the Securities and Exchange Commission which may require stockholder approval);


27)	changes in location or the opening or closing of facilities;


28)	contract or other development of relationship with identified suppliers, distributors or other business partners; and


29)	new product development (including but not limited to third-party collaborations or contracts, and with milestones that may include but are not limited to contract execution, proof of concept, regulatory approval, product launch and targets such as unit volume and revenue following product launch).

In addition, for any awards not intended to meet the requirements of Section 162(m) of the Code, the Committee may establish goals based on other performance criteria as it deems appropriate. The Committee may disregard or offset the effect of certain extraordinary items, such as restructuring charges, gains or losses on the disposition of a business, changes in tax or accounting rules or the effects of a merger or acquisition, in determining the attainment of performance goals. Awards may also be payable when our performance, as measured by one or more of the above criteria, as compared to peer companies meets or exceeds an objective criterion established by the Committee.

Adjustments on Capitalization

In the event of a subdivision of our outstanding shares of Common Stock, a declaration of a dividend payable in shares, a declaration of a dividend payable in a form other than shares in an amount that has a material effect on the price of shares, a combination or consolidation of the outstanding shares (by reclassification or otherwise) into a lesser number of shares, a recapitalization, a spin-off or a similar occurrence, such that an adjustment is appropriate to prevent dilution or enlargement of the benefits intended to be made available under the Restated Plan, then the Committee may make appropriate adjustments in the maximum aggregate number and kind of shares issuable under the Restated Plan, and to any one participant, and the number and kind of shares and the price per share subject to outstanding awards.

Change in Control

For purposes of the Restated Plan, "change in control" means any of the following events:

(a)The consummation of a merger or consolidation of the Company with or into another entity of any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation, or other reorganization; or

(b)The consummation of a sale, transfer or other disposition of all or substantially all of the Company's assets; or

(c)A majority of the members of the Board are replaced during any eighteen-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or

(d)Solely with respect to awards granted in 2018 or later, any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than (i) the Company, (ii) a subsidiary thereof, (iii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary thereof, or (iv) any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent of the total voting power represented by the Company's then outstanding voting securities.

An award agreement may provide that an award will vest, become exercisable, and/or become unrestricted in the event of a change in control.

Amendment

The Board can amend, suspend or terminate the Restated Plan. An amendment of the Restated Plan will be subject to our stockholders' approval only to the extent required by law.

Certain Federal Tax Aspects

The following paragraphs are a summary of the Company's understanding of the general federal income tax consequences to U.S. taxpayers and the Company of awards granted under the Restated Plan. Tax consequences for any particular individual may be different.

Incentive Stock Options

No taxable income is reportable when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case taxable income is the same as for nonstatutory stock options). If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two- or one-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option if the sale price exceeds the exercise price.

Nonstatutory Stock Options

No taxable income is reportable when a nonstatutory stock option, which also may be referred to as a nonqualified stock option, is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

Restricted Shares

A participant will not have taxable income upon grant unless he or she elects to be taxed at that time. Instead, he or she will recognize ordinary income at the time of vesting equal to the fair market value (on the vesting date) of the vested shares.

Stock Appreciation Rights

A participant who is granted a stock appreciation right will not recognize ordinary income for United States federal income tax purposes upon receipt or vesting of the stock appreciation right. At the time of exercise, however, the participant will recognize ordinary income equal to the value of any cash received and the fair market value on the date of exercise of any shares received. The participant's tax basis in any shares received will be the fair market value on the date of exercise and, if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of the shares on the date of exercise will generally be taxable as long-term or short-term capital gain or loss (if the stock is a capital asset of the participant) depending upon the length of time such shares were held by the participant.

Restricted Stock Units

A participant who is granted a restricted stock unit will not recognize ordinary income for United States federal income tax purposes upon the receipt of the restricted stock unit, but rather will recognize ordinary income in an amount equal to the fair market value of the shares (or value of the cash paid) at the time of settlement.

Other Stock-Based and Other Cash-Based Awards

In the case of other stock-based and other cash-based awards, depending on the form of the award, a participant generally will not be taxed upon the grant of such an award, but, rather, will generally recognize ordinary income for United States federal income tax purposes when such an award vests or otherwise is free of restrictions.

Tax Effect for the Company

The Company generally will be entitled to a tax deduction in connection with an award under the Restated Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option or a stock appreciation right or the settlement of a restricted stock unit).

Special rules limit the deductibility of compensation paid to certain of our executive officers. Under Section 162(m) of the Code, the annual compensation paid to certain executive officers will be deductible only to the extent that it does not exceed $1,000,000. Prior to recent tax law changes, however, the Company could preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. These conditions included stockholder approval of the Stock Plan, setting limits on the number of awards that any individual may receive and, for awards other than certain stock options, establishing performance criteria that must be met before the award actually will vest or be paid. While no assurance regarding the deductibility of awards granted prior to these tax law changes can be made based on ambiguities and uncertainties as to the application and interpretation of the transition relief under the legislation repealing Section 162(m)'s exemption from the deduction limit, the Restated Plan as designed is intended to fall within the transition relief under Section 162(m) to permit the Company to receive a federal income tax deduction in connection with awards granted prior to these tax law changes to the extent that they qualified as performance-based for purposes of satisfying the conditions of Section 162(m).

New Plan Benefits

The number of awards that our Named Executive Officers, directors, other Executive Officers and other employees may receive under the Restated Plan will be determined in the discretion of the Committee in the future, and the Committee has not made any determination to make future grants to any persons under the Restated Plan as of the date of this proxy statement. It is not possible to determine the future benefits that will be received by any participants under the Restated Plan, or the benefits that would have been received by such participants if the Restated Plan had been in effect in the year ended December 31, 2018.

Vote Required; Recommendation of our Board of Directors

The Restated Plan is to be approved by the affirmative vote of a Quorum Majority. Based on the number of shares of Common Stock outstanding as of the Record Date, this requires the affirmative vote of 3,871,112 shares. If the Restated Plan is not approved, the Stock Plan will remain as-is with no changes.

Our Board unanimously recommends a vote FOR the approval of the Restated Plan.

PROPOSAL NO. 4

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our Board is submitting the appointment of Plante & Moran PLLC ("Plante Moran") as the Company's independent registered public accounting firm for stockholder ratification at the Annual Meeting. Effective October 1, 2018, EKS&H LLLP ("EKS&H"), the independent registered public accounting firm for the Company ratified by our stockholders at our 2018 Annual Meeting, combined with Plante Moran. As a result EKS&H resigned as the independent registered public accounting firm for the Company, and the Audit Committee contemporaneously with the resignation appointed Plante Moran as the successor to EKS&H. EKS&H served as our independent registered public accounting firm since March 31, 2006. A representative of Plante Moran is expected to be present at the Annual Meeting and will have an opportunity to make a statement if the representative desires to do so. Such representative also is expected to be available to answer questions at the meeting.

Vote Required; Recommendation of our Board of Directors

Stockholder ratification of the appointment of Plante Moran as our independent registered public accounting firm is not required by our Bylaws or otherwise. Our Board, however, is submitting the appointment of Plante Moran to the stockholders for ratification as a matter of good corporate governance practice. If a Voting Majority is FOR this proposal, we will consider the ratification of our independent registered public accounting firm for 2019 complete. If stockholders fail to ratify the appointment, our Audit Committee will reconsider whether or not to retain Plante Moran as our independent registered public accounting firm, although our Audit Committee maintains the full discretion to continue to retain Plante Moran in such a circumstance. Even if the appointment is ratified, our Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Company and its stockholders.

Our Board unanimously recommends a vote FOR the ratification of Plante Moran as our independent registered public accounting firm for the fiscal year ending December 31, 2019.

PROPOSAL NO. 5

OFFER OF APPROVAL OF EXECUTIVE COMPENSATION IN A

NON-BINDING ADVISORY VOTE

The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), enacted in July 2010, and Section 14A of the Exchange Act require that we provide you with the opportunity to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers. We are asking for your advisory vote on the following resolution (the "say-on-pay" resolution):

RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed in the subsection of this proxy statement titled "Executive Compensation", including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.

We did not offer a stockholder vote on executive compensation prior to such a vote being required under Dodd-Frank as we believe this topic is best handled by a deliberative compensation committee with access to detailed information on each executive's individual performance, which it may not be appropriate or in a company's best interest to disclose, and accordingly, a general vote on the subject is unlikely to provide valuable insight to such a committee in its role of determining appropriate compensation for a given executive officer, or executive officers as a group.

At our 2018 Annual Meeting of Stockholders, an identical resolution received 99.1% of votes "for" and 0.9% "against" of the shares voted "for" or "against".

Compensation Philosophy

As described in greater detail under the heading "Executive Compensation", we seek to closely align the interests of our named executive officers with the interests of our stockholders. The ultimate objective of our executive compensation program is to attract, retain and reward executives who will enhance the value and profitability of the Company and increase stockholder value. The Compensation Committee strives to provide competitive compensation opportunities with the ultimate amount of compensation received tied significantly to short-term and long-term Company performance. Inherent in our approach is the philosophy that compensation can align behavior and actions with stockholder interests, attract and retain stronger executives and thus create value for stockholders over time.

The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC.

Vote Required; Recommendation of our Board of Directors

If a Voting Majority is FOR this proposal, we will consider the non-binding, advisory approval of the compensation paid to our named executive officers to have occurred. If such a Voting Majority is not obtained, our Compensation Committee may consider changes to some of our executive compensation policies, although our Compensation Committee maintains its full discretion in this area as this is an advisory vote only.

Our Board unanimously recommends a vote FOR the approval, on a non-binding, advisory basis, of the compensation paid to our named executive officers in fiscal year 2018.

PROPOSAL NO. 6

ADVISORY VOTE ON FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

Dodd-Frank and Section 14A of the Securities and Exchange Act of 1934 require that we seek your advisory vote this year on how often the Company should hold a say-on-pay vote. By law, stockholders in public companies like Heska are to have an opportunity to cast an advisory vote on the frequency of the advisory executive compensation vote at least every six years.

By law, as a stockholder you will be able to specify one of four choices for the frequency of the vote on the say-on-pay proposal as follows: (i) one year; (ii) two years; (iii) three years; or (iv) abstain. This vote is advisory only and therefore will not be binding on our Board or the Company. Our Board may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than any preference indicated by our stockholders.

The Company is to announce its decision on the frequency of advisory executive compensation stockholder votes in a Form 8-K filed with the SEC no later than 150 days after the Annual Meeting. Our Board may change the vote frequency of advisory executive compensation stockholder votes at its discretion.

Vote Required; Recommendation of our Board of Directors

Our Board may consider this advisory vote in making its decision on the frequency of advisory executive compensation votes, although our Board maintains its full discretion in this area as this is an advisory vote only.

Our Board unanimously recommends a vote for ONE year as the frequency for holding a non-binding, advisory vote on the compensation paid to our named executive officers as our Board believes this has come to be regarded as a corporate governance best practice.

POTENTIAL VOTE NO. 7

ADVISORY VOTE WITH RESPECT TO

DISCRETIONARY VOTING BY PROXYHOLDERS

Other than the items of business described in Proposal Nos. 1 through 6, we are not aware of any other business to be acted upon at the Annual Meeting. Since our initial public offering in 1997, only items that were described in the proxy materials made available to stockholders prior to the corresponding Annual Meeting or Special Meeting were resolved by a vote of our stockholders at such meetings. While we have taken steps to ensure this remains the case, it is possible other business may properly come before our Annual Meeting, via the efforts of a stockholder or otherwise. In such a circumstance, our proxyholders - Eleanor F. Baker, our Vice President, General Counsel and Secretary, Catherine I. Grassman, our Vice President, Chief Accounting Officer and Controller, and Christopher D. Sveen, our Vice President, General Counsel - will have the discretion to vote shares for which we have been granted a proxy as they may determine. As a matter of good corporate governance practice, we are asking stockholders to submit an advisory vote for the proxyholders' consideration in such a circumstance. We will interpret a "for" vote as an indication that the stockholder's preference is that the proxyholders exercise their voting discretion in a manner they determine to be in the best interest of the Company's stockholders, an "against" vote as an indication that the stockholder's preference is that the proxyholders exercise their voting discretion against any proposal brought to a vote as outlined above, including a proposal the proxyholders otherwise believe to be in the best interests of the Company's stockholders, and an "abstain" or non-vote as an indication that the stockholder does not wish to express a preference regarding such a circumstance. It is important to note this is an advisory vote only, and that while the proxyholders may consider the advisory vote in such a circumstance, the proxyholders retain full discretion to vote as they may determine regardless of any outcome of the advisory vote.

Recommendation of our Board of Directors

Our Board unanimously recommends a vote FOR your preference being that the proxyholders exercise their voting discretion in a manner they determine to be in the best interest of the Company's stockholders, if other business properly comes before the Annual Meeting and you are voting by proxy.

OTHER MATTERS

The Board knows of no other business to be transacted at the Annual Meeting.

OTHER INFORMATION

"Householding" of Proxy Materials

The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as "householding", potentially provides extra convenience for stockholders and cost savings for companies. Heska and some brokers household proxy materials, delivering a single proxy statement to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent to such householding. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You can notify us by sending a written request to Investor Relations, Heska Corporation, 3760 Rocky Mountain Avenue, Loveland, Colorado 80538.

Proxy Solicitor

You may contact our proxy solicitor, Morrow Sodali LLC ("Morrow Sodali"), for a copy of the proxy materials. Morrow Sodali's address is 470 West Ave., Stamford, CT 06902. Stockholders may call Morrow Sodali at 1-800-662-5200 and brokers and banks may call Morrow Sodali at 1-203-658-9400. We undertake to promptly deliver a separate copy of the proxy materials upon receiving your written or oral request.

OWNERSHIP OF SECURITIES - COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of March 13, 2019 (except where otherwise noted), regarding the beneficial ownership of shares of Common Stock by each director of the Company, by the persons named in the summary compensation table (the "Named Executive Officers") elsewhere in this proxy statement, by all current directors and executive officers of the Company as a group, and by each person who is known by us to be the beneficial owner of more than 5% of our Common Stock. We had 7,742,222 shares of Common Stock outstanding on March 13, 2019.

Beneficial Ownership Table



Name and Address of Beneficial Owner	Shares Beneficially Owned (1)	Percentage Beneficially Owned (1)
BlackRock, Inc. (2)	1,075,438	13.9%
55 East 52nd Street
New York, NY 10055

Alger Associates, Inc. (3)	841,359	10.9%
360 Park Avenue South
New York, NY 10010

Neuberger Berman Group LLC (4)	576,251	7.4%
1290 Avenue of the Americas
New York, NY 10104

FMR LLC (5)	444,794	5.7%
245 Summer Street
Boston, MS 02210

The Vanguard Group (6)	426,531	5.5%
100 Vanguard Blvd.
Malvern, PA 19355

Named Executive Officers and Directors
Mark F. Furlong (7)	117	*
G. Irwin Gordon (7)	25,779	*
Scott W. Humphrey (7)	1,272	*
Sharon J. Larson (7)	12,570	*
David E. Sveen, Ph.D. (7)(8)	38,472	*
Bonnie J. Trowbridge (7)	6,166	*
Kevin S. Wilson (7)(9)	591,331	7.6%
Carol A. Wrenn (7)	23,820	*
Jason D. Aroesty (7)	25,000	*
Catherine I. Grassman (7)	13,885	*
Jason A. Napolitano (7)(10)	95,081	1.2%
Nancy Wisnewski, Ph.D. (7)	156,885	2.0%
All Directors and Executive Officers as a group	1,115,837	14.0%
(15 Persons) (7)(8)(9)(10)

________________________________________________________


*	Amount represents less than 1% of our common stock.

(1)

To our knowledge and unless otherwise noted, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to securities. Shares of common stock issuable upon exercise of stock options exercisable within 60 days of March 13, 2019 without further action by Heska's Stockholders are deemed outstanding and beneficially owned by the person holding such option for purposes of computing such person's percentage ownership, but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.


(2)	Based upon information derived from an amended Schedule 13G/A filed by BlackRock, Inc. on January 28, 2019 for holdings on December 31, 2018.


(3)	Based upon information derived from an amended Schedule 13G/A filed by Alger Associates, Inc. on March 8, 2019 for holdings on February 28, 2019.


(4)	Based upon information derived from a Schedule 13G/A filed by Neuberger Berman Group LLC on February 14, 2019 for holdings on December 31, 2018.


(5)	Based upon information derived from an amended Schedule 13G filed by FMR LLC on February13, 2019 for holdings on December 31, 2018.


(6)	Based upon information derived from a Schedule 13G/A filed by The Vanguard Group on February 12, 2019 for holdings on December 31, 2018.


(7)	Includes "Shares Owned", "Unvested Shares" and "Exercisable Options" from "Exercisable Option Table" below for each Director and Named Executive Officer, as well as for all Directors and Executive Officers as a group.


(8)	Includes 14,285 shares held by Bethany Creek Partners, LP and 7,143 shares held by Lindberg Capital Partners, LP. Dr. Sveen is a general partner of, and an investor in, both Bethany Creek Partners, LP and Lindberg Capital Partners, LP.

(9)

Mr. Wilson is the spouse of a woman ("Mrs. Wilson") who owns Heska Corporation shares. Mr. Wilson, Mrs. Wilson and trusts for the benefit of their children and family own a 100% interest in Cuattro, LLC. Mr. Wilson, Mrs. Wilson and the two eldest of their children control the Cuattro Foundation, a 501(c)(3) charitable organization. Includes 162,763 shares held by Cuattro, LLC, 16,099 shares held by the Cuattro Foundation, 7,000 shares owned by Mrs. Wilson, 138,743 shares held by the Wilson Family Trust and 25,726 shares held in trusts for the benefit of Mr. and Mrs. Wilson's children for which a third party is trustee. Mr. Wilson disclaims beneficial ownership of the shares held by Mrs. Wilson and trusts for the benefit of Mr. and Mrs. Wilson's children.


(10)	Includes one share jointly owned by Mr. Napolitano and Robert B. Grieve, Ph.D. Mr. Napolitano is the spouse of a woman ("Mrs. Napolitano") who owns 100 shares of common stock which is included in the table above, with respect to which Mr. Napolitano disclaims beneficial ownership.

Option Tables (as of March 13, 2019)

Exercisable Option Table



Name	Shares Owned (1)	Unvested Shares (2)	Exercisable Options (3)	Exercisable Option Price Range (4)	Exercisable Option Average Price (5)		Weighted Average Remaining Contractual Life (6)	Exercisable "In-the Money" Options (7)	Net Shares From Exercisable Options (8)
Mark F. Furlong	—	117	—	—	—		—	—	—
G. Irwin Gordon	25,074	705	—	—	—		—	—	—
Scott W. Humphrey	567	705	—	—	—		—	—	—
Sharon J. Larson	3,294	705	8,571	$28.41-$39.56		$33.06	6.57	8,571	5,030
David E. Sveen, Ph.D. (9)	29,196	705	8,571	$28.41-$39.56		$33.06	6.57	8,571	5,030
Bonnie J. Trowbridge	544	705	4,917	$18.36-$39.56		$33.76	6.81	4,917	2,842
Kevin S. Wilson (10)	455,331	90,000	46,000	$7.36-$69.77		$21.16	5.45	46,000	33,832
Carol A. Wrenn	4,544	705	18,571	$8.34-$39.56		$20.59	5.53	18,571	13,792
Jason D. Aroesty	—	25,000	—	—	—		—	—	—
Catherine I. Grassman	51	10,500	3,334	$69.77-$69.77	$69.77		8.98	3,334	427
Jason A. Napolitano (11)	60,727	25,000	9,354	$7.36-$72.85		$64.22	8.44	9,354	1,846
Nancy Wisnewski, Ph.D.	39,902	25,000	91,983	$4.50-$72.85		$20.80	4.55	91,983	68,074
All Directors and Executive Officers as a group (15 persons) (9)(10)(11)	646,793	225,730	243,314	$4.50-$72.85	$29.59		5.84	243,314	153,322

Outstanding Option Table



Name	Shares Owned (1)	Unvested Shares (2)	Outstanding Options (12)	Outstanding Option Price Range (13)	Outstanding Option Average Price (14)		Weighted Average Remaining Contractual Life (15)	Outstanding "In-the Money" Options (16)	Net Shares From Outstanding Options (17)
Mark F. Furlong	—	117	—	—	—		—	—	—
G. Irwin Gordon	25,074	705	—	—	—		—	—	—
Scott W. Humphrey	567	705	—	—	—		—	—	—
Sharon J. Larson	3,294	705	8,571	$28.41-$39.56		$33.06	6.57	8,571	5,030
David E. Sveen, Ph.D. (9)	29,196	705	8,571	$28.41-$39.56		$33.06	6.57	8,571	5,030
Bonnie J. Trowbridge	544	705	4,917	$18.36-$39.56		$33.76	6.81	4,917	2,842
Kevin S. Wilson (10)	455,331	90,000	66,000	$7.36-$69.77		$35.89	6.52	66,000	36,392
Carol A. Wrenn	4,544	705	18,571	$8.34-$39.56		$20.59	5.53	18,571	13,792
Jason D. Aroesty	—	25,000	20,000	$106.67-$106.67		$106.67	9.36	—	—
Catherine I. Grassman	51	10,500	10,000	$69.77-$69.77		$69.77	8.98	10,000	1,280
Jason A. Napolitano (11)	60,727	25,000	32,626	$7.36-$72.85		$65.25	8.35	32,626	6,017
Nancy Wisnewski, Ph.D.	39,902	25,000	111,900	$4.50-$72.85		$29.15	5.25	111,900	71,129
All Directors and Executive Officers as a group (15 persons) (9)(10)(11)	646,793	225,730	381,586	$4.50-$106.67	$33.94		5.57	361,586	171,801


(1)	To our knowledge and unless otherwise noted, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown in the column, which shares of common stock are not subject to any vesting restriction, subject to community property laws where applicable.

(2)

To our knowledge and unless otherwise noted, the persons named in the table have sole voting power with respect to all shares of common stock shown in the column, which shares of common stock are subject to vesting restrictions, subject to community property laws where applicable. Vesting events may include change in control, death and disability in addition to the requirements discussed below and is generally subject to other provisions in the related restricted stock grant agreement. Vesting for an additional 43,625, 12,116, 12,116, 14,061, 5,089, and 87,007 shares held by Mr. Wilson, Mr. Napolitano, Dr. Wisnewski, Mr. Aroesty, Ms. Grassman and All Executive officers as a group, respectively, is subject to certain time-based and performance-based conditions which may not be achieved for more than one year. Vesting for 35,125, 9,758, 9,758, 9,758, 4,097, and 68,496 shares held by Mr. Wilson, Mr. Napolitano, Dr. Wisnewski, Mr. Aroesty, Ms. Grassman and All Executive

officers as a group, respectively, is subject to certain performance-based which may be achieved in one year or less. Vesting for an additional 5,625, 1,563, 1,563, 1,563, 657, and 10,971 shares held by Mr. Wilson, Mr. Napolitano, Dr. Wisnewski, Mr. Aroesty, Ms. Grassman and All Executive officers as a group, respectively, is subject to time-based service conditions in excess of one year. Vesting for all other shares is subject to time-based service conditions of one year or less, as the performance condition has been achieved.


(3)	Represents shares of common stock issuable upon exercise of stock options exercisable within 60 days of March 13, 2019.


(4)	Represents the lowest and highest strike price for stock options exercisable within 60 days of March 13, 2019.


(5)	Represents the average strike price for stock options exercisable within 60 days of March 13, 2019.


(6)	Represents the weighted average remaining contractual life, in years, for stock options exercisable within 60 days of March 13, 2019.


(7)	Represents shares of common stock issuable upon exercise of stock options exercisable within 60 days of March 13, 2019, that have a strike price less than $80.01, the closing market price per share of Heska stock on March 13, 2019.


(8)	Represents net shares under the Treasury Stock Method assuming a market price per share of $80.01, the closing market price per share of Heska Stock on March 13, 2019, for shares of common stock issuable upon exercise of stock options exercisable within 60 days of March 13, 2019 that have a strike price less than $80.01.


(9)	Includes 14,285 shares held by Bethany Creek Partners, LP and 7,143 shares held by Lindberg Capital Partners, LP. Dr. Sveen is a general partner of, and an investor in, both Bethany Creek Partners, LP and Lindberg Capital Partners, LP.

(10)

Includes 162,763 shares held by Cuattro, LLC. Mr. Wilson, Mrs. Wilson and trusts for the benefit of their children and family own a 100% interest in Cuattro, LLC. Also includes 16,099 shares held by the Cuattro Foundation, a 501(c)(3) charitable organization controlled by Mr. Wilson, Mrs. Wilson and the two eldest of their children. Also includes 7,000 shares owned by Mrs. Wilson, 138,743 shares held in the Wilson Family Trust and 25,726 shares held in trust for the benefit of Mr. and Mrs. Wilson's children for which a third party is trustee. Mr. Wilson disclaims beneficial ownership of the shares held by Cuattro Foundation, Mrs. Wilson and trusts for the benefit of Mr. and Mrs. Wilson's children.


(11)	Includes one share jointly owned by Mr. Napolitano and Robert B. Grieve, Ph.D. Also includes 100 shares of common stock held by Mrs. Napolitano, with respect to which Mr. Napolitano disclaims beneficial ownership.


(12)	Represents shares of common stock issuable upon exercise of stock options outstanding on March 13, 2019.


(13)	Represents the lowest and highest strike price for stock options outstanding on March 13, 2019.


(14)	Represents the average strike price for stock options outstanding on March 13, 2019.


(15)	Represents the weighted average remaining contractual life, in years, for stock options outstanding on March 13, 2019.


(16)	Represents shares of common stock issuable upon exercise of stock options outstanding on March 13, 2019 that have a strike price less than $80.01, the closing market price per share of Heska Common Stock on March 13, 2019.


(17)	Represents net shares under the Treasury Stock method assuming a market price per share of $80.01, the closing market price per share of Heska stock on March 13, 2019, for shares of common stock issuable upon exercise of stock options outstanding that have a strike price less than $80.01.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Compliance with Section 16(a) of the Exchange Act requires our directors, Executive Officers and persons who own more than 10% of a registered class of our equity securities to file reports of holdings and transactions of Heska Common Stock and other equity securities with the SEC. Directors, Executive Officers and 10% or greater stockholders are required by SEC regulations to furnish us with copies of all of the Section 16(a) reports they file. Based solely upon a review of the copies of the forms furnished to us and the representations made by the reporting persons to us, we believe that during 2018 our directors, Executive Officers and 10% or greater stockholders complied with all filing requirements under Section 16(a) of the Exchange Act, except that one Form 4 for each of Dr. Wisnewski, Mr. Asakowicz, Mr. Eyl, and Mr. Lippincott were filed late due to administrative error and an additional Form 4 disclosing one transaction with respect to Mr. Eyl was inadvertently filed late.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information about our common stock that may be issued upon exercise of options and rights under all of our equity compensation plans as of December 31, 2018, including the Stock Plan, as amended and restated, the 1997 Employee Stock Purchase Plan, as amended and restated (the "1997 ESPP") and the 2003 Equity Incentive Plan, as amended and restated. Our stockholders have approved all of these plans.



Plan Category	(a) Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights	(b) Weighted-Average Exercise Price of Outstanding Options and Rights	(c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column)
Equity Compensation Plans Approved by Stockholders	620,553	$40.74	273,998
Equity Compensation Plans Not Approved by Stockholders	None	None	None
Total	620,553	$40.74	273,998

Our stockholders have authorized that up to 450,000 shares may be issued under our 1997 ESPP. 429,729 of these authorized shares have been used to purchase shares under the 1997 ESPP through December 31, 2018, leaving 20,271 shares remaining for purchase under our 1997 ESPP on December 31, 2018, which is included in column (c) of the above table.

SIGNIFICANT RELATIONSHIPS AND TRANSACTIONS WITH DIRECTORS, OFFICERS OR PRINCIPAL STOCKHOLDERS

Related Party Transactions

Pursuant to our code of ethics for senior executives and financial officers, a copy of which is available on Heska's website at www.heska.com, and our Corporate Governance Committee charter, our Audit Committee or our Corporate Governance Committee must review and approve any transaction that the Company proposes to enter into that would be required to be disclosed under Item 404(a) of Regulation S-K. Item 404(a) of Regulation S-K requires the Company to disclose in its proxy statement any transaction involving more than $120,000 in which the Company is a participant and in which any related person has or will have a direct or indirect material interest. A related person for purposes of this analysis is any executive officer, director, nominee for director, or holder of 5% or more of the Company's Common Stock, or an immediate family member of any of those persons.

Kevin S. Wilson is Heska Corporation's Chief Executive Officer and President as well as a member of Heska Corporation's Board. Heska Corporation's employment agreement with Mr. Wilson acknowledges that Mr. Wilson has business interests in Cuattro, LLC, Cuattro Software, LLC and Cuattro Medical, LLC which may require a portion of his time, resources and attention in his working hours.

Mr. Wilson is the spouse of Shawna M. Wilson ("Mrs. Wilson"). Mr. Wilson, Mrs. Wilson and trusts for the benefit of their children and family own a 100% interest in Cuattro, LLC as well as a majority interest in Cuattro Medical, LLC. Cuattro, LLC owns a 100% interest in Cuattro Software, LLC.

On February 24, 2013, we acquired a 54.6% interest (the "Acquisition") in Cuattro Veterinary USA, LLC, which was, subsequently, renamed Heska Imaging US, LLC. This transaction marked our entry into the veterinary imaging market. The remaining minority position (45.4%) in Heska Imaging US, LLC was subject to purchase by Heska Corporation under certain performance-based puts (the "US Imaging Puts"). The Amended and Restated Master License Agreement and the Supply Agreement between Heska Imagining US,

LLC and Cuattro, LLC were negotiated at arms length as part of the Acquisition. Immediately following the Acquisition and continuing until immediately prior to the US Imaging Purchase (as defined below), Shawna M. Wilson, Clint Roth, DVM, Steven M. Asakowicz, Rodney A. Lippincott, Kevin S. Wilson and Cuattro, LLC (collectively, the "Imaging Minority") owned approximately 29.75%, 8.39%, 4.09%, 3.07%, 0.05% and 0.05% of Heska Imaging US, LLC, respectively. Steven M. Asakowicz serves as Executive Vice President, Companion Animal Health Sales for Heska Corporation. Rodney A. Lippincott serves as Executive Vice President, Companion Animal Health Sales for Heska Corporation.

On May 31, 2016, Heska Corporation closed the transactions contemplated by that certain Agreement and Plan of Merger (the "Merger Agreement") with Cuattro Veterinary, LLC ("Cuattro International"), Cuattro International Merger Subsidiary, Inc., a wholly-owned subsidiary of the Company ("Merger Sub"), Kevin S. Wilson, and all of the members of Cuattro International (the "Members"). Pursuant to the Merger Agreement, on the Closing Date the Merger Sub was merged with and into Cuattro International, with Cuattro International surviving the merger as a wholly-owned subsidiary of the Company. In addition, as of the Closing Date, Cuattro International was renamed Heska Imaging International, LLC, and the Company’s interest in both Heska Imaging International, LLC ("International Imaging") and Heska Imaging US, LLC was transferred to the Company’s wholly-owned subsidiary, Heska Imaging Global, LLC ("Global Imaging"). Heska Imaging US, LLC, Cuattro, LLC and Global Imaging agreed the Amended and Restated Master License Agreement and the Supply Agreement with Cuattro, LLC would be assigned from Heska Imaging US, LLC to Global Imaging so that the licensing and supply agreements would be between Cuattro, LLC and Global Imaging after the transactions contemplated by the Merger Agreement closed. Mr. Wilson was a founder of Cuattro International and Cuattro, LLC and, including equity held by members of his family and trust for the benefit of his children and family, owned a majority interest in Cuattro International prior to the transactions contemplated by the Merger Agreement closing.

The required performance criteria for the US Imaging Puts were met based on 2016 financial performance, Heska Corporation considered notice given on March 3, 2017 that the US Imaging Puts were being exercised in full and on May 31, 2017, Heska Corporation delivered $13.8 million in cash to purchase the remaining 45.4% in Heska Imaging US, LLC it did not already own (the "US Imaging Purchase").

On April 3, 2017, and in accordance with the terms of its Operating Agreement, Heska Imaging US, LLC distributed $2.1 million based on financial results through December 31, 2016, including $1.0 million to the Imaging Minority. In January 2018, there was a distribution of $277 thousand to the owners of Heska Imaging US, LLC immediately prior to the US Imaging Purchase, including $126 thousand to the Imaging Minority, based on the financial results of Heska Imaging US, LLC through May 31, 2017.

On June 1, 2017, the Company consolidated (the "Consolidation") its assets and liabilities in Heska Imaging US, LLC and Heska Imaging International, LLC into Heska Imaging Global, LLC, which was re-named Heska Imaging, LLC ("Heska Imaging").

On November 26, 2018, Heska Imaging, entered into a Purchase Agreement for Certain Assets (the "Purchase Agreement") with Cuattro, LLC, pursuant to which Heska Imaging will purchase certain software and related assets (the "Software Assets") for an aggregate purchase price of approximately $8.2 million and terminate its existing license of the Software Assets and certain related obligations as described below (the "2018 Imaging Transactions"). The aggregate purchase price consists of $2.75 million in cash and 54,763 shares of the Company’s common stock, $0.01 par value per share. The Purchase Agreement includes a covenant of each party to use reasonable commercial efforts and negotiate in good faith with its hardware vendors to make hardware components available to both parties on the same terms. The 2018 Imaging Transactions closed on December 21, 2018.

As part of the 2018 Imaging Transactions, Heska Imaging acquired ownership of the Software Assets that were subject to the Amended and Restated License Agreement and the Amended and Restated License Agreement was terminated. Cuattro, LLC will retain ownership of software used in markets other than the veterinary market that is similar or identical to the Software Assets. The Supply Agreement was also terminated as part of the 2018 Imaging Transactions, although Cuattro, LLC is obligated, without further compensation, to assist Heska Imaging to implement data migration to a third-party image hosting platform and to continue to provide hosting, DICOM nodes, data migration and other cloud-related services to Heska Imaging through December 31, 2019, which may be extended as necessary to complete the transition to a third-party provider if such transition has not occurred for any reason other than failure of Heska Imaging to cooperate with the transition. While the remaining Cuattro, LLC obligations were originally negotiated at arm’s length as part of the Acquisition, Mr. Wilson has an interest in these obligations and any time and resources devoted to monitoring, overseeing and fulfilling the obligations and commitments of both Cuattro, LLC and Heska Imaging in this transition may prevent us from deploying resources on more productive matters.

We have entered into consulting agreements related to the Software Assets with two software consultants who we are aware also are to perform consulting services for Cuattro, LLC. We hired two employees following the 2018 Imaging Transactions who previously worked exclusively for Cuattro, LLC and who we are aware continue to offer to work part-time for Cuattro, LLC when not working for the Company.

Cuattro, LLC charged Heska Imaging US, LLC $3.6 million from January 1, 2016 through May 31, 2016 and charged Heska Imaging Global, LLC $10.9 million from June 1, 2016 through December 31, 2016, primarily related to digital imaging products, for which there is an underlying supply contract with minimum purchase obligations, software and services as well as other operating expenses provided for under a license agreement and a supply agreement, respectfully; Heska Corporation charged Heska Imaging US, LLC $5.3 million during 2016, primarily related to sales and other administrative expenses; and Heska Corporation net charged Cuattro, LLC $189 thousand during 2016, primarily related to facility usage and other services. In general, the entities above have charged one another the lower of cost or market in the absence of a formal contract.

Cuattro, LLC charged Heska Imaging $17.7 million during 2017 primarily related to digital imaging products, for which there is an underlying supply contract with minimum purchase obligations, software and services as well as other operating expenses provided for under a license agreement and a supply agreement, respectfully. Heska Corporation charged Heska Imaging US, LLC $2.9 million during the five months ended May 31, 2017, primarily related to sales expenses. Heska Corporation net charged Cuattro, LLC $111 thousand during 2017, primarily related to facility usage and other services. In general, the entities above have charged one another the lower of cost or market in the absence of a formal contract.

Cuattro LLC charged Heska Imaging $4.6 million during 2018 primarily related to digital imaging products, for which there is an underlying supply contract with minimum purchase obligations, software and services as well as other operating expenses provided for under a license agreement and a supply agreement, respectfully. Heska Corporation net charged Cuattro, LLC $3 thousand during 2018 primarily related to facility usage and other services. In, general, the entities above have charged one another the lower of cost or market in the absence of a formal contract.

At December 31, 2018, Heska Imagining owed Cuattro LLC $226 thousand.

Since January 1, 2016, the Company has not been a participant in any transaction with a related person other than described above and the indemnification agreements described below.

Indemnification agreements with officers and directors

Our Certificate of Incorporation and our Bylaws provide that we will indemnify each of our directors and Executive Officers to the fullest extent permitted by the Delaware General Corporation Law. Further, we have entered into indemnification agreements with each of our directors and Executive Officers.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Compensation Objective and Philosophy

The Compensation Committee of Heska Corporation's Board of Directors (the "Compensation Committee") administers our executive compensation program and establishes the salaries of our Executive Officers. The ultimate objective of our executive compensation program is to attract, retain and reward executives who will enhance the value and profitability of Heska Corporation and increase stockholder value. The Compensation Committee strives to provide competitive compensation opportunities with the ultimate amount of compensation received tied significantly to short-term and long-term Company performance. Inherent in our approach is the philosophy that compensation can align behavior and actions with stockholder interests, attract and retain stronger executives and thus create value for stockholders over time. The Compensation Committee's goal in executive compensation is to design and administer programs that best serve these ends.

What is Heska's Executive Compensation Program Designed to Reward?

The Compensation Committee develops our executive compensation programs to reward Executive Officers for their contribution to Heska's financial performance and to recognize individual initiative, leadership, achievement and other contributions. We believe an effective compensation program will reward executives for working well collectively as well as for strong individual performance.

What are the Elements of Heska's Executive Compensation?

Our compensation program is designed to reward four interlocking aspects of executive performance:


•	Annual financial performance: rewarded primarily through the awards paid under the Management Incentive Plan ("MIP");


•	Individual contribution: rewarded primarily through the setting of base salary and annual MIP targets;


•	Long-term gains in stockholder value: rewarded primarily through the equity incentive program; and


•	Continued service to the Company; rewarded primarily through base salary, equity award requirements and vesting and competitive benefits levels.

Why Does Heska Choose to Pay Each Element of Executive Compensation?

Base salary. Base salaries are set on an annual or other periodic basis and designed to reflect competitive market salaries for each position. They are also used in determining the basis for bonus targets in our MIP discussed below.

Performance-based incentive compensation. This form of compensation is based on the achievement of predetermined financial, project, research or other designated objectives. This form of compensation is paid to reward near-term performance (i.e., no longer than the coming year) and encourage Executive Officers to optimize immediate opportunities. In recent years, an MIP has been offered to Executive Officers and other managers to provide a performance-based incentive.

Long-term equity compensation. This form of compensation is designed to encourage the achievement of superior financial results over an extended period of time and align the interests of stockholders and

Executive Officers. It is intended to ensure that Executive Officers make thoughtful decisions about the Company's future and long-term prospects.

Other benefits, compensation or arrangements. Other than broad-based programs open to all employees, such as participation in our 401(k) program and employee stock purchase plan, this category tends to be used rarely. All of our Executive Officers have employment agreements. An Executive Officer's extraordinary performance or participation in an unanticipated endeavor may occasionally trigger such an award in this category.

Determination of Compensation Elements

In reviewing the compensation of our Executive Officers, the Compensation Committee reviews the nature and scope of each Executive Officer's responsibilities as well as his or her effectiveness in that role and in supporting the Company's long-term goals. Heska's Board of Directors (the "Board") formally evaluates the Chief Executive Officer (our "CEO"). Our CEO communicates his view of the performance of other Executive Officers to the Compensation Committee and makes recommendations regarding salary, incentive-based performance compensation and long-term compensation grants for the Compensation Committee's consideration. The Company has a review system it uses to evaluate its employees, including Executive Officers, which the CEO may consider, potentially along with other information, such as third-party interviews of Company employees who interact with the Company's Executive Officers. In the past several years, the Officer responsible for Human Resources has compiled and/or presented data discussed below for the Compensation Committee's consideration of the different compensation elements.

The Compensation Committee has considered it appropriate, and in the best interests of Heska's stockholders, to endeavor to set our overall Executive Officer compensation near the mid-point of the range of companies in the comparison group it reviewed ("Comparable Companies"). The Compensation Committee also reviews the relative mix of compensation paid by Comparable Companies for use as a guideline. In compensation matters, the Compensation Committee reviews relevant information and makes a case-by-case determination relying on its collective judgment and experience.

The Compensation Committee engaged an outside compensation consultant (the "Consultant") in 2016 and 2017 regarding Executive Compensation matters. The Compensation Committee viewed the Consultant as an advisor only, and the Compensation Committee retained the discretion to implement or not implement the Consultant's suggestions. The Consultant did not advise the Compensation Committee regarding Executive Compensation matters in 2015, 2018 or 2019. Other than services related to Director Compensation in 2015 and 2017 and Executive Compensation in 2016 and 2017, the Consultant did not provide any other services to the Company in 2015, 2016, 2017, 2018 or 2019.

The Compensation Committee considers compensation data from companies in medical, biotechnology and general industry groups that have similar revenues, veterinary focus and/or are in a similar stage of development to Heska. In 2015 and 2016, the Compensation Committee reviewed compensation data for the following companies as part of its review of Executive Compensation: Abaxis, Inc., Aratana Therapeutics, Inc., Array Biopharma Inc., Axogen, Inc., Caladrius Biosciences, Inc., Cumberland Pharmaceuticals Inc., Cutera, Inc., DepoMed, Inc., Derma Sciences, Inc., DURECT Corporation, Enzo Biochem, Inc., Harvard Bioscience, Inc., Lannett Company, Inc., Natural Alternatives International, Inc., Pernix Therapeutic Holdings, Inc., POZEN Inc., Progenics Pharmaceuticals, Inc., Psychemedics Corporation, Quidel Corporation, Retractable Technologies, Inc., Synergetics USA, Inc., Tearlab Corp., Unilife Corporation, XOMA Corporation and Zogenix, Inc. In 2017, the Compensation Committee received advice from the Consultant regarding the group of companies to review in relation to Executive Compensation and reviewed compensation data for the following companies as part of its review of Executive Compensation:

Abaxis, Inc., ANI Pharmaceuticals, Inc., Anika Therapeutics, Inc., Array BioPharma Inc., Atrion Corporation, Endologix, Inc., Enzo Biochem, Inc., Landauer, Inc., Meridian Bioscience, Inc., Natera, Inc., National Research Corporation, OraSure Technologies, Inc., Osiris Therapeutics, Inc., Progenics Pharmaceuticals, Inc., Quidel Corporation, Spectrum Pharmaceuticals, Inc., STAAR Surgical Company, Tactile Systems Technology, Inc., Teligent, Inc. and Veracyte, Inc. as well as aggregate data from a Radford Life Sciences Custom Report created with data from the following companies: Abaxis, Inc., Aduro Biotech, Inc., Anika Therapeutics, Inc., Array BioPharma Inc., Coherus Biosciences, Inc., CryoLife, Inc., Enanta Pharmaceuticals, Inc., FibroGen, Inc., Intersect ENT, Inc., Mannkind Corporation, Meridian Bioscience, Inc., Merrimack Pharmaceuticals, Inc., Momenta Pharmaceuticals, Inc., Nanostring Technologies, Inc., Natera, Inc., OraSure Technologies, Inc., Progenics Pharmaceuticals, Inc., PTC Therapeutics, Inc., Quidel Corporation, Repligen Corporation, Retrophin, Inc., SciClone Pharmaceuticals, Inc., STAAR Surgical Company, Surmodics, Inc., Supernus Pharmaceuticals, Inc., Veracyte, Inc. and Xencor, Inc. In 2018, the Company reviewed compensation data for the following companies as part of its review of Executive Compensation: Abaxis, Inc., ANI Pharmaceuticals, Inc., Anika Therapeutics, Inc., Array BioPharma Inc., Atrion Corporation, Endologix, Inc., Enzo Biochem, Inc., Landauer, Inc., Meridian Bioscience, Inc., Natera, Inc., National Research Corporation, OraSure Technologies, Inc., Osiris Therapeutics, Inc., Progenics Pharmaceuticals, Inc., Quidel Corporation, Spectrum Pharmaceuticals, Inc., STAAR Surgical Company, Tactile Systems Technology, Inc., Teligent, Inc. and Veracyte, Inc. In 2015, 2016 and 2017, the Compensation Committee also reviewed Radford Life Sciences Executive Survey data and Mountain States Employees Council Survey data.

Base Salary. The Compensation Committee reviews each Executive Officer's base salary annually. When reviewing base salaries, the Compensation Committee considers compensation data from companies in medical, biotechnology and general industry groups that have similar revenues, veterinary focus and/or are in a similar stage of development to Heska. Consideration is also given to prior performance, relevant experience, level of responsibility and skills, and abilities of each Executive Officer. Similar positions are grouped to ensure both internal equity and external equity. The Compensation Committee reviews relevant information and makes a case-by-case determination relying on its collective judgment and experience.

In March 2014, Mr. Wilson became our Chief Executive Officer and President at an annual salary of $275,000 and the Company entered into a new employment agreement with Mr. Wilson (the "Wilson Agreement"). See "March 2014 Wilson Employment Agreement" and "Transition of Chief Executive Officer Role" below for more detail.

Following approval by the Compensation Committee in September 2015, who reviewed proposed responsibilities and market compensation data, Mr. Napolitano's annual salary was increased to $350,000 concurrent with his being named the Company's Chief Operating Officer effective October 1, 2015.

In September 2016, the Compensation Committee reviewed Executive Officer performance, responsibilities, and market compensation data with Mr. Wilson and, effective October 1, 2016, and increased Dr. Wisnewski's annual salary to $300,000.

In December 2017, Ms. Grassman was appointed as the Company's Vice President, Chief Accounting Officer and Controller at an annual salary of $210,000.

In December 2017, based in part on Mr. Wilson’s strong performance as Chief Executive Officer and President of the Company, the Compensation Committee authorized and approved an increased annual salary for Mr. Wilson to $600,000.

In April 2018, Mr. Aroesty was appointed as the Company's Executive Vice President, International Diagnostics at an annual salary of $300,000.

Performance-Based Incentive Compensation. The Company first adopted an MIP in 1999 to provide incentives to our Executive Officers, other managers and key employees to meet and exceed certain predetermined annual goals. Target annual incentives and specific performance criteria are established each year by the Compensation Committee, with the actual payout based on the extent to which the specified performance criteria are met. We believe this approach provides a strong incentive for our management to achieve the stated annual goals. In May 2014, our stockholders approved the Amended and Restated Management Incentive Plan Master Document (the "Master Document"). A goal of the Master Document is self-funding status for the MIP in any given year. A given year's MIP can be implemented by the Compensation Committee agreeing on four parameters: 1) the Category Percentages - the percent of salary, based on job category, that determines an individual's targeted bonus compensation, 2) the Plan Allocation - a guideline in determining the MIP Payout to an individual, such as the relative weighting of companywide and individual performance, 3) the Key Parameters on which the MIP Payouts are to be based and 4) the Payout Structure by which MIP funding is accrued. Typically there has been a cap on the MIP of approximately at least 150% of target payout to all employees, although this was not required in any given year and the cap for 2016, 2017 and 2018 was 200% of target payout for each MIP Participant. Each individual has a MIP Payout "target" and this is intended as a guideline. Our CEO will generally make recommendations to the Compensation Committee regarding MIP Payouts to other MIP Plan participants; all awards under the MIP Plan are at the discretion of the Compensation Committee. All Executive Officers are eligible to participate in our 2019 MIP. We do not believe our compensation policy for our Executive Officers, our sales force or our other employees are reasonably likely to have a material adverse effect on our Company. We generally pay our sales force commissions based on sales volume and other targets, which we believe is typical in our industry.

In March 2016, after reviewing and discussing with Management the Company's 2015 financial results and 2016 budget, the Compensation Committee agreed to adopt the 2016 MIP with the following parameters:



Parameter	Result
Category Percentages	Executive Vice President-level: 40% Other Officers: 35%
Plan Allocation	50% Company Performance/50% Individual Performance
Key Parameters	Pre-MIP Target Income ("PMTI"), which is Pre-MIP Operating Income excluding certain specified items, and Revenue
Payout Structure	Funding starts at $9.8 million of PMTI and $106 million in Revenue Target funding of $1.3 million at $11.5 million of PMTI and $115 million of Revenue (76.5% share of PMTI above initial threshold) Interpolated between various levels above and below target funding, subject to PMTI interpolation Total MIP Payouts Capped at $1.95 million Maximum MIP Payout of 200% of Incentive Target for a given participant Executive Vice President-level participants may elect to receive up to 50% of MIP Payout in Restricted Stock, subject to a 2,500 share maximum

Mr. Wilson was ineligible to participate in the 2016 MIP due to his employment agreement. Participating Executive Officers were given the option to elect to receive up to 50% of MIP Payouts in Common Stock in lieu of cash under the 2016 MIP (the percentage chosen by a given participating Executive Officer in a given MIP year to be referred to as the "Chosen Percentage" in such MIP year for such Executive Officer) and such Executive Officers were given a corresponding performance-based restricted stock grant related to the Company's Management Incentive Plan (each, an "MIP Grant" and a "20XX MIP Grant" when referring specifically to a given year's MIP, so an MIP Grant issued in relation to the 2016 MIP would be referred to as a "2016 MIP Grant"). Up to 100% of each 2016 MIP Grant was to vest at the time payments

were made under the 2016 MIP. The number of shares vesting under a given 2016 MIP Grant was to be determined by multiplying the Chosen Percentage by the holder's MIP Payout, dividing the result by the stock price at the time of the 2016 MIP Grant and rounding to the nearest whole share, with any shares underlying the 2016 MIP Grant that do not vest at this time being forfeited. The balance of the MIP Payout for the individual in the previous sentence is to be in cash after deducting the value of the vested portion of the 2016 MIP Grant as calculated in the previous sentence. For example, if a participating Executive Officer had a Chosen Percentage of 45% and the stock price at the time of the MIP Grant was $22.50 and subsequently was awarded an MIP Payout of $100,000, he or she would vest up to 2,000 shares of the affiliated MIP Grant (45% times $100,000 divided by $22.50), and assuming the affiliated MIP Grant was 2,000 shares he or she would receive $55,000 in cash ($100,000 minus 2,000 shares times $22.50). In the table named "Grants of Plan-Based Awards" below, we list potential cash payouts under the 2016 MIP to the Named Executive Officers, under "Estimated Future Payouts Under Non-Equity Incentive Plan Awards" and 2016 MIP Grants that had the potential to vest under "Estimated Future Payouts Under Equity Incentive Plan Awards". These amounts are adjusted for the Chosen Percentages for each Named Executive Officer. Under the 2016 MIP, Chosen Percentages were 45% and 40% for Mr. Napolitano and Dr. Wisnewski, respectively. In March 2016, each of Mr. Napolitano and Dr. Wisnewski received a 2016 MIP Grant of 2,500 shares.

At a Compensation Committee meeting in February 2017, the Compensation Committee reviewed the Company's financial performance, which translated to the maximum Incentive Pool under the 2016 MIP and discussed Mr. Wilson's recommendations regarding total MIP Payouts with Mr. Wilson. The cash MIP Payouts to MIP-eligible Named Executive Officers are listed in the "Non-Equity Incentive Plan Compensation" in the "Summary Compensation Table" below for Mr. Napolitano and Dr. Wisnewski. 2,500 shares from Mr. Napolitano's 2016 MIP Grant were vested. 2,177 shares from Dr. Wisnewski's 2016 MIP Grant were vested, 691 of which were withheld for tax. The vested value of the 2016 MIP Grants as calculated above is included in "Stock Compensation" in the "Summary Compensation Table" below for Mr. Napolitano and Dr. Wisnewski.

In May 2017, after reviewing and discussing with Management the Company's 2016 financial results and 2017 budget, the Compensation Committee agreed to adopt the 2017 MIP with the following parameters:



Parameter	Result
Category Percentages	Executive Officers: 40%
Plan Allocation	50% Company Performance/50% Individual Performance
Key Parameters	Pre-MIP Target Income ("PMTI"), which is Pre-MIP Operating Income excluding certain specified items, and Revenue
Payout Structure	Funding starts at $18.6 million of PMTI and $131 million in Revenue Target funding of $1.43 million at $20.1 million of PMTI and $141.8 million of Revenue (93.3% share of PMTI above initial threshold) Interpolated between various levels above and below target funding, subject to PMTI interpolation Total MIP Payouts Capped at $2.10 million Maximum MIP Payout of 200% of Incentive Target for a given participant Executive Officer participants may elect to receive up to 50% of MIP Payout in Restricted Stock, subject to a 3,000 share maximum

Mr. Wilson was ineligible to participate in the 2017 MIP due to his employment agreement. In June 2017, each of Mr. Napolitano and Dr. Wisnewski received a 2017 MIP Grant of 1,180 and 1,011, respectively. Under the 2017 MIP, Chosen Percentages were 40% and 40% for Mr. Napolitano and Dr. Wisnewski, respectively.

At a Compensation Committee meeting in February 2018, the Compensation Committee reviewed the Company’s financial performance for 2017 and determined that the Company’s financial performance did not meet the minimum threshold for MIP Payouts under the 2017 MIP. Accordingly, no MIP Payouts were made and all 2017 MIP Grant shares were forfeited.

During 2017, the Compensation Committee discussed the concept of lowering the MIP Category Percentages for Executive Officers in future MIPs as part of an overall compensation approach which would emphasize large equity grants to a greater degree than in the past.

In July 2018, after reviewing and discussing with Management the Company's 2017 financial results, 2018 budget and the publicly communicated outlook from May 2018 for the Company's financial performance, the Compensation Committee agreed to adopt the 2018 MIP with the following parameters:



Parameter	Result
Category Percentages	Executive Officers: 20%
Plan Allocation	50% Company Performance/50% Individual Performance
Key Parameters	Pre-MIP Target Income ("PMTI"), which is Pre-MIP Operating Income excluding certain specified items, and Revenue
Payout Structure	Funding starts at $20.91 million of PMTI and $130 million in Revenue Target funding of $1.0 million at $21.97 million of PMTI and $139.0 million of Revenue (48.5% share of PMTI above initial threshold) Interpolated between various levels above and below target funding, subject to a minimum post-MIP Operating Income Level Total MIP Payouts Capped at $1.5 million Maximum MIP Payout of 200% of Incentive Target for a given participant

As the Compensation Committee believed the 2018 MIP PMTI targets were unlikely to be achieved all "Threshold" and "Target" 2018 MIP Payouts are listed at zero in the "Grants of Plan-Based Awards" table that follows. All "Maximum" MIP Payouts are listed at the maximum of 200% of Incentive Target for a given participant.

At a Compensation Committee meeting in February 2019, the Compensation Committee determined that the Company’s financial performance did not meet the minimum threshold for MIP Payouts under the 2018 MIP. Accordingly, no 2018 MIP Payouts were made.

Long-Term Equity Compensation. Historically, we have used stock options to provide long-term equity compensation to our Executive Officers. The Compensation Committee is responsible for determining the number and terms of options, or other forms of long-term equity compensation, to be granted to Executive Officers, taking into account such factors as individual and Company performance, policies regarding cash compensation and practices of Comparable Companies. Options granted to Executive Officers have exercise prices equal to fair market value (closing price) at the time of grant and expire within ten years from the time of grant. Any vesting ceases and the vested portion of options must be exercised within a certain period should an Executive Officer leave Heska's service (subject to any rights to partial acceleration of vesting upon termination without cause under employment agreements). Accordingly, option grants will provide a return to an Executive Officer only if said Executive Officer continues to work for the benefit of the Company and only if Heska's market price per share appreciates over the option term. We believe that these provisions help both to retain qualified employees and to motivate them to achieve long-term increases in stock value, providing continuing benefits to the Company and its stockholders beyond those in the year of grant. Stock options grants generally have had 4-year monthly vesting when granted, although the Compensation Committee issued stock options with 3-year annual vesting in March 2018 and could issue stock options with these or other vesting provisions in the future. In addition to the MIP Grants under the Company’s 2016 MIP and

2017 MIP discussed above, the Compensation Committee issued performance-based restricted stock in 2014, 2015 and 2018, as discussed below. It is possible the Compensation Committee may use some or all of performance-based restricted stock, time-based restricted stock, stock options or some other form of long-term equity compensation in the future.

In March 2014, Mr. Wilson was awarded restricted stock awards under the Wilson Agreement. In May 2014, Mr. Wilson was awarded a further restricted stock award under the Wilson Agreement following approval of the Company's stockholders. See "March 2014 Wilson Employment Agreement" below for more detail.

In March 2015, following a discussion with Mr. Wilson at its February 2015 meeting regarding Mr. Wilson's preferred approach to the compensation of management and key individuals, the Compensation Committee approved performance-based restricted stock grants (the "Performance Grants") to certain Executive Officers. The Performance Grants are to cliff vest three years following issuance, subject to the Company achieving $7 million in Operating Cash Flow, as defined in the underlying restricted stock grant agreement, in at least one of 2015, 2016 or 2017. The Company met the Operating Cash Flow requirement based on its 2015 financial results. The Company generally targeted Performance Grants to the Executive Officer's annual salary. Mr. Napolitano received 12,863 shares in Performance Grants and Dr. Wisnewski received 10,892 shares in Performance Grants.

In December 2016, the Compensation Committee discussed long-term compensation for Executive Officers and other key Company managers with Mr. Wilson and awarded option grants for Executive Officers, including Mr. Napolitano and Dr. Wisnewski.

Throughout 2017, the Compensation Committee discussed the concept of moving away from its historical policy of annual long-term compensation grants to an approach entailing less frequent, but larger grants of long-term compensation awards to the Company’s Executive Officers.

In December 2017, based in part on Mr. Wilson’s strong performance as the Company’s Chief Executive Officer and President as well as to more closely align Mr. Wilson's interests with those of our stockholders, Mr. Wilson was issued a performance-based restricted stock grant of 45,000 shares. 16,875 of the performance-based restricted shares were subject to possible market price vesting through December 1, 2024 as follows: 5,625 of such shares shall vest each time the Company’s stock price per share first averages over a 20 trading day period $110 per share, $125 per share and $150 per share. If any of such vesting events is achieved prior to the first anniversary of the grant date, then such vesting event will be deemed to be the first anniversary of the grant date. 28,125 of the performance-based restricted shares were subject to possible vesting in three installments of 9,375 shares each if the Company achieves targeted operating income results of $25 million, $30 million and $35 million through the Company’s fiscal years ending December 31, 2024, with vesting to occur no earlier than the later of (i) three years following the achievement of such target or (ii) the date occurring in calendar year 2022 that the Company's independent registered public accountants issue their financial report on the Company's financial statements for the preceding fiscal year. Any of the shares that vest are subject to forfeiture generally if within 3 years thereafter the Company issues a restatement of its audited financial statements. The restricted shares may also vest in connection with a change in control of the company, upon the occurrence of Mr. Wilson’s death or defined disability, or termination of employment by the Company without cause or by Mr. Wilson for good reason.

In March 2018 the Compensation Committee authorized the issuance of (i) 9,165, 9,165, and 3,849 restricted common shares (the "Revenue-based Shares") to Mr. Napolitano, Dr. Wisnewski and Ms. Grassman, respectively, in four approximately equal tranches for each individual with vesting tied to minimum service conditions described below and the achievement of four respective annual revenue targets increasing in $30 million increments from $170 million to $260 million, (ii) 7,813, 7,813, and 3,280 restricted

common shares (the "Income-based Shares") to Mr. Napolitano, Dr. Wisnewski and Ms. Grassman, respectively, in three approximately equal tranches for each individual with vesting tied to the achievement of three respective annual operating income targets increasing in $5 million increments from $25 million to $35 million, (iii) 12,000, 3,334, 3,334, and 1,401 restricted common shares (the "S&P-based Shares") to Mr. Wilson, Mr. Napolitano, Dr. Wisnewski and Ms. Grassman, respectively, with vesting tied to the Company's common stock closing price outperforming the S&P 500 Index over either a two or four year time period, and (iv) 4,688, 4,688, and 1,970 restricted common shares (the "Stock Price-based Shares") to Mr. Napolitano, Dr. Wisnewski and Ms. Grassman, respectively, in three approximately equal tranches for each individual with vesting tied to minimum service conditions described below and the achievement of three respective 20-day average closing common stock price levels with increases of approximately 25%, 45% and 75% as compared to the Company’s stock price level at the time of grant. Approximately 75% of the Revenue-based Shares have a minimum service condition through the date in each fiscal year that the Company's independent registered public accountants issue their financial report on the Company's financial statements for the preceding fiscal year (the "Reporting Date") in 2022 and approximately 25% of the Revenue-based Shares have a minimum service condition through the Reporting Date in 2021. Approximately one-third of the Stock Price-based Shares have a minimum service condition through March 7, 2020, March 7, 2021 and March 7, 2022, respectively. S&P-based Shares are to be forfeited if not achieved at the end of the specified time period, Revenue-based Shares and Income-based Shares are to be forfeited if the corresponding performance condition is not met by the Reporting Date in 2025 and Stock Price-based Shares are to be forfeited if the corresponding stock price is not achieved by March 31, 2025. The Compensation Committee also authorized the issuance of stock options with 30,000, 20,000, 20,000 and 10,000 underlying shares to Mr. Wilson, Mr. Napolitano, Dr. Wisnewski and Ms. Grassman. The stock options are to vest in three approximately equal annual tranches or at the time of change in control, and were issued with an exercise price per share of $69.77. The shares of common stock subject to the foregoing awards are also subject to a possible three year claw back by the Company after vesting in the event of a financial statement restatement, and the restricted stock awards are subject to accelerated vesting in the event of a termination without cause or a resignation for good reason or in the event of a change in control of the company, in each case as described in the restricted stock grant agreement.

In July 2018 the Compensation Committee authorized the issuance of (i) 9,165 restricted common shares (the "Aroesty Revenue-based Shares") in four approximately equal tranches for each individual with vesting tied to minimum service conditions described below and the achievement of four respective annual revenue targets increasing in $30 million increments from $170 million to $260 million, (ii) 7,813 restricted common shares (the "Aroesty Income-based Shares") in three approximately equal tranches for each individual with vesting tied to the achievement of three respective annual operating income targets increasing in $5 million increments from $25 million to $35 million, (iii) 3,334 restricted common shares (the "Aroesty S&P-based Shares") with vesting tied to the Company's common stock closing price outperforming the S&P 500 Index over either a two or four year time period, and (iv) 4,688 restricted common shares (the "Aroesty Stock Price-based Shares") in three approximately equal tranches for each individual with vesting tied to minimum service conditions described below and the achievement of three respective 20-day average closing common stock price levels with increases of approximately 25%, 45% and 75% as compared to the Company’s stock price level at the time of grant. Approximately 75% of the Aroesty Revenue-based Shares have a minimum service condition through the Reporting Date in 2022 and approximately 25% of the Aroesty Revenue-based Shares have a minimum service condition through the Reporting Date in 2021. Approximately one-third of the Aroesty Stock Price-based Shares have a minimum service condition through July 25, 2020, July 25, 2021 and July 25, 2022, respectively. Aroesty S&P-based Shares are to be forfeited if not achieved at the end of the specified time period, Aroesty Revenue-based Shares and Aroesty Income-based Shares are to be forfeited if the corresponding performance condition is not met by the Reporting Date in 2025 and Aroesty Stock Price-based Shares are to be forfeited if the corresponding stock price is not achieved by March 31, 2025. The Compensation Committee also authorized the issuance of stock options

with 20,000 underlying shares to Mr. Aroesty. The stock options are to vest in three approximately equal annual tranches or at the time of change in control, and were issued with an exercise price per share of $106.67. The shares of common stock subject to the foregoing awards are also subject to a possible three year claw back by the Company after vesting in the event of a financial statement restatement, and the restricted stock awards are subject to accelerated vesting in the event of a termination without cause or a resignation for good reason or in the event of a change in control of the company, in each case as described in the restricted stock grant agreement.

Other Benefits, Compensation or Arrangements

"All Other Compensation" in the "Summary Compensation Table" below represent matching funds received by each of our Named Executive Officers under our 401(k) plan, which is open to all employees, as well as life insurance and short-term and long-term disability premiums. We have historically provided a 25% match of 401(k) contributions (up to a certain maximum), which was increased to a 40% match of 401(k) contributions (up to a certain maximum) as of April 1, 2018.

All of our Named Executive Officers had employment contracts in 2016, 2017 and 2018, except Ms. Grassman and Mr. Aroesty. Ms. Grassman joined the Company in January 2017, became an Executive Officer in December 2017 and was offered an employment agreement in March 2018. Mr. Aroesty joined the Company and signed an employment agreement at the time he joined the Company in April 2018. These employment agreements entitle Named Executive Officers to payments based on salary, continuing medical benefits for a given period and immediate vesting of unvested options in noted circumstances. Payments based on salary are typically paid bi-monthly consistent with Company policy. The Compensation Committee believes these terms are common, are in line with the experience of the Compensation Committee for executives at other companies and are intended to provide Executive Officers with additional resources to seek a comparable job, which is unlikely to be a rapid process given the level of employment, in these certain circumstances, such as an acquisition. These employment contracts are intended to provide the Named Executive Officers with protections appropriate for, and in line with, those received by comparable executives at companies similar to Heska. Periodically, we review these agreements versus market benchmarks. Such a review was conducted in September 2016.

On March 7, 2018, the Company agreed to offer an employment agreement to Catherine Grassman, the Company's Vice President, Chief Accounting Officer and Controller, and the Company's principal financial and accounting officer for Securities and Exchange Commission (the "Commission") reporting purposes. Under the employment agreement, Ms. Grassman's initial employment term is thirty-six months from the effective date, with automatic one year extensions after the original expiration date in the absence of notice to the contrary at least 120 days prior to expiration. Ms. Grassman is to continue to serve as the Company's Vice President, Chief Accounting Officer and Controller at an annual base salary of $210,000, and she is eligible to participate in the Company's MIP. Ms. Grassman is to devote all of her full attention, skills, time and business efforts to the Company. Under the agreement, she is also eligible to participate in the benefits offered to other executives of the Company. Should Ms. Grassman resign for good reason or be terminated without cause (other than in connection with a change of control) or be terminated due to Ms. Grassman's death or disability, she is to be entitled to a payment of an amount equal to 6 months of base salary. Should Ms. Grassman resign for good reason or be terminated without cause in connection with a change of control of the Company, she is to be entitled to a payment of an amount equal to 12 months of base salary. The agreement also provides for a 12 month noncompetition and a 24 month non-solicitation period following termination of employment.

Effective April 23, 2018, the Company entered into an employment agreement with Jason D. Aroesty, the Company's Executive Vice President, International Diagnostics. Under the employment agreement, Mr.

Aroesty's initial employment term is thirty-six months from the effective date, with automatic one year extensions after the original expiration date in the absence of notice to the contrary at least 120 days prior to expiration. Mr. Aroesty is to continue to serve as the Company's Executive Vice President, International Diagnostics at an annual base salary of $300,000, and he is eligible to participate in the Company's MIP. Mr. Aroesty is to devote all of his full attention, skills, time and business efforts to the Company. Under the agreement, he is also eligible to participate in the benefits offered to other executives of the Company. Should Mr. Aroesty resign for good reason or be terminated without cause (other than in connection with a change of control) or be terminated due to Mr. Aroesty’s death or disability on or before March 1, 2021, he is to be entitled to a payment of an amount equal to 12 months of base salary. Should Mr. Aroesty resign for good reason or be terminated without cause (other than in connection with a change of control) or be terminated due to Mr. Aroesty’s death or disability after March 1, 2021, he is to be entitled to a payment of an amount equal to 6 months of base salary. Should Mr. Aroesty resign for good reason or be terminated without cause in connection with a change of control of the Company, he is to be entitled to a payment of an amount equal to 12 months of base salary. The agreement also provides for a 12 month noncompetition and a 24 month non-solicitation period following termination of employment.

Transition of Chief Executive Officer Role

Our Board of Directors has expressed a high degree of interest in focusing the Company on growth opportunities for several years. Cognizant of this and following discussions with Mr. Wilson, Robert B. Grieve, Ph.D., the Company’s Chairman and Chief Executive Officer from May 2000 to March 2014, raised the possibility with other Board members in November 2013 of Mr. Wilson becoming Chief Executive Officer, with Dr. Grieve acting in an Executive Chairman role for a transition period. Dr. Grieve noted the very positive commercial impact Mr. Wilson had made on the Company in less than a year as President and Chief Operating Officer, as well as Mr. Wilson's experience in generating strong growth at his prior company, Sound Technologies, Inc. Following discussions and diligence by the Compensation Committee as well as individual Board members, the Board discussed this notion in depth at an in-person Board meeting on February 19, 2014 and decided to proceed. On February 19, 2014, the Compensation Committee met and unanimously agreed to offer Mr. Wilson a new employment agreement with certain economic terms. The Compensation Committee authorized Mr. Gordon to negotiate with Mr. Wilson to finalize this agreement. Mr. Gordon was ultimately able to obtain agreement with Mr. Wilson, which was approved by the Compensation Committee in a telephonic meeting on March 25, 2014. Mr. Wilson and William A. Aylesworth, the Company’s Lead Director from May 2010 to May 2014, signed the resulting agreement one day later, on March 26, 2014.

March 2014 Wilson Employment Agreement

The Compensation Committee hired the Consultant to advise on Mr. Wilson's compensation as Chief Executive Officer and President. Mr. Wilson expressed a strong preference for upfront restricted stock grants in lieu of other forms of compensation. The Consultant advised a majority of such compensation be subject to vesting based on performance. Members of the Board and the Compensation Committee ultimately felt that this would best align Mr. Wilson's interest with stockholder interest.

Mr. Wilson agreed to an employment agreement with the following components on March 26, 2014. The term of Mr. Wilson's employment agreement was to expire on March 26, 2018. Beginning immediately following the filing of the Company's Form 10-K, which occurred on March 31, 2014, Mr. Wilson began to serve as Chief Executive Officer and President of the Company for an annual base salary of $275,000. Our Board agreed to nominate Mr. Wilson for election to a three-year term as director at the 2014 Annual Meeting as well as for future election when Mr. Wilson's then existing term is set to expire. Mr. Wilson was eligible to participate in the Company's 2014 MIP based on service from January 1, 2014 to March 31, 2014 at a

Category Percentage of 35% but not for service after becoming Chief Executive Officer, which translated to a Category Percentage of less than 9% for full year 2014. Pursuant to the employment agreement, the Company granted Mr. Wilson 110,000 shares of restricted stock (the "Time Grant") which were to vest as follows, subject to the terms and conditions of the related award agreement: (i) 27,500 shares on the six month anniversary of the employment agreement on September 26, 2014 and (ii) 27,500 shares on each of March 26, 2015, March 26, 2016 and March 26, 2017. Other than in special circumstances, Mr. Wilson is not to receive periodic equity grants normally made to executives of the Company.

In addition, the Company's stockholders approved a 130,000 share restricted stock grant to Mr. Wilson (the "Contract Grant") at our 2014 Annual Meeting. The Contract Grant, subject to the terms and conditions of the related award agreement was to vest in ten (10) performance-based tranches - five of which were to be based on the market price of the Company's Common Stock reaching targeted thresholds based on a 90 trading day trailing average and five of which were to be based on Adjusted EBITDA, as defined in the employment agreement, reaching certain targeted thresholds. Based on 2014 performance, Mr. Wilson vested all five tranches based on Adjusted EBITDA and one of five tranches based on the market price of the Company's Common Stock. The remaining four tranches based on the market price of the Company's Common Stock vested during 2015.

The issuance of shares to Mr. Wilson under the Wilson Agreement is the reason the "Stock Awards" column of the "Summary Compensation Table" below shows a zero value in 2016. The expensing of shares issued to Mr. Wilson under the Wilson Agreement is responsible for the annual decrease in "Stock Awards" column of the "Historical Compensation Table" below; the "Stock Awards" expense decreased in 2017 as compared to 2016 as recognition related to fewer underlying award shares vested.

March 2018 Wilson Employment Agreement

On March 7, 2018, the Company agreed to a new employment agreement with Mr. Wilson, the Company's Chief Executive Officer and President, which superseded and terminated Mr. Wilson's existing employment agreement that was set to expire by its terms on March 26, 2018. Under the new employment agreement, Mr. Wilson's employment term is to expire on December 31, 2021, he is to continue to serve as the Company's Chief Executive Officer and President at an annual base salary of $600,000, and the Board has agreed during the term of the agreement to nominate Mr. Wilson for election to the Board at each stockholder meeting when Mr. Wilson is up for election, which next such election is expected in 2020. Mr. Wilson remains eligible to participate in the Company's MIP, or such other bonus programs as established by the Compensation Committee, at a target bonus of 20% of his base salary then in effect. Pursuant to the agreement, the Company granted to Mr. Wilson the 12,000 S&P-based Shares and the stock option to purchase 30,000 shares of common stock discussed above and also agreed that at its 2018 Annual Meeting of Stockholders, the Company was to propose for approval by its stockholders an additional 250,000 shares of the Company's common stock to be authorized for issuance under the Stock Plan (the "Share Increase") and the Company was to grant Mr. Wilson an additional 33,000 shares under certain performance-based and time-based service conditions if the Share Increase was approved by the Company’s stockholders. The Share Increase was approved by the Company's stockholders in May 2018 and the Company granted Mr. Wilson 33,000 Revenue-based Shares (the "Conditional Grant"), which shares shall vest in tranches of 8,250 shares and are subject to the other terms and conditions of the Revenue-based Shares as described above. Mr. Wilson is to devote all of his business efforts and time as well as other such attention, skills, time and business efforts to the Company as are necessary to responsibly act as Chief Executive Officer and President; provided, however, that Mr. Wilson may perform part-time management activities for Cuattro, LLC, Cuattro Software, LLC, and Cuattro Medical, LLC, as long as such services do not adversely affect Mr. Wilson's obligations to the Company. Under the agreement, Mr. Wilson is also eligible to participate in the benefit programs, such as the Company's 401(k) plan, generally available to the Company's executive officers. Should Mr. Wilson resign for good reason or be terminated without cause (other than in connection with a change of control) or

be terminated due to Mr. Wilson's death or disability, (i) he is to be entitled to a payment of an amount equal to 12 months of base salary, and (ii) all vesting of outstanding equity awards will terminate immediately, provided that if his employment is terminated (A) at least one year following a grant date due to death or disability, any remaining unvested equity awards will vest, and (B) if within one year after any such termination without cause or for good reason the Company achieves one or more of the performance criteria for vesting, then any equity awards that would otherwise have vested by virtue of the achievement shall be deemed to vest on the applicable vesting date as if such employment had not terminated. Should Mr. Wilson resign for good reason or be terminated without cause in connection with a change of control of the Company, he is to be entitled to (i) a payment of an amount equal to 12 months of base salary, and (ii) the vesting of all then unvested equity awards. As described above, the shares of common stock subject to the equity awards issued pursuant to the employment agreement are also subject to a possible three year claw back by the Company after vesting in the event of a financial statement restatement. The agreement also provides for a 12 month noncompetition and non-solicitation period following termination of employment.

Compensation Tax Deductibility

The Compensation Committee is also sensitive to, and tries to optimize, tax implications. It is our policy generally to qualify compensation paid to Executive Officers for deductibility under Section 162(m) of the Code when possible. The Master Document was designed to qualify compensation paid to Executive Officers for deductibility under Section 162(m) of the Code based on the laws in place at the time of its adoption. However, the Compensation Committee reserves the discretion to pay compensation to its Executive Officers that may not be tax deductible.

In summary, as Heska Corporation continues to evolve, Heska's Executive Compensation is evolving. The Compensation Committee endeavors to find the proper level and balance of base salary, performance-based incentive compensation, long-term equity incentive compensation and other forms of compensation.

Historical and Summary Compensation Tables

The following table sets forth compensation for services rendered in all capacities to us during 2016, 2017 and 2018 by Kevin S. Wilson, who served as our Chief Executive Officer throughout 2018, Catherine I. Grassman, who served as our Chief Accounting Officer throughout 2018 and our three other most highly compensated Executive Officers for the fiscal year ended December 31, 2018 (the "Listed Executive Officers"). The following table represents compensation recognized for financial reporting purposes for each of the Listed Executive Officers in a given year. The "Stock Awards" column lists the cost of restricted stock granted to each of the Listed Executive Officers recognized for financial reporting purposes. The "Option Awards" column lists the cost of options granted to each of the Listed Executive Officers recognized for financial reporting purposes. In general, restricted stock and stock options are valued at the time of grant with the corresponding cost amortized ratably over the corresponding option vesting period.

Historical Compensation Table



Name and Principal Position		Salary ($) (1)	Bonus ($)	Stock Awards ($)(2)(3)	Option Awards ($)(2)(3)	Non-Equity Incentive Plan Compensation ($) (5)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($) (6)	Total ($)
Kevin S. Wilson Chief Executive Officer and President	2018 2017 2016	600,000 302,083 275,000	— — —	1,105,772 153,398 240,625	218,442 14,661 23,702	— — —	— — —	8,840 7,555 7,805	1,933,054 477,697 547,132
Jason A. Napolitano (7) Chief Operating Officer and Chief Strategist	2018 2017 2016	350,000 350,000 350,000	— — —	134,606 103,333 187,433	329,979 195,518 121,193	— — 165,900	— — —	9,381 7,896 7,896	823,965 656,747 832,422
Nancy Wisnewski Ph.D. (8) Executive Vice President, Diagnostic Operations and Product Development	2018 2017 2016	300,000 300,000 271,875	— — —	134,606 87,499 73,234	268,073 132,064 302,421	— — 109,891	— — —	9,891 8,482 8,338	712,569 309,488 896,911
Jason D. Aroesty Executive Vice President, International Diagnostics	2018	206,923	—	101,632	119,228	—	—	6,207	433,990
Catherine I. Grassman (9) Vice President, Chief Accounting Officer and Controller	2018 2017	210,000 172,216	— —	56,565 —	72,814 —	— —	— —	8,444 3,727	347,823 175,943

The following table sets forth compensation for services rendered in all capacities to us during 2016, 2017 and 2018 by Kevin S. Wilson, who served as our Chief Executive Officer throughout 2018, Catherine I. Grassman, who served as our Chief Accounting Officer throughout 2018 and our three other most highly compensated Executive Officers for the fiscal year ended December 31, 2018 (the "Named Executive Officers"). The following table sets forth compensation for services rendered in all capacities to us during 2016, 2017 and 2018 by the Named Executive Officers for the fiscal year ended December 31, 2018. The following table contains the same information as above with the exception of the columns entitled "Stock Awards" and "Option Awards." "Stock Awards" in the following table represent the grant day value for all stock grants for a given individual in a given year rather than the cost of stock grants for such individual recognized in such year for financial reporting purposes. "Option Awards" in the following table represent the grant date option value for all stock options granted to a given individual in a given year rather than the cost of stock option grants for such individual recognized in such year for financial reporting purposes.

Summary Compensation Table



Name and Principal Position		Salary ($) (1)	Bonus ($)	Stock Awards ($)(3)(4)	Option Awards ($)(3)(4)	Non-Equity Incentive Plan Compensation ($) (5)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($) (6)	Total ($)
Kevin S. Wilson Chief Executive Officer and President	2018 2017 2016	600,000 302,083 275,000	— — —	3,344,700 3,658,838 —	800,712 — —	— — —	— — —	8,840 7,555 7,805	4,754,252 3,968,476 282,805
Jason A. Napolitano (7) Chief Operating Officer and Chief Strategist	2018 2017 2016	350,000 350,000 350,000	— — —	1,614,711 — 84,100	533,808 — 397,923	— — 165,900	— — —	9,381 7,896 7,896	2,507,899 357,896 1,005,819
Nancy Wisnewski Ph.D. (8) Executive Vice President, Diagnostic Operations and Product Development	2018 2017 2016	300,000 300,000 271,875	— — —	1,614,711 — 84,100	533,808 — 397,923	— — 133,400	— — —	9,648 9,488 9,613	2,458,410 309,488 896,911
Jason D. Aroesty Executive Vice President, International Diagnostics	2018	206,923	—	2,460,168	821,848	—	—	6,207	3,495,146
Catherine I. Grassman (9) Vice President, Chief Accounting Officer and Controller	2018 2017	210,000 172,216	— —	678,154 —	266,904 —	— —	— —	8,444 3,727	1,163,502 175,943



(1)	Salary includes amounts, if any, deferred pursuant to 401(k) arrangements.
(2)	Represents cost recognized in each year for financial reporting purposes, based on estimates determined under ASC 718.
(3)	Grant date fair value of option awards and stock awards with market conditions are based on valuation techniques required by Option Accounting Rules. Like any estimate prepared in good faith, the underlying assumptions we use under Option Accounting Rules may vary from our actual future results. The option valuation used for accounting and/or financial reporting purposes does not necessarily represent the value any individual recipient would place on an option award. In addition, Option Accounting Rules prohibits some valuation techniques which may be useful in certain circumstances. A more detailed description of our option valuation techniques and assumptions can be found in our 2018 Form 10-K in our Note 11 of the Notes to Consolidated Financial Statements.
(4)	Represents grant date fair value.
(5)	Amounts earned pursuant to cash payouts under our Management Incentive Plans. Amounts indicated are for year in which compensation was earned.
(6)	Includes life insurance premiums, short-term and long-term disability premiums and 401(k) match.
(7)	Mr. Napolitano served as our Chief Operating Officer, Chief Financial Officer, Executive Vice President and Secretary from October 1, 2015 to September 28, 2016, as our Chief Operating Officer, Chief Strategist and Secretary from September 28, 2018 to March 8, 2019 and as our Chief Operating Officer and Chief Strategist thereafter.
(8)	Dr. Wisnewski served as our Executive Vice President, Product Development and Customer Service from April 2011 to September 28, 2016 and as our Executive Vice President, Diagnostic Operations and Product Development thereafter.
(9)	Ms. Grassman served as our Director, Corporate Controller from January 30, 2017 through November 30, 2017 and as our Vice President, Chief Accounting Officer and Controller thereafter.

Grants of Plan-Based Awards in Last Fiscal Year

The following table shows all grants of options to acquire shares of our common stock granted in the fiscal year ended December 31, 2018 to the Named Executive Officers.

Grants of Plan-Based Awards



		Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)			Estimated Future Payouts Under Equity Incentive Plan Awards
Name	Grant Date	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)	All Other Stock Awards: Number of Shares of Stock or Units (#)	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards ($)
Kevin S. Wilson	5/3/2018	—	—	—	—	33,000	33,000	—	—	—	2,807,970
	3/7/2018	—	—	—	—	7,622	12,000	—	—	—	837,240
	3/7/2018	—	—	—	—	—	—	—	30,000	69.77	800,712
	NA	—	—	240,000	—	—	—	—	—	—	—
Jason A. Napolitano	3/7/2018	—	_—	—	—	9,165	9,165	—	—	—	639,442
	3/7/2018	—	—	—	—	7,813	7,813	—	—	—	545,113
	3/7/2018	—	—	—	—	4,028	4,688	—	—	—	281,034
	3/7/2018	—	—	—	—	2,137	3,334	—	—	—	149,098
	3/7/2018	—	—	—	—	—	—	—	20,000	69.77	553,808
	NA	—	—	140,000	—	—	—	—	—	—	—
Jason D. Aroesty	7/25/2018	—	—	—	—	9,165	9,165	—	—	—	977,631
	7/25/2018	—	—	—	—	7,813	7,813	—	—	—	833,413
	7/25/2018	—	—	—	—	3,968	4,688	—	—	—	423,267
	7/25/2018	—	—	—	—	2,118	3,334	—	—	—	225,927
	7/25/2018	—	—	—	—	—	—	—	20,000	106.67	821,848
	NA	—	—	82,849	—	—	—	—	—	—	—
Nancy Wisnewski, Ph.D.	3/7/2018	—	—	—	—	9,165	9,165	—	—	—	639,442
	3/7/2018	—	—	—	—	7,813	7,813	—	—	—	545,113
	3/7/2018	—	—	—	—	4,028	4,688	—	—	—	281,034
	3/7/2018	—	—	—	—	2,137	3,334	—	—	—	149,098
	3/7/2018	—	—	—	—	—	—	—	20,000	69.77	533,808
	NA	—	—	120,000	—	—	—	—	—	—	—
Catherine I. Grassman	3/7/2018	—	—	—	—	3,849	3,849	—	—	—	268,545
	3/7/2018	—	—	—	—	3,280	3,280	—	—	—	228,846
	3/7/2018	—	—	—	—	1,693	1,970	—	—	—	118,121
	3/7/2018	—	—	—	—	1,401	1,401	—	—	—	97,748
	3/7/2018	—	—	—	—	—	—	—	10,000	69.77	266,904
	NA	—	—	84,000	—	—	—	—	—	—	—

________________________


(1)	All compensation in these columns is related to the Company's 2018 MIP.

Outstanding Equity Awards at Fiscal Year-End

The following table shows unexercised stock options held at the end of fiscal year ended December 31, 2018 by the executive officers named in the Summary Compensation Table.



	Option Awards					Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable (1)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date (2)	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Kevin S. Wilson	—	30,000 (3)	—	69.77	3/6/2028	—	—	28,125 (4)	2,421,563
	11,000	—	—	8.35	2/23/2023			16,875 (5)	1,452,938
	25,000	—	—	7.36	11/20/2023	—	—	12,000 (6)	1,033,200
	—	—	—	—	—	—	—	33,000 (7)	2,841,300
Jason A. Napolitano	—	20,000 (3)	—	69.77	3/6/2028	—	—	3,126 (8)	269,149
	7,500	7,500	—	72.85	12/28/2026	—	—	9,165 (7)	789,107
	14,250	4,750	—	39.76	12/28/2025	—	—	7,813 (9)	672,699
	4,062	938	—	32.21	9/24/2025	—	—	1,562 (10)	134,488
	14,000	—	—	18.13	12/30/2024	—	—	3,334 (6)	287,057
	20,000	—	—	7.36	11/20/2023	—	—	—	—
	5,500	—	—	8.38	2/19/2023	—	—	—	—
	10,000	—	—	8.55	12/18/2022	—	—	—	—
	10,000	—	—	6.90	12/11/2021	—	—	—	—
	13,500	—	—	4.96	12/30/2020	—	—	—	—
	14,000	—	—	4.50	11/9/2019	—	—	—
Nancy Wisnewski, Ph.D.	—	20,000 (3)	—	69.77	3/6/2028	—	—	3,126 (8)	269,149
	5,700	5,700	—	72.85	12/28/2026	—	—	9,165 (7)	789,107
	8,250	2,750	—	39.76	12/28/2025	—	—	7,813 (9)	672,699
	11,000	—	—	18.13	12/30/2024	—	—	1,562 (10)	134,488
	18,000	—	—	7.36	11/20/2023	—	—	3,334 (6)	287,057
	10,000	—	—	8.55	12/18/2022	—	—	—	—
	10,000	—	—	6.90	12/11/2021	—	—	—	—
	7,500	—	—	6.76	5/1/2021	—	—	—	—
	6,000	—	—	4.96	12/30/2020	—	—	—	—
	6,000	—	—	4.50	11/9/2019	—	—	—	—
	1,000	—	—	5.00	9/13/2019	—