DEF 14A of Guardant Health, Inc.
Filed Apr 25, 2024 · FY20230001193125-24-113951
Board Committees
| • | reviewing and recommending to our Board the compensation of our directors; |
Board Committees
| • | updating the peer group of companies for our executive and director compensation analysis; |
Board Committees
| • | conducting detailed market analysis on executive and director compensation relative to our peer group, and advising on general industry pay practices; |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Our Director Compensation Program is intended to fairly compensate our non-employee directors for the time and effort necessary to serve on our Board, in a manner that is competitive and serves the best interests of the Company and our stockholders. Process for Determining Director Compensation. Decisions regarding the non-employee director compensation program are approved by our full Board based on recommendations by the Compensation Committee. The Compensation Committee reviews the total compensation of our non-employee directors and each element of our director compensation program each year, with this review usually scheduled before our annual stockholder meeting. The Compensation Committee consults with its independent compensation consultant periodically as to the competitive position of our director compensation program, both in terms of the compensation amount and with respect to the program’s design, against those of our peers (information about our peer group is on page 42). The compensation for our Board members is aligned with long-term value creation because it consists solely of stock option and restricted stock unit awards that do not vest as to any of the underlying shares until one-year after the grant date. By using a program that is entirely based on stock awards, the Board has established a compensation program that fully aligns their interests with those of our stockholders. Our directors do not receive cash compensation for their service as directors, but we pay their reasonable expenses incurred for attending meetings. The Compensation Committee did not recommend to the Board any adjustments to our director compensation program for 2023. The following is a summary of our director compensation program that was adopted in June 2020 and remained in effect for 2023: Initial Awards (each, an “Initial Award”)
DIRECTOR COMPENSATION
| • | stock option award with an aggregate value of $362,500 (determined by dividing the value of the award by the per share Black-Scholes valuation as of the applicable grant date) and an exercise price equal to the fair market value of our common stock on the date of grant; and |
DIRECTOR COMPENSATION
| • | restricted stock unit award with an aggregate value of $362,500 (determined by dividing the value by the fair market value of our common stock on the applicable grant date). |
DIRECTOR COMPENSATION
Annual Awards (each, an “Annual Award”)
DIRECTOR COMPENSATION
| • | stock option award with an aggregate value of $212,500 (determined by dividing the value of the award by the per share Black-Scholes valuation as of the applicable grant date) and an exercise price equal to the fair market value of our common stock on the date of grant; and |
DIRECTOR COMPENSATION
| • | restricted stock unit award with an aggregate value of $212,500 (determined by dividing the value by the fair market value of our common stock on the applicable grant date). |
DIRECTOR COMPENSATION
Annual Lead Independent Director Award (each, a “LID Award”)
DIRECTOR COMPENSATION
| • | restricted stock unit award with an aggregate value of $45,000 (determined by dividing the value by the fair market value of our common stock on the applicable grant date). |
DIRECTOR COMPENSATION
The Initial Award is granted to each non-employee director who is initially elected or appointed to serve on the Board and each Initial Award vests and becomes exercisable (as applicable) as to 25% of the shares subject to such award on the first anniversary of the director’s election to the Board, and as to the remaining 75% of the shares subject to the Initial Award in substantially equal installments on each monthly anniversary of the director’s election to the Board thereafter, subject to continued service through the applicable vesting date. The Annual Award is granted on the date of each annual stockholders’ meeting to non-employee directors who have served on the Board for at least six months prior to the date of such annual stockholders’ meeting. Each Annual Award vests and become exercisable (as applicable) in full on the earlier to occur of (i) the one-year anniversary of the applicable grant date and (ii) the date of the next annual meeting of the Company’s stockholders following the grant date, subject to continued service through the applicable vesting date. The LID Award is granted on the date of each annual stockholders’ meeting to the non-employee director who has served on the Board for at least six months as of the date of such annual stockholders’ meeting and who will also serve as Lead Independent Director of the Board immediately following such meeting. Each LID Award will vest in full on the earlier to occur of (i) the one-year anniversary of the applicable grant date and (ii) the date of the next annual meeting of the Company’s stockholders following the grant date, subject to continued service through the applicable vesting date. Our Board decided that the additional LID Award is appropriate given the significant role and scope of the responsibilities of the Board’s Lead Independent Director, such as responsibilities related to leading meetings of independent directors, providing input on meeting agendas, advising our Co-CEOs as to quantity, quality and timeliness of information and materials, providing feedback to our Co-CEOs on the Co-CEOs’ evaluation, and leading the Board evaluation process. In addition, each Initial Award, Annual Award and LID Award will vest in full immediately prior to the director’s death, disability, termination without cause, or a change in control (as defined in our 2018 Incentive Award Plan (the “2018 Plan”)). Any compensation payable to a director will comply with the director annual compensation limit set forth in our 2018 Plan (currently, an annual limit of $750,000 per director). We do not pay any additional compensation for committee service or attendance at Board or committee meetings. Director Compensation Table. The following table contains information concerning the compensation received by our non-employee directors during the year ended December 31, 2023. Directors who are also employees do not receive compensation for service on our Board (in addition to the compensation payable for their service as our employees). Drs. Eltoukhy and Talasaz are not included in the table below because they did not receive any additional compensation for their service on our Board. Drs. Eltoukhy’s and Talasaz’s 2023 compensation is presented in the Summary Compensation Table found on page 61.
2023 DIRECTOR COMPENSATION TABLE
2023 DIRECTOR COMPENSATION TABLE
2023 DIRECTOR COMPENSATION TABLE
| Name | Fees Earned or Paid in Cash ($) | Stock Awards (1)(3) ($) | Option Awards (2)(3) ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation ($) | All Other Compensation ($) | Total ($) | | Ian Clark | — | 257,522 | 212,690 | — | — | — | 470,212 | | Vijaya Gadde | — | 212,524 | 212,690 | — | — | — | 425,214 | | Meghan Joyce | — | 212,524 | 212,690 | — | — | — | 425,214 | | Samir Kaul(4) | — | 212,524 | 212,690 | — | — | — | 425,214 | | Steven Krognes | — | 212,524 | 212,690 | — | — | — | 425,214 | | Myrtle Potter | — | 212,524 | 212,690 | — | — | — | 425,214 | | Musa Tariq(5) | — | 362,518 | 362,783 | — | — | — | 725,301 |
2023 DIRECTOR COMPENSATION TABLE
| (1) The amounts shown in the Stock Awards column reflects the aggregate grant date fair value of the restricted stock units (“RSUs”) awarded to our non-employee directors, computed in accordance with Topic 718, excluding the effect of estimated forfeitures. Amounts in this column reflect the market value of the RSUs using the closing price of a share of our common stock as reported on Nasdaq on the date of grant multiplied by the number of shares underlying each award, as follows: for Messrs. Clark, Kaul, and Krognes and Mses. Gadde, Joyce and Potter using the closing price of $38.01 on June 14, 2023; for Mr. Tariq, using the closing price of $30.23 on March 6, 2023. |
2023 DIRECTOR COMPENSATION TABLE
| (2) The amounts shown in the Option Awards column represent the aggregate grant date fair value of stock options computed in accordance with Topic 718. Valuations of options were determined using the Black-Scholes option pricing model. For information regarding assumptions, factors and methodologies used in our computations pursuant to Topic 718, see Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. |
2023 DIRECTOR COMPENSATION TABLE
| (3) The non-employee directors held the following outstanding RSUs and stock options as of December 31, 2023: |
2023 DIRECTOR COMPENSATION TABLE
| Name | RSUs | Stock Options | | Ian Clark | 6,776 | 24,374 | | Vijaya Gadde | 6,180 | 28,947 | | Meghan Joyce | 6,920 | 23,258 | | Samir Kaul(4) | 5,592 | 28,138 | | Steven Krognes | 10,221 | 20,682 | | Myrtle Potter | 7,097 | 23,521 | | Musa Tariq(5) | 11,992 | 18,237 |
2023 DIRECTOR COMPENSATION TABLE
| (4) Mr. Kaul resigned as a member of the Board on February 1, 2024. |
2023 DIRECTOR COMPENSATION TABLE
| (5) Mr. Tariq joined the Board effective March 6, 2023. |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Board Nominees
Board Nominees Pursuant to our Certificate of Incorporation and our Bylaws, the total number of directors constituting the Board is fixed from time to time by the Board. There are currently eight authorized directors and eight persons serving as directors. The Board is divided into three classes (Class I, Class II and Class III) with staggered terms of three years each, with each director holding office until his or her successor is duly elected and qualified, or until his or her earlier resignation or removal. Each class contains as nearly as possible an equal number of directors. The term of one class expires at each annual meeting of stockholders; thus, directors typically stand for election after three years, unless they are filling an unexpired term. The current term of office of our Class III Directors expires at the Annual Meeting, while the term for our Class I Directors expires at our 2025 annual meeting of stockholders and the term for our Class II Directors expires at our 2026 annual meeting of stockholders. Based upon the recommendation of our Governance Committee, the Board has nominated Helmy Eltoukhy, Steve Krognes and AmirAli Talasaz, each a current Class III Director, for re-election at the Annual Meeting. Each director elected at the Annual Meeting will serve a three-year term expiring at the 2027 annual meeting of stockholders and until his successor is duly elected and qualified as a Class III Director, or until his earlier death, resignation or removal. At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the three nominees named in this proxy statement. The Board and the Governance Committee believe the skills, qualities, attributes and experience of our directors provide us with business acumen and a diverse range of perspectives to engage each other and management to effectively address our evolving needs and represent the best interests of our stockholders. Vacancies on the Board, including any vacancy created by an increase in the size of the Board, may be filled only by a majority of the directors remaining in office, even though less than a quorum of the Board, or a sole remaining director. A director elected by the Board to fill a vacancy will serve until the next election of the class of directors for which such director was chosen and until such director’s successor is elected and qualified, or until such director’s earlier retirement, resignation, disqualification, removal or death. If any nominee should become unavailable for election prior to the Annual Meeting, an event that currently is not anticipated by the Board, the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board or the number of directors may be reduced accordingly. Each nominee has agreed to serve if elected and the Board has no reason to believe that any nominee will be unable to serve.
Information about Class III Director Nominees
Information about Class III Director Nominees Set forth below is biographical information for each nominee and a summary of the specific qualifications, attributes, skills and experiences which led the Board to conclude that each nominee should serve on the Board at this time. Class III Directors with Term Expiring at the 2024 Annual Meeting
Information about Class III Director Nominees
| Helmy Eltoukhy Co-Chief Executive Officer at Guardant Health, Inc. | Dr. Eltoukhy is our co-founder and has served as our CEO and a member of our Board since January 2013. On August 5, 2021, Dr. Eltoukhy was appointed as Chairperson of our Board and Co-CEO. Prior to co-founding our company, Dr. Eltoukhy held various positions at Illumina, Inc. from August 2008 to December 2012, including Senior Director of Advanced Technology Research, where he developed novel chemistries, hardware and informatics for genetic analysis systems. In June 2007, he co-founded Avantome Inc. to commercialize semiconductor sequencing to help speed up the democratization of high throughput DNA sequencing and served as Chief Executive Officer until its acquisition by Illumina in August 2008. He joined the Stanford Genome Technology Center as a post-doctoral fellow in 2006 to work on low-cost DNA sequencing technologies. During his doctoral studies and at the Stanford Genome Technology Center, he developed the first semiconductor sequencing platform and first base-calling algorithm for next-generation sequencing under several National Human Genome Research Institute grants. He received his Ph.D., M.S. and B.S. degrees in electrical engineering from Stanford University. We believe that Dr. Eltoukhy is qualified to serve as Chairperson of our Board due to his extensive knowledge of our company as co-founder and Co-CEO and his experience in the life sciences and biotechnology industries. |
Information about Class III Director Nominees
| Steve Krognes Former Chief Financial Officer of Denali Therapeutics Inc. Current Committee Assignments: • Audit Committee (Chair) • Nominating and Corporate Governance Committee | Mr. Krognes has served as a member of our Board since June 2022. Mr. Krognes is a professional independent board member in the biotech and life sciences sector. Before joining the Board, Mr. Krognes was the Chief Financial Officer at Denali Therapeutics Inc., a public biotechnology company, from October 2015 to April 2022. Mr. Krognes joined Denali from Genentech, Inc., a biotechnology company, where he served as Chief Financial Officer and a member of the Executive Committee from April 2009 to September 2015. Mr. Krognes also oversaw Genentech’s Site Services organization between 2011 and 2015, and Genentech’s IT organization between 2009 and 2011. He chaired the Genentech Access to Care Foundation between 2009 and 2015. From January 2004 to April 2009, Mr. Krognes served as Head of Mergers & Acquisitions and a member of the Finance Executive Committee at Roche Holding AG, a Swiss biotechnology company. From July 2002 to December 2003, Mr. Krognes served as Director of M&A at Danske Bank based in Norway. Mr. Krognes currently serves as a member of the Board of Directors at Denali Therapeutics Inc., Gritstone bio, Inc., argenx SE and ClavystBio, and previously served on the Board of Directors at Corvus Pharmaceuticals, Inc. between January 2016 and March 2021 and RLS Global AB from January 2016 to January 2023. He received his M.B.A. from Harvard Business School and his B.S. in Economics from The Wharton School of the University of Pennsylvania. We believe that Mr. Krognes is qualified to serve as a member of our Board due to his extensive experience in the biotechnology and life sciences industries. |
Information about Class III Director Nominees
| AmirAli Talasaz Co-Chief Executive Officer at Guardant Health, Inc. | Dr. Talasaz is our co-founder and served as Chairperson of our Board, President and Chief Operating Officer (COO) from January 2013 until August 2021. On August 5, 2021, the Company appointed Dr. Talasaz as Co-CEO of the Company. On the same day, Dr. Talasaz resigned his position as Chairperson of the Board and as President and COO of the Company. Prior to co-founding our company, Dr. Talasaz held various positions at Illumina, Inc., including Senior Director of Diagnostics Research from October 2011 to June 2012, where he led the efforts for emerging clinical applications of next-generation genomic analysis. During that time, he developed different genomic technologies suitable for clinical applications. In March 2008, he founded Auriphex Biosciences, Inc., which focused on purification and genetic analysis of circulating tumor cells for cancer management. The technology was acquired by lllumina, Inc. in 2009. During his academic years, he led the Technology Development group at the Stanford Genome Technology Center. He received his Ph.D. degree in electrical engineering, M.S. degree in electrical engineering and M.S. degree in management science and engineering from Stanford University. We believe that Dr. Talasaz is qualified to serve as a member of our Board due to his extensive knowledge of our company as co-founder and Co-CEO and his knowledge of the life sciences and biotechnology industries. |
Information about Other Directors Not Standing for Election at this Meeting
Information about Other Directors Not Standing for Election at this Meeting Class I Directors with Term Expiring at the 2025 Annual Meeting
Information about Other Directors Not Standing for Election at this Meeting
| Vijaya Gadde Former Chief Legal Officer of Twitter, Inc. Current Committee Assignments: • Compensation Committee (Chair) | Ms. Gadde has served as a member of our Board since June 2020. Ms. Gadde served as the Chief Legal Officer of Twitter, Inc., from February 2018 to October 2022, and Secretary from August 2013 to October 2022, leading its legal, public policy, and trust and safety teams globally before Twitter, Inc. became a private company. Ms. Gadde previously served as Twitter, Inc.’s General Counsel from 2013 to 2018, its head of communications from 2015 to 2016 and as its Director, Legal from 2011 to 2013. Ms. Gadde currently serves on the Board of Trustees of NYU Law School and the Board of Directors of Planet Labs PBC, as well as Mercy Corps, a global humanitarian aid and development organization that partners with communities, corporations and governments. Ms. Gadde also co-founded #Angels, an investment collective focused on funding diverse and ambitious founders pursuing bold ideas. Previously, from 2010 to 2011, Ms. Gadde served as Senior Director, Legal at Juniper Networks, Inc., a provider of network infrastructure products and services. From 2000 to 2010, Ms. Gadde was an attorney at Wilson Sonsini Goodrich & Rosati, P.C. Ms. Gadde earned a J.D. from New York University School of Law and a B.S. in industrial and labor relations from Cornell University. We believe that Ms. Gadde is qualified to serve as a member of our Board due to her deep public company experience, in addition to her executive leadership experience and significant legal, public policy and regulatory expertise. |
Information about Other Directors Not Standing for Election at this Meeting
| Myrtle Potter Former President, Chief Executive Officer and Chairperson of Sumitomo Pharma America, Inc. Current Committee Assignments: • Audit Committee • Compensation Committee | Ms. Potter has served as a member of our Board since October 2021. Ms. Potter most recently served as President, Chief Executive Officer and Chairperson of the Board of Sumitomo Pharma America, Inc. from July 1, 2023 to April 1, 2024. Prior to this, Ms. Potter served as the Chief Executive Officer of Sumitovant Biopharma, Inc., a subsidiary of Sumitovant Biopharma Ltd., from December 2019 to July 2023, when Sumitomo Pharma America, Inc. announced its launch resulting from the combination of Sumitovant and its wholly owned U.S. subsidiaries and other U.S. Sumitomo Pharma wholly owned subsidiaries. Previously, from 2018 to 2019, Ms. Potter served as Vant Operating Chair at Roivant Sciences, Ltd., and as Chief Executive Officer of Myrtle Potter & Company, LLC from 2005 to 2018. From 2000 to 2004, Ms. Potter served as Chief Operating Officer at Genentech, Inc., and from 2004 to 2005, she served as the President, Commercial Operations and Executive Vice President of Genentech. Prior to joining Genentech, she held various positions, including President, U.S. Cardiovascular/Metabolics at Bristol-Myers Squibb, and a vice president at Merck & Co. Ms. Potter currently serves on the Board of Directors of Liberty Mutual Holding Company, Inc. Ms. Potter previously served on the Board of Directors of Myovant Sciences, Ltd. from September 2018 to March 2023, Urovant Sciences Ltd. from July 2018 to March 2021, Axsome Therapeutics, Inc. from June 2017 to June 2020, Everyday Health, Inc. from September 2010 to December 2016, Immunovant, Inc. from June 2019 to February 2020, Axovant Gene Therapies, Ltd. from September 2018 to February 2020, Arbutus Biopharma, Inc. from October 2018 to February 2020, Insmed Incorporated from December 2014 to November 2018, and Rite Aid Corporation from November 2013 to September 2018. Ms. Potter holds a Bachelor of Arts Degree from The University of Chicago. We believe that Ms. Potter is qualified to serve as a member of our Board due to her years of experience in the biotechnology industry, including extensive commercial and operational experience leading pharmaceutical companies in bringing new therapies to market and her extensive experience serving on boards of public companies. |
Information about Other Directors Not Standing for Election at this Meeting
| Musa Tariq Former Chief Marketing Officer of GoFundMe Current Committee Assignments: • Nominating and Corporate Governance Committee | Mr. Tariq has served as a member of our Board since March 2023. Mr. Tariq most recently served as Chief Marketing Officer of GoFundMe, a crowdfunding platform, from January 2021 to June 2023. He joined GoFundMe to further build the GoFundMe brand and drive the company’s marketing and communications functions. Prior to GoFundMe, Mr. Tariq was Global Head of Marketing for Airbnb Experiences, a division of Airbnb, Inc., a provider of an online marketplace for short-term homestays and experiences, from September 2018 to December 2020 where he drove brand awareness and adoption of that rapidly growing part of Airbnb’s business. Before Airbnb, he was Chief Brand Officer at Ford Motor Company from January 2017 to March 2018. Mr. Tariq has also held marketing leadership roles at Apple, Nike and Burberry. Mr. Tariq has a B.S. in Geography and Economics from London School of Economics. A distinguished counselor to iconic and emerging global brands, Mr. Tariq currently serves as an advisor to MasterClass, The British Fashion Council, Felix Capital and several other start-ups. We believe that Mr. Tariq is qualified to serve as a member of our Board due to his extensive marketing experience leading global consumer brands. |
Information about Other Directors Not Standing for Election at this Meeting
Class II Directors with Term Expiring at the 2026 Annual Meeting
Information about Other Directors Not Standing for Election at this Meeting
| Ian Clark Former Chief Executive Officer of Genentech Inc. Current Committee Assignments: • Nominating and Corporate Governance Committee (Chair) | Mr. Clark has served as a member of our Board since January 2017 and is our lead independent director. Mr. Clark most recently served as CEO, led the Executive Committee, and was a member of the Board of Directors of Genentech Inc., a biotechnology company, from January 2010 to December 2016. In total he served for 14 years at Genentech of which 12 were on the Genentech Executive Committee, initially as Executive Vice President of Commercial Operations. Before that, he served as Senior Vice President and General Manager of BioOncology. Prior to this, Mr. Clark spent 20 years in positions of increasing responsibility at Novartis, Sanofi, Ivax, and Searle, working in the United Kingdom, Canada, Eastern Europe and France. Mr. Clark currently serves on the Board of Directors of Takeda Pharmaceutical Company Limited, Olema Pharmaceuticals, Inc., Kyverna Therapeutics Inc, Corvus Pharmaceuticals, Inc., and AVROBIO, Inc. He previously served on the Board of Directors of Shire, Kite Pharma, Gyroscope, Forty Seven, Agios, TerraVia (formerly Solazyme), Dendreon, and Vernalis. Mr. Clark is an advisor to KKR and was previously an advisor at Lazard, Blackstone Life Sciences, and Perella Weinberg Partners. He served on the Board of the Biotechnology Industry Organization (BIO) and as a member of the 12th District Economic Advisory Council (EAC) of the Federal Reserve. He also served on the BioFulcrum Board of the Gladstone Institute and as Chair of the External Advisory Board to Southampton University’s Institute for Life Sciences. Mr. Clark received a B.Sc. and an honorary doctorate in biological sciences from Southampton University We believe that Mr. Clark is qualified to serve as a member of our Board due to his vast experience in the biopharmaceutical industry, combined with his experience serving on the boards of directors of successful, high-growth public and private companies. |
Information about Other Directors Not Standing for Election at this Meeting
| Meghan Joyce Independent Advisor Current Committee Assignments: • Audit Committee • Compensation Committee | Ms. Joyce has served as a member of our Board since August 2021. She is co-founder and CEO of Duckbill Technologies, Inc., a consumer tech startup, a role she has held since April 2022, and also serves as an independent director and advisor to select high growth organizations in the healthcare and consumer space. Previously, from September 2019 to April 2022, Ms. Joyce served as Chief Operating Officer and Executive Vice President of Platform at Oscar Health, a high-growth health tech and health insurance company, where she led operations, technology, clinical, marketing, and new business lines. Prior to joining Oscar Health, from 2013 to 2019, Ms. Joyce held several leadership roles at Uber Technologies, most recently as Regional General Manager of the United States and Canada. Ms. Joyce previously served as a Senior Policy Advisor at the United States Department of the Treasury, an investor at Bain Capital, and a consultant at Bain & Company. Ms. Joyce currently serves as a member of the Board of Directors of The Boston Beer Company. She holds an MBA from Harvard Business School and an A.B. degree in History from Harvard College. We believe that Ms. Joyce is qualified to serve as a member of our Board due to her extensive experience in business strategy, managing growth, financial modeling, implementation of new technologies, and management and retention of diverse employee groups. |
Compensation Objectives
| • | Provide market competitive compensation, the majority of which is “at risk”; and |
Compensation Objectives
| • | Offer competitive compensation to attract and retain talent. The biopharmaceutical and technology industries are fiercely competitive, particularly in the San Francisco Bay Area and other areas where we operate, and we must compete for executive talent in these industries and areas. To manage our business and carry out our strategy, we seek high-caliber executive officers and managers who have diverse experience, expertise, capabilities and backgrounds. |
Compensation Program Governance
| What We Don’t Do | | | | | No Guaranteed Employment Agreements | We do not have employment agreements that guarantee employment for a specified term. Our executive officers are at-will employees. | | | No Hedging or Pledging of Company Securities | We prohibit employees and non-employee directors from engaging in hedging, pledging or short sale transactions in Company securities. | | | No Excessive Perks | We do not provide large perquisites to executive officers. | | | No Excise Tax Gross-Ups | We do not provide excise tax gross-ups. | | | No Guaranteed Bonuses | We do not guarantee our NEOs any minimum levels of payment under our annual incentive plan, which is entirely performance-based. |
Role of the Compensation Committee
Role of the Compensation Committee The Compensation Committee establishes our compensation philosophy and objectives; determines the structure, components, and other elements of the executive compensation program; and reviews and approves the compensation of the NEOs or recommends it for approval by the Board. The Compensation Committee structures the executive compensation program to accomplish its articulated compensation objectives in light of the compensation philosophy described above. Toward the end of each year, the Compensation Committee reviews the elements of our executive compensation program to verify the alignment of the program with our business strategy and with the items that we believe drive the creation of stockholder value, and to determine whether any changes would be appropriate. At the beginning of the new year, after the end of applicable annual performance periods, the Compensation Committee evaluates achievement relative to performance targets, and examines whether it would be appropriate to apply negative discretion to the initial earned amounts in order to take relevant factors into consideration, and determines corresponding payouts earned. The Compensation Committee obtains input from executive officers regarding the annual operating plan, expected financial results, anticipated milestone results and related risks. Based on this information, the Compensation Committee establishes the performance-based metrics and targets for the cash-based annual incentive plan and for the performance share units granted under our equity incentive plan. For each metric, the Compensation Committee sets appropriate threshold and maximum levels of performance designed to motivate achievement without incentivizing excessive risk-taking. With the input of the Co-CEOs, the Compensation Committee also establishes the compensation for all the other executive officers. The Compensation Committee sets the compensation for each of our NEOs and makes recommendations to the full Board generally at its meetings in the first quarter of each year.
Role of the Independent Compensation Consultant
Role of the Independent Compensation Consultant The Compensation Committee recognizes that there is value in procuring independent, objective expertise and counsel in connection with fulfilling its duties, and pursuant to its charter, the Compensation Committee has the authority to select and retain independent advisors and counsel to assist it with carrying out its duties and responsibilities. The Compensation Committee has exercised this authority to engage Aon as its independent compensation consultant, and has worked with Aon to develop a compensation peer group, provide a competitive market analysis of the base salary, annual cash incentive awards and long-term incentive compensation of our executive officers compared against the compensation peer group, report on share utilization, and review of other market practices and trends. While the Compensation Committee took into consideration the review and recommendations of Aon as well as the practices of our compensation peer group when making decisions about our executive compensation program, ultimately, the Compensation Committee made its own independent decisions in determining our executives’ compensation.
Compensation Peer Groups and Peer Selection Process
Compensation Peer Groups and Peer Selection Process Relevant market and benchmark data provide a solid reference point for making decisions and very helpful context, even though, relative to other companies, there are differences and unique aspects of the Company. The Compensation Committee takes into consideration the structure and components of, and the amounts paid under, the executive compensation programs of other, comparable peer companies, as derived from public filings and other sources when making decisions about the structure and component mix of our executive compensation program. The Compensation Committee, with the assistance of Aon, developed a peer group in 2022 for use in connection with decisions about 2023 executive compensation using the following criteria: sector (commercial biopharma and medical technology companies, with an emphasis on oncology and diagnostics where possible), revenue, and market capitalization. Based on these criteria and considerations, the Compensation Committee in July 2022 approved a peer group for decisions relating to 2023 executive compensation that consisted of the following 16 companies:
Compensation Peer Groups and Peer Selection Process
| 10x Genomics, Inc. | Natera, Inc. | | ACADIA Pharmaceuticals Inc. | Neurocrine Biosciences, Inc. | | Adaptive Biotechnologies Corporation | Novocure Ltd. | | Blueprint Medicines Corporation | Penumbra, Inc. | | EXACT Sciences Corporation | Repligen Corporation | | Exelixis, Inc. | Sarepta Therapeutics, Inc. | | Invitae Corporation | Ultragenyx Pharmaceutical Inc. | | iRythym Technologies, Inc. | Veracyte, Inc. |
Compensation Peer Groups and Peer Selection Process
Based on the peer analysis performed by Aon in 2022, Alnylam Pharmaceuticals Inc., Beigene Ltd., Insulet Corporation and NeoGeomics Inc. were removed, and ACADIA Pharmaceuticals, iRhythm Technologies, Ultragenyx Pharmaceutical and Veracyte, Inc. were added. In general, the removed peer companies no longer fit the selection criteria, as described above and further below, while the additions reflect companies with financial and industry characteristics more similar to our company. Subsequently, in August 2023, the Compensation Committee engaged Aon to develop a new peer group that would be referenced in making subsequent decisions regarding executive compensation. The August 2023 peer group used the same framework as the July 2022 peer group, and used Guardant’s then-current revenue and market capitalization. Invitae Corporation was removed, and Myriad Genetics, Inc. and NeoGenomics, Inc. were added. Based on these criteria and considerations, the Compensation Committee approved a revised peer group relating to executive compensation decisions subsequent to August 2023 that consisted of the following 17 companies:
Compensation Peer Groups and Peer Selection Process
| 10x Genomics, Inc. | NeoGenomics, Inc. | | ACADIA Pharmaceuticals Inc. | Neurocrine Biosciences, Inc. | | Adaptive Biotechnologies Corporation | Novocure Ltd. | | Blueprint Medicines Corporation | Penumbra, Inc. | | EXACT Sciences Corporation | Repligen Corporation | | Exelixis, Inc. | Sarepta Therapeutics, Inc. | | iRythym Technologies, Inc. | Ultragenyx Pharmaceutical Inc. | | Myriad Genetics, Inc. | Veracyte, Inc. | | Natera, Inc. | |
Compensation Peer Groups and Peer Selection Process
In addition to the criteria above, the Compensation Committee also referenced general and specific industry surveys from other sources. The market data are used as a reference point and to provide information on the range of competitive pay levels and current compensation practices in our industry. We believe that the compensation practices of our peer group provided us with appropriate compensation reference points for evaluating and determining the compensation of our NEOs during 2023. Consistent with best practices for corporate governance, the Compensation Committee will review our peer group annually.
2023 Components in General
| Element | Description | Additional Detail | | Base Salary | Fixed cash compensation. Drs. Eltoukhy and Talasaz receive annual base salaries of $1 following the May 2020 grant of the Founders’ 2020 Performance Awards. Base salaries for the other NEOs determined based on each executive officer’s role, individual skills, experience, performance, positioning relative to competitive market and internal equity. | Base salaries are intended to provide stable compensation to executive officers, allow us to attract and retain skilled executive talent and maintain a consistent leadership team. | | Short-Term Incentives: Annual Cash Incentive Opportunities | Variable cash compensation based on the level of achievement of certain annual performance objectives that are pre-determined. Financial objectives, product development and research-based milestone objectives. Performance against the revenue goal must be at least 98% of target to earn any credit toward a payout with respect to that goal. Cash incentive opportunities are capped at a maximum of 200% of target, which are earned solely based on corporate performance. Target cash award is no greater than 50% of the NEO’s base salary. As previously noted, Drs. Eltoukhy and Talasaz were not eligible to participate in our 2023 annual incentive plan. | Annual cash incentive opportunities are designed to align our executive officers in pursuing our short-term goals; payout levels are generally determined based on actual financial results and the degree of achievement of product development and research milestones. |
2023 Components in General
| Element | Description | Additional Detail | | Long-Term Incentives: Equity-Based Compensation | Variable equity-based compensation. Stock Options: Right to purchase shares at a price at least equal to the stock price on the grant date. Restricted Stock Units (RSUs): Restricted stock units that vest based on continued service over a period of time. Performance Stock Units (PSUs): PSUs vest over a three-year period, with the amount vesting based on corporate performance. | Equity-based compensation is designed to motivate and reward executive officers to achieve multi-year strategic goals and to deliver sustained long-term value to stockholders, as well as to attract and retain executive officers for the long term. |
Annual Incentive Plan
Annual Incentive Plan The annual incentive plan for executive officers is a cash plan that rewards NEOs for the achievement of key short-term objectives. In particular, the plan offers incentives to the NEOs other than the Co-CEOs to accomplish certain specified product development and research-based milestones and short-term financial results that the Compensation Committee views as key steps in the execution of our overall business strategy, with the intent ultimately of increasing stockholder value. In connection with the Founders’ 2020 Performance Awards granted to Drs. Eltoukhy and Talasaz in May 2020 and the long-term opportunity presented by such grants, each of Drs. Eltoukhy and Talasaz formally agreed to waive their right to receive an annual cash incentive opportunity until 2027. In the Compensation Committee’s view, the most senior executive officers have the greatest responsibility for the performance of the Company, and consequently, the annual incentive plan for such executive officers utilizes only pre-established objective Company performance measures, with no individual discretionary component (other than with respect to the application of negative discretion to reduce earned amounts). Performance Measures The amount of the payout, if any, under the annual incentive plan is based on our achievement against (1) oncology product development milestones and screening research and development measures, representing a combined 55% of the target bonus opportunity (together, the “Operational Performance Component”), and (2) financial performance metrics, representing 45% of the target bonus opportunity (the “Financial Performance Component”). In the view of the Compensation Committee, for 2023, it was critically important to advance our oncology product program and our screening research and development program, and thus the Compensation Committee placed significant emphasis on the Operational Performance Component. Specifically:
Annual Incentive Plan
| • | 30% of the target bonus opportunity related to oncology products and performance with respect to new product launches, product reimbursement in one foreign jurisdiction and the development of data for use of tests for additional indications. |
Annual Incentive Plan
| • | 25% related to the submittal of a premarket approval for a product and enrollment in ECLIPSE and another study. |
Annual Incentive Plan
The financial measures selected by the Compensation Committee—Revenue, Gross Margin and Adjusted EBITDA—also remained very important, as they focus executive officers on the critical strategic priorities of top line revenue growth and operating profitability.
Annual Incentive Plan
| • | Revenue (weighted 30%). Given the Company’s stage of development and market opportunity and window, the Compensation Committee emphasized revenue growth as a high priority. We derive revenue from the provision of precision oncology testing services provided to our ordering physicians and biopharmaceutical customers, as well as from biopharmaceutical research and development services provided to our biopharmaceutical customers. |
Annual Incentive Plan
| • | Adjusted EBITDA (weighted 10%). The Compensation Committee continued using Adjusted EBITDA as a measure that reflected profitability without regard to how the Company is financed or taxed and adjusted for certain items beyond the control of management. A general description of how we calculate Adjusted EBITDA for purposes of our 2023 annual cash incentive plan is described above. See Appendix B for a reconciliation of non-GAAP information. |
Annual Incentive Plan
| • | Gross Margin (weighted 5%). Gross margin is defined as total revenue less cost of precision oncology testing and costs of development and other services, divided by total revenue. |
Annual Incentive Plan
Target, Threshold and Maximum Performance Levels The Compensation Committee set the performance metric targets at levels that it considered rigorous and challenging and that took into account the relevant risks and opportunities. More specifically, the Compensation Committee reviewed the relevant operational goals in light of the Company’s plans, as well as the financial objectives set as a result of the detailed budgeting process, and assessed various factors related to the achievability of these targets, including the risks associated with various macroeconomic factors, and the risks of achieving specific actions that underlie the targets and the implied performance relative to prior years. Considering these factors, the Compensation Committee set the 2023 targets for the Operational Performance Components at levels or with timing in accordance with the Company’s strategic and operational plans. With respect to the Financial Performance Component, the Compensation Committee set the 2023 target for revenue at a 20.1% growth rate over total revenue in 2022, the target for Adjusted EBITDA loss at a 13.1% improvement over 2022 actual, and the target for 2023 gross margin was established at a 500 basis point decrease over the actual gross margin in 2022. The target for gross margin was reduced as a result of a number of factors, including due to the change in mix between clinical and biopharma revenue. Having set the targets, the Compensation Committee also set the threshold and maximum performance levels for both the Operational Performance Component and the Financial Performance Component. For the 2023 milestone measures, the threshold level of performance generally involved achieving the goal later or in a lower amount, and maximum performance generally involved achieving it sooner or in a higher amount. For the 2023 financial measures, the Compensation Committee set the threshold at a high-performance level of approximately 98% of the target for revenue. The thresholds for gross margin and Adjusted EBITDA loss were also set at high performance levels. The Compensation Committee set the maximum level for revenue at 104% of target, a level that presents a significant challenge requiring exceptionally strong performance. The Compensation Committee set maximum levels for the other two metrics that were also based on our 2023 operating plan, including the planned growth in revenue and expenses, and that required significant effort to achieve. Payout Levels The Compensation Committee defined payout levels representing the amount to be paid to NEOs based on the level of actual performance relative to the targets. If achievement is below the threshold level of performance, the Compensation Committee set the payout at 0% in order to motivate performance and underscore the importance of achieving, or closely approaching, the targets at this critical time in our development. If we achieve threshold performance on a metric, the payout is 50% of target; if we achieve 100% of target performance, the payout is 100% of target; and if we achieve maximum performance, the payout is 200% of target. For performance between the threshold and maximum for any metric, the payout amount is interpolated as a payout percentage between a threshold of 50% and a maximum of 200%. With respect to the Operational Performance Component, for the oncology products and performance, of the two upgraded product launches, one was achieved on time and on target and the other was not. The reimbursement for Guardant360 in Japan was accomplished on time. The development of clinical validity data for additional indications for two of our tests was accomplished, which was above target. For the screening research and development performance, the submittal of the Premarket Application was achieved on time and on target, and the enrollment in ECLIPSE and one other study were both accomplished on target. With respect to the Financial Performance Component, as described above, total revenue increased to $563.9 million for the year ended December 31, 2023, a 25% increase from $449.5 million for the year ended December 31, 2022. The following tables show (1) for each operational performance component, the weighted payout, and (2) for each financial performance component, the achievements necessary to obtain payouts at the target level, the actual result for each performance component and the resulting achievement percentage, as well as the weighted payout:
Annual Incentive Plan
| Operational Performance Component | | Relative Weighting (%) | Weighted Payout% | | Oncology Product Milestones | | 30% | 20% | | Launch new products | 20% | | | | Secure reimbursement in Japan | 5% | | | | Develop data for additional Reveal/Response indications | 5% | | | | Screening Research and Development Objectives | | 25% | 30% | | Submit Premarket Application | 20% | | | | Enroll patients in ECLIPSE and SHIELD-LUNG | 5% | | | | Subtotal | | 55% | 50% |
Annual Incentive Plan
| Financial Performance Component | Relative Weighting (%) | Target ($) | Actual Result ($) | % Achievement | Weighted Payout % | | Revenue (in millions) | 30% | 540 | 563.9 | 200% | 60% | | Percentage of Target Performance | | 100% | | | | | Gross Margin % | 5% | 60 | 60 | 100% | 5% | | Adjusted EBITDA | 10% | (350.0) | (344)(1) | 200% | 20% | | Subtotal | 45% | 100% | | | 85% | | Total Operational Performance Component, Financial Performance Component and Employee Retention Metric Achievement Percentage | | | | | 135% |
Annual Incentive Plan
| (1) For purposes of the annual incentive plan, the final result excludes the amount of incentive compensation expense in excess of the target level of $10 million. |
Annual Incentive Plan
Target Opportunities The Compensation Committee determines the target cash incentive opportunity available to each NEO by taking the individual’s annual base salary in effect at year end and multiplying it by the individual’s target incentive percentage. Among other factors, the target incentive percentages are determined with reference to the peer group company percentages of salary and the proportion of total direct compensation represented by the annual incentive. For 2023, the target opportunity percentage for each of the NEOs was 50%. Payout Determination The Compensation Committee verifies our achievement relative to the targets for the Operational Performance Component and Financial Performance Component to determine the respective performance levels, and then translates those performance levels to a payout level based on linear interpolation between achievement levels. As noted above, for 2023, the calculated payout level was 135%. Having determined the total 2023 annual incentive plan payouts for each eligible NEO, the Compensation Committee then shared its conclusions with the Board for discussion.
Annual Incentive Plan
| NEO | Base Salary ($)(1) | Target Opportunity as a Percentage of Base Salary (%) | Target Opportunity ($) | Achievement% | Total Approved Payout ($) | | Helmy Eltoukhy | 1(2) | — | — | — | — | | AmirAli Talasaz | 1(2) | — | — | — | — | | Michael Bell | 485,000 | 50% | 242,500 | 135% | 327,375 | | Craig Eagle | 500,000 | 50% | 250,000 | 135% | 337,500 | | Christopher Freeman | 495,000 | 50% | 247,500 | 135% | 327,443 | | Darya Chudova | 445,000 | 50% (3) | 206,875 (3) | 135% | 279,281 |
Annual Incentive Plan
| (1) Amounts shown are the annual base salary in effect at year end. Ms. Dahne-Steuber was not employed at year-end and therefore was ineligible for an annual incentive payout under the terms of the program. |
Annual Incentive Plan
| (2) In connection with the Founders’ 2020 Performance Awards, each of Drs. Eltoukhy and Talasaz entered into Waiver Letters, pursuant to which they formally agreed to waive their opportunity to receive annual incentive opportunities or payouts under our annual incentive plan for seven years, including for 2023. |
Annual Incentive Plan
| (3) Dr. Chudova’s annual incentive plan opportunity was increased to 50% upon her promotion to Chief Technology Officer in May 2023 from 40%. Her payout in 2023 was a pro-rata blend of the two rates. |
Long-Term Incentives
Long-Term Incentives The third and largest component of our executive compensation program is long-term equity incentives. The Compensation Committee has designed the long-term incentive opportunity for the NEOs to motivate and reward executive officers to achieve multi-year strategic goals and deliver sustained long-term value to stockholders, while at the same time monitoring the overall dilutive effect of equity granted. The long-term incentives create a strong link between payouts and performance, and a strong alignment between the interests of executive officers and the interests of our stockholders. Long-term equity incentives also promote retention, because executive officers will only receive value if they remain employed by us over the required term, and they foster an ownership culture among our executive officers by making executive officers become stockholders, with a personal stake in the value they are incentivized to create. Equity Vehicles In 2023, long-term incentive grants took the form of stock options, RSUs and PSUs. The Compensation Committee structures the mix of equity vehicles and the relative weight assigned to each type to: motivate growth through achievement of performance goals through PSUs with operational metrics; motivate stock price appreciation over the long term through stock options, which deliver value only if the stock price increases; and ensure value delivery through the RSUs, which deliver value even during period of stock market or stock price underperformance, reinforcing an ownership culture and commitment to us.
Long-Term Incentives
| Equity Vehicle | Vesting Period | Rationale for Use | | PSUs | 3 years | Aligns payout with prioritizing revenue performance and growth, key indicators of success of our strategy Promotes retention through performance achievement and vesting requirements | | Stock Options | 3 years Exercise price: closing price on grant date 10-year term | Prioritizes increasing stockholder value, thus aligning with stockholders Promotes long-term focus | | RSUs | 3 years | Aligns with stockholders Promotes retention Provides value even during periods of stock price or market underperformance |
Long-Term Incentives
2023 Annual Equity Grants Typically, in making determinations about long-term equity incentive grants to the NEOs, the Compensation Committee considers: equity grant levels and the overall pay mix in peer group companies; the NEO’s role, skills and experience and the critical nature of the NEO’s contributions to the Company; and the importance of maintaining a consistent leadership team, among other things. The grants to the NEOs vary based on these factors. This portion of the NEOs’ total direct compensation is variable and directly aligned with stockholder interests. The Compensation Committee made no equity grants to the Co-CEOs in 2023 pursuant to the terms of the Waiver Letters. We continue to manage award amounts, with a goal of maintaining broad-based equity participation, delivering value that is aligned with our compensation philosophy and proactively managing our share usage as well as dilution during a period of rapid growth. 2023 PSU Grants As disclosed previously, in the first quarter of 2023, the Compensation Committee increased the performance nature of long-term incentives by granting performance stock units, or PSUs. At this key moment for liquid biopsy in screening for early detection, recurrence and treatment selection, the Compensation Committee believed that at this time, the Company has a unique opportunity in the market and only a brief window to take maximum advantage of it. The Compensation Committee thus viewed incentivizing top line revenue growth (after also having selected it as one of the measures in the annual cash incentive) as the most important goal because it focuses executive officers on the Company’s most critical strategic priorities of growing the business and seizing market share, and aligns the incentives for the NEOs with these goals. The 2023 PSUs vest over a three-year performance period ending in 2025 based on 1) a one-year revenue growth metric for 2023 and 2) a three-year revenue Compound Annual Growth Rate, or CAGR, each weighted 50%. The CAGR metric underscores the importance of consistent strong revenue growth over the 2023-25 performance period. The actual number of PSUs earned will be based on the Company’s performance relative to target. The addition of these PSUs reinforces the pay-for-performance nature of the long-term incentive grants and the executive compensation program overall. The Compensation Committee views the use of these measures as critical because they tie executive officer compensation with key long-term priorities and align the interests of executive officers with those of Guardant and its stockholders. The performance-based metrics, in conjunction with the proportion of total compensation that was variable and at-risk, further enhanced the link between pay and performance for the NEOs, as well as strengthened the alignment of the interests of the executive officers with those of our stockholders. The Compensation Committee intends, as appropriate and in line with the further development of the Company over time, to consider increasing the proportion of long-term incentives allocated to performance-based vehicles. The Compensation Committee awarded PSUs to the NEOs in 2023 as follows:
Long-Term Incentives
| NEO (1) | Target Value ($) | PSUs (#) | | Michael Bell | 540,000 | 10,519 | | Craig Eagle | 704,000 | 13,713 | | Christopher Freeman | 792,000 | 15,427 | | Darya Chudova | 550,000 | 10,714 |
Long-Term Incentives
| (1) Drs. Eltoukhy and Talasaz and Ms. Dahne-Steuber did not receive 2023 PSU awards. |
Long-Term Incentives
At the time of grant, the Compensation Committee established the specific performance measures and associated payout levels, and evaluated the rigor of the performance goals and the alignment of those goals with the Company’s objectives. For the half of the total 2023-2025 PSU target value that is determined based on a one-year absolute revenue growth metric for 2023, the Compensation Committee established performance levels and potential payouts as follows:
Long-Term Incentives
| Less than 15% Revenue Growth (Threshold) | Greater than or equal to 18% and less than 20% Revenue Growth | Greater than or equal to 20% and less than 22% Revenue Growth (Target) | Greater than or equal to 22% and less than 25% Revenue Growth | Greater than or equal to 25% Revenue Growth (Maximum) | | No Payout | 50% Payout | 100% Payout | 150% Payout | 200% Payout |
Long-Term Incentives
The Company’s 2023 revenue growth was 25%, resulting in a 200% payout for one-half of the 2023 PSUs awarded to each NEO, as shown above. While the performance measure has been achieved, the PSUs are not considered “earned” and shares will not be delivered unless and until the NEO remains in service for the three-year period (except in certain circumstances as described below under the heading entitled “Potential Payments Upon Termination or Change in Control”) and the performance is approved by the Compensation Committee. The other half of the 2023 PSUs is based on three-year Revenue CAGR. Before the conclusion of the three-year performance period, we do not publicly disclose our specific performance measure targets and the corresponding minimums and maximums because of the potential for competitive harm from such disclosure. These measures are competitively sensitive and would reveal information about our view of our anticipated trajectory, which is not otherwise public. The Compensation Committee believes that they have set performance goals at rigorous and challenging levels so as to require significant effort and achievement by our executive officers to be attained, and that such goals have been established in light of our internal forecast as well as the macroeconomic and industry environments. After the end of the performance period, the targets and achievement relative to such targets will be disclosed.
2023 Option and RSU Grants
2023 Option and RSU Grants The Compensation Committee structured a mix of equity vehicles and the relative weight assigned to each type to motivate performance against long-term targets and stock price appreciation over the long term and to encourage ownership and retention while aligning executive officers’ interests with those of our stockholders. The Compensation Committee sought to motivate stock price appreciation over the long term through stock options because they deliver value only if the stock price increases, and the RSUs are complementary to the PSUs and options because they have upside potential but deliver some value even during periods of market or stock price underperformance, providing a retention incentive and reinforcing an ownership culture and commitment to the Company. In the fourth quarter of 2023, the Compensation Committee granted stock options and RSUs to the NEOs, with the awards vesting over a four-year period, as reflected in the table below.
2023 Option and RSU Grants
| NEO (1) | Target Value for Options and RSUs ($) (2) | Stock Options (#) | RSUs (#) | | Michael Bell | 1,750,000 | 37,326 | 24,884 | | Craig Eagle | 1,400,000 | 29,861 | 19,907 | | Christopher Freeman | 1,400,000 | 29,861 | 19,907 | | Darya Chudova | 1,400,000 | 29,861 | 19,907 |
2023 Option and RSU Grants
| (1) Pursuant to the Waiver Letters, Drs. Eltoukhy and Talasaz did not receive any equity grants in 2023. Ms. Dahne-Steuber did not receive a grant of options and RSUs in the fourth quarter of 2023 as she had resigned from employment by the date of grant. |
2023 Option and RSU Grants
| (2) The target value is converted to a number of RSUs by taking the average closing stock price of the Company’s common stock for each trading day for the fiscal quarter before the Compensation Committee’s grant. The number of options awarded is based on a Black-Scholes option pricing model. |
2023 Option and RSU Grants
Supplemental Grants The Compensation Committee views supplemental grants as an important way to meet the Company’s needs for a specific purpose or during a specific period. For several years, there has been fierce competition in the life sciences industry for executive officers and employees with the skills and experience to lead our team on our pioneering mission of helping patients at all stages of cancer live longer and healthier lives through the power of blood tests and the data they unlock—from informing better treatment in patients with advanced cancer, to new ways of monitoring recurrence in cancer survivors, and screening to find cancer at its earliest and most treatable stage in the general population. There is also tough competition for qualified sales and operations leaders who are veterans of the biotechnology industry. This is especially true in the San Francisco Bay Area, where there is an ongoing “war for talent”. Various factors, including inflation and the post-COVID employment market, have made the situation even more intense. In addition, as a pioneer in our market, our employees, including our executive officers, are desirable as candidates for employment with other organizations, and they receive substantial ongoing interest from other companies. Attracting and retaining executive talent of the caliber of our leaders, and maintaining a stable, consistent team, is both extremely challenging and vitally important. Our ability to execute our strategy, our future success and the promotion and protection of the interest of our stockholders depend to a great extent on our continuing ability to retain highly qualified and skilled employees. Against this backdrop, the Compensation Committee determined that it was in the best interest of the Company and our stockholders to make certain supplemental grants to our NEOs. In June 2023, the Compensation Committee made the following grants in the form of stock options, which the Compensation Committee views as related to performance because they provide no value to recipients unless the recipients help create stockholder value, and RSUs that vest over a three-year term:
2023 Option and RSU Grants
| NEO (1) | Target Value for Options and RSUs ($) (2) | Stock Options (#) | RSUs (#) | | Michael Bell | 1,600,000 | 36,519 | 24,346 | | Craig Eagle | 1,100,000 | 25,107 | 16,738 | | Christopher Freeman | 1,100,000 | 25,107 | 16,738 |
2023 Option and RSU Grants
| (1) Pursuant to the Waiver Letters, Drs. Eltoukhy and Talasaz did not receive any equity grants in 2023. Neither Dr. Chudova nor Ms. Dahne-Steuber received a supplemental grant. |
2023 Option and RSU Grants
| (2) The target value is converted to a number of RSUs by taking the average closing stock price of the Company’s common stock for each trading day for the fiscal quarter before the Compensation Committee’s grant. The number of options awarded is based on a Black-Scholes option pricing model. |
Leadership Transitions
Leadership Transitions On May 8, 2023, the Company promoted Darya Chudova to the position of Chief Technology Officer. The Company adjusted her base salary for this new position to $445,000, set a new target annual cash incentive opportunity to 50% (which percentage was blended with her prior target opportunity to determine her total 2023 opportunity) and made a grant of options and RSUs with a target value of $2,000,000 that vest over four years. Effective May 2, 2023, the Board appointed Ines Dahne-Steuber to the position of Chief Operations Officer. In connection with her appointment, Ms. Dahne-Steuber was entitled to receive (i) an annual base salary of $490,000; (ii) a target bonus equal to 50% of her annual base salary; (iii) RSUs valued at approximately $2,000,000; and (iv) a stock option to purchase approximately $2,000,000 of the Company’s common stock. Additionally, Ms. Dahne-Steuber received a signing bonus of $50,000 and a relocation allowance of up to $50,000, both of which were subject to clawback (on a prorated basis) in the event Ms. Dahne-Steuber voluntarily terminated employment with the Company prior to completing 12 months of service. Ms. Dahne-Steuber agreed to certain restrictive covenants, including confidentiality, invention assignment, and a customer and one-year employee non-solicitation. In November 2023, the Company and Ms. Dahne-Steuber negotiated the terms of her involuntary termination, effective as of November 10, 2023. Ms. Dahne-Steuber remained employed through December 1, 2023. Under these terms, in exchange for a release of claims, Ms. Steuber was entitled to receive an amount equal to six months of base salary and six months of COBRA premiums for continued health coverage, and was entitled to retain the remaining prorated portion of her signing bonus and relocation allowance. All RSUs and stock options received upon appointment were forfeited.
2024 Compensation of Drs. Eltoukhy and Talasaz
2024 Compensation of Drs. Eltoukhy and Talasaz In 2021, 2022 and 2023, the compensation of each of Drs. Eltoukhy and Talasaz consisted of a base salary of $1, no annual cash incentive opportunity and no long-term incentive equity opportunity, pursuant to waivers they had granted. The Board, aided by its Compensation Committee, had adopted these arrangements in the first half of 2020, in conjunction with the grant to each of the Co-CEOs of 1,695,574 PSUs with stock price hurdles of $120, $150, and $200 (the “Founders’ 2020 Performance Awards”). The Company achieved the first stock price hurdle in 2021 and one-third of the PSUs vested, but the stock price has not achieved the other two stock price hurdles have not been achieved, and the stock closed at $20.63 on March 28, 2024, approximately 86% below the $150/share hurdle. Over the last year, the Board became increasingly concerned that the Founders’ 2020 Performance Awards were no longer effective at accomplishing the goals for which they were originally designed, and thus were no longer in the best interests of the Company and its stockholders. Specifically, given the decrease in market values of high growth biotechnology companies generally over the last two years, and of the Company in particular, the Founders’ 2020 Performance Awards no longer offered meaningful financial or retentive value. From the Board’s perspective, the misalignment raised increasing concerns about the Founders’ 2020 Performance Awards’ ability to motivate the Co-CEOs at this critical time in the development of the market for precision oncology. The Compensation Committee also viewed it as vital to align the performance goals for the Co-CEOs with the performance goals of all other executive officers, so that the full leadership team was aligned in pursuit of the same short-and long-term objectives. In addition, the Board took into account the feedback that it had received after the grant of the Founders’ 2020 Performance Awards that future performance-based equity awards to Drs. Eltoukhy and Talasaz should be granted annually and contain a variety of performance metrics. The Board also considered more recent directional stockholder feedback about different compensation structures, such as the inclusion of the typical components of base salary, annual cash incentive and long-term equity incentive that are set based on reference to competitive market levels. As part of its regular review, and in light of the Board’s view that the Founders’ 2020 Performance Awards were no longer effective, the Compensation Committee considered a number of alternatives, and sought advice solely for this purpose from a separate independent compensation consultant, Meridian Compensation Partners LLC (“Meridian”). The Compensation Committee referenced the compensation of CEOs at companies in the peer group, as well as obtaining directional input from some of the Company’s top stockholders. At the conclusion of a comprehensive process that began in mid-2023, including obtaining advice from Meridian, and in view of the program’s important role in motivating the Co-CEOs and keeping a stable, consistent leadership team, the Compensation Committee determined, and the independent members of the Board approved, a change to the compensation arrangements with Drs. Eltoukhy and Talasaz, effective as of January 1, 2024. In order to motivate the achievement of strategic, financial and value creation goals, on March 18, 2024, the Board established the following 2024 compensation for Drs. Eltoukhy and Talasaz:
2024 Compensation of Drs. Eltoukhy and Talasaz
| 1) | with respect to base salary, the Co-CEOs requested equity in lieu of cash, given their confidence in the Company’s fundamentals and future business outlook, and the Compensation Committee viewed doing so as appropriate because it further aligned the Co-CEOs’ and stockholders’ interests. The Co-CEOs were granted RSUs with a grant date value of $800,000, which vest quarterly over a one-year period. This quantum was set based on reference to base salary levels of comparable positions at the peer group companies. The Compensation Committee anticipates that Drs. Eltoukhy and Talasaz will be eligible for similar annual equity awards each year, provided to them in lieu of cash base salary, the value of which will be reviewed annually by the Compensation Committee, as is customary for all executive officers; |
2024 Compensation of Drs. Eltoukhy and Talasaz
| 2) | with respect to an annual cash bonus opportunity, the Co-CEOs requested equity in lieu of cash, given their confidence in the Company’s fundamentals and future business outlook, the Compensation Committee granted PSUs with a target value equal to 100% of the target base salary amount ($800,000 in 2024), with the opportunity to earn 0% to 200% of the target number of PSUs. This quantum was set based on reference to annual cash bonus incentive levels of comparable positions at the peer group companies. The PSUs cliff vest after one year based upon performance relative to the identical annual incentive performance metrics as applicable in the annual cash incentive for all other executive officers. The Compensation Committee anticipates that Drs. Eltoukhy and Talasaz will be eligible for similar annual equity awards each year, provided to them in lieu of their annual cash bonus, the target value of which will be reviewed annually by the Compensation Committee, as is customary for all executive officers; and |
2024 Compensation of Drs. Eltoukhy and Talasaz
| 3) | the Compensation Committee granted annual long term incentive equity grants in the form of 50% PSUs, with a target value of $5 million, and 50% RSUs, with a grant date fair value of $5 million. The quantum for these awards was set based on reference to long-term incentive equity grant levels of CEOs from the peer companies. The PSUs are based on Revenue CAGR, with a relative total stockholder return (TSR) modifier and a negative TSR cap. The RSUs vest one-third on the first anniversary of the vesting commencement date, and quarterly thereafter for the remaining two years. The PSUs have the same performance metrics and as those granted to other executive officers, and the PSUs and RSUs have the same vesting and other terms as those granted to other executive officers. The Compensation Committee anticipates that Drs. Eltoukhy and Talasaz will be eligible for similar annual equity awards each year, the target value of which will be reviewed annually by the Compensation Committee, as is customary for all executive officers. |
Other Elements of Compensation
| • | short-term and long-term disability insurance; and |
Other Elements of Compensation
We also provide supplemental short-term disability coverage to our NEOs in addition to the short-term disability coverage provided to our full-time employees generally. We offer a sabbatical program to honor our active, regular employees upon completion of five or ten years of continuous service, under which employees are eligible for up to 20 consecutive business days off as a paid sabbatical. In addition, employees who take the sabbatical receive up to $25,000 as a travel award to be used during the sabbatical, with the Company paying for the taxes that the employee would incur from using the award. The purpose of the sabbatical program is to honor employees for their service to the Company by giving them time to innovate and pursue their interests outside of work, and travel, in the hope that it renews their commitment to working for the Company in the long-term. In 2023, Dr. Talasaz was eligible for, and elected to take, the sabbatical award. We believe the benefits and limited perquisite described above are necessary and appropriate to provide a competitive compensation package to our named executive officers. Severance Arrangements We maintain the Guardant Health, Inc. Executive Severance Plan (the “Severance Plan”). The Severance Plan provides for the payment of certain severance and other benefits to participants. The Severance Plan generally provides for severance amounts if the NEO’s employment is terminated by us without cause or by the NEO for good reason. For terminations not in connection with a change in control, severance amounts range from 50% to 100% of base salary. For terminations from three months prior to one year after a change in control, severance amounts range from 100% to 150% of the sum of base salary and target cash bonus. The Severance Plan also provides for reimbursement for health benefit continuation of up to 18 months. The payments and benefits provided under the Severance Plan are contingent upon the affected NEO’s execution and non-revocation of a general release of claims and compliance with specified restrictive covenants. See “Potential Payments upon a Termination or Change in Control,” which describes the payments to which the participating NEOs may be entitled under the Severance Plan. In addition, in 2019, we entered into letter agreements with each of Drs. Eltoukhy and Talasaz that provide that if the executive experiences a “qualifying termination” of employment (as defined in the Severance Plan), other than in connection with a change in control, then each time-based vesting Company equity award held by the executive will vest and become exercisable as to the portion of the award that would have vested over the one-year period following the termination date (had the executive remained in continuous service during such period). This acceleration right is subject to the executive’s timely execution and non-revocation of a general release of claims.
Accounting Policies for Stock-Based Compensation
Accounting Policies for Stock-Based Compensation We follow the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, or ASC Topic 718, for our stock-based compensation awards. ASC Topic 718 requires companies to calculate the grant date “fair value” of their stock-based awards using a variety of assumptions. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based awards in their income statements over the period that an employee is required to render service in exchange for the award. Grants of performance stock units, stock options and restricted stock units under our equity incentive award plans are accounted for under ASC Topic 718. Our Board or Committee will consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, the Compensation Committee may revise certain programs to appropriately align accounting expenses of equity awards with the overall executive compensation philosophy and objectives.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary (1) ($) | Bonus (2) ($) | Stock Awards (1,3) ($) | Option Awards (1,4) ($) | Non-Equity Incentive Plan Compensation (1,5) ($) | All Other Compensation (6) ($) | Total ($) | | Helmy Eltoukhy (1) | 2023 | 1 | — | — | — | — | 11,590 | 11,591 | | Chairman and Co-Chief | 2022 | 1 | — | — | — | — | 11,631 | 11,632 | | Executive Officer | 2021 | 1 | — | — | — | — | 13,664 | 13,665 | | AmirAli Talasaz (1) | 2023 | 1 | — | — | — | — | 26,414 | 26,415 | | Co-Chief Executive Officer | 2022 | 1 | — | — | — | — | 11,174 | 11,175 | | | 2021 | 1 | — | — | — | — | 13,270 | 13,271 | | Michael Bell | 2023 | 482,000 | — | 1,851,413 | 1,453,305 | 327,375 | 9,900 | 4,123,993 | | Chief Financial Officer | 2022 | 466,077 | — | 604,238 | 742,480 | 154,958 | 9,959 | 1,977,712 | | | 2021 | 439,616 | 500,000 | 2,941,720 | 2,317,493 | 250,155 | 10,998 | 6,459,981 | | Darya Chudova | 2023 | 424,462 | — | 2,222,397 | 1,817,482 | 279,281 | 11,919 | 4,755,541 | | Chief Technology Officer | | | | | | | | | | Craig Eagle | 2023 | 497,462 | — | 1,565,107 | 1,075,387 | 337,500 | 9,900 | 3,485,356 | | Chief Medical Officer | 2022 | 485,231 | — | 1,294,507 | 1,673,671 | 157,262 | 6,642 | 3,617,313 | | | 2021 | 317,885 | 2,370,000 | 1,642,986 | 1,935,250 | 186,390 | 3,531 | 6,456,043 | | Christopher Freeman | 2023 | 490,385 | — | 1,621,395 | 1,075,387 | 327,443 | 8,442 | 3,523,052 | | Chief Commercial Officer | 2022 | 468,269 | — | 1,456,309 | 1,882,865 | 152,760 | 9,364 | 3,969,567 | | | 2021 | 249,231 | 300,000 | 2,156,323 | 2,539,902 | 183,938 | 7,056 | 5,436,449 | | Ines Dahne-Steuber (2) | 2023 | 307,101 | 50,000 | 2,611,538 | 2,550,722 | — | 317,355 | 5,836,716 | | Former Chief Operating Officer (a) | | | | | | | | |
Summary Compensation Table
| (a) Ms. Dahne-Steuber’s employment with the Company ended on December 1, 2023. |
Summary Compensation Table
| (1) In connection with the Founders’ 2020 Performance Awards granted to Drs. Eltoukhy and Talasaz in May 2020, pursuant to the Waiver Letters, each of Drs. Eltoukhy and Talasaz formally agreed to accept a base salary of $1 per year and waived their opportunity to receive annual incentive opportunities or payouts under our annual incentive plan, or to receive grants of equity incentive awards, for seven years. |
Summary Compensation Table
| (2) The amount shown in the Bonus column for Ms. Dahne-Steuber is a sign on bonus paid as part of her new hire compensation. The amounts shown in the Stock Awards and Option Awards columns were forfeited upon Ms. Dahne-Steuber’s separation from service. |
Summary Compensation Table
| (3) The amounts shown in the Stock Awards column represent the aggregate grant date fair value of time-based RSUs and performance-condition PSUs, computed in accordance with FASB Accounting Standards Codification Topic 718 (“Topic 718”), excluding the effect of estimated forfeitures. Amounts in this column relating to RSUs reflect the market value of the RSUs using the closing price of a shares of our common stock on the date of grant, multiplied by the number of shares underlying each award. The amounts included in this column for the PSU awards are calculated based upon achievement of performance at the “target” level, which is the probable outcome of the performance metrics associated with each award of PSUs. If performance were to be achieved at “maximum” level, the grant date fair value of the 2023 PSU awards as of the respective grant dates would have been as follows: Michael Bell, $690,888; Darya Chudova, $703,696; Craig Eagle, $900,670; Christopher Freeman, $1,013,245. For information regarding assumptions, factors and methodologies used in our |
Summary Compensation Table
| computations pursuant to Topic 718, see Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Summary Compensation Table
| (4) The amounts shown in the Option Awards column represent the aggregate grant date fair value of stock options computed in accordance with Topic 718. Valuations of options were determined using the Black-Scholes option pricing model. For information regarding assumptions, factors and methodologies used in our computations pursuant to Topic 718, see Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Summary Compensation Table
| (5) The amounts shown in the Non-Equity Incentive Plan Compensation column are comprised of amounts paid in respect of our annual incentive plan, as determined by the Compensation Committee in accordance with the plan and the awards thereunder. Payments pursuant to the annual incentive plan are generally made early in the year following the year in which they are earned. As described in footnote 1, each of Drs. Eltoukhy and Talasaz waived their opportunity to receive annual incentive opportunities or payouts under our annual incentive plan. |
Summary Compensation Table
| (6) For Dr. Talasaz, the amount shown includes $18,996 for (a) tax reimbursements related to the waived health insurance premiums and (b) tax reimbursements all participants are eligible to receive related to the travel expenditures under the Company-wide Sabbatical and Travel Award Program. For Ms. Dahne-Steuber, the amount shown includes relocation reimbursements of $26,911 and payments totaling $282,111 under her separation agreement. (See below under “Potential Payments Upon Termination or Change in Control”). |
2023 Grants of Plan Based Awards Table
2023 Grants of Plan Based Awards Table
2023 Grants of Plan Based Awards Table
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | | | All Other Stock Awards: Number of Shares of Stock or Units (4) (#) | All Other Option Awards: Number of Securities Underlying Options (5) (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value Of Stock and Option Awards (6) ($) | | Name | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Helmy Eltoukhy (2) | | | — | — | — | — | — | — | — | — | — | — | | AmirAli Talasaz (2) | | | — | — | — | | | | | | | | | Michael Bell | | | — | 242,500 | 485,000 | — | — | — | — | — | — | — | | | 6/7/2023 | 3/15/2023 | — | — | — | 5,260 | 10,519 | 21,038 | — | — | — | 345,444 | | | 6/9/2023 | | — | — | — | — | — | — | 24,346 | — | — | 800,010 | | | 6/9/2023 | | — | — | — | — | — | — | — | 36,519 | 32.86 | 775,689 | | | 12/13/2023 | | — | — | — | — | — | — | — | 37,326 | 28.37 | 677,616 | | | 12/13/2023 | | — | — | — | — | — | — | 24,884 | — | — | 705,959 | | Darya Chudova | | | — | 201,667 | 403,334 | — | — | — | — | — | — | | | | 6/7/2023 | 3/15/2023 | — | — | — | 5,357 | 10,714 | 21,428 | — | — | — | 351,848 | | | 8/7/2023 | | — | — | — | — | — | — | 34,821 | — | — | 1,305,788 | | | 8/7/2023 | | — | — | — | — | — | — | — | 52,232 | 37.50 | 1,275,385 | | | 12/13/2023 | | — | — | — | — | — | — | — | 29,861 | 28.37 | 542,097 | | | 12/13/2023 | | — | — | — | — | — | — | 19,907 | — | — | 564,762 | | Craig Eagle | | | — | 250,000 | 500,000 | — | — | — | — | — | — | — | | | 6/7/2023 | 3/15/2023 | — | — | — | 6,857 | 13,713 | 27,426 | — | — | — | 450,335 | | | 6/9/2023 | | — | — | — | — | — | — | 16,738 | — | — | 550,011 | | | 6/9/2023 | | — | — | — | — | — | — | — | 25,107 | 32.86 | 533,290 | | | 12/13/2023 | | — | — | — | — | — | — | — | 29,861 | 28.37 | 542,097 | | | 12/13/2023 | | — | — | — | — | — | — | 19,907 | — | — | 564,762 | | Christopher Freeman | | | — | 247,500 | 495,000 | — | — | — | — | — | — | — | | | 6/7/2023 | 3/15/2023 | — | — | — | 7,714 | 15,427 | 30,854 | — | — | — | 506,623 | | | 6/9/2023 | | — | — | — | — | — | — | 16,738 | — | — | 550,011 | | | 6/9/2023 | | — | — | — | — | — | — | — | 25,107 | 32.86 | 533,290 | | | 12/13/2023 | | — | — | — | — | — | — | — | 29,861 | 28.37 | 542,097 | | | 12/13/2023 | | — | — | — | — | — | — | 19,907 | — | — | 564,762 | | Ines Dahne-Steuber | | | — | 183,750 | 367,500 | — | — | — | — | — | — | — | | | 8/7/2023 | | — | — | — | — | — | — | — | 104,462 | 37.50 | 2,550,722 | | | 8/7/2023 | | — | — | — | — | — | — | 69,641 | — | — | 2,611,538 |
2023 Grants of Plan Based Awards Table
| (1) The amounts disclosed in these columns reflect the threshold, target and maximum annual cash incentive opportunities of our NEOs for 2023. The amounts of the annual cash incentive opportunities depend on the eligible annual base salary in effect at year end for each NEO. Below threshold performance on the financial metrics results in 0% payout. However, the Operational Performance Component metrics do not establish quantifiable threshold performance and thus payout for those metrics could be as little as 1%. See “Compensation Discussion and Analysis—Compensation Program Components—Annual Incentive Plan” for a detailed description of annual incentive plan awards, including the criteria for determining the amounts payable. Actual 2023 annual incentive plan results are reported in the “Summary Compensation Table” in the “Non-Equity Incentive Plan Compensation” column. The maximum award is 200% of target. Linear interpolation is used to determine the applicable payout amount between threshold and target and between target and maximum. |
2023 Grants of Plan Based Awards Table
| (2) In connection with the Founders’ 2020 Performance Awards granted to Drs. Eltoukhy and Talasaz in May 2020, each of Drs. Eltoukhy and Talasaz formally waived their opportunity to receive annual incentive opportunities and payouts under our annual incentive plan. |
2023 Grants of Plan Based Awards Table
| (3) Amounts disclosed in these columns reflect the potential threshold, target and maximum number of PSUs that may be earned in respect of the PSUs awarded in 2023 to each NEO. Actual amounts earned are based on the level of achievement relative to two financial goals. Results will be certified by the Compensation Committee in the first quarter of 2026. For more information on the 2023 PSUs, including the applicable performance metrics, please see “Compensation Discussion and Analysis-IV. Compensation Program Components-Long Term Incentives-2023 PSU Grants”. Valuations of PSUs disclosed in this table were determined based on the fair market value of a shares on the grant date. |
2023 Grants of Plan Based Awards Table
| (4) Amounts disclosed in this column reflect the number of RSUs granted to our NEOs in 2023. The RSUs generally vest over three years; one-third of the RSUs will vest on the first anniversary of the grant date, and 1/12th of the shares subject to the RSU vest on each quarterly anniversary thereafter, subject to the NEO’s continued service. RSUs granted to Dr. Chudova on August 7, 2023, vest 25% on May 15, 2024 and 25% of each subsequent May 15th, subject to her continued service. Ms. Dahne-Steuber’s RSUs were granted with the same vesting schedule as Dr. Chudova’s RSUs, but were forfeited upon her separation from the Company in 2023. |
2023 Grants of Plan Based Awards Table
| (5) Amounts disclosed in this column reflect the number of stock options granted to our NEOs in 2023. The options generally vest one-third on the first anniversary of the grant date, and monthly thereafter at a rate of one thirty-sixth (1/36) per month over the next two years, subject to continued service. Stock options granted to Dr. Chudova on August 7, 2023, vest 25% on May 15th, 2024 and monthly thereafter at a rate of one forty-eighth (1/48) per month over the next three years, subject to continued service. Ms. Dahne-Steuber’s stock options were granted with the same vesting schedule as Dr. Chudova’s stock options, but were forfeited upon her separation from the Company in 2023. |
2023 Grants of Plan Based Awards Table
| (6) The amounts shown in this column for RSUs and PSUs represent the aggregate grant date fair value of time-based RSUs, and performance-based PSUs, computed in accordance with Topic 718, excluding the effect of estimated forfeitures. Amounts in this column relating to RSUs and PSUs reflect the market value of the RSUs and PSUs using the closing price of a share of our common stock as reported on Nasdaq on the date of grant, multiplied by the number of shares underlying each award. The amounts shown in this column for stock options represent the aggregate grant date fair value of the stock options computed in accordance with Topic 718. Valuations of options were determined using the Black-Scholes option pricing model. For information regarding assumptions, factors and methodologies used in our computations pursuant to Topic 718, see Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023. |
2023 Options Exercised and Stock Vested
2023 Options Exercised and Stock Vested
2023 Options Exercised and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (1) (#) | Value Realized on Vesting (2) ($) | | Helmy Eltoukhy | — | — | — | — | | AmirAli Talasaz | — | — | — | — | | Michael Bell | — | — | 11,939 | 350,595 | | Darya Chudova | — | — | 10,966 | 350,047 | | Craig Eagle | — | — | 10,574 | 306,907 | | Christopher Freeman | — | — | 12,592 | 413,332 | | Ines Dahne-Steuber | — | — | — | — |
2023 Options Exercised and Stock Vested
| (1) The amounts shown in this column represent the number of RSUs that vested for each named executive officer during 2023. |
2023 Options Exercised and Stock Vested
| (2) The amounts shown in this column reflect the value realized upon vesting of the RSUs for each named executive officer, as calculated based on the price of a share of our common stock on the vesting date, multiplied by the number of shares underlying each award. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Upon a termination, or upon a change in control of Guardant Health, the Company maintains certain arrangements, guidelines, plans and programs pursuant to which our NEOs could be eligible to receive certain cash severance, equity vesting and other benefits. The amounts that the NEOs could receive are set forth below for the following types of termination of employment:
Potential Payments Upon Termination or Change in Control
| • | Termination without cause or by executive for good reason not in connection with a change in control; |
Potential Payments Upon Termination or Change in Control
| • | Termination without cause or by executive for good reason following a change in control; and |
Potential Payments Upon Termination or Change in Control
| • | Death or disability. |
Potential Payments Upon Termination or Change in Control
Executive Severance Plan In September 2018, our Board adopted the Guardant Health, Inc. Executive Severance Plan (the “Severance Plan”). The Severance Plan provides for the payment of certain severance and other benefits to participants according to their participant tier in the event of a qualifying termination of employment with us. Drs. Eltoukhy and Talasaz are designated as “Tier 1” participants. Messrs. Bell, and Freeman and Drs. Chudova and Eagle are designated as “Tier 2” participants. As discussed above, each of Drs. Eltoukhy and Talasaz have agreed by means of a written Waiver Letter filed with the SEC to effectively forego all base salary and annual incentive for a period of seven years. Consequently, while the terms of the Severance Plan do apply, the amount of base salary upon which they are based is nominal. Severance Not in Connection with a Change in Control. Under the Severance Plan, in the event of a termination of a participant’s employment by us without “cause” or by the participant for “good reason,” in either case, more than three months prior to or more than one year after “a change in control” (as defined in the 2018 Plan), the participant will be eligible to receive the following benefits:
Potential Payments Upon Termination or Change in Control
| • | “Tier 1” participants: |
Potential Payments Upon Termination or Change in Control
| ○ | a lump-sum cash payment equal to 100% of the participant’s then-current annual base salary; and |
Potential Payments Upon Termination or Change in Control
| ○ | company-paid COBRA premium payments for the participant and his or her covered dependents for up to 12 months. |
Potential Payments Upon Termination or Change in Control
| • | “Tier 2” participants: |
Potential Payments Upon Termination or Change in Control
| ○ | a lump-sum cash payment equal to 50% of the participant’s then-current annual base salary; and |
Potential Payments Upon Termination or Change in Control
| ○ | company-paid COBRA premium payments for the participant and his or her covered dependents for up to 6 months. |
Potential Payments Upon Termination or Change in Control
Severance in Connection with a Change in Control. In the event of a termination by us of a participant’s employment without “cause” or by the participant for “good reason,” in either case, within the period beginning three months prior to a “change in control” (as defined in the 2018 Plan) and ending on the one-year anniversary of such change in control, the participant will be eligible to receive:
Potential Payments Upon Termination or Change in Control
| • | “Tier 1” participants: |
Potential Payments Upon Termination or Change in Control
| ○ | a lump sum cash payment equal to the sum of (a) 150% of the participant’s then-current annual base salary and (b) 100% of the participant’s target cash performance bonus, if any, for the year in which the qualifying termination occurs; |
Potential Payments Upon Termination or Change in Control
| ○ | accelerated vesting of all equity awards which vest based solely on the participant’s continued service with us or the passage of time; and |
Potential Payments Upon Termination or Change in Control
| ○ | company-paid COBRA premium payments for the participant and his or her covered dependents for up to 18 months. |
Potential Payments Upon Termination or Change in Control
| • | “Tier 2” participants: |
Potential Payments Upon Termination or Change in Control
| ○ | a lump sum cash payment equal to 100% of the sum of participant’s then-current annual base salary and target cash performance bonus, if any, for the year in which the qualifying termination occurs; |
Potential Payments Upon Termination or Change in Control
| ○ | accelerated vesting of all equity awards which vest based solely on the participant’s continued service with us or the passage of time; and |
Potential Payments Upon Termination or Change in Control
| ○ | company-paid COBRA premium payments for the participant and his or her covered dependents for up to 12 months. |
Potential Payments Upon Termination or Change in Control
Any participant’s right to receive the severance payments and benefits described above is subject to his or her delivery and, as applicable, non-revocation of a general release of claims in our favor, and his or her continued compliance with any applicable restrictive covenants. In addition, in the event that any payment under the Severance Plan, together with any other amounts paid to the participant by us, would subject such participant to an excise tax under Section 4999 of the Internal Revenue Code, such payments will be reduced to the extent that such reduction would produce a better net after-tax result for the participant. For purposes of the Severance Plan, “cause” generally means the occurrence of any one or more of the following events (unless, to the extent capable of correction, the participant fully corrects the circumstances constituting cause within 15 days after written notice thereof): (i) the participant’s willful failure to substantially perform his or her duties (other than such failure resulting from the participant’s incapacity due to physical or mental illness or any such actual or anticipated failure after his or her issuance of a notice of termination for “good reason”), after a written demand for performance is delivered to the participant by our Compensation Committee; (ii) the participant’s commission of an act of fraud or material dishonesty resulting in reputational, economic or financial injury to us; (iii) the participant’s material misappropriation or embezzlement of our property or the property of any of our affiliates; (iv) the participant’s commission of (including entry of a guilty or no contest plea to) a felony (other than a traffic violation) or other crime involving moral turpitude, or the participant’s commission of unlawful harassment or discrimination; (v) the participant’s willful misconduct or gross negligence with respect to any material aspect of our business or a material breach by the participant of his or her fiduciary duty to us, which willful misconduct, gross negligence or material breach has a material and demonstrable adverse effect on us; or (vi) the participant’s material breach of his or her obligations to us under a written agreement with us. For purposes of the Severance Plan, “good reason” generally means the occurrence of any one or more of the following without the participant’s prior written consent unless we fully correct the circumstances constituting good reason (provided such circumstances are capable of correction): (i) a material diminution in the participant’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, excluding for this purpose any isolated, insubstantial or inadvertent actions not taken in bad faith and which are remedied by us promptly after receipt of notice thereof given by the participant; (ii) the material reduction by us of participant’s then-current annual base salary, other than as a result of a proportionate, across-the-board reduction of base compensation payable to similarly situated employees; or (iii) a material change in the geographic location at which the participant performs his or her principal duties for us to a new location that is more than 30 miles from the location at which the participant performs his or her principal duties for us as of the date on which he or she first becomes a participant in the Severance Plan. The participant will not be deemed to have resigned for “good reason” unless (1) he or she provides us with written notice setting forth in reasonable detail the facts and circumstances claimed by the participant to constitute “good reason” within 90 days after the date of the occurrence of any event that the participant knows or should reasonably have known to constitute “good reason,” (2) we fail to cure such acts or omissions within 30 days following its receipt of such notice, and (3) the effective date of the participant’s termination for “good reason” occurs no later than 60 days after the expiration of the 30-day cure period set forth above. Eltoukhy and Talasaz Letter Agreements In addition, in 2019 we entered into letter agreements with each of Drs. Eltoukhy and Talasaz that provide that if either executive experiences a qualifying termination of employment for purposes of the Severance Plan, other than in connection with a change in control, then each time-based vesting company equity award held by the executive will vest and become exercisable as to the portion of the award that would have vested over the one-year period following the termination date (had the executive remained in continuous service during such period). This acceleration right is subject to the executive’s timely execution and non-revocation of a general release of claims. Drs. Eltoukhy and Talasaz did not hold any unvested time-based equity awards as of December 31, 2023. Termination Terms of Founders’ 2020 Performance Awards Under the terms of the Founders’ 2020 Performance Awards, upon a termination of employment of Dr. Eltoukhy or Dr. Talasaz, the 2020 PSUs granted to such executive would have been treated as follows, subject to the executive’s timely execution and non-revocation of a general release of claims:
Potential Payments Upon Termination or Change in Control
| • | If the employment of Dr. Eltoukhy or Dr. Talasaz is terminated by the Company without cause or by Dr. Eltoukhy or Dr. Talasaz for good reason, then one-third of the total PSUs would have vested. Any then-remaining unvested PSUs would have remained outstanding for up to six months following the termination of employment and would have vested to the extent that the Company achieves a stock price goal during such time period. |
Potential Payments Upon Termination or Change in Control
| • | The PSUs would have vested in full upon a termination of the Founder’s employment due to his death. |
Potential Payments Upon Termination or Change in Control
| • | If the employment of Dr. Eltoukhy or Dr. Talasaz terminated due to his disability, then the PSUs would have remained outstanding and eligible to vest through the later to occur of (x) the one-year anniversary the termination date and (y) the four-year anniversary of the grant date (but not beyond the Expiration Date). |
Potential Payments Upon Termination or Change in Control
In the event of a change in control of the Company:
Potential Payments Upon Termination or Change in Control
| • | If the price per share received by the Company’s common stockholders in a change in control had exceeded the greater of (i) the fair market value of the Company’s stock on the grant date and (ii) the volume-weighted average stock price over the 180 days ending on the grant date, but is less than $120 per share, then one-third of the total PSUs would have vested. |
Potential Payments Upon Termination or Change in Control
| • | If the price per share received by the Company’s common stockholders in a change in control had equalled or exceeded $120 per share, then the PSUs would have vested |
Potential Payments Upon Termination or Change in Control
| with respect to any stock price goal achieved by the deal price. In addition, if the deal price would have been between two stock price goals, then either 50% or 100% of the PSUs associated with the greater goal would have vested (depending on whether the deal price is more or less than 50% between the two goals). |
Potential Payments Upon Termination or Change in Control
| • | In addition, if any then-remaining unvested PSUs were assumed, they would have continued to be eligible to vest following the transaction based on the achievement of stock price goals adjusted to reflect the transaction. |
Potential Payments Upon Termination or Change in Control
Change in Control Terms of 2023 PSU Awards For PSU awards granted in 2023, the portion of the award subject to a performance period in which a change in control occurs will be considered earned based on the greater of (a) the target level of performance or (b) the actual performance through the date of the change in control. Any earned PSUs under the award agreement (after giving effect of this provision) will remain outstanding and subject to the continued-service vesting conditions of the award (unless a qualifying termination under the Executive Severance Plan occurs). Any unearned PSUs as of the date of the change in control will be forfeited. Dahne-Steuber Separation As previously discussed above in the CD&A, in conjunction with her separation Ms. Dahne-Steuber received amounts equal to six-months of base salary ($245,000), up to six-months of COBRA premiums ($5,765) for continued health coverage and was entitled to retain the remaining prorated portion of her signing bonus and relocation allowance ($32,046). The total amount of these items is $282,811. Summary of Potential Payments upon Termination or Change in Control The following table summarizes the payments that would be made to our NEOs upon the occurrence of certain qualifying terminations of employment or a change in control, in any case, occurring on December 31, 2023. In accordance with SEC rules, the potential payments upon termination or change in control do not include certain distributions or benefits to which the NEO is already entitled, including the value of equity awards that have already vested and distributions from qualified retirement plans. Since many factors (e.g., the time of year when the event occurs, our stock price) could affect the nature and amount of benefits an NEO could potentially receive, any amounts paid or distributed upon a future termination may be different from those shown in the tables below.
Potential Payments Upon Termination or Change in Control
| Name | Compensation Component | Change in Control ($) | Involuntary Termination In Connection With a Change in Control ($) | Termination without Cause or for Good Reason Termination ($) | Death or Disability ($) | | Helmy Eltoukhy | | | | | | | | Cash Severance | | 2(1) | 1(2) | — | | | Long Term Incentives | (3) | —(4) | —(5) | 30,576,833(6) | | | COBRA Premium Reimbursement | | 51,623(7) | 34,415(8) | — | | | Total | | 51,625 | 34,416 | 30,576,833 | | AmirAli Talasaz | | | | | | | | Cash Severance | | 2(1) | 1(2) | — | | | Long Term Incentives | (3) | —(4) | —(5) | 30,576,833(6) | | | COBRA Premium Reimbursement | | 51,623(7) | 34,415(8) | — | | | Total | | 51,625 | 34,416 | 30,576,833 | | Michael Bell | | | | | | | | Cash Severance | | 727,500(1) | 242,500(2) | — | | | Long Term Incentives | (3) | 2,237,657(4) | — | — | | | COBRA Premium Reimbursement | | 34,415(7) | 17,208(8) | — | | | Total | | 2,999,572 | 259,708 | — | | Darya Chudova | | | | | | | | Cash Severance | | 667,500(1) | 222,500(2) | — | | | Long Term Incentives | (3) | 2,752,202(4) | — | — | | | COBRA Premium Reimbursement | | 20,160(7) | 10,080(8) | — | | | Total | | 3,439,862 | 232,580 | — | | Craig Eagle | | | | | | | | Cash Severance | | 750,000(1) | 250,000(2) | — | | | Long Term Incentives | (3) | 2,305,201(4) | — | — | | | COBRA Premium Reimbursement | | 24,630(7) | 12,315(8) | — | | | Total | | 3,079,831 | 262,315 | — | | Christopher Freeman | | | | | | | | Cash Severance | | 742,500(1) | 247,500(2) | — | | | Long Term Incentives | | 2,507,129(4) | — | — | | | COBRA Premium Reimbursement | | 33,118(7) | 16,559(8) | — | | | Total | | 3,282,747 | 264,059 | — |
Potential Payments Upon Termination or Change in Control
| (1) Under the Company’s Severance Plan, for each of Drs. Eltoukhy and Talasaz, the amount is equal to the sum of 150% of the base salary in effect immediately prior to termination plus each executive’s target annual incentive bonus. For the other NEOs, the amount is equal to the sum of 100% of the base salary in effect immediately prior to termination plus each executive’s target annual incentive bonus. |
Potential Payments Upon Termination or Change in Control
| (2) Under the Company’s Severance Plan, for each of Drs. Eltoukhy and Talasaz, the amount is equal to 100% of the base salary in effect immediately prior to termination. For the other NEOs, the amount is equal to 50% of the base salary in effect immediately prior to termination. |
Potential Payments Upon Termination or Change in Control
| (3) Under the Founders’ 2020 Performance Awards, upon a change in control the PSUs are eligible to vest based on the price per share received by our common stockholders in connection with the change in control. Because the price of a share of our common stock as of December 29, 2023, the last trading day of the year, was $27.05, no portion of the awards would have vested on a change in control on that date. For Mr. Bell, and Dr. Chudova, upon a change in control PSUs awarded in 2021 and 2020 respectively are eligible to vest if the underlying performance criteria for the award has been met as of the change in control date. Because those criteria were unmet as of December 31, 2023, no value has been included. |
Potential Payments Upon Termination or Change in Control
| (4) Under the Company’s Executive Severance Plan, all unvested stock options and RSUs, and earned PSUs which vest based solely on the participant’s continued service with us or the passage of time will vest. The amount shown for Messrs. Bell, Freeman and Drs. Chudova and Eagle includes the value of all unvested stock options based on the positive difference (if any) between the exercise price and the price of a share of our common stock as of December 29, 2023, the last trading day of the year ($27.05), plus the market value of all unvested RSUs based on the price of a share of our common stock as of December 29, 2023. For Mr. Bell and Dr. Chudova, upon a change in control the PSUs awarded in 2021 and 2020 respectively are eligible to vest if the underlying performance criteria for the award has been met as of the change in control date. Because those criteria were unmet as of December 31, 2023 no value has been included. Under the Founders’ 2020 Performance Awards, upon a change in control the PSUs are eligible to vest based on the price per share received by our common stockholders in connection with the change in control. Because the price of a share of our common stock as of December 29, 2023, the last trading day of the year, was $27.05, no portion of the awards would have vested on a change in control and qualifying termination on that date. For Messrs. Bell and Freeman and Drs. Chudova and Eagle, the amounts include the value of the PSUs awarded in 2023, both the 2023 portion that was already earned at the maximum level of performance and the remaining portion, which is assumed to be earned at the target level of performance. |
Potential Payments Upon Termination or Change in Control
| (5) Under the Founders’ 2020 Performance Awards, any then-remaining unvested PSUs will remain outstanding for up to six months following the termination of employment and will vest to the extent that the Company achieves a stock price goal during such time period. |
Potential Payments Upon Termination or Change in Control
| (6) Under the Founders’ 2020 Performance Awards for each of Drs. Eltoukhy and Talasaz, the amount reflects the vesting upon death of all remaining unvested PSUs. If the employment of Dr. Eltoukhy or Dr. Talasaz terminates due to disability, then the PSUs will remain outstanding and eligible to vest through the later to occur of (x) the one-year anniversary the termination date and (y) the four-year anniversary of the grant date (but not beyond the expiration date of the PSUs). See “Compensation Discussion and Analysis — IV. Components of Our Compensation Program — Leadership Transition” above for a description of the 2024 compensation arrangements of Drs. Eltoukhy and Talasaz, pursuant to which the remaining PSUs were cancelled in March 2024. |
Potential Payments Upon Termination or Change in Control
| (7) Under the Company’s Severance Plan, the amount is the Company’s reimbursement for the full amount of the COBRA premium payments for an 18-month period following termination for Dr. Eltoukhy and Dr. Talasaz, and for a 12-month period for the other NEOs. |
Potential Payments Upon Termination or Change in Control
| (8) Under the Company’s Severance Plan, the amount is the Company’s reimbursement for the full amount of the COBRA premium payments for a 12-month period following termination for Dr. Eltoukhy and Dr. Talasaz, and for a 6-month period for the other NEOs. |
CEO Pay Ratio
CEO Pay Ratio Under rules adopted pursuant to the Dodd-Frank Act, we are required to calculate and disclose the total compensation paid to our median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our Chief Executive Officer (the “CEO Pay Ratio”). The paragraphs that follow describe our methodology and the resulting CEO Pay Ratio. Measurement Date We identified the median employee using our employee population on October 1, 2023 (including all employees, whether employed on a full-time, part-time, seasonal or temporary basis). Consistently Applied Compensation Measure Under the relevant rules, we are required to identify the median employee by use of a “consistently applied compensation measure” (“CACM”). We chose a CACM that closely approximates the annual target total direct compensation of our employees. Specifically, we identified the median employee by aggregating, for each employee as of October 1, 2023: (1) annual base pay, (2) annual target cash incentive opportunity, and (3) the grant date fair value for equity awards granted in 2023. In identifying the median employee, we annualized the compensation values of individuals who joined our Company during 2023, other than temporary or seasonal employees. Methodology and Pay Ratio After applying our CACM methodology, we identified the median employee. Once the median employee was identified, we calculated the median employee’s annual target total direct compensation in accordance with the requirements of the Summary Compensation Table. Our median employee’s compensation in 2023, as calculated using Summary Compensation Table requirements, was $169,585. As disclosed in the Summary Compensation Table, the 2023 compensation was $11,591 for Dr. Eltoukhy and $26,415 for Dr. Talasaz. Therefore, using the highest-compensated of our Co-CEOs, the CEO Pay Ratio for 2023 is approximately 0.2:1. This information is being provided for compliance purposes and is a reasonable estimate calculated in a manner consistent with the SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Neither the Compensation Committee nor management of the Company used the CEO Pay Ratio measure in making compensation decisions.
Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officers (“PEOs”) and Non-PEO NEOs and Company performance for the fiscal years listed below.
Pay Versus Performance
| Year | Summary Compensation Table Total for Helmy Eltoukhy (1) ($) | Summary Compensation Table Total for AmirAli Talasaz (1) ($) | Compensation Actually Paid to Helmy Eltoukhy (1) (2) (3) ($) | Compensation Actually Paid to AmirAli Talasaz (1) (2) (3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs (1) ($) | Average Compensation Actually Paid to Non-PEO NEOs (1) (2) (3) ($) | Value of Initial Fixed $100 Investment based on: (4) | | Net Income ($ Millions) | Revenue (5) ($ Millions) | | | | | | | | | TSR ($) | Peer Group TSR ($) | | | | (a) | (b) | (b) | (c) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 11,591 | 26,415 | (4,228,364) | (4,213,540) | 4,344,931 | 2,870,807 | 42.23 | 118.87 | (479.4) | 563.9 | | 2022 | 11,632 | 11,175 | (68,726,853) | (68,727,310) | 3,895,818 | 538,306 | 39.25 | 113.65 | (654.6) | 449.5 | | 2021 | 13,665 | 13,271 | (30,979,967) | (30,980,361) | 5,016,617 | 3,923,973 | 156.16 | 126.45 | (384.8) | 373.7 | | 2020 | 113,870,986 | — | 196,429,143 | — | 29,791,305 | 51,705,986 | 201.22 | 126.42 | (246.3) | 286.7 |
Pay Versus Performance
| (1) Helmy Eltoukhy and AmirAli Talasaz were our PEOs in 2021, 2022 and 2023. Helmy Eltoukhy was our PEO in 2020. The individuals comprising the Non-PEO NEOs for each year presented are listed below. |
Pay Versus Performance
| 2020 | 2021 | 2022 | 2023 | | AmirAli Talasaz | Michael Bell | Michael Bell | Michael Bell | | Derek Bertocci | Craig Eagle | Craig Eagle | Craig Eagle | | Michael Wiley | Christopher Freeman | Christopher Freeman | Christopher Freeman | | John Saia | John Saia | John Saia | Darya Chudova | | | | | Ines Dahne-Steuber |
Pay Versus Performance
| (2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. |
Pay Versus Performance
| (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEOs and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table. |
Pay Versus Performance
| Year | Summary Compensation Table Total for Helmy Eltoukhy ($) | Exclusion of Change in Pension Value for Helmy Eltoukhy ($) | Exclusion of Stock Awards and Option Awards for Helmy Eltoukhy ($) | Inclusion of Pension Service Cost for Helmy Eltoukhy ($) | Inclusion of Equity Values for Helmy Eltoukhy ($) | Compensation Actually Paid to Helmy Eltoukhy ($) | | 2023 | 11,591 | — | — | — | (4,239,955) | (4,228,364) |
Pay Versus Performance
| Year | Summary Compensation Table Total for AmirAli Talasaz ($) | Exclusion of Change in Pension Value for AmirAli Talasaz ($) | Exclusion of Stock Awards and Option Awards for AmirAli Talasaz ($) | Inclusion of Pension Service Cost for AmirAli Talasaz ($) | Inclusion of Equity Values for AmirAli Talasaz ($) | Compensation Actually Paid to AmirAli Talasaz ($) | | 2023 | 26,415 | — | — | — | (4,239,955) | (4,213,540) |
Pay Versus Performance
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Change in Pension Value for Non-PEO NEOs ($) | Average Exclusion of Stock Awards and Option Awards for Non-PEO NEOs ($) | Average Inclusion of Pension Service Cost for Non-PEO NEOs ($) | Average Inclusion of Equity Values for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 4,344,931 | — | (3,568,826) | — | 2,094,702 | 2,870,807 |
Pay Versus Performance
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Pay Versus Performance
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Helmy Eltoukhy ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Helmy Eltoukhy ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Helmy Eltoukhy ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Helmy Eltoukhy ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Helmy Eltoukhy ($) | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Helmy Eltoukhy ($) | Total - Inclusion of Equity Values for Helmy Eltoukhy ($) | | 2023 | — | (4,239,955) | — | — | — | — | (4,239,955) |
Pay Versus Performance
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for AmirAli Talasaz ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for AmirAli Talasaz ($) | Vesting- Date Fair Value of Equity Awards Granted During Year that Vested During Year for AmirAli Talasaz ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for AmirAli Talasaz ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for AmirAli Talasaz ($) | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for AmirAli Talasaz ($) | Total - Inclusion of Equity Values for AmirAli Talasaz ($) | | 2023 | — | (4,239,955) | — | — | — | — | (4,239,955) |
Pay Versus Performance
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Vesting- Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs ($) | Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Non-PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2023 | 1,964,078 | (127,536) | 272,534 | (14,374) | — | — | 2,094,702 |
Pay Versus Performance
| (4) The Peer Group TSR set forth in this table utilizes the NASDAQ Biotechnology Index which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the NASDAQ Biotech Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. |
Pay Versus Performance
| (5) We determined revenue to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our Non-PEO NEOs in 2023. The financial performance measure of revenue was not applicable to the determination of Compensation Actually Paid to either Dr. Eltoukhy or Dr. Talasaz in 2023 because, in connection with the Founders’ 2020 Performance Awards, each of Drs. Eltoukhy and Talasaz entered into Waiver Letters pursuant to which they formally agreed to waive their opportunity to receive annual incentive opportunities or payouts under our annual incentive plan for seven years, including for 2023. Revenue may not have been the most important financial performance measure for years, and we may determine a different financial performance measure to be the most important financial performance measure in future years. |
Pay Versus Performance
NEO Compensation Actually Paid and Company and Peer Group TSR The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s cumulative TSR over the four most recently completed fiscal years, and the NASDAQ Biotechnology Index TSR over the same period. NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the four most recently completed fiscal years. NEO Compensation Actually Paid and Adjusted Operating Income The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our Non-PEO NEOs, and our revenue during the four most recently completed fiscal years. Tabular List of Most Important Financial Performance Measures In light of the impact of stock price on the Founders’ 2020 Performance Awards, stock price was the sole financial performance measure that the Company considers to have linked Compensation Actually Paid to our PEOs for 2023 to Company performance. The following table presents the financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our Non-PEO NEOs for 2023 to Company performance. The measures in this table are not ranked.
Pay Versus Performance
| Revenue | | Adjusted EBITDA | | Gross Margin |