DEF 14A of Pacific Biosciences Of California, Inc., Apr 29, 2024

DEF 14A of Pacific Biosciences Of California, Inc.

Filed Apr 29, 2024 · FY20230001299130-24-000097

Open on EDGAR

  1. Nominees for Class II Directors (Directors Continuing in Office until the 2024 Annual Meeting; Term For Which Nominated Expires in 2027)

    Nominees for Class II Directors (Directors Continuing in Office until the 2024 Annual Meeting; Term For Which Nominated Expires in 2027) Randy Livingston has been a member of our Board of Directors since 2009. He has served as Vice President for Business Affairs and Chief Financial Officer of Stanford University since March 2001. In October 2017, he was also named University Liaison for Stanford Medicine and a director of Stanford Health Care and Lucile Packard Children’s Hospital at Stanford. Before joining Stanford University, Mr. Livingston served as chief financial officer for multiple technology and life science companies in Silicon Valley. Mr. Livingston also served as a director of eHealth, Inc. from 2008 to 2023 and as a director of Genomic Health, Inc. from 2004 to 2016. Mr. Livingston holds a B.S. in Mechanical Engineering and an M.B.A. from Stanford University. We believe that Mr. Livingston possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his executive experience and his financial and accounting expertise with public companies. David Meline has been a member of our Board of Directors since October 2023. Mr. Meline served as the Chief Financial Officer of Moderna, Inc., a global biotechnology and pharmaceutical leader, from 2020 to 2022. Prior to Moderna, Mr. Meline served as the Chief Financial Officer for Amgen Inc. from 2014 to 2020 and 3M Company from 2008 to 2014, and spent more than 20 years at General Motors Company in various finance and management roles. Mr. Meline currently serves on the boards of directors of HP, Inc.(NYSE: HPQ), a publicly traded global provider of personal computing and other devices, products, solutions and services, ABB Ltd. (SWX: ABBN), a publicly traded technology company specializing in electrification, motion and automation solutions, and the Los Angeles Philharmonic. Mr. Meline holds a Bachelor’s degree in Mechanical Engineering from Iowa State University, a Master’s degree in Economics from the London School of Economics and Political Science, and a Master’s degree in Business Administration from the University of Chicago. We believe that Mr. Meline possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his executive experience and his financial and accounting expertise with public companies. Marshall Mohr has been a member of our Board of Directors since 2012. Mr. Mohr joined Intuitive Surgical, Inc., a provider of surgical robotics, in March 2006 as Senior Vice President and Chief Financial Officer and was promoted to Executive Vice President and Chief Financial Officer in July 2018. Beginning January 1, 2022, Mr. Mohr assumed the role of Executive Vice President, Global Business Services. Prior to joining Intuitive Surgical, Mr. Mohr served as Vice President and Chief Financial Officer of Adaptec, Inc. Before 2003, Mr. Mohr was an audit partner with PricewaterhouseCoopers LLP where he was most recently the managing partner of the firm’s West Region Technology Industry Group and led its Silicon Valley accounting and audit advisory practice. In January of 2022, Mr. Mohr was appointed to the board of directors of Veeva Systems Inc. (NYSE: VEEV) and serves as its Chairman of the audit committee. Mr. Mohr served as a member of the board of directors and Chairman of the audit committee of Plantronics, Inc., a global outfitter of professional-grade audio and video technology, from 2005 to 2022 when Plantronics was sold to HP Inc., and also served as a member of the board of directors and Chairman of the audit committee of Atheros Communications, Inc., a developer of semiconductor system solutions for wireless communications products, from November 2003 to May 2011 when Atheros was sold to Qualcomm, Inc. Mr. Mohr holds a Bachelor of Business Administration in Accounting and Finance from Western Michigan University. We believe that Mr. Mohr possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his experience in financial and accounting matters. Hannah A. Valantine, M.D. has been a member of our Board of Directors since June 2021. Dr. Valantine currently serves as Professor of Medicine at Stanford University School of Medicine, where she has been a faculty member since 1987. From April 2014 to September 2020, Dr. Valantine served as Chief Officer for Scientific Workforce Diversity at the National Institutes of Health, and as a Senior Investigator in the Intramural Research Program at the National Heart, Lung, and Blood Institute. From November 2004 to April 2014, Dr. Valantine was Professor of Cardiovascular Medicine and the Senior Associate Dean for Diversity and Leadership at Stanford. In collaboration with her colleagues at Stanford, Dr. Valantine co-invented the technology for donor derived cell-free DNA for diagnosis of transplant rejection, which is currently licensed and used to monitor patients for early detection of acute rejection. Dr. Valantine also serves as Principal and Founder of HAV LLC, a consulting company for diversity, equity and inclusion that she founded in January 2021, and as a director on the boards of BridgeBio Pharma, Inc. (NASDAQ: BBIO), a company that finds, develops, and delivers breakthrough medicines for genetic diseases, and CareDX (NASDAQ: CDNA), a leading precision medicine company focused on the discovery, development and commercialization of clinically differentiated, high-value healthcare solutions for transplant patients and caregivers. We believe that Dr. Valantine possesses specific attributes that qualify her to serve as a member of our Board of Directors, including her extensive experience in the life sciences industry.

  2. Continuing Class III Directors (Term Expires in 2025)

    Continuing Class III Directors (Term Expires in 2025) William Ericson has been a member of our Board of Directors since 2004. Mr. Ericson has been the Founding Partner at Wildcat Venture Partners since 2016 where he focuses on investments in Digital Health. He has also been a Managing Partner at Mohr Davidow Ventures (MDV) since 2000. Mr. Ericson has also served as a director of Adamas Pharmaceuticals, Inc. from 2005 to 2021. Mr. Ericson holds a B.S.F.S. from Georgetown University School of Foreign Service and a J.D. from Northwestern University School of Law. We believe that Mr. Ericson possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his experience with multiple companies in the life sciences industry and his focus on companies with molecular diagnostic platforms that concentrate on personalized medicine. Kathy Ordoñez has been a member of our Board of Directors since December 2014. She served as our Chief Commercial Officer and Executive Vice President from October 2017 to October 2018. Ms. Ordoñez brings more than 30 years of experience in the life sciences and diagnostics industries. From January 2012 until June 2013, Ms. Ordoñez was a Senior Vice President at Quest Diagnostics Incorporated, a leading provider of diagnostic information services, where she was initially responsible for leading their R&D effort and later provided oversight to multiple businesses commercializing diagnostic products and testing services. Ms. Ordoñez joined Quest Diagnostics as part of its acquisition in 2011 of Celera Corporation, a leading provider of genetic testing products for HIV resistance, cystic fibrosis and high complexity tissue transplantation. From April 2002 until May 2011, Ms. Ordoñez was the Chief Executive Officer at Celera, and she founded Celera Diagnostics in December 2000. From 1985 until 2000, Ms. Ordoñez held several senior positions at Hoffmann-La Roche, overseeing the formation of Roche Molecular Systems, where she served as President and Chief Executive Officer, and led the wide-scale commercial application of the Polymerase Chain Reaction (PCR) technology to the research, diagnostic and forensic fields. Ms. Ordoñez curretly serves as a member of the board of directors of Science Mill. Ms. Ordoñez served as a member of the board of directors of Quidel Corporation from July 2019 to May 2022 and served on its compensation committee. Ms. Ordoñez also served as a director, non-executive Chairman, and Chief Executive Officer of RainDance Technologies, Inc., which was sold to Bio-Rad Laboratories, Inc. in February 2017. Ms. Ordoñez holds a B.A. in Chemistry and honorary Doctorate of Science from Hartwick College. We believe that Ms. Ordoñez possesses specific attributes that qualify her to serve as a member of our Board of Directors, including her extensive experience in the life sciences and diagnostic industries.

  3. Continuing Class I Directors (Term Expires in 2026)

    Continuing Class I Directors (Term Expires in 2026) Christian O. Henry became our President and Chief Executive Officer in September 2020. He has served as a member of our Board of Directors since 2018 and was appointed as Chair of the Board of Directors on March 2, 2020. Mr. Henry served as Executive Vice President & Chief Commercial Officer of Illumina, Inc. (“Illumina”) from 2015 through January 2017, and previously served as Senior Vice President & Chief Commercial Officer from 2014 to 2015, Senior Vice President & General Manager Genomic Solutions from 2012 to 2014, Senior Vice President, Chief Financial Officer & General Manager Life Sciences from 2010 to 2012, Senior Vice President, Corporate Development & Chief Financial Officer from 2009 to 2010, Senior Vice President & Chief Financial Officer from 2007 to 2009, and Vice President & Chief Financial Officer from 2005 to 2006. Prior to joining Illumina, Mr. Henry served as the Chief Financial Officer of Tickets.com, Inc. from 2003 to 2005. From 1999 to 2003, Mr. Henry served as Vice President, Finance & Corporate Controller of Affymetrix, Inc. (acquired by Thermo Fisher Scientific in 2016). In 1997, Mr. Henry joined Nektar Therapeutics (formerly Inhale Therapeutic Systems, Inc.), as Corporate Controller, and later as its Chief Accounting Officer from 1997 to 1999. In 1996, Mr. Henry served as General Accounting Manager of Sugen, Inc. Mr. Henry began his career in 1992 at Ernst & Young LLP, where he was a Senior Accountant through 1996. Mr. Henry currently serves as a director and Chairman of the board of WAVE Life Sciences Ltd. (NASDAQ: WVE) and serves as chairman of its compensation committee and a member of its audit committee. Mr. Henry serves as a director of Ginkgo Bioworks, Inc. (NYSE: DNA) and serves as Chairman of its audit committee and a member of its compensation committee, and was also a director of CM Life Sciences III LLC from April 2021 to December 2021. Mr. Henry holds a B.A. in biochemistry and cell biology from the University of California, San Diego and an M.B.A., with a concentration in finance, from the University of California, Irvine. We believe that Mr. Henry possesses specific attributes that qualify him to serve as a member of our Board of Directors including his over 20 years of experience in growing companies in the life sciences industry. John F. Milligan, Ph.D. has been a member of our Board of Directors since 2013 and became Chair in September 2020. Dr. Milligan joined Gilead Sciences Inc. in 1990 as a research scientist and was appointed Director of Project Management and Project Team Leader for the Gilead Hoffmann-La Roche Tamiflu® collaboration in 1996. In 2002, Dr. Milligan was appointed Chief Financial Officer of Gilead. He was named Gilead’s Chief Operating Officer in 2007 and President in 2008. Dr. Milligan was appointed Chief Executive Officer and elected to the board of directors of Gilead in 2016. On December 31, 2018, Dr. Milligan retired as Chief Executive Officer of Gilead and resigned from the board of directors. Dr. Milligan is currently the Executive Chair of 4D Molecular Therapeutics (NASDAQ: FDMT). Dr. Milligan serves on the board of directors of TurnCare, Inc., and is the past Chair of the board of trustees of Ohio Wesleyan University. Dr. Milligan received his B.A. from Ohio Wesleyan University, his Ph.D. in biochemistry from the University of Illinois and was an American Cancer Society postdoctoral fellow at the University of California at San Francisco. We believe that Dr. Milligan possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his executive experience and his financial expertise in the life sciences industry. Lucy Shapiro, Ph.D. has been a member of our Board of Directors since 2012. Dr. Shapiro currently serves as the Virginia and D.K. Ludwig Professor of Cancer Research and the Director of the Beckman Center for Molecular and Genetic Medicine at Stanford University’s School of Medicine, where she has been a faculty member since 1989. Dr. Shapiro is a co-founder and former director of Anacor Pharmaceuticals, Inc. which was acquired by Pfizer Inc. in 2016. In 2016 she founded a second anti-infectives company, Boragen, LLC. In 1989, Dr. Shapiro founded Stanford University’s Department of Developmental Biology, and served as its Chairman from 1989 to 1997. Prior to that, Dr. Shapiro served as Chair of the Department of Microbiology and Immunology in the College of Physicians and Surgeons of Columbia University. She received a B.A. from Brooklyn College and a Ph.D. in Molecular Biology from the Albert Einstein College of Medicine. Dr. Shapiro has received numerous awards including the National Medal of Science. She has been elected to the National Academy of Sciences, the American Academy of Microbiology, the American Academy of Arts and Sciences and the National Academy of Medicine for her work in the fields of molecular biology and microbiology. Dr. Shapiro previously served as a non-executive director of GlaxoSmithKline plc from 2001 to 2006 and Anacor Pharmaceuticals, Inc. from 2001 to 2016. Dr. Shapiro is currently a director of 5Metis, Inc., and was also a director of Gen-Probe, Inc. from 2008 to 2012. We believe that Dr. Shapiro possesses specific attributes that qualify her to serve as a member of our Board of Directors, including her extensive experience in the life sciences industry.

  4. Director Compensation

    Director Compensation

  5. Director Compensation Policy

    Director Compensation Policy Employee directors are not compensated for their services on our Board of Directors in addition to their regular employee compensation. Our non-employee directors are compensated in accordance with our non-employee director compensation policy. A summary of our non-employee director compensation policy during 2023 is set forth below. The Compensation Committee’s independent compensation consultant, Aon’s Human Capital Solutions practice, a division of Aon plc (“Aon”), regularly conducts a review of our director compensation policies and practices to advise on whether they are competitive with the market.

  6. Director Compensation for Fiscal Year 2023

    Director Compensation for Fiscal Year 2023 The following table sets forth information concerning compensation paid or accrued for services rendered to us by the non-employee members of our Board of Directors for the year ended December 31, 2023. The table excludes Mr. Henry, who was an employee during 2023 and consequently did not receive any compensation from us for his role as a director in 2023.

  7. Director Compensation for Fiscal Year 2023

    | Name | Fees earned or paid in cash ($) | Option Awards ($)(1)(2) | Total ($) | | David Botstein, Ph.D(4) | 45,000 | 199,996 | 244,996 | | William Ericson | 59,000 | 199,996 | 258,996 | | Randy Livingston | 65,000 | 199,996 | 264,996 | | David Meline | 10,879 | 449,997 | 460,876 | | John F. Milligan, Ph.D. | 97,000 | 199,996 | 296,996 | | Marshall Mohr | 57,000 | 199,996 | 256,996 | | Kathy Ordoñez | 51,166 | 199,996 | 251,162 | | Lucy Shapiro, Ph.D. | 55,000 | 199,996 | 254,996 | | Hannah A. Valantine, M.D. | 50,000 | 199,996 | 249,996 |

  8. Director Compensation for Fiscal Year 2023

    (1) Amounts shown represent the aggregate grant date fair value of stock option awards granted in 2023. These amounts have been computed in accordance with FASB ASC 718. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For a discussion of valuation assumptions, see the notes to our financial statements included in our annual report on Form 10-K for the year ended December 31, 2023. (2) The aggregate number of shares subject to stock options outstanding and exercisable as of December 31, 2023 for each non-employee director is as follows:

  9. Director Compensation for Fiscal Year 2023

    | Name | Aggregate Number of Stock Options Outstanding | Aggregate Number of Stock Options Exercisable | | David Botstein, Ph.D. | 160,286 | 160,286 | | William Ericson | 273,174 | 262,434 | | Randy Livingston | 273,174 | 262,434 | | David Meline | 86,954 | — | | John F. Milligan, Ph.D. | 233,174 | 222,434 | | Marshall Mohr | 273,174 | 262,434 | | Kathy Ordoñez(3) | 509,795 | 499,055 | | Lucy Shapiro, Ph.D. | 231,508 | 220,768 | | Hannah A. Valantine, M.D. | 117,782 | 102,210 |

  10. Director Compensation for Fiscal Year 2023

    (3)Ms. Ordoñez’ figures include certain stock options granted to her during her tenure as our Chief Commercial Officer and Executive Vice President from October 2017 to October 2018. (4)Dr. Botstein resigned from our Board of Directors effective December 2023 due to a disability. Consistent with the 2020 Plan and the Director Plan, and due to Dr. Botstein’s disability, the Compensation Committee approved a post-termination exercise period of 12 months for the vested portion of the stock options granted to him.

  11. PROPOSAL 1: ELECTION OF DIRECTORS

    PROPOSAL 1: ELECTION OF DIRECTORS Our certificate of incorporation provides for a classified Board of Directors. Each person elected as a Class II director at the Annual Meeting will serve for a three-year term expiring on the date of the 2027 annual meeting of stockholders. Our Board of Directors has nominated Randy Livingston, David Meline, Marshall Mohr and Hannah A. Valantine, M.D. for election as Class II directors at the Annual Meeting. Please refer to “Board of Directors and Committees of the Board” section above for the nominees’ biographies. Each nominee will be elected separately by a majority vote. A given nominee will be elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. If any incumbent nominee receives a greater number of votes against his or her election than votes for such election, our corporate governance guidelines require that such incumbent nominee promptly tender his or her resignation promptly following certification of the applicable stockholder vote. The Qualified Independent Directors (as defined in the corporate governance guidelines) will then decide whether to accept or reject the resignation or whether other action should be taken. Our Board of Directors, through the Qualified Independent Directors, will publicly disclose its decision and the rationale behind it within 90 days from the date the election results are certified. Full details of this policy are set forth in our corporate governance guidelines on our website. If a nominee is unable or declines to serve as a director, the proxies will be voted at the Annual Meeting for any nominee who may be designated by the Board of Directors to fill the vacancy. As of the date of this Proxy Statement, the Board of Directors is not aware of any nominee who is unable or will decline to serve as a director. Summary information regarding our Class II nominees, as well as directors not up for election at the Annual Meeting is set forth below.

  12. PROPOSAL 1: ELECTION OF DIRECTORS

    | Name of Director | Age | Principal Occupation | Director Since | | Class II Nominees (term for which nominated expires in 2027) | | | | | Randy Livingston | 70 | Vice President for Business Affairs and Chief Financial Officer of Stanford University | 2009 | | David Meline | 66 | Director | 2023 | | Marshall Mohr | 68 | Executive Vice President, Global Business Services of Intuitive Surgical, Inc. | 2012 | | Hannah A. Valantine, M.D. | 72 | Professor of Medicine (Cardiovascular) at the Stanford University Medical Center | 2021 | | Class III Directors (term expires in 2025) | | | | | William Ericson | 65 | Founding Partner of Wildcat Venture Partners | 2004 | | Kathy Ordoñez | 73 | Director | 2014 | | Class I Directors (term expires in 2026) | | | | | Christian O. Henry | 56 | President and Chief Executive Officer of Pacific Biosciences of California, Inc. | 2018 | | John F. Milligan, Ph.D. | 63 | Chair of the Board of Directors of Pacific Biosciences of California, Inc. | 2013 | | Lucy Shapiro, Ph.D. | 83 | Virginia and D.K. Ludwig Professor of Cancer Research and the Director of the Beckman Center for Molecular and Genetic Medicine at Stanford University’s School of Medicine | 2012 |

  13. PROPOSAL 1: ELECTION OF DIRECTORS

    There are no family relationships among any of the nominees, directors and/or any of our executive officers. Our executive officers serve at the discretion of the Board of Directors. Further information about our directors, including each of the Class II director nominees, is provided in the “Board of Directors and Committees of the Board” section above. The number of votes cast “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions and broker non-votes will have no effect on the outcome of the vote on this proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE FOUR CLASS II DIRECTOR NOMINEES TO SERVE AS A CLASS II DIRECTOR.

  14. Executive Summary

    | Element | Performance Period | Objective | | Base Salary | Annual | •Recognizes an individual’s contribution and performance •Rewards for the experience, education and criticality to the business •Serves as an important retention vehicle | | Short-term Cash Incentives | Annual | •Rewards achievement of financial and non-financial goals directly tied to the strategic priorities •In 2023, the cash incentive goals included financial measures, advancement of the research and development portfolio and capabilities, commercial and customer success and other operational goals | | Annual Equity Awards (RSUs and PSUs) | Long-term | •Supports the achievement of strong stock price growth •Aligns the interests of executives and stockholders over time •Serves as an important retention and motivation tool with awards vesting over time tied to continued service •Time-based RSUs vest in equal installments over two to four years, on each anniversary of the grant date, subject to continued service •PSUs vest subject to both continued service and achievement of certain revenue growth requirements for fiscal year 2025 |

  15. Executive Summary

    | | What We Do | | What We Avoid | | ✓ | Pay for performance philosophy and culture | X | Excise tax gross-ups | | ✓ | Majority of pay is variable and linked to corporate and individual performance | X | Significant perquisites | | ✓ | Compensation recoupment (“clawback”) policy | X | Guaranteed salary increases | | ✓ | Engage an independent compensation consultant | X | Contracts that guarantee employment | | ✓ | Responsible use of shares in our long-term incentive program | X | Margin accounts, hedging, pledging, derivatives or short sale transactions in our stock | | ✓ | Annually assesses compensation risk | X | Repricing stock options without stockholder approval |

  16. Compensation Philosophy and Objectives

    Compensation Philosophy and Objectives Our executive compensation program is overseen and administered by the Compensation Committee, of which each member is an independent member of our Board of Directors as defined in the listing rules. The guiding principle in the development of our compensation strategy is to create and promote a pay-for-performance culture, where contributions to enhancing stockholder value have the potential to be matched with appropriate financial rewards. The objectives of our compensation program are to: •attract highly skilled employees; •motivate successful execution of our corporate objectives; •ensure that, consistent with our pay for performance objectives, broad-based compensation programs are aligned with company objectives that when achieved will promote an increase in the value of the Company for our stockholders; and •ensure retention of key staff. Our executive compensation program consists primarily of salary, incentive cash and equity compensation, which consisted of RSUs and PSUs in 2023. Likewise, we maintain compensation programs that cover the majority of employees to align with the variable cash and equity pay component already provided to executive-level employees. We typically make new equity award grants annually and consider adjustments to the components of our executive compensation program in connection with our yearly compensation review, which typically occurs during the first quarter of the year. These determinations are based in part upon market analysis performed by the independent compensation consultant retained by our Compensation Committee as well as by the Company’s business priorities and in consideration of the Company’s resources.

  17. Process for Setting Executive Compensation

    Process for Setting Executive Compensation Role of Compensation Committee and Board The Compensation Committee has the authority to review and approve the compensation of all our executive officers, other than our Chief Executive Officer, whose compensation is recommended by the Compensation Committee and approved by our Board of Directors. From time to time, the Compensation Committee, in its discretion, may also recommend for approval by the Board of Directors any elements of compensation of other executive officers, to the extent that the Compensation Committee deems appropriate or advisable. The Compensation Committee does not have a formula for setting pay and considers a number of factors including experience, role criticality, external market data, internal comparisons, and the future contributions of the executive when setting the level and structure of pay. The Compensation Committee may form and delegate authority to subcommittees when appropriate. Role of Compensation Consultant For fiscal year 2023, our Compensation Committee continued the engagement of Aon as its compensation consultant to advise the Compensation Committee in matters related to executive compensation and broader employee compensation programs, including the prevailing market compensation environment and compensation trends. The Compensation Committee provided Aon with instructions regarding the goals of our executive compensation program and the parameters of the competitive review of executive officer compensation packages that it was to conduct. In particular, the Compensation Committee instructed Aon to analyze whether the compensation packages of our executive officers were consistent with our compensation philosophy and competitive relative to market. The Compensation Committee further instructed Aon to evaluate the following components to assist the Compensation Committee in establishing fiscal year 2023 compensation: base salary; target annual incentive compensation; target total cash compensation (base salary and annual incentive compensation); long-term incentive compensation (equity awards); target total direct compensation (base salary, annual incentive compensation and long-term incentive compensation). Aon reports directly to the Compensation Committee and the Compensation Committee maintains sole authority to direct Aon’s work. Aon provides general observations regarding our executive and broader employee compensation programs. The Compensation Committee meets with Aon in executive session, without management to address various compensation matters. The Compensation Committee conducted a specific review of its relationship with Aon in 2023 and 2022. In 2024 the Compensation Committee determined that Aon’s work for the Compensation Committee did not raise any conflicts of interest, and that Aon is independent. Aon’s work has conformed to the independence factors and guidance provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Securities and Exchange Commission and The Nasdaq Stock Market. Use of Market Data and Peer Group Analysis In making compensation decisions for our executive officers, including determining the various key elements of compensation for our NEOs, our Compensation Committee develops and approves a peer group from which to derive certain relevant market data to assist it in the review of the Company’s executive compensation. The Compensation Committee believes that the use of a peer group enables it to be better informed about compensation practices and thereby allows the Company to provide compensation that more effectively helps achieve its recruiting, retention and incentive objectives in a highly competitive market for talent. In late 2022, the Compensation Committee engaged Aon to assist in reviewing the peer group established in late 2021 and to determine the appropriate updated peer group in setting 2023 compensation for the NEOs (the “Peer Group”). Upon consultation with Aon and a review of market and peer practices, the Compensation Committee set the following criteria for consideration: •Industry — primary emphasis on publicly-traded, US-based medical device, life science tools, and medical technology companies, with a secondary emphasis on comparably sized commercial biotechnology industry companies •Revenues — a range of approximately $50 million to $400 million •Market Capitalization — a range of approximately $1.5 billion to $16 billion Using these criteria, the Compensation Committee approved the following 20 companies as our Peer Group:

  18. Process for Setting Executive Compensation

    (1)Subsequently acquired by Bruker Corporation. (2)Subsequently acquired by Standard Biotools Inc. Each of Penumbra Inc., and Repligen Corporation was removed based on its market capitalization and revenue being above the parameters described above, and Maravai LifeSciences Holdings, Inc. was removed based on its revenue being above the parameters described above. The Compensation Committee added Ginkgo Bioworks Holdings, Inc., Inspire Medical Systems, Inc., and SomaLogic, Inc., each of which satisfied most or all of the targeted criteria described above. In assisting it in setting (or recommending to our Board of Directors) the compensation for our NEOs, the Compensation Committee reviews the Peer Group data for base salary, target bonus opportunity, equity compensation, target total cash (consisting of base salary and target bonus opportunity), and target total direct compensation (consisting of target total cash and equity compensation). The Compensation Committee uses competitive compensation data from the annual total compensation study of peer companies to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally, the Compensation Committee uses multiple reference points when establishing targeted compensation levels. The Compensation Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies. Instead, the Compensation Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning. Role of Executive Officers in Compensation Decisions Our Compensation Committee seeks and considers input from our Chief Executive Officer regarding our executive officers’ responsibilities, performance and compensation. Our Compensation Committee considers our Chief Executive Officer’s recommendations as well as any other relevant factors (for example, market data, Company performance, internal equity, and the executive’s experience, tenure, skills, and historical and future expected contributions), and approves the specific compensation for all such executive officers. Our Compensation Committee discusses with the Chief Executive Officer the core operational and financial metrics to drive the business forward, and how various forms of variable and incentive compensation can be applied at the executive level to achieve our goals. Our Compensation Committee meets in executive session, without our Chief Executive Officer, when discussing or making recommendations regarding his compensation.

  19. Components of our Executive Compensation Program

    If a Company financial goal above is achieved at the target level, 100% of the portion of the bonus allocated to such goal would become payable; or at minimum threshold level achievement, 92% of such portion would become payable; or at maximum achievement, 120% of such portion would become payable. No portion of the bonus allocated to the goal would become payable if performance with respect to such goal is below the minimum threshold. Further, the 2023 variable cash incentive program included additional performance goals consisting of the following: •With respect to Revio systems, achievement of a specified number of customer shipments combined with certain run performance criteria (weighted at 15%), certain revenue recognizing shipments to first customers (weighted at 5%), and certain inventory improvements (weighted at 5%); •With respect to Onso systems, achievement of a specified number of customer shipments combined with certain run performance criteria (weighted at 10%), certain revenue recognizing shipments to first customers (weighted at 5%), and certain inventory improvements (weighted at 5%); and •Developing an inspired workforce (weighted at 5% in aggregate). The target level achievement for customer shipments of Revio systems was 165, and the threshold minimum and maximum levels for such goal were 150 and 180, respectively. However, certain run performance criteria also were required to be met for each such customer shipment to qualify for performance achievement under the goal. The targets for the revenue recognizing shipments to first customers for each of Revio and Onso were the first fiscal quarter and second fiscal quarter of the fiscal year, respectively. The threshold minimum levels of achievement for such goals for Revio and Onso were April and September, respectively, and the maximum levels of achievement were February and May, respectively. Upon the Company’s achievement of any of these additional goals, 100% of the portion of the bonus allocated to such goal would become payable. With respect to the manufacturing and quality goals, performance at a minimum threshold level would result in 67% with respect to Revio and 50% with respect to Onso, of such portion allocated to the goal becoming payable, or at the maximum level, 133% with respect to Revio and 100% with respect to Onso, of such portion allocated to the goal becoming payable. With respect to other additional goals, at minimum threshold level achievement, the percentage of such portion that would become payable ranged from 40% to 60%, and at maximum achievement, such percentage ranged from 100% to 160%. No portion of the bonus allocated to an additional goal would become payable if performance with respect to such goal is below the minimum threshold. The Compensation Committee and the Board of Directors believed that these goals were appropriate for 2023 given that the Company intended to advance the commercial release of two new sequencing platforms, Revio and Onso. Due to certain of the goals relating to our product development portfolios, certain manufacturing and quality initiatives, and workforce changes, being closely tied to the Company’s business strategy or other confidential information of the Company, any additional information otherwise considered material regarding performance goal targets were not provided in order to avoid competitive harm to the Company’s business (and ultimately to the Company’s stockholders) from such disclosures. Depending on individual performance during 2023, our Compensation Committee retained the discretion to adjust any bonus amounts up or down within the range of 0% to 100% of the amount otherwise payable. In 2023, no bonus amounts were adjusted as a result of individual performance. Consistent with prior years, we established our performance goals to be intentionally challenging such that performance at target would require significant achievements across multiple performance criteria. For example, in 2020, and 2021, achievement versus the corporate objectives under the variable cash incentive program resulted in payouts of 80% and 116% of the target levels, respectively, and in 2023, payouts occurred based on 56% achievement of certain strategic and operational goals for the year. Following the end of the year, the Compensation Committee and the Board of Directors assessed the extent of achievement of the performance criteria established under the 2023 variable cash incentive program. The Compensation Committee and the Board of Directors also noted there were a number of extraordinary activities by the Company in 2023 that, while not reflected as corporate objectives under the 2023 variable cash incentive program, were important in the Company’s continued transformation, including: a privately negotiated exchange agreement with Chimera, which held certain of our outstanding convertible senior notes due 2028, pursuant to which the Company reduced the coupon and extended the maturity with respect to an aggregate principal of $441 million under the convertible notes; the successful completion in January 2023 of a public offering with respect to 17.5 million shares and 2.6 million shares subject to an option exercised by the Company’s underwriters in relation to such offering; the acquisition of Apton Biosystems, Inc. in the third fiscal quarter of 2023 and subsequent integration efforts; certain achievements in Revio manufacturing quality; certain achievements relating to our proprietary SMRT Technology during the year; strategic reallocation of resources and priorities that enabled certain operational achievements; and the continued revenue growth for and faster-than-expected ramp in Revio instruments (collectively, the “Extraordinary Activities”). Based on such considerations, the Compensation Committee recommended, and the Board of Directors approved payouts of 100% of the target level. Typically, with respect to the variable cash incentive program, the Chief Executive Officer provides an evaluation of the Company’s actual performance against the performance goals and makes a recommendation for the funding of the program and the individual awards other than his own award. Based on the Compensation Committee’s assessment, and the Board of Director’s assessment with respect to the Chief Executive Officer’s performance, the final awards are determined, making adjustments up or down for the actual incentive cash paid for each of these NEOs, to reflect the individual’s contributions to the Company’s goals. Following 2023, the Compensation Committee and the Board of Directors reviewed the extent to which the performance objectives were achieved under our variable cash incentive program for the year with respect to the various goals. The Compensation Committee determined and recommended, and the Board of Directors approved, the following achievements under the variable cash incentive program:

  20. Components of our Executive Compensation Program

    | Name | 2023 Target Bonus Opportunity (as a % of salary) | 2023 Target Bonus Opportunity Amount | 2023 Actual Bonus (as a% of Target Bonus Opportunity) | 2023 Actual Bonus Amount ($) | | Christian O. Henry | 100% | $700,150 | 100% | $700,150 | | Susan G. Kim | 50% | $230,000 | 100% | $230,000 | | Mark Van Oene | 60% | $352,107 | 100% | $352,107 | | Jeff Eidel | 50% | $230,000 | 100% | $230,000 |

  21. Components of our Executive Compensation Program

    Equity Incentives We believe that equity awards promote closer alignment of the interests of our key employees with the development of long-term value for our stockholders. Historically, the Compensation Committee and the Board of Directors have used stock options, RSUs or PSUs to align executives’ interests with that of our stockholders. 2023 Annual Equity Awards. In February 2023, after considering input from its compensation consultant, the Compensation Committee and the Board of Directors determined that a mix of 75% RSUs and 25% PSUs (based on target achievement) was appropriate for further emphasizing the criticality of revenue growth and ensuring that a meaningful portion of our NEOs’ equity compensation vests only if we achieve significant financial growth. Accordingly, for 2023, for annual equity awards, the Company granted to each of Mr. Henry, Ms. Kim, Mr. Van Oene and Mr. Eidel equity awards in the form of RSUs and PSUs. The PSUs granted to the NEOs will require revenue growth over a period of time, and the extent of achievement of our revenue growth will be measured based on our revenue (determined in accordance with GAAP) for our fiscal year 2025. At the time of grant, we estimated that the probability of achieving these revenue goals was approximately 55%. The revenue goals include threshold, target and maximum levels of achievement. Vesting of any portions of the PSUs for which the revenue goal is achieved will be subject to the NEO’s continued service through the date following the end of the three-year period that achievement is assessed and certified by the Board of Directors or the Compensation Committee. In determining the annual equity awards for 2023 to the NEOs, the Compensation Committee and the Board of Directors considered the Peer Group data, including the size of the awards as a percent of the Company as well as on a grant date value basis. This information as well as overall company dilution, the limited share reserve pool under the Company’s 2020 Plan, and the desire to further emphasize the Company’s pay-for-performance philosophy by delivering compensation value for extraordinary performance were factored into determining any grants to our NEOs. The Compensation Committee also considered the realized or unrealized value of prior equity awards, and observed general retention risks given the then stock price and extent of underwater options held by the NEOs. There is no set formula for weighting these factors given the critical nature of each role to the Company, and how this might vary from roles at similarly situated companies. For fiscal year 2023, the Compensation Committee, and the Board of Directors with respect to our Chief Executive Officer, continued to grant RSUs to our NEOs to balance the objectives of incentive and retention as well as in consideration of factors such as overall dilution, burn rate and overhang. Equity awards to our NEOs are considered by the Compensation Committee and the Board of Directors additionally in the context of the total compensation mix that may be allocated among salary, cash incentives and long-term compensation. The Compensation Committee and the Board of Directors additionally consider the criticality of these roles to the Company as well as the retention objectives for maintaining leadership stability for leading the business forward. The 25th percentile, 50th percentile and 75th percentile pay range for our Peer Group was provided to the Compensation Committee and the Board of Directors, which in turn used this data as a guide in determining equity awards for our NEOs, provided that the Compensation Committee and the Board of Directors, as applicable, applied their own discretion in taking into account any other factors they deemed relevant and appropriate. The following table sets forth the number of shares of our common stock subject to the RSUs and PSUs granted to our NEOs in 2023:

  22. Components of our Executive Compensation Program

    | | Annual Equity Grants(1) | | | Name | RSUs (#) | PSUs(2) (#) | | Christian O. Henry | 594,687 | 198,229 | | Susan G. Kim | 164,200 | 54,700 | | Mark Van Oene | 328,500 | 109,500 | | Jeff Eidel | 164,200 | 54,700 |

  23. Change in Control and Severance Benefits

    Change in Control and Severance Benefits We have entered into change in control severance agreements with each of our NEOs as described further below under the section titled “Employment Agreements and Change in Control Arrangements.” It is expected that from time to time, we would consider the possibility of an acquisition by another company or other change in control event. We recognize that the occurrence or possibility of such a transaction could be a distraction to the NEOs and could cause the individual to consider alternative employment opportunities. We believe that it is important to provide these individuals with severance benefits upon a qualifying termination in connection with a change in control to secure our NEOs’ continued services to us notwithstanding the occurrence, possibility or threat of a change in control, provide them with an incentive to maximize our value in connection with a change in control for the benefit of our stockholders, and provide them with enhanced financial security. These change in control severance arrangements generally do not affect the determination of our NEOs’ key compensation elements.

  24. Tax Considerations

    Tax Considerations We have not provided any NEO or director with a gross-up or other reimbursement for tax amounts the executive might pay pursuant to Section 280G or Section 409A of the Internal Revenue Code of 1986, as amended (or the “Code”). Section 280G and related Code sections provide that executive officers, directors who hold significant stockholder interests and certain other service providers could be subject to significant additional taxes if they receive payments or benefits in connection with a change in control that exceeds certain limits, and that we or our successor could lose a deduction on the amounts subject to the additional tax. Code Section 409A also imposes additional significant taxes on the individual in the event that an executive officer, director or service provider receives “deferred compensation” that does not meet the requirements of Code Section 409A. In 2023, due to the limitations of Code Section 162(m), we generally would have received a federal income tax deduction for compensation paid to our Chief Executive Officer and to certain other highly compensated employees only if the compensation was less than $1,000,000 per person during the year. As a result of the Tax Cuts and Jobs Act of 2017, the ability to rely on the “performance-based” compensation exception under Code Section 162(m) was eliminated in 2017. Thus, following the effectiveness of this change, we generally will not be able to take a deduction for any compensation paid to our NEOs and certain other employees in excess of $1,000,000. We did not structure our compensation for our NEOs to qualify as performance-based compensation under Code Section 162(m). We accumulated net operating losses over several years and could not currently benefit from deductions we might otherwise be able to take if we did qualify compensation as performance-based under Code Section 162(m). Further, Code Section 162(m) generally had required a certain rigidity to qualify compensation as performance-based and we believed that it was in the Company’s best interest to retain flexibility and to structure programs in a manner to incentivize our executives to drive long-term stockholder value. Nonetheless, our Compensation Committee maintained for 2023, and intends to continue to maintain, an approach to executive compensation that strongly links pay to performance.

  25. Equity Grant Practices

    Equity Grant Practices We maintain an equity award granting policy, pursuant to which stock options and other equity awards granted to our new employees below the level of vice president generally become effective on the first 15th day of the month to occur following approval of the equity award by the Compensation Committee (or the Board of Directors, as applicable), whereas stock options granted to our new employees at the level of vice president and above generally become effective on the date of hire. Any equity awards to be granted to newly hired employees below the level of vice president generally are not considered for approval until at least the month following the month in which employment begins. The Compensation Committee has delegated authority to an Equity Award Grant Committee consisting of our Chief Executive Officer, Chief Financial Officer, Chief People Officer and General Counsel, to approve equity awards covering shares of our common stock, within the range of guidelines approved by the Board of Directors or Compensation Committee (based on job grade) and pursuant to our equity award granting policy approved by the Board of Directors (including any revision thereto approved by the Board of Directors or a committee thereof), to newly-hired employees who are below the level of vice president (or equivalent title) and who are not subject to Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

  26. Summary Compensation Table

    Summary Compensation Table The following table provides information regarding the compensation of our NEOs for the years ended December 31, 2023, 2022, and 2021, respectively:

  27. Summary Compensation Table for Fiscal Years 2023, 2022 and 2021

    Summary Compensation Table for Fiscal Years 2023, 2022 and 2021

  28. Summary Compensation Table for Fiscal Years 2023, 2022 and 2021

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-equity Incentive Plan Compensation ($)(2)(3) | All Other Compensation ($) | Total ($) | | Christian O. Henry | 2023 | 695,125 | — | 6,636,014 | — | 700,150 | 15,286(4) | 8,046,575 | | President, Chief Executive Officer | 2022 | 666,667 | — | 1,257,750 | 4,260,247 | 375,200 | 56,387(5) | 6,616,251 | | | 2021 | 650,000 | — | 695,550 | 752,502 | 754,650 | 14,229(6) | 2,866,931 | | Susan G. Kim | 2023 | 457,167 | — | 1,832,108 | — | 230,000 | — | 2,519,275 | | Chief Financial Officer | 2022 | 440,833 | — | 468,000 | 1,585,239 | 124,040 | — | 2,618,112 | | | 2021 | 421,875 | — | 292,131 | 316,051 | 249,615 | — | 1,279,672 | | Mark Van Oene(7) | 2023 | 583,538 | — | 3,665,677 | — | 352,107 | — | 4,601,322 | | Chief Operating Officer | 2022 | 564,167 | — | 2,918,250 | 2,873,329 | 190,512 | 17,433(8) | 6,563,691 | | | 2021 | 539,776 | 200,000(9) | 12,294,500 | 14,889,375 | 375,782 | — | 28,299,433 | | Jeff Eidel(10) | 2023 | 456,333 | — | 1,832,108 | — | 230,000 | 15,286(4) | 2,533,727 | | Chief Commercial Officer | 2022 | 164,250 | 225,000(9) | 2,400,000 | 2,965,867 | 46,368 | — | 5,801,485 |

  29. Summary Compensation Table for Fiscal Years 2023, 2022 and 2021

    (1)Amounts shown represent the aggregate grant date fair value of stock option awards granted in 2022 and 2021; RSUs granted in 2023, 2022, and 2021; and PSUs granted in 2023. The grant date fair value of PSUs is calculated based upon the probable outcome of achievement of the performance conditions as of the grant date. Assuming the highest level of performance is achieved under such performance conditions, the value of the maximum potential payout for such PSUs was $3,738,599 for Mr. Henry, $1,031,642 for Ms. Kim, $2,065,170 for Mr. Van Oene and $1,031,642 for Mr. Eidel. All amounts have been computed in accordance with FASB ASC 718. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For a discussion of valuation assumptions, see the notes to our financial statements included our annual report on Form 10-K for the year ended December 31, 2023. (2)Amounts shown represent all earnings on non-equity incentive plan compensation. (3)Includes cash bonuses paid under the Company’s variable cash incentive program for 2023, including amounts equal to $35,008 for Mr. Henry, $11,500 for Ms. Kim, $17,605 for Mr. Van Oene, and $11,500 for Mr. Eidel paid under such program that were attributable to the exercise by the Board of Directors and Compensation Committee of discretion to recognize achievement of the Extraordinary Activities, as discussed further above in the section of this proxy titled “Compensation Discussion and Analysis―Short-term Cash Incentives.” Such increase represented 5% of the applicable NEO’s annual target bonus opportunity under the Company’s 2023 variable cash incentive program. (4)Represents travel, lodging, and other costs covered by the Company for Messrs. Henry and Eidel in connection with his participation in a Company sales incentive trip in 2023. (5)Consists of $16,142 in travel, lodging, and other costs covered by the Company for Mr. Henry in connection with his participation in a Company sales incentive trip in 2022 and imputed income of $40,245 in connection with non-Company personnel who accompanied Mr. Henry on certain business trips on aircraft paid for by the Company; no additional amounts were actually paid in connection with the additional personnel who traveled on the aircraft with Mr. Henry. Mr. Henry fully reimburses the Company for all applicable withholding taxes associated with the imputed income related to such travel. (6)Represents imputed income in connection with non-Company personnel who accompanied Mr. Henry on certain business trips on aircraft paid for by the Company; no additional amounts were actually paid in connection with the additional personnel who traveled on the aircraft with Mr. Henry. Mr. Henry fully reimbursed the Company for all applicable withholding taxes associated with the imputed income related to such travel. (7)Mr. Van Oene was appointed as Chief Operating Officer effective January 8, 2021. (8)Represents travel, lodging, and other costs covered by the Company for Mr. Van Oene in connection with his participation in a Company sales incentive trip in 2022. (9)Represents a one-time signing bonus for Mr. Van Oene in connection with his hire in 2021 and Mr. Eidel in connection with his hire in 2022. (10)Mr. Eidel was appointed as Chief Commercial Officer effective August 16, 2022.

  30. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table provides information regarding the plan-based awards granted to our NEOs for the year ended December 31, 2023:

  31. Grants of Plan-Based Awards for Fiscal Year 2023

    Grants of Plan-Based Awards for Fiscal Year 2023

  32. Grants of Plan-Based Awards for Fiscal Year 2023

    | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(1) | | | Estimated Future Payments Under Equity Incentive Plan Awards(#) | | | Other Stock Awards: Number of Shares of Stock or Units(#)(2) | Grant Date Fair Value of Stock and Option Awards($)(3) | | Name | Grant Date | Approval Action Date | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Christian O. Henry | 02/14/2023(4) | | 14,003 | 700,150 | 840,180 | — | — | — | — | — | | | 03/02/2023 | 2/14/2023(5) | — | — | — | 49,558(6) | 198,229(6) | 396,458(6) | — | 1,028,115 | | | 03/02/2023 | | — | — | — | — | — | — | 594,687 | 5,607,898 | | Susan G. Kim | 02/13/2023(4) | | 4,600 | 230,000 | 276,000 | — | — | — | — | — | | | 03/02/2023 | 2/13/2023(7) | — | — | — | 13,675(6) | 54,700(6) | 109,400(6) | — | 283,702 | | | 03/02/2023 | | — | — | — | — | — | — | 164,200 | 1,548,406 | | Mark Van Oene | 02/13/2023(4) | | 7,042 | 352,107 | 422,528 | — | — | — | — | — | | | 03/02/2023 | 2/13/2023(7) | — | — | — | 27,375(6) | 109,500(6) | 219,000(6) | — | 567,922 | | | 03/02/2023 | | — | — | — | — | — | — | 328,500 | 3,097,755 | | Jeff Eidel | 02/13/2023(4) | | 4,600 | 230,000 | 276,000 | — | — | — | — | — | | | 03/02/2023 | 2/13/2023(7) | — | — | — | 13,675(6) | 54,700(6) | 109,400(6) | — | 283,702 | | | 03/02/2023 | | — | — | — | — | — | — | 164,200 | 1,548,406 |

  33. Grants of Plan-Based Awards for Fiscal Year 2023

    (1)The target amounts shown in this column reflect our annual cash incentive plan awards. The maximum amounts in this column reflect the greatest payouts that could be made if pre-established maximum performance levels were met or exceeded. Actual 2023 cash incentive payouts are reflected in the non- equity incentive plan compensation column of the Summary Compensation Table. (2)Represents awards granted under our 2020 Plan. (3)All amounts reported represent the grant date fair value of the equity awards, calculated in accordance with FASB ASC Topic 718 without regard to estimated forfeitures. The grant date fair value of the PSUs is calculated based upon the probable outcome of achievement of the performance conditions as of the grant date. See Note 10 of the notes to our audited consolidated financial statements included in our Form 10-K for a discussion of assumptions made in determining the grant date fair value. (4)Corresponds to the date on which our Compensation Committee (or, in the case of Mr. Henry, our Board of Directors) set the target cash incentive amounts payable to each of our executive officers for 2023. The payouts were based on achievement of Company goals and individual performance, as discussed in the section of our Compensation Discussion and Analysis titled “Short-term Cash Incentives.” (5)Corresponds to the date on which our Board of Directors, upon recommendation by our Compensation Committee, approved the PSU grant. (6)The amounts in these columns represent the number of PSUs that may vest if performance goals are achieved at the stated levels. For more information, see “—Compensation Discussion & Analysis—Components of our Executive Compensation Program—Equity Incentives.” (7)Corresponds to the date on which our Compensation Committee approved the PSU grant.

  34. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table presents certain information concerning equity awards held by the NEOs that were so designated at the end of the year ended December 31, 2023.

  35. Outstanding Equity Awards at Fiscal Year-End 2023

    Outstanding Equity Awards at Fiscal Year-End 2023

  36. Outstanding Equity Awards at Fiscal Year-End 2023

    | | | | Option Awards | | | | Stock Awards | | | | | | | | Number of Securities Underlying Unexercised Options | | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Name | Grant Date | Approval Action Date | Exercisable (#) | Unexercisable (#) | | | | | | | | Christian O. Henry | 7/27/2018 | | 35,000 | — | 3.66 | 7/27/2028 | | | | | | | 3/16/2020 | | 35,000 | — | 2.45 | 3/16/2030 | | | | | | | 8/4/2020 | | 46,499 | — | 3.89 | 8/4/2030 | | | | | | | 9/15/2020 | | 1,218,736 | 281,264(4) | 7.32 | 9/15/2030 | | | | | | | 9/15/2020 | | | | | | 187,500(5) | 1,839,375 | | | | | 2/16/2021 | | 21,249 | 8,751(6) | 46.37 | 2/16/2031 | | | | | | | 2/16/2021 | | | | | | 7,500(5) | 73,575 | | | | | 3/2/2022 | | 281,001 | 361,299(6) | 11.70 | 3/2/2032 | | | | | | | 3/2/2022 | | | | | | 80,625(5) | 790,931 | | | | | 3/2/2023 | | | | | | 594,687(7) | 5,833,879 | | | | | 3/2/2023 | 2/14/2023(8) | | | | | | | 49,558(9) | 486,164 | | Susan G. Kim | 9/28/2020 | | 324,996 | 75,004(4) | 9.60 | 9/28/2030 | | | | | | | 9/28/2020 | | | | | | 37,500(5) | 367,875 | | | | | 2/16/2021 | | 8,924 | 3,676(6) | 46.37 | 2/16/2031 | | | | | | | 2/16/2021 | | | | | | 3,150(5) | 30,902 | | | | | 3/2/2022 | | 104,560 | 134,440(6) | 11.70 | 3/2/2032 | | | | | | | 3/2/2022 | | | | | | 30,000(5) | 294,300 | | | | | 3/2/2023 | | | | | | 164,200(7) | 1,610,802 | | | | | 3/2/2023 | 2/13/2023(10) | | | | | | | 13,675(9) | 134,152 | | Mark Van Oene | 1/8/2021 | | 546,869 | 203,131(4) | 36.70 | 1/8/2031 | | | | | | | 1/8/2021 | | | | | | 167,500(5) | 1,643,175 | | | | | 3/2/2022 | | 189,521 | 243,679(6) | 11.70 | 3/2/2032 | | | | | | | 3/2/2022 | | | | | | 54,375(5) | 533,419 | | | | | 8/25/2022 | | | | | | 225,000(5) | 2,207,250 | | | | | 3/2/2023 | | | | | | 328,500(7) | 3,222,585 | | | | | 3/2/2023 | 2/13/2023(10) | | | | | | | 27,375(9) | 268,549 | | Jeff Eidel | 8/16/2022 | | 41,670 | 83,330(4) | 8.00 | 8/16/2032 | | | | | | | 8/16/2022 | | 158,346 | 316,654(4) | 8.00 | 8/16/2032 | | | | | | | 8/16/2022 | | | | | | 225,000(5) | 2,207,250 | | | | | 3/2/2023 | | | | | | 164,200(7) | 1,610,802 | | | | | 3/2/2023 | 2/13/2023(10) | | | | | | | 13,675(9) | 134,152 |

  37. Outstanding Equity Awards at Fiscal Year-End 2023

    (1)Includes RSUs that are subject to continued service-based vesting. (2)The value of stock awards not vested was computed by multiplying (x) the closing price of $9.81 for the Company’s common stock on December 29, 2023, and (y) the number of shares of the Company’s common stock subject to the award as of such date. (3)The value of PSUs are calculated based upon the threshold achievement of the performance conditions. (4)The option vests over four years with 1/4th of the total number of shares vesting on the first anniversary of the date of grant and 1/48th of such shares vesting monthly thereafter until fully vested, subject to continued service with us through each applicable vesting date. (5)The RSUs vest over four years with 1/4th of the shares vesting on each anniversary of the award’s grant date until fully vested, subject to continued service with us through each applicable vesting date. (6)The option vests over four years with 1/48th of the shares vesting monthly until fully vested, subject to continued service with us through each applicable vesting date. (7)The RSUs vest over four years with 1/4th of the shares vesting on February 15 of each of 2024, 2025, 2026, and 2027, subject to continued service with us through each applicable vesting date. (8)Corresponds to the date on which our Board of Directors, upon recommendation by our Compensation Committee, approved the PSU grant. (9)The PSUs will become eligible to vest upon achievement of a specified threshold level of revenue attainment for fiscal year 2025, and below which no portion of the PSUs will be eligible to vest, subject to continued service with us through the applicable vesting date. Maximum achievement of the revenue goal under the PSUs will result in up to 200% of the target number of shares subject to the PSUs to become eligible to vest. (10)Corresponds to the date on which our Compensation Committee approved the PSU grant.

  38. Option Exercises and Stock Vested During Fiscal Year 2023

    Option Exercises and Stock Vested During Fiscal Year 2023 The following table lists the number of shares acquired and the value realized as a result of vesting of RSUs by the NEOs that were so designated for the year ended December 31, 2023. The value realized on vesting is calculated by multiplying the number of shares acquired on vesting by the market price of common stock on the vesting date. None of our NEOs exercised stock options during the year ended December 31, 2023.

  39. Option Exercises and Stock Vested During Fiscal Year 2023

    Option Exercises and Stock Vested During Fiscal Year 2023

  40. Option Exercises and Stock Vested During Fiscal Year 2023

    | | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Christian O. Henry | 218,125 | 2,247,681 | | Susan G. Kim | 49,075 | 424,810 | | Mark Van Oene | 176,875 | 1,715,919 | | Jeff Eidel | 75,000 | 803,250 |

  41. Potential Payments upon Involuntary Termination or Change in Control

    Potential Payments upon Involuntary Termination or Change in Control

  42. Potential Payments upon Involuntary Termination or Change in Control

    | Compensation and Benefits | Involuntary Termination ($) | Involuntary Termination On or Within 12 Months Following Change In Control ($) | Change in Control ($) | | Christian O. Henry | | | | | Salary | 1,050,225 | 1,050,225 | — | | Performance-based cash bonus | — | 700,150 | — | | Equity acceleration | 2,225,771(1) | 11,182,735(1) | 1,944,626(2) | | Health care benefits | 43,001 | 43,001 | — | | Total | 3,318,997 | 12,976,111 | 1,944,626 | | Susan G. Kim | | | | | Salary | 460,000 | 460,000 | — | | Performance-based cash bonus | — | 230,000 | — | | Equity acceleration | — | 2,856,236(1) | 536,607(2) | | Health care benefits | — | — | — | | Total | 460,000 | 3,546,236 | 536,607 | | Mark Van Oene | | | | | Salary | 586,845 | 586,845 | — | | Performance-based cash bonus | — | 352,107 | — | | Equity acceleration | — | 8,680,624(1) | 1,074,195(2) | | Health care benefits | 28,817 | 28,817 | — | | Total | 615,662 | 9,648,393 | 1,074,195 | | Jeff Eidel | | | | | Salary | 460,000 | 460,000 | — | | Performance-based cash bonus | — | 230,000 | — | | Equity acceleration | — | 5,078,630(1) | 536,607(2) | | Health care benefits | 28,668 | 28,668 | — | | Total | 488,668 | 5,797,298 | 536,607 |

  43. Potential Payments upon Involuntary Termination or Change in Control

    (1)Includes vesting acceleration of shares of the Company’s common stock subject to options, RSUs and PSUs. (i) Amounts for shares subject to options are calculated as the intrinsic value per option, meaning the product of (x) the number of shares subject to the options that become immediately vested upon either (a) an involuntary termination or (b) an involuntary termination on or within 12 months following a change in control, as applicable, and (y) the excess, if any, of the closing price of a share of the Company’s common stock on December 29, 2023, which was $9.81 per share, over the per share exercise price of the option. The value of RSUs and PSUs was calculated as the product of (x) the number of shares subject to RSU or PSU (assuming that the applicable performance goals are considered achieved at the target level in accordance with the terms of such award) that become immediately vested upon (A) an involuntary termination or (B) an involuntary termination during a change in control period of the Company, and (y) the closing price of $9.81 for a share the Company’s common stock on December 29, 2023. Amounts shown also represent the vesting acceleration of shares of the Company's common stock subject to options, RSUs and PSUs in the event that a successor corporation refuses to assume or substitute for such awards upon the Company's change in control, assuming such change in control occurred on December 29, 2023 (the last business day of fiscal 2023), as determined in accordance with the foregoing assumptions in this footnote based on the triggering event being such change in control in lieu of involuntary termination. (2)Includes vesting acceleration of shares of the Company’s common stock subject to PSUs. The value of PSUs was calculated as the product of (x) the number of shares subject to the PSU that become immediately vested upon a change in control (assuming that the applicable performance goals are considered achieved at the target level in accordance with the terms of such award), and (y) the closing price of $9.81 for a share of the Company’s common stock on December 29, 2023.

  44. Pay Versus Performance

    Pay Versus Performance Our compensation programs are designed to align compensation with business objectives and our financial performance, and to attract, retain, motivate, focus, and reward executives in order to enhance our long-term growth and profitability, foster stockholder value creation, and align executives’ interests with those of our stockholders. As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationships between compensation actually paid to our named executive officers and company performance. In this section, we refer to compensation actually paid (“CAP”) and other terms used in the applicable SEC rules. For information concerning our compensation philosophy, refer to “Compensation Discussion and Analysis” above.

  45. Pay Versus Performance Table

    Pay Versus Performance Table

  46. Pay Versus Performance Table

    | | | | | | | | Value of Initial Fixed $100 Investment(1) | | | | | Year | Reported Summary Compensation Table (“SCT”) Total for PEO 1 | Compensation Actually Paid to PEO 1(2) | Reported Summary Compensation Table Total for PEO 2 | Compensation Actually Paid to PEO 2(2) | Average Reported Summary Compensation Table Total for Non-PEO NEOs(3) | Average Compensation Actually Paid to Non-PEO NEOs(2)(3) | Company Total Shareholder Return | Peer Group Shareholder Return(4) | Net Income (in millions) | Company Selected Measure: Revenue (in millions)(5) | | 2023 | $8,046,575 | $10,050,624 | N/A | N/A | $3,218,108 | $4,126,192 | $191 | $119 | $(306.7) | $200.5 | | 2022 | $6,616,251 | $(13,137,692) | N/A | N/A | $4,472,247 | $(842,693) | $159 | $114 | $(314.2) | $128.3 | | 2021 | $2,866,931 | $(6,449,458) | N/A | N/A | $11,099,491 | $6,128,515 | $398 | $126 | $(181.2) | $130.5 | | 2020 | $12,478,770 | $51,604,237 | $1,717,050 | $8,398,519 | $1,855,694 | $4,749,166 | $505 | $126 | $29.4 | $78.9 |

  47. Pay Versus Performance Table

    (1)TSR is calculated by assuming that a $100 investment was made at the close of trading on December 31, 2019, and reinvesting all dividends until the last day of each reported fiscal year. (2)The SEC rules require that certain adjustments be made to the Summary Compensation Table totals to determine CAP, as reported in the Pay Versus Performance table above. The following table details the applicable adjustments that were made to determine CAP.

  48. Pay Versus Performance Table

    | Year | Executives | SCT Total | Deduct SCT Stock & Option Awards | Add Year-End Value of Unvested Awards Granted in Year | Add Change in Value of Unvested Awards Granted in Prior Years | Add Fair Value of Vested Awards Granted in Year | Add Change in Value of Vested Awards Granted in Prior Years | Deduct Fair Value of Forfeited Awards in Year | | 2023 | PEO 1 | $8,046,575 | $(6,636,013) | $6,903,424 | $740,655 | — | $995,983 | — | | 2023 | Non-PEO NEOs* | $3,218,108 | $(2,443,297) | $2,541,755 | $560,532 | — | $249,095 | — | | 2022 | PEO 1 | $6,616,251 | $(5,517,997) | $3,572,661 | $(11,593,565) | $485,101 | $(6,700,144) | — | | 2022 | Non-PEO NEOs* | $4,472,247 | $(3,944,226) | $2,962,458 | $(2,161,553) | $141,415 | $(1,075,233) | $(1,237,802) | | 2021 | PEO 1 | $2,866,931 | $(1,448,052) | $574,247 | $(8,880,638) | $94,868 | $343,184 | — | | 2021 | Non-PEO NEOs* | $11,099,491 | $(10,246,763) | $5,818,159 | $(603,005) | $25,851 | $34,783 | — | | 2020 | PEO 1 | $12,478,770 | $(11,835,900) | $50,961,367 | — | — | — | — | | 2020 | PEO 2 | $1,717,050 | $(551,250) | $3,891,000 | $592,015 | $1,945,500 | $1,061,203 | $(257,000) | | 2020 | Non-PEO NEOs* | $1,855,694 | $(1,535,473) | $4,481,588 | $138,827 | — | $(8,737) | $(182,732) |

  49. Pay Versus Performance Table

    * Presented on an averaged basis (a) For purposes of the adjustments to determine “compensation actually paid”, we computed the fair value of equity awards as of each measurement date using valuation assumptions and methodologies (including expected term, volatility, dividend yield and risk-free interest rates) that are consistent with those used to estimate fair value at grant under U.S. GAAP. The valuation assumptions used to calculate option fair values differed materially from those disclosed at the time of grant in the following ways: •Risk-free rates range from 0.13% to 4.80% for the pay-versus-performance valuations versus a range of 0.28% to 3.66% for grant-date valuations. The risk-free rates differed due to macroeconomic changes between the grant date and valuation dates. •The expected option term estimates range from 2.17 years to 8.71 years for the pay versus performance valuations versus 4.63 years and 6.10 for the grant date valuations. The expected term changed from the grant date to incorporate the passage of time in the awards’ life and by the degree to which the option was in or out of the money. •The volatilities range from 58.39% to 95.74% for the pay versus performance valuations versus 67.00% to 75.45% for grant date valuations. The volatility differed due to macroeconomic changes in the market for our common stock between the grant date and valuation dates. •The stock price on the valuation date ranged from $2.80 to $50.32 for the pay versus performance valuations versus $2.54 to $46.37 for grant date valuations. All other valuation assumptions are not materially different from the grant-date assumptions and there were no changes in calculation methodology. For additional details on the valuation assumptions used at grant, see Note 10. “Stockholders’ Equity” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. (3)The NEOs for each applicable fiscal year are: •2023: PEO 1: Christian O. Henry. Non-PEO NEOs: Susan Kim, Mark Van Oene and Jeff Eidel. •2022: PEO 1: Christian O. Henry. Non-PEO NEOs: Susan Kim, Mark Van Oene, Jeff Eidel, and Peter Fromen. Mr. Fromen resigned from his role as Chief Commercial Officer effective May 20, 2022. Mr. Eidel was appointed as Chief Commercial Officer effective August 16, 2022. •2021: PEO 1: Christian O. Henry. Non-PEO NEOs: Susan Kim, Mark Van Oene, Peter Fromen, and Denis Zaccarin. Dr. Zaccarin ceased to serve as an executive officer after January 8, 2021. Mr. Van Oene was appointed as Chief Operating Officer, and Mr. Fromen was appointed Chief Commercial Officer, effective January 8, 2021. •2020: PEO 1: Christian O. Henry. PEO 2: Michael Hunkapiller. Dr. Hunkapiller stepped down from his role as Chief Executive Officer and President effective September 14, 2020. Non-PEO NEOs: Susan Kim, Susan Barnes, and Denis Zaccarin. Ms. Barnes retired from her role as Executive Vice President and Chief Financial Officer effective August 7, 2020. Mr. Henry was appointed as President and Chief Executive Officer effective September 14, 2020, and Ms. Kim was appointed as Chief Financial Officer effective September 28, 2020. (4)The peer group used for relative TSR is the Nasdaq Biotechnology Index, which is the same peer group we use for the stock performance graph included in our Annual Report on Form 10-K for the year ended December 31, 2023 pursuant to Item 201(e) of Regulation S-K. (5)The company-selected measure is revenue, as described above in "Compensation Discussion and Analysis.” Revenue means all GAAP-based revenue as reflected in our audited financial statements.

  50. Relationship Between Compensation Actually Paid (CAP) and Performance Measures

    Relationship Between Compensation Actually Paid (CAP) and Performance Measures The Pay Versus Performance table above and graphs below demonstrate that our executives’ CAP is aligned with our corporate performance over time. Specifically:

  51. Relationship Between Compensation Actually Paid (CAP) and Performance Measures

    | • | PEO and Non-PEO NEOs’ pay is strongly aligned with revenue. Each year, PEO and NEO CAP generally fluctuated with our revenue. |

  52. Relationship Between Compensation Actually Paid (CAP) and Performance Measures

    | • | Our revenue, which increased from $78.9 million in 2020 to $200.5 million in 2023, moved in conjunction with PEO and Non-PEO NEOs’ CAP. |

  53. Relationship Between Compensation Actually Paid (CAP) and Performance Measures

    PacBio’s TSR has either tracked with or outperformed the TSR of the Nasdaq Biotechnology Index peer group year-over-year. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company and Nasdaq Biotechnology Index ("NBI") TSR The following chart sets forth the relationship between Compensation Actually Paid to our PEOs and the average of Compensation Actually Paid to our Non-PEO NEOs, versus the Company’s cumulative TSR and the NBI TSR, as applicable, over the four most recently completed fiscal years. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income (Loss) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs and our Net Income (Loss) during the four most recently completed fiscal years. Although Item 402(v) of Regulation S-K requires the description of the relationship between the compensation actually paid for our NEOs and our net income (loss), we do not currently utilize GAAP or non-GAAP net income (loss) as a performance measure in any of our incentive programs. As a result, the impact of year-over-year fluctuations in our net income (loss) has less of an impact on compensation actually paid. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company-Selected Measure The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Company-Selected Measure during the four most recently completed fiscal years.

  54. Chief Executive Officer Pay Ratio

    Chief Executive Officer Pay Ratio Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Act, presented below is the ratio of annual total compensation of our Chief Executive Officer to the median of the annual total compensation of our employees, excluding our Chief Executive Officer (the employee whose compensation was such median, the “median employee”). The ratio presented below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Act of 1933. In 2023, there were no material changes to our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our Chief Executive Officer pay ratio disclosure. Therefore, we used our median employee identified in 2021 as the median employee to calculate this year’s pay ratio. To identify the median employee, we examined the 2021 total cash and equity compensation using payroll and equity plan records for January 1, 2021 through December 31, 2021 for all full-time, part-time, temporary and seasonal employees, excluding our Chief Executive Officer. Wages were annualized for full-time employees that were not employed by us for the entire calendar year, but wages were not annualized for part-time, temporary and seasonal employees. Other than the foregoing, we did not make any assumptions, adjustments or estimates with respect to our employees’ total cash and equity compensation and used this consistently applied compensation measure to identify our median employee. This approach to identifying our median employee has remained consistent with prior years. This year, we calculated the median employee’s annual total compensation using the same SEC rules we use for calculating the annual total compensation of our NEOs, as set forth in the Summary Compensation Table above. In 2023, the annual total compensation of our median employee was $366,784, and our Chief Executive Officer’s annual total compensation was $8,046,575 using the amount reported in the “Total” column of our Summary Compensation Table for 2023. The resulting ratio of the total annual compensation of our Chief Executive Officer to our median employee was approximately 22:1. The pay ratio was calculated in accordance with SEC rules based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to the Company’s pay ratio as disclosed above.