SCHEDULE 14A INFORMATION
Proxy Statement Pursuant
to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to § 240.14a-12 |
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SEQUENOM, INC. |
(Name
of Registrant as Specified In Its Charter) |
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(Name
of Person(s) Filing Proxy Statement if Other Than the Registrant) |
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Payment of Filing Fee (Check the appropriate box) |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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3595 JOHN HOPKINS COURT
SAN DIEGO, CALIFORNIA 92121
(858) 202-9000
NOTICE
OF ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON , 2015
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TO THE STOCKHOLDERS OF SEQUENOM, INC.: |
NOTICE IS HEREBY GIVEN
that the 2015 Annual Meeting of Stockholders of Sequenom, Inc., a Delaware corporation (the “Company”), will be held
on , 2015 at 9:00 a.m. local time at the
corporate headquarters of the Company located at 3595 John Hopkins Court, San Diego, California 92121 for the following purposes:
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to elect Kenneth F. Buechler, Myla Lai-Goldman, Richard A. Lerner, Ronald M. Lindsay, Catherine J. Mackey, David Pendarvis, Charles P. Slacik, Dirk van den Boom and William J. Welch as directors to hold office until the annual meeting of stockholders in 2016; |
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to approve an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 185,000,000 to 275,000,000 shares; |
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to approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement; |
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to ratify our Audit Committee’s selection of Ernst & Young LLP to be our independent registered public accounting firm for the fiscal year ending December 31, 2015; and |
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to conduct any other business properly brought before the meeting or any adjournment or postponement thereof. |
These items of business
are more fully described in the Proxy Statement accompanying this Notice of Annual Meeting.
The record date for
the annual meeting is April 21, 2015. Only stockholders of record at the close of business on that date may vote at the meeting
or any adjournment thereof.
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BY ORDER OF THE BOARD OF DIRECTORS |
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Kenneth F. Buechler |
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Chairman of the Board of Directors |
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San Diego, California |
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, 2015 |
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ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE PROXY MAILED TO YOU, OR VOTE OVER THE INTERNET AS INSTRUCTED IN THESE MATERIALS, AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES) WILL BE ENCLOSED WITH THE PROXY BEING MAILED TO YOU FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME. |
This summary highlights information
contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and
you should read the entire proxy statement carefully before voting.
Annual Meeting
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Time and Date: |
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9:00 a.m. local time, on , 2015 |
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Place: |
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Corporate headquarters located at 3595 John Hopkins Court, San Diego, California 92121 |
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Record Date: |
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April 21, 2015 |
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Voting: |
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Stockholders as of the record date are entitled to vote. |
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You can vote over the Internet or by completing and returning a proxy card or, if you hold shares in a brokerage account in your broker’s name (in “street name”), a voting instruction form as supplied by your broker. |
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See the voting instructions for Internet voting in the Notice of Availability or in the materials sent to you for more information. |
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Attending the Annual Meeting: |
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In Person: The meeting starts at 9:00 a.m. local time. |
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You do not need to attend the Annual Meeting to vote if you have submitted your proxy or otherwise voted your shares in advance of the meeting. |
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Annual Meeting Agenda
and Voting Recommendations
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Proposal |
Board Voting Recommendation |
Page Reference (for more detail) |
Election of 9 directors |
For each named nominee |
[__] |
Amendment to our Restated Certificate of Incorporation to increase the authorized number of shares |
For |
[__] |
Advisory vote to approve the compensation of our named executive officers |
For |
[__] |
Ratification of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015 |
For |
[__] |
Corporate Governance
Highlights
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Governance Matter |
Summary Highlights |
Page Reference (for more
detail) |
Board Independence |
Independent nominees: 6 out of 9
Independent chairman: Kenneth F. Buechler Independent Board committees: All except for Science Committee |
[__] |
Board Gender Diversity |
Female nominees: 2 out of 9 |
[__] |
Board Nominee Tenure |
Average tenure of nominees: 4 years |
[__] |
Director Elections |
Annual elections for all directors |
[__] |
Meeting Attendance |
8 of 9 directors attended at least 90% of the total number of meetings of our Board and committees on which the director served in 2014. |
[__] |
Evaluating and Improving Board Performance |
Board evaluations: Annual
Committee evaluations: Annual |
[__] |
Aligning Director and Stockholder Interests |
Non-employee director stock ownership guidelines: Yes
Non-employee director equity grants: Yes |
[__] |
Investor Outreach |
During 2014 our senior management team gathered feedback from our major stockholders regarding our executive compensation programs. |
[__] |
Continuing Education |
New directors participate in an orientation program and in regular continuing education programs. |
[__] |
Preliminary
Copy – Subject to Completion
3595
John Hopkins Court
San
Diego, California 92121
(858)
202-9000
PROXY STATEMENT
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FOR THE 2015 ANNUAL MEETING OF STOCKHOLDERS ,
2015 |
QUESTIONS AND ANSWERS ABOUT
THESE PROXY MATERIALS AND VOTING
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WHY DID I RECEIVE A NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS ON THE INTERNET? |
Pursuant to rules adopted
by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over
the internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our
stockholders of record. All stockholders will have the ability to access the proxy materials on the website referred to in the
Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet
or to request a printed copy may be found in the Notice.
We intend to mail the
Notice on or about , 2015 to all
stockholders of record entitled to vote at the annual meeting.
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WILL I RECEIVE ANY OTHER PROXY MATERIALS BY MAIL? |
We may send you a proxy
card, along with a second Notice, on or after ,
2015.
There are four matters
scheduled for a vote at the annual meeting:
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Election of Kenneth F. Buechler, Myla Lai-Goldman, Richard A. Lerner, Ronald M. Lindsay, Catherine J. Mackey, David Pendarvis, Charles P. Slacik, Dirk van den Boom and William J. Welch as directors to hold office until the annual meeting of stockholders in 2016; |
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Amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 185,000,000 to 275,000,000 shares; |
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Advisory vote to approve the compensation of our named executive officers, as disclosed in this proxy statement in accordance with SEC rules; and |
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Ratification of the selection by the Audit Committee of our Board of Directors of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015. |
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WHAT
IF ANOTHER MATTER IS PROPERLY BROUGHT BEFORE THE MEETING? |
The Board of Directors
knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance
with their best judgment.
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WHO
CAN VOTE AT THE ANNUAL MEETING? |
Only stockholders of
record at the close of business on April 21, 2015 will be entitled to vote at the annual meeting. At the close of business on this
record date, there were [___________] shares of common stock outstanding and entitled to vote.
Stockholder
of Record: Shares Registered in Your Name
If at the close of business
on April 21, 2015 your shares were registered directly in your name with our transfer agent, American Stock Transfer &
Trust Company, LLC, then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or
vote by proxy. Whether or not you plan to attend the meeting, we urge you to complete and return the proxy card or vote on the
internet to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or Bank
If at the close of business
on April 21, 2015 your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you
are the beneficial owner of shares held in street name, and the Notice is being forwarded to you by that organization. The organization
holding your account is considered the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner,
you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend
the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy from your broker or other agent.
You may either vote “For”
all the nominees to the Board of Directors or you may withhold your vote for any nominee you specify. You cannot vote for a greater
number of persons than the number of nominees to the Board of Directors named. For each of the other matters to be voted on, you
may vote “For” or “Against” or abstain from voting. The procedures for voting are fairly simple:
Stockholder
of Record: Shares Registered in Your Name
If you are a stockholder
of record, you may vote in person at the annual meeting or on the internet as instructed below, or vote by proxy using a proxy
card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the meeting, we urge
you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted
by proxy.
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To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered and return it promptly in the envelope provided. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct. |
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To vote through
the internet, go to [update] to complete an electronic proxy card. You will be asked to provide the Company number and
control number from the Notice. Your vote must be received by 11:59 p.m. Eastern Time on _______, 2015 to be counted. |
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To vote in person,
come to the annual meeting, and we will give you a ballot when you arrive. |
Beneficial
Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial
owner of shares registered in the name of your broker, bank or other agent, you should have received a notice containing voting
instructions from that organization rather than from us. Simply follow the voting instructions in that notice to ensure that your
vote is counted.
To vote in person at
the annual meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker
or bank included with these proxy materials or contact your broker or bank to request a proxy form.
Internet proxy voting
may be provided to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of
your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such
as usage charges from internet access providers and telephone companies.
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HOW
MANY VOTES DO I HAVE? |
On each matter to be voted
upon, you have one vote for each share of common stock you owned as of the close of business on April 21, 2015.
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WHAT
IF I RETURN A PROXY CARD BUT DO NOT MAKE SPECIFIC CHOICES? |
If you return a signed
and dated proxy card without marking any voting selections, your shares will be voted “For” the election of all nominees
for director, “For” approval of an amendment to the Company’s Restated Certificate of Incorporation to increase
the number of authorized shares of common stock, “For” the advisory vote to approve executive compensation and “For”
the ratification of our Audit Committee’s selection of Ernst & Young LLP to be our independent registered public
accounting firm for the fiscal year ending December 31, 2015. If any other matter is properly presented at the meeting, your
proxy will vote your shares using his best judgment.
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WHAT
DOES IT MEAN IF I RECEIVE MORE THAN ONE NOTICE? |
If you receive more than
one Notice, your shares are registered in more than one name or are registered in different accounts. Please follow the voting
instructions on the Notices to ensure that all of your shares are voted.
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CAN
I CHANGE MY VOTE AFTER SUBMITTING MY PROXY? |
Yes. You can revoke
your proxy at any time before the final vote at the meeting. You may revoke your proxy in any one of the following ways:
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You may submit
another properly completed proxy card with a later date. |
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You may grant a
subsequent proxy through the internet. |
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You may send a
written notice that you are revoking your proxy to Sequenom’s Secretary at 3595 John Hopkins Court, San Diego,
California 92121. |
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You may attend the annual meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy. |
Your most current proxy
card or internet proxy is the one that is counted.
If your shares are held
by your broker or bank as a nominee or agent, you must follow the instructions provided by your broker or bank to change your
vote.
Votes will be counted
by the inspector of election appointed for the meeting, who will separately count, in the election of directors, votes “For,”
“Withhold” and broker non-votes; and, with respect to other proposals, votes “For”, “Against,”
abstentions and, if applicable, broker non-votes. Abstentions will be counted towards the vote total for each proposal, and will
have the same effect as “Against” votes. Please see the more detailed description of the effect of broker non-votes
on specific proposals in the answer to “How many votes are needed to approve each proposal?” below.
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WHAT
ARE “BROKER NON-VOTES”? |
Broker non-votes occur
when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding
the shares as to how to vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial
owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner
does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered
to be “routine,” but not with respect to “non-routine” matters. Under the applicable rules and interpretations
of the New York Stock Exchange, “non-routine” matters are matters that may substantially affect the rights or privileges
of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested) and executive compensation,
including the advisory stockholder votes to approve named executive officer compensation.
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HOW
MANY VOTES ARE NEEDED TO APPROVE EACH PROPOSAL? |
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Proposal 1: For the
election of directors, the nine nominees receiving the most “For” votes from the shares present in person
or represented by proxy and entitled to vote at the annual meeting, will be elected. Only votes “For” or “Withheld”
will affect the outcome. |
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Proposal 2: To be
approved, the amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized
shares must receive “For” votes from the holders, either in person or by proxy, of a majority of the |
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outstanding shares entitled to vote on the matter. If you mark your proxy to “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will also have the same effect as “Against” votes. |
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Proposal 3: We will
consider the advisory vote to approve the compensation of the Company’s named executive officers, approved if it
receives “For” votes from a majority of the shares present in person or represented by proxy and entitled
to vote at the annual meeting. If you “Abstain” from voting, it will have the same effect as an “Against”
vote. Broker non-votes will have no effect. |
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Proposal 4: To
be approved, the ratification of the selection by the Audit Committee of our Board of Directors of Ernst & Young LLP
as our independent registered public accounting firm for the fiscal year ending December 31, 2015 must receive “For”
votes from a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting.
If you select “Abstain” on your proxy card or you attend the meeting and abstain from voting, it will have
the same effect as an “Against” vote. Broker non-votes will have no effect. |
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WHAT
IS THE QUORUM REQUIREMENT? |
A quorum of stockholders
is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares are represented
by stockholders present at the meeting or by proxy. On April 21, 2015, the record date, there were [update] shares outstanding
and entitled to vote. As a result [update] of these shares must be represented by stockholders present at the meeting or by proxy
to have a quorum.
Your shares will be
counted towards the quorum only if you submit a valid proxy or vote at the meeting. Abstentions and broker non-votes will be counted
towards the quorum requirement. If there is no quorum, a majority of the votes present at the meeting may adjourn the meeting
to another date.
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HOW
CAN I FIND OUT THE RESULTS OF THE VOTING AT THE ANNUAL MEETING? |
Preliminary voting results
will be announced at the annual meeting. In addition, final voting results will be published in a current report on Form 8-K that
we will file with the SEC within four business days after the annual meeting. If final voting results are not available to us
in time to file a Form 8-K within four business days after the meeting, we will file a Form 8-K to publish preliminary
results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the
final results.
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WHO
IS PAYING FOR THIS PROXY SOLICITATION? |
We will pay for the
entire cost of soliciting proxies. In addition to mailed and internet hosted proxy materials, our officers, employees and directors
may also solicit proxies in person, by telephone or by other means of communication. We have retained DF King & Co., Inc.
to assist in soliciting proxies for a fee of $7,500 plus reasonable out-of-pocket expenses. Officers, employees and
directors will not be paid any additional compensation for soliciting proxies. We will also reimburse brokerage firms, banks and
other agents for the cost of forwarding proxy materials to beneficial owners.
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WHEN
ARE STOCKHOLDER PROPOSALS DUE FOR NEXT YEAR’S ANNUAL MEETING? |
The deadline for submitting
a stockholder proposal for inclusion in our proxy statement and form of proxy for the 2016 Meeting of stockholders is ,
2015. Stockholders wishing to submit proposals or director nominations that are not to be included in such proxy statement
and proxy must also do so by is ,
2015. Stockholders are advised to review our Bylaws, which contain additional requirements with respect to advance notice of stockholder
proposals and director nominations. Our current Bylaws are available at the SEC’s website, www.sec.gov, or upon written request
to Secretary, Sequenom, Inc., 3595 John Hopkins Court, San Diego, California 92121.
PROPOSAL
1
Our Board of Directors
is currently comprised of nine members and is not classified. Each director serves for a one-year term. At the annual meeting,
the term of office of all directors will expire.
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NOMINEES
FOR ELECTION FOR A ONE-YEAR TERM EXPIRING AT THE 2015 ANNUAL MEETING |
The Nominating and Corporate
Governance Committee of the Board of Directors has nominated Kenneth F. Buechler, Myla Lai-Goldman, Richard A. Lerner, Ronald M.
Lindsay, Catherine J. Mackey, David Pendarvis, Charles P. Slacik, Dirk van den Boom and William J. Welch for election to the Board
of Directors. Drs. Buechler, Lai-Goldman, Lerner and Lindsay and Messrs. Pendarvis, Slacik and Welch were previously
elected by our stockholders at our 2014 annual meeting. Dr. van den Boom was identified by our Nominating and
Corporate Governance Committee as a candidate for director to succeed Dr. Harry F. Hixson, Jr., Ph.D., who resigned from the Board
of Directors effective March 31, 2015. Dr. van den Boom was elected by our Board of Directors as a director effective
April 1, 2015 to serve until the 2015 Annual Meeting. Current director John A. Fazio informed us in January of 2015 that he would
not stand for re-election at the 2015 annual meeting. As a result, the Nominating and Corporate Governance Committee
did not nominate Mr. Fazio for re-election. Mr. Fazio’s term as a director will end at the 2015 Annual Meeting. Dr.
Mackey was identified by our Nominating and Corporate Governance Committee as a candidate for director through the efforts of a
nationwide search pursuant to which the Nominating and Corporate Governance Committee screened several potential candidates. If
elected at the annual meeting, each nominee would serve until the 2016 Annual meeting and/or until his or her successor is elected
and qualified.
Directors are elected
by a plurality of the votes present in person or represented by proxy and entitled to vote at the annual meeting. Shares represented
by executed proxies will be voted, if authority to do so is not withheld, for the election of Dr. Buechler, Dr. Lai-Goldman,
Dr. Lerner, Dr. Lindsay, Dr. Mackey, Mr. Pendarvis, Mr. Slacik, Dr. van den Boom and Mr. Welch. In
the event that any nominee should be unavailable for election as a result of an unexpected occurrence, shares represented by such
proxies will be voted for the election of any substitute nominee proposed by the Nominating and Corporate Governance Committee.
Each of the nominees has agreed to serve if elected, and we have no reason to believe that any nominee will be unable to serve.
The following is a brief
biography of each nominee for director and a discussion of the specific experience, qualifications, attributes or skills of each
nominee that led the Nominating and Corporate Governance Committee to recommend that person as a nominee for director, as of the
date of this proxy statement.
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DIRECTOR
QUALIFICATIONS AND BIOGRAPHICAL INFORMATION |
KENNETH
F. BUECHLER, Ph.D., 61, has served as a director since December 2009.
Dr. Buechler was President and Chief Scientific Officer and a director of Biosite Incorporated, a provider of diagnostic
products and antibody development technologies, from 2003 to 2007, and prior to that was a co-founder, director and held
roles as Director of Chemistry and Vice President of Research and Development from 1988 to 2003. Prior to forming Biosite,
Dr. Buechler was a senior research scientist for the diagnostics research and development group at Hybritech
Incorporated, a biotechnology company located in San Diego. Dr. Buechler served on the board of directors of Adnavance,
Inc. from March 2008 until April 2010. Dr. Buechler currently serves on the board of directors of Quidel Corp., Sotera
Wireless Inc., Edico Genome Inc., and Astute Medical Inc. Dr. Buechler received his Ph.D in biochemistry from
Indiana University.
The Nominating and Corporate
Governance Committee believes Dr. Buechler’s business experience in diagnostics research and as a co-founder and executive
officer of Biosite, including the successful development of a number of diagnostic products, and his service on other public company
boards combined with his business acumen and judgment provides our Board of Directors with valuable scientific and operational
expertise and leadership skills.
MYLA LAI-GOLDMAN,
M.D., 57, has served as a
director since September 2012. She is the managing partner of Personalized Science, LLC, a consulting company she founded
in September 2008, that is focused on innovative diagnostics for patients’ unmet clinical needs. Dr. Lai-Goldman is
also the Chief Executive Officer and President of GeneCentric Diagnostics, Inc., a molecular diagnostics company focused on developing
and commercializing assays that enable oncologists and their patients to make informed, individualized, treatment decisions. Dr. Lai-Goldman
has been with GeneCentric Diagnostics, Inc., since June 2011. Dr. Lai-Goldman currently serves on the board of directors
of West Pharmaceuticals Services, Inc., a provider of drug administration systems, and is also a venture partner with Hatteras
Venture
Partners, a position she
has held since August 2011. From June 2009 to December 2010, Dr. Lai-Goldman was Chief Executive Officer and Chief Scientific Officer
of CancerGuide Diagnostics, Inc., a life science company focused on the development and commercialization of genomic-based clinical
and pharmaceutical cancer tests and services. From 1990 to December 2008, Dr. Lai-Goldman served in various roles at Laboratory
Corporation of America Holdings and its predecessor company, Roche Biomedical Laboratories, a clinical laboratory company, including
Executive Vice President, Chief Medical Officer, and Chief Scientific Officer. Dr. Lai-Goldman is a recognized author and speaker
on clinical diagnostics. She received her B.S. in biology from the University of Pennsylvania and her medical degree from Columbia
University. Dr. Lai-Goldman completed a pathology residency and surgical pathology fellowship at The University of California,
Los Angeles, and a hematopathology fellowship at The University of North Carolina, Chapel Hill. Dr. Lai-Goldman is board certified
in anatomic and clinical pathology.
The Nominating and Corporate
Governance Committee believes that Dr. Lai-Goldman’s clinical laboratory medicine and diagnostics experience, and business
experience as an executive officer, combined with her business acumen and judgment, provides our Board of Directors with valuable
scientific and operational expertise and leadership skills.
RICHARD
A. LERNER, M.D., 76, has served as a director since 2007. Dr. Lerner served as President
of the Scripps Research Institute, a private, non-profit biomedical research organization from 1986 to January 2012, and since
then has served and continues to serve as Institute Professor. Dr. Lerner received the Wolf Prize in Chemistry in 1994, the California
Scientist of the Year Award in 1996, the Paul Ehrlich and Ludwig Darmstaedter Prize in 2003, and the Prince of Asturias Award in
2012 for his achievements in the development of catalytic antibodies and combinatorial antibody libraries. Dr. Lerner is a member
of the Royal Swedish Academy of Sciences and the National Academy of Sciences. Dr. Lerner served as a director of Kraft Foods,
Inc. from 2005 to March 2012 and currently serves as a director of Opko Health, Inc., Teva Pharmaceutical Industries Ltd., IntraCellular
Therapies, and Zebra Biologics, Inc. Dr. Lerner received his M.D. from Stanford Medical School.
The Nominating and Corporate
Governance Committee believes that Dr. Lerner’s business experience as a research scientist and executive officer, including
his service as a director of other public companies, combined with his business acumen and judgment, provides our Board of Directors
with valuable scientific and operational expertise and leadership skills.
RONALD
M. LINDSAY, PH.D., 67, has served as a director since 2003. Dr. Lindsay is the Chief Executive
Officer and a director of Zebra Biologics Inc., a privately-held biotechnology company focused on a “next-gen” approach
to more efficiently and more effectively discover and develop novel human biologic drugs utilizing a proprietary platform technology.
Dr. Lindsay also operates Milestone Consulting, a biopharmaceutical consulting firm. He served as our Executive Vice President
of Strategic Planning from December 2012 through December 2013. Dr. Lindsay previously served as our Executive Vice President of
Research and Development from August 2010 until December 2012 and as our interim Senior Vice President of Research and Development
from September 2009 until August 2010. Dr. Lindsay served as Vice President, Research and Development, and Chief Science Officer
of diaDexus Inc., a biotechnology company, from 2000 to January 2004. From 1997 through 2000, Dr. Lindsay served in various senior
management roles with Millennium Pharmaceuticals, Inc., a biopharmaceutical company. From 1989 to 1997, Dr. Lindsay served in various
roles with Regeneron Pharmaceuticals Inc., of which he was a founding scientist. He is a director of Arqule Inc. and NeurocentRx
Ltd. Dr. Lindsay received his Ph.D. in Biochemistry from the University of Calgary.
The Nominating and Corporate
Governance Committee believes that Dr. Lindsay’s business experience including as an executive officer and research scientist,
and his service on other public company boards combined with his business acumen and judgment, provides our Board of Directors
with valuable scientific and operational expertise and leadership skills.
CATHERINE
J. MACKEY, PH.D., 59, is an experienced corporate director with thirty years of operating
experience in the pharmaceutical, biotechnology and agriculture industries, including twenty years at the executive level. Dr.
Mackey is the Chief Executive Officer of CYPrus Therapeutics, Inc., a privately-held small molecule pharmaceutical development
company. She is also the founder and Chief Executive Officer of MindPiece Partners, serves on the scientific advisory boards of
FHOOSH Inc. and Cypher Genomics and is a special advisor to Fortis Advisors LLC. Dr. Mackey’s past director experience includes
publicly-traded YM Biosciences (acquired by Gilead) and privately-held Althea Technologies (acquired by Ajinomoto). She currently
serves on the Boards of privately-held companies Cour Pharmaceutical Development Company (Chair), Evolve Biosystems, Inc. and Viventia
Bio, Inc. In addition, Dr. Mackey is a director and a member of the Audit & Compliance Committee of Rady Children’s Hospital
and is the immediate past-chair of CONNECT. Dr. Mackey was Senior Vice President Worldwide Research and Development at Pfizer Inc.
from 2001 through 2010 and is credited with leading Pfizer’s La Jolla Labs to become one of Pfizer’s most successful
R&D sites. Prior to that, Dr. Mackey was Executive Vice President of Strategic Alliances at Pfizer’s R&D headquarters
in Connecticut and before that she led Genomic and Proteomic Sciences at Pfizer. Before Pfizer, she held positions of increasing
responsibility for DEKALB Genetics including Vice President and head of Research and Development. She was
a member of DEKALB’s
executive team that sold the company to Monsanto. Dr. Mackey received her B.S. and Ph.D. degrees in microbiology from Cornell University.
The Nominating and Corporate
Governance Committee believes that Dr. Mackey’s combination of extensive research and development and business experience
including as an executive officer and research scientist, and her service on other company and not-for-profit boards, including
experience with audit and compliance functions, combined with her business acumen and judgment, provides our Board of Directors
with valuable scientific and operational expertise and leadership skills.
DAVID
PENDARVIS, 56, has served as a director
since December 2009. Mr. Pendarvis is Chief Administrative Officer, Global General Counsel and Secretary of ResMed Inc., a medical
device company focused on sleep-disordered breathing. He has been with ResMed since 2002. From 2000 until 2002, Mr. Pendarvis was
a partner in the law firm of Gray Cary Ware & Freidenrich LLP. Until 2000 he was a partner with Gibson, Dunn & Crutcher
LLP, where he began working in 1986. From 1984 until 1986 he was a law clerk to the Hon. J. Lawrence Irving, US District Judge,
Southern District of California. Mr. Pendarvis received his J.D. from the University ofTexas School of Law and his M.S. in executive
leadership from the University of San Diego.
The Nominating and Corporate
Governance Committee believes that Mr. Pendarvis’ experience as an executive officer at a medical device company and as an
attorney, combined with his business acumen and judgment, provides our Board of Directors with valuable operational expertise and
leadership skills.
CHARLES
P. SLACIK, 61, has served as a director since June 2011. Mr. Slacik was Chief Financial
Officer and Senior Vice President of Finance of Beckman Coulter Inc., a leading manufacturer of biomedical testing instrument systems,
tests and supplies, from October 2006 to September 2011 and was responsible for all aspects of financial management and information
technology. From 2003 to 2006, Mr. Slacik served as Executive Vice President and Chief Financial Officer of Watson Pharmaceuticals,
Inc., an integrated global pharmaceutical company engaged in the development, manufacturing, marketing, sale and distribution of
generic, brand and biologic pharmaceutical products. From 1999 to 2003, Mr. Slacik served as Senior Vice President and Chief Financial
officer of C.R. Bard, Inc., a developer and manufacturer of medical technologies in the fields of vascular, urology, oncology and
surgical specialty products. Currently, Mr. Slacik also serves on the board of directors of STAAR Surgical Company. Mr. Slacik
earned a Bachelor of Science degree in accounting and finance from the University of Connecticut and is a Certified Public Accountant.
The Nominating and Corporate
Governance Committee believes that Mr. Slacik’s experience as an executive officer of biomedical and pharmaceutical companies,
combined with his business acumen and judgment, provides our Board of Directors with valuable financial, healthcare and operational
expertise and leadership skills.
DIRK
VAN DEN BOOM, PH.D., 45, has served as a director since April 1, 2015 and as our Executive
Vice President and Chief Scientific and Strategy Officer since March 2015. Previously he served as our Chief Scientific and Strategy
Officer from June 2014 through March 2015 and as our Executive Vice President, Research and Development and Chief Technology Officer
from December 2012 through June 2014. Prior to that, he had served as our Senior Vice President of Research and Development since
August 2010 and as our Vice President, Research and Development from October 2009 through August 2010. Dr. van den Boom joined
Sequenom in 1998 in the Company’s Hamburg offices, subsequently serving in various management roles within our research and
development department. Dr. van den Boom has co-authored more than 50 scientific articles and is inventor on 48 patents/patent
applications. Dr. van den Boom received his Ph.D. in Biochemistry/Molecular Biology from the University of Hamburg where he focused
on various aspects of nucleic acid analysis with mass spectrometry.
The Nominating and Corporate
Governance Committee believes that Dr. van den Boom’s experience as an executive officer and research scientist, combined
with his business acumen and judgment, provides our Board of Directors with valuable healthcare and operational expertise and leadership
skills.
WILLIAM
J. WELCH, 53, has served as a director since June 2014 and as our President and Chief
Executive Officer since March 2015. Previously, he served as director and our Chief Executive Officer from June 2014 through March
2014. Prior to that, he was our President and Chief Operating Officer from December 2012 through June 2014 and our Senior Vice
President, Diagnostics, from January 2011 to December 2012. Before joining us, from September 2009 to January 2011, Mr. Welch was
a consultant to molecular diagnostic companies in the personalized medicine sector. From August 2005 to September 2009, Mr. Welch
was Senior Vice President and Chief Commercial Officer at Monogram Biosciences, a bioscience laboratory services company. Prior
to Monogram, Mr. Welch held commercial management positions at La Jolla Pharmaceuticals and Dade Behring MicroScan, and initially
entered the healthcare field with Abbott Laboratories where he held progressive management positions, including General Manager.
Mr. Welch received his M.B.A from Harvard University and a B.S. with honors in chemical engineering from the University of California,
Berkeley.
The Nominating and Corporate
Governance Committee believes that Mr. Welch’s experience as an executive officer and commercial leader of laboratory, pharmaceutical,
and healthcare companies, combined with his business acumen and judgment provides our Board of Directors with valuable healthcare
and operational expertise and leadership skills.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR EACH NAMED NOMINEE
THE BOARD OF DIRECTORS AND
ITS COMMITTEES
VACANCIES ON THE BOARD OF DIRECTORS |
Vacancies on the Board
of Directors may be filled only with the approval of at least two-thirds of the directors then in office. A director elected by
the Board of Directors to fill a vacancy, including a vacancy created by an increase in the number of directors, shall serve until
the next annual meeting of stockholders or until the director’s successor is elected.
INDEPENDENCE OF THE BOARD OF DIRECTORS |
As required under applicable
Nasdaq Marketplace Rules, a majority of the members of a listed company’s Board of Directors must qualify as “independent,”
as affirmatively determined by the Board of Directors. Our Board of Directors consults with our counsel to ensure that the Board
of Directors’ determinations are consistent with all relevant securities and other laws and regulations regarding the definition
of “independent,” including those set forth in pertinent Nasdaq Marketplace Rules, as in effect time to time. We require
each independent director of the Board of Directors to annually certify, in writing, to the Chair of the Nominating and Corporate
Governance Committee that he or she is independent under the Nasdaq Marketplace Rules and to immediately inform the Board of Directors
of any change in his or her independent status.
Consistent with these
considerations, after review of all relevant transactions and relationships between each director or any of his or her family members,
and our senior management, our independent registered public accounting firm and us, the Board of Directors affirmatively has determined
that all of the directors who served in 2014 were independent directors within the meaning of the applicable Nasdaq Marketplace
Rules, except for Mr. Welch, our current President and Chief Executive Officer, Dr. Hixson, our former Chief Executive Officer
and Dr. Lindsay, our former Executive Vice President of Strategic Planning. As required under applicable Nasdaq Marketplace Rules,
in 2014 our independent directors met in regularly scheduled executive sessions at which only independent directors were present.
We have a policy that following each regular meeting of the Board of Directors, the independent directors are required to hold
an executive session without the attendance or participation of our Chief Executive Officer or any other officer or employee.
We also have a policy
prohibiting our directors from serving on the Board of Directors of more than four public or private for-profit companies (not
including Sequenom or any of our subsidiaries or affiliates).
BOARD OF DIRECTORS LEADERSHIP STRUCTURE |
Our Board of Directors
is currently chaired by Dr. Buechler. The Board of Directors elected Dr. Buechler Chairman effective April 1, 2015 to succeed Dr.
Hixson who resigned from the Board of Directors effective March 31, 2015. Prior to Dr. Buechler’s election as Chairman of
the Board of Directors, the Board of Directors had appointed Dr. Lerner as lead independent director.
As a general policy,
our Board of Directors believes that separation of the positions of Chairman of the Board of Directors and Chief Executive Officer
reinforces the independence of the Board of Directors from management, creates an environment that encourages objective oversight
of management’s performance and enhances the effectiveness of the Board of Directors as a whole. Until September 2009, the
positions of Chairman of the Board and Chief Executive Officer were held by different individuals. In September 2009, our Board
of Directors appointed Dr. Hixson as Chief Executive Officer given his knowledge of the Company and business experience. On June
10, 2014, Dr. Hixson completed his service as Chief Executive Officer and Mr. Welch assumed that role, so the positions of Chairman
of the Board of Directors and Chief Executive Officer were once again held by two different individuals, reinforcing the independence
between the Board of Directors and management. In addition, upon Dr. Buechler’s election as Chairman of the Board of Directors,
the position of Chairman of the Board of Directors is now held by an independent director, further enhancing the independence between
the Board of Directors and management.
ROLE
OF THE BOARD OF DIRECTORS IN RISK OVERSIGHT |
One of the Board of Directors’
key functions is informed oversight of our risk management process. The Board of Directors does not have a standing risk management
committee, but rather administers this oversight function directly through the Board of Directors as a whole, as well as through
various Board of Directors’ standing committees that address risks inherent in their respective areas of oversight.
In particular, our Audit
Committee has the responsibility to consider and discuss our major financial risk exposures, including credit risks and liquidity
risks, and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern
the process by which risk assessment and management is undertaken. During 2014, the Audit Committee reviewed and discussed reports
from management, independent auditors and other committees with respect to accounting and financial controls, assessment of business
risks, including cyber security risks, and certain matters related to legal and ethical compliance programs. Our Nominating and
Corporate Governance Committee develops and monitors the effectiveness of our corporate governance policies and principles, including
oversight of risks associated with potential conflicts of interest. The Compensation Committee reviews and approves individual
and corporate performance goals, advises the Board of Directors regarding the adoption, modification, or termination of compensation
plans and policies and assesses and monitors whether any of our compensation policies and programs has the potential to encourage
excessive risk-taking. Our Science Committee advises the Board of Directors regarding risks associated with our technological and
scientific research, monitors the sufficiency of laboratory controls and procedures, assesses procedures for the conduct of research
and development and clinical studies and oversees external review of our research and development programs.
We have a policy requiring
new directors to participate in an initial orientation program upon election to the Board of Directors and in regular continuing
education programs thereafter, in order that they fully understand their directorial responsibilities and can faithfully fulfill
their fiduciary duties. This continuing education, outlining the essential elements of best corporate governance practices and
informing directors of new developments in this area, is conducted by our general counsel or otherwise by a designated outside
counsel with corporate governance expertise.
MEETINGS OF THE BOARD OF DIRECTORS |
The Board of Directors
met 14 times during 2014. Eight of our 9 directors attended at least 90% of the aggregate number of meetings of the Board of Directors
and of the committees on which they served, held during the portion of the last fiscal year for which they were directors or committee
members, respectively. Due to conflicts posed by unforeseen international travel, Dr. Lerner attended fewer than 75% of the aggregate
number of meetings of the Board of Directors or committees on which he served during 2014; however, he has provided assurance that
such conflicts will not recur in 2015 and anticipates that he will attend at least 90% of the aggregate number of meetings of the
Board of Directors and of the committees on which he serves. In the first quarter of 2015, Dr. Lerner attended all meetings of
the Board of Directors and of the committees on which he serves.
ATTENDANCE AT ANNUAL MEETINGS |
We have adopted a policy
of inviting and strongly encouraging our directors and nominees for director to attend our annual meeting of stockholders. All
of our directors attended our annual meeting in 2014.
CODE
OF BUSINESS CONDUCT AND ETHICS |
We have adopted a Code
of Business Conduct and Ethics that applies to all of our officers, directors and employees. The Code of Business Conduct and Ethics
is available in the Corporate Governance section under “Invest” on our website at www.sequenom.com. If we make any
substantive amendments to the Code of Business Conduct and Ethics or grant any waiver from a provision of the Code to the principal
executive, financial or accounting officers, we will promptly disclose the nature of the amendment or waiver on our website.
COMMUNICATION
WITH THE BOARD OF DIRECTORS |
Persons interested in
communicating with our Board of Directors regarding their concerns or issues may send written correspondence to the Board of Directors
in care of the Secretary at Sequenom, Inc., 3595 John Hopkins Court, San Diego, California 92121 or by email to “board@sequenom.com.”
The Secretary will screen communications for spam, junk mail, mass mailings, product complaints, product inquiries, new product
suggestions, resumes, job inquiries, surveys, business solicitations and advertisements, as well as unduly hostile, threatening,
illegal, unsuitable, frivolous, patently offensive or otherwise inappropriate material before forwarding to the Board of Directors.
The process regarding security holder communications with the Board of Directors may be found on our website at www.sequenom.com,
under “Invest.”
BOARD
OF DIRECTORS COMMITTEES |
The Board of Directors
has four standing committees: Audit, Compensation, Nominating and Corporate Governance and Science. The following table provides
current membership and meeting information for 2014 for each of the standing committees:
Name |
Audit |
Compensation |
Nominating
and
Corporate
Governance |
Science |
|
|
|
|
|
Kenneth F. Buechler |
|
√ |
|
Chair |
John
A. Fazio(1) |
Chair |
|
|
|
Harry
F. Hixson, Jr(2) |
|
|
|
√ |
Myla Lai-Goldman |
|
|
Chair |
√ |
Richard A. Lerner |
|
√ |
√ |
√ |
Ronald M. Lindsay |
|
|
|
√ |
David Pendarvis |
√ |
|
√ |
|
Charles P. Slacik |
√ |
Chair |
|
|
Dirk
van den Boom(3) |
|
|
|
√ |
William J. Welch |
|
|
|
|
Total meetings in 2014 |
9 |
8 |
6 |
2 |
(1) |
Mr. Fazio will serve on the Audit Committee
until , 2015. |
(2) |
Dr. Hixson served as a member of the Board
of Directors and as a member of the Science Committee until March 31, 2015. |
(3) |
Dr. van den Boom became a member of the
Board of Directors and a member of the Science Committee effective April 1, 2015. |
Below is a description
of each committee of the Board of Directors. Each of the committees has authority to engage legal counsel or other experts or consultants,
as it deems appropriate to carry out its responsibilities. The Board of Directors has determined that each current member of each
committee meets the applicable rules and regulations regarding independence and that each member is free of any relationship that
would interfere with his or her individual exercise of independent judgment.
NOMINATING
AND CORPORATE GOVERNANCE COMMITTEE |
Three directors comprise
the Nominating and Corporate Governance Committee: Dr. Lai-Goldman (chair), Dr. Lerner, and Mr. Pendarvis. The Nominating and Corporate
Governance Committee is responsible for identifying, reviewing and evaluating candidates to serve as directors consistent with
criteria approved by the Board of Directors; reviewing and evaluating incumbent directors; selecting candidates for election to
the Board of Directors; making recommendations to the Board of Directors regarding the membership of the committees of the Board
of Directors; assessing the performance of management and the Board of Directors; evaluating and establishing policies prohibiting
the purchase of financial instruments designed to hedge against market risk; and overseeing corporate governance matters. Our Nominating
and Corporate Governance Committee charter may be found in the Corporate Governance section under “Invest” on our website
at www.sequenom.com. All members of the Nominating and Corporate Governance Committee are independent (as currently defined in
Nasdaq Marketplace Rule 5605(a)(2)).
The Nominating and Corporate
Governance Committee believes that candidates for director should have certain minimum qualifications, including being able to
read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics.
The Committee also considers such factors as possessing relevant expertise upon which to be able to offer advice and guidance to
management, having sufficient time to devote to our affairs, demonstrated excellence in his or her field, having the ability to
exercise sound business judgment and having the commitment to rigorously represent the long term interests of our stockholders.
The Committee retains the right to modify these qualifications from time to time. The Nominating and Corporate Governance Committee
also focuses on issues of diversity, such as diversity of gender, race and national origin, education, professional experience
and differences in viewpoints and skills. The Nominating and Corporate Governance Committee does not have a formal policy with
respect to diversity; however, our Board of Directors and the Nominating and Corporate Governance Committee believe that it is
essential that the members of our Board of Directors represent diverse viewpoints. Candidates for director nominees are reviewed
in the context of the current composition of the Board of Directors, our operating requirements and the long term interests of
stockholders. In conducting this assessment, the Committee considers skills, diversity, age, and such other factors as it deems
appropriate given the current needs of the Board of Directors to maintain a balance of knowledge, experience and capability. In
the case of incumbent directors, the Nominating and Corporate Governance Committee reviews each director’s overall service
during his or her term, including the number of meetings attended, level of participation, quality of performance, and any other
relationships and transactions that might impair such director’s independence. In the case of new director candidates, the
Committee also determines whether the nominee must be independent under applicable NASDAQ and
SEC rules. The Committee
uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional
search firm. The Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible
candidates after considering the function and needs of the Board of Directors. The Committee meets to discuss and consider such
candidates’ qualifications and then selects a nominee by majority vote.
The Nominating and Corporate
Governance Committee will consider director candidates recommended by stockholders. The Committee does not intend to alter the
manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether the candidate was recommended
by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee
to become nominees for election to the Board of Directors may do so by delivering a written recommendation to the Nominating and
Corporate Governance Committee at the following address: Sequenom, Inc., 3595 John Hopkins Court, San Diego, California 92121.
Such recommendations must be received by the Nominating and Corporate Governance Committee at least 120 days prior to the anniversary
date of the mailing of our proxy statement for the last annual meeting of stockholders. Submissions must include the full name
of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years,
complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation
that the nominating stockholder is a beneficial or record owner of our stock. Any such submission must be accompanied by the written
consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
Three directors comprise
the Audit Committee: Mr. Fazio (chair), Mr. Pendarvis and Mr. Slacik. Mr. Fazio’s service on the Audit Committee will end
at the 2015 Annual Meeting when his term as a director ends. The Audit Committee oversees our corporate accounting and financial
reporting process, the systems of internal control over financial reporting and disclosure controls and procedures. The Audit Committee
evaluates the performance and assesses the qualifications of the independent registered public accounting firm that audits our
financial statements; determines and approves the engagement of the independent registered public accounting firm; determines whether
to retain or terminate the existing independent registered public accounting firm or to appoint and engage a new independent registered
public accounting firm; reviews and approves the retention of the independent registered public accounting firm to perform any
proposed permissible non-audit services; monitors the rotation of partners of the independent registered public accounting firm
on our audit engagement team as required by law; receives and reviews at least annually written statements from the independent
registered public accounting firm affirming their independence and delineating their relationships with us or our employees with
financial oversight roles that may reasonably be thought to bear on independence; confers with management and the independent registered
public accounting firm regarding any allegation of fraud, whether or not material, that includes management or other employees
who have any significant role in our internal control over financial reporting and any significant changes in internal controls
or other factors that could significantly affect internal controls; confers with management to ensure that adequate and effective
processes are in place to maintain disclosure controls and procedures that ensure that information we are required to disclose
is recorded, processed, summarized and reported accurately and within the applicable time periods and that such information is
accumulated and communicated to management, as appropriate, to allow for timely decisions regarding required disclosure; confers
with management and the independent registered public accounting firm regarding the effectiveness of internal controls over financial
reporting; establishes procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting
controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting
or auditing matters; reviews and approves or rejects related-person transactions; reviews and approves the disclosures to be included
in our periodic reports on Form 10-K and Form 10-Q; and discusses with management and the independent registered public accounting
firm the results of the annual audit and review of our quarterly financial statements. We have adopted a policy requiring the Audit
Committee to hold executive sessions with our independent auditor and our financial management team as a routine item on the agenda
for each of the Audit Committee’s regularly scheduled meetings other than telephonic meetings, for which executive sessions
are held upon request of the Audit Committee, management, or the independent registered public accounting firm. The Audit Committee
has adopted a written charter that may be found in the Corporate Governance section under “Invest” on our website at
www.sequenom.com and is attached to this Proxy as Exhibit A.
All communications directed
to the Audit Committee in accordance with the Open Door Policy for Reporting Complaints that relate to questionable accounting
or auditing matters involving the Company will be promptly and directly forwarded only to the Chair of the Audit Committee and
designated outside counsel to the Company. The Open Door Policy for Reporting Complaints is available in the Corporate Governance
section under “Invest” on our website at www.sequenom.com.
The Board of Directors
annually reviews the Nasdaq listing standards definition of independence for Audit Committee members and has determined that all
members who served on the Audit Committee in 2014 were independent (as independence is currently defined in Nasdaq Marketplace
Rule 5605(a)(2) and SEC Rule 10A-3). The Board of Directors has determined that Mr. Fazio and Mr. Slacik qualify as “audit
committee financial experts,” as defined in applicable SEC rules. The Board of Directors made a qualitative assessment of
Mr. Fazio’s and Mr. Slacik’s level of knowledge and experience based on a number of factors, including their formal
education and experience.
AUDIT
COMMITTEE REPORT*
The
Audit Committee has reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31,
2014 with management of the Company. The Audit Committee has discussed with the independent registered public accounting firm
the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol.
1. AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. The Audit
Committee has also received the written disclosures and the letter from the independent registered public accounting firm required
by applicable requirements of the PCAOB (Rule 3526) regarding the independent accountants’ communications with the Audit
Committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s
independence. Based on the foregoing, the Audit Committee recommended 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, 2014.
Three
directors comprise the Compensation Committee: Mr. Slacik (chair), Dr. Buechler and Dr. Lerner. The Compensation Committee establishes
our executive compensation philosophy and reviews and approves our overall compensation strategy and policies. All members who
served on the Compensation Committee in 2014 were independent and met the requirements as set forth in Nasdaq Marketplace Rule
5605(a)(2) and 5605(d). The Compensation Committee’s charter may be found in the Corporate Governance section under “Invest”
on our website at www.sequenom.com. The functions of the Compensation Committee include, among other things:
|
|
|
|
● |
reviewing the compensation and other
terms of employment of our Chief Executive Officer and recommending such compensation and items to the Board of Directors
for its approval; |
|
|
|
|
● |
reviewing and approving the compensation
and other terms of employment of the other executive officers and reviewing and approving the compensation of our non-employee
directors; |
|
|
|
|
● |
reviewing and approving corporate performance
goals and objectives relevant to the compensation of our executive officers and other senior management; |
|
|
|
|
● |
evaluating risks associated with our
compensation policies and practices and assessing whether risks arising from our compensation policies and practices for our
employees are reasonably likely to have a material adverse effect on us; and |
|
|
|
|
● |
administration of our equity incentive
and stock purchase plans and other benefit plans and programs. |
The
Compensation Committee also reviews with management the Company’s Compensation Discussion and Analysis and considers whether
to recommend that it be included in the proxy statement and other filings.
|
COMPENSATION
COMMITTEE PROCESSES AND PROCEDURES |
Typically,
the Compensation Committee meets in person in connection with regularly scheduled meetings of the Board of Directors and holds
meetings with greater frequency if necessary. The agenda for each meeting is usually developed by the Chair of the Compensation
Committee, in consultation with our Chief Executive Officer, Chief Financial Officer, and Vice President of Corporate Development
and Administration or Director of Human Resources. The Compensation Committee meets regularly in
*The
material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to
be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the “1933 Act”),
or the Securities Exchange Act of 1934, as amended (the “1934 Act”), whether made before or after the date of this
proxy statement and without regard to any general incorporation language therein.
executive
session. However, from time to time, various members of management and other employees as well as outside advisors or consultants
may be invited by the Compensation Committee to make presentations, provide financial or other background information or advice
or otherwise participate in Compensation Committee meetings. The Chief Executive Officer may not participate in or be present
during any deliberations or determinations of the Compensation Committee regarding his compensation or individual performance
objectives. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities
and personnel of the Company, as well as authority to obtain, at the expense of the Company, advice and assistance from internal
and external legal, accounting or other advisors and consultants and other external resources that the Compensation Committee
considers necessary or appropriate in the performance of its duties. In particular, the Compensation Committee has the authority
in its sole discretion to retain or obtain the advice of any compensation consultant, legal counsel or other advisor at the Company’s
expense and shall be directly responsible for the appointment, compensation and oversight of the work of such advisors and will
review the independence of such advisors prior to appointment, as required by SEC rules and regulations.
Under
its charter, each member of the Compensation Committee must be a “non-employee director” within the meaning of Rule
16b-3 under the 1934 Act and an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the “Code”), and each of Mr. Slacik, Dr. Lerner and Dr. Buechler meets these requirements. Under
its charter, the Compensation Committee is responsible for establishing the Company’s compensation policies, plans and programs
for all executive officers; overseeing the overall compensation strategy for the Company; evaluating risks and consequences associated
with the Company’s compensation policies and practices; establishing policies with respect to stockholder advisory votes
on our executive compensation and the frequency of such advisory votes; reviewing and approving the terms of employment agreements,
severance arrangements, change-of-control protections and any compensatory arrangement; administering the Company’s benefit
plans; and reviewing and approving the compensation of our non-employee directors. The Committee provides guidance with respect
to the purpose and principles behind the Company’s compensation decisions and overall compensation philosophy and objectives,
oversees our compensation policies, plans and programs, and reviews executive officer compensation. The Compensation Committee
annually evaluates the performance and determines the compensation of the executive officers of the Company (other than the Chief
Executive Officer) based upon a mix of factors including the achievement of corporate goals, achievement of individual goals,
overall individual performance, and comparisons with other biotechnology companies selected based on size and competition for
talent. The Compensation Committee also works with the independent members of the Board of Directors to evaluate our Chief Executive
Officer’s performance and the independent members of the Board of Directors determine the compensation of our Chief Executive
Officer. The Chief Executive Officer was not present during the voting or deliberations by the Compensation Committee or the independent
members of the Board of Directors regarding his compensation.
Historically,
the Compensation Committee has typically made adjustments to annual compensation, determined bonus and equity awards and set new
performance objectives consistent with the performance goals established by the Board of Directors at one or more meetings held
during the first quarter of the year. However, the Compensation Committee also considers matters related to individual compensation,
such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of the Company’s
compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various
meetings throughout the year. Generally, each year our Board of Directors, with input from our executive officers, defines measurable
performance goals for the Company. Based upon these performance goals, the Compensation Committee, with input from our Board of
Directors, weights each goal in view of each goal’s overall importance to the Company and establishes incentive compensation
parameters that reward achievement of those goals. The Compensation Committee’s process comprises two related elements:
(i) the determination of specific individual compensation levels and the implementation of performance objectives for the Company
as determined by our Board of Directors and (ii) performance objectives for the executives for the current year. For executives
other than the Chief Executive Officer, the Compensation Committee solicits and considers evaluations and recommendations submitted
to the Committee by the Chief Executive Officer. In the case of the Chief Executive Officer, the evaluation of his performance
is conducted by the Compensation Committee members and the other independent non-employee members of the Board of Directors. For
all executives, as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such
as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total
compensation that may become payable to executives in various hypothetical scenarios, executive stock ownership information, company
stock performance data, analyses of current Company-wide compensation levels, and opinions, recommendations, and/or data from
any compensation consultant that the Compensation Committee may have retained, including analyses of executive compensation paid
at other companies identified by the consultant.
For
2014, the Compensation Committee relied upon information provided by outside compensation consultant Compensia, Inc., or Compensia,
to assist the Compensation Committee with its compensation determinations for our executive officers and other employees, and
our non-employee members of our Board of Directors. The Compensation Committee received information from Compensia about potential
conflicts of interest and has analyzed whether the work of Compensia as a compensation consultant has raised any conflict of interest,
taking into consideration the following factors: (i) the provision of other services to the
Company
by Compensia; (ii) the amount of fees from the Company paid to Compensia as a percentage of Compensia’s total revenue; (iii)
Compensia’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship
of Compensia or the individual compensation advisors employed by Compensia with an executive officer of the Company; (v) any business
or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (vi) any stock
of the Company owned by the individual compensation advisors employed by Compensia. Based on these factors, the Compensation Committee
determined that there were no conflicts of interest with respect to Compensia providing services to the Compensation Committee.
The
specific determinations of the Compensation Committee with respect to executive compensation for fiscal year 2014 as well as additional
information regarding the role of the Compensation Committee and its processes and procedures are described in greater detail
in the Compensation Discussion and Analysis section of this proxy statement.
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
During
2014, the following directors served as members of the Compensation Committee: Mr. Slacik, Dr. Buechler and Dr. Lerner. No member
of the Compensation Committee has ever been our officer or employee nor has anyone who was a member in 2014 had a relationship
with us requiring disclosure as a transaction with a related person. None of our executive officers currently serves, or has served
during the last completed fiscal year, on the Compensation Committee or Board of Directors of any other entity that has one or
more executive officers serving as a member of our Board of Directors or Compensation Committee.
COMPENSATION
COMMITTEE REPORT*
The
Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy
statement. Based on the review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation
Discussion and Analysis be included in this proxy statement and incorporated into our Annual Report on Form 10-K for the fiscal
year ended December 31, 2014.
Our
Board of Directors established the Science Committee and its charter in November 2009. The Science Committee currently consists
of Dr. Buechler (chair), Dr. Lindsay, Dr. Lai-Goldman, Dr. Lerner and Dr. van den Boom. The functions of the Science Committee
include, among other things, evaluating the short and long term soundness and risks associated with the technology in which we
are investing research and development efforts; providing strategic advice and making recommendations to our Board of Directors
regarding prioritizations and resources related to current and planned research and technology initiatives; providing strategic
advice to our Board of Directors regarding emerging science and technology issues and trends; reviewing, evaluating and reporting
to our Board of Directors regarding the performance of our research leaders in achieving long term strategic goals and objectives
and the quality, direction and competitiveness of our research and development programs; providing guidance on the recruitment
and retention of scientific talent; reviewing with our management the sufficiency of our employee training in scientific processes,
our laboratory controls and procedures, including procedures for the conduct of research and development and clinical studies,
and the procedures for the storage and management of samples for testing; reviewing the sufficiency of external review of our
research and development programs; providing oversight of our technology and intellectual property portfolios, including our pipeline
of research and development programs and projects; reviewing our approaches to acquiring and maintaining a range of distinct technology
positions; and advising our Board of Directors regarding the scientific merit of technology or products involved in licensing
and acquisition opportunities.
*The
material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to
be incorporated by reference in any filing of the Company under the 1933 Act or the 1934 Act, whether made before or after the
date of this proxy statement and without regard to any general incorporation language therein.
PROPOSAL
2
|
APPROVAL
OF AN AMENDMENT TO THE COMPANY’S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK |
Our
Board of Directors is requesting stockholder approval of an amendment to our Restated Certificate of Incorporation to increase
the number of authorized shares of our common stock from 185,000,000 shares to 275,000,000 shares. On March 11, 2014, the Board
of Directors adopted resolutions approving and authorizing the amendment and directing that the amendment be submitted to a vote
of the stockholders at the 2015 Annual Meeting.
Our
Restated Certificate of Incorporation currently authorizes the issuance of up to 190,000,000 shares of capital stock, consisting
of 185,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per
share. An increase in the number of authorized shares of our common stock to 275,000,000 shares will increase our total capitalization
to 280,000,000 shares of capital stock, which includes our previously authorized 5,000,000 shares of preferred stock.
Of
the 185,000,000 shares of our common stock currently authorized, as of the close of business on March 31, 2015, there were 118,070,667
shares of common stock outstanding. In addition, as of March 31, 2015:
|
|
|
|
● |
11,829,785 shares of our common stock
are issuable upon the exercise of stock options outstanding under our equity incentive and stock option plans; |
|
|
|
|
● |
2,051,658 shares of our common stock
are issuable upon vesting of restricted stock units; |
|
|
|
|
● |
28,088,372 shares of our common stock
are issuable upon conversion of our outstanding convertible notes; |
|
|
|
|
● |
250,000 shares of our common stock are
issuable upon exercise of outstanding warrants; |
|
|
|
|
● |
an aggregate of 6,802,477 shares of
common stock are reserved for future issuance under our 2006 Equity Incentive Plan as amended; and |
|
|
|
|
● |
238,900 shares of common stock are reserved
for future issuance under our New-Hire Equity Incentive Plan. |
The
additional common stock to be authorized by adoption of the amendment would have rights identical to our currently outstanding
common stock. Adoption of the proposed amendment and issuance of the common stock would not affect the rights of the holders of
our common stock, except for effects incidental to increasing the number of shares of our common stock outstanding, such as dilution
of our earnings per share and voting influence of current holders of our common stock. If the amendment is adopted, it will become
effective upon filing of a Certificate of Amendment of Restated Certificate of Incorporation with the Secretary of State of the
State of Delaware. The complete text of the Certificate of Amendment of Restated Certificate of Incorporation that would be filed
with the Secretary of State of the State of Delaware is set forth in Exhibit B to this Proxy Statement. However, the text of the
Certificate of Amendment of Restated Certificate of Incorporation is subject to revision to include such changes as may be required
by the Secretary of State of the State of Delaware and as the Board deems necessary and advisable to effect the proposed amendment
of our Restated Certificate of Incorporation.
Although
our Board of Directors has no present plans to issue the additional shares of common stock, it believes that it is important that
we maintain the flexibility to issue additional shares of common stock in connection with business and financial purposes in the
future. The additional shares may be used for various purposes without further stockholder approval. For example, additional common
stock may be necessary to provide equity incentives to employees, for expanding our business or product lines through the acquisition
of other businesses or products, establishing strategic relationships, refinancing current debt, raising additional capital, or
other purposes our Board of Directors deems to be in the best interests of our company and our stockholders. Without approval
of this proposal by our stockholders, we may not be able to attract, retain and motivate employees, complete corporate acquisitions,
collaborations or partnerships, access the capital markets, refinance current debt, and pursue other business opportunities integral
to our growth and success.
If
our Board of Directors determines that a hostile takeover attempt or a change in our control is not in the best interest of our
stockholders, we could use the additional shares of common stock that would become available for issuance if this proposal is
approved to oppose, delay or prevent such attempted takeover or change. For example, without further stockholder approval, our
Board of Directors could prevent a takeover by adopting a “poison pill” to allow certain stockholders the right to
acquire additional shares of common stock at a low price, or strategically selling shares of common stock in a private transaction.
The purpose of this proposal is to ensure the Company has flexibility to pursue optimal business strategies and is not to avoid
a hostile takeover, but stockholders should be aware that its approval could facilitate future efforts by us to discourage certain
transactions in which our stockholders might otherwise receive a premium for their shares over the then current market prices.
The
affirmative vote of the holders of a majority of the outstanding shares of the common stock on the record date will be required
to approve this amendment to our Restated Certificate of Incorporation. As a result, abstentions and broker non-votes will have
the same effect as negative votes.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL 2
PROPOSAL
3
|
ADVISORY
VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION |
Under
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and Section 14A of the 1934 Act,
our stockholders are entitled to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed
in this proxy statement in accordance with SEC rules. This vote is not intended to address any specific item of compensation,
but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this
proxy statement.
The
compensation of our named executive officers subject to the vote is disclosed in the Compensation Discussion and Analysis, the
compensation tables, and the related narrative disclosure contained in this proxy statement. As discussed in those disclosures,
we believe that our compensation policies and decisions are focused on pay-for-performance principles and strongly aligned with
our stockholders’ interests consistent with current market practices. Compensation of our named executive officers is designed
to enable us to attract and retain talented and experienced executives to lead the Company successfully in a competitive environment.
The
compensation of our executive officers is based on a design that ties a substantial percentage of an executive’s compensation
to the attainment of financial and other performance measures that the Board of Directors believes promote the creation of long
term stockholder value and position the Company for long term success. As described more fully in the Compensation Discussion
and Analysis, the mix of base pay, annual bonus and equity grants, as well as the terms of executives’ employment agreements,
are all designed to enable the Company to attract and maintain top talent while, at the same time, creating a close relationship
between performance and compensation. The Compensation Committee and the Board of Directors believe that the design of the program,
and hence the compensation awarded to named executive officers under the current program, fulfills this objective.
Stockholders
are urged to read the Compensation Discussion and Analysis section of this proxy statement, which discusses in detail how our
compensation policies and procedures implement our compensation philosophy.
Accordingly,
our Board of Directors is asking our stockholders to indicate their support for the compensation of our named executive officers
as described in this proxy statement by casting a non-binding advisory vote “For” the following resolution:
“RESOLVED,
that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K,
including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”
Because
the vote is advisory, it is not binding on the Board of Directors or the Company. Nevertheless, the views expressed by the stockholders,
whether through this vote or otherwise, are important to management and the Board of Directors and, accordingly, the Board of
Directors and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding
executive compensation arrangements.
Advisory
approval of this proposal requires the vote of the holders of a majority of the shares present in person or represented by proxy
and entitled to vote at the annual meeting. Abstentions will be counted toward the tabulation of votes cast on proposals presented
to the stockholders and will have the same effect as negative votes. Broker non-votes are counted towards a quorum, but are not
counted for any purpose in determining whether this matter has been approved.
Unless
the Board of Directors decides to modify its policy regarding the frequency of soliciting advisory votes on the compensation of
the Company’s named executives, the next scheduled advisory vote on the compensation of the Company’s named executives
will be at the 2016 Annual Meeting of Stockholders.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL 3
PROPOSAL
4
|
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The
Audit Committee of the Board of Directors has selected Ernst & Young LLP as our independent registered public accounting firm
for the fiscal year ending December 31, 2015 and has further directed that management submit the selection of our independent
registered public accounting firm for ratification by the stockholders at the annual meeting. Ernst & Young LLP has audited
our financial statements since 1997. Representatives of Ernst & Young LLP are expected to be present at the annual meeting.
They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither
our Bylaws nor our other governing documents or law require stockholder ratification of the selection of Ernst & Young LLP
as our independent registered public accounting firm. However, our Audit Committee is submitting the selection of Ernst &
Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the
selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit
Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time
during the year if they determine that such a change would be in our best interests or in the best interests of our stockholders.
The
affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at
the annual meeting will be required to ratify the selection of Ernst & Young LLP. Abstentions will be counted toward the tabulation
of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes are
counted towards a quorum, but are not counted for any purpose in determining whether this matter has been approved.
THE
BOARD OF DIRECTORS RECOMMENDS
A
VOTE FOR THIS PROPOSAL 4
PRINCIPAL
ACCOUNTANT FEES AND SERVICES |
The
following table represents aggregate fees billed to us for fiscal years ended December 31, 2014 and 2013, by Ernst & Young
LLP, our principal independent registered public accounting firm.
|
|
|
|
|
|
|
|
|
|
|
2014
Actual Fees |
|
|
2013
Actual Fees |
|
|
Audit
Fees(1) |
|
$ |
1,930,868 |
|
|
$ |
1,099,650 |
|
Audit
Related Fees(2) |
|
|
|
|
|
|
|
|
Subsidiary
statutory audits |
|
|
— |
|
|
|
36,500 |
|
All
Other Fees(3) |
|
|
— |
|
|
|
2,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Fees |
|
$ |
1,930,868 |
|
|
$ |
1,138,150 |
|
|
|
|
|
|
|
|
|
|
(1) |
Includes fees and expenses
related to the fiscal year integrated audit and interim reviews, notwithstanding when the fees and expenses were billed or
when the services were rendered. Fiscal year 2014 audit fees are preliminary, and subject to final settlement based upon actual
hours incurred versus budgeted. |
(2) |
Includes fees and expenses related to
the fiscal year, notwithstanding when the fees and expenses were billed. |
(3) |
Subscription fees for proprietary online
research tool. |
All
fees described above were approved by the Audit Committee.
PRE-APPROVAL
POLICIES AND PROCEDURES |
The
Audit Committee pre-approves all audit and non-audit services rendered by our independent registered public accounting firm. The
Audit Committee generally pre-approves specified services up to specified amounts. Under its charter, the Audit Committee may
delegate the pre-approval of services to one or more of its members. Any such pre-approval must be reported to the full Audit
Committee at its next meeting.
The
Audit Committee has determined that the rendering of the services other than audit services by Ernst & Young LLP is compatible
with maintaining the principal accountant’s independence.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial ownership of our common stock as of March 31, 2015 by:
(i) each director and nominee for director; (ii) each of the named executive officers listed in the Summary Compensation Table;
(iii) all of our executive officers and directors as a group; and (iv) each person, or group of affiliated persons, known by us
to beneficially own more than five percent of our common stock.
Beneficial
ownership has been determined in accordance with Rule 13d-3 under the 1934 Act. Under this rule, certain shares may be deemed
to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of
the shares). Shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example,
upon exercise of an option or warrant) within 60 days of the date of the information provided. In computing the percentage ownership
of any person, the number of shares is deemed to include the number of shares beneficially owned by such person (and only such
person) by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the
following table does not necessarily reflect the person’s actual voting power at any particular date.
Except
as otherwise noted below, the address for each person or entity listed in the table is c/o Sequenom, Inc., 3595 John Hopkins Court,
San Diego, California 92121.
|
|
Beneficial
Ownership(1) |
|
|
|
|
|
Beneficial
Owner |
|
Number
of Shares |
|
Percent
of Total |
The
Vanguard Group and certain affiliated parties(2) 100
Vanguard Blvd. Malvern, PA 19355 |
|
11,769,245 |
|
|
9.97% |
Palo
Alto Investors, LLC and certain affiliated parties(3) 470
University Avenue Palo Alto, CA 94301 |
|
9,925,742 |
|
|
8.41% |
Camber
Capital Management, LLC(4) 101 Huntington Ave.,
#2550 Boston, MA 02199-8089 |
|
8,750,000 |
|
|
7.41% |
BlackRock,
Inc. and certain affiliated parties(5) 40 East
52nd Street New York, NY 10022 |
|
8,824,812 |
|
|
7.47% |
Directors
and Executive Officers |
|
|
|
|
|
Carolyn
Beaver(6) |
|
152,046 |
|
|
* |
Allen
Bombard(7) |
|
52,728 |
|
|
* |
Dirk
van den Boom, Ph.D.(8) |
|
468,957 |
|
|
* |
Kenneth
F. Buechler(9) |
|
235,458 |
|
|
* |
John
A. Fazio(10) |
|
211,978 |
|
|
* |
Harry
F. Hixson, Jr.(11) |
|
1,594,190 |
|
|
1.34% |
Myla
Lai-Goldman(12) |
|
109,892 |
|
|
* |
Richard
A. Lerner(13) |
|
243,657 |
|
|
* |
Ronald
M. Lindsay(14) |
|
864,048 |
|
|
* |
Jeffrey
D. Linton(15) |
|
11,187 |
|
|
* |
Catherine
J. Mackey(16) |
|
— |
|
|
* |
Paul
V. Maier(16) |
|
263,452 |
|
|
* |
David
Pendarvis(17) |
|
197,778 |
|
|
* |
Charles
P. Slacik(18) |
|
146,602 |
|
|
* |
Robin
Weiner(19) |
|
214,312 |
|
|
* |
William
J. Welch(20) |
|
442,575 |
|
|
* |
All
directors and executive officers as a group (14 persons)(21) |
|
4,892,680 |
|
|
4.01% |
* |
Less than
one percent. |
(1) |
This table is based upon
information supplied by executive officers and directors and by principal stockholders on Schedules 13D and 13G filed with
the SEC. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property
laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown
as beneficially owned by them. Applicable percentages are based on 118,070,667 shares of common stock outstanding on March
31, 2015 adjusted as required by SEC rules. |
(2) |
Based solely on the Schedule
13G filed with the SEC on February 13, 2015, as of December 31, 2014, The Vanguard Group, Inc. has sole voting power over
176,686 shares, sole dispositive power over 11,613,559 shares, and shared dispositive power over 155,686 shares. Vanguard
Fiduciary Trust Company and Vanguard Investments Australia, Ltd, both wholly-owned subsidiaries of The Vanguard Group, are
the beneficial owners of 155,686 and 21,000 shares, respectively, as a result of investment management agreements. The number
of shares held by The Vanguard Group and its affiliates may have changed since the filing of the Schedule 13G. |
(3) |
Based solely on the Schedule
13G, as amended, filed with the SEC on February 17, 2015, as of December 31, 2014, Palo Alto Investors, LLC, Patrick Lee,
MD and Anthony Joonkyoo Yun, MD each have shared voting and dispositive power over 9,925,742 shares. Dr. Lee and Yun co-manage
Palo Alto Investors, LLC. The number of shares held by Palo Alto Investors, LLC and its affiliates may have changed since
the filing of the Schedule 13G. |
(4) |
Based solely on the Schedule
13G, as amended, filed with the SEC on February 13, 2015, as of December 31, 2014, Camber Capital Management LLC has shared
voting power and shared dispositive power over 8,750,000 shares. The number of shares held by Camber Capital LLC and its affiliates
may have changed since the filing of the Schedule 13G. |
(5) |
Based solely on the Schedule
13G, as amended, filed with the SEC on January 26, 2015, as of December 31, 2014, BlackRock, Inc., on behalf of itself and
its wholly-owned subsidiaries (BlackRock Advisors, LLC, BlackRock Investment Management, LLC, BlackRock Investment Management
Australia Limited, BlackRock Asset Management Canada Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors and
BlackRock Institutional Trust Company, N.A.), has the sole voting and dispositive power over 8,556,006 and 8,824,812 shares,
respectively. Various persons have the right to receive or the power to direct the receipt of dividends from, or
the proceeds from the sale of the shares of our common stock held by BlackRock, Inc. No one person’s interest in our
common stock held by BlackRock, Inc. is more than 5% of our total outstanding common shares. The number of shares held by
BlackRock, Inc. and its affiliates may have changed since the filing of the Schedule 13G. |
(6) |
Includes 38,543 shares
of common stock owned by Ms. Beaver, 10,000 shares of common stock owned by her spouse, and 103,503 shares of common stock
that Ms. Beaver has the right to acquire from us upon the exercise of outstanding stock options within 60 days after March 31, 2015. |
(7) |
Mr. Bombard retired from
the Company as of June 10, 2014 and therefore beneficial ownership is only updated as of this date. |
(8) |
Includes 58,595 shares
of common stock owned by Dr. van den Boom and 410,362 shares of common stock that Dr. van den Boom has the right to acquire
from us upon the exercise of outstanding stock options within 60 days after March 31, 2015. |
(9) |
Includes 74,290 shares
of common stock owned by Dr. Buechler and 161,168 shares of common stock that Dr. Buechler has the right to acquire from us
upon the exercise of outstanding stock options within 60 days after March 31, 2015. |
(10) |
Includes 26,019 shares
of common stock owned by Mr. Fazio and 185,959 shares of common stock that Mr. Fazio has the right to acquire from us upon
the exercise of outstanding stock options within 60 days after March 31, 2015. |
(11) |
Includes 233,794 shares
of common stock owned directly by Dr. Hixson, 50,000 shares owned by a family trust in which Dr. Hixson has a beneficial
interest, and 1,310,396 shares that Dr. Hixson has the right to acquire from us upon the exercise of outstanding stock options
within 60 days after March 31, 2015. |
(12) |
Includes 48,494 shares
of common stock owned by Dr. Lai-Goldman and 61,398 shares of common stock that Dr. Lai-Goldman has the right to acquire from
us upon the exercise of outstanding stock options within 60 days after March 31, 2015. |
(13) |
Includes 27,383 shares
of common stock owned by Dr. Lerner and 216,274 shares of common stock that Dr. Lerner has the right to acquire from us upon
the exercise of outstanding stock options within 60 days after March 31, 2015. |
(14) |
Includes 206,467 shares
of common stock owned by Dr. Lindsay and 657,581 shares of common stock that Dr. Lindsay has the right to acquire from us
upon the exercise of outstanding stock options within 60 days after March 31, 2015. |
(15) |
Includes 10,000 shares
of common stock owned by Mr. Linton and 1,187 shares of common stock that Mr. Linton has the right to acquire from us upon
the exercise of outstanding stock options within 60 days after March 31, 2015. |
(16) |
Includes 63,789 shares
of common stock owned directly by Mr. Maier, 10,000 shares owned by a family trust in which Mr. Maier has a beneficial interest,
and 189,663 shares of common stock that Mr. Maier has the right to acquire from us upon the vesting of restricted stock
unit awards within 60 days after March 31, 2015. |
(17) |
Includes 77,778 shares
of common stock owned by Mr. Pendarvis and 120,000 shares of common stock that Mr. Pendarvis has the right to acquire from
us upon the exercise of outstanding stock options within 60 days after March 31, 2015. |
(18) |
Includes 20,033 shares
of common stock owned by Mr. Slacik and 126,569 shares of common stock that Mr. Slacik has the right to acquire from us upon
the exercise of outstanding stock options within 60 days after March 31, 2015. |
(19) |
Includes 25,126 shares
of common stock owned by Ms. Weiner and 189,186 shares of common stock that Ms. Weiner has the right to acquire from us upon
the exercise of outstanding stock options within 60 days after March 31, 2015. |
(20) |
Includes 52,627 shares
of common stock owned by Mr. Welch and 389,948 shares of common stock that Mr. Welch has the right to acquire from us upon
the exercise of outstanding stock options within 60 days after March 31, 2015. |
(21) |
Includes 959,149 shares
of common stock and 3,933,531 aggregate shares of common stock that such persons have the right to acquire from us upon the
exercise of outstanding options within 60 days after March 31, 2015. |
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE |
Section
16(a) of the 1934 Act requires our directors and executive officers, and persons who own more than ten percent of a registered
class of our equity securities, to file with the SEC initial reports of ownership within 10 days after he or she becomes a beneficial
owner, director or officer and reports of changes in ownership of our common stock and other equity securities within two business
days after the transaction is executed. Our officers, directors and greater than ten percent stockholders are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the
copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year
ended December 31, 2014, our officers, directors and greater than ten percent beneficial owners complied with all applicable Section
16(a) filing.
COMPENSATION
DISCUSSION AND ANALYSIS
The
following discussion covers the compensation arrangements for certain named executive officers, or NEOs, who have been named in
the Summary Compensation Table included in this proxy statement (the “NEOs”), and includes a general discussion and
analysis of our executive compensation program as well as a series of tables containing specific compensation information.
MANAGEMENT
TRANSITIONS AND 2014 NAMED EXECUTIVE OFFICERS |
Beginning
in late 2013 and through 2014, a number of our senior executives retired based solely upon personal decisions. Our Board of Directors
developed and implemented a management succession plan that was effective in allowing us to immediately fill the vacancies created
by these retirements.
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As we announced in March,
2014, our previous Chief Executive Officer, Harry F. Hixson, Ph.D. retired as an officer and employee, on June 10, 2014. William
J. Welch, previously our President and Chief Operating Officer, was appointed by our Board of Directors as his successor,
and became our Chief Executive Officer on June 10, 2014. |
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Also, as we announced in March, 2014,
our previous Chief Financial Officer, Paul V. Maier, retired as an officer and employee on June 10, 2014. Carolyn D. Beaver,
previously our Vice President and Chief Accounting Officer, was appointed by our Board of Directors as his successor, and
became our Chief Financial Officer on June 10, 2014. |
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At the end of 2013, two of our executive
officers, Ronald M. Lindsay, Ph.D., then our Executive Vice President, Strategic Planning, and Charles R. Cantor, Ph.D., our
Chief Scientific Officer, retired from service. Dirk van den Boom, Ph.D., then our Executive Vice President, Research and
Development and Chief Technology Officer, was named Chief Scientific Officer effective January 1, 2014, and as announced in
March 2014, became our Chief Scientific & Strategy Officer on June 10, 2014. |
The
former executives did not receive any severance benefits or special compensation in connection with their retirements, however
Dr. Hixson and Mr. Maier received a modification to all stock options granted to them prior to their retirement as an employee
to extend the period in which the options could be exercised.
Our
NEOs for 2014 are listed below and include Mr. Welch and Dr. Hixson, who each served as our principal executive officer for a
portion of the year; Ms. Beaver and Mr. Maier, who each served as our principal financial officer for a portion of the year; the
three other most highly compensated executive officers (Dr. van den Boom, Mr. Linton and Ms. Weiner); as well as our former Chief
Medical Officer, Dr. Bombard, who would have been among the most highly compensated executive officers at the end of 2014 if he
had still been serving as an executive officer as of December 31, 2014.
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William J. Welch, our President and
Chief Executive Officer(1) |
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Harry F. Hixson,
Ph.D., our former Chief Executive Officer(2) |
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Carolyn D. Beaver,
our Senior Vice President and Chief Financial Officer(3) |
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Paul V. Maier, our former Chief Financial
Officer(4) |
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Dirk van den Boom, Ph.D., our Executive
Vice President, Chief Scientific and Strategy Officer(5) |
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Jeffrey D. Linton, our Senior Vice President,
General Counsel and Secretary(7) |
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Robin Weiner, our Senior Vice President,
Corporate Governance and Regulatory Affairs(6) |
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Allan T. Bombard, our former Chief Medical
Officer(8) |
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(1) |
Mr. Welch was promoted to the position
of Chief Executive Officer and appointed to our Board of Directors effective June 10, 2014 and was named President
and Chief Executive Officer on March 10, 2015. |
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(2) |
Dr. Hixson retired from service as an
employee and executive officer on June 10, 2014, and retired and resigned from the Board of Directors, effective March 31,
2015. |
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(3) |
Ms. Beaver was promoted to the position
of Chief Financial Officer effective June 10, 2014 and was named Senior Vice President and Chief Financial Officer on March
10, 2015. |
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(4) |
Mr. Maier retired from service as an
employee and executive officer on June 10, 2014. |
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(5) |
Dr. van den Boom was promoted to the
position of Chief Scientific & Strategy Officer effective June 10, 2014 and was named Executive Vice President
and Chief Scientific Officer on March 10, 2015. |
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(6) |
Ms. Weiner’s title was changed
to the position of Senior Vice President, Corporate Governance and Regulatory Affairs effective December 1, 2014. |
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(7) |
Mr. Linton was hired for the position
of Senior Vice President and General Counsel on September 10, 2014 and was named Senior Vice President, General Counsel
and Secretary on March 10, 2015. |
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(8) |
Dr. Bombard retired as our Chief Medical
Officer on June 10, 2014. |
EXECUTIVE
SUMMARY
Sequenom,
Inc. is a life sciences company committed to enabling healthier lives through the development of innovative products and services.
We serve patients and physicians by providing early patient management information. We offer our services in the U.S. and globally
through licensing and commercial partnerships with international emphasis in countries in the European and Asia-Pacific regions.
Our
mission is to enable healthier lives as the premier provider of innovative genetic information with an exceptional customer experience.
Our strategy is focused on expanding our menu of molecular diagnostic testing services for women’s healthcare, with an emphasis
on noninvasive prenatal testing, or NIPT, for specific fetal chromosomal abnormalities, and utilizing our expertise in next generation
sequencing and circulating cell-free DNA to develop laboratory developed tests, for use in oncology.
2014
was a year of significant achievement for our Company.
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Total revenues during 2014
increased $32.0 million, or 27%, to $151.6 million when compared to $119.6 million during 2013. |
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Loss from continuing operations
decreased $95.2 million, or 88%, to $14.4 million when compared to $109.6 million loss in 2013. |
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Total
accessions for all tests during 2014 increased 12,000, or 6%, to 197,500 when compared to 185,500 during
2013. |
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Net cash used in operating activities was $28.1 million for the year ended December 31, 2014, compared to $88.1 million in the prior year and $82.8 million in 2012. |
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As of December 31, 2014, we had available cash and cash equivalents and current marketable securities totaling $93.9 million and working capital of $64.8 million. |
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In May, 2014, we sold our Biosciences business to enable us to focus on improving our core laboratory operations, entering new clinical areas, and strengthening our cash position. The Bioscience business developed, manufactured, marketed, sold and serviced mass spectrometry analytical instruments and related instruments, software, reagents and consumables for use in the field of mass spectrometry. |
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In September 2014, we purchased the noninvasive prenatal testing intellectual property from Isis Innovation, Ltd., or Isis Innovation, for $10.6 million. |
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In December 2014, we entered into a series of agreements with Illumina, Inc., or Illumina, including a Pooled Patents Agreement to pool our intellectual property for noninvasive prenatal testing. In addition, the Company and Illumina also entered into (i) a Settlement Agreement pursuant to which the parties settled certain longstanding claims and released the other party from certain liabilities and (ii) an expanded supply agreement, pursuant to which the Company and its affiliates will purchase various products from Illumina, which they will be able to use for NIPT as well as for other clinical and research uses. These pivotal agreements will enable the Company to continue to expand its NIPT laboratory tests offerings while also allowing it to participate more broadly in the growing global NIPT marketplace. Illumina made an aggregate $50 million upfront payment to us as part of the overall agreement and we will share in test fees paid by licensees to the pooled intellectual property and will receive royalties for the sale of in vitro diagnostic, or IVD, products that incorporate technology from the pooled intellectual property. Illumina has also agreed to minimum yearly payments to the Company under the pool through 2020 covering both IVD royalties and the Company’s share of the collected test fees. These test fees and royalties are expected to be a minimum of $80 million through 2020, subject to potential market adjustments. Broadening the field of use of our supply agreement enables the Company to pursue testing in other areas, including the recently announced plans to develop a test in the oncology market. |
Our management team oversaw these accomplishments
while continuing to successfully manage our core business. The diagnostics business requires unique expertise to provide a test
result with clinical utility to medical doctors, including deep knowledge of the laboratory business, regulatory environment and
the ever changing health care reimbursement arena and competitive landscape.
Our NEOs bring a depth and breadth of experience
from successful organizations across the biotechnology world, having introduced disruptive diagnostics and drugs to world markets.
Other members of our management team possess deep scientific understanding about next generation sequencing and other technologies
or have experience growing successful commercial organizations.
As we have grown to learn and appreciate, potential
employees with the skills and expertise necessary to succeed in our research and commercial environments carefully consider the
caliber of a company’s management team when making employment decisions. Of our approximately 448 employees, 38 hold Ph.D.
or M.D. degrees and 52 hold other advanced degrees. Numerous employees have told us that the caliber, experience, and success of
our leadership team were key factors in their decision to join Sequenom. Thus, we believe that to attract, motivate, and retain
employees with the unique skills and abilities necessary to succeed
throughout our organization, as well as to lead
the Company, we need high performing and insightful executives with proven business, scientific, practical, and technical expertise.
Accordingly, we have focused on developing competitive and appropriate compensation programs at every level of the Company, which
has contributed to a successful year. In 2014, we hired 119 new employees, including 20 sales and business development employees
and 7 research and development-focused associates.
COMMITMENT TO PAY FOR PERFORMANCE |
Our executive compensation is weighted toward
at-risk, performance-based compensation designed to align the interests of our executives with those of our stockholders. Specifically,
annual cash bonuses for our executives are contingent on the achievement of multiple corporate performance goals and individual
performance. As further described under “Annual Cash Bonus”, the Compensation Committee determined that the pre-determined
corporate financial and operational goals for 2014 were satisfied at an aggregate performance level of approximately 68% which
was less than the minimum 75% threshold required for triggering a payout, and therefore no corporate bonuses were paid for 2014
performance to NEOs. However, the Compensation Committee approved a one-time cash bonus to all eligible employees, which is discussed
below on page [__].
While 2014 was a successful year with many significant
achievements, we did not achieve the level of performance required to earn bonus compensation for 2014 because we missed the goal
of achieving positive cash flow from operations during the fourth quarter. We did not achieve this goal primarily because of lower
than expected collections for tests run within the quarter and lower than expected collections for tests run in previous quarters.
This goal was designed to specifically exclude the related cash flow impacts from the Illumina pooled patents and settlement agreement
and the purchase of the patents and settlement of accrued royalties from Isis Innovation.
During
the third quarter we saw a decrease in the volume of tests accessioned compared to our original estimates for both MaterniT21®
PLUS and HerediT® CF. This decrease was primarily due to competitive activities as well as the impact of seasonal prenatal
testing rates. Because the timing of cash payments related to these tests often requires several months, this decreased the amount
of cash that was collected during the fourth quarter. There were also some payments for tests performed in prior quarters that
were not collected during the fourth quarter as initially expected. Management continues to focus efforts to obtain timely payments
for tests performed and to increase the percentage of tests for which we are reimbursed by third party payors.
COMMITMENT TO RESPONSIBLE EXECUTIVE COMPENSATION PHILOSOPHY AND PRACTICES |
The Compensation Committee believes that our executive
compensation program is appropriately designed and reasonable in that it both encourages our NEOs to work for our long-term prosperity
and reflects a pay-for-performance philosophy, without encouraging our employees to assume excessive risks. Below we summarize
certain executive compensation practices, both the responsible practices we have implemented and the practices we have not implemented
because we do not believe they would serve our stockholders’ long-term interests.
What We Do:
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Pay for performance (page __) |
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Grant performance-based options to our Chief Executive Officer (pages __ and __) |
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Use a balanced mix of fixed and variable cash incentives and long-term equity (pages __–__) |
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Maintain stock ownership guidelines for our Chief Executive Officer and directors (page __) |
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Maintain a compensation recovery (or “clawback”) policy (page __) |
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Limit payments and benefits following a change in control of the Company to situations involving an involuntary termination of employment (a so-called “double trigger” arrangement) (page __) |
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Provide reasonable post-employment/change in control payments and benefits pursuant to a formal post-employment compensation program that applies uniformly (except with respect to payment and benefits levels) to all executives and includes a “best after-tax” provision for any parachute payments (pages __–__) |
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Conduct an annual assessment of compensation-related risk to effectively manage our compensation related risks profile (page __) |
What We Don’t Do:
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× |
We don’t provide perquisites or other personal benefits that are not available to all of our employees (pages __ and __) |
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× |
We don’t re-price underwater stock options (page __) |
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We don’t guarantee salary increases or non-performance-based bonuses (pages __–__ and __) |
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× |
We don’t provide excise tax gross-ups upon change in control of the Company (page __) |
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× |
We prohibit hedging transactions and pledging of company stock by
executive officers and directors (page __) |
STOCKHOLDER ADVISORY VOTE ON EXECUTIVE COMPENSATION |
At our 2014 Annual Meeting of Stockholders, approximately
86% of the shares that were voted were cast in favor of our advisory vote on NEO compensation. The 2014 vote outcome represented
an improvement compared to the 2013 vote, when approximately 76% of the shares that were voted were cast in favor of our NEO compensation.
The 2014 vote was recognized by the Company, the Board of Directors and the Compensation Committee as favorable but with room to
continue to improve. Our senior management team continued to engage and gather feedback from our major stockholders, none of whom
raised any significant concerns regarding our executive compensation programs. Our outreach efforts during 2014 included the following:
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multiple in-depth discussions with most of our institutional stockholders before our 2014 Annual Meeting of Stockholders and follow-on discussions following our 2014 Annual Meeting, |
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examination of reports and analyses issued by the principal proxy advisory services, |
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analysis of compensation practices at peer companies, and |
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solicitation of advice from the Compensation Committee’s compensation consultant. |
Our Compensation
Committee did not make any changes to our executive compensation program following the 2014 Annual Meeting of Stockholders;
however the Compensation Committee ensured that we continue to adopt and maintain the following approaches, policies and
guidelines set forth below that were implemented by us following our 2012 Annual Meeting of Stockholders as part of its
ongoing evaluation of our executive compensation program and in response to stockholder feedback:
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We provide detailed disclosure about our annual bonus program, including disclosing the weighting of each performance goal and more detail about each performance goal. |
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We granted stock options with market-based conditions that vest only if certain stock price appreciation goals are met. In addition, the time-based options granted to our executives have value only if and to the extent that the market price of the Company’s common stock appreciates and is greater than the exercise price of the option at the time of exercise. |
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We continue to maintain stock ownership guidelines, which apply to our Chief Executive Officer and each of the non-employee members of our Board of Directors so that each of these individuals must maintain a certain level of ownership of the Company’s common stock in an amount equal to at least three times the amount of such person’s annual cash retainer or base salary, as applicable. |
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We continue to maintain a clawback policy that applies to all of our current and former executive officers. If we are required to prepare an accounting restatement for any fiscal quarter or year and our Board of Directors determines that misconduct contributed to the noncompliance that resulted in the requirement to restate our financial statements, then our Board of Directors may recoup certain incentive compensation paid to such individuals. The policy applies to all incentive compensation paid or awarded on or after the date the policy was adopted. |
EXECUTIVE COMPENSATION PHILOSOPHY |
The Compensation Committee has established and
regularly reviews our executive compensation philosophy. The Compensation Committee has designed our executive compensation program
to help us achieve our goals and objectives, including:
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aligning our executive compensation with our business objectives; |
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providing incentives based on our performance as measured against annual company goals set by our full Board of Directors as well as individual performance objectives; |
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attracting, retaining, motivating and rewarding executive officers (including the NEOs) and maintaining a cohesive management team comprised of individuals with substantial skill and experience; and |
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aligning the financial interests of our executives with the long term financial interests of our stockholders. |
To accomplish these goals and objectives, we have
created an executive compensation program with three primary elements: base salary, annual cash bonus opportunities and long-term
incentive compensation in the form of equity awards. We also provide a change in control severance benefit plan that provides specified
payments and benefits in the event of certain terminations of employment in connection with a change in control of the Company.
ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM |
Our executive compensation program provides for
the following elements and for the following reasons:
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What We Pay |
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Why We Pay |
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Key Features |
Base Salary |
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Provide a fixed level of cash compensation for performing the essential elements of the job; necessary to help attract and retain
executives
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Give executives a degree of certainty in the face of having a majority of their compensation “at risk” |
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● Individual salaries may be above or below the applicable peer group, survey or market median to reflect the individual competencies, skills, experience, market availability of skills and sustained performance of the executive holding this position |
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Annual Cash Bonus |
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Motivate participants to focus their efforts on annual goals, and to take actions that maximize stockholder value
● Tie
financial rewards to measurable corporate objectives, reinforcing pay-for-performance
● Provide
a competitive variable award opportunity that motivates executives to achieve Company-wide operating and/or strategic objectives
and individual abilities |
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Cash bonuses are based on an established target percentage of actual base salary during the fiscal year, with actual awards based
on attainment of objective corporate goals and personal performance
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Financial corporate performance goals are based on measurable financial metrics, such as revenue, gross margin, cash burn and operating
expense
● Nonfinancial
corporate performance goals based on measurable strategic initiatives
● Corporate goals
are the same for NEOs as for all employees, which aligns the efforts of the entire organization
● If corporate
goals are attained, the Compensation Committee determines whether each NEO has individually performed in a manner that warrants
a bonus payment |
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What We Pay |
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Why We Pay |
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Key Features |
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Incentivizes and compensates for performance beyond 100% of the stated goals but also limits the potential opportunity with a reasonable
cap of 130% of target
● In unique circumstances,
the Compensation Committee may grant one-time cash bonuses outside of the regular annual cash bonus program to recognize eligible
employees for significant efforts related to exceptional achievement of transactional or strategic goals that were not contemplated
when the regular annual bonus plan goals were determined. |
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Equity Awards |
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Align the interests of management with those of our stockholders with the goal of creating long term growth and value for the Company
● Retain
the services of our NEOs for a multi-year period, as an executive must continue employment with us for his or her equity awards
to vest
● Allow
us to attract and recruit new executives |
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● Long-term
incentives are provided by annual grants of equity awards
● Target
value is intended to provide competitive compensation opportunities based on performance over a multi-year period with realizable
value directly tied to stock price performance |
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Employee Benefits |
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● Allow us to attract and recruit new executives |
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The same package of employee benefits that are provided to all full time employees, including health, dental and vision insurance
or cash compensation in lieu of health insurance coverage, and group term life and disability insurance
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● Our NEOs do not receive any additional perquisites |
A detailed discussion and analysis of these compensation
elements is provided below.
SIGNIFICANT AT-RISK COMPENSATION |
Our executive compensation is weighted toward
at-risk, performance-based compensation designed to align the interests of our executives with those of our stockholders. A significant
portion of the NEOs’ compensation is at risk and dependent upon the Company’s performance and/or an increase in the
market price of the Company’s common stock. Specifically, annual cash bonuses for our executives are contingent on the achievement
of multiple corporate performance goals and individual performance, and Mr. Welch’s market-based options vest only if certain
stock price appreciation goals are met. In addition, the time-based options granted to our executives have value only if and to
the extent that the market price of the Company’s common stock appreciates and is greater than the exercise price of the
option at the time of exercise. There is risk that the actual economic value of these options could be as little as zero if our
stock price were less than the exercise price of such stock options.
As shown in the above charts, for 2014, approximately
69% of Mr. Welch’s target total direct compensation was at risk, with approximately 52% of his target total direct compensation
delivered in the form of equity-based awards. In addition, an average of 61% of our other NEOs’ target total direct compensation
was at risk, with approximately 45% of our other NEOs’ target total direct compensation delivered in the form of equity-based
awards, the actual economic value of which will depend directly on the performance of our stock price over the period during which
the awards vest and, with respect to stock options, could be as little as zero if our stock price were less than the exercise price
of such stock options. The NEOs whose compensation is described in the above chart are Ms. Beaver, Dr. van den Boom, Mr. Linton
and Ms. Weiner. For this table, Mr. Linton’s base salary and target cash bonus are annualized.
COMPARING REPORTED COMPENSATION WITH REALIZABLE COMPENSATION |
We grant long-term incentives in the form of options
to purchase shares of the Company’s common stock to align the interests of our executives with those of our stockholders
and promote long-term decision-making. The value, if any, that may be realized from these options is directly tied to our stock
price performance over a multi-year period, during which an NEO must continue to provide effective and satisfactory services to
us for his options to vest. Similarly, we also grant long-term incentives in the form of restricted stock unit awards that are
either performance or time-based and the value that may be realized from these depends on successful performance and/or stock price
performance over a multi-year period during which an NEO must continue to provide effective and satisfactory services to us for
his restricted stock units to vest.
The following chart
illustrates the difference between the total direct compensation reported in the 2014 Summary Compensation Table for our
Chief Executive Officers for each of the three years covered in the table and compensation actually realizable from base
salary, annual cash bonuses, stock options and restricted stock awards granted during each of these three years. We believe
this supplemental information is important because a significant amount of our Chief Executive Officers’ reported
compensation is an incentive for future performance, which will provide an economic benefit only if the market price for the
Company’s common stock is greater than the exercise price of the options at the time of exercise and, with respect to
50% of the shares subject to Dr. Hixson’s 2012 stock option and 100% of the shares subject to his 2014 stock option, if
the Company meets or exceeds the applicable stock price appreciation target. Effective June 10, 2014, Mr. Welch was provided
the option to purchase up to 100,000 shares if the closing sales price as quoted on any established stock exchange or market
is $5.00 or more for at least 30 consecutive trading days. As can be seen, the economic value actually realizable from the
equity awards granted to our Chief Executive Officer during 2014, 2013, and 2012 differs significantly from the amounts
required to be reported in the 2014 Summary Compensation Table for these equity awards. For purposes of the following chart,
Dr. Hixson’s compensation is displayed for 2012 and 2013 and Mr. Welch’s compensation is displayed for 2014.
(1) |
Total reported compensation is defined as total compensation as reported in the 2014 Summary Compensation Table. |
(2) |
Total realizable compensation is defined as salary, non-equity incentive plan compensation and all other compensation as reported in the 2014 Summary Compensation Table, plus the intrinsic value of all equity awards granted in each of the three years covered in the table. For this purpose, we calculate the intrinsic value as the closing price of our common stock on December 31, 2014 less the per share exercise price, if any. For more information on total compensation as calculated under SEC rules, see the narrative and notes accompanying the 2014 Summary Compensation Table on page [__]. The amounts reported as realizable compensation differ from the amounts reported as total compensation in the 2014 Summary Compensation Table and are not a substitute for those amounts. |
COMPENSATION COMMITTEE’S ROLE IN THE EXECUTIVE COMPENSATION PROCESS |
The Compensation Committee is currently comprised
of three independent directors: Mr. Slacik (chair), Dr. Buechler and Dr. Lerner. Mr. Slacik replaced Mr. Pendarvis as chair in
March 2014 in connection with Board of Director committee membership rotations approved by our Board of Directors in March 2014.
The Compensation Committee has responsibilities delegated to it by our Board of Directors as set forth in its charter, which may
be found in the Corporate Governance section under “Invest” on our website at www.sequenom.com. Among its responsibilities,
the Compensation Committee provides guidance with respect to the purpose and principles behind the Company’s compensation
decisions and overall compensation philosophy and objectives, oversees our compensation policies, plans, and programs, and reviews
and, except for Chief Executive Officer compensation, determines executive officer compensation.
In the case of our Chief Executive Officer, the
Compensation Committee provides a compensation recommendation to the independent non-employee members of our Board of Directors
during executive session and those members of our Board of Directors determine our Chief Executive Officer’s compensation.
When the Compensation Committee and the independent members of our Board of Directors evaluate and determine compensation for our
Chief Executive Officer, the Compensation Committee and the independent members of our Board of Directors meet in executive session
without our Chief Executive Officer present.
The Compensation Committee met 8 times during
2014. During these meetings, the Compensation Committee explored various alternatives to portions of the executive compensation
program in addition to its regular duties of monitoring and approving compensation levels, approving the terms of compensation
arrangements for new executives, and reviewing corporate goals as they relate to executive compensation. In addition to these meetings,
throughout 2014, our Chief Executive Officer, Chief Financial Officer, Vice President, Corporate Development and Administration,
Human Resources representatives, and Compensation Committee members were involved in numerous discussions regarding compensation
matters. The Compensation Committee also reviews its charter each year, and made no changes to the charter in 2014.
The Compensation Committee maintains a calendar
to make sure that selected matters (such as compensation strategy, base salary, bonus program, and equity awards) are reviewed
on an annual basis. With respect to the annual bonus program, our Board of Directors, with input from our executive officers, defines
measurable performance goals and determines the importance of each goal for the Company each year. The Compensation Committee establishes
incentive compensation parameters that reward performance goal achievement. The Compensation Committee also takes into account
the advisory vote of the Company’s stockholders on the compensation of the Company’s NEOs for the previous year.
ROLE OF OUR COMPENSATION CONSULTANT |
For 2014, the Compensation Committee relied upon
information provided by outside compensation consultant Compensia, to assist the Compensation Committee with its compensation determinations
for our executive officers and other employees. For 2014, Compensia provided analysis of whether the Company’s existing compensation
strategy and practices were consistent with our compensation objectives and assisted the Compensation Committee in adjusting our
compensation program for executive officers as appropriate in order to better achieve our objectives. As part of their duties,
Compensia provided the following services:
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reviewed and provided recommendations on composition of peer groups; |
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provided compensation data for similarly situated executive officers at our peer group companies; |
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conducted a review of the compensation arrangements for our executive officers, including providing advice on our annual management bonus plan and longer term incentive stock option and restricted stock unit program; |
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conducted a review of the relationship between our executive compensation arrangements and Company performance; |
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updated the Compensation Committee on emerging trends and best practices in the area of executive compensation; and |
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● |
provided director compensation data to the Compensation Committee. |
Compensia provided compensation data for non-executive
employees including salary and equity structure and bonus level recommendations. Compensia was engaged at the direction of the
Compensation Committee and the Company paid the cost for Compensia’s services. Compensia did not provide any other services
to the Company in 2014.
For purposes of evaluating 2014 compensation for
each of our executives and making 2014 compensation decisions, Compensia provided data from a custom Radford Life Sciences Industry
Survey comprised of companies in the life sciences industry, in premium cost-of-living markets similar to San Diego, and with 400-800
employees, and also the Radford General Life Sciences Industry Survey for companies in the life sciences industry with 150-500
employees, which we collectively refer to as the survey data. Compensia also provided publicly available information for our 2014
peer group.
For 2014, five peers were dropped and four new
peers were added to the 2013 peer group. Our Compensation Committee decided to remove from the 2013 peer group (i) two members
that had been acquired (IRIS International and MEDTOX Scientific), and (ii) three members that had annual revenue significantly
lower than our own (Immunomedics, Targacept and XenoPort). Our final 2014 peer group was comprised of eleven existing peers from
the 2013 group and four new additions which were more in line with our market capitalization and annual revenue multiples. Our
2014 peer group consisted of companies with between $65 million and $260 million in annual revenues, and market capitalizations
of between $100 million and $1.8 billion. At the time of the study, as of October 1, 2013, we had approximately 606 employees,
revenues of approximately $117 million and a market capitalization of approximately $309 million.
THE PEER GROUP INCLUDED THE FOLLOWING COMPANIES:
Alnylam Pharmaceuticals |
Fluidigm |
Orasure Technologies |
Depomed |
Atrion |
Isis Pharmaceuticals |
Pacific Biosciences of CA |
Luminex |
DexCom |
Nektar Therapeutics |
Quidel |
Solta Medical |
Dyax |
Opko Health |
Cadence Pharmaceuticals |
|
The 2014 peer group was used as a reference for
purposes of evaluating our base salary, annual bonus, and equity awards against the competitive marketplace. Compensia reported
the survey data and 2014 peer group data and benchmarking results to the Compensation Committee, our Chief Executive Officer, and
Human Resources.
BASE
SALARY
When reviewing and analyzing
the amount of each major component of compensation for our NEOs, the Compensation Committee reviews each component at the 25th,
50th, and 75th percentiles of the level of pay for executives with similar duties based on the survey data
and the 2014 peer group data, and generally targets the 50th percentile
for setting our executive base pay. This target level has been selected by the Compensation Committee as a reference point in
determining whether the total compensation opportunity is likely to provide sufficient motivation and retention as well as whether
it properly reflects the NEO’s role and scope of responsibilities relative to our peer group. However, the Compensation
Committee does not set compensation components to meet specific benchmarks, but rather its philosophy allows flexibility as may
be needed to recruit or retain certain key executives, to reward exceptional performance or in unique circumstances.
Each year, the Compensation
Committee reviews the annual base salaries for each of our executive officers, considering whether existing base salary levels
continue to be at or close to the 50th percentile for the Company’s peer group companies. In addition to considering
the peer group and survey data, the Compensation Committee considers other factors, including our Chief Executive Officer’s
recommendations for the other NEOs, the salary level negotiated by an executive in his existing employment agreement, broader
economic conditions, the financial health of the Company, the competition for a particular skill set in the market and whether
the Compensation Committee and Chief Executive Officer are generally satisfied with an executive’s past performance and
expected future contributions.
After considering Compensia’s
competitive analysis, our Chief Executive Officer presented the Compensation Committee with proposals for an annual base pay increase
for our executive officers employed as of January 1, 2014. Factors included in our Chief Executive Officer’s proposals to
the Compensation Committee were the current executive salaries compared against the 50th percentile data, general industry
information which established an average merit increase per year of approximately 4%, and specific employee performance, progress
against goal achievement, and contribution to overall corporate performance and goal achievement.
In January 2014, the
Compensation Committee, and for Dr. Hixson, the independent non-employee member of the Board of Directors, approved increases
to our senior management’s salaries effective as of January 1, 2014. In consideration of the factors described above, the
base pay approved by the Compensation Committee for the majority of the NEOs was targeted generally at the 50th
percentile, although three executives (Mr. Welch, Ms. Beaver and Dr. van den Boom) had base pay increase that were higher
than the average in order to segue into the increases that would eventually be needed to facilitate our management succession
planning and also to reward exceptional performance. The increase for Dr. Hixson was below the 50th percentile and
not adjusted in lieu of his retirement notice. The changes in base pay were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO |
|
|
2013 Base Salary |
|
|
2014 Base Salary |
|
|
Percentage Increase for 2014 |
|
Mr.
Welch(1) |
|
|
$400,000 |
|
|
|
$450,000 |
|
|
|
12.50% |
|
|
Dr. Hixson |
|
|
$520,000 |
|
|
|
$535,000 |
|
|
|
2.88% |
|
|
Ms.
Beaver(2) |
|
|
$326,624 |
|
|
|
$350,000 |
|
|
|
7.15% |
|
|
Mr. Maier |
|
|
$354,299 |
|
|
|
$368,471 |
|
|
|
4.00% |
|
|
Dr.
van den Boom(3) |
|
|
$375,000 |
|
|
|
$425,000 |
|
|
|
13.33% |
|
|
Mr. Linton |
|
|
— |
|
|
|
$370,000 |
|
|
|
— |
|
|
Ms. Weiner |
|
|
$288,761 |
|
|
|
$300,311 |
|
|
|
4.00% |
|
|
Dr. Bombard |
|
|
$380,000 |
|
|
|
$395,960 |
|
|
|
4.20% |
|
|
|
|
|
(1) |
Mr. Welch’s base salary was increased
from $400,000 to $412,000 (a 3% increase) in January 2014 and from $412,000 to $450,000 (a 9.22% increase) in June 2014 when
he was promoted from President and Chief Operating Officer to Chief Executive Officer. The Compensation Committee determined
it was an appropriate increase for the promotion based on our management succession plan and to provide retention and reward
exceptional performance. |
|
(2) |
Ms. Beaver’s base salary was increased
from $326,624 to $336,423 (a 3% increase) in January 2014 and from $336,423 to $350,000 (a 4.04% increase) in June 2014 when
she was promoted from Vice President and Chief Accounting Officer to Chief Financial Officer. The Compensation Committee determined
it was an appropriate increase for the promotion base on our management succession plan and to provide retention and reward
exceptional performance. |
|
(3) |
Dr. van den Boom’s base salary
was increased from $375,000 to $386,250 (a 3% increase) in January 2014 and from $386,250 to $425,000 (a 10% increase) in
June 2014 when he was promoted from Executive Vice President, Research and Development, and Chief Technology Officer to Chief
Scientific and Strategy Officer. The Compensation Committee determined it was appropriate increase for the promotion based
on our management succession plan and to provide retention and reward exceptional performance. |
In January and February
2014, our Board of Directors, in conjunction with its work with our executive officers to establish our annual operating plan for
the year, approved metrics for 2014 under our annual bonus program for our employees, including the NEOs. Initially, our Chief
Executive Officer and Chief Financial Officer identified proposed corporate goals for the year that would support our annual operating
plan, proposed relative weighting of these goals and proposed achievement and payout levels for each goal, and presented such goals,
weightings, achievement levels, and payout levels within the framework of the annual bonus program to the Compensation Committee
and full Board of Directors for consideration and approval. In a mid-year review the Compensation Committee approved a modification
of the Corporate and individual goals to remove the Bioscience business’ net income, cash flow and revenue from the original
goals which were based on both the Laboratories and Bioscience business net income, cash flow, and revenue. In addition, the Compensation
Committee agreed that the impact to net income, cash flow, revenue or operating expense of any large, one-time transaction (e.g.,
one-time revenue gains, upfront fee, test fee payments, amortization of transaction costs and legal and other transaction-related
expenses) would be excluded from consideration of goal attainment.
Target Bonus Levels.
Under the annual bonus program, the target annual bonus of each NEO for 2014 was expressed as a percentage of base salary. In
establishing these target annual bonus levels, the Compensation Committee considered competitive market data provided by Compensia
(with reference to the 25th, 50th, and 75th percentiles
of the competitive market), the recommendations of our Chief Executive Officer with respect to each individual (except with respect
to his own target annual bonus), the executive’s experience, authority and responsibility, and the value of the executive
to the Company as a whole and to our key business initiatives. In the case of our Chief Executive Officer, his target annual bonus
was established by our Board of Directors, based on its consideration of these same factors.
Each NEO’s target
bonus for 2014 was targeted at the 50th percentile. The Compensation Committee determined the target for Mr. Welch
and Dr. van den Boom in recognition of their promotions, and to help align their compensation with our management succession plan,
and for purposes of retention and to incentivize them with respect to future performance.
The target annual bonus
levels of the NEOs for 2014, stated as a percentage of base salary, were as follows:
|
|
|
|
|
|
|
|
|
|
NEO |
|
|
2013
Target Level |
|
|
2014
Target Level |
|
Mr.
Welch(1) |
|
|
50 |
% |
|
|
60% |
|
Dr. Hixson |
|
|
75 |
% |
|
|
75% |
|
Ms.
Beaver(2) |
|
|
35 |
% |
|
|
40% |
|
Mr. Maier |
|
|
40 |
% |
|
|
40% |
|
Dr.
van den Boom(3) |
|
|
50 |
% |
|
|
60% |
|
Mr. Linton(4) |
|
|
— |
|
|
|
40% |
|
Ms.
Weiner |
|
|
35 |
% |
|
|
35% |
|
Dr. Bombard |
|
|
35 |
% |
|
|
35% |
|
(1) |
Mr. Welch’s 2014 potential
bonus payout to be pro-rated based on a target bonus opportunity of 50% for the period ruining 2014 in which he served as
President and Chief Operating Officer and based on a target bonus opportunity of 60% for the period during 2014 in which he
served as Chief Executive Officer. |
|
(2) |
Ms. Beaver’s 2014 potential bonus
payout to be pro-rated based on a target bonus opportunity of 35% for the period ruining 2014 in which she served as Vice
President and Chief Accounting Officer and based on a target bonus opportunity of 40% for the period during 2014 in which
she served as Chief Financial Officer. |
|
(3) |
Dr. van den Boom’s 2014 potential
bonus payout to be pro-rated based on a target bonus opportunity of 50% for the period ruining 2014 in which he served as
Executive Vice President, Research and Development and Chief Scientific Officer and based on a target bonus opportunity of
60% for the period during 2014 in which he served as Chief Scientific and Strategy Officer. |
|
(4) |
Mr. Linton was hired on September 10,
2014 so did not have a target annual bonus in 2013. |
Bonus
Calculations and Performance Measures. Payouts were not made under the annual bonus program for 2014 because
the threshold level of performance was not achieved. Under the annual bonus program, if bonus payouts for 2014 had been made,
they would have been based on both corporate and individual performance, as follows:
((2014 Actual
Salary x Bonus Target Percentage) x Corporate Performance) = Target Amount
Target Amount
x Individual Performance = 2014 Individual Bonus Payout
The Board of Directors
determines our actual performance for the year as measured against several pre-established corporate financial and operational
goals. For any bonus payout to be made under the annual bonus program, we must achieve at least 75% of the target level for the
pre-established corporate goals in the aggregate. Assuming that this condition is satisfied, the Compensation
Committee determines whether
our executive officers each individually performed satisfactorily to earn a bonus payment under the annual bonus program for the
year. The individual performance multiplier can range from .75 to 1.3.
The Board of Directors,
including the members of the Compensation Committee, established the corporate financial and operational goals, along with the
target levels and relative weightings for 2014, as shown in the table below. The Board of Directors continues to believe that compensation
should be tied to financial and operational goals that drive value and contribute to the long-term prosperity of the Company.
Bonus
Program Decisions for 2014. In January 2015, the Compensation Committee
determined that the corporate financial and operational goals for 2014 were satisfied at an aggregate performance level of approximately
67.5% which was less than the minimum 75% threshold required for triggering a payout under the annual bonus program, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
Company Performance Goals |
|
|
Target
Achievement
at 100%(1) |
|
|
Weighting |
|
|
Actual
Achievement |
|
|
Percentage
Earned |
|
Q4-14
Net Income break-even |
|
|
-$2M
and $0 |
|
|
20% |
|
|
-$1.5M |
|
|
20% |
|
Q4-14 Cash Flow Positive |
|
|
$1M and $5M |
|
|
30% |
|
|
-$5.5M |
|
|
0% |
|
FY-14
Total Revenue |
|
|
$160M
and $176M |
|
|
15% |
|
|
$151.7M |
|
|
10% |
|
Launch of T21 risk score
assay in Q3-14 |
|
|
Launch by Q3 |
|
|
10% |
|
|
Launched Q3 |
|
|
10% |
|
Completion
of clinical evaluation of low cost T21 assay (Mat’l cost ≤ $75) |
|
|
$74-$76 |
|
|
10% |
|
|
$57 |
|
|
15% |
|
MaterniT21
PLUS Quarterly Cash Collection Rate |
|
|
38%
for Q3 and Q4 |
|
|
15% |
|
|
Q3=36%
and Q4=39% |
|
|
12.50% |
|
Total |
|
|
|
|
|
100% |
|
|
|
|
|
67.50% |
|
(1) |
This
calculation is based on the revised financial and operation goals following the Bioscience sale. |
Because the Company did
not achieve at least 75% of the target level for the pre-established corporate goals in the aggregate, the Compensation Committee
did not consider the individual performance of each executive officer, and the full Board of Directors did not consider the individual
performance of the CEO, for purposes of making its bonus decisions under the annual bonus program, as would have been done if the
minimum threshold had been met.
Special
One-Time Cash Bonus. In December 2014, the Compensation Committee approved
a one-time cash bonus to all eligible employees of the Company in an aggregate amount of $2.07 million in recognition of our execution
of a series of agreements with Illumina, Inc. Eligible employees were all employees of the Company as of December 2014 who were
not subject to a separate incentive-based compensation plan. This bonus was paid in January 2015. The series of agreements with
Illumina are transformational for our business because the agreements settled litigation with Illumina affiliates and provide
a means for us to benefit financially from the use of Illumina’s and our NIPT technology by licensees on a global basis.
The agreements with Illumina include an agreement pursuant to which the parties have pooled their intellectual property directed
to noninvasive prenatal testing, or NIPT, and Illumina paid an aggregate $50 million upfront payment to us in addition to agreeing
to pay us royalties for sales of in-vitro diagnostic, or IVD, kits for NIPT and a share of per-test fees paid into the pool by
both parties and their sublicensees for laboratory-developed NIPT tests. Illumina has also agreed to minimum yearly payments to
us under the pool through 2020 covering both IVD royalties and the Company’s share of the collected test fees. We and Illumina
also entered into (i) a Settlement Agreement pursuant to which the parties settled certain longstanding claims and released the
other party from certain liabilities and (ii) an expanded supply agreement, pursuant to which we and our affiliates will purchase
various products from Illumina, which we and they will be able to use for NIPT as well as for other clinical and research uses.
These pivotal agreements will enable us to continue to expand our laboratory tests offerings while also allowing it to participate
more broadly in the growing global NIPT marketplace. In addition, the settlement of the litigation will result in a significant
reduction of the Company’s legal expenses and corresponding improvement in cash flow while also removing the risk of an
unfavorable judgment from the litigation.
The Compensation Committee
determined that it was appropriate to recognize the Company’s employees with this special bonus because of the significant
efforts displayed and the extraordinary results achieved by the Company’s employees on a transformational relationship that
was not contemplated at the time the annual bonus plan goals were determined at the beginning of 2014. With respect to the NEOs,
each was directly and significantly involved in the negotiations of the agreements with the multiple parties and devoted a significant
amount of time and energy toward the transaction. These activities took place during the entire calendar year culminating in the
December 2, 2014 execution of the agreements. One-Time Cash Bonuses paid to the NEOs were as follows:
|
|
|
|
|
Name |
|
|
Cash Bonus |
|
Mr.
Welch |
|
|
$150,000 |
|
Dr.
Hixson |
|
|
— |
|
Ms.
Beaver |
|
|
$115,000 |
|
Mr.
Maier |
|
|
— |
|
Dr.
van den Boom |
|
|
$150,000 |
|
Mr.
Linton |
|
|
$50,000 |
|
Ms.
Weiner |
|
|
$90,000 |
|
Dr.
Bombard |
|
|
— |
|
Dr. Hixson, Mr. Maier,
and Dr. Bombard were not eligible for this one-time bonus because they were not employees at the time the transaction with Illumina
was completed.
Stock
Options. Stock options provide a return to our NEOs only if the market price of our common stock appreciates over the
stock option term and only if the NEO remains with us through each applicable vesting date. We do not re-price past stock option
grants that may have an exercise price that exceeds the market price. Annual equity awards were granted in February 2014, and
all of the stock options granted had exercise prices equal to the fair market value of our common stock as of the date of grant.
Mr. Welch, Dr. van den Boom and Ms. Beaver were also granted stock options at the time of their respective promotions on June
10, 2014, with exercise prices equal to the fair market value of our common stock as of the date of grant. In addition, two separate
issuances of shares were granted to Mr. Welch and Dr. van den Boom, which are subject to the options vesting over four years and
only becoming exercisable for the first grant if the price of our common stock appreciates such that the closing sales price,
as quoted on any established stock exchange or market, is a minimum of a 25% premium (equal to $3.84 per share) to the exercise
price ($3.07 per share) of the stock option for at least 30 consecutive days. The second grant is subject to the shares vesting
after four years and only being exercisable if our common stock appreciates such that the closing price, as quoted on any established
stock exchange or market, is a minimum of $5.00 for at least 30 consecutive days after the vesting date. To date, these stock
appreciation triggers for exercisability have not been met. Options granted to our other NEOs generally vest on a monthly basis
over four years subject to each individual’s continued service to the Company.
Restricted
Stock Unit Awards. In connection with the annual equity awards granted in 2014, the Compensation Committee also granted
restricted stock unit awards to our NEOs. Mr. Welch, Dr. van den Boom and Ms. Beaver were also granted restricted stock unit awards
at the time of their respective promotions on June 10, 2014. The Compensation Committee believes that restricted stock unit awards
serve as a long-term retention tool for our NEOs and are less dilutive than stock options since a lesser number of shares provide
the same value as a greater number of stock options. The Compensation Committee also believes that restricted stock unit awards
motivate our NEOs to increase the value of our common stock. The restricted stock unit awards vest in equal annual increments
over four years.
2014
Equity Awards. As with cash incentive opportunities, in determining the
equity opportunity for each of our executive officers, the Compensation Committee believes that the incentive opportunity should
make up a larger portion of each executive officer’s target total compensation as the executive’s level of responsibility
increases. Therefore, the equity awards for our Chief Executive Officer are generally a greater percentage of total compensation
than are the equity awards granted to our other executive officers.
The values of prior
outstanding equity awards and prior year equity awards were a factor in determining current year equity awards. Equity awards
are determined by reference to the industry data as described above, the value of the particular executive officer to our Company
as a whole and to our Company’s key business initiatives, and the individual’s performance and contribution to Company
goals. The Compensation Committee desired a competitive and efficient plan and began by considering the 50th percentile
of equity awards granted to executives with similar duties based on the survey data and the 2014 peer group data and made adjustments
for individual performance considerations. This target level is a reference point in determining whether the equity award is likely
to provide for sufficient retention and alignment of the interests of management with those of our stockholders with the goal
of creating long-term growth and value for the Company.
In February 2014, the
Compensation Committee and the independent members of our Board of Directors with respect to Dr. Hixson and Mr. Welch granted
options to purchase shares of our common stock and restricted stock unit awards to our senior management pursuant to our 2006
Plan.
The NEOs received option
awards in 2014 covering the number of shares set forth below:
|
|
|
|
|
|
|
|
|
|
|
NEO |
|
|
Number
of Shares |
|
|
Grant
Date Fair Value |
|
Dr.
Hixson |
|
|
101,000 |
(1) |
|
|
$197,410 |
|
|
Mr. Welch |
|
|
251,000 |
|
|
|
$544,742 |
|
|
Mr.
Maier |
|
|
93,000 |
|
|
|
$169,976 |
|
|
Ms.
Beaver |
|
|
64,500 |
|
|
|
$136,144 |
|
|
Dr.
van den Boom |
|
|
232,500 |
|
|
|
$504,395 |
|
|
Ms. Weiner |
|
|
43,000 |
|
|
|
$78,591 |
|
|
Mr.
Linton |
|
|
125,000 |
(2) |
|
|
$326,675 |
|
|
Dr. Bombard |
|
|
80,000 |
|
|
|
$146,216 |
|
(1) |
Includes
20,000 shares of common stock with a grant date fair value of $49,366 granted to Dr. Hixson for his
service on the Board of Directors after his retirement as an officer and employee. |
(2) |
Represents a stock option award granted
upon Mr. Linton’s commencement of employment with the Company. |
The NEOs received
restricted stock unit awards in 2014 for the number of shares set forth below:
|
|
|
|
|
|
|
|
|
|
|
NEO |
|
|
Number
of Shares |
|
|
Grant
Date Fair Value |
|
Dr.
Hixson |
|
|
40,500 |
|
|
|
$91,935 |
|
|
Mr.
Welch |
|
|
76,000 |
|
|
|
$190,120 |
|
|
Mr.
Maier |
|
|
46,000 |
|
|
|
$104,420 |
|
|
Ms.
Beaver |
|
|
32,000 |
|
|
|
$83,840 |
|
|
Dr.
van den Boom |
|
|
66,500 |
|
|
|
$164,155 |
|
|
Ms.
Weiner |
|
|
22,000 |
|
|
|
$49,940 |
|
|
Mr.
Linton |
|
|
100,000 |
(1) |
|
|
$330,000 |
|
|
Dr.
Bombard |
|
|
40,000 |
|
|
|
$90,800 |
|
(1) |
Represents
a restricted stock unit award granted upon Mr. Linton’s commencement of employment with the Company. |
The Company’s general
policy is to make annual equity awards at the first Compensation Committee or full Board of Directors meeting each year, we do
not time the granting of stock option or other equity awards with any favorable or unfavorable news relating to the Company, and
all equity awards are granted at fair market value and in the case of options, with an exercise price at fair market value. During
2014, we were consistent with this approach. Proximity of any awards to an earnings announcement, market event or other event related
to us is purely coincidental.
Stock
Ownership Guidelines. We adopted stock ownership guidelines (the “Ownership
Guidelines”) in 2012 that require our Chief Executive Officer and non-employee members of our
Board of Directors to maintain a certain level of ownership of our common stock. The Ownership Guidelines provide that each individual
must own the number of shares of Company’s common stock in an amount equal to at least three times the amount of such person’s
annual cash retainer or base salary, as applicable, which amount shall be determined by multiplying the number of shares owned
(and certain shares subject to vested restricted stock unit awards where issuance of shares is deferred and a portion of vested
but unexercised shares underlying options for which the market price exceeds the exercise price) by such covered person and by
the closing price of such shares on the date on which such evaluation is made. Each person will have a period of 5 years to comply
with the ownership requirements starting from the later of the adoption of the Ownership Guidelines or the date such individual
becomes covered by the Ownership Guidelines.
Anti-Hedging
and Anti-Pledging Policies. We also maintain an insider trading policy that, in addition to prohibiting trading during
closed window periods, prohibits such individuals from short selling our stock and using hedging instruments or borrowing against
or pledging our stock. Additionally, our Code of Business Conduct and Ethics prohibits employees from engaging in any transaction
in which an employee would derive an economic benefit as a result of a decline in our stock price.
Compensation
Recovery Policy. We also maintain a policy for recoupment of incentive compensation, or a clawback policy. The clawback
policy applies to any of our current and former executive officers who, at the relevant time, were designated by the Board as
an officer for purposes of Section 16 of the 1934 Act (each, a “covered person”). Under the clawback policy, if we
are required to prepare an accounting restatement for any fiscal quarter or year commencing after the adoption of the clawback
policy and the Board determines that misconduct contributed to the noncompliance that resulted in the requirement to restate our
financial statements, then the Board may recoup certain incentive compensation paid to the covered persons. Specifically, the
Board
may require a covered
person to repay some or all of (i) any bonus compensation received that was calculated based on the financial statements that were
subsequently restated, (ii) up to the full amount of any equity incentive grant received that was determined based on the financial
statements that were subsequently restated and (iii) some or all of any gains realized on the exercise of stock options or on the
open-market sale of vested shares during certain periods. The Board may seek recoupment from each applicable covered person from
prior incentive compensation payments, future payments of incentive compensation, cancellation of outstanding equity awards, future
equity awards and direct repayment.
All of our executive
officers receive life and disability insurance benefits and either health insurance benefits under the programs that are available
to all employees or cash payments in lieu of participating in those programs. During the first half of 2014, prior to his retirement
in June of 2014, Mr. Maier received cash payments of $100 per month in lieu of receiving a health insurance benefit, a benefit
choice available to all full-time U.S. employees. The Company provides for a 401(k) plan but currently does not provide a “match”
for employee contributions.
CHANGE
IN CONTROL SEVERANCE BENEFIT PLAN |
In 2007, the Compensation
Committee approved a Change in Control Severance Benefit Plan (the “Change in Control Plan”), which provides three
tiers of severance payments and benefits for designated senior executives in the event that their employment is terminated under
certain circumstances in connection with a change in control of the Company. Each of the current NEOs is a participant in the Change
in Control Plan.
We believe that the payments
and benefits available under the Change in Control Plan are an important component of our overall executive compensation program
because these payments and benefits help us retain executive talent and, in the event of a potential change of control, allow the
executives to focus on the potential transaction without concern for their personal near-term financial future and to preserve
employee morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change in
control of the Company. The Change in Control Plan also allows us to provide a standard set of payments and benefits to new and
existing executives and avoids negotiation of individual arrangements with executive officers. In addition, the program is intended
to align the interests of our executive officers with those of our stockholders by enabling our executive officers to consider
corporate transactions that are in the best interests of the stockholders and other constituents of the Company without undue concern
over whether the transactions may jeopardize their own employment.
The payments and benefits
available under the Change in Control Plan are subject to a “double trigger”; that is, they are payable only in the
event that an executive officer loses his or her employment in connection with a change in control of Company. This is consistent
with the purpose of the program, which is to provide employees with a guaranteed level of financial protection only upon loss of
employment. The Change in Control Plan provides that following a covered termination, participants continue to receive, for a specified
period based on the participant’s assigned category of benefit or tier, salary continuation benefits, bonus payments, vesting
acceleration for equity awards and health insurance and other benefits.
Each participant is assigned
by the Compensation Committee to one of three tiers, based upon several factors including the participant’s title, role,
and responsibility. The tier selection for each participant is determined by the full Board of Directors for the Chief Executive
Officer and the Compensation Committee for executive officers. The Compensation Committee established three tiers in recognition
of the different levels of involvement individual executives may have in potential corporate transactions. The estimated potential
payments and benefits available under the Change in Control Plan are described in the “Post-Employment Payments” section
below.
POLICY
REGARDING TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION |
Section 162(m) of the
Code generally provides that public corporations may not deduct remuneration in excess of $1 million paid to their chief executive
officer and three other most highly-compensated executive officers (other than its chief financial officer) in any in a calendar
year. Remuneration that qualified as “performance based” compensation within the meaning of the Code does not count
toward the $1 million limit.
While the Compensation
Committee is mindful of the benefit of full deductibility of compensation, the Compensation Committee believes that it should
not be constrained by the requirements of Section 162(m) of the Code where those requirements would impair flexibility in compensating
our NEOs in a manner that can best promote our corporate objectives. Therefore, the Compensation Committee has not adopted a policy
regarding the limitation of executive pay to amounts that would be deductible under Section 162(m) of the Code. The Compensation
Committee intends to continue to compensate our executive officers in a manner consistent with the best interests of the Company
and our stockholders and retains the discretion to pay compensation that potentially may not be fully deductible to reward performance
and/or enhance retention.
EXECUTIVE
COMPENSATION
2014 SUMMARY COMPENSATION TABLE |
The following table provides
information regarding the compensation paid to, received by, and earned by our NEOs for the fiscal years ended December 31, 2014,
December 31, 2013, and December 31, 2012.
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Name
and Principal Position |
|
|
Year |
|
|
Salary
($) |
|
|
Stock
Awards
($)(1) |
|
|
Option
Awards
($)(2) |
|
|
Non-Equity
Incentive
Plan
Compensation
($) |
|
|
Non-qualified
Deferred
Compensation
Earnings
($) |
|
|
All
Other
Compensation
($)(3) |
|
|
Total
($) |
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|
William
J. Welch
President and Chief
Executive Officer(4) |
|
|
2014 |
|
|
432,954 |
|
|
190,120 |
(5) |
|
554,742 |
|
|
— |
|
|
— |
|
|
825 |
|
|
1,167,816 |
|
|
|
2013 |
|
|
400,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,444 |
|
|
401,444 |
|
|
|
2012 |
|
|
353,280 |
|
|
206,500 |
(6) |
|
943,440 |
|
|
158,745 |
|
|
— |
|
|
1,476 |
|
|
1,663,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harry
F. Hixson, Jr.
Former Chief Executive
Officer |
|
|
2014 |
|
|
251,306 |
|
|
91,935 |
(7) |
|
197,410 |
|
|
— |
|
|
— |
|
|
378 |
|
|
541,028 |
|
|
|
2013 |
|
|
520,000 |
|
|
340,080 |
(8) |
|
538,013 |
|
|
— |
|
|
— |
|
|
6,794 |
|
|
1,404,887 |
|
|
|
2012 |
|
|
500,000 |
|
|
— |
|
|
1,557,147 |
|
|
303,900 |
|
|
— |
|
|
6,986 |
|
|
2,368,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn
D. Beaver
Senior Vice President
and Chief Financial Officer(9) |
|
|
2014 |
|
|
343,867 |
|
|
83,840 |
(10) |
|
136,144 |
|
|
— |
|
|
— |
|
|
794 |
|
|
564,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
V. Maier
Former Chief Financial
Officer |
|
|
2014 |
|
|
165,703 |
|
|
104,420 |
(11) |
|
169,976 |
|
|
— |
|
|
— |
|
|
871 |
|
|
440,970 |
|
|
|
2013 |
|
|
354,299 |
|
|
118,976 |
(12) |
|
188,222 |
|
|
— |
|
|
— |
|
|
5,673 |
|
|
667,170 |
|
|
|
2012 |
|
|
340,673 |
|
|
— |
|
|
519,049 |
|
|
138,041 |
|
|
— |
|
|
5,780 |
|
|
1,003,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dirk
van den Boom
Executive Vice
President, Chief Scientific and Strategy Officer(14) |
|
|
2014 |
|
|
407,625 |
|
|
164,155 |
(14) |
|
504,395 |
|
|
— |
|
|
— |
|
|
825 |
|
|
1,077,000 |
|
|
|
2013 |
|
|
375,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,064 |
|
|
376,064 |
|
|
|
2012 |
|
|
328,125 |
|
|
177,000 |
(15) |
|
664,790 |
|
|
147,422 |
|
|
— |
|
|
1,042 |
|
|
1,318,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robin
Weiner
Senior Vice President,
Corporate Governance and Regulatory Affairs |
|
|
2014 |
|
|
300,222 |
|
|
49,940 |
(19) |
|
78,591 |
|
|
— |
|
|
— |
|
|
721 |
|
|
429,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
D. Linton
Senior Vice President,
General Counsel and Secretary(16) |
|
|
2014 |
|
|
111,000 |
(17) |
|
330,000 |
(18) |
|
326,675 |
|
|
16,000 |
|
|
— |
|
|
241 |
|
|
783,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allan
T. Bombard
Former Chief Medical
Officer |
|
|
2014 |
|
|
192,224 |
|
|
90,800 |
(20) |
|
146,216 |
|
|
— |
|
|
— |
|
|
828 |
|
|
430,068 |
|
|
|
2013 |
|
|
380,000 |
|
|
124,384 |
(21) |
|
196,778 |
|
|
— |
|
|
— |
|
|
2,701 |
|
|
703,863 |
|
|
|
2012 |
|
|
360,006 |
|
|
— |
|
|
519,049 |
|
|
140,404 |
|
|
— |
|
|
2,093 |
|
|
1,021,552 |
|
(1) |
Represents
the full grant date fair value of restricted stock units calculated in accordance with FASB ASC Topic 718. For a discussion
of valuation assumptions, see the footnotes to the table titled “Grants of Plan-Based Awards” below. |
(2) |
Represents the full grant
date fair value of stock option awards calculated in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions,
see the footnotes to the table titled “Grants of Plan-Based Awards” below. The stock option grants to our executive
officers generally vest on a monthly basis over four years, unless they are grants made in connection with the start of employment
in which case such awards typically vest 25% after the first 12 months, with the remainder vesting in 36 successive equal
monthly installments. |
(3) |
Represents health insurance
benefits (or for Mr. Maier, cash payments in lieu of health insurance benefits), life, and disability insurance. |
(4) |
Mr. Welch became our President
and Chief Executive Officer on March 10, 2015. Prior to this role, he served as our Chief Executive Officer between June 2014
and March 2014 and as our President and Chief Operating Officer between December 2012 and June 2014. |
(5) |
Represents restricted
stock unit awards for 54,000 and 22,000 shares of common stock granted to Mr. Welch at a fair value of $2.27 and $3.07 per
share on the date of grant, respectively. |
(6) |
Represents a restricted
stock unit award for 43,750 shares of common stock granted to Mr. Welch at a fair market value of $4.72 per share on the date
of grant. |
(7) |
Represents a restricted
stock unit award for 40,500 shares of common stock granted to Dr. Hixson at a fair value of $2.27 per share on the date of
grant. |
(8) |
Represents a restricted
stock unit award for 81,750 shares of common stock granted to Dr. Hixson at a fair market value of $4.16 per share on the
date of grant. |
(9) |
Ms. Beaver became our
Senior Vice President and Chief Financial Officer on March 10, 2015. Prior to this role, she served as our Chief Financial
Officer from June 10, 2014 to March 10, 2015 and as our Vice President and Chief Accounting Officer from June 2012 to June
2014. |
(10) |
Represents
restricted stock unit awards for 18,000 and 14,000 shares of common stock granted to Ms. Beaver at a fair value of $2.27 and
$3.07 per share on the date of grant, respectively. |
(11) |
Represents a restricted
stock unit award for 46,000 shares of common stock granted to Mr. Maier at a fair value of $2.27 per share on the date of
grant. |
(12) |
Represents a restricted
stock unit award for 28,600 shares of common stock granted to Mr. Maier at a fair market value of $4.16 per share on the date
of grant. |
(13) |
Dr. van den Boom became
our Executive Vice President, Chief Scientific and Strategy Officer. Prior to this role, he served as our Chief Scientific
& Strategy Officer between June 2014 and March 2015 and as our Executive Vice President, Research and Development and
Chief Scientific Officer. |
(14) |
Represents restricted
stock unit awards for 50,000 and 16,500 shares of common stock granted to Ms. Beaver at a fair value of $2.27 and $3.07 per
share on the date of grant, respectively. |
(15) |
Represents a restricted
stock unit award for 37,500 shares of common stock granted to Dr. van den Boom at a fair market value of $4.72 per share on
the date of grant. |
(16) |
Mr. Linton became our
Senior Vice President, General Counsel and Secretary on March 10, 2015. Prior to this role, he served as our Senior Vice President
and General Counsel since joining the Company on September 10, 2014. |
(17) |
Represents a pro-rata
portion of Mr. Linton’s salary based on his September 10, 2014 start date with the Company. |
(18) |
Represents a restricted
stock unit award for 100,000 shares of common stock granted to Mr. Linton at a fair value of $3.30 per share on the date of
grant. |
(19) |
Represents a restricted
stock unit award for 22,000 shares of common stock granted to Ms. Weiner at a fair value of $2.27 per share on the date of
grant. |
(20) |
Represents a restricted
stock unit award for 40,000 shares of common stock granted to Dr. Bombard at a fair value of $2.27 per share on the date of
grant. |
(21) |
Represents a restricted
stock unit award for 29,900 shares of common stock granted to Dr. Bombard at a fair market value of $4.16 per share on the
date of grant. |
We have entered into
employment agreements with Dr. Hixson, Mr. Welch and Dr. van den Boom and extended employment offer letters to Mr. Maier, Ms. Beaver,
Ms. Weiner, Mr. Linton and Dr. Bombard. These arrangements set forth the terms of employment for each of these individuals, including
their initial base salary, target annual bonus, equity award recommendation, and participation in our health and welfare benefit
plans. In addition, these arrangements stipulate that each individual is eligible for certain payments and benefits under our Change
in Control Severance Benefit Plan. These post-employment compensation arrangements are discussed in more detail in the “Potential
Payments Upon Termination or Change in Control” section below.
The material terms and
conditions of the employment arrangements of the NEOs are as follows.
On March 13, 2010, we
entered into an employment agreement with Dr. Hixson that formalized his employment as our Chief Executive Officer on an “at-will”
basis commencing September 28, 2009. This agreement set forth the initial terms and conditions of his employment, including base
salary, target annual bonus, standard employee health and welfare benefit plan participation, and a recommendation for an additional
stock option grant. These compensation arrangements were subject to future adjustment in the discretion of the Compensation Committee
based on an evaluation of corporate and individual performance, as well as other significant factors, including the competitive
market environment and our incentive and retention objectives. This employment agreement was subject to reaffirmation of the standard
proprietary information and invention agreement that he had previously executed an agreement to abide by non-competition and non-solicitation
covenants.
This agreement also set
forth his eligibility for certain payments and benefits in the event of a termination of employment, including a termination of
employment in connection with a change in control of the Company, as a Tier I participant in our Change in Control Severance Benefit
Plan.
Dr. Hixon retired as
our Chief Executive Officer on June 10, 2014. Upon retirement, the Board of Directors approved continuation of health plan coverage
for 24 months for Dr. Hixson and his family. Following his retirement as our Chief Executive Officer, Dr. Hixson remained Chairman
of our Board of Directors through March 31, 2015 and continued receiving compensation as a director.
MR. WELCH AND DR. VAN DEN BOOM |
On January 29, 2014,
we entered into employment agreements with Mr. Welch, and Dr. van den Boom that formalized their employment with us on an “at-will”
basis as our Chief Executive Officer (Mr. Welch) and Chief Scientific and Strategy Officer (Dr. van den Boom). The agreements each
have a term of 3 years and set forth the initial terms and conditions of their employment, including base salary, target annual
bonus, and standard employee health and welfare benefit plan participation. These compensation arrangements are subject to future
adjustment in the discretion of the Board of Directors based on an evaluation of individual performance and any company policies
regarding adjustments in officer compensation established from time to time by the Board of Directors. Mr. Welch and Dr. van den
Boom are each entitled to certain payments in the event of the termination of their employment with us; these payments are discussed
in more detail in the “Post-Employment Payments” section below. The employment agreements do not apply to any termination
of Mr. Welch’s or Dr. van den Boom’s employment in connection with a
change in control of the company, as provided
for under our Change in Control Plan. Mr. Welch and Dr. van den Boom previously executed our standard proprietary
information and invention agreement.
MR. MAIER, MS. BEAVER, MS. WEINER, MR. LINTON, AND DR. BOMBARD |
In connection with
their initial employment with us, we entered into employment offer letters with each of Mr. Maier, Ms. Beaver, Ms. Weiner,
Mr. Linton, and Dr. Bombard. Each of these offer letters provides for “at-will” employment and sets forth the
initial terms and conditions of employment of each individual, including his/her base salary, target annual bonus, standard
employee health and welfare benefit plan participation, and a recommendation for an equity award. These compensation
arrangements were subject to future adjustment in the discretion of the Compensation Committee based on an evaluation of
corporate and individual performance, as well as other significant factors, including the competitive market environment and
our incentive and retention objectives. In addition, these offer letters provided that each individual would be eligible for
certain payments and benefits in the event of a termination of employment, including a termination of employment in
connection with a change in control of the Company, under our Change in Control Severance Benefit Plan. Further, these
employment offers were subject to execution of our standard proprietary information and invention agreement.
Mr. Maier retired on
June 10, 2014, at which time we entered into a consulting services agreement that sets forth our agreement to pay a monthly rate
of $5,000 for Mr. Meier’s provision of three days per month of consulting services to the Company. This agreement also allows
us to request consulting services from Mr. Meier in excess of three days in a month, in which case we pay Mr. Maier a rate of $200
per hour. The consulting services agreement terminated in February 2015. In 2014, Mr. Maier received $23,333.33 for Consulting
Services.
Dr. Bombard retired on
June 10, 2014.
PAYMENTS
NOT RELATED TO A CHANGE IN CONTROL
DR.
HIXSON Under Dr. Hixson’s employment agreement, Dr. Hixson
was eligible to receive continued Company paid health insurance premiums for 90 days from his termination date and a pro-rated
portion of any target bonus determined to be appropriate after completion of the entire target bonus year (there was no 2014 Executive
bonus payout due to not meeting bonus performance goals). In March 2014, in connection with Dr. Hixson’s retirement on June
10, 2014, the Board of Directors approved continuation of health plan coverage for 24 months for Dr. Hixson and his family. The
value of health plan coverage for 24 months based on 2014 Cobra rates is $37,439. Following his retirement as our Chief Executive
Officer, Dr. Hixson remained Chairman of our Board of Directors through March 31, 2015 and continued receiving compensation as
a director.
MR.
WELCH AND DR. VAN DEN BOOM Under their employment agreements entered into on January 29,
2014, if Mr. Welch’s or Dr. van den Boom’s employment is terminated either by us without “cause”
or by Mr. Welch or Dr. van den Boom for “good reason” (each as defined in their employment agreements), then each
is eligible under his respective employment agreement to receive: twelve months of then-current base salary at the time of termination
and a pro-rated (to the date of termination) portion of his target bonus level, both payable within 60 days of termination; continued
health benefits for one year following the date of termination or until an earlier date that Mr. Welch or Dr. van den Boom obtains
new employment that provides at least substantially the same benefits; accelerated vesting of all stock options and other equity
awards issued by us for a period of 12 months following the date of termination; and an exercise period to exercise any outstanding
vested stock option grants until the earlier of 12 months following employment termination or the expiration of the term of the
stock option grant.
Except as set forth above,
none of our NEOs are eligible to receive any payments or benefits upon a termination of employment that is not related to a change
in control of the Company. In addition, except as set forth above, none of our NEOs are eligible to receive any payments or benefits
if their employment is terminated for cause or as the result of retirement, death or disability.
PAYMENTS RELATED TO A CHANGE IN CONTROL |
We currently provide
post-employment payments and benefits to our NEOs in certain limited circumstances pursuant to our Change in Control Plan. Our
Change in Control Plan provides payments and benefits to designated executive officers following a termination of employment in
connection with a change in control of the Company. None of our NEOs are eligible to receive additional payments or benefits under
their employment or letter agreements.
Our Change in Control
Plan provides that following a covered termination of employment (as defined in the Change in Control Plan as a termination of
employment by the Company without cause or a voluntary resignation of employment for good reason,
either of which occurring
within the one-month period preceding the date of a change in control or the 11-month period following a change in control), participants
continue to receive, for a specified period based on each participant’s assigned category of benefit or tier, salary continuation
benefits, bonus payments, vesting acceleration of outstanding equity awards and health insurance and other benefits. Each participant
is assigned by the Compensation Committee to one of three tiers.
We are not obligated
under our Change in Control Plan or pursuant to any employment agreement to provide any tax gross-up payments intended to offset
the cost of excise taxes that may be imposed if any payment provided to an NEO is considered a “parachute payment”
for purposes of Sections 280G and 4999 of the Code. Under the Change in Control Plan, the total of any payments that would be considered
“parachute payments” for purposes of Sections 280G and 4999 of the Code and subject to excise tax under Section 4999
of the Code are limited to the amount that would result in no excise tax being imposed (or, if greater, an amount in which the
participant receives a net after-tax payment if the excise tax is assessed), a provision known as a “best-after-tax”
arrangement.
TIER
I. Dr. Hixson was been assigned to Tier I, and in March 2014, Mr. Welch and Dr. van den Boom were changed from Tier
II to Tier I participants. Participants who have been assigned to Tier I are eligible to receive salary continuation payments
in an amount equal to the participant’s base salary payable for 24 months following termination of employment, subject to
a reduction during the last six months of such period for any salary the participant receives from other full-time employment
during the 24 months following termination of employment. Tier I participants are also eligible to receive a single lump-sum payment
equal to 1.5 times their target bonus amount, and all unvested equity awards held by them will vest immediately upon termination
of employment. We will also pay premiums for continuation of health plan coverage for 18 months following termination of employment.
TIER
II. Mr. Maier and Dr. Bombard were, and Ms. Beaver, Ms. Weiner, and Mr. Linton are, assigned to Tier II. Participants
who have been assigned to Tier II are eligible to receive salary continuation payments in an amount equal to the participant’s
base salary payable for 12 months following termination of employment. Tier II participants are eligible to receive a single lump-sum
payment equal to such participant’s target bonus amount and all of the participant’s equity awards that use time-based
vesting will immediately vest as to all remaining vesting installments upon termination of employment. We will also pay premiums
for continuation of health plan coverage for 12 months following termination of employment.
TIER
III. Participants that have been assigned to Tier III are eligible to receive salary continuation payments in an amount
equal to the participant’s base salary payable for 12 months following termination of employment. Tier III participants
are eligible to have all equity awards that use time-based vesting immediately vest as to the next 24 months of vesting installments
upon termination of employment. We will also pay premiums for continuation of health plan coverage for 12 months following termination
of employment.
POTENTIAL POST-EMPLOYMENT PAYMENTS AND BENEFITS |
The following table below
sets forth the potential payments and benefits that would be received by the NEOs upon a termination of employment, including a
termination of employment in connection with a change in control of the Company, assuming that the termination of employment occurred
on December 31, 2014.
The value of the equity
awards reported below represents the intrinsic value of the outstanding and unvested equity awards as of December 31, 2014 that
would become vested as a result of such triggering event. The market value of the Company’s common stock used for such calculations
was the closing price of the common stock on December 31, 2014 of $3.70 per share.
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upon
Termination Under Specified Circumstance Following a Change in Control |
|
|
|
Upon
termination without cause ($) |
|
|
Salary
Continuation Value ($) |
|
|
Bonus
Continuation Value ($) |
|
|
Benefit
Continuation Value ($) |
|
|
Equity Acceleration
($) |
|
|
Total
Value ($) |
|
William
J. Welch, President and Chief Executive Officer |
|
$893,633 |
|
|
$900,000 |
|
|
$405,000 |
|
|
$26,226 |
|
|
$606,664 |
|
|
$1,937,890 |
|
Harry
F. Hixson,
Former Chief Executive
Officer |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Carolyn
D. Beaver,
Senior Vice President
and Chief Financial Officer |
|
— |
|
|
$350,000 |
|
|
$140,000 |
|
|
$17,435 |
|
|
$206,853 |
|
|
$714,288 |
|
Paul
V. Maier,
Former Chief Financial
Officer |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upon
Termination Under Specified Circumstance Following a Change in Control |
|
|
|
Upon
termination without cause ($) |
|
|
Salary
Continuation Value ($) |
|
|
Bonus
Continuation Value ($) |
|
|
Benefit
Continuation Value ($) |
|
|
Equity Acceleration
($) |
|
|
Total
Value ($) |
|
Dirk
van den Boom, Ph.D.,
Executive Vice
President, Chief Scientific and Strategy Officer |
|
$835,788 |
|
|
$850,000 |
|
|
$382,500 |
|
|
$28,079 |
|
|
$559,046 |
|
|
$1,819,625 |
|
Robin
Weiner,
Senior Vice President,
Corporate Governance and Regulatory Affairs |
|
— |
|
|
$300,311 |
|
|
$105,109 |
|
|
$6,220 |
|
|
$215,040 |
|
|
$626,680 |
|
Jeffrey
D. Linton,
Senior Vice President,
General Counsel and Secretary |
|
— |
|
|
$370,000 |
|
|
$148,000 |
|
|
$18,719 |
|
|
$420,000 |
|
|
$956,719 |
|
Allan
T. Bombard, M.D., Former Chief Medical Officer |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
2014 GRANTS OF PLAN-BASED AWARDS |
The following table presents
information regarding the grants of plan-based awards to the NEOs made during the fiscal year ended December 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
Date(1) |
|
Estimated
Future Payouts Under Non- Equity Incentive Plan Awards (Threshold/Target/Max) $ |
|
|
Estimated
Future Payouts Under Equity Incentive Plan Awards (Threshold/Target/Max) $ |
|
|
All
Other Option Awards; Number of Shares of Stock or Units (#) |
|
|
Exercise
or Base Price of Option Awards ($/sh) |
|
|
Grant
Date Fair Value of Stock and
Option Awards ($)(2) |
|
William
J. Welch, President and Chief Executive Officer |
2/1/2014 |
|
— |
|
|
— |
|
|
31,500 |
(3) |
|
|
2.27 |
|
|
57,572 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
76,500 |
(4) |
|
|
2.27 |
|
|
139,819 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
54,000 |
(5) |
|
|
2.27 |
|
|
122,580 |
|
|
6/10/2014 |
|
— |
|
|
— |
|
|
22,000 |
(5) |
|
|
3.07 |
|
|
67,540 |
|
|
6/10/2014 |
|
— |
|
|
— |
|
|
59,995 |
(3)(11) |
|
|
3.07 |
|
|
97,988 |
|
|
6/10/2014 |
|
— |
|
|
— |
|
|
103,005 |
(4)(11) |
|
|
3.07 |
|
|
249,363 |
|
|
Harry
F. Hixson,
Former Chief Executive
Officer |
6/10/2014 |
|
— |
|
|
— |
|
|
20,000 |
(4) |
|
|
3.07 |
|
|
49,366 |
(6) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
81,000 |
(4)(9) |
|
|
2.27 |
|
|
148,044 |
(7)(10) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
40,500 |
(5) |
|
|
2.27 |
|
|
91,935 |
|
|
6/17/2005 |
|
— |
|
|
— |
|
|
5,000 |
(4)(9) |
|
|
3.48 |
|
|
1,250 |
(10) |
|
6/6/2006 |
|
— |
|
|
— |
|
|
50,000 |
(4)(9) |
|
|
1.87 |
|
|
15,000 |
(10) |
|
6/22/2007 |
|
— |
|
|
— |
|
|
20,000 |
(4)(9) |
|
|
4.58 |
|
|
14,200 |
(10) |
|
5/30/2008 |
|
— |
|
|
— |
|
|
20,000 |
(4)(9) |
|
|
7.69 |
|
|
12,400 |
(10) |
|
5/12/2009 |
|
— |
|
|
— |
|
|
20,000 |
(4)(9) |
|
|
3.42 |
|
|
14,400 |
(10) |
|
10/21/2009 |
|
— |
|
|
— |
|
|
58,996 |
(4)(9) |
|
|
3.39 |
|
|
39,527 |
(10) |
|
10/21/2009 |
|
— |
|
|
— |
|
|
128,504 |
(4)(9) |
|
|
3.39 |
|
|
86,098 |
(10) |
|
10/21/2009 |
|
— |
|
|
— |
|
|
29,498 |
(4)(9) |
|
|
3.39 |
|
|
19,764 |
(10) |
|
10/21/2009 |
|
— |
|
|
— |
|
|
158,002 |
(4)(9) |
|
|
3.39 |
|
|
105,861 |
(10) |
|
10/4/2010 |
|
— |
|
|
— |
|
|
59,520 |
(4)(9) |
|
|
6.96 |
|
|
86,304 |
(10) |
|
2/14/2011 |
|
— |
|
|
— |
|
|
59,700 |
(4)(9) |
|
|
6.7 |
|
|
137,011 |
(10) |
|
2/14/2011 |
|
— |
|
|
— |
|
|
310,300 |
(4)(9) |
|
|
6.7 |
|
|
712,138 |
(10) |
|
2/7/2012 |
|
— |
|
|
— |
|
|
8,375 |
(4)(9) |
|
|
4.92 |
|
|
23,612 |
(10) |
|
2/7/2012 |
|
— |
|
|
— |
|
|
192,625 |
(4)(9) |
|
|
4.92 |
|
|
523,743 |
(10) |
|
2/1/2013 |
|
— |
|
|
— |
|
|
11,040 |
(4)(9) |
|
|
4.16 |
|
|
26,694 |
(10) |
|
2/1/2012 |
|
— |
|
|
— |
|
|
152,460 |
(4)(9) |
|
|
4.16 |
|
|
361,126 |
(10) |
|
2/7/2012 |
|
— |
|
|
— |
|
|
8,375 |
(4)(9) |
|
|
4.92 |
|
|
23,612 |
(10) |
|
2/7/2012 |
|
— |
|
|
— |
|
|
192,625 |
(4)(9) |
|
|
4.92 |
|
|
523,743 |
(10) |
|
Carolyn
D. Beaver,
Senior Vice President
and Chief Financial Officer |
2/1/2014 |
|
— |
|
|
— |
|
|
36,000 |
(3) |
|
|
2.27 |
|
|
65,797 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
18,000 |
(5) |
|
|
2.27 |
|
|
40,860 |
|
|
6/10/2014 |
|
— |
|
|
— |
|
|
28,500 |
(3) |
|
|
3.07 |
|
|
70,347 |
(6) |
|
6/10/2014 |
|
— |
|
|
— |
|
|
14,000 |
(5) |
|
|
3.07 |
|
|
42,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
Date(1) |
|
Estimated
Future Payouts Under Non- Equity Incentive Plan Awards (Threshold/Target/Max) $ |
|
|
Estimated
Future Payouts Under Equity Incentive Plan Awards (Threshold/Target/Max) $ |
|
|
All
Other Option Awards; Number of Shares of Stock or Units (#) |
|
|
Exercise
or Base Price of Option Awards ($/sh) |
|
|
Grant
Date Fair Value of Stock and Option Awards ($)(2) |
|
Paul
V. Maier,
Former Chief Financial
Officer |
2/1/2014 |
|
— |
|
|
— |
|
|
46,000 |
(5) |
|
|
2.27 |
|
|
10,4420 |
|
|
2/1/2014 |
|
— |
|
|
— |
|
|
93,000 |
(4)(9) |
|
|
2.27 |
|
|
169,976 |
(7)(10) |
|
2/14/2011 |
|
— |
|
|
— |
|
|
60,400 |
(4)(12) |
|
|
6.7 |
|
|
138,618 |
(10) |
|
2/14/2011 |
|
— |
|
|
— |
|
|
2,100 |
(4)(12) |
|
|
6.7 |
|
|
4,820 |
(10) |
|
2/7/2012 |
|
— |
|
|
— |
|
|
22,362 |
(4)(12) |
|
|
4.92 |
|
|
63,045 |
(10) |
|
2/7/2012 |
|
— |
|
|
— |
|
|
111,638 |
(4)(12) |
|
|
4.92 |
|
|
303,544 |
(10) |
|
2/1/2013 |
|
— |
|
|
— |
|
|
16,683 |
(4)(12) |
|
|
4.16 |
|
|
40,339 |
(10) |
|
2/1/2013 |
|
— |
|
|
— |
|
|
40,517 |
(4)(12) |
|
|
4.16 |
|
|
95,973 |
(10) |
|
Dirk
van den Boom, Ph.D.,
Executive Vice
President, Chief Scientific and Strategy Officer |
2/1/2014 |
|
— |
|
|
— |
|
|
29,167 |
(3) |
|
|
2.27 |
|
|
53,308 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
70,833 |
(4) |
|
|
2.27 |
|
|
129,461 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
50,000 |
(5) |
|
|
2.27 |
|
|
113,500 |
|
|
6/10/2014 |
|
— |
|
|
— |
|
|
16,500 |
(5) |
|
|
3.07 |
|
|
50,655 |
|
|
6/10/2014 |
|
— |
|
|
— |
|
|
37,617 |
(3)(11) |
|
|
3.07 |
|
|
92,162 |
|
|
6/10/2014 |
|
— |
|
|
— |
|
|
94,883 |
(4)(11) |
|
|
3.07 |
|
|
229,464 |
|
|
Robin
Weiner,
Senior Vice President,
Corporate Governance and Regulatory Affairs |
2/1/2014 |
|
— |
|
|
— |
|
|
23,292 |
(3) |
|
|
2.27 |
|
|
42,571 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
19,708 |
(4) |
|
|
2.27 |
|
|
36,020 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
22,000 |
(5) |
|
|
2.27 |
|
|
49,940 |
|
|
Jeffrey
D. Linton,
Senior Vice
President, General Counsel and Secretary |
11/3/2014 |
|
— |
|
|
— |
|
|
119,555 |
(3) |
|
|
3.3 |
|
|
312,445 |
(8) |
|
11/3/2014 |
|
— |
|
|
— |
|
|
5,445 |
(4) |
|
|
3.3 |
|
|
14,229 |
(8) |
|
11/3/2014 |
|
— |
|
|
— |
|
|
100,000 |
(5) |
|
|
3.3 |
|
|
330000 |
|
|
Allan
T. Bombard, M.D.,
Former Chief Medical
Officer |
2/1/2014 |
|
— |
|
|
— |
|
|
27,887 |
(3) |
|
|
2.27 |
|
|
50,969 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
52,113 |
(4) |
|
|
2.27 |
|
|
95,247 |
(7) |
|
2/1/2014 |
|
— |
|
|
— |
|
|
40,000 |
(5) |
|
|
2.27 |
|
|
90,800 |
|
|
(1) |
This column
reflects the date that our Board of Directors or the Compensation Committee, as applicable, approved the award. |
(2) |
Represents the full grant
date fair value of stock and option awards calculated in accordance with FASB ASC Topic 718. |
(3) |
Incentive stock option
granted under the 2006 Equity Incentive Plan. |
(4) |
Non-qualified stock option
granted under the 2006 Equity Incentive Plan. |
(5) |
Restricted stock unit
awards granted under the 2006 Equity Incentive Plan. |
(6) |
The grant date fair value
of the option to purchase shares of the Company’s common stock granted on June 10, 2014 calculated using a Black-Scholes
option pricing model based on the following assumptions: an expected volatility of 93.8%; an expected term to exercise of
7.09 years from the date of grant; a risk-free interest rate of 2.16%; and a dividend yield of 0%. |
(7) |
The grant date fair value
of the option to purchase shares of the Company’s common stock granted on February 1, 2014 calculated using a Black-Scholes
option pricing model based on the following assumptions: an expected volatility of 94.0%; an expected term to exercise of
7.14 years from the date of grant; a risk-free interest rate of 1.96%; and a dividend yield of 0%. |
(8) |
The grant date fair value
of the option to purchase shares of the Company’s common stock granted on November 3, 2014 calculated using a Black-Scholes
option pricing model based on the following assumptions: an expected volatility of 92.7%; an expected term to exercise of
6.88 years from the date of grant; a risk-free interest rate of 2.14%; and a dividend yield of 0%. |
(9) |
Effective June 10, 2014,
the Company’s Board of Directors approved the modification of all stock options granted to Dr. Hixson prior to his retirement
as an employee and executive officer and return to service as a non-employee director to extend the exercise period for three
years following Dr. Hixson’s cessation of service as a member of the Board of Directors. This modification was consistent
with the exercise period of stock option grants awarded to the Company’s non-employee directors under the Company’s
non-employee director compensation program, and the Grant Date Fair Value in the table reflects this modification. |
(10) |
Amount represents the
remaining original grant date fair value of the unvested options based on the Black-Scholes option pricing model at the date
of modification plus the incremental fair value calculated using the Black-Scholes model related to the additional value obtained
of extending the period of time the options can be exercised. |
(11) |
We granted Mr. Welch and
Dr. van den Boom stock options that contained booth service and market performance conditions. The 1st grant of stock options
to Mr. Welch and Dr. van den Boom was comprised of 43,000 and 32,500 stock options, respectively, which vest equally over
48 months, beginning on July 1, 2014. The stock options only become exercisable if the Company’s stock price appreciates
such that the closing price is a minimum of $3.84 for at least 30 consecutive trading days. Additionally, we granted Mr. Welch
and Dr. van den Boom (the 2nd grant) 100,000 stock options each which vest on the fourth anniversary of the grant, June 10,
2018 and are only exercisable if the Company’s stock price is $5 or more for at least 30 consecutive trading days after
the vest date. As these awards contained market conditions we determined the fair value of the options on the date of grant
using a Monte Carlo Simulation model, which was determined to be $2.45 per share for the 1st grants and $2.42 per share for
the 2. |
(12) |
Effective June 10, 2014,
the Company’s Board of Directors approved the modification of all outstanding stock options granted to Mr. Maier prior
to his retirement as an employee and executive officer and transition to a consulting role for the Company to extend the exercise
period for one year following Mr. Maier’s cessation of service as a consultant. |
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END TABLE |
The
following table sets forth certain information regarding outstanding equity awards held by the NEOs at the end of the fiscal year
ended December 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
Securities
Underlying
Unexercised
Options—
Exercisable
(#) |
Number
of
Securities
Underlying
Unexercised
Options—
Unexercisable
(#) |
Option
Exercise
Price
($/share) |
Option
Expiration
Date |
Number
of
Shares or
Units of
Stock That
Have Not
Vested (#) |
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($) |
William
J. Welch,
President and Chief Executive Officer |
— |
|
14,236 |
(1) |
4.72 |
|
12/10/2022 |
|
21,874 |
(2) |
80,934 |
|
43,750 |
(3) |
29,514 |
(3) |
4.72 |
|
12/10/2022 |
|
54,000 |
(11) |
199,800 |
|
|
60,975 |
(4) |
26,992 |
(4) |
4.92 |
|
2/7/2022 |
|
22,000 |
(12) |
81,400 |
|
|
52,358 |
(5) |
19,675 |
(8) |
4.92 |
|
2/7/2022 |
|
— |
|
— |
|
|
146,875 |
(6) |
3,125 |
(6) |
7.70 |
|
1/7/2021 |
|
— |
|
— |
|
|
— |
|
31,500 |
(4) |
2.27 |
|
2/1/2024 |
|
— |
|
— |
|
|
22,500 |
(5) |
54,000 |
(5) |
2.27 |
|
2/1/2024 |
|
— |
|
— |
|
|
— |
|
29,245 |
(7) |
3.07 |
|
6/10/2024 |
|
— |
|
— |
|
|
— |
|
10,750 |
(8) |
3.07 |
|
6/10/2024 |
|
— |
|
— |
|
|
— |
|
70,755 |
(9) |
3.07 |
|
6/10/2024 |
|
— |
|
— |
|
|
— |
|
32,250 |
(10) |
3.07 |
|
6/10/2024 |
|
— |
|
— |
|
Harry
F. Hixson,
Former Chief Executive
Officer |
— |
|
20,000 |
(13) |
3.07 |
|
6/10/2024 |
|
61,312 |
(14) |
226,854 |
|
— |
|
11,040 |
(5)(15)(16) |
4.16 |
|
2/1/2023 |
|
40,500 |
(24) |
149,850 |
|
|
74,938 |
(5)(15)(16) |
77,522 |
(5)(15)(16) |
4.16 |
|
2/1/2023 |
|
— |
|
— |
|
|
284,750 |
(5)(17)(16) |
100,500 |
(5)(17)(16) |
4.92 |
|
2/7/2022 |
|
— |
|
— |
|
|
— |
|
16,750 |
(5)(17)(16) |
4.92 |
|
2/7/2022 |
|
— |
|
— |
|
|
44,775 |
(5)(16) |
14,925 |
(5) |
6.70 |
|
2/14/2021 |
|
— |
|
— |
|
|
309,808 |
(5)(16) |
492 |
(5) |
6.7 |
|
2/14/2021 |
|
— |
|
— |
|
|
59,520 |
(26)(16) |
— |
|
6.96 |
|
10/4/2020 |
|
— |
|
— |
|
|
58,996 |
(18)(16) |
— |
|
3.39 |
|
10/21/2019 |
|
— |
|
— |
|
|
128,504 |
(18)(16) |
— |
|
3.39 |
|
10/21/2019 |
|
— |
|
— |
|
|
29,498 |
(18)(16) |
— |
|
3.39 |
|
10/21/2019 |
|
— |
|
— |
|
|
158,002 |
(18)(16) |
— |
|
3.39 |
|
10/21/2019 |
|
— |
|
— |
|
|
20,000 |
(13)(16) |
— |
|
3.42 |
|
5/12/2019 |
|
— |
|
— |
|
|
20,000 |
(13)(16) |
— |
|
7.69 |
|
5/30/2018 |
|
— |
|
— |
|
|
20,000 |
(13)(16) |
— |
|
4.58 |
|
6/22/2017 |
|
— |
|
— |
|
|
50,000 |
(13)(16) |
— |
|
1.87 |
|
6/6/2016 |
|
— |
|
— |
|
|
5,000 |
(13)(16) |
— |
|
3.48 |
|
6/17/2015 |
|
— |
|
— |
|
|
67,500 |
(5)(16) |
13,500 |
(5)(16) |
2.27 |
|
2/1/2024 |
|
— |
|
— |
|
Carolyn
D. Beaver,
Senior Vice President
and Chief Financial Officer |
6,283 |
(4) |
7,425 |
(4) |
4.16 |
|
2/1/2023 |
|
5,140 |
(14) |
19,018 |
|
62,500 |
(6) |
37,500 |
(6) |
4.14 |
|
6/26/2022 |
|
18,000 |
(11) |
66,600 |
|
7,500 |
(4) |
28,500 |
(4) |
2.27 |
|
2/1/2024 |
|
14,000 |
(12) |
51,800 |
|
|
2,969 |
(4) |
25,531 |
(4) |
3.07 |
|
6/10/2024 |
|
|
|
|
|
Paul
V. Maier,
Former Chief Financial
Officer |
26,217 |
(5)(16) |
30,983 |
(5)(25) |
4.16 |
|
2/1/2023 |
|
21,450 |
(14) |
79,365 |
|
94,917 |
(5)(16) |
39,083 |
(5)(25) |
4.92 |
|
2/7/2022 |
|
46,000 |
(11) |
170,200 |
|
59,896 |
(5)(16) |
2,604 |
(5)(25) |
6.70 |
|
2/14/2021 |
|
— |
|
— |
|
|
19,375 |
(5)(16) |
73,625 |
(5)(25) |
2.27 |
|
2/1/2024 |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
Securities
Underlying
Unexercised
Options—
Exercisable
(#) |
Number
of
Securities
Underlying
Unexercised
Options—
Unexercisable
(#) |
Option
Exercise
Price
($/share) |
Option
Expiration
Date |
Number
of
Shares or
Units of
Stock That
Have Not
Vested (#) |
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($) |
Dirk
van den Boom, Ph.D.,
Executive Vice
President, Chief Scientific and Strategy Officer |
— |
|
16,842 |
(1) |
4.72 |
|
12/10/2022 |
|
18,750 |
(2) |
69,375 |
|
37,500 |
(3) |
20,658 |
(3) |
4.72 |
|
12/10/2022 |
|
50,000 |
(11) |
185,000 |
|
— |
|
20,946 |
(4) |
4.92 |
|
2/7/2022 |
|
16,500 |
(12) |
61,050 |
|
|
70,833 |
(5) |
8,221 |
(5) |
4.92 |
|
2/7/2022 |
|
|
|
|
|
|
3,380 |
(4) |
2,604 |
(4) |
6.70 |
|
2/14/2021 |
|
|
|
|
|
|
56,016 |
(5) |
— |
|
6.70 |
|
2/14/2021 |
|
|
|
|
|
|
26,634 |
(4) |
— |
|
5.92 |
|
8/3/2020 |
|
|
|
|
|
|
48,366 |
(5) |
— |
|
5.92 |
|
8/3/2020 |
|
|
|
|
|
|
3,130 |
(19) |
— |
|
3.38 |
|
10/20/2019 |
|
|
|
|
|
|
26,870 |
(20) |
— |
|
3.38 |
|
10/20/2019 |
|
|
|
|
|
|
1,604 |
(4) |
— |
|
25.15 |
|
1/16/2019 |
|
|
|
|
|
|
9,396 |
(5) |
— |
|
25.15 |
|
1/16/2019 |
|
|
|
|
|
|
12,082 |
(4) |
— |
|
14.07 |
|
12/1/2018 |
|
|
|
|
|
|
7,918 |
(5) |
— |
|
14.07 |
|
12/1/2018 |
|
|
|
|
|
|
13,000 |
(4) |
— |
|
8.66 |
|
2/12/2018 |
|
|
|
|
|
|
6,150 |
(4) |
— |
|
4.93 |
|
7/10/2017 |
|
|
|
|
|
|
16,500 |
(4) |
— |
|
4.93 |
|
7/10/2017 |
|
|
|
|
|
|
5,380 |
(4) |
— |
|
2.34 |
|
4/10/2016 |
|
|
|
|
|
|
375 |
(4) |
— |
|
3.09 |
|
4/1/2015 |
|
|
|
|
|
|
— |
|
29,167 |
(4) |
2.27 |
|
2/1/2024 |
|
|
|
|
|
|
20,833 |
(5) |
50,000 |
(5) |
2.27 |
|
2/1/2024 |
|
|
|
|
|
|
— |
|
29,492 |
(7) |
3.07 |
|
6/10/2024 |
|
|
|
|
|
|
— |
|
8,125 |
(8) |
3.07 |
|
6/10/2024 |
|
|
|
|
|
|
— |
|
70,508 |
(9) |
3.07 |
|
6/10/2024 |
|
|
|
|
|
|
— |
|
24,375 |
(10) |
3.07 |
|
6/10/2024 |
|
|
|
|
|
Robin
Weiner,
Senior Vice President, Corporate
Governance and Regulatory Affairs |
49,267 |
(22) |
— |
|
7.22 |
|
10/1/2020 |
|
19,500 |
(14) |
72,150 |
|
733 |
(23) |
— |
|
7.22 |
|
10/1/2020 |
|
22,000 |
(11) |
81,400 |
|
6,609 |
(4) |
1,250 |
(4) |
6.70 |
|
2/14/2021 |
|
|
|
|
|
|
22,141 |
(5) |
— |
|
6.70 |
|
2/14/2021 |
|
|
|
|
|
|
— |
|
21,956 |
(4) |
4.92 |
|
2/7/2022 |
|
|
|
|
|
|
56,666 |
(5) |
1,378 |
(5) |
4.92 |
|
2/7/2022 |
|
|
|
|
|
|
— |
|
15,168 |
(4) |
4.16 |
|
2/1/2023 |
|
|
|
|
|
|
23,833 |
(5) |
12,999 |
(5) |
4.16 |
|
2/1/2023 |
|
|
|
|
|
|
— |
|
23,292 |
(4) |
2.27 |
|
2/1/2024 |
|
|
|
|
|
|
8,958 |
(5) |
10,750 |
(5) |
2.27 |
|
2/1/2024 |
|
|
|
|
|
Jeffrey
D. Linton,
Senior Vice President,
General Counsel and Secretary |
— |
|
119,555 |
(6) |
3.30 |
|
11/3/2024 |
|
100,000 |
(21) |
370,000 |
|
— |
|
5,445 |
(6) |
3.30 |
|
11/3/2024 |
|
|
|
|
|
(1) |
Incentive options granted December 10,
2012 vesting over 4 years monthly. |
(2) |
Restricted common stock unit grants on
December 10, 2012, with 1/4 vesting yearly over four years. |
(3) |
Non-qualified options granted December
10, 2012 vesting over 4 years monthly. |
(4) |
Incentive stock options vesting monthly
over 4 years from the grant date. |
(5) |
Non-qualified options vesting monthly
over 4 years from the grant date. |
(6) |
New hire grant, vesting over 4 years
with 1/4 vesting 12 months after the grant date, then equal monthly installments thereafter. |
(7) |
Market-based incentive stock options
granted June 10, 2014, which vest on the 4th anniversary and are exercisable upon the Company’s stock price closing
at or above $5.00 for at least 30 consecutive trading days after vesting. |
(8) |
Market-based incentive stock options
granted June 10, 2014, which vest monthly over 4-years and are exercisable upon the Company’s stock price closing at
or above $3.84 for at least 30 consecutive trading days. |
(9) |
Market-based non-qualified stock options
granted June 10, 2014, which vest on the 4th anniversary and are exercisable upon the Company’s stock price closing
at or above $5.00 for at least 30 consecutive trading days after vesting. |
(10) |
Market-based non-qualified stock options
granted June 10, 2014, which vest monthly over 4-years and are exercisable upon the Company’s stock price closing at
or above $3.84 for at least 30 consecutive trading days. |
(11) |
Restricted common stock unit grant on
February 1, 2014, with ¼ vesting yearly over 4 years on February 10, 2015, 2016, 2017, and 2018. |
(12) |
Restricted common stock unit grant on
June 10, 2014, with ¼ vesting yearly over 4 years on June 10, 2015, 2016, 2017, and 2018. |
(13) |
Non-qualified option grant for services
as a member of our Board of Directors. |
(14) |
Restricted common stock unit grants on
February 1, 2013, with 1/4 vesting yearly over 4 years on February 10, 2014, 2015, 2016, and 2017. |
(15) |
The option is subject to a performance
measure as a precondition to exercisability that provides that the option is exercisable only if the closing sales price of
common stock quoted any established stock exchange or market is a minimum of a 25% premium (representing $5.20 per share)
to the exercise price, for a period of at least 30 consecutive trading days. |
(16) |
Effective June 10, 2014, the Company’s
Board of Directors approved the modification of all stock options granted to Dr. Hixson prior to his retirement as an employee
and executive officer and return to service as a non-employee director to extend the exercise period for three years following
Dr. Hixson’s cessation of service as a member of the Board of Directors. This modification was consistent with the exercise
period of stock option grants awarded to the Company’s non-employee directors under the Company’s non-employee
director compensation program. Mr. Hixson’s option life was extended to three years effective upon his retirement date. |
(17) |
In December 2012, the Board of Directors
approved the retroactive amendment of Dr. Hixson’s February 7, 2012 stock option grant to add a performance measure
as a precondition to exercisability which is applicable to 50% of the shares subject to the options. The performance measure
provides that the option is exercisable only if the closing sales price of common stock quoted on any established stock exchange
or market is a minimum of a 25% premium (representing $6.15 per share) to the exercise price, for a period of at least 30
consecutive trading days. |
(18) |
Non-qualified options granted on October
21, 2009 that vested in 12 equal monthly installments commencing September 28, 2009. |
(19) |
Incentive options, vesting over 4 years
with 1/4 vesting May 1, 2010, then in equal monthly installments thereafter. |
(20) |
Non-qualified options, vesting over 4
years with 1/4 vesting May 1, 2010, then in equal monthly installments thereafter. |
(21) |
Restricted common stock unit grant on
November 3, 2014, with ¼ vesting yearly over 4 years on November 3, 2015, 2016, 2017, and 2018. |
(22) |
Incentive options granted October 1,
2010 vesting over 4 years with 1/4 vesting 12 months after the grant date, then equal monthly installments thereafter. |
(23) |
Non-qualified options granted October
1, 2010 vesting over 4 years with 1/4 vesting 12 months after the grant date, then equal monthly installments thereafter. |
(24) |
Restricted common stock unit grant on
February 1, 2014, with total vesting 12 months after the grant date. |
(25) |
Effective June 10, 2014, the Company’s
Board of Directors approved the modification of all outstanding stock options granted to Mr. Maier prior to his retirement
as an employee and executive officer and transition to a consulting role for the Company to extend the exercise period for
one year following Mr. Maier’s cessation of service as a consultant. Mr. Maier’s option life was extended to one
year upon his services terminating. |
(26) |
Non-qualified option grant on October
4, 2010, which was fully-vested upon grant. |
OPTION
EXERCISES AND STOCK VESTED TABLE |
The
following table sets forth certain information regarding the exercise of options to purchase shares of the Company’s common
stock and the vesting of stock awards for the NEOs for the fiscal year ended December 31, 2014.
|
|
|
|
|
|
|
|
|
|
Option
Awards |
Stock
Awards |
Name |
Number
of
Shares
Acquired on
Exercise
(#) |
Value Realized
on Exercise
($) |
Number
of
Shares
Acquired on
Vesting
(#) |
Value Realized
on Vesting
($) |
William
J. Welch
President and Chief
Executive Officer |
— |
|
— |
|
10,938 |
(1)
|
40,798 |
|
Harry
F. Hixson
Former Chief Executive
Officer |
— |
|
— |
|
20,438 |
(2)
|
47,824 |
|
Carolyn
D. Beaver
Senior Vice President
and Chief Financial Officer |
— |
|
— |
|
1,714 |
(2)
|
4,010 |
|
Paul
V. Maier
Former Chief Financial
Officer |
— |
|
— |
|
7,150 |
(2)
|
16,731 |
|
Dirk
van den Boom
Executive Vice
President, Chief Scientific and Strategy Officer |
— |
|
— |
|
9,375 |
(1)
|
34,968 |
|
Robin
Weiner
Senior Vice President,
Corporate Governance and Regulatory Affairs |
— |
|
— |
|
6,500 |
(2)
|
15,210 |
|
Jeffrey
D. Linton
Senior Vice President,
General Counsel and Secretary |
— |
|
— |
|
— |
|
— |
|
Allan
T. Bombard
Former Chief Medical
Officer |
6,667 |
(3) |
25,348 |
|
7,475 |
(2) |
17,491 |
|
(1) |
Represents the vesting on December 10,
2014 of time-based restricted stock unit awards granted on December 10, 2012. |
(2) |
Represents the vesting on February 10,
2014 of time-based restricted stock unit awards granted on February 1, 2013. |
(3) |
Represents the exercise on September
2, 2014 of time-based stock option granted on February 1, 2014. |
We
did not engage in any option re-pricings of our outstanding equity awards during the fiscal year ended December 31, 2014.
We
do not have or sponsor any defined benefit or other actuarial plans.
NON-QUALIFIED
DEFERRED COMPENSATION |
We
have a Deferred Compensation Plan that is intended to comply with the requirements of Section 409A of the Code and the Deferred
Compensation Plan was amended in 2008 in order to comply with legislative changes to the Code.
The
Deferred Compensation Plan is intended to be an unfunded “top hat” plan which is maintained primarily to provide deferred
compensation benefits for our directors and a select group of our “management or highly compensated employees” within
the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
and to therefore be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. The Deferred Compensation Plan is intended
to help build a supplemental source of savings and retirement income through pre-tax deferrals of eligible compensation, which
may include cash director fees, base salary, cash bonus awards, stock unit awards, discretionary cash awards and any other payments
designated by the Deferred Compensation Plan committee as eligible for deferral under the Deferred Compensation Plan from time
to time.
Under
the Deferred Compensation Plan, we provide participants with the opportunity to make annual elections to defer a specified percentage
of up to 100% of their eligible compensation. Elective deferrals of cash compensation are withheld from a participant’s
paycheck and credited to a bookkeeping account established in the name of the participant. The participant is always 100% vested
in his or her own elective cash deferrals and any earnings thereon. Elective deferrals of stock unit awards are credited to a
bookkeeping account established in the name of the participant with respect to an equivalent number of shares of our common stock,
and such credited shares are subject to the same vesting conditions as are applicable to the stock unit award. We may also make
discretionary contributions to participants’ accounts in the future although we do not currently do so. Any discretionary
contributions made by us in the future would be subject to such vesting arrangements as we may determine.
Amounts
contributed to a participant’s account through elective deferrals of cash compensation or through our discretionary contributions
are generally not subject to income tax, and we do not receive a deduction, until they are distributed pursuant to the Deferred
Compensation Plan.
At
the time of deferral, with respect to the allocation of amounts credited to their bookkeeping accounts, participants may select
from a range of phantom investment alternatives that mirror the gains or losses of several different investment funds, including
our common stock. Deferrals of stock unit awards under the Deferred Compensation Plan are automatically allocated to our common
stock fund and may not be allocated to any other fund.
Under
the Deferred Compensation Plan, we will be obligated to deliver on a future date deferred compensation credited to the participant’s
account, adjusted for any positive or negative investment results from the phantom investment alternatives selected by the participant
under the Deferred Compensation Plan (each, an “Obligation” and collectively, the “Obligations”). The
Obligations are unfunded, unsecured general obligations of the Company and rank in parity with other unsecured and unsubordinated
indebtedness of the Company, subject to the claims of our general creditors. The Obligations are not transferable except upon
death of the participant.
Payments
will be distributed in the form of a lump sum payment or in up to ten annual installments upon either termination of service or
a selected specified distribution date or dates, depending upon the election made by the participant at the time of deferral.
If a participant’s service with us terminates prior to the selected specified distribution date or dates, payments will
commence in connection with the termination of service. Payments triggered upon termination of service will generally commence
at termination of service. Payment triggered upon termination of service may also commence in a specified year up to five years
following the date of termination of service in accordance with the participant’s deferral election if the participant has
completed at least five years of service with us at the time of termination. If a participant’s service terminates with
us due to disability or the participant is receiving installment payments and becomes disabled prior to payment of all the installments,
the Obligation will become immediately payable. If the participant’s service terminates with us due to participant’s
death or the participant is receiving installment payments and dies prior to payment of all the installments, the Obligation will
either continue to be paid in accordance with the payment schedule that applied prior to the participant’s death or will
become immediately payable if so specified in accordance with the participant’s deferral election. Any payments made to
specified employees that commence upon a separation from service will be delayed six months in accordance with the requirements
of Section 409A of the Code. Participants may be entitled to receive payments through certain unforeseeable emergency withdrawals.
Payments scheduled to be made under the Deferred Compensation Plan may be otherwise delayed or accelerated only upon the occurrence
of certain specified events that comply with the requirements of Section 409A of the Code.
A
committee appointed by our Board of Directors administers the Deferred Compensation Plan. We can amend or terminate the
Deferred Compensation Plan at any time, but no such action shall unilaterally reduce a participant’s account balance
without his or her consent prior to the date of such action. We may adopt any amendments to the Deferred Compensation Plan
that we deem necessary or appropriate to preserve the intended tax treatment of the Deferred Compensation Plan benefits or to otherwise comply with the
requirements of Section 409A of the Code and related guidance.
BOARD
OF DIRECTOR COMPENSATION
We
currently provide compensation to our non-employee directors for their service on our Board of Directors and on the committees
of our Board of Directors through cash retainers and equity awards in the form of restricted stock or options to purchase shares
of the Company’s common stock. Our non-employee directors may elect, in December of each calendar year, to have a portion
or all of their retainers for the following calendar year paid in cash, restricted stock awards, or stock options. The number
of shares of common stock subject to a restricted stock award is equal to the amount of cash that would have been received but
for the election, divided by the average daily closing market price of the common stock for the month of November. The number
of shares of common stock subject to a stock option award is equal to the dollar equivalent value of a stock option as calculated
using a Black-Scholes option-pricing model, divided into the amount of cash that would have been received but for the election.
The exercise price of the stock option is equal to the fair market value of our common stock on the date of grant. The restricted
stock awards, and stock options are granted on the first trading day of January and vest quarterly over the calendar year subject
to continued service as a non-employee director on the applicable vesting dates.
The
following table sets forth in summary form information concerning the compensation that we paid during the fiscal year ended December
31, 2014 to each of our non-employee directors:
|
|
|
|
|
|
|
|
|
Name |
Fees
Earned or
Paid in Cash
($) |
Option
Awards
($)(1) |
Restricted
Stock Awards
($)(1) |
Total
($) |
|
|
|
|
|
|
|
|
|
Kenneth
Buechler(3) |
— |
|
49,366 |
|
57,998 |
|
107,364 |
|
John
A. Fazio |
60,000 |
|
49,366 |
|
— |
|
109,366 |
|
Myla
Lai-Goldman(3) |
5,250 |
|
49,366 |
|
45,999 |
|
100,615 |
|
Harry
F. Hixon, Jr. |
30,000 |
(2) |
197,410 |
|
91,935 |
|
319,345 |
|
Richard
A. Lerner(3) |
— |
|
49,366 |
|
49,999 |
|
99,365 |
|
Ronald
M. Lindsay |
44,000 |
|
59,368 |
|
— |
|
103,368 |
|
David
Pendarvis(3) |
— |
|
49,366 |
|
60,000 |
|
109,366 |
|
Charles
P. Slacik(4) |
10,500 |
|
74,232 |
|
— |
|
84,732 |
|
(1) |
Represents the full grant date fair value
of option and restricted stock awards for awards granted during 2014 calculated in accordance with FASB ASC Topic 718. |
(2) |
Represents compensation paid to Dr. Hixon
for his service on the Board of Directors after his retirement as an officer and employee. |
(3) |
Dr. Buechler, Dr. Lerner and Mr. Pendarvis
elected to receive 100% of their Board of Directors retainers for 2014 in the form of restricted shares of common stock. Dr.
Lai-Goldman elected to receive $5,250 of her Board of Directors retainer for 2014 paid in cash, with the remaining portion
paid in restricted stock awards. The restricted stock awards vested in four quarterly installments on the last day of each
quarter of the fiscal year. |
(4) |
Mr. Slacik elected to receive $10,500
of his Board of Directors retainer for 2014 paid in cash, with the remaining portion paid in stock options. The stock options
vested in four quarterly installments on the last day of each quarter of the fiscal year. |
|
|
The aggregate number of shares
of the Company’s common stock subject to outstanding options held by each non-employee director as of December 31, 2014
was as follows: Dr. Buechler 181,168 shares; Mr. Fazio 205,959 shares; Dr. Lai-Goldman 80,000 shares; Dr. Lerner 236,274 shares;
Dr. Lindsay 725,516 shares; Mr. Pendarvis 140,000 shares; and Mr. Slacik 146,569 shares. |
STOCK
OWNERSHIP GUIDELINES |
As
described above under “Compensation Policies – Stock Ownership Guidelines,” in December 2012, our Board of Directors
adopted the Ownership Guidelines, which applies to our Chief Executive Officer and each of our non-employee directors. The Ownership
Guidelines provides that our non-employee directors must directly own shares of the Company’s common stock having a value
equal to at least three times the amount of their annual cash retainer, which value is to be determined by multiplying the number
of shares owned by the closing market price of the shares on the date that is five years from the later of the effective date
of the Ownership Guidelines or the date that he or she becomes a director, measured as of the last day of the applicable fiscal
year. Each non-employee director has a period of five years to comply with this requirement; measured from the later of the date
of adoption of the Ownership Guidelines or the date such individual becomes a non-employee director. The Ownership Guidelines
also provides that, until such time as a non-employee director satisfies this requirement, he or she (i) must hold all shares
of common stock received in lieu of cash compensation and 50% of the net shares of common stock received from equity awards and
(ii) will receive at least 25% of his or her annual retainer in shares of the Company’s common stock.
RETAINER
PAYMENTS FOR BOARD OF DIRECTORS AND COMMITTEE SERVICE |
The
Compensation Committee oversaw the compensation of our non-employee directors for 2014. For 2014 annual retainers were paid as
follows:
|
|
|
|
|
|
Type
of payment |
|
Amount |
|
|
|
|
|
|
Annual
retainer for all Directors |
|
$ |
40,000 |
|
|
Additional
annual retainer for the Chairman of the Board |
|
$ |
20,000 |
|
|
Additional
annual retainer for the Chairman of the Audit Committee |
|
$ |
20,000 |
|
|
Additional
annual retainer for Audit Committee Members (non-Chair) |
|
$ |
6,000 |
|
|
Additional
annual retainer for the Chairman of the Compensation Committee |
|
$ |
14,000 |
|
|
Additional
annual retainer for Compensation Committee Members (non-Chair) |
|
$ |
4,000 |
|
|
Additional
annual retainer for the Chairman of the Nominating and Corporate Governance Committee |
|
$ |
9,000 |
|
|
Additional
annual retainer for Nominating and Corporate Governance Committee Members (non-Chair) |
|
$ |
2,000 |
|
|
Additional
annual retainer for the Chairman of the Science Committee |
|
$ |
14,000 |
|
|
Additional
annual retainer for Science Committee Members (non-Chair) |
|
$ |
4,000 |
|
|
Retainer
payments are paid in cash, restricted stock awards or stock options, at the election of each individual director. Our non-employee
directors are also eligible to be reimbursed for their expenses incurred in connection with attendance of our Board of Directors
and committee meetings.
In
June 2014, in connection with their re-election to our Board of Directors, our existing non-employee directors each received an
option to purchase 20,000 shares of the Company’s common stock. These options vest upon the earlier of the first anniversary
of the grant date or the date of the next annual meeting of Stockholders, they have a ten year term, and they are exercisable
for a period of three years following cessation of service as a member of our Board of Directors (subject to the option term).
The
following table sets forth the number of shares of the Company’s common stock subject to the option awards and restricted
stock awards granted to our non-employee directors in 2014:
|
|
|
|
|
Name |
Stock
Options |
Restricted
Stock |
|
|
|
|
|
Kenneth
F. Buechler |
20,000 |
|
24,892 |
|
John
A. Fazio |
20,000 |
|
— |
|
Myla
Lai-Goldman |
20,000 |
|
19,742 |
|
Harry
F. Hixon, Jr. |
20,000 |
|
— |
|
Richard
A. Lerner |
20,000 |
|
21,459 |
|
Ronald
M. Lindsay |
30,000 |
(1) |
— |
|
David
Pendarvis |
20,000 |
|
25,751 |
|
Charles
P. Slacik |
44,864 |
|
— |
|
(1) |
Includes a pro-rata grant of 10,000 stock
options granted to Dr. Lindsay on January 2, 2014 upon his retirement as an employee of the Company. |
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS |
The
following table provides certain information with respect to all of our equity compensation plans in effect as of December 31,
2014.
EQUITY
COMPENSATION PLAN INFORMATION |
|
|
|
|
|
|
|
Plan
Category |
Number
of
securities to be
issued upon exercise
of outstanding
options,
warrants and rights
(a) |
*
Weighted-average
exercise price
of outstanding
options, warrants
and rights
(b) |
Number
of
securities remaining
available for
issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
(c) |
Equity
compensation plans approved by security holders |
12,729,213 |
|
$4.94 |
(1) |
9,760,483 |
(2) |
Equity
compensation plans not approved by security holders(3) |
311,100 |
|
$6.30 |
|
238,900 |
|
|
|
|
|
|
|
|
Total |
13,040,313 |
|
$4.97 |
(1) |
9,999,383 |
|
(1) |
The weighted-average exercise price does
not take into account 1,674,388 shares that may be issued under the outstanding restricted stock units. |
(2) |
Of the 9,760,483 shares available for
issuance, 1,388,809 shares were reserved for issuance under our 1999 Employee Stock Purchase Plan (“ESPP”). |
(3) |
Represents shares issuable under our
New-Hire Incentive Plan, which was approved by our Board of Directors in February 2010. In February 2011, our Board of Directors
increased the share reserve under the New-Hire Incentive Plan by an additional 400,000 shares of common stock. |
RELATED TRANSACTIONS
Our Audit Committee is
responsible for reviewing and approving or ratifying related-persons transactions. A related person is any executive officer, director,
or more than 5% stockholder of the Company, including any of their immediate family members, and any entity owned or controlled
by such persons.
Under our Audit Committee
Charter, where a transaction has been identified as a related-person transaction, management must present information regarding
the proposed related-person transaction to the Audit Committee for consideration and approval or ratification. Our Audit Committee
will generally review the material facts with respect to any such transaction, the interests, direct and indirect, of the related
persons, the benefits to the Company of the transaction and whether any alternative transactions were available. To identify related-person
transactions in advance, the Company relies on information supplied by its executive officers, directors and certain significant
stockholders. In considering related-person transactions, the Audit Committee may take into account the relevant available facts
and circumstances including, but not limited to (a) the risks, costs and benefits to the Company, (b) the impact on a director’s
independence in the event the related person is a director, immediate family member of a director or an entity with which a director
is affiliated, (c) the terms of the transaction, (d) the availability of other sources for comparable services or products and
(e) the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. In the event
a director has an interest in the proposed transaction, the director would recuse himself from the deliberations and approval.
Generally, in determining whether to approve, ratify or reject a related-person transaction, the Audit Committee would look at,
in light of known circumstances, whether the transaction is in, or is not inconsistent with, the best interests of the Company
and its stockholders, as the Audit Committee determines in the good faith exercise of its discretion.
|
CERTAIN RELATED-PERSON
TRANSACTIONS |
We have entered into
employment agreements with certain of our officers. Please see “Employment Contracts” and “Post-Employment Payments”
sections under “Executive Compensation” above.
We have entered into
indemnity agreements with our officers and directors which provide, among other things, that we will indemnify such officer or
director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements
he may be required to pay in actions or proceedings which he is or may be made a party by reason of his position as a director,
officer or other agent of ours, and otherwise to the full extent permitted under Delaware law and our Bylaws.
|
HOUSEHOLDING
OF PROXY MATERIALS |
The SEC has adopted rules
that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability
of Proxy Materials or other annual meeting materials with respect to two or more stockholders sharing the same address by delivering
a single Notice of Internet Availability of Proxy Materials or other annual meeting materials addressed to those stockholders.
This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders
and cost savings for companies.
This year, a number of
brokers with account holders who are Sequenom stockholders will be “householding” the Company’s proxy materials.
A single Notice of Internet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless
contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they
will be “householding” communications to your address, “householding” will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and
would prefer to receive a separate Notice of Internet Availability of Proxy Materials, please notify your broker, bank or other
agent, and direct a written request to Investor Relations, Sequenom, Inc., 3595 John Hopkins Court, San Diego, California 92121
or contact us at (858) 202-9000. Stockholders who currently receive multiple copies of the Notices of Internet Availability of
Proxy Materials at their addresses and would like to request “householding” of their communications should contact
their brokers.
AVAILABLE INFORMATION
A copy of the Company’s
Annual Report to the SEC on Form 10-K for the fiscal year ended December 31, 2014 is available without charge upon written request
to: Investor Relations Department, Sequenom, Inc., 3595 John Hopkins Court, San Diego, California 92121 or by telephone at (858)
202-9000.
The Board of Directors
knows of no other matters that will be presented for consideration at the 2015 Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance
with their best judgment.
|
BY ORDER OF THE BOARD OF DIRECTORS |
|
Chairman of the Board of Directors |
, 2015
SEQUENOM, INC.
PROXY SOLICITED BY THE
BOARD OF DIRECTORS
FOR THE ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD ON ,
2015
The undersigned hereby
appoints William J. Welch, Carolyn D. Beaver and Jeffrey D. Linton, and each of them, as proxies for the undersigned, with full
power of substitution and revocation, to vote all of the shares of stock of Sequenom, Inc. (the “Company”) that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of the Company to be held at the offices of the Company
located at 3595 John Hopkins Court, San Diego, California 92121 on ,
2015 at 9:00 a.m. local time, and at any and all postponements and adjournments thereof, with all powers that the undersigned would
possess if personally present, on the following matters and in accordance with the following instructions, with discretionary authority
as to any other business that may properly come before the meeting.
This proxy, when properly
executed and returned, will be voted in the manner directed herein. If no direction is indicated, this proxy will be voted FOR
all nominees listed in Proposal 1, FOR Proposals 2, 3 and 4, as more specifically described in the proxy statement, and in the
discretion of the proxy holders upon any other business as may properly come before the Annual Meeting of Stockholders or any adjournment
or postponement thereof.
- - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -detach here- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - -
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ALL OF THE NOMINEES FOR DIRECTOR LISTED BELOW.
Proposal 1: |
To elect nine directors to hold office until the 2015 annual meeting of stockholders. |
o |
FOR all nominees listed below (except as marked to the contrary below). |
Nominees: Kenneth
F. Buechler, Myla Lai-Goldman, Richard A. Lerner, Ronald M. Lindsay, Catherine J. Mackey, David Pendarvis, Charles P. Slacik, Dirk
van den Boom, and William J. Welch
o |
WITHHOLD AUTHORITY to vote for each nominee listed below. |
To withhold authority
to vote for any nominee(s) write such nominee(s)’ name(s) below:
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE FOLLOWING PROPOSAL.
Proposal 2: |
To approve an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 185,000,000 to 275,000,000 shares. |
|
|
|
o FOR |
o AGAINST |
o ABSTAIN |
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE FOLLOWING PROPOSAL.
Proposal 3: |
To approve, on an advisory basis, the compensation of the Company’s named executive officers. |
|
|
|
o FOR |
o AGAINST |
o ABSTAIN |
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE FOLLOWING PROPOSAL.
Proposal 4: |
To ratify the selection of Ernst & Young LLP as independent auditors of the Company for its fiscal year ending December 31, 2015. |
|
|
|
o FOR |
o AGAINST |
o ABSTAIN |
Please sign
exactly as your name appears hereon. If the stock is registered in the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their titles. If signer is a corporation, please give full
corporate name and have a duly authorized officer sign, stating title. If signer is a partnership, please sign in partnership name
by authorized person.
PLEASE VOTE, DATE AND PROMPTLY
RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
|
EXHIBIT
A AUDIT COMMITTEE CHARTER: |
SEQUENOM, INC. CHARTER
OF THE AUDIT COMMITTEE
PURPOSE AND POLICY
The primary purpose of
the Audit Committee (the “Committee”) shall be to act on behalf of the Board of Directors (the “Board”)
of Sequenom, Inc. (the “Company”) in fulfilling the Board’s oversight responsibilities with respect
to the Company’s corporate accounting and financial reporting processes, the systems of internal control over financial reporting
and financial disclosure controls and procedures, and audits of financial statements, as well as the quality and integrity of the
Company’s financial statements and reports and the qualifications, independence and performance of the firm or firms of certified
public accountants engaged as the Company’s independent outside auditors (the “Auditors”). The
operation of the Committee shall be subject to the Bylaws of the Company as in effect from time to time and Section 141 of the
Delaware General Corporation Law.
The policy of the Committee,
in discharging these obligations, shall be to maintain and foster an open avenue of communication among the Committee, the Auditors
and the Company’s financial management.
COMPOSITION
The Committee shall consist
of at least three members of the Board of Directors. The members of the Committee shall satisfy the independence and financial
literacy requirements of The Nasdaq Stock Market (“Nasdaq”) applicable to Committee members as in effect
from time to time, when and as required by Nasdaq. At least one member shall satisfy the applicable Nasdaq financial sophistication
requirements (Rule 5605(c)(2)(A)) as in effect from time to time. The members of the Committee shall be appointed by and serve
at the discretion of the Board. Vacancies occurring on the Committee shall be filled by the Board. The Chairman of the Committee
shall be designated by the Board.
MEETINGS AND MINUTES
The Committee shall hold
such regular or special meetings as its members shall deem necessary or appropriate, however such meetings shall occur at least
once per quarter. Minutes of each meeting of the Committee shall be prepared and distributed to each director of the Company and
the Secretary of the Company promptly after each meeting. The Chairman of the Committee shall report to the Board from time to
time, or whenever so requested by the Board.
AUTHORITY
The Committee shall have
authority to appoint, determine compensation for, and at the expense of the Company, retain and oversee the Auditors as set forth
in Section 10A(m)(2) of the Securities Exchange Act of 1934, as amended, and the rules thereunder and otherwise to fulfill its
responsibilities under this charter. The Committee shall have authority to retain and determine compensation for, at the expense
of the Company, special legal, accounting or other advisors or consultants as it deems necessary or appropriate in the performance
of its duties. The Committee shall also have authority to pay, at the expense of the Company, ordinary administrative expenses
that, as determined by the Committee, are necessary or appropriate in carrying out its duties. The Committee shall have full access
to all books, records, facilities and personnel of the Company as deemed necessary or appropriate by any member of the Committee
to discharge his or her responsibilities hereunder. The Committee shall have authority to require that any of the Company’s
personnel, counsel, Auditors or investment bankers, or any other consultant or advisor to the Company attend any meeting of the
Committee or meet with any member of the Committee or any of its special legal, accounting or other advisors and consultants. The
approval of this charter by the Board shall be construed as a delegation of authority to the Committee with respect to the responsibilities
set forth herein.
RESPONSIBILITIES
The Committee shall oversee
the Company’s financial reporting process on behalf of the Board, shall have direct responsibility for the appointment, compensation,
retention and oversight of the work of the Auditors, who shall report directly and be accountable to the Committee. The Committee’s
functions and procedures should remain flexible to address changing circumstances most effectively. To implement the Committee’s
purpose and policy, the Committee shall be charged with the following functions and processes with the understanding, however,
that the Committee may supplement or (except as otherwise required by applicable laws or rules) deviate from these activities as
appropriate under the circumstances:
1. To evaluate
the performance of the Auditors, to assess their qualifications (including their internal quality control procedures and any material
issues raised by that firm’s most recent internal quality control review or any investigations by regulatory authorities)
and to determine whether to retain or to terminate the existing Auditors or to appoint and engage new Auditors for the ensuing
year, which retention shall be subject only to ratification by the Company’s stockholders (if the Committee or the Board
elects to submit such retention for ratification by the stockholders).
2. To determine
and approve engagements of the Auditors (prior to commencement of such engagements) to perform all proposed audit, review and attest
services, including the scope of and plans for the audit, the adequacy of staffing, the compensation to be paid to the Auditors
and the negotiation and execution, on behalf of the Company, of the Auditors’ engagement letters, which approval may be pursuant
to preapproval policies and procedures, including the delegation of preapproval authority to one or more Committee members so long
as any such preapproval decisions are presented to the full Committee at the next scheduled meeting.
3. To determine
and approve engagements of the Auditors, prior to commencement of such engagements (unless in compliance with exceptions available
under applicable laws and rules related to immaterial aggregate amounts of services), to perform any proposed permissible non-audit
services, including the scope of the service and the compensation to be paid therefor, which approval may be pursuant to preapproval
policies and procedures established by the Committee consistent with applicable laws and rules, including the delegation of preapproval
authority to one or more Committee members so long as any such preapproval decisions are presented to the full Committee at the
next scheduled meeting.
4. To monitor the
rotation of the partners of the Auditors on the Company’s audit engagement team as required by applicable laws and rules
and to consider periodically and, if deemed appropriate, adopt a policy regarding rotation of auditing firms.
5. Prior to engagement
of any prospective Auditors, and at least annually thereafter, to receive and review written statements from the Auditors delineating
all relationships between the Auditors and the Company or persons in financial oversight roles at the Company that may reasonably
be thought to bear on independence and a letter from the Auditors affirming their independence, to consider and discuss with the
Auditors any potential effects of any such relationships on the independence of the Auditors as well as any compensation or services
that could affect the Auditors’ objectivity and independence, and to assess and to otherwise take appropriate action to oversee
the independence of the Auditors in accordance with the rules of the Public Company Accounting Oversight Board (United States).
6. To pre-approve
employment by the Company of individuals employed or formerly employed by the Company’s Auditors and engaged on the Company’s
account.
7. To review, upon
completion of the audit, the financial statements proposed to be included in the Company’s Annual Report on Form 10-K to
be filed with the Securities and Exchange Commission and to recommend whether or not such financial statements should be so included.
8. To review with
management and the Auditors the results of the annual audit, including the Auditors’ assessment of the quality, not just
acceptability, of accounting principles, the Auditor’s views about qualitative aspects of the Company’s significant
accounting practices, the reasonableness of significant judgments and estimates (including material changes in estimates), any
material audit adjustments proposed by the Auditors and any adjustments proposed but not recorded, the adequacy of the disclosures
in the financial statements and any other matters required to be communicated to the Committee by the Auditors under the standards
of the Public Company Accounting Oversight Board (United States).
9. To review with
management and the Auditors the results of the Auditors’ review of the Company’s quarterly financial statements, prior
to public disclosure of quarterly financial information or filing with the Securities and Exchange Commission of the Company’s
Quarterly Report on Form 10-Q, and any other matters required to be communicated to the Committee by the Auditors under the standards
of the Public Company Accounting Oversight Board (United States).
10. To review with
management and the Auditors, as appropriate, the Company’s disclosures in its periodic reports on Form 10-K and Form 10-Q
to be filed with the Securities and Exchange Commission and approve the filing of each such report.
11. To review with
management and the Auditors, as appropriate, earnings press releases, as well as earnings guidance, if any, to the extent provided
to analysts and ratings agencies.
12. To review with
management and the Auditors significant issues that arise regarding accounting principles and financial statement presentation,
including critical accounting policies and practices, alternative accounting policies available under generally accepted accounting
principles (“GAAP”) related to material items discussed with management and any other significant reporting
issues and judgments that may have a material impact on the Company’s financial statements.
13. To review with
management and the Auditors, as appropriate, the Company’s major financial risk exposures and the steps taken by management
to monitor and control these exposures.
14. To evaluate
the cooperation received by the Auditors during their audit examination, including any significant difficulties with the audit
or any restrictions on the scope of their activities or access to required records, data and information, significant disagreements
with management and management’s response, if any.
15. To review with
the Auditors and, if appropriate, management, any “management” letter issued or, to the extent practicable, proposed
to be issued by the Auditors and management’s response, if any, to such letter, as well as any additional material written
communications between the Auditors and management.
16. To review with
the Auditors communications between the audit team and the firm’s national office with respect to accounting or auditing
issues presented by the engagement.
17. To review with
management and the Auditors any conflicts or disagreements between management and the Auditors regarding financial reporting, accounting
practices or policies and to resolve any such conflicts or disagreements regarding financial reporting.
18. To confer with
management and the Auditors regarding the scope, adequacy and effectiveness of internal control over financial reporting, including
any special audit steps taken in the event of material weaknesses, and to advise the Auditors and the Board of any known or suspected
fraud in connection with financial reporting or accounting practices. To confer with management and the Auditors regarding any
fraud, whether or not material, that includes management or other employees who have any significant role in the Company’s
internal control over financial reporting and any significant changes in internal controls or other factors that could significantly
affect internal controls. To confer with management to ensure that adequate and effective processes are in place to maintain financial
disclosure controls and procedures that ensure that information required to be disclosed by the Company are recorded, processed,
summarized and reported accurately and within the applicable time periods and that such information is accumulated and communicated
to management, as appropriate, to allow for timely decisions regarding required disclosure.
19. Periodically,
to meet in separate sessions with the Auditors and management to discuss any matters that the Committee, the Auditors or management
believe should be discussed privately with the Committee.
20. To consider
and review with management, the Auditors, outside counsel, as appropriate, and, in the judgment of the Committee, such special
counsel, separate accounting firm and other consultants and advisors as the Committee deems appropriate, any significant regulatory
or other legal or accounting initiatives or matters that may have a material impact on the Company’s financial statements,
and any correspondence with regulators or governmental agencies and any published reports that raise material issues regarding
the Company’s financial statements or accounting policies.
21. To establish
and monitor enforcement of procedures for the receipt, retention and treatment of complaints made under the Company’s Open
Door Policy or otherwise received by the Company regarding accounting, internal accounting controls or auditing matters and the
confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
22. To determine
and approve engagements of any registered public accounting firm (in addition to the Auditors) to perform any other audit, review
or attest service, including the compensation to be paid to such firm and the negotiation and execution, on behalf of the Company,
of such firm’s engagement letter, which approval may be pursuant to preapproval policies and procedures, including the delegation
of preapproval authority to one or more Committee members so long as any such preapproval decisions are presented to the full Committee
at the next scheduled meeting, and to regularly evaluate the performance of any such firm and to determine whether to continue
or terminate any such engagement.
23. To review the
results of management’s efforts to monitor compliance with the Company’s programs and policies designed to ensure adherence
to applicable laws and rules, including the Company’s financial disclosure controls and procedures, as well as to its Open
Door Policy and Code of Business Conduct and Ethics, including review and approval of every transaction with a related person that
must be disclosed by the Company pursuant to Item 404(a) of Regulation S-K of the Securities and Exchange Commission.
24. To investigate
any matter brought to the attention of the Committee within the scope of its duties if, in the judgment of the Committee, such
investigation is necessary or appropriate.
25. To prepare
the report required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.
26. To review and
assess the adequacy of this charter annually and recommend any proposed changes to the Board for approval.
27. To report to
the Board with respect to material issues that arise regarding the quality or integrity of the Company’s financial statements,
the performance or independence of the Company’s Auditors, or such other matters as the Committee deems appropriate from
time to time or whenever it shall be called upon to do so.
28. To review,
discuss and assess the Committee’s own performance at least annually.
29. To perform
such other functions and to have such powers as may be necessary or appropriate in the efficient and lawful discharge of the foregoing.
It shall be the responsibility
of management to prepare the Company’s financial statements and periodic reports and the responsibility of the Auditors to
audit the Company’s annual financial statements and to review the Company’s quarterly financial statements. These functions
shall not be the responsibility of the Committee, nor shall it be the Committee’s responsibility to ensure that the financial
statements or periodic reports are complete and accurate, conform to GAAP or otherwise comply with applicable laws.
###
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE
OF INCORPORATION
OF
SEQUENOM, INC.
Sequenom, Inc., a Delaware
corporation (the “Company”), does hereby certify that:
First: The name of the
Company is Sequenom, Inc.
Second: The date on which
the Certificate of Incorporation of the Company was originally filed with the Secretary of State of the State of Delaware is February
14, 1994.
Third: Article IV, Section
A of the Company’s Restated Certificate of Incorporation is hereby amended and restated in its entirety as follows:
A. Classes of Stock. This
corporation is authorized to issue two classes of stock, denominated Common Stock and Preferred Stock. The Common Stock shall have
a par value of $0.001 per share and the Preferred Stock shall have a par value of $0.001 per share. The total number of shares
of Common Stock which the corporation is authorized to issue is Two Hundred Seventy-Five Million (275,000,000), and the total number
of shares of Preferred Stock which the corporation is authorized to issue is five million (5,000,000), which shares of Preferred
Stock shall be undesignated as to series.
Fourth: This Certificate
of Amendment has been duly approved by the Company’s Board of Directors in accordance with the provisions of Sections 141
and 242 of the General Corporation Law of the State of Delaware (the “DGCL”) and was duly adopted by the stockholders
of this Company in accordance with the provisions of Section 242 of the DGCL.
In Witness Whereof, Sequenom,
Inc. has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer as of ,
2015.
Sequenom, Inc.
By:
Name:
Title:
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Sequenom, Inc. (NASDAQ:SQNM)
Historical Stock Chart
From May 2024 to Jun 2024
Sequenom, Inc. (NASDAQ:SQNM)
Historical Stock Chart
From Jun 2023 to Jun 2024