DEF 14A of Orasure Technologies Inc
Filed Apr 3, 2024 · FY20230001116463-24-000022
Proposal No. 1 – Election of Directors
Proposal No. 1 – Election of Directors The table below provides summary information about each of our nominees for Class III Directors, whose new terms will expire at the 2027 Annual Meeting of Stockholders. The Board of Directors (the “Board”) is recommending that stockholders vote for each Director nominee.
Proposal No. 1 – Election of Directors
| | | | | Committee Memberships1 | | | Other Public Boards | | Name and Principal Occupation | Age | Director Since | Independent | AC | CC | N& CG | | | Nancy J. Gagliano, M.D. | | | | | | | | | Managing Director, Granite Healthcare Advisors | 64 | 2021 | Yes | No | √ | C | No | | Lelio Marmora | | | | | | | | | President, Former Executive Director, Unitaid | 57 | 2020 | Yes | √ | No | √ | No |
Proposal No. 1 – Election of Directors
______________________ 1AC = Audit Committee; CC = Compensation Committee; N&CG = Nominating & Corporate Governance Committee; C = Chairperson; √ = Member.
Proposal No. 6 – Adjournment of Annual Meeting
| •Compensation is market driven with total compensation of our executives targeted at the 50th percentile of the Company’s peer group (as set forth in the CD&A) (the “Peer Group”). | •Regular stockholder outreach on compensation and governance matters. | | •Compensation is predominantly variable or performance based. | •Use of a third-party compensation consultant to provide executive compensation market assessment and independent advice on compensation matters. | | •Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. | •Strong stock ownership/retention requirements for executives and Directors. | | •In order to incentivize growth, performance objectives for annual bonus incentives target key financial measures and/or important strategic goals. | •As a general matter, no perquisites for NEOs that are not offered to all employees of the Company. | | •The Board’s discretionary ability to adjust annual incentive bonus payment is limited to +/- 10% in order to avoid excessive discretionary bonus adjustments. In 2023, the Compensation Committee and Board included a condition that the annual incentive bonus may be further adjusted downward based on profitability and cash liquidity needs of the Company. | •Use of peer company benchmarking. | | •Long-term equity incentive awards include 50% PRUs that vest based on (i) three-year cumulative revenue, (ii) three-year relative total stockholder return (“rTSR”) and (iii) three years of continued service. | •Compensation recoupment or “clawback” policy, under which we are required to recover excess compensation paid to an executive if our financial statements are restated. | | •No excise tax gross-up in any of our NEO employment agreements and no “single trigger” change-in-control severance in any of our new executive employment agreements. | •No hedging or pledging of our Common Stock. |
It is important that you vote your shares if you are a stockholder of record and, if you hold
| We believe it is inappropriate for any employee of the Company or its affiliates or any member of the Board to engage in short-term or speculative transactions involving Company securities, including entering into financial instruments or engaging in other transactions that hedge or offset, or that are designed to hedge or offset, any decrease in the market value of our Common Stock. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into transactions involving our Common Stock, such as short sales, the buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common Stock as collateral. | We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in our stock, such as hedging, pledging and short sales. |
It is important that you vote your shares if you are a stockholder of record and, if you hold
Any individual who becomes subject to the guidelines is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2023, one of the non-employee Directors was not in compliance with the stock ownership guidelines as they have recently joined the Company. The Company will ensure they are in compliance within five years, which is the guideline.
It is important that you vote your shares if you are a stockholder of record and, if you hold
| ANNUAL PERFORMANCE EVALUATIONS |
It is important that you vote your shares if you are a stockholder of record and, if you hold
On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible. The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs. Depending on the Company’s overall performance and the extent to which an executive achieves his or her individual objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” On occasion, a blended rating such as “Meets/Exceeds” or “High Meets” will be used to indicate performance between the foregoing performance rating levels. The Compensation Committee uses the performance ratings and other factors to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards. Although this approach was also followed in evaluating Ms. Eglinton Manner’s performance for 2023, Ms. Eglinton Manner’s performance assessment was primarily based on the Company’s overall performance.
It is important that you vote your shares if you are a stockholder of record and, if you hold
| ROLE OF THE COMPENSATION CONSULTANT |
It is important that you vote your shares if you are a stockholder of record and, if you hold
Since January 1, 2023, there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com. Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement.
It is important that you vote your shares if you are a stockholder of record and, if you hold
| Summary Compensation Table | 53 | | Grants of Plan-Based Awards | 54 | | Outstanding Equity Awards at December 31, 2023 | 55 | | Option Exercises and Stock Vested | 56 | | Retirement Benefits | 56 | | Nonqualified Deferred Compensation | 56 |
2023 NEO Compensation at a Glance
2023 NEO Compensation at a Glance NEO compensation for 2023 was as follows: •Base Salary: The base salaries paid to our senior management (including the NEOs) during 2023 increased from 2022 by 3% on average. Salary adjustments for 2023 were based on the performance of each executive and the Company during 2022, the marketplace compensation data provided to the Compensation Committee in 2022 by its compensation consultant and the Company-wide average salary merit increase budget of 3%. Generally, an executive’s annual salary adjustment tended to be at the higher end of the range budgeted by the Company if the executive received a performance rating of “Meets Expectations” or better and such executive’s pre-adjustment salary level was below the 50th percentile for his or her position as reflected in marketplace and the Peer Group compensation data. •Annual Incentive Bonuses: Incentive cash bonus awards for 2023 performance were based on pre-established financial goals consistent with our operating plan. Payouts determined based on actual Company performance during 2023 were at 153% of target for each of the NEOs based on Company results. The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs. •Long-Term Incentive Awards: Incentive equity awards granted to the NEOs in March 2023 were based on the Company’s financial performance and/or each executive’s performance during 2022, as described under the “2023 Base Salaries” Section, above. The value of the awards ranged from 125% to 140%, (excluding CEO) of each executive’s base salary. The NEOs received equity awards consisting of 50% time-vested restricted shares (RS) and 50% performance-vested restricted units (PRUs). For the PRUs granted in 2023, a cumulative three-year revenue target for the period 2023-2025 and a rTSR target for the period 2023-2025 was established as the performance vesting criteria in September 2023 based on targets established in February 2023. See further discussion below in this CD&A. Additional information regarding NEO compensation for 2023 is provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below.
Say-on-Pay Results in 2023, Stockholder Feedback and the Company’s Response
| Topic | What we heard | Company Response & Actions | | Executive Compensation | Payment of severance benefits in 2022 for a non-qualifying termination were a concern | We discussed the topic of severance benefits paid for non-qualifying terminations with stockholders throughout our engagement process, and a vast majority of stockholders did not consider it to be a cause for concern going forward. In 2023, we did not pay any executive severance, and in the future, we plan to only pay executive severance benefits for qualified terminations. | | | Alignment of Pay-for-Performance with Key Measures of Success | We refined our OTIP and LTIP in 2023 to include additional performance objectives: OTIP (annual incentive program): The Compensation Committee has implemented a policy that positive discretion will not be applied to individual objectives in determining payouts for our NEOs in 2023. We removed individual performance modifiers for NEOs in 2024. LTIP (long-term incentive program) changes included: •Increased the weight of the rTSR component to 50% •Increased the rTSR target to 105% so that OraSure has to outperform the broader market to achieve 100% attainment •Added a rTSR performance threshold so that attainment is capped if relative TSR is negative •Added Revenue performance thresholds aligned with our operating cash flow targets •50% of our LTIP is performance-based | | | Provide key measures of success for NEOs for the current year in the proxy statement | •Consistent with our current guidance practices, we will continue to share OTIP/LTIP resulting payouts through the proxy cycle, rather than through metrics ahead of time, because this is aligned with our public disclosures | | | Equity grants should be a part of Pay-for-Performance rather than one-time or retention grants | •50% of our LTIP is performance-based •No issuance of one-time grants for employee retention in 2023 |
Compensation Risk Assessment
| BENCHMARKING |
Compensation Risk Assessment
Among various other internal and external considerations, the Compensation Committee uses the practices and policies at other comparable medical diagnostic and healthcare companies as one piece of context in annually assessing the reasonableness and appropriateness of our executive compensation programs. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, we annually review and select a Peer Group of companies using criteria primarily based on industry and company size. No changes were made to the peer group during 2023. The following table provides information about the Peer Group used by the Compensation Committee in assessing the competitiveness of executive compensation (all dollars in millions):
Compensation Risk Assessment
___________________ 1Data collected from Standard & Poor’s Capital I.Q. database. 2Heska Corporation was acquired in June 2023. 3Meridian Bioscience was acquired in January 2023. 4Reflects most recently available four quarters of revenue as of 9/30/2023. The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50th) 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 (50th) percentile is intended as a market-based reference and not as a strict target or limit. 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 (50th) 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 2023 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with the pay practices of similar roles at companies within the Peer Group and using data for comparable positions reported in the 2023 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Compensation Committee considers both samples to ensure a thorough understanding of the competitive market.
Overview
| 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 (PRU) and Time-Vested Restricted Stock (RS) | 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 upon qualifying terminations only in order to ensure continued focus on the strategic matters of the Company during potentially uncertain times. |
Compensation Components in Detail
2023 Annual Incentive Cash Bonuses Annual cash bonuses are included as part of executive compensation because the Compensation Committee and Board believe that a significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities relating 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, the OraSure Technologies Incentive Plan (“OTIP”), which is intended to be the principal vehicle for incentive cash bonus awards. When establishing the terms of the OTIP, the Compensation Committee and the Board evaluate which funding objectives will provide the most appropriate incentives for our NEOs to improve our annual financial performance. In recent years, OTIP bonuses have 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 desires 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. Individual bonus payments to executives are generally calculated using a formula that considers the executive’s achievement of individual performance objectives, company performance 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 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 120% of his or her target bonus. 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 following guidelines are used to determine the multiple of an executive’s target bonus, or individual performance factor, to be used to calculate a bonus payout based on the executive’s performance rating for the applicable year:
Compensation Components in Detail
| Performance Rating | % Target Bonus | | Outstanding | 100% - 120% | | Exceeds | 100% - 110% | | Meets | 90 - 105% | | Needs Improvement | 0% - 90% | | Unsatisfactory | 0% |
Compensation Components in Detail
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 decrease or reject any or all of the recommended bonus awards, even if 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. In establishing the 2023 OTIP, the Board and Compensation Committee decided that the bonus plan metrics should be based on the achievement of three key financial objectives: consolidated revenues, adjusted operating income, and cash and cash equivalents ending balance. Note, adjusted operating income is defined as our U.S. GAAP operating income adjusted for certain non-cash or non-recurring expenditures including: stock compensation, amortization of acquisition-related intangible assets, reduction in workforce severance, accelerated depreciation, inventory reserves for excess levels, impairment loss, transformation-related expenses, governmental grant accounting, and the change in fair value of acquisition-related contingent consideration. Under the 2023 Incentive Plan, Threshold, Target and Maximum performance levels were established for the financial objectives. For each objective, the Company must attain a Threshold, as defined by a minimum level of achievement, to be eligible for any payout on that component of the plan. The Target levels for the objective were set at the performance reflected in our Operating Plan for 2023, which included challenging growth targets considering the uncertainty in the fourth year of the impact of COVID-19 on volume trends, particularly in our US Government contracts for InteliSwab® test kits. The Threshold levels were established as follows: •Consolidated Net Revenues: 80% of Target •Adjusted Operating Income: Breakeven •Cash and Cash Equivalents Ending Balance: 35% growth over year-end 2022 balance The following sets forth the financial objectives and actual achievement under the 2023 Incentive Plan (amounts in millions):
Compensation Components in Detail
| Financial Objectives/Weight | Threshold (80%) | Target (100%) | Maximum1 (200%) | Actual | Achieved | % Payout2 | | Consolidated Net Revenues (50%) | $300 | $375-$400 | $500 | $406 | 106% | 53% | | Adjusted Operating Income (15%) | $0 | $17- $32 | $70 | $74 | 200% | 30% | | Cash and Cash Equivalents Ending Balance (35%) | $150 | $180-$220 | $250 | $290 | 200% | 70% | | Calculated Final Payout | | | | | | 153% | | Actual Final Payout | | | | | | 153% |
Compensation Components in Detail
| Title | Target Payout Opportunities (% of Salary) | | CEO | 100% | | Chief Financial Officer and Chief Product Officer | 50% |
Compensation Components in Detail
In February 2024, the Compensation Committee authorized the payout of individual bonus awards to executive officers based on the target bonus amounts and an assessment based on the Company's overall performance. Individual performance of each of the officers, which is capped at 100%, was considered as described below. Factors Considered in CEO & NEO Performance Evaluation In evaluating Ms. Eglinton Manner’s and the Company’s performance, the Compensation Committee recognized that the Company delivered greater than 100% attainment on its targets for Revenue, Adjusted Operating Income, and cash balance for 2023. Additionally, management made significant progress in its strategic transformation, strengthening the Company's foundation while delivering the second-consecutive year of record financial performance. Consolidated revenues were $405.5 million in 2023, representing a 5% increase over 2022. The Compensation Committee noted that this increase was primarily driven by 10% increased sales of its InteliSwab® COVID-19 Rapid Test, while also growing its core (non-InteliSwab®) portfolio 2%, driven by strong HIV sales offsetting its molecular solutions revenue decline. The Company completed all milestones, and received payment for those milestones, included in its contract with the U.S. government related to manufacturing capacity expansion at its Opus Way facility earlier than expected while also streamlining its operational footprint, leveraging automation and infrastructure. Additionally, the Company built upon the strength of its government contracts, winning a new federal RFP for InteliSwab® in 2023. The Compensation Committee also noted that the Company improved its operating efficiency and increased its gross margin 400 basis points through the course of the year to 42.3% in 2023 from 38.3% in 2022. Operating expenses, excluding non-cash impairment losses, also declined by $25 million in 2023 as compared to 2022. The Compensation Committee further noted that the company generated $142 million in cash flow from operations in 2023 and grew its balance of cash and cash equivalents by $180 million during the year to $290 million as of December 31, 2023. Furthermore, with its stronger balance sheet the Company invested in its innovation pipeline while working to elevate its core and accelerate profitable growth, including by expanding the portfolio of products that its sales teams can offer to customers in several important segments through distribution and strategic agreements. Finally, the Compensation Committee recognized that the Company delivered outstanding TSR, outperforming the Nasdaq Healthcare index and its peers with 54% TSR based on the average stock price for the last twenty trading days of the year in 2023 compared to the last twenty trading days of 2022. This compares to the Nasdaq Healthcare index TSR of 0.4% for the same period. In view of the foregoing, the Compensation Committee determined that Ms. Eglinton Manner should receive an Outstanding performance rating for 2023. The remaining NEOs were evaluated based on Company and individual objectives established for their respective positions. The Compensation Committee changed its consideration of individual performance factors in 2023, determining that those ratings may not increase the bonuses for Ms. Eglinton Manner and the other NEOs. Based on strong performance ratings for each of them, the Compensation Committee determined that each would receive a bonus based on their target (% salary) level at the 2023 Company Performance Factor (153%) with no further individual adjustment. Using the approach described above, a final 2023 incentive cash bonus was calculated for Ms. Eglinton Manner, representing approximately 153% of her target bonus, as follows:
Compensation Components in Detail
| 2023 SalaryX | Bonus Target (% Salary)X | 2023 Company Performance FactorX | 2023 Individual Performance Factor1 | = | 2023 Bonus | | $721,000 | 100% | 153% | 100% | | $1,103,130 |
2023 NEO Bonus Payments
2023 NEO Bonus Payments
2023 NEO Bonus Payments
| NEO | 2023 Salary | Bonus Target (% Salary) | 2023 Company Performance Factor | 2023 Individual Performance Factor1 | 2023 Bonus | | Kenneth McGrath Chief Financial Officer | $483,000 | 50% | 153% | 100% | $369,495 | | Kathleen G. Weber Chief Product Officer | $473,800 | 50% | 153% | 100% | $362,457 |
2023 NEO Bonus Payments
1 Individual performance factor for NEOs cannot exceed 100% which has the affect of limiting NEO payments to a maximum of the Company performance factor. 2023 Long-Term Incentive Equity Awards An additional way that we promote the long-term growth of the Company and align the interests of our executives with those of our stockholders is by compensating executives with equity in the Company that vests over a multi-year period and in part only on achievement against certain performance expectations. To accomplish this, the Compensation Committee administers the Company’s LTIP pursuant to which grants of RS and PRUs 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 our CEO who is evaluated based on 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 2023 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2022, are summarized below:
2023 NEO Bonus Payments
| 2023 LTIP Award Ranges (% of salary) | | | | | | Performance | | | | Position | Lower End | Target | Maximum | | President/CEO | Market Assessment | 300% | Market Assessment | | Chief Financial Officer | 105% | 140% | 175% | | Chief Product Officer | 95% | 125% | 155% |
2023 NEO Bonus Payments
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 the benchmarking review prepared by its independent consultant. 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. 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. The awards made in 2023 incorporate two performance metrics, each at 50% weighting and each with a performance threshold payout modifier:
2023 NEO Bonus Payments
| Component (Weighting) | PRU Performance Metrics | PRU Performance Threshold Payout Modifier* | | Revenue (50%) | Cumulative revenues during the three-year period beginning with 2023 | Profitability: cash from operations (CFO) must be positive in 2025 to payout revenue > 100% | | rTSR (50%) | Relative TSR performance vs NASDAQ Healthcare Index | TSR: If the Company's TSR is negative, the payout on rTSR cannot exceed 105% |
2023 NEO Bonus Payments
With respect to each of the performance metrics, the Compensation Committee approved the following threshold, target, and maximum levels of achievement, with the performance threshold payout modifier set forth above:
2023 NEO Bonus Payments
| Component (Weighting) | Threshold* | Target* | Maximum* | | Revenue (50%) | $570.0 million | $677.0 - $749.0 million | $856.0 million | | rTSR (50%) | 50% | 105% | 150% |
2023 NEO Bonus Payments
*To the extent performance falls between two levels, achievement shall be determined using linear interpolation 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 historical input from our stockholders reflecting 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. 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 that directly promotes alignment with stockholders and further supports executive retention.
2023 NEO Bonus Payments
| Overall, the Compensation Committee and Board believe that our 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. |
2023 NEO Bonus Payments
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 early February, or early March 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 March 1, 2023, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2022, as summarized below. A description of the basis for each of the NEO’s 2022 performance evaluation is set forth above under the Section entitled, “2023 Base Salaries,” in this CD&A. The following summarizes the equity award provided to the NEOs during 2023 under the LTIP:
2023 NEO Bonus Payments
| Executive Officer | 2023 Performance Assessment | Time Vested Restricted Stock (in shs) | Performance-Vested Restricted Units (in shs) | | Carrie Eglinton Manner President and CEO | Outstanding | 258,065 | — | | Kenneth McGrath Chief Financial Officer | Outstanding | 53,629 | — | | Kathleen G. Weber Chief Product Officer | Exceeds | 46,371 | — |
2023 NEO Bonus Payments
2021 PRU Payout in 2023 Pay Out Under 2021 PRUs. The PRU portion of equity awards made to executives in early 2021 based on performance during 2020 did not vest until three years after the grant date, based on one performance metric: cumulative revenues during the three-year period beginning with 2021, subject to a modifier of up to +/- 15% based on relative TSR against the TSRs of each member of the Nasdaq Health Care Index. The three-year service period for these PRUs expired on February 1, 2024. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures:
2023 NEO Bonus Payments
| 3-Year Cumulative Revenue | Payout Percentage* | | $1,297.5 million | 150% | | $921.2 million | 100% | | $695.0 million | 50% | | below $695.0 million | 0% |
2023 NEO Bonus Payments
•intermediate results are interpolated on a straight line basis
2023 NEO Bonus Payments
| OraSure's TSR Percentile Rank | PRU Payout Modifier | | 90th and Above | 115% | | 55th | 100% | | 25th and Below | 85% |
2023 NEO Bonus Payments
For the 2021 PRUs, the Company's cumulative three-year revenue was $1,026.6 million and exceeded the cumulative three-year revenue target by 114%. The Company's TSR for the three year measurement period was ranked at the 76th percentile relative to the TSR of each member of the Nasdaq Health Care Index. This resulted in a payout of 131%. The following summarizes the three-year cumulative revenue target for the 2021 PRUs and, our performance against this target and the resulting number of shares delivered to the NEOs upon settlement of the PRUs:
2023 NEO Bonus Payments
| | Performance Target | Actual Performance | % of Target | % Vested | | Revenue | $921.2 million | $1,026.6 million | 114% | 114% | | rTSR Modifier | | | | 115% | | Final Vesting | | | | 131% |
2023 NEO Bonus Payments
| | 2021 PRU’s Target and Actual Payout | | | | Revenue Target (# of shs) | Revenue Actual (# of shs) | | Carrie Eglinton Manner1 | N/A | N/A | | Kenneth McGrath1 | N/A | N/A | | Kathleen G. Weber | 18,218 | 23,866 |
2023 NEO Bonus Payments
1Ms. Eglinton Manner and Mr. McGrath did not receive any 2021 PRU’s because they joined the Company after these awards were made.
2023 NEO Bonus Payments
| OTHER COMPENSATION |
2023 NEO Bonus Payments
We provide minimal additional benefits outside of our primary elements of compensation, as follows:
Retirement Programs
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. 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 $4,000 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. A further description of these benefits is set forth in the Section entitled “Nonqualified Deferred Compensation.”
Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements
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 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.
Compensation Recoupment Policy
| SUMMARY COMPENSATION TABLE |
Compensation Recoupment Policy
| Name & Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All other Compensation ($) (4) | Total ($) | | Carrie Eglinton Manner | 2023 | $721,000 | — | $4,873,637 | — | $1,103,130 | — | $4,000 | $6,701,767 | | President and Chief Executive Officer | 2022 | $376,923 | — | $5,600,000 | — | $770,000 | — | — | $6,746,923 | | | 2021 | — | — | — | — | — | — | — | — | | Ken McGrath | 2023 | $483,000 | — | $672,104 | — | $369,495 | — | $4,000 | $1,528,599 | | Chief Financial Officer | 2022 | $173,558 | — | $400,000 | — | $261,250 | — | $4,000 | $838,808 | | | 2021 | — | — | — | — | — | — | — | — | | Kathleen G. Weber | 2023 | $473,800 | — | $752,471 | — | $362,457 | — | $84,169 | $1,672,897 | | Chief Product Officer | 2022 | $460,000 | — | $801,778 | — | $241,500 | — | $172,920 | $1,676,198 | | | 2021 | $416,246 | — | $483,596 | — | $233,098 | — | $418,505 | $1,551,445 |
Compensation Recoupment Policy
| GRANTS OF PLAN-BASED AWARDS |
Compensation Recoupment Policy
| OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023 |
Compensation Recoupment Policy
| OPTION EXERCISES AND STOCK VESTED |
Compensation Recoupment Policy
| NONQUALIFIED DEFERRED COMPENSATION |
Compensation Recoupment Policy
| EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL |
Compensation Recoupment Policy
| CEO PAY RATIO |
Compensation Recoupment Policy
| PAY VERSUS PERFORMANCE |
Fiscal Year 2023 Pay versus Performance Table
Fiscal Year 2023 Pay versus Performance Table
Fiscal Year 2023 Pay versus Performance Table
| | Summary Compensation Table Total | | | Compensation Actually Paid | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Fiscal Year | Carrie Eglinton Manner ($)1 | Nancy Gagliano, M.D. ($)2 | Stephen S. Tang, Ph.D. ($)3 | Carrie Eglinton Manner ($)4 | Nancy Gagliano, M.D. ($)4 | Stephen S. Tang, Ph.D. ($)4 | Average Summary Compensation Table Total for Non-PEO NEOs ($)5 | Average Compensation Actually Paid to Non-PEO NEOs ($)6 | Total Stockholder Return ($)7 | Peer Group Total Stockholder Return ($)8 | Net Income (Loss) (thousands) ($)9 | Total Revenue (millions) ($)10 | | 2023 | 6,701,767 | — | — | 13,791,592 | — | — | 1,600,748 | 2,390,906 | 102.12 | 106.34 | 53,655 | 405.5 | | 2022 | 6,746,923 | 940,292 | 2,769,508 | 6,645,396 | 347,561 | 714,651 | 1,457,621 | 751,486 | 60.02 | 99.31 | (17,934) | 387.5 | | 2021 | — | — | 2,959,781 | — | — | 2,697,616 | 1,088,815 | 808,537 | 108.22 | 125.43 | (22,998) | 233.7 | | 2020 | — | — | 3,085,421 | — | — | 3,888,690 | 1,601,825 | 1,595,129 | 131.82 | 130.04 | (14,922) | 171.1 |
Fiscal Year 2023 Pay versus Performance Table
1During fiscal year 2022, Ms. Eglinton Manner was appointed as our President and CEO effective June 4, 2022. Dr. Gagliano resigned effective June 4, 2022 from her position as the Company’s Interim CEO. 2During fiscal year 2022, Dr. Gagliano was appointed as our Interim CEO effective April 1, 2022 following Dr. Tang’s termination on March 31, 2022 and resigned from the position effective June 4, 2022. 3During fiscal years 2022, 2021 and 2020, Dr. Tang served as our President and CEO for all or a portion of the year. Dr. Tang’s employment with the Company as CEO ended on March 31, 2022. 4Represents amounts of “compensation actually paid” to each of our CEO’s in each of 2023, 2022, 2021, and 2020 as computed in accordance with Item 402(v) of Regulation S-K, not the actual amount of compensation earned by or paid to each of our CEO’s during fiscal year 2023. The table below reflects the adjustments made from the amounts reported in the “Total” column of the Summary Compensation Table for each year to calculate the amounts set forth in “Compensation Actually Paid to PEO” column in the table above.
Fiscal Year 2023 Pay versus Performance Table
| | Carrie Eglinton Manner | | Nancy Gagliano, M.D. | Stephen S. Tang, Ph.D. | | | | | 2023 ($) | 2022 ($) | 2022 ($) | 2022 ($) | 2021 ($)(a) | 2020 ($)(a) | | Summary Compensation Table Total | 6,701,767 | 6,746,923 | 940,292 | 2,769,508 | 2,959,781 | 3,085,421 | | Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | (4,873,637) | (5,600,000) | (770,000)(b) | (834,913) | (1,946,860) | (1,218,000) | | Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | 8,377,123 | 5,498,473 | — | — | 1,337,758 | 1,799,376 | | Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | 3,488,559 | — | (40,879) | — | 132,795 | 237,531 | | Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | — | — | 218,148 | 664,350 | — | — | | Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | 97,780 | — | — | (1,387,479) | 214,142 | (15,638) | | Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | — | — | (496,815) | — | — | | Compensation Actually Paid to PEOs | 13,791,592 | 6,645,396 | 347,561 | 714,651 | 2,697,616 | 3,888,690 |
Fiscal Year 2023 Pay versus Performance Table
(a)The fair values of time-based equity awards and performance-based restricted share units granted in 2020 are based on the closing price of the Company’s common shares as reported on the NASDAQ on the relevant valuation date. Performance-based restricted share units granted in 2021 were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718 using the following assumptions: (A) for valuations as of December 31, 2021, a risk free interest rate of 0.73% and share price volatility of 75.82%, for valuations on December 31, 2022, a risk free interest rate of 4.67% and share price volatility of 60.57%.” Note that the reference to valuations on December 31, 2022 is appropriate as this relates to the valuation of the 2021 PRUs as of December 31, 2022. (b)Dr. Gagliano received, as part of her Interim CEO agreement, a sign-on equity grant consisting of $100,000 of fully vested shares (14,815 shares) and $670,000 of restricted stock units (99,259 restricted stock units) which vest in equal monthly installments beginning on April 30, 2022, subject to continued employment as Interim CEO. Dr. Gagliano vested in 24,815 units of the 99,259 restricted stock units granted prior to her resignation as Interim CEO in June 2022, and accordingly, 74,444 units of her restricted stock unit award were forfeited. 5Our non-PEO NEOs includes the individuals indicated in the table below for each fiscal year:
Fiscal Year 2023 Pay versus Performance Table
| Year | Non-PEO NEOs | | 2023 | Kenneth McGrath, Kathleen Weber | | 2022 | Kenneth McGrath, Kathleen Weber, Lisa Nibauer, Agnieszka Gallagher, Scott Gleason | | 2021 | Kathleen Weber, Jack Jerrett, Roberto Cuca, Agnieszka Gallagher, Scott Gleason | | 2020 | Kathleen Weber, Jack Jerrett, Roberto Cuca, Anthony Zezzo, Lisa Nibauer |
Fiscal Year 2023 Pay versus Performance Table
6Represents amounts of average “compensation actually paid” as computed in accordance with Item 402(v) of Regulation S-K, not the actual average amount of compensation earned by or paid to the Company’s named executive officers, except for Dr. Tang with respect to fiscal years 2022, 2021, and 2020, Ms. Gagliano with respect to fiscal year 2022, and Ms. Eglinton Manner with respect to fiscal years 2023 and 2022. The table below reflects the adjustments made from the amounts reported in the “Total” column of the Summary Compensation Table for the named executive officers as a group (excluding Dr. Tang and Mses. Gagliano and Eglinton Manner, as applicable) each year to calculate the amounts set forth in “Compensation Actually Paid to non-PEO NEOs” column in the table above, using the same methodology as set forth in footnote 4, above.
Fiscal Year 2023 Pay versus Performance Table
| | NEO Averages | | | | | | 2023 ($) | 2022 ($) | 2021 ($)(a) | 2020 ($)(a) | | Summary Compensation Table Total | 1,600,748 | 1,457,621 | 1,088,815 | 1,601,825 | | Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | (712,288) | (729,670) | (552,646) | (766,909) | | Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | 1,127,865 | 293,934 | 353,108 | 625,180 | | Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | 316,490 | (102,310) | 43,223 | 59,438 | | Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | — | 85,437 | 29,005 | 80,708 | | Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | 58,090 | (103,440) | 59,492 | (5,113) | | Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | (150,086) | (212,460) | — | | Compensation Actually Paid to NEOs | 2,390,906 | 751,486 | 808,537 | 1,595,129 |
Fiscal Year 2023 Pay versus Performance Table
(a)The fair values of time-based equity awards and performance-based restricted share units granted in 2020 are based on the closing price of the Company’s common shares as reported on the NASDAQ on the relevant valuation date. Performance-based restricted share units granted in 2021 were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718 using the following assumptions: (A) for valuations on December 31, 2021, a risk free interest rate of 0.73% and share price volatility of 75.82%. The fair value of non-qualified stock options granted to Ms. Gallagher as of December 31, 2021 were valued using a Black-Scholes model in accordance with the provision of ASC Topic 718 using the following assumptions: an expected term of 2 years, a risk-free interest rate of 0.73%, a dividend yield of 0% and share price volatility of 75.82%. 7For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of OraSure Technologies, Inc. for the measurement periods ending on December 31 of each of 2023, 2022, 2021, and 2020, respectively. 8For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of NASDAQ Health Care Index for the measurement periods ending on December 31 of each of 2023, 2022, 2021, and 2020, respectively. 9Reflects GAAP “Net Income (Loss)” in the Company’s Consolidated Statement of Operations included in the Company’s Annual Report on Form 10-K for each of the years ended December 31, 2023, 2022, 2021, and 2020. 10Represents “Net Revenues” in the Company’s Consolidated Statement of Operations included in the Company’s Annual Report on Form 10-K for each of the years ended December 31, 2023, 2022, 2021, and 2020.
Relationship Between Compensation Actually Paid and Financial Performance
Relationship Between Compensation Actually Paid and Financial Performance As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” while the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table above. Moreover, the Company’s executive compensation program includes components designed to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the following graphs illustrate the relationship across the Company’s last three completed fiscal years between the amounts disclosed in the Pay Versus Performance Table, above, as “Compensation Actually Paid” to the Company’s First PEO, Second PEO, and Third PEO respectively, and the “Average Compensation Actually Paid” to the Company’s non-PEO named executive officers and Total Stockholder Return, Peer Group Total Stockholder Return, Net Income (Loss) and Total Revenue.
Tabular List of Performance Measures
| DIRECTOR COMPENSATION |
Tabular List of Performance Measures
| DIRECTOR COMPENSATION DURING 2023 |
Tabular List of Performance Measures
| Name1, 2 | Fees Earned or Paid in Cash3 ($) | Stock Awards4 ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) | | Mara G. Aspinall | $98,992 | $130,000 | — | — | — | — | $228,992 | | James A. Datin | $80,000 | $105,000 | — | — | — | — | $185,000 | | David J. Shulkin, M.D. | $65,000 | $105,000 | — | — | — | — | $170,000 | | Lelio Marmora | $65,000 | $105,000 | — | — | — | — | $170,000 | | Nancy Gagliano, M.D. | $78,122 | $105,000 | — | — | — | — | $183,122 | | Anne Whitaker5 | $22,667 | $— | — | — | — | — | $22,667 | | Robert W. McMahon | $30,927 | $105,000 | — | — | — | — | $135,927 |
Background
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 Nancy J. Gagliano, M.D., and Lelio Marmora for election as the Class III Directors, for terms expiring at the Annual Meeting of Stockholders in 2027. The Board has determined that Mr. Datin, a current Class III member of the Board, will not stand for re-election at the Annual Meeting, and his service as a member of the Board will end effective as of the Annual Meeting. Accordingly, Mr. Datin's seat shall remain vacant until such seat is filled or the size of the Board is reduced, in each case in accordance with our Bylaws. We extend our deepest gratitude to Mr. Datin for his distinguished service to the Board. We do not know of anything that would preclude any of the nominees 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. Each of the nominees for election as Directors is currently a member of our Board and has consented to continue to serve if re-elected to the Board. Mr. Datin joined the Board in 2019 and serves as the Chairperson of the Compensation Committee and a member of the Audit Committee. Dr. Gagliano joined the Board in 2021 and serves as the Chairperson of the Nominating and Corporate Governance Committee and a member of the Compensation Committee. Mr. Marmora joined the Board in 2020 and serves as a member of the Audit Committee and the Nominating and Corporate Governance Committee. 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.
Background
| Name | Principal Occupation | Age | Director Since | | Class III (Nominees Whose Terms Expire in 2024): | | | | | Nancy J. Gagliano, M.D. | Managing Director, Granite Healthcare Advisors | 64 | 2021 | | Lelio Marmora | Former Executive Director, Unitaid | 57 | 2020 | | Class I (Directors For Terms Expiring in 2025): | | | | | Carrie Eglinton Manner | President and CEO, OraSure Technologies, Inc. | 50 | 2022 | | David J. Shulkin, M.D. | President and CEO, Shulkin Solutions, Inc. | 64 | 2020 | | Class II (Directors For Terms Expiring in 2026): | | | | | Mara G. Aspinall | Partner, Illumina Ventures | 61 | 2017 | | Robert W. McMahon | Senior Vice President and Chief Financial Officer, Agilent Technologies | 55 | 2023 |
Background
| Nancy J. Gagliano, M.D. | | | Independent Director Director since: 2021 Class III Nominee Term Expires: 2024 Age: 64 Other Current Public Company Directorships: None | Nancy J. Gagliano, M.D. became a member of the Board in November 2021 and is the chair of the Nominating and Corporate Governance Committee and member of the Compensation Committee. Dr. Gagliano also served as interim CEO from March to June 2022. Dr. Gagliano has more than 35 years of experience as a senior healthcare physician executive and practicing physician in internal medicine. Dr. Gagliano most recently served as an executive leader of the National Institute of Health’s RADx Tech, Rapid Acceleration of Diagnostics program, from May 2020 to November 2021. In this position she has helped oversee over one billion dollars of sponsored programs to bring millions of new COVID-19 tests to market. Prior to her work for the National Institute of Health, Dr. Gagliano was the Chief Medical Officer of Culbert Healthcare Solutions from September 2016 to May 2020, providing strategic guidance on healthcare consulting services. Before joining Culbert Healthcare, Dr. Gagliano spent six years with CVS Health holding senior leadership positions including as the Chief Medical Officer of Minute Clinic, and as a Senior Vice President overseeing key programs such as the enterprise smoking cessation program and the development of the company’s telemedicine program. Prior to her leadership roles at CVS Health, Dr. Gagliano was a practicing internal medicine physician and held numerous leadership positions at Massachusetts General Hospital and Massachusetts General Physicians Organization. Dr. Gagliano holds an M.D. from Harvard Medical School, an MBA from Northeastern University, and a Bachelor’s of Science Degree from Union College in Computer Science and Biology. Skills and Qualifications leading to conclusion that she should serve on the Board: •Extensive medical and healthcare experience. • Executive leadership experience. •Strong background managing public health programs. |
Background
| Lelio Marmora | | | Independent Director Director since: 2020 Class III Nominee Term Expires: 2024 Age: 57 Other Current Public Company Directorships: None | Lelio Marmora became a member of the Board in June 2020 and serves as a member of the Audit Committee and as a member of the Nominating and Corporate Governance Committee. Since June 2020, he has served as the President of The Management Lab. Prior to that, Mr. Marmora served as Executive Director of Unitaid in Geneva, Switzerland, from 2014 to 2020, overseeing a portfolio of $1.5 billion in 100 countries. Prior to Unitaid, Mr. Marmora was a member of the board of directors for The Global Fund to Fight AIDS, Tuberculosis and Malaria from 2016 to 2019, overseeing a $4 billion portfolio. Earlier in his career, Mr. Marmora served in various capacities at a range of international organizations, including the World Bank, the Inter-American Development Bank and the United Nations Development Program, managing modernization of the State programs. Mr. Marmora graduated from the Universite Pantheon-Assas (Paris II) with a Master’s degree in International Law and Administration of International Organizations. Skills and Qualifications leading to conclusion that he should serve on the Board: • Extensive experience in international public health. • Expertise in public funding. • Executive leadership experience. |
Background
| Carrie Eglinton Manner | | | Director Director since: 2022 Class I Director Term Expires: 2025 Age: 50 Other Current Public Company Directorships: 1 | For biographical information on Ms. Eglinton Manner, see the Section entitled, “Executive Officers,” in this Proxy Statement. Skills and Qualifications leading to conclusion that he should serve on the Board: •Extensive experience in the healthcare industry. •Extensive experience managing business operations in areas such as diagnostic imaging, lab services and medical devices. •Extensive leadership experience. |
Background
| David J. Shulkin, M.D. | | | Independent Director Director since: 2020 Class I Director Term Expires: 2025 Age: 64 Other Current Public Company Directorships: 1 | David J. Shulkin, M.D. became a member of the Board in April 2020 and serves as a member of the Compensation Committee and as a member of the Nominating and Corporate Governance Committee. Since 2018, he has served as President and CEO of Shulkin Solutions, Inc., a company that promotes innovation in healthcare and advocates for veterans and underserved populations. From July 2015 through March 2018, Dr. Shulkin served in various capacities at the U.S. Department of Veterans Affairs (the “VA”), including as Secretary of the VA from February 2017 to March 2018 and as Under Secretary for Health from July 2015 to February 2017. Prior to his tenure at the VA, he served in executive leadership positions at Morristown Medical Center, Beth Israel Medical Center, Temple University Hospital, Drexel University School of Medicine, Doctor Quality, Inc. and the University of Pennsylvania Health System and Hospital of the University of Pennsylvania. Dr. Shulkin received a B.A. from Hampshire College and his M.D. from the Medical College of Pennsylvania (Drexel College of Medicine). He also completed residencies in Internal Medicine at Yale University School of Medicine and University of Pittsburgh School of Medicine, was a Fellow in General Medicine at the University of Pittsburgh School of Medicine and was a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania School of Medicine. Dr. Shulkin is certified by the American Board of Internal Medicine. He currently serves on the board of directors of Cactus Acquisition Corp. 1 Ltd. Skills and Qualifications leading to conclusion that he should serve on the Board: • Expertise in medical matters and public health. • Expertise in government affairs. •Executive-level management experience. |
Background
| Mara G. Aspinall | | | Independent Director Director since: 2017 Class II Director Term Expires: 2026 Age: 61 Other Current Public Company Directorships: 1 | Mara G. Aspinall joined the Board in June 2017 and serves as a member of the Audit Committee and as a member the Compensation Committee. Ms. Aspinall is Partner at Illumina Ventures, a venture capital firm focused on investing in innovative, genomics-related companies. Since 2014, she has served as the Managing Member of her single-member consulting firm, Health Catalysts Group. Ms. Aspinall has also served as 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. 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 is certified in Cybersecurity Oversight from Carnegie Mellon University. Ms. Aspinall currently serves on the board of directors of Castle Biosciences, Inc. (“Castle”). In March 2024, Ms. Aspinall notified the board of directors of Castle that she will not stand for re-election to Castle’s board of directors at the expiration of her current term, which expires on the date of Castle’s 2024 annual meeting of stockholders. 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 biomedical diagnostics. |
Background
| Robert W. McMahon | | | Independent Director Director since: 2023 Class II Director Term Expires: 2026 Age: 55 Other Current Public Company Directorships: None | Robert W. McMahon became a member of the Board in July 2023 and is the chair of the Audit Committee. Mr. McMahon has served as the Senior Vice President and Chief Financial Officer, since August 2018 and September 2018, respectively, of Agilent Technologies, Inc., a leading life sciences tools and diagnostics company, where he is responsible for Finance, Audit, Treasury, Tax, and Investor Relations. Prior to his work for Agilent, Mr. McMahon spent four years serving as Chief Financial Officer for Hologic, Inc., a medical technology company, where he helped reshape the product portfolio and significantly improved company performance and profitability. He also spent 20 years at Johnson & Johnson, a producer of medical devices and pharmaceuticals, and the owner of many well- known consumer brands, most recently as Worldwide Vice President of Finance and Business Development for Ortho Clinical Diagnostics, a division of Johnson & Johnson’s Medical Device and Diagnostics group. Mr. McMahon holds an MBA in Finance from the University of Central Florida and a bachelor’s degree in Finance from the University of Florida. Skills and Qualifications leading to conclusion that he should serve on the Board: • Extensive leadership experience in life sciences industry. • Executive-level experience as a CFO. •Executive-level management experience. |
Background
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 on the election of directors. This means that each nominee shall be elected to the Board if the votes validly cast “for” such nominee’s election exceed the votes validly cast “against” such nominee’s election. Abstention and 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 nominees, each whom has consented to be named and to serve if elected. Your Board recommends that you vote FOR the election of the Director nominees.
Background
| PROPOSAL NO. 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Background
Background The Audit Committee of the Board of Directors has approved the appointment of Grant Thornton (“GT”) as our independent registered public accounting firm for the 2024 fiscal year after a competitive selection process conducted by the Audit Committee. The Audit Committee has also recommended that the Board submit the appointment of GT 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 GT for the 2024 fiscal year or in the future. One or more representatives of GT 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. Ratification of the appointment of GT requires the affirmative vote of a majority of shares present in person or by proxy and entitled to vote on this proposal. Abstentions will have the effect of voting against this proposal. Broker non-votes, if any, will have no effect on 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 GT as our independent registered public accounting firm for the 2024 fiscal year. Your Board recommends that the stockholders vote FOR ratification of the appointment of GT.
Background
| PROPOSAL NO. 3. ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION |
Background
Background Section 14A of the Exchange Act, enacted pursuant to the 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 2023 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 2023 compensation of our NEOs.