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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

 

Exact Sciences Corporation

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441 Charmany Drive
Madison, Wisconsin 53719

June 11, 2020

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of Exact Sciences Corporation to be held at 10:00 a.m., Central Time, on Thursday, July 23, 2020. We have been monitoring the COVID-19 situation closely and have determined that holding an in-person annual meeting could pose a risk to the health and safety of our stockholders, employees, and directors. As a result, this year's annual meeting will be completely virtual and conducted via live webcast. You will be able to attend the annual meeting online and submit your questions during the meeting by visiting https://www.virtualshareholdermeeting.com/EXAS2020. You will also be able to vote your shares electronically at the annual meeting.

We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders. Hosting a virtual meeting enables increased stockholder attendance and participation since stockholders can participate from any location around the world with Internet connectivity. Information on how to participate in this year's virtual meeting can be found beginning on Page 57 of the accompanying Proxy Statement.

For your convenience, we are also pleased to offer a re-playable webcast of the annual meeting at https://www.virtualshareholdermeeting.com/EXAS2020.

Your vote is important to us. Please act as soon as possible to vote your shares. It is important that your shares be represented at the meeting whether or not you plan to attend the annual meeting via the Internet. Please vote electronically over the Internet, by telephone or if, you receive a paper copy of the proxy card by mail, by returning your signed proxy card in the envelope provided.

On behalf of the Board of Directors and management, it is my pleasure to express our appreciation for your continued support.

Very truly yours,

GRAPHIC

Kevin T. Conroy
Chairman, President and Chief Executive Officer


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EXACT SCIENCES CORPORATION
441 Charmany Drive
Madison, Wisconsin 53719

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 23, 2020

To the Stockholders of Exact Sciences Corporation:

NOTICE IS HEREBY GIVEN that the 2020 Annual Meeting of Stockholders of Exact Sciences Corporation, a Delaware corporation, will be held on Thursday, July 23, 2020, at 10:00 a.m., Central Time. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting https://www.virtualshareholdermeeting.com/EXAS2020. For instructions on how to attend and vote your shares at the Annual Meeting, see the information in the accompanying Proxy Statement in the section titled "Questions and Answers" beginning on page 56.

The Annual Meeting is being held for the following purposes:

1. To elect the four nominees to our Board of Directors nominated by our Board of Directors to serve for a three year term as Class II directors.

2. To ratify the appointment of PricewaterhouseCoopers, LLP as our independent registered public accounting firm for 2020.

3. To hold an advisory vote on executive compensation.

4. 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.

5. To transact such other business as may properly come before the annual meeting and any adjournments or postponements thereof.

We are pleased to utilize the Securities and Exchange Commission ("SEC") rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. 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 containing instructions on how to access our proxy statement and our Annual Report on Form 10-K.

By Order of our Board of Directors,

GRAPHIC

D. Scott Coward
Senior Vice President, General Counsel, Chief
Administrative Officer and Secretary

Madison, Wisconsin
June 11, 2020

This Notice of Annual Meeting and Proxy Statement are first being distributed or made available, as the case may be, on or about June 11, 2020.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting:
This Proxy Statement and our Annual Report are available free of charge at www.proxyvote.com.


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2020 Proxy Summary

  1

Proposal 1—Election of Directors

 
5

Information Concerning Directors and Nominees for Director

 
6

Information Concerning Executive Officers

 
11

Corporate Governance Principles, Board Matters and Non-Employee Director Compensation

 
13

Proposal 2—Ratification of Appointment of Independent Registered Public Accounting Firm

 
24

Certain Relationships and Related Transactions

 
25

Independent Registered Public Accounting Firm

 
26

Report of the Audit and Finance Committee

 
27

Proposal 3—Advisory Vote on Executive Compensation

 
28

Compensation and Other Information Concerning Named Executive Officers

 
29

Report of the Compensation and Management Development Committee

 
41

Executive Compensation Tables

 
42

Equity Compensation Plan Information

 
49

CEO Pay Ratio

 
50

Proposal 4—Approval of Amendment to Certificate of Incorporation

 
51

Securities Ownership of Certain Beneficial Owners and Management

 
53

Section 16(a) Beneficial Ownership Reporting Compliance

 
55

Other Business

 
55

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on July 23, 2020

 
55

Questions and Answers

 
56

Annex A—Certificate of Amendment to Sixth Amended and Restated Certificate of Incorporation

 
60

Exact Sciences 2020 Proxy Statement

 

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441 Charmany Drive
Madison, Wisconsin 53719

2020 PROXY SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROXY STATEMENT. IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER. PLEASE READ THE ENTIRE PROXY STATEMENT CAREFULLY BEFORE VOTING.

2020 Annual Meeting of Stockholders Information

Date and Time:   Thursday, July 23, 2020, at 10:00 a.m., Central Time

Location:

 

Meeting live via the Internet by visiting https://www.virtualshareholdermeeting.com/EXAS2020

Record Date:

 

June 1, 2020

Admission:

 

To participate in the Annual Meeting, visit https://www.virtualshareholdermeeting.com/EXAS2020. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompanied your proxy materials.

Your Vote

Your vote is very important. Our Board of Directors is requesting you to allow your Common Stock to be represented at our 2020 Annual Meeting by proxies named on the proxy card.

In connection with this request, on or about June 11, 2020, we expect to send to our stockholders (other than those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our annual report, and how to vote through the Internet or by telephone.

How to Vote

Stockholders of record may vote their shares prior to the annual meeting via the Internet, by telephone or by mail.

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Beneficial owners of shares held in "street name" may vote by following the voting instructions provided to them by their bank or broker.

Exact Sciences 2020 Proxy Statement

 

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2020 PROXY SUMMARY

Summary of Voting Proposals and Voting Recommendations

Proposals
  Board Recommendation
PROPOSAL 1.Election of Directors (Page 5)   FOR ALL

We are asking stockholders to vote on each director nominee to our Board of Directors named in this Proxy Statement. Our Board of Directors believes that each director nominee has the qualifications, experience, and skills necessary to represent stockholders through service on our Board of Directors.

 

 

PROPOSAL 2.Ratification of Appointment of Independent Registered Public Accounting Firm (Page 24)

 

FOR

Our Audit and Finance Committee has appointed PricewaterhouseCoopers, LLP ("PWC") to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2020. Our Audit and Finance Committee and our Board of Directors believe that the retention of PWC to serve as our independent auditor is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify our Audit and Finance Committee's appointment of PWC.

 

 

PROPOSAL 3.Non-Binding, Advisory Approval of Compensation to NEOs ("Say-on-Pay") (Page 28)

 

FOR

We are asking our stockholders to indicate their support for our executive compensation programs as described in this Proxy Statement. This vote is referred to as a "Say-on-Pay" vote.

 

 

PROPOSAL 4.Approval of Amendment to our Certificate of Incorporation (Page 51)

 

FOR

We are asking stockholders 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.

 

 

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Exact Sciences 2020 Proxy Statement


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2020 PROXY SUMMARY

Nominees for Election as Directors and Continuing Directors

Our Board of Directors recommends a vote FOR the election of each of the following nominees for director:

        Director   Director       Committee Membership
Name   Age   Since   Class   Primary Occupation   AFC   CMDC   CGNC   ITPC
Nominees for Election as Class II Directors            
Eli Casdin*   47   2017   Class II   Founder, Chief Investment Officer and Managing Director, Casdin Capital   GRAPHIC           GRAPHIC
James E. Doyle*    74   2014   Class II   Former Governor of Wisconsin (2003-2011); Currently Of Counsel, Foley & Lardner LLP, and Partner, Doyle & Boyce Strategies       GRAPHIC   GRAPHIC    
Freda Lewis-Hall*   65   2020   Class II   Former Chief Patient Officer, Executive Vice President, and Chief Medical Officer of Pfizer Inc.                
Kathleen Sebelius*   72   2019   Class II   Former Secretary of the Department of Health and Human Services (2009-2014) and former Governor of Kansas (2003-2009); Currently CEO of Sebelius Resources LLC           GRAPHIC   GRAPHIC
Continuing Directors                                
Thomas D. Carey*   58   2013   Class III   Founder and Managing Director, Perspective Group, LLC           GRAPHIC    
Kevin T. Conroy   54   2009   Class I   President, CEO and Chairman of the Board of Directors, Exact Sciences Corporation                
Pierre Jacquet*   53   2019   Class III   Vice Chairman, Global Healthcare Managing Director, L.E.K. Consulting   GRAPHIC           GRAPHIC
Daniel J. Levangie*   69   2010   Class III   Former CEO and President, Cytyc Health Corporation; Currently Co-founder and Manager, ATON Partners       GRAPHIC       GRAPHIC
Andrew Slavitt   54   2019   Class I   Founder and General Partner of Town Hall Ventures; Former Acting Administrator, Centers for Medicare & Medicaid Services                
Michael S. Wyzga*   65   2015   Class III   Former Executive Vice President, Finance and Chief Financial Officer, Genzyme Corporation   GRAPHIC            
Katherine S. Zanotti*   65   2009   Class I   Former CEO of Arbonne International       GRAPHIC        
*    Independent    GRAPHIC  Chair    GRAPHIC  Member     Lead Independent Director
AFC = Audit and Finance Committee; CMDC = Compensation and Management Development Committee; CGNC = Corporate Governance & Nominating Committee; ITPC = Innovation, Technology and Pipeline Committee

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2020 PROXY SUMMARY

Governance Highlights

Nine of eleven directors independent
Annual evaluation of CEO by our Board of Directors
Annual Board and Committee self-evaluations
Board exercising a strong, independent oversight function
Robust director nominee selection process
Committed to actively seeking female and minority board candidates
Lead Independent Director exercising forceful, energetic and independent leadership
Standing Committees comprised entirely of independent directors
Robust stock ownership guidelines for independent directors and executive officers
Clawback provisions in our key compensation programs
Regular executive sessions of non-management directors
Annual "say on pay" advisory vote
Anti-hedging, anti-short sale and anti-pledging policies
Engagement of independent compensation consultant

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PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

WHAT YOU ARE VOTING ON:

At the 2020 Annual Meeting, four Class II directors are to be elected, each to hold office until the 2023 Annual Meeting and until his or her respective successor is elected and qualified, or until his or her earlier death, resignation or removal.

The Company's Board of Directors currently consists of eleven members and is divided into three classes serving terms of three years. Stockholders elect one class of directors at each annual meeting. The class up for election at the 2020 Annual Meeting is Class II, whose members are currently Eli Casdin, James E. Doyle, Freda Lewis-Hall and Kathleen Sebelius. Upon the recommendation of the Corporate Governance and Nominating Committee of our Board of Directors, our Board of Directors has nominated and recommended Eli Casdin, James E. Doyle, Freda Lewis-Hall and Kathleen Sebelius for re-election to our Board of Directors as Class II directors.

Shares represented by all proxies received by our Board of Directors and not marked so as to withhold authority to vote for any individual nominee will be voted FOR the election of the nominees named below. Our Board of Directors knows of no reason why any nominee would be unable or unwilling to serve, but if such should be the case, proxies may be voted for the election of some other person nominated by our Board of Directors.

The Company's Corporate Governance Guidelines provide for a majority voting policy in uncontested elections of nominees to our Board of Directors. Under the majority voting policy, 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 the Corporate Governance and Nominating Committee of our Board of Directors. Upon receipt of this offer of resignation, the 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. Our majority voting policy is set forth in our Corporate Governance Guidelines, which can be found on our website located at www.exactsciences.com under "Investor Relations—Corporate Governance."

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Set forth below are the nominees to be elected at the 2020 Annual Meeting and other members of our Board of Directors and, for each such other director, the year such director was first elected as a director, the year each director's current term will expire and the current class of each director.

Exact Sciences 2020 Proxy Statement

 

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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR

INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR

Set forth below is background information for each current director and nominee for director, as well as information regarding additional experience, qualifications, attributes or skills that led our Board of Directors to conclude that such director or nominee should serve on our Board of Directors.

Nominees for Class II Directors

 
  ELI
CASDIN
DIRECTOR SINCE: 2017  
 
 



PHOTO
Current Class of Director: II
Current Term Expiration: 2020

 
Eli Casdin, age 47, is the Chief Investment Officer and founder of Casdin Capital. For the last 17 years he has analyzed and invested in disruptive technologies and business models in life sciences and healthcare. Prior to founding Casdin Capital, Mr. Casdin was a vice president at Alliance Bernstein in its "thematic" based investment group where he researched and invested in the implications of new technologies for the life science and healthcare sectors. His Alliance Bernstein black book, "The Dawn of Molecular Medicine" detailed the early yet already accelerating wave of innovations in life sciences, and the next wave of investment opportunities. Mr. Casdin's prior experience includes time at Bear Stearns and Cooper Hill Partners, a healthcare focused investment firm. Mr. Casdin earned a bachelor's degree from Columbia University and an MBA from Columbia Business School.

Casdin brings to our Board of Directors significant financial and investment experience and a deep knowledge of the healthcare and life sciences industries that provides important insights into our industry and competitive landscape.

 
 

 

 
  JAMES E.
DOYLE
DIRECTOR SINCE: 2014  
 
 



PHOTO
Current Class of Director: II
Current Term Expiration: 2020

 
James E. Doyle, age 74, is currently Of Counsel at Foley & Lardner LLP, an international law firm, as well as partner of Doyle & Boyce Strategies, a consultant to several national foundations. Prior to his current positions, Mr. Doyle served two terms as the 44th governor of the state of Wisconsin from 2003 to 2011. Prior to his gubernatorial service, Mr. Doyle served three terms as the attorney general of the state of Wisconsin from 1991 to 2003. In connection with his service as attorney general, Mr. Doyle served as president of the National Association of Attorneys General from 1997 to 1998. Mr. Doyle also previously served as the District Attorney of Dane County, Wisconsin and worked in private practice. His extensive public service also includes stints in the Peace Corps as a teacher in Tunisia and as an attorney in a federal legal services office on the Navajo Indian Reservation. Mr. Doyle earned a bachelor's degree from the University of Wisconsin—Madison and a JD from Harvard Law School.

Mr. Doyle brings to our Board of Directors proven leadership and managerial capabilities acquired through his extensive public and private sector experience. He also provides our Board of Directors with deep knowledge of governmental and legal affairs.

 
 

 

 
  FREDA
LEWIS-HALL
DIRECTOR SINCE: 2020  
 
 



PHOTO
Current Class of Director: II
Current Term Expiration: 2020

 
Freda Lewis-Hall, M.D., DFAPA, age 65, served as Chief Patient Officer and Executive Vice President of Pfizer Inc. (NYSE: PFE) from January 2019 to December 2019. She acted as a Senior Medical Advisor to the CEO until her retirement in March 2020. From 2009 to December 2019, Dr. Lewis-Hall served as Pfizer's Chief Medical Officer and Executive Vice President. Prior to joining Pfizer in 2009, Dr. Lewis-Hall held various senior leadership positions including Chief Medical Officer and Executive Vice President, Medicines Development at Vertex Pharmaceuticals, Inc., a biopharmaceutical company, from 2008 to 2009, and Senior Vice President, U.S. Pharmaceuticals, Medical Affairs for Bristol-Myers Squibb Co. from 2003 to 2008. Dr. Lewis-Hall serves on the board of directors of SpringWorks Therapeutics, Inc. (NASDAQ: SWTX) and 1Life Healthcare, Inc. (NASDAQ: ONEM). From December 2014 to May 2017, she served on the board of directors of Tenet Healthcare Corporation (NYSE: THC). Dr. Lewis-Hall currently serves on the board of fellows of The Harvard School and the board of advisors of the Dell Medical School. She also serves as a member of the board of governors for the Patient-Centered Outcomes Research Institute. Dr. Lewis-Hall earned a B.A. in Natural Sciences from Johns Hopkins University and an M.D. from Howard University College of Medicine.

Dr. Lewis-Hall brings significant expertise in the biopharmaceutical industry and leadership experience as a senior executive at various biopharmaceutical companies. Her leadership in patient-focused medicine and emphasis on patient engagement and inclusion provides critical insight to our Board of Directors.

 
 

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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR
 
  KATHLEEN G.
SEBELIUS
DIRECTOR SINCE: 2019  
 
 


PHOTO
Current Class of Director: II
Current Term Expiration: 2020

 
Kathleen G. Sebelius, age 72, serves as CEO of Sebelius Resources LLC, a strategic consulting firm that advises private companies, non-profit organizations and financial investors. From 2009 through 2014, Ms. Sebelius served in President Barack Obama's Cabinet as the 21st Secretary of the Department of Health and Human Services. At HHS, Sebelius managed 11 operating agencies, 90,000 employees in 50 countries around the world, and a $1 trillion budget. Prior to that Ms. Sebelius served as Governor of Kansas from 2003 to 2009. Previous elected offices include two terms as the Kansas insurance commissioner and four terms in the Kansas Legislature. Ms. Sebelius serves as a director of Dermira, Inc. (Nasdaq: DERM), a biopharmaceutical company, Myovant Sciences Ltd. (NYSE: MYOV), a biopharmaceutical company, and the Kaiser Family Foundation. She also co-chairs the Aspen Institute Health Strategy Group and serves on advisory boards for the Dole Institute of Politics, Solera Health, Out Leadership, the Estée Lauder Foundation, and the University of Kansas College of Liberal Arts and Sciences. Ms. Sebelius earned a bachelor's degree from Trinity Washington University and a master of public administration from the University of Kansas.

Ms. Sebelius brings a wealth of state and federal government expertise, management insight and health care experience to our Board of Directors with deep knowledge of the systemic challenges and opportunities to improve health care.

 
 

Other Members of our Board of Directors

 
  THOMAS D.
CAREY
DIRECTOR SINCE: 2013  
 
 


PHOTO
Current Class of Director: III
Current Term Expiration: 2021

 
Thomas D. Carey, age 58, is the founder and Managing Director of Perspective Group, LLC, a human capital and executive search firm serving the healthcare industry. Previously, Mr. Carey was a member at Spencer Stuart, a global executive search firm, from 2010 through 2015, where he was responsible for leading the firm's global efforts in providing board services to companies within all segments of the healthcare market. Prior to Spencer Stuart, Mr. Carey was with Russell Reynolds Associates from 2001 to 2010 where he served as a Partner and Co-Head of the firm's Global Life Sciences Practice for the three years preceding his move to Spencer Stuart. Prior to entering the search industry, Mr. Carey served as an investment banker and then chief financial officer of both private and public healthcare and information technology companies. Mr. Carey earned a bachelor's degree from the College of the Holy Cross and an MBA from the Kellogg Graduate School of Management at Northwestern University.

Mr. Carey brings to our Board of Directors more than 20 years of broad life sciences industry expertise. His background in finance and the executive search industry also provides our Board of Directors a valuable perspective with respect to financial strategy, key executive hires and other personnel-related matters.

 
 

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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR

 
  KEVIN T.
CONROY
DIRECTOR SINCE: 2009  
 
 


PHOTO
Current Class of Director: I
Current Term Expiration: 2022

 
Kevin T. Conroy, age 54, has served as our President and Chief Executive Officer and as a director since 2009, and as Chairman of our Board of Directors since 2014. Mr. Conroy served as president and chief executive officer of Third Wave Technologies, Inc., a molecular diagnostics company, from 2005 until the acquisition of Third Wave by Hologic, Inc. in 2008. He joined Third Wave in 2004 and served as general counsel until 2005. Prior to joining Third Wave, Mr. Conroy held leadership positions at GE Healthcare and practiced intellectual property law in private practice. Mr. Conroy also serves as a director of Epizyme, Inc. (Nasdaq: EPZM), Adaptive Biotechnologies Corporation (Nasdaq: ADPT) and ARYA Sciences Acquisition Corporation (Nasdaq: ARYAU:US). He earned a bachelor's degree in electrical engineering at Michigan State University and a JD from the University of Michigan.

Mr. Conroy brings extensive business, legal and executive leadership experience to our Board of Directors. With his significant knowledge of, and breadth of experience in, the healthcare industry in general and the molecular diagnostics industry and our Company in particular, he provides our Board of Directors with a vital understanding of our business and industry.

 
 

 

 
  PIERRE
JACQUET
DIRECTOR SINCE: 2019  
 
 


PHOTO
Current Class of Director: III
Current Term Expiration: 2021

 
Pierre Jacquet, age 53, is Vice Chairman, Global Healthcare Managing Director of L.E.K. Consulting. He has served in a variety of leadership roles for L.E.K., including the firm's Global Leadership Team, the Americas management committee, and various partner operating committees since 2001. Mr. Jacquet has spent more than two decades focused on corporate strategy consulting, merger and acquisition advisory services, and value management, both domestically and internationally. A former physician, he worked with Arthur D. Little from 1998 to 2000 as a manager of its pharmaceutical practice and performed business development for Genzyme in 1997. During his medical career, he was a Fellow at the Washington Cancer Institute from 1993 to 1996, where he authored over 40 publications and presentations. Pierre has also served on the Advisory Board of Life Science Cares since 2017. Mr. Jacquet earned a Master of Business Administration from the Darden Graduate School at the University of Virginia in 1998, was awarded a Doctor of Medicine with high distinction in 1991, and a Doctor of Philosophy in biomedical sciences in 1996 from the University of Liège in Belgium.

Mr. Jacquet brings to our Board of Directors extensive business and managerial experience in the healthcare industry and his service as a physician and fellow at an oncology focused medical institute provides valuable insight to our Board of Directors.

 
 

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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR
 
  DANIEL J.
LEVANGIE
DIRECTOR SINCE: 2010  
 
 


PHOTO
Current Class of Director: III
Current Term Expiration: 2021

 
Daniel J. Levangie, age 69, is an experienced executive and corporate director with senior operating experience in the field of medical devices and in vitro diagnostics. Mr. Levangie is co-founder and manager of ATON Partners, a private investment firm, and Chairman, President & CEO of CereVasc, LLC, an early-stage medical device company. From 2013 through January 2017, Mr. Levangie served as President of Insulet Drug Delivery Systems. From 2011 through 2013, Mr. Levangie was chief executive officer of Dune Medical Devices, Inc. and co-founder and managing partner of Constitution Medical Investors, Inc., a Boston-based private investment and product development firm acquired by Roche Diagnostics Corporation in 2013. Prior to the above, Mr. Levangie held a variety of executive management positions with Cytyc Corporation until the acquisition of Cytyc by Hologic, Inc. in 2007. These positions include executive vice president and chief operating officer, chief executive officer and president of Cytyc Health Corporation, executive vice president and chief commercial officer and president, Cytyc Surgical Products Division. Prior to joining Cytyc Corporation in 1992, Mr. Levangie held a number of sales, marketing and management positions with Abbott Laboratories, a diversified healthcare company. Mr. Levangie is currently a director of CereVasc, LLC, Dune Medical Devices and Renovia, Inc. He previously served as a director of Insulet Corporation, a medical device company (Nasdaq: PODD), Liposcience, Inc., a diagnostics company (formerly Nasdaq: LIPO), ev3, Inc., a medical device company, and Hologic, Inc., a diagnostic, imaging systems and surgical products company (Nasdaq: HOLX). Mr. Levangie is a member of the Advisory Board of the Barnett Institute of Northeastern University and is a trustee of Excel Charter School, East Boston. Mr. Levangie earned a bachelor's degree in pharmacy from Northeastern University.

Levangie brings a wealth of executive, managerial and leadership experience in the healthcare industry to our Board. He has significant board of director experience from his service on the boards of directors of numerous medical device and biotechnology companies.

 
 

 

 
  ANDREW
SLAVITT
DIRECTOR SINCE: 2019  
 
 


PHOTO
Current Class of Director: I
Current Term Expiration: 2022

 
Andrew Slavitt, age 54, is the founder and General Partner of Town Hall Ventures, which invests in healthcare innovations in vulnerable communities, a position he has held since 2018. Prior to that, he served as the Acting Administrator for the Centers for Medicare & Medicaid Services from 2015 to 2017, and as Group Executive Vice President of Optum, UnitedHealth Group's health services platform, from 2012 to 2014. From 2006 through 2011, Mr. Slavitt was the CEO of OptumInsight (formerly Ingenix), a UnitedHealth Group subsidiary. He serves on the Board of Directors of United States of Care, a national non-profit health think-tank and advocacy organization, is co-chair of the Future of Healthcare Initiative at the Bipartisan Policy Center, and previously served as a director of Capella Education Company, an education services company (formerly Nasdaq: CPLA). Mr. Slavitt received his MBA from Harvard Business School and bachelor of arts and bachelor of science degrees from the University of Pennsylvania.

Mr. Slavitt brings to our Board of Directors extensive executive and leadership experience in the healthcare industry. His leadership at Centers for Medicare & Medicaid Services and within the healthcare insurance industry provides a valuable perspective to our Board.

 
 

Exact Sciences 2020 Proxy Statement

 

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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR

 
  MICHAEL S.
WYZGA
DIRECTOR SINCE: 2015  
 
 


PHOTO
Current Class of Director: III
Current Term Expiration: 2021

 
Michael S. Wyzga, age 65, is an independent healthcare consultant and served as the President and Chief Executive Officer and a member of the board of directors of Radius Health, Inc., a biopharmaceutical company focused on developing new therapeutics for the treatment of osteoporosis and other women's health conditions, from December 2011 to November 2013. Prior to that, Mr. Wyzga served in various senior management positions at Genzyme Corporation, a global biotechnology company. Mr. Wyzga joined Genzyme in March 1997 and most recently served as Executive Vice President, Finance from May 2003 until November 2011 and as Chief Financial Officer from July 1999 until November 2011. Mr. Wyzga currently serves as Chairman of the Board of Directors of Gensight Biologics S.A., a clinical-stage biologics company (EPA: SIGHT), Chairman of the Board of Directors of X4 Pharmaceuticals, a biopharmaceutical company (Nasdaq: XFOR), a director of Mereo BioPharma Group plc, a clinical-stage biopharmaceutical company (Nasdaq: MREO), and LogiBio Therapeutics, Inc., a biopharmaceutical company (Nasdaq: LOGC), and previously served as a director of Akebia Therapeutics, Inc. (Nasdaq: AKBA), Prosensa Holding N.V. (formerly Nasdaq: RNA), a biotechnology company, and Idenix Pharmaceuticals, Inc. (formerly Nasdaq: IDIX), a pharmaceutical company. Mr. Wyzga earned a bachelor's degree from Suffolk University and an MBA from Providence College.

Mr. Wyzga brings extensive financial and managerial experience in the biotechnology and biopharmaceutical industries to our Board of Directors with key insight into financial and strategic initiatives as well as extensive public company board service within our industry.

 
 

 

 
  KATHERINE S.
ZANOTTI
DIRECTOR SINCE: 2009  
 
 


PHOTO
Current Class of Director: I
Current Term Expiration: 2022

 
Katherine S. Zanotti, age 65, served as chief executive officer of Arbonne International from 2009 until 2018. Ms. Zanotti also served as Chair of Natural Products Group (the holding company of Arbonne, Nature's Gate, and Levlad) from 2010 until 2018 when Groupe Rocher acquired Natural Products Group and Arbonne International. Arbonne is a botanically based skin care, cosmetic and nutrition company marketed in seven countries, with revenue of over $600 million. From 2002 to 2006, she served as senior vice president of marketing at McDonald's Corporation. Prior to joining McDonald's Ms. Zanotti was a vice president at the Procter & Gamble Company and most recently served as vice president and general manager of the North American pharmaceutical business and the corporate women's health platform. Ms. Zanotti currently serves on the Board of Trustees of Xavier University. Ms. Zanotti currently serves as a director of Cutera, Inc., a developer of cosmetic and aesthetic laser equipment (Nasdaq:CUTR). She previously served as a director of Hill-Rom Holdings, Inc., a worldwide manufacturer and provider of medical technologies and related services (NYSE:HRC); Mentor Corporation, a medical device company; Alberto Culver Company, a personal care products company; and Third Wave Technologies, Inc., a molecular diagnostics company. Ms. Zanotti earned a bachelor's degree in economics and studio fine arts from Georgetown University and an MBA with a concentration in marketing and finance from Xavier University.

Ms. Zanotti's extensive executive, managerial and leadership experience, including many years in the pharmaceutical industry, positions her well to serve as a member of our Board. Her business acumen and experience on the boards of directors of numerous companies make her a valuable addition to our Board of Directors.

 
 

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INFORMATION CONCERNING EXECUTIVE OFFICERS

INFORMATION CONCERNING EXECUTIVE OFFICERS

Set forth below is background information relating to our executive officers. Kevin T. Conroy is discussed above under Information Concerning Directors and Nominees for Director.

 
  JEFFREY T.
ELLIOTT
   
 
 


PHOTO
Position: Chief Financial
Officer

 
Jeffrey T. Elliott, age 42, has served as our Chief Financial Officer since November 2016. Prior to his appointment as Chief Financial Officer, Mr. Elliott served as the Company's Vice President, Business Development and Strategy, from June 2016 to November 2016. Prior to joining the Company, from 2007 to 2016, Mr. Elliott was with Robert W. Baird & Co., where from June 2012 to June 2016 he was a senior research analyst who covered diagnostics and life science tools companies. Earlier in his career, Mr. Elliott worked in a supply chain role for Walgreens and as a consultant at Cap Gemini Ernst & Young. Mr. Elliott earned a bachelor's degree in business administration from the University of Illinois at Urbana-Champaign and an MBA from the University of Chicago Booth School of Business. Mr. Elliott is a CFA charterholder.
 
 

 

 
  MARK
STENHOUSE
   
 
 


PHOTO
Position: General Manager, Screening

 
Mark Stenhouse, age 53, has served as General Manager, Screening since November 2019 and served as President, Cologuard from April 2018 until November 2019. Prior to joining the Company, Mr. Stenhouse worked for over 25 years at Abbott Laboratories (NYSE: ABT) and AbbVie, Inc. (NYSE: ABVV), including in a number of executive and managerial positions within its U.S. Immunology division. Most recently, from October 2016 until March 2018, Mr. Stenhouse served as Vice President, U.S. Immunology, where Mr. Stenhouse developed AbbVie's U.S. expansion into the immunology marketplace. From April 2010 until September 2016, Mr. Stenhouse served as Vice President and Vice President/General Manager, U.S. Immunology—Gastroenterology Franchise, where Mr. Stenhouse led a successful turnaround of the franchise, including approval of HUMIRA for treatment of Ulcerative Colitis. From September 2006 through March 2010, Mr. Stenhouse held various senior management, marketing and sales positions within Abbott Laboratories' U.S. Immunology division. Mr. Stenhouse earned a bachelor's degree in business administration from College of Charleston.
 
 

 

 
  TORSTEN
HOOF
   
 
 


PHOTO
Position: General Manager,
International

 
Torsten Hoof, age 60, has served as our General Manager, International since the Company's acquisition of Genomic Health in November 2019. Mr. Hoof joined Genomic Health in September 2017 as Senior Vice President, International. Mr. Hoof previously served from May 2015 to March 2017 as the Vice President and Head of Oncology EMEA at Baxalta, where he built the company's oncology presence in Europe. From February 2013 to October 2014, Mr. Hoof was also the European General Manager for Endocyte, where he established its European organization designed to bring an innovative, precision medicine solution to patients with ovarian cancer. During his 10 years at Bristol-Myers Squibb, he led the global haemato-oncology franchise and was EMEA General Manager and Vice President for HIV and Primary Care. In his career with Roche, Torsten led the Tamiflu launch as a Global Business Leader and established Roche's German leadership position in Virology. Torsten also served as an Independent Director at HRA Pharma until its acquisition by Goldman Sachs and Astorg in February 2016. Mr. Hoof earned PhD and master's degrees from the University of Hannover, Germany and is an alumnus of the Boehringer Ingelheim Fonds, Germany.
 
 

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  JAKE
ORVILLE
   
 
 


PHOTO
Position: General Manager,
Pipeline

 
Jake Orville, age 46, has served as our General Manager, Pipeline since November 2019 and served as Senior Vice President, Pipeline from February 2019 to November 2019. Mr. Orville previously served as general manager, Cardiometabolic & Endocrinology Franchise, Quest Diagnostics, Inc. from November 2017 to February 2018. Mr. Orville co-founded Cleveland HeartLab, Inc. in December 2008 and served as its chief executive officer from December 2008 to November 2017. Earlier in his career Mr. Orville served in leadership and operational roles at NextGen Sciences, Inc. and Third Wave Technologies, Inc. Mr. Orville earned a bachelor's degree from University of Massachusetts-Amherst and an MBA from the University of Wisconsin-Madison.
 
 

 

 
  GISELA
PAULSEN
   
 
 


PHOTO
Position: General Manager,
Precision Oncology

 
Gisela Paulsen, age 54, has served as our General Manager, Precision Oncology since April 2020. Prior to joining the Company, Ms. Paulsen served in various management roles at F. Hoffmann-La Roche Ltd. and Genentech, Inc since November 2005. She served as Roche and Genentech's Senior Vice President, Global Head, Product Development, Clinical Operations from January 2018 to April 2020, as Roche and Genentech's Vice President, Global Head, Product Development, Global Product Strategy & Late-Stage Portfolio Finance beginning from March 2017 to February 2018, and as Genentech's Vice President, Access Solutions from September 2014 to February 2017. Ms. Paulsen received a bachelor of science, pharmacy and a master of science, pharmaceutics and drug delivery from Uppsala University in Sweden.
 
 

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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION

CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION

Board Independence

Our Board of Directors has determined that each of Thomas D. Carey, Eli Casdin, James E. Doyle, Pierre Jacquet, Daniel J. Levangie, Freda Lewis-Hall, Kathleen Sebelius, Michael S. Wyzga and Katherine S. Zanotti is an independent director within the meaning of the director independence standards of The NASDAQ Stock Market, Inc. ("NASDAQ"). Furthermore, our Board of Directors has determined that all of the members of our Audit and Finance Committee, Compensation and Management Development Committee, Corporate Governance and Nominating Committee and Innovation, Technology and Pipeline Committee are independent within the meaning of the director independence standards of NASDAQ and the rules of the SEC applicable to each such committee.

Executive Sessions of Independent Directors

Executive sessions of our independent directors are generally scheduled following each regularly scheduled in-person meeting of our Board of Directors. Executive sessions are led by James E. Doyle, our lead independent director, who actively solicits other independent directors for agenda items in advance of such meetings. The independent directors utilize the executive sessions to discuss, among other items, corporate strategy and planning, including succession planning for our executive officers.

Board Qualifications

Our Corporate Governance and Nominating Committee is responsible for identifying the appropriate qualifications, skills and characteristics desired of members of our Board of Directors in the context of the needs of the business and the current composition and needs of our Board of Directors.

Director candidates are considered based upon a variety of criteria, including demonstrated business and professional skills and experiences relevant to our business and strategic direction, concern for long-term stockholder interests, personal integrity and sound business judgment. Our Board of Directors seeks members from diverse professional backgrounds who combine a broad spectrum of relevant industry and strategic experience and expertise that, in concert, offer us and our stockholders diversity of opinion and insight in the areas most important to us and our corporate mission. In addition, nominees for director are selected to have complementary, rather than overlapping, skill sets. We are committed to actively seeking female and minority candidates for the pool from which Board candidates are chosen. All candidates for director nominee must have time available to devote to the activities of our Board of Directors. Our Corporate Governance and Nominating Committee also considers the independence of candidates for director nominee, including the appearance of any conflict in serving as a director. Candidates for director nominees who do not meet all of these criteria may still be considered for nomination to our Board of Directors if our Corporate Governance and Nominating Committee believes that the candidate will make an exceptional contribution to us and our stockholders.

Board Leadership Structure

Currently, Mr. Conroy serves as both the Chairman of our Board of Directors and the Chief Executive Officer of the Company. Our by-laws permit these positions to be held by the same person, and our Board of Directors believes that it is in the best interests of the Company to retain flexibility in determining whether to separate or combine the roles of Chairman and Chief Executive Officer based on our circumstances. While our Board of Directors does not have a formal policy regarding the separation of the roles of Chairman and Chief Executive Officer, our Board of Directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of senior management, a highly engaged Board of Directors, and the right balance between (i) effective independent oversight of the Company's business, (ii) our Board of Directors' activities and (iii) consistent corporate leadership. On at least an annual basis, our Corporate Governance and Nominating Committee reviews our corporate leadership structure. As part of its most recent such assessment, the Corporate Governance and Nominating Committee gave thorough consideration to a number of factors, including, but not limited to, the pros and cons of alternative leadership structures given the Company's current operating and governance environment, a review of empirical data on the topic, investor feedback and the dynamics of our Board of Directors.

Based upon these considerations and the recommendation of the Corporate Governance and Nominating Committee, the Board of Directors determined to maintain our Board of Directors' current leadership structure with Mr. Conroy serving as both the Chairman of our Board of Directors and the Chief Executive Officer of the Company. The Board of Directors based this determination on (1) Mr. Conroy's extensive experience in and knowledge of the Company, the molecular diagnostics industry and the regulatory environment, (2) the highly effective bridge Mr. Conroy's service provides between our Board of Directors and the Company's management, (3) Mr. Conroy's continued leadership and vision necessary to lead our Board of Directors and the Company through its challenging industry and macroeconomic environments, (4) Mr. Conroy's investor-focused perspective and (5) the effective independent leadership provided on the Board of Directors by our Lead Independent Director and other independent directors as well as our standing committees which are all comprised entirely of independent directors.

Pursuant to our Corporate Governance Guidelines, at any time that the Company does not have an independent chairman of the Board of Directors, the Board of Directors appoints an independent director to serve as Lead Independent Director. The Lead Independent Director is elected to serve a one-year term commencing upon the adjournment of the annual meeting of stockholders until the adjournment of the following year's annual meeting of stockholders. Our Corporate Governance Guidelines empower our Lead Independent Director with well-defined duties that are further summarized below. In addition, our Board of Directors—which currently is comprised of 82% independent directors—exercises a

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strong, independent oversight function which enhances the accountability of the senior management team to our Board of Directors and provides for robust and impartial leadership and a unified voice that is accountable to our stockholders. This oversight function is enhanced by the fact that our Audit and Finance, Compensation and Management Development, Corporate Governance and Nominating and Innovation, Technology and Pipeline Committees are comprised entirely of independent directors. Further, our Board of Directors meetings include regular executive sessions of the independent directors and an annual evaluation of our CEO's performance against pre-determined goals. Our Board of Directors can and will change its leadership structure if our Board of Directors determines that doing so is in the best interest of the Company and its stockholders.

Lead Independent Director Duties
»
Counsel the CEO on issues of interest and/or concern to the independent directors

»
Coordinate, develop the agenda for and chair executive sessions of the Board's independent directors

»
Act as principal liaison between the independent directors and the CEO on sensitive issues

»
Lead the annual CEO review process and meet with the CEO to discuss such evaluation

»
Review recommendations for retention of consultants who report directly to the Board

»
Provide the Board's chairperson with input as to the preparation of the agenda for Board meetings

»
Advise the Board's chairperson as to the quantity, quality and timeliness of the flow of information from management to the independent directors

Corporate Governance Guidelines

Our Board of Directors has approved, upon the recommendation of the Corporate Governance and Nominating Committee, a set of Corporate Governance Guidelines under which our Board of Directors and its committees operate. Our Corporate Governance Guidelines assist the Board and its committees in the exercise of their responsibilities and establish a common set of expectations and guidelines in order to provide a strong and robust governance framework for the Company. Among other topics, our Corporate Governance Guidelines address the following matters:

 
   

»

Board Evaluation:  Our Board of Directors annually conducts a confidential performance evaluation to determine whether it and its committees are functioning adequately and effectively. As part of this evaluation, each director completes a written self-assessment questionnaire with a variety of questions designed to gather suggestions for improving the effectiveness of the Board of Directors and its committees and to solicit feedback on a range of issues, including Board composition, Board dynamics, the Board's relationship with senior management, Board agendas and meetings, Board processes and Board committees.

   
   

»

Limitation on Other Board Service:  Carrying out the duties and fulfilling the responsibilities as a member of our Board of Directors requires a significant commitment of an individual's time and attention. While our Board of Directors does not believe that explicit limits on the number of other boards of directors on which directors may serve are currently appropriate, each director must notify the Chairman in connection with accepting a seat on the board of directors of another business corporation so that the potential for conflicts or other factors compromising such director's ability to perform his or her duties for our Board of Directors may be fully assessed.

   
   

»

Board and Committee Meeting Attendance:  Each member of the Board is expected to make reasonable efforts to attend regularly scheduled meetings of the Board and to participate in telephone conference meetings or other special meetings of the Board. Attendance and participation at meetings is an important component of the directors' duties and, as such, attendance rates are taken into account by the Corporate Governance and Nominating Committee in connection with assessments of director candidates for re-nomination as directors.

   
   

»

Director Orientation and Continuing Education:  Our Corporate Governance and Nominating Committee has developed an orientation program designed to familiarize new directors with our business and strategic plans, key policies and practices, principal officers and management structure, auditing and compliance processes and our Code of Business Conduct and Ethics. In addition, our Board committees monitor the continuing education needs of their members and recommend action to the Board where appropriate. Further, our executive officers are responsible for periodically providing materials or briefing sessions for continuing directors to assist them in discharging their duties.

   
   

»

Director Access to Management and Advisors:  Directors have complete access to senior members of our management. Our Board of Directors and each of its committees is authorized to request that any Company officer or employee, outside legal counsel, independent auditor or other professional retained by the Company to render advice to the Company, attend any meeting of the Board or such committee, or otherwise meet with members of or advisors to the Board of Directors. Our Board of Directors and each committee is authorized to engage legal, accounting or other advisors to provide it with advice and information in connection with carrying out its or their responsibilities.

   

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Management Succession Planning

Our Board of Directors recognizes that one of its most important duties is to ensure continuity in the Company's senior leadership positions by overseeing the development of executive talent and planning for the succession of our senior management, including our Chief Executive Officer.

Our Corporate Governance and Nominating Committee and Compensation and Management Development Committee review and oversee the development and implementation of senior management succession plans. These committees periodically report to the Board of Directors on (i) such management succession plans, including recommendations and evaluations of potential successors to the Chief Executive Officer and other members of senior management and (ii) any development plans for then-current members of senior management.

Stockholder Engagement

We believe effective corporate governance requires regular, constructive and thoughtful engagement with our stockholders on a number of topics, including operating performance, corporate governance, long-term strategy, executive compensation, corporate social responsibility and governance-related issues. Our Board of Directors, CEO and senior management team play a central role in our stockholder engagement strategy and we regularly engage stockholders throughout the year and consider their input. In addition, our Compensation and Management Development Committee is charged with monitoring and evaluating the Company's engagement with stockholders to solicit feedback on the Company's compensation philosophy, structure, programs, practices and policies.

We solicit ongoing feedback from major stockholders and strive for continued and robust stockholder engagement throughout the year. Our Board of Directors welcomes feedback on its corporate governance and executive compensation practices and policies and believes that continued engagement with stockholders will further align the long-term interests of our Board of Directors, the Company, its management and its stockholders.

As set forth in our Corporate Governance Guidelines, a copy of which is available at www.exactsciences.com, security holders who wish to communicate directly with our Board of Directors, the independent directors of our Board of Directors or any individual member of our Board of Directors may do so by sending such communication by certified mail addressed to the Chairman of our Board of Directors, as a representative of the entire Board of Directors, the Lead Independent Director, as a representative of the independent directors of our Board of Directors, or to the individual director or directors, in each case, c/o Secretary, Exact Sciences Corporation, 441 Charmany Drive, Madison, Wisconsin 53719. The Secretary reviews any such security holder communication and forwards relevant communications to the addressee.

Policies Regarding Director Nominations

Our Board of Directors has adopted a policy concerning director nominations, a copy of which is available at www.exactsciences.com. Set forth below is a summary of certain provisions of this policy.

Process for Identifying and Evaluating Director Nominees

Our Board of Directors is responsible for selecting nominees for election to our Board of Directors by our stockholders. Our Board of Directors delegates the selection process to our Corporate Governance and Nominating Committee, with the expectation that other members of our Board of Directors, and of management, may be requested to take part in the process as appropriate. Generally, our Corporate Governance and Nominating Committee identifies candidates for director nominees in consultation with management, through the use of search firms or other advisers, through the recommendations submitted by other directors or stockholders or through such other methods as our Corporate Governance and Nominating Committee deems appropriate. We are committed to actively seeking female and minority candidates for the pool from which Board candidates are chosen. Once candidates have been identified, our Corporate Governance and Nominating Committee confirms that the candidates meet the qualifications for director nominees established by our Corporate Governance and Nominating Committee. Our Corporate Governance and Nominating Committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks, or any other means that our Corporate Governance and Nominating Committee deems to be helpful in the evaluation process. Our Corporate Governance and Nominating Committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of our Board of Directors. Based on the results of the evaluation process, our Corporate Governance and Nominating Committee recommends candidates for our Board of Directors' approval as nominees for election to our Board of Directors. Our Corporate Governance and Nominating Committee also recommends candidates for our Board of Directors' appointments to the standing committees of our Board of Directors.

Procedures for Recommendation of Director Nominees by Stockholders

The policy of our Corporate Governance and Nominating Committee is to consider properly submitted stockholder recommendations for director candidates. To submit a recommendation to our Corporate Governance and Nominating Committee for director nominee candidates, a stockholder must make such recommendation in writing and include:

»
the name and address of the stockholder making the recommendation, as they appear on our books and records, and of such record holder's beneficial owner, if any;

»
the class and number of shares of our equity that are owned beneficially and held of record by such stockholder and such beneficial owner including all "synthetic equity instruments" (e.g., derivatives, swaps, hedges, etc.), voting rights, rights to fees, dividends, or other material rights;

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»
a description of the material terms of any agreements, arrangements or understandings (whether or not in writing) entered into between such stockholder or such beneficial owner and any other person for the purpose of acquiring, holding, disposing or voting of any shares of any class of our equity;

»
the following information regarding the director nominee:

»
the name, age, business address and residence address of such person;

»
the principal occupation or employment of such person; and

»
the class and number of shares of our equity that are, directly or indirectly, owned beneficially or held of record by such person or any of its affiliates or associates including all "synthetic equity instruments" (e.g., derivatives, swaps, hedges, etc.), voting rights, rights to fees, dividends, or other material rights;

»
certain representations and agreements of such director nominee as set forth in detail in our by-laws;

»
why such recommended candidate meets our criteria and would be able to fulfill the duties of a director;

»
how the recommended candidate meets applicable independence requirements established by the SEC and NASDAQ;

»
a representation that the stockholder giving the notice of recommendation intends to appear in person or by proxy at the applicable meeting of stockholders to nominate the persons named in its notice of recommendation; and

»
all other information relating to the recommended candidate and the recommending stockholder that would be required to be disclosed in solicitations of proxies for the election of directors or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act or our by-laws, including the recommended candidate's written consent to being named in the proxy statement as a nominee and to serving as a director if approved by our Board of Directors and elected.

Recommendations must be sent to the Chairperson of our Corporate Governance and Nominating Committee, c/o Secretary, Exact Sciences Corporation, 441 Charmany Drive, Madison, Wisconsin 53719. The Secretary must receive any such recommendation for nomination not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the date of the proxy statement delivered to stockholders in connection with the preceding year's annual meeting of stockholders; provided, however, that with respect to a special meeting of stockholders called by us for the purpose of electing directors to our Board of Directors, the Secretary must receive any such recommendation not earlier than the 90th day prior to such special meeting nor later than the later of (1) the close of business on the 60th day prior to such special meeting or (2) the close of business on the 10th day following the day on which a public announcement is first made regarding such special meeting. We will promptly forward any such nominations to our Corporate Governance and Nominating Committee. Once our Corporate Governance and Nominating Committee receives a recommendation for a director candidate, such candidate will be evaluated in the same manner as other candidates and a recommendation with respect to such candidate will be delivered to our Board of Directors.

Policy Governing Director Attendance at Annual Meetings of Stockholders

Our policy is to schedule a regular meeting of our Board of Directors on the same date as our annual meeting of stockholders and, accordingly, directors are encouraged to be present at such stockholder meetings. With the exception of one director, all individuals serving on our Board of Directors at the time of the 2019 annual meeting, attended the 2019 annual meeting of stockholders.

Code of Business Conduct and Ethics

We have in place a Code of Business Conduct and Ethics (the "Code of Ethics") that applies to all of our directors, officers and employees. The Code of Ethics is designed to deter wrongdoing and promote:

»
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

»
full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications that we make;

»
compliance with applicable governmental laws, rules and regulations;

»
the prompt internal reporting of violations of the Code of Ethics to an appropriate person identified in the Code of Ethics;

»
accountability for adherence to the Code of Ethics; and

»
anonymous reporting of violations of the Code of Ethics via reporting mechanisms approved by our Audit and Finance Committee.

A current copy of the Code of Ethics is available at www.exactsciences.com. A copy may also be obtained, free of charge, from us upon a request directed to Exact Sciences Corporation, 441 Charmany Drive, Madison, Wisconsin 53719, attention: Investor Relations. We intend to disclose any amendments to or waivers of a provision of the Code of Ethics by posting such information on our website available at www.exactsciences.com and/or in our public filings with the SEC.

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Additional Governance Matters—Corporate Sustainability

Corporate sustainability is consistent with and supports our mission to empower patients and the colon cancer community with the most effective methods of detection to eradicate the disease and save lives. We believe that to serve patients well, it is important to also act responsibly in our relationships with our employees, our communities and the environment. We are committed to: (1) investing in our human capital; (2) conducting our business with the highest professional and ethical standards; (3) quality and the continuing effectiveness of our quality management system; (4) making it easy and affordable to complete our tests; (5) and working safely and being environmentally responsible. Our 2019 Sustainability Report, which outlines these goals in further detail and describes our sustainability practices is available at http://investor.exactsciences.com/investor-relations/corporate-governance/default.aspx.

Our Board of Directors and its Committees

Board of Directors

Our by-laws state that the number of directors constituting the entire Board of Directors shall be determined by resolution of our Board and that our Board has the authority to increase the number of directors, fill any vacancies on our Board and to decrease the number of directors to eliminate any vacancies. The number of directors currently fixed by our Board of Directors is eleven.

Our Board of Directors is classified into three separate classes (Classes I, II and III), with one class of directors nominated for election each year. Our Board of Directors believes the classification of the Board is important to our philosophy of managing and promoting the Company's long-term growth. Given the highly competitive nature of our business and the complexity and evolution of the life sciences industry more broadly, it can take several years to gain a robust understanding of our business and strategy, the Company's organization and structure, our products and our industry. Electing directors to a three year term is intended to promote continuity and stability of strategy and business direction for the long-term interests and expectations of our stockholders and other stakeholders.

Our Board of Directors met 18 times during the year ended December 31, 2019. All directors attended at least 75% of the aggregate of all meetings of our Board of Directors and all committees of our Board of Directors on which he or she served during 2019.

Committees

Our Board of Directors has standing Audit and Finance, Compensation and Management Development, Corporate Governance and Nominating and Innovation, Technology and Pipeline Committees. Our Board of Directors and each standing committee retains the authority to engage its own advisors and consultants. Each standing committee has a charter that has been approved by our Board of Directors. A copy of each committee charter is available at www.exactsciences.com. Each committee reviews the appropriateness of its charter annually or at such other intervals as each committee determines.

The following table sets forth the current members of each standing committee of our Board:

NAME
AUDIT AND
FINANCE

COMPENSATION
AND MANAGEMENT
DEVELOPMENT

CORPORATE
GOVERNANCE AND
NOMINATING

INNOVATION,
TECHNOLOGY AND
PIPELINE

Thomas D. Carey     GRAPHIC  
Eli Casdin GRAPHIC     GRAPHIC
James E. Doyle   GRAPHIC GRAPHIC  
Pierre Jacquet GRAPHIC     GRAPHIC
Daniel J. Levangie   GRAPHIC   GRAPHIC
Freda Lewis-Hall        
Kathleen G. Sebelius     GRAPHIC GRAPHIC
Andrew Slavitt        
Michael S. Wyzga GRAPHIC      
Katherine S. Zanotti   GRAPHIC    

GRAPHIC  Chair     GRAPHIC  Member

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The following summarizes the membership of each committee, as well as the primary roles and responsibilities of each committee and the number of times each committee met in 2019.

 
  AUDIT AND FINANCE
COMMITTEE
  NUMBER OF MEETINGS IN 2019: 7  
 

MEMBERS

»

Mr. Wyzga (Chair)

»

Mr. Casdin

»

Mr. Jacquet

 

AMONG OTHER THINGS, OUR AUDIT AND FINANCE COMMITTEE:

»

Maintains responsibility for assisting our Board of Directors in fulfilling its oversight responsibilities with respect to financial reports and other financial information.

»

Reviews, monitors and reports to our Board of Directors on the adequacy of the Company's financial reporting process and system of internal controls over financial reporting.

»

Selects, evaluates and replaces the independent auditor and serves as ultimate authority to which independent auditors are accountable.

»

Oversees the Company's internal audit department, including the appointment, replacement or dismissal of the director of internal audit and the internal audit department's activities, including all issued internal audit reports, major findings and updates on remediation of past findings.

»

In consultation with management, periodically reviews the adequacy of the Company's disclosure controls and procedures and approves any significant changes thereto.

»

Advises and consults with management concerning plans and objectives for the Company's capitalization, including the structure and amount of debt and equity required to meet the Company's financing needs.

»

Reviews and evaluates significant capital expenditures, mergers, acquisitions, divestitures, joint ventures and other significant transactions.

»

Regularly discusses with management, Company legal counsel and the internal audit department the Company's major risk exposures, their potential financial impact on the Company, and the steps taken to monitor and control those risks, and reviews with management annually a summary of legal and regulatory compliance matters and risk management activities.

»

Provides the Audit and Finance Committee report for inclusion in our proxy statement for our annual meeting of stockholders.

»

Recommends, establishes and monitors procedures for the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matters and the receipt of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters.

 
  Our Board of Directors has determined that each member of our Audit and Finance Committee is independent with the meaning of the NASDAQ director independence standards and applicable rules of the SEC for audit committee members. Our Board of Directors has also determined that each of Mr. Casdin and Mr. Wyzga qualifies as an "audit committee financial expert" under the rules of the SEC.  
 

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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION



 
  COMPENSATION AND
MANAGEMENT
DEVELOPMENT
COMMITTEE
  NUMBER OF MEETINGS IN 2019: 6  
 

MEMBERS

»

Ms. Zanotti (Chair)

»

Mr. Doyle

»

Mr. Levangie

 

AMONG OTHER THINGS, OUR COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE:

»

Discharges the responsibilities of our Board of Directors relating to the compensation of our executive officers.

»

Evaluates and recommends to our Board of Directors appropriate compensation for the Company's independent directors.

»

Oversees the Company's procedures for consideration and determination of executive and director compensation.

»

Reviews and approves all executive compensation.

»

Administers and implements the Company's incentive compensation plans and equity-based plans.

»

Reviews, monitors and oversees the Company's employee benefit plans.

»

Oversees succession planning for executive management and reviews the performance, potential, development and retention of current and future executive management and the organizational capability to meet short- and long-term strategic objectives.

»

Reviews and recommends the Compensation Discussion & Analysis for inclusion in our proxy statement for our annual meeting of stockholders.

»

Provides our Compensation and Management Development Committee Report for inclusion in our proxy statement for our annual meeting of stockholders.

 
  Each member of our Compensation and Management Development Committee is a non-employee director as defined in Rule 16b-3 of the Exchange Act. Our Board of Directors has determined that each member of our Compensation and Management Development Committee is also an independent director within the meaning of NASDAQ's director independence standards and applicable SEC rules.  
 

 

 
  CORPORATE
GOVERNANCE AND
NOMINATING
COMMITTEE
  NUMBER OF MEETINGS IN 2019: 6  
 

MEMBERS

»

Mr. Carey (Chair)

»

Mr. Doyle

»

Ms. Sebelius

 

AMONG OTHER THINGS, OUR CORPORATE GOVERNANCE AND NOMINATING COMMITTEE:

»

Recommends to our Board of Directors persons to serve as members of our Board of Directors and as members of and chairpersons for the committees of our Board of Directors.

»

Considers the recommendations of candidates to serve as directors submitted from our stockholders.

»

Assists our Board of Directors in evaluating the performance of our Board of Directors and our Board committees.

»

Advises our Board of Directors regarding the appropriate board leadership structure for the Company.

»

Reviews and makes recommendations to our Board of Directors on corporate governance matters.

»

Reviews the size and composition of our Board of Directors and recommends to our Board of Directors any changes it deems advisable.

 
  Our Board of Directors has determined that each member of our Corporate Governance and Nominating Committee is an independent director within the meaning of the NASDAQ director independence standards and applicable rules of the SEC.  
 

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  INNOVATION,
TECHNOLOGY AND
PIPELINE COMMITTEE
  NUMBER OF MEETINGS IN 2019: 3  
 

MEMBERS

»

Mr. Levangie (Chair)

»

Mr. Casdin

»

Mr. Jacquet

»

Ms. Sebelius

 

AMONG OTHER THINGS, OUR INNOVATION, TECHNOLOGY AND PIPELINE COMMITTEE:

»

Interacts with management and external advisors to develop insights and recommendations regarding the Company's approach to pipeline development and technical and commercial innovation, including:

»

Maintaining alignment between strategic commercial objectives and the Company's product development pipeline;

»

Assisting management in identification, evaluation and oversight of appropriate pipeline, technology and product development investments;

»

Working with management to prioritize medical and clinical technology needs that can effectively be addressed by the Company;

»

Development, oversight and review of key product development and other technical personnel; and

»

Assessment of new and existing intellectual property assets and risks.

»

Supports the recruitment and development of, and interaction with, the Company's scientific advisory board.

»

Provides an early assessment of, and acts as a sounding board to management with regard to, merger and acquisition opportunities that would expand the Company's pipeline or product/service offerings.

»

Provides feedback and input regarding the Company's development of innovative new business models, strategies and tactics.

 
  Our Board of Directors has determined that each member of our Innovation, Technology and Pipeline Committee is an independent director within the meaning of the NASDAQ director independence standards and applicable rules of the SEC.  
 

Compensation and Management Development Committee Interlocks and Insider Participation

James E. Doyle, Daniel J. Levangie, Katherine S. Zanotti and Eli Casdin served on our Compensation and Management Development Committee in 2019. None of the directors who served on our Compensation and Management Development Committee in 2019 has ever served as one of our employees or officers. During 2019, none of our executive officers served as a director or member of a compensation committee (or other committee performing similar functions) of any other entity of which an executive officer served on our Board of Directors or Compensation and Management Development Committee.

Role of our Board of Directors in Risk Oversight

Our Board of Directors administers its risk oversight function directly and through our Audit and Finance Committee and our Compensation and Management Development Committee. Our Audit and Finance Committee regularly discusses with management, Company legal counsel and the internal audit department the Company's major risk exposures, their potential financial impact on the Company, and the steps taken to monitor and control those risks and reviews with management annually a summary of legal and regulatory compliance matters and risk management activities, including an insurance review, a review of management's precautionary plans for disaster protection, and a review of the Company's policies and procedures with respect to cybersecurity threats and related issues. Additionally, our Audit and Finance Committee oversees the process by which the Board is informed regarding the legal and regulatory compliance risks facing the Company and coordinates with the Company's legal counsel to ensure the Board receives regular legal and regulatory compliance updates from management. Our Audit and Finance Committee also reviews regulatory investigations (including findings thereof) as well as any alleged significant violations of laws, regulations or Company policies, including the Company's Code of Business Conduct and Ethics and the Company's Code of Conduct on Interaction with Health Care Professionals, and reports such findings to the Board as needed. Our Compensation and Management Development Committee, together with management, has reviewed the Company's compensation policies and practices and concluded that such policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION

Cybersecurity and Data Protection Risk Management

Protecting the privacy of our patients' and employees' information and the security of our systems and networks has long been and will continue to be a priority for Exact Sciences and our Board of Directors. We have technical, administrative and physical safeguards in place to help protect against unauthorized access to, use or disclosure of patient and employee information and data we collect and store. In addition, our comprehensive information security program includes, among other aspects, vulnerability management, antivirus and malware protection, file integrity monitoring, encryption and access control.

Consistent with our Board of Directors' risk management and oversight structure, our Audit and Finance Committee has primary responsibility for overseeing our risk management practices, programs, policies and procedures related to data privacy, data protection and network security. Management provides our Audit and Finance Committee and our Board of Directors with updates about cybersecurity practices, programs, policies and procedures and the status of projects designed to strengthen internal cybersecurity and data protection. Our Board of Directors and our Audit and Finance Committee also discuss potential cybersecurity and data protection threats.

Director Compensation

Compensation Policy for Non-Employee Directors

We maintain a compensation policy for our non-employee directors (the "Director Compensation Policy") that is intended to enable us to attract and retain, on a longer-term basis, high-qualified non-employee directors. The Director Compensation Policy is supported by an annual benchmarking exercise conducted by Radford, an Aon Consulting Company ("Radford"), the Company's independent executive compensation consultant, which positions the cash and equity compensation paid to our non-employee directors at the market median of a peer group that is reviewed annually. For information regarding the peer group, which is the same peer group used in connection with the determination of executive compensation, see "Compensation And Other Information Concerning Named Executive Officers" beginning on page 29.

Under the Director Compensation Policy, on the date of the 2019 annual stockholders meeting, each non-employee director who continued to serve as a director following such meeting was paid an annual cash retainer as follows:

BOARD MEMBER COMPENSATION
  ANNUAL RETAINER ($)
 

Lead Independent Director

    75,000  

Director

    50,000  

 

COMMITTEE CHAIRPERSON COMPENSATION
  ANNUAL RETAINER ($)
 

Audit and Finance Committee

    25,000  

Compensation and Management Development Committee

    20,000  

Corporate Governance and Nominating Committee

    13,000  

Innovation, Technology & Pipeline Committee

    13,000  

 

COMMITTEE MEMBER COMPENSATION
  ANNUAL RETAINER ($)
 

Audit and Finance Committee

    12,500  

Compensation and Management Development Committee

    10,000  

Corporate Governance and Nominating Committee

    6,500  

Innovation, Technology & Pipeline Committee

    6,500  

In lieu of cash, each non-employee director may elect to receive shares of Company common stock having an equivalent dollar value.

In April 2020, in response to the rapidly evolving impact of the COVID-19 pandemic, the Board of Directors amended the Director Compensation Policy to provide that the annual cash retainer for Board service would not be paid for the service period commencing on the date of the 2020 Annual Meeting.

In addition, non-employee directors are paid cash compensation of $1,500 per meeting in atypical circumstances when (1) our Board of Directors or any committee has met more than 10 times per year or (2) our Board of Directors creates a special committee. Further, members of our Innovation, Technology & Pipeline Committee receive an additional cash payment of $5,000 per full-day, on-site, special working meeting (of which it is anticipated that two such meetings per year will take place).

Under the Director Compensation Policy, on the date of each annual stockholders meeting, each non-employee director who is continuing to serve as a director following such meeting is also granted restricted stock or deferred stock units having a value of $250,000 with the number of shares of restricted stock or deferred stock units to be issued being determined based on the closing price of the Company's common stock on the grant date. In addition, if the Board chair is independent and such Board chair will continue as Board chair following the date of the annual meeting, such Board chair will be granted an additional annual restricted stock or deferred stock unit award having a value of $15,000. These annual equity grants are scheduled to vest upon the earlier of the first anniversary of the grant date or the date of the next annual stockholders

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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION

meeting; provided upon the death of a director, such director's awards vest in full; upon a director's ceasing to serve for any other reason, such director's awards vest pro rata based on the number of days since the grant date; and upon a change of control, all awards vest in full.

Under the Director Compensation Policy, if a director is elected or appointed to our Board of Directors other than on the date of the Company's annual meeting of stockholders, such director's annual cash and equity compensation as described above, for the period between the date of such election or appointment and the date of the Company's next annual meeting of stockholders, will be granted in a pro rata amount on the date of such annual meeting to reflect the date of such director's election or appointment and the date of the Company's following annual meeting of stockholders. The number of shares of restricted stock or deferred stock units to be issued to the director based on the foregoing pro rata compensation is determined based on the closing price of the Company's common stock on the date of such director's appointment, and such shares of restricted stock or deferred stock units are fully vested upon grant.

Upon his or her initial election to our Board of Directors, a new director receives shares of restricted stock or deferred stock units having a value equal to $375,000 based on the closing sale price of our common stock on the date of grant. Such shares of restricted stock or deferred stock units vest in three equal annual installments.

The Exact Sciences Corporation 2019 Omnibus Long-Term Incentive Plan (the "2019 Plan") establishes limits on the awards issuable to our non-employee directors. Under the 2019 Plan, the maximum value of all awards granted to a non-employee director, taken together with all cash fees paid to such non-employee director under any other equity compensation plan of the Company or an affiliate in a given calendar year, may not exceed $600,000 (calculating the value of any equity compensation plan awards based on the grant date fair market value for financial reporting purposes). However, awards granted to non-employee directors upon their initial election to the Board of Directors or the board of directors of an affiliate will not be counted towards this limit, and certain other limited exceptions may apply.

The foregoing compensation is in addition to reimbursement of all out-of-pocket expenses incurred by directors in attending meetings of our Board of Directors.

Prior to his appointment to the Board of Directors in July 2019, the Company was party to a consulting agreement with Andrew Slavitt pursuant to which he provided certain advisory services. In accordance with the agreement, Mr. Slavitt was paid consulting fees totaling $105,000 in 2019.

Non-Employee Director Compensation in 2019

The following table provides compensation information for the one-year period ended December 31, 2019 for each non-employee member of our Board of Directors. No member of our Board employed by us receives separate compensation for services rendered as a member of our Board. Freda Lewis-Hall did not join our Board of Directors until April 22, 2020 and thus received no compensation in the one-year period ended December 31, 2019.

NAME
  FEES EARNED OR
PAID IN CASH
($)

  STOCK
AWARDS
($)(1)

  ALL OTHER
COMPENSATION
($)

  TOTAL
($)

 

Thomas D. Carey

    69,000 (2)   250,023         319,023  

Eli Casdin

    75,000     250,023         325,023  

James E. Doyle

    97,500     250,023         347,523  

Pierre Jacquet

    69,000 (2)   625,000 (3)       694,000  

Daniel J. Levangie

    79,000 (2)   250,023         329,023  

Kathleen Sebelius

    87,855 (2)(4)   723,638 (5)       811,493  

Andrew Slavitt

    50,000     625,000 (3)   105,000 (6)   780,000  

Michael S. Wyzga

    81,000 (2)   250,023         331,023  

Katherine S. Zanotti

    76,000     250,023         326,023  
(1)
The amounts shown in this column indicate the grant date fair value of stock or option awards, respectively, computed in accordance with FASB ASC Topic 718. Generally, the grant date fair value is the amount that we would expense in our financial statements over the award's vesting schedule. For additional information regarding the assumptions made in calculating these amounts, see the Notes to our audited, consolidated financial statements included in our Annual Report on Form 10-K for 2019. These amounts reflect our accounting expense for these awards and do not correspond to the actual value that will be recognized by the directors.

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CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION

As of December 31, 2019, the non-employee members of our Board of Directors held unexercised stock options and unvested shares of restricted stock, RSUs and deferred stock units as follows:

NAME
  NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS

  UNVESTED
SHARES OF
RESTRICTED STOCK,
RESTRICTED
STOCK UNITS
AND DEFERRED
STOCK UNITS

 

Thomas D. Carey

    15,620     2,155  

Eli Casdin

    10,100     2,155  

James E. Doyle

    18,477     2,155  

Pierre Jacquet

        5,387  

Daniel J. Levangie

    9,865     2,155  

Kathleen Sebelius

        6,374  

Andrew Slavitt

        5,387  

Michael S. Wyzga

    10,108     2,155  

Katherine S. Zanotti

    25,637     2,155  
(2)
Per the election of the director and in accordance with the Director Compensation Policy, 100% of the annual cash retainer was paid in shares of Company common stock having an equivalent dollar value.

(3)
Includes $374,976.64 of stock awards issued to the recipient upon the recipient's initial election to the Board of Directors at the time of the 2019 Annual Meeting, issued in accordance with the Director Compensation Policy

(4)
Includes $24,854.79 in cash fees earned for the period between the date of Ms. Sebelius' appointment to the Board of Directors and the 2019 Annual Meeting of Stockholders, paid in accordance with the Director Compensation Policy.

(5)
Includes (i) $374,984.72 of stock awards issued to Ms. Sebelius upon Ms. Sebelius' appointment to the Board of Directors in March 2019, issued in accordance with the Director Compensation Policy and (ii) $98,630.14 of stock awards earned for the period between the date of Ms. Sebelius' appointment to the Board of Directors and the 2019 Annual Meeting of Stockholders, paid in accordance with the Director Compensation Policy.

(6)
Represents consulting fees that Mr. Slavitt received pursuant to a consulting agreement prior to his appointment to the Board of Directors in July 2019.

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PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

WHAT YOU ARE VOTING ON:

We are asking our stockholders to ratify the appointment of PricewaterhouseCoopers, LLP as our independent registered public accounting firm for 2020.

The Audit and Finance Committee of the Board of Directors has appointed PricewaterhouseCoopers ("PWC") as our independent registered public accounting firm for the fiscal year ending December 31, 2020. PWC was selected as our independent registered public accounting firm for the fiscal year ending December 31, 2020 following completion of a competitive process to select a firm conducted by the Audit and Finance Committee. As a result of this process, on March 4, 2020 the Audit and Finance Committee dismissed BDO USA, LLP ("BDO") as the Company's independent registered public accounting firm effective immediately. PWC was engaged as the Company's independent registered public accounting firm on March 4, 2020.

The reports of BDO on the financial statements of the Company for the past two fiscal years contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the two most recent fiscal years, there were: (1) no disagreements between the Company and BDO on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to the subject matter of the disagreement in their reports on the financial statements for such years, and (2) no "reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K. A representative of BDO is not expected to be present at the 2020 Annual Meeting.

During 2018 and 2019, the Company did not consult with PWC regarding (1) the application of accounting principles to a specified transaction or transactions, either completed or proposed, or the type of audit opinion PWC might render on the Company's financial statements or (2) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to that Item, or a "reportable event" as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

A representative of PWC is expected to be present at the 2020 Annual Meeting. In addition to having the opportunity to make a statement, the PWC representative will be available to respond to any appropriate questions.

Vote Required for Approval

Ratification of the appointment of our independent registered public accounting firm requires the affirmative vote of a majority of the shares present or represented at the 2020 Annual Meeting, in person or by proxy, and voting on such ratification. If our stockholders fail to ratify the selection of PWC as the independent registered public accounting firm for 2020, our Audit and Finance Committee will reconsider whether to retain that firm. Even if the selection is ratified, our Audit and Finance Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year.

Board Recommendation

GRAPHIC

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Other than as described below and compensation agreements and other arrangements which are described in "Compensation And Other Information Concerning Named Executive Officers" beginning on page 29, in 2019 there was not, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of their immediate family had or will have a direct or indirect material interest.

At various times, including in 2019, the Company has engaged Perspective Group LLC, an executive search firm in which Thomas Carey, a member of our Board of Directors, is majority owner, to perform certain executive searches. Under the terms of the engagement, the Company paid Perspective Group approximately $100,000 of fees during the year ended December 31, 2019, which was less than 5% of the Perspective Group's aggregate revenue for the year ended December 31, 2019. Pursuant to this engagement, the Company expects to pay Perspective Group approximately $190,000 of fees during the year ended December 31, 2020.

Pierre Jacquet, a member of our Board of Directors, is Vice Chairman, Global Healthcare and Managing Director of L.E.K. Consulting, LLC. At various times, including in 2019, the Company has engaged L.E.K. to perform strategic consulting services. Under the terms of the Company's engagements with L.E.K., the Company paid L.E.K. approximately $1,811,000 of fees during the year ended December 31, 2019, which was less than 5% of L.E.K.'s aggregate revenue for the year ended December 31, 2019. Pursuant to this engagement, the Company expects to pay L.E.K. approximately $525,000 of fees during the year ended December 31, 2020.

Our Board of Directors has adopted a written policy with regard to related person transactions, which sets forth our procedures and standards for the review, approval or ratification of any transaction required to be reported in our filings with the SEC or in which one of our executive officers or directors has a direct or indirect material financial interest, with limited exceptions. Our policy is that our Audit and Finance Committee shall review the material facts of all related person transactions (as defined in the related person transaction approval policy) and either approve or disapprove of the entry into any related person transaction. In the event that obtaining the advance approval of our Audit and Finance Committee is not feasible, our Audit and Finance Committee shall consider the related person transaction and, if our Audit and Finance Committee determines it to be appropriate, may ratify the related person transaction. In determining whether to approve or ratify a related person transaction, our Audit and Finance Committee will take into account, among other factors it deems appropriate, whether the related person transaction is on terms comparable to those available from an unaffiliated third-party under the same or similar circumstances and the extent of the related person's interest in the transaction.

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The following table sets forth the aggregate fees billed or expected to be billed by BDO for 2019 and 2018 for audit and non-audit services, including "out-of-pocket" expenses incurred in rendering these services. The nature of the services provided for each category is described following the table.

Fee Category
  2019
  2018
 

Audit Fees(1)

  $ 2,008,111   $ 841,722  

Audit-Related Fees(2)

    27,540     21,828  

Tax Fees

         

All Other Fees(3)

    22,917      

Total

  $ 2,058,568   $ 863,550  
(1)
Audit fees include fees for professional services rendered for the audit of our consolidated annual statements, quarterly reviews, consents and assistance with and review of documents filed with the SEC. Audit fees also include fees for professional services rendered for statutory audits performed by BDO's international affiliates.

(2)
Audit-related fees include fees for professional services rendered for the audit of our 401(k) Plan.

(3)
All other fees include fees for professional services rendered in connection with certain consulting projects undertaken by the Company.

Pre-Approval Policies and Procedures

Our Audit and Finance Committee has adopted a policy that requires that all services to be provided by the Company's independent public accounting firm, including audit services and permitted non-audit services, to be pre-approved by our Audit and Finance Committee. Our Audit and Finance Committee pre-approved all audit and permitted non-audit services provided by BDO during 2019 pursuant to this policy.

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REPORT OF THE AUDIT AND FINANCE COMMITTEE

REPORT OF THE AUDIT AND FINANCE COMMITTEE

The Audit and Finance Committee is comprised of Eli Casdin, Pierre Jacquet and Michael S. Wyzga. None of the members of the Audit and Finance Committee is an officer or employee of the Company, and the Board of Directors has determined that each member of the Audit and Finance Committee meets the independence requirements promulgated by The NASDAQ Stock Market and the SEC, including Rule 10A-3(b)(1) under the Exchange Act.

The Audit and Finance Committee oversees the Company's financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls and the certification of the integrity and reliability of the Company's internal controls procedures. In fulfilling its oversight responsibilities, the Audit and Finance Committee has reviewed the Company's audited consolidated balance sheets at December 31, 2019 and 2018 and the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and has discussed them with both management and BDO USA, LLP ("BDO"), the Company's former independent registered public accounting firm. The Audit and Finance Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by the Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board. The Audit and Finance Committee has reviewed permitted services under rules of the SEC as currently in effect and discussed with BDO their independence from management and the Company, including the matters in the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit and Finance Committee concerning independence. The Audit and Finance Committee has also considered and discussed the compatibility of non-audit services provided by BDO with that firm's independence.

Based on its review of the consolidated financial statements and the aforementioned discussions, the Audit and Finance Committee concluded that it would be reasonable to recommend, and on that basis did recommend, to the Board of Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Respectfully submitted by the Audit and Finance Committee.

The Audit and Finance Committee:
Michael S. Wyzga, Chairperson
Eli Casdin
Pierre Jacquet

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PROPOSAL 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION

PROPOSAL 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION

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 Officers—Compensation 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

GRAPHIC

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COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS

COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS

Compensation Discussion and Analysis

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:

NAME

  POSITION

Kevin T. Conroy

 

Chairman, President and Chief Executive Officer

Jeffrey T. Elliott

 

Chief Financial Officer

Mark Stenhouse

 

General Manager, Screening

D. Scott Coward

 

Senior Vice President, General Counsel, Chief Administrative Officer and Secretary

G. Bradley Cole

 

Former General Manager, Precision Oncology

Jacob Orville

 

General Manager, Pipeline

Ana Hooker

 

Senior Vice President, Operations

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

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;

»
Provide a competitive compensation package that enables us to attract and retain qualified executives;

»
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

»
Align the interests of management and stockholders by providing management with long-term incentives through equity ownership.

Elements of Executive Compensation

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

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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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.

Use of Peer Group Data

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:

»
Represented companies operating in the diagnostics, medical device and biotechnology industries;

»
Comprised companies with at least one commercialized product; and

»
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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The companies in our peer group for 2019 were:

COMPANY
  INDUSTRY
ABIOMED   Health Care Equipment
Align Technology   Health Care Supplies
DexCom   Health Care Equipment
Genomic Health   Biotechnology
Guardant Health   Health Care Equipment
Halozyme Therapeutics   Biotechnology
Hologic   Health Care Equipment
Incyte   Biotechnology
Insulet   Health Care Equipment
Ionis Pharmaceuticals   Biotechnology
Ironwood Pharmaceuticals   Biotechnology
Masimo   Health Care Equipment
Merit Medical Systems   Health Care Supplies
Myriad Genetics   Biotechnology
Nektar Therapeutics   Pharmaceuticals
Neogen   Health Care Supplies
Opko Health   Biotechnology
Quidel   Health Care Supplies
ResMed   Health Care Equipment
Seattle Genetics   Biotechnology

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:

»
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.

»
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.

»
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.

»
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.

»
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
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
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

o
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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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:

NAME
  2018 BASE
SALARY ($)

  2019 BASE
SALARY ($)

 

Kevin T. Conroy

    695,800     800,200  

Jeffrey T. Elliott

    400,000     460,000  

Mark Stenhouse

    500,000     515,000  

D. Scott Coward

    470,000     484,100  

Ana Hooker

    371,700     410,000  

 

NAME
  2018 TARGET
BONUS %

  2019 TARGET
BONUS %

 

Kevin T. Conroy

    100 %   125 %

Jeffrey T. Elliott

    50 %   50 %

Mark Stenhouse

    50 %   50 %

D. Scott Coward

    50 %   50 %

Ana Hooker

    50 %   50 %

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:

NAME
  2018 OPTIONS
  2019 OPTIONS
 

Kevin T. Conroy

    68,300     34,110  

Jeffrey T. Elliott

    16,700     11,361  

Mark Stenhouse

    0     10,786  

D. Scott Coward

    16,700     10,786  

Ana Hooker

    11,700     7,790  

 

NAME
  2018 RSUS
  2019 RSUS
 

Kevin T. Conroy

    82,300     37,248  

Jeffrey T. Elliott

    20,100     13,747  

Mark Stenhouse(1)

    75,000     13,051  

D. Scott Coward

    20,100     13,051  

Ana Hooker

    14,100     9,426  
(1)
Mr. Stenhouse received an RSU award covering 75,000 shares upon his hiring in April 2018.
NAME
  2019 PSUs
(at threshold
achievement)

  2019 PSUs
(at target
achievement)

  2019 PSUs
(at maximum
achievement)

 

Kevin T. Conroy

    31,041     62,082     124,164  

Jeffrey T. Elliott

    6,747     13,494     26,988  

Mark Stenhouse

    6,747     13,494     26,988  

D. Scott Coward

    6,747     13,494     26,988  

Ana Hooker

    5,398     10,794     21,589  

2020 Salary Reductions

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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2019 Bonus Plan

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:

GOAL
  PERFORMANCE MEASURES
  TARGET WEIGHTING
  ACTUAL ACHIEVEMENT
 
Power the partnership  

»

Revenue

»

Scale lab capacity

»

Implement core IT infrastructure

    60.0 %   60.0 %
Enhance Cologuard  

»

Cologuard publications

»

Expand Cologuard label for age 45-49, average risk population

»

Establish proof of concept for enhanced Cologuard test

    25.0 %   27.5 %
Advance liquid biopsy  

»

Advance liver program

»

Identify new markers for colon cancer blood test

»

Marker selection and business plan for one new test

    15.0 %   17.5 %

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.

Annual Equity Awards

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 9,426 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 14,595 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.

2010 Plan and 2019 Plan

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.

Company Clawback Policy

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

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.

Other Compensation

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

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

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:

POSITION   BASE SALARY / FIXED SHARE TARGET

CEO

 

Number of shares with a Stock Value equal to or greater than 6 times Base Salary

Executive Officrs

 

Number of shares with a Stock Value equal to or greater than 2 times Base Salary

Board of Directors

 

Number of shares with a Stock Value equal to or greater than 3 times Annual Retainer

"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

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)

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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Our NEOs

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

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

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

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

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

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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Exact Sciences 2020 Proxy Statement

Table of Contents

COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS

Cole Letter Agreement

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

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

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

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