The following table sets forth information, as of March 28, 2019, regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; (b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement (except for Messrs. Michels and Spair who have retired from the Company); and (d) all of our Directors and executive officers as a group. Unless otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015.
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 28, 2019 are deemed to be outstanding for the purpose of computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any other person.
The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The Company’s management is responsible for the day-to-day operations of the Company.
The Board is divided into three classes with each class consisting of one-third of the total number of Directors on the Board. At each Annual Meeting of Stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the Annual Meeting of Stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at the Annual Meeting currently serves as a Director.
The Board has adopted Corporate Governance Principles which, along with the Charters for each of its Committees and the Company’s Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees and non-employee Directors. Copies of the current Corporate Governance Principles and Code of Business Conduct and Ethics are available on the Company’s website,
www.orasure.com
.
and the Company. As a result of this review, the Board determined that Mara Aspinall, Michael Celano, Eamonn P. Hobbs, Ronny B. Lancaster, Charles W. Patrick and Aradhana Sarin, M.D., are “independent,” as that term is defined in the applicable rules of NASDAQ and the SEC. Stephen S. Tang, Ph.D., was determined by the Board not to be independent because he is currently an executive officer employed by the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. All standing Committees of the Board are also comprised solely of independent Directors.
its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.”
The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on annual meeting attendance is provided on our website, at
www.orasure.com
. As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. Our 2018 Annual Meeting was attended by all members of the Board.
Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email:
corporatesecretary@orasure.com
.
The Board currently has three standing committees - the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and NASDAQ rules applicable to such Committees. In addition, the Board has determined that Michael Celano is an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at
www.orasure.com
. Additional information on each standing committee is provided below:
I – Determined by the Board to be independent under applicable SEC and NASDAQ rules.
I – Determined by the Board to be independent under applicable SEC and NASDAQ rules.
* – Mr. Hobbs joined the Nominating and Corporate Governance Committee and was appointed as Chairman of the Committee in February 2019.
We reported another strong year of financial performance in 2018, with record revenues and a fourth consecutive year of profitability. The following charts describe our consolidated financial performance during the last three fiscal years, expressed in dollars (thousands).
a litigation settlement. 2018 operating income includes $9.6 million
Business highlights from 2018 and the principal factors driving our financial performance are summarized below:
Dr. Tang and Mr. Cuca joined the Company during 2018 and their initial base salaries were determined based on marketplace compensation data provided to the Compensation Committee by its compensation consultant and an assessment of Dr. Tang’s and Mr. Cuca’s respective experience levels and ability to contribute to the Company’s future performance and success. Additional detail on these salaries is provided in the “2018 Base Salaries” Section, below.
Additional information regarding NEO compensation for 2018 is provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below.
We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding the achievement of predetermined financial and/or strategic objectives.
A significant portion of each NEO’s compensation is paid out in variable and long-term compensation that is intended to align such compensation with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share price performance. A further discussion of our pay mix for the NEOs is set forth in the “Pay Mix” Section, below.
In addition, for the past several years we have followed a policy of granting annual equity awards to executives that consist of 50% PRUs and 50% time-vested RS. The PRUs will only vest if (i) the NEO remains employed by the Company for three years following the date of grant and (ii) the performance criteria determined by the Committee and the Board are met. For the PRUs granted in 2018, a compound annual growth rate (“CAGR”) target for consolidated product revenues for the three-year period 2018-2020 and a one-year income before income taxes (“IBIT”) target for the fiscal year 2018 were established as the performance criteria. The time-vested RS portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the NEO’s continued employment by the Company.
We believe the performance targets and three-year service period applicable to PRUs complement the short-term incentives in our annual bonus plan. We also believe the combination of the structure of our annual bonus plan and the structure of our equity award policy will incentivize management to deliver substantially improved financial performance both on an annual basis and over a longer term period and help drive long-term growth in stockholder value.
We are committed to maintaining good corporate governance and practices. As a result, and in response to input from stockholders, the Compensation Committee and Board have adopted a number of changes over the past years to specifically respond to stockholder concerns and better align our compensation program with performance. The most significant of these changes was the adoption of PRUs for 50% of the value of annual long-term equity awards for our executives. These changes and other aspects of our compensation practices are summarized below:
To ensure that our executive compensation program and compensation levels are consistent with our pay-for-performance philosophy, we evaluated the degree of alignment between our CEO’s total realizable pay versus our TSR over the prior three fiscal years (2016 to 2018) relative to our Peer Group. The graph below shows the comparison of three-year TSR and “realizable pay” relative to our Peer Group.
Realizable pay for our CEO consists of Dr. Tang’s compensation for 2018 and Mr. Michels’ compensation for 2017 and 2016. Realizable pay includes base salary, incentive cash bonus and all other compensation reported in the SCT, and in the case of Dr. Tang includes his onboarding compensation. Equity awards are valued using each company’s closing stock price on December 31, 2018. Restricted stock and restricted unit awards are valued by multiplying the number of shares or units by the closing stock price on December 31, 2018. The number of restricted units included in the calculations for Mr. Michels reflect a payout based on the Company’s currently expected performance against the applicable performance measures for those awards. Option awards are valued as the difference between the closing stock price on December 31, 2018 and the exercise price multiplied by the number of option shares granted during the period. An option award with an exercise price greater than the closing stock price on December 31, 2018 is valued at $0.
As the graph indicates, there is a close relationship between our TSR performance and the realizable pay for our CEO relative to the relationship seen in our Peer Group. This analysis confirms the strong link between pay and performance embedded in our compensation program.
As described further below, we believe long-term equity awards are a key incentive for our executives to drive the Company’s long-term growth and align the interests of our executives with those of our stockholders. The SCT includes the estimated value of long-term incentive equity awards at the time of grant based on the accounting valuation determined under ASC 718. The actual value of these awards that may be realizable by our executives may vary from the estimates depending on the Company’s financial and stock performance and often differs significantly from what is reported in the SCT.
A comparison of the realizable value of long-term equity incentive awards as of December 31, 2018 against the values reported in the SCT indicates how compensation outcomes may be impacted by our performance. Such a comparison also shows the degree of alignment between our stock performance and the level of compensation provided to executives.
The table below compares the compensation values reported in the SCT and the value of realizable pay (“RP”) for the compensation awarded during the three-year period 2016 to 2018 for our CEO, which reflects a blend of Dr. Tang’s compensation for 2018 and Mr. Michels’ compensation for 2017 and 2016 as described above.
While TSR is a common measure of performance that is often used to evaluate a company’s compensation practices, we consider other performance measures to be, at times, more reflective of the success of our business. It is important to recognize that our TSR can be extremely volatile, as evidenced by the substantial movements in our stock price during the past several years. Our TSR can be, and often is, influenced by a variety of macro-economic factors that are outside the control of our executives. Specifically, in 2013 our stock price declined 12%, but rose 61% in 2014. Our stock price declined again by 37% in 2015 and rose 36% in 2016. More recently, our stock price rose 115% in 2017 and then declined 38% in 2018. These price changes are not solely tied to our underlying financial performance. For example, our stock price declined in 2015 and 2018 even though we achieved record financial performance with substantial growth and strong profitability in those years.
As a result, while our executive compensation opportunities do not follow a linear relationship with TSR, the pay realizable to our executives (as noted above for our CEO) should and does demonstrate a clear relationship with both TSR and financial results. We have tried to align our executive compensation with performance results that are part of our overall business strategy that we believe will drive stock price improvement and increased value for our stockholders over the longer term.
When establishing and evaluating our executive compensation program generally, and performance-based incentive plans in particular, we believe that TSR alone will not always immediately account for the value of our accomplishments and, in many cases, it may take time for the impact of our strategic and other accomplishments to be fully reflected in the value of our stock. Thus, while obviously important, TSR is only one of several factors we consider in making compensation decisions for our executives.
Pay Comparison $20,000,000 $15,503,935 $15,000,000 $4,648,636 $10,000,000 $8,426,767 $4,849,264 $1,333,088 $1,890,774 $1,641,826 $5,000,000 $838,697 $4,364,208 $4,364,208 Total Cash + All Other Stock Options Restricted Stock PSUs
At our 2018 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis on the compensation paid to our NEOs for 2017. We obtained strong stockholder support for our NEO compensation for 2017 with approximately 96% of stockholder votes cast in favor of our “say-on-pay” or SOP resolution. Even with this overwhelmingly positive response, we continued our outreach effort that had been initiated in response to prior SOP votes to contact certain of our major stockholders in order to continue to understand their concerns regarding our compensation practices. Overall, we attempted to contact stockholders who, in the aggregate, beneficially held approximately 33% of our outstanding Common Stock. As a general matter, our stockholders either did not respond or indicated that they saw no need to meet with us although they had done so in the past. We believe these stockholders responded in this manner because they are generally supportive of our executive compensation practices. As a result, we made no further changes to our executive compensation program following the SOP vote at the 2018 Annual Meeting.
We believe our stockholder engagement has been and continues to be beneficial for the Company and our stockholders. The feedback we received reaffirms that the compensation changes made in recent years were responsive to stockholder concerns and our executive compensation is strongly aligned with performance. The Board intends to continue ongoing dialogue with our stockholders to ensure our executive compensation programs are well understood by all stakeholders and that we continue to be responsive to stockholder concerns.
Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including:
Based on its consideration of the foregoing, management believes that the Company’s policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
The primary objectives of our compensation program for executive officers are to:
The total direct compensation provided to each executive consists of an annual base salary, an annual incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance.
We believe it is useful to regularly compare our compensation program against compensation paid to executives at other comparable medical diagnostic and healthcare companies. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, an updated Peer Group of companies was selected using criteria based on industry, revenues and market capitalization and a competitive assessment of our executive compensation was prepared.
The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50
th
) percentile of amounts paid by the Peer Group of companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50
th
) percentile is intended as a market-based reference and not as an absolute target. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50
th
) percentile depending on the experience and individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors.
In preparing its 2018 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with a 50/50 blend of proxy data from the Peer Group and data for each NEO position from the 2018 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Compensation Committee believes a blend of specific Peer Group proxy data and broader survey data better reflect market trends.
Based on its review of the Pay Governance assessment, the Compensation Committee decided not to make any changes to our executive compensation program, except as provided below.
|
2018 EXECUTIVE COMPENSATION COMPONENTS
|
Overview
Our compensation program consists of the following components:
|
|
|
Compensation
|
Form of
Compensation
|
Purpose
|
Base Salary
|
Cash
|
Base salaries provide fixed compensation necessary to attract and retain key executives.
|
Annual Incentive Bonus Awards
|
Cash
|
Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ individual performance objectives.
|
Long-Term Incentive Awards
|
Performance-Vested
Restricted Units and
Time-Vested Restricted
Stock
|
The largest component of our executive compensation is paid in equity. Annual LTIP awards for the NEOs consist of 50% PRUs and 50% time-vested RS in order to provide a strong link between pay and performance.
|
Benefits
|
401(k) Plan
Health and Welfare
Benefits
|
Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the needs of all employees and their families, including our executives.
|
Employment Agreements
|
Cash severance and
accelerated equity vesting
|
Severance and accelerated equity vesting are provided to our executive officers in order to ensure continued focus on the strategic matters of the Company during potentially uncertain times.
|
Pay Mix
We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives.
The following charts illustrate the relative proportion of 2018 base salaries compared to the performance-based elements of our executive compensation for Dr. Tang and the other NEOs (except for Messrs. Michels and Spair), respectively. In preparing the charts, the base salaries for Dr. Tang and Mr. Cuca were annualized since they joined the Company during 2018. In addition, in order to better represent Dr. Tang’s normal annual mix of compensation, the onboarding RS award he received was excluded and his compensation was calculated as if he received an annual long-term equity incentive award at his target amount (i.e. 200% of base salary). The onboarding equity award provided to Mr. Cuca was included in his compensation since it is representative of his normal annual incentive equity award.
35
|
Approximately 78% of Dr. Tang’s aggregate compensation (modified to reflect his normal compensation mix, as provided above) and 64% of the other NEOs’ aggregate compensation for 2018 consisted of performance-based compensation.
|
Compensation Components in Detail
2018 Base Salaries
Annual base salaries paid in 2018 to our NEOs (except for Dr. Tang and Mr. Cuca, whose base salaries were determined as described below) were established by the Compensation Committee at the beginning of 2018 based on a review of the Company’s performance and the individual contributions of each officer (other than Messrs. Michels and Spair, who were evaluated based on the Company’s overall performance) compared to pre-established performance objectives for 2017. The Compensation Committee also considered the Company’s budget for expected salary adjustments, salary levels paid at the Peer Group companies and recommendations provided by the compensation consultant engaged to assist the Compensation Committee. The initial salaries paid to Dr. Tang and Mr. Cuca were established based on market data provided by the Compensation Committee’s compensation consultant at the time these executives were hired during 2018.
Based on these factors, the Compensation Committee approved an annual base salary increase for our senior management (including the NEOs other than Dr. Tang and Mr. Cuca) averaging approximately 3.0%. This was in line with our Company-wide budgeted average salary increase of 3.0%. Individual salary increases for 2018 were determined by using the following guidelines:
|
Performance Rating
|
|
Merit Increase Range
|
|
|
Outstanding
|
|
5.0% - 7.0%
|
|
|
Exceeds Requirements
|
|
3.0% - 4.0%
|
|
|
Meets Requirements
|
|
2.0% - 2.5%
|
|
|
Does Not Consistently Meet
|
|
1.0% – 1.5%
|
|
|
Does Not Meet Requirements
|
|
0%
|
|
36
In evaluating the Company’s overall performance, the Compensation Committee recognized that our $167.1 million in consolidated net revenues for 2017 represented a 30% increase over 2016 and that our consolidated net income of $30.9 million, or $0.51 per share, represented an $11.2 million or $0.16 per share improvement over 2016. The Compensation Committee further recognized the substantial growth of our molecular collection systems business in 2017 and the strong performance of our infectious disease business as a result of substantial growth in HCV and HIV Self-Test revenues. A final factor considered by the Compensation Committee was the 115% increase in our TSR for 2017.
In view of the foregoing, the Compensation Committee determined that Messrs. Michels and Spair should receive above-target salary increases for 2018 as a result of the Company’s overall performance during 2017, with the remaining NEOs receiving increases based on their 2017 performance against their individual objectives. As noted above, the 2018 salaries for Dr. Tang and Mr. Cuca were based on market data, an assessment of their qualifications and likely contributions to our business, and what we negotiated in order to attract and retain these executives at the time they were hired. As a result, the Compensation Committee approved the following 2018 salary levels for the NEOs:
NEO
|
2017 Performance
|
2017
Performance
Rating
|
2017 Salary
|
2018
Salary
|
%
Increase
|
Stephen S. Tang, Ph.D.
President and Chief
Executive Officer
|
N/A
|
N/A
|
N/A
|
$565,000
1
|
N/A
|
Roberto Cuca
Chief Financial Officer
|
N/A
|
N/A
|
N/A
|
$415,000
1
|
N/A
|
Anthony Zezzo II
Executive Vice
President, Business
Unit Leader,
Infectious Disease
|
•
Mixed achievement of sales goals.
•
81% growth in HCV product sales including a 156% increase in international sales.
•
115% increase in international sales of HIV Self-Test.
•
Oversight of sales and marketing functions.
|
Meets
|
$400,503
|
$408,512
|
2.00%
|
Brian Smith
2
Vice Chairman and
Executive Vice President, Innovation
|
•
Substantially exceeded sales goals.
•
133% increase in net molecular collection revenues compared to 2016.
•
197% growth in genomics sales to commercial accounts, compared to 2016.
●
207% increase in microbiome revenues, compared to 2016.
|
Outstanding
|
$278,264
|
$334,000
|
N/A
|
37
NEO
|
2017 Performance
|
2017
Performance
Rating
|
2017 Salary
|
2018
Salary
|
%
Increase
|
Jack E. Jerrett
Senior Vice President
and General Counsel
|
•
Leadership in settling Ancestry litigation and resolution of other claims and disputes.
•
Assistance in evaluating various business development opportunities.
•
Assistance on numerous important commercial matters.
●
Ongoing advice and counsel to the Board and senior management.
|
Meets/Exceeds
|
$360,953
|
$369,977
|
2.50%
|
Douglas A. Michels
Former President and
Chief Executive Officer
|
•
Strong corporate performance, including record revenues and improved profitability, as described above.
|
N/A
3
|
$634,020
|
$659,381
|
4.00%
|
Ronald H. Spair
Former Chief Financial
Officer and Chief
Operating Officer
|
•
Strong corporate performance, including record revenues and improved profitability, as described above.
|
N/A
3
|
$497,053
|
$516,935
|
4.00%
|
1
Represents annualized salary amounts for Dr. Tang and Mr. Cuca because they were employed for only a portion of 2018.
2
|
Mr. Smith received a 6% base salary raise and, as a result, his initial salary for 2018 was increased to $300,622. In August 2018, Mr. Smith’s salary was further increased to $334,000 to bring his compensation in line with market levels. Mr. Smith’s Canadian-based salary amounts have been converted into U.S. Dollars using the Canadian to U.S. Dollar Exchange rate at the time of the increases.
|
3
Assessment based on overall Company performance during 2017.
2018 Annual Incentive Cash Bonuses
Annual cash bonuses are included as part of executive compensation because the Compensation Committee believes that a significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities related to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation Committee has adopted, with approval of the Board, an incentive plan (the “Incentive Plan”), which is intended to be the principal vehicle for incentive cash bonus awards.
When establishing the terms of each Incentive Plan, the Compensation Committee and the Board evaluate which funding objectives will provide the most appropriate incentive for our NEOs to improve our annual financial performance. In recent years, bonus pool funding has been based solely on the achievement of annual financial objectives. Strategic objectives may also be (and in the past have been) used in combination with annual financial objectives where there is greater financial uncertainty facing the Company and the Compensation Committee and the Board desire to incentivize our NEOs to take near- term strategic steps required to drive annual financial growth and stability. In general, the Compensation Committee and the Board will choose those funding objectives, whether they be financial, strategic, or a combination thereof, which in their judgement provide the most appropriate incentive for management to drive improved financial performance on a year-over-year basis.
Where funding is solely based on achievement of financial objectives (as has been the case in recent years), if the Company meets the Target levels for all funding objectives, the pool is initially funded at 100% of the aggregate projected bonuses for all participants in the Incentive Plan adjusted to reflect a normal range or mix of performance assessments (i.e., Outstanding, Exceeds, Meets, Does Not Meet), which increases or decreases the total amount of individual bonuses to be paid to participants. Unless circumstances require otherwise, the pool generally is initially funded at 50% of the aggregate projected bonuses if all of the Threshold levels are met and at 150% of the aggregate projected bonuses if all of the High levels are met. If the Company achieves a Maximum performance level for all objectives, the pool can be initially funded up to 200% of the aggregate projected bonuses. A linear interpolation of the amount of funding for each target objective is
38
made where a particular performance is in between the pre-established performance levels. To the extent the performance level for a funding objective is below the Threshold level, generally there is no funding for that particular objective. The Compensation Committee and the Board have some limited discretion to increase funding to recognize unique market conditions and extraordinary circumstances.
The amount of the cash bonus pool is determined by the Compensation Committee and recommended for Board approval. The Compensation Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect differences in the mix of actual performance assessments of the participants or market conditions affecting the Company or other factors. However, the Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- 10% of the pool size otherwise determined pursuant to the funding formula under the Incentive Plan. The cash bonus pool is used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the Company and all employees of its subsidiary, DNA Genotek.
Individual payments from the bonus pool to executives are generally calculated using a formula that considers the size of the bonus pool, the executive’s achievement of individual performance objectives, the number of individuals participating in the plan at the time bonuses are awarded and the executive’s target bonus percentage. Bonuses are paid, based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary.
If an executive officer has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the applicable year, he or she may be eligible to receive up to 150% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances.
The Compensation Committee recommends for Board approval any bonus award for the CEO based on an assessment of the Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable performance criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or the Board.
Under the 2018 Incentive Plan, the Compensation Committee established performance levels for two equally weighted financial objectives for revenues and operating income to be used to fund the bonus pool. The Threshold financial objectives reflected our actual performance for 2017. The Target levels reflected our annual budget or operating plan for 2018 and represented strong revenue growth and improved profitability compared to 2017 after eliminating certain one-time items from our 2017 results. The High and Maximum levels reflected 105% and 110% of our Target consolidated net product sales for 2018, respectively, and 100% of our Target for all other revenues for 2018. The funding objectives did not include any estimates for transition costs associated with the changes in our CEO and CFO, transaction costs associated with acquisitions or differences between actual foreign exchange rates and those assumed in our 2018 operating plan.
The following table summarizes the 2018 Incentive Plan performance objectives (dollar amounts in millions):
Financial Objective/Weight
|
|
Threshold
|
|
Target
|
|
High
|
|
Maximum
|
Consolidated Net Revenues (50%)
|
|
$167.1
|
|
$184.7
|
|
$193.5
|
|
$202.3
|
Consolidated Net Operating Income (50%)
|
|
$ 27.7
|
|
32.1
|
|
$ 37.0
|
|
$ 41.8
|
Incentive Plan Pool Funding (% of Target)
|
|
50%
|
|
100%
|
|
150%
|
|
200%
|
The following sets forth the potential and actual bonus pool funding for both objectives at each performance level (after application of the performance distribution factor mentioned above) established under the 2018 Incentive Plan, based on the participants covered by the Plan at year-end:
Objective
|
|
Weight
|
|
|
Threshold
|
|
|
Target
|
|
|
High
|
|
|
Maximum
|
|
|
Actual
|
|
Consolidated Net Revenues
|
|
50%
|
|
|
$
|
760,000
|
|
|
$
|
1,521,000
|
|
|
$
|
2,281,000
|
|
|
$
|
3,042,000
|
|
|
$
|
1,394,000
|
|
Consolidated Net Operating Income
|
|
50%
|
|
|
$
|
760,000
|
|
|
$
|
1,521,000
|
|
|
$
|
2,281,000
|
|
|
$
|
3,042,000
|
|
|
$
|
2,912,000
|
|
Potential Total Pool Funding
|
|
|
|
|
|
$
|
1,520,000
|
|
|
$
|
3,042,000
|
|
|
$
|
4,562,000
|
|
|
$
|
6,084,000
|
|
|
$
|
4,306,000
|
|
During 2018, we reported consolidated net revenues totaling $181.8 million, which exceeded the Threshold performance level but was less than the Target level, resulting in funding of $1.394 million for that objective. The Company’s
39
2018 consolidated net operating income was $41.0 million after eliminating (i) costs associated with our transition to a new CEO and CFO, (ii) transaction costs associated with two recent acquisitions and (iii) differences in foreign exchange rates from those that we had assumed in our 2018 operating plan. This amount exceeded the High performance target but was less than the Maximum target for this objective, resulting in funding of $2.912 million for that objective. As a result, the aggregate pool funding under the 2018 Incentive Plan was calculated to be $4.306 million.
The final bonus pool amount was approved by the full Board and used to pay bonuses to the Company’s NEOs and other members of our management team. In connection with Dr. Tang’s appointment as our new CEO, the Compensation Committee obtained market data from Pay Governance in order to ensure Dr. Tang’s compensation was set at market levels. Based on this data, the Compensation Committee and the Board decided to increase the bonus target for the CEO position from 70% to 85% of salary at the time Dr. Tang was hired in order to better reflect market levels. The Compensation Committee and Board also decided to apply this revised bonus target to Mr. Michels. Pursuant to their retirement agreements, Messrs. Michels and Spair received incentive cash bonuses for 2018 pro-rated to reflect the period of time they were employed prior to their respective retirement dates.
The specific target payouts for NEO bonuses for 2018 (expressed as a percentage of annual base salary) are shown below:
Title
|
Target Payouts
|
|
Chief Executive Officer
|
85%
|
|
Chief Financial Officer (and Chief Operating
Officer)
|
50%
|
|
Executive Vice President
|
40%
|
|
Senior Vice President
|
35%
|
|
In January 2019, the Compensation Committee authorized the payout of individual bonus awards to executive officers from the bonus pool for 2018 based on the target bonus amounts described above and an assessment of each officer’s performance during 2018 against pre-established performance objectives (except for (i) Dr. Tang where the assessment was based on the Company’s overall performance and (ii) Messrs. Michels and Spair where their target bonus amounts were pro-rated pursuant to the terms of their retirement agreements). The calculation of individual bonus awards was based on a formula that adjusted the foregoing target payments for both the executives’ individual performance during 2018 and the degree to which the final approved bonus pool funding exceeded the Target under the plan funding formula.
In evaluating Dr. Tang’s and the Company’s performance, the Compensation Committee recognized the successful leadership transition to a new CEO and CFO and the completion of an updated long-term strategy focused on innovation and growth. The Compensation Committee also noted the record 2018 net consolidated revenues of $181.7 million, our continued strong profitability, the generation of $39.1 million in cash for the year and our strong cash position at year end. Finally, the Compensation Committee recognized the completion of two strategic acquisitions of CoreBiome, Inc. and Novosanis, N.V., which both closed during the first week of January 2019, as evidence of initial progress in executing against our new growth strategy.
In view of the foregoing, the Compensation Committee determined that Dr. Tang should receive a High Meets performance rating for 2018 with the remaining NEOs being evaluated based on individual objectives established for their positions. Using these performance ratings, the Compensation Committee next considered individual performance factors to adjust the bonuses for Dr. Tang, the other NEOs and the other participants in the 2018 Incentive Plan to reflect their performance assessments for 2018. As a final step, the Compensation Committee adjusted the bonuses further by a pool funding factor reflecting the amount by which pool funding exceeded Target under the plan formula.
Using the approach described above, a final 2018 incentive cash bonus of $818,346 was calculated for Dr. Tang, as follows:
2018 Base
|
|
Target
|
|
2018 Individual Performance
|
|
2018 Pool Funding
|
|
2018
|
Salary
|
X
|
Bonus %
|
X
|
Factor
|
X
|
Factor
|
=
|
Bonus
|
$565,000
|
|
85%
|
|
120%
|
|
142%
|
|
$818,346
|
40
This same formula was used to calculate the 2018 bonus awards for all other NEOs, as follows:
2018 Bonus Payments
|
|
|
|
|
|
|
NEO
|
2018
Salary
|
Bonus Target
(% Salary)
|
2018 Performance Assessment and
Rating
|
Individual 2018 Performance
Factor
|
2018 Pool Funding
Factor
|
2018 Bonus
|
Stephen S. Tang, Ph.D.
President and Chief Executive Officer
|
$565,000
|
85%
|
High Meets
1
•
Strong corporate performance, including record revenues and continued profitability
|
120%
|
142%
|
$818,346
|
Roberto Cuca
Chief Financial Officer
|
$415,000
|
50%
|
High Meets
•
Successful transition into CFO role.
•
Strong management of financial planning, reporting and accounting.
•
Maintenance of strong investor base.
•
Assistance in business development activities.
•
Support for updated long-term business strategy.
|
120%
|
142%
|
$353,580
|
Anthony Zezzo II
Executive Vice President, Business Unit Leader, Infectious Disease
|
$408,513
|
40%
|
Meets
•
Mixed achievement of sales goals.
•
Oversight of infectious disease sales and marketing functions.
•
Support for updated long-term business strategy.
•
93% increase in international OraQuick
®
HIV revenues for 2018.
|
100%
|
142%
|
$232,035
|
41
|
|
|
|
|
|
|
NEO
|
2018
Salary
|
Bonus Target
(% Salary)
|
2018 Performance Assessment and
Rating
|
Individual 2018 Performance
Factor
|
2018 Pool Funding
Factor
|
2018 Bonus
|
Brian Smith
2
Vice Chairman and Executive Vice President, Innovation
|
$334,000
|
40%
|
Exceeds
•
Substantially met all sales goals.
•
28% growth in molecular collection revenues.
•
Strong oversight of molecular collection sales and
marketing functions.
•
Support for updated long-term business strategy.
•
Support for molecular collections leadership transition.
|
130%
|
142%
|
$246,626
|
Jack E. Jerrett
Senior Vice President and General Counsel
|
$369,977
|
35%
|
High Meets
•
Oversight of global legal function.
•
Assistance in evaluating various business development opportunities.
•
Assistance on numerous important commercial matters.
•
Ongoing advice and counsel to the Board and senior management.
|
120%
|
142%
|
$220,654
|
Douglas A. Michels
Former President and Chief Executive Officer
|
$659,381
|
85%
|
N/A
|
N/A
|
142%
|
$198,968
3
|
Ronald H. Spair
Former Chief Financial Officer and Chief Operating Officer
|
$516,935
|
50%
|
N/A
|
N/A
|
142%
|
$161,490
4
|
1
|
Assessment based on overall Company performance during 2018.
|
2
|
Mr. Smith’s 2018 incentive cash bonus was converted into U.S. Dollars using the Canadian to U.S. Dollar exchange rate in effect near the date on which his bonus award occurred.
|
3
Mr. Michels’ bonus was pro-rated to reflect his service prior to his March 31, 2018 retirement date.
4
Mr. Spair’s bonus was pro-rated to reflect his service prior to his June 8, 2018 retirement date.
42
2018 Long-Term Incentive Equity Awards
An additional way that we promote the long-term growth of the Company and align the interests of executives with those of our stockholders is by compensating executives with equity in the Company that vests over a multi-year period. To accomplish this, the Compensation Committee administers the Company’s LTIP (Long-Term Incentive Policy), pursuant to which grants of time-vested restricted shares and performance-vested restricted units are made to executive officers.
Incentive equity awards under the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or the Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including:
|
•
|
Performance of the participant for the applicable year;
|
|
•
|
The participant’s level of responsibilities and relative contribution to the Company’s business;
|
|
•
|
A competitive assessment of awards at Peer Group companies;
|
|
•
|
History of equity awards to the participant; and
|
|
•
|
Other factors deemed relevant by the Compensation Committee and/or the Board.
|
Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year, except for Dr. Tang who is evaluated based on total Company performance. As previously discussed, the performance of Messrs. Michels and Spair was also based on an assessment of total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board.
The value of potential incentive equity awards that could have been granted in 2018 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2017, are summarized below:
|
|
|
|
2018 LTIP Award Ranges
|
|
Performance
|
Position
|
Lower End
|
Target
|
Maximum
|
President/CEO
|
150%
|
200%
|
250%
|
CFO/COO
|
105%
|
140%
|
175%
|
EVP
|
95%
|
125%
|
155%
|
SVP and General Counsel
|
70%
|
100%
|
130%
|
Other SVPs
|
70%
|
90%
|
115%
|
The percentages set forth above were established at levels that the Compensation Committee believed represented an appropriate long-term incentive compensation value for each executive, based on the results of a competitive assessment of long-term incentive awards at the Peer Group companies. Once the aggregate dollar value of an award has been established by applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the NASDAQ Stock Market.
In August 2018, the range of percentages set forth above for annual incentive equity awards was increased by the Compensation Committee for Mr. Jerrett, the Company’s Senior Vice President and General Counsel (i.e. from 70%/90%/115% to 70%/100%/130%), based on advice to the Compensation Committee from Pay Governance, in order to bring the range more closely in line with market levels. The new percentage range was effective beginning with the incentive equity awards made in 2018 for performance during 2017.
Under the LTIP, 50% of an executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. In the past, the awards
43
incorporated two performance metrics: (i) a CAGR for consolidated product revenues during the three-year period beginning with the year in which the award was made and (ii) a one-year “EPS” target for the year of award followed by a further two-year time-vesting requirement.
However
,
in February 2018 when the Compensation Committee approved LTIP equity awards to executives for performance during 2017, the EPS performance measure used for past awards was changed to a one-year “IBIT”, or income before income tax, performance measure because of uncertainty related to the impact of recently enacted Federal tax legislation on our financial performance for 2018. The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies.
The structure of the equity awards reflects market-based good governance practices as well as input from our stockholders, several of whom advocated that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group. In addition, although some stockholders have mentioned TSR as a possible performance target, most of the stockholders we have contacted in recent years indicated that other measures such as financial or operational objectives would also be appropriate. The Board decided to use consolidated net product revenue and IBIT targets because they are important for our business, especially as we continue improving our profitability, and because of the Board’s belief that these measures will directly influence the performance of our stock price over time. Under the terms of the awards, the impact of stock repurchase programs is excluded in determining whether an IBIT target is met. As discussed above, the Board does not believe that the use of TSR as a performance metric in the long-term incentive plan is appropriate at this time, although the choice of performance metrics will be reviewed each year.
The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining 50% of each award achieves the equally important goal of share ownership/accumulation through a share-price sensitive vehicle that directly promotes alignment with stockholders and further supports executive retention. Overall, the Compensation Committee and Board believe that this approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best practices.
Equity awards are generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board.
Effective February 1, 2018, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2017, as summarized below. A description of the basis for each NEO’s 2017 performance evaluation is set forth above under the Section entitled, “2018 Base Salaries,” in this CD&A. Since Dr. Tang and Mr. Cuca joined the Company later in the year, they did not participate in the annual equity awards provided to the other NEOs in 2018. Instead, they both received onboarding equity awards pursuant to the terms of their respective employment agreements. Dr. Tang received an award of 37,116 shares of time-vesting RS, having a value of $623,363, which will become fully vested on the fifth anniversary of the grant date. Mr. Cuca received an equity award having an aggregate value of $435,758, consisting of 14,320 time-vested RS and 14,320 PRUs. The terms of Mr. Cuca’s award are substantially the same as the terms of the annual incentive awards made to the Company’s other NEOs in February 2018 for performance during 2017.
44
The following summarizes the equity awards provided to the NEOs during 2018:
Executive Officer
|
2017
Performance
Assessment
|
Time Vested
Restricted Stock
|
Performance-Vested
Restricted Units
|
Award Value
(% of Base Salary)
|
|
Stephen S. Tang, Ph.D.
President and Chief
Executive Officer
|
N/A
|
37,116 Shs
1
|
N/A
|
N/A
|
|
Roberto Cuca
Chief Financial
Officer
|
N/A
|
14,320 Shs
1
|
14,320 Shs
1
|
N/A
|
|
Anthony Zezzo II
Executive Vice
President, Business Unit
Leader, Infectious Disease
|
Meets
|
9,714 Shs
|
9,714 Shs
|
105%
|
|
Brian Smith
Executive Vice President,
Business Unit Leader,
Molecular Solutions
|
Outstanding
|
9,499 Shs
|
9,499 Shs
|
145%
|
|
Jack E. Jerrett
Senior Vice President
and General Counsel
|
Meets/Exceeds
|
8,755 Shs
|
8,755 Shs
|
105%
|
|
Douglas A. Michels
Former President and Chief
Executive Officer
|
N/A
2
|
36,615 Shs
|
36,615 Shs
|
250%
|
|
Ronald H. Spair
Former Chief Financial
Officer and Chief
Operating Officer
|
N/A
2
|
18,371 Shs
|
18,371 Shs
|
160%
|
|
1
Onboarding equity awards pursuant to Dr. Tang’s and Mr. Cuca’s respective employment agreements.
2
Assessment based on overall Company performance during 2017.
Compensation Developments in 2019
LTIP Amendments
. In February 2019, the Compensation Committee recommended, and the Board approved, increased ranges for incentive equity awards under the LTIP for Dr. Tang, the Company’s President and CEO, and Mr. Jerrett, the Company’s Senior Vice President and General Counsel. These changes were approved in order to bring the ranges more in line with market levels, based on market data and advice provided to the Compensation Committee by its compensation consultant, Pay Governance. As a result, the ranges were changed as follows and will be effective for equity awards expected to be made in early 2020 for performance during 2019:
|
|
|
|
2019 LTIP Award Ranges
|
|
President and CEO
(% of Salary)
|
|
Lower End
|
Target
|
Maximum
|
Old Range
|
150%
|
200%
|
250%
|
New Range
|
200%
|
250%
|
300%
|
|
|
|
Senior Vice President and General Counsel
(% of Salary)
|
|
Lower End
|
Target
|
Maximum
|
Old Range
|
70%
|
100%
|
130%
|
New Range
|
95%
|
125%
|
155%
|
Pay Out Under 2016 PRUs
. We initially adopted the current structure for annual incentive equity awards in early 2016 for awards based on performance during 2015. As noted above, these awards consisted of 50% time-vested RS and 50% PRUs. The PRU portion of the award would not vest until three years after the grant date and only if a three-year
45
product revenue CAGR target and/or a one-year EPS target were met. The three-year service period for these PRUs expired on February 1, 2019. Under the terms of the PRUs, the number of shares that are paid in settlement will depend on the degree to which the performance revenue CAGR and EPS measures were met. The following table summarizes the potential range of shares that will be delivered based upon the degree of achievement of the applicable performance measures:
|
|
Achievement Level of
Applicable Performance Target
|
Percentage of Restricted Units
To Become Vested
|
80%
|
50%
|
90%
|
75%
|
100%
|
100%
|
110%
|
125%
|
120%
|
150%
|
For the 2016 PRUs, the Company exceeded both of the applicable performance measures by more than 120%, thereby resulting in the maximum payout of 150% under the foregoing table. The following summarizes the three-year revenue CAGR and one-year EPS targets for the 2016 PRUs, our performance against these targets and the resulting number of shares delivered upon settlement of the PRUs:
|
|
|
|
|
|
Performance Target
|
Actual Performance
|
% of Target
|
% Vested
|
CAGR
|
5.6%
|
16.6%
|
296%
|
150%
|
EPS
|
$0.20
|
$0.26
|
130%
|
150%
|
|
|
|
|
|
|
2016 PRU’s Target and Actual Payout
|
CAGR Target
(# of shs)
|
CAGR Actual
(# of shs)
|
EPS Target
(# of shs)
|
EPS Actual
(# of shs)
|
Stephen S. Tang, Ph.D.
|
N/A
|
N/A
|
N/A
|
N/A
|
Roberto Cuca
|
N/A
|
N/A
|
N/A
|
N/A
|
Anthony Zezzo II
|
16,090
|
24,135
|
16,090
|
24,135
|
Brian Smith
|
6,469
|
9,704
|
6,469
|
9,704
|
Jack E. Jerrett
|
12,025
|
18,038
|
12,025
|
18,038
|
Douglas A. Michels
|
59,745
|
89,618
|
59,745
|
89,618
|
Ronald H. Spair
|
29,466
|
44,199
|
29,466
|
44,199
|
We provide minimal additional benefits outside of our primary elements of compensation, as follows:
Retirement Programs
All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Payments of employer-provided benefits accrued for a 401(k) Plan participant will be made upon retirement or upon termination of employment prior to retirement, provided certain vesting conditions have been met by the participant prior to termination. Our subsidiary DNA Genotek, which is located in Canada, offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $2,000 per year.
The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death.
46
Perquisites and Ot
her Compensation
As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. Executive officers do not receive any additional perquisites.
Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements
The Company has entered into employment agreements with each of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the executive for “good reason” and (except for Mr. Smith) provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the Peer Group companies, provide an incentive to the applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company.
Accounting and Tax Treatment of Compensation.
In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code, which disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for certain covered employees. Historically, there had been an exemption that permitted qualified “performance-based compensation” to be exempt from this $1 million cap on deductibility. Under the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “Tax Act”), this performance-based compensation exemption was eliminated. Thus, bonuses paid under the LTIP will be subject to the cap on deductibility described above unless they qualify for transition relief for certain pre-existing compensation arrangements. Notwithstanding the Tax Act, the Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable.
Compensation Recoupment Policy
The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted awards, stock options or other compensation, which was awarded to a covered officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the Company shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for recoupment of any compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under Section 954 of the Dodd-Frank Act and will be amended to conform with this Section when final guidance is available.
As required by applicable law and SEC regulations, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Stephen S. Tang, Ph.D., our President and CEO.
For the 2018 fiscal year, the median of the annual total compensation of all employees of the Company (other than Dr. Tang) and our subsidiary, DNA Genotek, was $60,826. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, we took the following steps:
|
•
|
We used the same median employee that we used in our pay ratio disclosure in our 2018 Proxy Statement for fiscal year 2017 because during 2018 there was no change in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio disclosure.
|
|
●
|
We determined that, as of December 31, 2017, our world-wide employee population consisted of 363 people.
|
47
|
•
|
To identify the “median employee” from our employee population, we compared the amount of salary, wages, overtime, commissions and bonuses of our employees as reflected in our payroll records. In making this determination, we did not annualize the compensation of employees who were hired in 2017 but did not work for us for the entire fiscal year. Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure.
|
|
•
|
Using the same median employee we used in our 2018 Proxy Statement, we combined all of the elements of this employee’s compensation for 2018 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation as described above.
|
In calculating Dr. Tang’s 2018 annual total compensation of $2,251,709 for purposes of this pay ratio disclosure, we annualized his base salary since he did not become our CEO until April 1, 2018 and included his other compensation reported in the SCT below.
Based on this information, for 2018 the ratio of the annual total compensation of Dr. Tang, our President and CEO, to the median of the annual total compensation for employees, was 37 to 1.
48
|
SUMMAR
Y COMPENSATION TABLE
|
The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, 2018, 2017 and 2016:
Name & Principal
Position
|
|
Year
|
|
Salary
1
($)
|
|
|
Bonus
2
($)
|
|
|
Stock
Awards
3,4
($)
|
|
|
Option
Awards
($)
|
|
|
Non-
Equity
Incentive
Plan
Compen-
sation
5
($)
|
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All other
Compen-
sation
6
($)
|
|
|
Total
($)
|
|
Stephen S. Tang, Ph.D.
|
|
2018
|
|
$
|
412,885
|
|
|
|
230,000
|
|
|
$
|
623,363
|
|
|
|
—
|
|
|
$
|
818,346
|
|
|
|
—
|
|
|
|
15,000
|
|
|
$
|
2,099,594
|
|
President and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roberto Cuca
|
|
2018
|
|
$
|
263,365
|
|
|
|
—
|
|
|
$
|
435,758
|
|
|
|
—
|
|
|
$
|
353,580
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
1,052,703
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony Zezzo II
|
|
2018
|
|
$
|
408,359
|
|
|
|
—
|
|
|
$
|
420,519
|
|
|
|
—
|
|
|
$
|
232,035
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
1,060,913
|
|
Executive Vice President,
|
|
2017
|
|
$
|
400,333
|
|
|
|
—
|
|
|
$
|
391,691
|
|
|
|
—
|
|
|
$
|
272,341
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
1,064,365
|
|
Business Unit Leader
|
|
2016
|
|
$
|
391,572
|
|
|
|
—
|
|
|
$
|
345,614
|
|
|
|
—
|
|
|
$
|
188,998
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
926,184
|
|
Infectious Disease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Smith
|
|
2018
|
|
$
|
320,813
|
|
|
|
—
|
|
|
$
|
411,212
|
|
|
|
—
|
|
|
$
|
246,626
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
978,651
|
|
Vice Chairman and
|
|
2017
|
|
$
|
259,778
|
|
|
|
—
|
|
|
$
|
225,386
|
|
|
|
—
|
|
|
$
|
317,639
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
802,803
|
|
Executive Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Innovation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack E. Jerrett
|
|
2018
|
|
$
|
369,804
|
|
|
|
—
|
|
|
$
|
379,004
|
|
|
|
—
|
|
|
$
|
220,654
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
973,462
|
|
Senior Vice President
|
|
2017
|
|
$
|
360,800
|
|
|
|
—
|
|
|
$
|
264,761
|
|
|
|
—
|
|
|
$
|
290,567
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
920,128
|
|
and General Counsel
|
|
2016
|
|
$
|
352,878
|
|
|
|
—
|
|
|
$
|
258,298
|
|
|
|
—
|
|
|
$
|
149,043
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
764,219
|
|
Douglas A. Michels
|
|
2018
|
|
$
|
220,986
|
|
|
|
—
|
|
|
$
|
3,738,872
|
|
|
|
—
|
|
|
$
|
198,968
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
4,162,826
|
|
Former President and
|
|
2017
|
|
$
|
633,608
|
|
|
|
—
|
|
|
$
|
1,378,310
|
|
|
|
—
|
|
|
$
|
1,331,442
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
3,347,360
|
|
Former Chief Executive
|
|
2016
|
|
$
|
612,339
|
|
|
|
—
|
|
|
$
|
1,283,322
|
|
|
|
—
|
|
|
$
|
646,586
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
2,546,247
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald H. Spair
|
|
2018
|
|
$
|
294,053
|
|
|
|
—
|
|
|
$
|
2,047,373
|
|
|
|
—
|
|
|
$
|
161,490
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
2,506,916
|
|
Former Chief Financial
|
|
2017
|
|
$
|
496,730
|
|
|
|
—
|
|
|
$
|
696,357
|
|
|
|
—
|
|
|
$
|
683,448
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
1,880,535
|
|
Officer and Former Chief
|
|
2016
|
|
$
|
480,069
|
|
|
|
—
|
|
|
$
|
632,930
|
|
|
|
—
|
|
|
$
|
362,074
|
|
|
|
—
|
|
|
$
|
4,000
|
|
|
$
|
1,479,073
|
|
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________________________
1
|
The salaries shown for Dr. Tang and Mr. Cuca represent the amounts paid to these executives after they joined the Company on April 1, 2018 and May 7, 2018, respectively. Mr. Smith’s 2018 salary was initially set at $300,622 and was increased to $334,000 in August 2018 to bring his compensation in line with market levels. Mr. Smith’s 2017 Canadian-based salary has been converted into U.S. dollars using the Canadian to U.S. Dollar exchange rate at December 31, 2017 and his 2018 Canadian-based salary has been converted into U.S. dollars using the Canadian to U.S. Dollar exchange rate at December 31, 2018.
|
2
The indicated amount represents an onboarding cash bonus paid to Dr. Tang pursuant to the terms of his employment agreement.
3
|
The indicated amounts reflect the aggregate grant date fair value of RS and PRU awards made to the NEOs during the applicable year, computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718. The value of the PRUs reflect the assumption that 100% of target will be achieved for each of the performance measures reflected in the terms of the restricted unit awards. Certain assumptions used in the calculation of the indicated amounts are set forth for the applicable year of award in footnote 9 to the Company’s audited consolidated financial statements for the year ended December 31, 2018, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2019 (the “2018 10-K Report”). The maximum grant-date fair value of the PRU awards made in 2018, assuming the highest level of performance measures will be achieved (120% of target resulting in a 150% payout), are as follows: Mr. Cuca, $326,818; Mr. Zezzo, $315,389; Mr. Smith, $308,409; Mr. Jerrett, $284,253; Mr. Michels, $1,188,798; and Mr. Spair, $596,460.
|
4
|
The amounts indicated for Mr. Michels and Mr. Spair for 2018 also include compensation resulting from the acceleration of unvested RS upon their retirement in the amount of $2,153,808 and $1,252,092, respectively.
|
5
|
The indicated amounts reflect incentive cash bonuses paid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable year. For a description of incentive cash bonus payments for performance during 2018, see the Section entitled, “2018 Annual Incentive Cash Bonuses,” in the CD&A.
|
6
|
The indicated amounts reflect $4,000 in cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to U.S. employees of the Company during each of the indicated years. Mr. Smith was eligible to participate in our Canadian subsidiary’s registered retirement savings plan in 2018; however he elected not to participate. The amount indicated for Dr. Tang represents the reimbursement of legal fees he incurred in connection with the review and negotiation of his employment agreement with the Company.
|
49
|
|
GRANTS OF PLAN-BASED AWARDS
|
The following table summarizes information concerning possible incentive cash bonuses and possible and actual RS and PRU awards for the NEOs during the fiscal year ended December 31, 2018:
|
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
4
|
|
|
Estimated Possible Payouts Under
Equity Incentive Plan Awards
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(# Shs.)
|
|
Target
(# Shs.)
|
|
Maximum
(# Shs.)
|
|
All other
Stock
Awards:
Number
of Shares
of Stock
or Units
6
(#Shs.)
|
|
All other
Option
Awards:
Number
of
Securities
Underlying
Options
(#Shs.)
|
|
|
Exercise
of Base
Price of
Option
awards
($/Sh)
|
|
|
Grant
Date
Fair
Value of
Stock
Awards
7
($)
|
|
Stephen S. Tang, Ph.D.
|
|
4/1/2018
1
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
37,116
|
|
RS
|
|
|
—
|
|
|
|
—
|
|
|
$
|
623,363
|
|
President and
|
|
N/A
|
|
$
|
240,125
|
|
|
$
|
480,250
|
|
|
$
|
1,440,750
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roberto Cuca
|
|
5/7/2018
2
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
14,320
|
|
RS
|
|
|
—
|
|
|
|
—
|
|
|
$
|
217,879
|
|
Chief Financial Officer
|
|
5/7/2018
2
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
14,320
|
|
PRU
|
|
|
—
|
|
|
|
—
|
|
|
$
|
217,879
|
|
|
|
N/A
|
|
$
|
103,750
|
|
|
$
|
207,500
|
|
|
$
|
622,500
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Anthony Zezzo II
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
9,714
|
|
RS
|
|
|
—
|
|
|
|
—
|
|
|
$
|
210,260
|
|
Executive Vice President
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
9,714
|
|
PRU
|
|
|
—
|
|
|
|
—
|
|
|
$
|
210,260
|
|
Business Unit Leader,
|
|
N/A
|
|
$
|
81,703
|
|
|
$
|
163,405
|
|
|
$
|
490,216
|
|
|
|
8,789
|
|
RS
|
|
|
11,565
|
|
RS
|
|
|
14,340
|
|
RS
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Infectious Disease
|
|
N/A
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,789
|
|
PRU
|
|
|
11,565
|
|
PRU
|
|
|
14,340
|
|
PRU
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Brian Smith
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
9,499
|
|
RS
|
|
|
—
|
|
|
|
—
|
|
|
$
|
205,606
|
|
Vice Chairman and
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
9,499
|
|
PRU
|
|
|
—
|
|
|
|
—
|
|
|
$
|
205,606
|
|
Executive Vice President,
|
|
N/A
|
|
$
|
66,800
|
|
|
$
|
133,600
|
|
|
$
|
400,800
|
|
|
|
6,224
|
|
RS
|
|
|
8,189
|
|
RS
|
|
|
10,155
|
|
RS
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Innovation
|
|
N/A
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,224
|
|
PRU
|
|
|
8,189
|
|
PRU
|
|
|
10,155
|
|
PRU
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Jack E. Jerrett
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
8,755
|
|
RS
|
|
|
—
|
|
|
|
—
|
|
|
$
|
189,502
|
|
Senior Vice President
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
8,755
|
|
PRU
|
|
|
—
|
|
|
|
—
|
|
|
$
|
189,502
|
|
and General Counsel
|
|
N/A
|
|
$
|
64,746
|
|
|
$
|
129,492
|
|
|
$
|
388,476
|
|
|
|
5,837
|
|
RS
|
|
|
8,338
|
|
RS
|
|
|
10,839
|
|
RS
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
|
|
N/A
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,837
|
|
PRU
|
|
|
8,338
|
|
PRU
|
|
|
10,839
|
|
PRU
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Douglas A. Michels
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
36,615
|
|
RS
|
|
|
—
|
|
|
|
—
|
|
|
$
|
792,532
|
|
Former President and
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
36,615
|
|
PRU
|
|
|
—
|
|
|
|
—
|
|
|
$
|
792,532
|
|
Former Chief Executive
|
|
N/A
|
|
$
|
280,237
|
|
|
$
|
560,474
|
|
|
$
|
1,681,422
|
|
|
|
21,969
|
|
RS
|
|
|
29,292
|
|
RS
|
|
|
36,615
|
|
RS
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Officer
|
|
N/A
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,969
|
|
PRU
|
|
|
29,292
|
|
PRU
|
|
|
36,615
|
|
PRU
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Ronald H. Spair
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
18,371
|
|
RS
|
|
|
—
|
|
|
|
—
|
|
|
$
|
397,640
|
|
Former Chief Financial
|
|
2/1/2018
3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
18,371
|
|
PRU
|
|
|
—
|
|
|
|
—
|
|
|
$
|
397,640
|
|
Officer and Former
|
|
N/A
|
|
$
|
129,234
|
|
|
$
|
258,468
|
|
|
$
|
775,403
|
|
|
|
12,056
|
|
RS
|
|
|
16,075
|
|
RS
|
|
|
20,093
|
|
RS
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Chief Operating
|
|
N/A
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,056
|
|
PRU
|
|
|
16,075
|
|
PRU
|
|
|
20,093
|
|
PRU
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
N/A
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_________________________________
1
Onboarding award consisting of time-vested RS granted to Dr. Tang on his date of hire.
2
Onboarding award consisting of time-vested RS and PRUs granted to Mr. Cuca on his date of hire.
3
|
Annual Incentive equity awards to NEOs consisted of a combination of time-vested RS and PRUs that were determined for 2018 pursuant to the LTIP based on performance during 2017. Annual equity awards made during 2018 were approved by the Compensation Committee effective on February 1, 2018. For a description of these equity awards and their terms, see the Section entitled, “2018 Long-Term Incentive Awards,” in the CD&A.
|
4
|
The indicated amounts represent potential incentive cash bonus payments to the NEOs under the 2018 Incentive Plan. On January 25, 2019, bonus payments under the 2018 Incentive Plan were approved by the Compensation Committee for the NEOs, based on performance during 2018. The Threshold and Target amounts assume the executive receives 50% and 100% of his target bonus and that the aggregate bonus pool is funded at 50% and 100% for each performance objective in the 2018 Incentive Plan, respectively. The Maximum amounts assume that the recipient receives 150% of his target bonus based on performance for 2018 and that the bonus pool is funded at 200% or the Maximum level for each performance objective in the 2018 Incentive Plan. Because Messrs. Michaels and Spair retired from the Company during 2018, they ultimately received bonuses equal to their target amounts (after adjustment for bonus pool funding) pro-rated to their respective dates of retirement. A further description of the payments approved under the 2018 Incentive Plan is set forth in the Section entitled, “2018 Annual Incentive Cash Bonuses,” in the CD&A.
|
50
5
|
The indicated amounts represent the potential number of shares which could have been granted to the NEOs in 2018 in the form of RS and PRUs pursuant to the LTIP, based on performance during 2017. The individual share numbers for each potential award were calculated by dividing 50% of the long-term incentive targets for each NEO set forth in the LTIP by the mean between the high and low sales price of the Common Stock as reported by NASDAQ on the date of grant. The number of shares corresponding to the PRUs were calculated based on the assumption that 100% of target is achieved for each of the performance measures set forth in the terms of such PRU awards. The actual number of shares received upon vesting of the PRUs could vary from 50% to 150% of target depending on the degree to which the performance measures are achieved.
|
6
|
The indicated amounts represent the actual number of shares of RS or PRUs granted to the NEOs in 2018 under the LTIP, based on performance during 2017 or, in the case of Dr. Tang and Mr. Cuca, granted to those executives as onboarding compensation pursuant to their respective employment agreements. A further description of these equity awards and their terms is set forth in the Section entitled, “2018 Long-Term Incentive Awards,” in the CD&A.
|
7
|
The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718.
|
|
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2018
|
The following table summarizes information regarding unexercised stock options and unvested RS and PRUs held by the NEOs as of December 31, 2018:
|
|
Option Awards
1
|
|
Stock Awards
1
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
2
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($/Sh.)
|
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock
That
Have
Not
Vested
2
(#)
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
10
($)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
that
Have Not
Vested
2
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
other
Rights
That
Have Not
Vested
10
($)
|
|
Stephen S. Tang, Ph.D.
|
|
|
16,667
|
|
|
|
|
—
|
|
|
|
—
|
|
$
|
8.33
|
|
|
11/14/2026
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
President and Chief
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
37,116
|
|
3(a)
|
|
$
|
433,515
|
|
|
|
—
|
|
|
|
|
—
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roberto Cuca
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
14,320
|
|
4(a)
|
|
$
|
167,258
|
|
|
|
—
|
|
|
|
|
—
|
|
Chief Financial Officer
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
7,160
|
|
4(b)
|
|
$
|
83,629
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
10,740
|
|
4(c)
|
|
$
|
125,443
|
|
Anthony Zezzo II
|
|
|
36,204
|
|
|
|
|
—
|
|
|
|
—
|
|
$
|
11.30
|
|
|
2/1/2022
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Executive Vice President,
|
|
|
32,921
|
|
|
|
|
—
|
|
|
|
—
|
|
$
|
7.05
|
|
|
2/1/2023
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Business Unit Leader,
|
|
|
10,427
|
|
|
|
|
—
|
|
|
|
—
|
|
$
|
5.72
|
|
|
2/3/2024
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Infectious Disease
|
|
|
40,040
|
|
|
|
|
1,741
|
|
5(a)
|
|
—
|
|
$
|
9.31
|
|
|
2/3/2025
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
10,726
|
|
5(b)
|
|
$
|
125,280
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
14,719
|
|
5(c)
|
|
$
|
171,918
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
9,714
|
|
5(d)
|
|
$
|
113,460
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
24,135
|
|
5(e)
|
|
$
|
281,897
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
24,135
|
|
5(e)
|
|
$
|
281,897
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
16,560
|
|
5(f)
|
|
$
|
193,421
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
11,040
|
|
5(g)
|
|
$
|
128,947
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
7,286
|
|
5(h)
|
|
$
|
85,100
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
4,857
|
|
5(i)
|
|
$
|
56,730
|
|
Brian Smith
|
|
|
1,343
|
|
|
|
|
—
|
|
|
|
—
|
|
$
|
11.30
|
|
|
2/1/2022
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Vice Chairman
|
|
|
7,777
|
|
|
|
|
730
|
|
6(a)
|
|
—
|
|
$
|
9.31
|
|
|
2/3/2025
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Executive Vice
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
4,312
|
|
6(b)
|
|
$
|
50,364
|
|
|
|
—
|
|
|
|
|
—
|
|
President, Innovation
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
8,470
|
|
6(c)
|
|
$
|
98,930
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
9,499
|
|
6(d)
|
|
$
|
110,948
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
9,704
|
|
6(e)
|
|
$
|
113,343
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
9,704
|
|
6(e)
|
|
$
|
113,343
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
9,530
|
|
6(f)
|
|
$
|
111,310
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
6,352
|
|
6(g)
|
|
$
|
74,191
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
7,125
|
|
6(h)
|
|
$
|
83,220
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
4,749
|
|
6(i)
|
|
$
|
55,468
|
|
51
|
|
Option Awards
1
|
|
Stock Awards
1
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
2
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($/Sh.)
|
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock
That
Have
Not
Vested
2
(#)
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
10
($)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
that
Have Not
Vested
2
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
other
Rights
That
Have Not
Vested
10
($)
|
|
Jack E. Jerrett
|
|
|
6,407
|
|
|
|
|
—
|
|
|
|
—
|
|
$
|
5.72
|
|
|
2/3/2024
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Senior Vice President and
|
|
|
12,133
|
|
|
|
|
1,517
|
|
7(a)
|
|
—
|
|
$
|
9.31
|
|
|
2/3/2025
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
General Counsel
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
8,016
|
|
7(b)
|
|
$
|
93,627
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
9,949
|
|
7(c)
|
|
$
|
116,204
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
8,755
|
|
7(d)
|
|
$
|
102,258
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
18,038
|
|
7(e)
|
|
$
|
210,684
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
18,038
|
|
7(e)
|
|
$
|
210,684
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
11,195
|
|
7(f)
|
|
$
|
130,758
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
7,462
|
|
7(g)
|
|
$
|
87,156
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
6,567
|
|
7(h)
|
|
$
|
76,703
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
4,377
|
|
7(i)
|
|
$
|
51,123
|
|
Douglas A. Michels
|
|
|
58,221
|
|
|
|
|
—
|
|
|
|
—
|
|
$
|
5.72
|
|
|
2/3/2024
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Former President and
|
|
|
82,378
|
|
|
|
|
—
|
|
|
|
—
|
|
$
|
9.31
|
|
|
2/3/2025
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Former Chief Executive
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
89,618
|
|
8(a)
|
|
$
|
1,046,738
|
|
Officer
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
89,618
|
|
8(a)
|
|
$
|
1,046,738
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
58,272
|
|
8(b)
|
|
$
|
680,617
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
38,847
|
|
8(c)
|
|
$
|
453,733
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
27,642
|
|
8(d)
|
|
$
|
322,859
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
18,307
|
|
8(e)
|
|
$
|
213,826
|
|
Ronald H. Spair
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
44,199
|
|
9(a)
|
|
$
|
516,244
|
|
Former Chief Financial
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
44,199
|
|
9(a)
|
|
$
|
516,244
|
|
Officer and Former Chief
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
29,441
|
|
9(b)
|
|
$
|
343,871
|
|
Operating Officer
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
19,627
|
|
9(c)
|
|
$
|
229,243
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
13,779
|
|
9(d)
|
|
$
|
160,939
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
9,185
|
|
9(e)
|
|
$
|
107,281
|
|
1
|
The table does not include RS and PRUs awarded to the NEOs in February 2019 pursuant to the LTIP in respect of performance during 2018.
|
2
|
Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of RS vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. PRUs will not vest until three years from the grant date and only if certain performance measures are met during the three-year service period.
|
3
|
The indicated stock options, RS, and PRUs vest as follows:
|
|
(a)
|
37,116 restricted shares cliff vesting on April 1, 2023
|
4
|
The indicated stock options, RS, and PRUs vest as follows:
|
|
(a)
|
4,774 restricted shares on May 7, 2019 and 4,773 restricted shares on May 7, 2020 and 2021;
|
|
(b)
|
7,160 PRUs cliff vesting on May 7, 2021, provided performance metrics have been achieved; and
|
|
(c)
|
10,740 PRUs cliff vesting on May 7, 2021, provided performance metrics have been achieved.
|
5
|
The indicated stock options, RS, and PRUs vest as follows:
|
|
(a)
|
870 options on January 3, 2019 and 871 options on February 3, 2019;
|
|
(b)
|
10,726 restricted shares on February 1, 2019;
|
|
(c)
|
7,360 restricted shares on February 1, 2019 and 7,359 restricted shares on February 1, 2020;
|
|
(d)
|
3,238 restricted shares on February 1, 2019, 2020 and 2021;
|
|
(e)
|
24,135 PRUs cliff vesting on February 1, 2019, provided performance metrics have been achieved;
|
|
(f)
|
16,560 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(g)
|
11,040 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(h)
|
7,286 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; and
|
|
(i)
|
4,857 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved.
|
52
6
|
The indicated stock options, RS, and PRUs vest as follows:
|
|
(a)
|
365 options on January 3 and February 3, 2019;
|
|
(b)
|
4,312 restricted shares on February 1, 2019;
|
|
(c)
|
4,235 restricted shares on February 1, 2019 and 2020;
|
|
(d)
|
3,167 restricted shares on February 1, 2019, 3,166 restricted shares on February 1, 2020 and 3,166 restricted shares on February 5, 2020;
|
|
(e)
|
9,704 PRUs cliff vesting on February 1, 2019, provided performance metrics have been achieved;
|
|
(f)
|
9,530 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(g)
|
6,352 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(h)
|
7,125 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; and
|
|
(i)
|
4,749 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved;
|
7
|
The indicated stock options, RS, and PRUs vest as follows:
|
|
(a)
|
758 options on January 3, 2019 and 759 options February 3, 2019;
|
|
(b)
|
8,016 restricted shares on February 1, 2019;
|
|
(c)
|
4,975 restricted shares on February 1, 2019 and 4,974 restricted shares on February 1, 2020;
|
|
(d)
|
2,919 restricted shares on February 1, 2019 and 2,918 restricted shares on February 1, 2020 and 2021;
|
|
(e)
|
18,038 PRUs cliff vesting on February 1, 2019, provided performance metrics have been achieved;
|
|
(f)
|
11,195 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(g)
|
7,462 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(h)
|
6,567 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; and
|
|
(i)
|
4,377 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved.
|
8
|
The indicated stock options, RS, and PRUs vest as follows:
|
|
(a)
|
89,618 PRUs cliff vesting on February 1, 2019, provided performance metrics have been achieved;
|
|
(b)
|
58,272 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(c)
|
38,847 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(d)
|
27,642 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; and
|
|
(e)
|
18,307 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved.
|
9
|
The indicated stock options, RS, and PRUs vest as follows:
|
|
(a)
|
44,199 PRUs cliff vesting on February 1, 2019, provided performance metrics have been achieved;
|
|
(b)
|
29,441 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(c)
|
19,627 PRUs cliff vesting on February 1, 2020, provided performance metrics have been achieved;
|
|
(d)
|
13,779 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved; and
|
|
(e)
|
9,185 PRUs cliff vesting on February 1, 2021, provided performance metrics have been achieved.
|
10
|
The indicated values were determined by multiplying the number of unvested shares of RS and unvested PRUs shown in this table by $11.68 per share, the closing price of the Company’s Common Stock as reported by NASDAQ on December 31, 2018.
|
|
OPTION EXERCISES AND STOCK VESTED
|
The following table summarizes information with respect to the exercise of stock options and vesting of RS for each of the NEOs during the fiscal year ended December 31, 2018:
|
|
Option Awards
|
|
Stock Awards
1
|
|
Name
|
|
Number
of Shares
Acquired
on
Exercise
(#)
|
|
|
Value
Realized
on
Exercise
2
($)
|
|
Number
Of Shares
Acquired
on
Vesting
(#)
|
|
|
|
Value
Realized
on
Vesting
3
($)
|
|
Stephen S. Tang, Ph.D.
|
|
|
23,333
|
|
|
|
$
|
225,047
|
|
|
|
|
7,952
|
|
|
|
$
|
127,073
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roberto Cuca
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony Zezzo II
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
22,942
|
|
|
|
$
|
493,539
|
|
Executive Vice President, Business Unit
Leader, Infectious Disease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Smith
|
|
|
20,000
|
|
|
|
$
|
240,070
|
|
|
|
|
10,583
|
|
|
|
$
|
227,799
|
|
Vice Chairman and
Executive Vice President, Innovation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53
|
|
Option Awards
|
|
Stock Awards
1
|
|
Name
|
|
Number
of Shares
Acquired
on
Exercise
(#)
|
|
|
Value
Realized
on
Exercise
2
($)
|
|
Number
Of Shares
Acquired
on
Vesting
(#)
|
|
|
|
Value
Realized
on
Vesting
3
($)
|
|
Jack E. Jerrett
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
17,222
|
|
|
|
$
|
370,107
|
|
Senior Vice President and General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Michels
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
213,948
|
|
|
|
$
|
3,996,562
|
|
Former President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald H. Spair
|
|
|
46,669
|
|
|
|
$
|
402,844
|
|
|
|
|
106,392
|
|
|
|
$
|
2,027,695
|
|
Former Chief Financial Officer and Chief Operating
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
There
were no PRUs that vested during 2018.
|
|
2
The indicated amounts represent the number of shares acquired upon exercise of the options multiplied by the difference between the market value of the Company’s Common Stock on the applicable exercise date and the option exercise price.
3
|
The indicated amounts were calculated by multiplying the number of restricted shares acquired upon vesting by the market value of the Company’s Common Stock on the applicable vesting date. The market value was determined by calculating the mean between the high and low sales prices of the Common Stock as reported by NASDAQ on the vesting date.
|
The NEOs are eligible to participate in our 401(k) Plan or, in the case of Mr. Smith, a registered retirement plan offered by DNA Genotek, on the same terms and conditions applicable to other employees. For a further description of the terms of the 401(k) Plan, see the Section entitled, “Retirement Programs,” in the CD&A.
|
NONQUALIFIED DEFERRED COMPENSATION
|
The OraSure Technologies, Inc. Deferred Compensation Plan (the “Plan”) is a non-qualified deferred compensation plan designed to provide deferred compensation benefits to a select group of the Company’s highly compensated employees, including all of the NEOs, and to non-employee members of the Board.
The Plan allows for deferrals by participants of up to 100% of their annual base salaries (or in the case of non-employee Directors, 100% of fees payable under the Company’s Non-Employee Director Compensation Policy), up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock and shares received in respect of performance-vested restricted units awarded under the LTIP. The Company may also make discretionary contributions to the accounts of employees participating in the Plan. Cash balances in participants’ accounts may be invested in a list of investment options that are similar to the fund choices offered in the Company’s 401(k) plan. Participants will be permitted to sell vested shares in their accounts, subject to compliance with the Company’s Insider Trading Policy and applicable securities laws, and invest the proceeds of any such sale in the investment options available under the Plan. Participants will be 100% vested in their accounts and the restricted shares they defer, except that Company contributions will vest over one or more years as determined by the Company. In the event of death, disability or change of control, a participant will become 100% vested in any then unvested Company contributions.
Participants may elect to receive a distribution from his or her account upon a specified date, separation from service, change of control, disability and/or death. Distributions will be made in a lump sum or installments, as allowed under the Plan.
Amounts contributed to a participant’s account through elective deferrals or through the Company’s discretionary contributions are generally not subject to income tax, and the Company does not receive a deduction until they are distributed pursuant to the Plan.
54
However, cash deferrals are subject to the Federal Insurance Contributions Act Tax imposed at the time of deferral (the “FICA tax”). Deferrals of restricted shares and shares received in respect of performance-vested restricted units are subject to the FICA tax at the time the shares vest, but are not subject to income tax, and the Company does not receive the deduction until the shares are distributed pursuant to the Plan. The Company may amend or terminate the Plan at any time in accordance with applicable law.
The following table summarizes information for each NEO with respect to the Plan for the fiscal year ended December 31, 2018:
Name
|
Executive
Contributions
1
($)
|
|
Registrant
Contributions
($)
|
Aggregate
Earnings/
Loss
2
($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance
at 12/31/18
1,2
($)
|
|
Stephen S. Tang, Ph.D.
President and Chief
Executive Officer
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
Roberto Cuca
Chief Financial Officer
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
Anthony Zezzo II
Executive Vice President,
Business Unit Leader
Infectious Disease
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
Brian Smith
Vice Chairman and
Executive Vice President,
Innovation
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
Jack E. Jerrett
Senior Vice President and
General Counsel
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
Douglas A. Michels
Former President and Former
Chief Executive Officer
|
—
|
|
—
|
—
|
|
—
|
|
—
|
|
Ronald H. Spair
Former Chief Financial Officer
and Former Chief Operating Officer
|
$
|
1,971,087
|
|
—
|
$
|
748,726
|
|
$
|
791,107
|
|
$
|
3,209,273
|
|
1
|
The indicated amounts of NEO contributions have been reported as compensation in the Summary Compensation Table.
|
2
|
There were no earnings or deferred compensation at above market or preferential rates and, therefore, no earnings have been reported as compensation in the Summary Compensation Table for 2018. Aggregate earnings include dividends and interest earned during the period, as well as the net unrealized appreciation of the underlying investments in the participant’s account.
|
55
EMPLOYMENT AGREEME
NTS AND POTENTIAL PAYME
NTS UPON
TERMINATION OR CHANGE OF CONTROL
Employment Agreements
We have entered into employment agreements with all of our NEOs. We believe such agreements are necessary to attract and retain critical talent, and are in-line with market practices. The following summary describes the material terms of the employment arrangements with Dr. Tang and the other NEOs.
In January 2018, we entered into an employment agreement with Dr. Tang in connection with his appointment as the Company’s new President and CEO, effective April 1, 2018. Under the agreement, Dr. Tang will receive (i) an annual base salary of at least $565,000, (ii) an annual cash bonus opportunity under the Company’s annual Incentive Plan with a bonus target of at least 85% of his base salary and (iii) annual equity awards under the Company’s LTIP ranging from at least 150%-250% of his base salary, with a target of 200%. Dr. Tang also received a sign-on cash bonus of $230,000 and an award of 37,116 shares of time-vested RS. The award of RS will vest on the fifth anniversary of Dr. Tang’s date of employment. Upon a termination of employment, Dr. Tang’s agreement provides for certain post-employment severance and other benefits, as described below.
Dr. Tang’s employment agreement will terminate upon his death or disability. In addition, Dr. Tang may unilaterally terminate his employment at any time and for any reason upon 90 days written notice to the Company or for “good reason” (as defined below). Dr. Tang’s employment agreement can also be terminated by the Company for “Cause” (as defined below) or without “Cause.”
As used in Dr. Tang’s agreement, the term “good reason” means (i) a material breach of the agreement by the Company, (ii) a material diminution in Dr. Tang’s base compensation or authority, duties or responsibilities (following a change of control, such a diminution shall occur if Dr. Tang no longer functions as the sole chief executive officer of the successor organization), (iii) a material change in Dr. Tang’s reporting relationship from the Board to another employee of the Company (following a change of control, such a diminution shall occur if Dr. Tang no longer reports to the board of directors of a public company), or (iv) a material change in Dr. Tang’s job location.
A “change of control” generally is defined to take place when disclosure of such a change would be required by the proxy rules promulgated by the SEC or when:
|
•
|
any person, or more than one person acting as a group within the meaning of Section 409A of the Internal Revenue Code (the “Code”) and the regulations issued thereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company;
|
|
•
|
any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock;
|
|
•
|
a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or
|
|
•
|
a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issued thereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions.
|
A “change of control period” is the period which begins 60 days prior to the occurrence of a change of control and ends 18 months thereafter.
“Cause” is defined as (i) the willful and continued failure by Dr. Tang to substantially perform his duties as provided in the agreement after a written demand for substantial performance is delivered to Dr. Tang by the Board, and Dr. Tang’s failure to comply with such demand within a reasonable time; (ii) the engaging by Dr. Tang in gross misconduct or gross negligence materially injurious to the Company; (iii) the commission of any act in direct competition with or materially detrimental to the best interests of the Company; or (iv) Dr. Tang’ conviction of having committed a felony.
56
Upon the termination of Dr. Tang’s employment for any reason, Dr. Tang will be entitled to receive his salary through the date of termination and any bonus approved by the Board or the Compensation Committee prior to the date of termination but not yet paid. In the case of a termination upon his death or disability or by the Company without Cause, or in the case of a unilateral termination by Dr. Tang or a termination by Dr. Tang for good reason where in either case the termination occurs after June 30 of any year, Dr. Tang will also receive a cash bonus for the year of termination prorated through the date of termination. In addition, if termination is for good reason or without Cause (which includes the Company’s failure to renew the agreement) and does not occur during a change of control period, Dr. Tang would receive additional severance in the form of a lump sum amount equivalent to 18 months of his annual salary plus reimbursement of the costs of continuation coverage under the Company’s health plans (if Dr. Tang elects coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985) for a period of 18 months after the date of termination. If, however, termination is for good reason or without Cause (which includes the Company’s failure to renew the agreement) and occurs during a change of control period, Dr. Tang will receive a lump sum amount equivalent to 36 months of his annual salary and reimbursement of continuation coverage under the Company’s health plan for 36 months. If Dr. Tang is a “specified employee” within the meaning of Code Section 409A at the time of the termination of his employment and any of the foregoing payments would subject him to any tax, interest or penalty under Code Section 409A or regulation thereunder, then the payment shall not be made until the first day which is at least six months after the date of termination of his employment.
All stock awards granted to Dr. Tang are required to immediately vest (i) in the event of a change of control or (ii) if Dr. Tang’s employment is terminated for good reason by Dr. Tang or by the Company without Cause during a change of control period, and 50% of such stock awards shall vest in the event Dr. Tang’s employment is terminated for good reason by Dr. Tang or by the Company without Cause during any period other than a change of control period.
In May 2018, we entered into an employment agreement with Mr. Cuca, pursuant to which Mr. Cuca will receive (i) an annual base salary of at least $415,000, (ii) a target bonus opportunity under the Company’s annual incentive plan of 50% of his base salary, and (iii) annual equity awards under the Company’s long-term incentive policy ranging from 105% to 175% of his base salary (with a target of 140%). Mr. Cuca also received an onboarding equity award having an aggregate value of $435,750. This award consisted of 50% time-vested RS and 50% PRUs. The terms of Mr. Cuca’s award are substantially the same as the terms of awards made to the Company’s other executives in February 2018.
The termination and severance provisions in the employment agreements for Mr. Cuca and the other NEOs (except for Mr. Smith) are substantially similar to Dr. Tang’s employment agreement, with the following exceptions: Mr. Jerrett is entitled to receive severance equivalent to 12 months of his annual salary, rather than 18 months, in the event of a termination for good reason or without Cause where such termination does not occur during a change of control period and he will be entitled to receive severance equivalent to 24 months of his annual salary, rather than the 36 months, if Mr. Jerrett terminates his agreement after a change of control or a termination for good reason or without Cause occurs during a change of control period. Mr. Zezzo will also be entitled to receive severance equal to 12 months of his annual salary if he is terminated for good reason or without Cause, but he will receive 24 months of his annual salary if such termination occurs during a change of control period. In the employment agreements with Messrs. Zezzo and Jerrett, the term “good reason” also includes a material diminution of the budget over which the executive exercises control and a change of control period begins upon the occurrence of a change of control. Finally, neither Mr. Zezzo nor Mr. Jerrett shall be entitled to a prorated bonus in the event of a unilateral termination by either executive after June 30 of the applicable year.
If Mr. Smith’s employment is terminated by the Company without “Cause” or for “good reason”, Mr. Smith will receive severance equal to 12 months of his base salary. As used in Mr. Smith’s employment agreement, “good reason” will occur if Mr. Smith terminates his employment within 30 days of the occurrence of any of the following: (i) any material reduction in his salary and bonus; (ii) a material amendment to his duties, including any transfer to any position other than his current position unless such transfer is clearly consistent with a promotion; or (iii) any required relocation beyond a 50 kilometer radius from the company’s head office. A termination of Mr. Smith’s employment for “Cause” will occur if the following events occur: (i) the act or omission involving (A) material dishonesty or (B) fraud with respect to the company, its subsidiaries or any of their customers or suppliers; (ii) a substantial and repeated failure to perform his duties; (iii) gross negligence or willful misconduct; or (iv) conduct tending to bring the company or any of its subsidiaries into substantial disgrace or disrepute.
57
Retirement Agreements
As we previously announced, during 2018 we entered into a retirement agreement with Mr. Michels, our former President and CEO, which provided that: (i) the unvested portions of stock options and time-vested RS awards granted to Mr. Michels prior to the date of his retirement agreement would vest in full as of March 31, 2018, his retirement date; (ii) the unvested portions of PRUs granted to Mr. Michels prior to the date of his retirement agreement would vest in full three years after the grant date, subject to the satisfaction of performance measures applicable to such PRUs, in accordance with the original terms of the relevant award agreement, but without the requirement that Mr. Michels continue to be employed by the Company after his retirement date; (iii) Mr. Michels would receive a pro-rated bonus payment under the Company’s 2018 Incentive Plan equal to 85% of his base salary, subject to adjustment to reflect the actual bonus pool funding approved by the Board; (iv) Mr. Michels would receive his normal annual equity award in 2018 for his performance during 2017 pursuant to the LTIP, with a grant date value at least equal to 200% of Mr. Michels’ base salary, with the RS portion of the award vesting on Mr. Michels’ retirement date and the PRU portion vesting three years after the grant date, subject to the satisfaction of performance measures determined by the Board, but without the requirement that Mr. Michels continue to be employed by the Company after his retirement date; and (v) if after retirement Mr. Michels elects to receive continuation coverage under the Company’s group health plan pursuant to the COBRA and maintains such coverage for the full period permitted by law, he would have the right to elect to continue such coverage at his own cost and expense under the terms of the Company’s group health plan.
As we also previously announced, we also entered into a retirement agreement with Mr. Spair in 2018 that contains the same terms as Mr. Michels’ retirement agreement, except that Mr. Spair’s retirement agreement provided that his 2018 equity award (for his performance during 2017) would have a grant date value at least equal to 140% of his base salary, and his bonus payment under the Company’s 2018 Incentive Plan would be based on his target of 50% of his base salary, subject to adjustment to reflect the actual bonus pool funding approved by the Board, and would be pro-rated to his date of retirement.
Finally, as previously announced, we entered into a retirement agreement with Brian Smith, pursuant to which Mr. Smith left his position as Executive Vice President, Business Unit Leader, Molecular Solutions of DNAG and became Vice Chairman and Executive Vice President, Innovation at DNAG, beginning January 1, 2019. Pursuant to his retirement agreement, Mr. Smith will lead the Company’s global innovation function, consult on strategy and business matters and transition his duties to Ms. Kathleen G. Weber, his successor who now serves as Executive Vice President, Business Unit Leader, Molecular Solutions at DNAG. Mr. Smith will be eligible to receive an incentive cash bonus under our 2019 Incentive Plan based on a 40% base salary target, consistent with past practice. The unvested portions of time-vested RS awards received by Mr. Smith prior to January 1, 2019 will vest in full on his February 5, 2020 planned retirement date. In addition, the unvested portions of PRUs received by Mr. Smith prior to January 1, 2019 will vest in full three years after the grant date, subject to satisfaction of performance measures applicable to such awards, in accordance with the original terms of the original award agreement, but without the requirement that Mr. Smith continue to be employed after his retirement date. Mr. Smith received his normal annual equity award in 2019 for his performance during 2018 and will receive his normal annual equity award in 2020 for his performance during 2019, consistent with past practice, with such awards consisting of 50% time-vested RS and 50% PRUs. Finally, Mr. Smith will receive additional supplemental equity awards in both 2019 and 2020 at the same time the annual LTIP awards are granted to other senior executives, with such awards ranging from 25,000 to 37,500 PRUs for achievement of 100% to 120% of the applicable net revenue budget for DNAG for 2019 and 2020, as applicable. These supplemental awards will vest one year after the grant date to the extent the net revenue target is met with respect to the applicable year.
58
The following table provides estimates of the potential severance and other post-termination benefits the NEOs (except for Messrs. Michels and Spair, because they are no longer with the Company) would receive assuming their employment was terminated as of December 31, 2018:
Name
|
|
Benefit
|
|
Voluntary
Termination
or
Termination
for Cause
1
|
|
|
Termination
for Death
or Disability
2
|
|
|
Termination
for Good
Reason or
Without
Cause Not
Within
Change of
Control
Period
2
|
|
|
Voluntary
Termination
after Change of
Control (only
for
Mr. Jerrett), or
Termination for
Good Reason or
Without Cause
Within Change of
Control Period
2
|
|
Stephen S. Tang, Ph.D.
|
|
Salary Continuation
|
|
|
—
|
|
|
|
—
|
|
|
$
|
847,500
|
|
|
$
|
1,695,000
|
|
President
|
|
Bonus
|
|
$
|
480,250
|
|
|
$
|
818,346
|
|
|
$
|
480,250
|
|
|
$
|
480,250
|
|
and Chief Executive Officer
|
|
Accelerated Option Vesting
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Accelerated Restricted Stock/Unit Vesting
|
|
|
—
|
|
|
$
|
433,515
|
|
|
$
|
216,757
|
|
|
$
|
433,515
|
|
|
|
Health Care Benefits
|
|
|
—
|
|
|
|
—
|
|
|
$
|
39,088
|
|
|
$
|
39,088
|
|
|
|
Total
|
|
$
|
480,250
|
|
|
$
|
1,251,861
|
|
|
$
|
1,583,595
|
|
|
$
|
2,647,853
|
|
Roberto Cuca
|
|
Salary Continuation
|
|
|
—
|
|
|
|
—
|
|
|
$
|
622,500
|
|
|
$
|
1,245,000
|
|
Chief Financial Officer
|
|
Bonus
|
|
$
|
207,500
|
|
|
$
|
353,580
|
|
|
$
|
207,500
|
|
|
$
|
207,500
|
|
|
|
Accelerated Option Vesting
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Accelerated Restricted Stock/Unit Vesting
|
|
|
—
|
|
|
$
|
334,515
|
|
|
$
|
167,258
|
|
|
$
|
334,515
|
|
|
|
Health Care Benefits
|
|
|
—
|
|
|
|
—
|
|
|
$
|
3,456
|
|
|
$
|
3,456
|
|
|
|
Total
|
|
$
|
207,500
|
|
|
$
|
688,095
|
|
|
$
|
1,000,714
|
|
|
$
|
1,790,471
|
|
Anthony Zezzo II
|
|
Salary Continuation
|
|
|
—
|
|
|
|
—
|
|
|
$
|
408,513
|
|
|
$
|
817,026
|
|
Executive Vice President,
|
|
Bonus
|
|
|
—
|
|
|
$
|
232,035
|
|
|
$
|
163,405
|
|
|
$
|
163,405
|
|
Business Unit Leader,
|
|
Accelerated Option Vesting
|
|
|
—
|
|
|
|
4,135
|
|
|
$
|
2,067
|
|
|
$
|
4,135
|
|
Infectious Disease
|
|
Accelerated Restricted Stock/Unit Vesting
|
|
|
—
|
|
|
$
|
1,157,873
|
|
|
$
|
578,937
|
|
|
$
|
1,157,873
|
|
|
|
Health Care Benefits
|
|
|
—
|
|
|
|
—
|
|
|
$
|
4,687
|
|
|
$
|
4,687
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
1,394,043
|
|
|
$
|
1,157,609
|
|
|
$
|
2,147,126
|
|
Brian Smith
|
|
Salary Continuation
|
|
|
—
|
|
|
|
—
|
|
|
$
|
334,000
|
|
|
$
|
334,000
|
|
Executive Vice President,
|
|
Bonus
|
|
|
—
|
|
|
$
|
246,626
|
|
|
|
—
|
|
|
|
—
|
|
Business Unit Leader
|
|
Accelerated Option Vesting
|
|
|
—
|
|
|
|
1,734
|
|
|
$
|
867
|
|
|
$
|
1,734
|
|
Molecular Solutions
|
|
Accelerated Restricted Stock/Unit Vesting
|
|
|
—
|
|
|
$
|
670,701
|
|
|
$
|
335,350
|
|
|
$
|
670,701
|
|
|
|
Health Care Benefits
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Total
|
|
|
—
|
|
|
$
|
919,061
|
|
|
$
|
670,217
|
|
|
$
|
1,006,435
|
|
Jack E. Jerrett
|
|
Salary Continuation
|
|
|
—
|
|
|
|
—
|
|
|
$
|
369,977
|
|
|
$
|
739,954
|
|
Senior Vice President
|
|
Bonus
|
|
|
—
|
|
|
$
|
220,654
|
|
|
$
|
129,492
|
|
|
$
|
129,492
|
|
and General Counsel
|
|
Accelerated Option Vesting
|
|
|
—
|
|
|
|
3,603
|
|
|
$
|
1,801
|
|
|
$
|
3,603
|
|
|
|
Accelerated Restricted Stock/Unit Vesting
|
|
|
—
|
|
|
$
|
869,576
|
|
|
$
|
434,788
|
|
|
$
|
869,576
|
|
|
|
Health Care Benefits
|
|
|
—
|
|
|
|
—
|
|
|
$
|
29,716
|
|
|
$
|
29,716
|
|
|
|
Total
|
|
|
—
|
|
|
$
|
1,093,833
|
|
|
$
|
965,774
|
|
|
$
|
1,772,341
|
|
1
In the event of a unilateral termination by Dr. Tang or Mr. Cuca after June 30, they would receive a prorated bonus for the year in which termination occurs.
2
|
The indicated values for the accelerated vesting of stock options reflect (i) the number of option shares which would vest on an accelerated basis, multiplied by (ii) the excess, if any, of the $11.68 per share closing price for the Company’s Common Stock, as reported by NASDAQ on December 31, 2018, over the applicable exercise price for each option. The indicated values for the accelerated vesting of RS and PRUs reflect the $11.68 per share closing price on December 31, 2018 multiplied by the number of shares which would vest on an accelerated basis (assuming, in the case of restricted units, that the applicable performance measures for the PRUs are met at 100% of target).
|
59
EQUITY COMPENSATION
PLAN INFORMATION
The following table provides information as of December 31, 2018 about the shares of Common Stock that may be issued upon the exercise of options under the OraSure Technologies, Inc. Stock Award Plan (“Award Plan”). The Award Plan, was adopted by the Company in connection with the merger of Epitope and STC to form the Company in September 2000. Additional grants of equity compensation may only be made under the Award Plan.
Plan Category
|
|
Number of Securities to be
Issued Upon Exercise of
Outstanding Options
(a)
|
|
Weighted-
Average Exercise
Price of Outstanding
Options
(b)
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)
|
Equity compensation plans approved by
security holders
|
|
|
|
1,083,102
|
|
|
|
|
$
|
10.19
|
|
|
|
|
|
3,704,243
|
|
1
|
Equity compensation plans not approved by
security holders
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
Total
|
|
|
|
1,083,102
|
|
|
|
|
|
|
|
|
|
|
|
3,704,243
|
|
|
1
|
Represents shares remaining available for future issuance as of December 31, 2018 under the Award Plan.
|
DIRECTOR COMPENSATION
Under our Non-Employee Director Compensation Policy (“Director Policy”), non-employee members of the Board receive fixed annual fees for service on the Board and Committees of the Board during 2018, as set forth below. The fees were paid quarterly in arrears.
Position
|
|
Annual Fee
|
|
Board Chairman
|
|
$
|
80,000
|
|
Non-Chairman Board Member
|
|
$
|
55,000
|
|
Audit Chairman
|
|
$
|
20,000
|
|
Compensation Chairman
|
|
$
|
20,000
|
|
N&CG Chairman
|
|
$
|
20,000
|
|
Non-Chairman Audit Member
|
|
$
|
5,000
|
|
Non-Chairman Compensation Member
|
|
$
|
5,000
|
|
Non-Chairman N&CG Member
|
|
$
|
5,000
|
|
Non-employee Directors receive an initial grant of 40,000 stock options for the Company’s Common Stock upon joining the Board (the “Initial Grant”). An additional grant of 40,000 stock options is also made to any non-employee Director who becomes Chairman of the Board (the “Chairman Grant”). The options granted to non-employee Directors are nonqualified stock options and have an exercise price equal to the mean between the high and low sales prices of the Company’s Common Stock as quoted on the NASDAQ Stock Market on the grant date. Each Initial Grant and Chairman Grant generally vest on a monthly basis over the 24 months immediately following the grant date. Payment of the exercise price may be made in cash or by delivery of previously acquired shares of Common Stock having a fair market value equal to the aggregate exercise price.
Under the Director Policy, each non-employee Director receives an annual grant of restricted shares (the “Annual Grant”) of the Company’s Common Stock on the date of each annual meeting of stockholders. Annual grants are made using a value transfer award method similar to that used for our executives under the LTIP. The dollar values of the Annual Awards were determined by the Compensation Committee and Board based on advice from an independent Compensation Consultant previously engaged by the Committee and an assessment of director equity awards made at comparable medical diagnostics and healthcare companies.
60
Under the Director Policy, Annual Grants of restricted stock were made in 2018 pursuant to the values set forth in the following table:
Board Position
|
|
Award Grant Value
|
Chairman
|
|
$
|
120,000
|
|
|
Non-Chairman Director
|
|
$
|
95,000
|
|
|
The dollar value of each Annual Grant is converted into restricted stock by dividing the above values by the average of the high and low sales prices of the Company’s Common Stock, as reported on the NASDAQ Stock Market, on the grant date. Annual Grants of restricted stock will vest on the date that is twelve months from the date of grant. Non-employee Directors are permitted to direct the Company to withhold restricted stock in order to pay tax withholding obligations arising upon the vesting of such shares.
Any unvested stock options and restricted stock granted to non-employee Directors will vest in their entirety immediately upon the occurrence of a “change of control” of the Company. A “change of control” means a change of control that would be required to be reported under the Securities Exchange Act of 1934, as amended, and would be deemed to have occurred at such time as (i) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; (ii) any person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership of stock of the Company possessing 30 percent or more of the total voting power of the Company’s stock; (iii) a majority of the members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or (iv) a person, or more than one person acting as a group within the meaning of Section 409A of the Code, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. In addition, if a non-employee Director leaves the Board for any reason other than a change of control, prior to the end of the vesting period for the Annual Grant of restricted stock, such award shall immediately vest on a pro-rata basis based on the actual duration of such Director’s service to the Board during such vesting period.
Non-employee Directors are permitted to defer all or a portion of the fees and grants of restricted stock under the Company’s Non-Qualified Deferred Compensation Plan, on terms similar to those applicable to our officers.
61
|
|
DIRECTOR COMPENSATION DURING 2018
|
The following table summarizes information related to compensation of non-employee Directors during the fiscal year ended December 31, 2018:
Name
1, 2
|
|
Fees
Earned
or Paid
in Cash
($)
|
|
|
Stock
Awards
3
($)
|
|
|
Option
Awards
4
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
Mara G. Aspinall
|
|
$
|
62,250
|
|
|
$
|
94,986
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
157,236
|
|
Michael Celano
|
|
$
|
83,000
|
|
|
$
|
120,000
|
|
|
$
|
303,360
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
506,360
|
|
Eamonn P. Hobbs
|
|
$
|
62,250
|
|
|
$
|
94,986
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
157,236
|
|
Ronny B. Lancaster
|
|
$
|
74,750
|
|
|
$
|
94,986
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
169,736
|
|
Charles W. Patrick
|
|
$
|
74,000
|
|
|
$
|
94,986
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
168,986
|
|
Aradhana Sarin, M.D.
|
|
$
|
68,378
|
|
|
$
|
94,986
|
|
|
$
|
398,948
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
562,312
|
|
1
|
Because Dr. Tang is an officer of the Company, he is not entitled to any separate compensation for service on the Board or any Committee thereof and has not been included in this table. Dr. Sarin became a Director in February 2018.
|
2
|
Non-employee Directors held the following number of unvested shares of restricted stock (“RS”) and stock options (“SOs”) at December 31, 2018: Ms. Aspinall: 6,144 RS; 10,000 SOs; Mr. Celano: 7,762 RS; 26,668 SOs; Mr. Hobbs: 6,144 RS; Mr. Lancaster: 6,144 RS; Mr. Patrick: 6,144 RS; and Dr. Sarin: 6,144 RS; 21,667 SOs. The aggregate number of stock options and restricted shares held by Dr. Tang are set forth in the table in the Section entitled, “Outstanding Equity Awards,” in this Proxy Statement.
|
3
|
The indicated amounts reflect the aggregate grant date fair value of restricted stock awards made to non-employee Directors during 2018, computed in accordance with FAS ASC Topic 718.
|
4
|
The indicated amount reflects the aggregate grant date fair value of the stock option award made to Dr. Sarin upon being elected as a Director, computed in accordance with FAS ASC Topic 718. Dr. Sarin received a stock option award for 40,000 shares upon joining the Board in February 2018 and Mr. Celano received a stock option award for 40,000 shares upon being elected Chairman of the Board in 2018. Certain assumptions used in the calculation of the indicated amounts are set forth in footnote 9 to the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2018, included in the Company’s 2018 Annual Report on Form 10-K.
|
62
PROPOSALS REQUI
RING YOUR VOTE
|
PROPOSAL NO. 1. ELECTION OF DIRECTORS
|
Background
At the Annual Meeting, you will be asked to vote on the election of two Directors. A majority of the independent members of the Board have nominated Eamonn P. Hobbs and Stephen S. Tang, Ph.D. for election as Class I Directors, for terms expiring at the Annual Meeting of Stockholders in 2022.
Each of the nominees for election as Directors is presently a member of our Board and has consented to continue to serve if re-elected to the Board. Mr. Hobbs joined the Board in 2016 and serves as a member of the Compensation Committee and Chairman of the Nominating and Corporate Governance Committee. Dr. Tang joined the Board in 2011 and now serves as the Company’s President and CEO.
We do not know of anything that would preclude any nominee from serving. However, should any nominee for any reason become unable or unwilling to serve as a Director, the persons named in the enclosed Proxy Card will vote the shares represented by each Proxy for such substitute nominee as the Board may approve.
Any vacancy that occurs on the Board that results from an increase in the number of Directors may be filled by the affirmative vote of a majority of the Directors then in office, and any other vacancy on the Board may be filled by the affirmative vote of a majority of the Directors then in office, even though less than a quorum of the Board, or by a sole remaining Director.
Certain information with respect to each person nominated for election as a Director and each person whose term of office as a Director will continue after the Annual Meeting, including the particular experience, qualifications, attributes and skills they possess that led to the conclusion that they should serve as a Director, is set forth below.
Name
|
Principal Occupation
|
Age
|
|
Director
Since
|
Class I (Nominees with Terms Expiring in 2019):
|
|
|
|
|
|
Eamonn P. Hobbs
|
President of Hobbs Medical Ventures, LLC
|
|
60
|
|
2016
|
Stephen S. Tang, Ph.D.
|
President and Chief Executive Officer of
OraSure Technologies, Inc.
|
|
58
|
|
2011
|
|
|
|
|
|
|
Class II (Directors Whose Terms Expire in 2020):
|
|
|
|
|
|
Mara G. Aspinall
|
President & Chief Executive Officer of
Health Catalysts Group
|
|
56
|
|
2017
|
Ronny B. Lancaster
|
Former Senior Vice President for Federal
Government Relations of Assurant, Inc.
|
|
67
|
|
2003
|
Aradhana Sarin, M.D.
|
Executive Vice President, Chief Strategy and
Business Officer of
Alexion Pharmaceuticals
|
|
44
|
|
2018
|
|
|
|
|
|
|
Class III (Directors Whose Terms Expire in 2021):
|
|
|
|
|
Michael Celano
|
Chief Operating Officer of Recro Pharma, Inc.
|
|
60
|
|
2006
|
Charles W. Patrick
|
Principal, Patrick Consulting
|
|
64
|
|
2006
|
63
Independent Director
Director since:
2016
Class I Nominee
Term Expires:
2019
Age
:
60
Other Current
Public Company
Directorships
:
None
|
Mr. Hobbs serves as President of Hobbs Medical Ventures, LLC, a consulting company he founded in the healthcare field. In March 2018, he co-founded and serves as Chairman of the Board and CEO of ImmunSYS, Inc. a company that is developing a new immunotherapy for late stage metastatic prostate cancer. From December 2016 to June 2017, Mr. Hobbs served as President and CEO of Digital Cognition Technologies, Inc., an early stage medical device company. From July 2014 to January 2016, Mr. Hobbs served as the President and Chief Executive Officer of Antares Pharma, Inc., a specialty pharmaceutical company focused on self-injection pharmaceutical products and technologies. He also served on the Antares board of directors from 2009 to 2016. From 2009 to 2013, Mr. Hobbs served as President and Chief Executive Officer, and from 2008 to 2013 was a member of the board of directors, of Delcath Systems, Inc., a specialty pharmaceutical and medical device public company specializing in cancer treatment. Prior to Delcath Systems, Inc., Mr. Hobbs served as President and Chief Executive Officer of AngioDynamics, Inc., a company he co-founded in 1988 as a division of E-Z-EM, Inc. which grew into a leading medical technology public company with a highly diverse product line. From 1988 to 2004, Mr. Hobbs also served as Executive Vice President of Business Development of E-Z-EM, Inc., a NASDAQ-traded company. Before joining AngioDynamics, Mr. Hobbs was Director of Marketing and Product Development at NAMIC; founder, President and Chief Executive Officer of Hobbs Medical, Inc.; and a Product Development Engineer at Cook Incorporated. Mr. Hobbs received a B.S. in Plastics Engineering with a Biomaterials emphasis at the University of Massachusetts (Lowell). Mr. Hobbs has served on the Board of Directors of the Medical Device Manufacturers Association since 2009.
Skills and Qualifications leading to conclusion that he should serve on the Board:
• Executive-level management experience as CEO of several public companies.
• Extensive experience in the medical device, pharmaceutical and combination products industries.
• Extensive experience managing operations in a cost-effective, efficient manner.
• Experience with governance and policy development for the medical device industry.
|
64
Director
Director since:
2011
Class I Nominee
Term Expires:
2019
Age
:
58
Other Current
Public Company
Directorships
:
None
|
For biographical information on Dr. Tang, see the Section entitled, “Executive Officers,” in this Proxy Statement.
Skills and Qualifications leading to conclusion that he should serve on the Board:
• Extensive business experience, particularly in the life sciences industry.
• Experience with strategic and business development matters.
• Executive-level management experience.
|
Independent Director
Director since:
2017
Class II Director
Term Expires:
2020
Age
:
56
Other Current
Public Company
Directorships
:
2
|
Mara G. Aspinall joined the Board in June 2017. Since 2014, she has served as the President and Chief Executive Officer of Health Catalysts Group, a consulting firm that focuses on growth of early stage life science and technology companies. Ms. Aspinall is also Managing Director of BlueStone Venture Partners, a venture capital firm dedicated to investing in life sciences and healthcare related companies. Prior to these positions, Ms. Aspinall served as President and CEO, Global Head of Roche Tissue Diagnostics/Ventana Medical Systems, a division of The Roche Group that provides tissue-based cancer diagnostic instruments, products and services. Prior to that, she founded and served as CEO and Director of On-Q-ity, Inc., a diagnostic research company focused on improving cancer treatment through the capture of circulating tumor cells in a patient’s blood. Ms. Aspinall also spent 12 years with Genzyme Corporation, serving as President of the Genzyme Genetics division, a leading provider of esoteric and genetic tests for the reproductive, oncology and personalized medicine markets, and as President of the Genzyme Pharmaceuticals division, a custom pharmaceutical intermediates provider. Ms. Aspinall began her career as a management consultant with Bain & Company. Ms. Aspinall holds an M.B.A from Harvard Business School and a B.A. in International Relations from Tufts University. Ms. Aspinall previously served on the Board at Safeguard Scientific and currently serves on the Boards of Abcam Plc and Allscripts.
Skills and Qualifications leading to conclusion that she should serve on the Board:
• Executive level experience as a CEO.
• Executive experience in the life sciences industry.
• Extensive experience in molecular diagnostics.
|
65
Independent Director
Director since:
2003
Class II Director
Term Expires:
2020
Age
:
67
Other Current
Public Company
Directorships
:
None
|
Ronny B. Lancaster became a member of the Board in May 2003. From September 2005 to December 2018, Mr. Lancaster served as Senior Vice President, Federal Government Relations of Assurant, Inc., a provider of specialty insurance and insurance-related products and services. Prior to that, Mr. Lancaster served as Chief Operating Officer of the Morehouse School of Medicine, Executive Assistant to the Secretary and Principal Deputy Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services, General Counsel of Hamilton Enterprises, Inc., Senior Washington Representative for Blue Cross/Blue Shield Association, and Chief of the Division of Fee-For-Service Plans at the U.S. Office of Personnel Management. Mr. Lancaster received a B.A. in Economics from the Catholic University of America, an M.B.A. from the Wharton School of the University of Pennsylvania, and a J.D. from The Georgetown University Law Center. He is admitted to the Bars of Pennsylvania and the District of Columbia. Mr. Lancaster previously served on the board of directors of Immucor, Inc.
Skills and Qualifications leading to conclusion that he should serve on the Board:
• Expertise in government affairs and political matters.
• Extensive medical and healthcare experience.
• Legal training.
|
Independent Director
Director since:
2018
Class II Director
Term Expires:
2020
Age
:
44
Other Current
Public Company
Directorships
:
None
|
Aradhana Sarin, M.D. became a member of the Board in January 2018. Since February 2019, Dr. Sarin has served as the Executive Vice President, Chief Strategy and Business Officer for Alexion Pharmaceuticals, a global biopharmaceutical company. Prior to that, Dr. Sarin served as Senior Vice President, Head of Corporate Business Development and Strategy at Alexion, since November 2017. She also serves as Co-Chair of the Executive Management Committee overseeing Science and Innovation at Alexion. Prior to her tenure at Alexion, Dr. Sarin served as the Managing Director of Healthcare Corporate & Investment Banking at Citi Global Banking, focusing on clients in the diagnostics, life sciences and biopharmaceutical sectors. Earlier in her career, Dr. Sarin also held various other positions in the investment banking industry, including with UBS and JP Morgan. Prior to her career in investment banking, Dr. Sarin spent two years as a medical resident practicing in both India and Africa. Dr. Sarin received her M.B.A. from Stanford Business School and obtained her medical training from the University of Delhi in India.
Skills and Qualifications leading to conclusion that she should serve on the Board:
• Extensive experience in the healthcare and life sciences sectors.
• Scientific and medical background and experience.
• Extensive experience at global financial institutions, involving M&A and equity and debt financing transactions
• Extensive knowledge of global healthcare systems.
|
66
Independent Director
Director since:
2006
Class III Director
Term Expires:
2021
Age
:
60
Other Current Public Company Directorships
:
None
|
Michael Celano became a member of the Board in October 2006 and has served as the Company’s Chairman of the Board since April 2018. Since January 2018, Mr. Celano has served as the Chief Operating Officer of Recro Pharma, Inc. and between July 2016 and January 2018, Mr. Celano served as Chief Financial Officer at Recro Pharma. Between 2015 and June 2016 Mr. Celano was self-employed providing consulting services to healthcare companies. From 2013 to 2015, Mr. Celano served as Chief Financial Officer of DrugScan, Inc. a clinical laboratory services company. Prior to that, Mr. Celano served as the Chief Financial Officer of Kensey Nash Corporation, a biomaterials company from 2009 to 2012. From 2007 to 2008, Mr. Celano also served as Chief Financial Officer for BioRexis Pharmaceutical Corporation, a biopharmaceutical company. Before joining BioRexis, Mr. Celano served as a partner with KPMG LLP, where he was co-leader of its National Life Science Practice. Mr. Celano also was co-leader of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano also served on the Board of Directors of Performance Health, a consumer health care product manufacturing company from 2015 to 2016. Mr. Celano holds a B.S. in Accounting from St. Joseph’s University.
Skills and Qualifications leading to conclusion that he should serve on the Board:
• Long career in public accounting focused in the life sciences area.
●
Life sciences industry operating company experience
• Accounting and financial expertise.
• Extensive business experience.
|
Independent Director
Director since:
2006
Class III Director
Term Expires:
2021
Age
:
64
Other Current Public Company Directorships
:
None
|
Charles W. Patrick became a member of the Board in January 2006. Since 2000, Mr. Patrick has served as Principal of Patrick Consulting, a management consulting firm that helps diagnostic, medical device and technology companies develop sales, marketing and distribution strategies. From 2001 through 2011, Mr. Patrick also served as the President and Co-owner of ADS Golf, Inc. Prior to that time, he served as the President and Chief Executive Officer of CallNexus, Inc., a provider of virtual call center services, and Vice President of Sales and Marketing for Biosite, Inc., a medical diagnostics company, where he had primary responsibility for developing and achieving Biosite’s strategic sales, marketing and distribution objectives. Prior to his time at Biosite, Mr. Patrick served as World Wide Group Marketing Manager and held several other sales and marketing positions for the Diagnostics Division of Abbott Laboratories. Mr. Patrick also previously served on the board of directors for DiaDexus, Inc., Accumentrics, Inc. and Seamless Medical Systems, Inc. Mr. Patrick received his undergraduate degree from the University of Central Florida.
Skills and Qualifications leading to conclusion that he should serve on the Board:
• Extensive sales and marketing background.
• More than 40 years of experience in the medical diagnostics industry.
• Entrepreneurial skills.
|
67
Vote Required; Boa
rd Recommendation
If a quorum is present, each nominee will be elected if he or she receives a majority of the votes cast by shares present in person or by Proxy and entitled to vote at the Annual Meeting. Shares voted in person or represented by proxy which are not voted for a nominee (by voting no or abstaining) will have the effect of voting against the nominee. Broker non-votes will have no effect on the required vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for the nominees, each of whom has consented to be named and to serve if elected.
Your Board recommends that you vote FOR the election of the Director nominees.
|
PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
|
Background
The Audit Committee of the Board of Directors has approved the reappointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for the 2019 fiscal year. The Audit Committee has also recommended that the Board submit the appointment of KPMG for ratification by stockholders at the Annual Meeting. Although action by the stockholders on this matter is not legally required, the Audit Committee and the Board believe it is appropriate to seek stockholder ratification of this appointment in light of the important role played by the independent registered public accounting firm in reporting on the Company’s consolidated financial statements. If this appointment is not ratified by stockholders, the Audit Committee may reconsider its appointment of KPMG for the 2019 fiscal year or in the future.
One or more representatives of KPMG are expected to attend the Annual Meeting electronically. They will have an opportunity to make a statement and will be available to respond to appropriate questions.
Vote Required; Board Recommendation
Ratification of the appointment of KPMG requires the affirmative vote of a majority of shares present in person or by Proxy and entitled to vote at the Annual Meeting. Shares voted in person or represented by Proxy which are not voted for this ratification (by voting no or abstaining) will have the effect of voting against this proposal. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for ratification of the appointment of KPMG as our independent registered public accounting firm for the 2018 fiscal year.
Your Board recommends that the stockholders vote FOR ratification of the appointment of KPMG.
|
PROPOSAL NO. 3. ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION
|
Background
Section 14A of the Exchange Act, enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), requires that stockholders be given the opportunity to vote to approve, on an advisory (non-binding) basis, no less frequently than once every three years, the compensation of our NEOs. Based on feedback received at our 2017 Annual Meeting, the Board determined that such a vote will continue to be held on an annual basis until the next advisory vote on frequency.
The vote on the resolution recommended below is not intended to address any specific element of compensation, but rather relates to the overall compensation of our NEOs. As described more fully under the CD&A Section of this Proxy Statement and the related tables and narrative, our compensation program is performance-based and is designed to pay executives for performance by offering rewards for the achievement of pre-determined objectives. In addition, our program is designed to align the interests of executives with the interests of our stockholders, provide long-term incentives and set compensation at levels sufficiently competitive to attract, retain and motivate high quality executives, and meet strong corporate governance principles. You are urged to carefully review the CD&A Section of this Proxy Statement which contains a detailed discussion of our executive compensation program, including the 2018 compensation of our NEOs.
68
Compensation Pr
ogram Features
As described more fully in the CD&A, there are many important features to our compensation program that illustrate our commitment to pay-for-performance and good corporate governance. A summary of some of the more significant of these features is set forth below:
•
|
Compensation is market driven and performance-based.
|
|
•
|
Total compensation targeted at 50
th
percentile of Peer Group.
|
•
|
Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components.
|
|
•
|
Use of peer company benchmarking and tally sheets.
|
•
|
Threshold financial performance objectives for annual bonus pool funding meet or exceed fiscal performance for the prior fiscal year.
|
|
•
|
Compensation recoupment policy.
|
•
|
Equity awards provide long-term incentive with three year vesting.
|
|
•
|
No hedging or pledge of our Common Stock.
|
•
|
50% of annual equity is performance-vested.
|
|
•
|
Robust stockholder outreach on compensation/governance matters.
|
Vote Required; Board Recommendation
If a quorum is present, the affirmative vote of a majority of shares present, in person or by Proxy and entitled to vote at the Annual Meeting, is required to approve, on an advisory (non-binding) basis, the compensation paid to NEOs. Shares voted in person or represented by Proxy which are not voted for approval of our executive compensation (by voting no or abstaining) will have the effect of voting against this proposal. Broker non-votes will not count toward the determination of whether this proposal is approved and will have no impact on the vote. In the absence of instructions to the contrary, shares of Common Stock represented by properly executed Proxies will be voted for approval of our executive compensation, as disclosed in this Proxy Statement. Because this stockholder vote is advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee and Board will take into account the outcome of the vote when considering future executive compensation programs and arrangements.
Based on the foregoing, the Board is requesting that stockholders vote on the following resolution:
RESOLVED
, that the compensation paid to the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
Your Board recommends that the stockholders vote FOR the approval of our executive compensation as described in the preceding resolution.
ANNUAL REPORT
Our Annual Report to Stockholders for the year ended December 31, 2018 accompanies this Proxy Statement. Following receipt of a written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC (including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of our Common Stock on March 28, 2019, the record date for the Annual Meeting, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of the Corporate Secretary of the Company at our address set forth in the Notice of Annual Meeting of Stockholders immediately preceding this Proxy Statement.
69
DEADLINE FOR STOCK
HOLDER PROPOSALS
You may submit proposals for inclusion in the proxy materials for the Company’s 2020 Annual Meeting of Stockholders. Any such proposals must meet the stockholder eligibility and other requirements imposed by rules issued by the SEC and must be received by the Company at 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, in accordance with Rule 14a-8 promulgated under the Exchange Act, not later than December 20, 2019.
In addition, our Bylaws provide that a stockholder proposal must meet certain predetermined requirements in order to be considered at the Annual Meeting. These requirements are separate from, and in addition to, the requirements discussed above to have the stockholder proposal included in the proxy materials pursuant to the SEC’s rules and regulations. In order to be considered, a stockholder’s proposal must be made in writing to the Company’s Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. However, if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received no later than the close of business on the tenth (10
th
) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Secretary must set forth, with respect to each matter the stockholder proposes to bring before the meeting, a brief description of the matter and the reasons for considering that matter at the Annual Meeting. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf notice of the proposed business is made: (i) the name and address of the stockholder and such beneficial owner; (ii) any material interest of such stockholder and such beneficial holder in such business; (iii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by the stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and such beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose the business described in its notice; and (v) any other information relating to such business matter that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. To the extent the Board of Directors or the SEC, or a court of competent jurisdiction, deems these Bylaw provisions to be inconsistent with the right of stockholders to request inclusion of a proposal in the Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange Act, such rule shall prevail.
The SEC has promulgated rules relating to the exercise of discretionary voting authority under proxies solicited by the Board. If a stockholder intends to present a proposal at our 2020 Annual Meeting without inclusion of that proposal in the Company’s proxy materials and written notice of the proposal is not received by the Secretary of the Company by February 13, 2020 (the date that is 45 days before the one-year anniversary of the date on which the Company first sent its proxy materials for the Annual Meeting), or if the Company meets other requirements of the applicable SEC rules and regulations, the proxies solicited by the Board for use at the 2020 Annual Meeting will confer discretionary authority to vote on the proposal should it then be raised at the 2020 Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Jack E. Jerrett
Secretary
April 10, 2019
70
|
|
|
|
220 EAST FIRST STREET
BETHLEHEM, PA 18015
|
VOTE BY INTERNET
Before The Meeting
- Go to
www.proxyvote.com
or scan the QR Barcode above
|
|
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
|
During The Meeting
- Go to
www.virtualshareholdermeeting.com/OSUR2019
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You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
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VOTE BY PHONE - 1-800-690-6903
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Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E38313-P03935 KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY
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ORASURE TECHNOLOGIES, INC.
The Board of Directors recommends you vote FOR each of the following nominees:
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1.
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ELECTION OF DIRECTORS
Class I (Expiring 2022)
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Nominees:
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For
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Against
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Abstain
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1a. Eamonn P. Hobbs
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☐
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☐
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☐
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1b. Stephen S. Tang, Ph.D.
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☐
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☐
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☐
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The Board of Directors recommends you vote FOR items 2 and 3.
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For
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Against
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Abstain
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2.
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Ratification of Appointment of KPMG LLP as the Independent Registered Public Accounting Firm for Fiscal Year 2019.
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☐
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☐
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3.
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Advisory (Non-Binding) Vote to Approve Executive Compensation.
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☐
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Mark Here for Address Changes or Comments SEE REVERSE
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☐
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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OraSure Technologies, Inc.
2019 Annual Meeting of Stockholders
Tuesday, May 21, 2019
Important notice regarding the Internet availability of proxy materials for the
Annual Meeting of Stockholders.
The Notice and Proxy Statement and 2018 Annual Report to Stockholders
are available at www.proxyvote.com.
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E38314-P03935
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PROXY
2019 Annual Meeting of Stockholders
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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The undersigned hereby appoints Jack E. Jerrett and Michele Miller, and each of them, proxies with full power of substitution, to vote all of the shares which the undersigned is entitled to vote at the 2019 Annual Meeting of Stockholders of OraSure Technologies, Inc.
(the “Company”), on Tuesday, May 21, 2019, at 10:00 a.m. (Eastern Time), and at any adjournment or adjournments thereof, with all the powers the undersigned would possess if personally present, with respect to the matters listed on the reverse side.
The shares represented by this Proxy, if properly executed, will be voted (i) FOR the election of the nominees listed on the reverse side as directors, (ii) FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2019, and (iii) FOR approval of the compensation of the Company’s named executive officers. If any other business properly comes before the meeting, the proxies named above will have discretionary authority to vote thereon in accordance with their best judgment.
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued and to be marked, dated and signed, on the other side)
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