DEF 14A of Globus Medical Inc
Filed Apr 25, 2019 · FY20180001237831-19-000019
PROPOSAL 1 ELECTION OF DIRECTORS
PROPOSAL 1 ELECTION OF DIRECTORS Our Board of Directors currently consists of eight members divided into three classes, as nearly equal in number as possible, with each director serving a three-year term and one class being elected at each year’s annual meeting of stockholders. At each annual meeting of stockholders, successors to the class of directors whose term expires at such meeting will be elected for a term of three years. Each director will serve until a successor is duly elected and qualified, or until the director’s earlier death, resignation or removal. There is no limit to the number of terms a director may serve. Three of our directors are nominated for election this year. Each director to be elected and qualified at the Annual Meeting will hold office until the 2022 annual meeting of stockholders and will serve until his or her successor is duly elected and qualified, or until the director’s earlier death, resignation or removal. Each of the nominees listed below is currently a director. Each person nominated for election has agreed to serve if elected, and we have no reason to believe that any nominee will be unable to serve. If any nominee becomes unavailable or unable to serve as director before the Annual Meeting, the shares of common stock represented by executed proxies will be voted for the election of a substitute nominee proposed by our Board of Directors or, in the alternative, the Board of Directors may elect to reduce its size. Our Board of Directors believes that each of our current directors, including those nominated for election this year, is highly qualified to serve as a member of our Board of Directors and each has contributed to the mix of skills, core competencies and qualifications of the Board of Directors. Our directors are highly experienced and have diverse backgrounds and skills, as well as extensive track records of success in what we believe are relevant positions. A number of our directors also have served as directors of Globus for many years, and we benefit from their knowledge of our history, operations and corporate philosophy.
Board of Directors
Board of Directors The following table sets forth information concerning our directors as of April 1, 2019:
Board of Directors
| Name | Age | Position and Committee Memberships | Term Expires | | David C. Paul | 52 | Chairman of the Board of Directors and Executive Chairman; Compensation Committee Chair and Nominating and Corporate Governance Committee | 2019(1) | | David M. Demski | 61 | Director, Chief Executive Officer; Member of the Nominating and Corporate Governance Committee | 2020 | | David D. Davidar | 53 | Director; Member of the Compensation Committee and Nominating and Corporate Governance Committee | 2021 | | Kurt C. Wheeler | 66 | Director; Member of the Compensation Committee; Lead Independent Director | 2020 | | Robert W. Liptak | 55 | Director; Member of the Compensation Committee and Audit Committee | 2021 | | Daniel T. Lemaitre | 65 | Director; Member of the Compensation Committee and Audit Committee | 2019(1) | | Ann D. Rhoads | 53 | Director; Audit Committee Chair and Member of the Nominating and Corporate Governance Committee | 2019(1) | | James R. Tobin | 74 | Director, Nominating and Corporate Governance Committee Chair and Member of the Audit Committee | 2021 |
Board of Directors
(1) If the director nominees are elected at the Annual Meeting, their term will expire in 2022
Nominees for Director
Nominees for Director The following is a brief biography of each nominee for director and a discussion of the relevant experiences, qualifications, attributes or skills of each nominee that, together with other relevant factors, led the Nominating and Corporate Governance Committee to recommend that person as a nominee for director as of the date of this Proxy Statement. David C. Paul served as our Chief Executive Officer from our inception in 2003 until August 2017, when he transitioned into the role of Executive Chairman. He has served as Chairman of our Board of Directors since our inception in 2003 and is a member of our Compensation Committee and our Nominating and Corporate Governance Committee. Prior to founding Globus, Mr. Paul was employed at Synthes in various positions. He served as Director of Product Development for Synthes in his last position, where he was responsible for product development and marketing functions. Prior to Synthes, Mr. Paul worked as a Research Engineer in biomaterials research at Temple University. Mr. Paul is a named inventor on approximately 225 patents and patent applications. Mr. Paul received a B.S. in Mechanical Engineering from the University of Madras, and an M.S. in Computer Integrated Mechanical Engineering Systems from Temple University. Mr. Paul brings to our Board of Directors valuable perspective and experience as our founder, former Chief Executive Officer, current Executive Chairman and largest stockholder, as well as leadership skills, industry experience and knowledge, discipline and dedication to our mission that qualify him to serve as one of our directors. Daniel T. Lemaitre has served on our Board of Directors since April 2011, and is a member of our Compensation Committee and Audit Committee. Mr. Lemaitre most recently served as the President and Chief Executive Officer of Direct Flow Medical. Previously, Mr. Lemaitre served as Chief Executive Officer of White Pine Medical, a venture-backed medical device start-up company, from June 2009 until May 2015. Prior to White Pine Medical, Mr. Lemaitre served as the President and Chief Executive Officer of CoreValve, a privately-held company focused on percutaneous aortic valve replacement, from April 2008 until its acquisition by Medtronic, Inc., a publicly-traded medical device company, in April 2009. From 2005 until March 2008, Mr. Lemaitre was a Senior Vice President at Medtronic, where he led the company’s strategic planning and corporate development. Prior to joining Medtronic, Mr. Lemaitre spent 28 years as an investment analyst in the medical device field. This included 18 years with SG Cowen, where he was a managing director and led the healthcare research team, and six years with Merrill Lynch. Mr. Lemaitre holds a B.A. in Economics from Bethany College and an M.B.A. from Bowling Green State University. Mr. Lemaitre also currently serves as the Chairman of the Board of Directors of Endologix, Inc. (NASDAQ: ELGX). Mr. Lemaitre’s extensive business, managerial, executive and leadership experience in the medical device industry, including having served as chief executive officer of a medical device company and as senior vice president of one of the world’s leading medical technology companies, as well as his current experience as a director of a publicly-traded medical device company bring to our Board of Directors a meaningful understanding of our business and industry and valuable skills related to strategic planning for a public company. These skills and experience, as well as his financial and accounting skills and expertise, qualify him to serve as one of our directors and as an “audit committee financial expert” on our Audit Committee. Ann D. Rhoads has served on our Board of Directors since July 2011, and is a member of our Audit Committee and our Nominating and Corporate Governance Committee. Ms. Rhoads currently serves as Chief Financial Officer of Forty Seven, Inc., a clinical-stage company focused on developing checkpoint therapies to activate macrophages in the fight against cancer. Previously, Ms. Rhoads was Executive Vice President and Chief Financial Officer of Zogenix, Inc. (NASDAQ:ZGNX), a pharmaceutical company, from March 2010 through January 2017. From 2000 through the end of 2009, Ms. Rhoads served as the Chief Financial Officer of Premier, Inc., a healthcare supply management company. From 1998 to 2000, she was Vice President, Strategic Initiatives at Premier, Inc., and from 1993 to 1998, she was a Vice President of The Sprout Group, an institutional venture capital firm. Ms. Rhoads holds a B.S. in Finance from the University of Arkansas and an M.B.A. from the Harvard Business School. Ms. Rhoads also serves on the board of directors, as chairman of the audit committee and as a member of the compensation committee of Evoke Pharma, Inc. (NASDAQ: EVOK). Ms. Rhoads also previously served on the board of directors of Iridex Corporation (NASDAQ: IRIX) from 2017 to 2018 and Novellus Systems, Inc. (NASDAQ: NVLS) from 2003 until 2012. Ms. Rhoads’ experience as the chief financial officer of a publicly-traded pharmaceutical company and as a member of the board of directors of a publicly-traded company brings to our Board of Directors and the committees of our Board of Directors valuable financial skills and expertise, which qualify her to serve as an “audit committee financial expert” on our Audit Committee, and significant executive management experience and leadership skills, as well as a strong understanding of corporate governance principles.
Continuing Directors
Continuing Directors The following is a brief biography of each current director who is not nominated for election at the Annual Meeting but will continue to serve on our Board of Directors following the Annual Meeting as of the date of this Proxy Statement. David M. Demski became Chief Executive Officer in August 2017. He has served as one of our directors since our inception in 2003 and is a member of our Nominating and Corporate Governance Committee. Between September 2015 and August 2017, Mr. Demski served as President, Emerging Technologies. He served as our President and Chief Operating Officer from August 2008 until September 2015 and as our Chief Financial Officer from 2003 until August 2008. Prior to joining Globus in 2003, Mr. Demski founded Cornerstone Capital LBO Fund, a boutique leveraged-buyout consultancy. Mr. Demski’s experience also includes serving as Vice President for Gilo Ventures, a Silicon Valley-based venture capital fund, from 2000 to 2001, and serving as Chief Operating Officer of Rendall and Associates, a telecommunications-focused consulting firm, from 1994 to 2000. He also managed regional and international distribution for Domino’s Pizza during the company’s growth in the late 1980s. Previously, he was an audit supervisor for Peat, Marwick, Mitchell & Company. Mr. Demski received a B.S. in Business Administration from the University of Michigan and an M.B.A. from the Stanford Graduate School of Business. Mr. Demski’s extensive leadership and experience at our Company and knowledge of our finances and operations, including as one of the founders of our Company, as well as his prior experience in the investing and auditing industries, bring to our Board of Directors critical strategic planning, financial, operations and leadership skills and qualify him to serve as one of our directors. David D. Davidar has served as a director since 2003 and is a member of our Nominating and Corporate Governance Committee and Compensation Committee. Mr. Davidar served as our Senior Vice President, Operations from January 2013 until March 2016 and as our Vice President, Operations from 2003 to January 2013. Prior to joining Globus, Mr. Davidar served as the Executive Director of Highway Home, an assisted living facility, from 1995 to 2003. Mr. Davidar also served in a management capacity for Pizza Hut, Inc. from 1993 to 1995. Mr. Davidar received a B.Com. in Commerce, Economics and Management from the University of Madras, a Post-Graduate diploma in Personnel Management at the Madras School of Social Work, and an M.B.A. from Bloomsburg University. Mr. Davidar’s role as one of our founders and his operational leadership of our Company have contributed significantly to our success and provided him with a deep familiarity with our Company, its history and business and brings to our Board of Directors valuable operational insight and managerial skill that qualify him to serve as one of our directors. Robert W. Liptak is a Senior Managing Director for Blackstone Life Sciences; he was previously a Senior Managing Director of Clarus Ventures, LLC, a life sciences venture capital firm, from its inception in 2005 until its acquisition by Blackstone in December 2018. He has served as one of our directors since July 2007 and is a member of our Compensation Committee and our Audit Committee. He has over 20 years of experience in investment management focusing primarily on the establishment and management of various investment management businesses, including as a General Partner in MPM Capital, L.P., a healthcare venture capital firm, from 2001 to 2008. From 1995 to 2001, Mr. Liptak was a Partner with the Geometry Group, a diversified asset management firm focused on establishing investment management firms. From 1992 to 1995, Mr. Liptak was Vice President of Finance for Global Asset Management (USA) Inc., an asset management firm, and he began his career in 1986 with Price Waterhouse where he was a Manager in its Capital Markets Group. Mr. Liptak also serves on the board of directors of SFJ Cayman Corp., a privately-held company. Mr. Liptak holds a B.A. in Accounting and Finance from LaSalle University and an M.B.A. from Columbia University, and is a certified public accountant. Mr. Liptak’s broad experience as an investment management professional in the healthcare industry, his leadership roles and his financial and accounting skills and expertise, which qualify him to serve as an “audit committee financial expert” on our Audit Committee, as well as his deep understanding of our Company through service as a director qualify him to serve as one of our directors. James R. Tobin has served on our Board of Directors since August 2015 and is a member of our Audit Committee and our Nominating and Corporate Governance Committee. Mr. Tobin served as President and Chief Executive Officer of Boston Scientific from March 1999 to July 2009. Before joining Boston Scientific, Mr. Tobin served Biogen, Inc. as its President and CEO from 1997 to 1998 and as its Chief Operating Officer from 1994 to 1997. Mr. Tobin served Baxter International in various capacities from 1972 to 1994, including as its President and Chief Operating Officer from 1992 to 1994. Mr. Tobin also currently serves on the board of directors of Oxford Immunotec Global PLC (NYSE: OXFD), a global diagnostics company, Corindus Vascular Robotics, Inc. (NYSE American: CVRS), a leading developer of precision vascular robotics, and two private companies, TransMedics, Inc. and Resolys Bio, Inc. He served as Lieutenant in the U.S. Navy from 1968 to 1972. Mr. Tobin holds an M.B.A. from Harvard Business School and an A.B. from Harvard College. We believe that Mr. Tobin is well qualified to serve on our board of directors and on our Audit Committee and Nominating and Corporate Governance Committee for numerous reasons, including his decades of experience as a senior executive of large multinational healthcare and medical device companies, and his service as a director of Boston Scientific Corporation and numerous other medical device companies.
Continuing Directors
Kurt C. Wheeler is a Senior Managing Director for Blackstone Life Sciences; he was previously a co-founder and Managing Director of Clarus Ventures, LLC, a life sciences venture capital firm, from its inception in 2005 to its acquisition by Blackstone Life Sciences in December 2018. He has served as one of our directors since July 2007 and is a member of our Compensation Committee. He has over 25 years of direct investment and industry experience within the healthcare sector, including being a General Partner at MPM Capital, L.P., a healthcare venture capital firm, since 2000. Mr. Wheeler co-founded and served as chief executive officer of InControl (NASDAQ: INCL), a publicly-traded medical device company that was acquired by Guidant Corporation in 1998. Prior to founding InControl, he was a Principal with the Mayfield Fund, a private equity firm, where he focused on healthcare investing. Mr. Wheeler began his career with Eli Lilly & Co., a pharmaceutical company. Mr. Wheeler also sits on the boards of directors of Avillion LP and Flowonix, both privately-held companies. Previously, he was responsible for investments in the following medical device companies: Hemosense (AMEX: HEM); Intratherapeutics, Inc.; and SenoRx, Inc. (NASDAQ: SENO), and the following biopharmaceutical companies: Eyetech Pharmaceuticals, Inc. (NASDAQ: EYET); Neuromed Pharmaceuticals, Ltd. (NASDAQ: CRXX); Somaxon Pharmaceuticals, Inc. (NASDAQ: SOMX); and Zogenix, Inc. (NASDAQ: ZGNX). Mr. Wheeler holds a B.A. from Brigham Young University and an M.B.A. from Northwestern University. Mr. Wheeler’s background as a chief executive officer of a publicly-traded medical device company, his extensive experience at the board level in various healthcare companies and his experience as a venture capitalist focused on the medical device and biopharmaceutical industries, bring to our Board of Directors critical skills related to financial oversight of complex organizations, strategic planning, and corporate governance and qualify him to serve as one of our directors.
Information Concerning the Board of Directors and Corporate Governance
Information Concerning the Board of Directors and Corporate Governance
Compensation Committee
| • | reviewing and making recommendations, on an annual basis, to the Board of Directors with respect to director compensation; |
Indemnification Agreements with our Directors and Officers
Indemnification Agreements with our Directors and Officers Our amended and restated certificate of incorporation and bylaws provide that we shall indemnify our directors and officers to the fullest extent permitted by law. In addition, as permitted by the laws of the State of Delaware, we have entered into indemnification agreements with each of our directors and certain of our officers. Under the terms of our indemnification agreements, we are required to indemnify each of our directors and officers, to the fullest extent permitted by the laws of the State of Delaware, if the indemnitee acted in good faith and in a manner the indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal proceeding, had no reasonable cause to believe the indemnitee’s conduct was unlawful. We must indemnify our officers and directors against any and all (a) costs and expenses (including attorneys’ and experts’ fees, expenses and charges) actually and reasonably paid or incurred in connection with investigating, defending, being a witness in or participating in, or preparing to investigate, defend, be a witness in or participate in, and (b) judgments, fines, penalties and amounts paid in settlement in connection with, in the case of either (a) or (b), any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, by reason of the fact that (x) such person is or was a director or officer, employee, agent or fiduciary of the Company or (y) such person is or was serving at our request as a director, officer, employee or agent or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The indemnification agreements also require us, if so requested, to advance within 30 days of such request any and all costs and expenses that such director or officer incurred, provided that such person will return any such advance if it shall ultimately be determined that such person is not entitled to be indemnified for such costs and expenses. Our bylaws also require that such person return any such advance if it is ultimately determined that such person is not entitled to indemnification by us as authorized by the laws of the State of Delaware. We are not required to provide indemnification under our indemnification agreements for certain matters, including:
Indemnification Agreements with our Directors and Officers
| 1. | indemnification in connection with certain proceedings or claims initiated or brought voluntarily by the director or officer; |
Indemnification Agreements with our Directors and Officers
| 2. | indemnification related to disgorgement of profits made from the purchase or sale of securities of our Company under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or similar provisions of state statutory or common law; |
Indemnification Agreements with our Directors and Officers
| 3. | indemnification that is finally determined, under the procedures and subject to the presumptions set forth in the indemnification agreements, to be unlawful; or |
Indemnification Agreements with our Directors and Officers
| 4. | indemnification for liabilities for which the director or officer has received payment under any insurance policy as may exist for such person’s benefit, our articles of incorporation or bylaws or any other contract or otherwise, except with respect to any excess amount beyond the amount so received by such director or officer. The indemnification agreements require us, to the extent that we maintain an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of our company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of our Company, to cover such person by such policy or policies to the maximum extent available. |
Key Elements of Our Compensation Program for 2019
Key Elements of Our Compensation Program for 2019 We generally pay executive compensation through a combination of base salary, annual non-equity incentive compensation, long-term equity incentives in the form of stock options, and benefits. We do not use specific formulas or weightings in determining the allocation of the various compensation elements. Instead, compensation for each of our executives has been designed to provide a combination of fixed and at-risk compensation that is tied to achievement of our short-term and long-term objectives. We believe that this approach achieves the primary objectives of our compensation program, which are to recruit, retain and properly motivate our executives. The Compensation Committee retains the discretion to increase or decrease the actual amount of any executive officer’s annual non-equity incentive compensation based on his or her individual performance during the year. In 2018, we compensated our named executive officers through a combination of base salary, annual non-equity incentive compensation, long-term equity incentives in the form of stock options, and benefits that included health, vision and dental insurance, paid time-off, life insurance, short-term and long-term disability insurance, 401(k) plan with Company matching contributions, relocation assistance, gym membership reimbursement, and car allowance. We believe the forms and mix of compensation provided to our named executive officers in 2018 appropriately reward performance, as the non-equity incentive plan compensation is tied to our Company performance as well as individual performance, and help to align the interests of our named executive officers with those of our stockholders, particularly through the grants of annual equity incentives. Base Salary. Base salaries for all of our employees are determined by position, taking into consideration the scope of job responsibilities and competitive market compensation paid by other companies for similar positions. Base salaries are also driven by market competition to attract and retain high quality professionals. Our overall approach to setting base salaries is to create and sustain long-term stockholder value by balancing our need to retain high-quality professionals while appropriately managing our general and administrative expenses. The Compensation Committee approved merit increases to the 2018 base salaries for our named executive officers of approximately 3.0% over each such named executive officer’s 2017 base salary. Annual Non-Equity Incentive Compensation. In 2018, all of our named executive officers participated in our annual non-equity incentive program pursuant to which they were eligible to earn cash payments (which were paid in January 2019). The target amount of the cash payment for each named executive officer was determined by the Compensation Committee on an individual basis using historical compensation amounts and the committee’s determination of competitive factors. These amounts are set forth in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards - Target” column of the 2018 Grants of Plan-Based Awards table below. Payment above or below the target amounts was dependent on the degree to which the Company exceeded or fell short of a 2018 revenue goal of $690 million set by the committee. The Compensation Committee determined that for each named executive officer, achievement of 75% or less of goal revenue would result in non-equity incentive compensation of $0, achievement of 90% of goal revenue would result in non-equity incentive compensation equal to 75% of target non-equity incentive compensation, achievement of 97.5% of goal revenue would result in non-equity incentive compensation equal to 100% of target non-equity incentive compensation, achievement of 100% of goal revenue would result in non-equity incentive compensation equal to 110% of target non-equity incentive compensation, and achievement of 110% of goal revenue would result in non-equity incentive compensation of 145% of the target non-equity incentive compensation. Achievement of revenue between the specified revenue goals would result in non-equity incentive compensation payments based on interpolation between the specified target payout amounts. After determining the amount of non-equity incentive compensation payable based on achievement of the specified revenue goals, the Compensation Committee may, in its discretion, adjust the final awards payable to each executive on an individual basis based on the committee’s evaluation of each executive’s individual performance during the year. In 2018, we ultimately achieved worldwide sales revenues of $712 million, an increase of 12.1% over 2017. Based on this performance, the Compensation Committee determined the default non-equity incentive award would be calculated at a rate of 119% of the applicable target amounts, which the committee reserved its right to adjust in its discretion as described above. Equity Incentive Compensation. The Compensation Committee believes that stock option awards are an important and useful long-term component of our overall compensation program. Stock options generally expire after ten years and vest ratably over four years. If an officer dies or becomes disabled, unexercised stock options generally are forfeited within one year. If an officer otherwise leaves our employ for any reason other than for cause, unexercised stock options generally are forfeited three months after termination of employment. If an officer’s employment is terminated for cause, unexercised stock options are typically forfeited upon termination of employment. In 2018, all of our named executive officers received options to purchase shares of our common stock as set forth in the “Number of Securities Underlying Options” column of the 2018 Grants of Plan-Based Awards table below. The number of options awarded each named executive officer generally was aligned with the committee’s historical practice. See “Outstanding Equity Awards at Fiscal Year-End” below, for a description of those stock option awards. All equity awards to our named executive officers were granted at no less than the fair market value of our common stock at the time of the grants, as determined by our Board of Directors. Employee Benefits and Perquisites. Each named executive officer receives the same company-wide benefits as are generally available to all other salaried employees, such as short- and long-term disability insurance, basic life insurance and eligibility for supplemental health and life insurance, access to flexible health care reimbursement accounts and 401(k) matching. Additionally, our named executive officers are entitled to a vehicle allowance.
Summary Compensation Table
Summary Compensation Table The following table sets forth certain compensation information for our named executive officers.
Summary Compensation Table
| Name and Principal Position | Year | Salary(1)($) | Bonus ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | | David C. Paul, Chairman of the Board of Directors and Executive Chairman | 2018 | 380,158 | - | 1,358,934 | 476,000 | 31,552 | 2,246,643 | | | 2017 | 369,085 | - | 1,249,029 | 650,582 | 31,464 | 2,300,160 | | | 2016 | 430,000 | - | 602,503 | 609,080 | 36,600 | 1,678,183 | | David M. Demski, Chief Executive Officer | 2018 | 456,190 | - | 2,038,401 | 862,750 | 36,671 | 3,394,012 | | | 2017 | 396,483 | - | 3,482,167 | 536,291 | 36,583 | 4,451,524 | | | 2016 | 358,335 | - | 482,003 | 332,000 | 34,005 | 1,206,343 | | Anthony L. Williams, President | 2018 | 381,924 | - | 1,087,147 | 369,250(5) | 32,152 | 1,870,473 | | | 2017 | 370,800 | - | 666,149 | 369,250 | 32,064 | 1,438,263 | | | 2016 | 360,000 | - | 482,003 | 290,500 | 32,081 | 1,164,584 | | Daniel T. Scavilla, Executive Vice President, Chief Commercial Officer and Chief Financial Officer | 2018 | 355,136 | - | 1,087,147 | 400,000 (6) | 37,280 | 1,879,563 | | | 2017 | 344,793 | - | 666,149 | 263,750 | 37,183 | 1,311,875 | | | 2016 | 334,750 | - | 1,205,006 | 207,500 | 37,200 | 1,784,456 | | Eric I. Schwartz, Senior Vice President and General Counsel | 2018 | 291,934 | - | 543,573 | - (7) | 16,286 | 851,792 | | | 2017 | 331,533 | - | 333,074 | 131,875 | 9,699 | 806,181 |
Summary Compensation Table
| (1) Reflects the base salary earned during the fiscal year covered. |
Summary Compensation Table
| (2) Reflects the grant date fair value for each named executive officer’s stock option awards, computed in accordance with Financial Accounting Standards Board, Accounting Standards Codification Topic 718, Stock Compensation. These values have been determined based on the assumptions set forth in Note 12 to our consolidated financial statements included in our 2018 Annual Report on Form 10-K. See “Outstanding Equity Awards as of December 31, 2018” below, for a description of those stock option awards. |
Summary Compensation Table
| (3) Reflects cash amounts earned pursuant to our annual non-equity incentive plan for the fiscal year covered. All such cash payouts earned under this plan in a given year were paid in the following year. |
Summary Compensation Table
| (4) Amounts for 2018 include participation in our group health insurance benefits, Company 401(k) plan matching contributions, vehicle allowance, YMCA membership reimbursement, and life and disability insurance premiums. The compensation amounts for our group health insurance benefits in 2018 were $20,956 for Messrs. Demski and Scavilla, and $15,837 for Messrs. Paul and Williams. The compensation amount for Mr. Schwartz included $2,522 and $3,000 for medical insurance waiver payments in 2018 and 2017, respectively. |
Summary Compensation Table
| (5) Pursuant to the formula specified above, Mr. William’s award would have been $416,500. The Compensation Committee exercised its discretion and adjusted Mr. William’s 2018 non-equity incentive compensation award to match his 2017 award amount of $369,250, deferring the excess that would have been earned pursuant to the formula to 2019. The deferred amount would have been payable in 2019 upon the achievement of certain criteria set by the Compensation Committee, but Mr. Williams resigned his employment in March 2019 and was not eligible to receive the deferred amount. |
Summary Compensation Table
| (6) Pursuant to the formula specified above, Mr. Scavilla’s award would have been $357,000. The Compensation Committee exercised its discretion and adjusted Mr. Scavilla’s 2018 non-equity incentive compensation award to reflect the fact that Mr. Scavilla remains serving as the Company’s Chief Financial Officer while also serving as the Company’s Chief Commercial Officer. |
Summary Compensation Table
| (7) Mr. Schwartz resigned his employment in November 2018 and was not eligible to receive non-equity incentive compensation for 2018. |
2018 Grants of Plan-Based Awards
2018 Grants of Plan-Based Awards The table below sets forth information with respect to awards granted to the named executive officers under our annual non-equity incentive compensation plan and our 2012 Equity Incentive Plan in 2018, which constitute all of the plan-based awards granted to our named executive officers in 2018.
2018 Grants of Plan-Based Awards
| Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Number of Securities Underlying Options (#) | Per-Share Exercise Price of Option Awards ($/share) | Grant Date Fair Value of Option Awards(2) ($) | | | | Threshold ($) | Target(1) ($) | Maximum ($) | | | | | David C. Paul | January 22, 2018 | - | 400,000 | 580,000 | 100,000 | 43.77 | 1,358,934 | | David M. Demski | January 22, 2018 | - | 725,000 | 1,051,250 | 150,000 | 43.77 | 2,038,401 | | Anthony L. Williams | January 22, 2018 | - | 350,000 | 507,500 | 80,000 | 43.77 | 1,087,147 | | Daniel T. Scavilla | January 22, 2018 | - | 300,000 | 435,000 | 80,000 | 43.77 | 1,087,147 | | Eric I. Schwartz | January 22, 2018 | - | 125,000 | 181,250 | 40,000 | 43.77 | 543,573 |
2018 Grants of Plan-Based Awards
| (1) These payouts represent the amount payable upon achievement of 97.5% of the revenue goal under the non-equity incentive compensation plan, and are listed because they are the base amounts on which the Compensation Committee determines final payouts. Upon achievement of 100% of the revenue goal, each named executive officer would receive a payout of 110% of the target amounts listed. |
2018 Grants of Plan-Based Awards
| (2) Reflects the grant date fair value for each named executive officer’s stock option awards, computed in accordance with Financial Accounting Standards Board, Accounting Standards Codification Topic 718, Stock Compensation. These values have been determined based on the assumptions set forth in Note 12 to our consolidated financial statements included in our 2018 Annual Report on Form 10-K. See “Outstanding Equity Awards as of December 31, 2018” below, for a description of those stock option awards. |
2018 Outstanding Equity Awards at Fiscal Year-End
2018 Outstanding Equity Awards at Fiscal Year-End The following table lists the outstanding equity awards held by our named executive officers as of December 31, 2018
2018 Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | | Name | Number of Securities Underlying Unexercised Options – Exercisable (#) | Number of Securities Underlying Unexercised Options – Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | | David C. Paul (1) | 23,438 | 2,604 | 24.10 | 1/20/2025 | | David C. Paul (2) | 14,063 | 20,312 | 25.52 | 1/25/2026 | | David C. Paul (3) | 28,125 | 78,125 | 26.27 | 1/30/2027 | | David C. Paul (4) | - | 100,000 | 43.77 | 1/22/2028 | | David M. Demski (1) | 20,834 | 2,083 | 24.10 | 1/20/2025 | | David M. Demski (2) | 14,887 | 16,250 | 25.52 | 1/25/2026 | | David M. Demski (3) | 38,333 | 41,667 | 26.27 | 1/30/2027 | | David M. Demski (5) | 100,000 | 200,000 | 29.31 | 8/28/2027 | | David M. Demski (4) | - | 150,000 | 43.77 | 1/22/2028 | | Anthony L. Williams (1) | 7,291 | 1,042 | 24.10 | 1/20/2025 | | Anthony L. Williams (6) | 85,417 | 14,583 | 25.65 | 7/7/2025 | | Anthony L. Williams (2) | 43,750 | 16,250 | 25.52 | 1/25/2026 | | Anthony L. Williams (3) | 38,333 | 41,667 | 26.27 | 1/30/2027 | | Anthony L. Williams (4) | - | 80,000 | 43.77 | 1/22/2028 | | Daniel T. Scavilla (7) | 20,833 | 10,417 | 25.40 | 4/8/2025 | | Daniel T. Scavilla (2) | 78,125 | 40,625 | 25.52 | 1/25/2026 | | Daniel T. Scavilla (3) | 38,333 | 41,667 | 26.27 | 1/30/2027 | | Daniel T. Scavilla (4) | - | 80,000 | 43.77 | 1/22/2028 | | Eric I. Schwartz (8) | 13,000 | - | 26.27 | 1/31/2019 |
2018 Outstanding Equity Awards at Fiscal Year-End
| (1) These options were granted on January 20, 2015, and vest over a four-year period with one-fourth (1/4) of the options granted vesting on January 1, 2016, the first anniversary of the vesting commencement date, and the balance of the options granted vesting ratably on a monthly basis over the following 36 months. |
2018 Outstanding Equity Awards at Fiscal Year-End
| (2) These options were granted on January 25, 2016, and vest over a four-year period with one-fourth (1/4) of the options granted vesting on January 1, 2017, the first anniversary of the vesting commencement date, and the balance of the options granted vesting ratably on a monthly basis over the following 36 months. |
2018 Outstanding Equity Awards at Fiscal Year-End
| (3) These options were granted on January 30, 2017, and vest over a four-year period with one-fourth (1/4) of the options granted vesting on January 1, 2018, the first anniversary of the vesting commencement date, and the balance of the options granted vesting ratably on a monthly basis over the following 36 months. |
2018 Outstanding Equity Awards at Fiscal Year-End
| (4) These options were granted on January 22, 2018, and vest over a four-year period with one-fourth (1/4) of the options granted vesting on January 1, 2019, the first anniversary of the vesting commencement date, and the balance of the options granted vesting ratably on a monthly basis over the following 36 months. |
2018 Outstanding Equity Awards at Fiscal Year-End
| (5) These options were granted on August 28, 2017, and vest over a four-year period with one-fourth (1/4) of the options granted vesting on August 28, 2018, the first anniversary of the vesting commencement date, and the balance of the options granted vesting ratably on a monthly basis over the following 36 months. |
2018 Outstanding Equity Awards at Fiscal Year-End
| (6) These options were granted on July 7, 2015, and vest over a four-year period with one-fourth (1/4) of the options granted vesting on July 7, 2016, the first anniversary of the vesting commencement date, and the balance of the options granted vesting ratably on a monthly basis over the following 36 months. |
2018 Outstanding Equity Awards at Fiscal Year-End
| (7) These options were granted on April 8, 2015, and vest over a four-year period with one-fourth (1/4) of the options granted vesting on May 4, 2016, the first anniversary of the vesting commencement date, and the balance of the options granted vesting ratably on a monthly basis over the following 36 months. |
2018 Outstanding Equity Awards at Fiscal Year-End
| (8) These options were granted on January 30, 2017, and vest over a four-year period with one-fourth (1/4) of the options granted vesting on January 1, 2018, the first anniversary of the vesting commencement date, and the balance of the options granted vesting ratably on a monthly basis over the following 36 months. Mr. Schwartz resigned his employment in November 2018 and these options must be exercised by January 31, 2019. |
2018 Option Exercises Table
2018 Option Exercises Table
2018 Option Exercises Table
| | Option Awards | | | Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | | David C. Paul | 361,716 | 11,428,625 | | David M. Demski | 271,329 | 6,851,408 | | Anthony L. Williams | 136,667 | 4,403,144 | | Daniel T. Scavilla | 100,000 | 2,447,691 | | Eric I. Schwartz | 52,208 | 1,342,171 |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control
Potential Payments Upon a Termination or Change in Control
Potential Payments Upon a Termination or Change in Control As described above, Messrs. Scavilla, Williams, and Demski are entitled to severance payments in the event of an involuntary, not-for-cause termination of employment, including a termination in connection with a change in control. Also, upon a termination in connection with a change in control of our Company, the unvested stock options held by our named executive officers would vest. The table below sets forth an estimate of the amounts that would be paid out to our named executive officers upon a change in control and assumes the termination, other than for cause, of the employment of Messrs. Scavilla, Williams, and Demski in connection with the change in control. The amounts in the table assume that such change in control was effective as of December 31, 2018. The actual amounts that would be paid can only be determined at the time of a change in control.
Potential Payments Upon a Termination or Change in Control
| Name | Cash Payment(1)($) | Value of Acceleration of Unvested Stock Options(2)($) | Total ($) | | David C. Paul | - | 1,739,592 | 1,739,592 | | David M. Demski | 1,318,940 | 3,831,308 | 5,150,248 | | Anthony L. Williams | 391,809 | 1,274,440 | 1,666,249 | | Daniel T. Scavilla | 365,021 | 1,616,512 | 1,981,533 |
Potential Payments Upon a Termination or Change in Control
| (1) Represents the amounts payable under the employment agreement described under the heading “Employment Agreements” above. |
Potential Payments Upon a Termination or Change in Control
| (2) Represents the difference between the exercise price and the fair market value of the unvested shares subject to outstanding stock options on December 31, 2018, calculated based on a closing price of $43.28 of our common stock on December 31, 2018. |
Non-Employee Director Compensation
Non-Employee Director Compensation
Director Compensation
Director Compensation The table below summarizes the compensation received by our non-employee directors who received compensation from us for the fiscal year ended December 31, 2018.
Director Compensation
| Name | Fees earned or paid in cash ($) | Option Awards(1)(2)($) | All Other Compensation(3) ($) | Total ($) | | Daniel T. Lemaitre | 52,859 | 313,081 | 22,141 | 388,081 | | Robert W. Liptak | 75,000 | 313,081 | - | 388,081 | | Ann D. Rhoads | 87,500 | 313,081 | - | 400,581 | | Kurt C. Wheeler | 95,000 | 313,081 | - | 408,081 | | James R. Tobin | 77,500 | 313,081 | - | 390,581 | | David Davidar | 35,359 | 313,081 | 22,141 | 370,581 |
Director Compensation
| (1) Reflects the compensation expense we recognized for the year ended December 31, 2018 for financial statement purposes, computed in accordance with Financial Accounting Standards Board, Accounting Standards Codification Topic 718, Stock Compensation. These values have been determined based on the assumptions set forth in Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K. |
Director Compensation
| (2) The following table lists the outstanding equity awards held by our non-employee directors as of December 31, 2018: |
Director Compensation
| Name | Total Shares Subject to Outstanding Stock Options (#) | | Daniel T. Lemaitre | 117,884 | | Robert W. Liptak | 102,500 | | Ann D. Rhoads | 117,884 | | Kurt C. Wheeler | 102,500 | | James R. Tobin | 85,000 | | David Davidar | 150,000 |
Director Compensation
| (3) Amounts for 2018 represent participation in our group health insurance benefits. For non-executive directors participating in our group health insurance plan, we deduct the cost of the plan from the fees we pay the director in order to ensure that total compensation is consistent among non-executive directors. |
Narrative Disclosure Relating to Director Compensation Table
Narrative Disclosure Relating to Director Compensation Table
Director Compensation
Director Compensation The form and amount of director compensation are determined and reviewed annually by the Compensation Committee. In 2018, our non-employee directors received from us an annual retainer of $57,500. In addition, the chair of the Audit Committee, currently Ms. Rhoads, received $30,000 per year for serving as committee chair. Our Lead Independent Director, currently Mr. Wheeler, received $30,000 per year for serving in that capacity. Other directors who serve on the Audit Committee, during 2018, Messrs. Liptak, Lemaitre and Tobin, received from us $10,000 per year for such service. All non-employee directors who serve on the Compensation Committee, during 2018, Messrs. Wheeler, Liptak and Lemaitre, received from us $7,500 for such service. For non-executive directors participating in our group health insurance plan, we deduct the cost of the plan from the fees we pay the director in cash in order to ensure that total compensation is consistent among non-executive directors. We also reimburse all non-employee directors for expenses incurred in connection with their service on the Board of Directors, including reimbursement of expenses incurred in connection with attending Board of Directors’ meetings.
Pay Ratio Disclosure
Pay Ratio Disclosure Under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to provide the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees of the Company (other than the Chief Executive Officer). For 2018, the median annual total compensation of all employees of the Company and its consolidated subsidiaries (other than the Chief Executive Officer) was $77,553. The annual total compensation of our Chief Executive Officer was $3,394,012. The resulting ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees was approximately 44 to 1. Our pay ratio was calculated in accordance with Item 402(u) of Regulation S-K. To identify the median employee, we used the following methodology: (1) we collected payroll data of all employees globally, whether employed on a full-time, part-time, temporary or seasonal basis as of December 31, 2018; (2) we applied an exchange rate as of December 31, 2018 to convert all international currencies into U.S. dollars; and (3) we used cash compensation paid to our employees during 2018 as our consistently applied compensation measure. After identifying our median employee, we calculated total 2018 compensation for our median employee and our Chief Executive Officer in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, which includes base pay, overtime pay, bonuses, stock option awards, and the Company’s matching contribution to the employee’s 401(k) plan. We added the dollar value of insurance premiums paid by the Company to the annual total compensation of our median employee and our Chief Executive Officer. We believe our methodology, assumptions and estimates above are reasonable given our employee population. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio disclosure may not be comparable to the pay ratio reported by other companies.