PROPOSAL 3ADVISORY VOTE ON EXECUTIVE COMPENSATION
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WHAT YOU ARE VOTING ON:
At the 2020 Annual Meeting, stockholders are being asked to approve the compensation of our NEOs
as disclosed in this Proxy Statement.
This
Proposal 3 enables our stockholders to cast a non-binding, advisory vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement.
As
described in detail under the heading "Compensation and Other Information Concerning Named Executive OfficersCompensation Discussion and
Analysis" beginning on page 29, our executive compensation program is designed to attract, motivate and retain our executive officers, who are critical to our success.
Please read the "Compensation and Other Information Concerning Named Executive Officers" section beginning on page 29 for additional details about
our executive compensation programs, including information about the 2019 compensation of our named executive officers.
We
are asking our stockholders to indicate their support for our executive compensation programs as described in this Proxy Statement. This vote is not intended to address any specific term of
compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking our
stockholders to vote FOR the following resolution at the annual meeting:
"RESOLVED,
that the compensation paid to the Company's named executive officers, as disclosed pursuant to the SEC's compensation disclosure rules, including the "Compensation
Discussion and Analysis", the compensation tables and any related material disclosed in the proxy statement for the Company's 2020 annual meeting, is hereby APPROVED."
Although
the vote on this Proposal 3 regarding the compensation of our named executive officers is not binding on our Board of Directors, we value the opinions of our stockholders and will consider
the result of the vote when determining future executive compensation arrangements.
Vote Required for Approval
The foregoing resolution will be approved if holders of a majority of the shares present or represented at the 2020 Annual Meeting, in person or by proxy, and
voting on Proposal 3 vote in favor of such resolution.
Board Recommendation
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2020
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Table of Contents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
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COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
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Compensation Discussion and Analysis
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This
Compensation Discussion and Analysis explains our executive compensation program as it relates to our named executive officers
("NEOs") determined in accordance with SEC rules, whose compensation information is presented in the following tables and discussion in accordance with SEC rules:
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NAME
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POSITION
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Kevin T. Conroy
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Chairman, President and Chief Executive Officer
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Jeffrey T. Elliott
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Chief Financial Officer
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Mark Stenhouse
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General Manager, Screening
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D. Scott Coward
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Senior Vice President, General Counsel, Chief Administrative Officer and Secretary
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G. Bradley Cole
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Former General Manager, Precision Oncology
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Jacob Orville
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General Manager, Pipeline
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Ana Hooker
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Senior Vice President, Operations
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Our
executive compensation program is designed to focus executive behavior on achievement of both our annual and long-term objectives and strategy as well as align the interests of management with
those of our stockholders. To that end, executive compensation generally consists of three primary elements: salary, long-term equity interests and an annual cash bonus opportunity based on corporate
performance.
Objectives and Philosophy of Our Executive Compensation Program
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Our
compensation program for our executive officers is intended to achieve the following objectives:
-
»
-
Focus executive behavior on achievement of our annual and long-term objectives and strategy;
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»
-
Provide a competitive compensation package that enables us to attract and retain qualified executives;
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»
-
Provide a total compensation structure that our Compensation and Management Development Committee believes is comparable to similarly sized
companies in the life sciences industry with which we may compete for talent and which consists of a mix of base salary, equity and cash incentives; and
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»
-
Align the interests of management and stockholders by providing management with long-term incentives through equity ownership.
Elements of Executive Compensation
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Our
executive compensation program generally consists of three primary elements: salary, long-term equity interests and an annual cash bonus opportunity based on corporate
performance. Pursuant to his employment agreement, Mr. Conroy participates in a long-term incentive plan that provides for certain cash payments upon certain changes of control of the Company.
Pursuant to their employment agreements and our equity plans, certain of our executive officers are also eligible for severance payments and benefits under certain circumstances. In addition,
effective as of January 1, 2019, we maintain an executive deferred compensation plan, which provides a tax-advantaged method for our eligible employees, including the NEOs, to save for
retirement, and which helps us provide a competitive
compensation package that enables us to attract and retain qualified executives. Our executive officers are also eligible for certain benefits offered to employees generally, including, life, health,
disability, dental and vision insurance, as well as participation in our 401(k) plan and 2010 Employee Stock Purchase Plan. We do not currently believe it is necessary for the attraction or retention
of management talent to provide executive officers with compensation in the form of perquisites (other than housing and relocation benefits from time to time).
Determining Executive Compensation
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It
is the responsibility of our Compensation and Management Development Committee to administer our compensation practices, to ensure that they are competitive and financially
prudent and that they include incentives that are designed to appropriately drive performance. To achieve these objectives, our Compensation and Management Development Committee periodically reviews
commercially-available, industry-specific compensation data for companies of generally similar stage of development, headcount, revenue and market capitalization in the diagnostic, biotechnology and
medical device industries as a general guide for establishing our pay and equity practices and structures. Our Compensation and Management Development Committee, along with our Board of Directors,
also reviews and approves corporate and financial
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29
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Table of Contents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
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objectives
used in our executive compensation program to confirm that appropriate goals have been established and tracks performance against them. On an annual basis, our Compensation and Management
Development Committee reviews tally sheets reflecting each executive officer's compensation history with respect to each element of compensation, as well as projected payouts that would come due in
connection with a termination or change of control.
Our
Compensation and Management Development Committee conducts an annual review of performance and compensation during the first quarter of each year for the purpose of determining the compensation of
executive officers other than the Chief Executive Officer. As part of this review, the Chief Executive Officer submits recommendations to our Compensation and Management Development Committee relating
to the compensation of these officers. Following a review of these recommendations, our Compensation and Management Development Committee approves the compensation of these officers, with such
modifications to the Chief Executive Officer's recommendations as our Compensation and Management Development Committee considers appropriate.
Our
Compensation and Management Development Committee's review of the Chief Executive Officer's compensation is subject to additional procedures. With input from the independent directors, the Lead
Independent Director, along with our Compensation and Management Development Committee, evaluates the Chief Executive Officer's performance and reviews the evaluation with him. Based on that
evaluation and review and consultation with its independent compensation consultant, our Compensation and Management Development Committee then determines the Chief Executive Officer's compensation.
The Chief Executive Officer does not attend the portions of meetings of our Compensation and Management Development Committee where the Committee votes or deliberates on his compensation.
Our
Compensation and Management Development Committee has engaged Radford as its independent executive compensation consultant. Our Compensation and Management Development Committee has assessed the
independence of Radford pursuant to SEC and listing exchange rules and concluded that no conflict of interest exists that would prevent Radford from serving as an independent consultant to our
Compensation and Management Development Committee.
In
early 2019, with the guidance of Radford, our Compensation and Management Development Committee conducted an annual review of the competitiveness of our executive compensation
program, including the competitiveness of our base salaries, target total cash compensation, long-term incentives and target total direct compensation.
Radford
analyzed the components of our executive compensation program against information blended from (1) proxy statement data from a peer group of companies that consisted of publicly-traded
diagnostic, biotechnology and medical device companies that were similar to the Company in terms of headcount, revenue and market capitalization and (2) survey data from a broader group of
commercial stage public diagnostics, biotechnology and medical device companies with revenue between $175 million and $1.75 billion and market capitalization between $3.0 billion
and $28.0 billion.
Our
Compensation and Management Development Committee seeks to identify an executive compensation peer group of approximately 20 companies in the diagnostic, biotechnology and medical device
industries at a similar stage of development and comparable financial profile that may compete with the Company for executive talent. In October 2018, based on Radford's review and recommendations
regarding the Company's executive compensation peer group, our Compensation and Management Development Committee approved a new peer group for 2019. In its review, Radford focused on creating a peer
group that:
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»
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Represented companies operating in the diagnostics, medical device and biotechnology industries;
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»
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Comprised companies with at least one commercialized product; and
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»
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Captured comparable companies in terms of headcount, revenue and market capitalization.
Based
on Radford's recommendations, our Compensation and Management Development Committee (1) removed five companies from the prior year's peer group either because they were acquired or were
no longer comparable based on financial metrics and (2) added seven companies to the prior year's peer group (Align Technology, Guardant Health, Incyte, Merit Medical Systems, Neogen, ResMed
and Seattle Genetics) that met the stated criteria.
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Table of Contents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
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The
companies in our peer group for 2019 were:
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COMPANY
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INDUSTRY
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ABIOMED
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Health Care Equipment
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Align Technology
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Health Care Supplies
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DexCom
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Health Care Equipment
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Genomic Health
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Biotechnology
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Guardant Health
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Health Care Equipment
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Halozyme Therapeutics
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Biotechnology
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Hologic
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Health Care Equipment
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Incyte
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Biotechnology
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Insulet
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Health Care Equipment
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Ionis Pharmaceuticals
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Biotechnology
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Ironwood Pharmaceuticals
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Biotechnology
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Masimo
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Health Care Equipment
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Merit Medical Systems
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Health Care Supplies
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Myriad Genetics
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Biotechnology
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Nektar Therapeutics
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Pharmaceuticals
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Neogen
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Health Care Supplies
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Opko Health
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Biotechnology
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Quidel
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Health Care Supplies
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ResMed
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Health Care Equipment
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Seattle Genetics
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Biotechnology
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Radford
also provided us with an assessment of our annual equity award burn rate and the expected retentive value of equity awards held by our executives, as well as an analysis of the alignment of
Company performance and CEO compensation.
Based
on Radford's analysis, we reached the following conclusions and took the following actions with respect to our NEOs (excluding Mr. Cole and Mr. Orville, who both joined the Company
in 2019) regarding our executive compensation program relative to our peer group:
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»
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In the case of Mr. Conroy, whose total cash compensation (base salary plus annual target cash bonus opportunity) had fallen below the
25th percentile, and Mr. Elliott and Ms. Hooker whose total cash compensation had fallen below the 50th percentile, base salary was increased by approximately 15%, 15% and
10%, respectively, while the other NEOs received 3% merit salary increases.
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»
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Mr. Conroy's target bonus opportunity was increased from 100% to 125% to bring his total target cash compensation level to approximately
the 50th percentile while the other NEOs target bonus levels were left unchanged.
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»
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Due to each named executive officer's performance in 2018, granted annual equity awards consisting of stock options and restricted stock units
(RSUs) with time-based vesting terms to Mr. Conroy as described below, to Mr. Elliott and Ms. Hooker above the market 60th percentile, and to Mr. Stenhouse and
Mr. Coward at the market 60th percentile, as shown in the tables below.
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»
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Granted equity awards with performance-based vesting terms tied to revenues and specified scientific milestones consisting of performance share
units ("PSUs") to Mr. Elliott, Mr. Stenhouse, Mr. Coward and Ms. Hooker covering (i) the threshold amounts, (ii) target amounts and (iii) maximum
amounts as shown in the table below, which are intended to cover performance over a three-year period and issued to cover the difference between the market 50th percentile and the market
65th percentile over three years.
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»
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Mr. Conroy also received annual equity awards consisting of stock options and restricted stock units (RSUs) with time-based vesting terms
and PSUs as shown in the below table which were determined in the following manner:
-
o
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The Committee initially considered annual equity grants at the
60th percentile and a PSU grant to bridge the gap between the 50th and 65th percentiles;
-
o
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The Committee desired to grant additional equity in the form of PSUs to
Mr. Conroy in light of the fact that his total target cash compensation approximated the 50th percentile which the Committee considered was well below what Mr. Conroy could
command in the open market given his experience level and his very strong performance; and
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o
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The Committee also desired to ensure that 50% of Mr. Conroy's total
equity grants were subject to performance-based vesting conditions.
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31
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Table of Contents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
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Based
on Radford's analysis and our assessment of the performance of the executives and our compensation philosophy as described in this Compensation Discussion and
Analysis, in early 2019 our Compensation and Management Development Committee set salaries and target bonus opportunities as follows:
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NAME
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2018 BASE
SALARY ($)
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2019 BASE
SALARY ($)
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Kevin T. Conroy
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695,800
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800,200
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Jeffrey T. Elliott
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400,000
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460,000
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Mark Stenhouse
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500,000
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515,000
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D. Scott Coward
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470,000
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484,100
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Ana Hooker
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371,700
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410,000
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NAME
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2018 TARGET
BONUS %
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2019 TARGET
BONUS %
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Kevin T. Conroy
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100
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%
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125
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%
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Jeffrey T. Elliott
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50
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%
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50
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%
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Mark Stenhouse
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50
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%
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50
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%
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D. Scott Coward
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50
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%
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50
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%
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Ana Hooker
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50
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%
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50
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%
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As
described above and indicated in the tables below, equity awards granted in 2019 generally consisted of time-based stock options and RSUs, as well as performance-based PSUs, as follows:
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NAME
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2018 OPTIONS
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2019 OPTIONS
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Kevin T. Conroy
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68,300
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34,110
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Jeffrey T. Elliott
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16,700
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11,361
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Mark Stenhouse
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0
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10,786
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D. Scott Coward
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16,700
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10,786
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Ana Hooker
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11,700
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7,790
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NAME
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2018 RSUS
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2019 RSUS
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Kevin T. Conroy
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82,300
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37,248
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Jeffrey T. Elliott
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20,100
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13,747
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Mark Stenhouse(1)
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75,000
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13,051
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D. Scott Coward
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20,100
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13,051
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Ana Hooker
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14,100
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9,426
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-
(1)
-
Mr. Stenhouse
received an RSU award covering 75,000 shares upon his hiring in April 2018.
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NAME
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2019 PSUs
(at threshold
achievement)
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2019 PSUs
(at target
achievement)
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2019 PSUs
(at maximum
achievement)
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Kevin T. Conroy
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31,041
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62,082
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124,164
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Jeffrey T. Elliott
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6,747
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13,494
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26,988
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Mark Stenhouse
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6,747
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13,494
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26,988
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D. Scott Coward
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6,747
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13,494
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26,988
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Ana Hooker
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5,398
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10,794
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21,589
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In
late March 2020, in response to the rapidly evolving impact of the COVID-19 pandemic on the current business environment and at the suggestion of Mr. Conroy and the
executive leadership team, the Compensation and Management Development Committee temporarily reduced Mr. Conroy's base salary to the amount necessary to cover the his portion of contributions,
and related taxes, under the Company benefit plans in which he participates, and temporarily reduced the base salaries of the other NEOs by 15%.
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Table of Contents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
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Our
Compensation and Management Development Committee believes that a meaningful portion of our executives' compensation should be "at risk"in other words, contingent
upon successful implementation of our strategy and goals. Accordingly, one component of our executive compensation program is an annual cash bonus opportunity under which each of our executive
officers is eligible to earn an annual cash bonus with a specified target amount equal to a percentage of base salary, with the actual bonus awarded to be based upon the achievement of corporate goals
determined by our Compensation and Management Development Committee in its discretion. In January 2019, our Compensation and Management Development Committee approved metrics to be used to determine
2019 bonuses, which included (1) power the partnership, (2) enhance Cologuard and (3) advance liquid biopsy. Our NEOs were eligible to earn bonuses for 2019 performance equal to
up to 150% of their target bonuses, which were target bonuses of 125% of base salary for Mr. Conroy and 50% of base salary for each of Mr. Elliott, Mr. Stenhouse,
Mr. Coward, Mr. Orville and Ms. Hooker. Because Mr. Cole joined the Company in November 2019, he did not participate in the 2019 annual bonus plan. Our Compensation and
Management Development Committee determined actual bonus payments after the end of 2019 based on the Committee's assessment of the performance of the Company relative to the business goals and
weightings as described in the chart below.
Performance
against the applicable goals is expected to be used by our Compensation and Management Development Committee in determining annual bonus payments. However, in determining actual bonus
payments our Compensation and Management Development Committee ultimately relies on its judgment after a comprehensive review of Company performance, as well as consideration of qualitative and other
factors, without being tied to any formulas or pre-established weightings. Our Compensation and Management Development Committee has ultimate discretion to modify the metrics and may periodically
revisit goals and weightings as circumstances change. Other than an April 2019 refinement in one of the bonus plan's nine performance measures to reflect an updated regulatory strategy for the liver
program, the Compensation and Management Development Committee did not make any such modifications with respect to the 2019 bonus plan.
In
determining 2019 bonus awards, our Compensation and Management Development Committee considered the executive team's achievement of a variety of business plan goals, as follows:
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GOAL
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PERFORMANCE MEASURES
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TARGET WEIGHTING
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ACTUAL ACHIEVEMENT
|
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Power the partnership
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»
Revenue
»
Scale lab capacity
»
Implement core IT infrastructure
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60.0
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%
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60.0
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%
|
|
|
|
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Enhance Cologuard
|
|
»
Cologuard publications
»
Expand Cologuard label
for age 45-49, average risk population
»
Establish proof of concept for enhanced Cologuard test
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25.0
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%
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|
27.5
|
%
|
|
|
|
|
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|
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|
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Advance liquid biopsy
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»
Advance liver program
»
Identify new markers for
colon cancer blood test
»
Marker selection and business plan for one new test
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15.0
|
%
|
|
17.5
|
%
|
|
|
|
|
|
|
|
|
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In
addition, our Compensation and Management Development Committee established certain additional goals based on employee engagement, as measured by certain employee survey satisfaction results, and
improvements in organizational inclusiveness and diversity, which were expected to be used to adjust bonus payments by up to plus or minus 15% of target. Based on partial achievement of these goals,
bonus payouts for the NEOs were reduced by 5% of target.
After
considering the executive team's actual achievement of performance measures, our Compensation and Management Development Committee determined to award cash bonuses for 2019 performance at 100%
of target. Accordingly, Mr. Conroy, Mr. Elliott, Mr. Stenhouse, Mr. Coward, Mr. Orville and Ms. Hooker received cash bonuses of $1,000,250, $230,000,
$257,500, $242,050, $170,137 and $203,636 respectively.
We
believe successful long-term Company performance is critical to enhancing stockholder value and aligning the interests of our executive officers with those of our stockholders.
Our Compensation and Management Development Committee believes that annual equity awards provide executive officers with the opportunity to acquire long-term stock ownership positions, which motivates
them to focus on long-term stockholder value, with the performance of each NEO primarily governing the Compensation and Management Development Committee's considerations in determining long-term
equity awards to each of them. These awards are also intended to motivate the retention of our NEOs and provide our NEOs with a market competitive long-term equity incentive opportunity. As described
above, equity awards granted in 2019 generally consisted of time-based stock options and RSUs, as well as performance-based PSUs.
In
January 2019, our Compensation and Management Development Committee approved annual equity awards to our then-NEOs consisting of time-vesting RSUs and stock options, as well as performance-vesting
PSUs, including the approval of the number of shares of our common stock subject to each award. These awards were issued on February 26, 2019 in accordance with our Statement of Policy with
respect to Equity Award Approvals. In connection with these annual equity awards, Mr. Conroy, Mr. Elliott, Mr. Stenhouse, Mr. Coward, and Ms. Hooker received
stock options covering 34,110, 11,361, 10,786, 10,786 and 7,790 shares, respectively. The shares underlying these options vest and become exercisable in four equal annual installments beginning on the
first anniversary of the grant date. Mr. Conroy, Mr. Elliott, Mr. Stenhouse, Mr. Coward and Ms. Hooker received RSUs covering 37,248, 13,747, 13,051, 13,051 and
7,070 shares, respectively. These RSUs vest in four equal annual installments beginning on the first anniversary of the grant date. In addition, Mr. Conroy, Mr. Elliott,
Mr. Stenhouse, Mr. Coward and
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Ms. Hooker
received PSUs tied 70% to revenues and 30% to specified scientific milestones, including, among other things, label expansion for Cologuard, launch of a version of Cologuard with
enhanced performance characteristics and launching of new diagnostic products. These PSUs covered (i) at threshold amounts, 31,041, 6,747, 6,747, 6,747 and 5,398 shares, respectively,
(ii) at target amounts, 62,082, 13,494, 13,494, 13,494 and 10,794 shares, respectively, and (iii) upon achievement of all performance-based vesting terms contained therein, 124,164,
26,988, 26,988, 26,988 and 21,589 shares, respectively. Mr. Cole and Mr. Orville each joined us in 2019 after the foregoing awards were issued. In connection with their commencement of
employment with the Company in 2019, Mr. Cole and Mr. Orville received RSUs covering 9,620 and 10,947 shares, respectively, and Mr. Orville received PSUs covering, (i) at
threshold, 5,398 shares, (ii) at target, 10,794 shares, and (iii) upon achievement of all performance-based vesting terms contained therein, 21,589 shares. Mr. Cole's RSU award
vest on December 31, 2020, and Mr. Orville's RSU award vests in four equal annual installments beginning on February 18, 2020.
The
Company maintains the Exact Sciences Corporation 2010 Omnibus Long-Term Incentive Plan (As Amended and Restated Effective July 27, 2017) (as amended, the "2010 Plan"),
under which, prior to the adoption of the 2019 Plan as described below, we were able to grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain
the talent for which we compete. The Company also maintains the Exact Sciences Corporation 2019 Omnibus Long-Term Incentive Plan (the "2019 Plan"). The 2019 Plan, like the 2010 Plan, provides for the
grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. Incentive stock options may be
granted only to employees, and all other awards may be granted to our and our affiliates' employees, non-employee directors, consultants and other service providers. The 2019 Plan is administered by
our Board of Directors or a committee of our Board of Directors designated by our Board of Directors to administer the 2019 Plan. Our Board of Directors has designated the Compensation and Management
Development Committee to administer the 2019 Plan.
If
any of the Company's financial statements are required to be restated, the Company may be entitled to recover all or a portion of any award made under the 2010 Plan or 2019 Plan
with respect to any fiscal year of the Company the financial results of which are negatively affected by the restatement. The amount to be recovered will be the amount by which the affected award
exceeds the amount that would have been payable had the financial statements been initially filed as restated. Moreover, any award, amount or benefit received under
the 2010 Plan or 2019 Plan, as applicable, will be subject to potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of any applicable Company clawback
policy or any applicable law, as may be in effect from time to time, whether adopted prior to or following the date of the award.
Deferred Compensation Plan
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We
maintain an executive non-qualified deferred compensation plan pursuant to which certain service providers, including our named executive officers, may defer up to 90% of their
cash compensation other than bonuses and 100% of their cash bonuses, and pursuant to which we may make matching and other contributions in our discretion. Any matching contributions made by us
generally would be subject to continued service for one year, subject to earlier vesting upon death, disability, a change in control of us or the participant becoming eligible for retirement under the
plan. A participant generally may elect to receive his or her account balance under the plan upon attaining an age specified by the participant or upon the participant's retirement, in either case in
lump-sum or in annual installments as specified in the plan, provided that the participant's remaining account balance generally would be paid to the participant in lump-sum in the event of the
participant's separation from service with us prior to retirement or in the event of death or disability.
We
permit executive officers to purchase common stock at a discount through our 2010 Employee Stock Purchase Plan on the same terms and conditions as our other employees. Executive
officers may also participate in our 401(k) Plan, which allows for the investment of a portion of plan assets in shares of our common stock. Our Compensation and Management Development Committee
approved a discretionary matching Company contribution to our 401(k) Plan for 2019. The matching contribution was made using Company stock in an amount equal to 100% of an employee's total deferrals
into the plan up to a limit of 6% of the employee's total compensation (subject to IRS limits).
Role of Stockholder Say-on-Pay Votes
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We
provide our stockholders with the opportunity to cast an annual advisory vote on executive compensation (a "say-on-pay proposal"). At the Company's annual meeting of stockholders
held in July 2019, approximately 89% of the votes cast on the say-on-pay proposal at the meeting were voted in favor of the proposal. Our Compensation and Management Development Committee believes
this vote affirms our stockholders' support of the Company's approach to executive compensation and did not make specific changes to our executive compensation program in response to the vote.
However, our Compensation and Management Development Committee continues to review and refine the design and administration of our executive pay practices. Our Compensation and Management Development
Committee also will continue to consider the outcome of the Company's say-on-pay votes when making future compensation decisions for our NEOs.
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Stock Ownership Guidelines
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We
maintain Stock Ownership Guidelines to encourage ownership of shares of the Company's common stock by our directors and executive officers, to further align their interests with
the long-term interests of our stockholders and to further promote the Company's commitment to sound corporate governance. Under these guidelines, directors and executive officers have until three
years from the date the director or executive officer becomes subject to the guidelines, to achieve an ownership target equal to the lower of the "Base
Salary Target" and the "Fixed Share Target" determined as follows:
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POSITION
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BASE SALARY / FIXED SHARE TARGET
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CEO
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Number of shares with a Stock Value equal to or greater than 6 times Base Salary
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Executive Officrs
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Number of shares with a Stock Value equal to or greater than 2 times Base Salary
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Board of Directors
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Number of shares with a Stock Value equal to or greater than 3 times Annual Retainer
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"Annual
Retainer" or "Base Salary" for purposes of both the Base Salary Target and Fixed Share Target is the director's annual retainer or the executive's base salary, as applicable, on June 30
of each fiscal year.
"Stock
Value" for purposes of the Base Salary Target is calculated annually at the end of each fiscal year based on the average of the closing prices of our common stock for the last 30 trading days
of the fiscal year.
"Stock
Value" for purposes of the Fixed Share Target is calculated as of the later of (1) January 1, 2012, and (2) the date the director or executive officer originally becomes
subject to the Stock Ownership Guidelines, as the case may be, based on the average of the closing prices of our common stock for the 30 days leading up to, and inclusive of, the applicable
date.
Each
director and executive officer is expected to continuously own sufficient shares to satisfy either the Base Salary Target or the Fixed Share Target ownership target once attained for as long as
he or she remains subject to the Stock Ownership Guidelines. Vested "in the money" stock options count as owned shares for this purpose but unvested stock options, restricted shares, restricted stock
units, and deferred stock units and vested "out of the money" stock options do not. If an individual's ownership target increases because of a change in position or
compensation, the individual will have a three-year period to achieve the incremental amount of shares beginning on the effective date of the change in position or compensation.
Following
the initial three-year period that the director or executive officer is afforded to achieve his or her individual ownership target under the Stock Ownership Guidelines, until a director or
executive officer has satisfied the applicable ownership target, the director or executive officer is required to retain an amount equal to 50% of the net shares received as the result of the
exercise, vesting or payment under any Company equity awards granted to the director or executive. This amount is calculated using the closing price of our common stock on the trading day immediately
preceding the date of exercise, vesting or payment under the equity award. Once a director or executive officer achieves his or her individual ownership target, the retention requirements as described
above no longer will apply to such director or executive officer unless a disposition by such director or executive officer would cause such individual's stock ownership to fall below his or her
ownership target.
As
of April 17, 2020, each of our directors and executive officers was in compliance with the Stock Ownership Guidelines.
Restrictions on Hedging and Pledging of Company Securities
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Our
Insider Trading Policy prohibits short sales of our securities, including a "sale against the box," by our directors and executives. Our Insider Trading Policy also prohibits
directors and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, as they involve the establishment of a short position in our
securities. Our Insider Trading Policy also prohibits directors and executives from holding our securities in a margin account or pledging such securities as collateral for a loan.
Section 162(m)
of the Internal Revenue Code generally limits our annual corporate tax deduction for compensation paid to each of our "covered employees" to $1 million.
"Covered employees" include anyone who served as chief executive officer or chief financial officer during any part of a year and the next three most highly compensated named executive officers for
that year. In addition, once a person is considered a "covered employee," that person remains a covered employee in all subsequent years (including after the person leaves our service or changes
roles). Consequently, we generally will not be entitled to a U.S. tax deduction for compensation paid in any year to our named executive officers and our other "covered employees" in excess of
$1 million. While considering tax deductibility as only one of several considerations in determining compensation, we believe that the tax deduction limitation should not compromise our ability
to structure compensation programs that provide benefits to the Company that outweigh the potential benefit of a tax deduction and, therefore, may approve compensation that is not deductible for tax
purposes.
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COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
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In
April 2009, Kevin T. Conroy joined us as our President & Chief Executive Officer. In November 2016, Jeffrey T. Elliott became our Chief Financial Officer. In January 2015,
D. Scott Coward joined us as Senior Vice President, General Counsel & Secretary. In July 2018, Mr. Coward was appointed Chief Administrative Officer in addition to his titles of Senior
Vice President, General Counsel and Secretary. In April 2018, Mark Stenhouse joined us as President, Cologuard and was named General Manager, Screening in November 2019. Mr. Cole joined us
General Manager, Precision Oncology following the Company's acquisition of Genomic Health in November 2019. Mr. Orville joined us as Senior Vice President, Pipeline in February 2019 and was
named General Manager, Pipeline in November 2019. Ms. Hooker joined us in 2013 to start our clinical laboratory pending FDA approval of Cologuard and has served as our Senior Vice President,
Operations since 2015.
Employment Agreements with our NEOs
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We
have entered into agreements with our NEOs under which we have agreed to certain compensation arrangements and severance and change of control benefits. In connection with his
commencement of employment with the Company in November 2019, we entered into a letter agreement with Mr. Cole, under which we have agreed to certain retention arrangements, as described below.
Each
of these packages was determined based on negotiations with the applicable NEO and taking into account his or her background and qualifications and the nature of his or her position. We believe
that these compensation packages are appropriate in light of the competition for top executives in the biotechnology field and among similarly-situated companies, and that the terms of these
arrangements are consistent with our executive compensation goals, including the balancing of short-term and long-term compensation to properly motivate our NEOs.
Conroy Employment Agreement
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Mr. Conroy's
employment agreement, dated March 18, 2009, provides for a minimum base salary and for a minimum target bonus opportunity equal to at least 50% of his base
salary, with the exact amount of any such bonus to be based upon the achievement of
corporate and individual performance goals to be determined by our Compensation and Management Development Committee. At the end of 2019, Mr. Conroy's base salary was $800,200 and his target
bonus opportunity was 125% of his base salary.
Under
his agreement, Mr. Conroy would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under
"Potential Benefits upon Termination or Change of Control" beginning on page 37 below. The agreement also prohibits Mr. Conroy from engaging
in certain activities involving competition with us and from soliciting our employees for an 18-month period following termination of his employment with the Company.
Elliott Employment Agreement
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Mr. Elliott's
employment agreement, dated November 8, 2016, provides for a minimum base salary and for a minimum target bonus opportunity equal to 40% of his base
salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our
Compensation and Management Development Committee. At the end of 2019, Mr. Elliott's base salary was $460,000 and his target bonus opportunity was 50% of his base salary.
Under
his agreement, Mr. Elliott would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under
"Potential Benefits upon Termination or Change of Control" beginning on page 37 below. The agreement also prohibits Mr. Elliott from
engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for a 12-month period following termination of his employment with the
Company.
Stenhouse Employment Agreement
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Mr. Stenhouse's
employment agreement, dated April 2, 2018, provides for a minimum base salary and for a minimum target bonus opportunity equal to 50% of his base
salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our
Compensation and Management Development Committee. At the end of 2019, Mr. Stenhouse's base salary was $515,000 and his target bonus opportunity was 50% of his base salary.
Under
his agreement, Mr. Stenhouse would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under
"Potential Benefits upon Termination or Change of Control" beginning on page 37 below. The agreement also prohibits Mr. Stenhouse from
engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for a 12-month period following termination of his employment with the
Company.
Coward Employment Agreement
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Mr. Coward's
employment agreement, dated October 30, 2014, provides for a minimum base salary and for a minimum target bonus opportunity equal to 40% of his base
salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our
Compensation and Management Development Committee. At the end of 2019, Mr. Coward's base salary was $484,100, and his target bonus opportunity was 50% of this base salary.
Under
his agreement, Mr. Coward would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under
"Potential Benefits upon Termination or Change of Control" beginning on page 37 below. The agreement also prohibits Mr. Coward from
soliciting our customers for a 12-month period following termination of his employment with the Company.
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On
November 15, 2019, the Company entered into a letter agreement with Mr. Cole setting forth the terms and conditions of a retention arrangement following the
Company's acquisition of Genomic Health. The letter agreement provides for a cash retention bonus of $550,000, subject to Mr. Cole's continued employment through December 31, 2020, a
further cash retention bonus of $450,000, subject to Mr. Cole's continued employment through May 8, 2021, and a retention RSU award with a target value of $800,000, vesting on
December 31, 2020, subject to Mr. Cole's continued employment through such date. At the end of 2019, Mr. Cole's base salary was $557,293, and his target bonus opportunity was 55%
of this base salary.
Orville Employment Agreement
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Mr. Orville's
employment agreement, dated February 18, 2019, provides for a minimum base salary and for a minimum target bonus opportunity equal to 50% of his base
salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our
Compensation and Management Development Committee. At the end of 2019, Mr. Orville's base salary was $375,000 and his target bonus opportunity was 50% of his base salary. Mr. Orville
also received a RSU grant (described above), a signing bonus in the amount of $200,000, and a one-time relocation payment in the amount of $325,000 in connection with his employment agreement.
Under
his agreement, Mr. Orville would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under
"Potential Benefits upon Termination or Change of Control" beginning on page 37 below. The agreement also prohibits Mr. Orville from
engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for a 12-month period following termination of his employment with the
Company.
Hooker Employment Agreement
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Ms. Hooker's
employment agreement, dated August 28, 2017, provides for a minimum base salary and for a minimum target bonus opportunity, with the exact amount of any
such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our Compensation and Management Development
Committee. At the end of 2019, Ms. Hooker's base salary was $371,700 and her target bonus opportunity was 50% of her base salary.
Under
her agreement, Ms. Hooker would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under
"Potential Benefits upon Termination or Change of Control" beginning on page 37 below. The agreement also prohibits Ms. Hooker from engaging
in certain activities involving competition with us and from soliciting our employees or certain of our customers for a 12-month period following termination of her employment with the Company.
Potential Benefits upon Termination or Change of Control
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We
believe that providing executives with severance and change of control protection is important for the following reasons:
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to allow executives to value the forward looking elements of their compensation packages, and therefore limit retention risk; and
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to provide compensation assurances which are competitive with those of other similarly-situated companies.
Accordingly,
the Company's employment agreements and equity awards generally provide for salary continuation in the event of certain employment terminations beyond the control of the executive, as
well as varying degrees of accelerated vesting of equity awards in the event of a change of control of the Company.
This
"Potential Benefits upon Termination or Change of Control" section should be read in conjunction with the "Potential Payments upon Termination or Change of Control" section beginning on
page 46 below, which provides a table that quantifies the benefits described in this section.
Severance and Change of Control Arrangements in General
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We
have entered into employment agreements and maintain certain plans that will require us to provide compensation and other benefits to our executive officers in connection with
certain events related to a termination of employment or change of control.
Conroy Employment Agreement
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Under
his employment agreement, Mr. Conroy would, upon termination without "cause," resignation for "good reason" or certain "change of control" events (in each case as
defined in Mr. Conroy's agreement), be entitled to receive certain benefits, as described below.
Under
Mr. Conroy's employment agreement, upon termination without cause or resignation for good reason, Mr. Conroy would become entitled to receive the
following:
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Salary continuation for a period of 18 months at his then current base salary;
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Any accrued but unpaid bonus, including any performance-based bonus, as of the termination date, on the same terms and at the same times as
would have applied had Mr. Conroy's employment not terminated;
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The pro rata portion of a target bonus or any other performance-based bonus, provided that such bonus is paid to other senior executives of the
Company at the end of the applicable period within which Mr. Conroy's employment was terminated;
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If Mr. Conroy elects COBRA coverage for health and/or dental insurance, Company-paid monthly premium payments for such coverage until the
earliest of: (1) 12 months from the termination date; (2) the date Mr. Conroy obtains employment offering health and/or dental coverage comparable to that offered by the
Company; or (3) the date COBRA coverage would otherwise terminate;
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A payment of $10,000 towards the cost of an outplacement consulting package within 30 days of termination;
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The vesting of the then unvested equity awards granted to Mr. Conroy (whether stock options, restricted stock or stock purchase rights
under the Company's equity compensation plan, or other equity awards) will immediately accelerate by a period of 12 months; and
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A change in the exercise period for vested equity awards such that vested equity awards become exercisable until the earlier of (1) two
years from the date of termination of employment and (2) the latest date on which those equity awards expire or are eligible to be exercised under the grant agreements, determined without
regard to such termination or resignation.
Under
Mr. Conroy's employment agreement, in connection with a change of control, Mr. Conroy would become entitled to receive the following:
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In the event of termination by the Company without cause or by Mr. Conroy for good reason, within 12 months before, or if
Mr. Conroy remains employed with the Company on the effective date of, a change of control, a lump-sum payment equal to 24 months of base salary and his pro rata target bonus through the
effective date of the change of control; provided, that any payments previously made to Mr. Conroy in connection with the termination of his employment by the Company without cause or by
Mr. Conroy with good reason within the 12 months preceding a change of control would be credited against any such lump-sum payment;
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Accelerated vesting of all outstanding unvested equity awards (whether stock options, restricted stock or stock purchase rights under the
Company's equity compensation plans, or other equity awards), subject to Mr. Conroy's agreement to remain employed by the Company or any successor, if requested, for a period of at least six
months following the change of control at his then current base salary;
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In the event Mr. Conroy's employment is terminated by the Company without cause or by Mr. Conroy for good reason in anticipation
or contemplation of a pending or potential change of control or while a potential change of control is under consideration or being negotiated by the Company's Board of Directors, Mr. Conroy
will be deemed to remain an employee for purposes of the incentive plan to which he is entitled to participate under his employment agreement (the "Long Term Incentive Plan", described below) as of
the effective date of the change of control and will receive a full payout under the Long Term Incentive Plan as described in his employment agreement as though he remained an employee of the Company
as of the effective date of such change of control; and
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A tax gross-up payment in an amount sufficient to cause the net amount retained by him, after deduction of any parachute payment excise taxes,
to equal the amounts payable as described above. At this time, our Board of Directors does not intend to provide any additional tax gross-up payments to employees it may hire in the future.
Elliott, Stenhouse, Coward, Orville and Hooker Employment Agreements
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Under
their employment agreements, Mr. Elliott, Mr. Stenhouse, Mr. Coward, Mr. Orville and Ms. Hooker would, upon termination without "cause,"
resignation for "good reason" or certain "change of control" events (in each case as defined in their respective agreements), receive certain benefits, as described below.
Under
their employment agreements, upon termination without cause or resignation for good reason, Mr. Elliott, Mr. Stenhouse, Mr. Coward, Mr. Orville and Ms. Hooker
would become entitled to receive the following:
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Salary continuation for a period of 12 months at the executive's then current base salary;
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Any accrued but unpaid bonus, including any performance-based bonus, as of the termination date, on the same terms and at the same times as
would have applied had the executive's employment not terminated;
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If the executive elects COBRA coverage for health and/or dental insurance, Company-paid monthly premium payments for such coverage until the
earliest of: (1) 12 months from the termination date; (2) the date the executive obtains employment offering health and/or dental coverage comparable to that offered by the
Company; or (3) the date COBRA coverage would otherwise terminate;
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A payment of $10,000 towards the cost of an outplacement consulting package within 30 days of termination;
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The vesting of the then unvested equity awards granted to the executive (whether stock options, restricted stock or stock purchase rights under
the Company's equity compensation plan, or other equity awards) will immediately accelerate by a period of 12 months; provided, that, solely in respect of Mr. Stenhouse,
Mr. Orville and Ms. Hooker, for purposes of Performance Awards (as defined in their employment agreements), they will be treated as having remained in service for an additional
12 months following actual Separation from Service (as defined in their employment agreements), provided that such Performance Awards will not become earned and vested solely as a result of
such treatment, and the vesting and earning of all Performance Awards will remain subject to the attainment of all applicable performance goals, and such Performance Awards, if and to the extent they
become earned and vested, will be payable at the same time as under the applicable award agreement; and
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A change in the exercise period for vested equity awards such that vested equity awards become exercisable until the earlier of (1) two
years from the date of termination of employment and (2) the latest date on which those equity awards expire or are eligible to be exercised under the grant agreements, determined without
regard to such termination or resignation.
Under
our employment agreements with Mr. Elliott, Mr. Stenhouse, Mr. Coward, Mr. Orville and Ms. Hooker, all such executives would become entitled to accelerated
vesting of all outstanding unvested equity awards (whether stock options, restricted stock, RSUs or stock purchase rights under the Company's equity compensation plans, or other equity awards) if
(1) within 12 months after a change of control, the executive is terminated by the Company (or any successor) without cause or the executive terminates the executive's employment for
good reason, (2) a change of control happens within four months after the Company terminates the executive without cause or the executive terminates the executive's employment for good reason
or (3) solely with respect to Mr. Elliott and Mr. Coward, he remains employed by the Company (or any successor) for at least six months following a change of control. Solely with
respect to Mr. Stenhouse, Mr. Orville and Ms. Hooker, any Performance Awards held by them as of such change of control will be deemed to have been fully vested and earned based
upon the greater of (A) an assumed achievement of all relevant performance goals at the "target" level or (B) the "actual" level of achievement of all relevant performance goals as of
the change of control.
Conditions to Receipt of Severance and Change of Control Benefits
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Under
Mr. Conroy's employment agreement, the Company's obligations to provide Mr. Conroy with the severance benefits described above are contingent
on:
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Mr. Conroy's resignation from our Board of Directors in the event of any termination of Mr. Conroy's employment with the Company
or upon the request of our Board of Directors in connection with any change of control;
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Mr. Conroy's delivery and non-revocation of a signed waiver and release in a form reasonably satisfactory to the Company of all claims he
may have against the Company;
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Mr. Conroy's compliance with his Employee Confidentiality and Assignment Agreement with the Company;
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Mr. Conroy's compliance with the 18-month non-competition covenant in his employment agreement; and
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Mr. Conroy's compliance with the 18-month non-solicitation covenant in his employment agreement.
Under
Mr. Elliott's, Mr. Stenhouse's, Mr. Coward's, Mr. Orville's and Ms. Hooker's employment agreements, the Company's obligations to provide the severance benefits
described above are contingent on:
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The executive's delivery and non-revocation of a signed waiver and release in a form reasonably satisfactory to the Company of all claims he may
have against the Company;
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The executive's compliance with the terms of the executive's Employee Confidentiality and Assignment Agreement with the Company;
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The executive's compliance with the 12-month non-competition covenant to the extent set forth in the executive's employment agreement; and
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The executive's compliance with the 12-month non-solicitation covenant set forth in the executive's employment agreement.
In
accordance with each NEO's employment agreement, in the event of the death or disability of the executive during the executive's employment term, the following will
occur:
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The executive's employment and the executive's employment agreement will immediately and automatically terminate; and
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All equity awards granted to the executive, whether stock options or stock purchase rights under the Company's equity compensation plans, or
other equity awards, that are unvested at the time of termination will immediately become fully vested and exercisable upon such termination.
Mr. Cole's
letter agreement provides that if his employment is terminated by the Company or an affiliate of the Company without cause (as defined in the letter agreement), he
would become entitled to payment of any unvested cash retention bonus thereunder, subject to his execution of a release of claims in favor of the Company and its affiliates. The letter agreement also
provides that if Mr. Cole's employment terminates for any reason other than cause during calendar year 2020, he will receive a pro-rata portion of the 2020 annual bonus he would otherwise have
received had his employment continued through December 31, 2020. Further, the letter agreement provides that if Mr. Cole's employment terminates for any reason other than cause between
January 1, 2021 and May 8, 2021, he will receive a pro-rata portion of the 2021 annual bonus he would have otherwise received had his employment continued through December 31,
2021. Finally, the letter agreement provides that if Mr. Cole's employment is terminated by the Company or an affiliate of the Company without cause, the unvested portion of the retention RSU
award granted to him under the letter agreement will vest in full.
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Exact
Sciences
2020
Proxy
Statement
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39
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Table of Contents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS
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Change in Control Benefits under 2010 Plan and 2019 Plan
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Under
both the 2010 Plan and 2019 Plan, except as otherwise specifically provided in the applicable award agreement or in an executive's employment agreement, upon the consummation
of a change in control (as defined in each of the 2010 Plan and 2019 Plan): all outstanding awards will remain the obligation of the Company or be assumed by the surviving or acquiring entity, and
there will be automatically substituted for the shares of our common stock then subject to the awards the consideration payable with respect of the outstanding shares of our common stock in connection
with the change in control, the time vesting and exercisability of all outstanding awards will immediately accelerate by a period of twelve months, provided that, with respect to Performance Awards
(as defined in each of the 2010 Plan and 2019 Plan), such acceleration will apply to Performance Awards such that if the applicable performance period is scheduled to end within 12 months
following the Change in Control, the Performance Award will be deemed to have been fully vested and earned as of the Change in Control based upon the greater of (A) an assumed achievement of
all relevant performance goals at the "target" level or (B) the actual level of achievement of all relevant performance goals as of the Change in Control. In addition to the foregoing, with
respect to awards granted prior to the consummation of the change in control, in the event that any grantee who remains an employee of the Company or the acquiring or surviving entity immediately
following the consummation of the change in control is terminated without cause (as defined in each of the 2010 Plan and 2019 Plan) or terminates his or her own employment for good reason (as defined
in each of the 2010 Plan and 2019 Plan) prior to the first anniversary of the consummation of the change in control: (1) all options and SARs outstanding on the date the grantee's employment is
terminated, will become immediately exercisable in full and will terminate, to the extent unexercised, on their scheduled expiration date, and if the shares of our common stock subject to the options
are subject to repurchase provisions then the repurchase restrictions will immediately lapse; (2) all restricted stock awards outstanding on the date the grantee's employment is terminated,
will become vested in full and free of all repurchase provisions; (3) all restricted stock units that are not Performance Awards outstanding on the date the grantee's employment is terminated
will become vested in full, and if the shares of common stock subject to such Restricted Stock Units are subject to repurchase provisions then such repurchase provisions will immediately lapse;
(4) all other stock-based awards (as defined in each of the 2010 Plan and 2019 Plan) that are not Performance Awards will become exercisable, realizable or vested in full, and will be free of
all repurchase provisions, as the case may be; and (5) all restricted stock awards, restricted stock units and other stock-based awards that are Performance Awards will become fully vested and
earned based upon the greater of (A) an assumed achievement of all relevant performance goals at the "target" level or (B) the actual level of achievement of all relevant performance
goals as of the change in control.
The
PSUs granted to our NEOs in 2019 provide that upon the consummation of a change in control (as defined in the 2019 Plan) prior to the NEO's separation from service (as defined in the 2019 Plan),
or upon a separation from service initiated by the Company or an affiliate in anticipation of the change in control and other than for cause (as defined in the 2019 Plan) during the six-month period
preceding the change in control, the PSUs will vest based upon the higher of "target" achievement or actual performance achieved through the change in control (or as otherwise determined by the
Compensation and Management Development Committee).
The
summary of the foregoing benefits arising out of a change in control under the 2010 Plan and the 2019 Plan are subject to and qualified by the terms and conditions of all applicable award
agreements and employment agreements to which our named executive officers are a party, in each case, as described in this Proxy Statement.
Payments under the Executive Deferred Compensation Plan
|
Participants
in our executive deferred compensation plan, including the named executive officers, generally may elect to receive their account balances under the plan upon attaining
an age specified by the applicable participant or upon the participant's retirement, in either case in lump-sum or in annual installments as specified in the plan, provided that the participant's
remaining account balance generally would be paid to the participant in lump-sum in the event of the participant's separation from service with us prior to retirement or in the event of death or
disability. In addition, any unvested amounts in a participant's account would vest upon the participant's death, disability, a change in control of us or the participant becoming eligible for
retirement under the plan.
As
part of Mr. Conroy's employment agreement, we established a Long Term Incentive Plan pursuant to which Mr. Conroy would be entitled to receive a cash payment upon a
change of control based on the equity value of the Company as reflected in the following table.
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LONG TERM INCENTIVE PLAN
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PORTION OF EQUITY VALUE
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NAME
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FROM $100 MILLION
TO $500 MILLION
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EACH INCREMENTAL
$50 MILLION FROM
$500 MILLION TO
$1 BILLION
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EACH INCREMENTAL
$50 MILLION FROM
$1 BILLION TO
$2 BILLION
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ANY AMOUNT OVER
$2 BILLION
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Kevin T. Conroy
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1.00
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%
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0.50
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%
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0.25
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%
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0.00
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%
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40
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Exact
Sciences
2020
Proxy
Statement
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Table of Contents
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
The
following table sets forth certain information regarding beneficial ownership of our common stock as of April 17, 2020 by:
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»
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each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock;
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»
-
each executive officer included in the Summary Compensation Table above;
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»
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each of our directors;
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»
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each person nominated to become a director; and
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»
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all executive officers, directors and nominees as a group.
Unless
otherwise noted below, the address of each person listed on the table is c/o Exact Sciences Corporation at 441 Charmany Drive, Madison, Wisconsin 53719. To our knowledge, each person listed
below has sole voting and investment power over the shares shown as beneficially owned except to the extent jointly owned with spouses or otherwise noted below.
Beneficial
ownership is determined in accordance with the rules of the SEC. The information does not necessarily indicate ownership for any other purpose. Under these rules, shares of common stock
issuable by us to a person pursuant to restricted stock unit awards expected to vest within 60 days of April 17, 2020 and options which may be exercised within 60 days after
April 17, 2020 are deemed to be beneficially owned and outstanding for purposes of calculating the number of shares and the percentage beneficially owned by that person. However, these shares
are not deemed to be beneficially owned and outstanding for purposes of computing the percentage beneficially owned by any other person. The applicable percentage of common stock outstanding as of
April 17, 2020 is based upon 149,443,103 shares outstanding on that date.
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AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
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NAME AND ADDRESS OF BENEFICIAL OWNER
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NUMBER OF
ISSUED
SHARES
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NUMBER OF
SHARES
ISSUABLE(1)
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TOTAL SHARES
BENEFICIALLY
OWNED
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PERCENTAGE OF
COMMON STOCK
OUTSTANDING
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Directors and Executive Officers
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Thomas D. Carey
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34,181
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18,850
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53,031
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*
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Eli Casdin
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6,712
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(2)
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8,888
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15,600
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*
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G. Bradley Cole
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10,194
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43,757
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53,951
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*
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Kevin T. Conroy
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1,019,268
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(3)
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830,721
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(4)
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1,849,989
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1.3%
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D. Scott Coward
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54,313
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(5)
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2,697
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(4)
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57,010
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*
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James E. Doyle
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32,440
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18,477
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50,917
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*
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Jeffrey T. Elliott
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60,015
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(6)
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59,940
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(4)
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119,955
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*
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Ana Hooker
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208,687
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(7)
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60,498
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(4)
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269,185
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*
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Pierre Jacquet
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5,982
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5,982
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*
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Daniel J. Levangie
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12,458
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16,545
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29,003
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*
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Jacob Orville
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2,688
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(8)
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(4)
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2,688
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*
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Kathleen Sebelius
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8,200
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8,200
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*
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Andrew Slavitt
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6,887
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6,887
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*
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Mark Stenhouse
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29,926
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(9)
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2,697
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(4)
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32,623
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*
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Michael S. Wyzga
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8,913
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26,595
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35,508
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*
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Katherine S. Zanotti
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77,513
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(10)
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25,637
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103,150
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*
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All directors and executive officers as a group (17 persons)(11)
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1,584,291
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1,118,912
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2,703,203
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1.8%
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Stockholders
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BlackRock, Inc.(12)
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7,784,507
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7,784,507
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5.3%
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T. Rowe Price(13)
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18,698,591
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18,698,591
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12.6%
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The Vanguard Group(14)
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13,428,104
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13,428,104
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9.1%
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Exact
Sciences
2020
Proxy
Statement
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53
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Table of Contents
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
-
(1)
-
Represents
shares of our common stock issuable pursuant to option, restricted stock unit and deferred stock unit awards exercisable or issuable within
60 days of April 17, 2020. Does not include shares of stock issuable pursuant to option, restricted stock unit and deferred stock unit awards not exercisable or issuable within
60 days of April 17, 2020.
-
(2)
-
Includes
450 shares of common stock held in custodial accounts, for the benefit of certain of Mr. Casdin's family members, over which
Mr. Casdin serves as custodian (the "Casdin Custodial Accounts"). Mr. Casdin may be deemed to have shared voting and investment power with respect to the shares of common stock held by
the Casdin Custodial Accounts. Mr. Casdin expressly disclaims beneficial ownership of any such securities held by the Casdin Custodial Accounts, except to the extent of his pecuniary interest
therein, if any.
-
(3)
-
Includes
26,305 shares held through our 401(k) plan.
-
(4)
-
Does
not include shares of common stock issuable on May 1, 2020 upon purchase pursuant to the Company's 2010 Employee Stock Purchase Plan. The
number of shares to be purchased on May 1, 2020 was indeterminable as of April 17, 2020.
-
(5)
-
Includes
4,074 shares held through our 401(k) plan.
-
(6)
-
Includes
1,147 shares held through our 401(k) plan.
-
(7)
-
Includes
1,551 shares held through our 401(k) plan.
-
(8)
-
Includes
192 shares held through our 401(k) plan.
-
(9)
-
Includes
355 shares held through our 401(k) plan.
-
(10)
-
Includes
37,000 shares held in a grantor retained annuity trust in respect of which Mrs. Zanotti is the trustee and holds sole voting and
investment power.
-
(11)
-
Amount
includes shares of common stock beneficially owned by Torsten Hoof, our General Manager, International, who became an executive officer on
November 11, 2019 following the completion of our acquisition of Genomic Health. As of April 17, 2020, Mr. Hoof beneficially owned 5,914 shares and options to purchase 3,610
shares which may be exercised within 60 days after April 17, 2020. As of April 17, 2020, Mr. Hoof did not hold any shares of common stock issuable by us pursuant to
restricted stock unit awards expected to vest within 60 days of April 17, 2020.
-
(12)
-
BlackRock, Inc.,
a Delaware corporation ("BlackRock"), beneficially owns these shares through its subsidiaries, BlackRock Life Limited,
BlackRock International Limited, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland
Limited, BlackRock Finanical Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset
Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management
North Asia Limited, BlackRock (Singapore) Limited and BlackRock Fund Managers Ltd., and has the sole power to vote or to direct the vote of 6,816,920 shares and has the sole power to dispose or
to direct the disposition of 7,784,507 shares. The principal address of BlackRock is 55 East 52nd Street, New York, New York 10055. This information has been obtained from Schedule 13G
filed by BlackRock with the SEC on February 10, 2020.
-
(13)
-
T.
Rowe Price Associates, Inc., a Maryland corporation ("T. Rowe Price"), has the sole power to vote or to direct the vote of 5,311,294 shares
and the sole power to dispose or to direct the disposition of 18,698,591 shares. As disclosed by T. Rowe Price, these securities are owned by various individual and institutional investors for which
T. Rowe Price serves as an investment advisor. For purposes of reporting requirements of the Exchange Act, T. Rowe Price is deemed to be the beneficial owner of such securities. The principal address
of T. Rowe Price is 100 E. Pratt Street, Baltimore, MD 21202. This information has been obtained from Amendment No. 2 to Schedule 13G filed by T. Rowe Price with the SEC on
February 14, 2020.
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(14)
-
The
Vanguard Group, Inc., a Pennsylvania corporation ("Vanguard"), beneficially owns these shares directly and through its subsidiaries,
Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. Vanguard has the sole power to vote or to direct the vote of 115,578 shares, the shared power to vote or to direct the
vote of 37,980 shares, the sole power to dispose or to direct the disposition of 13,289,134 shares and shared power to dispose or to direct the disposition of 138,970 shares. Vanguard Fiduciary Trust
Company, a wholly-owned subsidiary of Vanguard, is the beneficial owner of 62,530 shares, and Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, is the beneficial
owner of 127,145 shares. The principal address of Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. This information has been obtained from Amendment No. 7 to Schedule 13G
filed by Vanguard with the SEC on February 12, 2020.
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54
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Exact
Sciences
2020
Proxy
Statement
|
Table of Contents
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
Section 16(a)
of the Exchange Act requires our directors, executive officers and persons who own more than ten percent of a registered class of our equity securities to file
reports of ownership and changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all such filings. Based solely on our review of copies of such
filings, we believe that all reporting persons complied on a timely basis with all Section 16(a) filing requirements during the year ended December 31, 2019, except that Eli Casdin filed
one late Form 4 with respect to shares of common stock Mr. Casdin received in exchange for shares of Genomic Health he held indirectly prior to the Company's acquisition of Genomic
Health.
Our
Board of Directors knows of no business that will be presented for consideration at the 2020 Annual Meeting other than those items stated above. If any other business should come
before the 2020 Annual Meeting, votes may be cast pursuant to proxies in respect to any such business in the best judgment of the person or persons acting under the proxies.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 23, 2020
|
The
proxy statement and annual report to stockholders are available at www.proxvote.com.
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Exact
Sciences
2020
Proxy
Statement
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55
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Table of Contents
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials
instead of a full set of proxy materials?
Under rules adopted by the SEC, we are furnishing proxy materials to our stockholders primarily via the Internet, instead of mailing printed copies of those
materials to each stockholder. On or about June 11, 2020, we will mail to our stockholders of record as of June 1, 2020 (other than those who previously requested electronic or paper
delivery on an ongoing basis) a Notice of Meeting and Important Notice Regarding the Availability of Proxy Materials (the "Notice") containing instructions on how to access our proxy materials,
including our proxy statement and our 2020 Annual Report, which includes our Annual Report on Form 10-K for the year ended December 31, 2019. All stockholders will have the ability to
access our proxy materials on the website referred to in the Notice or request a printed set of the proxy materials. Instructions on how to access our proxy materials on the Internet or to request
printed versions are provided in the Notice. The Notice also instructs you on how to access your proxy card to vote through the Internet or by telephone. In addition, stockholders may request to
receive proxy materials in printed form by mail or electronically by email on an ongoing basis. If you have previously elected to receive our proxy materials electronically, you will continue to
receive these materials via email until you elect otherwise.
What does it mean if I receive more than one Notice or more than one set of proxy materials?
It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that
all of your shares are voted, for each Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing,
dating and returning the enclosed proxy card in the enclosed envelope.
How do I receive a paper copy of the materials?
If you prefer to receive paper copies of the proxy materials, you can still do so. You may request a paper copy by following the instructions provided in the
Notice. The Notice also provides you with instructions on how to request paper copies of the proxy materials on an ongoing basis. There is no charge to receive the materials by mail. You may request
printed copies of the materials until one year after the date of the Annual Meeting. If you have previously elected to receive printed proxy materials, you will continue to receive these materials in
paper format until you elect otherwise.
What is a proxy?
Our Board of Directors is asking for your proxy. This means you authorize persons selected by us to vote your shares at the annual meeting in the way that you
instruct. All shares represented by valid proxies received before the annual meeting will be voted in accordance with the stockholder's specific voting instructions.
What items will be voted on at the Annual Meeting?
There are four proposals scheduled to be voted on at the annual meeting:
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»
-
To elect the three nominees to our Board of Directors nominated by our Board of Directors to serve for a three year term as Class II
directors.
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»
-
To ratify the appointment of PricewaterhouseCoopers, LLP as our independent registered public accounting firm for 2020.
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»
-
To hold an advisory vote on executive compensation.
-
»
-
To approve an amendment to our Certificate of Incorporation increasing the number of authorized shares of common stock from 200,000,000 shares
to 400,000,000 shares.
Our
Board of Directors is not aware of any other matters to be brought before the meeting. If other matters are properly raised at the meeting, the proxy holders may vote any shares represented by
proxy in their discretion.
What are our Board of Directors' voting recommendations?
Our Board of Directors recommends that you vote your shares:
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»
-
FOR the three nominees to our Board of Directors nominated by our Board of Directors to serve for
a three year term as Class II directors;
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»
-
FOR the ratification of the appointment of PricewaterhouseCoopers, LLP as our independent
registered public accounting firm for 2020;
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»
-
FOR the approval of the advisory vote on executive compensation; and
-
»
-
FOR the approval of the amendment to our Certificate of Incorporation increasing the number of
authorized shares of common stock from 200,000,000 shares to 400,000,000 shares.
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56
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Exact
Sciences
2020
Proxy
Statement
|
Table of Contents
When is the record date and who is entitled to vote?
Our Board of Directors set June 1, 2020 as the record date. Holders of record of shares of our common stock as of the close of business on the record
date will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement or adjournment thereof. At the close of business on the record date, there
were
shares of our common stock issued and outstanding and entitled to vote. Each share of our common stock is entitled to one vote on any matter presented to stockholders at the Annual Meeting. You will
need to obtain your own Internet access if you choose to attend the Annual Meeting online and/or vote over the Internet.
To
attend and participate in the Annual Meeting, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompanied your proxy materials. If
your shares are held in "street name," you should contact your bank or broker to obtain your 16-digit control number or otherwise vote through the bank or broker. The meeting webcast will begin
promptly at 10:00 a.m. Central Time. We encourage you to access the meeting prior to the start time. Online check-in will begin shortly before the meeting on July 23, 2020.
Why hold a virtual meeting?
Virtual meeting technology provides expanded access, improved communication and cost savings for our stockholders and the Company while providing stockholders
the same rights and opportunities to participate as they would have at an in-person meeting. A virtual meeting enables stockholder participation from any location around the world with Internet
access. Furthermore, as part of our effort to maintain the health and safety of our directors, members of management, employees and stockholders who wish to attend the Annual Meeting, in light of the
novel coronavirus disease, COVID-19, we believe that hosting a virtual meeting is in the best interest of the Company and its stockholders.
What is a stockholder of record?
A stockholder of record or registered stockholder is a stockholder whose ownership of Exact Sciences stock is reflected directly on the books and records of
our transfer agent, American Stock Transfer and Trust Company, LLC. If you hold stock through an account with a bank, broker or similar organization, you are considered the beneficial owner of
shares held in "street name" and are not a stockholder of
record. For shares held in street name, the stockholder of record is your bank, broker or similar organization. We only have access to ownership records for the registered shares. If you are not a
stockholder of record, we will require additional documentation to evidence your stock ownership as of the record date, such as a copy of your brokerage account statement, a letter from your broker,
bank or other nominee or a copy of your notice or voting instruction card. As described below, if you are not a stockholder of record, you will not be able to vote your shares unless you have a proxy
from the stockholder of record authorizing you to vote your shares.
How do I vote my shares without attending the Annual Meeting?
We recommend that stockholders vote by proxy even if they plan to attend the Annual Meeting and vote electronically. If you are a stockholder of record, there
are three ways to vote by proxy:
-
»
-
By telephone. You can vote by calling 1-800-690-6903 with the control number included
on the Notice or proxy card.
-
»
-
By Internet. You can vote over the Internet at www.proxyvote.com by following the
instructions on the Notice or proxy card.
-
»
-
By mail. You can vote by mail by signing, dating and mailing the proxy card, which
you may have received by mail.
Telephone
and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on July 22, 2020.
If
your shares are held in the name of a bank, broker or other holder of record, you will receive instructions on how to vote from the bank, broker or holder of record. You must follow the
instructions of such bank, broker or holder of record in order for your shares to be voted.
How can I attend and vote at the Annual Meeting?
We will be hosting the Annual Meeting live via audio webcast. Any stockholder can attend the Annual Meeting live online at
https://www.virtualshareholdermeeting.com/EXAS2020. If you were a stockholder as of the record date, or you hold a valid proxy for the Annual Meeting, you can vote at the Annual Meeting. A summary of
the information you need to attend the Annual Meeting online is provided below:
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Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at
https://www.virtualshareholdermeeting.com/EXAS2020.
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Assistance with questions regarding how to attend and participate via the Internet will be provided at
https://www.virtualshareholdermeeting.com/EXAS2020 on the day of the Annual Meeting.
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Webcast starts at 10:00 a.m. Central Time.
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You will need your 16-Digit Control Number to enter the Annual Meeting.
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Stockholders may submit questions while attending the Annual Meeting via the Internet.
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Webcast replay of the Annual Meeting will be available until July 23, 2021.
To
attend and participate in the Annual Meeting, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompanied your proxy materials. If
your shares are held in "street name," you should contact your bank or broker to obtain your 16-digit control number or otherwise vote through the bank or broker.
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What if during the check-in time or during the Annual Meeting I have technical difficulties or trouble
accessing the virtual meeting website?
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any
difficulties accessing the virtual meeting website during the check-in or meeting time, please call the technical support number that will be posted on the Annual Meeting login page.
How can I change or revoke my vote?
You may change or revoke your vote as follows:
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Stockholders of record. You may change or revoke your vote by submitting a written
notice of revocation to Exact Sciences Corporation c/o Secretary at 441 Charmany Drive, Madison, Wisconsin 53719 or by submitting another vote on or before July 22, 2020. You may also change
your vote by voting again by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m., Eastern Time, on July 22, 2020 or by attending the Annual
Meeting, revoking your proxy and voting again.
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Beneficial owners of shares held in "street name." You may change or revoke your
voting instructions by following the specific directions provided to you by your bank or broker.
Your
most recent proxy card or telephone or Internet proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of
revocation to the Company before your proxy is voted or you vote at the Annual Meeting.
What happens if I do not give specific voting instructions?
Stockholders of record. If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions then the proxy holders
will vote your shares in the manner recommended by our Board of Directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion for any other
matters properly presented for a vote at the meeting.
Beneficial owners of shares held in "street name." If you are a beneficial owner of shares held in street name and do not provide the organization that holds your
shares with specific voting instructions, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your
shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have
the authority to vote on this matter with respect to your shares. This is referred to as a "broker non-vote."
What ballot measures are considered "routine" or "non-routine?"
The election of directors ("Proposal 1") and the advisory vote on the compensation paid to our executive officers ("Proposal 3") are considered to be
non-routine matters under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore there may be broker non-votes on Proposals 1 and 3.
The
ratification of the appointment of PWC as our independent registered public accounting firm for 2020 ("Proposal 2") and the approval of the amendment to our Certificate of Incorporation increasing
the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares ("Proposal 4") are considered to be routine matters under applicable rules. A broker or other nominee may
generally vote on routine matters, and we do not expect there to be any broker non-votes with respect to Proposals 2 or 4.
What is the quorum for the annual meeting?
The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote is necessary for the transaction of business at the annual
meeting. This is called a quorum.
What is the voting requirement to approve each of the proposals?
The following are the voting requirements for each proposal:
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Proposal 1, Election of Directors. The nominees receiving the highest number
of votes will be elected as Class II directors to serve until the 2023 annual meeting of stockholders. Under the majority voting policy contained in our Corporate Governance Guidelines, any
nominee for director in an uncontested election who receives a greater number of votes "withheld" from his or her election than votes "for" such election must offer his or her resignation as a
director to our Corporate Governance and Nominating Committee of our Board of Directors. Upon receipt of this offer of resignation, our Corporate Governance and Nominating Committee will consider the
offer of resignation and recommend to our Board of Directors action to be taken with respect to the offer of resignation, including whether or not to accept such offer of resignation. Our Board of
Directors will then act upon such recommendation and promptly disclose its decision, together with an explanation of the reasons behind such decision.
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Proposal 2, Ratification of Appointment of Independent Registered Public Accounting
Firm. The ratification of our Audit and Finance Committee's appointment of PWC as our independent registered public accounting firm for 2020 will be approved if a
majority of the votes of stockholders present or represented, in person or by proxy, and voting on this matter are cast in favor of the proposal.
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Proposal 3, Advisory Vote on Executive Compensation. The compensation paid to our
named executive officers will be considered approved if a majority of the votes of stockholders present or represented, in person or by proxy, and voting on this matter, are cast in favor of the
proposal.
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Proposal 4, Approval of an Amendment to our Certificate of Incorporation. The
amendment to our Certificate of Incorporation to increase the number of authorized shares of our common stock from 200,000,000 shares to 400,000,000 shares will be approved if holders of a majority of
the issued and outstanding shares of common stock as of the record date vote in favor of the proposal.
How are abstentions and broker non-votes treated?
Broker non-votes and abstentions are counted for purposes of determining whether a quorum is present. Broker non-votes and abstentions are not counted as votes
cast on any proposal considered at the annual meeting and, therefore, will have no effect on the proposals regarding the election of directors and the advisory vote on the compensation of our named
executive officers. We expect no broker non-votes on the proposals regarding the appointment of PWC as our independent registered public accounting firm for 2020 and the amendment to our Certificate
of Incorporation to increase the number of authorized shares. Abstentions will have no effect on the proposal ratifying the appointment of PWC as our independent registered public accounting firm for
2020. Abstentions will have the same effect as "no" votes on the proposal approving the amendment to the Certificate of Incorporation.
Who pays for solicitation of proxies?
We are paying the cost of soliciting proxies. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses for sending proxy materials to stockholders and obtaining their votes. In addition to soliciting the proxies by mail, certain of our directors, officers and regular employees,
without compensation, may solicit proxies personally or by telephone, facsimile and email.
Where can I find the voting results of the annual meeting?
We will announce preliminary or final voting results at the annual meeting and publish final results in a Form 8-K filed with the SEC within four
business days following the meeting.
What is the deadline to propose actions for consideration or to nominate individuals to serve as directors at
the 2021 annual meeting of stockholders?
Requirements for Stockholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials. Stockholder proposals to be considered for inclusion in the
proxy statement and form of proxy relating to the 2021 annual meeting of stockholders must be received no later than February 11, 2021. In addition, all proposals will need to comply with
Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which lists the requirements for the inclusion of stockholder proposals in company-sponsored proxy materials.
Stockholder proposals must be delivered to the Company's Secretary at 441 Charmany Drive, Madison, Wisconsin 53719.
Requirements for Stockholder Nominations or Proposals to Be Brought Before the 2021 Annual Meeting of Stockholders. Notice of any director nomination or other
proposal that you intend to present at the 2021 annual meeting of stockholders, but do not intend to have included in the proxy statement and form of proxy relating to the 2021 annual meeting of
stockholders, must be delivered to the Company's Secretary at 441 Charmany Drive, Madison, Wisconsin 53719 not earlier than the close of business on March 25, 2021 and not later than the close
of business on April 24, 2021. In addition, your notice must set forth the information required by our by-laws with respect to each director nomination or other proposal that you intend to
present at the 2021 annual meeting of stockholders.
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ANNEX A CERTIFICATE OF AMENDMENT TO SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EXACT SCIENCES CORPORATION
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ANNEX A CERTIFICATE OF AMENDMENT TO SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EXACT SCIENCES CORPORATION
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ANNEX A
CERTIFICATE OF AMENDMENT
TO SIXTH AMENDED AND RESTATED CERTIFICATE
OF
INCORPORATION OF EXACT SCIENCES CORPORATION
EXACT SCIENCES CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies
that:
FIRST:
This Certificate of Amendment amends the provisions of the Corporation's Sixth Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation").
SECOND:
Pursuant to the Section 242 of the Delaware General Corporation Law, this Certificate of Amendment hereby amends the provisions of the Corporation's Certificate of
Incorporation by deleting the first paragraph of Article "FOURTH" and substituting therefor a new first paragraph to read in its entirety as follows:
"FOURTH
The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 405,000,000 shares, consisting of 400,000,000 shares of Common
Stock with a par value of $0.01 per share (the "Common Stock") and 5,000,000 shares of Preferred Stock with a par value of $0.01 per share (the "Preferred Stock")."
THIRD:
This Certificate of Amendment has been duly adopted by the stockholders of the Corporation in accordance with the provisions of Section 242 of the Delaware General
Corporation Law.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its officer thereunto duly authorized this day
of 2020.
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EXACT SCIENCES CORPORATION
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By:
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Name:
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Title:
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VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on July 22, 2020 for shares held directly and by 11:59 p.m. Eastern Time on July 21, 2020 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. EXACT SCIENCES CORPORATION 441 CHARMANY DRIVE MADISON, WI 53719 ATTN: LEGAL DEPARTMENT During The Meeting - Go to www.virtualshareholdermeeting.com/EXAS2020 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on July 22, 2020 for shares held directly and by 11:59 p.m. Eastern Time on July 21, 2020 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D14223-P40404 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. EXACT SCIENCES CORPORATION THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR DIRECTOR AND "FOR" PROPOSALS 2, 3 AND 4. For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. ! ! ! 1. To elect three members of the board of directors to serve for three-year terms as Class II Directors, each such director to serve for such term and until his or her respective successor has been duly elected and qualified, or until his or her earlier death, resignation or removal. NOMINEES: 01) Eli Casdin 02) James E. Doyle 03) Kathleen Sebelius For Against Abstain ! ! ! ! ! ! ! ! ! 2. Proposal to ratify the selection of PricewaterhouseCoopers, LLP as the Company's independent registered public accounting firm for 2020. 3. Proposal to approve on an advisory basis the compensation of the Company's named executive officers. 4. Proposal to approve an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares. To transact such other business as may properly come before the Annual Meeting and any adjournment thereof. 5. ! For address changes and/or comments, please check this box and write them on the back where indicated. Note: Please sign exactly as your name or names appear(s) on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
2020 Annual Meeting of the Stockholders EXACT SCIENCES CORPORATION www.virtualshareholdermeeting.com/EXAS2020 Date: July 23, 2020 Time: 10:00 a.m. Central Time IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 23, 2020. THE PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE AT www.proxyvote.com. Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. D14224-P40404 EXACT SCIENCES CORPORATION Proxy for Annual Meeting of Stockholders July 23, 2020 SOLICITED BY THE BOARD OF DIRECTORS The undersigned hereby appoint(s) Kevin T. Conroy and Jeffrey T. Elliott together, and each of them singly, proxies, with full power of substitution to vote all shares of stock of Exact Sciences Corporation (the "Company") which the undersigned is/are entitled to vote at the Annual Meeting of Stockholders of Exact Sciences Corporation to be held on Thursday, July 23, 2020, at 10:00 a.m. local time, and at any adjournments or postponements thereof, upon matters set forth in the Notice of Annual Meeting of Stockholders and Proxy Statement. THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3 AND 4. PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) CONTINUED AND TO BE SIGNED ON REVERSE SIDE Address Changes/Comments: