UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment
No.
)
Filed by the Registrant
x
Filed by a Party other
than the Registrant
¨
Check the appropriate box:
¨
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Preliminary Proxy Statement
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¨
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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¨
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Definitive Additional Materials
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¨
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Soliciting Material Pursuant to § 240.14a-12
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SOLTA MEDICAL, INC.
(Exact name of registrant as
specified in its charter)
(Name of person(s) filing proxy
statement, if other than the registrant)
Payment of Filing Fee
(Check the appropriate box):
¨
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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¨
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Fee paid previously with preliminary materials.
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¨
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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NOTICE OF
2011 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 2011
To our stockholders:
You are cordially invited to attend the 2011 Annual Meeting of Stockholders of Solta Medical, Inc. The meeting will be held at our principal executive offices located at 25881 Industrial Boulevard,
Hayward, California 94545 on Thursday, June 2, 2011, for the following purposes:
1. To elect two Class II directors,
to serve a three-year term which will expire at the 2014 Annual Meeting of Stockholders or until such time as their respective successors have been duly elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2011;
3. Hold an advisory vote on executive compensation;
4. Hold an advisory vote on the frequency with which an advisory vote on executive compensation should be held; and
5. To transact such other business as may properly come before the Annual Meeting, including any motion to adjourn to a later date to permit further solicitation of proxies, if necessary, or before any
adjournment thereof.
The foregoing items of business are more fully described in the proxy statement accompanying this
notice.
The meeting will begin promptly at 9:00 a.m. local time, and check-in will begin at 8:30 a.m. local time. Only those
who are Solta Medical common stockholders of record at the close of business on April 15, 2011 will be entitled to vote and to receive notice of the Annual Meeting and any postponements or adjournments thereof.
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By order of the board of directors,
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By:
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/s/ Stephen J. Fanning
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Stephen J. Fanning
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Chairman, President and Chief Executive Officer
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Hayward, California
April 22, 2011
YOUR VOTE IS IMPORTANT!
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE PROMPTLY. YOU MAY VOTE VIA THE INTERNET OR BY TELEPHONE, IN EACH CASE AS INSTRUCTED ON THE
ENCLOSED PROXY CARD; OR, YOU MAY COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD IN POSTAGE-PAID ENVELOPE PROVIDED. NO ADDITIONAL POSTAGE IS NECESSARY IF THE PROXY IS MAILED IN THE UNITED STATES. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE
IT IS VOTED AT THE MEETING.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 2, 2011.
The Companys Proxy Statement, form of proxy card and Annual Report on Form 10-K are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=178331&p=proxy
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TABLE OF CONTENTS
i
ii
PROXY STATEMENT
FOR
2011 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 2011
The board of directors of Solta Medical, Inc., a Delaware corporation, is soliciting the enclosed proxy from you. The proxy will be used at our 2011 Annual Meeting of Stockholders to be held on Thursday,
June 2, 2011, beginning at 9:00 a.m., local time, at our principal executive offices located at 25881 Industrial Boulevard, Hayward, California 94545, and at any postponements or adjournments thereof. This proxy statement contains important
information regarding the meeting. Specifically, it identifies the matters upon which you are being asked to vote, provides information that you may find useful in determining how to vote and describes the voting procedures.
In this proxy statement: the terms
we
,
our
,
Solta Medical
and
Company
each refer to Solta Medical, Inc.; the term
proxy materials
means this proxy statement, the enclosed proxy card and our Annual Report, which you should read together with our Form 10-K, as amended,
for the year ended December 31, 2010, filed with the U.S. Securities and Exchange Commission on March 16, 2011; and the term
Annual Meeting
means our 2011 Annual Meeting of Stockholders.
We are sending these proxy materials on or about April 22, 2011, to all stockholders of record at the close of business on
April 15, 2011 (the
Record Date
).
QUESTIONS AND ANSWERS REGARDING THIS
SOLICITATION
AND VOTING AT THE ANNUAL MEETING
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Why am I receiving these proxy materials?
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You are receiving these proxy materials from us because you were a stockholder of record at the close of business on the Record Date which was April 15, 2011. As a
stockholder of record, you are invited to attend the meeting and are entitled to and requested to vote on the items of business described in this proxy statement.
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What is the purpose of the annual meeting?
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At our meeting, stockholders of record will vote upon the items of business outlined in the notice of meeting (on the cover page of this proxy statement), each of which is
described more fully in this proxy statement. In addition, management will be available to respond to questions from stockholders.
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Who is entitled to attend the meeting?
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You are entitled to attend the meeting
only
if you were a Solta Medical stockholder (or joint holder) of record as of the
close of business on April 15, 2011, or if you hold a valid proxy for the meeting. You should be prepared to present photo identification for admittance.
Please also note that if you are not a stockholder of record but hold shares in
street name
(that is, through a broker or nominee), you will need
to provide proof of beneficial ownership as of the Record Date, such as your most recent brokerage account statement, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of
ownership.
The meeting will begin promptly at 9:00 a.m., local time.
Check-in will begin at 8:30 a.m., local time.
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Who is entitled to vote at the meeting?
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Only stockholders who owned our common stock at the close of business on the Record Date are entitled to notice of the Annual Meeting and to vote at the meeting, and at any
postponements or adjournments thereof.
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How many shares must be present to conduct business?
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The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of our common stock at the close of business on the Record Date will constitute a
quorum. A quorum is required to conduct business at the meeting. Both abstentions and broker non-votes are counted for the purpose of determining the presence of a quorum.
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What will be voted on at the meeting?
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The items of business scheduled to be voted on at the meeting are as follows:
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1. the election of three nominees to serve as Class II directors on our
board; and
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2. the ratification of the appointment of our independent registered public accounting firm
for the 2010 fiscal year;
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3. an advisory vote on executive compensation; and
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4. an advisory vote on the frequency of with which an advisory vote on executive
compensation should be held.
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These proposals are described more fully below in this proxy statement. As of the date of this proxy statement, the only business that our board intends to present or knows of
that others will present at the meeting is set forth in this proxy statement. If any other matter or matters are properly brought before the meeting, it is the intention of the persons who hold proxies to vote the shares they represent in accordance
with their best judgment.
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How does the board recommend that I vote?
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Our board recommends that you vote your shares FOR the director nominees, FOR the ratification of independent registered public accounting firm for the
2010 fiscal year and FOR the proposal relating to executive compensation and for the holding of an advisory vote on executive compensation on an annual basis.
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What shares can I vote at the meeting?
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You may vote all shares owned by you as of the Record Date, including (1) shares held directly in your name as the
stockholder of record
, and (2) shares held for you as
the
beneficial owner
through a broker, trustee or other nominee such as a bank.
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What is the difference between holding shares as a stockholder of record and as a beneficial owner?
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Most of our stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized
below, there are some distinctions between shares held of record and those owned beneficially.
Stockholders of Record.
If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered, with respect to those
shares, the
stockholder of record
, and these proxy materials are being sent directly to you by us. As the
stockholder of record
, you have the right to grant your voting proxy directly to Solta Medical or to vote in person at the
meeting. We have enclosed a proxy card for you to use.
Beneficial
Owner.
If your shares are held in a brokerage account or by another nominee, you are considered the
beneficial owner
of shares held in
street name
, and these proxy materials are being forwarded to you together with a voting
instruction card. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote and are also invited to attend the meeting. Please note that since a beneficial owner is not the
stockholder of record
, you
may not vote these shares in person at the meeting unless you obtain a legal proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting. Your broker, trustee or nominee has
enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares.
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How can I vote my shares without attending the meeting?
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Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the meeting. Stockholders
of record of our common stock may submit proxies by completing, signing and dating their proxy cards and mailing them in the accompanying pre-addressed envelope. Solta Medical stockholders who hold shares beneficially in street name may vote by mail
by completing, signing and dating the voting instruction cards provided by the broker, trustee or nominee and mailing them in the accompanying pre-addressed envelope. In addition, if you are a stockholder of record, you may grant a proxy to vote
your shares at the annual meeting by telephone, by calling 1 (800) PROXIES (1 (800) 776-9437) and following the simple recorded instructions, twenty-four hours a day, seven days a week, at any time prior to 11:59 p.m. on June 1, 2011,
the day before the annual meeting. Alternatively, as a stockholder of record, you may vote via the Internet at any time prior to 11:59 p.m. on June 1, 2011, the day before the annual meeting, by going to http://www.voteproxy.com to create an
electronic ballot. If you vote by telephone or the Internet, you will be required to provide the control number contained on your proxy card. If your shares are held in street name, your proxy card may contain instructions from your broker, bank or
nominee that allow you to vote your shares using the Internet or by telephone. Please consult with your broker, bank or nominee if you have any questions regarding the electronic voting of shares held in street name. The granting of proxies
electronically is allowed by Section 212(c)(2) of the Delaware General Corporation Law.
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How can I vote my shares in person at the meeting?
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Shares held in your name as the stockholder of record may be voted in person at the meeting. Shares held beneficially in street name may be voted in person only if you obtain a
legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares.
Even if you plan to attend the meeting, we recommend that you also submit your proxy card or voting instructions as described above
so that your vote will be counted if you later decide not to, or are unable to, attend the meeting.
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Can I change my vote?
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You may change your vote at any time prior to the vote at the meeting. If you are the stockholder of record, you may change your vote
by granting a new proxy bearing a later date (which automatically revokes the earlier proxy), by providing a written notice of revocation to our Secretary prior to your shares being voted, or by attending the meeting and voting in person. Attendance
at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request.
For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee, or, if you have obtained a legal proxy from your broker,
trustee or nominee giving you the right to vote your shares, by attending the meeting and voting in person.
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What votes are required for the items subject to approval at the meeting ?
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The vote required to approve each item of business and the method for counting votes is set forth below:
Election of Directors.
The director nominees receiving the highest number of
affirmative FOR votes at the meeting (a plurality of votes cast) will be elected to serve as Class II directors. You may vote either FOR or WITHHOLD your vote for the director nominees. A properly executed
proxy marked WITHHOLD with respect to the election of a director will not be voted with respect to the director, although it will be counted for purposes of determining whether there is a quorum.
Ratification of Independent Registered Public Accounting Firm and Advisory Vote on
Executive Compensation
. For the ratification of the appointment of our independent registered public accounting firm and for the advisory vote on executive compensation, the affirmative FOR vote of a majority of the shares
represented in person or by proxy
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and entitled to vote on the item will be required for approval. You may vote FOR, AGAINST or
ABSTAIN for this item of business. If you choose to ABSTAIN, your abstention has the same effect as a vote AGAINST.
Frequency of Shareholder Vote Executive Compensation.
The frequency of the advisory vote on executive compensationEVERY THREE
YEARS, EVERY TWO YEARS or EVERY ONE YEARreceiving the largest number of votes of the shares represented in person or by proxy and entitled to vote on the item will be regarded as the frequency that stockholders
approve. You may vote EVERY THREE YEARS, EVERY TWO YEARS EVERY ONE YEAR or ABSTAIN for this item of business.
If you provide specific written instructions with regard to certain items, your shares will be voted as you instruct on such items. If you sign your proxy
card or voting instruction card without giving specific instructions, your shares will be voted in accordance with the recommendations of the board (FOR our nominees to the board, FOR ratification of the independent
registered public accounting firm, FOR the advisory vote on executive compensation and for the holding of an annual advisory vote on executive compensation and in the discretion of the proxy holders on any other matters that properly
come before the meeting).
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What is a broker non-vote?
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A broker non-vote occurs when a broker expressly instructs on a proxy card that it is not voting on a matter, whether routine or non-routine. Under the rules that
govern brokers who have record ownership of shares that are held in street name for their clients, who are the beneficial owners of the shares, brokers have the discretion to vote such shares on routine matters, which include ratifying the
appointment of independent registered public accounting firm but does not include the election of directors or the approval of the amendment and restatement of the 2006 Equity Incentive Plan. Therefore, if you do not otherwise instruct your broker,
the broker may turn in a proxy card voting your shares FOR the ratification of the independent registered public accounting firm. However, if you do not instruct your broker how to vote with respect to the election of directors, your
broker may not vote with respect to such proposal and your shares will not be counted as voting in favor of the election of directors and, similarly, if you do not instruct your broker regarding the advisory votes on executive compensation or the
frequency of approval of executive compensation, your broker may not vote with respect to such proposals and your shares will not be counted as voting in favor of either proposal.
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How are broker non-votes counted?
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Broker non-votes will be counted for the purpose of determining the presence or absence of a quorum for the transaction of business, but they will not be counted in tabulating
the voting result for any particular proposal.
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How are abstentions counted?
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If you return a proxy card that indicates an abstention from voting on all matters, the shares represented will be counted for the purpose of determining both the presence of a
quorum and the total number of votes cast with respect to a proposal but they will not be voted on any matter at the meeting. In the absence of controlling precedent to the contrary, we intend to treat abstentions in this manner. Accordingly,
abstentions will have the same effect as a vote AGAINST a proposal.
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What happens if additional matters are presented at the meeting?
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Other than the four proposals described in this proxy statement, we are not aware of any other business to be acted upon at the meeting, and we have not received notification of
any proposal to be made by stockholders within the time frame required by our Bylaws . If you grant a proxy, the persons named as proxy holders, Stephen J. Fanning (a Director and our President and Chief Executive Officer) and John F. Glenn (our
Chief Financial Officer), will have the discretion to vote your shares on any additional matters properly
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presented for a vote at the meeting. If, for any unforeseen reason, any of our nominees is not available as a candidate for director, the persons named as proxy holders will vote
your proxy for such other candidate as may be nominated by our board.
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Who will serve as inspector of election?
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We expect a representative of American Stock Transfer & Trust Company, our transfer agent, to tabulate the votes and expect John F. Glenn, our Chief Financial Officer,
to act as inspector of election at the meeting.
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What should I do if I receive more than one proxy?
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You may receive more than one set of these proxy solicitation materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards.
For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. In addition, if you are a stockholder of record and your shares are
registered in more than one name, you may receive more than one proxy card. Please complete, sign, date and return each Solta Medical proxy card and voting instruction card that you receive to ensure that all your shares are voted.
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Who is soliciting my vote and who is paying the costs?
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Your vote is being solicited on behalf of the board, and we will pay the costs associated with the solicitation of proxies, including preparation, assembly, printing and mailing
of this proxy statement.
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How can I find out the results of the voting?
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We intend to announce preliminary voting results at the annual meeting and file a Form 8-K within four business days after the end of our annual meeting to report the voting
results.
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What is the deadline for proposing action or director candidates?
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As a stockholder, you may be entitled to present proposals for action at a future meeting of stockholders, including director
nominations.
Stockholder Proposals:
For a stockholder proposal to
be considered for inclusion in the Solta Medical proxy statement for the annual meeting to be held in 2012, the written proposal must be received by our Corporate Secretary at our principal executive offices no later than December 23, 2011. If
the date of next years annual meeting is moved more than 30 days before or after the anniversary date of this years annual meeting, the deadline for inclusion of proposals in our proxy statement will instead be a reasonable time before
we begin to print and mail next years proxy materials. Stockholder proposals must comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the
Exchange Act
),
and any other applicable rules established by the U.S. Securities and Exchange Commission (the
SEC
). Proposals should be addressed to:
Secretary
Solta Medical, Inc.
25881 Industrial Boulevard
Hayward, California 94545
Nomination of Director Candidates and other stockholder proposal:
If you wish
to nominate a director candidate for the 2012 annual meeting, or submit a proposal for consideration at that meeting, your nomination or proposal should include information required by our Bylaws and should be directed to our Corporate Secretary at
the address of our principal executive offices set forth above. In addition, any such nomination or proposal must be submitted within the time period set forth above for Stockholder Proposals.
Copy of Bylaw Provisions:
You may contact the Corporate Secretary at our
principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.
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How can I obtain the proxy materials on the Internet?
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This Proxy Statement, the form of proxy card and the Annual Report on Form 10-K are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=178331&p=proxy
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STOCK OWNERSHIP
Security Ownership of Certain Beneficial Owners and Management
The following table provides information relating to the beneficial ownership of our common stock as of April 15, 2011, except where
otherwise noted, by:
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each stockholder known by us to own beneficially more than 5% of our common stock;
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each of our executive officers named in the summary compensation table on page 27 (our Chief Executive Officer, our Chief Financial Officer and our
three other most highly compensated executive officers);
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each of our current directors; and
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all of our directors and executive officers as a group.
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The number of shares beneficially owned by each entity, person, director or executive officer is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has the sole voting power, shared voting power, or investment power and includes any shares that the individual has the
right to acquire within 60 days of April 15, 2011 through the exercise of any stock option or other right. The number and percentage of shares beneficially owned is computed on the basis of 60,475,441 shares of our common stock
outstanding as of April 15, 2011. The information in the following table regarding the beneficial owners of more than 5% of our common stock is based upon information supplied by our principal stockholders or Schedules 13D and 13G filed with
the SEC.
Shares of our common stock that a person has the right to acquire within 60 days of April 15, 2011 are deemed
outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership
of all directors and executive officers as a group. To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person or entity named in the table has sole voting and dispositive
power with respect to the shares set forth opposite such persons or entitys name. The address for those persons for whom an address is not otherwise provided is c/o Solta Medical, Inc., 25881 Industrial Boulevard, Hayward,
California 94545.
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Beneficial Owner
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Number of
Shares
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Options
Exercisable
Within
60 Days
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Approximate
Percent
Owned
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5% Stockholders
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Individuals and entities affiliated with Three Arch Capital, L.P.
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6,582,733
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(1)
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10.88
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%
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3200 Alpine Road
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Portola Valley, CA 94028
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Individuals and entities affiliated with Meritech Capital Partners
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5,345,804
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(2)
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8.84
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%
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245 Lytton Ave, Suite 350
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Palo Alto, CA 94301
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Individuals and entities affiliated with Delphi Ventures, L.P.
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3,490,091
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(3)
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5.77
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%
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3000 Sand Hill Road
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Menlo Park, CA 94025
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Individuals and entities affiliated with Longitude Capital Partners, LLC
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3,123,681
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(4)
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1,237,624
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(5)
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7.07
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%
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800 El Camino Real, Ste 220
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Menlo Park, CA 94025
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Individuals and entities affiliated with Great Point Partners, LLC
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2,115,925
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(6)
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1,485,149
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(7)
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5.81
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%
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165 Mason Street, 3rd Floor
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Greenwich, CT 06830
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Named Executive Officers, Directors and Director Nominees
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Stephen J. Fanning
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266,270
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1,344,206
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2.61
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%
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John F. Glenn
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103,923
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278,706
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*
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Clint Carnell
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162,710
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117,394
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*
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William Brodie
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80,620
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181,665
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*
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Jeffrey Nardoci
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51,400
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16,667
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*
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Harold L. Covert
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80,416
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*
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Cathy L. McCarthy
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80,416
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*
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Mark M. Sieczkarek
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93,214
|
|
|
|
*
|
|
Eric B. Stang(8)
|
|
|
5,122
|
|
|
|
62,105
|
|
|
|
*
|
|
Edward W. Knowlton, M.D.
|
|
|
850,000
|
|
|
|
120,416
|
|
|
|
1.60
|
%
|
Linda Graebner
|
|
|
|
|
|
|
4,166
|
|
|
|
*
|
|
All executive officers, directors and director nominee as a group (14 persons)
|
|
|
1,621,686
|
|
|
|
2,703,784
|
|
|
|
6.85
|
%
|
*
|
Indicates ownership of less than 1%.
|
(1)
|
Consists of 6,285,596 shares held by Three Arch Capital, L.P. (TAC) and 297,137 shares held by TAC Associates, L.P. (TACA). TAC Management,
L.L.C. (TACM), the general partner of TAC and TACA, may be deemed to have sole power to vote and sole power to dispose of shares directly owned by TAC and TACA. Barclay Nicholson (Nicholson), Wilfred Jaeger
(Jaeger) and Mark Wan (Wan) are the managing members of TACM and may be deemed to have shared power to vote and shared power to dispose of shares directly owned by TAC and TACA.
|
(2)
|
Consists of 5,173,142 shares held by Meritech Capital Partners II L.P. (MCP II), 133,108 shares held by Meritech Capital Affiliates II L.P. (MC AFF
II), and 39,554 shares held by MCP Entrepreneur Partners II L.P. (MEP II). Meritech Capital Associates II L.L.C. (MCA II) is the general partner of MCP II, MC AFF II and MEP II, and may be deemed to have indirect
beneficial ownership of the shares directly owned by MCP II, MC AFF II and MEP II. Meritech Management Associates II L.L.C. (MMA II) is a managing member of MCA II and may be deemed to have indirect beneficial ownership of the shares
directly owned by MCP II, MC AFF II and MEP II. Paul Madera (Madera) and Michael Gordon (Gordon) are managing members of MMA II and may be deemed to have indirect beneficial ownership of the shares directly owned by MCP II,
MC AFF II and MEP II.
|
-8-
(3)
|
Consists of 2,737,315 shares held by Delphi Ventures VII, L.P. (DV VII), 27,370 shares held by Delphi BioInvestments VII, L.P. (DBI VII),
717,624 shares held by Delphi Ventures V, L.P. (DV V), and 7,782 shares held by Delphi BioInvestments V, L.P. (DBI V). Delphi Management Partners VII, L.L.C. (DMP VII) is the general partner of DV VII and DBI VII
and may be deemed to have sole power to vote and sole power to dispose of shares directly owned by DV VII and DBI VII. James J. Bochnowski (Bochnowski), David L. Douglass (Douglass), John F. Maroney (Maroney),
Douglas A. Roeder (Roeder) and Deepika R. Pakianathan, Ph.D. (Pakianathan) are the managing members of DMP VII and may be deemed to have shared power to vote and shared power to dispose of the shares directly owned by DV VII
and DBI VII. Delphi Management Partners V, L.L.C. (DMP V) is the general partner of DV V and DBI V and may be deemed to have sole power to vote and sole power to dispose of shares directly owned by DV V and DBI V. Bochnowski, Douglass,
Donald J. Lothrop (Lothrop), and Kevin L. Roberg (Roberg) are the managing members of DMP V and may be deemed to have shared power to vote and shared power to dispose of the shares directly owned by DV V and DBI V.
|
(4)
|
Consists of 3,062,307 shares of common stock owned of record by Longitude Venture Partners, L.P. (LVP), and 61,374 shares of common stock owned of record by
Longitude Capital Associates, L.P. (LCA). Longitude Capital Partners, LLC (Longitude Capital), as general partner of each of LVP and LCA, has the power to vote and dispose of securities held by each of them and may be deemed
to have beneficial ownership of the shares owned by LVP and LCA. Patrick G. Enright (Enright) and Juliet Tammenoms Bakker (Bakker) are each managing members of Longitude Capital, and share the decision making power of
Longitude Capital and may be deemed to have beneficial ownership of the shares owned by LVP and LCA. Each of Longitude Capital, Enright and Bakker disclaims beneficial ownership of all securities, including the shares underlying the warrants
described in footnote 5 below, except to the extent of their pecuniary interest therein.
|
(5)
|
Consists of 1,213,305 shares underlying a warrant held by LVP and 24,319 shares underlying a warrant held by LCA.
|
(6)
|
Consists of 811,105 shares owned by Biomedical Value Fund, LP (BVF), 423,184 shares owned by Biomedical Offshore Value Fund, Ltd. (BOVF),
528,986 shares owned by Class D Series of GEF-PS, L.P. (GEF-PS), 352,650 shares owned by Biomedical Institutional Value Fund, LP (BIVF). Great Point Partners, LLC (Great Point) is the investment manager of BVF,
BOVF and GEF-PS and by virtue of such status may be deemed to be the beneficial owner of the shares owned by BVF, BOVF and GEF-PS. Each of Jeffrey R. Jay, M.D. (Jay), as senior managing member of Great Point, and David Kroin
(Kroin), as special managing member of Great Point, has voting and investment power with respect to the shares owned by BVF, BOVF and GEF-PS, and therefore may be deemed to be the beneficial owner of the shares owned by BVF, BOVF and
GEF-PS. Each of Great Point, Jay and Kroin disclaim beneficial ownership of the shares owned by BVF, BOVF and GEF-PS and the shares underlying the warrants described in footnote 7 below, except to the extent of their respective pecuniary interests.
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(7)
|
Consists of 569,307 shares underlying a warrant held by BVF, 297,030 shares underlying a warrant held by BOVF, 371,287 shares underlying a warrant held by GEF-PS and
247,525 shares underlying a warrant held by BIVF.
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(8)
|
Includes 50 shares held by Stang Family Trust.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, officers and beneficial owners of more than 10% of our common stock to file
reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms received by us, or written representations from reporting persons that no Forms 3,
4 or 5 were required of such persons, we believe that during our fiscal year ended December 31, 2010, all reports were timely filed.
-9-
CORPORATE GOVERNANCE AND BOARD MATTERS
Board Leadership Structure
Our current Chairman is also the current President and Chief Executive Officer. In addition, the nominating and governance committee has designated a Lead Independent Director. The board of directors
believes that the Companys Chief Executive Officer is best situated to serve as Chairman because he is the director most familiar with the Companys business and industry, and most capable of effectively identifying strategic priorities
and leading discussion and execution of strategy. The board of directors believes that the Companys current model of the combined Chairman/President and Chief Executive Officer in conjunction with the lead director position with the duties
described below is the appropriate leadership structure for Solta Medical at this time.
Our Lead Independent Directors
responsibilities include reviewing and approving the agenda for board meetings and leading executive sessions of the board of directors during which our independent directors meet without management present, and providing consolidated feedback from
those meetings to the Chairman and Chief Executive Officer. These executive sessions allow the board of directors to review key decisions and discuss matters in a manner that is independent of the Chief Executive Officer. Our Lead Independent
Director also has the authority to call meetings of the board of directors in executive session and serves as a liaison to the Chairman and Chief Executive Officer in consultation with the other independent directors.
Risk Oversight & Analysis
Management is responsible for the day-to-day management of risks the Company faces, while the board of directors, as a whole and through its committees, has responsibility for the oversight of risk
management. In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes implemented by management are adequate and functioning as designed. As a critical part of this risk oversight
role, the board encourages full and open communication between management and the board of directors. Senior management attends the quarterly board meetings and is available to address any questions or concerns raised by the board on risk-related
and other matters. The board of directors regularly receives presentations from senior management on strategic matters involving our operations to enable it to understand our risk identification, risk management and risk mitigation strategies. The
board also holds strategic planning sessions with senior management to discuss strategies, key challenges and risks and opportunities for the company.
While the board is ultimately responsible for risk oversight at Solta Medical, our committees assist the board in fulfilling its responsibilities in certain areas of risk. The Audit Committee assists the
board in fulfilling its oversight responsibilities with respect to risk management in areas of financial risk, internal controls, and compliance with legal and regulatory requirements. The Compensation Committee assists the board in fulfilling its
oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The Nominating and Governance committee assists the board in fulfilling its oversight responsibilities with respect to the
management of risks associated with board organization, membership and structure.
-10-
Board of Directors and Committee Composition
Our authorized number of directors is eight. Our board of directors is divided into three classes, each with staggered three-year terms
expiring at the annual meeting of stockholders for the year specified below. Our board has three standing committees: (1) Nominating and Governance, (2) Compensation, and (3) Audit.
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Name
|
|
Age
|
|
|
Current
Term
Expires
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|
Nominating and
Governance
Committee
|
|
|
Compensation
Committee
|
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|
Audit
Committee
|
|
Employee Director:
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Stephen J. Fanning
|
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59
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|
|
|
2013
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Non-Employee Directors:
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|
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Harold L. Covert
|
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64
|
|
|
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2013
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|
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|
Member
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|
|
|
|
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Chair
|
|
Cathy L. McCarthy
|
|
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63
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2012
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|
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Member
|
|
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|
Member
|
|
Mark M. Sieczkarek
|
|
|
56
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|
|
|
2012
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|
|
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|
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Chair
|
|
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|
Member
|
|
Eric B. Stang
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51
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2012
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Chair
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Non-Employee Directors and Nominees:
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Edward W. Knowlton, M.D.
|
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62
|
|
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2011
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Linda Graebner
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61
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2013
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Number of Meetings in Fiscal 2010
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1
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7
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6
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Director Nominees
Edward W. Knowlton, M.D
.
Dr. Knowlton is our founder and has been a director since January 1996. From August 2004 to the present, Dr. Knowlton has been
retired from the practice of medicine, and has focused on developing medical technologies and consulting for us. From November 1978 to August 2004, Dr. Knowlton served as the President of Edward W. Knowlton, M.D. Inc., a private
practice in plastic surgery. He founded the Danville Ambulatory Surgery Center, an outpatient center for plastic surgery, in 1983. Dr. Knowlton received his M.D. from Washington University.
For the following reasons, the board concluded that Dr. Knowlton should serve as a director of Solta Medical. Dr. Knowlton has
a depth of medical and healthcare experience. Due to his experience as a plastic surgeon, he is very knowledgeable of our customer base and the use of our products in the field. In addition, due to his long association with Solta Medical, he has
deep institutional knowledge of the Companys operations and management as well as the aesthetics industry generally.
Linda Graebner
.
Linda Graebner was nominated to the Board of Directors effective February 9, 2011.
Ms. Graebner is currently Managing Partner of LG Associates, a consulting firm. From 1993 to 2006, Ms. Graebner was CEO of Tilia, a provider of houseware products. From 1987 to 1993 Ms. Graebner held various executive level positions
at Dole Food Company, a food producer. From 1979 to 1987, she held senior executive positions at James River Corporation, a manufacturer of disposable paper products, and Crown Zellerbach, a paper manufacturer. From 1975 to 1979, Ms. Graebner
was also a Senior Associate with the management consulting firm of Booz, Allen & Hamilton. Ms. Graebner is currently serves as a director of a privately held company that specializes in growing, roasting, trading and marketing coffee
and a privately held company that develops kitchen, cleaning and personal care products. Ms. Graebner has a B.S. degree in mathematics from Purdue University and an M.B.A. from Stanford University.
For the following reasons, the board concluded that Ms. Graebner should serve as a director of Solta Medical. Through her tenure as
Chief Executive Officer at Tilia and other various executive roles, Ms. Graebner brings to the board strategic and marketing management knowledge in the consumer products segment as well as demonstrated leadership ability and experience.
-11-
Directors Whose Terms Extend Beyond the 2011 Annual Meeting
Stephen J. Fanning.
Mr. Fanning has been our President and Chief Executive Officer since January 2005 and Chairman
of the board of directors since July 2006. From August 2001 to January 2005, Mr. Fanning served as the President and Chief Executive Officer of Ocular Sciences, a manufacturer and distributor of disposable contact lenses. Previously,
Mr. Fanning served in various senior executive positions at Johnson & Johnson for over 25 years. Mr. Fanning currently serves as a director of a privately held company that develops medical devices outside of the aesthetics
market. Within the past five years, Mr. Fanning also served on the board of directors of Isolagen, a biotechnology company. Mr. Fanning received his B.S. degree from Philadelphia University.
For the following reasons, the board concluded that Mr. Fanning should serve as a director of Solta Medical. As President and Chief
Executive Officer, Mr. Fanning has a deep knowledge and understanding of the Company and its business. Mr. Fannings prior experience in senior executive positions at Johnson & Johnson as well as his experience in the life
sciences industry gives him insight into the strategic and operational issues in the life sciences industry.
Harold L.
Covert
.
Mr. Covert has been a director since July 2007. From September 2009 to September 2010, Mr. Covert served as President of Silicon Image, Inc., a leader in the secure distribution, presentation and storage of
high-definition content. From October 2007 to September 2009, Mr. Covert has served as Chief Financial Officer of Silicon Image. From October 2005 to October 2007, Mr. Covert served as Chief Financial Officer of Openwave Systems, a
provider of software solutions for the communications and media industries. From December 2003 to September 2005, Mr. Covert served as Chief Financial Officer of Fortinet, a network security company. From July 2001 to October 2003,
Mr. Covert served as Chief Financial Officer of Extreme Networks, a network infrastructure equipment provider. Mr. Covert currently serves as a director of JDS Uniphase, a networking equipment manufacturer, and Harmonic, a leading provider
of video delivery solutions to cable, satellite, telco, terrestrial and wireless operators around the world. Mr. Covert received his B.S. degree from Lake Erie College and his M.B.A. from Cleveland State University. Mr. Covert is a
Certified Public Accountant.
For the following reasons, the board concluded that Mr. Covert should serve as a director
of Solta Medical. Mr. Covert is an experienced financial leader with vast experience in finance and accounting obtained through his education and his tenure as Chief Financial Officer of publicly traded companies including Openwave Systems,
Fortinet, Extreme Networks and Silicon Image. The compliance, financial reporting and audit experience Mr. Covert gained in these positions has enabled Mr. Covert to address issues that have arisen at Solta Medical during
Mr. Coverts tenure as chairman of the Companys audit committee.
Cathy L. McCarthy
.
Ms. McCarthy has been a director since July 2007. Ms. McCarthy is President & Chief Executive Officer and director and Chairman of the Board of SM&A, a provider of business capture and post-award risk mitigation services.
Since 2000, Ms. McCarthy has served in various senior executive positions at SM&A, including Executive Vice President, Chief Financial Officer, Corporate Secretary and from 2005 to mid-2007, Ms. McCarthy served as its President and
Chief Operating Officer. Ms. McCarthy currently serves as a director of the Orange County Advisory Board of City National Bank. Ms. McCarthy attended Robert Morris College majoring in finance and accounting, the University Of Wisconsin
School Of Banking at Madison and the Carnegie Mellon University Executive Finance & Accounting Program.
For the
following reasons, the board concluded that Ms. McCarthy should serve as a director of Solta Medical. Through her various roles at SM&A, including her tenure as Chief Executive Officer, Chief Operating Officer and Chief Financial Officer,
Ms. McCarthy brings to the board strategic, management and financial ability at senior executive levels as well as demonstrated leadership ability and experience.
Mark M. Sieczkarek
.
Mr. Sieczkarek has been a director since July 2006. From April 2003 to the present, Mr. Sieczkarek has served as the President and Chief Executive
Officer and director of Conceptus, a medical
-12-
device company. From 1995 to January 2003, Mr. Sieczkarek served in various senior executive positions at Bausch & Lomb, an eye care company, including as President of the Americas,
President of Europe, Middle East and Africa, Vice President of Finance and Information Management and Technology of Bausch & Lomb Surgical, Vice President of Corporate Development of Bausch & Lomb Surgical, and Vice President and
Controller of North American Vision Care. Previously, he served as the Vice President and Chief Financial Officer of KOS Pharmaceuticals. Mr. Sieczkarek currently serves as a director of Conceptus. Mr. Sieczkarek received his B.S. degree
from the State University of New York at Buffalo and his M.B.A. from Canisius College.
For the following reasons, the board
concluded that Mr. Sieczkarek should serve as a director of Solta Medical. Mr. Sieczkarek brings extensive experience in the medical device industry serving as Chief Executive Officer and President of a well known public company and as a
senior executive at Bausch & Lomb. Mr. Sieczkarek also serves as a director of the same company providing him with valuable insight in the workings and best practices at the board level. The executive and public company reporting
experience Mr. Sieczkarek gained in these positions has enabled Mr. Sieczkarek to address issues that have arisen at Solta Medical during Mr. Sieczkareks tenure as chairman of the Companys compensation committee.
Eric B. Stang
.
Mr. Stang has been a director since December 2008. From January 2009 to present,
Mr. Stang has served as Chief Executive Officer of ooma, Inc. a provider of broadband telephony products. From October 2006 to December 2008, Mr. Stang served as President and Chief Executive Officer and director of Reliant Technologies.
Mr. Stang served as Chairman, President and Chief Executive Officer of Lexar Media, a digital media products company, from July 2003 until its acquisition in June 2006 and until September 2006 in a transition role. From July 2001 to July 2003,
Mr. Stang served as President, Chief Executive Officer and on the board of directors of Lexar Media. Mr. Stang currently serves as a director of Rambus, a leading provider of chip-to-chip interface products and services. Within the past
five years, Mr. Stang also served on the board of directors of Lexar Media. Mr. Stang received his B.A. degree from Stanford University and his M.B.A. from the Harvard Business School.
For the following reasons, the board concluded that Mr. Stang should serve as a director of Solta Medical. Mr. Stangs
experience as President and Chief Executive Officer and director of Reliant Technologies provided Mr. Stang not only with extensive experience in operations but also with regard to strategic planning and best practices at the board level. His
prior executive experience demonstrates his management and financial ability at senior levels. His service as director for a public company board as well as two private companies allow him to provide valuable input to our board of directors.
Board and Committee Meetings
In the year ended December 31, 2010, our board of directors held 11 meetings, including five regularly scheduled meetings and six special meetings. Our board of directors has an audit committee, a
compensation committee and a nominating and governance committee. Each of our directors attended at least 75% of the aggregate meetings of the board and the committees on which he or she served that were held in 2010. We also encourage, but do not
require our directors to attend the annual meeting. Director Stephen J. Fanning attended the annual meeting in 2010. No other board members attended that meeting, in person or telephonically.
Audit Committee
. Our audit committee is a standing committee of, and operates under a written charter adopted by, our board of
directors. The committees written charter is available on our website at
http://www.solta.com
. Our audit committee is chaired by Mr. Covert and also includes Ms. McCarthy and Mr. Sieczkarek, each of whom is independent
within the meaning of applicable SEC and Nasdaq rules. Our board of directors has determined that Mr. Covert qualifies as an audit committee financial expert. The committee is authorized to:
|
|
|
appoint our independent registered public accounting firm;
|
|
|
|
review our internal accounting procedures and financial statements; and
|
-13-
|
|
|
consult with and review the services provided by our independent registered public accounting firm, including the results and scope of their audit.
|
Compensation Committee
. Our compensation committee is a standing committee of, and operates under a
written charter adopted by, our board of directors. The compensation committee, together with our board, establishes compensation for our Chief Executive Officer and our other executive officers and administers the 2006 Equity Incentive Plan, as
amended, the 2006 Employee Stock Purchase Plan, and the 1997 Stock Option Plan. The committees written charter is available on our website at
http://www.solta.com
. Our compensation committee is chaired by Mr. Sieczkarek and also
includes Ms. McCarthy, each of whom is independent within the meaning of applicable SEC and Nasdaq rules. The committee is authorized to:
|
|
|
discharge the boards responsibilities relating to compensation of our executive officers;
|
|
|
|
administer our stock option plans, stock purchase plans, restricted stock plans and any other equity incentive plans we adopt; and
|
|
|
|
provide disinterested administration of any employee benefit plans in which our executive officers are eligible to participate.
|
Our compensation committee also assists the board of directors in fulfilling its oversight responsibilities
with respect to the management of risks arising from our compensation policies and programs. Our compensation committee may form and delegate authority to subcommittees when appropriate.
In determining the compensation of the executive officers, our compensation committee has engaged Compensia, an outside executive
compensation consultant, to analyze trends in executive compensation and the compensation of our executive officers compared to its industry peer group. In addition, the Compensation Committee considers the recommendations of Mr. Fanning with
respect to the compensation of the executive officers other than himself.
In fulfilling its role in assisting the board in
its oversight responsibilities, our compensation committee believes that the various elements of our compensation program mitigate against and do not encourage excessive risk taking and instead encourages behaviors that support sustainable value
creation. Therefore, we do not believe that our compensation policies and practices are reasonably likely to have a material adverse effect on the Company.
Nominating and Governance Committee
. Our nominating and governance committee is a standing committee of, and operates under a written charter adopted by, our board of directors. The
committees written charter is available on our website at
http://www.solta.com
. Our nominating and governance committee is chaired by Mr. Stang and also includes Mr. Covert. Mr. Stang and Mr. Covert are independent
within the meaning of applicable SEC and Nasdaq rules.
The committee is authorized to:
|
|
|
discuss and recommend to full board of directors for approval by a majority of the independent members of the board of directors all nominees for
membership on the board of directors;
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|
|
discuss and recommend to full board of directors for approval by a majority of the independent members of the board of directors the appointment of
directors to committees of the board of directors and suggested rotations for chairmen of committees of the board of directors;
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|
review issues and developments relating to corporate governance; and
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|
evaluate the effectiveness of the operation of the board of directors and its committees.
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-14-
Consideration of Director Nominees
Stockholder Nominations and Recommendations
. As described above in the Question and Answer section of this proxy statement under
What is the deadline to propose actions for consideration at next years annual meeting of stockholders or to nominate individuals to serve as directors?, our Bylaws set forth the procedure for the proper submission of stockholder
nominations for membership on our board. In addition, the Nominating and Governance Committee will consider properly submitted stockholder recommendations (as opposed to formal nominations) of director candidates. A stockholder may recommend a
candidate for the board of directors by submitting the following information to our Secretary at 25881 Industrial Boulevard, Hayward, California 94545: the candidates name, home and business contact information, detailed biographical data,
relevant qualifications, professional and personal references and information regarding any relationships between the candidate and Solta Medical within the last three years. The party making the recommendation must submit evidence of being a Solta
Medical stockholder.
Director Qualifications
. Members of the board should have the highest professional and personal
ethics and values, and conduct themselves in a manner consistent with our Code of Business Conduct and Ethics. The Committee has not established specific minimum qualifications for director candidates, however, it believes that the board of
directors should be comprised of directors who (i) are predominantly independent, (ii) are of high integrity, (iii) have qualifications that will increase overall board effectiveness, and (iv) meet other criteria as may be
required by applicable rules, such as financial literacy or financial expertise with respect to audit committee members.
Identifying and Evaluating Director Nominees; Diversity
. Typically new candidates for nomination to our board are suggested by
existing directors or by our executive officers. Candidates may also come to the attention of our board through professional search firms, stockholders or other persons. The nominating and governance committee will carefully review the
qualifications of any candidates who have been properly brought to its attention. Such review may, in the nominating and governance committees discretion, include a review solely of information provided to the nominating and governance
committee or may also include discussions with persons familiar with the candidate, an interview with the candidate or other actions that the nominating and governance committee deems proper. The nominating and governance committee will consider the
suitability of each candidate, including the current members of the board, in light of the current size and composition of the board. While we do not have a formal diversity policy for board membership, the board of directors seeks members who
represent a mix of backgrounds and experiences that will enhance the quality of the boards deliberations and decisions. In evaluating the qualifications of the candidates, the nominating and governance committee considers many factors,
including, diversity with respect to judgment, independence, age, gender and race, skills and expertise, professional experience, length of service, other commitments and the like. The nominating and governance committee evaluates such factors,
among others, and does not assign any particular weighting or priority to any of these factors. Candidates properly recommended by stockholders will be evaluated by the independent directors using the same criteria as other candidates.
Director Nominees at our 2011 Annual Meeting
. Our nominating and governance committee recommended for nomination to our board.
Code of Business Conduct and Ethics
We are committed to maintaining the highest standards of business conduct and ethics. We have adopted a Code of Business Conduct and
Ethics (the Code) for our directors, officers (including our principal executive officer and principal financial officer) and employees. The Code reflects our values and the business practices and principles of behavior that support this
commitment. The Code satisfies SEC rules for a code of ethics required by Section 406 of the Sarbanes-Oxley Act of 2002, as well as the Nasdaq listing standards requirement for a code of conduct. The Code is available on
our website at
http://www.solta.com
under Investor RelationsCorporate Governance. We will post any amendment to the Code, as well as any waivers that are required to be disclosed by the rules of the SEC or the Nasdaq, on our
website.
-15-
Communications with the Board of Directors
Stockholders wishing to communicate with the board or with an individual board member concerning Solta Medical may do so by writing to the
board or to the particular board member, and mailing the correspondence to Attn: Board of Directors, c/o Secretary, Solta Medical, Inc., 25881 Industrial Boulevard, Hayward, California 94545. The envelope should indicate that it contains a
stockholder communication. All such stockholder communications will be forwarded to the director or directors to whom the communications are addressed.
Director Compensation
From January 1, 2010
to December 31, 2010, each of our non-employee directors received a $25,000 annual retainer, to be paid quarterly for general service as a director and $1,500 per meeting for attendance in person or $500 for participation via telephone.
From January 1, 2010 to December 31, 2010, the chairpersons of our audit committee, compensation committee, and
nominating and governance committee received an annual retainer of $15,000, $10,000 and $4,000, respectively, with each amount to be paid on a quarterly basis, in consideration for their services in these roles. In addition, each chairperson
received $500 for attendance at each committee meeting. Further, non-employee director members of our audit committee, compensation committee, and nominating and governance committee received an annual retainer of $5,000, $4,000 and $2,000,
respectively, with each amount to be paid on a quarterly basis. Each non-employee director committee member also received $500 for attendance at each committee meeting.
In addition, the lead independent director, Mr. Sieczkarek, received an annual retainer of $10,000.
Directors may be reimbursed for expenses incurred in connection with their attendance at board of directors and committee meetings.
In the past, we granted directors options to purchase our common stock pursuant to the terms of our 1997 Stock Option Plan. We now
provide for the automatic grant of non-statutory options to our non-employee directors under our 2006 Equity Incentive Plan, as amended. From January 1, 2010 to December 31, 2010, each non-employee director first appointed to the board of
directors received an initial option to purchase 50,000 shares upon such appointment. These options will vest ratably as to 1/36th of the shares subject to the option each month, subject to the directors continued service on each relevant
vesting date. In addition, non-employee directors who had been directors for at least six months received an option to purchase 25,000 shares immediately following the annual meeting of our stockholders. These options will vest ratably as to 1/12th
of the shares subject to the option each month, subject to the directors continued service on each relevant vesting date. All options granted under the automatic grant provisions have a term of ten years and an exercise price equal to the fair
market value on the date of grant.
The following table sets forth a summary of the compensation we paid to our non-employee
directors in 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid in
Cash
|
|
|
Option
Awards(1)
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Harold L. Covert
|
|
$
|
55,000
|
|
|
$
|
34,635
|
|
|
$
|
|
|
|
$
|
89,635
|
|
Linda Graebner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward W. Knowlton, M.D.
|
|
|
35,500
|
|
|
|
34,635
|
|
|
|
75,000
|
(2)
|
|
|
145,135
|
|
Cathy L. McCarthy
|
|
|
51,000
|
|
|
|
34,635
|
|
|
|
|
|
|
|
85,635
|
|
Marti Morfitt
|
|
|
42,500
|
|
|
|
34,635
|
|
|
|
|
|
|
|
77,135
|
|
Mark M. Sieczkarek
|
|
|
64,500
|
|
|
|
34,635
|
|
|
|
|
|
|
|
99,135
|
|
Eric B. Stang
|
|
|
36,000
|
|
|
|
34,635
|
|
|
|
|
|
|
|
70,635
|
|
-16-
(1)
|
Amounts represent the dollar amount of compensation cost recognized over the requisite service period, in accordance with ASC Topic 718, which include both the amounts
recorded as compensation expense in our statement of operations for the 2010 fiscal year as well as amounts to be recognized in future requisite service periods.
|
(2)
|
Amount represents consulting fees earned under a consulting agreement with Dr. Knowlton.
|
During fiscal 2010, our non-employee directors were issued options to purchase shares of our common stock as set forth in the following
table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Options
|
|
|
Exercise or
Base Price of
Option
Awards
|
|
|
Grant Date
Fair Value of
Option
Awards(1)
|
|
Harold L. Covert
|
|
|
6/3/10
|
|
|
|
25,000
|
|
|
$
|
2.47
|
|
|
$
|
34,635
|
|
Edward W. Knowlton, M.D.
|
|
|
6/3/10
|
|
|
|
25,000
|
|
|
|
2.47
|
|
|
|
34,635
|
|
Cathy L. McCarthy
|
|
|
6/3/10
|
|
|
|
25,000
|
|
|
|
2.47
|
|
|
|
34,635
|
|
Marti Morfitt
|
|
|
6/3/10
|
|
|
|
25,000
|
|
|
|
2.47
|
|
|
|
34,635
|
|
Mark M. Sieczkarek
|
|
|
6/3/10
|
|
|
|
25,000
|
|
|
|
2.47
|
|
|
|
34,635
|
|
Eric B. Stang
|
|
|
6/3/10
|
|
|
|
25,000
|
|
|
|
2.47
|
|
|
|
34,635
|
|
(1)
|
Amounts represent the dollar amount of compensation cost recognized over the requisite service period, in accordance with ASC Topic 718, which include both the amounts
recorded as compensation expense in our statement of operations for the 2010 fiscal year as well as amounts to be recognized in future requisite service periods.
|
Aggregate number of option awards outstanding (both exercisable and unexercisable) for each of our directors at fiscal year-end are set forth in the following table.
|
|
|
|
|
Name
|
|
Number of Option
Awards Outstanding
|
|
Harold L. Covert
|
|
|
82,500
|
|
Edward W. Knowlton, M.D.
|
|
|
122,500
|
|
Cathy L. McCarthy
|
|
|
82,500
|
|
Marti Morfitt
|
|
|
|
|
Mark M. Sieczkarek
|
|
|
95,298
|
|
Eric B. Stang
|
|
|
75,000
|
|
Director Independence
Our board of directors has determined that directors Harold L. Covert, Cathy L. McCarthy, Mark M. Sieczkarek and Eric Stang, and director nominees Edward W. Knowlton, M.D. and Linda Graebner are each
independent within the meaning of the rules of The NASDAQ Stock Market LLC. Mr. Fanning is not considered to be independent.
Our compensation committee is currently chaired by Mr. Sieczkarek and also includes Ms. McCarthy, each of whom is independent within the meaning of the rules of The NASDAQ Stock Market LLC and
applicable SEC rules.
Our nominating and governance committee is currently chaired by Mr. Stang and also includes
Mr. Covert. Mr. Stang and Mr. Covert are independent within the meaning of the rules of The NASDAQ Stock Market LLC and applicable SEC.
-17-
In determining the independence of Edward W. Knowlton, M.D., our board of directors took
into consideration our consulting agreement with Edward W. Knowlton, M.D. to obtain consulting services related to the development of our Thermage system. Pursuant to the consulting agreement, Dr. Knowlton provides approximately six days of
consulting services per month at a rate of $6,250 per month for an indefinite term. The consulting agreement is terminable by either party upon a one-year written notice.
In addition, our board of directors considered the fact that Dr. Knowlton was neither a beneficial owner of 5% of our common stock nor did the aggregate fees under his consulting agreement exceed
$120,000 during any period of 12 consecutive months within the previous three years. Furthermore, our board considered that Dr. Knowlton is neither an executive officer nor an employee of the company.
Related Party Transactions
We describe below transactions and series of similar transactions that have occurred during our last fiscal year to which we were a party or a party in which:
|
|
|
the amounts involved exceeded or will exceed $120,000; and
|
|
|
|
a director, executive officer, holder of more than 5% of our common stock or any member of their immediate family had or will have a direct or indirect
material interest.
|
In 2010, there were no related party transactions.
Review, Approval or Ratification of Related Party Transactions
As provided by our audit committee charter, our audit committee must review and approve in advance any related party transaction. All of
our directors, officers and employees are required to report to our audit committee any such related party transaction prior to its completion. We have not adopted specific standards for approval of related party transactions, but instead our audit
committee reviews each such transaction on a case-by-case basis. Our policy is to require that all executive compensation-related matters be recommended and approved by our compensation committee as provided by our compensation committee charter and
be reported under applicable SEC rules.
-18-
REPORT OF THE AUDIT COMMITTEE
The material in this section is not deemed filed with the SEC and is not incorporated by reference in any of our filings under the
Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this Proxy Statement and irrespective of any general incorporation language in those filings.
The Audit Committee is responsible for providing oversight to Solta Medicals accounting and financial reporting processes and the
audit of Solta Medicals financial statements. The Audit Committee monitors Solta Medicals external audit process, including auditor independence matters, the scope and fees related to audits, and the extent to which the independent
registered public accounting firm may be retained to perform non-audit services. The Audit Committee also reviews the results of the external audit with regard to the adequacy and appropriateness of our financial, accounting and internal controls
over financial reporting. In addition, the Audit Committee generally oversees Solta Medicals internal compliance programs. The function of the Audit Committee is not intended to duplicate or to certify the activities of management and the
independent registered public accounting firm, nor can the Audit Committee certify that the independent registered public accounting firm is independent under applicable rules. The Audit Committee members are not professional accountants
or auditors. Under its Charter, the Audit Committee has authority to retain outside legal, accounting or other advisors as it deems necessary to carry out its duties and to require Solta Medical to pay for such expenditures.
The Audit Committee provides counsel, advice and direction to management and the independent registered public accounting firm on matters
for which it is responsible, based on the information it receives from management and the independent registered public accounting firm and the experience of its members in business, financial and accounting matters.
Solta Medicals management is responsible for the preparation and integrity of its financial statements, accounting and financial
reporting principles, and internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations.
In this context, the Audit Committee hereby reports as follows:
1. Solta Medical
management has represented to the Audit Committee that the 2010 audited financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The Audit Committee has reviewed and discussed
the audited financial statements for 2010 with Solta Medicals management and the independent registered public accounting firm.
2. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under the Statement on Auditing Standards No. 61, as amended, as
adopted by the Public Accounting Oversight Board in Rule 3200T.
3. The Audit Committee has received written disclosures and a
letter from the independent registered public accounting firm, Deloitte & Touche LLP, required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firms
communications with the Audit Committee concerning independence.
4. Based on the review and discussion referred to above, the
Audit Committee recommended to the board, and the board has approved, that the audited financial statements be included in Solta Medicals Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
The foregoing report is provided by the undersigned members of the Audit Committee.
Hal Covert, Chairman
Cathy McCarthy
Mark M. Sieczkarek
-19-
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
Executive Officers
Our
executive officers are appointed by, and serve at the discretion of, our board of directors. There are no family relationships among our directors and officers. The following table sets forth certain information concerning our executive officers and
directors, as of April 15, 2011:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
|
Position
|
Stephen J. Fanning
|
|
|
59
|
|
|
President, Chief Executive Officer and Chairman of the board of directors
|
John F. Glenn
|
|
|
49
|
|
|
Chief Financial Officer
|
William Brodie
|
|
|
47
|
|
|
Vice President of Global Sales
|
H. Daniel Ferrari
|
|
|
52
|
|
|
Vice President of Finance
|
Kristine Foss
|
|
|
57
|
|
|
Vice President of Clinical and Regulatory
|
Douglas W. Heigel
|
|
|
50
|
|
|
Vice President of Operations
|
Jeffrey C. Nardoci
|
|
|
50
|
|
|
Vice President of Global Marketing
|
Thomas J. Yorkey, Ph.D.
|
|
|
49
|
|
|
Vice President of Research and Development
|
Further information with respect to Stephen J. Fanning is provided above under Director Nominees and Directors Whose
Terms Extend Beyond the 2011 Annual Meeting.
John F. Glenn.
Mr. Glenn has been our Chief Financial
Officer since January 2008. From October 2004 to September 2007, Mr. Glenn served as Chief Financial Officer, Vice President of Finance, Treasurer and Secretary of Cholestech, a provider of diagnostic tools and information for the risk
assessment and therapeutic monitoring of heart disease and inflammatory disorders. From 1990 to January 2004, Mr. Glenn served as the Chief Financial Officer and Vice President of Finance for Invivo, a medical device company. Mr. Glenn
received his B.S. in Business Administration from the University of Nevada and M.B.A. from Santa Clara University.
William Brodie.
Mr. Brodie has been our Vice President of Global Sales since January 2009. From January 2008 to
January 2009, Mr. Brodie served as our Vice President of US Sales. From February 2006 to January 2008, Mr. Brodie served as our Director of Sales, Eastern U.S. From September 1998 to February 2006, Mr. Brodie served as Vice President
of Sales and Field Operations and held various sales management positions with Benco Dental, a company specializing in dental office equipment sales, office design and supply management. Mr. Brodie received his B.S. degree from Rollins College
and M.S. in Management from Georgia Institute of Technology.
H. Daniel Ferrari.
Mr. Ferrari has been our
Vice President of Finance since July 2009. From January 2008 to June 2009, he served our Vice President, Business & Financial Planning. From November 2004 to January 2008, Mr. Ferrari served as our Senior Director of Finance. From
April 2004 to November 2004, Mr. Ferrari was a consultant for the Company. From September 2001 to March 2004, Mr. Ferrari served as Vice President, Corporate Controller of Critical Path, Inc., a publicly held enterprise software and hosted
messaging company. From 1999 to 2001, Mr. Ferrari was a financial consultant for a number of private companies, advising executive management and venture capital investors regarding business model optimization, mergers and acquisitions, funding
strategy, the IPO process and other financial matters. Prior to consulting, Mr. Ferrari served as Vice President, Finance of ReSound, Inc. a publicly held hearing device company, and was with the company from 1994 through 1999. Mr. Ferrari
received his B.S. degree in Commerce and M.B.A. from Santa Clara University.
Kristine Foss.
Ms. Foss has
been our Vice President of Clinical and Regulatory since February 2010. From January 2007 to February 2010, Ms. Foss served as Vice President of Global Regulatory and Clinical affairs at Ultrashape. From August 2005 to December 2006,
served as Vice President of Clinical and Regulatory Affairs at Mentor. Ms. Foss received her B.A. degree from Northwestern University and is a certified regulatory affairs professional (RAC).
-20-
Douglas W. Heigel.
Mr. Heigel has been our Vice President of
Operations since July 2003. From May 2002 to July 2003, he served as our Senior Director of Operations. From October 1995 to February 2002, Mr. Heigel worked for Argonaut Technologies, a biotech company, first as their
Director of Manufacturing and then as Vice President, Manufacturing. In 1995 Mr. Heigel was Director of Manufacturing for Biomolecular Technologies, an early state biotech company. From 1988 to 1995, Mr. Heigel held engineering and
operations management positions with Microsensor Technology, a measurement instrumentation company. Mr. Heigel received his B.S. degree from Oregon State University.
Jeffrey C. Nardoci.
Mr. Nardoci has been our Vice President of Global Marketing since September 2009. From 2002 to December 2008, Mr. Nardoci served as Vice President of
Commercial Operations of U.S. Vision Care with Bausch & Lomb. Prior to Bausch & Lomb, from 1997 to 2002, Mr. Nardoci was an executive consultant at Meridian Euro RSCG, a sales and marketing consulting group. Mr. Nardoci
received his B.A. degree from Fairleigh Dickinson University.
Thomas J. Yorkey, Ph.D.
Dr. Yorkey joined
Solta in October of 2010 as the Senior Director of Technology Development and was promoted to the Vice President of Research and Development in January 2011. Dr. Yorkey has more than 20 years of medical device experience. Most recently, he
served as the Vice President of Research and Development at Spiracur, wound care device company. Prior to Spiracur, Dr. Yorkey was the Vice President of Research and Development at NeoGuide Systems, a robotic endoscope company that was sold to
Intuitive Surgical. Prior to NeoGuide, Dr. Yorkey had similar executive roles in Research and Development including Nellcor Puritan Bennett, a division of Tyco Healthcare. He holds a Ph.D. in Electrical Engineering from the University of
Wisconsin, Madison and a Bachelor of Science degree in Electrical Engineering from the State University of New York at Buffalo.
-21-
COMPENSATION DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers and provides
perspective for the data presented in the tables and narrative that follow. Our named executive officers for 2010 were the following executive officers:
|
|
|
Name
|
|
Title
|
Stephen J. Fanning
|
|
President and Chief Executive Officer
|
John F. Glenn
|
|
Chief Financial Officer
|
Clint Carnell*
|
|
Chief Operating Officer
|
William Brodie
|
|
Vice President, Global Sales
|
Jeffrey Nardoci
|
|
Vice President, Global Marketing
|
|
*
|
Clint Carnell resigned from the Company on March 17, 2011.
|
Compensation Philosophy and Objectives
The
compensation committee of the board of directors (the Committee), together with our board, is responsible for establishing, implementing and monitoring adherence with our compensation philosophy. The Committee seeks to ensure that the
total compensation paid to our executive officers is fair, reasonable and competitive. The types of compensation and benefits provided to the named executive officers are similar to those provided to our other executive officers.
The primary objectives of our compensation programs are to:
|
|
|
attract and retain the top echelon of performers;
|
|
|
|
establish a direct link between sustained performance and individual rewards;
|
|
|
|
create long-term stockholder value; and
|
|
|
|
provide an ownership opportunity for all employees.
|
We seek to foster a performance-oriented culture, where individual performance is aligned with organizational objectives. Company performance is the primary measure of success upon which we structure our
compensation. We evaluate and reward our executive officers based on their contribution to the achievement of short and longer term goals. The Committee believes that the most effective executive compensation program is one that is designed to
reward achievement and that aligns executives interests with those of stockholders by rewarding performance, with the ultimate objective of improving stockholder value and building a sustainable company. The Committee evaluates each
executives performance and compensation. The Committee seeks to ensure that we maintain our ability to attract and retain superior employees in key positions and that the compensation provided to key employees remains competitive relative to
the compensation paid to similarly situated executives of a selected group of our peer companies and the broader marketplace from which we recruit and compete for talent. To that end, the Committee believes the compensation provided by us to our
executives, including the named executive officers, should include a mix of salary, cash bonuses and equity awards that reward performance and the creation of longer-term stockholder value, and that provide the appropriate level of incentives to
retain each executive. Each element of compensation and the practices used to evaluate and inform the Committees decisions are discussed in detail below.
Executive compensation is reviewed annually, and adjustments are made to reflect performance-based factors, as well as competitive conditions.
-22-
How We Implement and Manage our Executive Compensation Programs
Role of Our Compensation Committee
The Committee sets our overall compensation philosophy, which is reviewed and approved by our board. The Committee also reviews and approves our compensation programs, including the specific compensation
of our executive officers The Committee regularly meets in executive session to discuss compensation matters. The Committee operates under a written charter adopted by our board. A copy of this charter is available on our website at
http://www.solta.com.
The Committee is appointed by our board, and currently is comprised of Cathy L. McCarthy and
Mark Sieczkarek. A third director, Marti Morfitt, served on the Committee in 2010 until her resignation from the Board in September 2010. The primary purpose of the Committee is to:
|
|
|
discharge the boards responsibilities relating to compensation of our executive officers;
|
|
|
|
administer our stock option plans, stock purchase plans, restricted stock plans and any other equity incentive plans we adopt; and
|
|
|
|
provide disinterested administration of any employee benefit plans in which our executive officers are eligible to participate.
|
The Committee assumes primary responsibility for the annual compensation review process.
Role of Compensation Consultant
The Committee, which has the authority to directly engage outside firms or consultants, has retained Compensia, a third-party compensation consulting firm, to support the Committees responsibilities
in determining executive compensation and administering the related programs. The Committee periodically seeks input from Compensia on a range of external market factors. The Committee has worked with Compensia since 2007. During that time,
Compensia has assisted the Committees executive compensation-setting process by:
|
|
|
reviewing those companies that comprise our peer group and advising on whether any changes to this group were advisable;
|
|
|
|
assisting in the design of our compensation programs for executives and board members, including discussing evolving compensation trends;
|
|
|
|
assisting in the design of our equity ownership guidelines; and
|
|
|
|
compiling and providing market data to assist in setting our compensation plan parameters and measures.
|
In 2010, other than its role as compensation consultant to the Committee, Compensia performed no other work for the Company. In the
future, we may decide not to hire a compensation consultant each year, if we believe that the prior report we obtained, along with publicly-available data from our group, is sufficient to allow us to make informed decisions with regard to executive
compensation matters.
Role of Executive Officers
Our Chief Executive Officer aids the Committee by providing recommendations regarding the compensation of all executive officers other
than himself. Our Chief Executive Officer also advises the Committee regarding the alignment and weighting of our performance measures under our annual cash incentive (bonus) awards with our overall strategy, the impact of the design of our equity
incentive awards on our ability to attract, motivate and retain highly talented executives, and the competitiveness of our compensation program.
-23-
Prior to the end of the year, our Chief Executive Officer reviews each executive
officers performance as well as the Companys performance against the pre-established financial targets and critical strategic priorities. Our Chief Executive Officer then presents this assessment to the Committee and makes his
recommendations with respect to the appropriate base salary, annual bonus payments and grants of long-term equity incentive awards for all executive officers, other than himself. Any executive officer who participates in the Committees
meetings leaves the meetings during discussions and deliberations of individual compensation actions affecting him or her personally and during the Committees executive sessions.
Each named executive officer, with the exception of our Chief Executive Officer, participated in an annual performance review with his or
her respective manager, to provide input about his or her contributions to the Companys goals and objectives for the period being assessed. Our Chief Executive Officer participated in a similar annual review with our Lead Independent Director.
The recommendations of our Chief Executive Officer were assessed in the context of each named executive officers performance, along with competitive positioning information generated by Compensia and provided to management and the Committee
with respect to base salary, bonus and equity compensation for each executive.
Positioning of Cash and Equity
Compensation
The Committee believes it is important when making its compensation-related decisions to be informed as to
current compensation practices of comparable publicly held companies in the medical device and life sciences industries. In the past the Committee has reviewed corresponding pay practices of a peer group of companies that was developed with the
assistance of Compensia. Compensia was last asked to assist the Company in developing a new peer group in 2007. In light of the significant adverse global economic conditions that were affecting our business in 2009, the Committee accepted
managements recommendation not to award any base salary increases, without regard to peer group practices. This being the case, the Committee did not utilize a peer group for the determination of executive compensation for 2010. To provide
independent and comparable company guidance regarding equity compensation, the Committee directed Compensia to develop a framework for 2010 executive equity compensation.
The data source for Compensias equity recommendation was the 2009 Radford High-Technology Executive Compensation Survey for U.S. companies with $50 million to $200 million in revenues. The Committee
used the equity recommendations from the Compensia analyses to help define the competitive total compensation opportunity for each executive officer, but specific pay decisions for each executive are based on his or her past and anticipated
contributions, current compensation package, retention risks and overall corporate performance.
Assessment of
Corporate and Individual Achievement
Corporate Achievement
At the beginning of each year, management prepares and proposes to the Committee a set of corporate goals covering the expected operating
and financial performance of the Company for the year. Our corporate goals are focused towards deliverables expected to advance near-term stockholder value while also building towards long-term stockholder value. These corporate goals are then
reviewed and approved by the Committee. The Committee also assigns a specific weighting to each goal and establishes formulas for determining the resulting annual bonus payments based on actual achievement against these goals. In 2010, these goals
related to targets in the categories of revenue, operating income and cash flow from operations goals, weighted 40%, 30% and 30%, respectively, of the total bonus opportunity. These goals were divided into six-month and 12-month targets. In July
2010 and again in February 2011, the Committee assessed the overall level of corporate achievement based on the Companys performance relative to these goals. To further correlate executive compensation with corporate performance, in 2010 we
made equity awards that could be earned based on achieving specified financial goals tied to our 2010 operating results. This represented the first time that equity awards were made
-24-
subject to such thresholds. In 2011 we again made a portion of the equity awards to executives subject to performance criteria. Certain restricted stock units awarded in 2011 can be earned based
on performance criteria tied to future change in the trading price of our common stock.
Individual Achievement
Although the Committee believes that the largest portion of each executive officers total compensation should be
based on our executive officers success as a team and thus based on achievement of shared financial and critical strategic goals, it also believes that there should be some ability to reward individual and departmental contributions. To that
end, we consider individual and departmental performance, the impact of that performance on the achievement of our strategic goals and objectives and on the executive teams performance as significant factors in setting base salary and in
granting equity-based compensation. At the beginning of each year, individual goals are established for each named executive officer, except for our Chief Executive Officer, whose performance is evaluated based solely on the corporate goals
established for the year. These individual goals are derived from the corporate goals that relate to the named executive officers functional area.
Compensation Components
Compensation for our
executive officers, including the named executive officers, is broken out into the following components:
Cash
Compensation
. Cash compensation consists of base salary and an annual bonus opportunity. In 2011, Compensia assisted us in establishing a new peer group to guide our determination of appropriate cash compensation opportunities. Our cash
compensation goals for our executive officers are based upon the following principles:
|
|
|
Ensuring that our short-term incentive program is consistent with our compensation philosophy;
|
|
|
|
Payouts should be based primarily on corporate financial performance, rather than individual performance;
|
|
|
|
With improved company performance, pay will increase toward targeted positioning; and
|
|
|
|
Ensuring that individual target incentive opportunities align target total cash compensation levels with desired positioning.
|
Base Salary and Total Target Cash Compensation
. In the past, our goal has been to set the base
salaries of our executive officers between the 50th to 60th percentile of our peer group and total target cash compensation at or above the 60th percentile of our peer group. For 2009 and again in 2010, in light of the significant adverse global
economic conditions that were affecting our business, the Committee accepted managements recommendation not to award any base salary increases. In February 2011, the Committee approved salary increases for executives in the range of 4% to 6%
for 2011.
Bonus Program
. In addition to base salary, we have a bonus plan covering all full-time regular employees,
including our executive officers (except our sales representatives who participate in a sales compensation plan) pursuant to which cash bonus payments may be made. As noted above, bonuses are calculated based upon actual achievement of the
pre-established corporate financial goals. The financial targets for the 2010 cash bonus awards were the respective amounts included in the operating plan adopted by our Board of Directors for 2010.
For 2010, the Committee approved a bonus plan covering all full-time eligible regular employees, including our executive officers,
maintaining the same target percentages of salary for each executive officer as had been used for 2009. The target bonus opportunity for our Chief Executive Officer was 80% of his base salary, for our COO and CFO, 50% of their respective base
salaries, and for each other executive officer, 40% of his or her respective base salary. Bonuses were payable based on actual achievement against six-month and 12-month performance targets in the categories of revenue, operating income and cash
flow from operations goals, weighted 40%, 30% and 30%, respectively, of the total bonus opportunity. The six-month bonus opportunity represented approximately 40% of the full-year bonus opportunity.
-25-
In July 2010, the Committee approved bonuses with respect to the first six months of 2010
for Mr. Fanning in the amount of $117,792, for Mr. Glenn in the amount of $44,654, for Mr. Carnell in the amount of $51,043, for Mr. Brodie in the amount of $30,478 and for Mr. Nardoci in the amount of $30,102. These bonus
amounts represented approximately 32.7% of the respective executive officers full-year target bonus. The bonuses were determined based upon a comparison of our actual results to the six-month target performance objectives, as summarized in the
following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Category
|
|
Target (Threshold)
|
|
Actual Achievement
|
|
Level of
Achievement
of Target
|
|
|
Payout
Factor
|
|
Revenue (6 months)
|
|
$59.0 million($54.8 million)
|
|
$56.0 million
|
|
|
54.5
|
%
|
|
|
21.8
|
%
|
|
|
|
|
|
Non-GAAP Operating Income (6 months)
|
|
$2.6 million( $0.9 million)
|
|
$5.3 million
|
|
|
100
|
%
|
|
|
30.0
|
%
|
|
|
|
|
|
Cash Flow from Operations (6 months)
|
|
$4.4 million ($2.9 million)
|
|
$7.7 million
|
|
|
100
|
%
|
|
|
30.0
|
%
|
In February 2011, the
Committee approved bonuses with respect to the 12 months of 2010 for Mr. Fanning in the amount of $121,860, for Mr. Glenn in the amount of $46,197, for Mr. Carnell in the amount of $52,806, for Mr. Brodie in the amount of $35,204
and for Mr. Nardoci in the amount of $31,142. These bonus amounts, combined with the six-month bonus amounts determined and paid in July 2010, represented approximately 66.6% of the respective executive officers 12-month target bonus. The
bonuses were determined based upon a comparison of our actual results to the 12-month threshold and target performance objectives, as summarized in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Category
|
|
Target (Threshold)
|
|
Actual Achievement
|
|
Level of
Achievement
of Target
|
|
|
Payout
Factor
|
|
Revenue (12 months)
|
|
$123.8 million ($111.7 million)
|
|
$110.9 million
|
|
|
90
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
Non-GAAP Operating Income (12 months)
|
|
$8.1 million ($3.4 million)
|
|
$7.1 million
|
|
|
88
|
%
|
|
|
26.4
|
%
|
|
|
|
|
|
Cash flow from operations (12 months)
|
|
$9.9 million ($6.6 million)
|
|
$10.5 million
|
|
|
100
|
%
|
|
|
30.0
|
%
|
In February 2011, the
Committee approved a 2011 corporate bonus plan and again set bonuses targets for our Chief Executive Officer at 80% of his base salary, for our COO, CFO and VP of Global Sales, 50% of their respective base salaries, and for each other executive
officer, 40% of his or her respective base salary. Bonuses are payable based on actual achievement against six-month and 12-month performance targets in the categories of revenue, operating income and management business objectives, each of which is
weighted 34%, 33% and 33%, respectively, of the total bonus opportunity. The actual bonuses payable for 2011, if any, will vary depending on the extent to which our actual financial performance meets, exceeds, or falls short of these financial goals
as approved by the Committee. We believe that the 2011 goals necessary to trigger a 100% target bonus payout to our executive officers are reasonably achievable.
Long-Term Incentive Program
. We believe that long-term performance is achieved through an equity ownership culture that encourages long-term performance by our executive officers through the use of
stock-based awards. All employees are eligible to participate in our equity programs. Our equity compensation goals for our executive officers are based upon the following principles:
|
|
|
Stockholder and executive interests should be aligned;
|
|
|
|
The program should be structured to provide meaningful retention incentives to participants; and
|
|
|
|
Actual awards should be tailored to reflect individual performance and recruitment/retention goals.
|
-26-
Our practice is to make annual equity grants to our executive officers that is competitive
with companies of a comparable size and business focus. Using the analysis done by Compensia in addition to recommendations made by our Chief Executive Officer, in February 2010 the Committee awarded option grants to our executive officers that
approximated the 50th percentile of the 2009 Radford High-Technology Compensation Survey. We also took into consideration the use of equity awards as a means of rewarding achievement and as a means of retention, especially for our executive officers
who were mostly vested in their prior awards. Further to this end, in March 2010 the Committee approved equity awards, the earning of which was directly tied to specified performance criteria, and any earned awards were then subject to time-based
vesting. These awards consisted of restricted stock units, or RSUs, that were to vest in three equal annual installments if performance targets in the categories of revenue, operating income and cash flow from operations were achieved. The
performance targets for the RSUs were not achieved, and the RSUs granted in March 2010 lapsed. Equity awards for 2010 to our named executive officers are summarized below:
|
|
|
|
|
|
|
|
|
Executive
|
|
2010 Option Awards
|
|
|
2010 RSU Awards
|
|
Stephen J. Fanning
|
|
|
419,000
|
|
|
|
237,389
|
|
John F. Glenn
|
|
|
175,000
|
|
|
|
65,991
|
|
Clint Carnell
|
|
|
200,000
|
|
|
|
115,484
|
|
William Brodie
|
|
|
98,000
|
|
|
|
94,037
|
|
Jeffrey Nardoci
|
|
|
100,000
|
|
|
|
41,244
|
|
We issue stock
options to our executive officers, directors and employees to purchase shares of our common stock at an exercise price equal to the fair market value of such stock on the date of grant. The date of grant for our executive officers is typically the
date of a regularly scheduled board meeting, of which we have four per year. We have no program, plan or practice to select option grant dates (or set board meeting dates) to correspond with the release of material non-public information.
In February 2011, the Committee again sought to make a portion of our equity awards to our executive officers subject not
only to time-based vesting but also to make these awards subject to specific performance criteria. The equity awards made at this time consisted of restricted share units that were made subject to time-based vesting and market share units, the
vesting of which is tied to the performance of the Companys common stock relative to the Russell Microcap Index.
Severance and Change of Control Benefits.
We entered into change of control and severance agreements providing for certain change
of control benefits for our executive officers, the terms of which are described in more detail below in the sections entitled Employment AgreementsChange of Control and Severance Agreements and Potential Payments Upon
Termination or Change in Control.
Other Benefits
. We provide the following benefits to our executive officers
generally on the same basis as the benefits provided to all employees:
|
|
|
Health, vision and dental insurance;
|
|
|
|
Short-and long-term disability;
|
|
|
|
Employee assistance plan; and
|
|
|
|
Flexible spending plan.
|
|
|
|
Performance awards programs (including Presidents Club travel and gift cards).
|
We believe that these benefits are consistent with those offered by other companies and specifically with those companies with which we
compete for employees.
-27-
Summary Compensation Table
The following table sets forth summary compensation information for the years ended December 31, 2010, December 31, 2009 and
December 31, 2008 for our chief executive officer, chief financial officer and each of our other three most highly compensated executive officers as of the end of the last fiscal year. We refer to these persons as our named executive officers
elsewhere in this prospectus. Except as provided below, none of our named executive officers received any other compensation required to be disclosed by law or in excess of $10,000 annually.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards(1)
|
|
|
Non-Equity
Incentive Plan
Compensation(2)
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Stephen J. Fanning
|
|
|
2010
|
|
|
$
|
450,000
|
|
|
$
|
|
|
|
$
|
510,386
|
(3)
|
|
$
|
449,713
|
|
|
$
|
239,652
|
|
|
$
|
16,765
|
(5)
|
|
$
|
1,666,516
|
|
President and Chief Executive Officer
|
|
|
2009
|
|
|
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
182,309
|
|
|
|
140,184
|
|
|
|
|
|
|
|
772,493
|
|
|
|
2008
|
|
|
|
450,000
|
|
|
|
|
|
|
|
90,000
|
(4)
|
|
|
299,007
|
|
|
|
90,000
|
|
|
|
|
|
|
|
929,007
|
|
|
|
|
|
|
|
|
|
|
John F. Glenn
|
|
|
2010
|
|
|
|
272,950
|
|
|
|
|
|
|
|
141,881
|
(3)
|
|
|
187,828
|
|
|
|
90,851
|
|
|
|
747
|
(6)
|
|
|
694,257
|
|
Chief Financial Officer
|
|
|
2009
|
|
|
|
268,313
|
|
|
|
|
|
|
|
|
|
|
|
66,512
|
|
|
|
52,325
|
|
|
|
|
|
|
|
387,149
|
|
|
|
2008
|
|
|
|
262,994
|
|
|
|
|
|
|
|
26,501
|
(4)
|
|
|
348,670
|
|
|
|
26,500
|
|
|
|
|
|
|
|
664,665
|
|
|
|
|
|
|
|
|
|
|
Clint Carnell
|
|
|
2010
|
|
|
|
312,000
|
|
|
|
|
|
|
|
248,291
|
(3)
|
|
|
214,660
|
|
|
|
103,849
|
|
|
|
82,877
|
(7)
|
|
|
961,677
|
|
Chief Operating Officer
|
|
|
2009
|
|
|
|
305,000
|
|
|
|
|
|
|
|
|
|
|
|
93,308
|
|
|
|
59,510
|
|
|
|
95,557
|
(8)
|
|
|
553,375
|
|
|
|
2008
|
|
|
|
300,000
|
|
|
|
|
|
|
|
30,000
|
(4)
|
|
|
199,240
|
|
|
|
30,000
|
|
|
|
89,712
|
(8)
|
|
|
648,952
|
|
|
|
|
|
|
|
|
|
|
William Brodie
|
|
|
2010
|
|
|
|
244,177
|
|
|
|
|
|
|
|
202,180
|
(3)
|
|
|
105,183
|
|
|
|
65,683
|
|
|
|
68,919
|
(9)
|
|
|
686,142
|
|
Vice President, Global Sales
|
|
|
2009
|
|
|
|
228,281
|
|
|
|
|
|
|
|
|
|
|
|
37,323
|
|
|
|
35,624
|
|
|
|
62,349
|
(8)
|
|
|
363,577
|
|
|
|
|
|
|
|
|
|
|
Jeff Nardoci
|
|
|
2010
|
|
|
|
230,000
|
|
|
|
|
|
|
|
88,675
|
(3)
|
|
|
107,330
|
|
|
|
61,244
|
|
|
|
212,541
|
(10)
|
|
|
699,790
|
|
Vice President, Global Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts represent the dollar amount of compensation cost recognized over the requisite service period, in accordance with ASC Topic 718, which include both the amounts
recorded as compensation expense in our income statement for the 2010 fiscal year as well as amounts to be recognized in future requisite service periods.
|
(2)
|
Amounts reported on Non-Equity Incentive Plan Compensation represent cash amounts paid under our bonus program, a non equity incentive program for the
achievement of corporate operating performance. In 2010, our compensation committee determined to pay 123% of the target achievement of corporate performance under the bonus program in cash.
|
(3)
|
Represent grant of performance-based restricted stock units granted in 2010. The Company did not achieve the associated 2010 milestones and therefore the restricted
stock units were cancelled in 2011.
|
(4)
|
Represent grant of restricted stock units granted in 2008 and earned in 2008 and 2009. The restricted stock units vested on January 23, 2010.
|
(5)
|
Amount represents awards earned under performance award programs.
|
(6)
|
Amount represents awards earned under performance award programs.
|
(7)
|
Amount represents commute-related expenses ($72,618) and awards earned under performance award programs ($10,259).
|
(8)
|
Amounts represent commute-related expenses.
|
(9)
|
Amounts represent commute and moving-related expenses ($50,458) and awards earned under performance award programs ($18,461).
|
(10)
|
Amounts represent moving-related expenses.
|
-28-
Grants of Plan-Based Awards in 2010
The following table lists grants of plan based awards made to our named executive officers in 2010 and related total fair value
compensation for 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
|
|
|
All Other Option Awards
|
|
Name
|
|
Grant Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Number of
Securities
Underlying
Options
|
|
|
Exercise
Price of
Option
Awards
|
|
|
Grant Date
Fair
Value
of
Option
Awards(2)
|
|
Stephen J. Fanning
|
|
|
3/31/2010
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
237,389
|
|
|
$
|
*
|
|
|
$
|
510,386
|
|
President and Chief Executive Officer
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
419,000
|
|
|
|
1.91
|
|
|
|
449,713
|
|
|
|
1/11/2010
|
|
|
|
|
|
|
|
360,000
|
|
|
|
442,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Glenn
|
|
|
3/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,991
|
|
|
|
*
|
|
|
|
141,881
|
|
Chief Financial Officer
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
|
|
|
1.91
|
|
|
|
187,828
|
|
|
|
1/11/2010
|
|
|
|
|
|
|
|
136,475
|
|
|
|
167,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Carnell
|
|
|
3/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,484
|
|
|
|
*
|
|
|
|
248,291
|
|
Chief Operating Officer
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
1.91
|
|
|
|
214,660
|
|
|
|
1/11/2010
|
|
|
|
|
|
|
|
156,000
|
|
|
|
191,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William Brodie
|
|
|
3/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,037
|
|
|
|
*
|
|
|
|
202,180
|
|
Vice President, Global Sales
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,000
|
|
|
|
1.91
|
|
|
|
105,183
|
|
|
|
1/11/2010
|
|
|
|
|
|
|
|
104,000
|
|
|
|
127,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Nardoci
|
|
|
3/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,244
|
|
|
|
*
|
|
|
|
88,675
|
|
Vice President, Global Marketing
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
1.91
|
|
|
|
107,330
|
|
|
|
1/11/2010
|
|
|
|
|
|
|
|
92,000
|
|
|
|
113,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Represents grant of restricted stock units. The restricted stock units were to vest in three equal annual installments if performance targets in the categories of
revenue, operating income and cash flow from operations were achieved. The performance targets for these awards were not achieved, and therefore the restricted stock units were cancelled in 2011. The share price as of March 31, 2010 was $2.15
per share.
|
(1)
|
Represents cash amounts payable under our 2010 bonus program, a non equity incentive program for the achievement of corporate operating performance. The maximum amount
specified represents 123% of the target achievement of corporate operating performance.
|
(2)
|
In the case of options awarded, amounts represent the dollar amount of compensation cost recognized over the requisite service period, in accordance with ASC Topic 718,
which include both the amounts recorded as compensation expense in our statement of operations for the 2010 fiscal year as well as amounts to be recognized in future requisite service periods. Page 85 of our Form 10-K describes the assumptions made
in the valuation of our options under ASC Topic 718.
|
Employment Agreements
All of our current executive officers have entered into agreements with us which contain restrictions and covenants. These provisions
include covenants relating to the protection of our confidential information and the assignment of inventions. None of our employees are employed for a specified term, and each employees employment with us is subject to termination at any time
by either party for any reason, with or without cause.
Change of Control and Severance Agreements
In June 2008, we entered into the change of control and severance agreements with the following executive officers of the Company:
Stephen J. Fanning, John F. Glenn, Clint Carnell, William Brodie, H. Daniel Ferrari, and Douglas W. Heigel. Kristine Foss and Jeff Nardoci subsequently entered into a change of control and
-29-
severance agreement. With respect to Messrs. Fanning and Glenn, such change of control and severance agreements replace and supersede their previous employment agreements described above with
respect to the subject matter contained in the change of control and severance agreements.
Agreement with Stephen J. Fanning,
Chief Executive Officer:
Pursuant to the terms of the agreement with Mr. Fanning, in the event that Mr. Fanning is
terminated without cause or resigns for good reason either prior to three (3) months before or after twelve (12) months following a change of control of the Company, he will be entitled to receive the following
benefits:
|
|
|
A lump sum payment equal to two hundred percent (200%) of his annual base salary; and
|
|
|
|
Continuation of certain of his employee benefits for a period of up to twenty-four (24) months following termination.
|
In addition, in the event that Mr. Fanning is terminated without cause or resigns for
good reason within three (3) months before or twelve (12) months following a change of control of the Company, he will be entitled to receive the following benefits:
|
|
|
A lump sum payment equal to two hundred percent (200%) of his annual base salary in effect immediately prior to his termination date or (if
greater) at the level in effect immediately prior to the change of control;
|
|
|
|
A lump sum payment equal to two hundred percent (200%) of his annual target bonus for the fiscal year of his termination or (if greater) the
annual target bonus in effect immediately prior to the change of control;
|
|
|
|
Continuation of certain of his employee benefits for a period of up to twenty-four (24) months following termination; and
|
|
|
|
Full vesting acceleration of all equity incentive awards held by Mr. Fanning at the time of termination.
|
Agreements with John F. Glenn, Chief Financial Officer, and Clint Carnell, Chief Operating Officer:
Pursuant to the terms of the agreements with Messrs. Glenn and Carnell, in the event that either of these executive officers is terminated
without cause or resigns for good reason either prior to three (3) months before or after twelve (12) months following a change of control of the Company, he will be entitled to receive the following benefits:
|
|
|
A lump sum payment equal to one hundred percent (100%) of the executives annual base salary; and
|
|
|
|
Continuation of certain of the executives employee benefits for a period of up to twelve (12) months following termination.
|
In addition, in the event that any of these executive officers is terminated without cause or
resigns for good reason within three (3) months before or twelve (12) months following a change of control of the Company, he will be entitled to receive the following benefits:
|
|
|
A lump sum payment equal to one hundred percent (100%) of the executives annual base salary in effect immediately prior to the
executives termination date or (if greater) at the level in effect immediately prior to the change of control;
|
|
|
|
A lump sum payment equal to one hundred percent (100%) of the executives annual target bonus for the fiscal year of the executives
termination or (if greater) the annual target bonus in effect immediately prior to the change of control;
|
|
|
|
Continuation of certain of the executives employee benefits for a period of up to twelve (12) months following termination; and
|
|
|
|
Full vesting acceleration of all equity incentive awards held by the executive at the time of termination.
|
-30-
Agreements with Vice PresidentsWilliam Brodie and Jeff Nardoci:
Pursuant to the terms of the agreements with these executives, in the event that any of these executive officers is terminated without
cause or resigns for good reason either prior to three (3) months before or after twelve (12) months following a change of control of the Company, he or she will be entitled to receive the following benefits:
|
|
|
A lump sum payment equal to fifty percent (50%) of the executives annual base salary; and
|
|
|
|
Continuation of certain of the executives employee benefits for a period of up to six (6) months following termination.
|
In addition, in the event that any of these executive officers is terminated without cause or
resigns for good reason within three (3) months before or twelve (12) months following a change of control of the Company, he or she will be entitled to receive the following benefits:
|
|
|
A lump sum payment equal to fifty percent (50%) of the executives annual base salary in effect immediately prior to the executives
termination date or (if greater) at the level in effect immediately prior to the change of control;
|
|
|
|
A lump sum payment equal to fifty percent (50%) of the executives annual target bonus for the fiscal year of the executives
termination or (if greater) the annual target bonus in effect immediately prior to the change of control;
|
|
|
|
Continuation of certain of the executives employee benefits for a period of up to six (6) months following termination; and
|
|
|
|
Full vesting acceleration of all equity incentive awards held by the executive at the time of termination.
|
For purposes of these agreements, cause shall mean (i) the executive officers willful failure to substantially
perform the executive officers duties, other than a failure resulting from the executive officers complete or partial incapacity due to physical or mental illness or impairment; (ii) the executive officers willful act which
constitutes gross misconduct and which is injurious to the Company; (iii) the executive officers willful breach of a material provision of the agreement; or (iv) the executive officers knowing, material and willful violation of
a federal or state law or regulation applicable to the business of the Company.
For purposes of these agreements, good
reason shall mean the executive officers termination of employment within ninety (90) days following the expiration of a reasonable cure period following the occurrence of one or more of the following, without the executive
officers consent: (i) a material reduction in the executive officers authority, duties, or responsibilities relative to the executive officers duties, position or responsibilities in effect immediately prior to such reduction;
provided, however, that a reduction in duties, position or responsibilities solely by virtue of the Company being acquired and made part of a larger entity shall not constitute good reason; (ii) a material reduction by the Company
of the executive officers base salary in effect immediately prior to such reduction; (iii) a material change in the geographic location at which the executive officer must perform services (in other words, the relocation of the executive
officer to a facility that is more than fifty (50) miles from the executive officers current location).
We have
adopted a formal severance benefit plan for our full-time employees. The exact payment to any eligible employee is dependent on rank. The maximum possible payment to the highest ranking employees covered by the plan is equal to 12 weeks of severance
pay and 3 months of COBRA coverage and outplacement services. Our Chief Executive Officer and our Chief Financial Officer and our Executive Officers, whose employment agreements provide for separate and superior severance benefits, and our employees
based outside the United States, are not eligible to participate in the plan. Each of our other full-time employees who is involuntarily terminated as a result of the following circumstances is eligible to participate in the plan:
|
|
|
a corporate reorganization;
|
|
|
|
a reduction in staff and selection for participation in the plan by the Chief Executive Officer; or
|
|
|
|
a closure or reorganization of a facility or operation.
|
-31-
Potential Payments Upon Termination or Change in Control
The following table lists our named executive officers and the estimated payments and benefits they would have become entitled to had
their employment with us terminated without cause or if a named executive officer resigned for good reason on December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Estimated
Total Value of
Cash
Payment
|
|
|
Estimated
Total Value of
Health Coverage
Continuation
|
|
|
Value of
Accelerated
Equity(1)
|
|
Stephen J. Fanning
|
|
$
|
900,000
|
|
|
$
|
30,740
|
|
|
$
|
1,525,253
|
|
John F. Glenn
|
|
|
272,950
|
|
|
|
23,169
|
|
|
|
513,559
|
|
Clint Carnell
|
|
|
312,000
|
|
|
|
23,169
|
|
|
|
749,258
|
|
William Brodie
|
|
|
130,000
|
|
|
|
11,585
|
|
|
|
461,871
|
|
Jeff Nardoci
|
|
|
115,000
|
|
|
|
11,585
|
|
|
|
255,232
|
|
(1)
|
We estimate the value of acceleration of options and shares held by each of our name executive officers based on a share price of $3.05 per share as of
December 31, 2010 and the number of options and shares held by each of our executive officers that were unvested as of December 31, 2010.
|
The following table lists the named executive officers and the estimated amounts they would have become entitled to had their employment with us terminated as a result of the change of control of the
Company and had the named executive officer been terminated without cause or resigned for good reason on December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Estimated
Total Value of
Cash
Payment
|
|
|
Estimated
Total Value of
Health Coverage
Continuation
|
|
|
Value of
Accelerated
Equity(1)
|
|
Stephen J. Fanning
|
|
$
|
1,620,000
|
|
|
$
|
30,740
|
|
|
$
|
1,525,253
|
|
John F. Glenn
|
|
|
409,425
|
|
|
|
23,169
|
|
|
|
513,559
|
|
Clint Carnell
|
|
|
468,000
|
|
|
|
23,169
|
|
|
|
749,258
|
|
William Brodie
|
|
|
182,000
|
|
|
|
11,585
|
|
|
|
461,871
|
|
Jeff Nardoci
|
|
|
161,000
|
|
|
|
11,585
|
|
|
|
255,232
|
|
(1)
|
We estimate the value of acceleration of options and shares held by each of our named executive officers based on a share price of $3.05 per share as of
December 31, 2010 and the number of options and shares held by each of our executive officers that were unvested as of December 31, 2010.
|
-32-
Equity Incentive Awards Outstanding as of December 31, 2010
The following table lists the outstanding option awards held by our named executive officers as of December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Securities
Underlying
Unexercised
Options
Exercisable
|
|
|
Number of Securities
Underlying
Unexercised
Options
Unexercisable
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration Date
|
|
|
Vesting Schedule
|
|
Stephen J. Fanning
|
|
|
87,291
|
|
|
|
331,709
|
|
|
$
|
1.91
|
|
|
|
2/8/2020
|
|
|
|
(1
|
)
|
|
|
|
174,625
|
|
|
|
206,375
|
|
|
|
1.00
|
|
|
|
2/8/2020
|
|
|
|
(1
|
)
|
|
|
|
106,250
|
|
|
|
43,750
|
|
|
|
4.64
|
|
|
|
2/11/2018
|
|
|
|
(1
|
)
|
|
|
|
117,187
|
|
|
|
7,813
|
|
|
|
9.05
|
|
|
|
3/19/2017
|
|
|
|
(1
|
)
|
|
|
|
102,084
|
|
|
|
|
|
|
|
1.90
|
|
|
|
2/7/2016
|
|
|
|
(1
|
)
|
|
|
|
650,000
|
|
|
|
|
|
|
|
1.90
|
|
|
|
2/2/2015
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
John F. Glenn
|
|
|
36,458
|
|
|
|
138,542
|
|
|
|
1.91
|
|
|
|
2/8/2020
|
|
|
|
(1
|
)
|
|
|
|
63,708
|
|
|
|
75,292
|
|
|
|
1.00
|
|
|
|
2/27/2019
|
|
|
|
(1
|
)
|
|
|
|
127,604
|
|
|
|
47,396
|
|
|
|
4.64
|
|
|
|
2/11/2018
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
Clint Carnell
|
|
|
41,666
|
|
|
|
158,334
|
|
|
|
1.91
|
|
|
|
2/8/2020
|
|
|
|
(1
|
)
|
|
|
|
89,375
|
|
|
|
105,625
|
|
|
|
1.00
|
|
|
|
2/27/2019
|
|
|
|
(1
|
)
|
|
|
|
72,916
|
|
|
|
27,084
|
|
|
|
4.64
|
|
|
|
2/11/2018
|
|
|
|
(1
|
)
|
|
|
|
28,125
|
|
|
|
1,875
|
|
|
|
9.05
|
|
|
|
3/19/2017
|
|
|
|
(1
|
)
|
|
|
|
121,135
|
|
|
|
|
|
|
|
1.90
|
|
|
|
10/5/2015
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
William Brodie
|
|
|
20,416
|
|
|
|
77,584
|
|
|
|
1.91
|
|
|
|
2/8/2020
|
|
|
|
(1
|
)
|
|
|
|
35,750
|
|
|
|
42,250
|
|
|
|
1.00
|
|
|
|
2/27/2019
|
|
|
|
(1
|
)
|
|
|
|
2,500
|
|
|
|
|
|
|
|
4.63
|
|
|
|
2/19/2018
|
|
|
|
(3
|
)
|
|
|
|
58,333
|
|
|
|
21,667
|
|
|
|
4.64
|
|
|
|
2/11/2018
|
|
|
|
(1
|
)
|
|
|
|
12,000
|
|
|
|
|
|
|
|
8.70
|
|
|
|
2/28/2017
|
|
|
|
(1
|
)
|
|
|
|
26,000
|
|
|
|
|
|
|
|
3.00
|
|
|
|
5/3/2016
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
Jeff Nardoci
|
|
|
20,833
|
|
|
|
79,167
|
|
|
|
1.91
|
|
|
|
2/8/2020
|
|
|
|
(1
|
)
|
|
|
|
31,250
|
|
|
|
68,750
|
|
|
|
2.48
|
|
|
|
10/28/2019
|
|
|
|
(2
|
)
|
(1)
|
The shares underlying this option vest 1/48 per month following the vesting commencement date.
|
(2)
|
The shares underlying this option vest 1/4 on the one year anniversary of the vesting commencement date and 1/48 per month thereafter.
|
(3)
|
The shares underlying this option are fully vested.
|
Aggregated Option Exercises in 2010
The following table lists the options
exercised by our named executive officers in 2010.
|
|
|
|
|
|
|
|
|
Name
|
|
Option Awards
|
|
|
Number of Shares
Acquired on Exercise
|
|
|
Value Realized on
Exercise
|
|
Stephen J. Fanning
|
|
|
|
|
|
|
|
|
John F. Glenn
|
|
|
|
|
|
|
|
|
Clint Carnell
|
|
|
|
|
|
|
|
|
William Brodie
|
|
|
|
|
|
|
|
|
Jeff Nardoci
|
|
|
|
|
|
|
|
|
-33-
Nonqualified Deferred Compensation
None of our named executive officers currently participates in a non-qualified defined contribution plan or other deferred compensation
plan maintained by us.
Compensation Committee Interlocks and Insider Participation
Cathy L. McCarthy and Mark M. Sieczkarek are the current members of the compensation committee. No member of the compensation committee is
an executive officer or former officer of ours. No executive officer of ours served on the board of directors of any entity whose executive officers included a director of ours.
-34-
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with
management of Solta Medical, and based upon those discussions, the Committee has recommended to Solta Medicals board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
The foregoing report is provided by the undersigned members of the Compensation Committee.
Mark M. Sieczkarek, Chairman
Cathy L. McCarthy
-35-
PROPOSAL ONEELECTION OF DIRECTORS
Classes of the Board of Directors
Our board currently consists of eight directors, divided among the three classes designated as Class I, Class II and Class III of approximately equal size. The members of each class are
usually elected to serve three-year terms with the term of office for each class ending in successive years.
The term of our
Class II directors, Edward W. Knowlton, M.D. and Linda Graebner, expires at this Annual Meeting.
Edward W. Knowlton,
M.D. and Linda Graebner have been nominated for election to the board to serve as our Class II directors until the 2014 Annual Meeting or until their successors have been elected and qualified.
Vote Required
The nominees for directors receiving the highest number of affirmative votes of the shares entitled to vote for him or her shall be elected as director. Votes withheld from a director are counted for
purposes of determining the presence or absence of the quorum, but have no other legal effect.
Board of
Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES FOR CLASS II DIRECTORS LISTED
ABOVE.
-36-
PROPOSAL TWORATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has selected Deloitte & Touche LLP as the independent
registered public accounting firm to perform the audit of our financial statements for the fiscal year ending December 31, 2011. If our stockholders fail to ratify the Audit Committees selection, the Audit Committee will reconsider
whether or not to retain Deloitte & Touche LLP. Even if the selection is ratified, the Audit Committee may, in its discretion, select a different independent registered public accounting firm at any time during the year if it determines
such a change would be in the best interests of our company and our stockholders.
Representatives of Deloitte &
Touche LLP are expected to be present at the meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from our stockholders.
In 2009, PricewaterhouseCoopers LLP resigned as our independent registered public accounting firm. The reports of PricewaterhouseCoopers
LLP on our consolidated financial statements as of and for the year ended December 31, 2008 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting
principle. During the years ended December 31, 2008, and through May 6, 2009, there were no (a) disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to PricewaterhouseCoopers LLPs satisfaction, would have caused PricewaterhouseCoopers LLP to make reference to the subject matter thereof in connection with its reports on the
financial statements of Solta Medical, Inc. for such years, or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.
We provided PricewaterhouseCoopers LLP with a copy of the disclosures we proposed to make in a current report on Form 8-K filed on April 30, 2009, as amended on May 13, 2009, and requested from
PricewaterhouseCoopers LLP a letter indicating whether or not it agrees with such disclosures. A copy of PricewaterhouseCoopers LLPs letter was filed as an exhibit to the Form 8-K reporting the change in our auditors.
Also on April 29, 2009, we selected Deloitte & Touche LLP to serve as our independent registered public accounting firm.
The reports of Deloitte & Touche LLP on our consolidated financial statements as of and for the year ended December 31, 2010 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principle. During the years ended December 31, 2010 and 2009, there were no (a) disagreements with Deloitte & Touche LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Deloitte & Touche LLPs satisfaction, would have caused Deloitte & Touche LLP Deloitte & Touche LLP to make reference to
the subject matter thereof in connection with its reports on the financial statements of Solta Medical, Inc. for such years, or (b) reportable events, as described under Item 304(a)(1)(v) of Regulation S-K.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2011.
-37-
Fees Paid to Independent Registered Public Accounting Firm
The following information sets out the fees paid to our independent registered public accounting firm, PricewaterhouseCoopers LLP, during
the fiscal years 2010 and 2009.
|
|
|
|
|
|
|
|
|
Service Category
|
|
2010
|
|
|
2009
|
|
Audit Fees
|
|
$
|
|
|
|
$
|
46,100
|
|
Audit-Related Fees
|
|
|
|
|
|
|
15,000
|
|
Tax Fees
|
|
|
12,236
|
|
|
|
10,000
|
|
All Other Fees
|
|
|
27,800
|
|
|
|
21,500
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
40,036
|
|
|
$
|
92,600
|
|
|
|
|
|
|
|
|
|
|
In the above table, in accordance with the SECs definitions and rules, audit fees are fees
for professional services for the audit of the Companys 2008 financial statements, the review of quarterly financial statements, and for services that are normally provided by the accountant in connection with other statutory and regulatory
filings or engagements. Audit-related fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of a companys financial statements, such as advisory on Sarbanes-Oxley
compliance; tax services fees are fees for tax compliance, tax advice and tax planning; and all other fees are fees for any services not included in the first three categories.
The following information sets out the fees paid to our independent registered public accounting firm, Deloitte & Touche LLP,
during the fiscal years 2010 and 2009.
|
|
|
|
|
|
|
|
|
Service Category
|
|
2010
|
|
|
2009
|
|
Audit Fees
|
|
$
|
415,000
|
|
|
$
|
476,000
|
|
Audit-Related Fees
|
|
|
11,600
|
|
|
|
29,005
|
|
Tax Fees
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
74,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
501,100
|
|
|
$
|
505,005
|
|
|
|
|
|
|
|
|
|
|
In the above table, in accordance with the SECs definitions and rules, audit fees are fees
for professional services for the audit of the Companys 2010 financial statements, the review of quarterly financial statements, and for services that are normally provided by the accountant in connection with other statutory and regulatory
filings or engagements. Audit-related fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of a companys financial statements, such as advisory on Sarbanes-Oxley
compliance; tax services fees are fees for tax compliance, tax advice and tax planning; and all other fees are fees for any services not included in the first three categories.
To help ensure the independence of the independent registered public accounting firm, the Audit Committee has adopted a policy for the
pre-approval of all audit and non-audit services to be performed for us by the independent registered public accounting firm. Pursuant to this policy, all audit and non-audit services to be performed by the independent registered public accounting
firm must be approved in advance by the Audit Committee. The Audit Committee may delegate to one or more of its members the authority to grant the required approvals, provided that any exercise of such authority is presented to the full Audit
Committee at its next regularly scheduled meeting.
All of the services provided by PricewaterhouseCoopers LLP and
Deloitte & Touche LLP described in the tables above were approved by the Audit Committee.
-38-
PROPOSAL THREEADVISORY VOTE ON EXECUTIVE COMPENSATION
We are requesting your advisory approval of the compensation of our named executive officers as disclosed above in the
Compensation Discussion and Analysis, the compensation tables, and the related narrative discussion. This non-binding advisory vote is commonly referred to as a say-on-pay vote.
Our Compensation Committee believes that the most effective executive compensation program is one that is designed to reward achievement
and that aligns executives interests with those of stockholders by rewarding performance, with the ultimate objective of improving stockholder value and building a sustainable company. The Committee also seeks to ensure that we maintain our
ability to attract and retain superior employees in key positions and that the compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of a selected group of our peer companies
and the broader marketplace from which we recruit and compete for talent.
We are asking you to indicate your support for the
compensation of our named executive officers as described in this Proxy Statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy,
policies and practices described in this Proxy Statement. Accordingly, we are asking you to vote, on an advisory basis, For the following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the companys named executive officers, as disclosed pursuant to Item 402 of
Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion set forth on pages 22 to 44 of this Proxy Statement, is hereby approved.
While the results of this advisory vote are not binding, the Compensation Committee will consider the outcome of the vote in deciding
whether to take any action as a result of the vote and when making future compensation decisions for named executive officers.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADVISORY VOTE ON
EXECUTIVE COMPENSATION
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PROPOSAL FOURADVISORY VOTE ON THE FREQUENCY WITH WHICH AN
ADVISORY VOTE ON EXECUTIVE COMPENSATION SHOULD BE HELD
You are being provided with the opportunity to cast an advisory
vote on how frequently we should seek an advisory vote on the compensation of our named executive officers as provided in Proposal Three. This advisory vote is referred to here as the frequency of say-on- pay vote. Under this Proposal
Four, you may vote on whether you would prefer to have a say-on-pay vote every year, every two years or every three years.
The say-on-pay and frequency of say-on-pay voting provisions are new and at this time our Board of Directors believes that the say-on-pay advisory vote should be
conducted every year. An annual advisory vote on executive compensation will allow our stockholders to provide input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year.
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years or three years or abstain from
voting when you vote in response to the resolution set forth below.
RESOLVED, that the compensation of the
companys named executive officers be submitted to the shareholders of the company for an advisory vote: (a) every year; (b) every two years; or (c) every three years.
You are not voting to approve or disapprove our Board of Directors recommendation.
While this advisory vote on the frequency of the say on pay vote is non-binding, our Board of Directors and Compensation
Committee will give careful consideration to the outcome of this vote when considering the frequency of future say on pay votes.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE HOLDING OF AN ANNUAL ADVISORY VOTE ON EXECUTIVE COMPENSATION.
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OTHER MATTERS
We are not aware of any other business to be presented at the meeting. As of the date of this proxy statement, no stockholder had advised
us of the intent to present any business at the meeting. Accordingly, the only business that our board intends to present at the meeting is as set forth in this proxy statement.
If any other matter or matters are properly brought before the meeting, the proxies will use their discretion to vote on such matters in
accordance with their best judgment.
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By order of the board of directors,
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By:
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/s/ Stephen J. Fanning
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Stephen J. Fanning
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Chairman, President and Chief Executive Officer and
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Hayward, California
April 22, 2011
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SOLTA MEDICAL, INC.
2011 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Solta
Medical, Inc., a Delaware corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement each dated April 22, 2011 and hereby appoints Stephen J. Fanning and John F. Glenn, each as proxy and
attorney-in-fact, with full power of substitution, on behalf and in the name of the undersigned to represent the undersigned at the 2011 Annual Meeting of Stockholders of Solta Medical, Inc. to be held on June 2, 2011, at 9:00 a.m., local time,
at Solta Medicals offices located at 25881 Industrial Boulevard, Hayward, California 94545, and at any postponement or adjournment thereof, and to vote all shares of common stock which the undersigned would be entitled to vote if then and
there personally present, on the matters set forth below:
SEE REVERSE SIDE
FOLD AND DETACH HERE
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION
IS INDICATED, WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF THE NOMINATED CLASS II DIRECTORS; (2) FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM;
(3) FOR THE ADVISORY VOTE ON EXECUTIVE COMPENSATION; (4) FOR THE HOLDING OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION EVERY YEAR; AND AS THE PROXY HOLDERS DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
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1. Election of Directors
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FOR
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WITHHOLD
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Class II Nominees:
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Edward W. Knowlton, M.D.
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¨
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¨
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Linda Graebner
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¨
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¨
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2. Proposal to ratify the appointment of Deloitte & Touche LLP as independent registered public accounting firm of Solta Medical for the fiscal year ending
December 31, 2011.
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FOR
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AGAINST
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ABSTAIN
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¨
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¨
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¨
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3. Advisory Vote on Executive Compensation
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FOR
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AGAINST
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ABSTAIN
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¨
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¨
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4. Advisory vote on the frequency with which an advisory vote on executive compensation should be held.
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EVERY YEAR
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EVERY TWO YEARS
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EVERY THREE YEARS
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ABSTAIN
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¨
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¨
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¨
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¨
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PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE, WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES
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SIGNATURE(S)
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SIGNATURE(S)
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Date:
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, 2011
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NOTE
: This Proxy should be marked,
signed by the stockholder(s) exactly as his or her name appears hereon, and returned promptly in the enclosed envelope. If the stock you are voting is registered in the name of two or more persons, each should sign. Persons signing in a fiduciary
capacity should use their respective titles. If shares are held by joint tenants or as community property, both parties should sign.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON JUNE 2, 2011.
The Companys Proxy Statement, form of proxy card and Annual
Report on Form 10-K are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=178331&p=proxy
.
FOLD AND DETACH HERE
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available
through 11:59 PM local time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
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Internet
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Telephone
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Mail
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http://www.voteproxy.com
Use the internet to vote your proxy.
Have your proxy card in hand when
you access the web site.
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OR
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1 (800) 776-9437
Use any touch-tone telephone to
vote your proxy. Have your
proxy card in hand when you
call.
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OR
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Mark, sign and
date your proxy
card and return it in the enclosed
postage-paid envelope.
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If you vote your proxy by Internet or
by telephone, you do NOT need to mail back your proxy card.
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