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Name of Nominee or Director
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Age
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Principal
Occupation
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Director
Since
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Class II Director Nominees with term
expiring at the 2012 annual meeting:
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Charles W. Federico(1)(2)(3)
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60
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Former President and Chief Executive
Officer, Orthofix International N.V.; Director, Orthofix International N.V.
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2007
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Maurice R. Ferré, M.D.(4)
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48
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President, Chief Executive Officer and
Chairman, MAKO Surgical Corp.
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2004
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Frederic H. Moll, M.D.(3)
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57
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Chief Executive Officer and Director,
Hansen Medical, Inc.
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2007
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Class III Directors with term expiring at
the 2010 annual meeting:
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Marcelo G. Chao(2)(5)
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42
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Managing Director, The Exxel Group, an
affiliate of MK Investment Company
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2007
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Christopher C. Dewey
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64
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Vice Chairman, National Holdings Corporation
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2004
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John J. Savarese, M.D.
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40
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Managing Director, Montreux Equity Partners
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2008
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Class I Directors with term expiring at the
2011 annual meeting:
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S. Morry Blumenfeld, Ph.D.(5)
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71
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Founder, Meditech Advisors LLC and Meditech
Advisors Management LLC
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2005
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John G. Freund, M.D.
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55
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Managing Director of Skyline Ventures
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2008
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William D. Pruitt(2)(3)
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67
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President, Pruitt Enterprises, LP
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2008
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Table of Contents
The
principal occupations and positions for at least the past five years of our
directors and director nominees are described below. There are no family
relationships among any of our directors or executive officers.
Class
II Director Nominees for Election for a Three-Year Term Expiring at the 2012
Annual Meeting of Stockholders
Charles
W. Federico
,
our lead director, has served as one of our directors since June 2007.
From 2001 to April 2006, Mr. Federico served as President and Chief
Executive Officer of Orthofix International N.V., a global diversified medical
device company, and, from 1996 to 2001, President of Orthofix Inc. From 1985 to
1996, Mr. Federico was President of Smith & Nephew Endoscopy
(formerly Dyonics, Inc.). From 1981 to 1985, Mr. Federico served as Vice
President of Dyonics. Previously, he held management and marketing positions
with General Foods Corporation, Puritan Bennett Corporation and LSE
Corporation. Mr. Federico is a Trustee of the Orthopedic Research and
Education Foundation and a director of Orthofix International N.V.,
SRI/Surgical Express, Inc., BioMimetic Therapeutics, Inc., Power Medical Innovations, and Alveolus, Inc.
Mr. Federico holds a B.S. in marketing from Fordham University.
Maurice
R. Ferré, M.D.
our founding President, Chief
Executive Officer and current Chairman of our board of directors, has been with
us since our inception in November 2004. In May 2004, Dr. Ferré became
Chief Executive Officer of Z-KAT, Inc., a surgical navigation medical device
company that incorporated MAKO Surgical Corp. In 1993, Dr. Ferré founded
Visualization Technology, Inc., a medical device company for image-guided
surgery, and served as its Chief Executive Officer until the company was
acquired by GE Healthcare in April 2002. Dr. Ferré served as Vice
President of Strategic Development at GE Navigation, a division of GE
Healthcare, from April 2002 until April 2004. Dr. Ferré holds a B.A. in
biology from Bennington College and an M.P.H. and an M.D. from Boston
University.
Frederic
H. Moll, M.D.
has served as one of our directors
since August 2007. In September 2002, Dr. Moll co-founded Hansen Medical,
Inc., a medical robotics company, and serves as its Chief Executive Officer and
is a member of its board of directors. In November 1995, Dr. Moll
co-founded Intuitive Surgical, Inc., a medical device company, and served as
its first Chief Executive Officer and later, its Vice President and Medical
Director until September 2003. In 1989, Dr. Moll co-founded Origin
Medsystems, Inc., a medical device company, which later became an operating
company within Guidant Corporation, a medical device company, following its
acquisition by Eli Lilly in 1992. Dr. Moll served as Medical Director of
Guidant’s surgical device division until November 1995. Dr. Moll holds a
B.A. from the University of California, Berkeley, an M.S. from Stanford
University and an M.D. from the University of Washington School of Medicine.
Class
III Directors with a Term Expiring at the 2010 Annual Meeting of Stockholders
Marcelo
G. Chao
has
served as one of our directors since February 2007. He is a Managing Director
at The Exxel Group, an affiliate of MK Investment Company, which he joined in March
2000. From 1995 to 2000, Mr. Chao was a Partner at Hermes Management
Consulting. From 1992 to 1995, Mr. Chao was Vice President of Citibank in
Buenos Aires, Argentina, and from 1991 to 1992 he worked for
McKinsey & Company. Currently, Mr. Chao serves on the board of
directors of several Exxel Group portfolio companies. Between November 2002 and
December 2006, Mr. Chao also served on the Latin American and Caribbean
board of MasterCard International. Mr. Chao holds a B.S. in business
administration from Universidad Católica Argentina and is a Certified Public
Accountant.
Christopher
C. Dewey
has
served as one of our directors since our inception in November 2004. Since
January 2007, Mr. Dewey has served as Vice Chairman of the board of
directors of National Holdings Corporation, a financial services organization
operating through its subsidiary, National Securities. From December 2006 to
December 2008, Mr. Dewey served as acting Chief Executive Officer and
director of Z-KAT, Inc. Mr. Dewey has over 25 years of experience in
finance, most recently as Executive Vice President of Jefferies &
Company, Inc., the principal operating subsidiary of Jeffries Group, Inc., a
securities and investment banking firm, from 1994 to December 2006.
Mr. Dewey co-founded several companies, including Robotic Ventures LLC,
Bonds Direct
10
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Securities LLC and Cannon Group Inc., a motion picture company that
went public in 1972. Mr. Dewey holds an M.B.A. from The Wharton School of
the University of Pennsylvania.
John
J. Savarese, M.D.
has served as one of our
directors since October 2008. Since June 2003, Dr. Savarese has been a Managing
Director at Montreux Equity Partners, a life sciences investment firm. Prior to
joining Montreux Equity Partners, Dr. Savarese served as Director of Business
Development and Marketing at NeurogesX and worked in the Life Sciences
Investment Banking division of Credit Suisse First Boston. Currently, Dr.
Savarese serves on the board of directors of several medical device and pharmaceutical
companies. Dr. Savarese’s clinical experience in Orthopedic and General Surgery
was gained at the Cornell Medical College/Hospital for Special Surgery. Dr.
Savarese holds an M.B.A from Stanford University and an M.D. from Duke
University Medical School. Montreux Equity Partners was one of the investors in
our private placement discussed below under “Certain Relationships and Related
Person Transactions – Recent Sale of Securities.” In connection with the
private placement, we agreed that Montreux Equity Partners was entitled to
appoint one representative to our board of directors so long as its affiliated
funds hold at least 25% of the shares of our common stock that they purchased
in the private placement. Dr. Savarese was appointed to our board pursuant to
that agreement.
Class
I Directors with a Term Expiring at the 2011 Annual Meeting of Stockholders
S. Morry
Blumenfeld, Ph.D.
has served as one of our directors since July 2005. In 2003,
Dr. Blumenfeld founded Meditech Advisors LLC and Meditech Advisors
Management LLC, a member of Ziegler MediTech Partners, LLC, the sole general
partner of Ziegler Meditech Equity Partners, LP, a private equity fund
specializing in investments in healthcare and medical device companies. In April
2002, Dr. Blumenfeld retired as Managing Director of GE Medical Systems in
Israel after more than 34 years with the company, where he helped initiate
both GE’s CT and MR business lines. Currently, he serves on the board of
directors of a number of medical device and technology companies, including
Oridion Systems Ltd. and several private companies. Dr. Blumenfeld holds a
B.A.Sc in engineering physics and a Ph.D. in molecular physics from the
University of Toronto.
John
G. Freund, M.D.
has served as one of our directors since October 2008. Since 1997, Dr.
Freund has been a Managing Director of Skyline Ventures, a venture capital firm. From September 1995 to September 1997,
Dr. Freund was a Managing Director in the private equity group at
Chancellor Capital Management, an investment firm. In 1995, Dr. Freund
co-founded Intuitive Surgical, Inc., a medical device company, and served on
Intuitive’s board of directors until March 2000. From June 1988 to December
1994, Dr. Freund held various positions at Acuson Corporation, a medical device
company, including Executive Vice President. From 1982 to 1988, Dr. Freund
was at Morgan Stanley & Co., Inc., an investment banking firm, where
he was the co-founder of the Healthcare Group in the Corporate Finance Department
and later was the original healthcare partner at Morgan Stanley Venture
Partners, a venture capital management firm affiliated with Morgan Stanley. Dr.
Freund also serves on the board of directors of Hansen Medical, Inc., XenoPort
Inc., MAP Pharmaceuticals, Inc., the New Economy Fund, and the SmallCap World
Fund, as well as a number of private companies. Dr. Freund received an M.D.
from Harvard Medical School in 1980 and an M.B.A. from Harvard Business School
in 1982, where he was a Baker Scholar. Skyline Ventures was one of the
investors in our private placement discussed below under “Certain Relationships
and Related Person Transactions – Recent Sale of Securities.” In connection
with the private placement, we agreed that Skyline Ventures was entitled to
appoint one representative to our board of directors so long as its affiliated
funds hold at least 25% of the shares of our common stock that they purchased
in the private placement. Dr. Freund was appointed to our board pursuant to
that agreement.
William
D. Pruitt
has served as one of our directors since June 2008. Mr. Pruitt is president of
Pruitt Enterprises, LP. Mr. Pruitt has been a board member of The PBSJ
Corporation, an international professional services firm, since July 2005 and
has been the chairman of the PBSJ audit committee since 2003. Mr. Pruitt served
as chairman of the audit committee of KOS Pharmaceuticals, Inc., a fully
integrated specialty pharmaceutical company, until its sale in 2006. He was
also chairman of the audit committee for Adjoined Consulting, Inc., a
full-service management consulting firm, until it was merged into Kanbay
International, a
11
Table of Contents
global consulting firm, in February 2006.
From 2002 to 2004, Mr. Pruitt provided market consultancy services to Ernst
& Young LLP, our independent registered public accounting firm. From 1980
to 1999, Mr. Pruitt served as the managing partner for the Florida, Caribbean
and Venezuela operations of the independent auditing firm of Arthur Andersen
LLP. Mr. Pruitt holds a Bachelor of Business Administration from the University
of Miami and is a Certified Public Accountant (inactive).
BOARD OF
DIRECTORS AND CORPORATE GOVERNANCE
INDEPENDENT DIRECTORS
Our
board of directors has determined that nine of the ten directors currently
serving on our board are independent directors under the independence standards
of The NASDAQ Global Market; specifically, Messrs. Brunk, Chao, Dewey, Federico
and Pruitt and Drs. Blumenfeld, Freund, Moll, and Savarese are independent. Mr.
Brunk is retiring from our board of directors when his current term as a
director expires at the annual meeting of stockholders.
In
making determinations of independence with respect to Messrs. Brunk and Chao
and Drs. Blumenfeld, Freund, and Savarese, each of whom is affiliated with a
principal stockholder of our company, our board considered the relationship
between the director and the respective stockholder and determined, in each
case, that the relationship was not relevant to the director’s independence.
In
accordance with the requirements of NASDAQ, our independent directors meet in
regularly convened executive sessions at least twice per year, in conjunction
with regularly scheduled board meetings.
LEAD DIRECTOR
In March
2009, our board established the position of Lead Director and appointed Charles
Federico to serve as Lead Director, initially until the annual meeting of
stockholders and, contingent upon Mr. Federico’s reelection to the board at the
2009 annual meeting, through the 2012 annual meeting of stockholders. The Lead
Director shall work closely with the Chairman of the Board and our Chief
Executive Officer to assure that our board is able to more effectively and
pro-actively execute its fundamental duties on an ongoing basis and enhance our
board’s oversight and monitoring obligations to stockholders.
MEETINGS AND ATTENDANCE
During
2008, our board of directors held twenty-two meetings. Each of our incumbent directors,
except Drs. Blumenfeld and Moll, attended at least 75% of the aggregate number
of meetings of the board and the committees on which the director served, which
were held during such director’s term of office. None of the members of the
standing committees of our board of directors, described in detail below, was an officer or employee of our
company.
We
have no policy requiring our directors to attend our annual stockholders
meetings; however, our corporate governance guidelines provide that directors
should make every effort to attend all annual and special meetings of
stockholders, as well as meetings of our board of directors and meetings of the
board committees of which they are members. All of our directors attended our
2008 annual stockholders meeting.
BOARD COMMITTEES AND MEETINGS
Our board
of directors has a standing audit committee, compensation committee, and
corporate governance and nominating committee. The board has adopted, and may
amend from time to time, a written charter for each of the committees. We
maintain a website at
www
.
makosurgical
.
com
and make available on
that website, free of
12
Table of Contents
charge, copies of each of the committee charters. We are not including
the information contained on or available through our website as a part of, or
incorporating such information by reference into, this proxy statement.
We provide below information on the standing committees of our board
of directors, including the membership, functions and number of meetings of
each committee held in 2008. As part of its standard practices and in light of Mr. Brunk’s resignation from our board,
at our board’s annual meeting, immediately following the 2009 annual stockholders meeting, our board
of directors will reconstitute the membership of each committee.
Audit
Committee
Our audit
committee consists of Messrs. Brunk, Chao, Federico, and Pruitt, each of
whom our board of directors has determined to be an independent director. Our
board of directors has determined that each of Messrs. Brunk and Pruitt
qualifies as an audit committee financial expert within the meaning of SEC
regulations and the NASDAQ listing standards. In making this determination, our
board considered the nature and scope of experience that Messrs. Brunk and
Pruitt have previously had with reporting companies. The audit committee held
seventeen meetings in 2008.
Mr. Pruitt
currently serves as the chair of the audit committee. Mr. Brunk served as the
chair of the audit committee until March 26, 2009. The functions of this
committee include, among other things:
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•
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Overseeing the audit and other services of our independent registered
public accounting firm and being directly responsible for the appointment,
compensation, retention and oversight of the independent registered public
accounting firm, who will report directly to the audit committee;
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•
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Reviewing and pre-approving the engagement of our independent
registered public accounting firm to perform audit services and any
permissible non-audit services;
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•
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Overseeing compliance with the requirements of Section 404 of
the Sarbanes-Oxley Act of 2002, as required;
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•
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Reviewing our annual and quarterly financial statements and reports
and discussing the financial statements and reports with our independent
registered public accounting firm and management;
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•
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Reviewing and approving all related person transactions;
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•
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Reviewing with our independent registered public accounting firm and
management significant issues that may arise regarding accounting principles
and financial statement presentation, as well as matters concerning the
scope, adequacy and effectiveness of our internal controls over financial
reporting;
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•
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Establishing procedures for the receipt, retention and treatment of
complaints received by us regarding internal control over financial reporting,
accounting or auditing matters; and
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•
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Preparing the audit committee report for inclusion in our proxy
statement for our annual meeting.
|
Both our
independent registered public accounting firm and management periodically meet
privately with our audit committee.
Compensation
Committee
Our
compensation committee consists of Dr. Blumenfeld and Messrs. Brunk and Chao,
each of whom our board has determined to be an independent director. Each
member of our compensation committee is a non-employee director, as defined in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, and an outside director, as defined pursuant to Section 162(m) of
the Internal Revenue Code of 1986. The compensation committee held six meetings
in 2008.
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Table of Contents
Dr. Blumenfeld
serves as the chair of the compensation committee. The functions of this
committee include, among other things:
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•
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Determining the compensation and other terms of employment of our
Chief Executive Officer and other executive officers and reviewing and
approving corporate performance goals and objectives relevant to such
compensation;
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•
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Administering and implementing our incentive compensation plans and
equity-based plans, including approving option grants, restricted stock and
other awards;
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•
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Evaluating and recommending to our board of directors the equity
incentive compensation plans, equity-based plans and similar programs
advisable for us, as well as modifications or terminations of existing plans
and programs;
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•
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Reviewing and approving the terms of any employment-related
agreements, severance arrangements, change-in-control and similar
agreements/provision and any amendments, supplements or waivers to the
foregoing agreements with our Chief Executive Officer and other executive
officers;
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•
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Reviewing and discussing the Compensation Discussion and
Analysis required in our annual report and proxy statement with management
and determining whether to recommend to the board the inclusion of the
Compensation Discussion and Analysis in the annual report or
proxy; and
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•
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Preparing the compensation committee report for inclusion in our
proxy statement for our annual meeting.
|
In making
decisions concerning executive compensation, the compensation committee
typically considers, but is not required to accept, the recommendations of Dr.
Ferré, our President and Chief Executive Officer, regarding the performance and
proposed base salary, bonus target and equity awards for our named executive
officers, including Dr. Ferré. The compensation committee may also request the
assistance of Mr. LaPorte, our Chief Financial Officer, and our human resources
department in evaluating the financial, accounting and tax implications of
various compensation awards paid to the named executive officers. Neither Mr.
LaPorte nor our human resources employees, however, recommend or determine the
amounts or types of compensation paid to the named executive officers. Dr.
Ferré and certain of our other executive officers may attend compensation
committee meetings, as requested by the chairman of the compensation committee
and depending on the issues to be discussed by the compensation committee, but
none of these executive officers, including Dr. Ferré, attends any portion of
the compensation committee meetings during which his compensation is discussed
and approved.
In the
third quarter of 2007, as we discuss below under “Compensation Discussion and
Analysis,” the compensation committee retained Radford Surveys and Consulting
to conduct a review of the pre-IPO equity ownership levels for senior
management at other pre-IPO medical device and biotechnology companies in later
stages of financing, and provide an analysis of how the current equity holdings
of our senior management, including each of the then named executive officers,
compared to the median of the surveyed companies. In 2008, the compensation
committee did not engage a compensation consultant in making decisions
concerning executive compensation.
Additional
information regarding the compensation committee and our policies and
procedures regarding executive compensation, including the role of executive
officers and compensation consultants in recommending executive compensation, is
provided below under “Compensation Discussion and Analysis.”
14
Table of Contents
Corporate Governance and Nominating Committee
Our
corporate governance and nominating committee consists of Messrs. Brunk
and Pruitt and Dr. Moll, each of whom our board has determined to be an
independent director. The corporate governance and nominating committee held
two meetings in 2008.
Mr. Brunk
serves as the chair of the corporate governance and nominating committee. The
functions of this committee include, among other things:
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•
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Evaluating director performance on the board and applicable
committees of the board;
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•
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Interviewing, evaluating, nominating and recommending individuals for
membership on our board of directors;
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•
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Evaluating nominations by stockholders of candidates for election to
our board;
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•
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Reviewing and recommending to our board of directors any amendments
to our corporate governance documents; and
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•
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Making recommendations to the board regarding management succession
planning.
|
NOMINATION PROCESS
Under our
corporate governance guidelines, the corporate governance and nominating
committee is responsible for identifying and recommending to our board of
directors qualified candidates for board membership. In considering potential
candidates for board membership, the corporate governance and nominating
committee considers the entirety of each candidate’s credentials.
Qualifications for consideration as a director nominee may vary according to
the particular areas of expertise being sought as a complement to the existing
composition of the board. However, at a minimum, candidates for the board must
possess:
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•
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high personal and professional ethics and integrity;
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•
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an ability to exercise sound judgment;
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•
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an ability to make independent analytical inquiries;
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•
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a willingness and ability to devote adequate time and resources to
diligently perform board duties; and
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•
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appropriate and relevant business experience and acumen.
|
In addition
to the aforementioned minimum qualifications, the corporate governance and
nominating committee may take into account other factors when considering
whether to nominate a particular person. These factors include:
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•
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whether the person possesses specific industry expertise and
familiarity with general issues affecting our business;
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•
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whether the person’s nomination and election would enable our board
to have a member that qualifies as an “audit committee financial expert” as
this term is defined by the SEC in Item 407 of Regulation S-K, as may be
amended;
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•
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whether the person would qualify as an independent director;
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15
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the importance of continuity of the existing composition of the
board; and
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•
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the importance of diversified board membership, in terms of both the
individuals involved and their various experiences and areas of expertise.
|
A director
candidate should have expertise, skills, knowledge and experience that, when
taken together with that of other board members, will lead to a board of
directors that is effective, collegial and responsive to our needs.
The
corporate governance and nominating committee may seek to identify director
candidates based on input provided by a number of sources, including (i)
committee members, (ii) our other directors, (iii) our stockholders, (iv) our
Chief Executive Officer and (v) third parties. The corporate governance and
nominating committee also has the authority to consult with or retain advisors
or search firms to assist in the identification of qualified director
candidates.
The
corporate governance and nominating committee gives appropriate consideration
to candidates for board membership recommended for nomination by stockholders
and evaluates such candidates in the same manner as other candidates identified
to the committee. Stockholders who wish to nominate director candidates for
election by stockholders at the annual meeting may do so in the manner
disclosed in the Questions and Answers section of this proxy statement in
accordance with the provisions of our bylaws. Members of the corporate
governance and nominating committee will discuss and evaluate possible
candidates in detail prior to recommending them to the board.
The
corporate governance and nominating committee is also responsible for initially
assessing whether a candidate would be an independent director. Our board of
directors, taking into consideration the recommendations of the corporate
governance and nominating committee, is responsible for selecting the nominees
for election to the board by the stockholders and for appointing directors to
the board to fill vacancies and newly created directorships, with primary
emphasis on the criteria set forth above. The board, taking into consideration
the assessment of the corporate governance and nominating committee, also
determines whether a nominee or appointee would be an independent director.
CORPORATE GOVERNANCE GUIDELINES AND CODE OF
BUSINESS CONDUCT AND ETHICS
Our board
has adopted a Code of Business Conduct and Ethics applicable to all of our
directors, officers, and employees, including, without limitation, our
principal executive officer, principal financial officer, controller, and
persons performing similar functions. In addition, our board also has adopted
Corporate Governance Guidelines to assist our board in exercising its duties.
The Code of Business Conduct and Ethics and our Corporate Governance Guidelines
are available, free of charge, on the Investor Relations section our website at
www
.
makosurgical
.
com
.
We intend to satisfy the disclosure requirement under Item 5.05 of
Form 8-K regarding any waivers from or amendments to any provision of the
Code of Business Conduct and Ethics by disclosing such information on the same
website. We are not including the information contained on or available through
our website as a part of, or incorporating such information by reference into,
this proxy statement.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
You can
contact our board of directors to provide comments, to report concerns, or to ask
a question, at the following address: Corporate Secretary, MAKO Surgical Corp.,
2555 Davie Road, Fort Lauderdale, Florida, 33317. You may submit your concern
anonymously or confidentially by postal mail. You may also indicate whether you
are a stockholder, customer, supplier or other interested party. Communications
are distributed to the board of directors, or to any individual director or
directors as appropriate, depending on the facts and
16
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circumstances outlined in the communication. In that regard, our board
of directors has requested that certain items that are unrelated to the duties
and responsibilities of the board should be excluded, such as:
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Product complaints
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•
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Product inquiries
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•
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New product suggestions
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Resumes and other forms of job inquiries
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•
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Surveys
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•
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Business solicitations or advertisements
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In
addition, material that is unduly hostile, threatening, illegal or similarly
unsuitable will be excluded, with the provision that any communication that is
filtered out must be made available to any non-management director upon
request.
You may
also communicate online with our board of directors as a group by visiting the
Investor Relations section of our website at
www.makosurgical.com
.
CERTAIN RELATIONSHIPS
AND RELATED PERSON TRANSACTIONS
POLICIES AND PROCEDURES FOR RELATED PERSON
TRANSACTIONS
We have
adopted a related person transactions policy pursuant to which our executive
officers, directors and principal stockholders, including their immediate
family members, are not permitted to enter into a related person transaction
with us without the consent of our audit committee, other independent committee
of our board of directors, or the full board. Any request for us to enter into
a transaction with an executive officer, director, principal stockholder or any
of such person’s immediate family members in which the amount involved exceeds
$120,000 must be presented to our audit committee for review, consideration and
approval. All of our directors, executive officers and employees are required
to report to our audit committee any such related person transaction. In
approving or rejecting the proposed agreement, our audit committee shall take
into account, among other factors it deems appropriate, whether the proposed
related person transaction is on terms no less favorable than terms generally
available to an unaffiliated third party under the same or similar
circumstances, the extent of the person’s interest in the transaction and, if
applicable, the impact on a director’s independence. After consideration of
these and other factors, the audit committee may approve or reject the
transaction. Under the policy, if we should discover related person
transactions that have not been approved, the audit committee will be notified
and will determine the appropriate action, including ratification, rescission
or amendment of the transaction.
RECENT SALE OF SECURITIES
In October
2008, we entered into a Securities Purchase Agreement, or Purchase Agreement,
for a private placement of up to $60.2 million, with initial gross proceeds of
approximately $40.2 million, which we closed on October 31, 2008, and
conditional access to an additional $20 million, which we refer to as the
Second Closing. The private placement resulted in net proceeds of approximately
$39.7 million, after expenses of approximately $469,000. In connection with the
private placement, we issued and sold to the participating investors 6,451,613
shares of our common stock at a purchase price of $6.20 per share and warrants, at a purchase price of $0.125 per warrant, to
purchase 1,290,323 shares of our common stock at an exercise price of $7.44 per share. We refer to these warrants
as the First Closing Warrants. The First Closing Warrants will become
exercisable 180 days from issuance and have a seven-year term. Subject to our
satisfaction of certain business related milestones before December 31,
2009, we will have the right to require certain participants in the private
placement to purchase an additional $20 million of common stock, or Call
Shares, and warrants to purchase common stock, or Second Closing Warrants. At
the initial closing, the investors that agreed to provide the additional $20
million investment received warrants, or Call Warrants, at a purchase price of $0.125 per warrant, to purchase an
additional 322,581 shares of common stock
17
Table of Contents
at an exercise price of $6.20 per
share. These Call Warrants will not be exercisable until the earlier of the
Second Closing or December 31, 2009, and are subject to forfeiture if the
investors do not participate in the Second Closing, if any.
Set forth
below is information regarding the eleven participating investors, six of whom
were existing stockholders deemed to be affiliates of our company by virtue of
their representation on the board or their board membership. The information
does not necessarily reflect their current ownership.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor
(1)
|
|
Common
Shares
(#)
|
|
First
Closing
Warrants
(#)
|
|
Call
Warrants
(#)
|
|
Total
Warrants
Issued at First Closing
(#)
|
|
Purchase
Price
Shares
($)
|
|
Purchase
Price
First Closing
Warrants
($)
|
|
Purchase
Price Call
Warrants
($)
|
|
Total
Purchase
Price
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alta Partners VIII, LP
|
|
|
1,316,115
|
|
|
263,223
|
|
|
77,305
|
|
|
340,528
|
|
$
|
8,159,913
|
|
$
|
32,903
|
|
$
|
9,663
|
|
$
|
8,202,479
|
|
|
Aperture Capital III, L.P. (2)
|
|
|
322,581
|
|
|
64,516
|
|
|
—
|
|
|
64,516
|
|
$
|
2,000,002
|
|
$
|
8,065
|
|
|
—
|
|
$
|
2,008,067
|
|
|
Christopher C. Dewey (3)
|
|
|
32,258
|
|
|
6,452
|
|
|
—
|
|
|
6,452
|
|
$
|
200,000
|
|
$
|
806
|
|
|
—
|
|
$
|
200,806
|
|
|
Frederic H. Moll(4)
|
|
|
40,323
|
|
|
8,065
|
|
|
—
|
|
|
8,065
|
|
$
|
250,003
|
|
$
|
1,008
|
|
|
—
|
|
$
|
251,011
|
|
|
Lumira Capital I Limited Partnership(5)
|
|
|
119,270
|
|
|
23,854
|
|
|
—
|
|
|
23,854
|
|
$
|
739,474
|
|
$
|
2,982
|
|
|
—
|
|
$
|
742,456
|
|
|
Lumira Capital I Quebec Limited Partnership(5)
|
|
|
42,020
|
|
|
8,404
|
|
|
—
|
|
|
8,404
|
|
$
|
260,524
|
|
$
|
1,051
|
|
|
—
|
|
$
|
261,575
|
|
|
MK Investment Company(6)
|
|
|
80,645
|
|
|
16,129
|
|
|
—
|
|
|
16,129
|
|
$
|
499,999
|
|
$
|
2,016
|
|
|
—
|
|
$
|
502,015
|
|
|
Montreux Equity Partners IV, L.P.
|
|
|
1,623,876
|
|
|
324,775
|
|
|
95,382
|
|
|
420,157
|
|
$
|
10,068,031
|
|
$
|
40,597
|
|
$
|
11,923
|
|
$
|
10,120,551
|
|
|
Montreux IV Associates, L.L.C.
|
|
|
114,695
|
|
|
22,939
|
|
|
6,737
|
|
|
29,676
|
|
$
|
711,109
|
|
$
|
2,867
|
|
$
|
842
|
|
$
|
714,818
|
|
|
Skyline Venture Partners V, L.P.
|
|
|
2,437,249
|
|
|
487,450
|
|
|
143,157
|
|
|
630,607
|
|
$
|
15,110,944
|
|
$
|
60,931
|
|
$
|
17,895
|
|
$
|
15,189,770
|
|
|
Ziegler Meditech Equity Partners(7)
|
|
|
322,581
|
|
|
64,516
|
|
|
—
|
|
|
64,516
|
|
$
|
2,000,002
|
|
$
|
8,065
|
|
|
—
|
|
$
|
2,008,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,451,613
|
|
|
1,290,323
|
|
|
322,581
|
|
|
1,612,904
|
|
$
|
40,000,001
|
|
$
|
161,291
|
|
$
|
40,323
|
|
$
|
40,201,615
|
|
|
|
|
|
|
|
(1)
|
See the section of this proxy entitled “Principal Stockholders” for
more detail on shares beneficially owned by these investors.
|
|
|
|
|
(2)
|
Aperture Capital III, L.P. was an existing stockholder of our
company.
|
|
|
|
|
(3)
|
Mr. Dewey was an existing stockholder and is a member of our board of
directors.
|
|
|
|
|
(4)
|
Dr. Moll was an existing stockholder and is a member of our board of
directors.
|
|
|
|
|
(5)
|
Lumira Capital I Limited Partnership and Lumira Capital I Quebec
Limited Partnership were existing stockholders and are represented on our
board of directors by Gerald A. Brunk.
|
|
|
|
|
(6)
|
MK Investment Company was an existing stockholder and is represented
on the board of directors by Marcelo G. Chao.
|
|
|
|
|
(7)
|
Ziegler Meditech Equity Partners was an existing stockholder and is
affiliated with S. Morry Blumenfeld, Ph.D., one of our directors.
|
As noted
above, each of these investors, other than Alta Partners VIII, LP, Montreux
Equity Partners IV, L.P., Montreux IV Associates, L.L.C. (together with
Montreux Equity Partners IV, L.P., Montreux), and Skyline Venture Partners V,
L.P., or Skyline, was an existing stockholder prior to the private placement.
These existing stockholders participated in the private placement on the same
terms as the other purchasers. The members of the Audit Committee of our board
of directors having no financial interest in the transactions contemplated by
the private placement approved the terms of the private placement and the
participation of these existing stockholders.
18
Table of Contents
In
connection with the private placement, we also entered into (i) an Amendment to
the Second Amended and Restated Registration Rights Agreement, dated as of
February 6, 2007, or Prior Registration Agreement, with the investors in
our company named therein and (ii) Voting Agreements with certain of our
stockholders and investors. In addition, in connection with the private
placement, we agreed that each of Montreux and Skyline were entitled to appoint
one representative to the board of directors so long as each of them and their
respective affiliated funds holds at least 25% of the shares of our common
stock that they purchased in the private placement; accordingly, effective
October 31, 2008, Dr. Freund (Skyline’s representative) and Dr. Savarese
(Montreux’s representative) were appointed to our board of directors.
Pursuant to
the terms of the Purchase Agreement, we filed a registration statement with the
SEC to register the shares of our common stock and the shares of our common
stock issuable upon exercise of the First Closing Warrants, the Call Warrants,
and 4,916,434 shares of our common stock that are the subject of the Prior
Registration Agreement. In addition, we agreed to file a registration statement
with the SEC to register the Call Shares and the shares of our common stock issuable
upon exercise of the Second Closing Warrants within 30 days after the Second
Closing and we agreed to use commercially reasonable efforts to have such
registration statement declared effective within 90 days after the Second
Closing (or 120 days if the registration statement is reviewed by the SEC). If
we do not file the registration statement with the SEC within 30 days after the
Second Closing or such registration statement is not declared effective by the
applicable required date, then we have agreed to pay each investor as
liquidated damages an amount equal to 1.0% of the aggregate purchase price paid
by such investor for each 30 day period thereafter until the registration
statement is either filed with the SEC or declared effective, as the case may
be, up to a total of 6%.
In
addition, we agreed to use commercially reasonable efforts to keep the
registration statement effective until all of the shares of our common stock
issued in connection with the private placement and all of the shares of our
common stock underlying all of the warrants issued in connection with the
private placement have been sold or are eligible for resale under Rule 144
under the Securities Act of 1933, as amended, within a three-month period. If
sales cannot be made under a registration statement after it is declared
effective because we fail to keep such registration statement effective or our
common stock is not listed on the NYSE, NASDAQ or AMEX for 10 consecutive days
or for 30 or more days in a 12-month period, we agreed to pay each investor as
liquidated damages an amount equal to 1.0% of the purchase price paid by the
investor for each share of our common stock purchased in the private placement,
and not yet sold by said investor, for each such 10 consecutive day period or
30 day period, as the case may be, up to a total of 6%. Under the Purchase
Agreement, the maximum amount of liquidated damages payable is limited to 6% of
the aggregate purchase price in the private placement.
We believe
that there has not been any other transaction or series of similar transactions
during 2008, or any currently proposed transaction, to which we were or are to
be a party in which the amount involved exceeds $120,000 and in which any
director, executive officer or principal stockholder, or members of any such
person’s immediate family, had or will have a direct or indirect material
interest, other than compensation described in “Executive Compensation.” We
intend that any such future transactions will be approved by our audit
committee and will be on terms no less favorable to our company than could be
obtained from unaffiliated third parties.
19
Table of Contents
2008 DIRECTOR
COMPENSATION
The
following table sets forth information with respect to the compensation of all
our non-employee directors during 2008. The number of shares set forth in the
footnotes to the table reflects our one-for-3.03 reverse split of our common
stock effected in February 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned or
Paid
in Cash
($)(1)
|
|
Option Awards
($)(2)
|
|
Total
($)
|
|
|
S. Morry
Blumenfeld, Ph.D.
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Gerald A.
Brunk
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Marcelo G.
Chao
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Christopher
C. Dewey
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Charles W.
Federico
|
|
$
|
40,000
|
|
$
|
26,763(3
|
)
|
$
|
66,763
|
|
|
John G.
Freund, M.D.
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Frederic H.
Moll, M.D.
|
|
$
|
25,500
|
|
$
|
21,427(4
|
)
|
$
|
46,927
|
|
|
William D.
Pruitt
|
|
$
|
27,167
|
|
$
|
9,948(5
|
)
|
$
|
37,115
|
|
|
John J.
Savarese, M.D.
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Michael P.
Stansky(6)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
(1)
|
Represents
fees earned in cash in 2008, including an annual retainer of $20,000 prorated
for the length of service during 2008, $1,000 for each board or committee
meeting attended in 2008, and $500 for each telephonic or video board or
committee meeting attended in 2008.
|
|
|
|
|
(2)
|
Amounts
represent the compensation expense recognized by our company during 2008 as
computed in accordance with Statement of Financial Accounting Standards
No. 123 Revised,
Share-Based Payment
,
or FAS 123(R), disregarding any estimated forfeitures relating to
service-based vesting conditions.
|
|
|
|
|
(3)
|
With respect
to Mr. Federico’s option award granted June 5, 2007, the grant date total
fair value of the award, computed in accordance with FAS 123(R), was
$58,816. With respect to the option award to Mr. Federico on
August 24, 2007, the grant date total fair value of the award, computed in
accordance with FAS 123(R), was $21,430. As of December 31, 2008,
Mr. Federico held options exercisable for 13,200 shares, 6,323 of
which had vested and become exercisable.
|
|
|
|
|
(4)
|
With respect
to the option award to Dr. Moll on August 24, 2007, the grant date total
fair value of the award, computed in accordance with FAS 123(R), was
$64,289. As of December 31, 2008, Dr. Moll held options exercisable
for 9,900 shares, 4,399 of which had vested and become exercisable.
|
|
|
|
|
(5)
|
With respect
to the option award to Mr. Pruitt on June 3, 2008, the grant date total
fair value of the award, computed in accordance with FAS 123(R), was
$51,496. As of December 31, 2008, Mr. Pruitt held options
exercisable for 9,900 shares, none of which had vested or become
exercisable.
|
|
|
|
|
(6)
|
Mr. Stansky
served as a director until the 2008 annual meeting of the stockholders held
on June 3, 2008, when his term as director expired.
|
We
reimburse all of our directors for their reasonable out-of-pocket travel
expenses associated with attending board or committee meetings in person. Drs.
Blumenfeld, Freund, and Savarese and Messrs. Brunk, Chao, Dewey, and
Stansky did not receive any compensation for their services on the board of
directors during 2008. Similarly, Dr. Ferré, our only employee director,
does not receive any compensation for his services as a director.
Annual Cash Compensation
Each member
of our board whose directorship did not initially arise in conjunction with either a direct or indirect (through an investing
fund) investment in our company
received an annual retainer of $20,000, a fee of
$1,000 for each board meeting or committee meeting attended in person during
2008, and $500 for each telephonic or video board or committee meeting attended
during 2008. Accordingly, during fiscal year 2008, Dr. Moll and Messrs.
Federico and Pruitt each received an annual retainer of $20,000, a fee of
$1,000 for each board meeting or committee meeting attended in person during
2008, and $500 for each telephonic or video board or committee meeting attended
during 2008. Mr. Pruitt, who joined our board of directors in June 2008,
received a prorated annual retainer. Drs. Blumenfeld,
20
Table of Contents
Ferré, Freund, and Savarese and Messrs. Brunk, Chao, Dewey, and Stanksy
did not receive any compensation in connection with their service on our board
of directors during fiscal year 2008.
Equity Compensation
On a
case-by-case basis, non-employee directors may be entitled to receive options,
in an amount determined by our board of directors or its compensation committee
in its respective discretion, to purchase shares of common stock upon initial
election or appointment to the board of directors. In determining the number of
options granted to a director upon initial election or appointment, the
compensation committee uses its judgment and, consistent with our compensation
objectives, maintains the flexibility necessary to recruit qualified and experienced
directors. Furthermore, certain non-employee directors, specifically Dr. Moll
and Messrs. Federico and Pruitt, are entitled to an annual grant of options to
purchase 3,300 shares of the Company’s common stock for a price per share
equal to the fair market value of our common stock on the day of grant. In each
case, one-third of the option grant vests on the first anniversary of the grant
date with the remaining two-thirds of the option grant vesting ratably over the
ensuing twenty-four months. We
refer to the annual grant as the Anniversary Grant. Until February 2008, all
outstanding options granted to our non-employee directors were issued under our
2004 Stock Incentive Plan. Thereafter, all options granted to our non-employee
directors will be issued under our 2008 Omnibus Incentive Plan.
On April 25, 2008, our
board of directors approved an option award to Mr. Pruitt of 9,900 shares
of our common stock, subject to and effective upon the date of Mr. Pruitt’s
election to the board. On June 3, 2008, following Mr. Pruitt’s election to our
board, Mr. Pruitt was granted an option to purchase 9,900 shares of our
common stock with an exercise price per share of $9.10, which was the closing
price per share of our common stock on the grant date. One-third of the option
grant vests on the first anniversary of Mr. Pruitt’s election to the
board. The remaining two-thirds of the option grant vests ratably over the
ensuing 24 months of Mr. Pruitt’s tenure on our board of directors.
The first
anniversary dates of service for Mr. Federico and Dr. Moll were June 5, 2008
and August 24, 2008, respectively. On January 27, 2009, the compensation
committee approved an Anniversary Grant to each of Mr. Federico and Dr. Moll in
recognition of their first anniversary dates of service in 2008. Accordingly,
on January 27, 2009, each of Mr. Federico and Dr. Moll were granted an option
to purchase 3,300 shares of our common stock with an exercise price per
share of $7.10, which was the closing price per share of our common stock on
the grant date. Each option vests over three years as follows: one-third on the
first anniversary of the grant date and two-thirds ratably over the remaining
twenty-four months.
EXECUTIVE OFFICERS
Our
executive officers, their respective ages as of April 16, 2009, and their
positions with our company are as follows:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Maurice R.
Ferré, M.D.
|
|
48
|
|
President,
Chief Executive Officer and Chairman
|
|
Fritz L.
LaPorte
|
|
39
|
|
Senior Vice
President of Finance and Administration, Chief Financial Officer and
Treasurer
|
|
Rony A.
Abovitz
|
|
38
|
|
Senior Vice
President and Chief Technology Officer
|
|
Ivan
Delevic(1)
|
|
43
|
|
Senior Vice
President of Strategic Marketing and Business Development
|
|
Menashe R.
Frank
|
|
42
|
|
Senior Vice
President, General Counsel and Secretary
|
|
Duncan H.
Moffat
|
|
48
|
|
Senior Vice
President of Operations
|
|
Steven J.
Nunes
|
|
50
|
|
Senior Vice
President of Sales and Marketing
|
21
Table of Contents
|
|
|
|
|
|
|
|
(1)
|
Mr. Delevic joined our company on April 27, 2009.
|
The
principal occupations and positions for at least the past five years of the
executive officers named above are as follows:
Maurice
R. Ferré, M.D.
Please see “Election of Directors”
above.
Fritz
L. LaPorte
, our Senior Vice President of Finance
and Administration, Chief Financial Officer and Treasurer, has been with us
since our inception in November 2004. From 2001 to November 2004,
Mr. LaPorte served as Chief Financial Officer of Z-KAT, Inc. From 1997 to
2000, Mr. LaPorte served as the Director of Finance for Holy Cross
Hospital, Inc., a 580-bed acute care facility in Fort Lauderdale, Florida.
From 1993 to 1997, Mr. LaPorte served as a Senior Auditor in the Assurance
Healthcare Group of Ernst & Young LLP, our independent registered public
accounting firm. Mr. LaPorte holds a B.B.A. in accounting from Florida
Atlantic University and is a Certified Public Accountant.
Rony
A. Abovitz
, our Senior Vice President and Chief
Technology Officer, has been with us since our inception in November 2004.
Mr. Abovitz was a co-founder of Z-KAT, Inc., and from 1997 to November
2004, he held various executive positions, including Chief Executive Officer
and Chief Technology Officer. From 1994 to 1996, Mr. Abovitz worked as a
research and development engineer for Lima Orthopedics, Inc. developing
orthopedic implants. Mr. Abovitz holds a B.S. in mechanical engineering
and an M.S. in biomedical engineering from the University of Miami.
Ivan
Delevic
,
our Senior Vice President of Strategic Marketing and Business Development,
joined our company in April 2009. Beginning in 2007 through April 2009, Mr.
Delevic was a business development consultant to medical device companies through
ATID Group Inc. and IDAT LLC, companies he founded in 2007. From 1996 to 2007,
Mr. Delevic held various positions with General Electric’s healthcare division,
both domestically and internationally, including as General Manager for
Molecular Imaging EMEA, Global Marketing and Sales Manager for Surgical
Navigation, Business Development Manager with GE Healthcare’s Global Business
Development, Six Sigma Leader & Black Belt for Global Functional Imaging,
and Sales Manager for Southeastern Europe. From 1992 to 1996, Mr. Delevic
worked for Johnson & Johnson, Inc. as a Business Manager in Budapest,
Hungary. Mr. Delevic holds a M.B.A. from the Technical University of Budapest
through a joint program with Herriot-Watt University and a M.S. in Electrical
Engineering from the Technical University of Budapest.
Menashe
R. Frank
, our Senior Vice President, General
Counsel and Secretary, has been with us since our inception in November 2004.
From July 2004 to November 2004, Mr. Frank was a legal consultant to
Z-KAT, Inc. Mr. Frank was a corporate associate at the law firm of
Hogan & Hartson LLP from 2001 to June 2004, and the law firm of Baker
& McKenzie from 2000 to 2001. From 1998 to 2000, Mr. Frank served
as Chief Legal Officer for Enticent.com, Inc., a marketing technology
enterprise. He was also an associate in the business finance and restructuring
department of the law firm of Weil, Gotshal & Manges LLP from 1996 to
1998. Mr. Frank holds a B.A. in political science from American University
and a J.D. from the University of Miami School of Law.
Duncan
H. Moffat
, our Senior Vice President of
Operations, has been with us since April 2008. From 2001 to 2008, Mr. Moffat
served as Vice President of Operations for the nuclear medicine business of Philips Medical Systems,
a worldwide manufacturer of medical imaging equipment. From 1998 to 2001, Mr.
Moffat served as Vice President of Operations for Lumisys, a start-up company
providing digital x-ray products that was sold to Eastman Kodak in 2001.
Beginning in 1982, Mr. Moffat held various positions with the Lucas companies,
first with two Lucas affiliates in England, followed by a position as project
manager with Lucas Control Systems Products, Hampton, Virginia, and then by a
position as Director of Operations with Lucas Deeco Systems, Hayward,
California, from 1995 to 1998. Mr. Moffat holds a Bachelor of Science in
Electrical and Electronic Engineering, Strathclyde University, Glasgow,
Scotland.
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Steven
J. Nunes
,
our
Senior Vice President of Sales and Marketing, has been with us since May 2006.
From September 2002 to May 2006, Mr. Nunes served as Director of
Commercialization for GE Healthcare, a unit of General Electric Company, a
diversified technology, media, and financial services company. From 1996 to
April 2002, Mr. Nunes held various positions, including Vice President of
Sales and Marketing, at Visualization Technology, Inc., a medical device
company for image-guided surgery, which was later acquired by GE Healthcare. In
1990, Mr. Nunes established SJN Medical Inc., an independent
distributor of surgical endoscopy products, and served as its President until
the company was acquired in 1996. Mr. Nunes holds a B.A. in broadcast
journalism from the University of Massachusetts-Amherst.
COMPENSATION DISCUSSION AND ANALYSIS
INTRODUCTION
The
purpose of this Compensation Discussion and Analysis is to provide material
information about the compensation of our executive officers named below under
the caption, “Executive Compensation—2008, 2007 and 2006 Summary Compensation
Table,” whom we refer to as our named executive officers. In this section, we
provide an analysis and explanation of our executive compensation program and
the compensation derived by our named executive officers from this program. All
share numbers in this section and the tables that follow reflect our one-for
3.03 reverse split of our common stock effected in February 2008.
EXECUTIVE
SUMMARY
This
Compensation Discussion and Analysis outlines our executive compensation
program. In particular, it explains our compensation philosophy, which is to provide
performance-oriented incentives that fairly compensate our executive officers
and enable us to attract, retain and motivate executives with outstanding
ability and potential. We then discuss the elements of our executive
compensation program including base salary, cash bonuses, and long-term equity
compensation. This Compensation Discussion and Analysis also provides a summary of the key
provisions of our employments agreements with each of our named executive
officers, including the change in control arrangements.
COMPENSATION
PHILOSOPHY AND OBJECTIVES
Our
compensation philosophy is to offer our executive officers, including the named
executive officers, compensation and benefits that are competitive and that
meet our goals of attracting, motivating, and retaining highly skilled
management so that we can achieve our financial and strategic objectives to
create long-term value for our stockholders. We believe that compensation
should be determined within a framework that is intended to reward individual
contribution and strong financial performance by our company. Within this
overall philosophy, our objectives are to:
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offer a total compensation program that takes into consideration
competitive market requirements and strategic business needs;
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•
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determine total compensation based on our company’s overall financial
performance as well as individual contributions; and
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align the financial interests of our executive officers with those of
our stockholders.
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Our board
of directors has delegated to its compensation committee the authority to make
all final decisions regarding the compensation of our named executive officers.
In making such decisions, the compensation committee considers the various
factors described below in this Compensation Discussion and Analysis with
respect to particular compensation elements. In addition, the compensation
committee typically considers, but is not required to accept, the
recommendations of Dr. Ferré, our President and Chief Executive Officer,
regarding
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the performance and proposed base salary, bonus target and equity
awards for our named executive officers, including Dr. Ferré. The compensation
committee may also request the assistance of Mr. LaPorte, our Chief
Financial Officer, and our human resources department in evaluating the
financial, accounting and tax implications of various compensation awards paid
to the named executive officers. Neither Mr. LaPorte nor our human
resources employees, however, recommend or determine the amounts or types of
compensation paid to the named executive officers. Dr. Ferré and certain
of our other executive officers may attend compensation committee meetings, as
requested by the chairman of the compensation committee and depending on the
issues to be discussed by the compensation committee, but none of these
executive officers, including Dr. Ferré, attends any portion of the
compensation committee meetings during which his compensation is discussed and
approved.
The
compensation committee historically has not performed competitive reviews of
our compensation programs with those of similarly-situated companies, nor have
we engaged in formal “benchmarking” of compensation paid to our named executive
officers. The compensation committee did not engage in such benchmarking in
2008. In the third quarter
of 2007, however, the compensation committee retained Radford Surveys and
Consulting to conduct a review of the pre-IPO equity ownership levels for
senior management at other pre-IPO medical device and biotechnology companies
in later stages of financing, and provide an analysis of how the current equity
holdings of our senior management, including each of the then named executive
officers, compared to the median of the surveyed companies. As discussed below
under “Elements of our Executive Compensation Program—Long-Term Equity
Compensation,” the survey showed that the equity holdings of our senior
management, including Dr. Ferré, were below the median. As a result, the
compensation committee recommended, and the board of directors approved,
additional equity grants, primarily in an effort to retain these executives
following the completion of our initial public offering, consistent with our
objectives. We made these additional equity grants to all of our named
executive officers in 2007 with the exception of a grant of stock options to
Dr. Ferré which, as discussed below, we made effective upon the closing of
our initial public offering in February 2008. We made these grants to bring the
equity holdings of management in line with the median of the surveyed companies
for retention purposes.
Radford
Surveys and Consulting used the following survey sources to conduct their
analysis: (i) the 2006 Radford Biotechnology Pre-IPO Executive Report,
which included 30 pre-IPO biotechnology and pharmaceutical companies with
outside investment levels between $40 and $80 million; (ii) the Dow
Jones Venture Capital — Compensation Pro Database, which included pre-IPO
companies that had classified themselves as a medical device company and were
in the “later stage” rounds of financings (generally, any round after the
second round of financing); and (iii) the Top 5 Pre-IPO Life Sciences
Industry (Medical Device) Survey, which included 10 pre-IPO medical device
companies that had completed series C rounds of financing. We do not know
the component companies that were surveyed by Radford Surveys and Consulting as
the companies’ names were not included in the report that Radford provided to
the compensation committee.
In
analyzing pre-IPO ownership levels, our company was compared to the 50
th
percentile of the surveyed companies. While we compared our senior management
to the median of the survey results for equity holding purposes, we do not
believe it is appropriate to emphasize this target, as it was used for the
limited purpose of determining equity holdings as a pre-IPO company and it was
not seen as an indication that we intended to “benchmark” the equity holdings
of our senior management at the median of a “peer group” of companies. Any such
determinations as to whether or not we will “benchmark” in the future will be
made by the compensation committee.
ELEMENTS OF
OUR EXECUTIVE COMPENSATION PROGRAM
The
principal elements of our executive compensation program have been base salary,
cash bonus compensation and long-term equity compensation in the form of stock
options or shares of restricted stock. We also have provided some named
executive officers with limited perquisites and other benefits that the
compensation committee believes were reasonable and consistent with the
objectives of our executive compensation programs, as discussed below. In 2008,
we made grants of performance-based compensation under
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our 2007-2008 performance-based cash bonus plan applicable to all
employees in management positions, including the named executive officers, that
we adopted in April 2007, and we made other grants of incentive compensation to
certain of our employees, including some of the named executive officers. We
discuss the grants more fully below.
Each of
these compensation elements satisfies one or more of our retention, performance
and alignment objectives, as described more fully below. We combine the
compensation elements for each executive officer in a manner that the
compensation committee believes, in its discretion and judgment, is consistent
with the executive’s contributions to our company and our overall goals with
respect to executive compensation. We have not adopted any policies with
respect to the mix of long-term versus currently-paid compensation, but believe
that both elements are necessary for achieving our compensation objectives.
Currently-paid compensation provides financial stability for each of our named
executive officers and immediate reward for superior company and individual
performance, while long-term compensation rewards achievement of strategic
long-term objectives and contributes toward overall stockholder value.
Similarly, while we have not adopted any policies with respect to the mix of
cash versus equity compensation, we believe that it is important to encourage
or provide for a meaningful amount of equity ownership by our named executive
officers to help align their interests with those of our stockholders, one of
our compensation objectives.
Base Salary
We believe
that a competitive base salary is an important component of compensation as it
provides a degree of financial stability for our executive officers and is
critical to recruiting and retaining our executives. Base salary is also
designed to recognize the scope of responsibilities placed on each executive
officer and reward each executive for his unique leadership skills, management
experience and contributions. We make a subjective determination of base salary
after considering such factors collectively. Our compensation committee has
historically reviewed the base salaries of our named executive officers on a periodic
basis, as the facts and circumstances may warrant.
As
discussed below under “Employment Agreements,” each of our named executive
officers entered into an employment agreement with us that established an
initial base salary for each officer. In April 2008, when Mr. Moffat joined our
company, we established his initial base salary at an annual amount of $210,000
pursuant to such an agreement. We determined this salary amount as a result of
an arm’s length negotiation with Mr. Moffat over the terms of his employment.
The members of our compensation committee believe, based on their collective
experience and general awareness of compensation practices, that this salary
amount is comparable to salaries offered by our competitors for similar positions.
In February
2008, the compensation committee awarded merit pay increases to each of our
named executive officers except for Dr. Ferré and Mr. Moffat, who had not yet
joined our company, to reflect the compensation committee’s subjective review
of each named executive officer’s overall individual 2007 performances. The
compensation committee increased the base salary of each of Messrs. LaPorte,
Abovitz and Frank from $176,550, $173,340 and $176,550, respectively, to
$225,101. The compensation committee did not increase Dr. Ferré’s base
salary in 2008 because the committee believed that, due to prior increases, his
base salary was at an appropriate level at that time.
Cash Bonuses
We have
designed our cash bonus compensation arrangements to reward achievement of
strategic and financial goals that support our objective of enhancing
stockholder value and to motivate executives to achieve superior performance in
their areas of responsibility.
In April
2008, the compensation committee approved the 2008 MAKO Metrics Scorecard as a
tool to measure the Company’s overall performance and achievement of specific
goals and objectives as set forth in our
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annual operating plan and approved its use in connection with
determining employee compensation matters under the 2008 Leadership Cash Bonus
Plan. Pursuant to the 2008 Leadership Cash Bonus Plan, our management level
employees, including our named executive officers, were eligible to be
compensated in the form of a cash bonus with respect to performance in 2008.
The 2008 Leadership Cash Bonus Plan was designed to encourage teamwork and
collaboration among our employees and to reward them for achieving financial
and operating goals that are key to the success of our business as measured by
the 2008 MAKO Metrics Scorecard. Moreover, the board believed that a cash bonus
plan that primarily measured achievement of company-wide performance targets
was the appropriate mechanism for rewarding and motivating management,
including our named executive officers, because each of these executives is
responsible for, among other things, strategic, operational and financial
objectives that cannot always be measured on an individual basis.
The 2008
Leadership Cash Bonus Plan provides that upon our achievement of specified
measurable performance goals derived for our 2008 operating plan and set forth
in the MAKO Metrics Scorecard, each management level employee, including our
named executive officers, will be paid a cash performance bonus amount. The
amount of this bonus will be a percentage of the employee’s base salary based
on a percentage of the MAKO Metrics Scorecard Percentage achieved by our
company. The MAKO Metrics Scorecard Percentage represents the percentage of
pre-defined goals that we achieved at the end of 2008, as determined by the
compensation committee in its discretion. In connection with the determination
of the amount of the bonus, there is a minimum and maximum MAKO Metrics
Scorecard Percentage that governs any potential award.
Our
compensation committee also set potential bonus amounts for individual
participants in the Leadership Cash Bonus Plan as measured by a percentage of
base salary. For 2008, our compensation committee set the threshold, minimum
and maximum percentages of base salary for our named executive officers at the
following levels:
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Name
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Threshold (%)
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Target (%)
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Maximum (%)
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Maurice R. Ferré, M.D.
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50(1)
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50(1)
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Fritz L. LaPorte
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20
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50
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Rony A. Abovitz
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20
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50
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Duncan H. Moffat
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13.5
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16.9
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33.7
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Menashe R. Frank
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20
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25
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50
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(1)
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Although Dr. Ferré participates in the Leadership Cash Bonus Plan,
his employment agreement provides for a target cash bonus equal to 50% of his
base salary, which may be increased or decreased at the compensation
committee’s discretion.
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Our
compensation committee set these percentages based on management’s proposal and
its subjective evaluation of the relative importance of our named executive
officers’ positions, the officers’ past and expected future contributions, to
the performance of our company, and, in the case of Dr. Ferré, the terms of the
executive officer’s employment agreement. Our compensation committee initially
prorated the percentage applicable to Mr. Moffat to reflect his partial year of
service.
In February
2008, management presented to our board of directors a proposed operating plan
for 2008 which included the performance goals and criteria for our company for
2008. The operating plan was reviewed and approved by our board of directors in
February 2008. Management then presented to our board of directors the proposed
MAKO Metrics Scorecard for 2008 as a tool to measure the Company’s performance
against the defined business objectives set forth in the operating plan. In
March 2008, our board of directors referred the
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proposed
MAKO Metrics Scorecard for 2008 to the compensation committee for consideration
for use in determining executive compensation. After the compensation committee
considered the proposals, it made recommendations to management concerning the
performance goals and criteria and approved a revised version of the
performance goals and criteria in April 2008. The performance goals and
criteria that the committee chose to govern potential awards under the
Leadership Cash Bonus Plan for 2008 were the following:
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installations and customer acceptance of TGS units and achievement of
revenue (including deferred revenue) for TGS units;
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number of MAKOplasty procedures performed and total MAKOplasty
revenue;
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market release of TGS version 1.2 and version 1.3 and on-going
development of version 2.0;
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commercialization and on-going development of MAKO-branded knee
implant systems;
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submission of peer-reviewed manuscripts for publication to validate
the clinical value of MAKOplasty;
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development of MAKOplasty Center of Excellence business case;
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development of strategic business plan and five-year technology
roadmap;
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achievement of 2008 budget; and
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continuation of company values and vision.
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We
established a baseline target and stretch level metrics for each of these
goals. We believed it was more likely than not that we would achieve the
baseline target metric and reasonably possible that we would achieve the
stretch level metric. The determination of whether and to what extent these metrics
were achieved during 2008 was made by the compensation committee. Following the
compensation committee’s review in February 2009 of 2008 performance under the
2008 Leadership Cash Bonus Plan, the committee authorized cash bonus awards of
$150,000, $56,275, $56,275, $52,500 and $56,275 to be paid to Dr. Ferré and
Messrs. LaPorte, Abovitz, Moffat and Frank, respectively, following receipt of
our 2008 year-end independent audit results confirming the accuracy of the
auditable financial operating results contained in the 2008 MAKO Metrics
Scorecard. These awards reflected achievement of 100% of the target levels
established for 2008 plus, in the case of Mr. Moffat, an additional amount of
$17,070, which is the difference between what Mr. Moffat would have received
for full-year performance at 100% of target and the prorated amount he was to
have received for the partial year. The compensation committee increased Mr.
Moffat’s bonus based upon the recommendation of Dr. Ferré to recognize Mr.
Moffat’s exceptional contributions to our company during 2008. In accordance
with the terms of the 2008 Leadership Cash Bonus Plan, the dollar amount of
each bonus was calculated as a percentage of the named executive officer’s
annual base salary.
Long-Term Equity Compensation
We grant
stock options and restricted stock to our named executive officers, as we
believe that such grants further our compensation objectives of aligning the
interests of our named executive officers with those of our stockholders,
encouraging long-term performance, and providing a simple and
easy-to-understand form of equity compensation that promotes executive
retention. We view such grants both as incentives for future performance and as
compensation for past accomplishments.
We historically
have made grants of equity to named executive officers in connection with their
initial hire. We continued this practice when Mr. Moffat joined our company in
April 2008, granting him an option to purchase 100,000 shares of our common
stock. The number of stock options or shares of restricted stock granted
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to each named executive officer, including Mr. Moffat, in connection
with his initial hire, was determined based upon negotiations with each
executive, represented the number necessary to recruit each executive from his
then-existing position and reflected the compensation committee’s subjective
evaluation of the executive’s experience and potential for future performance.
In addition, we have made additional discretionary grants, from time to time,
as determined by the compensation committee or our board of directors, as
applicable, taking into consideration such factors as individual performance
and competitive market conditions. The compensation committee determined the
timing of any such equity grant based on of achievement by the named executive
officer and not any effort to time the grants in coordination with changes in
our stock price.
We have
used stock options and restricted stock, rather than other forms of long-term
incentives, because they create value for the executive only if stockholder
value is increased through an increased market price of our common stock. Prior
to the completion of our initial public offering in February 2008, all stock
option and restricted stock grants were made pursuant to our company’s 2004
Stock Incentive Plan and our board of directors, based on the recommendation of
our compensation committee, determined the exercise price based on internal or
third-party valuation reports. Since the completion of our initial public
offering, all option grants have been approved by the compensation committee
and made pursuant to our 2008 Omnibus Incentive Plan, and the exercise price of
stock options is based on the fair market value of our common stock on the
grant date, which is equal to the closing price of our common stock on that
date.
As
referenced under “Compensation Philosophy and Objectives” above, in the third quarter of 2007, the compensation committee
retained Radford Surveys and Consulting to conduct a review of pre-IPO equity
ownership levels for our senior management, as compared to other pre-IPO
medical device and biotechnology companies in later stages of financing. Based
on Radford’s analysis of our equity ownership levels for senior management,
including the named executive officers, the compensation committee recommended,
and the board of directors approved in August 2007, the grant of
247,524 shares of restricted stock to Dr. Ferré, which shares vest ratably
on a quarterly basis over a four-year period, based on his continued service.
The compensation committee also recommended, and the board of directors
approved, the grant of stock options to Dr. Ferré to purchase
198,019 shares of our common stock, to be made upon closing of our initial
public offering. The committee chose to make the stock option grant upon the
closing of our initial public offering to provide an incentive and reward for
the closing and so that the exercise price per share of the stock options would
reflect the market price of our common stock on the day of grant as determined
by the stock market. The stock option grant was made in February 2008 at an
exercise price of $9.30 per share, which was the closing price per share of our
common stock on the date of the grant, as reflected in the “2008 Grants of
Plan-Based Awards” table included in the section titled “Executive
Compensation” below. The options vest ratably on a quarterly basis over a
four-year period starting at grant.
Other than
this grant of stock options to Dr. Ferré, and the award of incentive stock
options to Mr. Moffat discussed above, we did not make any equity awards to our
named executive officers in 2008.
Employee Stock Purchase Plan
We
have not adopted any formal employee equity ownership requirements or
guidelines. In 2007, we adopted the 2008 Employee Stock Purchase Plan to
encourage equity ownership by all of our employees, which became effective
immediately upon completion of our initial public offering in February 2008. We
offer subscriptions for shares of our common stock pursuant to the plan to
eligible employees, including our named executive officers. Our named executive
officers may participate in the plan on the same basis as all other eligible
participants, who include substantially all of our salaried employees. The
initial purchase period under the plan began on October 1, 2008 and the initial
purchase date was December 31, 2008.
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Perquisites and Other Benefits
As a general
matter, we do not intend to offer perquisites or other benefits to any
executive officer, including the named executive officers, with an aggregate
value in excess of $10,000, because we believe we can provide better incentives
for desired performance with compensation in the forms described above. We
recognize that, from time to time, it may be appropriate to provide some
perquisites or other benefits in order to attract, motivate and retain our
executives, with any such decision to be reviewed and approved by the
compensation committee as needed.
In
connection with our hiring of Mr. Moffat, we agreed to reimburse him for
reasonable relocation expenses up to a total of $160,000, net of applicable
payroll taxes for non-reimbursable items. We agreed to provide this benefit to
Mr. Moffat as a result of an arm’s length negotiation with Mr. Moffat over the
terms of his employment with our company, to encourage Mr. Moffat to relocate
from California to Fort Lauderdale, Florida and based on the compensation
committee’s subjective evaluation of Mr. Moffat’s likely contributions to the
future performance of our company. To protect us in the event Mr. Moffat’s
employment terminates within the first two years of employment, the relocation
expense benefit is subject to pro rated recoupment from Mr. Moffat if his
employment terminates for any reason, other than by Mr. Moffat for good
reason, within such period.
EMPLOYMENT
AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
Each of our
named executive officers has an employment agreement that provides for
severance payment arrangements following specified termination events. We have
entered into these employment agreements because we believe they are necessary
to retain our named executive officers and to obtain their agreement to
post-employment restrictions, such as non-competition, non-solicitation and
confidentiality, that protect our interests. We negotiated the severance
provisions in the employment agreements with each of the named executive
officers based on what the compensation committee believed, in its experience,
to be a reasonable, but not overly generous, severance package to each
executive and necessary to retain the executive. The terms of the employment
agreements are discussed below under “Executive Compensation – Employment
Agreements.”
In February
2009, the compensation committee approved an amended and restated form of
employment agreement for certain of our senior vice presidents because we
believed it was necessary to expand the post-employment restrictions to provide
greater protection to our company as it expands its business and to align our
employment agreements with those utilized by similarly situated public
companies. Following the committee’s approval, we entered into amended and
restated employment agreements with Messrs. LaPorte and Frank and an amendment
to Dr. Ferré’s existing employment agreement. These amendments broadened the
post-employment noncompetition and non-solicitation restrictions so that the
restrictions apply to any image guided surgical device and/or software used in
combination with any surgical robotic device and/or software in the field of
orthopedics. Mr. Moffat’s employment agreement already contained these expanded
noncompetition and non-solicitation restrictions. In consideration for these
changes, we also agreed to the following modifications to the employment
agreements of Messrs. LaPorte and Frank:
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Accelerated vesting of equity awards that vest based on time upon the
occurrence of a change in control of our company or upon termination of
employment as a result of death, disability, without cause or for good
reason.
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Increased severance payments upon termination of employment and the
occurrence of a change in control of our company.
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Eighteen month period of noncompetition and non-solicitation of
employees and customers following termination of employment as a result of a
change in control (lengthened from a twelve month period).
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Dr. Ferré’s
employment agreement already provided for accelerated vesting of equity awards
upon a change in control of our company. We had agreed to such accelerated
vesting as a result of an arm’s length negotiation with Dr. Ferré over the
terms of his agreement. None of the named executive officers would
automatically be entitled to severance payments under their employment
agreements upon a change in control of our company, unless specific additional
events occur, such as a material adverse change in responsibilities.
The compensation
committee does not take into account severance packages in determining the
amounts of other elements of compensation, such as base salary, cash bonus,
stock option grants and restricted stock grants. See “Executive
Compensation—Termination and Change in Control Payments” below for a
description of the severance and change in control arrangements for our named
executive officers.
EFFECT OF
ACCOUNTING AND TAX TREATMENT ON COMPENSATION DECISIONS
In the
review and establishment of our compensation programs, we consider the
anticipated accounting and tax implications to us and our named executive
officers. While we consider the applicable accounting and tax treatment, these
factors alone are not dispositive, and we also consider the cash and non-cash
impact of the programs and whether a program is consistent with our overall
compensation philosophy and objectives.
Section 162(m)
of the Internal Revenue Code imposes a limit on the amount of compensation that
we may deduct in any one year with respect to covered employees, unless
specific and detailed criteria are satisfied. Performance-based compensation,
as defined in the Internal Revenue Code, is fully deductible if the programs
are approved by stockholders and meet other requirements. In general, we have
determined that we will not seek to limit executive compensation so that all of
such compensation is deductible under Section 162(m). However, from time
to time, we monitor whether it might be in our interests to structure our compensation
programs to satisfy the requirements of Section 162(m). We seek to
maintain flexibility in compensating our executives in a manner designed to
promote our corporate goals and, as a result, our compensation committee has
not adopted a policy requiring all compensation to be deductible. Our
compensation committee will continue to assess the impact of
Section 162(m) on our compensation practices and determine what further
action, if any, is appropriate.
Sections
280G and 4999 of the Internal Revenue Code impose an excise tax on certain
payments to executives made in connection with a change in control and make
such payments non-deductible to the company. The effects of Sections 280G and
4999 generally are unpredictable and can have widely divergent and unexpected
effects based on an executive officer’s personal compensation history. To
ensure that Dr. Ferré receives the level of benefits that we intend, the
compensation committee determined that it would be appropriate to pay the cost
of any excise tax imposed under Sections 280G and 4999, in the event such
provisions became applicable, plus an amount needed to pay income taxes due on
such additional payment. Dr. Ferré’s employment agreement accordingly
provides for such a gross-up payment, which the compensation committee believes
is consistent with its goal of offering a total compensation program that takes
into consideration competitive market requirements.
COMPENSATION
COMMITTEE REPORT
The
compensation committee has reviewed and discussed the above Compensation
Discussion and Analysis with our management and, based on such review and
discussion, has recommended to our board of directors that the Compensation
Discussion and Analysis be included in this proxy statement and in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008.
|
|
|
|
|
MAKO Surgical Corp.
|
|
|
COMPENSATION COMMITTEE
|
|
|
|
|
|
S. Morry Blumenfeld, Ph.D., Chairman
|
|
|
Gerald A. Brunk
|
|
|
Marcelo G. Chao
|
30
Table of Contents
EXECUTIVE
COMPENSATION
The
following table sets forth the compensation paid in 2008, 2007, and 2006 to our
Chief Executive Officer, our Chief Financial Officer and each of the three
other most highly compensated executive officers who were serving as executive
officers on December 31, 2008. These five individuals are sometimes
referred to collectively as the “named executive officers.”
2008, 2007,
AND 2006 SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)(1)
|
|
|
Stock
Awards
($)(2)
|
|
|
Option
Awards
($)(2
)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)(3)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Maurice R. Ferré, M.D.
|
|
2008
|
|
$
|
300,000
|
|
|
—
|
|
$
|
907,296
|
|
$
|
284,665
|
|
$
|
150,000
|
|
$
|
1,010
|
(4)
|
$
|
1,642,971
|
|
|
President, Chief
Executive Officer and Chairman
|
|
2007
|
|
$
|
299,058
|
|
|
—
|
|
$
|
379,589
|
|
$
|
18,339
|
|
$
|
97,500
|
|
$
|
1,149,320
|
(5)
|
$
|
1,943,806
|
|
|
|
2006
|
|
$
|
274,000
|
|
$
|
200,000
|
|
$
|
73,112
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
547,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fritz L. LaPorte
|
|
2008
|
|
$
|
219,499
|
|
|
—
|
|
|
—
|
|
$
|
125,634
|
|
$
|
56,275
|
|
$
|
909
|
(4)
|
$
|
402,317
|
|
|
Senior Vice President
of Finance and Administration,Chief
Financial Officer and Treasurer
|
|
2007
|
|
$
|
175,686
|
|
|
—
|
|
|
—
|
|
$
|
48,394
|
|
$
|
57,379
|
|
|
—
|
|
$
|
281,459
|
|
|
|
2006
|
|
$
|
159,692
|
|
$
|
48,150
|
|
|
—
|
|
$
|
9,118
|
|
|
—
|
|
|
—
|
|
$
|
216,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rony A. Abovitz
|
|
2008
|
|
$
|
219,128
|
|
|
—
|
|
|
—
|
|
$
|
187,089
|
|
$
|
56,275
|
|
$
|
758
|
(4)
|
$
|
463,250
|
|
|
Senior Vice President
and Chief Technology Officer
|
|
2007
|
|
$
|
172,772
|
|
|
—
|
|
|
—
|
|
$
|
76,263
|
|
$
|
56,336
|
|
$
|
26,815
|
(6)
|
$
|
332,186
|
|
|
|
2006
|
|
$
|
159,692
|
|
$
|
48,150
|
|
|
—
|
|
$
|
21,930
|
|
|
—
|
|
|
—
|
|
$
|
229,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duncan
H. Moffat (7)
|
|
2008
|
|
$
|
137,308
|
|
|
—
|
|
|
—
|
|
$
|
81,053
|
|
$
|
52,500
|
|
$
|
160,848
|
(8)
|
$
|
431,709
|
|
|
Senior Vice President
of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Menashe R. Frank
|
|
2008
|
|
$
|
219,499
|
|
|
—
|
|
|
—
|
|
$
|
123,272
|
|
$
|
56,275
|
|
|
—
|
|
$
|
399,046
|
|
|
Senior Vice President,
General Counsel and Secretary
|
|
2007
|
|
$
|
175,686
|
|
|
—
|
|
|
—
|
|
$
|
46,035
|
|
$
|
57,379
|
|
|
—
|
|
$
|
279,100
|
|
|
|
2006
|
|
$
|
159,692
|
|
$
|
48,150
|
|
|
—
|
|
$
|
6,759
|
|
|
—
|
|
|
—
|
|
$
|
214,601
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts represent discretionary cash bonus payments made to each
named executive officer in respect of his performance in 2006 as determined
by the compensation committee. All payments were made in the first quarter of
2007.
|
|
|
|
|
(2)
|
Amounts represent the compensation expense recognized by the Company
during 2008, 2007 and 2006, as computed in accordance with FAS 123(R),
disregarding any estimated forfeitures relating to service-based vesting
conditions. For a discussion of the assumptions made in the valuation of
these awards, see Note 8 to Financial Statements in our Form 10-K for
the year ended December 31, 2008.
|
|
|
|
|
(3)
|
Amounts represent cash bonus payments made to the named executive
officer pursuant to our Leadership Cash Bonus Plan. All payments were made in
the first quarter of the year following the year in which the bonuses were
earned.
|
|
|
|
|
(4)
|
Amounts represent matching contributions under our 401(k) plan.
|
|
|
|
|
(5)
|
On September 5, 2007, our board of directors forgave
approximately $1,149,320 of outstanding loans, including accrued interest,
that we made to Dr. Ferré.
|
|
|
|
|
(6)
|
On September 5, 2007, our board of directors forgave
approximately $25,000 of outstanding loans that we made to Mr. Abovitz.
|
31
Table of Contents
|
|
|
|
(7)
|
Mr. Moffat joined our company on April 28, 2008.
|
|
|
|
|
(8)
|
Amount represents $848 of matching contributions made by the Company
under its 401(k) plan and $160,000 of relocation and temporary housing
expense. As part of our employment agreement with Mr. Moffat, and to
encourage Mr. Moffat to relocate to Fort Lauderdale, Florida, we
agreed to cover Mr. Moffat’s relocation expenses and costs of temporary
housing during the initial six-month relocation period.
|
2008 GRANTS OF PLAN-BASED AWARDS
The
following table sets forth information with respect to grants of plan-based
awards during 2008 to the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity
Incentive
Plan Awards(1)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)(2)
|
|
Grant
Date Fair
Value of
Stock
and
Option
Awards(($)(3)
|
|
|
Name
|
|
Grant
Date
|
|
Date of
Committee
Action
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
|
|
|
|
Maurice R. Ferré, M.D.(4)
|
|
|
|
|
|
|
|
$
|
60,000
|
|
$
|
150,000
|
|
$
|
150,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
2/20/08
|
|
|
8/24/07
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
198,019
|
|
$
|
9.30
|
|
$
|
1,053,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fritz L. LaPorte
|
|
|
|
|
|
|
|
|
45,020
|
|
|
56,275
|
|
|
112,551
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rony A. Abovitz
|
|
|
|
|
|
|
|
|
45,020
|
|
|
56,275
|
|
|
112,551
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duncan H. Moffat (5)
|
|
|
|
|
|
|
|
|
28,344
|
|
|
35,430
|
|
|
70,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/08
|
|
|
4/25/08
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
$
|
7.94
|
|
$
|
454,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Menashe R. Frank
|
|
|
|
|
|
|
|
|
45,020
|
|
|
56,275
|
|
|
112,551
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the threshold, target and maximum amounts that could be
earned by each named executive officer pursuant to our Leadership Cash Bonus
Plan.
|
|
|
|
|
(2)
|
Equals the closing price per share of our common stock on the date of
grant.
|
|
|
|
|
(3)
|
Represents the grant date fair value of the awards calculated in
accordance with FAS 123(R).
|
|
|
|
|
(4)
|
As discussed above in “Compensation and Discussion Analysis-Cash
Bonuses,” Dr. Ferré participates in the Leadership Cash Bonus Plan; however,
his employment agreement provides for a target cash bonus equal to 50% of his
base salary, which may be increased or decreased at the discretion of the
compensation committee.
|
|
|
|
|
(5)
|
Mr. Moffat’s threshold, target and maximum amounts were pro-rated at
the time the award was granted for the portion of 2008 in which he was
employed by us.
|
EMPLOYMENT AGREEMENTS
On September 19, 2007, we entered into a new
employment agreement with Dr. Ferré, which was subsequently amended and
restated on November 12, 2007 to permit Dr. Ferré to serve on the
board of directors of Z-KAT if approved by a majority of our disinterested
directors. The employment agreement expires on December 31, 2010, subject
to automatic renewal for successive one-year terms unless either party gives
120 days’ notice of its intention not to renew the agreement. Under the
employment agreement, Dr. Ferré is entitled to an initial base salary of
$300,000 and an opportunity to earn a performance bonus with a target of 50% of
his base salary under the Leadership Cash Bonus Plan, which performance bonus
may be higher or lower based
32
Table of Contents
on
the attainment of performance criteria that we establish. For a description of
severance arrangements, see “Termination and Change in Control Payments” below.
As noted above, in February 2009, we entered into an amendment to Dr. Ferré’s
employment agreement that provided for broader post-employment noncompetition
and non-solicitation restrictions.
We
entered into employment agreements, effective January 2005, with each of
Messrs. LaPorte, Abovitz and Frank. Each of these agreements was amended
and restated on February 5, 2007 to provide for a term of three years from
the effective date of the original agreement. In April 2008, we entered into an
employment agreement with Mr. Moffat for a term of one year. Each of these
agreements provides for automatic renewal for successive one-year terms. These
employment agreements provided for an initial negotiated base salary of
$150,000 for each of Messrs. LaPorte, Abovitz and Frank and $210,000 for Mr.
Moffat. See “Compensation Discussion and Analysis—Base Salary” above for the
base salaries of the named executive officers as of December 31, 2008. Pursuant
to these employment agreements, each of Messrs. LaPorte, Abovitz and Frank
received options for 24,752, 82,508 and 13,201 shares, respectively, of
our common stock upon closing of the Series B redeemable convertible
preferred stock financing in July 2005. Mr. Moffat received options to
purchase 100,000 shares of our common stock pursuant to his employment
agreement. As part of our package to recruit Mr. Moffat to relocate to
Fort Lauderdale, Florida in April 2008, we agreed to reimburse
Mr. Moffat for up to $160,000 of his reasonable relocation expenses,
including moving expenses, certain costs related to the purchase of a new home
and the costs of temporary housing during the initial six-month relocation period.
In the event that Mr. Moffat’s employment is terminated for any reason
during the first 24 months following his employment, other than by
Mr. Moffat for good reason, Mr. Moffat is required to repay a
prorated share of the relocation bonus. Each executive is also eligible to
participate in various benefits programs that are available to our employees
generally. In addition, the employment agreements provided for certain payments
to be made to Messrs. LaPorte, Abovitz, Moffat and Frank upon termination
of employment.
As
noted above, in February 2009, we entered into amended and restated employment
agreements with Messrs. LaPorte and Frank that provided for broader
post-employment noncompetition and non-solicitation restrictions; accelerated vesting
of equity awards that vest based on time upon the occurrence of a change in
control of our company or upon termination of employment as a result of death,
disability, without cause or for good reason; increased severance payments upon
termination of employment and the occurrence of a change in control of our
company; and longer noncompetition and nonsolicitation periods following
termination of employment as a result of a change in control.
For a
description of the terms of our named executive officers’ arrangements
concerning terminations of employment, including an estimation of the payments
to be made, see “Termination and Change in Control Payments” below.
33
Table of Contents
2
008
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The
following table sets forth information with respect to outstanding equity
awards of the named executive officers as of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Awards
|
|
|
|
|
Option
Awards
|
|
Number
of
Shares or
Units of Stock
That Have Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have
Not Vested
($)
|
|
|
|
Number
of Securities
Underlying
Unexercised
Options (#)
|
|
Option
Exercise
Price
($)
|
|
|
|
|
|
|
|
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
Maurice R.
Ferré
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
39,788
|
(1)
|
|
$
|
265,786
|
(1)
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
21,916
|
(2)
|
|
$
|
146,400
|
(2)
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
34,808
|
(3)
|
|
$
|
232,518
|
(3)
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
170,173
|
(4)
|
|
$
|
1,136,754
|
(4)
|
|
|
|
11,013
|
(5)
|
|
24,231
|
(5)
|
|
$
|
11.12
|
|
|
9/05/2017
|
|
—
|
|
|
|
—
|
|
|
|
|
37,128
|
(6)
|
|
160,891
|
(6)
|
|
$
|
9.30
|
|
|
2/20/2018
|
|
—
|
|
|
|
—
|
|
|
Fritz L.
LaPorte
|
|
69,867
|
(7)
|
|
0
|
(7)
|
|
$
|
0.67
|
|
|
12/16/2014
|
|
—
|
|
|
|
—
|
|
|
|
|
21,139
|
(8)
|
|
3,613
|
(8)
|
|
$
|
1.27
|
|
|
7/18/2015
|
|
—
|
|
|
|
—
|
|
|
|
|
21,312
|
(9)
|
|
11,691
|
(9)
|
|
$
|
1.27
|
|
|
5/22/2016
|
|
—
|
|
|
|
—
|
|
|
|
|
14,437
|
(10)
|
|
18,566
|
(10)
|
|
$
|
2.48
|
|
|
3/26/2017
|
|
—
|
|
|
|
—
|
|
|
|
|
16,500
|
(11)
|
|
49,506
|
(11)
|
|
$
|
11.12
|
|
|
8/24/2017
|
|
—
|
|
|
|
—
|
|
|
Rony A.
Abovitz
|
|
49,867
|
(12)
|
|
0
|
(12)
|
|
$
|
0.67
|
|
|
12/16/2014
|
|
—
|
|
|
|
—
|
|
|
|
|
70,467
|
(13)
|
|
12,041
|
(13)
|
|
$
|
1.27
|
|
|
7/18/2015
|
|
—
|
|
|
|
—
|
|
|
|
|
26,640
|
(14)
|
|
14,614
|
(14)
|
|
$
|
1.27
|
|
|
5/22/2016
|
|
|
|
|
|
|
|
|
|
|
18,047
|
(15)
|
|
23,207
|
(15)
|
|
$
|
2.48
|
|
|
3/26/2017
|
|
—
|
|
|
|
—
|
|
|
|
|
23,786
|
(16)
|
|
71,362
|
(16)
|
|
$
|
11.12
|
|
|
8/24/2017
|
|
—
|
|
|
|
—
|
|
|
Menashe R.
Frank
|
|
34,933
|
(17)
|
|
0
|
(17)
|
|
$
|
0.67
|
|
|
12/16/2014
|
|
—
|
|
|
|
—
|
|
|
|
|
11,274
|
(18)
|
|
1,927
|
(18)
|
|
$
|
1.27
|
|
|
7/18/2015
|
|
—
|
|
|
|
—
|
|
|
|
|
21,312
|
(19)
|
|
11,691
|
(19)
|
|
$
|
1.27
|
|
|
5/22/2016
|
|
|
|
|
|
|
|
|
|
|
14,437
|
(20)
|
|
18,566
|
(20)
|
|
$
|
2.48
|
|
|
3/26/2017
|
|
—
|
|
|
|
—
|
|
|
|
|
16,500
|
(21)
|
|
49,506
|
(21)
|
|
$
|
11.12
|
|
|
8/24/2017
|
|
—
|
|
|
|
—
|
|
|
Duncan H.
Moffat
|
|
12,500
|
(22)
|
|
87,500
|
(22)
|
|
$
|
7.94
|
|
|
4/28/2018
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
(1)
|
The vesting of the shares subject to this restricted stock award is
as follows: (i) 90,945 shares vested on July 14, 2005; and
(ii) 272,834 shares vest ratably monthly over a 48 month
period through July 14, 2009.
|
|
|
|
|
(2)
|
The vesting of the shares subject to this restricted stock award is
as follows: (i) 20,627 shares vested on May 22, 2006; and
(ii) 61,881 shares vest ratably monthly over a 48 month period
through May 22, 2010.
|
|
|
|
|
(3)
|
The vesting of the shares subject to this restricted stock award is
as follows: (i) 20,627 shares vested on March 26, 2007; and
(ii) 61,881 shares vest ratably monthly over a 48 month period
through March 26, 2011.
|
|
|
|
|
(4)
|
These shares of restricted stock vest ratably on a quarterly basis
though August 24, 2011.
|
|
|
|
|
(5)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 2,202 shares on December 5, 2007; and (ii) it vests with
respect to 33,042 shares ratably quarterly over the remaining period
through September 5, 2011.
|
|
|
|
|
(6)
|
The vesting of this stock option is as follows: (i) it vested with
respect to 12,376 shares on May 20, 2008; and (ii) it vests
with respect to 185,643 shares ratably quarterly over the remaining
period through February 20, 2012.
|
|
|
|
|
(7)
|
This option vested with respect to all 69,867 shares on
December 16, 2004.
|
|
|
|
|
(8)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 6,188 shares on July 18, 2006; and (ii) it vests
with respect to 18,564 shares ratably monthly over a 36 month
period through July 18, 2009.
|
|
|
|
|
(9)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 8,251 shares on May 22, 2007; and (ii) it vests
with respect to 24,752 shares ratably monthly over a 36 month
period through May 22, 2010.
|
|
|
|
|
(10)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 8,251 shares vested on March 26, 2008; and (ii) it
vests with respect to 24,752 shares ratably monthly over a 36 month
period through March 26, 2011.
|
34
Table of Contents
|
|
|
|
(11)
|
The vesting of this stock option is as follows: (i) it vests
with respect to 33,003 shares ratably quarterly over four years
beginning on August 24, 2007; and (ii) it vests with respect to 33,003 shares
ratably quarterly over four years beginning on February 20, 2008 subject to a
satisfactory 2007 performance evaluation, which was achieved.
|
|
|
|
|
(12)
|
This option vested with respect to all 69,867 shares on
December 16, 2004. As of December 31, 2008, Mr. Abovitz had exercised this
option with respect to 20,000 shares.
|
|
|
|
|
(13)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 20,627 shares on July 18, 2006; and (ii) it vests
with respect to 61,881 shares ratably monthly over a 36 month
period through July 18, 2009.
|
|
|
|
|
(14)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 10,313 shares on May 22, 2007; and (ii) it vests
with respect to 30,941 shares ratably monthly over a 36 month period
through May 22, 2010.
|
|
|
|
|
(15)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 10,313 shares on March 26, 2008; and (ii) it vests
with respect to 30,941 shares ratably monthly over a 36 month
period through March 26, 2011.
|
|
|
|
|
(16)
|
The vesting of this stock option is as follows: (i) it vests
with respect to 47,574 shares ratably quarterly over four years
beginning on August 24, 2007; and (ii) it vests with respect to
47,574 shares ratably quarterly over four years beginning on February
20, 2008 subject to a satisfactory 2007 performance evaluation, which was
achieved.
|
|
|
|
|
(17)
|
This option vested with respect to all 34,933 shares on
December 16, 2004.
|
|
|
|
|
(18)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 3,300 shares on July 18, 2006; and (ii) it vests
with respect to 9,901 shares ratably monthly over a 36 month period
through July 18, 2009.
|
|
|
|
|
(19)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 8,251 shares on May 22, 2007; and (ii) it vests
with respect to 24,752 shares ratably monthly over a 36 month
period through May 22, 2010.
|
|
|
|
|
(20)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 8,251 shares on March 26, 2008; and (ii) it vests
with respect to 24,752 shares ratably monthly over a 36 month
period through March 26, 2011.
|
|
|
|
|
(21)
|
The vesting of this stock option is as follows: (i) it vests
with respect to 33,003 shares ratably quarterly over four years
beginning on August 24, 2007; and (ii) it vests with respect to
33,003 shares ratably quarterly over four years beginning on February
20, 2008 subject to a satisfactory 2007 performance evaluation, which was
achieved.
|
|
|
|
|
(22)
|
The vesting of this stock option is as follows: (i) it vested
with respect to 6,250 shares on July 28, 2008; and (ii) it vests
with respect to 93,750 shares ratably quarterly over the remaining
period through April 28, 2012.
|
2
008
OPTION EXERCISES AND STOCK VESTED
The
following table sets forth information with respect to options exercised and
stock vested during 2008:
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
Number
of
Shares
Acquired on
Exercise (#)
|
|
Value
Realized on
Exercise
($)(1)
|
|
Number
of
Shares
Acquired on
Vesting (#)
|
|
Value
Realized on
Vesting ($)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
|
|
|
Maurice R.
Ferré, M.D.
|
|
|
—
|
|
|
—
|
|
|
161,030
|
|
$
|
1,389,846
|
|
|
Fritz L.
LaPorte
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Rony A.
Abovitz
|
|
|
20,000
|
|
$
|
149,133
|
|
|
—
|
|
|
—
|
|
|
Menashe R.
Frank
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Duncan H.
Moffat
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
(1)
|
Value realized is the amount by which the market value of our common
stock on the date of exercise exceeds the exercise price, multiplied by the
number of shares for which the option was exercised.
|
|
(2)
|
Value realized on vesting is determined by multiplying the number of
vested shares by the price of our common stock on the vesting date. This
amount is not intended to represent the value, if any, that is actually
realized by the individual.
|
35
Table of Contents
T
ERMINATION
AND CHANGE IN CONTROL PAYMENTS
Dr. Ferré
The
employment agreement for Dr. Ferré provides for the payment of severance
benefits if Dr. Ferré is terminated without “cause” or if Dr. Ferré
resigns for “good reason.” Upon such a termination, Dr. Ferré will be
entitled to receive all accrued but unpaid compensation, reimbursement of any
outstanding reasonable business expenses, one times the sum of Dr. Ferré’s
annual salary and cash bonuses received by him during the preceding completed
fiscal years in a lump sum payment and accelerated vesting of equity awards
that vest based on the passage of time; provided that if the termination occurs
in anticipation of a change in control of our company or within two years
thereafter, the applicable multiplier will be two instead of one, payment of a
prorated bonus for the year of termination, and assuming attainment of target
performance goals, accelerated vesting of all equity awards that vest based on
the attainment of performance goals at the greater of target levels or actual
performance at the date of termination. Dr. Ferré is also entitled to a
gross-up payment to the extent any payments payable to him in connection with a
change in control become subject to an excise tax pursuant to
sections 4999 and 280G of the Internal Revenue Code. The vesting of all
equity that vests based on the passage of time will accelerate in the event of
a change in control. In addition, all equity awards that vest based on the
passage of time vest in the event of a termination of employment due to death
or disability.
Under
Dr. Ferré’s employment agreement, “good reason” includes any of the
following, in each case to the extent not corrected by us following
30 days’ notice from Dr. Ferré:
|
|
|
|
|
|
•
|
the assignment of duties materially inconsistent with
Dr. Ferré’s position and status or a materially adverse change in the
nature of Dr. Ferré’s duties, responsibilities and authorities from
those described in his agreement;
|
|
|
|
|
|
|
•
|
a material reduction in Dr. Ferré’s annual salary or the setting
of his annual target incentive opportunity in amounts materially less than
those specified in his agreement;
|
|
|
|
|
|
|
•
|
relocation of Dr. Ferré’s principal work location more than 25 miles
from our current headquarters;
|
|
|
|
|
|
|
•
|
failure to elect or reelect Dr. Ferré to our board of directors or
his removal from the board other than for cause;
|
|
|
|
|
|
|
•
|
our failure to obtain an agreement from any successor to us to assume
the agreement; or
|
|
|
|
|
|
|
•
|
any other failure by us to perform any material obligation or
provision of the agreement.
|
Under
Dr. Ferré’s employment agreement, “cause” includes any of the following,
provided that the executive has been provided a copy of the resolution adopted
by at least three-quarters of the independent members of our board of directors
at a meeting of the board (after reasonable notice to the executive and an
opportunity for the executive, together with the executive’s counsel, to be
heard before the board) finding that the executive was guilty of the specified
conduct:
|
|
|
|
|
|
•
|
conviction for commission of a felony or a crime involving moral
turpitude;
|
|
|
|
|
|
|
•
|
willful commission of any act of theft, fraud, embezzlement or
misappropriation against us; or
|
|
|
|
|
|
|
•
|
willful and continued failure to perform duties, which failure is not
remedied within 30 days after we provide notice.
|
36
Table of Contents
Messrs. LaPorte,
Abovitz, Moffat and Frank
The current
employment agreements for Messrs. LaPorte, Abovitz, Moffat and Frank
provide for the payment of severance benefits to the executive if we terminate
the executive’s employment without “cause” or if the executive resigns for
“good reason.” Upon such a termination, the executive will be entitled to
receive all accrued but unpaid compensation, reimbursement of any outstanding reasonable
business expenses, an amount equal to six months with respect to Mr. Moffat and
nine months with respect to Messrs. LaPorte, Abovitz, and Frank (18 months in
the case of such a termination in connection with a change in control of our
company for Messrs. LaPorte and Frank) of the executive’s annual base salary at
the rate then in effect, the costs of continuation of health benefits for six
months with respect to Mr. Moffat and nine months with respect to Messrs.
LaPorte, Abovitz, and Frank and, for Messrs. LaPorte and Frank, accelerated
vesting of equity awards that vest based on the passage of time. The portion of
severance determined on the basis of six, nine or eighteen months’ base salary
is payable in a lump sum for Messrs. LaPorte and Frank, and on a monthly basis
for Messrs. Abovitz and Moffat. Prior to the amendment of the employment
agreements described above under “Compensation Discussion and Analysis –
Employment Agreement and Change in Control Arrangements,” the portion of
severance determined on the basis of nine or eighteen months’ base salary and
nine months’ health benefits was determined on the basis of six months’ base
salary and health benefits for Messrs. LaPorte and Frank, and the vesting of
their equity awards was not accelerated.
Under
these employment agreements, “good reason” includes:
|
|
|
|
|
|
•
|
a material adverse change of the executive’s job responsibilities;
|
|
|
|
|
|
|
•
|
a breach by us with respect to our compensation obligations under the
employment agreement, which has not been cured within 30 days after the
executive provides written notice or our notice of non-renewal;
|
|
|
|
|
|
|
•
|
a decrease in executive’s base salary not equally applied (on a
percentage basis) to all employees subject to an employment agreement with
us; or
|
|
|
|
|
|
|
•
|
relocation of our headquarters to a location more than 100 miles
from the location at the time the employment agreement was first executed.
|
We have the
right to terminate Messrs. LaPorte, Abovitz, Frank and Moffat for cause if
such termination is approved by not less than two-thirds of our board of
directors, provided the executive is given at least five days’ advance notice
of such meeting and is given the opportunity to speak at such meeting. If we
terminate the employment of any of these executives for cause or if the
executive terminates his employment without good reason, the executive will be
entitled to receive only accrued but unpaid compensation and reimbursement of
any outstanding reasonable business expenses. Termination for cause may include
termination as a result of any act or failure to act on the part of the
executive that constitutes:
|
|
|
|
|
|
•
|
the willful, knowing or grossly negligent failure or refusal of the
executive to perform his duties under the employment agreement or to follow
the reasonable directions of the Chief Executive Officer which has continued
for 30 days following written notice of such failure or refusal from the
board;
|
|
|
|
|
|
|
•
|
a breach by the executive of any fiduciary duty to us or any of our
subsidiaries for which the executive is required to perform services under
the employment agreement;
|
|
|
|
|
|
|
•
|
material and willful misfeasance or malfeasance by the executive in
connection with the performance of his duties under the employment agreement;
|
|
|
|
|
|
|
•
|
the executive’s commission of an act which is a fraud or
embezzlement;
|
37
Table of Contents
|
|
|
|
|
|
•
|
the conviction of the executive for, or a plea of guilty or nolo
contendere, to a criminal act that is a felony;
|
|
|
|
|
|
|
•
|
a material breach or default by the executive of any provision of the
employment agreement that has continued for 30 days following notice of
breach or default from the board;
|
|
|
|
|
|
|
•
|
the executive’s willful and material breach or violation of any law,
rule or regulation (other than traffic violations or similar offenses);
|
|
|
|
|
|
|
•
|
abuse of drugs or alcohol to our detriment; or
|
|
|
|
|
|
|
•
|
not maintaining his primary residence in the South Florida region.
|
Following the amendment and
restatement of the employment agreements described above under “Compensation
Discussion and Analysis – Employment Agreement and Change in Control
Arrangements,” the agreements for Messrs. LaPorte and Frank also provide for
the accelerated vesting of equity awards that vest based on time upon the
occurrence of a change in control of our company or upon termination of
employment as a result of death or disability, or, as described above, upon an
involuntary termination of employment without cause or a voluntary termination
for good reason. Each employment agreement includes customary non-competition
and non-solicitation restrictions applicable to the executive for a period of
twelve months after the termination of the executive’s employment
(eighteen months if the termination is in connection with a change in control
of our company for Messrs. LaPorte and Frank), as well as customary
confidentiality provisions. Prior to the amendment of the employment agreements
described above under “Compensation Discussion and Analysis – Employment
Agreement and Change in Control Arrangements,” this restricted period was
twelve months under all circumstances. In addition, each of these employment
agreements provides that all confidential information that the executive has
access to, uses or creates during his employment and all intellectual property
resulting from work done by him on our behalf is our property.
Acceleration
of Equity
Pursuant to
the terms of restricted stock and option award agreements we have entered into
with our named executive officers, no additional shares of common stock subject
to any outstanding restricted stock and option awards will vest after
termination of or by the executive for any reason. If the executive is
terminated for cause, the executive will forfeit all rights to his options and
the option will expire immediately. For all other terminations, other than
death or disability, options expire on the ninetieth day after the
termination date. Upon death or disability, options expire twelve months
after the date of death or the date of termination resulting from disability.
Under the
arrangements for our named executive officers that were in place as of December
31, 2008, in the event of a change in control, if the successor entity did not
assume, continue or substitute for outstanding options and restricted stock,
all outstanding shares of our restricted common stock would vest, and either
(i) all options would become immediately exercisable or (ii) the board would
elect to cancel any outstanding grants of options or restricted stock and pay
an amount in cash or securities. These arrangements define a change in control
as the dissolution or liquidation of our company; a merger, consolidation or
reorganization of our company in which our company is not the surviving entity;
a sale of substantially all of our assets; or any transaction that results in
any person (other than certain related persons) owning 50% or more of the
combined voting power of all classes of our common stock.
As
described above, pursuant to the terms of our amended employment agreements
with Messrs. LaPorte and Frank, and under Dr. Ferré’s employment agreement in
place as of December 31, 2008, in the event of a change in control or a
termination of employment as a result of death, disability, without cause or
for good reason, any unvested equity awards that vest on the passage of time
would vest. A “change in control” of our company is defined under these
employment agreements to mean any of the following:
38
Table of Contents
|
|
|
|
|
|
•
|
A
transaction that results in any person (other than certain related persons)
acquiring beneficial ownership of more than 50% of the voting power of the
total combined voting power of our outstanding securities.
|
|
|
|
|
|
|
•
|
A
change in the majority of our directors over a two year period involving
directors whose election or nomination for election by our stockholders has
not been approved by a supermajority of the incumbent board.
|
|
|
|
|
|
|
•
|
Our
completion of an acquisition, merger, consolidation, reorganization, business
combination or disposition of assets meeting specified criteria.
|
|
|
|
|
|
|
•
|
The
approval by our stockholders of a liquidation or dissolution of our company
and the satisfaction or waiver of all material contingencies to such
liquidation or dissolution.
|
Assuming
a December 31, 2008 termination event, under the arrangements then in place,
the aggregate severance and change in control payments to the named executive
officers were estimated to be as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Termination
by
Company Without Cause
or by Employee For
Good Reason
|
|
Change
in Control
|
|
Disability
|
|
Death
|
|
|
Maurice R. Ferré, M.D.
|
|
|
$
|
2,267,901
|
(1)
|
|
|
$
|
2,985,160
|
(2)
|
|
|
$
|
1,940,040(3
|
)
|
|
|
$
|
1,936,898(4
|
)
|
|
|
Fritz L. LaPorte
|
|
|
$
|
118,040
|
(5)
|
|
|
|
—
|
|
|
|
$
|
5,490(6
|
)
|
|
|
$
|
3,239(7
|
)
|
|
|
Rony A. Abovitz
|
|
|
$
|
177,408
|
(8)
|
|
|
|
—
|
|
|
|
$
|
5,721(6
|
)
|
|
|
$
|
3,627(7
|
)
|
|
|
Duncan H. Moffat
|
|
|
$
|
109,083
|
(9)
|
|
|
|
—
|
|
|
|
$
|
4,083(6
|
)
|
|
|
$
|
1,932(7
|
)
|
|
|
Menashe R. Frank
|
|
|
$
|
118,271
|
(10)
|
|
|
|
—
|
|
|
|
$
|
5,721(6
|
)
|
|
|
$
|
3,627(7
|
)
|
|
|
|
|
|
|
|
(1)
|
Represents
a severance payment of $475,000, which equals Dr. Ferré’s base salary, as of
December 31, 2008, plus the average of the largest two cash bonuses received
by Dr. Ferré for performance in 2006, 2007, and 2008, $11,443 associated with
the continuation of healthcare coverage for Dr. Ferré and his family for one
year, and $1,781,458 associated with the accelerated vesting of Dr. Ferré’s
equity awards.
|
|
|
|
|
(2)
|
Represents
a payment of $950,000, which equals two times the severance payment described
in footnote (1) above, plus $11,443 associated with the continuation of
healthcare coverage for Dr. Ferré and his family for one year plus $1,781,458
associated with the accelerated vesting of Dr. Ferré’s equity awards plus a
gross-up payment of $242,259 as a result of these benefits to Dr. Ferré being
subject to an excise tax pursuant to sections 4999 and 280G of the Internal
Revenue Code. Dr. Ferré would have been entitled to these benefits, in lieu
of a severance payment, if he had been terminated without cause as of
December 31, 2008 in anticipation of a change in control of our company or
within two years thereafter. Upon a change in control without such a
termination, Dr. Ferré would have been entitled only to $1,781,458 associated
with the accelerated vesting of his equity awards.
|
|
|
|
|
|
In
determining the amount of the excise tax gross-up included in the table
above, we made the following material assumptions: a section 4999 excise tax
rate of 20%, a 35% federal income tax rate, and a 1.45% Medicare tax rate. We
also assumed that no value will be attributed to reasonable compensation
under any non-competition agreement. At the time of any change in control, a
value may be so attributed, which would result in a reduction of amounts
subject to the excise tax.
|
|
|
|
|
(3)
|
Represents
cash bonus of $150,000 received by Dr. Ferré for performance in 2008, $8,582
associated with the continuation of healthcare coverage for Dr. Ferré and his
family for nine months, and $1,781,458 associated with the accelerated
vesting of Dr. Ferré’s equity awards.
|
|
|
|
|
(4)
|
Represents
cash bonus of $150,000 received by Dr. Ferré for performance in 2008, $5,440
associated with the continuation of healthcare coverage for Dr. Ferré’s
family for nine months, and $1,781,458 associated with the accelerated
vesting of Dr. Ferré’s equity awards.
|
|
|
|
|
(5)
|
Represents
a severance payment of $112,550, which equals the continuation of base
salary, as of December 31, 2008, for a period of six months plus $5,490 associated
with the healthcare coverage for Mr. LaPorte and his family for a period of
six months. No additional severance payments would have been payable upon or
in connection with a change
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39
Table of Contents
|
|
|
|
|
in
control under the agreement in effect on December 31, 2008.
|
|
|
|
|
(6)
|
Represents
the continuation of healthcare coverage for the named executive officer and
his family for a period of six months.
|
|
|
|
|
(7)
|
Represents
the continuation of healthcare coverage for the named executive officer’s
family for a period of six months.
|
|
|
|
|
(8)
|
Represents
a severance payment of $168,826, which equals the continuation of base
salary, as of December 31, 2008, for a period of nine months, plus $8,582
associated with the continuation of healthcare coverage for Mr. Abovitz and
his family for nine months. No additional severance payments would be payable
upon or in connection with a change in control under the agreement in effect
on December 31, 2008.
|
|
|
|
|
(9)
|
Represents
a severance payment of $105,000, which equals the continuation of base
salary, as of December 31, 2009, for a period of six months plus $4,083
associated with the continuation of healthcare coverage for Mr. Moffat and
his family for six months. No additional severance payments would be payable
upon or in connection with a change in control under the agreement in effect
on December 31, 2008.
|
|
|
|
|
(10)
|
Represents
a severance payment of $112,550, which equals the continuation of base
salary, as of December 31, 2008, for a period of six months plus $5,721
associated with the healthcare coverage for Mr. Frank and his family for a
period of six months. No additional severance payments would have been
payable upon or in connection with a change in control under the agreement in
effect on December 31, 2008.
|
Assuming
an April 16, 2009 change in control event, under the current arrangements, the
aggregate severance and change in control payments to the named executive
officers were estimated to be as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in Control
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Termination
by
Company Without
Cause or by
Employee For
Good Reason
|
|
Assuming
No
Termination
|
|
Assuming
Termination
|
|
Disability
|
|
Death
|
|
|
Maurice R. Ferré, M.D.
|
|
|
$
|
2,062,860
|
(1)
|
|
$
|
1,547,417
|
(2)
|
$
|
2,722,436
|
(3)
|
$
|
1,599,561
|
(4)
|
$
|
1,596,419
|
(5)
|
|
Fritz L. LaPorte
|
|
|
$
|
334,038
|
(6)
|
|
$
|
141,782
|
(2)
|
$
|
518,058
|
(7)
|
$
|
147,272
|
(8)
|
$
|
145,021
|
(9)
|
|
Rony A. Abovitz
|
|
|
$
|
184,161
|
(10)
|
|
|
—
|
|
|
—
|
|
$
|
5,721
|
(11)
|
$
|
3,627
|
(12)
|
|
Duncan H. Moffat
|
|
|
$
|
119,083
|
(13)
|
|
|
—
|
|
|
—
|
|
$
|
4,083
|
(11)
|
$
|
1,932
|
(12)
|
|
Menashe R. Frank
|
|
|
$
|
325,477
|
(14)
|
|
$
|
136,251
|
(2)
|
$
|
506,120
|
(15)
|
$
|
141,972
|
(16)
|
$
|
139,878
|
(17)
|
|
|
|
|
(1)
|
Represents
a severance payment of $502,000, which equals the sum of Dr. Ferré’s base
salary, as of April 16, 2009, and the average of the largest two cash bonuses
received by Dr. Ferré for performance in 2006, 2007, and 2008, plus $11,443
associated with the continuation of healthcare coverage for Dr. Ferré and his
family for one year plus $1,547,417 associated with the accelerated vesting
of Dr. Ferré’s equity awards.
|
|
|
|
|
(2)
|
Represents
accelerated vesting of the named executive officer’s equity awards upon a
change in control of our company.
|
|
|
|
|
(3)
|
Represents
a payment of $1,004,000, which equals two times the severance payment
described in footnote (1) above, plus $11,443 associated with the
continuation of healthcare coverage for Dr. Ferré and his family for one year
plus $1,547,417 associated with the accelerated vesting of Dr. Ferré’s equity
awards plus a gross-up payment of $159,576 as a result of these benefits to
Dr. Ferré being subject to an excise tax pursuant to sections 4999 and 280G
of the Internal Revenue Code. Dr. Ferré would have been entitled to these
benefits, in lieu of a severance payment, if he had been terminated without
cause as of April 16, 2009 in anticipation of a change in control of our
company or within two years thereafter.
|
|
|
|
|
|
In
determining the amount of the excise tax gross-up included in the table
above, we made the following material assumptions: a section 4999 excise tax
rate of 20%, a 35% federal income tax rate, and a 1.45% Medicare tax rate. We
also assumed that no value will be attributed to reasonable compensation
under any non-competition agreement. At the time of any change in control, a
value may be so attributed, which would result in a reduction of amounts
subject to the excise tax.
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40
Table of Contents
|
|
|
|
(4)
|
Represents
a prorated cash bonus Dr. Ferré is entitled to with respect to his
performance in 2009 as of April 16, 2009 of $43,562 plus $8,582 associated
with the continuation of healthcare coverage for Dr. Ferré and his family for
nine months plus $1,547,417 associated with the accelerated vesting of Dr.
Ferré’s equity awards.
|
|
|
|
|
(5)
|
Represents
a prorated cash bonus Dr. Ferré is entitled to with respect to his
performance in 2009 as of April 16, 2009 of $43,562 plus $5,440 associated
with the continuation of healthcare coverage for Dr. Ferré’s family for nine
months plus $1,547,417 associated with the accelerated vesting of Dr. Ferré’s
equity awards.
|
|
|
|
|
(6)
|
Represents
a severance payment of $184,020, which equals the continuation of base
salary, as of April 16, 2009, for a period of nine months plus $8,236
associated with the healthcare coverage for Mr. LaPorte and his family for a
period of nine months plus $141,782 associated with the accelerated vesting
of Mr. LaPorte’s equity awards.
|
|
|
|
|
(7)
|
Represents
a payment of $368,040, which is the continuation of base salary, as of April
16, 2009, for a period of eighteen months, plus $8,236 associated with the
continuation of healthcare coverage for Mr. LaPorte and his family for nine
months plus $141,782 associated with the accelerated vesting of Mr. LaPorte’s
equity awards. Under the current employment agreement with Mr. LaPorte, he is
entitled to a payment in connection with a change in control if he is
terminated without cause in anticipation of a change in control or within
nine months after a change in control.
|
|
|
|
|
(8)
|
Represents
$5,490 associated with the continuation of healthcare coverage for Mr.
LaPorte and his family for a period of six months plus $141,782 associated
with the accelerated vesting of Mr. LaPorte’s equity awards.
|
|
|
|
|
(9)
|
Represents
$3,239 associated with the continuation of healthcare coverage for Mr.
LaPorte’s family for a period of six months plus $141,782 associated with the
accelerated vesting of Mr. LaPorte’s equity awards.
|
|
|
|
|
(10)
|
Represents
a severance payment of $175,579, which is the continuation of base salary, as
of April 16, 2009, for nine months plus $8,582 associated with the
continuation of healthcare coverage for Mr. Abovitz and his family for a
period of nine months. No additional severance payments would be payable upon
or in connection with a change in control under the agreement in effect on
April 16, 2009.
|
|
|
|
|
(11)
|
Represents
the continuation of healthcare coverage for the named executive officer and
his family for a period of six months.
|
|
|
|
|
(12)
|
Represents
the continuation of healthcare coverage for the named executive officer’s
family for a period of six months.
|
|
|
|
|
(13)
|
Represents
a severance payment of $115,000, which is the continuation of base salary, as
of April 16, 2009, for six months plus $4,083 associated with the
continuation of healthcare coverage for Mr. Moffat and his family for a
period of six months. No additional severance payments would be payable upon
or in connection with a change in control under the agreement in effect on
April 16, 2009.
|
|
|
|
|
(14)
|
Represents
a severance payment of $180,644, which equals the continuation of base
salary, as of April 16, 2009, for a period of nine months plus $8,582
associated with the healthcare coverage for Mr. Frank and his family for a
period of nine months plus $136,251 associated with the accelerated vesting
of Mr. Frank’s equity awards.
|
|
|
|
|
(15)
|
Represents
a payment of $361,287, which is the continuation of base salary, as of April
16, 2009, for a period of eighteen months, plus $8,582 associated with the
continuation of healthcare coverage for Mr. Frank and his family for nine
months plus $136,251 associated with the accelerated vesting of Mr. Frank’s
equity awards. Under the current employment agreements with Mr. Frank, he is
entitled to a payment in connection with a change in control if he is
terminated without cause in anticipation of a change in control or within
nine months after a change in control.
|
|
|
|
|
(16)
|
Represents
$5,721 associated with the continuation of healthcare coverage for Mr. Frank
and his family for a period of six months plus $136,251 associated with the
accelerated vesting of Mr. Frank’s equity awards.
|
|
|
|
|
(17)
|
Represents $3,627 associated with the continuation of healthcare
coverage for Mr. Frank’s family for a period of six months plus $136,251
associated with the accelerated vesting of Mr. Frank’s equity awards.
|
41
Table of Contents
AUDIT
COMMITTEE REPORT
Our audit
committee is composed of four “independent” directors, as determined in
accordance with Rule 4200(a)(15) of The NASDAQ Stock Market’s regulations and
Rule 10A-3 of the Securities Exchange Act of 1934, as amended. The audit
committee operates pursuant to a written charter adopted by our board of
directors, a copy of which is available on the Investor Relations page of our
website at
www.makosurgical.com
.
As
described more fully in its charter, the purpose of our audit committee is to
assist the board of directors with its oversight responsibilities regarding the
integrity of our company’s financial statements, our compliance with legal and
regulatory requirements, assessing the independent registered public accounting
firm’s qualifications, independence and performance. Management is responsible
for preparation, presentation and integrity of our financial statements as well
as our financial reporting process, accounting policies, internal accounting
controls and disclosure controls and procedures. The independent registered
public accounting firm is responsible for performing an independent audit of
our financial statements in accordance with generally accepted auditing
standards and to issue a report thereon. The audit committee’s responsibility
is to monitor and oversee these processes. The following is the audit
committee’s report submitted to our board of directors for 2008.
The
audit committee has:
|
|
|
|
|
|
•
|
reviewed and discussed our audited financial statements with
management and Ernst & Young LLP, our independent registered public
accounting firm;
|
|
|
•
|
discussed with Ernst & Young LLP the matters required to be
discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees
,
as amended and adopted by the Public Company Accounting Oversight Board, or
PCAOB, in Rule 3200T; and
|
|
|
•
|
received from Ernst & Young LLP the written disclosures and
the letter regarding their communications with the audit committee concerning
independence as required by the applicable requirements of the PCAOB and
discussed with Ernst & Young LLP the auditors’ independence from our
company and management.
|
In
addition, the audit committee has met separately with management and with
Ernst & Young LLP.
Based on
the review and discussions referred to above, our audit committee recommended
to the board of directors that the audited financial statements be included in
our Annual Report on Form 10-K for the year ended December 31, 2008 for
filing with the Securities and Exchange Commission.
|
|
|
|
|
AUDIT
COMMITTEE
|
|
|
|
|
|
Gerald A.
Brunk, Chairman
|
|
|
Marcelo G.
Chao
|
|
|
Charles W.
Federico
|
|
|
William D.
Pruitt
|
The
foregoing audit committee report shall not be deemed incorporated by reference
into any filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934 and shall not otherwise be deemed filed under these acts, except to the
extent we specifically incorporate it by reference into such filings.
42
Table of Contents
RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit
committee has appointed Ernst & Young LLP as our independent
registered public accounting firm for the year ending December 31, 2009,
and our board of directors has directed management to submit the appointment of
Ernst & Young LLP for ratification by the stockholders at the annual
meeting.
Ernst &
Young LLP has audited our financial statements since our inception in 2004. Representatives
of Ernst & Young LLP will be present at the annual meeting, will have
the opportunity to make a statement if they desire to do so, and will be
available to respond to questions from stockholders.
Stockholder
ratification of Ernst & Young LLP as our independent registered public
accounting firm is not required by our bylaws or otherwise. Our board of
directors is seeking such ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection of Ernst & Young LLP
as our independent registered public accounting firm, our audit committee will
consider whether to retain that firm for 2009.
A majority
of the shares present in person or by proxy and entitled to vote at the annual
meeting is required for ratification of the appointment of Ernst & Young
LLP as our independent registered public accounting firm for 2009.
Our
board of directors recommends that you vote “FOR” the ratification of the
appointment of Ernst & Young LLP as our independent registered public
accounting firm for 2009. Shares of common stock represented by executed, but
unmarked, proxies will be voted “FOR” such ratification.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
PRINCIPAL ACCOUNTING FEES AND SERVICES
Our
auditors for the year ended December 31, 2008 were Ernst & Young
LLP. We expect that Ernst & Young LLP will serve as our auditors for
fiscal year 2009.
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|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Audit
fees(1)
|
|
$
|
385,500
|
|
$
|
1,037,000
|
|
|
Audit-related
fees(2)
|
|
|
50,000
|
|
|
—
|
|
|
Tax fees
|
|
|
—
|
|
|
—
|
|
|
All other
fees(3)
|
|
|
1,500
|
|
|
2,000
|
|
|
Total fees
|
|
$
|
437,000
|
|
$
|
1,039,000
|
|
|
|
|
|
|
|
(1)
|
Represents
fees for the audit of our annual consolidated financial statements and
reviews of the interim financial statements. Included in the audit fees for
2008 are fees totaling $38,000 incurred in connection with our equity
financing which closed on October 31, 2008. Included in the audit fees for
2007 are fees totaling $837,000 incurred in connection with our initial
public offering.
|
|
|
(2)
|
Represents
fees incurred in connection with providing consultation services in
connection with the Company’s reporting on internal control over financial
reporting as of December 31, 2008 in anticipation of an audit of the Company’s
internal control over financial reporting in 2009.
|
|
|
(3)
|
Represents
subscription fees for the EY Online web-based research service.
|
PRE-APPROVAL POLICIES AND PROCEDURES
The
audit committee has established a pre-approval policy that provides for the
pre-approval of audit, audit-related, tax and other services specifically
described by the committee on an annual basis. Unless a type of service is
pre-approved under the policy, it will require separate pre-approval by the
committee if it is to be provided by our independent registered public
accounting firm. The policy authorizes the committee to delegate to one or
43
Table of Contents
more of its
members pre-approval authority with respect to permitted services.
Mr. Pruitt, our Audit Committee Chairman, has the delegated authority to
pre-approve such services up to a specified aggregate fee amount. These
pre-approval decisions are presented to the full Audit Committee at its next
scheduled meeting.
All audit
and other fees for services set forth in the table above were pre-approved by
our audit committee, which concluded that the provision of such services by
Ernst & Young LLP was compatible with the maintenance of that firm’s
independence in the conduct of its auditing functions.
DELIVERY OF PROXY
MATERIALS TO HOUSEHOLDS
Pursuant to
the rules of the SEC, services that deliver our communications to stockholders
that hold their stock through a bank, broker or other holder of record may
deliver to multiple stockholders sharing the same address a single copy of our
annual report to stockholders and this proxy statement. Upon oral or written
request, we will promptly deliver a separate copy of the annual report to
stockholders or this proxy statement to any stockholder at a shared address to
which a single copy of the document was delivered. Stockholders sharing an
address may also request delivery of a single copy of the annual report or
proxy statement if they are currently receiving multiple copies of such
documents. Stockholders may notify us of their requests by calling or writing
to Menashe R. Frank, Senior Vice President, General Counsel and Secretary, MAKO
Surgical Corp., 2555 Davie Road, Ft. Lauderdale, Florida 33317, telephone
number: (954) 927-2044.
OTHER MATTERS
Our board
of directors knows of no other matters to be presented at the annual meeting
other than those mentioned in this proxy statement. If any other matters are
properly brought before the annual meeting, it is intended that the proxies
will be voted in accordance with the best judgment of the person or persons
voting the proxies.
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|
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|
By Order of
the Board of Directors,
|
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|
|
MAKO
Surgical Corp.
|
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|
|
|
|
|
|
Menashe R.
Frank
|
|
|
|
Secretary
|
|
|
|
Fort Lauderdale, Florida
|
|
|
|
April 30, 2009
|
|
|
We will furnish to any stockholder, without
charge, a copy of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2008. You may obtain a copy of the Form 10-K by writing to Menashe
R. Frank, Senior Vice President, General Counsel and Secretary, MAKO Surgical
Corp., 2555 Davie Road, Ft. Lauderdale, Florida 33317 or on our website at
www.makosurgical.com.
44
MAKO SURGICAL CORP.
BANK OF NEW YORK MELLON
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 358015
PITTSBURGH, PA 15252-8015
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time on
June 10, 2009. Have your proxy card in hand when you access the web site and
follow the instructions to obtain your records and to
create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by MAKO
Surgical Corp. in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or
access stockholder communications electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up
until 11:59 P.M. Eastern Time on June 10, 2009. Have your proxy
card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to MAKO Surgical Corp.,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M14117-P78767
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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MAKO SURGICAL CORP.
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark
“For All Except” and write the number(s) of the nominee(s) on the
line below.
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THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” ALL THE LISTED DIRECTOR NOMINEES AND “FOR” ITEM 2.
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o
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o
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o
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Vote on Directors
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1.
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ELECTION OF DIRECTORS
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Nominees:
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01) Charles W. Federico
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02) Maurice R. Ferré, M.D.
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03) Frederic H. Moll, M.D.
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Vote on Proposal
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For
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Against
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Abstain
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2.
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Proposal to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for 2009.
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o
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o
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The shares represented by this proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
Stockholder(s).
If no direction is made, the shares represented by
this proxy will be voted FOR all listed director nominees and FOR
Item 2.
If any other matters properly come before the meeting,
the persons named in this proxy will vote in their discretion.
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For address changes and/or comments, please check this box and write them on
the back where indicated.
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o
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Please indicate if you plan to attend this meeting.
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o
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o
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Yes
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No
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(
NOTE:
Please sign exactly as
your name(s) appear(s) hereon. All holders must sign. When signing as attorney,
executor, administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. If a corporation, please sign in full corporate name,
by authorized officer. If a partnership, please sign in partnership name by authorized person.)
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Signature [PLEASE SIGN WITHIN
BOX]
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Date
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Signature (Joint Owners)
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Date
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Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice of
Meeting, Proxy Statement and our 2008 Annual Report to Stockholders are
available at
www.proxyvote.com.
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M14118-P78767
MAKO SURGICAL CORP.
THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2009 ANNUAL
MEETING OF STOCKHOLDERS
June 11, 2009
The
stockholder(s) hereby appoint(s) Menashe R. Frank and Fritz L. LaPorte, or
either of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
side of this ballot, all of the shares of Common Stock of MAKO Surgical Corp.
that the stockholder(s) is/are entitled to vote at the 2009 Annual Meeting of
Stockholders to be held at 10:00 a.m., Eastern Time, on June 11, 2009, at the
company’s headquarters, 2555 Davie Road, Ft. Lauderdale, Florida 33317, and at
any adjournment or postponement thereof.
THIS PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO
SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED FOR THE BOARD OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE MARK,
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY
ENVELOPE.
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Address
Changes/Comments:
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(If you noted any Address
Changes/Comments above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON
REVERSE SIDE
Mako Surgical Corp. (MM) (NASDAQ:MAKO)
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