ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS
The following table sets forth information about our directors. The respective age of each individual in the table below is as of April 22, 2016:
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Name
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Age
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Position
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Pehong Chen
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58
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Chairman, President and Chief Executive Officer
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James D. Dixon(1)(2)
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72
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Director
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Robert Lee(1)(2)(3)
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67
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Director
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François Stieger(1)(3)
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66
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Director
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(1)
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Member of the Audit Committee.
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(2)
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Member of the Compensation Committee.
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(3)
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Member of the Nominating and Corporate Governance Committee.
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The following sets forth biographical information with respect to our directors:
Pehong Chen
has served as our Chairman of the Board, Chief Executive Officer and President since our incorporation in May 1993. Dr. Chen served as Interim Chief Financial Officer during the period between William Meyer’s departure in June 2006 and Shin-Yuan Tzou’s appointment as Chief Financial Officer in January 2008. From 1992 to 1993, Dr. Chen served as the Vice President of Multimedia Technology at Sybase, Inc., a supplier of client-server software products. Dr. Chen founded and, from 1989 to 1992, served as President of Gain Technology, Inc., a provider of multimedia applications development systems, which was acquired by Sybase, Inc. Dr. Chen served on the board of directors of Sina Corporation from March 1999 through December 2015. Dr. Chen currently serves on the board of directors of Weibo Corporation, which he joined in January 2016. He received a B.S. in Computer Science from National Taiwan University, an M.S. in Computer Science from Indiana University and a Ph.D. in Computer Science from the University of California at Berkeley. We believe Dr. Chen’s qualifications to sit on our Board of Directors include his decades of experience in the technology industry, including as our founder, and our Chairman, President and Chief Executive Officer for the past 20 years. The Committee believes that Dr. Chen’s extensive experience with the Company brings necessary historical knowledge, industry experience and continuity to the board.
James D. Dixon
has served as one of our directors since January 2003. Prior to his retirement from Bank of America in January 2002, Mr. Dixon served as an executive with bankofamerica.com. From September 1998 to February 2000, Mr. Dixon was Group Executive and Chief Information Officer of Bank of America Technology & Operations. From 1990 to 1998, before the merger of NationsBank Corporation and BankAmerica Corporation, Mr. Dixon was President of NationsBank Services, Inc. From 1986 to 1990, he also served as Chief Financial Officer for Citizens and Southern Bank/Sovran, a predecessor company to NationsBank. Mr. Dixon holds a B.A. from Florida State University, a J.D. from the University of Florida School of Law, and he is a graduate of the executive M.B.A. program at Stanford University. Mr. Dixon also previously served on the board of directors of CheckFree Corporation, a provider of financial electronic commerce services and products, 724 Solutions Inc., a provider of mobile internet, mobile broadband and IP messaging solutions and Rare Hospitality International, Inc., a restaurant operator and franchisor. Mr. Dixon’s employment within the technology sector of the banking industry and his leadership role with several major national corporations give him the background to provide
strategic financial guidance and leadership to the Company and the Board. Additionally, his extensive service on other boards of directors in the technology industry gives him substantial
insight into the issues that arise in a technology-based business.
Robert Lee
has served as one of our directors since August 2004. Mr. Lee was a corporate Executive Vice President and President of Business Communications Services at Pacific Bell, where he established two new subsidiaries: Pacific Bell Internet Services and Pacific Bell Network Integration. During his 26 year career at Pacific Bell, Mr. Lee managed groups in finance, operations, sales and marketing. Mr. Lee served as Executive Vice President of Marketing and Sales from 1987 to 1992. Mr. Lee is a member of the board and serves on the Audit Committee of Blue Shield of California, which provides health insurance to members in California. He previously served as a member of the board and the Audit Committee of Corinthian Colleges, which operates as a post-secondary education company in North America, from October 2006 through August 2015. Mr. Lee also previously served on the board of directors of Web.com, a provider of online marketing services for small businesses, from April 1999 until September 2007 and Netopia, a provider of voice and data solutions, from November 2001 until February 2007. Mr. Lee holds a B.S. in Electrical Engineering from the University of Southern California and an M.B.A. from the University of California at Berkeley.
The Company believes that Mr. Lee’s extensive operations, sales and marketing expertise make him a
valuable member of the board. His executive experience, along with his experience serving on other boards and his historical knowledge of our company, give him the qualifications and skills to serve as a director.
François Stieger
has served as one of our directors since August 2006. Mr. Stieger has served as Vice President EMEA at Typesafe Switzerland LLC since October 2012. From January 2006 until October 2012, Mr. Stieger led Intentional Software’s international group as CEO of Intentional Software International Sarl. From April 2003 until January 2006, Mr. Stieger was senior vice president and general manager for Europe, Middle East and Africa for Verisign, the leading provider of critical infrastructure security services for the Internet and telecommunication markets. Mr. Stieger was responsible for Verisign’s business throughout that region. Prior to joining Verisign, Mr. Stieger was a partner of Amadeus Capital, a leading European venture capital firm based in London. Mr. Stieger served as our Director, Worldwide Marketing Organization, from 1996 to 2001. While serving in that capacity, in 1996, he established our European operations. Under his management through mid-2001, these operations grew to more than 400 employees and US$104 million annual revenues. He was also personally involved in our initial public offering in June 1996, and our public offering on the Neuer Markt in Frankfurt in November 1999. From 1987-1992, as vice president, Mr. Stieger established and managed operations of Oracle Corporation for southern and central Europe. Mr. Stieger is a graduate of the University of Strasbourg’s Institute of Technology.
Mr. Steiger’s experience as an executive of several international technology companies provides the board with a global perspective. Additionally, his experiences as a former Company executive provide him with a deep understanding of the Company that we believe to be valuable to the board.
EXECUTIVE OFFICERS
The following table sets forth information about our current executive officers. The respective age of each individual in the table below is as of April 22, 2016
:
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Name
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Age
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Position
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Pehong Chen
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58
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Chairman, President and Chief Executive Officer
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Peter Chu
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52
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Chief Financial Officer and Vice President Strategy and Product Management
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The following sets forth biographical information with respect to Mr. Chu. The biography for Dr. Chen appears earlier under the heading “Directors”:
Peter Chu
has served as our Chief
Financial Officer since July 2014.
Mr. Chu
also
served as our Vice President of Strategy, Product Management from October 2011, when he joined the Company, through July 2014. Prior to joining BroadVision, Mr. Chu was a Managing Partner at AsiaTech Ventures and Senior Advisor at Inspirior, LLC for over a decade. Mr. Chu holds a BSEE from Stanford University and an MBA from Harvard University.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. Directors, officers and greater than ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2015 all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with.
Code of Business Ethics and Conduct
We have adopted a Code of Business Ethics and Conduct (the “Code of Conduct”) that applies to all of our directors, officers and employees. The text of the Code of Conduct is posted on our website at www.broadvision.com. If we make any amendment to the Code of Conduct or grant any waiver from a provision of the Code of Conduct to any executive officer or director, we intend to disclose the amendment or waiver on our website to the extent required by applicable rules and exchange requirements.
The Audit Committee
The Board of Directors has a separately designated standing Audit Committee. The Audit Committee is presently composed of three non-employee directors: Messrs. Dixon (Chairman), Lee and Stieger. The Board has determined that all members of our Audit Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). The
Board has determined that Mr. Dixon qualifies as an “audit committee financial expert,” as defined in applicable Securities and Exchange Commission (“SEC”) rules.
ITEM 11.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE FOR FISCAL 2015 AND 2014
The following table shows for the fiscal years ended December 31, 2015 and 2014, compensation paid to, or earned by, Dr. Pehong Chen, the Company’s Chief Executive Officer, and Peter Chu, the Company’s Chief Financial Officer (the “Named Executive Officers”). We do not consider any officer or other employee of the Company or any subsidiary of the Company to be an executive officer of the Company.
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Name and Principal Position
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Year
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Salary ($)
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Bonus ($) (1)
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Stock Awards ($)
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Option Awards ($) (1)
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Non-Equity Incentive Plan Compensation ($)
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Nonqualified Deferred Compensation Earnings ($)
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All Other Compensation ($) (2)
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Total
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Pehong Chen, CEO
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2015
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$
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350,000
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$
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–
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$
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–
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$
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–
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$
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–
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$
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–
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$
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2,000
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$
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352,653
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2014
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$
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350,000
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$
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–
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$
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–
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$
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–
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$
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–
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$
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–
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$
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2,000
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$
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352,000
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Peter Chu, CFO
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2015
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$
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196,667
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$
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16,000(3)
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$
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–
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$
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–
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$
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–
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$
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–
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$
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2,000
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$
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215,320
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2014
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$
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174,000
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$
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16,000(3)
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$
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–
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$
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117,892
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$
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–
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$
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–
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$
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2,000
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$
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309,892
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(1)
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Represents the grant date fair value of stock options granted in the fiscal year, as calculated in accordance with FASB ASC Topic 718
, using the Black-Scholes option valuation model. Assumptions used in the calculation of these amounts are included in the notes to our audited consolidated financial statements included in the Original 10-K. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the Named Executive Officers.
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(2)
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Represents discretionary matching contributions under our 401(k) plan of $2,000 for each of Dr. Chen and Mr. Chu in each of 2014 and 2015.
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(3)
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Represents discretionary cash bonuses based on Mr. Chu’s performance in the specified years.
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Employment, Severance and Change in Control
Each Named Executive Officer serves at the discretion of our Board of Directors. Our Named Executive Officers are at-will employees and have not entered into written employment contracts with the Company.
Dr. Pehong Chen
Dr. Chen founded the Company in 1993 and has been our President and Chief Executive Officer since our founding. His base salary was set at $350,000 in 2002 and has not been increased or decreased since that time. In each of fiscal year 2014 and fiscal year 2015 the compensation committee decided not to change the base salary for Dr. Chen. Although we have been successful in controlling our expenses (which have been reduced through conscientious expense management and non-essential employee layoffs), the compensation committee did not feel that an increase in base salary or the grant of a stock or option award to Dr. Chen was appropriate given our operating performance. Additionally, the compensation committee has believed that a change in Dr. Chen’s base salary or equity award is unnecessary to appropriately incentivize Dr. Chen, as his 32.9% ownership of the Company’s common stock adequately incentivizes Dr. Chen to maximize stockholder value. The decisions with regard to Dr. Chen’s salary were not based in any material respect on a comparison to a peer group.
Mr. Peter Chu
Mr. Chu joined the Company in October 2011 as Vice President of Strategy and Product Management. His initial base salary was set at $168,000 and he was eligible to receive a discretionary bonus of up to $40,000 a year based on a mixture of company and personal goals agreed upon by Mr. Chu and Dr. Chen on an annual basis. Each quarter, Dr. Chen determines the percentage of goals attained by Mr. Chu during the quarter and calculates the dollar value of the portion of the discretionary bonus to be paid for the quarter. Mr. Chu has held the position of Chief Financial Officer and Vice President of Strategy and
Product Management at the Company since July 2014. In this role, Mr. Chu serves as the Company’s principal financial and accounting officer. On July 1, 2014, in connection with his new role, Mr. Chu’s annual salary was increased to $180,000 and he is eligible to receive an annual discretionary bonus of up to $20,000. In February 2015, at Dr. Chen’s request, the compensation committee approved an increase in Mr. Chu’s annual salary to $200,000.
Stock Awards and Option Awards
Dr. Chen was not granted any stock awards or option grants in fiscal years 2014 or 2015. For fiscal year 2014, the compensation committee approved two nonqualified stock option grants to Mr. Chu pursuant to our Amended and Restated 2006 Equity Incentive Plan (“2006 Equity Incentive Plan”) to purchase an aggregate of 24,000 shares, each of which vests monthly over 48 consecutive months, subject to his continuous service as of each vesting date. Mr. Chu did not receive any option grants in fiscal year 2015 or any stock awards in fiscal years 2014 or 2015.
Perquisites
We maintain a 401(k) plan for our employees. Our Named Executive Officers are eligible to participate in the 401(k) plan on the same basis as our other employees. The 401(k) plan provides that each participant may defer eligible compensation subject to the statutory limit, which was $17,500 and $18,000, respectively, for calendar years 2014 and 2015. Participants that are 50 years or older can also make "catch-up" contributions, which for calendar years 2014 and 2015 was up to an additional $5,500 and $6,000, respectively, above the statutory limit. We also have a discretionary matching contribution feature for all employees participating in the 401(k) plan, including our Named Executive Officers. Discretionary matching contributions were made in January 2015 for the 2014 401(k) plan year and in January 2016 for the 2015 401(k) plan year. Each employee who participated in the 401(k) plan received up to a maximum of $2,000 in matching contributions provided that such employee was still employed by the Company as of the end of the applicable 401(k) plan year.
Employees are immediately and fully vested in both their contributions and our matching contributions. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.
Our health and insurance plans for our Named Executive Officers are the same plans that we provide to all employees. We generally do not provide perquisites or personal benefits to our named executive officers, except in limited circumstances.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2015
The following table shows, for the fiscal year ended December 31, 2015, certain information regarding outstanding equity awards at fiscal year-end for our Named Executive Officers. Dr. Chen, our Chief Executive Officer, did not hold any outstanding equity awards at December 31, 2015:
Stock Awards
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Name
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Number of Securities Underlying Unexercised Options (#) Exercisable
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Number of Securities Underlying Unexercised Options (#) Unexercisable
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Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (1)
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Option Exercise Price ($)
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Option Expiration Date
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Number of Shares or Units of Stock That Have Not Vested (#)
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Market Value of Shares or Units of Stock That Have Not Vested ($)
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Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
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Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
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Peter Chu
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13,000
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0
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–
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$
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9.96
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10/19/2021
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(2)
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–
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–
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–
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–
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7,438
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6,562
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–
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$
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9.45
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9/18/2023
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(3)
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–
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–
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–
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–
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4,500
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7,500
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–
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$
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9.94
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6/18/2024
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(4)
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–
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–
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–
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–
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3,000
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9,000
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–
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$
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6.01
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12/17/2024
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(5)
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–
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–
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–
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–
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(1)
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All our options were granted pursuant to our 2006 Equity Incentive Plan and are subject to time-based vesting.
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(2)
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The option was granted on October 19, 2011 and has a 10 year term. The option vests monthly over 48 consecutive months and will be fully vested on October 19, 2015, subject to the participant’s continuous service as of each vesting date.
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(3)
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The option was granted on September 18, 2013 and has a 10 year term. The option vests monthly over 48 consecutive months and will be fully vested on September 18, 2017, subject to the participant’s continuous service as of each vesting date.
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(4)
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The option was granted on June 18, 2014 and has a 10 year term. The option vests monthly over 48 consecutive months and will be fully vested on June 18, 2018, subject to the participant’s continuous service as of each vesting date.
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(5)
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The option was granted on December 17, 2014 and has a 10 year term. The option vests monthly over 48 consecutive months and will be fully vested on December 17, 2018, subject to the participant’s continuous service as of each vesting date.
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PAYMENTS UNDER SEVERANCE BENEFIT PLAN
Severance Benefit Plan
On March 26, 2007, our Board approved our Severance Benefit Plan (the “Severance Plan”) for certain of our eligible employees. The Severance Plan was amended on October 21, 2009 to alter the benefits accrual and caps on such accrual under the Severance Plan for certain eligible employees of the Company. The Severance Plan provides for the payment of certain benefits to employees if (i) the employee has been continuously employed for a period of one year or more; (ii) if we terminate the employee’s employment pursuant to (a) an involuntary termination without cause or (b) constructive termination within one month prior to or 24 months following a change of control; and (iii) we notify the employee in writing that he or she is eligible for participation in the Severance Plan. We, in our sole discretion, will determine whether employees are “eligible employees.” Dr. Chen and Mr. Chu currently participate in the Severance Plan.
The Severance Plan provides for the following benefits:
No Change of Control
Designated eligible employees that experience an involuntary termination without cause that is not in connection with a change of control will receive a cash severance benefit in accordance with our then-current payroll practices as follows:
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Employee Designation
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Base
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Accrual/Yr
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Maximum
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CEO
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6.00 Mo.
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1.00 Mo/Yr.
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12.00 Mo.
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EVP
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3.00 Mo.
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0.50 Mo/Yr.
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6.00 Mo.
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SVP
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2.00 Mo.
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0.50 Mo/Yr.
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4.00 Mo.
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VP
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1.00 Mo.
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0.50 Mo/Yr.
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2.00 Mo.
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All Other
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0.50 Mo.
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0.08 Mo./Yr.
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1.00 Mo.
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In addition, with respect to an eligible employee who is enrolled in a health, dental, or vision plan sponsored by the Company and who elects to continue coverage under such health, dental, or vision plan (or to convert to an individual policy), at the time of the eligible employee's termination of employment, the Company shall pay the portion of premiums for the eligible employee's health, dental and/or vision plan coverage, including coverage for the eligible employee's eligible dependents, that the Company paid prior to the eligible employee's termination of employment for the same number of months as such eligible employee is entitled to receive cash severance benefits as set forth above. Additionally, if an eligible employee elects to receive COBRA continuation coverage under the Company’s health plans, the Company's payment, if any, of applicable insurance premiums, will be credited as payment by the eligible employee for purposes of the eligible employee's payment required under COBRA.
Under the Severance Plan, because Dr. Chen is our Chief Executive Officer, if Dr. Chen experiences an involuntary termination without cause that is not in connection with a change of control, Dr. Chen’s severance will consist of (i) payment of twelve months of his base salary and (ii) payment of the same portion of the premiums for continued medical and any other applicable health insurance coverage under COBRA as the Company paid prior to such termination for twelve months.
Under the Severance Plan, because Mr. Chu is designated as a vice president, if Mr. Chu experiences an involuntary termination without cause that is not in connection with a change of control, Mr. Chu’s severance will consist of (i) payment of two months of his base salary and (ii) payment of the same portion of the premiums for continued medical and any other applicable health insurance coverage under COBRA as the Company paid prior to such termination for two months.
Change of Control
There are three categories of eligible employees covered in a change of control situation: Level I, Level II and Level III as hereinafter defined. Level I eligible employees are defined as those Company Executive Officers designated by the Compensation Committee as Level I eligible employees. Level II eligible employees are defined as those Non-Executive Company Officers who report directly to the Chief Executive Officer and who are designated by the Chief Executive Officer as Level II eligible employees. Level III eligible employees are defined as those Non-Executive Company Officers and Department Managers who report either directly to the Chief Executive Officer or to Level II eligible employees and who are designated by the Chief Executive Officer as Level III eligible employees. Dr. Chen is a Level I Eligible Employee and Mr. Chu is a Level III Eligible Employee.
Designated eligible employees who experience an involuntary termination without cause or constructive termination within one month prior to or 24 months following a change of control shall receive a cash severance benefit in accordance with our then-current payroll practices as follows:
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Employee Level
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Base (Number of Mo. Base Salary After 1 Year Tenure)
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Accelerator (Number of Mo. Base Salary Accrued Per Each Yr. of Additional Tenure)
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Maximum Years Tenure Accelerator Applied
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Maximum Months Base Salary Accrual Allowed
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Level I
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9
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1.25
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12
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24
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Level II
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6
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1.00
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9
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15
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Level III
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3
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0.75
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8
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9
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The vesting and exercisability of unvested stock options held by an eligible employee that are outstanding as of the eligible employee’s termination date, beginning with the earliest unvested installments, shall be accelerated according to the following chart:
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Employee Level
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Base (Percentage
of Unvested Stock Options Accelerated After
1 Year Tenure)
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Accelerator (Percentage
of Unvested Stock Options Accelerated Per Each Yr.
of Additional Tenure)
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Maximum (Total % of Unvested Stock Options Allowed to be Accelerated)
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Level I
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30%
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7.8%
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100%
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Level II
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25%
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6.1%
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80%
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Level III
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20%
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4.4%
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60%
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In addition, with respect to an eligible employee who is enrolled in a health, dental, or vision plan sponsored by the Company and who elects to continue coverage under such health, dental, or vision plan (or to convert to an individual policy), at the time of the eligible employee's termination of employment, the Company shall pay the portion of premiums for the eligible employee's health, dental and/or vision plan coverage, including coverage for the eligible employee's eligible dependents, that the Company paid prior to the eligible employee's termination of employment as follows: Level I shall receive a continuation of benefits (as in effect immediately prior to termination) for up to a maximum of 24 months; Level II shall receive continuation of benefits (as in effect immediately prior to termination) for up to a maximum of 15 months; Level III shall receive continuation of benefits (as in effect immediately prior to termination) for up to a maximum of 9 months. Additionally, if an eligible employee elects to receive COBRA continuation coverage under the Company’s health plans, the Company's p
ayment, if any, of applicable insurance premiums, will be credited as payment by the eligible employee for purposes of the eligible employee's payment required under COBRA.
Under the Severance Plan, if Dr. Chen experiences an involuntary termination without cause or constructive termination within one month prior to or 24 months following a change of control, Dr. Chen’s severance will consist of (i) payment of twenty-four months of his base sa
lary; (ii) payment of the same portion of the premiums for continued medical and any other applicable health insurance coverage under COBRA as the Company paid prior to the change of control for 24 months; and (iii) the vesting of 100% of any unvested stock options held by Dr. Chen as of the date of his termination.
Under the Severance Plan, if Mr. Chu experiences an involuntary termination without cause or constructive termination within one month prior to or 24 months following a change of control, as of April 22, 2016, the latest practical date, Mr. Chu’s severance will consist of (i) payment of 6 months of his base salary; (ii) payment of the same portion of the premiums for continued medical and any other applicable health insurance coverage under COBRA as the Company paid prior to the change of control for six months; and (iii) the vesting of 33.4% of any unvested stock options held by Mr. Chu as of the date of his termination.
Definitions
For purposes of
our Severance Plan
, an "involuntary termination without cause" means an eligible employee's involuntary termination of employment by the Company for a reason other than cause.
For purposes of
our Severance Plan,
"cause" generally means the occurrence of one or more of the following: (1) the eligible employee's conviction of, or plea of no contest with respect to, any crime involving fraud, dishonesty or moral turpitude; (2) the eligible employee's attempted commission of or participation in a fraud or act of dishonesty against the Company that results in (or might have reasonably resulted in) material harm to the business of the Company; (3) the eligible employee's intentional, material violation of any contract or agreement between the eligible employee and the Company or any statutory duty the eligible employee owes to the Company; (4) the eligible employee's conduct that constitutes gross misconduct, insubordination, incompetence or habitual neglect of duties and that results in (or might have reasonably resulted in) material harm to the business of the Company; or (5) the eligible employee's persistent unsatisfactory performance of his or her job duties. The conduct described in (3), (4) or (5) above will only constitute “cause” if such conduct is not cured within 15 days after the eligible employee's receipt of written notice from the Company or our Board of Directors specifying the particulars of the conduct that may constitute “cause”.
For purposes of our Severance Plan, a "change of control" generally means the occurrence in a single transaction or in a series of related transactions of any one or more of the following events: (1) any person within the meaning of the Exchange Act becomes the owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar transaction, other than any person who owns, as of the effective date of the
Severance
Plan, securities of the Company representing more than 15% of the combined voting power of the Company's then outstanding securities; (2) the consummation of a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not own, directly or indirectly, outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or more than 50% of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction; (3) the stockholders of the Company approve or our Board of Directors approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur; or (4) there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity, more than 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale, lease, license or other disposition.
For purposes of
our Severance Plan, a
"constructive termination" means a termination of employment by an eligible employee after one of the following occurs following a change of control without the eligible employee's express written consent: (1) a substantial reduction in the eligible employee's duties or responsibilities (and not simply a change in title or reporting relationships) in effect immediately prior to the effective date of the change of control; (2) a material reduction by the Company in the eligible employee's annual base salary, as in effect on the effective date of the change of control or as increased thereafter; (3) any failure by the Company to continue in effect any benefit plan or program, including incentive plans or plans with respect to the receipt of securities of the Company, in which the eligible employee was participating immediately prior to the effective date of the change of control, or the taking of any action by the Company that would adversely affect the eligible employee's participation in or reduce the eligible employee's benefits under such plans or deprive the eligible employee of any fringe benefit that he or she enjoyed immediately prior to the effective date of the change of control; (4) a relocation of the eligible employee's business office to a location more than 50 miles from the location at which the eligible employee performed his or her duties as of the effective date of the change of control, except for required travel by the eligible employee on the Company's business to an extent substantially consistent with his or her business travel obligations prior to the effective date of the change of control; or (5) a material breach by the Company of any provision of any material agreement between the eligible employee and the Company concerning the terms and conditions of the eligible employee's employment.
DIRECTOR COMPENSATION FOR FISCAL 2015
The following table shows for the fiscal year ended December 31, 2015 certain information with respect to the compensation of all non-employee directors of the Company:
Name(1)
|
|
Fees Earned or Paid in Cash ($)
|
|
Stock Awards ($)(2)(3)
|
|
Option Awards ($)(3)
|
|
|
Non-Equity Incentive Plan Compensation ($)
|
|
Nonqualified Deferred Compensation Earnings ($)
|
|
All Other Compensation ($)
|
|
Total ($)
|
|
James Dixon
|
|
$
|
-
|
|
$
|
24,993
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
24,993
|
|
Robert Lee
|
|
$
|
-
|
|
$
|
19,999
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
19,999
|
|
François Stieger
|
|
$
|
-
|
|
$
|
19,999
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
19,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Dr. Chen is not included in this table because, as our employee, he did not earn any additional compensation for his services as a director. The compensation earned by Dr. Chen as our employee is shown in the Summary Compensation Table above.
|
(2)
|
|
The amounts reflect the grant date fair value of the stock awards granted in the 2015 fiscal year, as calculated in accordance with FASB ASC Topic 718
. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by our directors.
|
(3)
|
|
The aggregate number of stock awards and stock option awards for each non-employee director that were outstanding at December 31, 2015 are as follows:
|
|
|
|
|
|
|
Name
|
|
Number of Shares Subject to Outstanding Restricted Stock Awards (#)
|
|
Number of Shares Subject to Outstanding Options (#)
|
|
James Dixon
|
|
2,082
|
|
-
|
|
Robert Lee
|
|
1,666
|
|
-
|
|
François Stieger
|
|
1,666
|
|
800
|
|
Overview of Director Compensation and Procedures
We compensate non-employee members of our Board of Directors through grants of restricted Common Stock. We do not pay our non-employee directors any cash remuneration other than reimbursement of travel expenses and de minimus items.
Pursuant to the 2006 Equity Incentive Plan, in 2015 each non-employee director was granted restricted Common Stock in an amount equal to $20,000 ($25,000, in the case of the individual serving as the audit committee chairman as of immediately following the Annual Meeting) divided by the last trading price of the Company’s Common Stock on the trading day immediately prior to the date of the annual meeting of stockholders as quoted on the principal trading market for the Common Stock. Each such grant vests over a one-year period measured from the date of the Annual Meeting, with one quarter of the shares included in each such grant vesting on each of the dates that are three months, six months, nine months and twelve months from the Annual Meeting, so long as the recipient continues to serve as a member of the Company’s board. These restricted shares are granted at 100% of the fair market value of the Common Stock on the date of grant. The annual grants are discretionary and are granted upon action by our Board of Directors.