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Orthopedic and
General Surgery was gained at the Cornell Medical College/Hospital for Special
Surgery. Dr. Savarese holds an M.B.A from Stanford University and an M.D. from
Duke University Medical School. Montreux Equity Partners was one of the
investors in our October 2008 private placement. In connection with the private
placement, we agreed that Montreux Equity Partners was entitled to appoint one
representative to our board of directors so long as its affiliated funds hold
at least 25% of the shares of our common stock that they purchased in the
private placement. Dr. Savarese was appointed to our board pursuant to that
agreement. We believe that Dr. Savarese is qualified to serve as a director of
our company due to his historical experience as an executive and an investor in
the healthcare industry, his governance experience as a director of several
other medical device and healthcare companies, and his clinical background in
orthopedic surgery.
Class
II Directors with a Term Expiring at the 2012 Annual Meeting of Stockholders
Charles
W. Federico
, our Lead Director, has served as one
of our directors since June 2007. From 2001 to April 2006, Mr. Federico served
as President and Chief Executive Officer of Orthofix International N.V., a
global diversified medical device company, and, from 1996 to 2001, President of
Orthofix Inc. From 1985 to 1996, Mr. Federico was President of Smith &
Nephew Endoscopy (formerly Dyonics, Inc.). From 1981 to 1985, Mr. Federico
served as Vice President of Dyonics. Previously, he held management and
marketing positions with General Foods Corporation, Puritan Bennett Corporation
and LSE Corporation. Mr. Federico is a Trustee of the Orthopedic Research and
Education Foundation and was a corporate governance panel member at the 2009
Florida Directors Institute. Mr. Federico is a director of Orthofix
International N.V., chairman of the board and a member of the nominating and
corporate governance and compensation committees of SRI/Surgical Express, Inc.,
and a director, chairman of the compensation committee, and member of the audit
committee of BioMimetic Therapeutics, Inc. Mr. Federico previously served as
the lead director and a member of the compensation and audit committees of
Power Medical Interventions, Inc. and as a director of Alveolus, Inc. Mr.
Federico holds a B.S. in marketing from Fordham University. Mr. Federico’s
leadership experience in the public and private sectors, his long career as an
executive of a publicly traded medical device company, his experience serving
on the board of directors for both public and private companies, and his
resulting skills in the areas of corporate governance, corporate transactions,
and enterprise risk management, as well his familiarity with our industry, led
to the conclusion that he should serve as a director of our company.
Maurice
R. Ferré, M.D.
our
founding President, Chief Executive Officer and current Chairman of our board
of directors, has been with us since our inception in November 2004. In May
2004, Dr. Ferré became Chief Executive Officer of Z-KAT, Inc., a surgical
navigation medical device company that incorporated MAKO Surgical Corp. Dr.
Ferré served as Vice President of Strategic Development at GE Navigation, a
division of GE Healthcare, from April 2002 until April 2004. In 1993, Dr. Ferré
founded Visualization Technology, Inc., a medical device company for
image-guided surgery, and served as its Chief Executive Officer until the
company was acquired by GE Healthcare in April 2002. Dr. Ferré holds a B.A. in
biology from Bennington College and a Masters in Public Health and an M.D. from
Boston University. Dr. Ferré’s experience as an executive of our company and
other medical device companies and his resulting skills in the areas of
corporate transactions, operations and manufacturing, business development,
brand marketing, corporate communications and enterprise risk management, along
with his familiarity with our business and industry and role as our President
and Chief Executive Officer, led to the conclusion that he should serve as a
director of our company and Chairman of the Board.
Frederic
H. Moll, M.D.
has served as one of our directors
since August 2007. In September 2002, Dr. Moll co-founded Hansen Medical, Inc.,
a medical robotics company, and serves as its Chief Executive Officer and is a
member of its board of directors. In November 1995, Dr. Moll co-founded Intuitive
Surgical, Inc., a medical device company, and served as its first Chief
Executive Officer and later, its Vice President and Medical Director until
September 2003. In 1989, Dr. Moll co-founded Origin Medsystems, Inc., a medical
device company, which later became an operating company within Guidant
Corporation, a medical device company, following its acquisition by Eli Lilly
in 1992. Dr. Moll served as Medical Director of Guidant’s surgical device
division until November 1995. Dr. Moll holds a B.A. from the University of
California, Berkeley, an M.S. from Stanford University and an M.D. from the
University of Washington School of Medicine. Dr. Moll’s leadership experience
in the medical device industry, his long career as an executive of a
publicly-traded company, his medical background, and his resulting skills in
the areas of business development, corporate transactions, corporate
communications and enterprise risk management led to the conclusion that he
should serve as a director of our company.
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Class
I Directors with a Term Expiring at the 2011 Annual Meeting of Stockholders
S.
Morry Blumenfeld, Ph.D.
has served as one of our directors since July 2005. In
2003, Dr. Blumenfeld founded Meditech Advisors LLC and Meditech Advisors
Management LLC, a member of Ziegler MediTech Partners, LLC, the sole general
partner of Ziegler Meditech Equity Partners, LP, a private equity fund
specializing in investments in healthcare and medical device companies. In
April 2002, Dr. Blumenfeld retired as Managing Director of GE Medical Systems
in Israel after more than 34 years with the company, where he helped initiate
both GE’s CT and MR business lines. Currently, he serves on the board of
directors of a number of medical device and technology companies, including
Oridion Systems Ltd., where he is a member of the compensation committee, and
several private companies. Dr. Blumenfeld holds a B.A.Sc in engineering physics
and a Ph.D. in molecular physics from the University of Toronto. Dr. Blumenfeld’s
leadership experience and international business, corporate transactions, and
corporate governance expertise garnered from his business experience, as well
as his familiarity with our industry, led to the conclusion that he should
serve as a director of our company.
John
G. Freund, M.D.
has served as one of our directors since October 2008. Since 1997,
Dr. Freund has been a Managing Director of Skyline Ventures, a venture capital
firm. From September 1995 to September 1997, Dr. Freund was a Managing Director
in the Alternative Assets Group at Chancellor Capital Management, an investment
firm. In 1995, Dr. Freund co-founded Intuitive Surgical, Inc., a medical device
company, and served on Intuitive’s board of directors until March 2000. From June
1988 to December 1994, Dr. Freund held various positions at Acuson Corporation,
a medical device company, including Executive Vice President. From 1982 to
1988, Dr. Freund was at Morgan Stanley & Co., Inc., an investment banking
firm, where he was the co-founder of the Healthcare Group in the Corporate
Finance Department and later was the original healthcare partner at Morgan
Stanley Venture Partners, a venture capital firm affiliated with Morgan
Stanley. Dr. Freund served on the board of directors of Hansen Medical, Inc., a
medical device company, from November 2002 to March 2010 and is currently a
director and member of the audit committee and the nominating and corporate
governance committee of XenoPort Inc., a biotech company, a director and member
of the nominating and corporate governance committee of MAP Pharmaceuticals,
Inc., a biotech company, a director and member of the contracts and governance
committee and the nominating committee of the SmallCap World Fund, and a
director and member of the contracts committee and the nominating and
governance committee of each of The Growth Fund of America, Inc. and
Fundamental Investors, Inc., each of which are U.S.-registered investment
funds. Dr. Freund also is a director of a number of private companies. Dr.
Freund received an M.D. from Harvard Medical School in 1980 and an M.B.A. from
Harvard Business School in 1982, where he was a Baker Scholar. Skyline Ventures
was one of the investors in our October 2008 private placement. In connection
with the private placement, we agreed that Skyline Ventures was entitled to
appoint one representative to our board of directors so long as its affiliated
funds hold at least 25% of the shares of our common stock that they purchased
in the private placement. Dr. Freund was appointed to our board pursuant to
that agreement. We believe that Dr. Freund is qualified to serve as a director
of our company due to his leadership experience in the life sciences industry,
his experience as a director of several other medical device and biotech
companies, his medical background, and his resulting skills in the areas of
business development, corporate transactions, corporate communications, and
enterprise risk management.
William
D. Pruitt
has served as one of our directors since
June 2008. Mr. Pruitt is president of Pruitt Enterprises, LP. Mr. Pruitt has
been an independent board member of The PBSJ Corporation, an international
professional services firm, since July 2005, has been the chairman of the PBSJ
audit committee since 2003, and is a member of the PBSJ compensation committee.
Mr. Pruitt served as chairman of the audit committee of KOS Pharmaceuticals,
Inc., a fully integrated specialty pharmaceutical company, until its sale in
2006. He was also chairman of the audit committee for Adjoined Consulting,
Inc., a full-service management consulting firm, until it was merged into
Kanbay International, a global consulting firm, in February 2006. Mr. Pruitt
also has served as a director and chairman of the audit committee of Coral
Gables Trust Company since December 2009. From 2002 to 2004, Mr. Pruitt
provided market consultancy services to Ernst & Young LLP, our independent
registered public accounting firm. From 1980 to 1999, Mr. Pruitt served as the
managing partner for the Florida, Caribbean and Venezuela operations of the
independent auditing firm of Arthur Andersen LLP. Mr. Pruitt holds a Bachelor
of Business Administration from the University of Miami and is a Certified
Public Accountant (inactive). Mr. Pruitt’s experience in financial matters as a
certified public accountant and as a former managing partner of an accounting
firm and the skills he acquired through these positions in the areas of
financial matters, public accounting, corporate transactions and enterprise risk
management, as well as his background as a director and audit committee member
of publicly-traded companies, led to the conclusion that he should serve as a
director of our company.
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BOARD
OF DIRECTORS AND CORPORATE GOVERNANCE
INDEPENDENT DIRECTORS
Our
board of directors has determined that eight of the nine directors currently
serving on our board are independent directors under the independence standards
of The NASDAQ Global Market; specifically, Messrs. Chao, Dewey, Federico and
Pruitt and Drs. Blumenfeld, Freund, Moll, and Savarese are independent. Mr.
Chao is retiring from our board of directors when his current term as a
director expires at the annual meeting of stockholders.
In
making determinations of independence with respect to Messrs. Chao and Drs.
Blumenfeld, Freund, and Savarese, each of whom is affiliated with a principal
stockholder of our company, our board considered the relationship between the
director and the respective stockholder and determined, in each case, that the
relationship was not relevant to the director’s independence.
In
accordance with the requirements of NASDAQ, our independent directors meet in
regularly convened executive sessions at least twice per year, in conjunction
with regularly scheduled board meetings.
BOARD LEADERSHIP STRUCTURE
Our
board of directors does not have a policy regarding the separation of the roles
of Chief Executive Officer and Chairman of the Board as our board of directors
believes it is in the best interest of the company to make that determination
based on the current position and direction of the company and the membership
of the board of directors. Dr. Ferré, our company’s Chief Executive Officer,
currently serves as Chairman of the Board. Our board of directors has
determined that this combined role is in the best interests of the company’s
stockholders at this time because Dr. Ferré is the person best qualified to
serve as Chairman of the Board given his history with our company and his
skills and experience within the industry that we operate. Further, our board
of directors believes that this leadership structure is appropriate at this
time as it establishes a single leader with one vision setting the tone and
direction for our company. Our board of directors believes that there is no
single best organizational model that would be most effective in all
circumstances and therefore retains the authority to modify this structure to
best address our company’s unique circumstances as and when appropriate.
In
March 2009, our board of directors established the position of Lead Director to
supplement the combined Chief Executive Officer and Chairman of the Board
position. Charles W. Federico currently serves as our Lead Director. The Lead
Director works closely with the Chairman of the Board and our Chief Executive
Officer to assure that our board is able to more effectively and pro-actively
execute its fundamental duties on an ongoing basis and to enhance our board’s
ability to oversee and monitor the operations of our company. The primary
responsibilities of the Lead Director include the following, among other
things:
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Presiding at
all meetings of the board at which the Chairman of the Board is not present,
including all executive sessions of the independent directors and
establishing agendas for the executive sessions in consultation with the
other directors and the Chairman of the Board;
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Working with
the Chairman of the Board to establish meeting agendas for the board of
directors and its committees;
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Reviewing
all board materials;
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Advising the
Chairman of the Board regarding any director and stockholder concerns;
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Interviewing,
along with the chairman of the corporate governance and nominating committee,
all candidates for our board of directors;
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Soliciting
suggestions from the chairs of the board’s committees;
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Participating
with the Chairman of the Board and the company’s executive officers in
certain strategic planning and implementation tasks.
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THE BOARD’S ROLE IN RISK OVERSIGHT
Our
board of directors is responsible for overseeing the operational and strategic
risk management processes that have been designed and implemented by our
company’s senior management. Our board of directors has delegated to its audit
committee primary responsibility for reviewing the company’s policies with
respect to risk assessment and risk management. Each committee of our board of
directors also oversees the management of company risks that fall within the
committee’s areas of responsibility. For examples, the audit committee
addresses significant financial risk exposures facing the company and the steps
management has taken to monitor, control and report such exposures; the
compensation committee addresses significant risk exposures facing the company
with respect to compensation; and the corporate governance and nominating
committee oversees corporate governance risks. Each committee reports to the
full board of directors on a regular basis, including, as appropriate, an
update on the committee’s risk oversight activities. Our board of director’s
role in our company’s risk oversight has not affected our leadership structure.
Our
company has created a Risk Management Committee comprised of senior management
from each operating division of the company that is responsible for
identifying, assessing, and developing a mitigation strategy for significant
enterprise risks that could impact our company’s ability to meet our objectives
and execute our strategic plan. Our Risk Management Committee periodically
meets to identify, assess, and prioritize internal and external significant
risks and to develop processes for responding to, mitigating, and monitoring
such risks. The Risk Management Committee provides a summary of its activities
and findings directly to the audit committee and, as appropriate, to the other
committees and the full board of directors.
MEETINGS AND ATTENDANCE
During
2009, our board of directors held twelve meetings. Each of our incumbent
directors attended at least 75% of the aggregate number of meetings of the
board and the committees on which the director served, which were held during
such director’s term of office. None of the members of the standing committees
of our board of directors, described in detail below, was an officer or
employee of our company.
We
have no policy requiring our directors to attend our annual stockholders
meetings; however, our corporate governance guidelines provide that directors
should make every effort to attend all annual and special meetings of
stockholders, as well as meetings of our board of directors and meetings of the
board committees of which they are members. Eight of our directors attended our
2009 annual stockholders meeting.
BOARD COMMITTEES AND MEETINGS
Our
board of directors has a standing audit committee, compensation committee, and
corporate governance and nominating committee. The board has adopted, and may
amend from time to time, a written charter for each of the committees. We
maintain a website at
www
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makosurgical
.
com
and make available on that website, free of charge,
copies of each of the committee charters. We are not including the information
contained on or available through our website as a part of, or incorporating
such information by reference into, this proxy statement.
We
provide below information on the standing committees of our board of directors,
including the membership, functions and number of meetings of each committee
held in 2009. As part of its standard practices and in light of Mr. Chao’s
resignation from our board, our board of directors will reconstitute the
membership of each committee at our board’s annual meeting immediately
following the 2010 annual stockholders meeting.
Audit Committee
Our
audit committee consists of Messrs. Pruitt, Chao, and Federico, each of whom
our board of directors has determined to be an independent director. Our board
of directors has determined that Mr. Pruitt qualifies as an audit committee
financial expert within the meaning of SEC regulations and is financially
sophisticated within the meaning of the NASDAQ listing standards. In making
this determination, our board considered the nature and scope of experience that
Mr. Pruitt has previously had with reporting companies. Mr. Pruitt currently
serves as the chair of the audit committee. The audit committee held nine
meetings in 2009. The functions of this committee include, among other things:
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Overseeing
the audit and other services of our independent registered public accounting
firm and being directly responsible for the appointment, compensation,
retention and oversight of the independent registered public accounting firm,
who will report directly to the audit committee;
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Reviewing
and pre-approving the engagement of our independent registered public
accounting firm to perform audit services and any permissible non-audit
services;
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Overseeing
compliance with the requirements of Section 404 of the Sarbanes-Oxley
Act of 2002;
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Reviewing
our annual and quarterly financial statements and reports and discussing the
financial statements and reports with our independent registered public
accounting firm and management;
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Reviewing
and approving all related person transactions;
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Reviewing
with our independent registered public accounting firm and management
significant issues that may arise regarding accounting principles and
financial statement presentation, as well as matters concerning the scope,
adequacy and effectiveness of our internal controls over financial reporting;
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Establishing
procedures for the receipt, retention and treatment of complaints received by
us regarding internal control over financial reporting, accounting or
auditing matters; and
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Preparing
the audit committee report for inclusion in our proxy statement for our
annual meeting.
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Both
our independent registered public accounting firm and management periodically
meet privately with our audit committee.
Compensation
Committee
Our
compensation committee consists of Mr. Chao, Dr. Blumenfeld, and
Mr. Dewey, each of whom our board has determined to be an independent
director. Each member of our compensation committee is a non-employee director,
as defined in Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended, and an outside director, as defined pursuant to
Section 162(m) of the Internal Revenue Code of 1986. The compensation committee
held eight meetings in 2009.
Mr.
Chao serves as the chair of the compensation committee. The functions of this
committee include, among other things:
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Determining
the compensation and other terms of employment of our Chief Executive Officer
and other executive officers and reviewing and approving corporate
performance goals and objectives relevant to such compensation;
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Administering
and implementing our incentive compensation plans and equity-based plans,
including approving option grants, restricted stock and other awards;
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Evaluating
and recommending to our board of directors the equity incentive compensation
plans, equity-based plans and similar programs advisable for us, as well as
modifications or terminations of existing plans and programs;
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Reviewing
and approving the terms of any employment-related agreements, severance
arrangements, change-in-control and similar agreements/provision and any
amendments, supplements or waivers to the foregoing agreements with our Chief
Executive Officer and other executive officers;
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Reviewing
and discussing the Compensation Discussion and Analysis required in our
annual report and proxy statement with management and determining whether to
recommend to the board the inclusion of the Compensation Discussion and
Analysis in the annual report or proxy; and
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Preparing
the compensation committee report for inclusion in our proxy statement for
our annual meeting.
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In
making decisions concerning executive compensation, the compensation committee
typically considers, but is not required to accept, the recommendations of Dr.
Ferré, our President and Chief Executive Officer, regarding the performance and
proposed base salary, bonus target and equity awards for our named executive
officers, including Dr. Ferré. The compensation committee may also request
the assistance of Fritz L. LaPorte, our Chief Financial Officer, and our human
resources department in evaluating the financial, accounting and tax
implications of various compensation awards paid to the named executive
officers. Neither Mr. LaPorte nor our human resources employees, however,
recommend or determine the amounts or types of compensation paid to the named
executive officers. Dr. Ferré and certain of our other executive officers
may attend compensation committee meetings, as requested by the chairman of the
compensation committee and depending on the issues to be discussed by the
compensation committee, but none of these executive officers, including Dr. Ferré,
attends any portion of the compensation committee meetings during which his
compensation is discussed and approved.
In
the third quarter of 2007, as we discuss below under “Compensation Discussion
and Analysis,” the compensation committee retained Radford Surveys and
Consulting to conduct a review of the pre-IPO equity ownership levels for
senior management at other pre-IPO medical device and biotechnology companies
in later stages of financing, and provide an analysis of how the then-current equity
holdings of our senior management, including each of the then named executive
officers, compared to the median of the surveyed companies. In 2008, the
compensation committee did not engage a compensation consultant in making
decisions concerning executive compensation. In late 2009, the compensation
committee engaged Radford Surveys and Consulting to provide consulting services
to the committee related to 2010 executive compensation.
Additional
information regarding the compensation committee and our policies and
procedures regarding executive compensation, including the role of executive
officers and compensation consultants in recommending executive compensation,
is provided below under “Compensation Discussion and Analysis.”
Corporate
Governance and Nominating Committee
Our
corporate governance and nominating committee consists of Mr. Federico and
Drs. Freund, Moll, and Savarese each of whom our board has determined to be an
independent director. The corporate governance and nominating committee held
three meetings in 2009.
Mr.
Federico serves as the chair of the corporate governance and nominating
committee. The functions of this committee include, among other things:
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Evaluating
director performance on the board and applicable committees of the board;
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Interviewing,
evaluating, nominating and recommending individuals for membership on our
board of directors;
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Evaluating
nominations by stockholders of candidates for election to our board;
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Reviewing
and recommending to our board of directors any amendments to our corporate
governance documents; and
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Making
recommendations to the board regarding management succession planning.
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N
OMINATION PROCESS
Under
our corporate governance guidelines, the corporate governance and nominating
committee is responsible for identifying and recommending to our board of
directors qualified candidates for board membership. In considering potential
candidates for board membership, the corporate governance and nominating
committee considers the entirety of each candidate’s credentials.
Qualifications for consideration as a director nominee may vary according to
the particular areas of expertise being sought as a complement to the existing
composition of the board. However, at a minimum, candidates for the board must
possess:
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high
personal and professional ethics and integrity;
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an ability
to exercise sound judgment;
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an ability
to make independent analytical inquiries;
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a willingness
and ability to devote adequate time and resources to diligently perform board
duties; and
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appropriate
and relevant business experience and acumen.
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In
addition to the aforementioned minimum qualifications, the corporate governance
and nominating committee may take into account other factors when considering
whether to nominate a particular person. These factors include:
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whether the
person possesses specific industry expertise and familiarity with general
issues affecting our business;
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whether the
person’s nomination and election would enable our board to have a member that
qualifies as an “audit committee financial expert” as this term is defined by
the SEC in Item 407 of Regulation S-K, as may be amended;
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whether the
person would qualify as an independent director;
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the
importance of continuity of the existing composition of the board; and
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the
importance of diversified board membership, in terms of both the individuals
involved and their various experiences and areas of expertise.
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A
director candidate should have expertise, skills, knowledge and experience
that, when taken together with that of other board members, will lead to a
board of directors that is effective, collegial and responsive to our needs.
While
the corporate governance and nominating committee does not have a formal policy
relating specifically to the consideration of diversity in indentifying
director nominees, the committee does, as noted above, consider the importance
of a diversified board membership, including diversity of viewpoint,
background, industry knowledge and perspective, as part of its overall
evaluation of candidates for director nominees.
The
corporate governance and nominating committee may seek to identify director
candidates based on input provided by a number of sources, including (i)
committee members, (ii) our other directors, (iii) our stockholders,
(iv) our Chief Executive Officer and (v) third parties. The corporate
governance and nominating committee also has the authority to consult with or
retain advisors or search firms to assist in the identification of qualified
director candidates. In 2010, the corporate governance and nominating committee
retained a search firm to assist it in identifying and assessing potential
director candidates meeting the criteria established by the committee,
interviewing and screening such candidates, and acting as an intermediary with
such candidates.
The
corporate governance and nominating committee gives appropriate consideration
to candidates for board membership recommended for nomination by stockholders
and evaluates such candidates in the same manner as other candidates identified
to the committee. Stockholders who
wish to nominate director candidates for election by stockholders at the annual
meeting may do so in the manner disclosed in the Questions and Answers section
of this proxy statement in accordance with the provisions of our bylaws. Members
of the corporate governance and nominating committee will discuss and evaluate
possible candidates in detail prior to recommending them to the board.
The
corporate governance and nominating committee is also responsible for initially
assessing whether a candidate would be an independent director. Our board of
directors, taking into consideration the recommendations of the corporate
governance and nominating committee, is responsible for selecting the nominees
for election to the board by the stockholders and for appointing directors to
the board to fill vacancies and newly created directorships, with primary
emphasis on the criteria set forth above. The board, taking into consideration
the assessment of the corporate governance and nominating committee, also
determines whether a nominee or appointee would be an
independent director.
C
OMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
No
member of our compensation committee is or has been an officer or employee of
the company. None of our executive officers served on the board of directors or
compensation committee of any other entity that has or has had an executive
officer who served as a member of our board of directors or compensation
committee during 2009. Each of Dr. Blumenfeld and Mr. Dewey had relationships
with the company during 2009 that were disclosed as related person
transactions. See “Certain Relationships and Related Person Transactions –
Research and Development Agreement” and “Certain Relationships and Related
Person Transactions – Z-KAT Asset Purchase” below.
16
Table of Contents
C
ORPORATE GOVERNANCE GUIDELINES AND CODE OF BUSINESS
CONDUCT AND ETHICS
Our board
of directors has adopted a Code of Business Conduct and Ethics applicable to
all of our directors, officers, and employees, including, without limitation,
our principal executive officer, principal financial officer, controller, and
persons performing similar functions. In addition, our board of directors also
has adopted Corporate Governance Guidelines to assist our board in exercising
its duties. The Code of Business Conduct and Ethics and our Corporate
Governance Guidelines are available, free of charge, on the Investor Relations
section our website at
www
.
makosurgical
.
com
. We intend to satisfy
the disclosure requirement under Item 5.05 of Form 8-K regarding any
waivers from or amendments to any provision of the Code of Business Conduct and
Ethics by disclosing such information on the same website. We are not including the information
contained on or available through our website as a part of, or incorporating
such information by reference into, this proxy statement.
C
OMMUNICATIONS WITH THE BOARD OF DIRECTORS
You
can contact our board of directors to provide comments, to report concerns, or
to ask a question, at the following address: Corporate Secretary, MAKO Surgical
Corp., 2555 Davie Road, Fort Lauderdale, Florida, 33317. You may submit your
concern anonymously or confidentially by postal mail. You may also indicate
whether you are a stockholder, customer, supplier or other interested party.
Communications are distributed to the board of directors, or to any individual
director or directors as appropriate, depending on the facts and circumstances
outlined in the communication. In that regard, our board of directors has
requested that certain items that are unrelated to the duties and
responsibilities of the board should be excluded, such as:
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Ÿ
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Product
complaints
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Ÿ
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Product
inquiries
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Ÿ
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New product
suggestions
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Ÿ
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Resumes and
other forms of job inquiries
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Ÿ
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Surveys
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Ÿ
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Business
solicitations or advertisements
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In
addition, material that is unduly hostile, threatening, illegal or similarly
unsuitable will be excluded, with the provision that any communication that is
filtered out must be made available to any non-management director
upon request.
You
may also communicate online with our board of directors as a group by visiting
the Investor Relations section of our website at
www.makosurgical.com
.
CE
RTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
P
OLICIES AND PROCEDURES FOR RELATED PERSON
TRANSACTIONS
We
have adopted a Related Person Transactions Policy pursuant to which our
executive officers, directors and principal stockholders, including their
immediate family members, are not permitted to enter into a related person
transaction with us without the consent of our audit committee, other
independent committee of our board of directors, or the full board. Any request
for us to enter into a transaction with an executive officer, director,
principal stockholder or any of such person’s immediate family members in which
the amount involved exceeds $120,000 must be presented to our audit committee
for review, consideration and approval. All of our directors, executive
officers and employees are required to report to our audit committee any such
related person transaction. In approving or rejecting the proposed transaction,
our audit committee shall take into account, among other factors it deems
appropriate, whether the proposed related person transaction is on terms no
less favorable than terms generally available to an unaffiliated third party
under the same or similar circumstances, the extent of the person’s interest in
the transaction and, if applicable, the impact on a director’s independence.
After consideration of these and other factors, the audit committee may approve
or reject the transaction. Under the policy, if we should discover related
person transactions that have not been approved, the audit committee will be notified
and will determine the appropriate action, including ratification, rescission
or amendment of the transaction.
17
Table of Contents
R
ESEARCH AND DEVELOPMENT AGREEMENT
In
August 2009, we entered into a Research and Development Agreement, or the
R&D Agreement, with a third-party sensor company associated with the
potential future development of intellectual property and technology related to
sensing devices. The R&D Agreement required an initial payment of $50,000
and requires future payments ranging from $250,000 to $1,000,000 in the event
that we decide to enter into a licensing and supply agreement with the
third-party sensor company following the end of the research and development
period.
S.
Morry Blumenfeld and Christopher C. Dewey, members of our board of directors,
hold approximately five percent (5%) and ten percent (10%), respectively, of
the issued and outstanding stock of the third-party sensor company. The members
of the audit committee of our board of directors having no financial interest
in the R&D Agreement approved the terms of the R&D Agreement.
R
ECENT SALE OF SECURITIES
In
August 2009, we completed a public offering of our common stock, issuing
8,050,000 shares at an offering price to the public of $7.25 per share, resulting
in net proceeds, after underwriting discounts and commissions and expenses, of
approximately $54.3 million. Set forth below is information regarding two of
the participating investors who were existing stockholders deemed to be
affiliates of our company by virtue of their representation on the board.
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Investor (1)
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Common
Shares
(#)
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|
Purchase
Price
($)
|
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|
Montreux
Equity Partners IV, L.P. (2)
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632,000
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$
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4,582,000
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Skyline
Venture Partners V, L.P. (3)
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758,000
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$
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5,495,500
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(1)
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See the
section of this proxy entitled “Principal Stockholders” for more detail on
shares beneficially owned by these investors.
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(2)
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Montreux
Equity Partners IV, L.P. was an existing stockholder at the time of the
public offering and is represented on the board of directors by John J.
Savarese, M.D.
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(3)
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Skyline
Venture Partners V, L.P. was an existing stockholder at the time of the
public offering and is represented on the board of directors by John G.
Freund, M.D.
|
Each
of these existing stockholders participated in the public offering on the same
terms as the other purchasers. The members of the audit committee of our board
of directors having no financial interest in the public offering approved the
terms of the public offering and the participation of these existing
stockholders.
Z-
KAT
ASSET PURCHASE
In
February 2010, we completed the acquisition of substantially all of the
intellectual property assets of Z-KAT, Inc., or Z-KAT. The terms of the asset
purchase agreement between us and Z-KAT terminated our prior licenses with
Z-KAT, including Z-KAT’s nonexclusive sublicense to our intellectual property
portfolio, and transferred to us ownership rights to certain intellectual
property assets for core technologies in computer assisted surgery, or CAS,
haptics and robotics, including U.S. and foreign patents and patent
applications, proprietary software and documentation, trade secrets and
trademarks owned by Z-KAT, and certain contractual and other rights to licensed
patents, patent applications and other intellectual property licensed to Z-KAT.
We paid the purchase price in full at the time of closing by issuing 230,458
shares of our common stock to Z-KAT in a private placement. In connection with
the acquisition, we also entered into a new license agreement with Z-KAT
pursuant to which we obtained an exclusive worldwide, fully transferable,
perpetual, royalty-free and fully paid-up sublicense to certain intellectual
property for technologies in CAS licensed by Z-KAT. This new license agreement
expands our rights in this intellectual property from the field of orthopedics
to the medical field generally. Certain of our rights under the asset purchase
agreement and new license agreement remain subject to any prior license granted
by Z-KAT, including the license from Z-KAT to Biomet Manufacturing Corp.
Z-KAT
formed MAKO Surgical Corp. in November 2004 and Christopher C. Dewey, a member
of our board of directors, Maurice R. Ferré, M.D., our President and Chief
Executive Officer and Chairman of our board of directors, and Rony Abovitz, our
Chief Visionary Officer and Co-Founder, collectively hold more than ten percent
(10%) of the
18
Table of Contents
outstanding
stock of Z-KAT. The members of the audit committee of our board of directors having
no financial interest in the asset purchase agreement and new license agreement
approved the terms of the asset purchase agreement and new license agreement.
We
believe that there has not been any other transaction or series of similar transactions
during 2009, or any currently proposed transaction, to which we were or are to
be a party in which the amount involved exceeds $120,000 and in which any
director, executive officer or principal stockholder, or members of any such
person’s immediate family, had or will have a direct or indirect material
interest, other than compensation described in “Executive Compensation.” We
intend that any such future transactions will be approved by our audit
committee and will be on terms no less favorable to our company than could be
obtained from unaffiliated third parties.
2
009 DIRECTOR
COMPENSATION
The following
table sets forth information with respect to the compensation of all our
non-employee directors during 2009.
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Name
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Fees Earned or
Paid in Cash
($)
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Option Awards
($)(1)
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Total
($)
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S. Morry
Blumenfeld, Ph.D.
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—
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—
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—
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Gerald A.
Brunk (2)
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—
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—
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—
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Marcelo G.
Chao
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—
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—
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—
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Christopher
C. Dewey
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—
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—
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—
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Charles W.
Federico
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$
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44,750
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(3)
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$
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49,449
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(4)
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$
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94,199
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John G.
Freund, M.D.
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—
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—
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—
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Frederic H.
Moll, M.D.
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$
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27,500
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(5)
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$
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23,479
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(6)
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$
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50,979
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William D.
Pruitt
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$
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35,000
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(5)
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$
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16,666
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(7)
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$
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51,666
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John J.
Savarese, M.D.
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—
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—
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—
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(1)
|
Amounts
represent the aggregate grant date fair value of awards granted by the
Company during 2009, as computed in accordance with Accounting Standards
Codification (“ASC”) 718,
Compensation-Stock Compensation
,
disregarding any estimated forfeitures relating to service-based vesting
conditions. The 2009 Director Option Awards Table below provides further
detail on director option grants made in 2009.
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(2)
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Mr. Brunk
served as a director until the 2009 annual meeting of the stockholders held
on June 11, 2009, when his term as director expired.
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(3)
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Represents
fees earned in cash in 2009, including an annual retainer of $20,000, an
annual retainer as Lead Director of $16,000 which was prorated for the length
of service as Lead Director during 2009, $1,000 for each board or committee
meeting attended in 2009, and $500 for each telephonic or video board or
committee meeting attended in 2009.
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(4)
|
As of
December 31, 2009, Mr. Federico held options exercisable for
23,925 shares, 10,723 of which had vested and become exercisable.
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(5)
|
Represents fees
earned in cash in 2009, including an annual retainer of $20,000, $1,000 for
each board or committee meeting attended in 2009, and $500 for each
telephonic or video board or committee meeting attended in 2009.
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(6)
|
As of
December 31, 2009, Dr. Moll held options exercisable for
15,675 shares, 7,699 of which had vested and become exercisable.
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(7)
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As of
December 31, 2009, Mr. Pruitt held options exercisable for
13,200 shares, 4,949 of which had vested or become exercisable.
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19
Table of Contents
2009
Director Option Awards Table
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Name
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Grant
Date
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Number
of
Securities
Underlying
Options
(#)(1)
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Grant
Date
Fair Value
of Option Awards
($)(2)
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Charles W.
Federico
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1/27/09
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3,300
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$
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12,935
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Charles W.
Federico
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3/26/09
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825
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$
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3,486
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Charles W.
Federico
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6/5/09
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3,300
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$
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16,666
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Charles W.
Federico
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6/11/09
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3,300
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$
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16,362
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Frederic H.
Moll, M.D.
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1/27/09
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3,300
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$
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12,935
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Frederic H.
Moll, M.D.
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8/24/09
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2,475
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$
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10,544
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William D.
Pruitt
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6/5/09
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3,300
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$
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16,666
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(1)
|
Option
awards granted to each named executive officer during 2009 vest over three
years.
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(2)
|
Amounts
represent the aggregate grant date fair value of awards granted by the
Company during 2009, as computed in accordance with ASC 718, disregarding any
estimated forfeitures relating to service-based vesting conditions.
|
We
reimburse all of our directors for their reasonable out-of-pocket travel
expenses associated with attending board or committee meetings in person. Drs.
Blumenfeld, Freund, and Savarese and Messrs. Brunk, Chao, and Dewey did
not receive any compensation for their services on the board of directors
during 2009. Similarly, Dr. Ferré, our only employee director, does not
receive any compensation for his services as a director.
Annual
Cash Compensation
Each
member of our board whose directorship did not initially arise in conjunction
with either a direct or indirect (through an investing fund) investment in our
company received an annual retainer of $20,000, a fee of $1,000 for each board
meeting or committee meeting attended in person during 2009, $500 for each
telephonic or video board or committee meeting attended during 2009, and, with
respect to our lead director only, an additional annual retainer of $16,000.
Accordingly, during fiscal year 2009, Dr. Moll and Messrs. Federico and Pruitt
each received an annual retainer of $20,000, a fee of $1,000 for each board
meeting or committee meeting attended in person during 2009, $500 for each
telephonic or video board or committee meeting attended during 2009, and with
respect to Mr. Federico only, an additional prorated annual retainer of $12,250
for his partial year of service as lead director. Drs. Blumenfeld, Ferré,
Freund, and Savarese and Messrs. Brunk, Chao, and Dewey did not receive any
compensation in connection with their service on our board of directors during
fiscal year 2009.
Equity
Compensation
On
a case-by-case basis, non-employee directors may be entitled to receive
options, in an amount determined by our board of directors or its compensation
committee in its respective discretion, to purchase shares of common stock upon
initial election or appointment to the board of directors. In determining the
number of options granted to a director upon initial election or appointment,
the compensation committee uses its judgment and, consistent with our
compensation objectives, maintains the flexibility necessary to recruit
qualified and experienced directors. Furthermore, our lead director is entitled
to an annual grant of options to purchase 3,300 shares of our company’s common
stock and certain non-employee directors, specifically Dr. Moll and Messrs.
Federico and Pruitt, are entitled to an annual grant of options to purchase
3,300 shares of our company’s common stock. In each case, the exercise
price is equal to the fair market value of our common stock on the day of grant
and one-third of the option grant vests on the first anniversary of the grant
date with the remaining two-thirds of the option grant vesting ratably over the
ensuing twenty-four months. We refer to the annual anniversary grant as the
Anniversary Grant and the annual lead director grant as the Leader Director
Grant. Historically, the Anniversary Grants were granted in connection with the
anniversary date of each director’s initial election to our board of directors.
In August 2009, the compensation committee approved the granting of all
Anniversary Grants in connection with the annual meeting of stockholders,
beginning with the 2010 annual meeting. Until February 2008, all outstanding
options granted to our non-employee
20
Table of Contents
directors were issued under our 2004 Stock Incentive Plan. Thereafter,
all options granted to our non-employee directors will be issued under our 2008
Omnibus Incentive Plan.
The first
anniversary dates of service for Mr. Federico and Dr. Moll were June 5, 2008
and August 24, 2008, respectively. On January 27, 2009, the compensation
committee approved an Anniversary Grant to each of Mr. Federico and Dr.
Moll in recognition of their first anniversary dates of service in 2008.
Accordingly, on January 27, 2009, each of Mr. Federico and Dr. Moll were
granted an option to purchase 3,300 shares of our common stock with an
exercise price per share of $7.10, which was the closing price per share of our
common stock on the grant date. In connection with Mr. Federico’s election as
lead director on March 26, 2009 for a term through our 2009 annual meeting of
stockholders, the compensation committee approved a prorated Lead Director
Grant to Mr. Federico. Accordingly, on March 26, 2009, Mr. Federico was granted
an option to purchase 825 shares of our common stock with an exercise price of
$7.55, which was the closing price per share of our common stock on the grant
date. On June 5, 2009, the compensation committee approved an Anniversary Grant
to each of Messrs. Federico and Pruitt in recognition of their 2009 anniversary
dates of service and each of them were granted an option to purchase
3,300 shares of our common stock with an exercise price per share of
$8.70, which was the closing price per share of our common stock on the grant
date. In connection with Mr. Federico’s reelection to the position of Lead
Director on June 11, 2009, the compensation committee approved a Lead Director
Grant to Mr. Federico and he was granted an option to purchase 3,300 shares of our
common stock with an exercise price per share of $8.55, which was the closing
price per share of our common stock on the grant date. The compensation
committee approved an Anniversary Grant to Dr. Moll on August 24, 2009 in
recognition of his 2009 anniversary date of service and he was granted an
option to purchase 2,475 shares of our common stock with an exercise price
per share of $7.66, which was the closing price per share of our common stock
on the grant date. Each option vests over three years as follows: one-third on
the first anniversary of the grant date and two-thirds ratably over the
remaining twenty-four months.
E
XECUTIVE OFFICERS
Our executive officers, their respective ages as of April 12, 2010, and
their positions with our company are as follows:
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|
|
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Name
|
|
Age
|
|
Position
|
|
Maurice
R. Ferré, M.D.
|
|
49
|
|
President,
Chief Executive Officer and Chairman
|
|
Fritz
L. LaPorte
|
|
40
|
|
Senior Vice
President of Finance and Administration, Chief Financial Officer and
Treasurer
|
|
Ivan
Delevic
|
|
44
|
|
Senior Vice
President of Strategic Marketing and Business Development
|
|
Menashe
R. Frank
|
|
43
|
|
Senior Vice
President, General Counsel and Secretary
|
|
James
E. Keller(1)
|
|
58
|
|
Senior Vice
President of Regulatory Affairs and Quality Assurance
|
|
Richard
Leparmentier(2)
|
|
42
|
|
Senior Vice
President of Engineering
|
|
Duncan
H. Moffat
|
|
49
|
|
Senior Vice
President of Operations
|
|
Steven
J. Nunes
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|
51
|
|
Senior Vice
President of Sales and Marketing
|
|
|
|
|
|
|
|
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|
|
(1)
|
Mr. Keller
joined our company on March 22, 2010.
|
|
|
|
|
(2)
|
Mr.
Leparmentier joined our company on March 29, 2010.
|
The
principal occupations and positions for at least the past five years of the
executive officers named above are as follows:
Maurice
R. Ferré, M.D.
Please see “Election of Directors”
above.
Fritz
L. LaPorte
, our Senior Vice President of Finance
and Administration, Chief Financial Officer and Treasurer, has been with us
since our inception in November 2004. From 2001 to November 2004,
Mr. LaPorte served as Chief Financial Officer of Z-KAT, Inc. From 1997 to
2000, Mr. LaPorte served as the Director of Finance for Holy Cross
Hospital, Inc., a 580-bed acute care facility in Fort Lauderdale, Florida.
From 1993 to 1997, Mr. LaPorte served as a Senior Auditor in the Assurance
Healthcare Group of Ernst & Young LLP, our independent registered public
accounting firm. Mr. LaPorte holds a B.B.A. in accounting from Florida
Atlantic University and is a Certified Public Accountant.
21
Table of Contents
Ivan
Delevic
,
our Senior Vice President of Strategic Marketing and Business Development,
joined our company in April 2009. Beginning in 2007 through April 2009, Mr.
Delevic was a business development consultant to medical device companies
through ATID Group Inc. and IDAT LLC, companies he founded in 2007. From 1996
to 2007, Mr. Delevic held various positions with General Electric’s
healthcare division, both domestically and internationally, including as
General Manager for Molecular Imaging EMEA, Global Marketing and Sales Manager
for Surgical Navigation, Business Development Manager with GE Healthcare’s
Global Business Development, Six Sigma Leader & Black Belt for Global
Functional Imaging, and Sales Manager for Southeastern Europe. From 1992 to
1996, Mr. Delevic worked for Johnson & Johnson, Inc. as a Business
Manager in Budapest, Hungary. Mr. Delevic holds a M.B.A. from the Technical
University of Budapest through a joint program with Herriot-Watt University and
a M.S. in Electrical Engineering from the Technical University of Budapest.
Menashe
R. Frank
, our Senior Vice President, General
Counsel and Secretary, has been with us since our inception in November 2004.
From July 2004 to November 2004, Mr. Frank was a legal consultant to
Z-KAT, Inc. Mr. Frank was a corporate associate at the law firm of
Hogan & Hartson LLP from 2001 to June 2004, and the law firm of Baker
& McKenzie from 2000 to 2001. From 1998 to 2000, Mr. Frank served
as Chief Legal Officer for Enticent.com, Inc., a marketing technology
enterprise. He was also an associate in the business finance and restructuring
department of the law firm of Weil, Gotshal & Manges LLP from 1996 to
1998. Mr. Frank holds a B.A. in political science from American University
and a J.D. from the University of Miami School of Law.
James
E. Keller
, our Senior Vice President of Regulatory
Affairs and Quality Assurance, joined our company in March 2010. From 2008 to
2009, Mr. Keller served as VP of Regulatory Affairs & Pharmacovigilence for
Medicis Pharmaceutical Corp., a mid-cap diversified drug and Class 3 medical
device company for the aesthetic and dermatology markets, where his
responsibilities included the development of a regulatory strategy for domestic
and international registration of new and revised products, adverse event investigation,
reporting, and trending. From 2007 to 2008, Mr. Keller served as Vice President
of Regulatory Affairs & Quality Assurance for F. Dohmen Company, a small
healthcare services company, where his responsibilities included providing
regulatory affairs and quality and compliance services to early-stage
biotechnology and medical device firms and developing and implementing a
corporate quality management system. From 2005 to 2007, Mr. Keller served as
the Vice President of Clinical, Spinal & Biologics for the orthopedic and
biologics division of Medtronic, a large medical device company, where his
responsibilities included reengineering the regulatory and clinical operations
organization and creating regulatory and clinical strategies for new biologic
and drug/device combination products, pharmaceuticals, and Class 3 implantable
medical devices. From 2001 to 2005, Mr. Keller served as Vice President of
Regulatory Affairs & Quality Assurance for Light Sciences Corporation, an
early-stage biotechnology development company. From 1996 to 2000, Mr. Keller
served as Vice President of Regulatory Affairs for Mallinckrodt, a
pharmaceutical and medical device company. Beginning in 1987, Mr. Keller held
various positions with E.I. Du Pont de Nemours, including Associate Director of
Regulatory Affairs with DuPont Pharmaceuticals and Manager of Regulatory
Affairs, Quality Assurance and Government Affairs with DuPont Medical Products.
Mr. Keller holds a B.S. in Microbiology from Clemson University and an M.B.A.
from John M. Olin School of Business, Washington University.
Richard
Leparmentier
, our Senior Vice President of
Engineering, joined our company in March 2010. From 2007 to 2010, Mr.
Leparmentier served as U.S. VP of Design and Engineering for ASML, a Dutch lithography
equipment company, where he managed a team of approximately 320 engineers
across the U.S. and the Netherlands. From 1995 to 2006, Mr. Leparmentier held
various positions with GE Healthcare, including Vice President of OEC-Surgery
Engineering, a leader in surgical x-ray and navigation equipment, where he
managed approximately 270 engineers and his responsibilities included new
product development through both internal development and business development,
Engineering Manager for radiography products in China, and Lead System Designer
for radiographic products in Buc, France. Mr. Leparmentier holds an engineering
degree in Biology and Micromechanics from Ecole Politechnique in France.
Duncan
H. Moffat
, our Senior Vice President of Operations,
has been with us since April 2008. From 2001 to 2008, Mr. Moffat served as Vice
President of Operations for the nuclear medicine business of Philips Medical
Systems, a worldwide manufacturer of medical imaging equipment. From 1998 to
2001, Mr. Moffat served as Vice President of Operations for Lumisys, a start-up
company providing digital x-ray products that was sold to Eastman Kodak in
2001. Beginning in 1982, Mr. Moffat held various positions with the Lucas
companies, first with two Lucas affiliates in England, followed by a position
as project manager with Lucas Control Systems Products, Hampton, Virginia, and
then by a position as Director of Operations with Lucas Deeco Systems, Hayward,
California, from 1995
22
Table of Contents
to 1998. Mr. Moffat holds a Bachelor of Science in Electrical and
Electronic Engineering, Strathclyde University, Glasgow, Scotland.
Steven
J. Nunes
,
our
Senior Vice President of Sales and Marketing, has been with us since May 2006.
From September 2002 to May 2006, Mr. Nunes served as Director of
Commercialization for GE Healthcare, a unit of General Electric Company, a
diversified technology, media, and financial services company. From 1996 to
April 2002, Mr. Nunes held various positions, including Vice President of
Sales and Marketing, at Visualization Technology, Inc., a medical device
company for image-guided surgery, which was later acquired by GE Healthcare. In
1990, Mr. Nunes established SJN Medical Inc., an independent
distributor of surgical endoscopy products, and served as its President until
the company was acquired in 1996. Mr. Nunes holds a B.A. in broadcast
journalism from the University of Massachusetts-Amherst.
C
OMPENSATION DISCUSSION AND ANALYSIS
I
NTRODUCTION
The
purpose of this Compensation Discussion and Analysis is to provide material
information about the compensation of our executive officers named below under
the caption, “Executive Compensation—2009, 2008, and 2007 Summary Compensation
Table,” whom we refer to as our named executive officers. In this section, we
provide an analysis and explanation of our executive compensation program and
the compensation derived by our named executive officers from this program. All
share numbers in this section and the tables that follow reflect our one-for
3.03 reverse split of our common stock effected in February 2008.
E
XECUTIVE SUMMARY
This
Compensation Discussion and Analysis outlines our executive compensation
program. In particular, it explains our compensation philosophy, which is to provide
performance-oriented incentives that fairly compensate our executive officers
and enable us to attract, retain and motivate executives with outstanding
ability and potential. We then discuss the elements of our executive
compensation program including base salary, cash bonuses, and long-term equity
compensation. This Compensation Discussion and Analysis also provides a summary of the key
provisions of our employments agreements with each of our named executive
officers, including the change in control arrangements.
C
OMPENSATION PHILOSOPHY AND OBJECTIVES
Our
compensation philosophy is to offer our executive officers, including the named
executive officers, compensation and benefits that are competitive and that
meet our goals of attracting, motivating, and retaining highly skilled
management so that we can achieve our financial and strategic objectives to
create long-term value for our stockholders. We believe that compensation
should be determined within a framework that is intended to reward individual contribution
and strong financial performance by our company. Within this overall
philosophy, our objectives are to:
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•
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offer a total compensation program that takes into consideration
competitive market requirements and strategic business needs;
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•
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determine total compensation based on our company’s overall financial
performance as well as individual contributions; and
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•
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align the financial interests of our executive officers with those of
our stockholders.
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Our board
of directors has delegated to its compensation committee the authority to make
all final decisions regarding the compensation of our named executive officers,
although on occasion the compensation committee has referred recommended
actions to the board of directors for final resolution. In making such
decisions, the compensation committee considers the various factors described
below in this Compensation Discussion and Analysis with respect to particular
compensation elements. In addition, the compensation committee considers
whether our compensation programs for all employees, including our named
executive officers, encourage unnecessary or excessive risk taking. We believe
that our compensation programs are balanced and do not encourage unnecessary or
excessive risk. We believe we have achieved this by striking an appropriate
balance between short-term and long-term
23
Table of Contents
incentives and by using a variety of key business measurement metrics
that promote disciplined progress towards longer-term company goals to assess
performance under our compensation program.
When making
compensation decisions, the compensation committee also typically considers,
but is not required to accept, the recommendations of Dr. Maurice R.
Ferré, our President and Chief Executive Officer, regarding the performance and
proposed base salary, bonus target and equity awards for our named executive
officers, including Dr. Ferré. The compensation committee may also request
the assistance of Mr. Fritz L. LaPorte, our Chief Financial Officer, and
our human resources department in evaluating the financial, accounting and tax
implications of various compensation awards paid to the named executive
officers. Neither Mr. LaPorte nor our human resources employees, however,
recommend or determine the amounts or types of compensation paid to the named
executive officers. Dr. Ferré and certain of our other executive officers
may attend compensation committee meetings, as requested by the chairman of the
compensation committee and depending on the issues to be discussed by the
compensation committee, but none of these executive officers, including
Dr. Ferré, attends any portion of the compensation committee meetings
during which his compensation is discussed and approved.
The
compensation committee historically has not performed competitive reviews of
our compensation programs with those of similarly-situated companies, nor have
we engaged in formal “benchmarking” of compensation paid to our named executive
officers. The compensation committee did not engage in such benchmarking in
2008 or 2009. In the
third quarter of 2007, however, the compensation committee retained Radford
Surveys and Consulting to conduct a review of the pre-IPO equity ownership
levels for senior management at other pre-IPO medical device and biotechnology
companies in later stages of financing, and provide an analysis of how the then
current equity holdings of our senior management, including each of the then
named executive officers, compared to the median of the surveyed companies. As
discussed below under “Elements of our Executive Compensation Program—Long-Term
Equity Compensation,” the survey showed that the equity holdings of our senior
management, including Dr. Ferré, were below the median. As a result, the
compensation committee recommended, and the board of directors approved,
additional equity grants, primarily in an effort to retain these executives
following the completion of our initial public offering, consistent with our
objectives. We made these additional equity grants to all of our named
executive officers in 2007 with the exception of a grant of stock options to
Dr. Ferré which we made effective upon the closing of our initial public
offering in February 2008. We made these grants to bring the equity holdings of
management in line with the approximate median of the surveyed companies for
retention purposes.
Radford
Surveys and Consulting used the following survey sources to conduct their
analysis: (i) the 2006 Radford Biotechnology Pre-IPO Executive Report,
which included thirty pre-IPO biotechnology and pharmaceutical companies with
outside investment levels between $40 and $80 million; (ii) the Dow
Jones Venture Capital — Compensation Pro Database, which included pre-IPO
companies that had classified themselves as a medical device company and were
in the “later stage” rounds of financings (generally, any round after the
second round of financing); and (iii) the Top 5 Pre-IPO Life Sciences
Industry (Medical Device) Survey, which included ten pre-IPO medical device
companies that had completed series C rounds of financing. We do not know
the component companies that were surveyed by Radford Surveys and Consulting as
the companies’ names were not included in the report that Radford provided to
the compensation committee.
In
analyzing pre-IPO ownership levels, our company was compared to the 50
th
percentile of the surveyed companies. While we compared our senior management
to the median of the survey results for equity holding purposes, we do not believe
it is appropriate to emphasize this target, as it was used for the limited
purpose of determining equity holdings as a pre-IPO company and it was not seen
as an indication that we intended to “benchmark” the equity holdings of our
senior management at the median of a “peer group” of companies. Any such
determinations as to whether or not we will “benchmark” in the future will be
made by the compensation committee.
E
LEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM
The
principal elements of our executive compensation program have been base salary,
cash bonus compensation and long-term equity compensation in the form of stock
options or shares of restricted stock. We also have provided some named
executive officers with limited perquisites and other benefits that the
compensation committee believes were reasonable and consistent with the
objectives of our executive compensation programs, as discussed below. We made
grants of performance-based compensation with respect to 2009 performance under
our 2009 Leadership Cash Bonus Plan applicable to all employees in management
positions, including the named executive officers, and our 2009 Senior Vice
President of Sales and Marketing Bonus Plan applicable to Steven J. Nunes, our
Senior Vice
24
Table of Contents
President of Sales & Marketing, and we made other grants of
incentive compensation to certain of our employees, including some of the named
executive officers. We discuss the grants more fully below.
As
described more fully below, each of these forms of compensation enables the
satisfaction of one or more of our compensation objectives: to attract and
retain talented key employees, to reward superior individual and company
performance and to align executive and stockholder interests. We combine the
compensation elements for each executive officer in a manner that the
compensation committee believes, in its discretion and judgment, is consistent
with the executive’s contributions to our company and our overall goals with
respect to executive compensation. We have not adopted any policies with
respect to the mix of long-term versus currently-paid compensation, but believe
that both elements are necessary for achieving our compensation objectives.
Currently-paid compensation provides financial stability for each of our named
executive officers and immediate reward for superior company and individual
performance, while long-term compensation rewards achievement of strategic
long-term objectives and contributes toward overall stockholder value.
Similarly, while we have not adopted any policies with respect to the mix of
cash versus equity compensation, we believe that it is important to encourage
or provide for a meaningful amount of equity ownership by our named executive
officers to help align their interests with those of our stockholders, one of
our compensation objectives.
Base Salary
We believe
that a competitive base salary is an important component of compensation as it
provides a degree of financial stability for our executive officers and is
critical to recruiting and retaining our executives. Base salary is also
designed to recognize the scope of responsibilities placed on each executive
officer and reward each executive for his unique leadership skills, management
experience and contributions. We make a subjective determination of base salary
after considering such factors collectively. Our compensation committee has
historically reviewed the base salaries of our named executive officers on a
periodic basis, as the facts and circumstances may warrant.
As
discussed below under “Employment Agreements,” each of our named executive
officers has entered into an employment agreement with us that established an
initial base salary for such officer. In April 2009, when Mr. Ivan Delevic, our
Senior Vice President Strategic
Marketing and Business Development, joined our company, we established
his initial base salary at an annual amount of $225,000 pursuant to such an
agreement. We determined this salary amount as a result of an arm’s length
negotiation with Mr. Delevic over the terms of his employment. The members of
our compensation committee believe, based on their collective experience and
general awareness of compensation practices, that this salary amount is
comparable to salaries offered by our competitors for similar positions.
In February
2009, the compensation committee awarded merit pay increases, reflected in the
table below, to each of our named executive officers except for Mr. Delevic,
who had not yet joined our company, to reflect the compensation committee’s
subjective review of each named executive officer’s overall individual
performances.
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Name
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Previous Salary
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New Salary
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Maurice R.
Ferré, M.D.
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$
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300,000
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$
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327,000
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Fritz L.
LaPorte
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$
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225,101
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$
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245,360
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Rony A.
Abovitz
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$
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225,101
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$
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234,105
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Steven J.
Nunes
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$
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177,910
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$
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210,000
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Cash Bonuses
We have
designed our cash bonus compensation arrangements to reward achievement of
strategic and financial goals that support our objective of enhancing
stockholder value and to motivate executives to achieve superior performance in
their areas of responsibility.
Annually,
management presents to our board of directors a proposed operating plan that
includes the proposed performance goals and criteria for our company for the
upcoming year. Following an opportunity to review the operating plan and
provide comments and suggested revisions, the board of directors adopts the
operating plan, reserving the right, but not the obligation, to make
modifications to the operating plan, and the related MAKO metrics scorecard,
described below, throughout the upcoming year if any such modifications are
required as a result of new information or changes in the company’s objectives or
strategic plan. Following our board of director’s approval of the operating
plan, management presents to our compensation committee the proposed leadership
cash bonus plan and
25
Table of Contents
MAKO metrics scorecard for the upcoming year. The leadership cash bonus
plan is the plan under which our management level employees, including our
named executive officers, are eligible to be compensated in the form of a cash
bonus with respect to performance in the upcoming year. The MAKO metrics
scorecard is a tool to measure the Company’s overall performance and
achievement of specific goals and objectives as set forth in our annual
operating plan and is used in connection with determining employee compensation
matters under the annual leadership cash bonus plan.
2009 Leadership Cash Bonus Plan
In December 2008, our board of directors reviewed and approved
management’s proposed operating plan for 2009, which included the performance
goals and criteria for our company for 2009. Management then presented to our
compensation committee the proposed 2009 Leadership Cash Bonus Plan and the
proposed 2009 MAKO Metrics Scorecard as a tool to measure the Company’s
performance against the defined business objectives set forth in the operating
plan. After the compensation committee considered the proposals, it made
recommendations to management concerning the performance goals and criteria and
approved a revised version of the performance goals and criteria. Thereafter,
the compensation committee approved the 2009 Leadership Cash Bonus Plan, the
2009 MAKO Metrics Scorecard, and the use of the 2009 MAKO Metrics Scorecard in
connection with determining employee compensation matters under the 2009
Leadership Cash Bonus Plan.
The 2009 Leadership Cash Bonus Plan provides that upon our achievement
of specified measurable performance goals derived from our 2009 operating plan
and set forth in the 2009 MAKO Metrics Scorecard, each management level
employee, including our named executive officers, will be paid a cash
performance bonus amount. The amount of this bonus will be a percentage of the
employee’s base salary based on a percentage of the MAKO Metrics Scorecard
Percentage achieved by our company for the year. The 2009 MAKO Metrics
Scorecard Percentage represents the weighted percentage of pre-defined goals
that we achieved at the end of 2009, as determined by the compensation
committee in its discretion. In connection with the determination of the amount
of the bonus, there is a minimum and maximum MAKO Metrics Scorecard Percentage
that governs any potential award.
Our compensation committee also sets potential bonus amounts for
individual participants in the Leadership Cash Bonus Plan as measured by a
percentage of base salary. For 2009, our compensation committee set the
threshold, minimum and maximum percentages of base salary for our named
executive officers at the following levels:
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Name
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Threshold
(%)
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Target (%)
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Maximum
(%)
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Maurice R.
Ferré, M.D.(1)
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—
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(2)
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50
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(2)
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50
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(2)
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Fritz L.
LaPorte
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20
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25
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50
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Rony A.
Abovitz
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20
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25
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50
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Ivan
Delevic(3)
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13.6
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17
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34
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Steven J.
Nunes
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20
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25
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50
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(1)
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Although Dr.
Ferré’s employment agreement, prior to the February 2010 amendment discussed
below under “Executive Compensation – Employment Agreements,” did not
expressly provide for his inclusion in the Leadership Cash Bonus Plan for
2009, the compensation committee treated him as a participant for the purpose
of determining whether he achieved specific measurable performance goals for
2009.
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(2)
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Dr. Ferré’s
employment agreement provides for a target cash bonus equal to 50% of his
base salary, which may be increased or decreased at the compensation
committee’s discretion.
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(3)
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Our
compensation committee prorated the percentage applicable to Mr. Delevic to
reflect his partial year of service.
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Our
compensation committee set these percentages based on management’s proposal and
its subjective evaluation of the relative importance of our named executive
officers’ positions, the officers’ past and expected future contributions, to
the performance of our company, and, in the case of Dr. Ferré, the terms of the
executive officer’s employment agreement.
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Table of Contents
The
performance goals and criteria that the committee chose to govern potential
awards under the Leadership Cash Bonus Plan for 2009 relate to the following:
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commercial
launch of our RIO® Robotic Arm Interactive Orthopedic System, or the RIO, our
RESTORIS MCK multicompartmental knee implant system, or RESTORIS MCK,
and our lateral knee application;
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•
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installations
and customer acceptance of RIO units, including the upgrade of Tactile
Guidance System (or TGS) units to RIO units, revenue for TGS and RIO units,
and target RIO materials cost of goods sold;
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number of
MAKOplasty® procedures performed, total MAKOplasty revenue, MAKOplasty
monthly utilization, and target MAKOplasty materials cost of goods sold;
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development
of a plan for targeted cost reductions;
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•
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achievement
of 2009 budget;
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•
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implementation
of external customer satisfaction surveys with achievement of target results
and achievement of target MAKOplasty procedure success rate;
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•
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implementation
of internal customer satisfaction surveys and achievement of target rapid
response on-time delivery goals;
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•
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achievement
of target quality and reliability indicators relating to the RIO system;
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achievement
of targets with respect to expanded applications of the RIO system;
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•
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achievement
of targets with respect to adoption of MAKOplasty related to the submittal of
manuscripts to peer-reviewed journals and abstracts to orthopedic
conferences, the completion of white papers, patient follow-up, and the
economic value of MAKOplasty; and
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•
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development
and maintenance of a strategic plan.
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We
established a target metric and stretch metric for each goal. We believed it
was more likely than not that we would achieve the target metric and reasonably
possible that we would achieve the stretch metric. The determination of whether
and to what extent these metrics were achieved during 2009 was made by the
compensation committee. The target and stretch metrics for several product and
financial related performance goals are set forth below; the specific metrics
for our other performance goals involve confidential commercial or financial
information, the disclosure of which would provide competitors and other third
parties with insights into our confidential planning process and strategic
plan, including related development timelines, that we believe would result in
competitive harm to our company.
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Performance
Goal
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Target
Metric
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Stretch
Metric
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RIO Commercial Launch
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February 25,
2009
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February 22,
2009
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RIO Upgrades
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17 by August
31, 2009
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17 by June
30, 2009
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RIO Revenue
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$14,980,000
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$16,478,000
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RESTORIS MCK Launch
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February 25,
2009
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February 22,
2009
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MAKOplasty Procedure Revenue
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$6,867,000
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$7,200,000
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Total Operating Expenses (excluding
depreciation and amortization)
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$43,500,000
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$42,400,000
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Lateral Knee Application Launch
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September
30, 2009
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August 31,
2009
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Following
the compensation committee’s review in February 2010 of 2009 performance under
the 2009 Leadership Cash Bonus Plan, the committee authorized cash bonus awards
of $154,998, $58,150, $55,483, $36,232 and $49,770 to be paid to Dr. Ferré and
Messrs. LaPorte, Abovitz, Delevic and Nunes, respectively, following receipt of
our 2009 year-end independent audit results confirming the accuracy of the
auditable financial operating results contained in the 2009 MAKO Metrics
Scorecard. These awards reflected achievement of 94.8% of the weighted metric
levels established for 2009. In accordance with the terms of the 2009
Leadership Cash Bonus Plan, the dollar amount of each bonus was calculated as a
percentage of the named executive officer’s annual base salary.
27
Table of Contents
2009 Senior Vice President of Sales &
Marketing Bonus Plan
In February
2009, the compensation committee approved the 2009 Senior Vice President of
Sales & Marketing Metric Scorecard, or 2009 S&M Metric Scorecard, as a
tool to measure Mr. Nunes’ incremental bonus under the 2009 Senior Vice
President of Sales & Marketing Bonus Plan, or 2009 S&M Plan. The 2009
S&M Plan was designed to reward Mr. Nunes for achieving the Company’s
quarterly and annual sales-related performance goals set forth in the 2009 MAKO
Metrics Scorecard. Under the 2009 S&M Plan, Mr. Nunes was eligible to
receive a cash and/or equity bonus if a certain minimum threshold was achieved
based on a point system derived from weighting the sales-related performance
goals. Although Mr. Nunes did not achieve this minimum threshold in 2009 and
did not receive an incremental bonus under the 2009 S&M Plan, in February
2010, the compensation committee authorized a cash bonus of $30,000 to Mr.
Nunes in recognition of the favorable 2009 sales-related results.
Long-Term Equity Compensation
We
grant stock options and restricted stock to our named executive officers, as we
believe that such grants further our compensation objectives of aligning the
interests of our named executive officers with those of our stockholders,
encouraging long-term performance, and providing a simple and
easy-to-understand form of equity compensation that promotes executive
retention. We view such grants both as incentives for future performance and as
compensation for past accomplishments.
We
historically have made grants of equity to named executive officers in
connection with their initial hire. We continued this practice when Mr. Delevic
joined our company in April 2009, granting him an option to purchase 100,000
shares of our common stock. The number of stock options or shares of restricted
stock granted to each named executive officer, including Mr. Delevic, in
connection with such executive’s initial hire, was determined based upon
negotiations with each executive, represented the number necessary to recruit
each executive from his then-existing position and reflected the compensation
committee’s subjective evaluation of the executive’s experience and potential
for future performance. In addition, we have made annual grants and additional
discretionary grants, from time to time, as determined by the compensation
committee or our board of directors, as applicable, taking into consideration
such factors as individual performance and competitive market conditions. The
compensation committee determined the timing of any such equity grant based on
the achievement by the named executive officer and not any effort to time the
grants in coordination with changes in our stock price.
We
have used stock options and restricted stock, rather than other forms of
long-term incentives, because they create value for the executive only if
stockholder value is increased through an increased market price of our common
stock. Prior to the completion of our initial public offering in February 2008,
all stock option and restricted stock grants were made pursuant to our
company’s 2004 Stock Incentive Plan and our board of directors, based on the
recommendation of our compensation committee, determined the exercise price
based on internal or third-party valuation reports. Since the completion of our
initial public offering, all option grants have been approved by the
compensation committee and made pursuant to our 2008 Omnibus Incentive Plan,
and the exercise price of stock options is based on the fair market value of
our common stock on the grant date, which is equal to the closing price of our
common stock on that date.
In
connection with the compensation committee’s annual review of each named
executive officer’s individual performance, the committee approved the grant of
303,000, 80,000, and 55,000 incentive stock options to Dr. Ferré and Messrs.
LaPorte and Nunes, respectively, in February 2009 and 80,000 incentive stock
options to Mr. Abovitz in April 2009. In April 2009, the compensation committee
approved the grant of an additional 25,000 incentive stock options to Mr. Nunes
after considering Mr. Nunes’ potential for future retention, responsibilities,
contributions to the company’s growth, and the compensation packages offered to
recently hired executive officers of the company. All of these options vest
ratably on a quarterly basis over a four-year period starting on the date of
grant.
In
May 2009, the compensation committee undertook a review of Dr. Ferré’s
equity-based compensation. In connection with such review, the committee
considered Dr. Ferré’s performance, our company’s interest in retaining and
motivating Dr. Ferré during challenging economic conditions, and the review
undertaken by Radford Surveys and Consulting in the third quarter of 2007 with
respect to the pre-IPO equity ownership levels of our senior management as
compared to other pre-IPO medical device and biotechnology companies in later
stages of financing, as discussed under “Compensation Philosophy and
Objectives” above. Following its review, the compensation committee
28
Table of Contents
recommended,
and the board of directors approved, the grant of 100,000 shares of restricted
stock to Dr. Ferré, which shares vest ratably on a quarterly basis over a
four-year period.
In
late 2009, the compensation committee engaged Radford Surveys and Consulting to
provide consulting services to the committee with respect to 2010 executive
compensation, including an evaluation of the company’s policies with respect to
Dr. Ferré’s long-term equity compensation. Radford proposed a long-term equity
incentive strategy that will guide Dr. Ferré’s long-term equity compensation
through the end of 2014. The proposed strategy included awards to
Dr. Ferré in 2010 of 75,000 shares of restricted stock with vesting to
occur upon the satisfaction of certain
performance targets and completion of a certain period of service and 100,000
non-qualified stock options which vest ratably on a quarterly basis over a
four-year period. Following its review of the long-term equity incentive strategy proposed by Radford, the compensation
committee approved the 2010 components of the strategy described above in order to retain
Dr. Ferré and motivate his performance in an effort to continue to
improve stockholder value. The compensation committee will consider the
additional components proposed by Radford in subsequent years.
Employee Stock Purchase Plan
We
have not adopted any formal employee equity ownership requirements or
guidelines. In 2007, we adopted the 2008 Employee Stock Purchase Plan to
encourage equity ownership by all of our employees, which became effective
immediately upon completion of our initial public offering in February 2008. We
offer subscriptions for shares of our common stock pursuant to the plan to
eligible employees, including our named executive officers. Our named executive
officers may participate in the plan on the same basis as all other eligible
participants, who include substantially all of our salaried employees.
Perquisites and Other Benefits
As
a general matter, we do not intend to offer perquisites or other benefits to
any executive officer, including the named executive officers, with an
aggregate value in excess of $10,000, because we believe we can provide better
incentives for desired performance with compensation in the forms described
above. We recognize that, from time to time, it may be appropriate to provide
some perquisites or other benefits in order to attract, motivate and retain our
executives, with any such decision to be reviewed and approved by the
compensation committee as needed.
In
connection with our hiring of Mr. Delevic, we agreed to reimburse him for
reasonable relocation expenses up to a total of $128,500, subject to applicable
payroll taxes for non-reimbursable items. We agreed to provide this benefit to
Mr. Delevic as a result of an arm’s length negotiation with Mr. Delevic over
the terms of his employment with our company, to encourage Mr. Delevic to
relocate from New Jersey to Fort Lauderdale, Florida and based on the
compensation committee’s subjective evaluation of Mr. Delevic’s likely
contributions to the future performance of our company and the terms of the
relocation packages provided to previously hired executives. To protect us in
the event Mr. Delevic’s employment terminates within the first two years of employment,
the relocation expense benefit is subject to pro rated recoupment from Mr.
Delevic if his employment terminates for any reason, other than by
Mr. Delevic for good reason, within such period.
E
MPLOYMENT AGREEMENTS AND CHANGE IN CONTROL
ARRANGEMENTS
Each
of our named executive officers has an employment agreement that provides for
severance payment arrangements following specified termination events. We have
entered into these employment agreements because we believe they are necessary
to retain our named executive officers and to obtain their agreement to
post-employment restrictions, such as non-competition, non-solicitation and
confidentiality, that protect our interests. We negotiated the severance
provisions in the employment agreements with each of the named executive
officers based on what the compensation committee believed, in its experience,
to be a reasonable, but not overly generous, severance package to each
executive and necessary to retain the executive. The terms of the employment
agreements are discussed below under “Executive Compensation – Employment
Agreements.”
In
February 2009, the compensation committee approved an amended and restated form
of employment agreement for certain of our senior vice presidents because we
believed it was necessary to expand the post-employment restrictions to provide
greater protection to our company as it expands its business and to align our
employment agreements with those utilized by similarly situated public
companies. Following the committee’s approval, we entered into amended and
restated employment agreements with Messrs. LaPorte and Nunes and an amendment
to Dr. Ferré’s existing employment agreement. These amendments broadened the
post-employment noncompetition and non-
29
Table of Contents
solicitation restrictions so that the
restrictions apply to any image guided surgical device and/or software used in
combination with any surgical robotic device and/or software in the field of
orthopedics. Mr. Delevic’s employment agreement contains these expanded
noncompetition and non-solicitation
restrictions. In consideration for these changes, we also agreed to the
following modifications to the employment agreements of Messrs. LaPorte and
Nunes:
|
|
|
|
|
|
•
|
Accelerated
vesting of equity awards that vest based on time upon the occurrence of a
change in control of our company or upon termination of employment as a
result of death, disability, without cause or for good reason.
|
|
|
|
|
|
|
•
|
Increased
severance payments upon termination of employment and the occurrence of a
change in control of our company.
|
|
|
|
|
|
|
•
|
Eighteen
month period of noncompetition and non-solicitation of employees and
customers following termination of employment as a result of a change in
control (lengthened from a twelve month period).
|
Dr.
Ferré’s employment agreement already provided for accelerated vesting of equity
awards upon a change in control of our company. We had agreed to such
accelerated vesting as a result of an arm’s length negotiation with
Dr. Ferré over the terms of his agreement. None of the named executive
officers would automatically be entitled to severance payments under their
employment agreements upon a change in control of our company, unless specific
additional events occur, such as a material adverse change in responsibilities.
The
compensation committee does not take into account severance packages in
determining the amounts of other elements of compensation, such as base salary,
cash bonus, stock option grants and restricted stock grants. See “Executive
Compensation—Termination and Change in Control Payments” below for a
description of the severance and change in control arrangements for our named
executive officers.
E
FFECT OF ACCOUNTING AND TAX TREATMENT ON COMPENSATION
DECISIONS
In the review
and establishment of our compensation programs, we consider the anticipated
accounting and tax implications to us and our named executive officers. While
we consider the applicable accounting and tax treatment, these factors alone
are not dispositive, and we also consider the cash and non-cash impact of the
programs and whether a program is consistent with our overall compensation
philosophy and objectives.
Section 162(m)
of the Internal Revenue Code imposes a limit on the amount of compensation that
we may deduct in any one year with respect to covered employees, unless
specific and detailed criteria are satisfied. Performance-based compensation,
as defined in the Internal Revenue Code, is fully deductible if the programs
are approved by stockholders and meet other requirements. In general, we have
determined that we will not seek to limit executive compensation so that all of
such compensation is deductible under Section 162(m). However, from time
to time, we monitor whether it might be in our interests to structure our
compensation programs to satisfy the requirements of Section 162(m). We
seek to maintain flexibility in compensating our executives in a manner
designed to promote our corporate goals and, as a result, our compensation
committee has not adopted a policy requiring all compensation to be deductible.
Our compensation committee will continue to assess the impact of
Section 162(m) on our compensation practices and determine what further
action, if any, is appropriate.
Sections 280G
and 4999 of the Internal Revenue Code impose an excise tax on certain payments
to executives made in connection with a change in control and make such
payments non-deductible to the company. The effects of Sections 280G and 4999
generally are unpredictable and can have widely divergent and unexpected
effects based on an executive officer’s personal compensation history. To
ensure that Dr. Ferré receives the level of benefits that we intend, the
compensation committee determined that it would be appropriate to pay the cost
of any excise tax imposed under Sections 280G and 4999, in the event such
provisions became applicable, plus an amount needed to pay income taxes due on
such additional payment. Dr. Ferré’s employment agreement accordingly
provides for such a gross-up payment, which the compensation committee believes
is consistent with its goal of offering a total compensation program that takes
into consideration competitive market requirements.
30
Table of Contents
C
OMPENSATION
COMMITTEE REPORT
The
compensation committee has reviewed and discussed the above Compensation
Discussion and Analysis with our management and, based on such review and
discussion, has recommended to our board of directors that the Compensation
Discussion and Analysis be included in this proxy statement and in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2009.
|
|
|
|
|
MAKO Surgical Corp.
|
|
|
COMPENSATION COMMITTEE
|
|
|
|
|
|
Marcelo G. Chao, Chairman
|
|
|
S. Morry Blumenfeld, Ph.D.
|
|
|
Christopher C. Dewey
|
31
Table of Contents
E
XECUTIVE
COMPENSATION
The
following table sets forth the compensation paid in 2009, 2008, and 2007 to our
Chief Executive Officer, our Chief Financial Officer and each of the three
other most highly compensated executive officers who were serving as executive
officers on December 31, 2009. These five individuals are sometimes
referred to collectively as the “named executive officers.”
2
009, 2008, and 2007 Summary Compensation Table
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)(1)
|
|
Stock
Awards
($)(2)
|
|
Option
Awards
($)(2)
|
|
Non-Equity
Incentive Plan
Compensation
($)(3)
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
|
Maurice R. Ferré, M.D.
|
|
|
2009
|
|
$
|
322,859
|
|
|
—
|
|
$
|
870,000
|
|
$
|
1,356,652
|
|
$
|
154,998
|
|
$
|
3,675
|
(4)
|
$
|
2,708,184
|
|
|
President, Chief
Executive Officer
and Chairman
|
|
|
2008
|
|
$
|
300,000
|
|
|
—
|
|
|
—
|
|
$
|
1,053,759
|
|
$
|
150,000
|
|
$
|
1,010
|
(4)
|
$
|
1,504,769
|
|
|
|
|
2007
|
|
$
|
299,058
|
|
|
—
|
|
$
|
2,752,492
|
|
$
|
228,851
|
|
$
|
97,500
|
|
$
|
1,149,320
|
(5)
|
$
|
4,527,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fritz L. LaPorte
|
|
|
2009
|
|
$
|
243,023
|
|
|
—
|
|
|
—
|
|
$
|
358,192
|
|
$
|
58,150
|
|
$
|
3,542
|
(4)
|
$
|
662,907
|
|
|
Senior Vice President of Finance and Administration,
Chief Financial Officer and Treasurer
|
|
|
2008
|
|
$
|
219,499
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
56,275
|
|
$
|
909
|
(4)
|
$
|
276,683
|
|
|
|
|
2007
|
|
$
|
175,686
|
|
|
—
|
|
|
—
|
|
$
|
476,949
|
|
$
|
57,379
|
|
|
—
|
|
$
|
710,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ivan Delevic (6)
|
|
|
2009
|
|
$
|
147,714
|
|
|
—
|
|
|
—
|
|
$
|
390,040
|
|
$
|
36,232
|
|
$
|
66,767
|
(7)
|
$
|
640,753
|
|
|
Senior Vice President of Strategic Marketing and
Business Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve J. Nunes
|
|
|
2009
|
|
$
|
206,298
|
|
$
|
30,000
|
|
|
—
|
|
$
|
343,767
|
|
$
|
49,770
|
|
$
|
3,315
|
(4)
|
$
|
633,150
|
|
|
Senior Vice President
of Sales and Marketing
|
|
|
2008
|
|
$
|
176,748
|
|
$
|
35,000
|
|
|
—
|
|
$
|
—
|
|
$
|
44,478
|
|
$
|
718
|
(4)
|
$
|
256,944
|
|
|
|
|
2007
|
|
$
|
167,731
|
|
|
—
|
|
|
—
|
|
$
|
238,475
|
|
$
|
46,366
|
|
|
—
|
|
$
|
452,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rony A. Abovitz (8)
|
|
|
2009
|
|
$
|
233,066
|
|
|
—
|
|
|
—
|
|
$
|
296,360
|
|
$
|
55,483
|
|
$
|
3,629
|
(4)
|
$
|
588,538
|
|
|
Senior Vice President
and Chief Technology Officer
|
|
|
2008
|
|
$
|
219,128
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
56,275
|
|
$
|
758
|
(4)
|
$
|
276,161
|
|
|
|
|
2007
|
|
$
|
172,772
|
|
|
—
|
|
|
—
|
|
$
|
678,262
|
|
$
|
56,336
|
|
$
|
26,815
|
(9)
|
$
|
934,185
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts represent discretionary cash bonus payments made to Mr. Nunes
in respect of his performance in 2009 and 2008 as determined by the
compensation committee. Payments were made in the first quarter of the year
following the year in which the bonuses were earned.
|
|
|
|
|
(2)
|
Amounts represent the aggregate grant date fair value of awards
granted by the Company during 2009, 2008 and 2007, as computed in accordance
with ASC 718, disregarding any estimated forfeitures relating to
service-based vesting conditions. For a discussion of the assumptions made in
the valuation of these awards, see Note 8 to Financial Statements in our
Form 10-K for the year ended December 31, 2009.
|
|
|
|
|
(3)
|
Amounts represent cash bonus payments made to the named executive
officer pursuant to our Leadership Cash Bonus Plan. All payments were made in
the first quarter of the year following the year in which the bonuses
were earned.
|
|
|
|
|
(4)
|
Amounts represent matching contributions under our 401(k) plan.
|
|
|
|
|
(5)
|
On September 5, 2007, our board of directors forgave
approximately $1,149,000 of outstanding loans, including accrued interest,
that we made to Dr. Ferré.
|
32
Table of Contents
|
|
|
|
(6)
|
Mr. Delevic joined our company on April 27, 2009.
|
|
|
|
|
(7)
|
Amount represents $30,000 signing bonus and $36,767 of temporary
housing and travel expense. As part of our employment agreement with
Mr. Delevic, we agreed to cover Mr. Delevic’s costs of temporary housing
and personal travel expense during the initial one-year employment period.
|
|
|
|
|
(8)
|
Effective March 29, 2010, Mr. Abovitz transitioned to the
non-executive officer position of Chief Visionary Officer and Co-Founder of
the Company.
|
|
|
|
|
(9)
|
On September 5, 2007, our board of directors forgave
approximately $25,000 of outstanding loans that we made to Mr. Abovitz.
|
2
009 GRANTS OF
PLAN-BASED AWARDS
The following
table sets forth information with respect to grants of plan-based awards during
2009 to the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock
(#)(2)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(2)
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)(3)
|
|
Grant
Date Fair
Value of
Stock
and
Option
Awards($)(4)
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Date of
Committee
Action
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
|
|
|
|
|
Maurice R. Ferré, M.D.(5)
|
|
|
|
|
|
|
|
$
|
163,500
|
|
$
|
163,500
|
|
$
|
163,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
2/20/09
|
|
|
2/20/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
303,000
|
|
$
|
8.06
|
|
$
|
1,356,652
|
|
|
|
|
|
5/22/09
|
|
|
5/22/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
|
—
|
|
$
|
8.70
|
|
$
|
870,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fritz L. LaPorte
|
|
|
|
|
|
|
|
|
49,072
|
|
|
61,340
|
|
|
122,680
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
2/20/09
|
|
|
2/20/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,000
|
|
$
|
8.06
|
|
$
|
358,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ivan Delevic (6)
|
|
|
|
|
|
|
|
|
30,575
|
|
|
38,219
|
|
|
76,438
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
4/27/09
|
|
|
4/27/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
$
|
6.90
|
|
$
|
390,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve J. Nunes (1)
|
|
|
|
|
|
|
|
|
42,000
|
|
|
52,500
|
|
|
105,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
|
|
|
|
|
|
50,000
|
|
|
80,000
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
2/20/09
|
|
|
2/20/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,000
|
|
$
|
8.06
|
|
$
|
246,257
|
|
|
|
|
|
4/27/09
|
|
|
4/27/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
$
|
6.90
|
|
$
|
97,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rony A. Abovitz
|
|
|
|
|
|
|
|
|
46,821
|
|
|
58,526
|
|
|
117,053
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
5/1/09
|
|
|
4/28/09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,000
|
|
$
|
8.06
|
(8)
|
$
|
296,360
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the threshold, target and maximum amounts that could be
earned by each named executive officer pursuant to our 2009 Leadership Cash
Bonus Plan.
|
|
|
|
|
(2)
|
Stock and option awards granted to each named executive officer
during 2009 vest ratably quarterly over four years.
|
|
|
|
|
(3)
|
Equals the closing price per share of our common stock on the date of
grant unless otherwise noted.
|
|
|
|
|
(4)
|
Represents the grant date fair value of the awards calculated in
accordance with ASC 718.
|
|
|
|
|
(5)
|
As discussed above in “Compensation and Discussion Analysis-Cash
Bonuses,” Dr. Ferré participates in the Leadership Cash Bonus Plan; however,
his employment agreement provides for a target cash bonus equal to 50% of his
base salary, which may be increased or decreased at the discretion of the
compensation committee.
|
|
|
|
|
(6)
|
Mr. Delevic’s threshold, target and maximum amounts were pro-rated at
the time the award was granted for the portion of 2009 during which he was
employed by us.
|
|
|
|
|
(7)
|
Represents the threshold, target and maximum amounts that could be
earned by Mr. Nunes pursuant to the 2009 Senior Vice President of Sales and
Marketing Bonus Plan.
|
|
|
|
|
(8)
|
Equals the higher of $8.06 per share or the closing price per share
of our common stock on the date of grant.
|
|
|
|
|
|
33
Table of Contents
EMPLOYMENT AGREEMENTS
On
September 18, 2007, we entered into a new employment agreement with Dr. Ferré,
which was subsequently amended and restated on November 12, 2007 to permit Dr.
Ferré to serve on the board of directors of Z-KAT, Inc., our predecessor
company, if approved by a majority of our disinterested directors. The
employment agreement expires on December 31, 2010, subject to automatic renewal
for successive one-year terms unless either party gives 120 days’ notice of its
intention not to renew the agreement. Under the employment agreement, Dr. Ferré
is entitled to an initial base salary of $300,000 and an opportunity to earn a
performance bonus with a target of 50% of his base salary, which performance
bonus may be higher or lower based on the attainment of performance criteria
that we establish. For a description of severance arrangements, see
“Termination and Change in Control Payments” below. As noted above, in February
2009, we entered into an amendment to Dr. Ferré’s employment agreement that
provided for broader post-employment noncompetition and non-solicitation
restrictions. In February 2010, we entered into a second amendment to Dr.
Ferré’s employment agreement that provides for Dr. Ferré to participate in and
be subject to the Company’s leadership cash bonus plan for 2010 and beyond.
We
entered into employment agreements, effective January 1, 2005, with each of
Messrs. LaPorte and Abovitz and, effective May 15, 2006, with Mr. Nunes. Each
of these agreements was amended on February 5, 2007 to expand the bases for
termination for cause by our company and, with respect to Messrs. LaPorte and
Abovitz, to provide for a term of three years from the effective date of the
original agreement. In July 2008, we entered into a second amendment to Mr.
Nunes’ employment agreement to incorporate the 2008 Performance Bonus Plan for
Mr. Nunes. In April 2009, we entered into an employment agreement with Mr.
Delevic for a term of one year and in April 2010, we entered into an amendment
to such employment agreement to provide certain clarifications with respect to
Mr. Delevic’s relocation benefits. Each of these agreements provides for
automatic renewal for successive one-year terms. These employment agreements
provided for an initial negotiated base salary of $150,000 for each of Messrs.
LaPorte and Abovitz, $160,000 for Mr. Nunes and $225,000 for Mr. Delevic. See
“Compensation Discussion and Analysis—Base Salary” above for the base salaries
of the named executive officers as of December 31, 2009. Pursuant to these
employment agreements, each of Messrs. LaPorte and Abovitz received options for
24,752 and 82,508 shares, respectively, of our common stock upon closing of the
Series B redeemable convertible preferred stock financing in July 2005.
Pursuant to Mr. Nunes’ employment agreement, he received options to purchase
33,003 shares of our common stock on the effective date of his employment
agreement and options to purchase an additional 16,501 shares of our common
stock at the end of the 2006 calendar year upon approval of our board of
directors. Mr. Delevic received options to purchase 100,000 shares of our
common stock pursuant to his employment agreement. As part of our package to
recruit Mr. Delevic to relocate to Fort Lauderdale, Florida, we agreed to
provide Mr. Delevic with a signing bonus of $30,000 and reimbursement for up to
$128,500 of his reasonable relocation expenses, including moving expenses,
certain costs related to the purchase of a new home and the costs of travel and
temporary housing during the initial twelve-month relocation period. In the
event that Mr. Delevic’s employment is terminated for any reason during the
first 24 months following his employment, other than by Mr. Delevic for good
reason, Mr. Delevic is required to repay a prorated share of the relocation
benefit. Each executive is also eligible to participate in various benefits
programs that are available to our employees generally. In addition, the
employment agreements provided for certain payments to be made to Messrs.
LaPorte, Abovitz, Delevic and Nunes upon termination of employment.
As
noted above, in February 2009, we entered into amended and restated employment
agreements with Messrs. LaPorte and Nunes that provided for broader
post-employment noncompetition and non-solicitation restrictions; accelerated
vesting of equity awards that vest based on time upon the occurrence of a
change in control of our company or upon termination of employment as a result
of death, disability, without cause or for good reason; increased severance
payments upon termination of employment and the occurrence of a change in
control of our company; and longer noncompetition and nonsolicitation periods
following termination of employment as a result of a change in control.
For
a description of the terms of our named executive officers’ arrangements
concerning terminations of employment, including an estimation of the payments
to be made, see “Termination and Change in Control Payments” below.
34
Table of Contents
2009 OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
The
following table sets forth information with respect to outstanding equity
awards of the named executive officers as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
Option Awards
|
|
Number of
Shares or
Units of Stock
That Have Not
Vested
(#)
|
|
Market Value of
Shares or Units
of
Stock That Have
Not Vested
($)
|
|
|
|
|
Number of Securities
Underlying Unexercised
Options (#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
Maurice R.
Ferré
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
6,446
|
(1)
|
|
$
|
71,551
|
(1)
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
19,338
|
(2)
|
|
$
|
214,652
|
(2)
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
108,292
|
(3)
|
|
$
|
1,202,041
|
(3)
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
87,500
|
(4)
|
|
$
|
971,250
|
(4)
|
|
|
|
|
|
19,824
|
(5)
|
|
|
15,420
|
(5)
|
|
$
|
11.12
|
|
|
9/05/2017
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
86,633
|
(6)
|
|
|
111,386
|
(6)
|
|
$
|
9.30
|
|
|
2/20/2018
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
56,812
|
(7)
|
|
|
246,188
|
(7)
|
|
$
|
8.06
|
|
|
2/20/2019
|
|
|
—
|
|
|
|
—
|
|
|
|
Fritz L.
LaPorte
|
|
|
69,867
|
(8)
|
|
|
0
|
(8)
|
|
$
|
0.67
|
|
|
12/16/2014
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
24,752
|
(9)
|
|
|
0
|
(9)
|
|
$
|
1.27
|
|
|
7/18/2015
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
29,561
|
(10)
|
|
|
3,442
|
(10)
|
|
$
|
1.27
|
|
|
5/22/2016
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
22,687
|
(11)
|
|
|
10,316
|
(11)
|
|
$
|
2.48
|
|
|
3/26/2017
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
33,002
|
(12)
|
|
|
33,004
|
(12)
|
|
$
|
11.12
|
|
|
8/24/2017
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
15,000
|
(13)
|
|
|
65,000
|
(13)
|
|
$
|
8.06
|
|
|
2/20/2019
|
|
|
—
|
|
|
|
—
|
|
|
|
Ivan Delevic
|
|
|
12,500
|
(14)
|
|
|
87,500
|
(14)
|
|
$
|
6.90
|
|
|
4/27/2019
|
|
|
—
|
|
|
|
—
|
|
|
|
Steve J.
Nunes
|
|
|
29,561
|
(15)
|
|
|
3,442
|
(15)
|
|
$
|
1.27
|
|
|
5/15/2016
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
11,343
|
(16)
|
|
|
5,158
|
(16)
|
|
$
|
2.48
|
|
|
3/26/2017
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
16,500
|
(17)
|
|
|
16,503
|
(17)
|
|
$
|
11.12
|
|
|
8/24/2017
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
10,312
|
(18)
|
|
|
44,688
|
(18)
|
|
$
|
8.06
|
|
|
2/20/2019
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
3,125
|
(19)
|
|
|
21,875
|
(19)
|
|
$
|
6.90
|
|
|
4/27/2019
|
|
|
—
|
|
|
|
—
|
|
|
|
Rony A.
Abovitz
|
|
|
45,375
|
(20)
|
|
|
0
|
(20)
|
|
$
|
1.27
|
|
|
7/18/2015
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
36,952
|
(21)
|
|
|
4,302
|
(21)
|
|
$
|
1.27
|
|
|
5/22/2016
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
28,359
|
(22)
|
|
|
12,895
|
(22)
|
|
$
|
2.48
|
|
|
3/26/2017
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
47,572
|
(23)
|
|
|
47,576
|
(23)
|
|
$
|
11.12
|
|
|
8/24/2017
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
10,000
|
(24)
|
|
|
70,000
|
(24)
|
|
$
|
8.06
|
|
|
5/1/2019
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The vesting
of the shares subject to this restricted stock award is as follows: (i)
20,627 shares vested on May 22, 2006; and (ii) 61,881 shares vest ratably
monthly over a 48 month period through May 22, 2010.
|
|
|
|
|
|
(2)
|
The vesting of
the shares subject to this restricted stock award is as follows: (i) 20,627
shares vested on March 26, 2007; and (ii) 61,881 shares vest ratably monthly
over a 48 month period through March 26, 2011.
|
|
|
|
|
|
(3)
|
The grant of
247,524 shares of restricted stock vest ratably on a quarterly basis though
August 24, 2011.
|
|
|
|
|
|
(4)
|
The grant of
100,000 shares of restricted stock vest ratably on a quarterly basis though
May 22, 2013.
|
|
|
|
|
|
(5)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 2,202
shares on December 5, 2007; and (ii) it vests with respect to 33,042 shares
ratably quarterly over the remaining period through September 5, 2011.
|
|
|
|
|
|
(6)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 12,376 shares
on May 20, 2008; and (ii) it vests with respect to 185,643 shares ratably
quarterly over the remaining period through February 20, 2012.
|
|
|
|
|
|
(7)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 18,937
shares on May 20, 2009; and (ii) it vests with respect to 284,063 shares
ratably quarterly over the remaining period through February 20, 2013.
|
|
|
|
|
|
(8)
|
This option
vested with respect to all 69,867 shares on December 16, 2004.
|
|
|
|
|
|
(9)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 6,188
shares on July 18, 2006; and (ii) it vested with respect to 18,564 shares
ratably monthly over a 36 month period through July 18, 2009.
|
35
Table of Contents
|
|
|
|
(10)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 8,251
shares on May 22, 2007; and (ii) it vests with respect to 24,752 shares
ratably monthly over a 36 month period through May 22, 2010.
|
|
|
|
|
(11)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 8,251 shares
vested on March 26, 2008; and (ii) it vests with respect to 24,752 shares
ratably monthly over a 36 month period through March 26, 2011.
|
|
|
|
|
(12)
|
The vesting
of this stock option is as follows: (i) it vests with respect to 33,003
shares ratably quarterly over four years beginning on August 24, 2007; and
(ii) it vests with respect to 33,003 shares ratably quarterly over four years
beginning on February 20, 2008 subject to a satisfactory 2007 performance
evaluation, which was achieved.
|
|
|
|
|
(13)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 5,000
shares on May 20, 2009; and (ii) it vests with respect to 75,000 shares
ratably quarterly over the remaining period through February 20, 2013.
|
|
|
|
|
(14)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 6,250
shares on July 27, 2009; and (ii) it vests with respect to 93,750 shares
ratably quarterly over the remaining period through April 27, 2013.
|
|
|
|
|
(15)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 8,251
shares on May 15, 2007; and (ii) it vests with respect to 24,752 shares
ratably monthly over a 36 month period through May 15, 2010.
|
|
|
|
|
(16)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 4,125
shares vested on March 26, 2008; and (ii) it vests with respect to 12,376
shares ratably monthly over a 36 month period through March 26, 2011.
|
|
|
|
|
(17)
|
The vesting
of this stock option is as follows: (i) it vests with respect to 16,502
shares ratably quarterly over four years beginning on August 24, 2007; and
(ii) it vests with respect to 16,501 shares ratably quarterly over four years
beginning on February 20, 2008 subject to a satisfactory 2007 performance
evaluation, which was achieved.
|
|
|
|
|
(18)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 3,437
shares on May 20, 2009; and (ii) it vests with respect to 51,563 shares
ratably quarterly over the remaining period through February 20, 2013.
|
|
|
|
|
(19)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 1,562
shares on July 27, 2009; and (ii) it vests with respect to 23,438 shares
ratably quarterly over the remaining period through April 27, 2013.
|
|
|
|
|
(20)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 20,627
shares on July 18, 2006; and (ii) it vested with respect to 61,881 shares
ratably monthly over a 36 month period through July 18, 2009. As of December
31, 2009, Mr. Abovitz had exercised this option with respect to 37,133
shares.
|
|
|
|
|
(21)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 10,313
shares on May 22, 2007; and (ii) it vests with respect to 30,941 shares
ratably monthly over a 36 month period through May 22, 2010.
|
|
|
|
|
(22)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 10,313
shares on March 26, 2008; and (ii) it vests with respect to 30,941 shares
ratably monthly over a 36 month period through March 26, 2011.
|
|
|
|
|
(23)
|
The vesting
of this stock option is as follows: (i) it vests with respect to 47,574
shares ratably quarterly over four years beginning on August 24, 2007; and
(ii) it vests with respect to 47,574 shares ratably quarterly over four years
beginning on February 20, 2008 subject to a satisfactory 2007 performance
evaluation, which was achieved.
|
|
|
|
|
(24)
|
The vesting
of this stock option is as follows: (i) it vested with respect to 5,000
shares on August 1, 2009; and (ii) it vests with respect to 75,000 shares
ratably quarterly over the remaining period through May 1, 2013.
|
36
Table of Contents
2009 O
PTION
EXERCISES AND STOCK VESTED
The
following table sets forth information with respect to options exercised and
stock vested during 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
Name
|
|
|
Number
of
Shares
Acquired on
Exercise (#)
|
|
Value
Realized on
Exercise ($)(1)
|
|
Number
of
Shares
Acquired on
Vesting (#)
|
|
Value
Realized on
Vesting ($)(2)
|
|
|
Maurice R.
Ferré, M.D.
|
|
|
—
|
|
|
—
|
|
|
145,110
|
|
$
|
1,238,570
|
|
|
Fritz L.
LaPorte
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Ivan Delevic
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Steve J.
Nunes
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Rony A.
Abovitz
|
|
|
87,000
|
|
$
|
756,064
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
(1)
|
Value realized is the amount by which the market value of our common
stock on the date of exercise exceeds the exercise price, multiplied by the
number of shares for which the option was exercised.
|
|
(2)
|
Value realized on vesting is determined by multiplying the number of
vested shares by the price of our common stock on the vesting date. This
amount is not intended to represent the value, if any, that is actually
realized by the individual.
|
T
ERMINATION AND
CHANGE IN CONTROL PAYMENTS
Dr. Ferré
The
employment agreement for Dr. Ferré provides for the payment of severance
benefits if Dr. Ferré is terminated without “cause” or if Dr. Ferré
resigns for “good reason.” Upon such a termination, Dr. Ferré will be
entitled to receive all accrued but unpaid compensation, reimbursement of any
outstanding reasonable business expenses, and one times the sum of (i)
Dr. Ferré’s annual salary and (ii) the average of the two highest cash
bonuses received by him during the preceding three completed fiscal years in a
lump sum payment; provided that if the termination occurs in anticipation of a
change in control of our company or within two years thereafter, the applicable
multiplier will be two instead of one, and he will be entitled to accelerated
vesting of equity awards that vest based on the passage of time, a payment of a
prorated bonus for the year of termination, and, assuming attainment of target
performance goals, accelerated vesting of all equity awards that vest based on
the attainment of performance goals at the greater of target levels or actual
performance at the date of termination. Dr. Ferré is also entitled to a
gross-up payment to the extent any payments payable to him in connection with a
change in control become subject to an excise tax pursuant to
sections 4999 and 280G of the Internal Revenue Code. In addition, all
equity awards that vest based on the passage of time vest in the event of a
termination of employment due to death or disability.
Under
Dr. Ferré’s employment agreement, “good reason” includes any of the
following, in each case to the extent not corrected by us following
thirty days’ notice from Dr. Ferré:
|
|
|
|
|
|
Ÿ
|
the assignment of duties materially inconsistent with
Dr. Ferré’s position and status or a materially adverse change in the
nature of Dr. Ferré’s duties, responsibilities and authorities from
those described in his agreement;
|
|
|
|
|
|
|
Ÿ
|
a material reduction in Dr. Ferré’s annual salary or the setting
of his annual target incentive opportunity in amounts materially less than
those specified in his agreement;
|
|
|
|
|
|
|
Ÿ
|
relocation of Dr. Ferré’s principal work location more than
twenty-five miles from our current headquarters;
|
|
|
|
|
|
|
Ÿ
|
failure to elect or reelect Dr. Ferré to our board of directors or
his removal from the board other than for cause;
|
|
|
|
|
|
|
Ÿ
|
our failure to obtain an agreement from any successor to us to assume
the agreement; or
|
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|
|
|
|
|
Ÿ
|
any other failure by us to perform any material obligation or
provision of the agreement.
|
37
Table of Contents
Under
Dr. Ferré’s employment agreement, “cause” includes any of the following,
provided that Dr. Ferré has been provided a copy of the resolution adopted
by at least three-quarters of the independent members of our board of directors
at a meeting of the board (after reasonable notice to the executive and an
opportunity for Dr. Ferré, together with his counsel, to be heard before
the board) finding that he was guilty of the specified conduct:
|
|
|
|
|
|
Ÿ
|
conviction for commission of a felony or a crime involving moral
turpitude;
|
|
|
|
|
|
|
Ÿ
|
willful commission of any act of theft, fraud, embezzlement or
misappropriation against us; or
|
|
|
|
|
|
|
Ÿ
|
willful and continued failure to perform duties, which failure is not
remedied within thirty days after we provide notice.
|
Messrs. LaPorte,
Abovitz, Delevic and Nunes
The
employment agreements in effect for Messrs. LaPorte, Abovitz, Delevic and
Nunes as of December 31, 2009 provide for the payment of severance benefits to
the executive if we terminate the executive’s employment without “cause” or if
the executive resigns for “good reason.” Upon such a termination, the executive
will be entitled to receive all accrued but unpaid compensation, reimbursement
of any outstanding reasonable business expenses and the additional benefits
detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
by Company Without Cause or by Employee for Good Reason
|
|
Named Executive Officer
|
|
Severance
Payment
(termination
unrelated to
change in control)
|
|
Severance
Payment
(termination
related to
change in control)
|
|
Payment
Method of
Severance
Payment
|
|
Continuation
of Health
Benefits
|
|
Accelerated
Vesting of
Equity Awards
that Vest
Based on the
Passage of Time
|
|
Fritz L.
LaPorte
|
|
9 months of annual
base salary
|
|
18 months of annual
base salary (1)
|
|
Lump sum
|
|
9 months
|
|
Yes
|
|
Rony A.
Abovitz (2)
|
|
9 months of annual
base salary
|
|
9 months of annual
base salary
|
|
Monthly
|
|
9 months
|
|
No
|
|
Ivan Delevic
|
|
6 months of annual
base salary
|
|
6 months of annual
base salary
|
|
Monthly
|
|
6 months
|
|
No
|
|
Steven Nunes
|
|
9 months of annual
base salary
|
|
18 months of annual
base salary (1)
|
|
Lump sum
|
|
9 months
|
|
Yes
|
|
|
|
|
|
|
|
|
(1)
|
The named executive officer will be entitled to this severance
payment in the event he is terminated without cause or resigns for good
reason in anticipation of a change of control or within nine months after a
change in control.
|
|
|
|
(2)
|
Effective March 29, 2010, the company entered into an amended and
restated employment agreement with Mr. Abovitz pursuant to which the portion
of severance determined on the basis of nine months’ base salary and nine
months’ health benefits is now determined on the basis of twelve months’ base
salary and nine months’ health benefits.
|
|
|
|
|
|
|
Under these employment agreements, “good reason” includes:
|
|
|
|
|
|
|
Ÿ
|
a material adverse change of the executive’s job responsibilities;
|
|
|
|
|
|
|
Ÿ
|
a breach by us with respect to our compensation obligations under the
employment agreement, which has not been cured within thirty days after the
executive provides written notice or our notice of non-renewal;
|
|
|
|
|
|
|
Ÿ
|
a decrease in executive’s base salary not equally applied (on a
percentage basis) to all employees subject to an employment agreement with
us; or
|
|
|
|
|
|
|
Ÿ
|
relocation of our headquarters to a location more than 100 miles
from the location at the time the employment agreement was first executed.
|
Under the
employment agreements in effect as of December 31, 2009, we have the right to
terminate Messrs. LaPorte, Abovitz, Delevic, and Nunes for cause if such
termination is approved by not less than two-thirds of our board of directors,
provided the executive is given at least five days’ advance notice of such
meeting and is given the opportunity to speak at such meeting. Following the
amendment and restatement of Mr. Abovitz’s employment agreement in March 2010,
we have the right to immediately terminate Mr. Abovitz for cause as determined
by our Chief Executive Officer in his sole discretion. If we terminate the
employment of any of these executives for cause or if the executive terminates
his employment without good reason, the executive will be entitled to receive
only accrued
38
Table of Contents
but unpaid compensation and reimbursement of any outstanding reasonable
business expenses. Termination for cause may include termination as a result of
any act or failure to act on the part of the executive that constitutes:
|
|
|
|
|
|
Ÿ
|
the willful, knowing or grossly negligent failure or refusal of the
executive to perform his duties under the employment agreement or to follow
the reasonable directions of the Chief Executive Officer which has continued
for thirty days following written notice of such failure or refusal from
the board;
|
|
|
|
|
|
|
Ÿ
|
a breach by the executive of any fiduciary duty to us or any of our
subsidiaries for which the executive is required to perform services under
the employment agreement;
|
|
|
|
|
|
|
Ÿ
|
material and willful misfeasance or malfeasance by the executive in
connection with the performance of his duties under the employment agreement;
|
|
|
|
|
|
|
Ÿ
|
the executive’s commission of an act which is a fraud or
embezzlement;
|
|
|
|
|
|
|
Ÿ
|
the conviction of the executive for, or a plea of guilty or nolo
contendere, to a criminal act that is a felony;
|
|
|
|
|
|
|
Ÿ
|
a material breach or default by the executive of any provision of the
employment agreement that has continued for thirty days following notice
of breach or default from the board;
|
|
|
|
|
|
|
Ÿ
|
the executive’s willful and material breach or violation of any law,
rule or regulation (other than traffic violations or similar offenses);
|
|
|
|
|
|
|
Ÿ
|
abuse of drugs or alcohol to our detriment; or
|
|
|
|
|
|
|
Ÿ
|
not maintaining his primary residence in the South Florida region.
|
Following
the amendment and restatement of the employment agreements for Messrs. LaPorte
and Nunes described above under “Compensation Discussion and Analysis –
Employment Agreement and Change in Control Arrangements,” the agreements for
Messrs. LaPorte and Nunes also provide for the accelerated vesting of equity
awards that vest based on time upon the occurrence of a change in control of
our company or upon termination of employment as a result of death or
disability, or, as described above, upon an involuntary termination of
employment without cause or a voluntary termination for good reason. Following
the amendment and restatement of Mr. Abovitz’s employment agreement described
above, his agreement also provides for the accelerated vesting of equity awards
that vest based on time upon the occurrence of a change in control of our
company.
Each
employment agreement includes customary non-competition and non-solicitation
restrictions applicable to the executive for a period of twelve months
after the termination of the executive’s employment (eighteen months if the
termination is in connection with a change in control of our company for
Messrs. LaPorte and Nunes), as well as customary confidentiality provisions. In
addition, each of these employment agreements provides that all confidential
information that the executive has access to, uses or creates during his
employment and all intellectual property resulting from work done by him on our
behalf is our property.
Acceleration
of Equity
Pursuant to
the terms of restricted stock and option award agreements we have entered into
with our named executive officers, generally, with the one exception described
below, no additional shares of common stock subject to any outstanding
restricted stock and option awards will vest after termination of or by the
executive for any reason. The terms of such restricted stock and option award
agreements also provide that: (a) if the executive is terminated for cause, the
executive will forfeit all rights to his options and the option will expire
immediately; (b) for all terminations, other than for cause, death or
disability, options expire on the ninetieth day after the termination
date; and (c) upon death or disability, options expire twelve months after
the date of death or the date of termination resulting from disability. In March
2010, in connection with the amendment and restatement of Mr. Abovitz’s
employment agreement, the compensation committee approved an option award
agreement for Mr. Abovitz which provides for the continued vesting of the
related option following a termination of Mr. Abovitz without cause or by Mr.
Abovitz for good reason.
Under the
terms of our 2004 Stock Incentive Plan and our 2008 Omnibus Incentive Plan, in
the event of a change in control, if the successor entity does not assume,
continue or substitute for outstanding options and restricted stock, all
outstanding shares of our restricted common stock will vest, and either (i) all
options will become immediately exercisable or (ii) our board of directors
could elect to cancel any outstanding grants of options or restricted stock and
pay an amount in cash or securities. These plans define a change in control as
the dissolution or liquidation of our
39
Table of Contents
company; a
merger, consolidation or reorganization of our company in which our company is
not the surviving entity; a sale of substantially all of our assets; or any
transaction that results in any person (other than certain related persons)
owning 50% or more of the combined voting power of all classes of our common
stock.
As
described above, pursuant to the terms of our employment agreements with Dr.
Ferré and Messrs. LaPorte and Nunes that were in place as of December 31, 2009,
in the event of a change in control or a termination of employment as a result
of death, disability, without cause or for good reason, any unvested equity
awards that vest on the passage of time would vest. A “change in control” of
our company is defined under these employment agreements to mean any of the
following:
|
|
|
|
|
|
Ÿ
|
A
transaction that results in any person (other than certain related persons)
acquiring beneficial ownership of more than 50% of the voting power of the
total combined voting power of our outstanding securities.
|
|
|
|
|
|
|
Ÿ
|
A change in
the majority of our directors over a two year period involving directors
whose election or nomination for election by our stockholders has not been
approved by a supermajority of the incumbent board.
|
|
|
|
|
|
|
Ÿ
|
Our
completion of an acquisition, merger, consolidation, reorganization, business
combination or disposition of assets meeting specified criteria.
|
|
|
|
|
|
|
Ÿ
|
The approval
by our stockholders of a liquidation or dissolution of our company and the
satisfaction or waiver of all material contingencies to such liquidation or
dissolution.
|
Assuming
a December 31, 2009 termination event, under the arrangements then in
place, the aggregate severance and change in control benefits and payments to
the named executive officers were estimated to be as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in Control
|
|
|
|
|
Named Executive Officer
|
|
Termination
by
Company Without
Cause or by
Employee For
Good Reason
|
|
Assuming
No Termination
|
|
Assuming
Termination by
Company Without
Cause or by
Employee For
Good Reason
|
|
Death
or
Disability
|
|
|
Maurice R.
Ferré, M.D.
|
|
$
|
4,077,796
|
(1)
|
$
|
3,408,400
|
(2)
|
$
|
5,401,913
|
(3)
|
$
|
3,572,696
|
(4)
|
|
Fritz L.
LaPorte
|
|
$
|
571,366
|
(5)
|
$
|
320,302
|
(2)
|
$
|
755,386
|
(6)
|
$
|
384,381
|
(7)
|
|
Ivan Delevic
|
|
$
|
154,931
|
(8)
|
|
—
|
|
$
|
154,931
|
(8)
|
$
|
42,431
|
(9)
|
|
Steve J.
Nunes
|
|
$
|
516,387
|
(10)
|
$
|
305,991
|
(2)
|
$
|
673,887
|
(11)
|
$
|
357,845
|
(12)
|
|
Rony A.
Abovitz
|
|
$
|
240,360
|
(13)
|
|
—
|
|
$
|
240,360
|
(13)
|
$
|
61,682
|
(14)
|
|
|
|
|
|
|
|
|
(1)
|
Represents a
severance payment of $656,998, which equals the sum of Dr. Ferré’s base
salary, as of December 31, 2009, a prorated cash bonus Dr. Ferré is
entitled to with respect to his performance in 2009 as of December 31,
2009 of $154,998 and $175,000 which represents the average of the largest two
cash bonuses received by Dr. Ferré for performance in 2009, 2008, and
2007, plus $12,398 associated with the continuation of healthcare coverage
for Dr. Ferré and his family for one year plus $3,408,400 associated with the
accelerated vesting of Dr. Ferré’s equity awards.
|
|
|
|
|
(2)
|
Represents
accelerated vesting of the named executive officer’s equity awards upon a
change in control of our company.
|
|
|
|
|
(3)
|
Represents a
payment of $1,158,998, which equals the sum of two times Dr. Ferré’s base
salary, as of December 31, 2009, $154,998 prorated cash bonus Dr. Ferré
is entitled to with respect to his performance in 2009 as of December 31,
2009 and $350,000 which represents two times the average of the largest two
cash bonuses received by Dr. Ferré for performance in 2009, 2008, and
2007, plus $12,398 associated with the continuation of healthcare coverage
for Dr. Ferré and his family for one year plus $3,408,400 associated with the
accelerated vesting of Dr. Ferré’s equity awards plus a gross-up payment of
$822,117 as a result of these benefits to Dr. Ferré being subject to an
excise tax pursuant to sections 4999 and 280G of the Internal Revenue Code.
Dr. Ferré would have been entitled to these benefits, in lieu of a
severance payment, if he had been terminated without cause as of December 31,
2009 in anticipation of a change in control of our company or within two
years thereafter.
|
40
Table of Contents
|
|
|
|
|
In
determining the amount of the excise tax gross-up included in the table
above, we made the following material assumptions: a section 4999 excise tax
rate of 20%, a 35% federal income tax rate, and a 1.45% Medicare tax rate. We
also assumed that no value will be attributed to reasonable compensation
under any non-competition agreement. At the time of any change in control, a
value may be so attributed, which would result in a reduction of amounts
subject to the excise tax.
|
|
|
|
|
(4)
|
Represents a
prorated cash bonus Dr. Ferré is entitled to with respect to his performance
in 2009 as of December 31, 2009 of $154,998 plus $9,298 associated with
the continuation of healthcare coverage for Dr. Ferré and his family for
nine months plus $3,408,400 associated with the accelerated vesting of Dr.
Ferré’s equity awards.
|
|
|
|
|
(5)
|
Represents a
severance payment of $242,170, which equals nine months of Mr. LaPorte’s base
salary as of December 31, 2009, and a prorated cash bonus Mr. LaPorte is
entitled to with respect to his performance in 2009 as of December 31, 2009
of $58,150, plus $8,894 associated with the continuation of healthcare
coverage for Mr. LaPorte and his family for a period of nine months plus
$320,302 associated with the accelerated vesting of Mr. LaPorte’s equity
awards.
|
|
|
|
|
(6)
|
Represents a
payment of $426,190, which equals eighteen months of Mr. LaPorte’s base
salary as of December 31, 2009, and a prorated cash bonus Mr. LaPorte is
entitled to with respect to his performance in 2009 as of December 31, 2009
of $58,150, plus $8,894 associated with the continuation of healthcare
coverage for Mr. LaPorte and his family for nine months plus $320,302
associated with the accelerated vesting of Mr. LaPorte’s equity awards.
|
|
|
|
|
(7)
|
Represents a
prorated cash bonus Mr. LaPorte is entitled to with respect to his
performance in 2009 as of December 31, 2009 of $58,150 plus $5,929 associated
with the continuation of healthcare coverage for Mr. LaPorte and his
family for a period of six months plus $320,302 associated with the
accelerated vesting of Mr. LaPorte’s equity awards.
|
|
|
|
|
(8)
|
Represents a
severance payment of $148,732, which is the continuation of base salary, as
of December 31, 2009, for a period of six months and a prorated cash bonus
Mr. Delevic is entitled to with respect to his performance in 2009 as of
December 31, 2009 of $36,232, plus $6,199 associated with the continuation of
healthcare coverage for Mr. Delevic and his family for a period of six
months. No additional severance payments would be payable upon or in
connection with a change in control under the agreement in effect on December
31, 2009.
|
|
|
|
|
(9)
|
Represents a
prorated cash bonus Mr. Delevic is entitled to with respect to his
performance in 2009 as of December 31, 2009 of $36,232, plus $6,199
associated with the continuation of healthcare coverage for Mr. Delevic
and his family for a period of six months.
|
|
|
|
|
(10)
|
Represents a
severance payment of $207,270, which equals nine months of Mr. Nunes’ base
salary as of December 31, 2009, and a prorated cash bonus Mr. Nunes is
entitled to with respect to his performance in 2009 as of December 31, 2009
of $49,770, plus $3,126 associated with the continuation of healthcare
coverage for Mr. Nunes and his family for a period of nine months plus
$305,991 associated with the accelerated vesting of Mr. Nunes’s equity
awards.
|
|
|
|
|
(11)
|
Represents a
payment of $364,770, which equals eighteen months of Mr. Nunes’ base salary
as of December 31, 2009, and a prorated cash bonus Mr. Nunes is
entitled to with respect to his performance in 2009 as of December 31,
2009 of $49,770, plus $3,126 associated with the continuation of healthcare
coverage for Mr. Nunes and his family for nine months plus $305,991
associated with the accelerated vesting of Mr. Nunes’ equity awards.
|
|
|
|
|
(12)
|
Represents a
prorated cash bonus Mr. Nunes is entitled to with respect to his performance
in 2009 as of December 31, 2009 of $49,770 plus $2,084 associated with the
continuation of healthcare coverage for Mr. Nunes and his family for a
period of six months plus $305,991 associated with the accelerated vesting of
Mr. Nunes’ equity awards.
|
|
|
|
|
(13)
|
Represents a
severance payment of $231,062, which is the continuation of base salary, as
of December 31, 2009, for nine months and a prorated cash bonus Mr. Abovitz
is entitled to with respect to his performance in 2009 as of December 31,
2009 of $55,483, plus $9,298 associated with the continuation of healthcare
coverage for Mr. Abovitz and his family for a period of nine months. No
additional severance payments would be payable upon or in connection with a
change in control under the agreement in effect on December 31, 2009.
|
|
|
|
|
(14)
|
Represents a
prorated cash bonus Mr. Abovitz is entitled to with respect to his
performance in 2009 as of December 31, 2009 of $55,483 plus $6,199 associated
with the continuation of healthcare coverage for Mr. Abovitz and his
family for a period of six months.
|
41
Table of Contents
A
UDIT COMMITTEE REPORT
Our
audit committee is composed of three “independent” directors, as determined in
accordance with Rule 5605(a)(2) of The NASDAQ Stock Market’s regulations and
Rule 10A-3 of the Securities Exchange Act of 1934, as amended. The audit
committee operates pursuant to a written charter adopted by our board of
directors, a copy of which is available on the Investor Relations page of our
website at
www.makosurgical.com
.
As
described more fully in its charter, the purpose of our audit committee is to
assist the board of directors with its oversight responsibilities regarding the
integrity of our company’s financial statements, our compliance with legal and
regulatory requirements, and assessing the independent registered public accounting
firm’s qualifications, independence and performance. Management is responsible
for preparation, presentation and integrity of our financial statements as well
as our financial reporting process, accounting policies, internal accounting
controls and disclosure controls and procedures. The independent registered
public accounting firm is responsible for performing an independent audit of
our financial statements in accordance with generally accepted auditing
standards and to issue a report thereon. The audit committee’s responsibility
is to monitor and oversee these processes. The following is the audit
committee’s report submitted to our board of directors for 2009.
The
audit committee has:
|
|
|
|
|
|
Ÿ
|
reviewed and discussed our
audited financial statements with management and Ernst & Young LLP,
our independent registered public accounting firm;
|
|
|
|
|
|
|
Ÿ
|
discussed with
Ernst & Young LLP the matters required to be discussed by Statement
on Auditing Standards No. 61,
Communications with Audit Committees
, as amended and adopted by
the Public Company Accounting Oversight Board, or PCAOB, in Rule 3200T; and
|
|
|
|
|
|
|
Ÿ
|
received from
Ernst & Young LLP the written disclosures and the letter regarding
their communications with the audit committee concerning independence as
required by the applicable requirements of the PCAOB and discussed with Ernst
& Young LLP the auditors’ independence from our company and management.
|
In
addition, the audit committee has met separately with management and with Ernst &
Young LLP.
Based
on the review and discussions referred to above, our audit committee
recommended to the board of directors that the audited financial statements be
included in our Annual Report on Form 10-K for the year ended December 31,
2009 for filing with the Securities and Exchange Commission.
|
|
|
|
|
AUDIT COMMITTEE
|
|
|
|
|
|
William D. Pruitt,
Chairman
|
|
|
Marcelo G. Chao
|
|
|
Charles W. Federico
|
The
foregoing audit committee report shall not be deemed incorporated by reference into
any filing under the Securities Act of 1933 or the Securities Exchange Act of
1934 and shall not otherwise be deemed filed under these acts, except to the
extent we specifically incorporate it by reference into such filings.
42
Table of Contents
R
ATIFICATION OF THE APPOINTMENT OF ERNST
& YOUNG LLP
AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our
audit committee has appointed Ernst & Young LLP as our independent
registered public accounting firm for the year ending December 31, 2010,
and our board of directors has directed management to submit the appointment of
Ernst & Young LLP for ratification by the stockholders at the annual
meeting.
Ernst &
Young LLP has audited our financial statements since our inception in 2004.
Representatives of Ernst & Young LLP will be present at the annual
meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to questions from stockholders.
Stockholder
ratification of Ernst & Young LLP as our independent registered public
accounting firm is not required by our bylaws or otherwise. Our board of
directors is seeking such ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection of Ernst & Young LLP
as our independent registered public accounting firm, our audit committee will
consider whether to retain that firm for 2010.
A
majority of the shares present in person or by proxy and entitled to vote at
the annual meeting is required for ratification of the appointment of Ernst
& Young LLP as our independent registered public accounting firm for 2010.
Our
board of directors recommends that you vote “FOR” the ratification of the
appointment of Ernst & Young LLP as our independent registered public
accounting firm for 2010. Shares of common stock represented by executed, but
unmarked, proxies will be voted “FOR” such ratification.
P
RINCIPAL ACCOUNTING FEES AND SERVICES
P
RINCIPAL ACCOUNTING FEES AND SERVICES
Our
auditors for the year ended December 31, 2009 were Ernst & Young
LLP. We expect that Ernst & Young LLP will serve as our auditors for
fiscal year 2010.
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
|
Audit
fees(1)
|
|
$
|
644,000
|
|
$
|
385,500
|
|
|
Audit-related
fees(2)
|
|
|
—
|
|
|
50,000
|
|
|
Tax fees
|
|
|
—
|
|
|
—
|
|
|
All other
fees(3)
|
|
|
1,500
|
|
|
1,500
|
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Total fees
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$
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645,500
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$
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437,000
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(1)
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Represents
fees for our integrated audit in 2009 and financial statement audit in 2008
and reviews of our interim financial statements. Included in the audit fees
for 2009 are fees totaling $62,000 incurred in connection with our equity
financing which closed on August 19, 2009. Included in the audit fees for
2008 are fees totaling $38,000 incurred in connection with our equity
financing which closed on October 31, 2008.
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(2)
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Represents
fees incurred in connection with providing consultation services in
connection with the Company’s reporting on internal control over financial
reporting as of December 31, 2008 in anticipation of an audit of the Company’s
internal control over financial reporting in 2009.
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(3)
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Represents
subscription fees for the EY Online web-based research service.
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P
RE-APPROVAL POLICIES AND PROCEDURES
The
audit committee has established a pre-approval policy that provides for the
pre-approval of audit, audit-related, tax and other services specifically
described by the committee on an annual basis. Unless a type of service is
pre-approved under the policy, it will require separate pre-approval by the
committee if it is to be provided by our independent registered public
accounting firm. The policy authorizes the committee to delegate to one or more
of its members pre-approval authority with respect to permitted services.
Mr. Pruitt, our audit committee chairman, has the delegated authority to
pre-approve such services up to a specified aggregate fee amount. These
pre-approval decisions are presented to the full audit committee at its next
scheduled meeting.
43
Table of Contents
All
audit and other fees for services set forth in the table above were
pre-approved by our audit committee, which concluded that the provision of such
services by Ernst & Young LLP was compatible with the maintenance of
that firm’s independence in the conduct of its auditing functions.
D
ELIVERY OF
PROXY MATERIALS TO HOUSEHOLDS
Pursuant
to the rules of the SEC, services that deliver our communications to
stockholders that hold their stock through a bank, broker or other holder of
record may deliver to multiple stockholders sharing the same address a single
copy of our annual report to stockholders and this proxy statement. Upon oral
or written request, we will promptly deliver a separate copy of the annual
report to stockholders or this proxy statement to any stockholder at a shared
address to which a single copy of the document was delivered. Stockholders
sharing an address may also request delivery of a single copy of the annual
report or proxy statement if they are currently receiving multiple copies of
such documents. Stockholders may notify us of their requests by calling or
writing to Menashe R. Frank, Senior Vice President, General Counsel and
Secretary, MAKO Surgical Corp., 2555 Davie Road, Ft. Lauderdale, Florida 33317,
telephone number: (954) 927-2044.
O
THER MATTERS
Our
board of directors knows of no other matters to be presented at the annual
meeting other than those mentioned in this proxy statement. If any other
matters are properly brought before the annual meeting, it is intended that the
proxies will be voted in accordance with the best judgment of the person or
persons voting the proxies.
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By Order of
the Board of Directors,
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MAKO Surgical Corp.
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Menashe R. Frank
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Secretary
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Fort Lauderdale, Florida
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April 28, 2010
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We
will furnish to any stockholder, without charge, a copy of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2009. You may obtain a copy of
the Form 10-K by writing to Menashe R. Frank, Senior Vice President, General
Counsel and Secretary, MAKO Surgical Corp., 2555 Davie Road, Ft. Lauderdale,
Florida 33317 or on our website at www.makosurgical.com.
44
Table of Contents
MAKO SURGICAL CORP.
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
17 BATTERY PLACE, 8TH FLOOR
NEW YORK, NY 10004
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 p.m. Eastern Time on
June 9, 2010. Have your proxy card in hand when you access the web site and
follow the instructions to obtain your records and to
create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by MAKO
Surgical Corp. in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or
access stockholder communications electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up
until 11:59 p.m. Eastern Time on June 9, 2010. Have your proxy
card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M23717-P94368
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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MAKO SURGICAL CORP.
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark
“For All Except” and write the number(s) of the nominee(s) on the
line below.
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The Board of Directors
recommends that you vote “FOR“ all of the listed director nominees:
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Vote on Directors
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1.
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Election of Directors
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Nominees:
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01) Christopher C. Dewey
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02) John J. Savarese, M.D.
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The Board of Directors recommends you vote FOR the following proposal:
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Vote on Proposal
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For
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Against
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Abstain
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2.
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Proposal to ratify the appointment of Ernst & Young LLP as the company’s independent registered public accounting firm for 2010.
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NOTE:
The shares represented by this proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
Stockholder(s).
If no direction is made, this proxy will be voted FOR all listed director nominees and FOR
Item 2.
If any other matters properly come before the meeting,
the persons named in this proxy will vote in their discretion.
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For address changes and/or comments, please check this box and write them on
the back where indicated.
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Please indicate if you plan to attend this meeting.
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Yes
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No
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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
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Table of Contents
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Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice of
Meeting, Proxy Statement and our 2009 Annual Report to Stockholders are
available at
www.proxyvote.com.
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M23718-P94368
MAKO SURGICAL
CORP.
THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2010 ANNUAL
MEETING OF STOCKHOLDERS
June 10, 2010
THIS PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO
SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
DIRECTOR NOMINEES LISTED ON THE REVERSE SIDE AND FOR PROPOSAL 2.
PLEASE MARK,
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY
ENVELOPE.
The
stockholder(s) hereby appoint(s) Menashe R. Frank and Fritz L. LaPorte, or
either of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
side of this ballot, all of the shares of Common Stock of MAKO Surgical Corp.
that the stockholder(s) is/are entitled to vote at the 2010 Annual Meeting of
Stockholders to be held at 10:00 a.m., Eastern Time, on June 10, 2010, at the
company’s headquarters, 2555 Davie Road, Ft. Lauderdale, Florida 33317, and any
adjournment or postponement thereof.
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Address
Changes/Comments:
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(If you noted any Address
Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on
reverse side
Mako Surgical Corp. (MM) (NASDAQ:MAKO)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Mako Surgical Corp. (MM) (NASDAQ:MAKO)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
