DEF 14A of Neogenomics Inc
Filed Apr 8, 2024 · FY20230001077183-24-000042
Index of Frequently Requested Information
| Auditor Fees | 21 | | Board Leadership Structure | 4 | | CEO Pay Ratio | 50 | | Clawback Policy | 18 | | Compensation Design | 29 | | Culture and Compensation Governance | 31 | | Director Attendance | 13 | | Director Independence | 5 | | Director Qualifications | 8 | | Managing Compensation Related Risks | 32 | | Nominee Biographies | 8 | | Pay Versus Performance | 51 | | Risk Oversight | 6 | | Stockholder Engagement | 34 | | Stockholder Engagement on the 2023 Say-on-Pay Vote | 34 | | Summary Compensation Table | 43 | | Use of an Independent Advisor | 32 |
Information as to Nominees and Other Director Information
Information as to Nominees and Other Director Information Background information, as of the date of this Proxy Statement, about the Board’s nominees for election, as well as information regarding additional experience, qualifications, attributes, or skills that led the Board to conclude that the nominees should serve on the Board, is set forth below.
Information as to Nominees and Other Director Information
| Lynn Tetrault | Age: 61 | Non-Executive Chair of the Board | | Lynn Tetrault has served as the non-executive Chair of the Board since August 2022. Prior to her holding this position, from May 2022, Ms. Tetrault served as our Interim Chief Executive Officer and Chair of the Board. From March 2022 to May 2022, Ms. Tetrault served as our Executive Chair of the Board and functioned as the Company's principal executive officer. From October 2021 to March 2022, she served as our non-executive Chair and from July 2020 to October 2021 she served as our Lead Independent Director. Ms. Tetrault has been a director since June 2015. She has also served as a director of Rhythm Pharmaceuticals, Inc. since 2020 and as a director of Acelyrin, Inc. since December 2023. Ms. Tetrault has more than 30 years of experience in the healthcare sector. She worked from 1993 to 2014 with AstraZeneca PLC, most recently as Executive Vice President of Human Resources and Corporate Affairs from 2007 to 2014. Ms. Tetrault was responsible for human resources strategy, talent management, executive compensation and related activities, internal and external communications, government affairs, corporate reputation, and corporate social responsibility for AstraZeneca. Prior to AstraZeneca Ms. Tetrault practiced healthcare and corporate law at Choate, Hall and Stewart in Boston. Ms. Tetrault has a BA from Princeton University and a JD from the University of Virginia Law School. Skills and Qualifications Lynn Tetrault is a dynamic, seasoned executive in the pharmaceutical industry. Having progressed through numerous senior management roles at AstraZeneca, she acquired extensive human resource and corporate governance experience at the highest level of that company. As the Company continues to grow, Ms. Tetrault’s experience is helping to shape human resource policies and operations as well as the make-up of the Board and its governance policies, and therefore we believe that Ms. Tetrault is well qualified to serve on our Board. |
Information as to Nominees and Other Director Information
| Christopher Smith | Age: 61 | Board Member and Chief Executive Officer | | Chris Smith was appointed Chief Executive Officer and a director in August 2022. Prior to joining NeoGenomics, from 2019 to 2022, Mr. Smith served as Chief Executive Officer of Ortho Clinical Diagnostics (“Ortho Clinical”). Under his leadership, Ortho Clinical raised $1.45 billion in funding for a 2021 initial public offering and achieved accelerated revenue growth while simultaneously improving profitability. Mr. Smith successfully guided the company through a combination with Quidel that closed in May 2022. Prior to Ortho Clinical, from 2004 to 2018, Mr. Smith served in key executive leadership positions, including CEO of Cochlear Limited (“Cochlear”), a global market leader in implantable hearing solutions. Having initially joined Cochlear as President of Cochlear Americas in 2004, Mr. Smith helped grow division revenue from $80 million to over $400 million before being named CEO in 2015. Before joining Cochlear, Mr. Smith served as a Chief Executive Officer in residence at global private equity firm Warburg Pincus and Global Group President at Gyrus Group Plc., a surgical products company. Prior to that he served in a variety of leadership roles at Abbott, KCI, Prism and Cardinal Health. Prior to 2023, Mr. Smith has served as a member of the board of directors at QuidelOrtho, a global provider of innovative in vitro diagnostic technologies, Akouos, Inc., Osler Diagnostics Limited and Results Physiotherapy. In addition, since mid-2023, Mr. Smith has served as a member of the board of directors of Laborie Medical Technologies Corp. Mr. Smith has a BS from Texas A&M University. Skills and Qualifications Mr. Smith is a dynamic leader with strong cultural values, vast diagnostic industry experience, and an extensive history of proven operating success. Because of Mr. Smith’s extensive industry knowledge and his experience serving on the boards of directors of other public companies, we believe Mr. Smith is well qualified to serve on our Board. |
Information as to Nominees and Other Director Information
| NeoGenomics, Inc. | 8 | 2024 Proxy Statement |
Information as to Nominees and Other Director Information
| Table of Contents | Proposal 1 |
Information as to Nominees and Other Director Information
| Dr. Alison Hannah | Age: 63 | Board Member and Chair of the Compliance Committee | | Dr. Hannah has served as a director since June 2015. Dr. Hannah has over 30 years’ experience in the development of investigational cancer chemotherapies. She currently serves as a consultant to the pharmaceutical industry, working with over 30 companies over 20 years with a focus on molecularly targeted anti-cancer therapy. From 2020 to 2022, Dr. Hannah served as Senior Vice President and Chief Medical Officer at CytomX Therapeutics, an oncology-focused biopharmaceutical company. Previously, Dr. Hannah worked as Senior Medical Director at SUGEN (working on Sutent and other tyrokine kinase inhibitors) and Quintiles, a global contract research organization. Dr. Hannah has also served on the board of directors of Rigel Pharmaceuticals since 2021. Dr. Hannah specializes in clinical development strategy and has filed over 30 Investigational New Drug applications for new molecular entities and seven successful New Drug Applications (including talazoparib, enzalutamide, defibrotide, carfilzomib, and others). Dr. Hannah received her BA in biochemistry and immunology from Harvard University and her MD from the University of Saint Andrews. She is a member of ASCO, AACR, ASH, ESMO, SITC, and a Fellow with the Royal Society of Medicine. Skills and Qualifications Dr. Hannah has significant healthcare knowledge having spent over 20 years as a consultant in the field of oncology drug development and has over 30 years of experience working with biopharmaceutical companies. Dr. Hannah has extensive knowledge of the clinical trials marketplace, and we believe she will continue to offer valuable guidance on how the Company should position itself to obtain clinical trials diagnostic testing volumes as the Company continues to grow its revenue in that area. Because of this experience and knowledge, we believe Dr. Hannah is well qualified to serve on our Board. |
Information as to Nominees and Other Director Information
| Stephen Kanovsky | Age: 61 | Board Member and Chair of the Nominating and Corporate Governance Committee | | Mr. Kanovsky has served as a director since July 2017. Mr. Kanovsky is Deputy General Counsel and Chief Commercial Counsel of GE HealthCare, where he has served since 2012, which provides medical technologies and solutions to the global healthcare industry and supports customers throughout the world with a broad range of services and systems, from diagnostic imaging and healthcare IT to molecular diagnostics and life sciences. Prior to his service at GE HealthCare, Mr. Kanovsky held numerous legal, compliance, and research roles in several global pharmaceutical companies. Mr. Kanovsky earned his bachelor’s degree from the University of Pennsylvania. He subsequently graduated from Temple University’s School of Pharmacy with a master’s degree in Pharmacology and Temple University’s School of Law with a juris doctorate degree. Mr. Kanovsky also holds an MBA from Saint Joseph’s University’s Haub School of Business. Skills and Qualifications Mr. Kanovsky has over 25 years of legal and compliance experience in the global life sciences and pharmaceutical industry. Through his work as Deputy General Counsel and Chief Commercial Counsel of GE HealthCare, Mr. Kanovsky is able to provide continued knowledge of the life sciences space. He also brings valuable experience to our Board through his prior involvement with Clarient, Inc. (“Clarient”), prior to its acquisition by NeoGenomics in December 2015. Because of Mr. Kanovsky’s extensive legal and compliance background and long-term service to the Board, we believe Mr. Kanovsky is well qualified to serve on our Board. |
Information as to Nominees and Other Director Information
| NeoGenomics, Inc. | 9 | 2024 Proxy Statement |
Information as to Nominees and Other Director Information
| Proposal 1 | Table of Contents |
Information as to Nominees and Other Director Information
| Michael Kelly | Age: 67 | Board Member and Chair of the Audit and Finance Committee | | Mr. Kelly has served as a director since July 2020 and served as the Board’s Lead Independent Director for the duration of Ms. Tetrault’s service as Executive Chair of the Board and Interim Chief Executive Officer in 2022. Mr. Kelly is a former senior executive of Amgen, Inc. ("Amgen") and is currently acting as Founder & President of Sentry Hill Partners, LLC, a global life sciences transformation and management consulting business he founded in 2018. Mr. Kelly has more than two decades of executive experience as a senior leader in the life sciences industry serving in various strategic finance and operations positions at Amgen from 2003 to 2017, most recently as Senior Vice President, Global Business Services and Vice President & CFO, International Commercial Operations. Mr. Kelly has also held positions at Biogen, Tanox, and Monsanto Life Sciences. Mr. Kelly currently serves as a director for Amicus Therapeutics, DMC Global, Inc., and Prime Medicine, Inc. Mr. Kelly serves on the Council of Advisors and was the former audit committee chair for Direct Relief, a humanitarian aid organization focused on health outcomes and disaster relief. Mr. Kelly holds a BS in business administration from Florida A&M University, concentrating in Finance and Industrial Relations. Skills and Qualifications Mr. Kelly has more than two decades of executive experience as a senior leader in the life sciences industry serving in various strategic finance and operations positions. We believe Mr. Kelly’s extensive experience managing and growing domestic and international organizations, as well as his track record in finance, operations and building differentiated product companies is highly valuable as we continue our long-term growth strategy, and therefore Mr. Kelly is well qualified to serve on our Board. In addition, we believe Mr. Kelly’s extensive knowledge and background in finance qualifies him to serve as a financial expert on the Audit and Finance Committee. |
Information as to Nominees and Other Director Information
| David Perez | Age: 64 | Board Member | | Mr. Perez has served as a director since November 2022. Mr. Perez has over 40 years of global executive leadership experience, leading the growth and operations of several businesses, growing and scaling organically through research and development and innovation, as well as through mergers and acquisitions. In March 2019, he retired from his position as president and CEO of Terumo BCT, a company dedicated to blood banking, transfusion medicine and cell-based therapies, following a comprehensive two-year succession and transition plan. Mr. Perez currently serves as a director on the following private company boards Laborie Medical Technologies Corp., Advanced Instruments, LLC and MoInlycke Health Care AB. During his nearly 20-year tenure, Mr. Perez guided Terumo BCT through several foreign ownership structures, leveraging his extensive experience leading complex, multinational businesses, and diverse, cross-cultural organizations. Under his leadership as CEO for 18.5 years, the company transformed from a single manufacturing and R&D site to a multi-national biomedical organization with five R&D centers and six manufacturing plants, as he helped drive global revenue growth from $160 million to $1 billion. Mr. Perez holds a BA in Political Science from Texas Tech University. Skills and Qualifications Mr. Perez has 40 years of executive leadership in medical device and health care services, He serves as an independent board member and advisor to several corporations and non-profit organizations. His expertise encompasses growing and scaling highly regulated global businesses organically through R&D and innovation and inorganically through M&A, leading within a variety of foreign, public, and private equity ownership structures, strategic planning, culture and talent development, succession planning, enterprise risk management, operations, compliance, and corporate governance. We believe Mr. Perez’s extensive knowledge and background as a chief executive and director qualifies him to service on our board. |
Information as to Nominees and Other Director Information
| NeoGenomics, Inc. | 10 | 2024 Proxy Statement |
Information as to Nominees and Other Director Information
| Table of Contents | Proposal 1 |
Information as to Nominees and Other Director Information
| Anthony Zook | Age: 63 | Board Member and Chair of the Culture and Compensation Committee | | Mr. Zook has served as a director since June 2023. Mr. Zook served as Chief Executive Officer of Innocoll Pharmaceuticals, and prior to that Mr. Zook was Executive Vice President, Commercial Operations of AstraZeneca (AZ) where he held global P&L responsibility for all of AZ's brands and markets. Under Mr. Zook's leadership, AZ commercialized ten brands, each in excess of $1 billion in sales. Mr. Zook was also responsible for MedImmune, AZ's global biologics business. He also chaired the Commercial Investment Board, which identified and approved critical investments company-wide, including investments in plants, markets, and technology. Earlier in his career at AZ, Mr. Zook held various positions including CEO of North America and VP of Sales, where he helped lead the integrations of Astra US, Astra Merck, and Zeneca. Prior to joining AZ, Mr. Zook spent 14 years with Berlex Laboratories in a variety of positions. Skills and Qualifications Mr. Zook has significant experience as a brand and marketing executive with a focus on managing the interface between commercial and research and development aspects of an organization. Mr. Zook has served as a Chief Executive Officer of a large pharmaceutical company with global responsibilities, has significant sales and marketing experience, as well as operational and oncology experience. Because of Mr. Zook's industry knowledge, we believe Mr. Zook is well qualified to serve on our Board. |
Information as to Nominees and Other Director Information
| Elizabeth Floegel | Age: 48 | Board Member | | Ms. Floegel has served as a director since June 2023. Ms. Floegel is Chief Information & Digital Officer of Numotion and manages a significant digital and cybersecurity transformation with the strategic use of data and technology to drive value creation by creating efficient and compliant operations. Before joining Numotion, Ms. Floegel was the Global Vice President of Business Technology at Allergan (now part of Abbvie) where she led the technology portfolio across global commercial, retail, digital products, and marketing. Prior to Allergan, Ms. Floegel was Head of Commercial and Digital Technology for Regeneron Pharmaceuticals and Global Vice President of Commercial Technology for Baxter Healthcare. Ms. Floegel holds an MBA from Benedictine University. Skills and Qualifications Ms. Floegel has a track record for successfully leading technology and organizational transformation in highly matrixed environments. She has extensive experience in cybersecurity, data privacy, automation, compliance technology and digital technology transformation. Because of her experience and knowledge, we believe Ms. Floegel is well qualified to serve on our Board. |
Information as to Nominees and Other Director Information
| Dr. Neil Gunn | Age: 63 | Board Member and Chair of the Innovation, Pipeline & Technology Committee | | Dr. Neil Gunn has served as a director since June 2023. Most recently, Dr. Gunn was the Chief Executive Officer of IDbyDNA, which was acquired by Illumina in 2022. Prior to that, Dr. Gunn was President of Roche Sequencing Solutions ("RSS"), where he grew the organization from early initial concepts to over 900 employees across three continents while integrating nine acquisitions into one with a common vision and strategy. Before RSS, Dr. Gunn was Head of Global Business for Roche Molecular Diagnostics and was responsible of the development and execution of strategic plan that launched over 140 major assay, instrument, and software launches over six years. Dr. Gunn’s earlier roles include Vice President Commercial Operations for CaridianBCT and Vice President of Commercial Operations - Americas for Novartis Diagnostics. Skills and Qualifications Dr. Gunn is a veteran diagnostics senior executive with expertise in company organization to maximize efficiencies with a focus on value generators to drive growth. Dr. Gunn has multi-year executive experience in multinational diagnostic companies and startups. He also has technical expertise in oncology diagnostics, next generation sequencing and other relevant technologies. Because of this experience and knowledge, we believe Dr. Gunn is well qualified to serve on our Board. |
Information as to Nominees and Other Director Information
| NeoGenomics, Inc. | 11 | 2024 Proxy Statement |
Information as to Nominees and Other Director Information
| Proposal 1 | Table of Contents |
Independent Director Compensation Tables
Independent Director Compensation Tables The following table provides the compensation of each of our independent directors for the year ended December 31, 2023.
Independent Director Compensation Tables
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Option Awards(1) ($) | Total ($) | | Lynn Tetrault | 125,000 | 168,000 | 72,000 | 365,000 | | Bruce Crowther | 73,451 | 168,000 | 72,000 | 313,451 | | David Daly(2) | — | — | — | — | | Dr. Alison Hannah | 65,000 | 168,000 | 72,000 | 305,000 | | Stephen Kanovsky(3) | 69,200 | 168,000 | 72,000 | 309,200 | | Michael Kelly | 77,500 | 168,000 | 72,000 | 317,500 | | David Perez(3) | 69,800 | 168,000 | 72,000 | 309,800 | | Dr. Neil Gunn(3)(4) | 36,309 | 168,000 | 72,000 | 276,309 | | Tony Zook(4) | 36,226 | 168,000 | 72,000 | 276,226 | | Elizabeth Floegel(4) | 33,393 | 168,000 | 72,000 | 273,393 | | Rachel Stahler(5) | 16,250 | — | — | 16,250 |
Independent Director Compensation Tables
(1)Amounts shown represent grant date fair value computed in accordance with ASC Topic 718, with respect to restricted stock awards and stock option awards granted to the independent directors. The amounts shown disregard the impact of estimated forfeitures related to service-based vesting conditions. Each restricted stock award was granted with a fair market value based on the closing price of our common stock on the
Independent Director Compensation Tables
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Independent Director Compensation Tables
| Independent Compensation Tables | Table of Contents |
Independent Director Compensation Tables
day prior to the grant date. Each stock option was granted with an exercise price equal to the closing price of our common stock on the day prior to the grant date. See Item 8. Note 2. Summary of Significant Accounting Policies, to our Consolidated Financial Statements of our Annual Report on Form 10-K as filed with the SEC on February 20, 2024, for a description of the valuation methodology of stock and option awards. (2)Mr. Daly resigned from the Board effective January 19, 2023. (3)Members of the ad hoc Special Litigation Committee established to investigate and evaluate certain derivative claims receive an hourly cash fee for their service. During 2023, Mr. Kanovsky received an additional fee of $4,200, Mr. Perez received an additional fee of $4,800 and Dr. Gunn received an additional fee of $4,200 for their service on the ad hoc Special Litigation Committee. (4)Dr. Gunn, Mr. Zook, and Ms. Floegel were appointed to the Board effective June 26, 2023. (5)Ms. Stahler resigned from the Board effective June 26, 2023. The aggregate number of unvested shares of restricted stock and stock option awards granted and outstanding for the year ended December 31, 2023, were as follows:
Independent Director Compensation Tables
| Name | Shares of Restricted Stock | Number of Shares Underlying Options | | Lynn Tetrault | 11,336 | 8,353 | | Bruce Crowther | 11,336 | 8,353 | | David Daly(1) | — | — | | Dr. Alison Hannah | 11,336 | 8,353 | | Stephen Kanovsky | 11,336 | 8,353 | | Michael Kelly | 11,336 | 8,353 | | David Perez | 11,336 | 8,353 | | Dr. Neil Gunn(2) | 11,336 | 8,353 | | Tony Zook(2) | 11,336 | 8,353 | | Elizabeth Floegel(2) | 11,336 | 8,353 | | Rachel Stahler(3) | — | — |
Independent Director Compensation Tables
(1)Mr. Daly resigned from the Board effective January 19, 2023. (2)Dr. Gunn, Mr. Zook, and Ms. Floegel were appointed to the Board effective June 26, 2023. (3)Ms. Stahler resigned from the Board effective June 26, 2023.
Independent Director Compensation Tables
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Independent Director Compensation Tables
EXECUTIVE COMPENSATION
Overview and Philosophy
Overview and Philosophy The Culture and Compensation Committee strives to create a compensation structure that supports a pay-for-performance culture and strongly believes that executive compensation should be tied to the performance of the Company and stockholder returns. In establishing compensation, the Committee leverages guiding principles to drive decisions that are aligned with this pay-for-performance culture. These guiding principles include: •High Performance: We believe compensation should be tied to our success in delivering on our mission and the value we create for our clients, patients, and stockholders. •Market Driven: We compete to attract and retain the best employees in the healthcare market. To ensure that we are successful in securing the employees that possess the knowledge and skill set that we need to be the market leader, we consider market conditions and the competitive environment. •Align Interests: We believe that our long-term success is dependent on our employees feeling a sense of company ownership and alignment with our stockholder interests, and we will strive to develop an inextricable link. •Communication: We will clearly and transparently share our compensation philosophy and program with all employees. Consistent with these guiding principles, our compensation philosophy is focused on providing our executive officers with compensation and benefits that are competitive and that meet our goals of attracting, retaining, and motivating highly skilled management. The levels of compensation we provide should be competitive, reasonable, and appropriate for our business needs and circumstances. Our executive compensation program focuses on both short and long-term results and is composed of three key elements: (1)base salaries, which reflect various factors including market-competitive pay levels, scope of the position, experience, individual performance, and strategic criticality; (2)annual cash incentive opportunities, which reflect Company and individual performance; and (3)longer-term stock-based incentive opportunities under our equity incentive plan, generally in the form of stock option awards, restricted stock grants or performance share units, which link the interests of senior management with our other stockholders. Equity incentive grants are generally subject to three-year vesting provisions. Each of our compensation elements is designed to simultaneously fulfill one or more of our core objectives. Our compensation program is administered under a rigorous process that includes our Culture and Compensation Committee soliciting the advice of an independent third-party consultant (which reports directly to the Culture and Compensation Committee, not to management) and long-standing, consistently applied policies with respect to establishing short-term incentive targets, long-term equity targets, the timing of equity grants, the pricing of stock option awards, and the periodic review of peer group practices.
2023 Performance Highlights
2023 Performance Highlights Fiscal 2023 was characterized as a year of very strong business performance while continuing to navigate another year of change and transition for NeoGenomics. The Company added new leaders to its executive leadership team, as well as many new talented individuals to create an agile and broad leadership team. Building a talented pipeline of contributors and leaders through internal and external succession planning is an important part of our growth strategy. The Company embraced and emphasized its commitment to its mission of saving lives by improving patient care and to its vision of becoming the world’s leading cancer testing, information, and decision support company by providing uncompromising quality, exceptional service, and innovative solutions. During 2023, the Company made significant progress throughout the business to support sustainable, long-term growth, including: •Strong business results led to a total year-on-year revenue increase of ~16% and positive adjusted EBITDA, both ahead of guidance; •Outpaced competitor set from a market cap growth and stock price performance perspective; •Dramatic sustainable improvements in operational effectiveness drove substantial increases in both adjusted gross profit (~27.5%) and adjusted gross margin (to ~44.7%); •Executed a reorganization in the first quarter to help prioritize our investments, optimize our general and administrative spend and enable execution of our strategic priorities. •Re-invested in our operating model and our people. This includes introducing a new go-to-market strategy within our clinical commercial business to ensure enhanced focus on our customers and patients. We also made significant investments in strengthening our lab operations staff and workflow to ensure we can continue to deliver excellence in support of our customers. •Introduced our strategic objectives focus chart centered around driving sustainable collaborative execution and outcomes. The core strategy here is to drive outcomes around profitable growth across our core clinical business, accelerating prowess and impact across advanced diagnostics, enhancing our people & culture, and driving value creation for both our stockholders and customers. •Launched Neo Comprehensive NGS assay for solid tumors, continue to provide innovative solutions for assay improvement, and reimbursement approvals; and •Enhanced our vision and collective focus around “NEOSpirit” to better integrate the Company through strong collaboration, align our core capabilities and enhance communication. These strategic operational initiatives helped to drive improvements throughout the business, including sequential revenue, gross margin, and adjusted EBITDA growth in each of the four quarters of 2023. During 2023, consolidated revenues increased $81.9 million, or 16.1%, year-over-year. Revenues in our Clinical Services segment increased $76.9 million, or 18.4%, year-over-year, primarily driven by an increase in test volume, a more favorable test mix, and an increase in average unit price due to strategic reimbursement initiatives. Advanced Diagnostics revenue increased $5.0 million, or 5.5% year-over-year primarily driven by increased volume and higher billings across its portfolio. Executive compensation decisions made by the Culture and Compensation Committee in 2023 reflected the events noted above as well as the macro environment. The annual incentive plan outcome for fiscal 2023 was determined in the first quarter of 2024 based on Company performance and the performance of our executive officers. Separate from the company-wide financial and individual performance outcomes, the Culture and Compensation Committee approved a corporate performance score of 98% of target (“the Corporate Performance Score”) based on performance relative to our strategic critical success factors. Annual focus areas are established each year to align with our strategic critical success factors. In 2023, our focus areas included: profitability grow our core business; accelerate Advanced Diagnostics; enhance our people and culture; and drive value creation. Measurement against the achievement of these focus areas provides for continuous alignment with our common purpose and vision. Payments varied by Named Executive Officer, reflecting the individual’s performance objectives and achievements for the year relative to each Named Executive Officer’s goals. The Culture and Compensation Committee believes that the compensation of our Named Executive Officers for 2023 aligned with both our performance in 2023 and the objectives of our executive compensation policies. Our executive compensation framework purposefully emphasizes at-risk pay, annual bonuses are earned based on annual performance objectives and achievements during the year, performance stock unit awards are earned based on multi-year performance objectives and achievements over the vesting period, and the value of restricted stock awards, stock options, and performance stock unit awards, may change based on the Company's stock price performance through the awards' vesting period or exercise period. For 2023, approximately 85% of our Named Executive Officers' compensation was at risk. During 2023, the Culture and Compensation Committee took the following actions: •Strengthened the Company's Focus on Human Capital – Throughout 2023 in partnership with new leadership we have strengthened our human capital initiatives including succession planning and pay-for-performance. •Enhanced Stockholder Engagement Efforts – We continued to increase our proactive stockholder engagement, including having the Chair of our Culture and Compensation Committee engage with stockholders on topics that included
2023 Performance Highlights
our executive compensation program and ESG. We have summarized feedback from several stockholders in the “View from our Stockholders” section of this Proxy Statement. •Improved Plan Designs – Beginning in 2023, we introduced a more robust short-term incentive plan that focuses on business performance primarily and a performance stock unit component to our Named Executive Officer equity awards that is measured against share price growth. The Culture and Compensation Committee believes that these decisions appropriately reflect the significant business achievements of 2023 and provide meaningful retention and alignment to our investment and growth priorities over the next five years. Additional information, as well as details on the compensation practices and policies more generally, are detailed in the balance of the Compensation Discussion & Analysis.
Compensation Elements
Compensation Elements Our compensation program aims to retain our executive leaders over the long-term. In accordance with our compensation philosophy we provide competitive fixed cash compensation, an annual incentive program that aligns pay with in-year progress against our longer-term goals, and long-term incentive awards in the form of restricted stock awards, performance share units and stock options that provide clear and transparent alignment to sustainable stockholder value creation. The aggregate value of base salary, annual incentive and long-term incentives is generally positioned within a market competitive range. The following table summarizes the purpose and key features of each element of compensation.
Compensation Elements
| Element | Purpose | Key Features | | Base Salary | Provide competitive baseline compensation for role | •Fixed cash compensation •Amounts informed by levels in the market, taking account of the role, scope of the position, experience, performance and strategic criticality •As a starting point, we review market median benchmark ranges, and position against that range based on a variety of factors, including performance, criticality, unique skills, experience, and other relevant factors | | Annual Incentive | Reward for the achievement of both NeoGenomics and individual performance during the year | •Variable cash compensation •Target opportunity informed by levels in the market •Actual value based on financial performance, company-defined critical strategic success factors and the executive’s performance against individual objectives | | Long-Term Incentives | Align with the long-term interests of NeoGenomics, our stockholders and our employees, while rewarding long-term sustainable value creation and driving retention | •Grants of stock option awards, restricted stock awards and performance share units generally made annually to Named Executive Officers •Variable equity-based compensation •Target opportunity informed by levels in the market •Options require stock price appreciation to yield value •Restricted stock and options have three-year ratable vesting, options have a ten-year term and performance share/stock units have 3-year growth vesting targets |
Compensation Elements
| Compensation Best Practices | | | | | What We Do: | | What We Avoid: | | | ✓ | Pay for performance | ✗ | No tax gross-ups on any change-in-control benefits | | ✓ | Deliver majority of executive compensation in the form of variable or performance-based pay | ✗ | No hedging or pledging of NeoGenomics stock | | ✓ | Align annual performance objectives with our strategy | ✗ | No excessive perquisites, benefits, or pension payments | | ✓ | Conduct annual assessment of Chief Executive Officer pay versus performance | ✗ | No reloading or repricing of stock option awards | | ✓ | Take into consideration the compensation levels of a relevant peer group of companies when setting compensation | ✗ | No option grants with an exercise price below fair market value | | ✓ | Cap payout opportunities under our incentive plans | | | | ✓ | Impose share ownership and retention requirements | | | | ✓ | Impose clawback policy | | | | ✓ | Limit change-in-control benefits to double trigger | | | | ✓ | Solicit an annual ‘say on pay’ vote | | | | ✓ | Engage an independent compensation consultant | | |
The Annual Process
| Quarter | Typical Meeting Topics | | Q1 | •Setting compensation for Company executive officers, including the review and approval of executive benchmarking and pay recommendations, salary adjustments, annual bonus payouts, and long-term incentive award values; •Approve annual company and individual performance goals for the year ahead; •Assess compliance versus stock ownership guidelines; •Review historical equity awards and resulting burn rates; and •Engage in various stockholder outreach and engagement activities. | | Q2 | •Review and finalize compensation discussion and analysis section of the proxy statement; and •Monitor the Company’s incentive and equity-based compensation plan, including the review and approval of annual equity grants. •Review and finalize Board of Director compensation with guidance from WTW, our independent outside compensation consultant. | | Q3 | •Review and discuss proxy advisor reports and any other investor feedback; •Receive update on legislative, regulatory and governance environments; •Review current compensation philosophy and benchmark against our peers various elements of compensation, including organizational culture programs and practices pertaining to diversity, equity and inclusion; and •Review Culture and Compensation Committee charter. | | Q4 | •Conduct annual peer group review; •Undertake Culture and Compensation Committee self-evaluation; •Discuss potential compensation design enhancements and review planning timeline; and •Succession planning. |
Use of an Independent Advisor
Use of an Independent Advisor As outlined in its charter, the Culture and Compensation Committee has the authority to select, retain, and/or replace, as needed, compensation and benefits consultants to provide independent advice to the Culture and Compensation Committee. Since 2016 the Culture and Compensation Committee has retained WTW as an independent outside compensation consultant. During 2023 WTW advised the Culture and Compensation Committee on peer group development, market practices, industry trends, investor views, pay versus performance, and benchmark compensation data. In addition, they reviewed and provided the Culture and Compensation Committee with an independent perspective of the Company’s compensation related to its executive officers. These duties were consistent with those performed in prior years. The Culture and Compensation Committee considered the six independence assessment factors specified under the SEC Rule 10C-1(b)(4) to monitor the independence of their compensation advisors. As was the case in prior years the Culture and Compensation Committee determined that WTW’s services during 2023 did not raise a conflict of interest.
Compensation Peer Group
Compensation Peer Group In evaluating executive compensation, the Culture and Compensation Committee considers a number of factors including: •Company performance; •Individual performance; •Company performance relative to our established peer group; •Compensation practices observed in our established peer group; and •Stockholder views. Given the fast-changing nature of our industry the Culture and Compensation Committee reviews the compensation peer group annually with input from WTW. Consideration is given to relative size (revenue, number of employees and market capitalization) and nature of business (business focus and model) of the organizations. The Culture and Compensation Committee has consciously chosen to adopt a compensation peer group that includes certain companies that appear different from the group of companies with which our business competes. This is primarily due to the fact that many of our direct business competitors are either much larger or smaller than us in terms of size and scope, meaning the compensation data would not necessarily be appropriate to inform decision-making regarding executive compensation levels at NeoGenomics. The 2023 compensation peer group comprised the following 16 companies:
Compensation Peer Group
| •10x Genomics, Inc. | •Fulgent Genetics, Inc. | •Natera, Inc. | | •Adaptive Biotechnologies Corporation | •Invitae Corporation | •OPKO Health, Inc. | | •AtriCure, Inc. | •Maravai Life Sciences Holdings, Inc.(1) | •QuidelOrtho Corporation(2) | | •CareDx, Inc. | •Medpace Holdings, Inc. | •Veracyte, Inc. | | •Emergent BioSolutions, Inc. | •Myriad Genetics, Inc | | | •Exact Sciences Corporation | •NanoString Technologies, Inc. | |
Compensation Peer Group
(1)Excluded from the Chief Executive Officer pay vs. performance graph below because three years of stock data is not available. (2)Excluded from the Chief Executive Officer pay vs. performance graph below due to the merger of Quidel Corporation and Ortho Clinical Diagnostics Holdings in 2022. Peers included in 2023 met industry selection criteria and fell within the Life Sciences industry and desired ranges for revenue and market capitalization. Relative to the peer group, the Company ranked approximately at the median for revenue and market capitalization. While a specific percentile is not targeted, the Culture and Compensation Committee will generally reference a competitive range around market median to inform decisions on executive compensation (both by component, and in aggregate), along with role scope, company and individual performance, role criticality and other relevant factors.
Compensation Peer Group
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Compensation Peer Group
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Assessment of the Chief Executive Officer’s Compensation
Assessment of the Chief Executive Officer’s Compensation As noted above, one of the Culture and Compensation Committee’s annual activities is to assess the total compensation of the Chief Executive Officer related to our compensation peer group. The peer group used for this purpose consists of the compensation peer group as defined above. The following graph shows the relationship of Mr. Smith, our Chief Executive Officer’s, total compensation as set forth in the 2023 Summary Compensation Table and the change in stock price for the three years ended December 31, 2020, 2021, and 2022 (annualized) as compared to the companies included in our peer group, as defined above. Data for the most recent year ended December 31, 2023, was not used in this graph as the Chief Executive Officer compensation was not available for this period for all companies presented. As previously highlighted throughout this report, Mr. Smith was brought in as Chief Executive Officer in 2022 as part of a significant leadership and business transition. The turnaround impact needed to structure the organization optimally and drive business outcomes dictated the need for the referenced Chief Executive Officer compensation.
2023 Compensation Decisions and Outcomes
2023 Compensation Decisions and Outcomes The chart below presents the cumulative total return to our stockholders of $100 during the period from December 31, 2018, through December 31, 2023, in comparison to the cumulative return on the S&P 500 Index and the Nasdaq Biotechnology Index (^NBI). The Nasdaq Biotechnology Index has been selected for this comparison because the Company is traded on the Nasdaq exchange, and it is considered to be the most suitable comparative index. The customized peer group is reflective of five publicly traded companies during that same period. The peer group is made up of Invitae Corporation, Exact Sciences Corporation, Laboratory Corporation of America Holdings, Natera, Inc., and Quest Diagnostics, Inc. Several of our closest competitors are part of large pharmaceutical or other multi-national firms, or are privately held and, as such, we are unable to obtain financial information for them.
Annual Incentive
Annual Incentive The MIP provides for an annual performance bonus, paid in cash, designed to incentivize and reward Named Executive Officers currently employed by the Company for operating results, both financial and strategic. The 2023 business performance goals were approved by the Culture and Compensation Committee and were communicated to each of our Named Executive Officers at the start of the calendar year or as of the date of hire, as applicable. In 2023, bonus opportunities and outcomes for the Named Executive Officers currently employed by the Company were as follows:
Annual Incentive
| Named Executive Officer | Target Bonus (% of annual salary) | Maximum Bonus (% of annual salary) | Actual Bonus (% of annual salary) | Actual Bonus (% of target) | | Christopher Smith | 100 | 200 | 185 | 185 | | Jeffrey Sherman | 70 | 140 | 119 | 171 | | Melody Harris | 60 | 120 | 101 | 169 | | Warren Stone | 60 | 120 | 104 | 174 | | Vishal Sikri | 60 | 120 | 100 | 167 |
Annual Incentive
In the first quarter of 2023, the Culture and Compensation Committee approved the performance metrics and associated goals for the 2023 annual incentive plan. Consistent with prior years, corporate performance was tied to financial performance (revenue and Adjusted EBITDA) and our Strategic Critical Success Factors. For 2023, the weighting of these financial measures has intentionally increased. All participants, including the Named Executive Officers, also had a component of their annual cash bonus contingent on individual performance. The relative weightings reflect the role of each Named Executive Officer and the areas on which they are able to have the most influence and impact. The inclusion of a shared corporate performance component reflects the importance of our senior management working collectively as a team and across the broader organization to deliver results and their shared accountability to our stockholders. The weight of each measure for 2023 was as follows:
Annual Incentive
| | Corporate Performance | | | Individual Performance | | Named Executive Officer | Revenue (%) | Adjusted EBITDA (%) | Strategic Critical Success Factors (%) | Individual Goals (%) | | Christopher Smith | 40 | 40 | 10 | 10 | | Jeffrey Sherman | 40 | 40 | 10 | 10 | | Melody Harris | 40 | 40 | 10 | 10 | | Warren Stone | 40 | 40 | 10 | 10 | | Vishal Sikri | 40 | 40 | 10 | 10 |
Annual Incentive
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Individual Performance
| Named Executive Officer | 2023 Target Cash Incentive Opportunity | Revenue (40% Weight) @ 172% Performance | EBITDA (40% Weight) @ 200% Performance | Strategic Critical Success Factors (10% Weight) @ 98% Performance | 2023 Individual Performance Modifier | Individual Performance Modifier (10% Weight) | = | 2023 Actual Cash Incentive Award | | Christopher Smith(1) | 1,000,000 | 688,000 | 800,000 | 98,000 | 200% | 200,000 | = | 1,850,000 | | Jeffrey Sherman | 367,500 | 252,840 | 294,000 | 36,015 | 120% | 44,145 | = | 627,000 | | Melody Harris | 315,000 | 216,720 | 252,000 | 30,870 | 105% | 33,110 | = | 532,700 | | Warren Stone | 315,000 | 216,720 | 252,000 | 30,870 | 150% | 47,210 | = | 546,800 | | Vishal Sikri | 321,600 | 221,261 | 257,280 | 31,517 | 80% | 25,242 | = | 535,300 |
2023 Long-Term Incentive Awards
2023 Long-Term Incentive Awards Annual 2023 long-term incentive (“LTI”) awards to our Named Executive Officers were made in the form of a combination of stock option awards, time-based restricted stock and/or performance-based restricted stock units subject to a market condition (the “Performance Stock”). This directly reflects our strategy and, in turn, our compensation philosophy by delivering an appropriate balance of retention and motivation to deliver strong strategic performance, with a view to long-term value creation for our stockholders. In addition to the performance share units which were introduced in 2023 and represent a performance-based incentive, the Culture and Compensation Committee views stock option awards as a performance-based incentive given the inherent requirement for stock price appreciation for awards to yield value. The Culture and Compensation Committee also considers it appropriate to grant restricted stock awards and performance share units to our Named Executive Officers to drive performance outcomes and align with market practice. This aligns with one of the goals of our compensation philosophy, which is to attract and retain our highly skilled management team. The amount of LTI awards granted to each Named Executive Officer is determined based on individual performance, potential future contributions, market competitiveness, and other factors. Our Culture and Compensation Committee reviews our LTI awards against LTI awards of our peer group and also reviews the overall total compensation of our executive officers against our peer group. On average, annual LTI grant awards for our Named Executive Officers position their overall compensation competitively versus values of our peer group, in cases where there are comparable positions at the peer companies. Stock options and restricted stock awards generally vest ratably over three years from the date of grant, starting on the first anniversary of the date of grant subject to continued employment with the Company. The performance shares units vest over three years from the date, based on the achievement of pre-determined metrics with the final year's measurement being the only measurement period where achievement above target is possible, and subject to continued employment with the Company. Further details of the awards granted to each of our Named Executive Officers are described under the section “Narrative Disclosure to the Summary Compensation Table and the Grants of Plan Awards Table” of this Proxy Statement.
Summary Compensation Table
Summary Compensation Table The following Summary Compensation Table sets forth all compensation awarded to, earned by, and paid in all capacities, during the fiscal years ended December 31, 2023, 2022, and 2021 (or shorter period of employment, as applicable), by the principal executive officers, principal financial officers, and our three other most highly compensated executive officers in 2023, together “Named Executive Officers”:
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus(1) ($) | Stock Award(2) ($) | Option Award(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | | Christopher Smith Director and Chief Executive Officer | 2023 | 1,000,000 | — | 5,986,768 | 2,816,870 | 1,850,000 | 12,308 | 11,665,946 | | | 2022 | 346,154 | — | 7,600,000 | 4,250,000 | 455,438 | 2,146,930 | 14,798,522 | | | 2021 | — | — | — | — | — | — | — | | Jeffrey Sherman Chief Financial Officer | 2023 | 525,000 | — | 1,619,944 | 762,214 | 627,000 | 13,200 | 3,547,358 | | | 2022 | 16,154 | 250,000 | 1,500,000 | 1,500,000 | — | — | 3,266,154 | | | 2021 | — | — | — | — | — | — | — | | Melody Harris President, Enterprise Operations | 2023 | 525,000 | — | 1,880,389 | 1,413,551 | 532,700 | 342,585 | 4,694,225 | | | 2022 | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | | Warren Stone President, Clinical Services | 2023 | 525,000 | — | 1,030,398 | 563,383 | 546,800 | 343,669 | 3,009,250 | | | 2022 | 40,385 | 350,000 | 1,000,000 | 1,000,000 | — | — | 2,390,385 | | | 2021 | — | — | — | — | — | — | — | | Vishal Sikri President, Advanced Diagnostics | 2023 | 528,635 | — | 880,390 | 414,251 | 535,300 | 13,200 | 2,371,776 | | | 2022 | 294,231 | 500,000 | 1,250,000 | 1,250,000 | 255,000 | 12,750 | 3,561,981 | | | 2021 | — | — | — | — | — | — | — |
Summary Compensation Table
(1)Amounts shown in 2022 for Mr. Sherman, Mr. Stone and Mr. Sikri consist of a one-time signing bonus. (2)Amounts shown represent grant date fair value computed in accordance with ASC Topic 718, with respect to restricted stock awards (based on the closing price of our common stock on the day prior to the grant date) and stock option awards granted to the Named Executive Officers. The amounts shown disregard the impact of estimated forfeitures related to service-based vesting conditions. Each stock option was granted with an exercise price equal to the closing value of our common stock on the day prior to the grant date. In 2023, the Named Executive Officers were granted performance-based restricted stock subject to a market condition (the “Performance Stock”). Under SEC rules, the Performance Stock is valued based on the probable outcome of the market condition associated with these awards. See Item 8, Note 2. Summary of Significant Accounting Policies, to our Consolidated Financial Statements of our Annual Report on Form 10-K as filed with the SEC on February 20, 2024, for a description of the valuation methodology of stock awards, option awards, and Performance Stock. (3)Amounts shown consist of awards based on performance under our MIP for each respective year. (4)Perquisites and other personal benefits for a Named Executive Officer are excluded if the total value of all of such perquisites and personal benefits is less than $10,000. The table below shows the components of the All Other Compensation column shown above for 2023:
Summary Compensation Table
| Named Executive Officer | Relocation Allowance(a) ($) | Severance ($) | Retirement Plan Company Contribution(b) ($) | Total All Other Compensation ($) | | Christopher Smith | — | — | 12,308 | 12,308 | | Jeffrey Sherman | — | — | 13,200 | 13,200 | | Melody Harris | 330,469 | — | 12,116 | 342,585 | | Warren Stone | 330,469 | — | 13,200 | 343,669 | | Vishal Sikri | — | — | 13,200 | 13,200 |
Summary Compensation Table
(a) The amounts in this column represent payments to Ms. Harris and Mr. Stone for relocation allowance pursuant to their employment agreement.. (b) The amounts in this column, represent our matching contributions allocated to each of the named executive officers who participated in the Company’s 401(k) retirement savings plan in 2023. All such matching contributions were fully vested upon contribution.
Summary Compensation Table
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Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table shows information regarding grants of non-equity and equity awards that we made during the fiscal year ended December 31, 2023, to each of our Named Executive Officers:
Grants of Plan-Based Awards
| Named Executive Officer | Equity Incentive Plan Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan(1) ($) | | | Estimated Future Payouts Under Equity Incentive Plan(2) (#) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price per Share of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards(3) ($) | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | | | | Christopher Smith Director and Chief Executive Officer | 5/11/23 | — | 1,000,000 | 2,000,000 | — | — | — | 144,190 | | — | — | 2,833,334 | | | 5/11/23 | — | — | — | — | — | — | — | | 269,841 | 19.65 | 2,816,870 | | | 5/11/23 | — | — | — | 72,095 | 144,190 | 216,285 | — | | — | — | 3,153,435 | | Jeffrey Sherman Chief Financial Officer | 5/11/23 | — | 367,500 | 735,000 | — | — | — | 39,016 | | — | — | 766,664 | | | 5/11/23 | — | — | — | — | — | — | — | | 73,016 | 19.65 | 762,214 | | | 5/11/23 | — | — | — | 19,508 | 39,016 | 58,524 | — | | — | — | 853,280 | | Melody Harris President, Enterprise Operations | 1/01/23 | — | 315,000 | 630,000 | — | — | — | 108,225 | | — | — | 999,999 | | | 1/01/23 | — | — | — | — | — | — | — | | 201,613 | 9.24 | 999,300 | | | 5/11/23 | — | — | — | — | — | — | 21,204 | | — | — | 416,659 | | | 5/11/23 | — | — | — | — | — | — | — | — | 39,683 | 19.65 | 414,251 | | | 5/11/23 | — | — | — | 10,602 | 21,204 | 31,806 | — | | — | — | 463,731 | | Warren Stone President, Clinical Services | 5/11/23 | — | 315,000 | 630,000 | — | — | — | 28,838 | | — | — | 566,667 | | | 5/11/23 | — | — | — | — | — | — | — | | 53,969 | 19.65 | 563,383 | | | 5/11/23 | — | — | — | 10,602 | 21,204 | 31,806 | — | | — | — | 463,731 | | Vishal Sikri President, Advanced Diagnostics | 5/11/23 | — | 321,600 | 642,600 | — | — | — | 21,204 | | — | — | 416,659 | | | 5/11/23 | — | — | — | — | — | — | — | | 39,683 | 19.65 | 414,251 | | | 5/11/23 | — | — | — | 10,602 | 21,204 | 31,806 | — | | — | — | 463,731 |
Grants of Plan-Based Awards
(1)The Fiscal Year 2023 annual bonus of non-equity incentive plan awards sets forth the target and maximum of the amounts awarded as an annual bonus in fiscal year 2023 under the MIP. The actual amount earned is reflected in the Summary Compensation Table above in the “Non-Equity Incentive Plan Compensation” column. (2)The Named Executive Officers received performance-based restricted stock units which vest based on the achievement of a total stockholder return ("TSR") performance target, measured on the first, second and third anniversaries of the date of grant. If the TSR performance target is achieved, the awards will vest at the end of the three-year requisite service period subject to the Named Executive Officer's continued employment through the vesting date. (3)Represents the grant date fair value calculated in accordance with FASB ASC Topic 718. Information regarding the assumptions used in the valuation of option awards can be found in Item 8, Note 2. Summary of Significant Accounting Policies, to our Consolidated Financial Statements of our Annual Report on Form 10-K as filed with the SEC on February 20, 2024, for a description of the valuation methodology of stock and option awards. See also our discussion of stock-based compensation under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report on Form 10-K.
Grants of Plan-Based Awards
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Options Exercised and Stock Vested
Options Exercised and Stock Vested The options exercised by and stock vested for our Named Executive Officers during the year ended December 31, 2023, were as follows:
Options Exercised and Stock Vested
| | Stock Option Awards | | Restricted Stock Awards | | | Name Executive Officer | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Christopher Smith | — | — | 84,191(1) | 1,173,623 | | Jeffrey Sherman | — | — | 33,451(1) | 608,474 | | Melody Harris | — | — | — | — | | Warren Stone | — | — | 22,301(1) | 405,209 | | Vishal Sikri | — | — | 59,381(1)(1) | 1,020,166 |
Options Exercised and Stock Vested
(1)Shares were withheld to cover tax withholding obligations in connection with these exercises. The number of shares reported represents the gross number before the withholding of such shares.
Options Exercised and Stock Vested
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Outstanding Equity Awards on December 31, 2023
Outstanding Equity Awards on December 31, 2023 The following table sets forth information with respect to outstanding equity awards held by our Named Executive Officers as of December 31, 2023:
Outstanding Equity Awards on December 31, 2023
| Stock Option Awards | | | | | | | Restricted Stock Awards | | | Name and Principal Position | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that have not Vested (#) | Market Value of Shares or Units of Stock that have not Vested(1) ($) | | Christopher Smith Director and Chief Executive Officer | 8/15/22 | 173,611 | 520,833(2) | — | 12.62 | 8/15/29 | 252,576 | 4,086,680(3) | | | 8/15/22 | — | — | — | — | — | 265,452 | 4,295,013(6) | | | 5/11/23 | — | 269,841(7) | — | 19.65 | 5/11/30 | 144,190 | 2,332,994(8) | | | 5/11/23 | — | — | — | — | — | 144,190 | 2,332,994(10) | | Jeffrey Sherman Chief Financial Officer | 12/05/22 | 62,292 | 186,877(2) | — | 11.62 | 12/05/29 | 33,453 | 541,270(3) | | | 12/05/22 | — | — | — | — | — | 66,905 | 1,082,523(9) | | | 5/11/23 | — | 73,016(7) | — | 19.65 | 5/11/30 | 39,016 | 631,279(8) | | | 5/11/23 | — | — | — | — | — | 39,016 | 631,279(10) | | Melody Harris President, Enterprise Operations | 1/01/23 | — | 201,613(2) | — | 9.24 | 1/01/30 | 108,225 | 1,751,081(3) | | | 5/11/23 | — | 39,683(7) | — | 19.65 | 5/11/30 | 21,204 | 343,081(8) | | | 5/11/23 | — | — | — | — | — | 21,204 | 343,081(10) | | Warren Stone President, Clinical Services | 12/01/22 | 41,528 | 124,585(2) | — | 11.21 | 12/01/29 | 66,905 | 1,082,523(3) | | | 5/11/23 | — | 53,969(7) | — | 19.65 | 5/11/30 | 28,838 | 466,599(8) | | | 5/11/23 | — | — | — | — | — | 21,204 | 343,081(10) | | Vishal Sikri President, Advanced Diagnostics | 6/01/22 | 31,328 | 93,985(2) | — | 8.42 | 6/01/29 | 44,537 | 720,609(3) | | | 6/01/22 | 96,899 | 96,900(4) | — | 8.42 | 6/01/29 | 44,537 | 720,609(5) | | | 5/11/23 | — | 39,683(7) | — | 19.65 | 5/11/30 | 21,204 | 343,081(8) | | | 5/11/23 | — | — | — | — | — | 21,204 | 343,081(10) |
Outstanding Equity Awards on December 31, 2023
(1)Market value based on the closing stock price of $16.18 at December 31, 2023. (2)Option awards vest ratably over four years commencing one year after date of grant. (3)Restricted stock awards vest ratably over four years commencing one year after date of grant. (4)Option awards vest ratably over two years commencing one year after date of grant. (5)Restricted stock awards vest ratably over two years commencing one year after date of grant. (6)Restricted stock awards vest on the fourth anniversary of the date of grant. (7)Option awards vest ratably over three years commencing one year after date of grant. (8)Restricted stock awards vest ratably over three years commencing one year after date of grant. (9)Performance-based restricted stock awards vest based on the Absolute TSR Goal in the 12-month period commenced December 7, 2022 and ended on December 6, 2023. As this market condition has been met, this portion of the award vest in four equal annual installments beginning December 7, 2023, subject to Mr. Sherman’s continued employment through each applicable vesting date. (10)Performance-based restricted stock awards will vest based on the achievement of a total stockholder return ("TSR") performance target, measured on the first, second and third anniversaries of the date of grant. If the TSR performance target is achieved, the awards will vest at the end of the three-year requisite service period subject to the Named Executive Officer's continued employment through the vesting date.
Outstanding Equity Awards on December 31, 2023
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Outstanding Equity Awards on December 31, 2023
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Employment Agreements and Potential Payments Upon Termination or Change in Control
Employment Agreements and Potential Payments Upon Termination or Change in Control The Company is a party to employment contracts that contain provisions for payment of severance upon termination by either the Company without cause or the executive for good reason, or terminations occurring during a change of control period. General terms under these arrangements for each of our currently employed Named Executive Officers are described below.
Potential Payments Upon Termination
Potential Payments Upon Termination In the event of termination of an executive’s employment by either the Company without cause or the executive for good reason, under the employment and service agreements as currently in effect, the Company will provide the following in addition to final compensation: •an amount equal to one times the executive’s annual base salary, •an amount equal to the executive’s target bonus, •reimbursement of COBRA premiums for up to 12 months following the executive’s termination, and •accelerated vesting of time-based equity awards outstanding at the time of the executive’s termination that would have continued to vest for the following 12 months. The following table presents estimated amounts that would be payable or provided to the below Named Executive Officers if employment were terminated by either the Company without cause or the executive for good reason at December 31, 2023:
Potential Payments Upon Termination
| | Benefits and Payments Upon Termination | | | | Named Executive Officer | Base Salary ($) | Target Bonus ($) | Benefits(1) ($) | | Christopher Smith | 1,000,000 | 1,000,000 | 26,438 | | Jeffrey Sherman | 525,000 | 367,500 | 26,641 | | Melody Harris | 525,000 | 315,000 | 8,211 | | Warren Stone | 525,000 | 315,000 | — | | Vishal Sikri | 536,000 | 321,600 | 31,264 |
Potential Payments Upon Termination
(1) Represents the estimated incremental cost to the Company for continuation of health care benefits for 12 months. Amounts vary based on elected benefits for each executive. The following table presents accelerated vesting for certain equity awards outstanding at the time of the executive’s termination for each Named Executive Officer, if employment were terminated by either the Company without cause or the executive for good reason at December 31, 2023:
Potential Payments Upon Termination
| | Vesting Upon Termination | | | | | Named Executive Officer | Unvested Stock Option (#) | Stock Option Awards Estimated Benefit(1) ($) | Unvested Restricted Stock (#) | Restricted Stock Estimated Benefit(1) ($) | | Christopher Smith | 263,558 | 618,055 | 132,255 | 2,139,886 | | Jeffrey Sherman | 86,630 | 284,052 | 46,457 | 751,674 | | Melody Harris | 63,630 | 349,797 | 34,124 | 552,126 | | Warren Stone | 59,517 | 206,394 | 31,913 | 516,352 | | Vishal Sikri | 141,455 | 995,049 | 66,450 | 1,075,161 |
Potential Payments Upon Termination
(1) Estimated benefit based on the closing stock price of $16.18 at December 31, 2023.
Potential Payments Upon Termination
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Potential Payments Upon Change in Control
Potential Payments Upon Change in Control In the event of termination during the three-month period prior to or the twenty-four-month period following a change in control (“Change in Control Period”), the general terms of these arrangements are as follows: In the event of termination of an executive’s employment by either the Company without cause or the executive for good reason during a Change in Control Period, the Company will provide the following in addition to final compensation: •in the case of the Chief Executive Officer, an amount equal to the Chief Executive’s base salary times three and in the case of an executive other than the Chief Executive Officer, an amount equal to the executive’s base salary times two; •an amount equal to the executive’s target bonus; •reimbursement of COBRA premiums for up to 12 months following the executive’s termination; •accelerated vesting of all unvested equity awards outstanding at the time of the executive’s termination; The following table presents estimated amounts that would be payable or provided to these Named Executive Officers if employment were terminated due to a change in control at December 31, 2023:
Potential Payments Upon Change in Control
| | Benefits and Payments Due to Change in Control | | | | Named Executive Officer | Base Salary ($) | Target Bonus ($) | Benefits ($)(1) | | Christopher Smith | 3,000,000 | 1,000,000 | 26,438 | | Jeffrey Sherman | 1,050,000 | 367,500 | 26,641 | | Melody Harris | 1,050,000 | 315,000 | 8,211 | | Warren Stone | 1,050,000 | 315,000 | — | | Vishal Sikri | 1,072,000 | 321,600 | 31,264 |
Potential Payments Upon Change in Control
(1) Represents the estimated incremental cost to the Company for continuation of health care benefits for 12 months. Amounts vary based on elected benefits for each executive. The following table presents accelerated vesting for certain equity awards outstanding to these Named Executive Officers if employment were terminated due to a change in control on December 31, 2023:
Potential Payments Upon Change in Control
| | Vesting Due to Change in Control | | | | | Named Executive Officer | Unvested Stock Option (#) | Stock Option Awards Estimated Benefit(1) ($) | Unvested Restricted Stock (#) | Restricted Stock Estimated Benefit(1) ($) | | Christopher Smith | 790,674 | 1,854,165 | 662,218 | 10,714,687 | | Jeffrey Sherman | 259,893 | 852,159 | 139,374 | 2,255,071 | | Melody Harris | 241,296 | 1,399,194 | 129,429 | 2,094,161 | | Warren Stone | 178,554 | 619,187 | 95,743 | 1,549,122 | | Vishal Sikri | 230,568 | 1,481,268 | 110,278 | 1,784,298 |
Potential Payments Upon Change in Control
(1) Estimated benefit based on the closing stock price of $16.18 at December 31, 2023.
Potential Payments Upon Change in Control
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Timing of Potential Payments Upon Termination or Change in Control
Timing of Potential Payments Upon Termination or Change in Control The timing of severance payments is subject to certain terms and conditions contained within each Named Executive Officer’s agreement. For a complete description of these terms and conditions please refer to Exhibit 10.9, Form of Executive Employment Agreement between NeoGenomics, Inc. and each of its executive officers, as incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Chief Executive Officer Pay Ratio
Chief Executive Officer Pay Ratio The following table sets forth the pay ratio of NeoGenomics’ Chief Executive Officer, Christopher M. Smith, to that of NeoGenomics’ approximate median employee total compensation for the year ended December 31, 2023.
Chief Executive Officer Pay Ratio
| Chief Executive Officer total compensation in 2023 | $11,665,946 | | Median employee approximate total compensation in 2023 | $89,324 | | Ratio of Chief Executive Officer compensation to median employee total compensation | 131:1 |
Chief Executive Officer Pay Ratio
To determine the median employee compensation, we analyzed all of NeoGenomics’ employees, excluding the Chief Executive Officer, including all active full-time, part-time, and per diem employees. We annualized wages and salaries for employees that were not employed for the full year. We used annualized total gross amount of salary, wages, and other compensation, which—depending on the individual—could include items such as commissions, bonuses, overtime pay, and shift differentials as the compensation metric to determine the median employee. It is important to note that the timing of bonus payments under the Performance Incentive Plan has been adjusted. For the fiscal year 2023, half of the Performance Incentive Plan bonus was paid during the year, representing half of the target amount. The remaining half, along with adjustments based on company performance, will be paid in the subsequent fiscal year. The compensation measure excluded the following pay elements: (i) grant date fair value of any stock awards granted; (ii) Company-paid 401(k) match; and (iii) Company-paid health insurance premiums. After identifying the median employee, we calculated annual total compensation for the median employee according to the methodology used to report the annual compensation of our Chief Executive Officer in the Summary Compensation Table. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s total annual compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
Chief Executive Officer Pay Ratio
| NeoGenomics, Inc. | 50 | 2024 Proxy Statement |
Chief Executive Officer Pay Ratio
| Table of Contents | Executive Compensation |
2023 Pay Versus Performance Table
2023 Pay Versus Performance Table
2023 Pay Versus Performance Table
| Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(1) | Summary Compensation Table Total for PEO ($)(2) | Compensation Actually Paid to PEO ($)(2) | Summary Compensation Table Total for PEO ($)(3) | Compensation Actually Paid to PEO ($)(3) | Summary Compensation Table Total for PEO ($)(4) | Compensation Actually Paid to PEO ($)(4) | | 2023 | 11,665,946 | 16,407,815 | Not a PEO | Not a PEO | Not a PEO | Not a PEO | Not a PEO | Not a PEO | | 2022 | 14,798,522 | 11,330,664 | 2,071,184 | 1,951,681 | 7,695,856 | (3,624,626) | Not a PEO | Not a PEO | | 2021 | Not a PEO | Not a PEO | Not a PEO | Not a PEO | 11,479,855 | 9,094,405 | 7,227,002 | (3,903,431) | | 2020 | Not a PEO | Not a PEO | Not a PEO | Not a PEO | Not a PEO | Not a PEO | 4,122,039 | 14,718,158 |
2023 Pay Versus Performance Table
| Year | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($)(5) | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($)(5) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($ millions) | Company-selected measure (Adjusted EBITDA) ($ millions)(7) | | | | | Total Stockholder Return ($) | Peer Group Total Stockholder Return ($)(6) | | | | 2023 | 2,999,799 | 4,429,543 | 55 | 119 | (88) | 3 | | 2022 | 2,688,029 | 1,906,745 | 32 | 114 | (144) | (48) | | 2021 | 4,041,472 | 2,553,526 | 117 | 126 | (8) | (4) | | 2020 | 972,616 | 2,315,879 | 184 | 126 | 4 | 35 |
2023 Pay Versus Performance Table
(1)Reflects compensation for our Chief Executive Officer, Christopher Smith, who has served as our Principal Executive Officer (“PEO”) since August 15, 2022. (2)Reflects compensation for our Interim Chief Executive Officer, Lynn Tetrault, who served as our PEO from March 28, 2022 through August 14, 2022. (3)Reflects compensation for our Former Chief Executive Officer, Mark Mallon, who served as our PEO from April 19, 2021 through March 27, 2022. (4)Reflects compensation for our Former Chair of the Board and Chief Executive Officer, Douglas VanOort, who served as our PEO from January 1, 2021 through April 19, 2021 and for the full year ended December 31, 2020. (5)Reflects compensation for Kathryn McKenzie, Sharon Virag, Robert Shovlin, Douglas Brown, and Lawrence Weiss in 2020, Kathryn McKenzie, George Cardoza, Halley Gilbert, Clive Morris in 2021, Jeff Sherman, Bill Bonello, Warren Stone, Vishal Sikri, Dr. Shashikant Kulkarni in 2022, and Jeff Sherman, Warren Stone, Vishal Sikri, Dr. Shashikant Kulkarni, and Melody Harris in 2023. (6)Peer Group used for Total Stockholder Return comparisons reflects the Nasdaq Biotechnology Index. (7)We determined adjusted EBITDA, a non-GAAP measure, to be the most important financial performance measure used to link Company performance to Compensation Actually Paid (“CAP”) to our PEO and Non-PEO Named Executive Officers in the years 2023.
2023 Pay Versus Performance Table
| NeoGenomics, Inc. | 51 | 2024 Proxy Statement |
2023 Pay Versus Performance Table
| Executive Compensation | Table of Contents |
2023 Pay Versus Performance Table
To calculate the CAP for our PEOs and other Named Executive Officers the following adjustments were made to Summary Compensation Table total compensation:
Compensation Actually Paid Versus Company Performance
Compensation Actually Paid Versus Company Performance The following charts visually represent the relationships between CAP to our PEOs, and the average for our non-PEO Named Executive Officers and select NeoGenomics financial performance measures.
Compensation Actually Paid Versus Company Performance
| NeoGenomics, Inc. | 54 | 2024 Proxy Statement |
Compensation Actually Paid Versus Company Performance
| Table of Contents | Executive Compensation |
•Proposal 1 - Election of Directors
•Proposal 1 - Election of Directors Each of the nine director nominees will be elected if a majority of the votes cast by stockholders virtually or via proxy are cast in favor of each respective nominee, requiring the number of votes cast “for” a director nominee’s election to exceed the number of votes cast “against” that director nominee. Abstentions and broker non-votes will have no effect on the outcome of Proposal 1.