Item 10.
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Directors, Executive Officers and Corporate Governance
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DIRECTORS
The following includes a brief biography of each member of our Board of Directors, or the Board, including their respective ages as of
April 30, 2017. The brief biographies below also include information regarding the specific experience, qualifications, attributes or skills that led our Board to determine that the applicable director should serve as a member of our Board as
of the date of this report.
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Name
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Age
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POSITION HELD WITH ZELTIQ
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Mark J. Foley
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51
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Chairman, Chief Executive Officer, President, and Director
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D. Keith Grossman
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57
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Lead Independent Director, Director
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David J. Endicott
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52
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Director
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Mary M. Fisher
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55
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Director
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Kevin C. OBoyle
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61
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Director
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Andrew N. Schiff, M.D.
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51
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Director
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Mark J. Foley
has served on our Board of Directors since 2009 and became our Interim President and
Chief Executive Officer in April 2012, and our President and Chief Executive Officer in August 2012. He previously served as our Executive Chairman of the Board of Directors from July 2009 to May 2010, and again since February 2015. Mr. Foley
currently serves as a Managing Director at RWI Ventures, and until March 2014, was Executive Chairman at Onpharma until its acquisition by Valeant Pharmaceuticals. Prior to this, Mr. Foley held a variety of operating roles in large public
companies and venture-backed startups including U.S. Surgical Corporation, Guidant Corporation, Devices for Vascular Intervention (acquired by Eli Lilly), Perclose (acquired by Abbott) and Ventrica (acquired by Medtronic) where he was the founder
and CEO. Mr. Foley has over 25 years of medical device operating, investment and CEO experience. Additionally, he has partnered with a number of entrepreneurs to assist with the formation and capitalization of new companies. Mr. Foley
serves or has served as Senior Advisor, Executive Chairman, Interim CEO and Board Member to a number of medical device companies. Mr. Foley is currently a director of Glaukos Corporation, a publicly traded company. Mr. Foley received his
B.A. from the University of Notre Dame. We believe Mr. Foley is qualified to serve on our Board of Directors because as our President and Chief Executive Officer, he has deep knowledge and understanding of our company and the business. He is
also qualified because of his previous medical device experience as a senior executive and his service on the boards of several medical device companies.
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D. Keith Grossman
has served on our Board of Directors since October 2013. In
February 2016, the Board appointed Mr. Grossman as its Lead Independent Director to preside over periodic meetings of our independent directors, to serve as a liaison between our Chairman and the independent directors, and to perform such
additional duties as our Board may otherwise determine and delegate. Mr. Grossman brings over 30 years of experience in the medical device industry. He most recently served for the second time as Chief Executive Officer, President and
Director of Thoratec Corporation (THOR) from September 2014 until October 2015, when the company was acquired by St. Jude Medical. Previous to Thoratec Corporation he served as Chief Executive Officer, President and a Director of Conceptus,
Inc. (CPTS), from December 2011 until September 2013, when the company was acquired by Bayer Healthcare. Prior to Conceptus, Mr. Grossman served as a Managing Director of TPG (Texas Pacific Group) Biotech from 2007 to 2011, where he
co-led
the medical device practice, and also served as a Senior Advisor to the healthcare efforts of the buyout fund, TPG Capital. Before joining TPG Biotech, Mr. Grossman was Chief Executive Officer, President
and a Director of Thoratec Corporation from 1996 to 2006. Before joining Thoratec, Mr. Grossmans experience included Sulzermedica and American Hospital Supply Corporation, in a variety of sales, marketing and general management
positions. He is a past member of the boards of public companies Kyphon, Inc. (KYPH) and Intuitive Surgical, Inc. (ISRG). He has served on the boards of numerous private medical device companies, as well as the Board of the Medical Device
Manufacturers Association. Mr. Grossman received a B.S. in life sciences from The Ohio State University, and an M.B.A. from Pepperdine University. Mr. Grossman brings to our Board of Directors substantial experience in the life
sciences industry, as well as the experience he obtained as a chief executive officer and president of other companies, which make him qualified to serve on our Board of Directors.
David J. Endicott
has served on our Board of Directors since April 2016. Mr. Endicott was President, Medical Devices of Hospira,
Inc., the worlds leading provider of injectable drugs and infusion technologies and a global leader in biosimilars, from March 2014 until September 2015 when Hospira was acquired by Pfizer Inc. From July 2010 to March 2014, Mr. Endicott
served as President, Allergan Medical, Asia Pacific and Latin America and as an executive committee member of Allergan, Inc., a multi-specialty healthcare company. Earlier in 2010 he served as President, Europe, Africa & Middle East.
Mr. Endicott currently serves on the board of directors of Orexigen Therapeutics, Inc., a biopharmaceutical company focused on the treatment of obesity and as a member of the board of directors for AdvaMed, the principal industry association
for medical devices. Mr. Endicott earned his bachelors degree in chemistry from Whitman College, his masters in business administration from the University of Southern California and is a graduate of the Harvard Business School
Advanced Management Program. We believe Mr. Endicott is qualified to serve on our Board of Directors based on his strong operational and management experience across multiple business and geographic regions which will provide significant value
as we continue to push for a greater international presence. His past leadership positions at Allergan and his role in Allergans international corporate expansion exemplifies his operational, strategic and corporate leadership experience.
Mary M. Fisher
has served on our Board of Directors since September 2012. Ms. Fisher currently serves as Chief
Executive Officer and Director at Colorescience. Prior to Colorescience, Ms. Fisher was Chief Executive Officer and a Director at SkinMedica from April 2008 to December 2012. Ms. Fisher brings more than 25 years of experience in the
pharmaceutical and biotechnology industries including service as Chief Operating Officer of Acorda Therapeutics, a CNS company, with responsibility for corporate strategy and business development, financial planning, sales and marketing, and
manufacturing. Previously, Ms. Fisher was Vice President, Strategic Healthcare and Commercial Operations for Cephalon, with responsibility for product planning and marketing, managed care sales, and manufacturing. Her earlier experience
includes positions at Immunex and Boehringer Ingelheim. She is also a member of the board of directors of Ovascience, Inc., a publicly traded company, and Neuroscience Nursing Foundation. We believe Ms. Fisher is qualified to serve on our Board
of Directors based on her executive experience in the aesthetics medical device industry and her collective experience and expertise, as described above.
Kevin C. OBoyle
has served on our Board of Directors since July 2011. Mr. OBoyle served as Senior Vice President and
Chief Financial Officer at Advanced BioHealing, Inc. from December 2010 until June 2011 when it was acquired. Previously, Mr. OBoyle served as the Chief Financial Officer of NuVasive, Inc., a medical device company focused on the design,
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development, and marketing of products for the surgical treatment of spine disorders, from January 2003 to December 2009 and the Executive Vice President of NuVasive from December 2004 to
December 2009. Prior to that time, Mr. OBoyle served as Chief Financial Officer and Chief Operating Officer during his six years with ChromaVision Medical Systems, Inc., a publicly traded medical device firm specializing in the oncology
market. Also, Mr. OBoyle held various positions during his six years with Albert Fisher North America, Inc., a publicly traded international food company, before it was sold in 1996, including Chief Financial Officer and Senior Vice
President of Operations. Mr. OBoyle is currently a member of the board of directors of Wright Medical Group N.V., a global orthopedics company, Genmark Diagnostics, Inc., a molecular diagnostics company, and Sientra, Inc., a medical
device company, all publicly traded, and was a member of the board of directors of Durata Therapeutics, a publicly traded pharmaceutical company until it was acquired by Actavis in 2014. Mr. OBoyle received a B.S. in Accounting from the
Rochester Institute of Technology and successfully completed the Executive Management Program at the University of California at Los Angeles, John E. Anderson Graduate Business School. We believe Mr. OBoyle is qualified to serve on our
Board of Directors and to serve as a Chairman of our Audit Committee based on his executive experience in the medical device industry and his financial and accounting expertise.
Andrew N. Schiff, M.D.
has served on our Board of Directors since July 2010. Dr. Schiff joined Aisling Capital in September
of 1999 and has served as a Managing Partner since 2002. Prior to joining Aisling Capital, Dr. Schiff practiced internal medicine at The New York Presbyterian Hospital where he maintains his position as a Clinical Assistant Professor of
Medicine. In addition to ZELTIQ, Dr. Schiff served as a director of Agile Therapeutics, Inc., a publicly-traded company, until February 2016, and currently serves as a director of a number of private companies. Dr. Schiff received his
M.D. from Cornell University Medical College, his M.B.A. from Columbia University, and his B.S. with honors in Neuroscience from Brown University. Dr. Schiffs medical background, venture experience, and service on the board of directors
of several healthcare companies make him qualified to serve on our Board of Directors and to serve as Chairman of our Compensation Committee.
EXECUTIVE OFFICERS
Our
executive officers are appointed by and serve at the discretion of the board of directors. There are no family relationships among our directors and officers, other than Brent Hauser, our President, North America, and Brad Hauser, our Senior Vice
President of Research and Development, are brothers. The following table provides information regarding our executive officers, including their ages and positions, as of April 30, 2017:
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Name
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Age
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Position
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Mark J. Foley
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51
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Chairman, Chief Executive Officer, President, and Director
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Todd E. Zavodnick
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45
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President, International
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Brent Hauser
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40
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President, North America
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Taylor C. Harris
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41
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Chief Financial Officer and Senior Vice President
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Sergio Garcia
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55
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Senior Vice President, General Counsel and Corporate Secretary
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Carl H. Lamm
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55
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Senior Vice President of Operations
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Brad Hauser
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40
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Senior Vice President of Research and Development
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Danika Harrison
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41
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Senior Vice President of Global Marketing
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Mike Fitzgerald
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57
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Senior Vice President of Global Human Resources
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Mark J. Foley
Biographical information with respect to Mark J. Foley is provided above under
Directors.
Todd E. Zavodnick
has served as President, International, since February 2016. Prior to joining ZELTIQ,
Mr. Zavodnick was the President & General Manager of Galderma North America, where he was responsible for all North America operations within the Pharmaceutical, Consumer (self-medication), and Aesthetic & Corrective
businesses. He also previously served as Galdermas Vice President, General Manager Aesthetic & Corrective USA, from May 2014 to January 2016, during which time
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he was responsible for Galdermas Aesthetic & Corrective operations in the United States. Todd also served as Senior Regional Director for Galdermas European and Latin
America Operations, from May 2012 to January 2015, during which time he was responsible for all operations within Europe, Middle East, Africa, and Latin America for Galderma regarding all business units of Pharmaceutical, Consumer (self-medication),
and Aesthetic and Corrective Lines. Prior to joining Galderma, Mr. Zavodnick served as President, China and Mongolia for Alcon, a Novartis company, from April 2009 to July 2012, at which he oversaw operations for Alcon China and Mongolia
focusing on the areas of medical devices, pharmaceuticals and consumer eye care. In his career, Mr. Zavodnick has spent time leading organizations in Asia (residing in Beijing, China, for four years), Europe (residing in Lausanne,
Switzerland, for two and a half years), the Middle East, Africa, and Latin America for Alcon Laboratories and Galderma Laboratories. He began his career as a Registered Pharmacist. In addition Mr. Zavodnick serves on the Board of
Directors for the Childrens Skin Disease Foundation whose mission is to care for children with severe life threatening skin diseases. Mr. Zavodnick earned a Bachelor of Science degree in Pharmacy from Rutgers University and an M.B.A.
from the University of Texas at Dallas.
Brent Hauser
has served as President, North America since January 2017, and previously
served as Vice President of North America Sales from January 2013 through December 2016. He first joined ZELTIQ as Regional Sales Director, West Region in November 2012. Mr. Hauser has more than 15 years of sales experience in the
medical device industry. Prior to joining ZELTIQ, he served as Director of Sales, APAC for Solta Medical, from March 2010 to October 2012, where he was responsible for developing and implementing the sales, clinical and training strategy
throughout the Asia Pacific region. He also served as Area Sales Manager from March 2008 through February 2010. Prior to the Solta Medical acquisition, Mr. Hauser served as Director of Sales, EMEA from January 2006 through February 2008,
for Reliant Technologies. Mr. Hauser received his Bachelor of Arts in Human Biology from Stanford University.
Taylor C.
Harris
has served as Chief Financial Officer and Senior Vice President since April 2016; however, he joined the company in March 2016 on a part-time basis as Vice President of Finance. Mr. Harris previously served as Vice President and
Chief Financial Officer at Thoratec Corporation from October 2012 until October 2015 when Thoratec was acquired by St. Jude Medical, Inc., during which tenure he was responsible for all finance, accounting, treasury and investor relations functions.
Mr. Harris joined Thoratec as its Senior Director of Investor Relations and Business Development in February 2010, in which capacity he was responsible for developing and executing the companys investor relations strategy, as well as
supporting the companys strategic and business development activities. Prior to joining Thoratec, Mr. Harris worked at JPMorgan Chase & Co. for over a decade in several capacities, including as a Vice President in the firms
Healthcare Investment Banking and Equity Research departments. Mr. Harris holds a Bachelor of Arts in Physics and Economics from the University of North Carolina at Chapel Hill.
Sergio Garcia
has served as Senior Vice President, General Counsel and Corporate Secretary since March 2012. With more than two decades
of legal and compliance experience, Mr. Garcia brings a wealth of expertise and knowledge to ZELTIQ. Before joining ZELTIQ, Mr. Garcia was a partner at the law firm Reed Smith LLP from July 2008 to February 2012 and at Fenwick &
West LLP from October 2005 to July 2008 where he advised public and private emerging growth biotechnology and medical device companies on corporate governance, securities matters, and strategic transactions, including mergers and acquisitions. Prior
to that, Mr. Garcia served as Vice President, Legal and General Counsel at PDL BioPharma Inc. where he was responsible for overseeing the companys legal affairs worldwide, including corporate governance, securities compliance, strategic
partnerships, litigation, licensing and mergers and acquisitions activity. Mr. Garcia received his Bachelor of Arts degree in International Relations from Stanford University and his J.D. degree from the University of California, Berkeley,
School of Law.
Carl H. Lamm
has served as Senior Vice President of Operations since January 2017 and previously as Vice President
of Operations from November 2012 to January 2017. He previously served as Vice President of Manufacturing & Supply Chain from July 2011 to November 2012 and as Senior Director of Supply Chain from April 2008 to July 2011. Prior to joining
ZELTIQ, Mr. Lamm served as Manufacturing Manager at Thoratec Corporation, as Operations Manager at Varian Inc. and Director of Logistics and Materials at Orthopedic Technology Inc. With over 25 years of Operations experience in Class II
and III Medical Device and High Technology companies managing operations, supply chain and manufacturing functions,
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Mr. Lamm is now responsible for establishing a flexible, scalable, cost effective and quality driven operations organization. Mr. Lamm holds a Bachelor of Arts in Economics from the
University of Washington and an M.B.A from Saint Marys College.
Brad Hauser
has served as Senior Vice President of Research
and Development since January 2017 and previously as Vice President of Research and Development from July 2015 to January 2017. He joined ZELTIQ in December 2013 as Vice President of Product and Clinical Strategy. Prior to joining ZELTIQ,
Mr. Hauser served as Executive Vice President, Commercial Operations for Cutera, from June 2011 to December 2013, where he was responsible for marketing, clinical and business development activities for its global laser and energy-based
devices. From April 2010 to June 2011, Mr. Hauser served as Director of Research and Development at Medicis where he was responsible for clinical and product development for the LipoSonix program. Prior to joining Medicis, Mr. Hauser
served as Managing Director of Product and Clinical Marketing at Solta Medical. Mr. Hauser received his Bachelor of Arts in Human Biology from Stanford University.
Danika Harrison
has served as Senior Vice President of Global Marketing since January 2017 and previously as Vice President of Global
Marketing from February 2015 to January 2017. She joined ZELTIQ in November 2014 as Vice President of Consumer and Brand Marketing. Prior to joining ZELTIQ, Ms. Harrison worked at Tria Beauty from March 2011 to June 2014 in several capacities,
including as Senior Vice President of Global Marketing and General Manager of North America, where she was responsible for marketing and eCommerce programs to drive consumer demand. Prior to joining Tria Beauty, Ms. Harrison worked at
digital marketing agency Rosetta from June 2006 to March 2011 where she partnered with companies such as Johnson & Johnson to build consumer-facing marketing programs. She spent the first six years of her career working in marketing
for financial services at MBNA (now Bank of America) and Merrill Lynch Investment Managers (now Blackrock). Ms. Harrison graduated cum laude with a Bachelor of Science from Georgetown University, and she received a Master of Business
Administration from Northwestern Universitys Kellogg School of Management.
Mike Fitzgerald
has served as Senior Vice
President, Global Human Resources since January 2017. Prior to joining ZELTIQ, Mr. Fitzgerald was the Executive Vice President, Global Human Resources for Cepheid, a leading company in molecular diagnostics, from January 2012 to January 2017,
where he was responsible for devising and implementing the companys human capital strategy and associated programs. Before joining Cepheid, he served as the Senior Vice President of Global Human Resources at Verigy, Ltd (now a part of
Advantest Corp.) from October 2010 to January 2012. Prior to Verigy, Mr. Fitzgerald was Vice President of Human Resources at Varian, Inc. (acquired by Agilent Technologies) from 2007 to 2010, and prior to that, he held various HR roles
culminating in becoming the Global Director of HR Strategy and Planning for Vodafone Group, plc from 1995 to 2006. He earned a bachelors degree in Political Science from the University of California, Berkeley, a masters degree in
Industrial Relations and Personnel Management from the University of Londons London School of Economics and Political Science, a masters in Management at McGill University in Montreal, Canada as part of the International Masters in
Practicing Management Program (IMPM), and a postgraduate diploma in applied social studies at Trinity College, Dublin. He is a current participant in the masters degree in Social Innovation program at the University of Cambridge Judge Business
School.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered
class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of ZELTIQ. Officers, directors and greater than ten percent stockholders are required
by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the
copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2016, all Section 16(a) filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with, except that each of Messrs. Endicott, Grossman and OBoyle, Dr. Schiff and Ms. Fisher filed one Form 4 reporting one transaction late, the automatic grant of restricted stock units to
them as
non-employee
directors.
7
CODE OF BUSINESS CONDUCT
We have adopted a code of business conduct that applies to all of our officers, directors, and employees. We have posted a copy of our code of
business conduct, and intend to post amendments to this code, or any waivers of its requirements, on our website at
www.zeltiq.com
, as permitted under SEC rules and regulations. The reference to our web address does not constitute
incorporation by reference of the information contained at or available through this site.
AUDIT COMMITTEE
The Board of Directors established an Audit Committee in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 to oversee
our corporate accounting and financial reporting processes and audits of its financial statements. The Audit Committee comprises Mr. OBoyle (Chair), Ms. Fisher and Mr. Grossman.
The Board of Directors reviews the NASDAQ listing standards definition of independence for Audit Committee members on an annual basis and has
determined that all members of our Audit Committee meet the independence requirements for serving on the Audit Committee (as currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the NASDAQ listing standards).
The Board of Directors has also determined that Mr. OBoyle qualifies as an audit committee financial expert, as defined
in applicable SEC rules.
The Board made a qualitative assessment of Mr. OBoyles level of knowledge and experience based on a number of factors, including his experience as a chief financial officer for public reporting
companies.
PROCEDURES BY WHICH SECURITY HOLDERS MAY RECOMMEND NOMINEES TO THE BOARD
Our Nominating and Corporate Governance Committee will consider candidates proposed for nomination by our stockholders, and does not intend to
treat candidates recommended by stockholders differently from other candidates. Stockholders may propose candidates by submitting the names and supporting information to: Corporate Secretary, 4410 Rosewood Drive, Pleasanton, CA 94588. Supporting
information should include (a) the name and address of the candidate and the proposing stockholder, (b) a comprehensive biography of the candidate and an explanation of why the candidate is qualified to serve as a director taking into
account the criteria identified in our corporate governance guidelines, (c) proof of ownership, the class and number of shares, and the length of time that the shares of our voting securities have been beneficially owned by each of the
candidate and the proposing stockholder, and (d) a letter signed by the candidate stating his or her willingness to serve, if elected.
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Item 11.
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Executive Compensation
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis is designed to provide our stockholders with an understanding of our compensation
philosophy and objectives as well as the analysis that we performed in setting executive compensation. It discusses the Compensation Committees and Boards determination of how and why, in addition to what, compensation actions were taken
for each person serving as our chief executive officer, our chief financial officer, our former chief financial officer, and our three other most highly compensated executive officers at the end of 2016. These individuals are collectively referred
to in this discussion as the named executive officers because they are named in the compensation tables included in this proxy statement.
Our named executive officers for 2016 were:
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Name
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Position
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Mark J. Foley
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Chairman, Chief Executive Officer, President, and Director
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Todd E. Zavodnick
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President, International
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Taylor C. Harris
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Chief Financial Officer and Senior Vice President
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Patrick Williams
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Former Chief Financial Officer and Senior Vice President
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Sergio Garcia
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Senior Vice President, General Counsel and Corporate Secretary
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Keith J. Sullivan
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Former Chief Commercial Officer and President, North America
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Investors are encouraged to read this discussion in conjunction with the compensation tables and related
notes, which include more detailed information about the compensation of the named executive officers for 2016 as well as prior years.
Compensation
Philosophy and Objectives
The Compensation Committee of the Board of Directors designs our compensation and benefits programs to
attract, retain, and incentivize talented and qualified executives who share our commitment to our vision, customers, and constituents. We recruit and hire employees who strive to meet and surpass our annual and long-term corporate goals and build
long-term value for our stockholders. The Compensation Committee and Board believe compensation incentives should promote the success of our company and motivate our executive officers to pursue and exceed our corporate objectives.
The Compensation Committees philosophy is that an appropriate portion of an executives compensation should be performance-based to
encourage and foster a culture in which individual performance is aligned with corporate objectives. The Compensation Committee believes that by promoting a
pay-for-performance
philosophy it will enable us to align our executive officers interests with those of our stockholders. Our performance-based compensation
programs combine short- and long-term components, consisting of cash bonuses based on performance, and equity grants that vest over time (and increase in value with the increase in our stock price) or upon achievement of performance objectives, in
amounts and proportions aimed to create incentives and reward our executive officers for achieving and surpassing our corporate objectives. Our executive compensation program also is intended to make us competitive in our industry, where there is
considerable competition for talented executives.
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Role of
Say-on-Pay
Vote
At the 2012 annual meeting, our stockholders voted to review our executive compensation, commonly referred to as a
say-on-pay
vote, once every three years. At the 2012 annual meeting, we presented stockholders with a
non-binding
say-on-pay
vote on our executive compensation for 2011 described in the 2012 proxy statement. Of the total votes cast, approximately 99% were in favor of our 2011 executive
compensation. The Compensation Committee reviewed the results of the vote and concluded that the stockholders had endorsed the Compensation Committees compensation philosophy.
At the 2015 annual meeting we presented stockholders with a
non-binding
say-on-pay
vote on our executive compensation for 2014 described in the 2015 proxy statement. Of the total votes cast, 79% were in favor of our executive compensation.
The Compensation Committee reviewed the results of the vote and concluded it was not necessary to make any changes to its compensation philosophy. Taking into consideration the 2015
say-on-pay
vote, the Compensation Committee continued its compensation philosophy and practices and, in February 2016, applied the same compensation principles in
establishing 2016 compensation.
Summary of Compensation Program
The overall objective of our compensation program is to motivate our executives to meet and exceed our corporate goals and build stockholder
value. Therefore, the elements of our compensation program are focused on providing our executives with both annual and long-term performance incentives. The elements include:
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Annual performance-based cash incentive awards;
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In cases of exceptional performance, additional cash bonuses; and
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Stock-based incentive awards.
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We also provide our executives with the same benefits we
provide generally to our employees, including health insurance, short-term and long-term disability insurance, life and accidental death and dismemberment insurance, and other insurance benefits.
In determining the amounts of each of these compensation elements, the Compensation Committee considers the following objectives:
An appropriate portion of executive compensation should be performance-based
.
We believe that a
meaningful portion of executive compensation should be directly tied to the performance of our company as a whole. Consistent with this objective, we adopted a 2016 Corporate Bonus Plan to reward achievement of our corporate goals.
Stock-based incentive awards should be a significant portion of executive compensation
.
We believe
a meaningful portion of executive compensation should be tied to the long-term performance of the organization with a focus on building long-term stockholder value. By granting executives stock option, performance stock unit and restricted stock
unit awards, we directly incentivize our executives to build stockholder value. To assure the long-term focus on stockholder value as well as to retain our executives responsible for achieving this objective, our stock option and restricted stock
unit awards typically have a four-year vesting schedule.
Our executive compensation should be competitive
and fair
.
Executive talent is important to our organization, and there is significant competition for top talent in the medical technology industry. To attract and retain talented executives, our compensation programs should be
competitive when compared to our peers and fair with respect to internal and external considerations.
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Compensation Process
Our Compensation Committee is responsible for establishing our compensation philosophy and ultimately determining the compensation levels for
our named executive officers, including base salaries, cash incentive compensation and stock-based incentive awards. The Compensation Committee is also responsible for approving the corporate goals for purposes of determining annual cash incentive
awards. To assist the Compensation Committee, our Chief Executive Officer collaborates with our Chief Financial Officer and Human Resources to develop recommendations to make to the Compensation Committee for base salaries, cash incentive bonus
plans, stock-based incentive awards, corporate goals for the fiscal year, and individual performance goals for each named executive officer (other than with respect to the Chief Executive Officers own compensation). The Compensation Committee
in its sole discretion determines whether to adopt the Chief Executive Officers recommendations. No named executive officer may be present at the time his or her compensation is being discussed or determined by the Compensation Committee. With
respect to the compensation of the Chief Executive Officer, the Compensation Committee makes recommendations to the Board, and the Board ultimately approves the compensation of the Chief Executive Officer.
The Compensation Committee engaged Compensia, a national compensation consulting firm, to provide executive compensation advisory services,
which services with respect to 2016 compensation for the named executive officers included the following:
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an assessment of executives base salaries, cash incentives and equity compensation levels, and plan structures;
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a review of market practice with respect to executive severance and change in control arrangements;
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a review of recommendations for our peer group;
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a review of market data and compensation trends specific to our peer group to design compensation plans; and
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a review of our compensation discussion and analysis included in our proxy statement.
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Determination of
Executive Compensation
In setting the compensation for our named executive officers, our Compensation Committee places significant
emphasis on the recommendations of our Chief Executive Officer for all named executive officers, except with respect to the compensation of the Chief Executive Officer. Our Compensation Committee also considers market data, our overall performance
during the prior fiscal year relative to our financial goals and the executives individual contributions during the prior fiscal years toward the achievement of our corporate goals. Our Compensation Committee determines compensation for newly
hired executive officers based on the following (not mentioned in any specific order): (1) significance of the position relative to our business needs and objectives; (2) competitive market data of our peer companies and other available
market data; (3) industry experience; (4) experience and expertise; and
(5) arms-length
negotiations between the company and the executive officer in connection with the executive officer
becoming employed by us.
Establishment of Peer Group
In the second half of 2011 in connection with our initial public offering, the Compensation Committee engaged Compensia to conduct a
compensation analysis of our peer group, and has continued to use Compensia ever since. In December 2015, Compensia reviewed our peer group originally established in 2013, and revised in 2014, and delivered its findings and recommendations to the
Compensation Committee, which our Compensation Committee adopted, leading to the removal of one company from the peer group, due to reduced market capitalization (Fluidigm) and the inclusion of one new company (Natus Medical) as a replacement.
Compensias and the Compensation Committees goal in creating the new peer group was to establish representative industry group most similar to the company based on revenues, industry segment, business model and U.S. location. The 2016
peer group was as follows:
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Abaxis, Inc.
ABIOMED, Inc.
AtriCure Inc.
Atrion Corporation
Cardiovascular Systems, Inc.
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Cynosure, Inc.
DexCom, Inc.
Endologix, Inc.
HeartWare International, Inc.
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Insulet Corporation
LDR Holding
Natus Medical
Vascular Solutions, Inc.
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11
Components of Executive Compensation
As indicated above, our executives are compensated through a combination of annual and long-term incentives designed to motivate them to help
us achieve our key corporate goals and build value for our stockholders.
The Compensation Committee considers many factors in the process
of determining compensation levels for each named executive officer, including:
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the Compensation Committees belief that our compensation amounts should be internally fair and equitable relative to roles, responsibilities, and relationships among our named executive officers;
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prior compensation or amounts realized or realizable from equity compensation by named executive officers; and
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the evaluations and recommendations of our Chief Executive Officer based on his evaluation of each executives performance and contributions (other than with respect to his own compensation).
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We do not have a predefined framework that determines which factors may be more or less important, and the emphasis placed on specific factors
may vary among the named executive officers. Ultimately, it is our Compensation Committees judgment of these factors, along with competitive data, that form the basis for determining named executives compensation.
Base Salary
Our Compensation
Committee is responsible for setting our executive base salaries based on input from the Chief Executive Officer (except with respect to the compensation of the Chief Executive Officer, whose base salary the Compensation Committee recommends to the
Board, with Board making the final determination). The Compensation Committee annually sets the base salary for our executives and adjustments are made to reflect performance-based factors and competitive conditions.
Based upon Compensias market findings and to remain competitive with salaries offered by peer companies, at the beginning of 2016, based
on a recommendation by the Compensation Committee, the Board of Directors increased the base salary of Mr. Foley by 14.3% from $525,000 per year to $600,000. In addition, based upon the recommendation of the Chief Executive Officer and
Compensias market findings, at the beginning of 2016 the Compensation Committee increased the base salary of Mr. Garcia by 4.8% from $310,000 to $325,000.
In addition, in January 2016 Mr. Sullivan was promoted from Senior Vice President and Chief Commercial Officer to Chief Commercial
Officer and President, North America. With this promotion, the Compensation Committee increased Mr. Sullivans base salary 10.8%, from $325,000 to $360,000. Mr. Sullivans compensation adjustment was a result of the Chief
Executive Officers recommendation and market findings by Compensia.
On February 1, 2016, Mr. Zavodnick joined us on a
full-time basis as President, International, earning a base salary of $350,000 per year. The base salary for Mr. Zavodnick was the result of arms-length negotiations in connection with the negotiation of his employment agreement in December
2015, and the Compensation Committee approved Mr. Zavodnicks salary level prior to his hire based in part upon the recommendation from the Chief Executive Officer and market findings by Compensia.
On March 1, 2016, Mr. Harris joined us on a part-time basis as Vice President of Finance, earning a base salary of $175,000 per
year. Mr. Harris became Senior Vice President and Chief Financial Officer on April 18, 2016, and began working full-time with a base salary of $350,000. The base salary for Mr. Harris was the result of arms-length negotiations in
connection with the negotiation of his employment agreement in February 2016, and the Compensation Committee approved Mr. Harriss salary level prior to his hire based in part upon the recommendation from the Chief Executive Officer and
market findings by Compensia.
Mr. Williams base salary was not adjusted in 2016, and remained at $325,000.
12
Performance-Based Cash Incentive Awards
Our Compensation Committee is responsible for administration of our bonus plans, and in February 2016 adopted the 2016 Corporate Bonus Plan, or
the Bonus Plan, which provided for cash incentive awards for performance in 2016. All named executive officers were eligible to participate in the Bonus Plan other than Mr. Williams, who would be terminating employment with our company. The
Bonus Plan was designed to align our named executive officers efforts with our corporate goals and our Compensation Committees
pay-for-performance
philosophy. Each named executive officer had a target bonus ranging from 50% to 100% of his base salary.
In determining the percentage of
base salary used to establish the target bonus for each of the named executive officers, the Compensation Committee (and the Board with respect to our Chief Executive Officer), considered the factors described above in the Components of Executive
Compensation. The Compensation Committee has no formula for making these determinations, but uses its judgment and industry knowledge, as well as the advice of Compensia, in determining the target bonus as a percentage of base salary. For 2016, the
Compensation Committee (and the Board with respect to our Chief Executive Officer), set target bonuses as a percentage of base salary for our named executive officers as follows:
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Name
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Target Bonus as a Percentage of Base Salary
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Mark J. Foley
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100
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%
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Todd E. Zavodnick
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75
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%
(1)
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Taylor C. Harris
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|
60
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%
(1)
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Patrick F. Williams
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60
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%
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Sergio Garcia
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50
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%
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Keith J. Sullivan
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75
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%
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(1)
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Mr. Zavodnicks and Mr. Harris target bonuses were established in connection with the negotiation of their employment agreements in December 2015 and February 2016, respectively.
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For our Chief Executive Officer, the Compensation Committee and the Board determined that 100% of his actual bonus would be determined based
solely on company performance as against the established metrics. For our other named executive officers for whom a target bonus was established, 70% of actual bonus would be based on company performance as against the established metrics, and the
remaining 30% would be based on individual goals. There are no guaranteed bonuses under the Bonus Plan. The company must achieve corporate goals and objectives, at specified levels, for any bonus payouts to occur that are tied to company
performance. Individual goals are set at the beginning of the year specific to each named executive officers functional area.
The
Compensation Committee and the Board determined that the metrics for company performance under the Bonus Plan would be 2016 revenue and 2016 Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, excluding stock-based
compensation), which are collectively referred to as the Corporate Objective. Further, the Compensation Committee and the Board determined to weight these metrics for the Bonus Plan with 70% for revenue performance and 30% for Adjusted
EBITDA performance, for purposes of determining actual payouts. The Compensation Committee and the Board determined to use these metrics and weightings for the Bonus Plan based upon their determination that these metrics and weightings were the
appropriate mix to best motivate the named executive officers to maximize the companys financial performance.
The Compensation
Committee and the Board determined that no bonus would be achieved unless at least $315.0 million of 2016 revenue was recognized, and no less than $31.5 million of Adjusted EBITDA was achieved. At these minimum levels, 50% of the Corporate
Objective component of target bonuses would be earned. For amounts above these minimums, actual bonuses related to the Corporate Objective component of target bonuses would increase to 100% of the target bonus tied to Corporate Objective being paid
if (1) the companys actual 2016 revenue equaled the revenue set forth in the companys budget ($327.5 million), and (2) the companys actual 2016 Adjusted EBITDA was achieved as set forth in the companys budget
13
($35.7 million). The maximum bonus payable with respect to the Corporate Objective was 200% of target bonus for Mr. Foley, Mr. Zavodnick, Mr. Harris and Mr. Sullivan, and 175%
of target bonus for Mr. Garcia, which would be reached if at least $350.0 million of 2016 revenue was recognized, and no less than $40.6 million of Adjusted EBITDA was achieved. Mr. Williams was eligible for a
pro-rated
target bonus as per his separation agreement.
The 2016 individual goals for each named
executive officer included International Sales and expansion activities (for Mr. Zavodnick),
non-financial
goals for Finance and Information Technologies (for Mr. Harris), execution of legal strategy
and favorable legal outcomes (for Mr. Garcia), and North American Sales, Commercial Operations, Training and Marketing related goals (for Mr. Sullivan).
Actual company performance with respect to the Corporate Objective component was: 2016 world-wide revenue of $354.2 million, exceeding
target by 8.2%; and 2016 Adjusted EBITDA of $35.3 million, missing target by 7.4%. Therefore although our world-wide revenue achieved the maximum level, our Adjusted EBITDA achievement did not achieve the target level. As such, the company paid
bonuses below the target levels at 98.6% but earned overachievement of bonus due to the exceeded revenue target.
As a result of this
performance, in February 2017, our Compensation Committee made the subjective determination to pay bonuses to each of our named executive officers as follows:
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Name
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Target Bonus
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Portion of Target
Bonus Earned (1)
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Portion of Over-achievement
Bonus Earned(2)
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Total Bonus
Earned
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Percentage of
Target Bonus
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Mark J. Foley
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$
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600,000
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$
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591,463
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420,000
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$
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1,011,463
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|
|
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168
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%
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Todd E. Zavodnick
(3)
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$
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262,500
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$
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255,948
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|
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183,750
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$
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439,698
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168
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%
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Taylor C. Harris
(4)
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$
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161,875
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$
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131,936
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113,313
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$
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245,249
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|
152
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%
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Patrick F. Williams
(5)
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$
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57,688
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|
$
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57,113
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|
|
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$
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57,113
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99
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%
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Sergio Garcia
(6)
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$
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162,500
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$
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160,881
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85,313
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|
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$
|
246,194
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152
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%
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Keith J. Sullivan
(6)
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$
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270,000
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$
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267,311
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189,000
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$
|
456,311
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|
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169
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%
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(1)
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The company achieved 98.6% of its Target Bonus. Excludes amounts paid for overachievement.
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(2)
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Overachievement was calculated as follows: the company exceeded its maximum world-wide revenue target of $350.0 million by achieving $354.2 million, but did not achieve the target Adjusted EBITDA of
$35.7 million. The actual achievement was $35.3 million in Adjusted EBITDA and was, therefore, under the 100% target for Adjusted EBITDA. Based on the weighting of these metrics at 70% (for world-wide revenue) and 30% (for Adjusted
EBITDA), it was determined that the company achieved 98.6% of its target and 70% of its overachievement metric, as the revenue target exceeded the maximum target. This 168% overachievement metric was multiplied by the overachievement opportunity for
each objective (an additional 100% for Messrs. Foley, Harris, Zavodnick and Sullivan and 75% for Mr. Garcia) to determine their earned bonus.
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(3)
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Mr. Zavodnick did not achieve all of his individual goals. As such, his earned bonus is calculated below the full achievement for which he is eligible and his overachievement is based on a multiple of the lower
earned bonus. Though Mr. Zavodnick was hired in February 2016, his bonus was not
pro-rated
for his length of service in 2016 per his employment arrangements with the company.
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(4)
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Mr. Harris did not achieve all of his individual goals. As such, his earned bonus is calculated below the full achievement for which he is eligible and his overachievement is based on a multiple of the lower earned
bonus. Mr. Harris began his employment on March 1, 2016, and as such, his bonus is
pro-rated
for his length of service in 2016. Per his employment agreement with the company,
Mr. Harris earnings while a part-time employee from March 1, 2016, through April 17, 2016, were included with his 2016 bonus opportunity.
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(5)
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Based on Mr. Williams separation agreement, he was eligible to receive the target bonus level,
pro-rated
for his length of service in 2016. Mr. Williams
employment terminated on April 18, 2016.
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(6)
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Achieved 100% of his individual goals.
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14
Cash Bonuses
In 2016 we paid a cash bonus to Mr. Zavodnick pursuant to the terms of his employment agreement in the amount of $153,361, which comprised
$50,000 as a sign on bonus and the remainder as a bonus as a result of the bonus he was required to forego from his prior employer to join our company.
Mr. Harris received a
one-time
discretionary bonus in the amount of $28,327 on March 15,
2017, for his work performed in 2016 based on a recommendation from the Chief Executive Officer and approved by the Compensation Committee.
Stock-Based Incentive Awards
In
addition to our performance-based cash incentive awards, we provide long-term stock-based incentive awards to our executive officers. These stock-based incentive awards are a blend of options to purchase shares of our common stock, performance stock
units (PSUs) and restricted stock units (RSUs), which provide incentives which enable the company to continue to attract, retain experienced and skilled industry leaders, and maintain a competitive position.
Our Chief Executive Officer recommends to our Compensation Committee a specific value of shares to be subject to each award granted to each
named executive officer (with the exception of his own stock-based grants). The actual value of shares granted to the named executive officers is determined by the Compensation Committee and the Board based on the Compensation Committees and
the Boards subjective assessment of the companys performance, the named executive officers total compensation, the individual officers level of duties and responsibilities, performance, demand in the labor market, and market
data (including competitive analysis provided by Compensia), as well as the dilutive effects of equity grants. Each named executive officer generally receives award grants with a value determined by reference to the named executive officers
responsibilities and duties. The number of RSUs awarded is calculated by taking the average fair market value of our common stock for the preceding 30 calendar days and dividing it into the aggregate award value. Generally, our executive officers
receive these grants at the time of their initial hire, following promotion and, if approved by the Compensation Committee, on an annual basis. The determination of the specific value of shares to be subject to each grant to our Chief Executive
Officer is made by the Board of Directors following discussion with the chairman of the Compensation Committee.
All equity based
incentive awards to our continuing executive officers are granted at regular meetings of the Compensation Committee. Awards to new employees and to current employees who are promoted are granted on or soon after the date of hire or promotion. Our
Compensation Committee does not time the granting of equity awards based on whether the company is in possession of material
non-public
information. The number of options awarded is calculated by taking the
Black-Scholes value of the average fair market value of our common stock for the preceding 30 calendar days and dividing it into the aggregate award value. The exercise price of any option grant is determined by reference to the fair market value
listed of such shares, which our Equity Incentive Plan defines as the closing price of our common stock on the date of grant. On the vesting date, the value for each RSU and PSU is determined by calculating the closing price listed on NASDAQ
multiplied by the number of shares vesting.
In 2016, our Board and Compensation Committee made equity award grants only of stock options
and RSUs to our named executive officers other than to Keith J. Sullivan, our Chief Commercial Officer and President, North America. The Compensation Committee made equity award grants solely of PSUs to Mr. Sullivan. Mr. Sullivans
PSUs are subject to vesting quarterly over one year based upon the achievement of quarterly revenue levels. Our Board and Compensation Committee determined the value of shares to be subject to the stock options and RSUs granted to our named
executive officers other than to Mr. Sullivan using the subjective criteria discussed above. The Compensation Committee made the grant of PSUs to Mr. Sullivan pursuant to Mr. Sullivans employment agreement with the company,
which was negotiated with Mr. Sullivan at the time that he entered into his employment with the company, which PSUs are intended to provide him with substantial incentives to achieve superior sales performance by tying the vesting of the PSUs
to sales performance.
Equity grants to Mr. Zavodnick and Mr. Harris were negotiated in connection with the negotiation of their
employment agreements in December 2015 and February 2016, and the grants were effective upon their beginning employment with the company.
15
Equity incentives are generally granted on a time-based vesting schedule, with the exception of
certain prior grants to Mr. Foley and Mr. Sullivan, each of which vest upon the achievement of performance targets, and a grant to Mr. Garcia in 2015, which vests upon the achievement of an operational milestone. Most new hire option
grants, including those for our named executive officers, generally vest over a four-year period with 25% vesting on the first anniversary of the grant date or vesting commencement date and the remainder vesting in equal monthly installments over
the subsequent three years of employment. Annual option grants generally vest over a four-year period. RSU grants vest over four years. Mr. Sullivans PSUs vest quarterly in amounts depending on achievement of quarterly revenues. The named
executive officers also have accelerated vesting on certain types of terminations of employment, as described below in the section Employment Agreements.
The equity grants made in 2016 were as follows:
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Name
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Number of Shares Subject
to Stock Options
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Number of Shares Subject
to RSUs
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|
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Number of Shares Subject to PSUs
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|
Mark J. Foley
|
|
|
124,610
|
|
|
|
65,421
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|
|
|
|
|
Todd E. Zavodnick
|
|
|
|
|
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99,049
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|
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Taylor C. Harris
|
|
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106,411
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|
|
|
55,865
|
|
|
|
|
|
Patrick F. Williams
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|
|
|
|
|
|
|
|
|
|
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Sergio Garcia
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|
|
26,702
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|
|
|
14,019
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|
|
|
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Keith J. Sullivan
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|
|
|
|
|
|
|
|
|
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40,000
|
|
Other Benefits
To attract, retain and offer market levels of compensation to our executives, we provide the following benefits:
Health insurance
.
We provide each of our executives and their spouses and children the same health, dental and vision
insurance coverage we make available to our other eligible employees.
Health Saving Account/Flexible Spending
Account
.
Pursuant to the plan restrictions all eligible executives have the same opportunity to participate in these plans consistent with all of our eligible employees.
Disability insurance.
We provide each of our executives with the same short-term and long-term disability insurance we provide to all
eligible employees.
Life insurance.
We provide each of our executives with the same life insurance we provide to all eligible
employees at 1x annual compensation.
401(k) retirement plan.
All executives are eligible to participate in the same 401(k) Plan
that is available to all eligible employees. Pursuant to our 401(k) plan, we made matching contributions for each of our named executive officers in an amount equal to $1.00 for every $1.00 contributed by an employee up to 3% of earnings and $0.50
for every $1.00 contributed by an employee between 3% and 5% of earnings to a maximum matching contribution of 4% of earnings.
Employee
Stock Purchase Plan.
All executives are eligible to participate in the same plan that is available to all eligible employees.
Personal
Time-Off
(PTO).
We provide each of our executives with the same PTO accrual
that is available to all eligible employees.
Nonqualified deferred compensation.
We do not currently provide any nonqualified
deferred contribution or other deferred compensation plans to any employees.
16
Perquisites.
We have limited the perquisites made available to our executive officers. In
the event of relocation upon acceptance of a position with the company, we have provided relocation assistance to include actual moving expenses and limited assistance with the sale of a residence. Relocation assistance has been provided to other
employees in the organization. A formal relocation plan has not been developed. If necessary, we may develop a formal relocation plan to aid us in attracting and retaining key employees.
Post-Employment Compensation
Certain
employment arrangements with our named executive officers provide for protections in the event of their termination of employment under specified circumstances. We believe that these protections are necessary for both recruiting and retention
purposes. We also believe that entering into these arrangements will help our executives maintain continued focus and dedication to their responsibilities to help maximize stockholder value if there is a potential transaction that could involve a
change in control of our company. For a summary of the material terms and conditions of these severance and change in control arrangements, please review section Employment Arrangements.
On February 25, 2016, we entered into a severance and consulting agreement with Mr. Williams pursuant to which Mr. Williams
remained an employee of ZELTIQ until April 17, 2016, at which time he became a consultant to us. The severance and consulting agreement provides that Mr. Williams will: (a) receive severance of continued payment of his base cash
compensation for a period of nine (9) months following April 17, 2018; (b) receive nine (9) months of COBRA health insurance premiums (or a shorter period if Mr. Williams becomes eligible for health insurance benefits through
another employer); (c) be a participant in the ZELTIQ 2016 Corporate Bonus Plan for his service while he remains an employee of ZELTIQ, with a target bonus of 60% of his actual annual base cash compensation; and receive a consulting fee equal to
$1,000 per month, beginning April 18, 2016, until the earlier of (a) the expiration or termination of the period during which he provides consulting services to ZELTIQ, or (b) the date on which he begins full-time employment with
another company. These terms were arrived at based on Mr. Williams contractual obligations to severance in addition to the companys periodic need for his consultative services over a transitional period of time.
Accounting and Tax Considerations
Internal Revenue Code, or the Code, Section 162(m) limits the amount that we may deduct for compensation paid to our Chief Executive
Officer and to certain other of our most highly compensated officers to $1,000,000 per person, unless certain exemption requirements are met. Exemptions to this deductibility limit may be made for various forms of performance-based
compensation. In 2016 our Compensation Committee and stockholders approved our 2016 Executive Performance Award Plan that was intended to be used in future years to establish performance-based compensation for 2017 and beyond. With the
impending acquisition of our company by Allergan in the second quarter of 2017, we do not expect that the Compensation Committee will be making any further compensation decisions.
17
SUMMARY COMPENSATION TABLE
The following table shows for the fiscal years ended December 31, 2016, 2015 and 2014, compensation earned by our Chief Executive Officer,
Chief Financial Officer and our three other most highly compensated executive officers at December 31, 2015 (the named executive officers).
Summary Compensation Table
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|
Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
($)
|
|
|
Stock Awards
($)(1)(2)
|
|
|
Option
Awards
($)(1)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
All Other
Compensation
($)(3)
|
|
|
Total ($)
|
|
Mark J. Foley
President and Chief Executive
Officer
|
|
|
2016
2015
2014
|
|
|
|
600,000
525,000
500,000
|
|
|
|
|
|
|
|
1,506,646
1,820,996
735,000
|
|
|
|
1,437,825
477,952
154,440
|
|
|
|
1,011,463
945,000
750,000
|
|
|
|
11,260
11,029
10,829
|
|
|
|
4,567,194
3,779,977
2,150,269
|
|
|
|
|
|
|
|
|
|
|
Todd E. Zavodnick (4)
President, International
|
|
|
2016
|
|
|
|
320,833
|
|
|
|
153,361
|
|
|
|
2,291,004
|
|
|
|
|
|
|
|
439,698
|
|
|
|
19,274
|
|
|
|
3,224,170
|
|
|
|
|
|
|
|
|
|
|
Taylor C. Harris (5)
Chief Financial Officer,
Senior Vice President
|
|
|
2016
|
|
|
|
269,792
|
|
|
|
28,327
|
|
|
|
1,162,551
|
|
|
|
1,109,473
|
|
|
|
245,249
|
|
|
|
10,517
|
|
|
|
2,825,909
|
|
|
|
|
|
|
|
|
|
|
Patrick F. Williams (6)
Former
Chief Financial Officer,
Senior Vice President
|
|
|
2016
2015
2014
|
|
|
|
96,146
325,000
318,750
|
|
|
|
|
|
|
|
705,613
417,600
|
|
|
|
185,200
230,343
|
|
|
|
57,113
346,788
318,750
|
|
|
|
285,025
15,028
14,822
|
|
|
|
438,284
1,577,629
1,300,265
|
|
|
|
|
|
|
|
|
|
|
Sergio Garcia
Senior Vice President, General
Counsel and Corporate Secretary
|
|
|
2016
2015
2014
|
|
|
|
325,000
310,000
310,000
|
|
|
|
|
|
|
|
322,858
691,899
250,560
|
|
|
|
308,104
55,549
57,586
|
|
|
|
246,194
223,200
244,125
|
|
|
|
11,235
10,265
9,833
|
|
|
|
1,213,391
1,290,913
872,104
|
|
|
|
|
|
|
|
|
|
|
Keith J. Sullivan (7)
Former Chief Commercial Officer
and President, North America
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|
|
2016
2015
2014
|
|
|
|
360,000
325,000
325,000
|
|
|
|
|
|
|
|
921,200
1,386,000
1,111,800
|
|
|
|
|
|
|
|
456,311
410,000
455,000
|
|
|
|
23,260
191,686
23,829
|
|
|
|
1,760,771
2,312,686
1,915,629
|
|
(1)
|
As required by SEC rules, amounts shown present the aggregate grant date fair value calculated using the same valuation methodology we use for financial reporting purposes in accordance with ASC 718, excluding the
effects of forfeiture with respect to awards subject to performance conditions. As a result, these amounts do not reflect the amount of compensation actually received by the named executive officer during the fiscal year. For a description of the
assumptions used in calculating the fair value of equity awards under ASC 718, see Note 8, Stock Based Compensation, in the notes to consolidated financial statements included in our Annual Report on Form
10-K
for the year ended December 31, 2016.
|
(2)
|
Includes the fair value of the performance stock units (PSUs) granted, excluding estimates of forfeiture, that were granted to Mr. Sullivan in the year with vesting based upon the achievement of
revenue-based targets for each year, and to Mr. Garcia in 2015 with vesting based upon the achievement of an operational milestone. The fair value is calculated based upon the probable outcome of the vesting conditions. The probable outcome
values for PSUs granted to Mr. Sullivan for 2014, 2015 and 2016 were the same as the maximum values, which were $1,111,800, $1,386,000 and $921,000, respectively. The probable outcome value for the PSU granted to Mr. Garcia in 2015 was $0,
and the maximum value was $691,899. No other named executive officers were granted PSUs in 2014, 2015 or 2016.
|
(3)
|
For 2016, includes (i) matching contributions to our 401(k) plan; (ii) life insurance premiums and (iii) the value of perquisites, including car allowance, medical expenses, severance/PTO/COBRA and
relocation fees. The individual components of the total amounts for 2016 are as follows:
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
401K
Contributions
($)
|
|
|
Life
Insurance ($)
|
|
|
HSA
Contribution
($)
|
|
|
Car
Allowance ($)
|
|
|
Severance/PT
O/COBRA
($)
|
|
Mr. Foley
|
|
|
10,600
|
|
|
|
660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Zavodnick
|
|
|
10,600
|
|
|
|
424
|
|
|
|
|
|
|
|
8,250
|
|
|
|
|
|
Mr. Harris
|
|
|
10,208
|
|
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Williams
|
|
|
10,600
|
|
|
|
220
|
|
|
|
1,500
|
|
|
|
|
|
|
|
272,705
|
|
Mr. Garcia
|
|
|
10,600
|
|
|
|
635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Sullivan
|
|
|
10,600
|
|
|
|
660
|
|
|
|
3,000
|
|
|
|
9,000
|
|
|
|
|
|
In association with Mr. Williams termination of employment, he received $230,208 in 2016 severance
payments, $31,249 in PTO (personal time off) payments and $11,248 in COBRA benefits.
(4)
|
Mr. Zavodnick became our President, International in February 2016. The amount in the bonus column represents the bonus he received pursuant to the terms of his employment agreement with us upon joining our
company. See Compensation Discussion and Analysis Components of Executive Compensation Cash Bonuses for more information.
|
(5)
|
Mr. Harris became our employee March 1, 2016, and our Chief Financial Officer on April 18, 2016. The amount in the bonus column represents a
one-time
discretionary
bonus on March 15, 2017, for his work performed in 2016 based on a recommendation from the Chief Executive Officer and approved by the Compensation Committee.
|
(6)
|
Mr. Williams ceased to be our Chief Financial Officer on April 18, 2016.
|
(7)
|
Mr. Sullivan was promoted from Senior Vice President of Worldwide Sales and Marketing to Chief Commercial Officer and President, North America in January 2016. His employment terminated in January 2017.
|
19
GRANTS OF PLAN-BASED AWARDS
Grants of Plan-Based Awards in Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
|
|
Estimated Future Payouts Under Non-
Equity Incentive Plan Awards (1)
|
|
Estimated Future Payouts Under Equity
Incentive Plan Awards(2)
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(3)
(#)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options(4)
(#)
|
|
Exercise
or Base
Price per
share of
Option
Awards
($)(5)
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($) (6)
|
|
Approval
Date
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|
|
|
Mr. Foley
|
|
2/25/2016
2/29/2016
2/29/2016
|
|
2/28/2016
2/29/2016
2/29/2016
|
|
300,000
|
|
600,000
|
|
1,200,000
|
|
|
|
|
|
|
|
65,421
|
|
124,610
|
|
23.03
|
|
1,506,646
1,437,825
|
Mr. Zavodnick
|
|
12/1/2015
12/10/2016
|
|
2/11/2016
2/1/2016
|
|
131,250
|
|
262,500
|
|
525,000
|
|
|
|
|
|
|
|
99,049
|
|
|
|
|
|
2,291,003
|
Mr. Harris
|
|
2/2/2016
2/2/2016
2/2/2016
|
|
2/26/2016
2/26/2016
2/26/2016
|
|
80,938
|
|
161,875
|
|
323,750
|
|
|
|
|
|
|
|
55,865
|
|
106,411
|
|
20.81
|
|
1,162,551
308,104
|
Mr. Williams
|
|
2/2/2016
|
|
2/26/2016
|
|
|
|
57,688
|
|
57,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Garcia
|
|
2/25/2016
2/29/2016
2/29/2016
|
|
2/25/2016
2/29/2016
2/29/2016
|
|
81,250
|
|
162,500
|
|
284,375
|
|
|
|
|
|
|
|
14,019
|
|
26,702
|
|
23.03
|
|
322,858
308,104
|
Mr. Sullivan
|
|
2/25/2016
2/29/2016
|
|
2/25/2016
2/29/2016
|
|
135,000
|
|
270,000
|
|
540,000
|
|
0
|
|
10,000
|
|
10,000
|
|
|
|
|
|
|
|
921,200
|
(1)
|
Threshold, target and maximum are the amounts to be paid under the 2016 Corporate Bonus Plan if the minimum criteria are met for bonus awards to be paid, target goals are met, and over achievement goals are met,
respectively. Mr. Harris amounts are
pro-rated
based on his length of service in 2016. Mr. Williams was eligible for target bonus, based on his separation agreement. Mr. Zavodnicks
amounts are not
pro-rated
based on his length of service in 2016 per his employment agreement.
|
(2)
|
Reflects performance stock units to Mr. Sullivan, of which 10,000 vest each quarter upon achievement of certain revenue-based targets.
|
(3)
|
Reflect restricted stock units that vest annually at a rate of 25% per year beginning from February 29, 2016, subject to the named executive officers continued service to us.
|
(4)
|
Generally, 25% of the shares subject to options vest annually over four years. Options expire ten years from the date of grant.
|
(5)
|
The exercise price for all option awards is equal to the closing market price per share of our common stock on the date of grant.
|
(6)
|
Values expressed were determined in accordance with ASC 718, excluding estimates of forfeiture in the case of performance awards to Mr. Sullivan, utilizing the assumptions discussed in Note 8, Stock Based
Compensation, in the notes to consolidated financial statements included in our Annual Report on Form
10-K
for the year ended December 31, 2016.
|
20
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table shows for the fiscal year ended December 31, 2016, certain information regarding outstanding equity awards at fiscal
year-end
for the named executive officers.
Outstanding Equity Awards at December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($) (1)
|
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)(2)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not Vested
($) (1)
|
|
Mr. Foley
|
|
|
121,236
|
|
|
|
|
(3)
|
|
$
|
6.38
|
|
|
|
4/26/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,536
|
|
|
|
|
(4)
|
|
$
|
5.06
|
|
|
|
6/13/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
758,667
|
|
|
|
|
(4)
|
|
$
|
5.04
|
|
|
|
8/22/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
572,435
|
|
|
|
|
(4)
|
|
$
|
5.04
|
|
|
|
8/22/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,167
|
|
|
|
5,833
|
(4)
|
|
$
|
21.00
|
|
|
|
2/23/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,043
|
|
|
|
14,234
|
(4)
|
|
$
|
34.65
|
|
|
|
2/18/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124,610
|
(4)
|
|
$
|
23.03
|
|
|
|
2/27/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
(5)
|
|
$
|
761,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,415
|
(5)
|
|
$
|
1,715,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,421
|
(5)
|
|
$
|
2,847,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,488,084
|
|
|
|
144,677
|
|
|
|
|
|
|
|
|
|
|
|
122,336
|
|
|
$
|
5,324,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Zavodnick
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,049
|
|
|
$
|
4,310,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,049
|
|
|
$
|
4,310,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Harris
|
|
|
|
|
|
|
106,411
|
(5)
|
|
$
|
20.81
|
|
|
|
2/28/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,865
|
(5)
|
|
$
|
2,431,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
106,411
|
|
|
|
|
|
|
|
|
|
|
|
55,865
|
|
|
$
|
2,431,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Williams
|
|
|
63,125
|
|
|
|
|
(4)
|
|
$
|
4.62
|
|
|
|
11/18/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,250
|
|
|
|
8,750
|
(4)
|
|
$
|
20.88
|
|
|
|
2/20/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,666
|
|
|
|
5,516
|
(4)
|
|
$
|
34.65
|
|
|
|
2/18/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(5)
|
|
$
|
435,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,273
|
(5)
|
|
$
|
664,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
89,041
|
|
|
|
14,266
|
|
|
|
|
|
|
|
|
|
|
|
25,273
|
|
|
$
|
1,099,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Garcia
|
|
|
32,000
|
|
|
|
|
(4)
|
|
$
|
4.30
|
|
|
|
11/18/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,313
|
|
|
|
2,187
|
(4)
|
|
$
|
20.88
|
|
|
|
2/20/24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,399
|
|
|
|
1,655
|
(4)
|
|
$
|
34.65
|
|
|
|
2/18/25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,702
|
(4)
|
|
$
|
23.06
|
|
|
|
2/27/26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
(5)
|
|
$
|
261,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,581
|
(5)
|
|
$
|
199,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,019
|
(5)
|
|
$
|
610,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,938
|
|
|
$
|
650,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
38,712
|
|
|
|
30,544
|
|
|
|
|
|
|
|
|
|
|
|
24,600
|
|
|
$
|
1,070,592
|
|
|
|
14,938
|
|
|
$
|
650,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Sullivan
|
|
|
25,625
|
|
|
|
4,375
|
(4)
|
|
$
|
5.95
|
|
|
|
7/17/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(5)
|
|
$
|
217,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
$
|
435,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
25,625
|
|
|
|
4,375
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
$
|
217,600
|
|
|
|
10,000
|
|
|
$
|
435,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
(1)
|
The market value was calculated based on the closing market price per share of our common stock on the last trading day of 2016, which was $43.52 per share.
|
(2)
|
The number of performance units disclosed is based on achievement of certain performance milestones.
|
(3)
|
The options vest monthly over 48 months beginning on the grant date.
|
(4)
|
The shares vest 25% after the first year from the date of grant, and the remaining shares vest monthly over the remaining 36 month period.
|
(5)
|
The shares vest 25% per year beginning one year from the date of grant.
|
OPTION EXERCISES AND STOCK VESTED
The following table shows for the fiscal year ended December 31, 2016, certain information regarding option exercises and stock
vested during the last fiscal year with respect to the named executive officers:
Option Exercises and Stock Vested in Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
|
Value
Realized
on Exercise
($)(1)
|
|
|
Number of
Shares
Acquired
on Vesting
(#)
|
|
|
Value
Realized
on Vesting
($)(2)
|
|
Mr. Foley
|
|
|
100,000
|
|
|
|
3,157,925
|
|
|
|
111,333
|
|
|
|
3,152,423
|
|
Mr. Zavodnick
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Harris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Williams
|
|
|
26,875
|
|
|
|
939,550
|
|
|
|
28,841
|
|
|
|
1,006,033
|
|
Mr. Garcia
|
|
|
20,000
|
|
|
|
692,000
|
|
|
|
29,527
|
|
|
|
852,164
|
|
Mr. Sullivan
|
|
|
48,000
|
|
|
|
1,460,560
|
|
|
|
56,042
|
|
|
|
1,743,225
|
|
(1)
|
The value realized by the named executive officer was calculated based on the difference between the closing market price per share of our common stock on the date of exercise and the applicable exercise price.
|
(2)
|
The value realized by the named executive officer was calculated based on the closing market price per share of our common stock on the date of vesting.
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The table below describes the potential payments or benefits to our named executive officers upon termination of employment by us without
cause not in connection with a change in control, as if each executives employment terminated as of December 31, 2016. See Employment Arrangements for additional information. Mr. Williams employment with us
terminated in April 2016 and, accordingly, he was not eligible to receive any further severance as of December 31, 2016. For a description of Mr. Williams severance arrangements with us, see Employment Arrangements
Former Chief Financial Officer Severance and Consulting Arrangements below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Base
Salary
($)
|
|
|
Bonus
($)
|
|
|
Health
($)
|
|
|
Option/
Award
Vesting
($)
|
|
|
Total ($)
|
|
Mr. Foley
|
|
|
900,000
|
|
|
|
900,000
|
|
|
|
|
(1)
|
|
|
|
|
|
|
1,800,000
|
|
Mr. Zavodnick
|
|
|
350,000
|
|
|
|
262,500
|
|
|
|
13,010
|
|
|
|
|
|
|
|
625,510
|
|
Mr. Harris
|
|
|
350,000
|
|
|
|
210,000
|
|
|
|
28,023
|
|
|
|
|
|
|
|
588,023
|
|
Mr. Williams
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Garcia
|
|
|
325,000
|
|
|
|
162,500
|
|
|
|
17,329
|
|
|
|
|
|
|
|
504,829
|
|
Mr. Sullivan
|
|
|
360,000
|
|
|
|
270,000
|
|
|
|
12,600
|
|
|
|
|
|
|
|
642,600
|
|
22
(1)
|
Mr. Foley waived his medical coverage for 2016.
|
The table below describes the potential
payments or benefits to our named executive officers upon termination of employment by the company without cause or by the executive for good reason within one year following a change in control, as if the change in control and
termination occurred as of December 31, 2016. See Employment Arrangements for additional information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Base
Salary
($)
|
|
|
Bonus ($)
|
|
|
Health
($)
|
|
|
Option/
Award
Vesting
($)(1)
|
|
|
Total
($)
|
|
Mr. Foley
|
|
|
1,200,000
|
|
|
|
1,200,000
|
|
|
|
|
(2)
|
|
|
8,134,936
|
|
|
|
10,534,936
|
|
Mr. Zavodnick
|
|
|
350,000
|
|
|
|
262,500
|
|
|
|
13,010
|
|
|
|
4,310,612
|
|
|
|
4,936,122
|
|
Mr. Harris
|
|
|
350,000
|
|
|
|
210,000
|
|
|
|
28,023
|
|
|
|
4,847,839
|
|
|
|
5,435,862
|
|
Mr. Williams
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Garcia
|
|
|
325,000
|
|
|
|
162,500
|
|
|
|
17,329
|
|
|
|
2,332,011
|
|
|
|
2,836,840
|
|
Mr. Sullivan
|
|
|
360,000
|
|
|
|
270,000
|
|
|
|
12,600
|
|
|
|
817,169
|
|
|
|
1,459,769
|
|
(1)
|
The value was calculated based on the closing market price per share of our common stock on the last trading day of 2016, which was $43.52 per share.
|
(2)
|
Mr. Foley waived his medical coverage for 2016.
|
INDEMNIFICATION AGREEMENTS
Under indemnification agreements with our named executive officers and directors and the companys bylaws, we are obligated to indemnify
each of our directors and officers against expenses (including attorneys fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with any action, suit or proceeding, arising by
reason of services provided as a director, officer, employee or agent of the company. To cover these possible expenses, the company purchases and maintains D&O insurance on behalf of each executive officer and director.
EMPLOYMENT ARRANGEMENTS
All of our named
executive officers have entered into agreements with us which contain provisions relating to our confidential information and the assignment of inventions. None of our named executive officers is employed for a certain term, and employment with us
is
at-will
and subject to termination at any time by either party for any reason, with or without cause. We have also entered into employment offer letters with our named executive officers, each
of which has been amended from time to time. The following description of the employment offer letters reflects the terms and conditions of the agreements as in effect on December 31, 2016, to provide context for the calculations in the section
captioned Potential Payments Upon Termination or Change in Control.
General Compensation Terms
As of December 31, 2016, the employment offer letters with our named executive officers other than Mr. Williams, who was not an
employee on December 31, 2016, provided for:
|
|
|
In the case of Mr. Foley, an annual base salary of $600,000 and a target bonus of 100% of base salary.
|
|
|
|
In the case of Mr. Zavodnick, an annual base salary of $350,000, a target bonus of 75% of base salary, a car allowance of $750 per month, and a
sign-on
bonus of $50,000 plus
an advance equal to $247,500 less any bonus amount he received from his previous employer when he terminated his previous employment. These advances were considered earned after Mr. Zavodnick completed twelve months of service to the company.
|
|
|
|
In the case of Mr. Harris, an annual base salary of $350,000 and a target bonus of 60% of base salary.
|
23
|
|
|
In the case of Mr. Garcia, an annual base salary of $325,000 and a target bonus of 50% of base salary.
|
|
|
|
In the case of Mr. Sullivan, an annual base salary of $360,000, a target bonus of 75% of base salary, a car allowance of $750 per month, and annual grants of 40,000 performance stock units.
|
Severance Provisions
As of
December 31, 2016, the employment offer letters with our named executive officers other than Mr. Williams, who was not an employee on December 31, 2016, provided for:
|
|
|
On a termination by the company without cause (as defined in the offer letters) other than within three months prior to, or 18 months following, a change in control (as defined in the offer letters), the executive
receives: (a) twelve months of salary continuation and COBRA (18 months in the case of Mr. Foley); and (b) if the company pays bonuses for the year of termination, a bonus of one times target bonus (1.5 times target bonus in the case
of Mr. Foley).
|
|
|
|
On a termination by the company without cause or by the executive for good reason (as defined in the offer letters) within three months prior to, or 18 months following, a change in control the executive receives:
(a) twelve months of salary continuation and COBRA (24 months in the case of Mr. Foley); (b) payment of one times target bonus (two times target bonus in the case of Mr. Foley); and (c) full accelerated vesting of equity awards.
|
Former Chief Financial Officer Severance and Consulting Arrangements
On February 25, 2016, ZELTIQ and Mr. Williams entered into a severance and consulting agreement. Pursuant to the terms of
Mr. Williams severance and consulting agreement, Mr. Williams remained an employee of ZELTIQ until April 17, 2016, and will then serve as a consultant from April 18, 2016, until April 17, 2017, unless terminated
earlier. Further, the severance and consulting agreement provides that Mr. Williams will: (a) receive severance of continued payment of his base cash compensation for a period of nine (9) months following April 17, 2018; (b)
receive nine (9) months of COBRA health insurance premiums (or a shorter period if Mr. Williams becomes eligible for health insurance benefits through another employer); (c) be a participant in the ZELTIQ 2016 Corporate Bonus Plan for his
service while he remains an employee of ZELTIQ, with a target bonus of 60% of his actual annual base cash compensation; and receive a consulting fee equal to $1,000 per month, beginning April 18, 2016, until the earlier of (a) the
expiration or termination of the period during which he provides consulting services to ZELTIQ, or (b) the date on which he begins full-time employment with another company. These terms were arrived at based on Mr. Williams
contractual obligations to severance in addition to the companys periodic need for his consultative services over a transitional period of time.
DIRECTOR COMPENSATION
The following
table shows for the fiscal year ended December 31, 2016, certain information with respect to the compensation of all of our
non-employee
directors:
24
Director Compensation for Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned or Paid
in Cash
($)
|
|
|
Stock
Awards
($)(1)(2)
|
|
|
Total
($)(2)
|
|
David J. Endicott
|
|
|
43,000
|
|
|
|
474,974
|
|
|
|
517,974
|
|
Mary M. Fisher (3)
|
|
|
63,500
|
|
|
|
174,998
|
|
|
|
238,498
|
|
D. Keith Grossman
|
|
|
80,750
|
|
|
|
239,988
|
|
|
|
320,738
|
|
Kevin C. OBoyle
|
|
|
74,000
|
|
|
|
174,998
|
|
|
|
248,998
|
|
Bryan E. Roberts, Ph.D. (3) (4)
|
|
|
29,500
|
|
|
|
|
|
|
|
29,500
|
|
Andrew N. Schiff, M.D.(4)
|
|
|
65,000
|
|
|
|
174,998
|
|
|
|
239,998
|
|
(1)
|
Amounts reflect the aggregate grant date fair value determined of restricted stock units granted, as required, under Financial Accounting Standards Board Topic 718, Stock Compensation. For a more detailed
discussion on the valuation model and assumptions used to calculate the fair value of our equity instruments, refer to Note 8, Stock Based Compensation, in the notes to consolidated financial statements included in our Annual Report on
Form
10-K
for the year ended December 31, 2016. These amounts do not reflect whether the recipient has actually realized or will realize a financial benefit from the instrument. Each
non-employee
director was granted only one restricted stock unit award in 2016, other than: Mr. Endicott, who received two restricted stock unit awards valued at $299,977 and $174,998; and Mr. Grossman,
who received two restricted stock unit awards valued at $64,990 and $174,998.
|
(2)
|
Stock awards are restricted stock units. The aggregate number of shares subject to restricted stock units and stock options outstanding at December 31, 2016, and held by our
non-employee
directors was:
|
|
|
|
|
|
|
|
|
|
Name
|
|
RSU Shares
|
|
|
Option Shares
|
|
David J. Endicott
|
|
|
16,132
|
|
|
|
|
|
Mary M. Fisher
|
|
|
6,199
|
|
|
|
|
|
D. Keith Grossman
|
|
|
8,351
|
|
|
|
48,987
|
|
Kevin C. OBoyle
|
|
|
6,199
|
|
|
|
82,907
|
|
Bryan E. Roberts, Ph.D.
|
|
|
|
|
|
|
|
|
Andrew N. Schiff, M.D.
|
|
|
6,199
|
|
|
|
1,589
|
|
(3)
|
Dr. Roberts ceased to be a director in June 2016.
|
(4)
|
Dr. Roberts and Dr. Schiffs board and committee fees are made payable to each of their respective firms.
|
DIRECTOR COMPENSATION ARRANGEMENTS
Our
standard compensation arrangements with our
non-employee
directors in 2016 were as follows:
|
|
|
each
non-employee
director receives an annual cash fee of $50,000 payable for the directors service during the year;
|
|
|
|
our Lead Independent Director receives an additional annual cash fee of $20,000 payable for the directors service as Lead Independent Director during the year;
|
|
|
|
the Chairman of the Audit Committee receives an additional annual fee of $20,000 for the Chairmans service during the year and each Audit Committee member receives $7,500 for their service during the year;
|
|
|
|
the Chairman of the Compensation Committee receives an additional annual fee of $16,000 for the Chairmans service during the year and each Compensation Committee member receives $6,000 for their service during the
year;
|
|
|
|
the Chairman of the Nominating and Corporate Governance Committee receives an additional annual fee of $9,000 for the Chairmans service during the year and each Nominating and Corporate Governance Committee member
receives $4,000 for their service during the year;
|
25
|
|
|
on the date of a
non-employee
directors initial election to the Board, the
non-employee
director will automatically, and without
further action by the Board, be granted a restricted stock unit to acquire the number of shares of our common stock which equals $300,000 divided by the fair market value per share of our common stock as of the date of appointment, which will vest
monthly over three years, subject to the
non-employee
directors continuous service with us, which vesting will accelerate in full upon a change in control of our company; and
|
|
|
|
on the date of each company annual meeting of stockholders, each
non-employee
director will automatically, and without further action by the Board, be granted a restricted stock
unit to acquire the number of shares of our common stock which equals $175, 000 divided by the fair market value per share of our common stock as of the date of grant, which will vest monthly over one year and be fully vested at the next annual
meeting, subject to the
non-employee
directors continuous service with us, which vesting will accelerate in full upon a change in control of our company.
|
In February 2016, the Board appointed D. Keith Grossman as its Lead Independent Director. In April 2016, the Board approved the annual
compensation of $20,000 for the Lead Independent Director and, concurrently with this decision, granted Mr. Grossman a one time RSU grant to acquire 2,152 shares of the companys common stock, vesting over three years.
Each director is also entitled to be reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the
Board and any committee on which he or she serves.
All of our directors are eligible to participate in our 2011 Equity Incentive Plan.
RISK ASSOCIATED WITH COMPENSATION PLANS
Our Compensation Committee reviews and evaluates potential risks related to our compensation policies and practices for employees and has
determined that we have no compensation risks that are reasonably likely to have a material adverse effect on our company. We structure our compensation to address company-wide risk. This is accomplished in part by tying compensation to corporate
goals and individual performance goals. These goals can be adjusted to address risks identified in the risk assessment. We also use a mix of different compensation elements to balance short-term awards versus long-term awards to align compensation
with our business strategy and stockholders interests. We believe the combination of base salary, performance-based cash, and stock-based incentive awards with multi-year vesting periods is balanced and serves to motivate our employees to
accomplish our business plan without creating risks that are reasonably likely to have a material adverse effect on our company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of our Compensation Committee during 2016 were Dr. Schiff, Ms. Fisher and Mr. Grossman until April 25, 2016,
at which time Mr. Endicott joined the Board and replaced Mr. Grossman on the Compensation Committee. No member of our Compensation Committee during 2016 was at any time during 2016 one of our officers or employees, or was formerly an
officer or employee. None of our executive officers currently serve, or in the past year have served, as a member of the board of directors or compensation committee of any other entity that has executive officers who have served on our Board or
Compensation Committee.
26
COMPENSATION COMMITTEE REPORT
Compensation Committee Report*
The
Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis (CD&A) contained in this Annual Report on Form
10-K/A.
Based on this review and
discussion, the Compensation Committee has recommended to the Board of Directors that the CD&A be included in ZELTIQs Annual Report on Form
10-K
for the fiscal year ended December 31, 2016.
|
Andrew N. Schiff, M.D.
David J. Endicott
Mary M. Fisher
|
*
|
The preceding Compensation Committee Report shall not be deemed to be soliciting material or to be filed with the Securities and Exchange Commission, nor shall any information in
this report be incorporated by reference into any past or future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent ZELTIQ specifically incorporates it by reference into such
filing.
|