def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
QUIDEL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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QUIDEL CORPORATION
10165 McKellar Court
San Diego, CA 92121
(858) 552-1100
April 2, 2010
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders, which will be held on
Wednesday, May 12, 2010, at 8:30 a.m., local time, at the San Diego Marriott Del Mar, located at
11966 El Camino Real, San Diego, California 92130. At the Annual Meeting, you will be asked to
consider and vote upon (i) the election of seven directors designated herein to the Board of
Directors; (ii) the ratification of the selection of Ernst & Young LLP as our independent
registered public accounting firm; (iii) the approval of the adoption of our 2010 Equity Incentive
Plan; and (iv) such other business as may properly be presented at the Annual Meeting or any
adjournments or postponements thereof.
Enclosed are the Notice of the Annual Meeting, the Proxy Statement and accompanying proxy
card, and a copy of our Annual Report to Stockholders.
To assure your representation at the Annual Meeting, you are urged to vote on, date, sign and
return the enclosed proxy card for which a prepaid, return envelope is provided. Your prompt
response is helpful and appreciated.
Our Board of Directors and officers look forward to seeing you at the Annual Meeting.
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Sincerely yours,
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/s/ Douglas C. Bryant
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Douglas C. Bryant |
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President and Chief Executive
Officer
QUIDEL CORPORATION |
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QUIDEL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 12, 2010
To Our Stockholders:
The Annual Meeting of Stockholders of Quidel Corporation will be held on Wednesday, May 12,
2010, at 8:30 a.m., local time, at the San Diego Marriott Del Mar, located at 11966 El Camino Real,
San Diego, California 92130, for the following purposes:
1. To elect seven directors designated herein to serve on the Board of Directors to hold
office until the 2011 Annual Meeting of Stockholders and until their successors are elected and
qualified;
2. To ratify the selection by the Audit Committee of the Board of Directors of Ernst &
Young LLP as our independent registered public accounting firm for our fiscal year ending
December 31, 2010;
3. To approve the adoption of the Quidel Corporation 2010 Equity Incentive Plan; and
4. To transact such other business as may properly be presented at the Annual Meeting or any
adjournments or postponements thereof.
Only stockholders of record at the close of business on March 19, 2010 are entitled to receive
notice of and to vote at the Annual Meeting and any adjournments or postponements thereof.
The Board of Directors of Quidel Corporation unanimously recommends that the stockholders vote
FOR the seven nominees for the Board of Directors named in the accompanying Proxy Statement; FOR
the ratification of the selection of Ernst & Young LLP as our independent registered public
accounting firm; and FOR the adoption of the 2010 Equity Incentive Plan.
All stockholders are cordially invited to attend the Annual Meeting. You are urged to sign,
date and otherwise complete the enclosed proxy card and return it promptly in the enclosed envelope
whether or not you plan to attend the Annual Meeting. If you attend the Annual Meeting and wish to
do so, you may vote your shares in person even if you have signed and returned your proxy card.
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By Order of the Board of Directors,
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/s/ Douglas C. Bryant
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Douglas C. Bryant |
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President and Chief Executive Officer |
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San Diego, California
April 2, 2010
TABLE OF CONTENTS
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i
QUIDEL CORPORATION
Principal Executive Offices
10165 McKellar Court
San Diego, California 92121
(858) 552-1100
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 2010
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board
of Directors of Quidel Corporation for use at the 2010 Annual Meeting of Stockholders to be held on
Wednesday, May 12, 2010, at 8:30 a.m., local time, at the San Diego Marriott Del Mar, located at
11966 El Camino Real, San Diego, California 92130, and at any and all adjournments and
postponements of the Annual Meeting. This Proxy Statement and the accompanying proxy card will
first be sent to stockholders on or about April 7, 2010.
We will pay the expenses in connection with this solicitation. Our employees may solicit
proxies by mail, in person, by telephone, facsimile or other electronic means and will not receive
any additional compensation for such solicitations. In addition, we have engaged InvestorCom, Inc.
to aid in the solicitation of proxies to be voted at the Annual Meeting at an estimated cost of
$7,500 plus out-of-pocket expenses. We will also pay brokers or other nominees for the expenses of
forwarding soliciting material to beneficial owners.
RECORD DATE AND VOTING
The close of business on March 19, 2010 has been fixed as the record date (the Record Date)
for determining the stockholders entitled to notice of and to vote at the Annual Meeting. On the
Record Date, 28,923,211 shares of our voting common stock were outstanding. Each share of such
common stock is entitled to one vote on any matter that may be presented for consideration and
action by the stockholders at the Annual Meeting. A quorum is required to transact business at the
Annual Meeting. The holders of a majority of the outstanding shares of common stock on the Record
Date and entitled to be voted at the Annual Meeting, present in person or by proxy, will constitute
a quorum for the transaction of business at the Annual Meeting and any adjournments and
postponements thereof. Abstentions and broker non-votes are counted for the purpose of determining
the presence or absence of a quorum for the transaction of business.
Where a stockholder has directed how his or her proxy is to be voted, it will be voted
according to the stockholders directions. If your shares are held in a brokerage account or by
another nominee, you are considered the beneficial owner of shares held in street name, and
this proxy and the related materials are being forwarded to you by your broker or nominee (the
record holder) along with a voting instruction card. As the beneficial owner, you have the right
to direct your record holder regarding how to vote your shares, and the record holder is required
to vote your shares in accordance with your instructions. If a proposal is routine, a broker or
other entity holding shares for a beneficial owner in street name may vote on the proposal without
voting instructions from the owner. If a proposal is non-routine, the broker or other entity may
vote on the proposal only if the beneficial owner has provided voting instructions. A broker
non-vote occurs when the broker or other entity is unable to vote on a proposal because the
proposal is non-routine and the beneficial owner does not provide instructions.
If you do not give instructions to your record holder prior to the Annual Meeting, the record
holder will be entitled to vote your shares in its discretion only on Proposal 2 (Ratification of
Appointment of Independent Registered Public Accounting Firm) and will not be able to vote your
shares on Proposal 1 (Election of Directors), or Proposal 3 (Adoption of 2010 Equity Incentive
Plan) and your shares will be counted as a broker non-vote on those proposals. We are not aware
of any other matters to be presented at the Annual Meeting except for those described in this proxy
statement. However, if any other matters not described in this proxy statement are properly
presented at the Annual Meeting, the persons named as proxies will use their own judgment to
determine how to vote your shares. If the Annual Meeting is adjourned, your shares may be voted by
the persons named as proxies on the new meeting date as well, unless you have revoked your proxy
instructions prior to that time.
With regard to the election of directors, votes may be cast in favor of a director nominee or
withheld. Because directors are elected by plurality, broker non-votes will be entirely excluded
from the vote and will have no effect on its outcome. If a quorum is present at the Annual Meeting,
the nominees receiving the greatest number of votes (up to seven
1
directors) will be elected. For proposals other than the election of directors, the
affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting
and entitled to vote on the matter is required for approval. With regard to these proposals,
abstentions will be counted in tabulations of the votes cast on a proposal presented to
stockholders and will have the same effect as a vote against the proposal, whereas broker non-votes
will not be counted for purposes of determining whether a proposal has been approved and
accordingly will have no effect on the outcome of the vote on such proposal. Unless otherwise
designated, each proxy submitted by a stockholder will be voted:
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FOR each of the seven nominees named below for election as directors; |
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FOR ratification of the selection by the Audit Committee of the Board of
Directors of Ernst & Young LLP as our independent registered public accounting firm for
our fiscal year ending December 31, 2010; and |
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FOR the adoption of the 2010 Equity Incentive Plan. |
Any stockholder has the power to revoke his or her proxy at any time before it is voted at the
Annual Meeting by submitting a written notice of revocation to the Secretary of the Company or by
timely filing a duly executed proxy bearing a later date. The proxy will not be voted if the
stockholder who executed it is present at the Annual Meeting and elects to vote in person the
shares represented by the proxy. Attendance at the Annual Meeting will not by itself revoke a
proxy.
2
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees for Election
Our directors are elected at each annual meeting of stockholders. At the Annual Meeting, seven
directors will be elected to serve until the next annual meeting of stockholders and until their
successors are elected and qualified. The nominees receiving the greatest number of votes (up to
seven directors) at the Annual Meeting will be elected. Our Board of Directors recommends that the
stockholders vote FOR the seven nominees named below for the Board of Directors.
Each of the nominees set forth below for election as a director is an incumbent director. Each
of the nominees has consented to serve as a director if elected. Unless authority to vote for any
director nominee is withheld in a proxy, it is intended that each proxy will be voted FOR each of
the nominees. If, before the Annual Meeting, any of the nominees for director should become unable
to serve if elected, it is intended that shares represented by proxies will be voted for such
substitute nominees, if any, as may be recommended by our existing Board of Directors, unless other
directions are given in the proxies.
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Name of Nominee |
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Principal Occupation |
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Director Since |
Thomas D. Brown
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61 |
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Retired Senior Vice President and
President of the Diagnostics Division of
Abbott Laboratories
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2004 |
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Douglas C. Bryant
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52 |
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President and Chief Executive Officer,
Quidel Corporation
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2009 |
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Kenneth F. Buechler, Ph.D.
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56 |
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Founder and former President and Chief
Scientific Officer of Biosite, Inc.
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2007 |
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Rod F. Dammeyer
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69 |
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President of CAC, L.L.C., a private
company providing capital investment and
management advisory services
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2006 |
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Mary Lake Polan, M.D., Ph.D., M.P.H.
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66 |
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Professor and Chair Emeritus, Department
of Gynecology and Obstetrics, Stanford
University School of Medicine
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1993 |
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Mark A. Pulido
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57 |
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Chairman of the Board, Quidel Corporation
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2002 |
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Jack W. Schuler
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69 |
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Co-founder, Crabtree Partners, LLC, a
private investment company
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2006 |
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Biographical Information
THOMAS D. BROWN was appointed to our Board of Directors in December 2004. Prior to his
retirement in 2002, Mr. Brown had a 28-year career in the healthcare industry where he held various
sales, marketing and executive positions within Abbott Laboratories, a broad-based healthcare
company. From 1998 to 2002, Mr. Brown was Senior Vice President and President of the Diagnostics
Division. From 1993 to 1998, Mr. Brown was Corporate Vice President Worldwide Commercial
Operations. From 1992 to 1993, Mr. Brown was Divisional Vice President Worldwide Commercial
Operations. From 1987 to 1992, Mr. Brown was Divisional Vice President and General Manager, Western
Hemisphere Commercial Operations. From 1986 to 1987, Mr. Brown was Divisional Vice President U.S.
Sales and, from 1985 to 1986, was Director of Sales. Mr. Brown currently serves on the Board of
Directors of Cepheid, a molecular diagnostics company, and Stericycle, Inc., a medical waste
management and healthcare compliance services company. Mr. Brown also served on the Board of
Directors of Ventana Medical Systems, Inc. until its acquisition in 2008. Mr. Brown holds a
Bachelor of Arts degree from the State University of New York at Buffalo.
DOUGLAS C. BRYANT was appointed to our Board of Directors on February 2, 2009 and became our
President and Chief Executive Officer on March 1, 2009. Prior to joining us, Mr. Bryant served as
Executive Vice President and Chief Operating Officer at Luminex Corporation, managing its
Bioscience Group, Luminex Molecular Diagnostics (Toronto), manufacturing, R&D, technical
operations, and commercial operations. From 1983 to 2007, Mr. Bryant held various worldwide
commercial operations positions with Abbott Laboratories including, among others: Vice President of
Abbott Vascular for Asia/Japan, Vice President of Abbott Molecular Global Commercial Operations and
Vice President of Abbott Diagnostics Global Commercial Operations. Earlier in his career with
Abbott, Mr. Bryant was Vice President of Diagnostic Operations in Europe, the Middle East and
Africa, and Vice President of Diagnostic Operations Asia Pacific. Mr. Bryant has over 25 years of
industry experience in sales and marketing, product development, manufacturing and service and
support in both the diagnostics and life sciences markets. Mr. Bryant holds a B.A. in Economics from the
University of California at Davis.
3
KENNETH F. BUECHLER, Ph.D. was appointed to our Board of Directors in November 2007. Dr.
Buechler was a founder of Biosite, Inc., a diagnostic products and antibody development company.
Dr. Buechler served as a Director at Biosite from June 2003 through July 2007 and was President and
Chief Scientific Officer of Biosite from October 2004 to July 2007. From March 2003 to October
2004, Dr. Buechler was Biosites Senior Vice President, Research and Development, and from April
2001 to March 2003, Dr. Buechler was Biosites Vice President, Research and Development. From
January 1994 to April 2001, Dr. Buechler was Biosites Vice President, Research and was Director of
Chemistry from April 1988 to January 1994. Before founding Biosite, Dr. Buechler was a Senior
Scientist in the Diagnostics Research and Development Group at Hybritech Incorporated. Dr. Buechler
received a B.S. in Chemistry and Ph.D. in Chemistry from Indiana University. Dr. Buechler also
serves on the Board of Directors of Sequenom Inc., Sotera Wireless Inc., Adnavance Inc., and Astute
Medical Inc.
ROD F. DAMMEYER was appointed to our Board of Directors in February 2006. Mr. Dammeyer is the
President of CAC, L.L.C., a private company providing capital investment and management advisory
services, and is the retired Vice Chairman of Anixter International, where he served from 1985
until February 2001, and retired managing partner of corporate investments of Equity Group
Investments, L.L.C., where he served from 1995 until June 2000. Mr. Dammeyer currently serves as a
director of Stericycle, Inc., a medical waste management and healthcare compliance services
company. Mr. Dammeyer has also served on the Board of Directors of Ventana Medical Systems, Inc.
and GATX Corporation within the past five years. He also serves as a trustee of Van Kampen
Investments, Inc. He received a B.S. degree in accounting from Kent State University.
MARY LAKE POLAN, M.D., Ph.D., M.P.H. has served on our Board of Directors since 1993. She is a
Professor and Chair Emeritus of the Department of Gynecology and Obstetrics at Stanford University
School of Medicine where she served from 1990 to 2005. Dr. Polan received a Bachelor of Arts Degree
from Connecticut College, a Ph.D. in Molecular Biophysics and Biochemistry and an M.D. from Yale
University School of Medicine and her Masters in Public Health from the University of California,
Berkeley. Dr. Polan remained at Yale New Haven Hospital for her residency in Obstetrics and
Gynecology, followed by a Reproductive Endocrine Fellowship. Dr. Polan was on the faculty at Yale
University until 1990, when she joined Stanford University. She is currently an Adjunct Professor
in the Department of Obstetrics and Gynecology at Columbia University School of Medicine. Dr. Polan
is a practicing clinical Reproductive Endocrinologist with a research interest in ovarian function
and granulosa cell steroidogenesis. More recently, Dr. Polans interests have been in the
interaction between the immune and endocrine systems: the role of monokines in reproductive events
and gene expression in stress urinary incontinence as well as brain activation in human sexual
function. Dr. Polan also served on the Board of Directors of Wyeth, a research-based global
pharmaceutical and health care products company, until its acquisition in 2009.
MARK A. PULIDO was appointed to our Board of Directors in August 2002. Mr. Pulido has been
Chairman of the Companys Board of Directors since May 2004. Prior to his retirement in June 2002,
Mr. Pulido served as the Chairman of the Board of BenefitPoint, Inc., an employee benefits
technology company, where he also served as its President and Chief Executive Officer. From May
1996 to July 1999, Mr. Pulido was President and Chief Executive Officer of McKesson Corporation, a
healthcare services and information technology company. Previously, Mr. Pulido served as President
and Chief Executive Officer of Novartis Pharmaceuticals Corporation (formerly Sandoz
Pharmaceuticals Corporation), a research-based pharmaceutical manufacturer, and RedLine Healthcare
Corporation (previously owned by Novartis and now a subsidiary of McKesson Corp.), a medical
surgical distribution company, during the period from January 1990 to April 1996. Mr. Pulido is an
affiliated executive with Freeman Spogli, a private equity firm, and serves on the Board of
Directors of Smile Brands Group, a dental practice management company and Winebow, a leading
importer and distributor of premium wines, both Freeman Spogli portfolio companies. Mr. Pulido
holds a B.S. degree in Pharmacy from the University of Arizona, College of Pharmacy, and an M.S.
degree in Pharmacy Administration from the University of Minnesota.
JACK W. SCHULER was appointed to our Board of Directors in February 2006. Mr. Schuler has been
on the Board of Directors of Stericycle, Inc., a medical waste management and healthcare compliance
services company, since March 1989 and currently serves as Lead
Director. Mr. Schuler is also a co-founder of Crabtree Partners, LLC, a
Chicago-based venture capital firm which was formed in 1995. Prior to 1990, Mr. Schuler held
various executive positions at Abbott Laboratories, a broad-based healthcare company, from December
1972 through August 1989, most recently serving as President and Chief Operating Officer. Mr.
Schuler also currently serves on the Board of Directors of Medtronic Inc. and Elan Corporation.
Mr. Schuler also served on the Board of Directors of Ventana Medical Systems, Inc. until its
acquisition in 2008. Mr. Schuler holds a B.S. in Mechanical Engineering from Tufts University and
an M.B.A. from Stanford University.
4
Vote Required and Board Recommendation
The nominees for election as directors will be elected by a plurality of the votes of the
shares present in person or represented by proxy and entitled to vote on the proposal at the Annual
Meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE NAMED NOMINEES
IN PROPOSAL 1.
5
PROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected the firm of Ernst & Young LLP,
independent registered public accounting firm, to audit our consolidated financial statements for
the fiscal year ending December 31, 2010, and to perform other appropriate accounting and tax
services. We are asking our stockholders to ratify the selection of Ernst & Young LLP as our
independent registered public accounting firm for 2010. Although ratification is not required by
our bylaws or otherwise, the Board of Directors is submitting the selection of Ernst & Young LLP to
our stockholders as a matter of good corporate practice. If the stockholders do not ratify the
appointment of Ernst & Young LLP, the selection of the Companys independent registered public
accounting firm will be reconsidered by the Audit Committee. Even if the selection is ratified, the
Audit Committee in its discretion may direct the appointment of a different independent registered
public accounting firm at any time during the year if it determines that such a change would be in
the best interests of the Company and its stockholders.
One or more representatives of Ernst & Young LLP are expected to be at the Annual Meeting.
They will have an opportunity to make a statement, if they so desire, and will be available to
respond to appropriate questions.
Vote Required and Board Recommendation
The affirmative vote of a majority of the shares present in person or represented by proxy and
entitled to vote on the proposal at the Annual Meeting is required to ratify the selection of Ernst
& Young LLP as our independent registered public accounting firm for 2010.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2010.
6
PROPOSAL 3
ADOPTION OF THE 2010 EQUITY INCENTIVE PLAN
General
At the Annual Meeting, the stockholders will be asked to approve the Quidel Corporation 2010
Equity Incentive Plan (the 2010 Plan). The 2010 Plan was unanimously approved by the Board of
Directors on February 23, 2010, subject to the approval of stockholders at the Annual Meeting. We
continue to rely heavily upon equity compensation to recruit, retain, motivate and reward our
employees, management, directors and other qualified persons, and to align their interests with the
interests of our stockholders, and approval of Proposal 3 will enable us to continue to use equity
compensation for these purposes.
Our equity compensation program is currently operated under the Quidel Corporation 2001 Equity
Incentive Plan, as amended (the 2001 Plan). As of March 19, 2010, a total of 8,050,000 shares
were authorized for issuance under the 2001 Plan, and only 1,251,008 shares remained available for
future issuance. In addition, as of March 19, 2010, there were 3,129,771 stock options outstanding
under the Companys equity compensation plans with a weighted average exercise price of $12.18 and
weighted average remaining term of 8.29 years. Further, as of March 19, 2010, there were 468,502
full-value awards outstanding under the Companys equity compensation plans. Other than the
foregoing, no other awards under the Companys equity compensation plans were outstanding as of
March 19, 2010. Upon approval of the 2010 Plan by stockholders, the 2001 Plan will be frozen with
respect to new awards effective as of the date of the Annual Meeting. As such, if the 2010 Plan is
approved by stockholders, no further awards will be made under the 2001 Plan after the date of the
Annual Meeting.
Section 162(m) of the Code
The Board of Directors believes that it is in the best interests of the Company and its
stockholders to provide for an equity incentive plan under which compensation awards made to the
Companys executive officers can qualify for deductibility by the Company for federal income tax
purposes. Accordingly, the 2010 Plan has been structured in a manner such that awards granted
under it can satisfy the requirements for performance-based compensation within the meaning of
Section 162(m) of the Internal Revenue Code of 1986 (the Code). In general, under Section 162(m),
in order for the Company to be able to deduct compensation in excess of $1,000,000 paid in any one
year to our Chief Executive Officer or any of our three other most highly compensated executive
officers (other than our chief financial officer), such compensation must qualify as
performance-based. One of the requirements of performance-based compensation for purposes of
Section 162(m) is that the material terms of the performance goals under which compensation may be
paid be disclosed to and approved by the Companys stockholders. For purposes of Section 162(m),
the material terms include (i) the employees eligible to receive compensation, (ii) a description
of the business criteria on which the performance goal is based and (iii) the maximum amount of
compensation that can be paid to an employee under the performance goal. With respect to the
various types of awards under the 2010 Plan, each of these aspects is discussed below, and
stockholder approval of the 2010 Plan will be deemed to constitute approval of each of these
aspects of the 2010 Plan for purposes of the approval requirements of Section 162(m).
Summary of the 2010 Plan
The following summary of the 2010 Plan, as proposed to be adopted, is qualified in its
entirety by the terms of the 2010 Plan, a copy of which, as proposed to be adopted, is attached
hereto as Appendix A.
Purpose. The purpose of the 2010 Plan is to promote our and our stockholders interests by
using investment interests in the Company to attract, retain and motivate our directors,
management, employees and other persons, to encourage and reward their contributions to our
performance and to align their interests with the interests of our stockholders.
Administration, Amendment and Termination. The 2010 Plan is currently administered by the
Compensation Committee of our Board of Directors (the administrator). The administrator has the
power to:
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select the eligible persons to whom, and the times at which, awards will be
granted, the nature of each award and the terms and conditions of each award; |
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interpret the 2010 Plan and the rights of recipients of awards granted under
the 2010 Plan; |
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discontinue, suspend or amend the 2010 Plan in any manner, insofar as permitted
by applicable law, rule or regulation and subject to stockholder approval where such
approval is required by the 2010 Plan, applicable law, rule or regulation; |
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accelerate or extend the vesting or exercise period of any award, and make such
other modifications in the terms and conditions of an award as it deems advisable;
provided, however, that the administrator may not, other than in connection with a
change in capitalization, reprice or otherwise reduce the exercise or base price of a
stock option or stock appreciation right (including by the cancellation of the stock
option or stock appreciation right in exchange for cash, other awards, or a new stock
option or stock appreciation right at such reduced exercise or base price or by
amendment of the stock option or stock appreciation right) without stockholder
approval; and |
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change the number of shares or vesting periods associated with non-employee
director options, and suspend and reactivate the 2010 Plan provisions regarding
automatic grants of non-employee director options. |
Any amendment of the 2010 Plan shall, in the discretion of the administrator, apply to and
govern awards granted under the 2010 Plan prior to the date of such amendment; provided, however,
that the consent of an award holder is required if such amendment would alter, impair or diminish
in any material respect any rights or obligations under any award or cause the award to cease to
qualify as an incentive stock option. Awards may be granted under the 2010 Plan until May 12, 2020,
unless earlier terminated.
Securities Subject to the 2010 Equity Incentive Plan. The aggregate number of shares of
common stock issuable pursuant to the 2010 Plan may not exceed 950,000 shares, plus (i) any
shares that were authorized for issuance under the 2001 Plan that, as of the date of the Annual
Meeting, remain available for issuance under the 2001 Plan (not including any shares that are
subject to outstanding awards under the 2001 Plan or any shares that previously were issued
pursuant to awards granted under the 2001 Plan) and (ii) any shares subject to outstanding awards
under the 2001 Plan as of the date of the Annual Meeting that on or after such date cease for any
reason to be subject to such awards (other than by reason of exercise or settlement of the awards
to the extent they are exercised for or settled in vested and nonforfeitable shares), subject to
adjustment upon a change in capitalization.
As noted above, as of March 19, 2010, 1,251,008 shares remained available for issuance under
future awards that could be granted under the 2001 Plan (which shares will cease to be available
for issuance under the 2001 Plan upon stockholder approval of the 2010 Plan). As such, if the 2010
Plan is approved by stockholders, approximately 2,201,008 shares will initially be available for
awards under the 2010 Plan consisting of 950,000 new shares and approximately 1,251,008 shares
previously authorized for issuance under the 2001 Plan.
The 2010 Plan provides that each share issued under awards other than options or stock
appreciation rights (full-value awards) will count against the number of shares available under
the Plan as 1.5 shares. Shares issued under options or stock appreciation rights count against the
shares available under the Plan as 1 share. The Board of Directors believes that this
formula-based limit will allow for the issuance of a sufficient number of full-value awards to
satisfy projected grants thereof, while providing the flexibility to change the mix of option and
full-value awards to the extent the Board of Directors determines a different mix than currently
provided is in the best interests of the Company and stockholders.
In addition, in order to address potential stockholder concerns regarding the number of shares
subject to options and other awards that the Company intends to grant in a given year, the Board of
Directors commits to stockholders that over the Companys 2010, 2011 and 2012 fiscal years the
Company will not grant a number of shares subject to options or other awards to employees or
non-employee directors at an average rate greater than 4.02% of the number of shares of common
stock that the Company believes will be outstanding over such three year period. For purposes of
calculating the number of shares granted in a year, each share subject to a full-value award will
count as equivalent to 1.5 shares.
The 4.02% was calculated as the average of the 2009 and 2010 Risk Metrics Group thresholds for our industry.
We may issue common stock under the 2010 Plan from authorized but unissued shares of common
stock or from previously issued shares of common stock that we reacquired, including shares
purchased on the open market. For purposes of calculating the aggregate number of shares issued
under the 2010 Plan, we will count only the number of shares issued upon exercise or
settlement of an award and not returned to us upon expiration, termination or cancellation of any
awards. However, if an award holder pays the exercise price or withholding taxes relating to an
award with shares of our common stock, or if we withhold shares in satisfaction of the exercise
price or withholding taxes payment, then we will reduce the number of shares of common stock
available for issuance under the 2010 Plan by the gross number of shares for which the award is
exercised or for which it vests, as applicable. In addition, upon the exercise of a stock
appreciation right,
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the number of shares of common stock available for issuance under the 2010 Plan will be
reduced by the gross number of shares for which the award is exercised and not by the net number of
shares issued to the holder in settlement thereof.
The 2010 Plan provides that the administrator shall appropriately and proportionately adjust
the maximum number and kind of shares subject to the 2010 Plan, the number and kind of shares or
other securities subject to then outstanding awards, the price for each share or other unit of any
other securities subject to, or measurement criteria applicable to, then outstanding awards, and/or
the number and kind of shares or other securities to be issued as non-employee director options if
our common stock is affected through any of the following:
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merger; |
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consolidation; |
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sale or exchange of assets; |
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recapitalization; |
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reclassification; |
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combination; |
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stock dividend; |
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extraordinary cash dividend; |
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stock split; |
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reverse stock split; |
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spin off; or |
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similar transaction. |
Awards Under the 2010 Plan. We may grant the following types of awards under the 2010 Plan:
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stock options; |
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performance awards; |
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restricted stock; |
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stock appreciation rights; |
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stock payments; |
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dividend equivalents; |
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stock bonuses; |
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stock sales; |
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phantom stock; and |
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other stock-based benefits. |
Stock options granted under the 2010 Plan may be incentive stock options intended to qualify
under the provisions of Section 422 of the Code or non-qualified stock options that do not so
qualify. However, the aggregate fair market value of stock with respect to which any employees
incentive stock options first become exercisable during any calendar year (under
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all our plans and those of any subsidiary corporation) may not exceed $100,000 (as determined
on the grant date), and may be further limited by other requirements in the Internal Revenue Code.
If this $100,000 limitation is exceeded, the excess incentive stock options will be treated as
non-qualified stock options.
In each calendar year no participant may be granted awards under the 2010 Plan (other than
performance awards payable in cash) relating up to more than 1,800,000 shares. In addition, in
each calendar year no participant may be granted performance awards payable in cash that exceed
$1,000,000. The forgoing limitations will not apply if it is not required in order for the
compensation attributable to awards under the 2010 Plan to qualify as performance-based
compensation under Section 162(m).
Eligibility. Our directors, officers, employees, consultants and advisors, and those of our
affiliated entities, are eligible to receive awards under the 2010 Plan, except that only
non-employee directors may receive non-employee director options, as described below. As of March
19, 2010, 580 persons (not including consultants and advisors) were eligible for selection to
receive awards under the 2010 Plan, consisting of: 567 employees other than executive officers, 7
executive officers and 6 non-employee directors.
Terms and Conditions of Non-Employee Director Options. In May 2004, the Board of Directors
suspended automatic grants for directors under the 2001 Plan. Similar to the 2001 Plan, the 2010
Plan provides for automatic grants to non-employee directors, however, these automatic grants
remain suspended. Prior to May 2004, immediately following each annual meeting of stockholders,
each non-employee director who had served as a director since his or her election or appointment
and who had been re-elected as a director at such annual meeting automatically received an option
to purchase up to 10,000 shares of common stock. In addition, each non-employee director who was
appointed or elected other than at an annual meeting of stockholders (whether by replacing a
director who retired, resigned or otherwise terminated his or her service as a director prior to
the expiration of his or her term or otherwise) automatically received an option to purchase shares
of our common stock as of the date of such appointment or election, consisting of a number of
shares of common stock determined by multiplying 10,000 by a fraction, the numerator of which was
the number of days from the date of grant to the date of the next scheduled annual meeting of
stockholders and the denominator of which was 365 (exclusive of fractional shares). The automatic
non-employee director option grants vested and became exercisable 100% on the day prior to the date
of the next annual meeting of stockholders following the grant date, provided, that the recipient
remained a director for the entire period from the date of grant to such vesting date.
All automatic non-employee director option grants had a term of 10 years and an exercise price
equal to the fair market value on the date of grant. Unless provided otherwise in an agreement with
the Company, if a recipient of a non-employee director option ceased to be a director, all
non-employee director options granted to the recipient remained exercisable, only to the extent
already exercisable at the date the director ceases to be a director, for a period of 365 days
after that date (or, if sooner, until the expiration of the option according to its terms), and
would then terminate.
Apart from these automatic non-employee director options, non-employee directors are eligible
to receive other grants of awards under the 2010 Plan, including non-qualified stock options other
than the automatic non-employee director options, at the discretion of the administrator. To the
extent not inconsistent with the provisions of the 2010 Plan governing non-employee director
options, the terms of general stock option awards under the 2010 Plan apply to non-employee
director options.
Terms and Conditions of Other Awards. The administrator will select the recipients of awards
(other than with respect to automatic non-employee director options) granted under the 2010 Plan
from the pool of eligible persons and will set the terms of the awards.
Award Pricing. The administrator will determine the exercise or purchase price of awards
(other than the automatic non-employee director options) granted under the 2010 Plan; which, with
respect to options and stock appreciation rights, will be no less than the fair market value of the
shares underlying the award as of the grant date. In addition, the exercise price for an incentive
stock option must comply with the provisions of Section 422 of the Code. Section 422 currently
provides that the exercise price must not be less than the fair market value of the common stock on
the date of grant and not less than 110% of the fair market value as of the date of grant in the
case of a grant to a person owning more than 10% of the total combined voting power of all classes
of the issuers stock or the stock of any parent or any subsidiary corporations. On March 19, 2010,
the closing price of our common stock on the Nasdaq Global Market was $12.93 per share.
Award Vesting and Term. The administrator will determine the date or dates on which awards
(other than the automatic non-employee director options) granted under the 2010 Plan vest and
become exercisable.
The term of each stock option or stock appreciation right granted will expire no later than ten
(10) years after the date the stock option or stock appreciation right is granted and may
be subject to earlier termination as described below.
In addition, the term for an incentive stock option must comply with the
provisions of Section 422 of the Code. Section 422 currently provides that
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the incentive stock option may not be exercisable after the expiration of 10 years from the
date of grant, or five years in the case of an incentive stock option granted to a person owning
more than 10% of the total combined voting power of all classes of stock of the issuer, or of its
parent or any subsidiary corporations.
Awards granted under the 2010 Plan may be exercised at any time after they vest and before the
expiration date determined by the administrator, provided that an award is generally exercisable
following an award holders termination of employment only to the extent that the award had become
exercisable on or before the date of termination and to the extent that the award is not forfeited
under the terms of the 2010 Plan. Furthermore, in the absence of a specific agreement to the
contrary, stock options will generally expire and become unexercisable immediately upon termination
of the recipients employment with us for just cause (as defined in the 2010 Plan); 90 days after
termination of the recipients employment with us for any reason other than just cause, death or
permanent disability; or one year after termination of the recipients employment with us due to
death or permanent disability, in each case unless the term of the options provides for an earlier
expiration. If the employment of a recipient of restricted stock is terminated for any reason, any
such restricted stock that remains subject to restrictions on the date of such termination will be
repurchased by the Company at the purchase price, if any, paid by the recipient, or returned to the
Company without consideration, provided, however, that the administrator may in its discretion
determine otherwise.
Other Award Provisions. The administrator will determine any applicable performance criteria,
restrictions or conditions of any award. The administrator may establish performance criteria and
level of achievement versus such criteria that will determine the number of shares to be granted,
retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an
award, which criteria may be based on qualifying performance criteria (as described below) or
other standards of financial performance and/or personal performance evaluations. In addition, the
administrator may specify that an award or a portion of an award is intended to satisfy the
requirements for performance-based compensation under Section 162(m) of the Code, provided that
the performance criteria for such award or portion of an award that is intended by the
administrator to satisfy the requirements for performance-based compensation under Section 162(m)
of the Code will be a measure based on one or more qualifying performance criteria selected by the
administrator and specified at the time the award is granted. The administrator will certify the
extent to which any qualifying performance criteria has been satisfied, and the amount payable as a
result thereof, prior to payment, settlement or vesting of any award that is intended to satisfy
the requirements for performance-based compensation under Section 162(m) of the Code.
Notwithstanding satisfaction of any performance goals, the number of shares issued under or the
amount paid under an award may be reduced, but not increased, by the administrator on the basis of
such further considerations as the administrator in its sole discretion may determine.
For purposes of the 2010 Plan, the term qualifying performance criteria means any one or
more of the following performance criteria, or derivations of such performance criteria, either
individually, alternatively or in any combination, applied to either the Company as a whole or to a
business unit or affiliated entity, either individually, alternatively or in any combination, and
measured either annually (or over such shorter period) or cumulatively over a period of years, on
an absolute basis or relative to a pre-established target, to previous years results or to a
designated comparison group, in each case as specified by the administrator: (a) cash flow, (b)
earnings and earnings per share (including earnings before interest, taxes, and amortization), (c)
return on equity, (d) total stockholder return, (e) return on capital, (f) return on assets or net
assets, (g) aggregate product price and other product measures; (h) market share or market
penetration with respect to specific designated products and/or geographic areas; (i) revenues,
income or net income, (j) operating income or net operating income, (k) operating margin and (l)
return on operating revenue.
Award Payments. A holder of an award may pay cash or any other consideration deemed
acceptable by the administrator to pay the exercise price for the award, if any. The administrator
may, in its discretion, allow an award holder to pay the exercise price for an award by delivering
our common stock.
Non-Assignability of Awards. Awards are generally not transferable by the recipient during
the life of the recipient. Awards are generally exercisable during the life of a recipient only by
the recipient.
Award Documentation. Each award must be evidenced by an award document setting forth such
terms and conditions applicable to the award as the administrator may in its discretion determine.
Rights With Respect to Stock Ownership. No recipient of an award under the 2010 Plan or other
person will have any right, title or interest in or to any shares of common stock subject to any
award or any rights as a stockholder unless the award is duly exercised pursuant to the terms of
the 2010 Plan and/or the shares of common stock subject to the award are issued to the recipient.
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Provisions Regarding Changes in Control. As of the effective time and date of any change in
control (as defined in the 2010 Plan), the 2010 Plan and any of the then outstanding awards
(whether or not vested) will automatically terminate unless:
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provision is made in writing in connection with such change in control
transaction for the continuance of the 2010 Plan and for the assumption of such awards,
or for the substitution for such awards of new awards covering the securities of a
successor entity or an affiliate thereof with appropriate adjustments as to the number
and kind of securities and exercise prices, in which event the 2010 Plan and such
outstanding awards will continue or be replaced, as the case may be, in the manner and
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our Board of Directors otherwise provides in writing for such adjustments as it
deems appropriate in the terms and conditions of the then outstanding awards (whether
or not vested), including without limitation accelerating the vesting of outstanding
awards and/or providing for the cancellation of awards and their automatic conversion
into the right to receive the securities, cash or other consideration that a holder of
the shares underlying such awards would have been entitled to receive upon consummation
of such change in control had such shares been issued and outstanding immediately prior
to the effective date and time of the change in control (net of the appropriate option
exercise prices). |
If, pursuant to these provisions, the 2010 Plan and the awards terminate by reason of the
occurrence of a change in control without provision for any of the actions described in the
paragraph above, then any recipient holding outstanding awards will have the right, at such time
immediately prior to the consummation of the change in control as our Board of Directors will
designate, to exercise the recipients awards to the full extent not theretofore exercised,
including any installments that have not yet become vested.
Tax Information
The following summary of certain federal income tax consequences of the receipt and exercise
of awards we grant is based on the laws and regulations in effect as of the date of this Proxy
Statement and does not purport to be a complete statement of the law in this area. Furthermore, the
discussion below does not address the tax consequences of the receipt and exercise of awards under
foreign, state and local tax laws, and such tax laws may not correspond to the federal income tax
treatment described herein. The exact federal income tax treatment of transactions under the 2010
Plan will vary depending upon the specific facts and circumstances involved.
Incentive Stock Options. Except as discussed below, under federal income tax law, a recipient
of an incentive stock option generally will not owe tax on the grant or the exercise of the option
if the recipient exercises the option while the recipient is our employee (or an employee of any
parent or subsidiary corporation) or within three months following termination of the recipients
employment (or within one year, if termination was due to a permanent and total disability).
If the recipient of the incentive stock option sells the shares acquired upon the exercise of
the option at any time within one year after the date we issue the shares to the recipient or
within two years after the date we grant the incentive stock option to the recipient, then:
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if the recipients sales price exceeds the purchase price the recipient paid
for the shares upon exercise of the incentive stock option, the recipient will
recognize capital gain equal to the excess, if any, of the sales price over the fair
market value of the shares on the date of exercise, and will recognize ordinary income
equal to the excess, if any, of the lesser of the sales price or the fair market value
of the shares on the date of exercise over the purchase price paid for the shares upon
exercise of the incentive stock option; or |
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if the recipients sales price is less than the purchase
price paid for the shares upon exercise of the incentive stock option, the recipient will recognize a
capital loss equal to the excess of the purchase price paid for the shares upon
exercise of the incentive stock option over the sales price of the shares. |
If the recipient sells shares acquired upon exercise of an incentive stock option at any time
after the recipient has held the shares for at least one year after the date we issue the shares to
the recipient pursuant to the recipients exercise of the incentive stock option and at least two
years after the date we grant the recipient the incentive stock option, then the recipient will
recognize capital gain or loss equal to the difference between the sales price and the purchase
price paid for the shares upon exercise of the incentive stock option.
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The amount by which the fair market value of shares the recipient acquires upon exercise of an
incentive stock option (determined as of the date of exercise) exceeds the purchase price paid for
the shares upon exercise of the incentive stock option will be included as a positive adjustment in
the calculation of the recipients alternative minimum taxable income in the year of exercise.
In the case of an early disposition of shares by a recipient that results in the recognition
of ordinary income, we will be entitled to a deduction equal to the amount of such ordinary income.
If the recipient holds the shares for the requisite period described above and therefore solely
recognizes capital gain upon the sale of such shares, we are not entitled to any deduction.
Non-qualified Stock Options. Our grant of a non-qualified stock option to a recipient is
generally not a taxable event for the recipient. Upon the exercise of a non-qualified stock option,
the recipient will generally recognize ordinary income equal to the excess of the fair market value
of the shares the recipient acquires upon exercise (determined as of the date of exercise) over the
purchase price paid for the shares upon exercise of the non-qualified stock option. We generally
will be entitled to deduct as a compensation expense the amount of such ordinary income. Provided
the shares are held as a capital asset, the recipients subsequent sale of the shares generally
will give rise to capital gain or loss equal to the difference between the sale price and the sum
of the purchase price paid for the shares plus the ordinary income recognized with respect to the
shares, and such capital gain or loss will be taxable as long term or short term capital gain or
loss depending upon the recipients holding period after exercise.
Stock Appreciation Rights and Phantom Stock. Generally, the holder of a stock appreciation
right or phantom stock award will recognize ordinary income equal to the value we pay (whether in
cash, stock or a combination thereof) under either arrangement on the date the holder receives
payment. If we place a limit on the amount that will be payable under a stock appreciation right,
the holder may recognize ordinary income equal to the value of the holders right under the stock
appreciation right at the time the value of such right equals such limit and the stock appreciation
right is exercisable. We will generally be entitled to a deduction in an amount equal to the
ordinary income recognized by the holder.
Stock Purchase RightsRestricted Stock. Under the 2010 Plan, we are authorized to grant
rights to purchase our restricted common stock subject to a right to repurchase such stock at the
price paid by the participant if the participants employment or service relationship with us
terminates prior to the lapse of such repurchase right. In general, there will be no tax
consequences to a participant upon the grant of a right to purchase such restricted stock or upon
purchase of such restricted stock. Instead, the participant will be taxed at ordinary income rates
at the time our repurchase rights expire or are removed on an amount equal to the excess of the
fair market value of the stock at that time over the amount the participant paid to acquire such
stock. A participant who acquires restricted stock, however, may make an election under Section
83(b) of the Code with respect to such stock. If such an election is made within 30 days after the
participants acquisition of the stock, the participant is taxed at ordinary income rates in the
year in which the participant acquires the restricted stock. The ordinary income the participant
must recognize is equal to the excess of the fair market value of the stock at the time of the
participants acquisition of the stock (determined without regard to the restrictions) over the
amount that the participant paid to acquire such stock. If a participant makes a timely election
under Section 83(b) of the Code with respect to restricted stock, the participant generally will
not be required to report any additional income with respect to such restricted stock until he or
she disposes of such stock, at which time he or she will generally recognize capital gain or loss
(provided the shares are held as a capital asset) equal to the difference between the sales price
and the fair market value of the stock at the time or the participants acquisition of the stock
(determined without regard to restrictions). In the event that a participant forfeits (as a result
of our repurchase) restricted stock with respect to which an election under Section 83(b) of the
Code has been made, the participant ordinarily will not be entitled to recognize any loss for
federal income tax purposes (except to the extent the amount realized by the participant at the
time of such forfeiture is less than the participants purchase price for such stock). We generally
will be entitled to a deduction equal to the amount of ordinary income (if any) recognized by a
participant.
Other Awards. In addition to the types of awards described above, the 2010 Plan authorizes
certain other awards that may include payments in cash, our common stock, or a combination of cash
and common stock. The tax consequences of such awards will depend upon the specific terms of such
awards. Generally, however, a participant who receives an award payable in cash will recognize
ordinary income, and we will be entitled to a deduction, with respect to such award at the earliest
time at which the participant has an unrestricted right to receive the amount of the cash payment.
In general, the sale or grant of stock to a participant under the 2010 Plan will be a taxable event
at the time of the sale or grant if such stock at that time is not subject to a substantial risk of
forfeiture or is transferable within the meaning of Section 83 of the Code in the hands of the
participant. For such purposes, stock is ordinarily considered to be transferable if it can be
transferred to another person who takes the stock free of any substantial risk of forfeiture. In
such case, the participant will recognize ordinary income, and we will be entitled to a deduction,
equal to the excess of the fair market value of such stock on the date of the sale or grant over
the amount, if any, that the participant paid for such stock. Stock that at the time of receipt by
a participant
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is subject to restrictions that constitute a substantial risk of forfeiture and that is not
transferable within the meaning of Internal Revenue Code Section 83 generally will be taxed under
the rules applicable to restricted stock as described above.
Withholding. In the event that an optionee or other recipient of an award under the 2010 Plan
is our employee, we ordinarily will be required to withhold applicable federal income taxes with
respect to any ordinary income recognized by such optionee or other award recipient in connection
with stock options or other awards under the 2010 Plan.
Certain Additional Rules Applicable to Awards. The terms of awards granted under the 2010
Plan may provide for accelerated vesting in connection with a change in control. In that event and
depending upon the individual circumstances of the recipient, certain amounts with respect to such
awards may constitute excess parachute payments under the golden parachute provisions of the
Code. Under these provisions, a participant will be subject to a 20% excise tax on any excess
parachute payments and we will be denied any deduction with respect to such excise tax payment.
Participation in the 2010 Plan by Executive Officers, Directors and Other Employees; Interest of
Certain Persons in Matters to be Acted Upon
Each of our current directors, executive officers and employees is eligible to receive awards
under the 2010 Plan. The administrator has the discretion to determine which eligible persons will
receive awards under the 2010 Plan, except to the extent that non-employee directors may again
receive the automatic non-employee director options in accordance with the 2010 Plan. As a result,
and except for any future automatic option awards to non-employee directors, the amount and timing
of such awards are not determinable at this time. If our stockholders approve Proposal 3,
approximately 2,201,008 shares (as of March 19, 2010) will be available for grant of awards to
eligible persons under the 2010 Plan.
Vote Required and Board Recommendation
The affirmative vote of a majority of the shares present in person or represented by proxy and
entitled to vote on the proposal at the Annual Meeting is required to approve the 2010 Plan.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF OUR 2010
EQUITY INCENTIVE PLAN.
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CORPORATE GOVERNANCE
Board Leadership Structure and Risk Oversight
The Board of Directors believes that separate individuals should hold the positions of
Chairman of the Board and Chief Executive Officer, and that the Chairman should not be an employee
of the Company. Under our corporate governance principles, the Chairman of the Board is
responsible for coordinating Board activities, including the scheduling of meetings and executive
sessions of the non-employee directors and the relevant agenda items in each case (in consultation
with the Chief Executive Officer as appropriate). The Board of Directors believes this leadership
structure enhances the Boards oversight of and independence from our management and the ability of
the Board to carry out its roles and responsibilities on behalf of our stockholders.
The Company takes a comprehensive approach to risk management. We believe risk can arise in
every decision and action taken by the Company, whether strategic or operational. The Company,
therefore, seeks to include risk management principles in all of its management processes and in
the responsibilities of its employees at every level. Our comprehensive approach is reflected in
the reporting processes by which our management provides timely and comprehensive information to
the Board of Directors to support the Boards role in oversight, approval and decision-making.
The Board of Directors closely monitors the information it receives from management and
provides oversight and guidance to our management team concerning the assessment and management of
risk. The Board approves the Companys high level goals, strategies and policies to set the tone
and direction for appropriate risk taking within the business. The Board and its committees then
emphasize this tone and direction in its oversight of managements implementation of the Companys
goals, strategies and policies.
Our senior executives provide the Board and its committees with regular updates about the
Companys strategies and objectives and the risks inherent within them at Board and committee
meetings and in regular reports. Board and committee meetings also provide a venue for directors
to discuss issues with management. The Board and committees call special meetings when necessary
to address specific issues. In addition, our directors have access to Company management at all
levels to discuss any matters of interest, including those related to risk. Those members of
management most knowledgeable of the issues often attend Board meetings to provide additional
insight into items being discussed, including risk exposures.
The Board has delegated oversight for matters involving certain specific areas of risk
exposure to its three standing committees. Each committee reports to the Board of Directors at
regularly scheduled Board meetings, and more frequently if appropriate, with respect to matters and
risks for which the committee provides oversight. The specific responsibilities of each of our
Board committees are more fully described below under the headings Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee.
Board of Directors Meetings, Committees of the Board and Related Matters
The Board of Directors currently has a standing Audit, Nominating and Corporate Governance,
and Compensation Committee. The Board of Directors and its committees held an aggregate of 21
meetings during the year ended December 31, 2009, of which nine were full Board meetings. All
directors attended 75% or more of the aggregate of all meetings of the Board of Directors and its
committees, if any, upon which the directors served during the year ended December 31, 2009.
Director Independence
Our Board of Directors has determined that each of Mr. Brown, Dr. Buechler, Mr. Dammeyer, Dr.
Polan, Mr. Pulido (Chairman of the Board of Directors) and Mr. Schuler is independent within the
meaning of Nasdaq Marketplace Rule 5605(a)(2) as adopted by The Nasdaq Stock Market LLC (Nasdaq).
Mr. Bryant who serves as our President and Chief Executive Officer is not deemed to be
independent because of his employment with us.
Audit Committee
The Audit Committee is responsible for assisting the Board of Directors in overseeing our
accounting and financial reporting processes and the audits of our financial statements. In
addition, the Audit Committee assists the Board of Directors in its oversight of our compliance
with legal and regulatory requirements. Under the Audit Committees written charter, the specific
duties of the Audit Committee include, among others: monitoring the integrity of our financial
process and systems
15
of internal controls regarding finance, accounting and legal compliance; selecting our
independent registered public accounting firm; monitoring the independence and performance of our
independent registered public accounting firm; and providing an avenue of communication among the
independent registered public accounting firm, our management and our Board of Directors. The Audit
Committee has the authority to conduct any investigation appropriate to fulfilling its
responsibilities, and it has direct access to all of our employees and to the independent
registered public accounting firm. The Audit Committee also has the ability to retain, at our
expense and without further approval of the Board of Directors, special legal, accounting or other
consultants or experts that it deems necessary in the performance of its duties.
The Audit Committee met five times during 2009. The members of the Audit Committee currently
include Mr. Dammeyer (Chairman), Mr. Brown and Dr. Polan. The Audit Committee has been established
in accordance with applicable Nasdaq and Securities and Exchange Commission rules and regulations,
and our Board of Directors has determined that each of Mr. Dammeyer, Mr. Brown and Dr. Polan is
independent within the meaning of Nasdaq Rule 5605(a)(2) as well as the enhanced independence
standards contained in Nasdaq Rule 5605(c)(2)(A) and Rule 10A-3 under the Securities Exchange Act
of 1934 that relate specifically to members of audit committees. Our Board of Directors has also
determined that both Mr. Dammeyer and Mr. Brown qualify as audit committee financial experts
within the meaning of the Securities and Exchange Commissions rules and regulations.
Compensation Committee
The Compensation Committee is responsible for assisting the Board of Directors in discharging
its responsibilities regarding the compensation of our employees and directors. Under the
Compensation Committees written charter, the specific duties of the Compensation Committee
include, among other matters: reviewing and approving (or recommending to the Board of Directors
for approval) corporate goals and objectives relevant to executive compensation; evaluating our
executive officers performance in light of such goals and objectives; determining (or recommending
to the Board of Directors for determination) the compensation levels of our executive officers
based on such evaluations; administering our incentive compensation plans, including our
equity-based incentive plans; and making recommendations to our Board of Directors regarding our
overall compensation structure, policies and programs.
Design of the compensation program for 2009 was completed without the assistance of an
independent outside compensation consultant, although in prior years the Compensation Committee has
engaged third party compensation consultants to assist in structuring and reviewing the Companys
compensation programs, including competitiveness of base salaries, short-term cash incentives, and
both short-term and long-term equity incentive programs. Our Compensation Committee considers
market data from a variety of sources, including the annual Radford Global Life Sciences Survey and
a comparative group of publicly-traded companies. Our Compensation Committee utilizes management
(and from time to time independent compensation consultants) to gather such market data and provide
appropriate analyses. In addition, the Compensation Committee considers the recommendations of our
Chief Executive Officer in determining the compensation of executive officers (other than the CEO).
Additional information about the Compensation Committees process of setting executive
compensation is included under the caption Executive Compensation-Compensation Discussion and
Analysis.
The Compensation Committee held two meetings during 2009. The members of the Compensation
Committee currently include Mr. Brown (Chairman), Dr. Polan and Mr. Schuler, and our Board of
Directors has determined that each of Mr. Brown, Dr. Polan and Mr. Schuler is independent within
the meaning of Nasdaq Rule 5605(a)(2).
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for assisting the Board of
Directors in identifying qualified individuals to become Board members; recommending the
composition of the Board of Directors and its committees; monitoring and assessing the
effectiveness of the Board of Directors and its committees; and performing a leadership role in
shaping and monitoring our corporate governance principles. Under the Nominating and Corporate
Governance Committees written charter, the specific duties of the Nominating and Corporate
Governance Committee include, among other matters: identifying, reviewing and recruiting candidates
for the Board of Directors for election to the Board; reviewing director candidates recommended by
our stockholders; monitoring the independence of current directors and nominees; recommending to
the Board of Directors candidates for election or re-election to the Board at each annual meeting
of stockholders; and overseeing the periodic evaluation of the Board, its committees and each of
our incumbent directors.
The Nominating and Corporate Governance Committee held two meetings during 2009. The
Nominating and Corporate Governance Committee currently includes Mr. Schuler (Chairman), Dr.
Buechler and Mr. Pulido. Our Board of Directors has determined that each of Mr. Schuler, Dr. Buechler and Mr. Pulido is independent
within the meaning of Nasdaq Rule 5605(a)(2).
16
Meetings of Non-Management Directors
The non-management members of the Board of Directors regularly meet without any members of
management present during regularly scheduled and periodic executive sessions of meetings of the
Board of Directors.
Director Nominations
The Nominating and Corporate Governance Committee regularly assesses the appropriate size of
the Board of Directors and whether any vacancies on the Board of Directors are expected due to
retirement or otherwise. The Nominating and Corporate Governance Committee utilizes a variety of
methods for identifying and evaluating director candidates. Candidates may come to the attention of
the Nominating and Corporate Governance Committee through current directors, professional search
firms, stockholders or other persons.
Once the Nominating and Corporate Governance Committee has identified a prospective nominee,
the Nominating and Corporate Governance Committee will evaluate the prospective nominee in the
context of the then-current composition of the Board of Directors and will consider a variety of
other factors, including the prospective nominees business, technology and industry, finance and
financial reporting experience, and other attributes that would be expected to contribute to an
effective Board of Directors. The Nominating and Corporate Governance Committee seeks to identify
nominees who possess a wide range of experience, skills, areas of expertise, knowledge and business
judgment. Successful nominees must have a history of superior performance or accomplishments in
their professional undertakings and should have the highest personal and professional ethics and
values.
Our Nominating and Corporate Governance Committee will consider stockholder nominations for
directors. A stockholder may propose a person for consideration by the committee by submitting the
individuals name and qualifications, and other information described below under Stockholder
Proposals, to our Corporate Secretary, Quidel Corporation, 10165 McKellar Court, San Diego,
California 92121. The Nominating and Corporate Governance Committee will consider each
stockholder-recommended candidate at the same time and under the same criteria used to evaluate all
other candidates. As described in our Corporate Governance Guidelines, in evaluating the
suitability of individuals to serve as members of our Board of Directors, the Board of Directors
and Nominating and Corporate Governance Committee consider a number of factors, including:
experience at a policy-making level; strategic thinking; depth of understanding of the Companys
industry, including relevant technology, leadership and objectivity; and a general understanding of
marketing, financing and other disciplines relevant to the success of a publicly-traded company and
sound principles of corporate governance in todays business environment. The Board of Directors
and the Nominating and Corporate Governance Committee evaluate each individual in the context of
Board functions as a whole and in light of the then-current needs of the Board at that point in
time, with the objective of providing independent, diversified and effective representation of the
interests of our stockholders.
In addition, stockholders who wish to nominate candidates for election to the Board of
Directors at any annual meeting must follow the procedures set forth in our bylaws, including
providing timely written notice, in proper form, of the intent to make such a nomination. To be
timely, the notice must be received within the time frame discussed below in this Proxy Statement
under the heading Stockholder Proposals. To be in proper form, the notice must, among other
matters, include each nominees written consent to serve as a director if elected, a description of
all arrangements or understandings between the nominating stockholder and each nominee and
information about the nominating stockholder and each nominee. These requirements are further
described below under the heading Stockholder Proposals and are detailed in our bylaws.
17
Director Qualifications
Our Board of Directors should possess the highest personal and professional ethics, integrity,
judgment and values, and be committed to representing the long-term interests of our stockholders.
As described in our Corporate Governance Guidelines, our Board of Directors is particularly
interested in maintaining a mix that includes the following attributes:
|
|
|
History of superior performance or accomplishments in professional
undertakings; |
|
|
|
|
Highest personal and professional ethics and values and sound principles of
corporate governance in todays business environment; |
|
|
|
|
A depth of understanding of the Companys industry, including relevant
technology, leadership and objectivity and a general understanding of marketing, finance
and other disciplines relevant to the success of a publicly-traded company; |
|
|
|
|
Diversity of background and personal experience; |
|
|
|
|
Fit of abilities and personality with those of current and potential directors
in building a Board of Directors that is effective, collegial and responsive to the needs
of our business; and |
|
|
|
|
Independence and an absence of conflicting time commitments. |
We believe our Board members represent a desirable mix of backgrounds, skills and experiences,
and they all share the personal attributes of effective directors, which are described above.
Below are some of the specific experiences and skills of our directors:
Thomas D. Brown. Mr. Brown has a strong record of operational success and extensive knowledge
of the diagnostics industry and technology utilized by the Company through his various executive
leadership positions at Abbott Laboratories. His background as an executive and service on the
boards of other public companies qualifies Mr. Brown as an audit committee financial expert.
Douglas C. Bryant. Mr. Bryant is our President and Chief Executive Officer. Mr. Bryant has a
background of strong executive experience in the diagnostics industry in the U.S. and
internationally. He brings over 25 years of industry experience in sales and marketing, product
development, manufacturing and service and support in the diagnostics and life sciences markets.
Kenneth F. Buechler, Ph.D. Dr. Buechler has extensive experience in the field of diagnostics
as a scientist and through his founding of Biosite Inc. He also has extensive executive leadership
and governance experience through his service on the boards of other companies.
Rod F. Dammeyer. Mr. Dammeyer has a strong financial background as an executive and
investment advisor. He is an audit committee financial expert as a result of his prior
professional experience as a Certified Public Accountant and experience as an investment advisor
and as a member and chairman of the audit committee of another U.S. public company.
Mary Lake Polan, M.D., Ph.D., M.P.H. Dr. Polan is a prominent medical clinician, researcher,
and academian. She has extensive experience in the area of womens health which is a critical area
for us. As a medical doctor, Dr. Polan brings an important practicing physician perspective in
evaluating and discussing the Companys performance and strategic direction.
Mark A. Pulido. Mr. Pulido serves as our Chairman of the Board. Mr. Pulido has previously
served as an executive in a variety of healthcare companies, including as CEO of McKesson
Corporation, a large distribution partner of the Company. Mr. Pulido brings strong leadership to
our Board, through his knowledge of commercial market channels and the distributor industry and his
extensive executive experience and service on the boards of other companies.
Jack W. Schuler. Mr. Schuler has nearly 40 years of experience as an executive, director and
investor in the healthcare industry. Mr. Schuler has extensive knowledge of the diagnostics
industry and technology utilized by the Company. He also has extensive executive leadership and
governance experience through his service on the boards of other companies.
18
Communications With the Board of Directors
Our stockholders may communicate with our Board of Directors, a committee of our Board of
Directors or an individual director by sending a letter addressed to the Board, a committee or a
director c/o Corporate Secretary, Quidel Corporation, 10165 McKellar Court, San Diego, California
92121. All communications will be compiled by our Corporate Secretary and forwarded to the Board of
Directors, the committee or the director accordingly.
Director Attendance at Annual Meetings
Our Board of Directors has adopted a policy that encourages our directors to attend our annual
stockholder meetings. The 2009 annual meeting of stockholders was attended by all seven of our
then-current directors.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all our officers,
directors and employees. If we grant any waiver, including any implicit waiver, to our principal
executive, financial or accounting officers (or persons performing similar functions), we will
disclose the nature of such amendment or waiver on our website at www.quidel.com or in a report on
Form 8-K in accordance with applicable rules and regulations.
Access to Corporate Governance Documentation and Other Information Available on Our Website
Our Code of Business Conduct and Ethics, the current charters for each of the Audit,
Compensation and Nominating and Corporate Governance Committees and the Companys Corporate
Governance Guidelines are accessible via our website at www.quidel.com through the Investor
Relations link under the heading Corporate Governance.
DIRECTOR COMPENSATION
The current compensation and benefit program for non-employee directors is designed to achieve
the following goals: compensation should fairly pay directors for work required for a company of
our size and scope; compensation should align directors interests with the long-term interests of
our other stockholders; and the structure of the compensation should be simple, transparent and
easy for stockholders to understand. The table below relating to non-employee directors
compensation includes the following compensation elements:
Annual Cash Retainers
The Non-Executive Chairman of the Board of Directors currently receives an annual cash
retainer of $83,600. Each of the other non-employee directors receives an annual cash retainer of
$31,350.
The Chairman of our Audit Committee receives an additional annual cash retainer of $15,000.
The Chairperson for each of the Boards other standing committees receives an additional annual
cash retainer of $7,500.
Board and Committee Meeting Attendance Fees
The non-employee directors receive $2,200 per Board meeting attended in person and $2,200 per
committee meeting attended in person, but only if the committee meeting is not held on the same day
as a Board meeting. Non-employee directors are also reimbursed for out-of-pocket expenses incurred
in connection with attendance at Board and committee meetings. The non-employee directors do not
receive a fee for attendance at telephonic Board or committee meetings.
Non-Employee Director Deferred Compensation Program
In May 2007, the Board of Directors adopted a non-employee director deferred compensation
program. The current non-employee director deferred compensation program allows non-employee
directors to elect on a yearly basis (for the yearly period between the Companys annual meetings
of stockholders) to receive his or her (i) annual retainer fee and (ii) compensation for services
as a chairperson of any of the Boards standing committees
(collectively, the Covered Fees) as
follows: (1) 100% of the Covered Fees (plus an additional 20% premium on the Covered Fees) in the
form of fully vested restricted stock units (RSUs); or (2) 50% of the Covered Fees in cash and
50% of the Covered Fees (plus an additional 20% premium on that portion of the Covered Fees) in the
form of fully vested RSUs.
19
The RSUs are granted under the 2001 Plan (or if approved, the 2010 Plan going forward) as of
the date of the applicable annual meeting of stockholders, and the number of shares subject to an
award of RSUs is calculated based on the closing price of the Companys shares on the date of the
applicable annual meeting. In addition, the issuance of shares of the Companys common stock
underlying an award of RSUs will not occur until thirty (30) days after the earlier of (i)
separation of such non-employee directors service to the Company (as described in Section
409A(a)(2)(A)(i) of the Code and related guidance thereunder) or (ii) a change in the ownership or
effective control of the Company, or in the ownership of a substantial portion of the assets of the
Company (as described in Internal Revenue Code Section 409A(a)(2)(A)(v) and related guidance
thereunder).
Periodic Equity Awards
The Board of Directors periodically assesses potential equity awards to non-employee directors
in lieu of an annual automatic grant of stock options, as contemplated under the 2001 Plan (or if
approved, the 2010 Plan going forward). The Board of Directors suspended the automatic grants in
May 2004 on an indefinite basis.
On May 12, 2009, the Board of Directors approved stock option grants to each of the Companys
non-employee directors as follows: (i) a grant of 21,003 stock options to the Chairman of the Board
(with a Black-Scholes value of approximately $5.60 per option as of the grant date) and (ii) a
grant of 16,002 stock options to each of the Companys other non-employee directors (with a
Black-Scholes value of approximately $5.60 per option as of the grant date). The stock options vest
upon the earlier of (x) immediately prior to the annual meeting of the Companys stockholders in
2010, or (y) the one-year anniversary of the grant date. The exercise price for the stock options
was equal to the closing price of the Companys common stock as of the grant date in accordance
with the 2001 Plan. The options have a ten-year term.
Director Compensation Table
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned |
|
|
|
|
|
|
Option |
|
|
|
|
|
|
or Paid in |
|
|
Stock |
|
|
Awards |
|
|
Total |
|
Name |
|
Cash ($)(1) |
|
|
Awards ($)(2) |
|
|
($)(3) |
|
|
($) |
|
Thomas D. Brown |
|
|
6,600 |
|
|
|
46,620 |
|
|
|
89,611 |
|
|
|
142,831 |
|
Kenneth F. Buechler, Ph.D. |
|
|
8,800 |
|
|
|
37,614 |
|
|
|
89,611 |
|
|
|
136,025 |
|
Rod F. Dammeyer |
|
|
18,600 |
|
|
|
55,614 |
|
|
|
89,611 |
|
|
|
163,825 |
|
Mary Lake Polan, M.D., Ph.D., M.P.H. |
|
|
24,888 |
|
|
|
18,801 |
|
|
|
89,611 |
|
|
|
133,300 |
|
Mark A. Pulido |
|
|
72,600 |
|
|
|
|
|
|
|
117,617 |
|
|
|
190,217 |
|
Jack W. Schuler |
|
|
8,800 |
|
|
|
46,620 |
|
|
|
89,611 |
|
|
|
145,031 |
|
|
|
|
(1) |
|
This column reports the amount of cash compensation paid in 2009 for Board service. |
|
(2) |
|
This column represents the dollar amount recognized for financial statement reporting
purposes with respect to the fair value of the RSUs granted in 2009, in accordance with ASC
Topic 718. Fair value is calculated using the closing price of our common stock on the date of
grant. At December 31, 2009, the aggregate number of stock awards held by each Director was:
Mr. Brown 25,268; Dr. Buechler 5,581; Mr. Dammeyer 8,060; Dr. Polan 19,674; Mr. Pulido 21,958;
and Mr. Schuler 11,790. |
|
(3) |
|
This column represents the dollar amount recognized for financial statement reporting
purposes with respect to the fair value of stock options granted to the directors in 2009. The
fair value was estimated using the Black-Scholes option-pricing model in accordance with ASC
Topic 718. The fair value per option granted in 2009 was $5.60 per option, based on
assumptions of 4.73 years expected life, expected volatility of 0.54, a risk-free rate of
2.09% and zero dividend yield. At December 31, 2009, the aggregate number of option awards
held by each Director was: Mr. Brown 52,300; Dr. Buechler 32,821; Mr. Dammeyer 46,818; Dr.
Polan 109,568; Mr. Pulido 124,590; and Mr. Schuler 46,818. |
20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of our common stock beneficially owned as
of March 19, 2010 by (i) those known to be the beneficial owners of more than five percent (5%) of
our outstanding common stock, (ii) each of the current directors and nominees for director, (iii)
each of the Companys current executive officers named in the Summary Compensation Table herein and
(iv) all directors and named executive officers as a group. On March 19, 2010, there were
28,923,211 shares of our common stock outstanding.
|
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|
|
|
|
|
|
|
|
Beneficial Ownership
of |
|
|
|
Common
Stock(1)(2) |
|
|
|
Number
of |
|
|
|
|
Name |
|
Shares |
|
|
Percent of Class |
|
Beneficial Owners |
|
|
|
|
|
|
|
|
Entities affiliated with Larry N. Feinberg(3) |
|
|
2,992,369 |
|
|
|
10.3 |
% |
Oracle Associates LLC
200 Greenwich Avenue, 3rd Floor
Greenwich, Connecticut 06820 |
|
|
|
|
|
|
|
|
FMR LLC(4) |
|
|
2,843,905 |
|
|
|
9.8 |
% |
82
Devonshire Street
Boston, Massachusetts 02109 |
|
|
|
|
|
|
|
|
T. Rowe Price Associates, Inc.(5) |
|
|
2,241,400 |
|
|
|
7.7 |
% |
100 E. Pratt
Street
Baltimore, Maryland 21202 |
|
|
|
|
|
|
|
|
Directors and Nominees for Director |
|
|
|
|
|
|
|
|
Thomas D. Brown(6) |
|
|
77,568 |
|
|
|
* |
|
Douglas C. Bryant(7) |
|
|
145,769 |
|
|
|
* |
|
Kenneth F. Buechler, Ph.D.(8) |
|
|
38,402 |
|
|
|
* |
|
Rod F. Dammeyer(9) |
|
|
104,878 |
|
|
|
* |
|
Mary Lake Polan, M.D., Ph.D., M.P.H.(10) |
|
|
110,842 |
|
|
|
* |
|
Mark A. Pulido(11) |
|
|
146,548 |
|
|
|
* |
|
Jack W. Schuler(12) |
|
|
3,898,659 |
|
|
|
13.5 |
% |
Named Executive Officers |
|
|
|
|
|
|
|
|
Robert J. Bujarski, J.D.(13) |
|
|
82,375 |
|
|
|
* |
|
Scot M. McLeod(14) |
|
|
90,667 |
|
|
|
* |
|
John M. Radak(15) |
|
|
133,805 |
|
|
|
* |
|
John D. Tamerius, Ph.D.(16) |
|
|
122,030 |
|
|
|
* |
|
All directors and executive officers as a group (11 persons)(17) |
|
|
4,951,543 |
|
|
|
16.7 |
% |
|
|
|
* |
|
Less than one percent |
|
(1) |
|
Beneficial ownership is determined in accordance with the rules of the Securities and
Exchange Commission. Unless otherwise noted, and subject to applicable community property
laws, each executive officer and director has sole voting and dispositive power with respect
to the shares indicated. |
|
(2) |
|
Shares of common stock subject to options exercisable on or within 60 days of March 19, 2010
are deemed outstanding for computing the number of shares and the percentage ownership of the
person holding such options, but are not deemed outstanding for computing the percentage of
any other person. |
|
(3) |
|
Based on information reported in Amendment No. 7 to Schedule 13G filed with the Securities
and Exchange Commission on February 2, 2010 by Oracle Partners, L.P., Oracle Associates, LLC
and Larry N. Feinberg in which Mr. Feinberg reported beneficial ownership of 2,992,369 shares
of common stock with respect to which he has sole voting and dispositive power of 40,000
shares and shared voting and dispositive power of 2,952,369 shares. |
|
(4) |
|
Based on information reported in Amendment No. 3 to Schedule 13G filed with the Securities
and Exchange Commission on February 16, 2010. Pursuant to the instructions in item 7 of
Schedule 13G, Fidelity Management & Research Company (Fidelity), 82 Devonshire Street,
Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR LLC and an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 2,843,905 shares of common stock as a result of acting as investment
adviser to various investment companies. |
21
|
|
|
(5) |
|
Based on information reported in Amendment No. 7 to Schedule 13G filed with the Securities
and Exchange Commission on February 12, 2010 by T. Rowe Price Associates, Inc. and T. Rowe
Price Small-Cap Value Fund, Inc. (collectively, Price Associates), in which T. Rowe Price
Associates, Inc. reported beneficial ownership of 2,241,400 shares of common stock with
respect to which T. Rowe Price Associates, Inc. has sole voting power of 166,500 shares and
sole dispositive power of 2,241,400 shares. T. Rowe Price Small-Cap Value Fund, Inc. reported
sole voting power of 2,068,500 of such shares and no dispositive power. |
|
(6) |
|
Includes 52,300 shares of common stock issuable upon exercise of options that are exercisable
on or within 60 days of March 19, 2010 and 11,440 shares of common stock underlying an equal
number of fully vested restricted stock units for which the individual has no voting or
dispositive power over such shares. |
|
(7) |
|
Represents 100,769 restricted shares for which the individual has voting rights, but does not
have dispositive power over such shares. |
|
(8) |
|
Includes 32,821 shares of common stock issuable upon exercise of options that are exercisable
on or within 60 days of March 19, 2010 and 5,581 shares of common stock underlying an equal
number of fully vested restricted stock units for which the individual has no voting or
dispositive power over such shares. |
|
(9) |
|
Includes 46,818 shares of common stock issuable upon exercise of options that are exercisable
on or within 60 days of March 19, 2010 and 6,422 shares of common stock underlying an equal
number of fully vested restricted stock units for which the individual has no voting or
dispositive power over such shares. |
|
(10) |
|
Includes 59,568 shares of common stock issuable upon exercise of options that are exercisable
on or within 60 days of March 19, 2010 and 4,744 shares of common stock underlying an equal
number of fully vested restricted stock units for which the individual has no voting or
dispositive power over such shares. |
|
(11) |
|
Includes 124,590 shares of common stock issuable upon exercise of options that are
exercisable on or within 60 days of March 19, 2010 and 7,028 shares of common stock underlying
an equal number of fully vested restricted stock units for which the individual has no voting
or dispositive power over such shares. |
|
(12) |
|
Includes 541,601 shares that are held indirectly by the Schuler Family Foundation, 567,800
shares that are held indirectly by three family trusts of his adult children and 65,000 shares
held indirectly by Mr. Schulers spouse. Mr. Schuler disclaims beneficial ownership of the
541,601 shares held indirectly by the Schuler Family Foundation, the 567,800 shares that are
held indirectly by three family trusts of his adult children and the 65,000 shares held by his
spouse, except to the extent of his pecuniary interest in such shares, if any. In addition,
includes 46,818 shares of common stock issuable upon exercise of options that are exercisable
on or within 60 days of March 19, 2010. Also includes 10,152 shares of common stock underlying
an equal number of fully vested restricted stock units for which Mr. Schuler has no voting or
dispositive power over such shares. |
|
(13) |
|
Includes 78,259 restricted shares for which the individual has sole voting rights but does
not have dispositive power over such shares. |
|
(14) |
|
Includes 51,319 shares of common stock issuable upon exercise of options that are exercisable
on or within 60 days of March 19, 2010 and 26,828 restricted shares for which the individual
has sole voting rights but does not have dispositive power over such shares. |
|
(15) |
|
Includes 108,224 shares of common stock issuable upon exercise of options that are
exercisable on or within 60 days of March 19, 2010 and 25,581 restricted shares for which the
individual has sole voting rights but does not have dispositive power over such shares. |
|
(16) |
|
Includes 72,146 shares of common stock issuable upon exercise of options that are exercisable
on or within 60 days of March 19, 2010 and 18,968 restricted shares for which the individual
has sole voting rights but does not have dispositive power over such shares. |
|
(17) |
|
All directors and executive officers as a group, including 594,604 shares of common stock
issuable upon exercise of options that are exercisable on or within 60 days of March 19, 2010,
and 45,367 shares of common stock underlying an equal number of fully vested restricted stock
units for which the individual has no voting or dispositive power over such shares. |
With the exception of information relating to stock options, restricted stock and restricted
stock units we issued, all information with respect to beneficial ownership of shares of common
stock referred to in this section is based on filings made by the respective beneficial owners with
the Securities and Exchange Commission or information the beneficial owners provided to us.
22
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview
The core objectives of our executive compensation program are to (1) support our mission,
values and corporate strategies by a pay for performance philosophy that provides incentives to
our executive officers and employees for support of these core principles; (2) align the interests
of management with those of our other stockholders; and (3) attract, retain and motivate high
quality executives. Towards these goals, our compensation program is designed with the following
principles:
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Provide an opportunity for the Company to communicate to our executive officers
and employees our performance expectations and priorities directly through the
selection of performance measures on which compensation is based, and calibrate payouts
with achievement of those performance measures; |
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Align pay such that management shares in value created from their efforts, and
the Companys compensation expense is correlated to its profitability and stockholder
returns; |
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Balance rewards appropriately between efforts and results; |
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Offer a competitive total compensation opportunity; and |
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Have a significant portion of total compensation paid to our executive officers
in equity and dependent upon the achievement of performance goals of the Company. |
Our compensation program focuses on both short and long-term results and is composed of three
key elements: (1) competitive base salaries, which reflect individual performance and
responsibilities, (2) annual cash incentive opportunities, which are a function of the performance
of the Company, and (3) longer-term stock-based incentive opportunities under our equity incentive
plans, generally in the form of stock options or restricted stock grants, which link the interests
of senior management with our other stockholders. Each of our compensation elements is designed to
simultaneously fulfill one or more of our core objectives.
Administration
The Compensation Committee of the Board of Directors administers the Companys executive
compensation programs and approves (or recommends to the Board of Directors for approval) salaries
of all officers, including those of the executive officers named in the Summary Compensation Table.
The Compensation Committee is responsible for reporting to the Board of Directors and administering
all other elements of executive compensation, including annual cash incentive, stock option and
restricted stock awards.
Compensation Plan Design and Key Elements Used to Achieve Compensation Objectives
The cash components of salary and annual incentive bonus are targeted to be moderate, yet
competitive in relation to salaries and annual incentive bonuses paid to officers in similar
positions in comparable companies. Our longer-term 2009 incentive stock-based awards were awarded
to each participating officer in the form of either (at the officers election): (i) 100% of the
award dollar value in non-qualified stock options; or (ii) a split of the award dollar value
between 75% of the award dollar value in non-qualified stock options and 25% of the award value in
time-based restricted stock. The dollar value of the awards are designed to be at competitive
levels at comparable companies based on the responsibilities of the executives. The vesting for the
stock options is over a four-year period with 50% vesting on the second anniversary of the grant
date and quarterly thereafter through the fourth anniversary of the grant date, and the vesting of
the time-based restricted stock is a cliff-vest on the fourth anniversary of the grant date. In
setting each executives compensation, the Compensation Committee also considers the scope of the
executives responsibilities, leadership abilities and effectiveness, and management experience. In
addition, the Compensation Committee incorporates flexibility into our programs and the assessment
process to respond to the evolving business environment. Total compensation therefore has
significant variability based on the Companys success in any given year and the Compensation
Committees assessment of such individuals contribution to that success.
23
Design of the compensation program for 2009 was completed without the assistance of an
independent outside compensation consultant, although in prior years the Compensation Committee has
engaged third party compensation consultants to assist in structuring and reviewing the Companys
compensation programs, including competitiveness of base salaries, short-term cash incentives, and
both short-term and long-term equity incentive programs.
Our Compensation Committee considers market data from a variety of sources, including the
annual Radford Global Life Sciences Survey and a comparative group of publicly-traded companies.
The Radford Global Life Sciences Survey provides data from participating companies with respect to
their compensation practices in numerous areas and with respect to various positions, including
senior management positions. We use this data in reviewing and assessing our executive compensation
policies. The companies in the public company peer group were selected based on various factors,
including industry, market capitalization and revenues. The companies in the peer group for 2009
include:
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Abaxis, Inc.
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Luminex Corporation |
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Celera Corporation
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Meridian Bioscience Inc. |
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Cepheid
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Merit Medical Systems, Inc. |
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Genomic Health, Inc.
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Myriad Genetics, Inc. |
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Genoptix, Inc.
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Orasure Technologies, Inc. |
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Illumina, Inc.
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Orchid Cellmark, Inc. |
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Immucor, Inc. |
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|
Our Compensation Committee utilizes management (and from time to time independent compensation
consultants) to gather such market data and provide appropriate analyses. The Compensation
Committee does not have a philosophy of setting compensation based on specific formulaic
benchmarking comparisons.
Base Salary
Base salaries are reviewed annually and are targeted to be moderate, yet competitive in
relation to salaries paid to officers in similar positions in comparable companies. With the
exception of the Chief Executive Officer, whose performance is reviewed directly by the Board of
Directors, performance of all other executive officers is reviewed annually by the Chief Executive
Officer in consultation with the Compensation Committee (and/or the Board of Directors).
In 2009, in connection with the setting of the base salary of our executive officers, the
Compensation Committee examined survey data for executives with similar responsibilities in
comparable companies in the medical device/diagnostics and biotechnology industries, using the 2008
Radford Global Life Sciences Survey, for companies between 150 and 500 employees projected forward
for 2009. The base salaries of each of our executive officers were set taking into account
comparable data for salaries relevant for their positions, and then modified to further take into
account our executive officers experience and skills.
Annual Cash Incentive Awards
Our annual cash incentive program provides the potential for receipt of competitive levels of
annual incentive cash compensation and is designed to reward senior management for their
contributions to annual corporate objectives. Under our annual cash incentive program, each
participating officer is entitled to receive a cash bonus based on achievement of certain corporate
goals in the particular fiscal year. Goals and payouts are calibrated to strike the appropriate
balance between being reasonably achievable, and thereby motivating executives, while targeting
improved performance. The balance is intended to ensure that the Company receives an appropriate
return on its annual incentive investment. The corporate performance goals are selected to require
sustained performance and results from senior management that are not easily achievable without
extra effort from each individual. Each eligible executives potential annual award under the
annual cash incentive program is expressed as a percentage of base salary earned by the individual
during the fiscal year.
Under our traditional annual cash incentive compensation program, the target bonus for our
Chief Executive Officer is 80% of salary, for all participating Senior Vice Presidents, 40% of
salary, and for all participating Vice Presidents, 30% of salary. In early 2009, the Compensation
Committee determined not to adopt a formal annual cash incentive program for 2009 and moved to a
discretionary program (as described below) in light of the then current business conditions
affecting the Company at that time, including the mild 2008/2009 influenza season, the change in
the Companys Chief Executive Officer and the Companys restructuring in the first quarter of 2009.
However, the Companys annual cash incentive program generally includes corporate objectives
consisting of revenue and EBITDA goals and other corporate non-financial goals with component
weighting among the objectives.
24
In the summer of 2009 and in light of the changed business conditions experienced by the
Company, including, among other matters, the potential impact of the H1N1 influenza pandemic, the
Compensation Committee implemented a discretionary award program applicable for 2009. On January
18, 2010 and with 2009 Company performance yielding record earnings and revenues, the Compensation
Committee approved the grant of discretionary cash awards to the Companys executive officers at
customary target levels of 80% of salary for our Chief Executive Officer (prorated based on time of
employment) and 40% of salary for each of our other participating Senior Vice Presidents.
Longer-Term Equity Incentive Awards
Longer-term equity-based incentive awards in the form of stock options and/or restricted stock
are intended to align the interests of management with those of the Companys other stockholders
and promote retention of our executives by using continued service as a requirement to receive the
value of the awards. The number of stock options and/or shares of restricted stock granted is
related to the individuals level of responsibility and allows executives to share in the value
they help create. Generally, the Compensation Committee does not consider an executives stock
holdings or outstanding equity awards in determining the number of equity awards to be granted. The
Compensation Committee believes that the Companys executive officers should be fairly compensated
each year relative to market pay levels of the Companys peer group. The Compensation Committee
views longer-term equity incentives as a primary compensation means for retaining executives.
In 2009 and as part of the 2009 long-term equity incentive program, each of our eligible named
executive officers received incentive stock-based awards in the form of either (at the officers
election): (i) 100% of the award dollar value in non-qualified stock options; or (ii) a split of
the award dollar value between 75% of the award dollar value in non-qualified stock options and 25%
of the award value in time-based restricted stock. The vesting for the stock options is over a
four-year period with 50% vesting on the second anniversary of the grant date and then 25% vesting
annually thereafter through the fourth anniversary of the grant date, and the vesting of the
time-based restricted stock is a cliff-vest on the fourth anniversary of the grant date. The stock
options have an exercise price equal to the closing price of the Companys common stock on the date
of grant as determined in accordance with the 2001 Plan.
In 2008 and as part of the 2008 long-term equity incentive program, each of our named
executive officers received a grant consisting entirely of stock options (the 2008 Stock
Options). The 2008 Stock Options vest over a period of four years with 50% vesting on the second
anniversary of the grant date and quarterly thereafter through the fourth anniversary of the grant
date. The 2008 Stock Options have an exercise price equal to the closing price of the Companys
common stock on the date of grant as determined in accordance with the 2001 Plan.
In 2007 and as part of the 2007 long-term equity incentive program, each of our named
executive officers received a grant consisting of entirely performance-based restricted stock (the
Performance Stock). The Performance Stock under the 2007 program vests at the end of a three-year
period if, and to the extent, the Company achieves three-year performance goals related to revenue
and EBITDA growth. Similar to the annual cash incentive program described above, the 2007 long-term
equity incentive program provided for payouts on a graduated basis upon achievement of certain
threshold performance measures with 100% payout upon achievement of target and a potential maximum
payout of 150% of target for goal achievement greater than 100%. In this regard, the Compensation
Committee determined that goal achievement had been met relative to the Performance Stock at a
graduated payout of 76.82% as a percentage of target.
Equity Ownership Guidelines
To further align the interests of our directors and executives with those of our other
stockholders, the Board of Directors adopted share ownership guidelines in 2004. Under these
guidelines, each non-employee director, the Chief Executive Officer, each Senior Vice President and
each Vice President is required to retain and hold 50% of the shares acquired under any equity
incentive award granted on or after March 19, 2004 (after subtracting shares sold to pay for option
exercise costs, and relevant federal and state taxes which are assumed to be at the highest
marginal tax rates). In addition, the foregoing share retention rule applies unless such director,
the Chief Executive Officer, Senior Vice President or Vice President beneficially owns shares with
a value at or in excess of the following share ownership guidelines:
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Chief Executive Officer3 times then-current annual base salary, |
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Senior Vice Presidents2 times then-current annual base salary, |
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Vice Presidents1 times then-current annual base salary, and |
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Non-employee directors2 times then-current annual cash retainer. |
25
The value of an individuals shares for purposes of the share ownership guidelines is deemed
to be the greater of the then-current fair market value of the stock, or the individuals cost
basis in the stock. Shares counted in calculating the share ownership guidelines include shares
beneficially owned outright, whether from open market purchases, purchases through the 1983
Employee Stock Purchase Plan, shares retained after option exercises, and shares of restricted
stock that have no further restrictions remaining. In addition, in the case of vested, unexercised,
in-the-money stock options, the in-the-money value of the stock options will be included in the
share ownership guidelines calculation. Directors, the Chief Executive Officer, Senior Vice
Presidents and Vice Presidents have five years from their election, hire or promotion to satisfy
the share ownership guidelines.
Employment and Severance Agreements
We have entered into change of control agreements with each of our executive officers. We have
entered into the change in control agreements in order to foster our executive officers
objectivity in making decisions with respect to any pending or threatened change in control
transaction and to alleviate certain risks and uncertainties with regard to our executive officers
financial and professional security that might be created by a pending or threatened change in
control transaction. In addition, as previously announced on January 5, 2009, Ms. Mason decided to
retire from the Company effective June 1, 2009, and she remained as the Companys President and
Chief Executive Officer through March 1, 2009. In connection with Ms. Masons retirement, we
entered into a retirement agreement with Ms. Mason on January 16, 2009. On January 20, 2009, the
Company also announced the appointment of Douglas C. Bryant as the Companys new President and
Chief Executive Officer. The details of the retirement agreement, change in control agreements and
any employment or severance arrangements entered into with our executive officers are provided
under Employment, Change in Control and Severance Arrangements below in this Proxy Statement.
Tax Deductibility of Compensation
Section 162(m) of the Code imposes a $1,000,000 limit on the amount that a public company may
deduct for compensation paid to any employee who is the companys CEO as of the close of the
taxable year and the next three most highly compensated executive officers, excluding the CEO and
CFO. This limitation does not apply to compensation that meets the requirements under Section
162(m) for qualifying performance-based compensation (i.e., compensation paid only if the
performance meets pre-established objective goals based on performance criteria approved by
stockholders). The Compensation Committee does not currently anticipate that the compensation of
any executive officer will materially exceed the limit on deductibility imposed by Section 162(m)
of the Code.
Stock Option Grant Practices
As described above, the Company uses stock options as part of its overall compensation
program. The stock option awards provide individuals with the right to purchase a specified number
of shares of the Companys stock at a specific price. The Company sets the exercise price of the
stock options that it awards at or above the closing price of the Companys stock on the grant
date. Accordingly, the option grant will have value to the individual only if he or she continues
in our service during the vesting period and then generally only if and to the extent that the
market price of the underlying shares of common stock appreciates over the option term.
Awards of equity-based compensation to our executive officers, such as options, are determined
and approved by the Board of Directors or the Compensation Committee. Equity grants are typically
made at the time of hire for executives and then annually as part of the overall executive
compensation review. The specific terms of the awards are determined based on the position of the
individual in the organization and as part of the applicable annual equity incentive program.
New hire grants are approved by the Board of Directors or the Compensation Committee when the
executives hire is approved, with the actual option grant issued on the first date of employment
and the exercise price of such options being set at the closing price of the Companys common stock
on that date. Annual performance grants made as part of the overall executive compensation program
are generally made as of the date of Board or Compensation Committee approval. This typically
occurs prior to the end of the first quarter, with grants effective on the date of Board or
Compensation Committee approval and at a price at or above the closing price on the grant date.
Options granted to the Company executives typically vest over a four-year period. Generally,
vesting ends when employment ends and the executive has 90 days following the end of employment
within which to exercise any vested stock options.
26
Perquisites and Other Benefits
The Compensation Committee believes that the named executive officers should participate in
the same benefit programs as the Companys other employees and that special executive perquisites
should be minimal. Consistent with this philosophy, the named executive officers participate in the
Companys employee benefit plans on the same terms as other employees. These plans include medical
and dental insurance, disability coverage, life insurance, the employee stock purchase plan and the
401(k) Plan.
Compensation of the Chief Executive Officer
Our Chief Executive Officer participates in the same executive compensation program provided
to our other executive officers and senior management as described above. The Compensation
Committees approach to setting compensation for the Chief Executive Officer is to be competitive
with comparable companies and to have a significant portion of total compensation depend upon the
achievement of performance goals for the Company.
As described above, the Compensation Committee determined not to adopt a formal annual cash
incentive plan for 2009, however, in the summer of 2009 and in light of the changed business
conditions experienced by the Company, the Compensation Committee implemented a discretionary award
program applicable for 2009. On January 18, 2010, the Compensation Committee approved the grant
of a discretionary cash award for our Chief Executive Officer at a customary target level of 80% of
his base salary or $328,438 (prorated for 2009 based on hire date).
Compensation of the Other Named Executive Officers
In March of 2009, the Compensation Committee determined not to increase base salaries for our
named executive officers for 2009.
As described above, the Compensation Committee determined not to adopt an annual cash
incentive plan for 2009, however, in the summer of 2009 and in light of the changed business
conditions experienced by the Company, the Compensation Committee implemented a discretionary award
program applicable for 2009. On January 18, 2010 and with 2009 Company performance yielding
record earnings and revenues, the Compensation Committee approved the grant of a discretionary cash
award for our named executive officers at a customary target level of 40% of base salary as
follows: $115,200, $103,376, $116,108 and $105,200 for Messrs. Bujarski, McLeod, Radak and
Tamerius, respectively.
Under the 2008 annual cash incentive program and based on the evaluation and assessment of the
Company relative to the 2008 goals, cash bonuses were not paid to the executive officers. In March
2008, cash bonus payments were made for 2007 performance as follows: $77,000, $71,867 (prorated)
and $50,513 for Messrs. Bujarski, Radak and Tamerius, respectively.
Compensation Committee Report
The Compensation Committee of the Board of Directors has reviewed the Compensation Discussion
and Analysis and discussed that analysis with management. Based on its review and discussions with
management, the Compensation Committee recommended to our Board of Directors that the Compensation
Discussion and Analysis be included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2009 and this Proxy Statement. This report is provided by the following independent
directors, who comprise the Compensation Committee:
Compensation Committee
Thomas D. Brown (Chairman)
Mary Lake Polan, M.D., Ph.D., M.P.H.
Jack W. Schuler
This Compensation Committee Report does not constitute soliciting material and should not be deemed
filed or incorporated by reference into any Company filing under the Securities Act of 1933, as
amended (the Securities Act), or the Exchange Act, except to the extent the Company specifically
incorporates this report.
27
Summary Compensation Table
The following table sets forth information relating to fiscal years 2009, 2008 and 2007
compensation of our Chief Executive Officer, Chief Financial Officer, and three other most highly
paid persons serving as executive officers as of December 31, 2009 and our former Chief Executive
Officer who retired from the Company effective March 1, 2009.
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Non-Equity |
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Stock |
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Option |
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Incentive Plan |
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All Other |
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Salary |
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|
Bonus |
|
|
Awards |
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|
Awards |
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|
Compensation |
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|
Compensation |
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|
|
Name and Principal Position |
|
Year |
|
|
($)(1) |
|
|
($)(2) |
|
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($)(3) |
|
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($)(4) |
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($)(5) |
|
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($)(6) |
|
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Total($) |
|
Douglas C. Bryant(7) |
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2009 |
|
|
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398,077 |
|
|
|
328,438 |
|
|
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1,236,000 |
|
|
|
4,585,275 |
|
|
|
|
|
|
|
390,446 |
|
|
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6,938,236 |
|
President and CEO |
|
|
2008 |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caren L. Mason(8) |
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|
2009 |
|
|
|
197,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,135 |
|
|
|
200,963 |
|
President and CEO |
|
|
2008 |
|
|
|
479,340 |
|
|
|
|
|
|
|
|
|
|
|
728,138 |
|
|
|
|
|
|
|
8,066 |
|
|
|
1,215,544 |
|
|
|
|
2007 |
|
|
|
464,538 |
|
|
|
|
|
|
|
1,102,236 |
|
|
|
|
|
|
|
643,800 |
|
|
|
7,916 |
|
|
|
2,218,490 |
|
John M. Radak, |
|
|
2009 |
|
|
|
290,270 |
|
|
|
116,108 |
|
|
|
|
|
|
|
294,240 |
|
|
|
|
|
|
|
33,241 |
|
|
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733,859 |
|
Chief
Financial Officer |
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|
2008 |
|
|
|
288,295 |
|
|
|
|
|
|
|
|
|
|
|
404,625 |
|
|
|
|
|
|
|
32,858 |
|
|
|
725,778 |
|
|
|
|
2007 |
|
|
|
248,128 |
|
|
|
|
|
|
|
192,996 |
|
|
|
800,000 |
|
|
|
71,867 |
|
|
|
82,598 |
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|
|
1,395,589 |
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Robert J. Bujarski, |
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|
2009 |
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|
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288,000 |
|
|
|
115,200 |
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|
|
72,004 |
|
|
|
218,956 |
|
|
|
|
|
|
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6,864 |
|
|
|
701,024 |
|
SVP, General Counsel |
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|
2008 |
|
|
|
255,261 |
|
|
|
|
|
|
|
1,160,358 |
|
|
|
381,500 |
|
|
|
|
|
|
|
7,399 |
|
|
|
1,804,518 |
|
and Corporate Secretary(9) |
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|
2007 |
|
|
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269,723 |
|
|
|
|
|
|
|
791,099 |
|
|
|
|
|
|
|
77,000 |
|
|
|
7,254 |
|
|
|
1,145,076 |
|
Scot M. McLeod, |
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|
2009 |
|
|
|
258,440 |
|
|
|
103,376 |
|
|
|
64,609 |
|
|
|
196,480 |
|
|
|
|
|
|
|
7,221 |
|
|
|
630,126 |
|
SVP, Operations |
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|
2008 |
|
|
|
256,528 |
|
|
|
|
|
|
|
|
|
|
|
249,563 |
|
|
|
|
|
|
|
7,461 |
|
|
|
513,552 |
|
|
|
|
2007 |
|
|
|
237,498 |
|
|
|
|
|
|
|
129,240 |
|
|
|
343,386 |
|
|
|
69,580 |
|
|
|
7,266 |
|
|
|
786,970 |
|
John D. Tamerius |
|
|
2009 |
|
|
|
263,000 |
|
|
|
105,200 |
|
|
|
|
|
|
|
266,597 |
|
|
|
|
|
|
|
92,471 |
|
|
|
727,268 |
|
SVP, Clinical/Regulatory |
|
|
2008 |
|
|
|
249,792 |
|
|
|
|
|
|
|
|
|
|
|
528,052 |
|
|
|
|
|
|
|
87,262 |
|
|
|
865,106 |
|
|
|
|
2007 |
|
|
|
238,548 |
|
|
|
|
|
|
|
124,344 |
|
|
|
|
|
|
|
50,513 |
|
|
|
80,514 |
|
|
|
493,919 |
|
|
|
|
(1) |
|
The amounts shown include cash compensation the executive officers earned or which was
deferred pursuant to our 401(k) Plan. This also includes payouts for accrued vacation to Ms.
Mason in the amount of $72,128 upon her departure from the Company. |
|
(2) |
|
For fiscal year 2009, the Compensation Committee determined not to adopt a formal annual cash
incentive program and instead implemented a discretionary award program. The Compensation
Committee approved the grant of discretionary cash awards to the Companys executive officers
at customary target levels of 80% of salary for Mr. Bryant (prorated based on time of
employment) and 40% of salary for Mr. Radak, Mr. Bujarski, Mr. McLeod and Dr. Tamerius. Cash
payments were made in February 2010, following the year in which the bonuses were earned. |
|
(3) |
|
This column represents the grant date fair value of performance-based and service-based
restricted stock awards granted during fiscal years 2009, 2008 and 2007. The performance
stock granted is subject to performance conditions, as described under Longer-Term Equity
Incentive Awards in the Compensation Discussion and Analysis section. Restricted stock
awards are valued based on the closing share price on the date of grant less the per share
purchase price paid by the grantee or at a later date if specific performance criteria have
not been communicated until such later date. For additional information with respect to the
2009 grants, refer to Note 5 of our financial statements in our Annual Report on Form 10-K for
the year ended December 31, 2009, as filed with the Securities and Exchange Commission. See
the Grants of Plan-Based Awards Table for information on stock awards granted in 2009. |
|
(4) |
|
This column represents the grant date fair value of stock options granted during fiscal years
2009, 2008 and 2007. The grant date fair value of option awards is determined using the
Black-Scholes option pricing model. For additional information on the valuation assumptions
with respect to the 2009 grants, refer to Note 5 of our financial statements in our Annual
Report on Form 10-K for the year ended December 31, 2009. See the Grants of Plan-Based
Awards Table for information on options granted in 2009. |
|
(5) |
|
For fiscal year 2007, this column includes cash payments earned in accordance with the
Companys annual cash incentive program. |
28
|
|
|
(6) |
|
During the year ended December 31, 2009, (a) we made contributions under our 401(k) Plan for
Mr. Bryant, Ms. Mason, Mr. Radak, Mr. Bujarski, Mr. McLeod and Dr. Tamerius, and (b) we funded
a group term life insurance plan providing life insurance in an amount equal to two times the
executive officers annual salary, a benefit that is provided to all employees. Mr. Bryant
also received an inducement bonus of $382,710 in February 2009 per the terms of his employment
agreement. Dr. Tamerius also reported gross income of $81,548 associated with reimbursement
for commuting and housing costs while he continues to live in San Francisco. In addition, Mr.
Radak was reimbursed $25,000 in connection with educational expenses and receipt of his MBA in
2008. Amounts related to contributions under our 401(k) Plan, life insurance and other
compensation for Mr. Bryant, Ms. Mason, Mr. Radak, Mr. Bujarski, Mr. McLeod and Dr. Tamerius
were as follows: |
|
|
Components of All Other Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Term Life |
|
|
|
|
401(k) |
|
Insurance Premiums |
|
|
|
|
Contributions |
|
Compensation |
|
Other |
|
|
($) |
|
($) |
|
($) |
Douglas C. Bryant |
|
|
6,750 |
|
|
|
986 |
|
|
|
382,710 |
|
Caren L. Mason |
|
|
2,213 |
|
|
|
922 |
|
|
|
|
|
John M. Radak |
|
|
7,245 |
|
|
|
996 |
|
|
|
25,000 |
|
Robert J. Bujarski |
|
|
6,206 |
|
|
|
658 |
|
|
|
|
|
Scot M. McLeod |
|
|
6,635 |
|
|
|
586 |
|
|
|
|
|
John D. Tamerius |
|
|
6,980 |
|
|
|
3,943 |
|
|
|
81,548 |
|
|
|
|
(7) |
|
Mr. Bryant became a Board Director in February 2009 and his role as President and CEO was
effective March 1, 2009. See details of this agreement described in the Employment, Change in
Control and Severance Arrangements section of this Proxy Statement. |
|
(8) |
|
As previously announced on January 5, 2009, Ms. Mason notified the Company of her intention
to resign, effective June 1, 2009. Ms. Mason continued in her capacity as President and CEO as
well as a Board Director until March 1, 2009, and from March 1, 2009 through June 1, 2009, Ms.
Mason served as a special advisor to the CEO. Due to Ms. Masons retirement in 2009, her
unvested equity awards granted in 2007 and 2008 were forfeited. |
|
(9) |
|
Mr. Bujarski was re-appointed as the Companys Senior Vice President, General Counsel and
Corporate Secretary, effective June 9, 2008. Mr. Bujarskis unvested equity awards granted in
2007 were forfeited as a result of his resignation from the Company and prior to his
re-appointment on June 9, 2008. |
29
Grants of Plan-Based Awards in Fiscal Year 2009
The following table sets forth all plan-based awards granted to our named executive officers
during fiscal year 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Awards: |
|
|
Exercise |
|
|
Grant Date |
|
|
|
|
|
|
|
Awards: |
|
|
Number of |
|
|
or Base |
|
|
Fair Value |
|
|
|
|
|
|
|
Number of |
|
|
Securities |
|
|
Price of |
|
|
of Stock |
|
|
|
|
|
|
|
Shares of |
|
|
Underlying |
|
|
Option |
|
|
and Option |
|
|
|
|
|
|
|
Stock |
|
|
Options |
|
|
Awards |
|
|
Awards |
|
Name |
|
Grant Date |
|
|
(#)(1) |
|
|
(#)(2) |
|
|
($/sh)(3) |
|
|
(4) |
|
Douglas C. Bryant |
|
|
2/2/2009 |
|
|
|
100,000 |
|
|
|
700,000 |
|
|
|
12.36 |
|
|
|
5,023,000 |
|
President and CEO |
|
|
4/10/2009 |
|
|
|
|
|
|
|
205,212 |
|
|
|
8.50 |
|
|
|
798,275 |
|
John M. Radak |
|
|
4/10/2009 |
|
|
|
|
|
|
|
75,640 |
|
|
|
8.50 |
|
|
|
294,240 |
|
Chief Financial
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Bujarski |
|
|
4/10/2009 |
|
|
|
8,471 |
|
|
|
56,287 |
|
|
|
8.50 |
|
|
|
290,960 |
|
SVP, General
Counsel and
Corp. Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scot M. McLeod |
|
|
4/10/2009 |
|
|
|
7,601 |
|
|
|
50,509 |
|
|
|
8.50 |
|
|
|
261,089 |
|
SVP, Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Tamerius |
|
|
4/10/2009 |
|
|
|
|
|
|
|
68,534 |
|
|
|
8.50 |
|
|
|
266,597 |
|
SVP, Clinical/
Regulatory |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This column shows the number of time-based stock awards granted in 2009 to the named
executive officers. The stock award for Mr. Bryant vests ratably over four years, with one
quarter of the award vesting on each anniversary of the grant date. The stock awards for Mr.
Bujarski and Mr. McLeod have a four-year cliff vesting provision, the entire stock award vests
on the fourth anniversary of the grant date. |
|
(2) |
|
This column shows the number of stock options granted in 2009 to the named executive
officers. These options vest and become exercisable ratably over four years, with one half of
the award vesting on the two-year anniversary of the grant date and the remaining vesting
annually thereafter through the remaining four-year vesting period. |
|
(3) |
|
This column shows the exercise price for the stock options granted, which was the closing
price of our common stock on the date of grant. |
|
(4) |
|
This column shows the full grant date fair value of stock awards and stock options under ASC
Topic 718 granted to the named executive officers in 2009. For stock awards, fair value is
calculated using the closing price of our common stock on the grant date. The grant date fair
value is the amount that the Company would expense in its financial statements over the
awards vesting schedule, unless the named executive leaves the Company. For stock options,
fair value is calculated using the Black-Scholes value on the grant date and is the amount
that the Company would expense in its financial statements over the awards vesting schedule,
unless the named executive leaves the Company. For additional information on the valuation
assumptions, refer to Note 5 of our financial statements in our Annual Report on Form 10-K for
the year ended December 31, 2009. |
30
Outstanding Equity Awards at 2009 Fiscal Year-End
The following table provides information on the holdings of stock option and restricted stock
awards by the named executive officers as of December 31, 2009. This table includes unexercised and
unvested stock options, unvested restricted stock awards, or restricted stock awards with
performance conditions that have not yet been satisfied. Each equity grant is shown separately for
each named executive officer. The vesting schedule for each grant is shown following this table,
based on the option or stock award grant date. The market value of the stock awards is based on the
closing market price of our common stock as of December 31, 2009, which was $13.78. For additional
information about the option awards and stock awards, see the description of Longer-term Equity
Incentive Awards in the Compensation Discussion and Analysis section.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1) |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
Incentive Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
|
Market or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
Number of |
|
|
Payout Value |
|
|
|
|
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Value of |
|
|
Unearned |
|
|
of Unearned |
|
|
|
|
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
Shares or |
|
|
Shares, Units |
|
|
Shares, Units |
|
|
|
|
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units of |
|
|
Units of |
|
|
or Other |
|
|
or Other |
|
|
|
|
|
|
|
Unexercised |
|
|
Unexercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Stock |
|
|
Rights That |
|
|
Rights That |
|
|
|
Option |
|
|
Options |
|
|
Options |
|
|
Option |
|
|
Option |
|
|
|
|
|
|
That Have |
|
|
That Have |
|
|
Have Not |
|
|
Have Not |
|
|
|
Grant |
|
|
Exercisable |
|
|
Unexercisable |
|
|
Exercise |
|
|
Expiration |
|
|
Stock Award |
|
|
Not Vested |
|
|
Not Vested |
|
|
Vested |
|
|
Vested |
|
Name |
|
Date |
|
|
(#) |
|
|
(#) |
|
|
Price($) |
|
|
Date |
|
|
Grant Date |
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
Douglas C. Bryant |
|
|
2/2/2009 |
|
|
|
|
|
|
|
700,000 |
|
|
|
12.36 |
|
|
|
2/2/2019 |
|
|
|
2/2/2009 |
(2) |
|
|
100,000 |
|
|
|
1,378,000 |
|
|
|
|
|
|
|
|
|
President and CEO |
|
|
4/10/2009 |
|
|
|
|
|
|
|
205,212 |
|
|
|
8.50 |
|
|
|
4/10/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Radak |
|
|
2/1/2007 |
|
|
|
68,750 |
|
|
|
31,250 |
|
|
|
13.42 |
|
|
|
2/1/2017 |
|
|
|
3/30/2007 |
(3) |
|
|
16,083 |
|
|
|
221,624 |
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
|
|
4/7/2008 |
|
|
|
|
|
|
|
53,950 |
|
|
|
16.77 |
|
|
|
4/7/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/10/2009 |
|
|
|
|
|
|
|
75,640 |
|
|
|
8.50 |
|
|
|
4/10/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Bujarski |
|
|
6/9/2008 |
|
|
|
|
|
|
|
50,000 |
|
|
|
17.38 |
|
|
|
6/9/2018 |
|
|
|
6/9/2008 |
(4) |
|
|
45,000 |
|
|
|
620,100 |
|
|
|
|
|
|
|
|
|
SVP, General Counsel |
|
|
4/10/2009 |
|
|
|
|
|
|
|
56,287 |
|
|
|
8.50 |
|
|
|
4/10/2019 |
|
|
|
6/9/2008 |
(4) |
|
|
15,364 |
|
|
|
211,716 |
|
|
|
|
|
|
|
|
|
and Corporate Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/10/2009 |
(5) |
|
|
8,471 |
|
|
|
116,730 |
|
|
|
|
|
|
|
|
|
Scot M. McLeod |
|
|
3/19/2004 |
|
|
|
2,344 |
|
|
|
2,344 |
|
|
|
7.50 |
|
|
|
3/19/2014 |
|
|
|
3/30/2007 |
(3) |
|
|
10,770 |
|
|
|
148,411 |
|
|
|
|
|
|
|
|
|
SVP, Operations |
|
|
3/21/2006 |
|
|
|
7,486 |
|
|
|
688 |
|
|
|
12.23 |
|
|
|
3/21/2016 |
|
|
|
4/10/2009 |
(5) |
|
|
7,601 |
|
|
|
104,742 |
|
|
|
|
|
|
|
|
|
|
|
|
7/2/2007 |
|
|
|
21,966 |
|
|
|
13,181 |
|
|
|
17.92 |
|
|
|
7/2/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/7/2008 |
|
|
|
|
|
|
|
33,275 |
|
|
|
16.77 |
|
|
|
4/7/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/10/2009 |
|
|
|
|
|
|
|
50,509 |
|
|
|
8.50 |
|
|
|
4/10/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Tamerius |
|
|
2/16/2001 |
|
|
|
3,000 |
|
|
|
|
|
|
|
4.81 |
|
|
|
2/16/2011 |
|
|
|
3/30/2007 |
(3) |
|
|
10,362 |
|
|
|
142,788 |
|
|
|
|
|
|
|
|
|
SVP, Clinical/Regulatory |
|
|
2/22/2002 |
|
|
|
5,625 |
|
|
|
|
|
|
|
5.70 |
|
|
|
2/22/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2003 |
|
|
|
9,000 |
|
|
|
|
|
|
|
3.19 |
|
|
|
2/26/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/19/2004 |
|
|
|
11,719 |
|
|
|
|
|
|
|
7.50 |
|
|
|
3/19/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/21/2006 |
|
|
|
10,312 |
|
|
|
688 |
|
|
|
12.23 |
|
|
|
3/20/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/7/2008 |
|
|
|
|
|
|
|
26,633 |
|
|
|
16.77 |
|
|
|
4/7/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/10/2008 |
|
|
|
12,324 |
|
|
|
36,971 |
|
|
|
15.71 |
|
|
|
11/10/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/10/2009 |
|
|
|
|
|
|
|
68,534 |
|
|
|
8.50 |
|
|
|
4/10/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Stock options are service-based and vest over four years. For stock options granted prior
to 2008, the first 25% vests on the first anniversary of grant and the remaining options vest
quarterly in equal increments over the remainder of the four-year vesting period. For stock
options granted in 2008, the first 50% vest on the second anniversary of the grant date and
the remaining options vest quarterly in equal increments over the remainder of the four-year
vesting period. For stock options granted in 2009, the first 50% vest on the second
anniversary of the grant date and the remaining options vest annually thereafter through the
remaining four-year vesting period. |
|
(2) |
|
Represents restricted stock awards granted to Mr. Bryant upon his appointment as the
Companys President and CEO. The stock award vests ratably over four years, with one quarter
of the award vesting on each anniversary of the grant date. |
|
(3) |
|
The restricted stock awards granted on March 30, 2007 were subject to specified performance
objectives related to revenue and EBITDA growth, which were measured at December 31, 2009.
The shares were released to the executives on March 30, 2010. The number of shares used in
the calculation is the actual payout of shares based upon the performance measurements. |
|
(4) |
|
Represents restricted stock awards granted to Mr. Bujarski upon his re-appointment as the
Companys Senior Vice President, General Counsel and Corporate Secretary effective June 9,
2008. The stock award of 45,000 shares is a time-based restricted stock award, with a
three-year cliff vesting provision. The stock award of 15,364 shares is a performance-based
restricted stock award, with vesting subject to the same performance criteria established for
the March 30, 2007 restricted stock award. The 15,364 shares were released to Mr. Bujarski on
March 30, 2010. The number of shares used in the calculation is the actual payout of shares
based upon the performance measurements. |
|
(5) |
|
Represents restricted stock awards granted to Mr. Bujarski and Mr. McLeod. The stock awards
have a four-year cliff vesting provision, the entire stock award vests on the fourth
anniversary of the grant date. |
31
Option Exercises and Stock Vested in Fiscal Year 2009
The following table sets forth stock options that were exercised by, and restricted stock that
vested for, the named executive officers during fiscal year 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of |
|
|
Value Realized |
|
|
Number of |
|
|
Value Realized |
|
|
|
Shares Acquired |
|
|
on Exercise |
|
|
Shares Acquired |
|
|
on Vesting |
|
Name |
|
on Exercise (#) |
|
|
($)(5) |
|
|
on Vesting (#) |
|
|
($)(6) |
|
Douglas C. Bryant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and CEO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caren L. Mason |
|
|
12,512 |
|
|
|
78,951 |
|
|
|
10,800 |
|
|
|
91,584 |
|
President and CEO(1) |
|
|
100,000 |
|
|
|
659,000 |
|
|
|
38,750 |
|
|
|
461,125 |
|
|
|
|
1,884 |
|
|
|
14,658 |
|
|
|
19,375 |
|
|
|
230,563 |
|
|
|
|
48,116 |
|
|
|
374,342 |
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
81,900 |
|
|
|
|
|
|
|
|
|
|
|
|
3,269 |
|
|
|
6,636 |
|
|
|
|
|
|
|
|
|
|
|
|
2,044 |
|
|
|
4,170 |
|
|
|
|
|
|
|
|
|
|
|
|
57,488 |
|
|
|
613,397 |
|
|
|
|
|
|
|
|
|
John M. Radak |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Bujarski |
|
|
|
|
|
|
|
|
|
|
2,400 |
|
|
|
20,352 |
|
SVP, General Counsel and Corporate
Secretary(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scot M. McLeod |
|
|
|
|
|
|
|
|
|
|
2,400 |
|
|
|
20,352 |
|
SVP, Operations(3) |
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
89,250 |
|
|
|
|
|
|
|
|
|
|
|
|
3,750 |
|
|
|
44,625 |
|
John D. Tamerius |
|
|
|
|
|
|
|
|
|
|
2,400 |
|
|
|
20,352 |
|
SVP, Clinical/Regulatory(4) |
|
|
|
|
|
|
|
|
|
|
3,750 |
|
|
|
44,625 |
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
89,250 |
|
|
|
|
(1) |
|
During 2009, restrictions lapsed with respect to 68,925 shares of restricted stock held by
Ms. Mason. The market price for our common stock on the dates of vesting ranged from $8.48 to
$11.90 per share. As previously announced, Ms. Mason resigned as our President and Chief Executive
Officer, as well as a Board Director, effective March 1, 2009. From March 1, 2009 through June 1,
2009, Ms. Mason served as a special advisor to the CEO. Pursuant to the terms of her retirement
agreement, Ms. Masons outstanding equity awards continued to vest through her retirement date of
June 1, 2009 at which time all unvested equity awards granted in 2007 and 2008 were forfeited. |
|
(2) |
|
During 2009, restrictions lapsed with respect to 2,400 shares of restricted stock held by Mr.
Bujarski. The market price for our common stock on the date of vesting was $8.48 per share. |
|
(3) |
|
During 2009, restrictions lapsed with respect to 13,650 shares of restricted stock held by
Mr. McLeod. The market price for our common stock on the dates of vesting ranged from $8.48 to
$11.90 per share. |
|
(4) |
|
During 2009, restrictions lapsed with respect to 13,650 shares of restricted stock held by
Dr. Tamerius. The market price for our common stock on the dates of vesting ranged from $8.48
to $11.90 per share. |
|
(5) |
|
The value realized on exercise equals the intrinsic value of the exercise which is the gain
realized in the difference from the market price of the shares sold and the exercise price of
the shares purchased. |
|
(6) |
|
The value realized on vesting equals the closing price of the Companys common stock on the
vesting date (the date the restrictions lapsed) multiplied by the number of shares with
respect to which restrictions lapsed on such date. |
Employment, Change in Control and Severance Arrangements
On January 20, 2009, we announced the appointment of Douglas C. Bryant as our new President
and Chief Executive Officer. Mr. Bryants employment with us and his service as a member of the
Board of Directors commenced on
February 2, 2009. Ms. Mason continued in her capacity as our President and Chief Executive
Officer as well as a Board Director until March 1, 2009, when Mr. Bryants appointment as President
and Chief Executive Officer became effective.
32
In connection with the appointment of Mr. Bryant as our President and Chief Executive Officer,
on January 16, 2009, Mr. Bryant entered into an employment agreement with us. Mr. Bryants
employment agreement sets forth the terms of his employment with us and provides for, among other
matters: (i) a minimum base salary of $450,000 per annum, subject to adjustment upward by the Board
of Directors or its Compensation Committee; (ii) an annual cash incentive bonus based upon
attainment of performance goals set by the Board of Directors or its Compensation Committee with a
target of at least 80% of base salary and a maximum opportunity of up to 120% of base salary; (iii)
an inducement bonus of $200,000 with a gross up for taxes, payable during his first week of
employment and with a claw-back provision in the event of voluntary termination by Mr. Bryant or
termination for cause (as defined in the employment agreement) within one year of commencement of
employment; (iv) non-qualified stock options to purchase up to 700,000 shares of the Companys
common stock; and (v) 100,000 shares of time-based restricted stock.
Under his employment agreement, Mr. Bryant is also eligible to receive up to an additional
$100,000 payment with a gross up for taxes in connection with actual moving costs, brokerage
commissions and other expenses of selling Mr. Bryants existing home in Texas and expenses of
purchasing a home in California (other than its purchase price and loan interest and points) in the
event such actual expenses are in excess of $200,000 and upon the mutual agreement of Mr. Bryant
and the Board or its Compensation Committee. The amount of the excess relocation payment shall be
equal to the amount of such actual costs and expenses in excess of $200,000 and is also subject to
a claw-back provision in the event of voluntary termination by Mr. Bryant or termination for
cause within one year of receipt of any excess relocation payment.
Under his employment agreement, Mr. Bryant is an at-will employee, which means that either
Mr. Bryant or we may terminate his employment at any time for any reason. However, and except in
the context of a change in control, if Mr. Bryants employment with us is terminated without cause
or he terminates his employment for good reason (as defined in the employment agreement) and
thereafter delivers and does not revoke a general release, he is entitled to a severance payment
equal to eighteen (18) months of his then-current base salary and payment of health insurance
premiums for a period of eighteen (18) months following termination. Amounts payable to Mr. Bryant
upon a change in control of the Company are generally governed by his change in control agreement,
dated as of January 16, 2009, which is described below.
Messrs. Radak, Bujarski, McLeod and Tamerius are each at will employees of the Company with
compensation arrangements that include, among other matters: (i) a minimum base salary, currently
of $300,429, $302,400, $268,778 and $273,520 per annum, respectively and (ii) eligibility for an
annual bonus in accordance with the Companys bonus plan. In addition, except in the context of a
change of control, if we terminate Mr. Bujarskis or Mr. Radaks employment without cause, such
officer would be entitled to a severance payment equal to six months of his annual salary.
Each of Mr. Bryant, Mr. Radak, Mr. Bujarski, Mr. McLeod and Dr. Tamerius has entered into a
change in control agreement with us, which provides for the payment of severance benefits in the
event of termination of employment in connection with a change in control of the Company. The
severance benefits are payable to Mr. Bryant, Mr. Radak, Mr. Bujarski, Mr. McLeod and Dr. Tamerius
if their respective employment with us is terminated within 30 days prior to or three years
following a change in control, unless terminated for cause or the termination is the result of a
voluntary resignation (which does not include resignations stemming from a material adverse change
in responsibilities, status, compensation, authority or location of work place) or their death or
disability.
The severance benefits under the change in control agreements generally consist of a lump sum
cash payment equal to two times the sum of (i) such executives highest annual salary rate within
the three year period ending on the date of termination plus (ii) an amount equal to the annualized
average of all bonuses paid to the executive during the two-year period immediately before the date
of termination. In addition, the change in control agreements provide for: payment of $25,000 to
help defray the legal, tax and accounting fees and other costs associated with transitional
matters; continued coverage for two years under our group medical insurance, group dental
insurance, group-term life insurance and disability insurance programs unless and to the extent the
executive obtains concurrent coverage through another program in which case our coverage will be
terminated or reduced as applicable; and immediate vesting and exercisability of any and all
unvested stock options and restricted stock of the executive (unless previously waived or otherwise
expressly agreed to by the executive).
33
Potential Post-Employment Payments
As described above, our named executive officers have employment, severance and/or change of
control agreements with us. The table below illustrates the compensation that would be payable by
the Company to each named executive officer in the event of a change in control of the Company or a
termination of the named executive officers employment with the Company for various described
reasons, sometimes referred to in this section as a triggering event. In accordance with
applicable rules of the Securities and Exchange Commission, the following discussion assumes:
|
|
|
that the triggering event in question, the death, disability, change in control
or termination occurred on January 1, 2010, the Friday prior to the last day of our
2009 fiscal year end which fell on Sunday January 3, 2010; and |
|
|
|
|
the calculations provided below are based on the closing market price of our
common stock as of December 31, 2009, which was $13.78. |
In addition, in connection with any actual termination of employment, the Board of Directors
or the Compensation Committee may determine to enter into an agreement providing additional
benefits or amounts, or altering the terms of benefits described below, as deemed appropriate by
the Compensation Committee or the Board of Directors. The actual amounts that would be paid upon a
named executive officers termination of employment can only be determined at the time of such
executives separation from the Company. Due to the number of factors that affect the nature and
amount of any benefits provided upon the events discussed below, any actual amounts paid or
distributed may be higher or lower than reported below. Factors that could affect these amounts
include our stock price at the time of termination and determinations by our Board of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause |
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
or Voluntary, |
|
Involuntary, |
|
Control |
Name and |
|
|
|
Voluntary |
|
|
|
|
|
Good Reason |
|
For Cause |
|
(Qualifying |
Principal |
|
Potential Executive Benefits |
|
Termination |
|
Retirement |
|
Termination |
|
Termination |
|
Termination) |
Position |
|
and Payments |
|
Total ($) |
|
Total ($) |
|
Total ($) |
|
Total ($) |
|
Total $ |
Douglas C. Bryant
|
|
Base Salary(1)
|
|
|
|
|
|
|
|
|
|
|
675,000 |
|
|
|
|
|
|
|
900,000 |
|
President & CEO
|
|
Short-term Incentive Bonus(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
328,438 |
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,378,000 |
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,077,519 |
|
|
|
Healthcare, Life and
Disability(5)
|
|
|
|
|
|
|
|
|
|
|
30,365 |
|
|
|
|
|
|
|
40,486 |
|
|
|
Accrued Vacation Pay(6)
|
|
|
31,985 |
|
|
|
31,985 |
|
|
|
31,985 |
|
|
|
31,985 |
|
|
|
31,985 |
|
|
|
Other Payments(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
John M. Radak
|
|
Base Salary(1)
|
|
|
|
|
|
|
|
|
|
|
145,135 |
|
|
|
|
|
|
|
580,540 |
|
Chief Financial Officer
|
|
Short-term Incentive Bonus(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,108 |
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221,624 |
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
410,629 |
|
|
|
Healthcare, Life and
Disability(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,832 |
|
|
|
Accrued Vacation Pay(6)
|
|
|
16,880 |
|
|
|
16,880 |
|
|
|
16,880 |
|
|
|
16,880 |
|
|
|
16,880 |
|
|
|
Other Payments(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
Robert J. Bujarski
|
|
Base Salary(1)
|
|
|
|
|
|
|
|
|
|
|
144,000 |
|
|
|
|
|
|
|
576,000 |
|
SVP, General Counsel and Corporate Secretary
|
|
Short-term Incentive Bonus(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,200 |
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
948,546 |
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
297,195 |
|
|
|
Healthcare, Life and
Disability(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,112 |
|
|
|
Accrued Vacation Pay(6)
|
|
|
34,970 |
|
|
|
34,970 |
|
|
|
34,970 |
|
|
|
34,970 |
|
|
|
34,970 |
|
|
|
Other Payments(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause |
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
or Voluntary, |
|
Involuntary, |
|
Control |
Name and |
|
|
|
Voluntary |
|
|
|
|
|
Good Reason |
|
For Cause |
|
(Qualifying |
Principal |
|
Potential Executive Benefits |
|
Termination |
|
Retirement |
|
Termination |
|
Termination |
|
Termination) |
Position |
|
and Payments |
|
Total ($) |
|
Total ($) |
|
Total ($) |
|
Total ($) |
|
Total $ |
Scot M. McLeod
|
|
Base Salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
516,880 |
|
SVP, Operations
|
|
Short-term Incentive Bonus(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,376 |
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
253,153 |
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
267,754 |
|
|
|
Healthcare, Life and
Disability(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,065 |
|
|
|
Accrued Vacation Pay(6)
|
|
|
21,283 |
|
|
|
21,283 |
|
|
|
21,283 |
|
|
|
21,283 |
|
|
|
21,283 |
|
|
|
Other Payments(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
John D. Tamerius
|
|
Base Salary(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
526,000 |
|
SVP, Clinical/Regulatory
|
|
Short-term Incentive Bonus(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,200 |
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142,788 |
|
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested and accelerated(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
362,926 |
|
|
|
Healthcare, Life and
Disability(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,643 |
|
|
|
Accrued Vacation Pay(6)
|
|
|
35,870 |
|
|
|
35,870 |
|
|
|
35,870 |
|
|
|
35,870 |
|
|
|
35,870 |
|
|
|
Other Payments(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
(1) |
|
Payable in one lump sum upon termination. |
|
(2) |
|
This amount represents two times the average bonus amounts earned for 2009 and 2008. The 2009
bonus was paid out in February 2010 and there was no bonus earned in 2008. This amount is
payable in one lump sum upon termination. |
|
(3) |
|
This represents the value of restricted stock awards upon acceleration of all unvested stock
awards granted to the executives. The officers have waived their right to automatic
acceleration of the restrictions relating to certain restricted shares; however, the
restrictions on such shares may be accelerated at the discretion of the Board of Directors and
are included in the table above. |
|
(4) |
|
This represents the intrinsic value of in-the-money unvested stock options (based on a market
price of $13.78 per share as of the last full business day prior to the end of our fiscal year
2009). |
|
(5) |
|
Per the change in control agreements, for two years, coverage is continued under our group
medical insurance, group dental insurance, group-term life insurance and disability insurance
programs unless and to the extent the executive obtains concurrent coverage through another
program in which case our coverage will be terminated or reduced as applicable. In addition,
if Mr. Bryants employment is terminated without cause or he terminates his employment for
good reason (as defined in his employment agreement) and thereafter does not revoke a
general release, he is entitled to receive payment of health insurance premiums for a period
of eighteen months following termination. |
|
(6) |
|
Payable in one lump sum upon termination. |
|
(7) |
|
Each executive officers change in control agreement provides for payment of $25,000 to help
defray the legal, tax and accounting fees and other costs associated with transitional
matters. |
SECURITIES AVAILABLE FOR ISSUANCE UNDER OUR EQUITY COMPENSATION PLANS
The following table provides information with respect to our equity compensation plans as of
December 31, 2009, which plans were as follows: the 1983 Employee Stock Purchase Plan; the 1990
Employee Stock Option Plan; the 1996 Non-Employee Director Plan; the 1998 Stock Incentive Plan and
the 2001 Plan. The 1990 Employee Stock Option Plan, the 1996 Non-Employee Director Plan and the
1998 Stock Incentive Plan have been terminated, and thus no additional awards will be made under
such plans.
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
Number of Securities |
|
|
Weighted-average |
|
|
Remaining Available for |
|
|
|
to be Issued upon |
|
|
Exercise Price of |
|
|
Future Issuance under |
|
|
|
Exercise of Outstanding |
|
|
Outstanding |
|
|
Equity Compensation Plans |
|
|
|
Options, Warrants |
|
|
Options, Warrants |
|
|
(Excluding Securities |
|
|
|
and Rights |
|
|
and Rights |
|
|
Reflected in Column (a)) |
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity
compensation plans
approved by
security holders |
|
|
2,825,479 |
(1) |
|
$ |
11.41 |
|
|
|
1,856,441 |
(2) |
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,825,479 |
(1) |
|
$ |
11.41 |
|
|
|
1,856,441 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Excludes 416,211 shares of unvested restricted stock issued at a purchase price of $0.01
under our 2001 Plan and 45,367 restricted stock units under our 2001 Plan. |
|
(2) |
|
Includes (i) 112,152 shares of common stock available for issuance under our 1983 Employee
Stock Purchase Plan and (ii) 1,744,289 shares of common stock available for issuance, as of
December 31, 2009, under our 2001 Plan, pursuant to which incentive stock awards may be
granted, including restricted stock. |
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
Mr. Brown, Dr. Polan and Mr. Schuler are not current or former officers or employees of ours,
and none have engaged in any transaction which would be required to be disclosed in this Proxy
Statement by Item 404 of Regulation S-K. There is no relationship that requires disclosure as a
compensation committee interlock for purposes of Item 407(e)(4) of Regulation S-K.
36
AUDIT COMMITTEE MATTERS
Report of the Audit Committee of the Board of Directors
The Audit Committee oversees our financial reporting process on behalf of the Board of
Directors. Management has the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls. In fulfilling its oversight responsibilities,
the Audit Committee reviewed and discussed the audited financial statements in our Annual Report on
Form 10-K for the year ended December 31, 2009 with management, including a discussion of the
quality, not just the acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
The Audit Committee has discussed and reviewed with our independent registered public
accounting firm all matters required to be discussed by the Statement on Auditing Standards No. 114
(The Auditors Communication With Those Charged With Governance), as may be modified or
supplemented. The Audit Committee has met with the independent registered public accounting firm to
discuss the overall scope and plans for the independent registered public accounting firms audit,
the results of its examinations, its evaluations of our internal controls and the overall quality
of our accounting and financial reporting. The Audit Committee also discussed with the independent
registered public accounting firm its judgments as to the substance and clarity, not just the
acceptability, of our accounting principles and financial statement disclosures. The Audit
Committee has also considered whether the independent registered public accounting firms provision
of non-audit services to us is compatible with the independent registered public accounting firms
independence.
The Audit Committee also reviewed managements report on its assessment of the effectiveness
of our internal control over financial reporting and Ernst & Young LLPs report on the
effectiveness of internal control over financial reporting.
The Audit Committee has received from the independent registered public accounting firm a
formal written statement describing all relationships between the independent registered public
accounting firm and us that might bear on the independent registered public accounting firms
independence consistent with the Public Company Accounting Oversight Board (PCAOB) Rule 3526
(Communication with Audit Committees Concerning Independence), as may be modified or supplemented,
discussed with the independent registered public accounting firm any relationships that may impact
its objectivity and independence, and has satisfied itself as to the independent registered public
accounting firms independence.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended
to the Board of Directors (and the Board of Directors has approved) that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended December 31, 2009.
Audit Committee
Rod F. Dammeyer (Chairman)
Thomas D. Brown
Mary Lake Polan, M.D., Ph.D., M.P.H.
This Report of the Audit Committee of the Board of Directors does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any Company filing under
the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates
this report.
37
Independent Registered Public Accounting Firm
Our Audit Committee retained Ernst & Young LLP to serve as our independent registered public
accounting firm for the fiscal year ended December 31, 2009. Set forth below are the aggregate fees
paid or accrued for audit and other professional services rendered by our independent registered
public accounting firm for the fiscal years ended December 31, 2009 and 2008.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ended |
|
|
|
December 31, |
|
|
|
2009 |
|
|
2008 |
|
Audit fees(1) |
|
$ |
624,500 |
|
|
$ |
753,500 |
|
Audit-related fees(2) |
|
|
31,365 |
|
|
|
10,000 |
|
Tax fees(3) |
|
|
180,279 |
|
|
|
229,575 |
|
All other fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fees |
|
$ |
836,144 |
|
|
$ |
993,075 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees represent fees for professional services provided in
connection with the audit of our financial statements, review of quarterly
financial statements, audit of compliance under Section 404 of the
Sarbanes-Oxley Act of 2002, and services provided in connection with statutory
and regulatory filings. |
|
(2) |
|
Audit-related fees consisted primarily of accounting
consultations regarding application of accounting standards and due diligence
fees. |
|
(3) |
|
For fiscal years 2009 and 2008, respectively, tax fees primarily
included tax compliance fees of $180,279 and $227,250 and tax consulting fees of
$2,325 for 2008. |
Policy on Audit Committee Pre-approval of Audit and Permissible Non-audit Services
The Audit Committee has the responsibility for appointing, compensating, retaining and
overseeing the work of the independent registered public accounting firm. The Audit Committees
policy is to pre-approve all audit and permissible non-audit services provided by our independent
registered public accounting firm. Pre-approval is detailed as to the particular service or
category of services and is generally subject to a specific budget. The Audit Committee may also
pre-approve particular services on a case-by-case basis. In assessing requests for services by our
independent registered public accounting firm, the Audit Committee considers whether such services
are consistent with the auditors independence, whether the independent registered public
accounting firm is likely to provide the most effective and efficient service, and whether the
service could enhance our ability to manage or control risk or improve audit quality.
All of the audit, audit-related, tax-related and all other fees provided by Ernst & Young, LLP
in fiscal years 2009 and 2008 (and as described in the footnotes to the table above) were approved
in advance by the Audit Committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the U.S., our directors and executive officers and persons who
own more than 10% of our common stock are required to report their initial beneficial ownership of
our common stock and any subsequent changes in that ownership to the Securities and Exchange
Commission. Specific due dates for these reports have been established, and we are required to
disclose in this Proxy Statement any late filings during the year ended December 31, 2009. To our
knowledge, all of the reports during 2009 were timely filed, except that Dr. Foley and Dr. Tamerius
both filed a Form 4 report late in connection with the disposition of shares in connection with the
Companys withholding of stock to satisfy tax withholding obligations related to the lapse of
restrictions on a restricted stock award on May 19, 2009.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Review and Approval of Related Party Transactions
Our Audit Committee reviews all relationships, transactions and arrangements in which the
Company and any director, nominee for director, greater than 5% beneficial holder of Company stock
or any immediate family member of any of the foregoing are participants (Interested Transactions)
to determine whether such persons have a direct or indirect
38
material interest and whether to approve, disapprove or ratify an Interested Transaction. We
have written policies and procedures for monitoring and seeking approval in connection with any
Interested Transaction. Our legal and finance departments assist in monitoring Interested
Transactions and our Audit Committee reviews, approves (or disapproves) or ratifies Interested
Transactions. In considering whether to approve or ratify an Interested Transaction, the Audit
Committee takes into account, among other factors it deems appropriate, whether the Interested
Transaction is on terms no less favorable than terms generally available to an unaffiliated third
party under the same or similar terms and conditions and the extent of the related persons
interest in the Interested Transaction. In addition, our written policy provides that no director
shall participate in any discussion or approval of an Interested Transaction for which he or she is
a related party, except that the director shall provide all material information concerning the
Interested Transaction to the Audit Committee.
Related Party Transactions
No director, executive officer, nominee for election as a director nor any beneficial holder
of more than 5% of our outstanding capital stock had any material interest, direct or indirect, in
any reportable transaction with us during the 2009 fiscal year or since the commencement of the
current fiscal year, or any reportable business relationship with us during such time.
STOCKHOLDER PROPOSALS
Our amended and restated bylaws require that a stockholder give timely written notice to our
Corporate Secretary of any proposal such stockholder proposes to bring before a stockholders
meeting or any proposal for the nomination of a director. Such written notice must be given, either
by personal delivery or U. S. mail, postage prepaid, to the Corporate Secretary, Quidel
Corporation, 10165 McKellar Court, San Diego, California 92121. To be timely, a stockholders
notice must be delivered to, or mailed and received at, the address provided above not less than
60 days nor more than 90 days prior to the scheduled annual meeting. However, if less than 60 days
notice or prior public disclosure of the date of the scheduled annual meeting is given or made,
notice by the stockholder, to be timely, must be received not later than the close of business on
the 10th day following the day on which the notice of the date of the scheduled annual meeting was
mailed or the day on which the public disclosure was made.
Any notice to the Corporate Secretary must include as to each matter the stockholder proposes
to bring before the meeting:
|
|
|
a brief description of the business desired to be brought before the meeting
and the reason for conducting the business at the annual meeting, |
|
|
|
|
the stockholders name and address, as they appear on our records, |
|
|
|
|
the class and number of shares that the stockholder beneficially owns, |
|
|
|
|
any material interest of the stockholder in the business requested to be
brought before the meeting, and |
|
|
|
|
any other information that is required to be provided by the stockholder
pursuant to Regulation 14A under the Securities Exchange Act of 1934 in his or her
capacity as a proponent of the stockholder proposal. |
A stockholders notice to the Corporate Secretary regarding a nomination for the election of
directors must set forth:
|
|
|
as to each person whom the stockholder proposes to nominate for election or
re-election as a director: |
|
|
|
the persons name, age, business address and residence address, |
|
|
|
|
the persons principal occupation or employment, |
|
|
|
|
the class and number of shares of capital stock beneficially
owned by the person, and |
|
|
|
|
any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934; and |
39
|
|
|
as to the stockholder giving the notice: |
|
|
|
the name and address of the stockholder, as they appear on our
records, and |
|
|
|
|
the class and number of shares of stock that are beneficially
owned by the stockholder on the date of the stockholder notice. If the Board of
Directors so requests, any person nominated for election to the Board shall
furnish to our Corporate Secretary the information required to be set forth in
the notice of nomination pertaining to the nominee. |
Any eligible stockholder who desires to have a proposal considered for inclusion in our proxy
solicitation materials for our 2011 annual meeting of stockholders must be received in writing by
our Corporate Secretary at 10165 McKellar Court, San Diego, California 92121 no later than
December 8, 2010. To be included in our proxy solicitation materials, proposals must be submitted
in accordance with our bylaws, as described above, and must comply with Securities and Exchange
Commission regulations promulgated under Rule 14a-8 of the Exchange Act of 1934, as amended.
Nothing in this section shall be deemed to require us to include in our proxy solicitation
materials relating to any annual meeting any stockholder proposal or nomination that does not meet
all of the requirements for inclusion established by the Securities and Exchange Commission.
ANNUAL REPORT
Our 2009 Annual Report to Stockholders has been mailed to stockholders concurrently with this
Proxy Statement. The Company incorporates by reference herein the information set forth in our
Annual Report on Form 10-K under Item 1 relating to the executive officers of the Company.
A copy of our Annual Report on Form 10-K and each of our other periodic and current reports,
including any amendments thereto, as filed with the Securities and Exchange Commission, are
available, free of charge, on our website, www.quidel.com, as soon as reasonably practicable after
such materials are filed or furnished to the Securities and Exchange Commission. In addition, a
copy of our Annual Report on Form 10-K, without exhibits, and/or exhibits to the Form 10-K, will be
furnished, free of charge upon written request to the Investor Relations department at Quidel
Corporation, 10165 McKellar Court, San Diego, California 92121. In addition, you may obtain such
documents by calling (858) 646-8031 or e-mail our Investor Relations department at ir@quidel.com.
INTERNET AVAILABILITY OF PROXY MATERIAL
We offer stockholders the ability to review our annual report on Form 10-K for the year ended
December 31, 2009 and proxy materials electronically over the internet at www.proxyvote.com. These
filings may also be reviewed through the Securities and Exchange
Commission website at www.sec.gov.
FORWARD LOOKING STATEMENTS
This proxy statement contains forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. These statements are based on managements
current expectations and involve substantial risks and uncertainties, which may cause results to
differ materially from those set forth in the statements. The forward-looking statements may
include, but are not limited to, statements made in the CD&A section of this proxy statement
regarding the anticipated effects of our compensation structure and programs. Quidel Corporation
undertakes no obligation to publicly update any forward-looking statement, whether as a result of
new information, future events, or otherwise. Forward-looking statements should be evaluated
together with the many uncertainties that affect Quidel Corporations business, particularly those
mentioned under the heading Risk Factors in Quidel Corporations Annual Report on Form 10-K, and
in the periodic reports that Quidel Corporation files with the SEC on Form 10-Q and Form 8-K.
OTHER BUSINESS
We know of no other matters to be submitted at the Annual Meeting. If any other matters
properly come before the Annual Meeting, it is the intention of the persons named in the enclosed
proxy card to vote the shares they represent as the Board of Directors may recommend.
San Diego, California
April 2, 2010
Stockholders are urged to specify their choices on, date, sign and return the enclosed proxy card
in the accompanying prepaid, return envelope. Prompt response is helpful and your cooperation
greatly appreciated.
40
QUIDEL CORPORATION
2010 EQUITY INCENTIVE PLAN
(As Proposed To Be Adopted On May 12, 2010)
ARTICLE I
PURPOSE OF PLAN
The Company has adopted this Plan to promote the interests of the Company and its stockholders
by using investment interests in the Company to attract, retain and motivate its management and
other persons, to encourage and reward their contributions to the performance of the Company, and
to align their interests with the interests of the Companys stockholders. Upon approval by
stockholders, this Plan will supersede the Prior Plan with respect to future Awards. Capitalized
terms not otherwise defined herein have the meanings ascribed to them in Article IX.
ARTICLE II
EFFECTIVE DATE AND TERM OF PLAN
2.1 Term of Plan.
This Plan was approved by the Board on February 23, 2010. This Plan will become effective on
the Effective Date and will continue in effect until the earlier of (a) the Expiration Date, or (b)
the date of any Plan termination pursuant to the provisions in Section 8.1, at which time this Plan
will automatically terminate.
2.2 Effect on Awards.
Awards may be granted only during the Plan Term, but each Award properly granted during the
Plan Term will remain in effect after the Expiration Date until such Award has been exercised,
terminated or expired in accordance with its terms and the terms of this Plan.
ARTICLE III
SHARES SUBJECT TO PLAN
3.1 Number of Shares.
The maximum number of shares of Common Stock that may be issued pursuant to Awards under this
Plan is 950,000, plus (a) any shares of Common Stock that were authorized for issuance under the
Prior Plan that, as of the Effective Date, remain available for issuance under the Prior Plan (not
including any shares that are subject to, as of the Effective Date, outstanding awards under the
Prior Plan or any shares that prior to the Effective Date were issued pursuant to awards granted
under the Prior Plan) and (b) any shares of Common Stock subject to outstanding awards under the
Prior Plan as of the Effective Date (the Prior Plan Awards) that on or after such date cease for
any reason to be subject to such awards (other than by reason of exercise or settlement of the
awards to the extent they are exercised for or settled in vested and nonforfeitable shares). Any
shares of Common Stock issued pursuant to Stock Options or Stock Appreciation Rights under this
Plan shall be counted against this limit on a one-for-one basis and any shares of Common Stock
issued pursuant to Awards under this Plan other than Stock Options or Stock Appreciation Rights
shall be counted against this limit as 1.5 shares for every one share of Common Stock issued
pursuant to such Award. The aggregate number of Shares available for grant under this Plan and the
number of Shares subject to outstanding Awards shall be subject to adjustment as set forth in
Section 3.4.
3.2 Source of Shares.
The Common Stock to be issued under this Plan will be made available, at the discretion of the
Administrator, either from authorized but unissued shares of Common Stock or from previously issued
shares of Common Stock reacquired by the Company, including without limitation shares purchased on
the open market.
3.3 Availability of Unused Shares.
Shares of Common Stock subject to unexercised portions of any Award (or Prior Plan Award) that
expire, terminate or are canceled, and shares of Common Stock issued pursuant to an Award (or Prior
Plan Award) that are reacquired by the Company pursuant to this Plan or the terms of the Award (or
Prior Plan Award) under which such shares were issued, will again become available for the grant of
further Awards under this Plan as part of the shares available under Section 3.1. However, if the
exercise price of, or withholding taxes incurred in connection with, an Award (or Prior Plan Award)
is paid with shares of Common Stock, or if shares of Common Stock otherwise issuable pursuant to
Awards (or Prior Plan Awards)
A-1
are withheld by the Company in satisfaction of an exercise price or the withholding taxes
incurred in connection with any exercise, vesting or settlement of an Award (or Prior Plan Award),
then the number of shares of Common Stock available for issuance under the Plan will be reduced by
the gross number of shares for which the Award (or Prior Plan Award) is exercised or for which it
vests or is settled, as applicable, and not by the net number of shares of Common Stock issued to
the holder of such Award (or Prior Plan Award). In addition, upon exercise of a Stock Appreciation
Right (or similar Prior Plan Award), the number of shares of Common Stock available for issuance
under the Plan will be reduced by the gross number of shares for which the Award (or Prior Plan
Award) is exercised and not by the net number of shares of Common Stock issued to the holder of
such Award (or Prior Plan Award) in settlement thereof. Any shares of Common Stock that again
become available for issuance pursuant to Section 3.1 or this Section 3.3 shall be added back as
one share if such shares were subject to Stock Options or Stock Appreciation Rights granted under
the Plan or stock options or stock appreciation rights granted under the Prior Plan, and as 1.5
shares if such shares were subject to Awards other than Stock Options or Stock Appreciation Rights
granted under the Plan or subject to awards other than stock options or stock appreciation rights
granted under the Prior Plan.
3.4 Adjustment Provisions.
(a) Adjustments. If the Company consummates any Reorganization in which holders of shares of
Common Stock are entitled to receive in respect of such shares any additional shares or new or
different shares or securities, cash or other consideration (including, without limitation, a
different number of shares of Common Stock), or if the outstanding shares of Common Stock are
increased, decreased, changed or exchanged for a different number or kind of shares or other
securities through merger, consolidation, sale or exchange of assets of the Company,
reorganization, recapitalization, reclassification, combination, stock dividend, extraordinary cash
dividend, stock split, reverse stock split, spin-off, or similar transaction then, subject to
Section 8.1, an appropriate and proportionate adjustment shall be made by the Administrator in: (i)
the maximum number and kind of shares subject to this Plan as provided in Section 3.1; (ii) the
number and kind of shares or other securities subject to then outstanding Awards; (iii) the price
for each share or other unit of any other securities subject to, or measurement criteria applicable
to, then outstanding Awards; and (iv) the number and kind of shares or other securities to be
issued as Non-Employee Director Options.
(b) No Fractional Interests. No fractional interests will be issued under the Plan resulting
from any adjustments.
(c) Adjustments Related to Company Stock. To the extent any adjustments relate to stock or
securities of the Company, such adjustments will be made by the Administrator, whose determination
in that respect will be final, binding and conclusive.
(d) Right to Make Adjustment. The grant of an Award will not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
(e) Limitations. No adjustment to the terms of an Incentive Stock Option may be made unless
such adjustment either: (i) would not cause the Option to lose its status as an Incentive Stock
Option; or (ii) is agreed to in writing by the Administrator and the Recipient.
3.5 Reservation of Shares.
The Company will at all times reserve and keep available shares of Common Stock equaling at
least the total number of shares of Common Stock issuable pursuant to all outstanding Awards.
ARTICLE IV
ADMINISTRATION OF PLAN
4.1 Administrator.
(a) Plan Administration. Subject to the provisions of Section 4.1(b), this Plan will be
administered by the Board and may also be administered by a Committee of the Board appointed
pursuant to Section 4.1(b).
(b) Administration by Committee. The Board in its sole discretion may from time to time
appoint a Committee of not less than two (2) Board members with authority to administer this Plan
in whole or part and, subject to applicable law, to exercise any or all of the powers, authority
and discretion of the Board under this Plan. As long as the Company has a class of equity
securities registered under Section 12 of the Exchange Act, this Plan will be administered by a
Committee of not less than two (2) Board members appointed by the Board in its sole discretion from
time to time, each of whom is (i) a Non-Employee Director, and (ii) an Outside Director as
defined in the regulations adopted under Section 162(m) of the IRC. The Board may from time to time
increase or decrease (but not below two (2)) the number of members of the Committee, remove from
membership on the Committee all or any portion of its members, and/or appoint such person or
persons as it desires to fill any vacancy existing on the Committee, whether caused by removal, resignation
or otherwise. Unless otherwise required by this Section 4.1(b), the Board may disband the Committee
at any time.
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4.2 Authority of Administrator.
(a) Authority to Interpret Plan. Subject to the express provisions of this Plan, the
Administrator will have the power to implement, interpret and construe this Plan and any Awards and
Award Documents or other documents defining the rights and obligations of the Company and
Recipients hereunder and thereunder, to determine all questions arising hereunder and thereunder,
and to adopt and amend such rules and regulations for the administration hereof and thereof as it
may deem desirable. The interpretation and construction by the Administrator of any provisions of
this Plan or of any Award or Award Document, and any action taken by, or inaction of, the
Administrator relating to this Plan or any Award or Award Document, will be within the discretion
of the Administrator and will be conclusive and binding upon all persons. Subject only to
compliance with the express provisions hereof, the Administrator may act in its discretion in
matters related to this Plan and any and all Awards and Award Documents.
(b) Authority to Grant Awards. Subject to the express provisions of this Plan, the
Administrator may from time to time in its discretion select the Eligible Persons to whom, and the
time or times at which, Awards will be granted or sold, the nature of each Award, the number of
shares of Common Stock or the number of rights that make up or underlie each Award, the exercise
price and period (if applicable) for the exercise of each Award, and such other terms and
conditions applicable to each individual Award as the Administrator may determine. Any and all
terms and conditions of Awards may be established by the Administrator without regard to existing
Awards or other grants and without incurring any obligation of the Company in respect of subsequent
Awards. The Administrator may grant at any time new Awards to an Eligible Person who has previously
received Awards or other grants (including other stock options) regardless of the status of such
other Awards or grants. The Administrator may grant Awards singly or in combination or in tandem
with other Awards as it determines in its discretion.
(c) Procedures. Subject to the Companys charter or bylaws or any Board resolution conferring
authority on the Committee, any action of the Administrator with respect to the administration of
this Plan must be taken pursuant to a majority vote of the authorized number of members of the
Administrator or by the unanimous written consent of its members; provided, however, that (i) if
the Administrator is the Committee and consists of two (2) members, then actions of the
Administrator must be unanimous, and (ii) actions taken by the Board will be valid if approved in
accordance with applicable law.
4.3 No Liability.
No member of the Board or the Committee or any designee thereof will be liable for any action
or inaction with respect to this Plan or any Award or any transaction arising under this Plan or
any Award except in circumstances constituting bad faith of such member.
4.4 Amendments.
(a) Plan Amendments. The Administrator may at any time and from time to time in its
discretion, insofar as permitted by applicable law, rule or regulation and subject to Section
4.4(c), suspend or discontinue this Plan or revise or amend it in any respect whatsoever, and this
Plan as so revised or amended will govern all Awards, including those granted before such revision
or amendment. Without limiting the generality of the foregoing, the Administrator is authorized to
amend this Plan to comply with or take advantage of amendments to applicable laws, rules or
regulations, including the Securities Act, the Exchange Act, the IRC, or the rules of any exchange
or market system upon which the Common Stock is listed or trades, or any rules or regulations
promulgated thereunder. No stockholder approval of any amendment or revision will be required
unless such approval is required by applicable law, rule or regulation.
(b) Award Amendments; No Repricing. The Administrator may at any time and from time to time in
its discretion, but subject to Section 4.4(c) and compliance with applicable statutory or
administrative requirements, accelerate or extend the vesting or exercise period of any Award as a
whole or in part, and make such other modifications in the terms and conditions of an Award as it
deems advisable, provided, however, that the Administrator, other than in connection with an
adjustment under Section 3.4, may reduce the exercise or base price of a Stock Option or SAR
(either by cancellation of such Stock Option or SAR in exchange for cash, other Awards, or a new
Stock Option or SAR at such reduced exercise or base price or by amending the terms of the Stock
Option or SAR to reflect such a reduced exercise or base price) only with stockholder approval.
(c) Limitation. Except as otherwise provided in this Plan or in the applicable Award Document,
no amendment, revision, suspension or termination of this Plan or an outstanding Award that would
cause an Incentive Stock Option to cease to qualify as such or that would alter, impair or diminish
in any material respect any rights or obligations under any Award theretofore granted under this Plan may be effected without the written consent of the
Recipient to whom such Award was granted.
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4.5 Other Compensation Plans.
The adoption of this Plan will not affect any other stock option, incentive or other
compensation plans in effect from time to time for the Company, and this Plan will not preclude the
Company from establishing any other forms of incentive or other compensation for employees,
directors, advisors or consultants of the Company, whether or not approved by stockholders. This
Plan does not affect in any way any outstanding award grants made under such plans and awards
granted under such plans will continue to be governed by the terms and conditions of such plans.
4.6 Plan Binding on Successors.
This Plan will be binding upon the successors and assigns of the Company.
4.7 References to Successor Statutes, Regulations and Rules.
Any reference in this Plan to a particular statute, regulation or rule will also refer to any
successor provision of such statute, regulation or rule.
4.8 Invalid Provisions.
In the event that any provision of this Plan is found to be invalid or otherwise unenforceable
under any applicable law, such invalidity or unenforceability is not to be construed as rendering
any other provisions contained herein invalid or unenforceable, and all such other provisions are
to be given full force and effect to the same extent as though the invalid and unenforceable
provision were not contained herein.
4.9 Governing Law.
This Plan will be governed by and interpreted in accordance with the internal laws of the
State of Delaware, without giving effect to the principles of the conflicts of laws thereof.
4.10 Interpretation.
Headings herein are for convenience of reference only, do not constitute a part of this Plan,
and will not affect the meaning or interpretation of this Plan. References herein to Sections or
Articles are references to the referenced Section or Article hereof, unless otherwise specified.
ARTICLE V
GENERAL AWARD PROVISIONS
5.1 Participation in Plan.
(a) Eligibility to Receive Awards. A person is eligible to receive grants of Awards if, at the
time of the grant of the Award, such person is an Eligible Person or has received an offer of
employment from the Company, provided, however, that only Non-Employee Directors are eligible to
receive Non-Employee Director Options, and provided further, that Awards granted to a person who
has received an offer of employment will terminate and be forfeited without consideration if the
employment offer is not accepted within such time as may be specified by the Company. Status as an
Eligible Person will not be construed as a commitment that any Award will be granted under this
Plan to an Eligible Person or to Eligible Persons generally.
(b) Eligibility to Receive Incentive Stock Options. Incentive Stock Options may be granted
only to Eligible Persons meeting the employment requirements of Section 422 of the IRC.
(c) Awards to Foreign Nationals. Notwithstanding anything to the contrary herein, the
Administrator may, in order to fulfill the purposes of this Plan, modify grants of Awards to
Recipients who are foreign nationals or employed outside of the United States to recognize
differences in applicable law, tax policy or local custom.
5.2 Award Documents.
Each Award must be evidenced by an Award Document setting forth such terms and conditions
applicable to the Award as the Administrator may in its discretion determine. Awards will not be
deemed made or binding upon the Company, and Recipients will have no rights thereto, until an Award
Document agreement is entered into between the Company and the Recipient or delivered by the
Company to the Recipient, but an Award may have an effective date prior to the date of such an
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Award Document, to the extent consistent with applicable law. Award Documents may be (but
need not be) identical and must comply with and be subject to the terms and conditions of this
Plan, a copy of which will be provided to each Recipient and incorporated by reference into each
Award Document. Any Award Document may contain such other terms, provisions and conditions not
inconsistent with this Plan as may be determined by the Administrator. In case of any conflict
between this Plan and any Award Document, this Plan shall control.
5.3 Payment For Awards.
(a) Payment of Exercise Price. The exercise price or other payment for an Award is payable
upon the exercise of a Stock Option or upon other purchase of shares pursuant to an Award granted
hereunder by delivery of legal tender of the United States or payment of such other consideration
as the Administrator may from time to time deem acceptable in any particular instance; provided,
however, that the Administrator may, in the exercise of its discretion, allow exercise of an Award
in a broker-assisted or similar transaction in which the exercise price is not received by the
Company until promptly after exercise.
(b) [Reserved]
(c) Cashless Exercise. If permitted in any case by the Administrator in its discretion, the
exercise price for Awards may be paid by capital stock of the Company delivered in transfer to the
Company by or on behalf of the person exercising the Award and duly endorsed in blank or
accompanied by stock powers duly endorsed in blank, with signatures guaranteed in accordance with
the Exchange Act if required by the Administrator; or retained by the Company from the stock
otherwise issuable upon exercise or surrender of vested and/or exercisable Awards or other equity
awards previously granted to the Recipient and being exercised (if applicable) (in either case
valued at Fair Market Value as of the exercise date); or such other consideration as the
Administrator may from time to time in the exercise of its discretion deem acceptable in any
particular instance.
(d) No Precedent. Recipients will have no rights to the exercise techniques described in
Section 5.3(c), and the Company may offer or permit such techniques on an ad hoc basis to any
Recipient without incurring any obligation to offer or permit such techniques on other occasions or
to other Recipients.
5.4 No Employment Rights.
Nothing contained in this Plan (or in Award Documents or in any other documents related to
this Plan or to Awards) will confer upon any Eligible Person or Recipient any right to continue in
the employ of or engagement by the Company or any Affiliated Entity or constitute any contract or
agreement of employment or engagement, or interfere in any way with the right of the Company or any
Affiliated Entity to reduce such persons compensation or other benefits or to terminate the
employment or engagement of such Eligible Person or Recipient, with or without cause. Except as
expressly provided in this Plan or in any statement evidencing the grant of an Award, the Company
has the right to deal with each Recipient in the same manner as if this Plan and any such statement
evidencing the grant of an Award did not exist, including, without limitation, with respect to all
matters related to the hiring, discharge, compensation and conditions of the employment or
engagement of the Recipient. Unless otherwise set forth in a written agreement binding upon the
Company or an Affiliated Entity, all employees of the Company or an Affiliated Entity are at will
employees whose employment may be terminated by the Company or the Affiliated Entity at any time
for any reason or no reason, without payment or penalty of any kind. Any question(s) as to whether
and when there has been a termination of a Recipients employment or engagement, the reason (if
any) for such termination, and/or the consequences thereof under the terms of this Plan or any
statement evidencing the grant of an Award pursuant to this Plan will be determined by the
Administrator and the Administrators determination thereof will be final and binding.
5.5 Restrictions Under Applicable Laws and Regulations.
(a) Government Approvals. All Awards will be subject to the requirement that, if at any time
the Company determines, in its discretion, that the listing, registration or qualification of the
securities subject to Awards granted under this Plan upon any securities exchange or interdealer
quotation system or under any federal, state or foreign law, or the consent or approval of any
government or regulatory body, is necessary or desirable as a condition of, or in connection with,
the granting of such an Award or the issuance, if any, or purchase of shares in connection
therewith, such Award may not be exercised as a whole or in part unless and until such listing,
registration, qualification, consent or approval has been effected or obtained free of any
conditions not acceptable to the Company. During the term of this Plan, the Company will use its
reasonable efforts to seek to obtain from the appropriate governmental and regulatory agencies any
requisite qualifications, consents, approvals or authorizations in order to issue and sell such
number of shares of its Common Stock as is sufficient to satisfy the requirements of this Plan. The
inability of the Company to obtain any such qualifications, consents, approvals or authorizations
after such reasonable efforts will relieve the Company of any liability in respect of the
nonissuance or sale of such stock as to which such qualifications, consents, approvals or
authorizations pertain.
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(b) No Registration Obligation; Recipient Representations. The Company will be under no
obligation to register or qualify the issuance of Awards or underlying securities under the
Securities Act or applicable state securities laws. Unless the issuance of Awards and underlying
securities have been registered under the Securities Act and qualified or registered under
applicable state securities laws, the Company shall be under no obligation to issue any Awards or
underlying securities unless the Awards and underlying securities may be issued pursuant to
applicable exemptions from such registration or qualification requirements. In connection with any
such exempt issuance, the Administrator may require the Recipient to provide a written
representation and undertaking to the Company, satisfactory in form and scope to the Company, that
such Recipient is acquiring such Awards and underlying securities for such Recipients own account
as an investment and not with a view to, or for sale in connection with, the distribution of any
such securities, and that such person will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the Securities Act and other
applicable law, and that if securities are issued without registration, a legend to this effect
(together with any other legends deemed appropriate by the Administrator) may be endorsed upon the
securities so issued, and to the effect of any additional representations that are appropriate in
light of applicable securities laws and rules. The Company may also order its transfer agent to
stop transfers of such shares. The Administrator may also require the Recipient to provide the
Company such information and other documents as the Administrator may request in order to satisfy
the Administrator as to the investment sophistication and experience of the Recipient and as to any
other conditions for compliance with any such exemptions from registration or qualification.
5.6 Additional Conditions.
Any Award may be subject to such provisions (whether or not applicable to any other Award or
Recipient) as the Administrator deems appropriate, including without limitation provisions for the
forfeiture of or restrictions on resale or other disposition of securities of the Company acquired
under this Plan, provisions giving the Company the right to repurchase securities of the Company
acquired under this Plan in the event the Recipient leaves the Company for any reason or elects to
effect any disposition thereof, and provisions to comply with federal and state securities laws.
5.7 No Privileges re Stock Ownership or Specific Assets.
Except as otherwise set forth herein, a Recipient or a permitted transferee of an Award will
have no rights as a stockholder with respect to any shares issuable or issued in connection with
the Award until the Recipient has delivered to the Company all amounts payable and performed all
obligations required to be performed in connection with exercise of the Award and the Company has
issued such shares. No person will have any right, title or interest in any fund or in any specific
asset (including shares of capital stock) of the Company by reason of any Award granted hereunder.
Neither this Plan (or any documents related hereto) nor any action taken pursuant hereto is to be
construed to create a trust of any kind or a fiduciary relationship between the Company and any
person. To the extent that any person acquires a right to receive an Award hereunder, such right
shall be no greater than the right of any unsecured general creditor of the Company.
5.8 Nonassignability.
No Award is assignable or transferable except: (a) by will or by the laws of descent and
distribution; or (b) subject to the final sentence of this Section 5.8, upon dissolution of
marriage pursuant to a qualified domestic relations order or, in the discretion of the
Administrator on a case-by-case basis and under circumstances that would not adversely affect the
interests of the Company, transfers for estate planning purposes or pursuant to a nominal transfer
that does not result in a change in beneficial ownership. Subject to the final sentence of this
Section 5.8, during the lifetime of a Recipient, an Award granted to such person will be
exercisable only by the Recipient (or the Recipients permitted transferee) or such persons
guardian or legal representative. Notwithstanding the foregoing, Stock Options intended to be
treated as Incentive Stock Options (or other Awards subject to transfer restrictions under the IRC)
(i) may not be assigned or transferred in violation of Section 422(b)(5) of the IRC or the
regulations thereunder, and nothing herein is intended to allow such assignment or transfer; and
(ii) will be exercisable during a Recipients lifetime only by the Recipient.
5.9 Information To Recipients.
(a) Provision of Information. The Administrator in its sole discretion may determine what, if
any, financial and other information is to be provided to Recipients and when such financial and
other information is to be provided after giving consideration to applicable federal and state
laws, rules and regulations, including, without limitation, applicable federal and state securities
laws, rules and regulations.
(b) Confidentiality. The furnishing of financial and other information that is confidential to
the Company is subject to the Recipients agreement to maintain the confidentiality of such
financial and other information, and not to use the information for any purpose other than
evaluating the Recipients position under this Plan. The Administrator may impose other
restrictions on the access to and use of such confidential information and may require a Recipient
to acknowledge the Recipients obligations under this Section 5.9(b) (which acknowledgment is not to be a
condition to Recipients obligations under this Section 5.9(b)).
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5.10 Withholding Taxes.
Whenever the granting, vesting or exercise of any Award, or the issuance of any Common Stock
or other securities upon exercise of any Award or transfer thereof, gives rise to tax or tax
withholding liabilities or obligations, the Administrator will have the right as a condition
thereto to require the Recipient to remit to the Company an amount sufficient to satisfy any
federal, state and local withholding tax requirements arising in connection therewith. The
Administrator may, in the exercise of its discretion, allow satisfaction of tax withholding
requirements by accepting delivery of stock of the Company or by withholding a portion of the stock
otherwise issuable in connection with an Award, in each case valued at Fair Market Value as of the
date of such delivery or withholding, as the case may be.
5.11 Legends on Awards and Stock Certificates.
Each Award Document and each certificate representing securities acquired upon grant, vesting
or exercise of an Award must be endorsed with all legends, if any, required by applicable federal
and state securities and other laws to be placed on the Award Document and/or the certificate. The
determination of which legends, if any, will be placed upon Award Documents or the certificates
will be made by the Administrator in its discretion and such decision will be final and binding.
5.12 Effect of Termination of Employment on Awards.
(a) Termination of Vesting. Notwithstanding anything to the contrary herein, but subject to
Section 5.12(b) Awards will be exercisable by a Recipient (or the Recipients successor in
interest) following such Recipients termination of employment or service only to the extent that
installments thereof had become exercisable on or prior to the date of such termination.
(b) Alteration of Vesting and Exercise Periods. Notwithstanding anything to the contrary
herein, the Administrator may in its discretion (i) designate shorter or longer periods following a
Recipients termination of employment or service during which Awards may vest or be exercised;
provided, however, that any shorter periods determined by the Administrator will be effective only
if provided for in this Plan or the instrument that evidences the grant to the Recipient of the
affected Award or if such shorter period is agreed to in writing by the Recipient, and (ii)
accelerate the vesting of all or any portion of any Awards by increasing the number of shares
purchasable at any time.
(c) Leave of Absence. In the case of any employee on an approved leave of absence, the
Administrator may make such provision respecting continuance of Awards granted to such employee as
the Administrator in its discretion deems appropriate, except that in no event will an Award be
exercisable after the date such Award would expire in accordance with its terms had the Recipient
remained continuously employed.
(d) General Cessation. Except as otherwise set forth in this Plan or an Award Document or as
determined by the Administrator in its discretion, all Awards granted to a Recipient, and all of
such Recipients rights thereunder, will terminate upon termination for any reason of such
Recipients employment or service with the Company or any Affiliated Entity (or cessation of any
other service relationship between the Recipient and the Company or any Affiliated Entity in place
as of the date the Award was granted).
5.13 Lock-Up Agreements.
Each Recipient agrees as a condition to receipt of an Award that, in connection with any
public offering by the Company of its equity securities and upon the request of the Company and the
principal underwriter (if any) in such public offering, any shares of Common Stock acquired or that
may be acquired upon exercise or vesting of an Award may not be sold, offered for sale, encumbered,
or otherwise disposed of or subjected to any transaction that will involve any sales or other
transfer of securities of the Company, or any interest therein, without the prior written consent
of the Company or such underwriter, as the case may be, for a period of not more than 365 days
after the commencement date of such public offering. Each Recipient will, if requested by the
Company or the principal underwriter, enter into a separate agreement to the effect of this Section
5.13.
5.14 Restrictions on Common Stock and Other Securities.
Common Stock or other securities of the Company issued or issuable in connection with any
Award will be subject to all of the restrictions imposed under this Plan upon Common Stock issuable
or issued upon exercise of Stock Options, except as otherwise determined by the Administrator.
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5.15 Limits on Awards to Eligible Persons.
Notwithstanding any other provision of this Plan, no one Eligible Person shall be (a) granted
Awards (other than Performance Awards payable in cash) with respect to more than 1,800,000 shares
of Common Stock in any one calendar year, and (b) granted Performance Awards payable in cash that
exceed $1,000,000 in any one calendar year, provided, however, that this limitation shall not apply
if it is not required in order for the compensation attributable to Awards hereunder to qualify as
Performance-Based Compensation. The limitation set forth in this Section 5.15(a) will be subject to
adjustment as provided in Section 3.4 or under Article VIII, but only to the extent such adjustment
would not affect the status of compensation attributable to Awards as Performance-Based
Compensation.
ARTICLE VI
AWARDS
6.1 Stock Options.
(a) Nature of Stock Options. Stock Options may be Incentive Stock Options or Nonqualified
Stock Options.
(b) Option Exercise Price. The exercise price for each Stock Option will be determined by the
Administrator as of the date such Stock Option is granted and shall not be less than the Fair
Market Value of the underlying stock on the date of grant, provided, however, that in the case of
Stock Options granted to employees upon a merger or acquisition, the exercise price may be higher
or lower than the Fair Market Value of the underlying stock on the date of grant if such exercise
price is required to assume or substitute options held by employees of the acquired corporation at
the time of the acquisition.
(c) Option Period and Vesting. Stock Options granted hereunder will vest and may be exercised
as determined by the Administrator, except that exercise of Stock Options after termination of the
Recipients employment or service shall be subject to Section 5.12 and Section 6.1(e). Each Stock
Option granted hereunder and all rights or obligations thereunder shall expire on such date as may
be determined by the Administrator, but not later than ten (10) years after the date the Stock
Option is granted and may be subject to earlier termination as provided herein or in the Award
Document. Except as otherwise provided herein, a Stock Option will become exercisable, as a whole
or in part, on the date or dates specified by the Administrator and thereafter will remain
exercisable until the exercise, expiration or earlier termination of the Stock Option.
(d) Exercise of Stock Options. The exercise price for Stock Options will be paid as set forth
in Section 5.3. No Stock Option will be exercisable except in respect of whole shares, and
fractional share interests shall be disregarded. Not fewer than 100 shares of Common Stock (or such
other amount as may be set forth in the applicable Award Document) may be purchased at one time and
Stock Options must be exercised in multiples of 100 unless the number purchased is the total number
of shares for which the Stock Option is exercisable at the time of exercise. A Stock Option will be
deemed to be exercised when the Secretary or other designated official of the Company receives
written notice of such exercise from the Recipient in such form as the Company may specify from
time to time, together with payment of the exercise price in accordance with Section 5.3 and any
amounts required under Section 5.10 or, with permission of the Administrator, arrangement for such
payment. Notwithstanding any other provision of this Plan, the Administrator may impose, by rule
and/or in Award Documents, such conditions upon the exercise of Stock Options (including, without
limitation, conditions limiting the time of exercise to specified periods) as may be required to
satisfy applicable regulatory requirements, including, without limitation, Rule 16b-3 and Rule
10b-5 under the Exchange Act, and any amounts required under Section 5.10, or any applicable
section of or regulation under the IRC.
(e) Termination of Employment.
(i) Termination for Just Cause. Subject to Section 5.12 and except as otherwise provided in
a written agreement between the Company or an Affiliated Entity and the Recipient, which may be
entered into at any time before or after termination of employment or service, in the event of a
Just Cause Dismissal of a Recipient all of the Recipients unexercised Stock Options, whether or
not vested, will expire and become unexercisable as of the date of such Just Cause Dismissal.
(ii) Termination Other Than for Just Cause. Subject to Section 5.12 and except as otherwise
provided in a written agreement between the Company or an Affiliated Entity and the Recipient,
which may be entered into at any time before or after termination of employment or service, if a
Recipients employment or service with the Company or any Affiliated Entity terminates for:
(A) any reason other than for Just Cause Dismissal, death, or Permanent Disability, the
Recipients Stock Options, whether or not vested, will expire and become unexercisable as of
the earlier of: (1) the date such Stock Options would expire in accordance with their terms
had the Recipient remained employed; and (2) 90 days after the date of termination of
employment or service.
(B) death or Permanent Disability, the Recipients unexercised Stock Options will,
whether or not vested, expire and become unexercisable as of the earlier of: (1) the date
such Stock Options would expire in accordance with their terms had the Recipient remained employed; and (2) one year after the date
of termination of employment or service.
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(f) Special Provisions Regarding Incentive Stock Options. Notwithstanding anything herein to
the contrary,
(i) The exercise price and vesting period of any Stock Option intended to be treated as an
Incentive Stock Option must comply with the provisions of Section 422 of the IRC and the
regulations thereunder. As of the Effective Date, such provisions require, among other matters,
that: (A) the exercise price must not be less than the Fair Market Value of the underlying
stock as of the date the Incentive Stock Option is granted, and not less than 110% of the Fair
Market Value as of such date in the case of a grant to a Significant Stockholder; and (B) that
the Incentive Stock Option not be exercisable after the expiration of ten (10) years from the
date of grant or the expiration of five (5) years from the date of grant in the case of an
Incentive Stock Option granted to a Significant Stockholder.
(ii) The aggregate Fair Market Value (determined as of the respective date or dates of
grant) of the Common Stock for which one or more Stock Options granted to any Recipient under
this Plan (or any other option plan of the Company or of any Parent Corporation or Subsidiary
Corporation) may for the first time become exercisable as Incentive Stock Options under the
federal tax laws during any one calendar year may not exceed $100,000.
(iii) Any Stock Options granted as Incentive Stock Options pursuant to this Plan that for
any reason fail or cease to qualify as such will be treated as Nonqualified Stock Options. If
the limit described in Section 6.1(f)(ii) is exceeded, the earliest granted Stock Options will
be treated as Incentive Stock Options, up to such limit.
(g) Non-Employee Director Options. Article VII will govern Non-Employee Director Options to
the extent inconsistent with this Section 6.1.
6.2 Performance Awards.
(a) Grant of Performance Award. The Administrator will determine in its discretion the
preestablished, objective performance goals (which need not be identical and may be established on
an individual or group basis) governing Performance Awards, the terms thereof, and the form and
time of payment of Performance Awards.
(b) Payment of Award. Upon satisfaction of the conditions applicable to a Performance Award,
payment will be made to the Recipient in cash, in shares of Common Stock valued at Fair Market
Value as of the date payment is due, or in a combination of Common Stock and cash, as the
Administrator in its discretion may determine.
6.3 Restricted Stock.
(a) Award of Restricted Stock. The Administrator will determine the Purchase Price (if any),
the terms of payment of the Purchase Price, the restrictions upon the Restricted Stock, and when
such restrictions will lapse.
(b) Requirements of Restricted Stock. All shares of Restricted Stock granted or sold pursuant
to this Plan will be subject to the following conditions:
(i) No Transfer. The shares may not be sold, assigned, transferred, pledged, hypothecated
or otherwise disposed of, alienated or encumbered until the restrictions are removed or expire;
(ii) Certificates. The Administrator may require that the certificates representing
Restricted Stock granted or sold to a Recipient remain in the physical custody of an escrow
holder or the Company until all restrictions are removed or expire;
(iii) Restrictive Legends. Each certificate representing Restricted Stock granted or sold
to a Recipient pursuant to this Plan will bear such legend or legends making reference to the
restrictions imposed upon such Restricted Stock as the Administrator in its discretion deems
necessary or appropriate to enforce such restrictions; and
(iv) Other Restrictions. The Administrator may impose such other conditions on Restricted
Stock as the Administrator may deem advisable, including, without limitation, restrictions under
the Securities Act, under the Exchange Act, under the requirements of any stock exchange or
interdealer quotation system upon which such Restricted Stock or other securities of the Company
are then listed or traded and under any blue sky or other securities laws applicable to such
shares.
(c) Lapse of Restrictions. The restrictions imposed upon Restricted Stock will lapse in
accordance with such terms or other conditions as are determined by the Administrator.
(d) Rights of Recipient. Subject to the provisions of Section 6.3(b) and any restrictions
imposed upon the Restricted Stock, the Recipient will have all rights of a stockholder with respect
to the Restricted Stock granted or sold to such Recipient under this Plan, including, without
limitation, the right to vote the shares and receive all dividends and other distributions paid or
made with respect thereto.
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(e) Termination of Employment. Unless the Administrator in its discretion determines
otherwise, if a Recipients employment or service with the Company or any Affiliated Entity
terminates for any reason, all of the Recipients Restricted Stock remaining subject to
restrictions on the date of such termination of employment or service will be repurchased by the
Company at the Purchase Price (if any) paid by the Recipient to the Company, without interest or
premium, and otherwise returned to the Company without consideration.
6.4 Stock Appreciation Rights.
(a) Granting of Stock Appreciation Rights. The Administrator may at any time and from time to
time approve the grant to Eligible Persons of Stock Appreciation Rights, related or unrelated to
Stock Options.
(b) SARs Related to Options.
(i) A Stock Appreciation Right related to a Stock Option will entitle the holder of the
related Stock Option, upon exercise of the Stock Appreciation Right, to surrender such Stock
Option, or any portion thereof to the extent previously vested but unexercised, with respect to
the number of shares as to which such Stock Appreciation Right is exercised, and to receive
payment of an amount computed pursuant to Section 6.4(b)(iii). Such Stock Option will, to the
extent surrendered, then cease to be exercisable.
(ii) A Stock Appreciation Right related to a Stock Option hereunder will be exercisable at
such time or times, and only to the extent that, the related Stock Option is exercisable, and
will not be transferable except to the extent that such related Stock Option may be transferable
(and under the same conditions), will expire no later than the expiration of the related Stock
Option, and may be exercised only when the market price of the Common Stock subject to the
related Stock Option exceeds the exercise price of the Stock Option.
(iii) Upon the exercise of a Stock Appreciation Right related to a Stock Option, the
Recipient will be entitled to receive payment of an amount determined by multiplying: (A) the
difference obtained by subtracting the exercise price of a share of Common Stock specified in
the related Stock Option from the Fair Market Value of a share of Common Stock on the date of
exercise of such Stock Appreciation Right (or as of such other date or as of the occurrence of
such event as may have been specified in the instrument evidencing the grant of the Stock
Appreciation Right), by (B) the number of shares as to which such Stock Appreciation Right is
exercised.
(c) SARs Unrelated to Options. The Administrator may grant Stock Appreciation Rights unrelated
to Stock Options. Section 6.4(b)(iii) will govern the amount payable at exercise under such Stock
Appreciation Right, except that in lieu of an option exercise price the initial base amount
specified in the Award shall be used. All Stock Appreciation Rights unrelated to Stock Options
shall be granted subject to the same terms and conditions applicable to Stock Options as set forth
in Section 6.1.
(d) Limits. Notwithstanding the foregoing, the Administrator, in its discretion, may place a
dollar limitation on the maximum amount that will be payable upon the exercise of a Stock
Appreciation Right.
(e) Payments. Payment of the amount determined under the foregoing provisions may be made
solely in whole shares of Common Stock valued at their Fair Market Value on the date of exercise of
the Stock Appreciation Right or, alternatively, at the discretion of the Administrator, in cash or
in a combination of cash and shares of Common Stock as the Administrator deems advisable. The
Administrator has full discretion to determine the form in which payment of a Stock Appreciation
Right will be made and to consent to or disapprove the election of a Recipient to receive cash in
full or partial settlement of a Stock Appreciation Right. If the Administrator decides to make full
payment in shares of Common Stock, and the amount payable results in a fractional share, payment
for the fractional share will be made in cash.
6.5 Stock Payments.
The Administrator may approve Stock Payments to any Eligible Person on such terms and
conditions as the Administrator may determine. Stock Payments will replace cash compensation at the
Fair Market Value of the Common Stock on the date payment is due.
6.6 Dividend Equivalents.
The Administrator may grant Dividend Equivalents to any Recipient who has received an Award
denominated in shares of Common Stock other than Stock Options or SARs or, to the extent unearned,
Performance Awards. Dividend Equivalents may be paid in cash, Common Stock or other Awards; the
amount of Dividend Equivalents paid other than in cash will be determined by the Administrator by
application of such formula as the Administrator may deem appropriate to translate the cash value
of dividends paid to the alternative form of payment of the Dividend Equivalent. Dividend
Equivalents will be computed as of each dividend record date and will be payable to recipients
thereof at such time as the Administrator may determine. Notwithstanding the foregoing, if it is
intended that an Award qualify as Performance-Based Compensation, and
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the amount of compensation the Recipient could receive under the Award is based solely on an
increase in value of the underlying stock after the date of the grant or award, then the payment of
any Dividend Equivalents related to the Award shall not be made contingent on the exercise of the
Award.
6.7 Stock Bonuses.
The Administrator may issue Stock Bonuses to Eligible Persons on such terms and conditions as
the Administrator may determine.
6.8 Stock Sales.
The Administrator may sell to Eligible Persons shares of Common Stock on such terms and
conditions as the Administrator may determine.
6.9 Phantom Stock.
The Administrator may grant Awards of Phantom Stock to Eligible Persons. Phantom Stock is a
cash payment measured by the Fair Market Value of a specified number of shares of Common Stock on a
specified date, or measured by the excess of such Fair Market Value over a specified minimum, which
may but need not include a Dividend Equivalent.
6.10 Other Stock-Based Benefits.
The Administrator is authorized to grant Other Stock-Based Benefits. Other Stock-Based
Benefits are any arrangements granted under this Plan not otherwise described above that: (a) by
their terms might involve the issuance or sale of Common Stock or other securities of the Company;
or (b) involve a benefit that is measured, as a whole or in part, by the value, appreciation,
dividend yield or other features attributable to a specified number of shares of Common Stock or
other securities of the Company.
ARTICLE VII
NON-EMPLOYEE DIRECTOR OPTIONS
7.1 Grants of Stock Options.
Immediately following each annual meeting of stockholders of the Company, each Non-Employee
Director who has served as a director since his or her election or appointment and has been
re-elected as a director at such annual meeting shall automatically receive an option to purchase
up to 10,000 shares of the Companys Common Stock. Each Non-Employee Director who is appointed or
elected other than at an annual meeting of stockholders of the Company (whether by replacing a
director who retires, resigns or otherwise terminates his or her service as a director prior to the
expiration of his or her term or otherwise) shall automatically receive an option to purchase
shares of the Companys Common Stock as of the date of such appointment or election, consisting of
a number of shares of Company Common Stock determined by multiplying 10,000 by a fraction, the
numerator of which is the number of days from the date of grant to the date of the next scheduled
annual meeting of stockholders of the Company and the denominator of which is 365 (exclusive of
fractional shares). The exercise price for all grants of options granted under this Section 7.1
shall be equal to the Fair Market Value of the Companys Common Stock on the date of grant, subject
to: (a) vesting as set forth in Section 7.2 and (b) adjustment as set forth in this Plan.
7.2 Vesting.
All grants of options granted under Section 7.1 shall vest and become exercisable 100% on the
day prior to the date of the next annual meeting of stockholders following the grant date if the
Recipient has remained a director for the entire period from the date of grant to such vesting
date. Notwithstanding the foregoing, however, subject to subject to Section 5.12, all grants of
options granted under Section 7.1 that have not vested and become exercisable at the time the
Recipient ceases to be a director shall terminate.
7.3 Exercise.
Non-Employee Director Options will be exercisable, and the exercise price therefor shall be
paid, in the same manner as provided herein for other Stock Options.
7.4 Term of Options and Effect of Termination.
Notwithstanding any other provision of the Plan, no Non-Employee Director Option granted under
the Plan shall be exercisable after the expiration of ten years from the effective date of its
grant. In the event that the Recipient of any Non-Employee Director Options granted under the Plan
shall cease to be a director of the Company, subject to Section 5.12, all
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grants of options granted under Section 7.1 of this Plan to such Recipient shall be
exercisable, to the extent already exercisable at the date such Recipient ceases to be a director
and regardless of the reason the Recipient ceases to be a director, for a period of 365 days after
that date (or, if sooner, until the expiration of the option according to its terms), and shall
then terminate. In the event of the death of a Recipient while such Recipient is a director of the
Company or within the period after termination of such status during which he or she is permitted
to exercise an option, such option may be exercised by any person or persons designated by the
Recipient on a beneficiary designation form adopted by the Plan administrator for such purpose or,
if there is no effective beneficiary designation form on file with the Company, by the executors or
administrators of the Recipients estate or by any person or persons who shall have acquired the
option directly from the Recipient by his or her will or the applicable laws of descent and
distribution.
7.5 Amendment; Suspension.
The Administrator may at any time and from time to time in its discretion (a) change the
number of shares or vesting periods associated with the Non-Employee Director Options, and (b)
suspend and reactivate this Article VII.
ARTICLE VIII
CHANGE IN CONTROL
8.1 Provision for Awards Upon Change in Control.
Unless otherwise set forth in an Award Document or in this Section 8.1, as of the effective
time and date of any Change in Control, this Plan and any then outstanding Awards (whether or not
vested) will automatically terminate unless: (a) provision is made in writing in connection with
such transaction for the continuance of this Plan and for the assumption of such Awards, or for the
substitution for such Awards of new awards covering the securities of a successor entity or an
affiliate thereof, with appropriate adjustments as to the number and kind of securities and
exercise prices or other measurement criteria, in which event this Plan and such outstanding Awards
will continue or be replaced, as the case may be, in the manner and under the terms so provided; or
(b) the Board otherwise provides in writing for such adjustments as it deems appropriate in the
terms and conditions of the then-outstanding Awards (whether or not vested), including, without
limitation, (i) accelerating the vesting of outstanding Awards, and/or (ii) providing for the
cancellation of Awards and their automatic conversion into the right to receive the securities,
cash or other consideration that a holder of the shares underlying such Awards would have been
entitled to receive upon consummation of such Change in Control had such shares been issued and
outstanding immediately prior to the effective date and time of the Change in Control (net of the
appropriate option exercise prices). If, pursuant to the foregoing provisions of this Section 8.1,
this Plan and the Awards terminate by reason of the occurrence of a Change in Control without
provision for any of the action(s) described in clause (a) or (b) hereof, then subject to Section
5.12 and Section 6.1(e), any Recipient holding outstanding Awards will have the right, at such time
prior to the consummation of the Change in Control as the Board designates, to exercise or receive
the full benefit of the Recipients Awards to the full extent not theretofore exercised, including
any installments which have not yet become vested. Notwithstanding anything to the contrary in this
Section 8.1, the vesting provisions of Section 7.2 or any other provision in the Plan, all
Non-Employee Director Options granted under the Plan shall automatically vest and become
exercisable immediately prior to any Change in Control if the optionee is a director of the Company
at that time.
ARTICLE IX
DEFINITIONS
Capitalized terms used in this Plan and not otherwise defined have the meanings set forth
below:
Administrator means the Board as long as no Committee has been appointed and is in effect
and also means the Committee to the extent that the Board has delegated authority thereto.
Affiliated Entity means any Parent Corporation of the Company or Subsidiary Corporation of
the Company or any other entity controlling, controlled by, or under common control with the
Company.
Applicable Dividend Period means (i) the period between the date a Dividend Equivalent is
granted and the date the related Award terminates or is converted to Common Stock, or (ii) such
other time as the Administrator may specify in the written instrument evidencing the grant of the
Dividend Equivalent.
Award means any Stock Option, Performance Award, Restricted Stock, Stock Appreciation Right,
Stock Payment, Stock Bonus, Stock Sale, Phantom Stock, Dividend Equivalent, or Other Stock-Based
Benefit granted or sold to an Eligible Person under this Plan, or any similar award granted by the
Company prior to the Effective Date and outstanding as of the Effective Date that is governed by
this Plan.
Award Document means the agreement or confirming memorandum (or other instrument) setting
forth the terms and conditions of an Award. An Award Document may be in the form of an agreement
to be executed by both the Recipient and the Company (or an authorized representative of the Company) or certificates, notices or
similar instruments as approved by the Administrator.
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Board means the Board of Directors of the Company.
Change in Control means the following and shall be deemed to occur if any of the following
events occurs:
(i) Any Person becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of fifty percent (50%) or more of either the then outstanding shares of
Common Stock or the combined voting power of the Companys then outstanding securities entitled to
vote generally in the election of directors; or
(ii) Individuals who, as of the effective date hereof, constitute the Board (the Incumbent
Board) cease for any reason to constitute at least a majority of the Board, provided, however,
that any individual who becomes a director after the effective date hereof whose election, or
nomination for election by the Companys stockholders, is approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered to be a member of the
Incumbent Board unless that individual was nominated or elected by any person, entity or group (as
defined above) having the power to exercise, through beneficial ownership, voting agreement and/or
proxy, twenty percent (20%) or more of either the outstanding shares of Common Stock or the
combined voting power of the Companys then outstanding voting securities entitled to vote
generally in the election of directors, in which case that individual shall not be considered to be
a member of the Incumbent Board unless such individuals election or nomination for election by the
Companys stockholders is approved by a vote of at least two-thirds of the directors then
comprising the Incumbent Board; or
(iii) Consummation by the Company of the sale or other disposition by the Company of all or
substantially all of the Companys assets or a Reorganization of the Company with any other person,
corporation or other entity, other than
(A) a Reorganization that would result in the voting securities of the Company outstanding
immediately prior thereto (or, in the case of a Reorganization that is preceded or accomplished
by an acquisition or series of related acquisitions by any Person, by tender or exchange offer
or otherwise, of voting securities representing 5% or more of the combined voting power of all
securities of the Company, immediately prior to such acquisition or the first acquisition in
such series of acquisitions) continuing to represent, either by remaining outstanding or by
being converted into voting securities of another entity, more than 50% of the combined voting
power of the voting securities of the Company or such other entity outstanding immediately after
such Reorganization (or series of related transactions involving such a Reorganization), or
(B) a Reorganization effected to implement a recapitalization or reincorporation of the
Company (or similar transaction) that does not result in a material change in beneficial
ownership of the voting securities of the Company or its successor; or
(iv) Approval by the stockholders of the Company or an order by a court of competent
jurisdiction of a plan of liquidation of the Company.
Committee means any committee appointed by the Board to administer this Plan pursuant to
Section 4.1.
Common Stock means the common stock of the Company, $0.001 par value per share, as
constituted on the Effective Date, and as thereafter adjusted under Section 3.4.
Company means Quidel Corporation, a Delaware corporation.
Dividend Equivalent means a right granted by the Company under Section 6.6 to a holder of an
Award denominated in shares of Common Stock to receive from the Company during the Applicable
Dividend Period payments equivalent to the amount of dividends payable to holders of the number of
shares of Common Stock underlying such Award.
Effective Date means the date this Plan is first approved and adopted by the Companys
stockholders.
Eligible Person includes directors, including Non-Employee Directors, officers, employees,
consultants and advisors of the Company or of any Affiliated Entity; provided, however, that in
order to be Eligible Persons, consultants and advisors must render bona fide services to the
Company or any Affiliated Entity that are not in connection with capital-raising.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Expiration Date means the tenth (10th) anniversary of the Effective Date.
Fair Market Value of a share of the Companys capital stock as of a particular date means:
(i) if the stock is listed on an established stock exchange or exchanges (including for this
purpose, the Nasdaq Global Select Market), the closing sale price of the stock for such date on the
primary exchange upon which the stock trades, as measured by volume, as published in The Wall
Street Journal, or, if no sale price was quoted for such date, then as of the next preceding date
on which such a sale price was quoted; or (ii) if the stock is not then listed on an exchange
(including the Nasdaq Global Select Market), the
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average of the closing bid and asked prices per share for the stock in the over-the-counter
market on such date (in the case of (i) or (ii), subject to adjustment as and if necessary and
appropriate to set an exercise price not less than 100% of the fair market value of the stock on
the date an Award is granted); or (iii) if the stock is not then listed on an exchange or quoted in
the over-the-counter market, an amount determined in good faith by the Administrator, provided,
however, that (A) when appropriate, the Administrator in determining Fair Market Value of capital
stock of the Company may take into account such other factors as it may deem appropriate under the
circumstances, and (B) if the stock is traded on the Nasdaq SmallCap Market and both sales prices
and bid and asked prices are quoted or available, the Administrator may elect to determine Fair
Market Value under either clause (i) or (ii) above. Notwithstanding the foregoing, the Fair Market
Value of capital stock for purposes of grants of Stock Options and Stock Appreciation Rights must
be determined in a manner consistent with Section 409A of the IRC and, to the extent applicable,
Section 422 of the IRC. The Fair Market Value of rights or property other than capital stock of the
Company means the fair market value thereof as determined by the Administrator on the basis of such
factors as it may deem appropriate.
Incentive Stock Option means a Stock Option that qualifies as an incentive stock option
under Section 422 of the IRC.
IRC means the Internal Revenue Code of 1986, as amended.
Just Cause Dismissal means a termination of a Recipients employment for any of the
following reasons: (i) the Recipient violates any reasonable rule or regulation of the Board, the
Companys President or Chief Executive Officer or the Recipients superiors that results in damage
to the Company or any Affiliated Entity or which, after written notice to do so, the Recipient
fails to correct within a reasonable time not exceeding 15 days; (ii) any willful misconduct or
gross negligence by the Recipient in the responsibilities assigned to the Recipient; (iii) any
willful failure to perform the Recipients job as required to meet the objectives of the Company or
any Affiliated Entity; (iv) any wrongful conduct of a Recipient which has an adverse impact on the
Company or any Affiliated Entity or which constitutes a misappropriation of assets of the Company
or any Affiliated Entity; (v) the Recipients performing services for any other person or entity
that competes with the Company while the Recipient is employed by the Company without the written
approval of the Chief Executive Officer of the Company; or (vi) any other conduct that the
Administrator reasonably determines constitutes Just Cause for Dismissal; provided, however, that
if a Recipient is party to an employment agreement with the Company or any Affiliated Entity
providing for just cause dismissal (or some comparable concept) of Recipient from Recipients
employment with the Company or any Affiliated Entity, Just Cause Dismissal for purposes of this
Plan will have the same meaning as ascribed thereto or to such comparable concept in such
employment agreement.
Non-Employee Director means a director of the Company who qualifies as a Non-Employee
Director under Rule 16b-3 under the Exchange Act.
Non-Employee Director Option means a right to purchase stock of the Company granted under
Section 7.1 of this Plan.
Nonqualified Stock Option means a Stock Option that is not an Incentive Stock Option.
Other Stock-Based Benefits means an Award granted under Section 6.10.
Parent Corporation means any Parent Corporation as defined in Section 424(e) of the IRC.
Performance Award means an Award under Section 6.2, payable in cash, Common Stock or a
combination thereof, that vests and becomes payable over a period of time upon attainment of
preestablished, objective performance goals established in connection with the grant of the Award,
which may be based on Qualifying Performance Criteria or other standards of financial performance
and/or personal performance evaluations.
Performance-Based Compensation means performance-based compensation as described in Section
162(m) of the IRC and the regulations issued thereunder. If the amount of compensation an Eligible
Person will receive under any Award is not based solely on an increase in the value of Common Stock
after the date of grant or award, the Administrator, in order to qualify an Award as
performance-based compensation under Section 162(m) of the IRC, can condition the grant, award,
vesting, or exercisability of such an Award on the attainment of one or more Qualifying Performance
Criteria.
Permanent Disability means that the Recipient becomes physically or mentally incapacitated
or disabled so that the Recipient is unable to perform substantially the same services as the
Recipient performed prior to incurring such incapacity or disability (the Company, at its option
and expense, being entitled to retain a physician to confirm the existence of such incapacity or
disability, and the determination of such physician to be binding upon the Company and the
Recipient), and such incapacity or disability continues for a period of three consecutive months or
six months in any 12-month period or such other period(s) as may be determined by the Administrator
with respect to any Award, provided, however, that for purposes of determining the period during
which an Incentive Stock Option may be exercised pursuant to Section 6.1(e), Permanent Disability
shall mean permanent and total disability as defined in Section 22(e) of the IRC.
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Person means any person, entity or group, within the meaning of Section 13(d) or 14(d) of
the Exchange Act, but excluding (i) the Company and its subsidiaries, (ii) any employee stock
ownership or other employee benefit plan maintained by the Company and (iii) an underwriter or
underwriting syndicate that has acquired the Companys securities solely in connection with a
public offering thereof.
Phantom Stock means an Award granted under Section 6.9.
Plan means this 2010 Equity Incentive Plan of the Company.
Plan Term means the period during which this Plan remains in effect (commencing the
Effective Date and ending on the Expiration Date).
Prior Plan means the 2001 Equity Incentive Plan of the Company, as amended.
Purchase Price means the purchase price (if any) to be paid by a Recipient for Restricted
Stock as determined by the Administrator (which price shall be at least equal to the minimum price
required under applicable laws and regulations for the issuance of Common Stock which is
nontransferable and subject to a substantial risk of forfeiture until specific conditions are met).
Qualifying Performance Criteria means any one or more of the following performance criteria,
or derivations of such performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or Affiliated Entity,
either individually, alternatively or in any combination, and measured either annually (or over
such shorter period) or cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years results or to a designated comparison group, in each
case as specified by the Administrator: (a) cash flow, (b) earnings and earnings per share
(including earnings before interest, taxes, and amortization), (c) return on equity, (d) total
Stockholder return, (e) return on capital, (f) return on assets or net assets, (g) aggregate
product price and other product measures; (h) market share or market penetration with respect to
specific designated products and/or geographic areas; (i) revenues, income or net income, (j)
operating income or net operating income, (k) operating margin and (l) return on operating revenue.
Recipient means a person who has received an Award.
Reorganization means any merger, consolidation or other reorganization.
Restricted Stock means Common Stock that is the subject of an Award made under Section 6.3
and that is nontransferable and subject to a substantial risk of forfeiture until specific
conditions are met, as set forth in this Plan and in any statement evidencing the grant of such
Award.
Securities Act means the Securities Act of 1933, as amended.
Significant Stockholder is an individual who, at the time a Stock Option is granted to such
individual under this Plan, owns more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of any Parent Corporation or Subsidiary Corporation (after
application of the attribution rules set forth in Section 424(d) of the IRC).
Stock Appreciation Right or SAR means a right granted under Section 6.4 to receive a
payment that is measured with reference to the amount by which the Fair Market Value of a specified
number of shares of Common Stock appreciates from a specified date, such as the date of grant of
the SAR, to the date of exercise.
Stock Bonus means an issuance or delivery of unrestricted or restricted shares of Common
Stock under Section 6.7 as a bonus for services rendered or for any other valid consideration under
applicable law.
Stock Payment means a payment in shares of the Companys Common Stock under Section 6.5 to
replace all or any portion of the compensation or other payment (other than base salary) that would
otherwise become payable to the Recipient in cash.
Stock Option means a right to purchase stock of the Company granted under Section 6.1 or
Section 7.1 of this Plan.
Stock Sale means a sale of Common Stock to an Eligible Person under Section 6.8.
Subsidiary Corporation means any Subsidiary Corporation as defined in Section 424(f) of the
IRC.
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ANNUAL MEETING OF STOCKHOLDERS OF
QUIDEL CORPORATION
May 12, 2010
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, 10-K Wrap is/are available at www.proxyvote.com.
QUIDEL CORPORATION
Annual Meeting of Stockholders to be held on May 12, 2010
This proxy is solicited by the Board of Directors
The undersigned, a Stockholder of QUIDEL CORPORATION, a Delaware corporation, hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders, the Annual Report to Stockholders and the
accompanying Proxy Statement for the Annual Meeting to be held on Wednesday, May 12, 2010, at
8:30 a.m., local time, at the San Diego Marriott Del Mar, 11966 El Camino Real, San Diego,
California 92130, and, revoking any proxy previously given, hereby appoints Douglas C. Bryant and
John M. Radak, and each of them individually, proxies and attorneys-in-fact, each with full power
of substitution and revocation, and each with all power that the undersigned would possess if
personally present, to vote QUIDEL CORPORATION Common Stock held by the undersigned at such meeting
and any postponements or adjournments of such meeting, as set forth on the reverse, and in their
discretion upon any other business that may properly come before the meeting.
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(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
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IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
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QUIDEL CORPORATION
10165 MCKELLAR COURT
SAN DIEGO, CA 92121
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VOTE BY INTERNETwww.proxyvote.com
Use the Internet to transmit your voting instructions
and for electronic delivery of information up until
11:59 P.M. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand
when you access the web site and follow the
instructions to obtain your records and to create an
electronic voting instruction form. |
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Electronic Delivery of Future PROXY MATERIALS
If you would like to reduce the costs incurred by our
company in mailing proxy materials, you can consent
to receiving all future proxy statements, proxy cards
and annual reports electronically via e-mail or the
Internet. To sign up for electronic delivery, please
follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree
to receive or access proxy materials electronically
in future years. |
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VOTE BY PHONE1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your
proxy card in hand when you call and then follow the
instructions. |
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in
the postage-paid envelope we have provided or return
it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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To withhold
authority to vote
for any individual |
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For
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Withhold
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For All
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nominee(s), mark For All Except and write the |
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QUIDEL CORPORATION
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All |
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All |
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Except |
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number(s) of the nominee(s) on the line below. |
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The Board of Directors recommends
that you vote FOR the following: |
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1.
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Election of Directors
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o
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o
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o |
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Nominees |
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01) Thomas D. Brown
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05) Mary Lake Polan |
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02) Douglas C. Bryant
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06) Mark A. Pulido |
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03) Kenneth F. Buechler
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07) Jack W. Schuler |
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04) Rod F. Dammeyer |
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The Board of Directors recommends that
you vote |
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FOR the following
proposal(s): |
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For |
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Against |
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Abstain |
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2.
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To ratify the selection by the Audit Committee
of the Board of Directors of Ernst & Young LLP
as our independent registered public accounting
firm for our fiscal year ending December 31,
2010;
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o
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o
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o |
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3.
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To approve the adoption of the Quidel Corporation 2010 Equity Incentive Plan;
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o
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o
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NOTE: To transact
such other business as may properly be presented at the Annual Meeting or any
adjournments or postponements thereof. Unless otherwise specified, this proxy will be
voted FOR the election of each nominee for director listed on this proxy card in proposal 1;
FOR proposals 2 and 3; and in the discretion of the proxy holders on all other business
that comes before the meeting.
For address changes/comments, mark here. o
(see reverse for instructions)
Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, or other fiduciary, please give full title
as such. Joint owners should each sign personally. All holders must sign. If
a corporation or partnership, please sign in full corporate or partnership
name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date |