DEF 14A of Veracyte, Inc., Apr 25, 2024

DEF 14A of Veracyte, Inc.

Filed Apr 25, 2024 · FY20230001384101-24-000057

Open on EDGAR

  1. Is cumulative voting permitted for the election of directors?

    Is cumulative voting permitted for the election of directors? Stockholders may not cumulate votes in the election of directors, which means that each stockholder may vote no more than the number of shares he or she owns for a single director candidate.

  2. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  3. Directors and Nominees

    Directors and Nominees The number of directors is currently set at eight with each current director either serving or completing a three-year term. Following approval by our stockholders at the 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”), we filed a Restated Certificate of Incorporation (the “Restated Certificate”) to implement a gradual declassification of the Board of Directors and provide for the annual election of directors for one-year terms, commencing upon the expiration of the directors’ then-current terms: •Robert S. Epstein, M.D., M.S. and Evan Jones were elected at our 2023 Annual Meeting and their three-year terms will expire at the annual meeting of stockholders to be held in 2026 (the “2026 Annual Meeting”); •Muna Bhanji, John L. Bishop and Marc Stapley, were elected at our 2021 Annual Meeting of Stockholders and their three-year terms will expire at the Annual Meeting; and •Eliav Barr, Karin Eastham, and Jens Holstein were elected at our 2022 annual meeting of stockholders and their three-year terms will expire at the annual meeting of stockholders to be held in 2025 (the “2025 Annual Meeting”). Mr. Bishop informed the Chair of the Board of Directors on February 7, 2024 that he will retire at the end of his current term and not stand for reelection at the Annual Meeting. Mr. Bishop will continue to serve on the Board of Directors until his term ends at the Annual Meeting. The Board of Directors has approved to set the number of directors at seven effective upon the conclusion of the Annual Meeting. Dr. Epstein will continue in the role of Chair of the Board. The nominating and corporate governance committee of the Board of Directors has recommended, and the Board of Directors has designated, Ms. Bhanji and Mr. Stapley as the nominees for directors to serve until the 2025 Annual Meeting. If the two director nominees receive more votes “FOR” reelection than “AGAINST,” they will be reelected to the Board of Directors. If any nominee is unable or declines to serve as a director at the time of the Annual Meeting, an event that we do not currently anticipate, proxies will be voted for any nominees designated by the Board of Directors, taking into account any recommendations of the nominating and corporate governance committee, to fill the vacancies. Names of the director nominees and the other members of the Board of Directors and certain biographical information as of April 15, 2024 are set forth below:

  4. Directors and Nominees

    | Name | Age | Position with Veracyte | Director Since | | Marc Stapley | 54 | Chief Executive Officer, Director and Director Nominee | 2021 | | Eliav Barr | 59 | Director | 2022 | | Muna Bhanji | 61 | Director and Director Nominee | 2021 | | John L. Bishop(1) | 79 | Director | 2014 | | Karin Eastham | 74 | Director | 2012 | | Robert S. Epstein, M.D., M.S. | 68 | Chairperson and Director | 2015 | | Jens Holstein | 60 | Director | 2020 | | Evan Jones | 67 | Director | 2008 | | (1) Mr. Bishop’s term as a director will end at the Annual Meeting. | | | |

  5. Directors and Nominees

    Marc Stapley has served as our Chief Executive Officer since June 1, 2021 and as a member of our Board of Directors since June 8, 2021. He served as the Chief Executive Officer of Helix, Inc., a genomics company, from April 2019 to May 2021. Prior to that, Mr. Stapley served in key managerial positions at Illumina, Inc., a genetic sequencing company, including as Chief Financial Officer from January 2012 to January 2017, as Chief Administrative Officer from December 2015 to October 2017, and as Executive Vice President from October 2017 to January 2019. From 2009 to 2012, Mr. Stapley served as Senior Vice President, Finance at Pfizer Inc., a pharmaceutical company. Mr. Stapley has served as a member of the board of directors of Glaukos Corporation, an ophthalmic medical technology company, since 2014, and has served as a member of the board of directors of Helix since 2015. Mr. Stapley holds a B.Sc. (Honors) in Mathematics from The University of Reading (England). We believe that Mr. Stapley is qualified to serve on our Board of Directors due to his significant leadership experience in the diagnostics and genetic sequencing fields, as well as his experience as our Chief Executive Officer and his service on the boards of directors of other life sciences and healthcare companies. Eliav Barr, M.D., has served on our Board of Directors since August 2022. Dr. Barr has served as Head of Global Clinical Development and Chief Medical Officer at Merck Research Laboratories (“MRL”), a division of Merck & Co., Inc. (“Merck”), since April 2022. He is also the Chairperson of the Late Development Review Committee at MRL, the governance committee that oversees the development programs for pipeline and in-line products in the Cardiovascular, Diabetes/Endocrine/ Metabolism, Immunology, Neurology, Oncology, Psychiatry, Respiratory, and Vaccines/Infectious Diseases therapeutic areas. Dr. Barr has held numerous leadership positions within MRL since joining the company in 1995, including serving as Senior Vice President, Global Medical and Scientific Affairs from 2018 to 2022. Prior to joining Merck, Dr. Barr pursued post-doctoral training at the University of Michigan and was on faculty at the University of Chicago. He holds a B.S. from Pennsylvania State University and an M.D. from Jefferson Medical College of Thomas Jefferson University and completed an Internal Medicine residency and Cardiology Fellowship at Johns Hopkins. We believe that Dr. Barr is qualified to serve on our Board of Directors due to his knowledge of the life sciences industry, his medical experience and his extensive executive and senior management experience in the biopharmaceutical industry. Muna Bhanji has served on our Board of Directors since March 2021. Ms. Bhanji is the Founder and President, TIBA Global Access LLC, an independent senior advisory/consultancy focused on commercialization and market access strategy development, serving the biopharmaceutical industry. Her prior experience includes an over 34-year tenure at Merck, during which she held a number of senior leadership roles within the U.S. and Global commercial organizations including Senior Vice President, Oncology and Senior Vice President, Hospital & Specialty Franchises. Most recently, through December 2020, she served as the Senior Vice President, Global Market Access & Policy. In addition to serving as a director on a private company board, she currently serves on the board of directors of Intellia Therapeutics, Inc., Cytokinetics, Inc., Ardelyx, Inc. and Corus International, an international NGO. Prior to that, she had served on the boards of Possible Health, a Nepal based NGO, the Foundation of Managed Care Pharmacy and had also chaired Merck’s Supervisory Board in the Netherlands. Ms. Bhanji earned her Bachelor of Pharmacy degree from Rutgers School of Pharmacy and an M.B.A. from St. Joseph’s University. We believe that Ms. Bhanji is qualified to serve on our Board of Directors due to her extensive experience in strategic roles in the biopharmaceutical industry. John L. Bishop has served on our Board of Directors since December 2014. Mr. Bishop served as the Chief Executive Officer and as a member of the board of directors of Cepheid Inc., a molecular diagnostics company, from April 2002 to November 2016, and became the chairman of its board of directors in February 2013. Mr. Bishop retired from Cepheid and resigned from the board of directors following the acquisition of Cepheid by Danaher Corporation. Mr. Bishop served as President and a member of the board of directors of Vysis, Inc., a genomic disease management company that was acquired by Abbott Laboratories, a health care company, from 1993 to 2002, and as Chief Executive Officer from 1996 to 2002. From 1991 until 1993, Mr. Bishop was Chairman and Chief Executive Officer of MicroProbe Corporation, a biotechnology company, and, from 1987 until 1991, of Source Scientific Systems Inc., a biomedical instrument manufacturing company. He previously served on the board of directors of Sense Biodetection Ltd, a private molecular diagnostics company focused on infectious disease from February 2020 until its sale in January 2023 and as a member of the board of directors and compensation committee of Conceptus, Inc. from February 2009 until June 2013 upon its acquisition by Bayer HealthCare LLC. Mr. Bishop also served as the chairman of the board of directors of AdvaMedDx, a division of the Advanced Medical Technology Association, a private medical diagnostics industry advocacy group, from December 2013 until April 2017. Mr. Bishop holds a B.S. from the University of Miami. Mr. Bishop’s term will end as of the annual meeting of stockholders. Karin Eastham has served on our Board of Directors since December 2012. Ms. Eastham has served on the board of directors of Personalis, Inc., a biotechnology company, since September 2019, and has served as chair of the board of directors of Personalis, Inc. since May 2022. She also has served on the boards of directors of Nektar Therapeutics, a biopharmaceutical company, and Geron Corporation, a biotechnology company. From May 2004 to September 2008, Ms. Eastham served as Executive Vice President and Chief Operating Officer, and as a member of the Board of Trustees, of the Burnham Institute for Medical Research, a non-profit corporation engaged in biomedical research. From April 1999 to May 2004, Ms. Eastham served as Senior Vice President, Chief Financial Officer and Secretary of Diversa Corporation, a biotechnology company. Ms. Eastham previously held similar positions with several life sciences companies. Ms. Eastham also previously served as a member of the board of directors of Illumina, Inc. from August 2004 to May 2019, MorphoSys AG from May 2012 to May 2017, Amylin Pharmaceuticals, Inc. from September 2005 until its acquisition in August 2012, Genoptix, Inc. from July 2008 until its acquisition in March 2011, Tercica, Inc. from December 2003 until its acquisition in October 2008, and Trius Therapeutics, Inc. from February 2007 until its acquisition in September 2013. Ms. Eastham received a B.S. in Accounting and an M.B.A. from Indiana University and is a Certified Public Accountant (inactive). We believe that Ms. Eastham is qualified to serve on our Board of Directors due to her experience as a director of numerous life sciences companies, as well as her extensive senior management experience in the biopharmaceutical industry.

  6. Directors and Nominees

    Robert S. Epstein, M.D., M.S. has served on our Board of Directors since January 2015 and is Chair of the Board of Directors. Dr. Epstein has served as a strategic consultant to life sciences companies since 2013. From 2010 to 2012, Dr. Epstein served as President of the Medco-UBC Division and as Chief Research and Development Officer of Medco Health Solutions, Inc., a managed healthcare company. Prior to that, Dr. Epstein served as Medco’s Chief Medical Officer from 1997 to 2010. Dr. Epstein has served as a member of the board of directors of Fate Therapeutics, Inc. since March 2014 and Illumina, Inc. since November 2012. Dr. Epstein previously served as a member of the board of directors of Aveo Pharmaceuticals, Inc. from December 2012 to June 2014 and was Chairman of the Board of Decipher Biosciences, Inc. (“Decipher”) from December 2019 until March 2021. Dr. Epstein is the former president of the International Society of Pharmacoeconomics and Outcomes Research, and served on the board of directors of the Drug Information Association and the International Society of Quality of Life. He has also served on the Centers for Disease Control and Prevention Evaluation of Genomic Applications in Practice & Prevention Stakeholder Committee and the Agency for Healthcare Research and Quality Centers for Education and Research on Therapeutics Committee. Dr. Epstein holds a B.S. in Biomedical Science and an M.D. from the University of Michigan, and an M.S. in Preventive Medicine from the University of Maryland. We believe that Dr. Epstein is qualified to serve on our Board of Directors due to his extensive experience in strategic roles in healthcare companies, his expertise in reimbursement and FDA regulation, and his experience as a director of publicly traded companies in the life sciences industry. Jens Holstein has served on our Board of Directors since August 2020. Mr. Holstein has served as Chief Financial Officer of BioNTech SE, a biotechnology company, since July 2021. Previously, Mr. Holstein served as chief financial officer of MorphoSys AG, a biopharmaceutical company, from May 2011 to December 2020. From July 1999 to April 2011, Mr. Holstein held various positions at Fresenius SE & Co. KGaA, a health care company, including regional Chief Financial Officer of Fresenius Kabi AG for the EME (Europe/Middle East) region and managing director of Fresenius Kabi Deutschland GmbH. Prior to joining Fresenius, Mr. Holstein spent several years in the consulting industry, with positions in Frankfurt and London. Mr. Holstein served as a director of InflaRx N.V., a biopharmaceutical company, from September 2018 to July 2020. Mr. Holstein holds a diploma in Business Administration from the University of Münster, Germany. We believe that Mr. Holstein is qualified to serve on our Board of Directors due to his significant experience as the chief financial officer of a publicly-traded biopharmaceutical company, as well as his extensive experience in management positions in life science and healthcare companies. Evan Jones has served on our Board of Directors since February 2008. Mr. Jones has also served as Managing Member of jVen Capital, LLC, a life sciences investment company, since 2007. He served as Chief Executive Officer of OpGen, Inc., a genetic analysis company, from 2013 to March 2020, and also served as a director from 2009 to June 2021. He was a co-founder of Digene Corporation, a biotechnology company focused on women’s health and molecular diagnostic testing, serving as chairman of its board of directors from 1995 until its acquisition in 2007 and served as Chief Executive Officer from 1990 to 2006 and as President from 1990 to 1999. Mr. Jones served as a member of the board of directors of Foundation Medicine, Inc. until its merger with Roche Holdings, Inc. in July 2018. Mr. Jones served as a director of Fluidigm Corporation from March 2011 to August 2017. Mr. Jones received a B.A. in biochemistry from the University of Colorado and an M.B.A. from The Wharton School at the University of Pennsylvania. We believe that Mr. Jones is qualified to serve on our Board of Directors due to his knowledge of the life sciences industry and his experience as a chief executive officer and as a board member of other publicly-traded and privately-held life sciences companies. The Board of Directors Recommends a Vote “FOR” Election as Director for Each of the Two Director Nominees, Muna Bhanji and Marc Stapley.

  7. 2023 Director Compensation

    2023 Director Compensation For 2023, our Compensation Committee engaged Aon’s Human Capital Solutions practice, a division of Aon plc (“Aon”), an independent compensation consultant, to provide an analysis of non-employee director compensation, including an analysis of compensation paid to non-employee directors by companies in our peer group (as described in “Compensation Discussion and Analysis - 2023 Peer Group”), and an assessment of both the cash and equity compensation and an evaluation of the type of equity instruments being awarded. The following table sets forth cash amounts and the value of equity compensation awarded to, earned by, or paid to our non-employee directors for their service in 2023. Mr. Stapley is not included in the table below as he did not receive compensation for service as a director in 2023. The compensation received by Mr. Stapley as an employee is shown in the “Executive Compensation—Summary Compensation Table” below.

  8. 2023 Director Compensation

    | Name | | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Total ($) | | Eliav Barr | | 45,000 | 249,976 | 294,976 | | Muna Bhanji | | 50,002 | 249,976 | 299,978 | | John L. Bishop | | 47,874 | 249,976 | 297,850 | | Karin Eastham | | 65,002 | 249,976 | 314,978 | | Robert S. Epstein | | 88,000 | 249,976 | 337,976 | | Jens Holstein | | 77,496 | 249,976 | 327,472 | | Evan Jones | | 65,000 | 249,976 | 314,976 | | (1) | Amounts represent the aggregate fair value of the awards computed as of the grant date of each stock award in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”) for financial reporting purposes, rather than amounts paid to or realized by the named individual. Our assumptions with respect to the calculation of these values are set forth in the Notes to Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023. There can be no assurance that stock awards will settle (in which case no value will be realized by the individual) or that the value on settlement will approximate the fair value as computed in accordance with ASC 718. | | | | | (2) | The following sets forth the number of shares of common stock subject to outstanding options or stock awards held by non-employee directors at December 31, 2023: | | | | | | Name | Number of Shares | | | | | Eliav Barr | 23,488 | | | | | Muna Bhanji | 13,521 | | | | | John L. Bishop | 74,674 | | | | | Karin Eastham | 79,674 | | | | | Robert S. Epstein | 84,674 | | | | | Jens Holstein | 44,674 | | | | | Evan Jones | 79,674 | | |

  9. 2023 Director Compensation

    Directors who are employees do not receive any fees or equity awards for their service on the Board of Directors or any committee. In February 2023, our compensation committee and Board of Directors reviewed our then-current non-employee director compensation program and competitive market data on the same, determined to retain the cash retainer without change from 2022, except as noted below, and to retain the equity awards from 2022 without change, as detailed below. Cash Retainers •$40,000 annual cash retainer for service on our Board of Directors; •$40,000 additional annual cash retainer for service as the chair of our Board of Directors; •$20,000 annual cash retainer for the chair of our audit committee and $10,000 for each of its other members; •$15,000 annual cash retainer for the chair of our compensation committee and $7,500 for each of its other members; •$10,000 annual cash retainer for the chair of our nominating and corporate governance committee and $5,000 for each of its other members; •$10,000 annual cash retainer for the chair of our regulatory and compliance committee and $5,000 for each of its other members; and •$25,000 additional annual cash retainer for the lead independent director (as needed). All annual cash retainers are payable quarterly in arrears and are pro-rated for partial service in any year. We also reimburse our non-employee directors for their reasonable out-of-pocket costs and travel expenses in connection with their attendance at Board of Directors and committee meetings in accordance with our travel policy. In February 2024, our compensation committee and Board of Directors reviewed our then-current non-employee director compensation program and competitive market data on the same, determined to increase the cash retainer for service on our Board of Directors from $40,000 to $50,000. The Board of Directors also approved the increase of the additional cash retainer for the chair of the Board of Directors from $40,000 to $50,000. In February 2024, our compensation committee of the Board of Directors also determined to retain the equity awards without change from 2023 (as detailed below). Equity Awards Our compensation policy for non-employee directors currently provides that any non-employee director who first joins our Board of Directors is automatically granted restricted stock units ("RSUs") valued on the grant date at approximately $500,000 (the “Initial RSUs”). The Initial RSUs will vest as to one-third of those shares on each of the first, second and third annual anniversaries of the date of grant. In addition, on the first business day after each annual meeting of stockholders, each non-employee director who continues to serve on our Board of Directors and who has served as a director for at least six months will be automatically granted RSUs valued on the grant date at approximately $250,000 (the “Annual RSUs”). The Annual RSUs will vest in full on the first anniversary of the date of grant or, if earlier, the date of the next annual meeting of stockholders. The vesting of the RSUs described above will accelerate in full upon a “change in control” referred to as a "corporate transaction" and as defined in our 2023 Equity Incentive Plan ("2023 Plan")). Pursuant to the terms of the 2023 Plan, no non-employee director may receive equity awards under our 2013 Stock Incentive Plan that, when combined with cash compensation received for service as a non-employee director, exceeds $750,000 in value in any calendar year, which amount shall instead be $1,500,000 in value in the calendar year in which such director first joins our Board of Directors.

  10. Executive Summary

    2023 Compensation Highlights •Annual Cash Incentive Compensation Tied to Financial Performance. In 2023, our annual incentive award plan was simplified and designed to drive performance on key financial metrics - revenue and cash flow from operations. These metrics were achieved at 138.5%. •Equity Mix. In 2023, our NEOs were granted a mix of performance-based restricted stock units (“PSUs”), time-based restricted stock units (“RSUs”) and stock options, with the equity mix consisting of 33% PSUs, 33% RSUs, and 34% Options. For 2024, our NEOs were granted a mix of performance-based equity reflecting a mix of 50% PSUs (at target) and 50% RSUs and no stock options. •Introduced Profitability-Focused Metric to PSU Program. The 2023 PSUs introduced a new cash balance metric to our PSU program, in addition to a revenue metric, each to be measured over two and three year performance periods. Our performance against the revenue metric continues to be an important indicator of our strategic long-term growth, while our performance against the new cash balance metric drives improving profitability and durable growth.

  11. Pay Program Overview

    | Base Salary | •Base salaries are set to be competitive within our industry and are important in attracting and retaining talented executives. •Base salaries are fixed pay set with consideration for responsibilities, experience, individual contribution expectations and market data. | | Annual Cash Incentive Compensation | •The annual cash incentive award plan is intended to motivate and reward our executives for the achievement of certain strategic goals of Veracyte set by our Board of Directors. •In 2023, our annual incentive award plan was simplified and designed to drive performance on key financial objectives, including revenue and cash flow from operations. | | Long-Term Equity Incentive Compensation | •Long-term equity awards incentivize executives to deliver long-term stockholder value, while also providing a retention vehicle for our top executive talent. •NEO equity awards are typically delivered as: ◦PSUs (based on achievement of revenue and cash balance metrics over two and three year periods) ◦RSUs (vesting over four years) ◦Stock options (vesting over four years; no longer granted in 2024) |

  12. Compensation Governance

    | What We Do | •Pay-for-performance philosophy and culture •An appropriate mix of short and long-term incentives for our executives •Responsible use of shares under our long-term incentive program •Perform an annual risk assessment of our compensation program •Maintain stock ownership guidelines for all executives and non-executive directors •“Double-trigger” change-in-control provisions •Annually conduct Say-on-Pay vote •Engage an independent compensation consultant •Have an independent compensation committee •Maintain a compensation recovery policy to ensure accountability | | What We Don't Do | •No excise tax gross-ups •No excessive perquisites •No repricing of stock option awards without stockholder approval •No discounted stock option awards •No hedging or pledging of our stock |

  13. Executive Compensation Philosophy and Objectives

    Executive Compensation Philosophy and Objectives We have designed our executive compensation program to reward our executive officers, including our named executive officers, at a level consistent with our overall strategic and financial performance and to provide remuneration sufficient to attract, retain, and motivate them to exert their best efforts in the highly competitive environment in which we operate. We believe in providing competitive compensation packages consisting of a combination of base salary, an annual cash bonus, and long-term incentive opportunities in the form of equity awards that are earned over a multi-year period. We believe the approach that has been adopted by our Compensation Committee, with an emphasis on variable cash compensation and equity awards, enables us to attract top talent, motivate successful short-term and long-term performance, satisfy our retention objectives, and align the compensation of our executive officers with our performance and long-term value creation for our stockholders.

  14. Role of Management

    Role of Management Veracyte’s Chief Executive Officer is involved in the design and implementation of our executive compensation and is typically present at Compensation Committee meetings, except that the Chief Executive Officer is not present during any voting or deliberations on his compensation. In 2023, the Chief Executive Officer reviewed the analysis and recommendations of Aon’s Human Capital Solutions practice, a division of Aon plc (“Aon”), with the Compensation Committee and made recommendations regarding proposed salary, cash bonus opportunities and equity awards for our officers (other than himself). Management also participates in conducting annual risk assessments and ensuring that any risks involving compensation are properly mitigated. The Compensation Committee exercises its business judgment in accepting, rejecting and/or modifying any such executive compensation recommendations and approves all compensation and equity awards for all executive officers other than the Chief Executive Officer.

  15. Role of Independent Compensation Consultant

    Role of Independent Compensation Consultant The Compensation Committee retains an independent compensation consultant to provide professional expertise regarding a variety of executive compensation and market practices. The Compensation Committee believes that working with an independent compensation consultant furthers our objectives to recruit and retain qualified executives, align their interests with those of stockholders and ensure that their compensation packages will appropriately motivate and reward ongoing achievement of business goals. The independent consultant assists the Compensation Committee in setting compensation and designing a comprehensive plan. In 2023, the Compensation Committee retained Aon to provide the following services: •Reviewing and modifying the compensation peer group; •Evaluating executive and director market pay analysis; •Developing executive and director pay programs; •Evaluating equity pay market analysis; •Examining the change in control and severance arrangement; and •Updating certain proxy disclosures, including this CD&A. The Compensation Committee annually evaluates the independent compensation consultant’s independence and performance under the applicable SEC and Nasdaq listing standards. The Compensation Committee conducted a specific review of its relationship with Aon in 2023, pursuant to the SEC rules and Nasdaq listing standards, and concluded that Aon’s work for the Compensation Committee did not raise any conflicts of interest.

  16. Use of Competitive Data

    Use of Competitive Data To assess the competitiveness of our executive compensation program and compensation levels, our Compensation Committee, with the assistance of Aon, examines the competitive compensation data for senior executives of our peer companies examining overall pay, and each pay element. The Compensation Committee uses a peer group to reference and analyze recent market data and understand the marketplace. The Compensation Committee also considers other factors such as individual performance, experience, history and scope of responsibility, current market conditions and the specific needs of the business at critical points in time. The Compensation Committee uses its best business judgment in setting pay with the peer group data as a reference point rather than as specific benchmark. The Compensation Committee conducts an annual assessment of the peer group to ensure that it reflects Veracyte’s most current financial and sector-specific standing.

  17. 2023 Peer Group

    2023 Peer Group Aon helped the Compensation Committee identify companies similar to us with respect to sector and market capitalization, as well as revenue and headcount, to provide a broad perspective on competitive pay levels and practices. The Compensation Committee also considers criteria from outside investors and the talent market when selecting the final criteria and list of companies. The following criteria was applied in developing the peer group used for 2023 compensation decisions: •Sector - Biotechnology/Pharmaceuticals, Life Sciences Tools and Services, and Health Care Equipment & Supplies companies; •Market Capitalization - $500.0 million to $5.0 billion which was 0.3x to 3.0x; •Revenue - 0.5x to 3x Veracyte's projected revenues; and •Headcount - 500 to 2,000 full time employees. Using these criteria, in September 2022 the following 18 companies were approved to comprise our 2023 peer group:

  18. 2023 Peer Group

    | 10x Genomics (TXG)* | Adaptive Biotechnologies (ADPT) | CareDx (CDNA) | | Castle Biosciences (CSTL) | Codexis (CDXS) | Cytek Biosciences (CTKB)* | | Exact Sciences (EXAS) | Glaukos (GKOS)* | Guardant Health (GH) | | Invitae (NVTA) | Myriad Genetics (MYGN) | NanoString Technologies (NSTG) | | Natera (NTRA) | NeoGenomics (NEO) | Nevro (NVRO)* | | Pacific Biosciences of California (PACB) | Twist Bioscience (TWST) | Vericel (VCEL) |

  19. 2023 Peer Group

    * New in 2023. In 2023, Berkeley Lights, Fluidigm, Maravai LifeSciences, OraSure Technologies, Personalis and Quanterix were removed from the 2022 peer list due to no longer fitting the criteria. At the time of approval, Veracyte was near the 50th percentile for revenue and market capitalization, reinforcing the balance in the group of companies.

  20. 2023 Annual Cash Incentives

    2023 Annual Cash Incentives We provide our executives, including our NEOs, with the opportunity to annually earn cash incentives to encourage the achievement of corporate objectives, and to reward those individuals who significantly impact our corporate results. Payments under our annual bonus plan are based on the achievement of corporate goals established by our Board of Directors. Actual performance against these metrics funds the annual bonus plan pool and threshold levels of performance must be met for the pool to be funded. Each of our NEOs participated in our 2023 annual bonus plan. Executive officers who participate in this plan have an established annual incentive target, which is equal to a percentage of their base salary. The actual earned annual incentive bonus, if any, is calculated based on the bonus plan pool funding, pre-established Company performance metrics and any adjustments for individual performance as assessed by the Compensation Committee (taking into consideration the assessment by the Chief Executive Officer) for the NEOs, and by the Board of Directors for the Chief Executive Officer. For 2023, our NEOs had the annual bonus target opportunities set forth in the table below. The target opportunities as a percentage of base salary for our incumbent NEOs were unchanged when compared to 2022. The maximum funding under the plan is 150% of target.

  21. 2023 Annual Cash Incentives

    | Executive | Target Annual Incentive (as % of base salary) | | Marc Stapley | 100% | | Rebecca Chambers | 55% | | Phillip Febbo | 55% | | John Leite | 55% | | Annie McGuire | 55% |

  22. 2023 Annual Cash Incentives

    2023 Bonus Plan Awards In February 2023, the independent members of our Board of Directors, on the recommendation of the Compensation Committee, approved corporate goals for our 2023 annual bonus plan. Under the plan, eligible employees, including our NEOs, were eligible to receive a cash bonus if we achieved the corporate goals approved by our Board of Directors, as described in the table below. In late 2022 and early 2023, the Compensation Committee reviewed the structure of our previous annual bonus plan as well as the proposed 2023 annual bonus plan to determine whether it aligned to our growth strategy and corporate positioning. The Compensation Committee recognized the complexity of the previous annual goals, which were linked to pipeline/product development metrics, and clinical/biopharma metrics as well as financial metrics. The Compensation Committee further noted that management determined product portfolio decisions based on the long-term benefit to the company, rather than to drive annual benefits. Further, the Compensation Committee determined that goals related to pipeline/product development and clinical/biopharma advancements are well captured in the PSU program. As a result of this analysis, the Compensation Committee recommended, and the independent members of the full Board agreed, that our annual bonus plan should be simplified by focusing exclusively on metrics linked to revenue and responsible cash management performance. Additionally, in order to more clearly emphasize the imperative for growth and need to maintain cash reserves, the Compensation Committee elected to increase the potential maximum annual award from 125% to 150% of target. To balance this increase and ensure that the annual bonus program incentivized exceptional performance, the Compensation Committee also increased the required outperformance relative to the target performance level required to receive a maximum payout as compared to the 2022 target performance levels. The Compensation Committee selected revenue as the primary financial performance measure to be used to determine annual cash bonuses as it is the best indicator of our growth in terms of aggregate test volume and sales, and successful execution of our annual operating plan. In addition, the Compensation Committee selected our cash balance as a second key measure to determine annual cash bonuses to provide an incentive to manage our cash expenditures and navigate toward eventual profitability as we continue to grow. With respect to our NEOs, the bonus pool could be funded from 0% to 150% based upon achieving certain annual revenue and ending cash balance goals as follows:

  23. 2023 Annual Cash Incentives

    | Goals | Weighting | Funding Amount | | | | | | 75% | 100% | 150% | | Revenue | 60% | $325M | $340M | $370M | | Cash Balance | 40% | $150M | $160M | $200M |

  24. 2023 Annual Cash Incentives

    For 2023, the annual incentive bonuses for the NEOs were determined based solely on Veracyte performance and did not include an individual performance multiplier. Actual annual performance bonus awards paid out under the plan could be greater or less than the NEOs' individual targets, as determined by the independent members of our Board of Directors at their discretion, considering the recommendation of the Compensation Committee. The Board of Directors did not exercise this discretion. In February 2024, the independent members of our Board of Directors, on the recommendation of the Compensation Committee, determined 2023 performance and the resulting cash bonus awards. For 2023, our total revenue, adjusted for the effect of changes in foreign currency exchange rates, was $358.5 million, which exceeded our goal of $340 million (an increase over the 2022 goal of $284 million and actual result of $296.5 million). For 2023, our ending cash balance was $216.4 million which exceeded our goal of greater than $160 million (an increase over the 2022 goal of $140 million and actual result of $154 million). Each metric is calculated individually, and the sum of the calculations determines the potential bonus pool payout:

  25. 2023 Annual Cash Incentives

    | Metric | Weighting | Minimum (75%) | Target (100%) | Maximum (150%) | Actual | Achievement (% of target payout) | | Total Revenue | 60% | $325M | $340M | $370M | $358.5M | 131% | | Ending Cash Balance | 40% | $150M | $160M | $200M | $216.4M | 150% | | Total | 100% | | | | | 138.5% |

  26. 2023 Annual Cash Incentives

    Based on a review of all goals and accomplishments, the independent members of our Board of Directors and Compensation Committee determined that the financial goals were achieved at 138.5%. Our NEOs’ earned annual incentives for 2023 were as follows:

  27. 2023 Annual Cash Incentives

    | Executive | Original FY 2023 Opportunity | | | Actual | | | | 2023 Base Salary | 2023 Target Bonus (as a % of base salary) | Target Bonus ($) | Corporate Multiplier | 2023 Earned Bonus | | Marc Stapley | $650,000 | 100% | $650,000 | 138.5% | $900,250 | | Rebecca Chambers | $510,000 | 55% | $280,500 | 138.5% | $388,493 | | Phillip Febbo(1) | $550,000 | 55% | $302,500 | 138.5% | $104,741 | | John Leite(2) | $450,000 | 55% | $247,500 | 138.5% | $264,433 | | Annie McGuire | $440,000 | 55% | $242,000 | 138.5% | $335,170 | | (1) Dr. Febbo's bonus is pro-rated for his date of hire. | | | | | | | (2) Dr. Leite's bonus is pro-rated for time spent in the roles of Senior Vice President, General Manager, Pulmonology and Market Access and Chief Commercial Officer, CLIA in 2023. | | | | | |

  28. Equity Compensation

    Equity Compensation A significant portion of executive pay is delivered as long-term incentives in the form of equity awards, which are designed to align executive officers’ interests with stockholder interests, promote retention through the reward of long-term company performance, and encourage ownership in our company. We grant equity awards in the form of stock options, RSUs and PSUs. The Compensation Committee believes that certain targeted PSUs can provide an appropriate long-term incentive for our executive officers, as PSUs reward our executive officers only to the extent certain performance measures aligned with driving increased stockholder value are met. We believe that stock options, which are granted with exercise prices equal to the fair market value of our common stock on the date of grant and vest over a four-year period, provide an appropriate long-term incentive for our executive officers, as the stock options provide value only to the extent that our stock price increases above the exercise price set at the date of grant. Likewise, we believe that RSUs reward our executive officers with long-term stock price appreciation while simultaneously helping us retain our executive officers, as RSUs provide some value to the recipient even if the market price of our common stock declines following the grant date. In addition, because RSUs are usually granted in smaller amounts than stock options, RSUs allow us to offer a robust equity compensation program while also managing dilution. In 2023, the Compensation Committee (and, in the case of our Chief Executive Officer, our Board of Directors), again granted PSUs to certain of our NEOs as a significant portion of their 2023 total equity compensation (“2023 PSUs”). The terms of these 2023 PSUs are described below. The Compensation Committee initially determines the size of equity grants by considering the executive officer’s position and market data of our peer group companies as provided by Aon. The Compensation Committee then takes into consideration each named executive officer’s recent performance history, his or her potential for future responsibility and criticality of his or her work to the long-term success of our company and the retention value of outstanding awards. The Compensation Committee has the discretion to give relative weight to each of these factors as it sets the size of the equity grant to appropriately create an opportunity for reward based on increasing stockholder value. For newly hired or promoted executive officers, the Compensation Committee also takes into consideration the value needed to induce the individual to accept the position and to drive substantial performance.

  29. 2023 Equity Grants

    2023 Equity Grants In February 2023, the independent members of the Board of Directors, on the recommendation of the Compensation Committee, approved annual equity awards to the NEOs to be granted in March consistent with past practice (except as noted below for newly hired or promoted NEOs), in the following amounts:

  30. 2023 Equity Grants

    | Executive | Stock Options (#) | RSUs (#) | PSUs (#) | | Marc Stapley | 128,869 | 78,044 | 78,044 | | Rebecca Chambers | 42,956 | 26,014 | 26,014 | | Phillip Febbo(1) | 85,858 | 53,182 | 53,182 | | John Leite(2) | 25,268 | 15,766 | 19,135 | | Annie McGuire | 38,660 | 23,413 | 23,413 | | (1) Dr. Febbo was granted his equity awards on October 2, 2023 in connection with the commencement of his employment as our Chief Scientific and Chief Medical Officer. (2) Dr. Leite was granted his PSU awards on September 11, 2023 in connection with his promotion to Chief Commercial Officer, CLIA. | | | |

  31. 2023 Equity Grants

    Time-Based Vesting Options & RSUs The annual option awards granted in March 2023 and new hire option awards granted to Dr. Febbo in October 2023 vest and become exercisable as to 25% of the shares on the first anniversary of the grant date, and the remaining shares vest at a rate of 1/48th of the total number of shares subject to the award for each month of continuous service thereafter (until the fourth anniversary of the date of grant). The annual RSU awards granted in March 2023 vest as to 1/4 on the first anniversary of March 2, 2023 and then in equal quarterly installments over the following 12 quarters, based on continuing service on each vesting date (until the fourth anniversary of the date of grant). The new hire RSUs granted to Dr. Febbo in October 2023 vest as to 1/4th on the first anniversary of December 2, 2023 and then in equal quarterly installments over the following 12 quarters, based on continuing service on each vesting date (until the fourth anniversary of the date of grant). Performance-Based RSUs In March 2023, we again granted PSUs to certain of our executive officers, referred to as the 2023 PSUs. In 2021 and 2022, our PSU awards included revenue as the sole performance metric. In 2023, we selected and continue to use revenue as a performance metric because we believe it is, and continues to be, an important indicator of our strategic long-term growth at this stage in our company’s maturity and it has been an important metric used by investors to assess the health and trajectory of our business. Further, in 2023, we incorporated an additional cash balance performance metric into this program to drive and reward improving profitability and durable growth, which is a key focus for the company. Consistent with our 2022 PSU awards, the 2023 PSU awards are split into a two-year performance period and a three-year performance period to reward growth and execution over time. Forty percent of the total number of shares subject to the PSU granted in 2023, will be earned if the revenue and cash balance for the two-year period ending December 31, 2024 equals or exceeds a certain threshold and sixty percent of the total number of shares subject to the PSU will be earned if the revenue and cash balance for the three-year period ending December 31, 2025 equals or exceeds a higher threshold. Achievement between threshold, target and maximum levels of performance of each metric is interpolated, with a maximum achievement level of 150% of the target PSUs for each performance period. The officer must remain in service with Veracyte at the end of each of these performance periods and on the day that performance is measured to vest in any "achieved" portion of the 2023 PSUs. At the time these 2023 PSUs were awarded, the Compensation Committee and Board of Directors believed our primary and immediate focus should be on increased, sustained revenue growth across multiple time horizons and with increased attention to profitability. To that end, in addition to including short-term one-year revenue growth and cash balance goals in the 2023 annual bonus plan, the Compensation Committee felt the 2023 PSU’s two-year and three-year performance periods were the most appropriate length for our growth strategy and drive toward profitability. In the Compensation Committee’s opinion, this structure strikes a reasonable balance between investing for long-term growth and an ongoing focus on medium-term revenue increases, balances with cash management, given the dynamic changes in the diagnostic and testing marketplace. For purposes of the 2023 PSU awards, “revenue” means our total revenue calculated in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"), as reported in our annual financial statements for the applicable year excluding adjustments for acquisitions or similar transactions and including adjustments for the impact of foreign currency exchange and decisions made by the Board to discontinue any of the company’s products for which projected revenue was included in the forecast on which the revenue target was based and “cash balance” means our cash and cash equivalents as of December 31 of the subject year calculated in accordance with U.S. GAAP, as reported in its annual financial statements for the subject year, excluding adjustments for acquisitions or similar transactions or the impact of foreign currency exchange and including adjustments for capital raises, capital uses and the impact of acquisition-related contingent consideration obligations arising or occurring on or following the start of the applicable performance period. Significant Competitive Harm in Disclosing Thresholds We have not publicly disclosed the specific PSU performance thresholds because we believe advance disclosure of the thresholds could cause significant competitive harm to our business. The thresholds were purposefully set to be more aggressive than our disclosed guidance and long-term financial plan and are fully achievable only by outperforming such guidance and plan. If specific thresholds were disclosed, they could be treated as our new guidance or long-term financial plan, which would not align with (i) our purpose of using the PSU performance thresholds to encourage exceptional outperformance of our rigorous disclosed guidance and plan, and (ii) how we understand the role the PSU performance thresholds have in our long-term business and strategy. Disclosing the specific thresholds could also create a retention risk for our Chief Executive Officer and other Named Executive Officers, who are crucial to the execution of our next phase of growth by giving insight into the retentive value of the PSU awards. Companies competing for our top executive talent could use the thresholds’ rigor and the significant challenge of achieving the full award, depending on how many tranches have been earned and what remains of the performance period, to undercut the value of the PSU awards by offering a sign-on bonus or a more easily achievable compensation package to induce our Named Executive Officers to leave Veracyte. While we are not disclosing the thresholds in advance, we plan to appropriately disclose applicable achievements in a fiscal year in the following year’s proxy statement.

  32. 2024 Equity Awards

    2024 Equity Awards In March 2024, we again granted PSUs to certain of our executive officers, referred to as the 2024 PSUs, which are split into a two-year performance period and a three-year performance period, and based upon achievement of revenue and cash balance metrics. To enhance the retention value of our long-term equity program and to drive sustained stockholder value growth, the 2024 PSUs also include a time-based service requirement such that any “achieved” PSUs will vest approximately one year after the end of the applicable performance period, subject to the officer’s continued service to Veracyte.

  33. Prior Year PSUs – Achievement

    Prior Year PSUs – Achievement The following table and footnotes summarizes PSU awards that were eligible to be achieved during 2023.

  34. Prior Year PSUs – Achievement

    | PSU Awards (Year of Grant) | Performance Period | Performance Metric | Achievement (%) | | 2021 PSUs | 3 years ended December 2023 | Revenue calculated in accordance with U.S. GAAP (inclusive of Decipher Biosciences, Inc.’s products but exclusive of any revenue associated with other products or businesses acquired by Veracyte following the date of grant) | 0% of target level performance of $400 million in Revenue 0% PSUs earned or vested | | 2022 PSUs(1) | 2 years ended December 2023 | Revenue calculated in accordance with U.S. GAAP, adjusted for certain acquisitions and dispositions | 148% of target level performance of $350 million in Revenue Max of 125% PSUs earned; vested in March 2024 |

  35. Prior Year PSUs – Achievement

    (1) 2022 PSUs (Performance Period ending December 31, 2023) – Achievement of the revenue two-year performance metric was measured based on maximum performance of $363 million at or above which 125% of the PSU would be achieved. Any achieved PSUs vested upon the date the achievement was certified by the Compensation Committee during the first quarter of 2024, subject to the officer’s continued service to Veracyte.

  36. Deductibility of Executive Compensation

    Deductibility of Executive Compensation Our Compensation Committee may take into consideration the accounting and tax treatment of the compensation and benefit arrangements for of our Named Executive Officers. These considerations are in addition to those described above that were material to the pay decisions for the most recent fiscal year. While the Compensation Committee considers the deductibility of awards as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by us for tax purposes. Taxation of “Parachute” Payments and Deferred Compensation. Sections 280G and 4999 of the Internal Revenue Code provide that named executive officers and directors who hold significant equity interests and certain other service providers may be subject to an excise tax if they receive payments or benefits in connection with a change in control of our Company that exceed certain prescribed limits, and that we (or a successor) may forfeit a deduction on the amounts subject to this additional tax. Section 409A of the Internal Revenue Code imposes significant additional taxes in the event that an employee, including a named executive officer, director, or service provider receives “nonqualified deferred compensation” that does not satisfy the conditions of Section 409A. We have not agreed and are not otherwise obligated to provide any named executive officer with a “gross-up” or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Sections 280G, 4999 or 409A of the Internal Revenue Code. Accounting for Stock-Based Compensation. We follow the FASB ASC Topic 718 for our stock-based compensation awards. ASC 718 requires companies to calculate the grant date “fair value” of their stock-based awards using a variety of assumptions. This calculation is performed for accounting purposes and reported in the compensation tables that accompany this CD&A, even though recipients may never realize any value from their awards. ASC 718 also requires companies to recognize the compensation cost of their stock-based awards in their statements of operations over the period that the recipient of the award is required to render service in exchange for the award.

  37. Summary Compensation Table

    Summary Compensation Table The following table provides information concerning compensation awarded to, earned by, or paid to each of our named executive officers for 2021, 2022 and 2023.

  38. Summary Compensation Table

    | Name and Principal Position | | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Marc Stapley | | 2023 | 650,000 | — | 3,703,968 | 1,927,416 | 900,250 | 3,000 | 7,184,634 | | Chief Executive Officer | | 2022 | 625,000 | — | 2,206,626 | 1,475,796 | 625,000 | 3,000 | 4,935,422 | | | | 2021 | 350,000 | — | 2,569,723 | 2,521,717 | 297,500 | 3,000 | 5,741,940 | | Rebecca Chambers | | 2023 | 510,000 | — | 1,234,624 | 642,467 | 388,493 | 3,000 | 2,778,584 | | Chief Financial Officer | | 2022 | 463,500 | — | 1,406,185 | 1,144,161 | 305,910 | 3,000 | 3,322,756 | | | | 2021 | 204,807 | 100,000 | 1,741,684 | 1,237,510 | 95,036 | 3,000 | 3,382,037 | | Phillip Febbo | | 2023 | 137,500 | — | 2,335,753 | 1,206,047 | 104,741 | 3,000 | 3,787,041 | | Chief Scientific and Chief Medical Officer | | | | | | | | | | | John Leite | | 2023 | 421,067 | — | 858,051 | 377,918 | 264,433 | 3,000 | 1,924,469 | | Chief Commercial Officer, CLIA | | | | | | | | | | | Annie McGuire | | 2023 | 440,000 | — | 1,111,181 | 578,214 | 335,170 | 16,553 | 2,481,118 | | General Counsel and Chief People Officer | | 2022 | 334,872 | — | 933,955 | 946,422 | 154,041 | 77,765 | 2,447,055 | | (1) | The amounts in this column represent a sign-on bonus of $100,000 paid to Ms. Chambers in 2021. | | | | | | | | | | (2) | Amounts represent the aggregate fair value of the awards computed as of the grant date of each award in accordance with Topic 718 for financial reporting purposes, rather than amounts paid to or realized by the named individual. Our assumptions with respect to the calculation of these values are set forth in the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. There can be no assurance that option awards will be exercised or that RSUs or PSUs will settle (in which case no value will be realized by the individual) or that the value on exercise of options or settlement of RSUs or PSUs will approximate the fair value as computed in accordance with Topic 718. We computed the grant date fair value of PSU awards based on our achievement of the PSU awards' performance conditions at 100% of target. If the PSUs were instead valued based on the maximum outcome of the applicable performance condition (i.e., based on maximum level performance), the total amount for the PSU awards reported in this column for 2023 would increase as follows: Mr. Stapley from $1,851,984 to $2,777,976; Ms. Chambers from $617,312 to $925,968; Dr. Febbo from $1,167,877 to $1,751,815; Dr. Leite from $483,924 to $725,886; and Ms. McGuire from $555,590 to $833,386. | | | | | | | | | | (3) | The amounts reported in the Non-Equity Incentive Plan Compensation column for 2023 represent annual cash bonuses paid to the Named Executive Officers as described in “—Compensation Discussion and Analysis—2023 Annual Cash Incentives.” | | | | | | | | | | (4) | Other income includes matching contributions to 401(k) plans in an amount up to $3,000 per year. Other income for Ms. McGuire also includes assistance with housing expenses and tax gross-up paid for such expenses totaling $11,000 in housing expenses and $3,553 in tax gross-up for 2023 and $50,000 in housing expenses and $24,707 in tax gross-up for 2022. | | | | | | | | |

  39. Grants of Plan-Based Awards Table

    Grants of Plan-Based Awards Table The following table provides information concerning each grant of an award made in 2023 for each of our named executive officers under any plan. This information supplements the information about these awards set forth in the Summary Compensation Table.

  40. Grants of Plan-Based Awards Table

    | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Name | Type of Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Marc Stapley | Cash | | 487,500 | 650,000 | 975,000 | — | — | — | — | — | — | — | | | Options(4) | 3/6/2023 | — | — | — | — | — | — | — | 128,869 | 23.73 | 1,927,416 | | | RSUs(5) | 3/6/2023 | — | — | — | — | — | — | 78,044 | — | — | 1,851,984 | | | PSUs(6) | 3/6/2023 | — | — | — | 58,533 | 78,044 | 117,066 | — | — | — | 1,851,984 | | Rebecca Chambers | Cash | | 210,375 | 280,500 | 420,750 | — | — | — | — | — | — | — | | | Options(4) | 3/6/2023 | — | — | — | — | — | — | — | 42,956 | 23.73 | 642,467 | | | RSUs(5) | 3/6/2023 | — | — | — | — | — | — | 26,014 | — | — | 617,312 | | | PSUs(6) | 3/6/2023 | — | — | — | 19,511 | 26,014 | 39,021 | — | — | — | 617,312 | | Phillip Febbo | Cash | | 226,875 | 302,500 | 453,750 | — | — | — | — | — | — | — | | | Options(4) | 10/2/2023 | — | — | — | — | — | — | — | 85,858 | 21.96 | 1,206,047 | | | RSUs(5) | 10/2/2023 | — | — | — | — | — | — | 53,182 | — | — | 1,167,877 | | | PSUs(6) | 10/2/2023 | — | — | — | 39,887 | 53,182 | 79,773 | — | — | — | 1,167,877 | | John Leite | Cash | | 185,625 | 247,500 | 371,250 | — | — | — | — | — | — | — | | | Options(4) | 3/6/2023 | — | — | — | — | — | — | — | 25,268 | 27.80 | 377,918 | | | RSUs(5) | 3/6/2023 | — | — | — | — | — | — | 15,766 | — | — | 374,127 | | | PSUs(6) | 9/11/2023 | — | — | — | 14,351 | 19,135 | 28,703 | — | — | — | 483,924 | | Annie McGuire | Cash | | 181,500 | 242,000 | 363,000 | — | — | — | — | — | — | — | | | Options(4) | 3/6/2023 | — | — | — | — | — | — | — | 38,660 | 23.73 | 578,214 | | | RSUs(5) | 3/6/2023 | — | — | — | — | — | — | 23,413 | — | — | 555,590 | | | PSUs(6) | 3/6/2023 | — | — | — | 17,560 | 23,413 | 35,120 | — | — | — | 555,590 | | (1) Reflects threshold, target and maximum cash bonus amounts for 2023 performance under our 2023 bonus plan, as described in “—Compensation Discussion and Analysis-2023 Bonus Plan Awards.” These amounts do not necessarily correspond to the actual amounts that were received by our named executive officers. | | | | | | | | | | | | | | (2) Reflects threshold, target and maximum amounts for 2023 PSUs awards, as described in “—Compensation Discussion and Analysis—Equity Compensation.” | | | | | | | | | | | | | | (3) The amounts reported in this column represent the grant date fair value of each award as computed in accordance with ASC 718. Note that the amounts reported in these columns reflect the accounting cost for these awards and do not correspond to the actual economic value that may be received by our named executive officers from the awards. In particular, amounts in this column include the grant date fair value of the 2023 PSUs granted to our named executive officers during the year ended December 31, 2023, as computed in accordance with ASC 718, assuming the probable outcome of related performance conditions, which we have expected to be achieved at 100% of target for each of the 2023 PSUs. | | | | | | | | | | | | | | (4) The stock option vests at a rate of 1/4th of the total number of shares of common stock underlying the stock option on the one-year anniversary of the vesting commencement date, and vests at a rate of 1/48th of the total number of shares of common stock underlying the stock option each month following such one-year anniversary. The stock option is subject to acceleration upon certain events as described in “—Potential Payments upon Termination or Change in Control.” | | | | | | | | | | | | | | (5) The RSUs vest at a rate of 1/4th of the total number of RSUs on the one-year anniversary of the vesting commencement date, and vest at a rate of 1/16th of the total number of RSUs on each quarter thereafter. The RSUs are subject to acceleration upon certain events as described in “—Potential Payments upon Termination or Change in Control.” | | | | | | | | | | | | | | (6) 40% of the total number of PSUs will vest subject to and upon the certification of achievement of the performance metric for the performance period ending December 31, 2024 and 60% of the total number of PSUs will vest subject to and upon the certification of achievement of the performance metric for the performance period ending December 31, 2025 and the continued service of the applicable executive. The PSUs are subject to acceleration upon certain events as described in “—Potential Payments upon Termination or Change in Control.” | | | | | | | | | | | | |

  41. 2023 Outstanding Equity Awards at Fiscal Year-End

    2023 Outstanding Equity Awards at Fiscal Year-End The following table provides information concerning the outstanding and unexercised stock options, outstanding RSUs and outstanding PSUs that have not vested for each named executive officer as of December 31, 2023.

  42. 2023 Outstanding Equity Awards at Fiscal Year-End

    | | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares or Units of Stock That Have Not Vested ($) (4) | | Marc Stapley | 6/1/2021 | 86,281 | 51,770 | $36.60 | 6/1/2031 | 17,553 | $482,883 | — | — | | | 3/3/2022 | 45,073 | 57,953 | $26.02 | 3/3/2032 | 43,583 | $1,198,968 | 18,844 | $518,398(5) | | | 3/6/2023 | — | 128,869 | $23.73 | 3/6/2033 | 78,044 | $2,146,990 | 78,044 | $2,146,990(6) | | Rebecca Chambers | 7/19/2021 | 40,479 | 26,521 | $36.59 | 7/19/2031 | 14,875 | $409,211 | — | — | | | 3/3/2022 | 16,525 | 21,248 | $26.02 | 3/3/2032 | 15,978 | $439,555 | 6,909 | $190,067(5) | | | 8/5/2022 | 16,221 | 20,275(2) | $27.90 | 8/5/2032 | 12,486 | $343,490(7) | — | — | | | 3/6/2023 | — | 42,956 | $23.73 | 3/6/2033 | 26,014 | $715,645 | 26,014 | $715,645(6) | | Phillip Febbo | 10/2/2023 | — | 85,858 | $21.96 | 10/2/2033 | 53,182 | $1,463,037 | 53,182 | $1,463,037(6) | | John Leite | 9/1/2022 | 13,451 | 29,593 | $19.81 | 2/27/2029 | 17,669 | $486,074 | — | — | | | 3/6/2023 | — | 25,268 | $23.73 | 2/27/2030 | 15,766 | $433,723 | — | — | | | 9/11/2023 | | | | | — | — | 19,135 | $526,404(6) | | Annie McGuire | 2/28/2022 | 19,329 | 22,846 | $27.80 | 2/28/2032 | 12,857 | $353,696 | — | —(5) | | | 8/5/2022 | 8,110 | 10,138(2) | $27.90 | 8/5/2032 | 6,243 | $171,745(7) | — | — | | | 3/6/2023 | — | 38,660 | $23.73 | 3/6/2033 | 23,413 | $644,092 | 23,413 | $644,092(6) |

  43. 2023 Outstanding Equity Awards at Fiscal Year-End

    | (1) Except as otherwise noted, options become exercisable as to 25% of the shares on the first anniversary of the vesting commencement date, and the remaining shares vest at a rate of 1/48th of the total number of shares subject to the options each month thereafter. The options have a term of ten years, subject to earlier termination upon termination of employment. The options are subject to acceleration upon certain specified events; for more information, see “—Potential Payments upon Termination or Change in Control” below. | | (2) The stock option vests at a rate of 1/3rd of the total number of shares of common stock underlying the stock option on the one-year anniversary of the vesting commencement date, and vests at a rate of 1/36th of the total number of shares of common stock underlying the stock option each month following such one-year anniversary. The stock option is subject to acceleration upon certain events as described in “—Potential Payments upon Termination or Change in Control” below. | | (3) Based on a price of $27.51 per share, which was the closing price per share of our common stock as reported by The Nasdaq Global Market on December 29, 2023. Except as otherwise noted, RSUs vest and settle as to 25% of the units on the first anniversary of the vesting commencement date, and the remaining RSUs vest and settle at a rate of 1/16th of the total number of shares subject to the units each quarter thereafter. The RSUs are subject to acceleration upon certain specified events; for more information, see “—Potential Payments upon Termination or Change in Control” below. | | (4) Based on a price of $27.51 per share, which was the closing price per share of our common stock as reported by The Nasdaq Global Market on December 29, 2023 and assuming the PSU awards' performance conditions are achieved at 100% of target. The PSUs are subject to acceleration upon certain specified events; for more information, see “—Potential Payments upon Termination or Change in Control” below. | | (5) For the 2022 PSUs, 1/3 of the total number of PSUs were eligible to be earned and vest subject to and upon certification of achievement of the performance metric for the performance period ending December 31, 2023 (the "2023 Tranche") and 2/3 of the total number of PSUs will vest subject to and upon the certification of achievement of the performance metric for the performance period ending December 31, 2024 and the continued service of the applicable executive. The 2022 PSUs vest between 75% and 125% of the total grant based on the achievement of the performance metrics. If the 2022 PSUs were instead valued based on the maximum outcome of the applicable performance condition (i.e., based on maximum level performance), the total amount for the 2022 PSU awards reported in this column as of December 31, 2023 would increase as follows: Mr. Stapley from $777,653 to $972,066 and Ms. Chambers from $285,114 to $356,392. The 2023 Tranche was earned at maximum achievement and the resulting PSUs are included under the column titled “Number of Shares or Units of Stock That Have Not Vested”; they vested in March 2024. The performance period for the 2024 Tranche has not yet concluded its PSU are included under the column titled “Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock That Have Not Vested.” |

  44. 2023 Outstanding Equity Awards at Fiscal Year-End

    | (6) For the 2023 PSUs, 40% of the total number of PSUs will vest subject to and upon certification of achievement of the performance metric for the performance period ending December 31, 2024 and 60% of the total number of PSUs will vest subject to and upon the certification of achievement of the performance metric for the performance period ending December 31, 2025 and the continued service of the applicable executive. The 2023 PSUs vest between 75% and 150% of the total grant based on the achievement of the performance metrics. If the 2023 PSUs were instead valued based on the maximum outcome of the applicable performance condition (i.e., based on maximum level performance), the total amount for the 2023 PSU awards reported in this column as of December 31, 2023 would increase as follows: Mr. Stapley from $2,146,990 to $3,220,486, Ms. Chambers from $715,645 to $1,073,468, Dr. Febbo from $1,463,037 to $2,194,555, Dr. Leite from $526,404 to $789,606; and Ms. McGuire from $644,092 to $966,137. | | (7) The RSUs vest at a rate of 1/3rd of the total number of RSUs on the one-year anniversary of the vesting commencement date, and vest at a rate of 1/12th of the total number of RSUs on each quarter thereafter. The RSUs are subject to acceleration upon certain events as described in “—Potential Payments upon Termination or Change in Control” below. |

  45. Stock Option Exercises and Stock Vested Table

    Stock Option Exercises and Stock Vested Table The following table presents, for each of our named executive officers, the number of shares of our common stock acquired upon the exercise of stock options or vesting and settlement of RSUs and PSUs during 2023 and the aggregate value realized upon the exercise of stock options and the vesting and settlement of RSUs and PSUs.

  46. Stock Option Exercises and Stock Vested Table

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | | Marc Stapley | — | — | 36,436 | 927,584 | | Rebecca Chambers | — | — | 26,486 | 687,414 | | Phillip Febbo | — | — | — | — | | John Leite | — | — | 8,030 | 214,144 | | Annie McGuire | — | — | 14,457 | 370,806 |

  47. Stock Option Exercises and Stock Vested Table

    | (1) The value realized on exercise is calculated as the difference between the fair market value of our common stock on the date of exercise and the applicable exercise price of those options. | | (2) The aggregate value realized upon the vesting and settlement of an RSU or PSU is based on the closing price on the Nasdaq Global Market of a share of common stock on the date prior to the day of vesting. |

  48. Potential Payments upon Termination or Change in Control

    Potential Payments upon Termination or Change in Control We have entered into change of control and severance agreements with each of our named executive officers. Each of these agreements has an initial term of four years, which term automatically renews for additional one‑year periods unless either party provides written notice of non-renewal at least 60 days prior to the date of automatic renewal and which term extends for one year from a “change of control,” as defined in the agreement, if such change of control occurs within the final 12 months of the initial term or the term as extended through automatic renewal.

  49. Pay Versus Performance

    Pay Versus Performance In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officers (“PEOs”) and Non-PEO NEOs and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.

  50. Pay Versus Performance

    | Year | Summary Compensation Table Total for Marc Stapley¹ ($) | Summary Compensation Table Total for Bonnie Anderson¹ ($) | Compensation Actually Paid to Marc Stapley1,2,3 ($) | Compensation Actually Paid to Bonnie Anderson1,2,3 ($) | Average Summary Compensation Table Total for Non-PEO NEOs1 ($) | Average Compensation Actually Paid to Non-PEO NEOs1,2,3 ($) | Value of Initial Fixed $100 Investment based on:4 | | Net Income ($ millions) | Total Revenue ($ millions) ⁵ | | | | | | | | | TSR ($) | Peer Group TSR ($) | | | | 2023 | 7,184,634 | — | 9,559,060 | — | 2,742,803 | 3,440,029 | 98.53 | 118.87 | (74.4) | 361.1 | | 2022 | 4,935,422 | — | 1,622,674 | — | 3,725,476 | 1,450,011 | 84.99 | 113.65 | (36.6) | 296.5 | | 2021 | 5,741,940 | 4,518,093 | 5,700,065 | 2,876,781 | 2,235,504 | (434,017) | 147.56 | 126.45 | (75.6) | 219.5 | | 2020 | — | 4,571,345 | — | 15,466,734 | 2,200,189 | 5,837,075 | 175.29 | 126.42 | (34.9) | 117.5 |

  51. Pay Versus Performance

    1. Bonnie Anderson was our PEO until June 2021. Marc Stapley was our PEO from June 2021 to present. The individuals comprising the Non-PEO NEOs for each year presented are listed below.

  52. Pay Versus Performance

    | 2020 | 2021 | 2022 | 2023 | | Keith Kennedy | Keith Kennedy | Giulia Kennedy | Rebecca Chambers | | Giulia Kennedy | Giulia Kennedy | Rebecca Chambers | Phillip Febbo | | John Hanna | James Erlinger III | Tina Nova | John Leite | | James Erlinger III | Beverly Jane Alley | Annie McGuire | Annie McGuire | | | Rebecca Chambers | | |

  53. Pay Versus Performance

    2. The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. 3. Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEOs and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table.

  54. Pay Versus Performance

    | Year | Summary Compensation Table Total for Marc Stapley ($) | Exclusion of Stock Awards and Option Awards for Marc Stapley ($) | Inclusion of Equity Values for Marc Stapley ($) | Compensation Actually Paid to Marc Stapley ($) | | 2023 | 7,184,634 | (5,631,384) | 8,005,810 | 9,559,060 |

  55. Pay Versus Performance

    | Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Stock Awards and Option Awards for Non-PEO NEOs ($) | Average Inclusion of Equity Values for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 2,742,803 | (2,086,064) | 2,783,290 | 3,440,029 |

  56. Pay Versus Performance

    The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:

  57. Pay Versus Performance

    | Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Marc Stapley ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Marc Stapley ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Marc Stapley ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Marc Stapley ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Marc Stapley ($) | Total - Inclusion of Equity Values for Marc Stapley ($) | | 2023 | 6,534,764 | 1,383,452 | — | 87,594 | — | 8,005,810 |

  58. Pay Versus Performance

    | Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2023 | 2,512,001 | 232,275 | — | 39,014 | — | 2,783,290 |

  59. Pay Versus Performance

    4. The Peer Group TSR set forth in this table utilizes the NASDAQ Biotechnology Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the company and in the NASDAQ Biotechnology Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. 5. We determined Total Revenue to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEOs and Non-PEO NEOs in 2023. This performance measure may not have been the most important financial performance measure in prior years and we may determine a different financial performance measure to be the most important financial performance measure in future years.

  60. Relationship Between Compensation Actually Paid and Performance

    Relationship Between Compensation Actually Paid and Performance The following charts show the relationship between Compensation Actually Paid, Total Stockholder Return, total revenue and net loss for 2020, 2021, 2022 and 2023.

  61. CEO Pay Ratio

    CEO Pay Ratio Under rules adopted pursuant to the Dodd-Frank Act, we are required to calculate and disclose the total compensation paid to our median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our Chief Executive Officer (the “CEO Pay Ratio”). The paragraphs that follow describe our methodology and the resulting CEO Pay Ratio.

  62. Methodology and Pay Ratio

    Methodology and Pay Ratio On December 31, 2023, the determination date, our principal executive officer was Mr. Marc Stapley, our Chief Executive Officer. For 2023, the total annual compensation for Mr. Stapley was $7,184,634. The total annual compensation of our median employee in 2023 was $143,268. The ratio of these two amounts is approximately 50:1. This information is being provided for compliance purposes and is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Neither the Compensation Committee nor management of the company used the CEO Pay Ratio measure in making compensation decisions.