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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
| Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 | |
| Exact Sciences Corporation | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
| (1) | Title of each class of securities to which transaction applies: | |||
| (2) | Aggregate number of securities to which transaction applies: | |||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
| (4) | Proposed maximum aggregate value of transaction: | |||
| (5) | Total fee paid: | |||
o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
| (2) | Form, Schedule or Registration Statement No.: | |||
| (3) | Filing Party: | |||
| (4) | Date Filed: | |||
441 Charmany Drive
Madison, Wisconsin 53719
June 17, 201611, 2020
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of Exact Sciences Corporation to be held at 10:00 a.m., local time,Central Time, on Thursday, July 28, 2016,23, 2020. We have been monitoring the COVID-19 situation closely and have determined that holding an in-person annual meeting could pose a risk to the health and safety of our stockholders, employees, and directors. As a result, this year's annual meeting will be completely virtual and conducted via live webcast. You will be able to attend the annual meeting online and submit your questions during the meeting by visiting https://www.virtualshareholdermeeting.com/EXAS2020. You will also be able to vote your shares electronically at the Monona Terrace Communityannual meeting.
We are excited to embrace the latest technology to provide expanded access, improved communication and Convention Center, 1 John Nolen Drive, Madison, Wisconsin 53703.cost savings for our stockholders. Hosting a virtual meeting enables increased stockholder attendance and participation since stockholders can participate from any location around the world with Internet connectivity. Information on how to participate in this year's virtual meeting can be found beginning on Page 57 of the accompanying Proxy Statement.
We look forwardFor your convenience, we are also pleased to offer a re-playable webcast of the annual meeting at https://www.virtualshareholdermeeting.com/EXAS2020.
Your vote is important to us. Please act as soon as possible to vote your attending either in personshares. It is important that your shares be represented at the meeting whether or not you plan to attend the annual meeting via the Internet. Please vote electronically over the Internet, by proxy. Further details regardingtelephone or if, you receive a paper copy of the matters to be acted upon at this meeting appearproxy card by mail, by returning your signed proxy card in the accompanying Noticeenvelope provided.
On behalf of 2016 Annual Meetingthe Board of Directors and Proxy Statement. Please give this materialmanagement, it is my pleasure to express our appreciation for your careful attention.continued support.
Very truly yours,
Kevin T. Conroy | ||
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EXACT SCIENCES CORPORATION
441 Charmany Drive
Madison, Wisconsin 53719
NOTICE OF 20162020 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 23, 2020
To Be Held on July 28, 2016
To the Stockholders of Exact Sciences Corporation:
NOTICE IS HEREBY GIVEN that the 20162020 Annual Meeting of Stockholders of Exact Sciences Corporation, a Delaware corporation, will be held on Thursday, July 28, 2016,23, 2020, at 10:00 a.m., local time,Central Time. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting https://www.virtualshareholdermeeting.com/EXAS2020. For instructions on how to attend and vote your shares at the Monona Terrace CommunityAnnual Meeting, see the information in the accompanying Proxy Statement in the section titled "Questions and Convention Center, 1 John Nolen Drive, Madison, Wisconsin 53703,Answers" beginning on page 56.
The Annual Meeting is being held for the following purposes:
1.
2.
3. To hold an advisory vote on executive compensation.
4. To approve an amendment to our Certificate of Incorporation increasing the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares.
5.
OnlyWe are pleased to utilize the Securities and Exchange Commission ("SEC") rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. On or about June 11, 2020, we will mail to our stockholders of record atas of June 1, 2020 (other than those who previously requested electronic or paper delivery on an ongoing basis) a Notice of Meeting and Important Notice Regarding the closeAvailability of businessProxy Materials containing instructions on June 3, 2016, the record date fixed by thehow to access our proxy statement and our Annual Report on Form 10-K.
By Order of our Board of Directors,
D. Scott Coward
Senior Vice President, General Counsel, Chief
Administrative Officer and Secretary
Madison, Wisconsin
June 11, 2020
This Notice of Annual Meeting and Proxy Statement are entitled to noticefirst being distributed or made available, as the case may be, on or about June 11, 2020.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting:
This Proxy Statement and to voteour Annual Report are available free of charge at the annual meeting and any adjournment or postponement thereof. If you plan to attend the annual meeting and you require directions, please call us at (608) 284-5700.www.proxyvote.com.
| TABLE OF CONTENTS |
TABLE OF CONTENTS |
2020 Proxy Summary | ||
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Information Concerning Executive Officers | 11 | |
Corporate Governance Principles, Board Matters and Non-Employee Director Compensation | 13 | |
Proposal 2—Ratification of Appointment of Independent Registered Public Accounting Firm | 24 | |
Certain Relationships and Related Transactions | 25 | |
Independent Registered Public Accounting Firm | 26 | |
Report of the Audit and Finance Committee | 27 | |
Proposal 3—Advisory Vote on Executive Compensation | 28 | |
Compensation and Other Information Concerning Named Executive Officers | 29 | |
Report of the Compensation and Management Development Committee | 41 | |
Executive Compensation Tables | 42 | |
Equity Compensation Plan Information | 49 | |
CEO Pay Ratio | 50 | |
Proposal 4—Approval of Amendment to Certificate of Incorporation | 51 | |
Securities Ownership of Certain Beneficial Owners and Management | 53 | |
Section 16(a) Beneficial Ownership Reporting Compliance | 55 | |
Other Business | 55 | |
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on July 23, 2020 | 55 | |
Questions and Answers | 56 | |
Annex A—Certificate of Amendment to Sixth Amended and Restated Certificate of Incorporation | 60 |
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Exact Sciences 2020 Proxy Statement | | i |
Madison, WisconsinJune 17, 2016
PROXY STATEMENT
441 Charmany Drive
Madison, Wisconsin 53719 TABLE
2020 PROXY SUMMARY |
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROXY STATEMENT. IT DOES NOT CONTAIN ALL OF CONTENTS
THE INFORMATION THAT YOU SHOULD CONSIDER. PLEASE READ THE ENTIRE PROXY STATEMENT CAREFULLY BEFORE VOTING.
2020 Annual Meeting of Stockholders Information |
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Your Vote |
441 Charmany DriveMadison, Wisconsin 53719
PROXY STATEMENT
The Board of Directors (the "Board") of Exact Sciences Corporation (the "Company," "Exact," "we," "us" or "our")Your vote is providing these materials to you in connection with Exact's annual meeting of stockholders. The annual meeting will take place on Thursday, July 28, 2016, at 10:00 a.m., local time, at the Monona Terrace Community and Convention Center, 1 John Nolen Drive, Madison, Wisconsin 53703. This proxy statement and the accompanying notice and form of proxy are expected to be first sent to stockholders on or about June 17, 2016.
Why am I receiving these materials?
You have received these proxy materials because our Board of Directors is soliciting your proxy to vote your shares at the annual meeting. The proxy statement includes information that we are required to provide you under Securities and Exchange Commission ("SEC") rules and is designed to assist you in voting your shares.
What is a proxy?
very important. Our Board of Directors is asking forrequesting you to allow your proxy. This means you authorize persons selectedCommon Stock to be represented at our 2020 Annual Meeting by usproxies named on the proxy card.
In connection with this request, on or about June 11, 2020, we expect to send to our stockholders (other than those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our annual report, and how to vote your shares atthrough the annual meeting in the way that you instruct. All shares representedInternet or by valid proxies received before the annual meeting will be voted in accordance with the stockholder's specific voting instructions.telephone.
What is included in these materials?
These materials include:
What items will be voted on at the annual meeting?
There are four proposals scheduled to be voted on at the annual meeting:
The Board of Directors is not aware of any other matters to be brought before the meeting. If other matters are properly raised at the meeting, the proxy holders may vote any shares represented by proxy in their discretion.
What are the board's voting recommendations?
Our Board of Directors recommends that you vote your shares:
Who can attend the annual meeting?
Admission to the annual meeting is limited to:
Each stockholder may be asked to present valid picture identification such as a driver's license or passport and proof of stock ownership as of the record date.
When is the record date and who is entitled to vote?
The Board of Directors set June 3, 2016 as the record date. All record holders of Exact common stock as of the close of business on that date are entitled to vote. Each share of common stock is entitled to one vote. As of the record date, there were shares of common stock outstanding.
What is a stockholder of record?
A stockholder of record or registered stockholder is a stockholder whose ownership of Exact stock is reflected directly on the books and records of our transfer agent, American Stock Transfer and Trust Company, LLC. If you hold stock through an account with a bank, broker or similar organization, you are considered the beneficial owner of shares held in "street name" and are not a stockholder of record. For shares held in street name, the stockholder of record is your bank, broker or similar organization. We only have access to ownership records for the registered shares. If you are not a stockholder of record, we will require additional documentation to evidence your stock ownership as of the record date, such as a copy of your brokerage account statement, a letter from your broker, bank or other nominee or a copy of your notice or voting instruction card. As described below, if you are not a stockholder of record, you will not be able to vote your shares unless you have a proxy from the stockholder of record authorizing you to vote your shares.
How to Vote |
How do I vote?
You may vote by any of the following methods:
Beneficial owners of shares held in "street name."
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Exact Sciences 2020 Proxy Statement | | 1 |
You may change or revoke your vote as follows:
What happens if I do not give specific voting instructions?
Stockholders of record. If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions then the proxy holders will vote your shares in the manner recommended by the Board of Directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion for any other matters properly presented for a vote at the meeting.
Beneficial owners of shares held in "street name." If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is referred to as a "broker non-vote."
Which ballot measures are considered "routine" or "non-routine"?
The election of directors ("Proposal 1"), the advisory vote on the compensation paid to our executive officers ("Proposal 2") and the approval of the Second Amendment to the 2010 Employee Stock Purchase Plan ("Proposal 3") are considered to be non-routine matters under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore there may be broker non-votes on Proposals 1, 2 and 3.
The ratification of the appointment of BDO as our independent registered public accounting firm for 2016 ("Proposal 4") is considered to be a routine matter under applicable rules. A broker or other nominee may generally vote on routine matters, and we do not expect there to be any broker non-votes with respect to Proposal 4.
What is the quorum for the annual meeting?
The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote is necessary for the transaction of business at the annual meeting. This is called a quorum.
What is the voting requirement to approve each of the proposals?
The following are the voting requirements for each proposal:
How are abstentions and broker non-votes treated?
Broker non-votes and abstentions are counted for purposes of determining whether a quorum is present. Broker non-votes and abstentions are not counted as votes cast on any proposal considered at the annual meeting and, therefore, will have no effect on the proposals regarding the election of directors, the advisory vote on the compensation of our named executive officers and the Second Amendment of the 2010 Employee Stock Purchase Plan. We expect no broker non-votes on the appointment of BDO as our independent registered public accounting firm for 2016. Abstentions will have no effect on the proposal ratifying the appointment of BDO as our independent registered public accounting firm for 2016.
Who pays for solicitation of proxies?
We are paying the cost of soliciting proxies. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to stockholders and obtaining their votes. In addition to soliciting the proxies by mail, certain of our directors, officers and regular employees, without compensation, may solicit proxies personally or by telephone, facsimile and email.
Where can I find the voting results of the annual meeting?
We will announce preliminary or final voting results at the annual meeting and publish final results in a Form 8-K filed with the SEC within four business days following the meeting.
2020 PROXY SUMMARY |
Summary of Voting Proposals and Voting Recommendations |
| Proposals | Board Recommendation | |
|---|---|---|
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| PROPOSAL 1.Election of Directors (Page 5) | FOR ALL | |
We are asking stockholders to vote on each director nominee to our Board of Directors named in this Proxy Statement. Our Board of Directors believes that each director nominee has the qualifications, experience, and skills necessary to represent stockholders through service on our Board of Directors. | ||
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PROPOSAL 2.Ratification of Appointment of Independent Registered Public Accounting Firm (Page 24) | FOR | |
Our Audit and Finance Committee has appointed PricewaterhouseCoopers, LLP ("PWC") to serve as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2020. Our Audit and Finance Committee and our Board of Directors believe that the retention of PWC to serve as our independent auditor is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify our Audit and Finance Committee's appointment of PWC. | ||
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PROPOSAL 3.Non-Binding, Advisory Approval of Compensation to NEOs ("Say-on-Pay") (Page 28) | FOR | |
We are asking our stockholders to indicate their support for our executive compensation programs as described in this Proxy Statement. This vote is referred to as a "Say-on-Pay" vote. | ||
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PROPOSAL 4.Approval of Amendment to our Certificate of Incorporation (Page 51) | FOR | |
We are asking stockholders to approve an amendment to our Certificate of Incorporation increasing the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares. | ||
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2 | | Exact Sciences 2020 Proxy Statement |
| 2020 PROXY SUMMARY |
Nominees for Election as Directors and Continuing Directors |
Our Board of Directors recommends a vote FOR the deadline to propose actions for consideration or to nominate individuals to serve as directors at the 2017 annual meetingelection of stockholders?
Requirements for Stockholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials. Stockholder proposals to be considered for inclusion in the proxy statement and form of proxy relating to the 2017 annual meeting of stockholders must be received no later than February 17, 2017. In addition, all proposals will need to comply with Rule 14a-8each of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which lists the requirementsfollowing nominees for the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals must be delivered to the Company's Secretary at 441 Charmany Drive, Madison, Wisconsin 53719.
Requirements for Stockholder Nominations or Proposals to Be Brought Before the 2017 Annual Meeting of Stockholders. Notice of any director nomination or other proposal that you intend to present at the 2017 annual meeting of stockholders, but do not intend to have included in the proxy statement and form of proxy relating to the 2017 annual meeting of stockholders, must be delivered to the Company's Secretary at 441 Charmany Drive, Madison, Wisconsin 53719 not earlier than the close of business on March 30, 2017 and not later than the close of business on April 29, 2017. In addition, your notice must set forth the information required by our bylaws with respect to each director nomination or other proposal that you intend to present at the 2017 annual meeting of stockholders.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of our common stock as of April 29, 2016 by:
Unless otherwise noted below, the address of each person listed on the table is c/o Exact Sciences Corporation at 441 Charmany Drive, Madison, Wisconsin 53719. To our knowledge, each person listed below has sole voting and investment power over the shares shown as beneficially owned except to the extent jointly owned with spouses or otherwise noted below.
Beneficial ownership is determined in accordance with the rules of the SEC. The information does not necessarily indicate ownership for any other purpose. Under these rules, shares of common stock issuable by us to a person pursuant to restricted stock unit awards expected to vest within 60 days of April 29, 2016 and options which may be exercised within 60 days after April 29, 2016 are deemed to be beneficially owned and outstanding for purposes of calculating the number of shares and the percentage beneficially owned by that person. However, these shares are not deemed to be beneficially owned and outstanding for purposes of computing the percentage beneficially owned by any otherdirector:
| Director | Director | Committee Membership | ||||||||||||||
| Name | Age | Since | Class | Primary Occupation | AFC | CMDC | CGNC | ITPC | ||||||||
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| Nominees for Election as Class II Directors | ||||||||||||||||
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| Eli Casdin* | 47 | 2017 | Class II | Founder, Chief Investment Officer and Managing Director, Casdin Capital |  | | ||||||||||
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| James E. Doyle* † | 74 | 2014 | Class II | Former Governor of Wisconsin (2003-2011); Currently Of Counsel, Foley & Lardner LLP, and Partner, Doyle & Boyce Strategies | | | ||||||||||
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| Freda Lewis-Hall* | 65 | 2020 | Class II | Former Chief Patient Officer, Executive Vice President, and Chief Medical Officer of Pfizer Inc. | ||||||||||||
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| Kathleen Sebelius* | 72 | 2019 | Class II | Former Secretary of the Department of Health and Human Services (2009-2014) and former Governor of Kansas (2003-2009); Currently CEO of Sebelius Resources LLC | | | ||||||||||
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| Continuing Directors | ||||||||||||||||
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| Thomas D. Carey* | 58 | 2013 | Class III | Founder and Managing Director, Perspective Group, LLC |  | |||||||||||
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| Kevin T. Conroy | 54 | 2009 | Class I | President, CEO and Chairman of the Board of Directors, Exact Sciences Corporation | ||||||||||||
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| Pierre Jacquet* | 53 | 2019 | Class III | Vice Chairman, Global Healthcare Managing Director, L.E.K. Consulting | | | ||||||||||
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| Daniel J. Levangie* | 69 | 2010 | Class III | Former CEO and President, Cytyc Health Corporation; Currently Co-founder and Manager, ATON Partners | | | ||||||||||
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| Andrew Slavitt | 54 | 2019 | Class I | Founder and General Partner of Town Hall Ventures; Former Acting Administrator, Centers for Medicare & Medicaid Services | ||||||||||||
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| Michael S. Wyzga* | 65 | 2015 | Class III | Former Executive Vice President, Finance and Chief Financial Officer, Genzyme Corporation | | |||||||||||
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| Katherine S. Zanotti* | 65 | 2009 | Class I | Former CEO of Arbonne International | | |||||||||||
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| * Independent Chair Member † Lead Independent Director | ||
| AFC = Audit and Finance Committee;CMDC = Compensation and Management Development Committee;CGNC = Corporate Governance & Nominating Committee;ITPC = Innovation, Technology and Pipeline Committee | ||
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Exact Sciences 2020 Proxy Statement | | 3 |
person. The applicable percentage of common stock outstanding as of April 29, 2016 is based upon 97,791,900 shares outstanding on that date.
| | Amount and Nature of Beneficial Ownership | ||||||||||||
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Name and Address of Beneficial Owner | Number of Issued Shares | Number of Shares Issuable(1) | Total Shares Beneficially Owned | Percentage of Common Stock Outstanding | |||||||||
Directors and Executive Officers | |||||||||||||
Maneesh K. Arora | 346,527 | (2) | 929,325 | 1,275,852 | 1.3 | % | |||||||
John K. Bakewell | 800 | — | 800 | * | |||||||||
Thomas D. Carey | 36,768 | 15,620 | 52,388 | * | |||||||||
Kevin T. Conroy | 800,616 | (3) | 1,897,826 | (4) | 2,698,442 | 2.7 | % | ||||||
D. Scott Coward | 21,853 | (5) | 4,375 | (4) | 26,228 | * | |||||||
Sally W. Crawford | 212,341 | — | 212,341 | * | |||||||||
James E. Doyle | 21,459 | 6,159 | 27,618 | * | |||||||||
Daniel J. Levangie | 51,322 | 52,472 | 103,794 | * | |||||||||
Graham P. Lidgard | 236,304 | (6) | 486,750 | (4) | 723,054 | * | |||||||
William J. Megan | 77,482 | (7) | 13,650 | 91,132 | * | ||||||||
Lionel N. Sterling | 102,391 | 52,472 | 154,863 | * | |||||||||
David A. Thompson | 110,213 | 52,472 | 162,685 | * | |||||||||
Michael S. Wyzga | 6,038 | 4,203 | 10,241 | * | |||||||||
Katherine S. Zanotti | 91,000 | 33,304 | 124,304 | * | |||||||||
All directors and executive officers as a group (14 persons) | 2,115,114 | 3,548,628 | 5,663,742 | 5.6 | % | ||||||||
Stockholders | |||||||||||||
BlackRock, Inc.(8) | 5,231,231 | — | 5,026,878 | 5.3 | % | ||||||||
William Blair Investment Management, LLC(9) | 5,766,280 | — | 5,766,280 | 5.9 | % | ||||||||
The Vanguard Group(10) | 6,697,527 | — | 6,697,527 | 6.8 | % | ||||||||
Capital Research Global Investors(11) | 5,531,844 | — | 5,531,844 | 5.7 | % | ||||||||
State Street Corporation(12) | 5,129,917 | — | 5,129,917 | 5.2 | % | ||||||||
2020 PROXY SUMMARY |
Governance Highlights |
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| Nine of eleven directors independent |
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| Annual evaluation of CEO by our Board of Directors |
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| Annual Board and Committee self-evaluations |
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| Board exercising a strong, independent oversight function |
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| Robust director nominee selection process |
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| Committed to actively seeking female and minority board candidates |
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| Lead Independent Director exercising forceful, energetic and independent leadership |
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| Standing Committees comprised entirely of independent directors |
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| Robust stock ownership guidelines for independent directors and executive officers |
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| Clawback provisions in our key compensation programs |
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| Regular executive sessions of non-management directors |
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| Annual "say on pay" advisory vote |
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| Anti-hedging, anti-short sale and anti-pledging policies |
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| Engagement of independent compensation consultant |
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4 | | Exact Sciences 2020 Proxy Statement |
| PROPOSAL 1—ELECTION OF DIRECTORS |
PROPOSAL 1—ELECTION OF DIRECTORS |
PROPOSAL 1—ELECTION OF DIRECTORS
WHAT YOU ARE VOTING ON:
At the 2020 Annual Meeting, four Class II directors are to be elected, each to hold office until the 2023 Annual Meeting and until his or her respective successor is elected and qualified, or until his or her earlier death, resignation or removal.
The Company's Board of Directors currently consists of teneleven members and is divided into three classes serving terms of three years. Stockholders elect one class of directors at each annual meeting. The class up for election at the 20162020 Annual Meeting is Class I,II, whose members are currently include Kevin T. Conroy, John A. Fallon, M.D., David A. ThompsonEli Casdin, James E. Doyle, Freda Lewis-Hall and Katherine S. Zanotti.Kathleen Sebelius. Upon the recommendation of the Corporate Governance and Nominating Committee of our Board of Directors, theour Board of Directors has nominated and recommended Kevin T. Conroy, John A. Fallon, M.D., David A. ThompsonEli Casdin, James E. Doyle, Freda Lewis-Hall and Katherine S. ZanottiKathleen Sebelius for re-election to theour Board of Directors as Class III directors.
Shares represented by all proxies received by theour Board of Directors and not marked so as to withhold authority to vote for any individual nominee will be voted FOR the election of the nominees named below. TheOur Board of Directors knows of no reason why any nominee would be unable or unwilling to serve, but if such should be the case, proxies may be voted for the election of some other person nominated by theour Board of Directors.
In January 2015, the Board of Directors of the Company approved an amendment to theThe Company's Corporate Governance Guidelines to provide for a majority voting policy in uncontested elections of nominees to theour Board of Directors. The Board of Directors adopted the policy as part of its review and evaluation of the Corporate Governance Guidelines and in response to communications received from stockholders. Under the majority voting policy, any nominee for director in an uncontested election who receives a greater number of votes "withheld" from his or her election than votes "for" such election must offer his or her resignation as a director to the Corporate Governance &and Nominating Committee of theour Board of Directors. Upon receipt of this offer of resignation, the Corporate Governance &and Nominating Committee will consider the offer of resignation and recommend to theour Board of Directors action to be taken with respect to the offer of resignation, including whether or not to accept such offer of resignation. TheOur Board of Directors will then act upon such recommendation and promptly disclose its decision, together with an explanation of the reasons behind such decision. Our majority voting policy is set forth in our Corporate Governance Guidelines, which can be found on our website located at www.exactsciences.com under "Investor Relations—Corporate Governance."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDSA VOTE FOR THE NOMINEES LISTED BELOW
The following table setsSet forth below are the nominees to be elected at the 20162020 Annual Meeting and continuing directorsother members of our Board of Directors and, for each such continuingother director, the year such director was first elected as a
director, the positions currently held by each director with us, the year each director's current term will expire and the current class of each director.
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INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR
INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR |
Set forth below is background information for each current director and nominee for director, as well as information regarding additional experience, qualifications, attributes or skills that led theour Board of Directors to conclude that such director or nominee should serve on the Board.
Maneesh K. Arora, age 47, has served as our Chief Operating Officer since February 2012 and as a Senior Vice President since April 2009 when he joined Exact. Mr. Arora also served as our Chief Financial Officer from April 2009 to August 2013. Prior to joining Exact, Mr. Arora worked for Third Wave Technologies, Inc., a molecular diagnostics company, from 2003 until the acquisition of Third Wave by Hologic, Inc. in July 2008. During his time at Third Wave, Mr. Arora was responsible for business strategy and commercial operations before being promoted to chief financial officer in January, 2006. He began his career at Kraft Foods as a financial analyst and held several positions of increasing responsibility during his nine years there. Mr. Arora earned a bachelor's degree in economics from the University of Chicago and an MBA from the Kellogg Graduate School of Management at Northwestern University.
Mr. Arora brings extensive financial and executive experience to the Board. His prior service as our Chief Financial Officer and deep knowledge of the Company and broader molecular diagnostics industry provides a valuable perspective to the Board of Directors.
Nominees for Class II Directors
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| ELI CASDIN | | DIRECTOR SINCE: 2017 | | |||||
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| | | Eli Casdin, age 47, is the Chief Investment Officer and founder of Casdin Capital. For the last 17 years he has analyzed and invested in disruptive technologies and business models in life sciences and healthcare. Prior to founding Casdin Capital, Mr. Casdin was a vice president at Alliance Bernstein in its "thematic" based investment group where he researched and invested in the implications of new technologies for the life science and healthcare sectors. His Alliance Bernstein black book, "The Dawn of Molecular Medicine" detailed the early yet already accelerating wave of innovations in life sciences, and the next wave of investment opportunities. Mr. Casdin's prior experience includes time at Bear Stearns and Cooper Hill Partners, a healthcare focused investment firm. Mr. Casdin earned a bachelor's degree from Columbia University and an MBA from Columbia Business School. Casdin brings to our Board of Directors significant financial and investment experience and a deep knowledge of the healthcare and life sciences industries that provides important insights into our industry and competitive landscape. | | |||
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| JAMES E. DOYLE | | DIRECTOR SINCE: 2014 | | |||||
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| | | James E. Doyle, age 74, is currently Of Counsel at Foley & Lardner LLP, an international law firm, as well as partner of Doyle & Boyce Strategies, a consultant to several national foundations. Prior to his current positions, Mr. Doyle served two terms as the 44th governor of the state of Wisconsin from 2003 to 2011. Prior to his gubernatorial service, Mr. Doyle served three terms as the attorney general of the state of Wisconsin from 1991 to 2003. In connection with his service as attorney general, Mr. Doyle served as president of the National Association of Attorneys General from 1997 to 1998. Mr. Doyle also previously served as the District Attorney of Dane County, Wisconsin and worked in private practice. His extensive public service also includes stints in the Peace Corps as a teacher in Tunisia and as an attorney in a federal legal services office on the Navajo Indian Reservation. Mr. Doyle earned a bachelor's degree from the University of Wisconsin—Madison and a JD from Harvard Law School. Mr. Doyle brings to our Board of Directors proven leadership and managerial capabilities acquired through his extensive public and private sector experience. He also provides our Board of Directors with deep knowledge of governmental and legal affairs. | | |||
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| FREDA LEWIS-HALL | | DIRECTOR SINCE: 2020 | | |||||
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| | | Freda Lewis-Hall, M.D., DFAPA, age 65, served as Chief Patient Officer and Executive Vice President of Pfizer Inc. (NYSE: PFE) from January 2019 to December 2019. She acted as a Senior Medical Advisor to the CEO until her retirement in March 2020. From 2009 to December 2019, Dr. Lewis-Hall served as Pfizer's Chief Medical Officer and Executive Vice President. Prior to joining Pfizer in 2009, Dr. Lewis-Hall held various senior leadership positions including Chief Medical Officer and Executive Vice President, Medicines Development at Vertex Pharmaceuticals, Inc., a biopharmaceutical company, from 2008 to 2009, and Senior Vice President, U.S. Pharmaceuticals, Medical Affairs for Bristol-Myers Squibb Co. from 2003 to 2008. Dr. Lewis-Hall serves on the board of directors of SpringWorks Therapeutics, Inc. (NASDAQ: SWTX) and 1Life Healthcare, Inc. (NASDAQ: ONEM). From December 2014 to May 2017, she served on the board of directors of Tenet Healthcare Corporation (NYSE: THC). Dr. Lewis-Hall currently serves on the board of fellows of The Harvard School and the board of advisors of the Dell Medical School. She also serves as a member of the board of governors for the Patient-Centered Outcomes Research Institute. Dr. Lewis-Hall earned a B.A. in Natural Sciences from Johns Hopkins University and an M.D. from Howard University College of Medicine. Dr. Lewis-Hall brings significant expertise in the biopharmaceutical industry and leadership experience as a senior executive at various biopharmaceutical companies. Her leadership in patient-focused medicine and emphasis on patient engagement and inclusion provides critical insight to our Board of Directors. | | |||
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6 | | Exact Sciences 2020 Proxy Statement |
| INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR |
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| KATHLEEN G. SEBELIUS | | DIRECTOR SINCE: 2019 | | |||||
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| | | Kathleen G. Sebelius, age 72, serves as CEO of Sebelius Resources LLC, a strategic consulting firm that advises private companies, non-profit organizations and financial investors. From 2009 through 2014, Ms. Sebelius served in President Barack Obama's Cabinet as the 21st Secretary of the Department of Health and Human Services. At HHS, Sebelius managed 11 operating agencies, 90,000 employees in 50 countries around the world, and a $1 trillion budget. Prior to that Ms. Sebelius served as Governor of Kansas from 2003 to 2009. Previous elected offices include two terms as the Kansas insurance commissioner and four terms in the Kansas Legislature. Ms. Sebelius serves as a director of Dermira, Inc. (Nasdaq: DERM), a biopharmaceutical company, Myovant Sciences Ltd. (NYSE: MYOV), a biopharmaceutical company, and the Kaiser Family Foundation. She also co-chairs the Aspen Institute Health Strategy Group and serves on advisory boards for the Dole Institute of Politics, Solera Health, Out Leadership, the Estée Lauder Foundation, and the University of Kansas College of Liberal Arts and Sciences. Ms. Sebelius earned a bachelor's degree from Trinity Washington University and a master of public administration from the University of Kansas. Ms. Sebelius brings a wealth of state and federal government expertise, management insight and health care experience to our Board of Directors with deep knowledge of the systemic challenges and opportunities to improve health care. | | |||
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, age 54, has served as a director since April 2013. Mr. Carey is the founder and Managing DirectorOther Members of Perspective Group, LLC, a human capital and executive search firm serving the healthcare industry. Previously, Mr. Carey was a member at Spencer Stuart, a global executive search firm, from 2010 through 2015, where he was responsible for leading the firm's global efforts in providing board services to companies within all segments of the healthcare market. Prior to Spencer Stuart, Mr. Carey was with Russell Reynolds Associates from 2001 to 2010 where he served as a Partner and Co-Head of the firm's Global Life Sciences Practice for the three years preceding his move to Spencer Stuart. Prior to entering the search industry, Mr. Carey served as an investment banker and then chief financial officer of both private and public healthcare and information technology companies. Mr. Carey earned a bachelor's degree from the College of the Holy Cross and an MM degree in management policy from the Kellogg Graduate School of Management at Northwestern University.
Mr. Carey brings to the Board more than 20 years of broad life sciences industry expertise. His background in finance and the executive search industry also provides theour Board of Directors a valuable perspective with respect to financial strategy, key executive hires and other personnel-related matters.
Kevin T. Conroy, age 50, has served as our President and Chief Executive Officer since April 2009, as a director since March 2009 and as Chairman of the Board since March 2014. Mr. Conroy served as president and chief executive officer of Third Wave Technologies, Inc., a molecular diagnostics company, from December 2005 until the acquisition of Third Wave by Hologic, Inc. in July 2008. He joined Third Wave in July 2004 and served as general counsel until December 2005. Prior to joining Third Wave, Mr. Conroy served as intellectual property counsel at GE Healthcare, a medical imaging and diagnostics company and a division of General Electric Company. Before joining GE Healthcare, Mr. Conroy was chief operating officer of two early-stage venture-backed technology companies. Prior to those positions, he was an intellectual property litigator at two Chicago law firms, McDermott Will & Emery, and Pattishall, McAuliffe, Newbury, Hilliard and Geraldson, where he was a partner. He earned a bachelor's degree in electrical engineering at Michigan State University and a law degree from the University of Michigan.
Mr. Conroy brings extensive business, legal and executive leadership experience to the Board. With his significant knowledge of, and breadth of experience in, the healthcare industry in general and the molecular diagnostics industry and our Company in particular, he provides the Board with a vital understanding of our business and industry.
James E. Doyle, age 70, is currently Of Counsel at Foley & Lardner LLP, an international law firm, as well as partner of Doyle & Boyce Strategies, a consultant to several national foundations. Prior to his current positions, Gov. Doyle served two terms as the 44th governor of the state of Wisconsin from 2003 to 2011. Prior to his gubernatorial service, Gov. Doyle served three terms as the attorney general of the state of Wisconsin from January 1991 to January 2003. In connection with his service as attorney general, Gov. Doyle served as president of the National Association of Attorneys General from 1997 to 1998. Gov. Doyle also previously served as the District Attorney of Dane County, Wisconsin and worked in private practice. His extensive public service also includes stints in the Peace Corps as a teacher in Tunisia and as an attorney in a federal legal services office on the Navajo Indian Reservation. Gov. Doyle earned a bachelor's degree from the University of Wisconsin���Madison and a law degree from Harvard Law School.
Gov. Doyle brings to the Board of Directors proven leadership and managerial capabilities acquired through his extensive public and private sector experience. He also provides the Board with deep knowledge of governmental and legal affairs.
John A. Fallon, M.D., age 68, has served as a director since January 2016. Dr. Fallon served as Senior Vice President and Chief Physician Executive at Blue Cross Blue Shield of Massachusetts ("BCBS") from 2004 through 2015. Prior to his role at BCBS, Dr. Fallon served as Chief Executive Officer for clinical affairs at the State University of New York Downstate Medical Center, including University Hospital of Brooklyn and the clinical faculty practice plan. His professional experience also includes the Partners Healthcare System, where he was chairman of the physician network. Dr. Fallon was also the founder and CEO of North Shore Health System, a large physician-hospital organization in Massachusetts. He serves on the boards of directors of Insulet Corporation (Nasdaq: PODD), a medical devices company, and AMAG Pharmaceuticals, Inc. (Nasdaq: AMAG), a specialty pharmaceutical company, as well as several not-for-profit boards, including Network for Excellence in Health Innovation (NEHI) (Chair), National Committee for Quality Assurance (NCQA) Medical Standards (Chair), New England Comparative Effectiveness Public Advisory Council (CEPAC) and Temple University School of Medicine Board of Advisors. Dr. Fallon practiced internal medicine for more than 20 years, fulfilled his residency at Boston City Hospital, is Board Certified in Internal Medicine and is a fellow of the American College of Physicians. He received a BA from the College of the Holy Cross, an MBA from the University of South Florida and a Doctor of Medicine from Tufts University School of Medicine.
Dr. Fallon brings to the Board extensive business experience in the healthcare industry, and his service as a physician and as an executive with numerous healthcare providers and insurers provides valuable insight to the Board of Directors.
Daniel J. Levangie, age 65, has served as a director since July 2010. He is an experienced executive with senior operating experience in the field of medical devices and in vitro diagnostics, and is currently President of Insulet Delivery Solutions and co-founder and manager of ATON Partners, a private investment and management consulting firm. Prior to co-founding ATON Partners, Mr. Levangie was chief executive officer of Dune Medical Devices, Inc. and co-founder and managing partner of Constitution Medical Investors, Inc., a Boston-based private investment and product development firm acquired by Roche Diagnostics Corporation in July 2013. Prior to the above, Mr. Levangie held a variety of executive management positions with Cytyc Corporation, until the acquisition of Cytyc by Hologic, Inc. in October 2007. These positions include executive vice president and chief operating officer, chief executive officer and president of Cytyc Health Corporation, executive vice president and chief commercial officer and president, Cytyc Surgical Products Division. Prior to joining Cytyc Corporation in 1992, Mr. Levangie held a number of sales, marketing and management positions with Abbott Laboratories, a diversified healthcare company. Mr. Levangie is currently a director of CereVasc, LLC. He previously served as a director of Insulet Corporation, a medical device company (Nasdaq: PODD), Liposcience, Inc., a diagnostics company (Nasdaq: LIPO), ev3, Inc., a medical device company, and Hologic, Inc., a diagnostic, imaging systems and surgical products company (Nasdaq: HOLX). Mr. Levangie is a member of the Advisory Board of the Barnett Institute of Northeastern University and is a trustee of Excel Charter School. Mr. Levangie earned a bachelor's degree in pharmacy from Northeastern University.
Mr. Levangie brings a wealth of executive, managerial and leadership experience in the healthcare industry to our Board. He has significant board of director experience from his service on the boards of directors of numerous medical device and biotechnology companies.
Lionel N. Sterling, age 78, has served as a director since July 2010. Since 1987, he has served as president of Equity Resources, Inc., a private investment firm. He previously co-founded and served as managing partner of the private investment firm Whitehead/Sterling. He also has served as chairman of the board of directors of Rayovac Corporation, executive vice president and director of United Brands Company, and sector executive and chief financial officer of American Can Company. He also held various investment and operating positions at ITT Corporation and Donaldson, Lufkin & Jenrette Inc. Mr. Sterling currently serves as a director of GlucoTec, Inc., a medical software firm focusing on
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| THOMAS D. CAREY | | DIRECTOR SINCE: 2013 | | |||||
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| | | Thomas D. Carey, age 58, is the founder and Managing Director of Perspective Group, LLC, a human capital and executive search firm serving the healthcare industry. Previously, Mr. Carey was a member at Spencer Stuart, a global executive search firm, from 2010 through 2015, where he was responsible for leading the firm's global efforts in providing board services to companies within all segments of the healthcare market. Prior to Spencer Stuart, Mr. Carey was with Russell Reynolds Associates from 2001 to 2010 where he served as a Partner and Co-Head of the firm's Global Life Sciences Practice for the three years preceding his move to Spencer Stuart. Prior to entering the search industry, Mr. Carey served as an investment banker and then chief financial officer of both private and public healthcare and information technology companies. Mr. Carey earned a bachelor's degree from the College of the Holy Cross and an MBA from the Kellogg Graduate School of Management at Northwestern University. Mr. Carey brings to our Board of Directors more than 20 years of broad life sciences industry expertise. His background in finance and the executive search industry also provides our Board of Directors a valuable perspective with respect to financial strategy, key executive hires and other personnel-related matters. | | |||
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Exact Sciences 2020 Proxy Statement | | 7 |
in-hospital Insulin control. He previously
INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR |
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| KEVIN T. CONROY | | DIRECTOR SINCE: 2009 | | |||||
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| | | Kevin T. Conroy, age 54, has served as our President and Chief Executive Officer and as a director since 2009, and as Chairman of our Board of Directors since 2014. Mr. Conroy served as president and chief executive officer of Third Wave Technologies, Inc., a molecular diagnostics company, from 2005 until the acquisition of Third Wave by Hologic, Inc. in 2008. He joined Third Wave in 2004 and served as general counsel until 2005. Prior to joining Third Wave, Mr. Conroy held leadership positions at GE Healthcare and practiced intellectual property law in private practice. Mr. Conroy also serves as a director of Epizyme, Inc. (Nasdaq: EPZM), Adaptive Biotechnologies Corporation (Nasdaq: ADPT) and ARYA Sciences Acquisition Corporation (Nasdaq: ARYAU:US). He earned a bachelor's degree in electrical engineering at Michigan State University and a JD from the University of Michigan. Mr. Conroy brings extensive business, legal and executive leadership experience to our Board of Directors. With his significant knowledge of, and breadth of experience in, the healthcare industry in general and the molecular diagnostics industry and our Company in particular, he provides our Board of Directors with a vital understanding of our business and industry. | | |||
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| PIERRE JACQUET | | DIRECTOR SINCE: 2019 | | |||||
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| | | Pierre Jacquet, age 53, is Vice Chairman, Global Healthcare Managing Director of L.E.K. Consulting. He has served in a variety of leadership roles for L.E.K., including the firm's Global Leadership Team, the Americas management committee, and various partner operating committees since 2001. Mr. Jacquet has spent more than two decades focused on corporate strategy consulting, merger and acquisition advisory services, and value management, both domestically and internationally. A former physician, he worked with Arthur D. Little from 1998 to 2000 as a manager of its pharmaceutical practice and performed business development for Genzyme in 1997. During his medical career, he was a Fellow at the Washington Cancer Institute from 1993 to 1996, where he authored over 40 publications and presentations. Pierre has also served on the Advisory Board of Life Science Cares since 2017. Mr. Jacquet earned a Master of Business Administration from the Darden Graduate School at the University of Virginia in 1998, was awarded a Doctor of Medicine with high distinction in 1991, and a Doctor of Philosophy in biomedical sciences in 1996 from the University of Liège in Belgium. Mr. Jacquet brings to our Board of Directors extensive business and managerial experience in the healthcare industry and his service as a physician and fellow at an oncology focused medical institute provides valuable insight to our Board of Directors. | | |||
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8 | | Exact Sciences 2020 Proxy Statement |
Table of i-STAT Corporation, a medical diagnostics company, Third Wave Technologies, Inc., a molecular diagnostics company, and Molecular Insight Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company. Mr. Sterling earned a bachelor's degree from Brooklyn College and an MBA from New York University.Contents
| INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR |
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| DANIEL J. LEVANGIE | | DIRECTOR SINCE: 2010 | | |||||
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| | | Daniel J. Levangie, age 69, is an experienced executive and corporate director with senior operating experience in the field of medical devices and in vitro diagnostics. Mr. Levangie is co-founder and manager of ATON Partners, a private investment firm, and Chairman, President & CEO of CereVasc, LLC, an early-stage medical device company. From 2013 through January 2017, Mr. Levangie served as President of Insulet Drug Delivery Systems. From 2011 through 2013, Mr. Levangie was chief executive officer of Dune Medical Devices, Inc. and co-founder and managing partner of Constitution Medical Investors, Inc., a Boston-based private investment and product development firm acquired by Roche Diagnostics Corporation in 2013. Prior to the above, Mr. Levangie held a variety of executive management positions with Cytyc Corporation until the acquisition of Cytyc by Hologic, Inc. in 2007. These positions include executive vice president and chief operating officer, chief executive officer and president of Cytyc Health Corporation, executive vice president and chief commercial officer and president, Cytyc Surgical Products Division. Prior to joining Cytyc Corporation in 1992, Mr. Levangie held a number of sales, marketing and management positions with Abbott Laboratories, a diversified healthcare company. Mr. Levangie is currently a director of CereVasc, LLC, Dune Medical Devices and Renovia, Inc. He previously served as a director of Insulet Corporation, a medical device company (Nasdaq: PODD), Liposcience, Inc., a diagnostics company (formerly Nasdaq: LIPO), ev3, Inc., a medical device company, and Hologic, Inc., a diagnostic, imaging systems and surgical products company (Nasdaq: HOLX). Mr. Levangie is a member of the Advisory Board of the Barnett Institute of Northeastern University and is a trustee of Excel Charter School, East Boston. Mr. Levangie earned a bachelor's degree in pharmacy from Northeastern University. Levangie brings a wealth of executive, managerial and leadership experience in the healthcare industry to our Board. He has significant board of director experience from his service on the boards of directors of numerous medical device and biotechnology companies. | | |||
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Mr. Sterling brings financial and investment expertise to our Board acquired through his finance education and his experience as a chief financial officer and as an operating executive. He also possesses valuable directorship experience from having served on the boards of directors of numerous companies, including a clinical-stage biopharmaceutical company and a molecular diagnostics company.
David A. Thompson, age 74, has served as a director since July 2010 and as lead independent director since March 2014. He was the chairman and lead independent director of Third Wave Technologies, Inc., a molecular diagnostics company, from 2005 until its acquisition by Hologic, Inc. in July 2008. Prior to that, he retired in 1995 from Abbott Laboratories, a diversified healthcare company, where he worked for more than 30 years. He held several corporate officer positions within Abbott, including senior vice president and president diagnostic division, vice president human resources, vice president corporate materials management and vice president operations. Mr. Thompson previously served as the lead director of St. Jude Medical, Inc., a medical technology and services company (NYSE: STJ), and as a director of each of Hycor Biomedical, Inc., a medical diagnostic products company, LifeCell Corporation, a biological products company, NABI, a biopharmaceutical company, and TriPath Imaging, Inc., an automated imaging company. Mr. Thompson earned a bachelor's degree from South Dakota State University.
Mr. Thompson brings to the Board extensive executive and leadership experience in the healthcare industry in general and the molecular diagnostics industry in particular. His prior service as lead independent director for other companies provides a valuable perspective to our Board.
Michael S. Wyzga, age 60, served as the President and Chief Executive Officer and a member of the board of directors of Radius Health, Inc., a biopharmaceutical company focused on developing new therapeutics for the treatment of osteoporosis and other women's health conditions, from December 2011 to November 2013. Prior to that, Mr. Wyzga served in various senior management positions at Genzyme Corporation, a global biotechnology company. Mr. Wyzga joined Genzyme in March 1997 and most recently served as Executive Vice President, Finance from May 2003 until November 2011 and as Chief Financial Officer from July 1999 until November 2011. Mr. Wyzga is an independent healthcare consultant and currently serves as a director of Akebia Therapeutics, Inc. (Nasdaq: AKBA), a pharmaceutical company, and Oncomed Pharmaceuticals, Inc. (Nasdaq: OMED), a pharmaceutical company, and previously served as a director of Prosensa Holding N.V. (formerly Nasdaq: RNA), a biotechnology company, and Idenix Pharmaceuticals, Inc. (formerly Nasdaq: IDIX), a pharmaceutical company. Mr. Wyzga received a BS from Suffolk University and an MBA from Providence College.
Mr. Wyzga brings a wealth of financial and managerial experience in the biotechnology and biopharmaceutical industries to the Board with key insight into financial and strategic initiatives as well as extensive public company board service within our industry.
Katherine S. Zanotti, formerly Katherine S. Napier, age 61, has served as a director since April 2009. She serves as chief executive officer of Arbonne International, a skin care, cosmetics and nutritional company, a position she has held since August 2009. From July 2002 to March 2006, she served as senior vice president of marketing at McDonald's Corporation, a leading global foodservice retailer. Before joining McDonald's, Ms. Zanotti held a variety of positions with Procter & Gamble, a manufacturer and distributor of a broad range of consumer products, where during a 23-year career she rose from assistant brand manager to vice president and general manager of the company's North American pharmaceutical business and the corporate women's health platform. Ms. Zanotti currently serves on the Board of Trustees of Xavier University. She previously served as a director of Hill-Rom Holdings, Inc., a worldwide manufacturer and provider of medical technologies and related services
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| ANDREW SLAVITT | | DIRECTOR SINCE: 2019 | | |||||
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| | | Andrew Slavitt, age 54, is the founder and General Partner of Town Hall Ventures, which invests in healthcare innovations in vulnerable communities, a position he has held since 2018. Prior to that, he served as the Acting Administrator for the Centers for Medicare & Medicaid Services from 2015 to 2017, and as Group Executive Vice President of Optum, UnitedHealth Group's health services platform, from 2012 to 2014. From 2006 through 2011, Mr. Slavitt was the CEO of OptumInsight (formerly Ingenix), a UnitedHealth Group subsidiary. He serves on the Board of Directors of United States of Care, a national non-profit health think-tank and advocacy organization, is co-chair of the Future of Healthcare Initiative at the Bipartisan Policy Center, and previously served as a director of Capella Education Company, an education services company (formerly Nasdaq: CPLA). Mr. Slavitt received his MBA from Harvard Business School and bachelor of arts and bachelor of science degrees from the University of Pennsylvania. Mr. Slavitt brings to our Board of Directors extensive executive and leadership experience in the healthcare industry. His leadership at Centers for Medicare & Medicaid Services and within the healthcare insurance industry provides a valuable perspective to our Board. | | |||
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Exact Sciences 2020 Proxy Statement | | 9 |
(NYSE: HRC), Mentor Corporation, a medical device company, Alberto-Culver Company, a personal care products company, and Third Wave Technologies, Inc., a molecular diagnostics company. Ms. Zanotti earned a bachelor's degree in economics and studio fine arts from Georgetown University and an MBA in marketing and finance from Xavier University.
INFORMATION CONCERNING DIRECTORS AND NOMINEES FOR DIRECTOR |
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| MICHAEL S. WYZGA | | DIRECTOR SINCE: 2015 | | |||||
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| | | Michael S. Wyzga, age 65, is an independent healthcare consultant and served as the President and Chief Executive Officer and a member of the board of directors of Radius Health, Inc., a biopharmaceutical company focused on developing new therapeutics for the treatment of osteoporosis and other women's health conditions, from December 2011 to November 2013. Prior to that, Mr. Wyzga served in various senior management positions at Genzyme Corporation, a global biotechnology company. Mr. Wyzga joined Genzyme in March 1997 and most recently served as Executive Vice President, Finance from May 2003 until November 2011 and as Chief Financial Officer from July 1999 until November 2011. Mr. Wyzga currently serves as Chairman of the Board of Directors of Gensight Biologics S.A., a clinical-stage biologics company (EPA: SIGHT), Chairman of the Board of Directors of X4 Pharmaceuticals, a biopharmaceutical company (Nasdaq: XFOR), a director of Mereo BioPharma Group plc, a clinical-stage biopharmaceutical company (Nasdaq: MREO), and LogiBio Therapeutics, Inc., a biopharmaceutical company (Nasdaq: LOGC), and previously served as a director of Akebia Therapeutics, Inc. (Nasdaq: AKBA), Prosensa Holding N.V. (formerly Nasdaq: RNA), a biotechnology company, and Idenix Pharmaceuticals, Inc. (formerly Nasdaq: IDIX), a pharmaceutical company. Mr. Wyzga earned a bachelor's degree from Suffolk University and an MBA from Providence College. Mr. Wyzga brings extensive financial and managerial experience in the biotechnology and biopharmaceutical industries to our Board of Directors with key insight into financial and strategic initiatives as well as extensive public company board service within our industry. | | |||
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| KATHERINE S. ZANOTTI | | DIRECTOR SINCE: 2009 | | |||||
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| | | Katherine S. Zanotti, age 65, served as chief executive officer of Arbonne International from 2009 until 2018. Ms. Zanotti also served as Chair of Natural Products Group (the holding company of Arbonne, Nature's Gate, and Levlad) from 2010 until 2018 when Groupe Rocher acquired Natural Products Group and Arbonne International. Arbonne is a botanically based skin care, cosmetic and nutrition company marketed in seven countries, with revenue of over $600 million. From 2002 to 2006, she served as senior vice president of marketing at McDonald's Corporation. Prior to joining McDonald's Ms. Zanotti was a vice president at the Procter & Gamble Company and most recently served as vice president and general manager of the North American pharmaceutical business and the corporate women's health platform. Ms. Zanotti currently serves on the Board of Trustees of Xavier University. Ms. Zanotti currently serves as a director of Cutera, Inc., a developer of cosmetic and aesthetic laser equipment (Nasdaq:CUTR). She previously served as a director of Hill-Rom Holdings, Inc., a worldwide manufacturer and provider of medical technologies and related services (NYSE:HRC); Mentor Corporation, a medical device company; Alberto Culver Company, a personal care products company; and Third Wave Technologies, Inc., a molecular diagnostics company. Ms. Zanotti earned a bachelor's degree in economics and studio fine arts from Georgetown University and an MBA with a concentration in marketing and finance from Xavier University. Ms. Zanotti's extensive executive, managerial and leadership experience, including many years in the pharmaceutical industry, positions her well to serve as a member of our | | |||
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10 | | Exact Sciences 2020 Proxy Statement |
INFORMATION CONCERNING EXECUTIVE OFFICERS
Table of Contents
| INFORMATION CONCERNING EXECUTIVE OFFICERS |
INFORMATION CONCERNING EXECUTIVE OFFICERS |
Set forth below is background information relating to our executive officers:
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Kevin T. Conroy is discussed above underInformation Concerning Directors and Nominees for Director.
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| JEFFREY T. ELLIOTT | | | ||||||
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| | | Jeffrey T. Elliott, age 42, has served as our Chief Financial Officer since November 2016. Prior to his appointment as Chief Financial Officer, Mr. Elliott served as the Company's Vice President, Business Development and Strategy, from June 2016 to November 2016. Prior to joining the Company, from 2007 to 2016, Mr. Elliott was with Robert W. Baird & Co., where from June 2012 to June 2016 he was a senior research analyst who covered diagnostics and life science tools companies. Earlier in his career, Mr. Elliott worked in a supply chain role for Walgreens and as a consultant at Cap Gemini Ernst & Young. Mr. Elliott earned a bachelor's degree in business administration from the University of Illinois at Urbana-Champaign and an MBA from the University of Chicago Booth School of Business. Mr. Elliott is a CFA charterholder. | | |||
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Maneesh K. Arora is discussed above underInformation Concerning Directors and Nominees for Director.
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| MARK STENHOUSE | | | ||||||
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| | | Mark Stenhouse, age 53, has served as General Manager, Screening since November 2019 and served as President, Cologuard from April 2018 until November 2019. Prior to joining the Company, Mr. Stenhouse worked for over 25 years at Abbott Laboratories (NYSE: ABT) and AbbVie, Inc. (NYSE: ABVV), including in a number of executive and managerial positions within its U.S. Immunology division. Most recently, from October 2016 until March 2018, Mr. Stenhouse served as Vice President, U.S. Immunology, where Mr. Stenhouse developed AbbVie's U.S. expansion into the immunology marketplace. From April 2010 until September 2016, Mr. Stenhouse served as Vice President and Vice President/General Manager, U.S. Immunology—Gastroenterology Franchise, where Mr. Stenhouse led a successful turnaround of the franchise, including approval of HUMIRA for treatment of Ulcerative Colitis. From September 2006 through March 2010, Mr. Stenhouse held various senior management, marketing and sales positions within Abbott Laboratories' U.S. Immunology division. Mr. Stenhouse earned a bachelor's degree in business administration from College of Charleston. | | |||
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Graham P. Lidgard, Ph.D. has served as our Senior Vice President and Chief Science Officer since August 2009. He joined us from Nanogen Inc., a medical diagnostics products company, where he was senior vice president of research and development from 2003 to 2009. Prior to joining Nanogen, Dr. Lidgard led the research and development organization at Gen-Probe Inc., a molecular diagnostics company, which developed that company's Procleix blood screening products and Aptima sexually transmitted disease products, as well as the system development group at Gen-Probe that developed its fully automated Tigris system. Prior to joining Gen-Probe in 1995, Dr. Lidgard was co-founder and vice president of product development of Matritech Inc., a developer of diagnostic products for the early detection of bladder cancer. Before he co-founded Matritech, Dr. Lidgard held senior positions at Ciba Corning Diagnostics Corp.'s worldwide diagnostics group. While at Ciba Corning, he was involved in the development of more than 70 510(k)-cleared products. He led the program for the development of the magnetic particle chemiluminescent technology that became the ACS:180 and Centaur systems. Dr. Lidgard earned a bachelor's degree and a doctorate in biological chemistry from the University of Manchester in England.
John K. Bakewell has served as our Senior Vice President and Chief Financial Officer since January 2016. Prior to joining the Company, Mr. Bakewell served as chief financial officer of Lantheus Holdings, Inc. from June 2014 to December 2015. Mr. Bakewell previously served as chief financial officer of Interline Brands, Inc. from June 2013 to May 2014 and as the executive vice president and chief financial officer of RegionalCare Hospital Partners from January 2010 to December 2011. In addition, Mr. Bakewell held the same positions with Wright Medical Group, a global orthopedic medical device manufacturer from 2000 to 2009. Mr. Bakewell also served as chief financial officer of
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| TORSTEN HOOF | | | ||||||
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| | | Torsten Hoof, age 60, has served as our General Manager, International since the Company's acquisition of Genomic Health in November 2019. Mr. Hoof joined Genomic Health in September 2017 as Senior Vice President, International. Mr. Hoof previously served from May 2015 to March 2017 as the Vice President and Head of Oncology EMEA at Baxalta, where he built the company's oncology presence in Europe. From February 2013 to October 2014, Mr. Hoof was also the European General Manager for Endocyte, where he established its European organization designed to bring an innovative, precision medicine solution to patients with ovarian cancer. During his 10 years at Bristol-Myers Squibb, he led the global haemato-oncology franchise and was EMEA General Manager and Vice President for HIV and Primary Care. In his career with Roche, Torsten led the Tamiflu launch as a Global Business Leader and established Roche's German leadership position in Virology. Torsten also served as an Independent Director at HRA Pharma until its acquisition by Goldman Sachs and Astorg in February 2016. Mr. Hoof earned PhD and master's degrees from the University of Hannover, Germany and is an alumnus of the Boehringer Ingelheim Fonds, Germany. | | |||
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Exact Sciences 2020 Proxy Statement | | 11 |
Altra Energy Technologies from 1998 to 2000, Cyberonics, Inc. from 1993 to 1998, and Zeos International from 1990 to 1993. Mr. Bakewell serves on the board of directors of each of Entellus Medical, Inc. and Keystone Dental, Inc. Mr. Bakewell earned a bachelor's degree in accounting from the University of Northern Iowa and is a certified public accountant (Minnesota and Iowa licensure, current status inactive).
INFORMATION CONCERNING EXECUTIVE OFFICERS |
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| JAKE ORVILLE | | | ||||||
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| | | Jake Orville, age 46, has served as our General Manager, Pipeline since November 2019 and served as Senior Vice President, Pipeline from February 2019 to November 2019. Mr. Orville previously served as general manager, Cardiometabolic & Endocrinology Franchise, Quest Diagnostics, Inc. from November 2017 to February 2018. Mr. Orville co-founded Cleveland HeartLab, Inc. in December 2008 and served as its chief executive officer from December 2008 to November 2017. Earlier in his career Mr. Orville served in leadership and operational roles at NextGen Sciences, Inc. and Third Wave Technologies, Inc. Mr. Orville earned a bachelor's degree from University of Massachusetts-Amherst and an MBA from the University of Wisconsin-Madison. | | |||
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| GISELA PAULSEN | | | ||||||
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| | | Gisela Paulsen, age 54, has served as our General Manager, Precision Oncology since April 2020. Prior to joining the Company, Ms. Paulsen served in various management roles at F. Hoffmann-La Roche Ltd. and Genentech, Inc since November 2005. She served as Roche and Genentech's Senior Vice President, Global Head, Product Development, Clinical Operations from January 2018 to April 2020, as Roche and Genentech's Vice President, Global Head, Product Development, Global Product Strategy & Late-Stage Portfolio Finance beginning from March 2017 to February 2018, and as Genentech's Vice President, Access Solutions from September 2014 to February 2017. Ms. Paulsen received a bachelor of science, pharmacy and a master of science, pharmaceutics and drug delivery from Uppsala University in Sweden. | | |||
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12 | | Exact Sciences 2020 Proxy Statement |
| CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
Board Independence
CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
The
Board Independence |
Our Board of Directors has determined that each of Thomas D. Carey, Eli Casdin, James E. Doyle, John A. Fallon, M.D.,Pierre Jacquet, Daniel J. Levangie, Lionel N. Sterling, David A. Thompson,Freda Lewis-Hall, Kathleen Sebelius, Michael S. Wyzga and Katherine S. Zanotti is an independent director within the meaning of the director independence standards of The NASDAQ Stock Market, Inc. ("NASDAQ"). Furthermore, theour Board of Directors has determined that all of the members of theour Audit and Finance Committee, Compensation and Management Development Committee, and Corporate Governance and Nominating Committee and Innovation, Technology and Pipeline Committee are independent within the meaning of the director independence standards of NASDAQ and the rules of the SEC applicable to each such committee.
Executive Sessions of Independent Directors
Executive Sessions of Independent Directors |
Executive sessions of our independent directors are generally scheduled following each regularly scheduled in-person meeting of theour Board of Directors. Executive sessions do not include any non-independent directors and are led by theJames E. Doyle, our lead independent director, David A. Thompson, who is independent.
Board Leadership Structure
Currently, Mr. Conroy serves as both the Chairman of the Board and the Chief Executive Officer of the Company. Our bylaws permit these positions to be held by the same person, and the Board believes that it is in the best interests of the Company to retain flexibility in determining whether to separate or combine the roles of Chairman and Chief Executive Officer based on our circumstances. While the Board does not have a formal policy regarding the separation of the roles of Chairman and Chief Executive Officer, the Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of senior management, a highly engaged Board of Directors, and the right balance between (i) effective independent oversight of the Company's business, (ii) the Board's activities and (iii) consistent corporate leadership. The Board is open to, and assesses on at least an annual basis, different structures that provide such an optimal leadership structure, particularly given the dynamic and competitive environment in which the Company operates. As part of its most recent such assessment, theactively solicits other independent directors gave thorough consideration to a numberfor agenda items in advance of factors, including, but not limited to, the strategic goals of the Company, the dynamics of our Board, best practices within our industry, and the status of the Company's progress with respect to certain key strategic initiatives.
Based upon these considerations, the independent directors determined to maintain the Board's current leadership structure with Mr. Conroy serving as both the Chairman of the Board and the Chief Executive Officer of the Company.such meetings. The independent directors based this determination on (1) Mr. Conroy's extensive experience in and knowledge ofutilize the Company, the diagnostics industry and the regulatory environment, (2) the highly effective bridge Mr. Conroy's service provides between the Board and the Company's management, (3) Mr. Conroy's continued leadership and vision necessary to lead the Board and the Company through its challenging industry and macroeconomic environments, and (4) Mr. Conroy's investor-focused perspective.
Our Corporate Governance and Nominating Committee Charter provides that at any time that the Company does not have an independent Chairman of the Board, the chairperson of the Corporate Governance and Nominating Committee shall also serve as our lead independent director. As such, David A. Thompson serves as our lead independent director. The independent directors believe that Mr. Thompson has demonstrated, and will continue to demonstrate, forceful, energetic and independent leadership and thought in that position.
The Board—which consists entirely of independent directors other than Mr. Conroy and Mr. Arora—exercises a strong, independent oversight function. This oversight function is enhanced by the fact that our Audit, Compensation and Corporate Governance and Nominating Committees are comprised entirely of independent directors. Further, our Board meetings include regular executive sessions of the independent directorsto discuss, among other items, corporate strategy and an annual evaluation ofplanning, including succession planning for our CEO's performance against pre-determined goals. The Board can and will change its leadership structure if the Board determines that doing so is in the best interest of the Company and its stockholders.executive officers.
Policy Governing Security Holder Communications with the Board of Directors
Board Qualifications |
As set forth in our Corporate Governance Guidelines, a copy of which is available at www.exactsciences.com, security holders who wish to communicate directly with the Board, the independent directors of the Board or any individual member of the Board may do so by sending such communication by certified mail addressed to the Chairman of the Board, as a representative of the entire Board of Directors, the Lead Independent Director, as a representative of the independent directors of the Board, or to the individual director or directors, in each case, c/o Secretary, Exact Sciences Corporation, 441 Charmany Drive, Madison, Wisconsin 53719. The Secretary reviews any such security holder communication and forwards relevant communications to the addressee.
Policies Regarding Director Nominations
The Board of Directors has adopted a policy concerning director nominations, a copy of which is available at www.exactsciences.com. Set forth below is a summary of certain provisions of this policy.
Director Qualifications
TheOur Corporate Governance and Nominating Committee is responsible for identifying the appropriate qualifications, skills and characteristics desired of members of theour Board of Directors in the context of the needs of the business and the current composition and needs of theour Board of Directors.
Director candidates are considered based upon a variety of criteria, including demonstrated business and professional skills and experiences relevant to our business and strategic direction, concern for long-term stockholder interests, personal integrity and sound business judgment. TheOur Board of Directors seeks members from diverse professional backgrounds who combine a broad spectrum of relevant industry and strategic experience and expertise that, in concert, offer us and our stockholders diversity of opinion and insight in the areas most important to us and our corporate mission. In addition, nominees for director are selected to have complementary, rather than overlapping, skill sets. However,We are committed to actively seeking female and minority candidates for the Corporate Governance and Nominating Committee does not have a formal policy
concerning the diversity of thepool from which Board of Directors.candidates are chosen. All candidates for director nominee must have time available to devote to the activities of theour Board of Directors. TheOur Corporate Governance and Nominating Committee also considers the independence of candidates for director nominee, including the appearance of any conflict in serving as a director. Candidates for director nominees who do not meet all of these criteria may still be considered for nomination to theour Board of Directors if theour Corporate Governance and Nominating Committee believes that the candidate will make an exceptional contribution to us and our stockholders.
Board Leadership Structure |
Currently, Mr. Conroy serves as both the Chairman of our Board of Directors and the Chief Executive Officer of the Company. Our by-laws permit these positions to be held by the same person, and our Board of Directors believes that it is in the best interests of the Company to retain flexibility in determining whether to separate or combine the roles of Chairman and Chief Executive Officer based on our circumstances. While our Board of Directors does not have a formal policy regarding the separation of the roles of Chairman and Chief Executive Officer, our Board of Directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of senior management, a highly engaged Board of Directors, and the right balance between (i) effective independent oversight of the Company's business, (ii) our Board of Directors' activities and (iii) consistent corporate leadership. On at least an annual basis, our Corporate Governance and Nominating Committee reviews our corporate leadership structure. As part of its most recent such assessment, the Corporate Governance and Nominating Committee gave thorough consideration to a number of factors, including, but not limited to, the pros and cons of alternative leadership structures given the Company's current operating and governance environment, a review of empirical data on the topic, investor feedback and the dynamics of our Board of Directors.
Based upon these considerations and the recommendation of the Corporate Governance and Nominating Committee, the Board of Directors determined to maintain our Board of Directors' current leadership structure with Mr. Conroy serving as both the Chairman of our Board of Directors and the Chief Executive Officer of the Company. The Board of Directors based this determination on (1) Mr. Conroy's extensive experience in and knowledge of the Company, the molecular diagnostics industry and the regulatory environment, (2) the highly effective bridge Mr. Conroy's service provides between our Board of Directors and the Company's management, (3) Mr. Conroy's continued leadership and vision necessary to lead our Board of Directors and the Company through its challenging industry and macroeconomic environments, (4) Mr. Conroy's investor-focused perspective and (5) the effective independent leadership provided on the Board of Directors by our Lead Independent Director and other independent directors as well as our standing committees which are all comprised entirely of independent directors.
Pursuant to our Corporate Governance Guidelines, at any time that the Company does not have an independent chairman of the Board of Directors, the Board of Directors appoints an independent director to serve as Lead Independent Director. The Lead Independent Director is elected to serve a one-year term commencing upon the adjournment of the annual meeting of stockholders until the adjournment of the following year's annual meeting of stockholders. Our Corporate Governance Guidelines empower our Lead Independent Director with well-defined duties that are further summarized below. In addition, our Board of Directors—which currently is comprised of 82% independent directors—exercises a
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Exact Sciences 2020 Proxy Statement | | 13 |
CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
strong, independent oversight function which enhances the accountability of the senior management team to our Board of Directors and provides for robust and impartial leadership and a unified voice that is accountable to our stockholders. This oversight function is enhanced by the fact that our Audit and Finance, Compensation and Management Development, Corporate Governance and Nominating and Innovation, Technology and Pipeline Committees are comprised entirely of independent directors. Further, our Board of Directors meetings include regular executive sessions of the independent directors and an annual evaluation of our CEO's performance against pre-determined goals. Our Board of Directors can and will change its leadership structure if our Board of Directors determines that doing so is in the best interest of the Company and its stockholders.
| Lead Independent Director Duties |
Corporate Governance Guidelines |
Our Board of Directors has approved, upon the recommendation of the Corporate Governance and Nominating Committee, a set of Corporate Governance Guidelines under which our Board of Directors and its committees operate. Our Corporate Governance Guidelines assist the Board and its committees in the exercise of their responsibilities and establish a common set of expectations and guidelines in order to provide a strong and robust governance framework for the Company. Among other topics, our Corporate Governance Guidelines address the following matters:
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» Board Evaluation: Our Board of Directors annually conducts a confidential performance evaluation to determine whether it and its committees are functioning adequately and effectively. As part of this evaluation, each director completes a written self-assessment questionnaire with a variety of questions designed to gather suggestions for improving the effectiveness of the Board of Directors and its committees and to solicit feedback on a range of issues, including Board composition, Board dynamics, the Board's relationship with senior management, Board agendas and meetings, Board processes and Board committees. | ||||
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» Limitation on Other Board Service: Carrying out the duties and fulfilling the responsibilities as a member of our Board of Directors requires a significant commitment of an individual's time and attention. While our Board of Directors does not believe that explicit limits on the number of other boards of directors on which directors may serve are currently appropriate, each director must notify the Chairman in connection with accepting a seat on the board of directors of another business corporation so that the potential for conflicts or other factors compromising such director's ability to perform his or her duties for our Board of Directors may be fully assessed. | ||||
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» Board and Committee Meeting Attendance: Each member of the Board is expected to make reasonable efforts to attend regularly scheduled meetings of the Board and to participate in telephone conference meetings or other special meetings of the Board. Attendance and participation at meetings is an important component of the directors' duties and, as such, attendance rates are taken into account by the Corporate Governance and Nominating Committee in connection with assessments of director candidates for re-nomination as directors. | ||||
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» Director Orientation and Continuing Education: Our Corporate Governance and Nominating Committee has developed an orientation program designed to familiarize new directors with our business and strategic plans, key policies and practices, principal officers and management structure, auditing and compliance processes and our Code of Business Conduct and Ethics. In addition, our Board committees monitor the continuing education needs of their members and recommend action to the Board where appropriate. Further, our executive officers are responsible for periodically providing materials or briefing sessions for continuing directors to assist them in discharging their duties. | ||||
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» Director Access to Management and Advisors: Directors have complete access to senior members of our management. Our Board of Directors and each of its committees is authorized to request that any Company officer or employee, outside legal counsel, independent auditor or other professional retained by the Company to render advice to the Company, attend any meeting of the Board or such committee, or otherwise meet with members of or advisors to the Board of Directors. Our Board of Directors and each committee is authorized to engage legal, accounting or other advisors to provide it with advice and information in connection with carrying out its or their responsibilities. | ||||
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14 | | Exact Sciences 2020 Proxy Statement |
| CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
Management Succession Planning |
Our Board of Directors recognizes that one of its most important duties is to ensure continuity in the Company's senior leadership positions by overseeing the development of executive talent and planning for the succession of our senior management, including our Chief Executive Officer.
Our Corporate Governance and Nominating Committee and Compensation and Management Development Committee review and oversee the development and implementation of senior management succession plans. These committees periodically report to the Board of Directors on (i) such management succession plans, including recommendations and evaluations of potential successors to the Chief Executive Officer and other members of senior management and (ii) any development plans for then-current members of senior management.
Stockholder Engagement |
We believe effective corporate governance requires regular, constructive and thoughtful engagement with our stockholders on a number of topics, including operating performance, corporate governance, long-term strategy, executive compensation, corporate social responsibility and governance-related issues. Our Board of Directors, CEO and senior management team play a central role in our stockholder engagement strategy and we regularly engage stockholders throughout the year and consider their input. In addition, our Compensation and Management Development Committee is charged with monitoring and evaluating the Company's engagement with stockholders to solicit feedback on the Company's compensation philosophy, structure, programs, practices and policies.
We solicit ongoing feedback from major stockholders and strive for continued and robust stockholder engagement throughout the year. Our Board of Directors welcomes feedback on its corporate governance and executive compensation practices and policies and believes that continued engagement with stockholders will further align the long-term interests of our Board of Directors, the Company, its management and its stockholders.
As set forth in our Corporate Governance Guidelines, a copy of which is available at www.exactsciences.com, security holders who wish to communicate directly with our Board of Directors, the independent directors of our Board of Directors or any individual member of our Board of Directors may do so by sending such communication by certified mail addressed to the Chairman of our Board of Directors, as a representative of the entire Board of Directors, the Lead Independent Director, as a representative of the independent directors of our Board of Directors, or to the individual director or directors, in each case, c/o Secretary, Exact Sciences Corporation, 441 Charmany Drive, Madison, Wisconsin 53719. The Secretary reviews any such security holder communication and forwards relevant communications to the addressee.
Policies Regarding Director Nominations |
Our Board of Directors has adopted a policy concerning director nominations, a copy of which is available at www.exactsciences.com. Set forth below is a summary of certain provisions of this policy.
Process for Identifying and Evaluating Director Nominees
TheOur Board of Directors is responsible for selecting nominees for election to theour Board of Directors by our stockholders. TheOur Board of Directors delegates the selection process to theour Corporate Governance and Nominating Committee, with the expectation that other members of theour Board of Directors, and of management, may be requested to take part in the process as appropriate. Generally, theour Corporate Governance and Nominating Committee identifies candidates for director nominees in consultation with management, through the use of search firms or other advisers, through the recommendations submitted by other directors or stockholders or through such other methods as theour Corporate Governance and Nominating Committee deems appropriate. We are committed to actively seeking female and minority candidates for the pool from which Board candidates are chosen. Once candidates have been identified, theour Corporate Governance and Nominating Committee confirms that the candidates meet the qualifications for director nominees established by theour Corporate Governance and Nominating Committee. TheOur Corporate Governance and Nominating Committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks, or any other means that theour Corporate Governance and Nominating Committee deems to be helpful in the evaluation process. TheOur Corporate Governance and Nominating Committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of theour Board of Directors. Based on the results of the evaluation process, theour Corporate Governance and Nominating Committee recommends candidates for theour Board of Directors' approval as nominees for election to theour Board of Directors. TheOur Corporate Governance and Nominating Committee also recommends candidates for theour Board of Directors' appointments to the standing committees of theour Board of Directors.
Procedures for Recommendation of Director Nominees by Stockholders
The policy of theour Corporate Governance and Nominating Committee is to consider properly submitted stockholder recommendations for director candidates. To submit a recommendation to theour Corporate Governance and Nominating Committee for director nominee candidates, a stockholder must make such recommendation in writing and include:
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Exact Sciences 2020 Proxy Statement | | 15 |
CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
Recommendations must be sent to the ChairmanChairperson of theour Corporate Governance and Nominating Committee, c/o Secretary, Exact Sciences Corporation, 441 Charmany Drive, Madison, Wisconsin 53719. The Secretary must receive any such recommendation for nomination not later than the close of business on the 120th90th day nor earlier than the close of business on the 150th120th day prior to the first anniversary of the date of the proxy statement delivered to stockholders in connection with the preceding year's annual meeting of stockholders; provided, however, that with respect to a special meeting of stockholders called by us for the purpose of electing directors to theour Board of Directors, the Secretary must receive any such recommendation not earlier than the 90th day prior to such special meeting nor later than the later of (1) the close of business on the 60th day prior to such special meeting or (2) the close of business on the 10th day following the day on which a public announcement is first made regarding such special meeting. We will promptly forward any such nominations to theour Corporate Governance and Nominating Committee. Once theour Corporate Governance and Nominating Committee receives a recommendation for a director candidate, such candidate will be evaluated in the same manner as other candidates and a recommendation with respect to such candidate will be delivered to theour Board of Directors.
Policy Governing Director Attendance at Annual Meetings of Stockholders
Policy Governing Director Attendance at Annual Meetings of Stockholders |
Our policy is to schedule a regular meeting of theour Board of Directors on the same date as our annual meeting of stockholders and, accordingly, directors are encouraged to be present at such stockholder meetings. AllWith the exception of our board membersone director, all individuals serving on theour Board of Directors at the time of the 20152019 annual meeting, attended the 20152019 annual meeting of stockholders.
Code of Business Conduct and Ethics
Code of Business Conduct and Ethics |
We have in place a Code of Business Conduct and Ethics (the "Code of Ethics") that applies to all of our directors, officers and employees. The Code of Ethics is designed to deter wrongdoing and promote:
A current copy of the Code of Ethics is available at www.exactsciences.com. A copy may also be obtained, free of charge, from us upon a request directed to Exact Sciences Corporation, 441 Charmany Drive, Madison, Wisconsin 53719, attention: Investor Relations. We intend to disclose any amendments to or waivers of a provision of the Code of Ethics by posting such information on our website available at www.exactsciences.com and/or in our public filings with the SEC.
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16 | | Exact Sciences 2020 Proxy Statement |
| CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
Additional Governance Matters—Corporate Sustainability |
Corporate sustainability is consistent with and supports our mission to empower patients and the colon cancer community with the most effective methods of detection to eradicate the disease and save lives. We believe that to serve patients well, it is important to also act responsibly in our relationships with our employees, our communities and the environment. We are committed to: (1) investing in our human capital; (2) conducting our business with the highest professional and ethical standards; (3) quality and the continuing effectiveness of our quality management system; (4) making it easy and affordable to complete our tests; (5) and working safely and being environmentally responsible. Our 2019 Sustainability Report, which outlines these goals in further detail and describes our sustainability practices is available atTHE BOARD OF DIRECTORS AND ITS COMMITTEES
http://investor.exactsciences.com/investor-relations/corporate-governance/default.aspx.
Board of Directors
Our Board of Directors and its Committees |
Board of Directors |
Our bylawsby-laws state that the number of directors constituting the entire Board of Directors shall be determined by resolution of theour Board and that theour Board has the authority to increase the number of directors, fill any vacancies on theour Board and to decrease the number of directors to eliminate any vacancies. The number of directors currently fixed by our Board of Directors is ten.eleven.
Our Board of Directors is classified into three separate classes (Classes I, II and III), with one class of directors nominated for election each year. Our Board of Directors believes the classification of the Board is important to our philosophy of managing and promoting the Company's long-term growth. Given the highly competitive nature of our business and the complexity and evolution of the life sciences industry more broadly, it can take several years to gain a robust understanding of our business and strategy, the Company's organization and structure, our products and our industry. Electing directors to a three year term is intended to promote continuity and stability of strategy and business direction for the long-term interests and expectations of our stockholders and other stakeholders.
Our Board of Directors met nine18 times during the year ended December 31, 2015.2019. All directors attended at least 75% of the aggregate of all meetings of theour Board of Directors and all committees of theour Board of Directors on which he or she served during 2015. The2019.
Committees |
Our Board of Directors has standing Compensation, Audit and Finance, Compensation and Management Development, Corporate Governance and Nominating and Innovation, Technology and Pipeline Committees. In January 2016, the Board of Directors dissolved the Innovation and Technology Committee, and the matters previously addressed by the Innovation and Technology Committee are now addressed by the entire Board of Directors with assistance from the Company's management. TheOur Board of Directors and each standing committee retains the authority to engage its own advisors and consultants. Each standing committee has a charter that has been approved by theour Board of Directors. A copy of each committee charter is available at www.exactsciences.com. Each committee reviews the appropriateness of its charter annually or at such other intervals as each committee determines.
The following table sets forth the current members of each standing committee of theour Board:
| | COMPENSATION AND MANAGEMENT DEVELOPMENT | | CORPORATE GOVERNANCE AND NOMINATING | | INNOVATION, TECHNOLOGY AND PIPELINE | |||||||
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| Thomas D. Carey | | | | | ||||||||
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| Eli Casdin | | | | | | | ||||||
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| James E. Doyle | | | | | | | ||||||
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| Pierre Jacquet | | | | | | | ||||||
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| Daniel J. Levangie | | | | | | |||||||
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| Freda Lewis-Hall | | | | |||||||||
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| Kathleen G. Sebelius | | | | | | | ||||||
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| Andrew Slavitt | | | | |||||||||
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| Michael S. Wyzga | | | | | ||||||||
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| Katherine S. Zanotti | | | | | | |||||||
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Committees
Audit Committee. Our Audit Committee consists of Dr. Fallon, Mr. Levangie, Mr. Sterling and Mr. Wyzga. The Board of Directors has determined that each member of the Audit Committee is independent within the meaning of the NASDAQ director independence standards and applicable rules of the SEC for audit committee members. The Board of Directors has elected Mr. Sterling as Chairperson of the Audit Committee and has determined that he qualifies as an "audit committee financial expert" under the rules of the SEC. The Audit Committee is responsible for assisting the Board of Directors in fulfilling its oversight responsibilities with respect to financial reports and other financial information. The Audit Committee (1) reviews, monitors and reports to the Board of Directors on the adequacy of the Company's financial reporting process and system of internal controls over financial reporting, (2) has the ultimate authority to select, evaluate and replace the independentChair Member
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Exact Sciences 2020 Proxy Statement | | 17 |
auditor
CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
The following summarizes the membership of each committee, as well as the primary roles and is the ultimate authority to which the independent auditors are accountable, (3) in consultation with management, periodically reviews the adequacyresponsibilities of the Company's disclosure controls and procedures and approves any significant changes thereto, (4) provides the Audit Committee report for inclusion in our proxy statement for our annual meeting of stockholders and (5) recommends, establishes and monitors procedures for the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matterseach committee and the receiptnumber of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. The Audit Committeetimes each committee met six times during 2015.
Compensation Committee. The Compensation Committee presently consists of Mr. Carey, Mr. Doyle, Mr. Wyzga and Ms. Zanotti, each of whom is a non-employee director as defined in Rule 16b-3 of the Exchange Act. The Board of Directors has also determined that each member of the Compensation Committee is also an independent director within the meaning of NASDAQ's director independence standards. Ms. Zanotti serves as Chairperson of the Compensation Committee. The Compensation Committee (1) discharges the responsibilities of the Board of Directors relating to the compensation of our executive officers, (2) evaluates and recommends to the Board of Directors appropriate compensation for the Company's independent directors, (3) oversees the Company's procedures for consideration and determination of executive and director compensation, and reviews and approves all executive compensation, (4) administers and implements the Company's incentive compensation plans and equity-based plans, (5) reviews and recommends the Compensation Discussion and Analysis for inclusion in our proxy statement for our annual meeting of stockholders and (6) provides the Compensation Committee report for inclusion in our proxy statement for our annual meeting of stockholders. The Compensation Committee met six times during 2015.
Corporate Governance and Nominating Committee. Our Corporate Governance and Nominating Committee consists of Mr. Carey, Mr. Doyle, Dr. Fallon, Mr. Levangie and Mr. Thompson. The Board of Directors has determined that each member of the Corporate Governance and Nominating Committee is an independent director within the meaning of the NASDAQ director independence standards and applicable rules of the SEC. Mr. Thompson serves as Chairperson of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee (1) recommends to the Board of Directors persons to serve as members of the Board of Directors and as members of and chairpersons for the committees of the Board of Directors, (2) considers the recommendation of candidates to serve as directors submitted from our stockholders, (3) assists the Board of Directors in evaluating the performance of the Board of Directors and the Board committees, (4) advises the Board of Directors regarding the appropriate board leadership structure for the Company, (5) reviews and makes recommendations to the Board of Directors on corporate governance and (6) reviews the size and composition of the Board of Directors and recommends to the Board of Directors any changes it deems advisable. The Corporate Governance and Nominating Committee met six times during 2015.
In January 2016, the Board of Directors determined that the Innovation and Technology Committee was no longer necessary to assist the Board of Directors and the Company, and that the matters and substance of the work previously addressed by the Innovation and Technology Committee would be better addressed by the Board of Directors with the assistance of the Company's management, including the Company's Chief Science Officer. Accordingly, the Innovation and Technology Committee was dissolved by a unanimous vote of the Board of Directors in January 2016.
Compensation Committee Interlocks and Insider Participation
Thomas D. Carey, James E. Doyle, Michael S. Wyzga and Katherine S. Zanotti served on the Compensation Committee in 2015. None of the directors who served on the Compensation Committee in 2015 served as one of our employees in 2015 or has ever served as one of our officers. During 2015, none of our executive officers served as a director or member of the compensation committee (or other2019.
committee performing similar functions) of any other entity of which an executive officer served on our Board of Directors or Compensation Committee.
Role of the Board of Directors in Risk Oversight
The Board of Directors administers its risk oversight function directly and through the Audit Committee and the Compensation Committee. The Audit Committee regularly
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| | AUDIT AND FINANCE COMMITTEE | | | NUMBER OF MEETINGS IN 2019: 7 | | |||
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| | MEMBERS » Mr. Wyzga (Chair) » Mr. Casdin » Mr. Jacquet | | | AMONG OTHER THINGS, OUR AUDIT AND FINANCE COMMITTEE: » Maintains responsibility for assisting our Board of Directors in fulfilling its oversight responsibilities with respect to financial reports and other financial information. » Reviews, monitors and reports to our Board of Directors on the adequacy of the Company's financial reporting process and system of internal controls over financial reporting. » Selects, evaluates and replaces the independent auditor and serves as ultimate authority to which independent auditors are accountable. » Oversees the Company's internal audit department, including the appointment, replacement or dismissal of the director of internal audit and the internal audit department's activities, including all issued internal audit reports, major findings and updates on remediation of past findings. » In consultation with management, periodically reviews the adequacy of the Company's disclosure controls and procedures and approves any significant changes thereto. » Advises and consults with management concerning plans and objectives for the Company's capitalization, including the structure and amount of debt and equity required to meet the Company's financing needs. » Reviews and evaluates significant capital expenditures, mergers, acquisitions, divestitures, joint ventures and other significant transactions. » Regularly discusses with management, Company legal counsel and the internal audit department the Company's major risk exposures, their potential financial impact on the Company, and the steps taken to monitor and control those risks, and reviews with management annually a summary of legal and regulatory compliance matters and risk management activities. » Provides the Audit and Finance Committee report for inclusion in our proxy statement for our annual meeting of stockholders. » Recommends, establishes and monitors procedures for the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matters and the receipt of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. | | |||
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| | Our Board of Directors has determined that each member of our Audit and Finance Committee is independent with the meaning of the NASDAQ director independence standards and applicable rules of the SEC for audit committee members. Our Board of Directors has also determined that each of Mr. Casdin and Mr. Wyzga qualifies as an "audit committee financial expert" under the rules of the SEC. | | ||||||
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18 | | Exact Sciences 2020 Proxy Statement |
| CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
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| | COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE | | | NUMBER OF MEETINGS IN 2019: 6 | | |||
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| | MEMBERS » Ms. Zanotti (Chair) » Mr. Doyle » Mr. Levangie | | | AMONG OTHER THINGS, OUR COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE: » Discharges the responsibilities of our Board of Directors relating to the compensation of our executive officers. » Evaluates and recommends to our Board of Directors appropriate compensation for the Company's independent directors. » Oversees the Company's procedures for consideration and determination of executive and director compensation. » Reviews and approves all executive compensation. » Administers and implements the Company's incentive compensation plans and equity-based plans. » Reviews, monitors and oversees the Company's employee benefit plans. » Oversees succession planning for executive management and reviews the performance, potential, development and retention of current and future executive management and the organizational capability to meet short- and long-term strategic objectives. » Reviews and recommends the Compensation Discussion & Analysis for inclusion in our proxy statement for our annual meeting of stockholders. » Provides our Compensation and Management Development Committee Report for inclusion in our proxy statement for our annual meeting of stockholders. | | |||
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| | Each member of our Compensation and Management Development Committee is a non-employee director as defined in Rule 16b-3 of the Exchange Act. Our Board of Directors has determined that each member of our Compensation and Management Development Committee is also an independent director within the meaning of NASDAQ's director independence standards and applicable SEC rules. | | ||||||
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| | CORPORATE GOVERNANCE AND NOMINATING COMMITTEE | | | NUMBER OF MEETINGS IN 2019: 6 | | |||
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| | MEMBERS » Mr. Carey (Chair) » Mr. Doyle » Ms. Sebelius | | | AMONG OTHER THINGS, OUR CORPORATE GOVERNANCE AND NOMINATING COMMITTEE: » Recommends to our Board of Directors persons to serve as members of our Board of Directors and as members of and chairpersons for the committees of our Board of Directors. » Considers the recommendations of candidates to serve as directors submitted from our stockholders. » Assists our Board of Directors in evaluating the performance of our Board of Directors and our Board committees. » Advises our Board of Directors regarding the appropriate board leadership structure for the Company. » Reviews and makes recommendations to our Board of Directors on corporate governance matters. » Reviews the size and composition of our Board of Directors and recommends to our Board of Directors any changes it deems advisable. | | |||
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| | Our Board of Directors has determined that each member of our Corporate Governance and Nominating Committee is an independent director within the meaning of the NASDAQ director independence standards and applicable rules of the SEC. | | ||||||
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Exact Sciences 2020 Proxy Statement | | 19 |
CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
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| | INNOVATION, TECHNOLOGY AND PIPELINE COMMITTEE | | | NUMBER OF MEETINGS IN 2019: 3 | | |||
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| | MEMBERS » Mr. Levangie (Chair) » Mr. Casdin » Mr. Jacquet » Ms. Sebelius | | | AMONG OTHER THINGS, OUR INNOVATION, TECHNOLOGY AND PIPELINE COMMITTEE: » Interacts with management and external advisors to develop insights and recommendations regarding the Company's approach to pipeline development and technical and commercial innovation, including: » Maintaining alignment between strategic commercial objectives and the Company's product development pipeline; » Assisting management in identification, evaluation and oversight of appropriate pipeline, technology and product development investments; » Working with management to prioritize medical and clinical technology needs that can effectively be addressed by the Company; » Development, oversight and review of key product development and other technical personnel; and » Assessment of new and existing intellectual property assets and risks. » Supports the recruitment and development of, and interaction with, the Company's scientific advisory board. » Provides an early assessment of, and acts as a sounding board to management with regard to, merger and acquisition opportunities that would expand the Company's pipeline or product/service offerings. » Provides feedback and input regarding the Company's development of innovative new business models, strategies and tactics. | | |||
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| | Our Board of Directors has determined that each member of our Innovation, Technology and Pipeline Committee is an independent director within the meaning of the NASDAQ director independence standards and applicable rules of the SEC. | | ||||||
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Compensation and Management Development Committee Interlocks and Insider Participation |
James E. Doyle, Daniel J. Levangie, Katherine S. Zanotti and Eli Casdin served on our Compensation and Management Development Committee in 2019. None of the directors who served on our Compensation and Management Development Committee in 2019 has ever served as one of our employees or officers. During 2019, none of our executive officers served as a director or member of a compensation committee (or other committee performing similar functions) of any other entity of which an executive officer served on our Board of Directors or Compensation and Management Development Committee.
Role of our Board of Directors in Risk Oversight |
Our Board of Directors administers its risk oversight function directly and through our Audit and Finance Committee and our Compensation and Management Development Committee. Our Audit and Finance Committee regularly discusses with management, Company legal counsel and the internal audit department the Company's major risk exposures, their potential financial impact on the Company, and the steps taken to monitor and control those risks and reviews with management annually a summary of legal and regulatory compliance matters and risk management activities, including an insurance review, a review of management's precautionary plans for disaster protection, and a review of the Company's policies and procedures with respect to cybersecurity threats and related issues. Additionally, our Audit and Finance Committee oversees the Audit Committee assistsprocess by which the Board in its oversight ofis informed regarding the Company's compliance with legal and regulatory matters. Thecompliance risks facing the Company and coordinates with the Company's legal counsel to ensure the Board receives regular legal and regulatory compliance updates from management. Our Audit and Finance Committee also reviews regulatory investigations (including findings thereof) as well as any alleged significant violations of laws, regulations or Company policies, including the Company's Code of Business Conduct and Ethics and the Company's Code of Conduct on Interaction with Health Care Professionals, and reports such findings to the Board as needed. Our Compensation and Management Development Committee, together with management, has reviewed the Company's compensation policies and practices and concluded that such policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
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20 | | Exact Sciences 2020 Proxy Statement |
| CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
Cybersecurity and Data Protection Risk Management
Protecting the privacy of our patients' and employees' information and the security of our systems and networks has long been and will continue to be a priority for Exact Sciences and our Board of Directors. We have technical, administrative and physical safeguards in place to help protect against unauthorized access to, use or disclosure of patient and employee information and data we collect and store. In addition, our comprehensive information security program includes, among other aspects, vulnerability management, antivirus and malware protection, file integrity monitoring, encryption and access control.
Consistent with our Board of Directors' risk management and oversight structure, our Audit and Finance Committee has primary responsibility for overseeing our risk management practices, programs, policies and procedures related to data privacy, data protection and network security. Management provides our Audit and Finance Committee and our Board of Directors with updates about cybersecurity practices, programs, policies and procedures and the status of projects designed to strengthen internal cybersecurity and data protection. Our Board of Directors and our Audit and Finance Committee also discuss potential cybersecurity and data protection threats.
Director Compensation |
Compensation Policy for Non-Employee Directors
We maintain a compensation policy for our non-employee directors (the "Director Compensation Policy") that is intended to enable us to attract and retain, on a longer-term basis, high-qualified non-employee directors. The Director Compensation Policy is supported by an annual benchmarking exercise conducted by Radford, an Aon Consulting Company ("Radford"), the Company's independent executive compensation consultant, which positions the cash and equity compensation paid to our non-employee directors at the market median of a peer group that is reviewed annually. For information regarding the peer group, which is the same peer group used in connection with the determination of executive compensation, see"Compensation And Other Information Concerning Named Executive Officers" beginning on page 29.
Under the Director Compensation Policy, on the date of the 2019 annual stockholders meeting, each non-employee director who continued to serve as a director following such meeting was paid an annual cash retainer as follows:
| BOARD MEMBER COMPENSATION | ANNUAL RETAINER ($) | |||
|---|---|---|---|---|
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Lead Independent Director | 75,000 | |||
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Director | 50,000 | |||
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| COMMITTEE CHAIRPERSON COMPENSATION | ANNUAL RETAINER ($) | |||
|---|---|---|---|---|
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Audit and Finance Committee | 25,000 | |||
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Compensation and Management Development Committee | 20,000 | |||
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Corporate Governance and Nominating Committee | 13,000 | |||
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Innovation, Technology & Pipeline Committee | 13,000 | |||
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| COMMITTEE MEMBER COMPENSATION | ANNUAL RETAINER ($) | |||
|---|---|---|---|---|
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Audit and Finance Committee | 12,500 | |||
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Compensation and Management Development Committee | 10,000 | |||
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Corporate Governance and Nominating Committee | 6,500 | |||
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Innovation, Technology & Pipeline Committee | 6,500 | |||
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In lieu of cash, each non-employee director may elect to receive shares of Company common stock having an equivalent dollar value.
In April 2020, in response to the rapidly evolving impact of the COVID-19 pandemic, the Board of Directors amended the Director Compensation Policy to provide that the annual cash retainer for Board service would not be paid for the service period commencing on the date of the 2020 Annual Meeting.
In addition, non-employee directors are paid cash compensation of $1,500 per meeting in atypical circumstances when (1) our Board of Directors or any committee has met more than 10 times per year or (2) our Board of Directors creates a special committee. Further, members of our Innovation, Technology & Pipeline Committee receive an additional cash payment of $5,000 per full-day, on-site, special working meeting (of which it is anticipated that two such meetings per year will take place).
Under the Director Compensation Policy, on the date of each annual stockholders meeting, each non-employee director who is continuing to serve as a director following such meeting is also granted restricted stock or deferred stock units having a value of $250,000 with the number of shares of restricted stock or deferred stock units to be issued being determined based on the closing price of the Company's common stock on the grant date. In addition, if the Board chair is independent and such Board chair will continue as Board chair following the date of the annual meeting, such Board chair will be granted an additional annual restricted stock or deferred stock unit award having a value of $15,000. These annual equity grants are scheduled to vest upon the earlier of the first anniversary of the grant date or the date of the next annual stockholders
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Exact Sciences 2020 Proxy Statement | | 21 |
CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
meeting; provided upon the death of a director, such director's awards vest in full; upon a director's ceasing to serve for any other reason, such director's awards vest pro rata based on the number of days since the grant date; and upon a change of control, all awards vest in full.
Under the Director Compensation Policy, if a director is elected or appointed to our Board of Directors other than on the date of the Company's annual meeting of stockholders, such director's annual cash and equity compensation as described above, for the period between the date of such election or appointment and the date of the Company's next annual meeting of stockholders, will be granted in a pro rata amount on the date of such annual meeting to reflect the date of such director's election or appointment and the date of the Company's following annual meeting of stockholders. The number of shares of restricted stock or deferred stock units to be issued to the director based on the foregoing pro rata compensation is determined based on the closing price of the Company's common stock on the date of such director's appointment, and such shares of restricted stock or deferred stock units are fully vested upon grant.
Upon his or her initial election to our Board of Directors, a new director receives shares of restricted stock or deferred stock units having a value equal to $375,000 based on the closing sale price of our common stock on the date of grant. Such shares of restricted stock or deferred stock units vest in three equal annual installments.
The Exact Sciences Corporation 2019 Omnibus Long-Term Incentive Plan (the "2019 Plan") establishes limits on the awards issuable to our non-employee directors. Under the 2019 Plan, the maximum value of all awards granted to a non-employee director, taken together with all cash fees paid to such non-employee director under any other equity compensation plan of the Company or an affiliate in a given calendar year, may not exceed $600,000 (calculating the value of any equity compensation plan awards based on the grant date fair market value for financial reporting purposes). However, awards granted to non-employee directors upon their initial election to the Board of Directors or the board of directors of an affiliate will not be counted towards this limit, and certain other limited exceptions may apply.
The foregoing compensation is in addition to reimbursement of all out-of-pocket expenses incurred by directors in attending meetings of our Board of Directors.
Prior to his appointment to the Board of Directors in July 2019, the Company was party to a consulting agreement with Andrew Slavitt pursuant to which he provided certain advisory services. In accordance with the agreement, Mr. Slavitt was paid consulting fees totaling $105,000 in 2019.
REPORT OF THE AUDIT COMMITTEE
Non-Employee Director Compensation in 2019
The following table provides compensation information for the one-year period ended December 31, 2019 for each non-employee member of our Board of Directors. No member of our Board employed by us receives separate compensation for services rendered as a member of our Board. Freda Lewis-Hall did not join our Board of Directors until April 22, 2020 and thus received no compensation in the one-year period ended December 31, 2019.
| NAME | FEES EARNED OR PAID IN CASH ($) | STOCK AWARDS ($)(1) | ALL OTHER COMPENSATION ($) | TOTAL ($) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Thomas D. Carey | 69,000 | (2) | 250,023 | — | 319,023 | ||||||||
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Eli Casdin | 75,000 | 250,023 | — | 325,023 | |||||||||
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James E. Doyle | 97,500 | 250,023 | — | 347,523 | |||||||||
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Pierre Jacquet | 69,000 | (2) | 625,000 | (3) | — | 694,000 | |||||||
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Daniel J. Levangie | 79,000 | (2) | 250,023 | — | 329,023 | ||||||||
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Kathleen Sebelius | 87,855 | (2)(4) | 723,638 | (5) | — | 811,493 | |||||||
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Andrew Slavitt | 50,000 | 625,000 | (3) | 105,000 | (6) | 780,000 | |||||||
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Michael S. Wyzga | 81,000 | (2) | 250,023 | — | 331,023 | ||||||||
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Katherine S. Zanotti | 76,000 | 250,023 | — | 326,023 | |||||||||
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22 | | Exact Sciences 2020 Proxy Statement |
| CORPORATE GOVERNANCE PRINCIPLES, BOARD MATTERS AND NON-EMPLOYEE DIRECTOR COMPENSATION |
As of December 31, 2019, the non-employee members of our Board of Directors held unexercised stock options and unvested shares of restricted stock, RSUs and deferred stock units as follows:
| NAME | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS | UNVESTED SHARES OF RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS | |||||
|---|---|---|---|---|---|---|---|
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Thomas D. Carey | 15,620 | 2,155 | |||||
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Eli Casdin | 10,100 | 2,155 | |||||
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James E. Doyle | 18,477 | 2,155 | |||||
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Pierre Jacquet | — | 5,387 | |||||
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Daniel J. Levangie | 9,865 | 2,155 | |||||
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Kathleen Sebelius | — | 6,374 | |||||
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Andrew Slavitt | — | 5,387 | |||||
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Michael S. Wyzga | 10,108 | 2,155 | |||||
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Katherine S. Zanotti | 25,637 | 2,155 | |||||
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Exact Sciences 2020 Proxy Statement | | 23 |
PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
PROPOSAL 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
WHAT YOU ARE VOTING ON:
We are asking our stockholders to ratify the appointment of PricewaterhouseCoopers, LLP as our independent registered public accounting firm for 2020.
The Audit and Finance Committee of the Board of Directors has appointed PricewaterhouseCoopers ("PWC") as our independent registered public accounting firm for the fiscal year ending December 31, 2020. PWC was selected as our independent registered public accounting firm for the fiscal year ending December 31, 2020 following completion of a competitive process to select a firm conducted by the Audit and Finance Committee. As a result of this process, on March 4, 2020 the Audit and Finance Committee dismissed BDO USA, LLP ("BDO") as the Company's independent registered public accounting firm effective immediately. PWC was engaged as the Company's independent registered public accounting firm on March 4, 2020.
The reports of BDO on the financial statements of the Company for the past two fiscal years contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the two most recent fiscal years, there were: (1) no disagreements between the Company and BDO on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to the subject matter of the disagreement in their reports on the financial statements for such years, and (2) no "reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K. A representative of BDO is not expected to be present at the 2020 Annual Meeting.
During 2018 and 2019, the Company did not consult with PWC regarding (1) the application of accounting principles to a specified transaction or transactions, either completed or proposed, or the type of audit opinion PWC might render on the Company's financial statements or (2) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to that Item, or a "reportable event" as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
A representative of PWC is expected to be present at the 2020 Annual Meeting. In addition to having the opportunity to make a statement, the PWC representative will be available to respond to any appropriate questions.
Vote Required for Approval
Ratification of the appointment of our independent registered public accounting firm requires the affirmative vote of a majority of the shares present or represented at the 2020 Annual Meeting, in person or by proxy, and voting on such ratification. If our stockholders fail to ratify the selection of PWC as the independent registered public accounting firm for 2020, our Audit and Finance Committee will reconsider whether to retain that firm. Even if the selection is ratified, our Audit and Finance Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year.
Board Recommendation
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24 | | Exact Sciences 2020 Proxy Statement |
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
Other than as described below and compensation agreements and other arrangements which are described in"Compensation And Other Information Concerning Named Executive Officers" beginning on page 29, in 2019 there was not, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of their immediate family had or will have a direct or indirect material interest.
At various times, including in 2019, the Company has engaged Perspective Group LLC, an executive search firm in which Thomas Carey, a member of our Board of Directors, is majority owner, to perform certain executive searches. Under the terms of the engagement, the Company paid Perspective Group approximately $100,000 of fees during the year ended December 31, 2019, which was less than 5% of the Perspective Group's aggregate revenue for the year ended December 31, 2019. Pursuant to this engagement, the Company expects to pay Perspective Group approximately $190,000 of fees during the year ended December 31, 2020.
Pierre Jacquet, a member of our Board of Directors, is Vice Chairman, Global Healthcare and Managing Director of L.E.K. Consulting, LLC. At various times, including in 2019, the Company has engaged L.E.K. to perform strategic consulting services. Under the terms of the Company's engagements with L.E.K., the Company paid L.E.K. approximately $1,811,000 of fees during the year ended December 31, 2019, which was less than 5% of L.E.K.'s aggregate revenue for the year ended December 31, 2019. Pursuant to this engagement, the Company expects to pay L.E.K. approximately $525,000 of fees during the year ended December 31, 2020.
Our Board of Directors has adopted a written policy with regard to related person transactions, which sets forth our procedures and standards for the review, approval or ratification of any transaction required to be reported in our filings with the SEC or in which one of our executive officers or directors has a direct or indirect material financial interest, with limited exceptions. Our policy is that our Audit and Finance Committee shall review the material facts of all related person transactions (as defined in the related person transaction approval policy) and either approve or disapprove of the entry into any related person transaction. In the event that obtaining the advance approval of our Audit and Finance Committee is not feasible, our Audit and Finance Committee shall consider the related person transaction and, if our Audit and Finance Committee determines it to be appropriate, may ratify the related person transaction. In determining whether to approve or ratify a related person transaction, our Audit and Finance Committee will take into account, among other factors it deems appropriate, whether the related person transaction is on terms comparable to those available from an unaffiliated third-party under the same or similar circumstances and the extent of the related person's interest in the transaction.
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Exact Sciences 2020 Proxy Statement | | 25 |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The following table sets forth the aggregate fees billed or expected to be billed by BDO for 2019 and 2018 for audit and non-audit services, including "out-of-pocket" expenses incurred in rendering these services. The nature of the services provided for each category is described following the table.
| Fee Category | 2019 | 2018 | |||||
|---|---|---|---|---|---|---|---|
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Audit Fees(1) | $ | 2,008,111 | $ | 841,722 | |||
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Audit-Related Fees(2) | 27,540 | 21,828 | |||||
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Tax Fees | — | — | |||||
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All Other Fees(3) | 22,917 | — | |||||
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Total | $ | 2,058,568 | $ | 863,550 | |||
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Pre-Approval Policies and Procedures |
Our Audit and Finance Committee has adopted a policy that requires that all services to be provided by the Company's independent public accounting firm, including audit services and permitted non-audit services, to be pre-approved by our Audit and Finance Committee. Our Audit and Finance Committee pre-approved all audit and permitted non-audit services provided by BDO during 2019 pursuant to this policy.
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26 | | Exact Sciences 2020 Proxy Statement |
| REPORT OF THE AUDIT AND FINANCE COMMITTEE |
REPORT OF THE AUDIT AND FINANCE COMMITTEE |
The Audit and Finance Committee is comprised of John A. Fallon, M.D., Daniel J. Levangie, Lionel N. SterlingEli Casdin, Pierre Jacquet and Michael S. Wyzga. None of the members of the Audit and Finance Committee is an officer or employee of the Company, and the Board of Directors has determined that each member of the Audit and Finance Committee meets the independence requirements promulgated by The NASDAQ Stock Market and the SEC, including Rule 10A-3(b)(1) under the Exchange Act.
The Audit and Finance Committee oversees the Company's financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls and the certification of the integrity and reliability of the Company's internal controls procedures. In fulfilling its oversight responsibilities, the Audit and Finance Committee has reviewed the Company's audited consolidated balance sheets at December 31, 20152019 and 20142018 and the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2015,2019, and has discussed them with both management and BDO USA, LLP ("BDO"), the Company's former independent registered public accounting firm. The Audit and Finance Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by the Auditing Standard No. 16,1301,Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board. The Audit and Finance Committee has reviewed permitted services under rules of the SEC as currently in effect and discussed with BDO their independence from management and the Company, including the matters in the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit and Finance Committee concerning independence. The Audit and Finance Committee has also considered and discussed the compatibility of non-audit services provided by BDO with that firm's independence.
Based on its review of the consolidated financial statements and the aforementioned discussions, the Audit and Finance Committee concluded that it would be reasonable to recommend, and on that basis did recommend, to the Board of Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015.2019.
Respectfully submitted by the Audit and Finance Committee.
The Audit and Finance Committee:
Michael S. Wyzga, Chairperson
Eli Casdin
Pierre Jacquet
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Exact Sciences 2020 Proxy Statement | | 27 |
Respectfully submitted by the Audit Committee.
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REPORT OF THE COMPENSATION COMMITTEE
The
PROPOSAL 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION |
WHAT YOU ARE VOTING ON:
At the 2020 Annual Meeting, stockholders are being asked to approve the compensation of our NEOs
as disclosed in this Proxy Statement.
This Proposal 3 enables our stockholders to cast a non-binding, advisory vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement.
As described in detail under the heading "Compensation Committee has reviewed and discussed the Other Information Concerning Named Executive Officers—Compensation Discussion and Analysis (the "CD&A")" beginning on page 29, our executive compensation program is designed to attract, motivate and retain our executive officers, who are critical to our success. Please read the "Compensation and Other Information Concerning Named Executive Officers" section beginning on page 29 for additional details about our executive compensation programs, including information about the 2019 compensation of our named executive officers.
We are asking our stockholders to indicate their support for our executive compensation programs as described in this Proxy Statement. This vote is not intended to address any specific term of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking our stockholders to vote FOR the following resolution at the annual meeting:
"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to the SEC's compensation disclosure rules, including the "Compensation Discussion and Analysis", the compensation tables and any related material disclosed in the proxy statement for the year ended December 31, 2015 with management. In relianceCompany's 2020 annual meeting, is hereby APPROVED."
Although the vote on this Proposal 3 regarding the reviews and discussions referred to above, the Compensation Committee recommended to thecompensation of our named executive officers is not binding on our Board of Directors, we value the opinions of our stockholders and will consider the result of the vote when determining future executive compensation arrangements.
Vote Required for Approval
The foregoing resolution will be approved if holders of a majority of the shares present or represented at the 2020 Annual Meeting, in person or by proxy, and voting on Proposal 3 vote in favor of such resolution.
Board Recommendation
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28 | | Exact Sciences 2020 Proxy Statement |
Table of Directors has approved, that the CD&A be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 and in this proxy statement.Contents
| COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
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ThisCOMPENSATION AND OTHER INFORMATION CONCERNING DIRECTORS AND OFFICERS
Compensation Discussion and Analysis
Executive Summary
This Compensation Discussion and Analysis explains our executive compensation program as it relates to our "namednamed executive officers" ("NEOs") determined in accordance with SEC rules, whose compensation information is presented in the following tables and discussion in accordance with SEC rules:
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Kevin T. Conroy | Chairman, President and Chief Executive Officer | ||||
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Mark Stenhouse | General Manager, Screening | ||||
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D. Scott Coward | Senior Vice President, General Counsel, Chief Administrative Officer and Secretary | ||||
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G. Bradley Cole | Former General Manager, Precision Oncology | ||||
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Jacob Orville | General Manager, Pipeline | ||||
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Ana Hooker | Senior Vice President, | ||||
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Our executive compensation program is designed to focus executive behavior on achievement of both our annual and long-term objectives and strategy as well as align the interests of management with those of our stockholders. To that end, executive compensation generally consists of three primary elements: salary, long-term equity interests and an annual cash bonus opportunity based on individual and corporate performance.
Based on our assessment of the performance of the executives and our compensation philosophy as described in thisCompensation Discussion and Analysis, we took the following actions regarding 2015 compensation:
In addition, in connection with his joining the Company and pursuant to his employment agreement, in January 2015, we granted Mr. Coward a restricted stock unit award covering 75,000 shares.
In 2014, the Company did not issue performance-based equity compensation to its named executive officers because of an insufficient number of shares available under the Company's 2010 Omnibus Long-Term Incentive Plan. The Compensation Committee set total equity compensation for fiscal year 2015 for the Company's named executive officers at approximately the market 80th percentile in part to compensate such named executive officers for the lack of performance-based equity compensation received in fiscal year 2014.
Our executive compensation is discussed in greater detail in the sections that follow. The Compensation Committee will continue to evaluate our overall compensation structure and awards to ensure that they are reflective of the performance of our executive officers and our Company and are consistent with our compensation objectives.
Objectives and Philosophy of Our Executive Compensation Program |
Objectives of Our Executive Compensation Program
Our compensation program for our executive officers is designedintended to achieve the following objectives:
Elements of Executive Compensation
Elements of Executive Compensation |
Our executive compensation program generally consists of three primary elements: salary, long-term equity interests and an annual cash bonus opportunity based on both corporate and individual performance. Pursuant to theirhis employment agreements, certain of our executive officers participateagreement, Mr. Conroy participates in a long-term incentive plan that provides for certain cash payments upon certain changes of control of the Company. AllPursuant to their employment agreements and our equity plans, certain of our executive officers are also eligible for severance payments and benefits under certain circumstances. In addition, effective as of January 1, 2019, we maintain an executive deferred compensation plan, which provides a tax-advantaged method for our eligible employees, including the NEOs, to save for retirement, and which helps us provide a competitive compensation package that enables us to attract and retain qualified executives. Our executive officers are also eligible for certain benefits offered to employees generally, including, life, health, disability, dental and vision insurance, as well as participation in our 401(k) plan and 2010 Employee Stock Purchase Plan. We do not currently believe it is necessary for the attraction or retention of management talent to provide executive officers with compensation in the form of perquisites.perquisites (other than housing and relocation benefits from time to time).
Determining Executive Compensation
Determining Executive Compensation |
It is the responsibility of theour Compensation and Management Development Committee to administer our compensation practices, to ensure that they are competitive and financially prudent and that they include incentives that are designed to appropriately drive performance. To achieve this, thethese objectives, our Compensation and Management Development Committee periodically reviews commercially-available, industry-specific compensation data for companies of generally similar employee size, complexitystage of development, headcount, revenue and market capitalization in the diagnostic, biotechnology and diagnosticsmedical device industries as a general guide for establishing our pay and equity practices and structures. TheOur Compensation and Management Development Committee, along with theour Board of Directors, also reviews and approves corporate and financial
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Exact Sciences 2020 Proxy Statement | | 29 |
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
objectives used in our executive compensation program to confirm that appropriate goals have been established and tracks performance against them. On an annual basis, theour Compensation and Management Development Committee reviews tally sheets reflecting each executive officer's compensation history with respect to each element of compensation, as well as projected payouts that would come due in connection with a termination or change of control.
TheOur Compensation and Management Development Committee conducts an annual review of performance and compensation during the first quarter of each year for the purpose of determining the compensation of executive officers other than the Chief Executive Officer. As part of this review, the Chief Executive Officer submits recommendations to theour Compensation and Management Development Committee relating to the compensation of these officers. Following a review of these recommendations, theour Compensation and Management Development Committee approves the compensation of these officers, with such modifications to the Chief Executive Officer's recommendations as theour Compensation and Management Development Committee considers appropriate.
TheOur Compensation and Management Development Committee's review of the Chief Executive Officer's compensation is subject to separateadditional procedures. With input from members of the entire Board of Directors,independent directors, the Lead Independent Director, along with theour Compensation and Management Development Committee, evaluates the Chief Executive Officer's performance
and reviews the evaluation with him. Based on that evaluation and review and consultation with its independent compensation consultant, theour Compensation and Management Development Committee then determines the Chief Executive Officer's compensation. The Chief Executive Officer isdoes not permitted to attend the portions of meetings of our Compensation and Management Development Committee where the Compensation Committee during votingvotes or deliberations regardingdeliberates on his compensation.
TheOur Compensation and Management Development Committee has engaged Radford an Aon Hewitt Consulting Company ("Radford"), as its independent executive compensation consultant. TheOur Compensation and Management Development Committee has assessed the independence of Radford pursuant to SEC and listing exchange rules and concluded that no conflict of interest exists that would prevent Radford from serving as an independent consultant to our Compensation and Management Development Committee.
Use of Peer Group Data |
In early 2019, with the guidance of Radford, our Compensation Committee.
Analysis of Executive Compensation
Pursuant to its engagement, in early 2015 Radford provided the Compensationand Management Development Committee conducted an annual review of the competitiveness of our executive compensation program, including the competitiveness of our base salaries, target total cash compensation, long-term incentives and target total direct compensation.
Radford analyzed the components of our executive compensation program against information blended from (1) proxy statement data from a peer group of companies that consisted of publicly-traded diagnostic, biotechnology and medical device companies that were similar to the Company in terms of headcount, stage of developmentrevenue and market capitalization and (2) survey data from a broader group of commercial stage public diagnostics, biotechnology and medical device and biopharma companies with headcountrevenue between 100$175 million and 1,000 employees.$1.75 billion and market capitalization between $3.0 billion and $28.0 billion.
TheOur Compensation and Management Development Committee seeks to identify an executive compensation peer group of approximately 20 companies in the diagnostic, biotechnology and medical device industries at a similar stage of development and comparable financial profile that may compete with the Company for executive talent. BasedIn October 2018, based on Radford's review and recommendations regarding the Company's executive compensation peer group, theour Compensation and Management Development Committee approved a new peer group for 2015.2019. In its review, Radford focused on creating a peer group that:
Based on Radford's recommendations, theour Compensation and Management Development Committee (1) removed eightfive companies from the prior year's peer group due to varying reasons, including below-scope market values, revenues, employee sizes and stages of development and acquisitionseither because they were acquired or were no longer comparable based on financial metrics and (2) added elevenseven companies to the prior year's peer group (Abaxis, Aegerion, Arena, ARIAD, Avanir, Depomed; DexCom; Insulet; Ionis; Nektar; Pacira)(Align Technology, Guardant Health, Incyte, Merit Medical Systems, Neogen, ResMed and Seattle Genetics) that met the stated criteria.
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| COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
The companies in theour peer group for 2019 were:
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| ABIOMED | Health Care Equipment | |
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| Align Technology | ||
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| DexCom | Health Care Equipment | |
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| Genomic Health | Biotechnology | |
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| Health Care Equipment | ||
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| Halozyme Therapeutics | Biotechnology | |
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| Health Care Equipment | ||
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| Incyte | Biotechnology | |
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| Insulet | Health Care Equipment | |
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| Ionis Pharmaceuticals | Biotechnology | |
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| Ironwood Pharmaceuticals | Biotechnology | |
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| Masimo | Health Care Equipment | |
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| Merit Medical Systems | Health Care Supplies | |
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| Myriad Genetics | Biotechnology | |
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| Nektar Therapeutics | Pharmaceuticals | |
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| Neogen | Health Care Supplies | |
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| Opko Health | Biotechnology | |
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| Quidel | Health Care Supplies | |
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| ResMed | Health Care Equipment | |
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| Seattle Genetics | Biotechnology | |
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Based on Radford's analysis, we reached the following conclusions regarding our executive compensation program relative to our peer group:
Radford also provided us with an assessment of our annual equity award burn rate and the expected retentive value of equity awards held by our executives, as well as an analysis of the alignment of Company performance and CEO compensation.
Based on Radford's analysis, we reached the following conclusions and took the following actions with respect to our NEOs (excluding Mr. Cole and Mr. Orville, who both joined the Company in 2019) regarding our executive compensation program relative to our peer group:
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Exact Sciences 2020 Proxy Statement | | 31 |
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
Based on Radford's analysis and our assessment of the performance of the executives and our compensation philosophy as described in thisCompensation Discussion and Analysis, in early 2015 we took2019 our Compensation and Management Development Committee set salaries and target bonus opportunities as follows:
| NAME | 2018 BASE SALARY ($) | 2019 BASE SALARY ($) | |||||
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Kevin T. Conroy | 695,800 | 800,200 | |||||
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Jeffrey T. Elliott | 400,000 | 460,000 | |||||
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Mark Stenhouse | 500,000 | 515,000 | |||||
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D. Scott Coward | 470,000 | 484,100 | |||||
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Ana Hooker | 371,700 | 410,000 | |||||
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| NAME | 2018 TARGET BONUS % | 2019 TARGET BONUS % | |||||
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Kevin T. Conroy | 100 | % | 125 | % | |||
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Jeffrey T. Elliott | 50 | % | 50 | % | |||
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Mark Stenhouse | 50 | % | 50 | % | |||
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D. Scott Coward | 50 | % | 50 | % | |||
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Ana Hooker | 50 | % | 50 | % | |||
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As described above and indicated in the following actions:tables below, equity awards granted in 2019 generally consisted of time-based stock options and RSUs, as well as performance-based PSUs, as follows:
| NAME | 2018 OPTIONS | 2019 OPTIONS | |||||
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Kevin T. Conroy | 68,300 | 34,110 | |||||
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Jeffrey T. Elliott | 16,700 | 11,361 | |||||
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Mark Stenhouse | 0 | 10,786 | |||||
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D. Scott Coward | 16,700 | 10,786 | |||||
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Ana Hooker | 11,700 | 7,790 | |||||
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Kevin T. Conroy | 82,300 | 37,248 | |||||
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Jeffrey T. Elliott | 20,100 | 13,747 | |||||
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Mark Stenhouse(1) | 75,000 | 13,051 | |||||
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D. Scott Coward | 20,100 | 13,051 | |||||
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Ana Hooker | 14,100 | 9,426 | |||||
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| NAME | 2019 PSUs (at threshold achievement) | 2019 PSUs (at target achievement) | 2019 PSUs (at maximum achievement) | |||||||
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Kevin T. Conroy | 31,041 | 62,082 | 124,164 | |||||||
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Jeffrey T. Elliott | 6,747 | 13,494 | 26,988 | |||||||
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Mark Stenhouse | 6,747 | 13,494 | 26,988 | |||||||
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D. Scott Coward | 6,747 | 13,494 | 26,988 | |||||||
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Ana Hooker | 5,398 | 10,794 | 21,589 | |||||||
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2020 Salary Reductions |
In late March 2020, in response to the rapidly evolving impact of the COVID-19 pandemic on the current business environment and at the suggestion of Mr. Conroy and the executive leadership team, the Compensation and Management Development Committee temporarily reduced Mr. Conroy's base salary to the amount necessary to cover the his portion of contributions, and related taxes, under the Company benefit plans in which he participates, and temporarily reduced the base salaries of Mr. Conroy, Mr. Arora, Dr. Lidgard and Mr. Megan from $500,000 to $575,000, $400,000 to $440,000, $357,000 to $380,000 and $260,000 to $283,300, respectively, to recognize the contributions of these individuals to the Company. The Company set Mr. Coward's initial base salary at $350,000, which was increased to $360,000other NEOs by the Compensation Committee in January 2016;15%.
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32 | | Exact Sciences 2020 Proxy Statement |
increased Mr. Arora's target bonus opportunity from 55% to 60% of base salary to recognize his high level of performance
| COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
2019 Bonus Plan |
Our Compensation and importance to the Company. The Company also set Mr. Coward's target bonus opportunity at 40% of base salary;
2015 Bonus Plan
The CompensationManagement Development Committee believes that a significantmeaningful portion of our executives' compensation should be "at risk:" risk"—in other words, contingent upon successful implementation of our strategy and goals. Accordingly, one component of our executive compensation program is an annual cash bonus opportunity pursuant tounder which each of our executive officers is eligible to earn an annual cash bonus with a specified target amount equal to a percentage of base salary, with the actual bonus awarded to be based upon the achievement of corporate and individual performance goals determined by theour Compensation and Management Development Committee in its discretion. In March 2015, theJanuary 2019, our Compensation and Management Development Committee approved metrics to be used to determine 20152019 bonuses, which included (1) power the growth ofpartnership, (2) enhance Cologuard revenue, (2) world-class service and (3) pipeline development.advance liquid biopsy. Our named executive officersNEOs were eligible to earn bonuses for 20152019 performance equal to up to 150% of their target bonuses, which were target bonuses of 70%125% of base salary for Mr. Conroy 60%and 50% of base salary for each of Mr. Arora, and 40% of base salary for Dr. Lidgard,Elliott, Mr. Stenhouse, Mr. Coward, Mr. Orville and Ms. Hooker. Because Mr. Megan. TheCole joined the Company in November 2019, he did not participate in the 2019 annual bonus plan. Our Compensation and Management Development Committee determined actual bonus payments after the end of 20152019 based on the Committee's assessment of the performance of the Company and of the individual executives relative to the business goals and weightings as described in the chart below.
Performance against the applicable goals is expected to be used by theour Compensation and Management Development Committee in determining annual bonus payments. However, in determining actual bonus payments theour Compensation and Management Development Committee ultimately relies on its judgementjudgment after a comprehensive review of Company and individual performance, as well as consideration of qualitative and other factors, without being tied to any formulas or pre-established weightings. TheOur Compensation and Management Development Committee has ultimate discretion to modify the matrixmetrics and may periodically revisit goals and weightings as circumstances change (thoughchange. Other than an April 2019 refinement in one of the bonus plan's nine performance measures to reflect an updated regulatory strategy for the liver program, the Compensation and Management Development Committee did not make any such modifications with respect to 2015 bonuses).
Table of Contentsthe 2019 bonus plan.
In determining 20152019 bonus awards, theour Compensation and Management Development Committee considered the executive team's achievement of a variety of business plan goals, as follows:
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| GOAL | PERFORMANCE MEASURES | TARGET WEIGHTING | ACTUAL ACHIEVEMENT | ||||||
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| Power the partnership | » Revenue » Scale lab capacity » Implement core IT infrastructure | 60.0 | % | 60.0 | % | ||||
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| Enhance Cologuard | » Cologuard publications » Expand Cologuard label for age 45-49, average risk population » Establish proof of concept for enhanced Cologuard test | 25.0 | % | 27.5 | % | ||||
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| Advance liquid biopsy | » Advance liver program » Identify new markers for colon cancer blood test » Marker selection and business plan for one new test | 15.0 | % | 17.5 | % | ||||
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In addition, our Compensation and Management Development Committee established certain additional goals based on employee engagement, as measured by certain employee survey satisfaction results, and improvements in organizational inclusiveness and diversity, which were expected to be used to adjust bonus payments by up to plus or minus 15% of target. Based on partial achievement of these goals, bonus payouts for the NEOs were reduced by 5% of target.
After considering the executive team's actual achievement of key business plan goals, theperformance measures, our Compensation and Management Development Committee determined to award cash bonuses for 20152019 performance toat 100% of target. Accordingly, Mr. Conroy, Mr. Arora, Dr. Lidgard,Elliott, Mr. Stenhouse, Mr. Coward, Mr. Orville and Mr. MeganMs. Hooker received cash bonuses of $277,725, $182,160, $104,880, $99,360$1,000,250, $230,000, $257,500, $242,050, $170,137 and $78,191,$203,636 respectively. These amounts represented payments at 69% of target.
Annual Equity Awards
Annual Equity Awards |
We believe successful long-term Company performance is more critical to enhancing stockholder value than short-term results. For this reason and to conserve cash and better alignaligning the interests of managementour executive officers with those of our stockholders. Our Compensation and stockholders, we emphasizeManagement Development Committee believes that annual equity awards provide executive officers with the opportunity to acquire long-term stock ownership positions, which motivates them to focus on long-term stockholder value, with the performance of each NEO primarily governing the Compensation and Management Development Committee's considerations in determining long-term equity compensation over annual salaryawards to each of them. These awards are also intended to motivate the retention of our NEOs and provide our NEOs with a market competitive long-term equity incentive compensation awards.opportunity. As described above, equity awards granted in 2019 generally consisted of time-based stock options and RSUs, as well as performance-based PSUs.
In March 2015, we madeJanuary 2019, our Compensation and Management Development Committee approved annual equity awards to the executivesour then-NEOs consisting of time-based restricted stock unitstime-vesting RSUs and stock options.options, as well as performance-vesting PSUs, including the approval of the number of shares of our common stock subject to each award. These awards were issued on February 26, 2019 in accordance with our Statement of Policy with respect to Equity Award Approvals. In connection with these annual equity awards, Mr. Conroy, Mr. Arora, Dr. Lidgard,Elliott, Mr. Stenhouse, Mr. Coward, and Mr. MeganMs. Hooker received stock option awardsoptions covering 71,000, 32,800, 24,500, 17,50034,110, 11,361, 10,786, 10,786 and 7,8007,790 shares, respectively. The shares underlying these options vest and become exercisable in four equal annual installments beginning on the first anniversary of the grant date. Additionally, Mr. Conroy, Mr. Arora, Dr. Lidgard,Elliott, Mr. Stenhouse, Mr. Coward and Mr. MeganMs. Hooker received restricted stock unit awardsRSUs covering 97,600, 45,100, 33,700, 24,10037,248, 13,747, 13,051, 13,051 and 10,8009,426 shares, respectively. These restricted stock unit awardsRSUs vest in four equal annual installments beginning on the first anniversary of the grant date.
These awards were intended to further align compensation with achievement of key business plan goals and to motivate the retention of our executives. The Compensation Committee believes that annual equity awards provide executive officers with the opportunity to acquire long-term stock ownership positions, which directly motivate them to maximize long-term stockholder value and that time-based vesting of these awards helps us to retain our leadership team in an extremely competitive environment.
2015 Special Equity Award to Mr. Coward
In addition, in connection with his joining the Company and pursuant to his employment agreement, in January 2015, we awardedMr. Conroy, Mr. Elliott, Mr. Stenhouse, Mr. Coward a restricted stock unit award covering 75,000 shares. These restricted stock units vest as follows: 25% on the one-year anniversary of grant and the balance in equal quarterly installments.
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COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
In March 2015, we awarded Mr. Conroy, Mr. Arora, Dr. Lidgard, Mr. CowardMs. Hooker received PSUs tied 70% to revenues and Mr. Megan30% to specified scientific milestones, including, among other things, label expansion for Cologuard, launch of a version of Cologuard with enhanced performance share unit awards covering,characteristics and launching of new diagnostic products. These PSUs covered (i) at thethreshold amounts, 31,041, 6,747, 6,747, 6,747 and 5,398 shares, respectively, (ii) at target amounts, 59,300, 32,900, 18,900, 18,30062,082, 13,494, 13,494, 13,494 and 6,00010,794 shares, respectively, and (ii)(iii) upon achievement of all performance-based vesting terms contained therein, 88,950, 49,350, 28,350, 27,450124,164, 26,988, 26,988, 26,988 and 9,00021,589 shares, respectively. Each executive could earn additional performance share unitsMr. Cole and Mr. Orville each joined us in 2019 after the foregoing awards were issued. In connection with their commencement of employment with the Company in 2019, Mr. Cole and Mr. Orville received RSUs covering 9,620 and 14,595 shares, respectively, and Mr. Orville received PSUs covering, (i) at threshold, 5,398 shares, (ii) at target, 10,794 shares, and (iii) upon the achievement of certainall performance-based goalsvesting terms contained therein, 21,589 shares. Mr. Cole's RSU award vest on December 31, 2020, and Mr. Orville's RSU award vests in excess of the target. The performance share units were to be earned upon the Company's achievement of certain revenue targets in fiscal year 2015, and any earned performance share units would vest in threefour equal annual installments beginning on December 31, 2015. Based uponFebruary 18, 2020.
2010 Plan and 2019 Plan |
The Company maintains the Company's failureExact Sciences Corporation 2010 Omnibus Long-Term Incentive Plan (As Amended and Restated Effective July 27, 2017) (as amended, the "2010 Plan"), under which, prior to achieve certain 2015 revenue targets,the adoption of the 2019 Plan as described below, we were able to grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which we compete. The Company also maintains the Exact Sciences Corporation 2019 Omnibus Long-Term Incentive Plan (the "2019 Plan"). The 2019 Plan, like the 2010 Plan, provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. Incentive stock options may be granted only to employees, and all other awards may be granted to our and our affiliates' employees, non-employee directors, consultants and other service providers. The 2019 Plan is administered by our Board of Directors or a committee of our Board of Directors designated by our Board of Directors to administer the 2019 Plan. Our Board of Directors has designated the Compensation and Management Development Committee determined that none of these awards were earned byto administer the 2019 Plan.
Company Clawback Policy |
If any of the executives andCompany's financial statements are required to be restated, the executivesCompany may be entitled to recover all or a portion of any award made under the 2010 Plan or 2019 Plan with respect to any fiscal year of the Company the financial results of which are negatively affected by the restatement. The amount to be recovered will not realizebe the amount by which the affected award exceeds the amount that would have been payable had the financial statements been initially filed as restated. Moreover, any valueaward, amount or benefit received under the 2010 Plan or 2019 Plan, as applicable, will be subject to potential cancellation, recoupment, rescission, payback or other action in connectionaccordance with the awards.terms of any applicable Company clawback policy or any applicable law, as may be in effect from time to time, whether adopted prior to or following the date of the award.
Other Compensation
Deferred Compensation Plan |
We alsomaintain an executive non-qualified deferred compensation plan pursuant to which certain service providers, including our named executive officers, may defer up to 90% of their cash compensation other than bonuses and 100% of their cash bonuses, and pursuant to which we may make matching and other contributions in our discretion. Any matching contributions made by us generally would be subject to continued service for one year, subject to earlier vesting upon death, disability, a change in control of us or the participant becoming eligible for retirement under the plan. A participant generally may elect to receive his or her account balance under the plan upon attaining an age specified by the participant or upon the participant's retirement, in either case in lump-sum or in annual installments as specified in the plan, provided that the participant's remaining account balance generally would be paid to the participant in lump-sum in the event of the participant's separation from service with us prior to retirement or in the event of death or disability.
Other Compensation |
We permit executive officers to purchase common stock at a discount through our 2010 Employee Stock Purchase Plan on the same terms and conditions as our other employees. Executive officers may also participate in our 401(k) Plan, which allows for the investment of a portion of plan assets in shares of our common stock. TheOur Compensation and Management Development Committee approved a discretionary matching Company contribution to our 401(k) Plan for 2015.2019. The matching contribution was made using Company stock in an amount equal to 100% of an employee's total deferrals into the plan up to a limit of 6% of the employee's total compensation (subject to IRS limits).
Role of Stockholder Say-on-Pay Votes
Role of Stockholder Say-on-Pay Votes |
We provide our stockholders with the opportunity to cast an annual advisory vote on executive compensation (a "say-on-pay proposal"). At the Company's annual meeting of stockholders held in July 2015,2019, approximately 95%89% of the votes cast on the say-on-pay proposal at the meeting were voted in favor of the proposal. TheOur Compensation and Management Development Committee believes this vote affirms our stockholders' support of the Company's approach to executive compensation and did not make specific changes to our executive compensation program in response to the vote. However, theour Compensation and Management Development Committee continues to review and refine the design and administration of our executive pay practices. TheOur Compensation and Management Development Committee also will continue to consider the outcome of the Company's say-on-pay votes when making future compensation decisions for our named executive officers.NEOs.
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34 | | Exact Sciences 2020 Proxy Statement |
Stock Ownership GuidelinesTable of Contents
| COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
Stock Ownership Guidelines |
We maintain Stock Ownership Guidelines to encourage ownership of shares of the Company's Common Stockcommon stock by our directors and senior executives,executive officers, to further align their interests with the long-term interests of our stockholders and to further promote the Company's commitment to sound corporate governance. Under these guidelines, directors and senior executivesexecutive officers have until the later of
(i) April 21, 2019 and (ii) three years from the date the director or senior executive officer becomes subject to the guidelines, to achieve an ownership target equal to thelower of the "Base Salary Target" and the "Fixed Share Target" determined as follows:
| | | | |||
| BASE SALARY / FIXED SHARE TARGET | |||||
| | | | |||
CEO | Number of shares with a | ||||
| | | | |||
Executive Officrs | Number of shares with a Stock Value equal to or greater than 2 times Base Salary | ||||
| | | | |||
Board of Directors | Number of shares with a Stock Value equal to or greater than 3 times | ||||
| |||||
Under"Annual Retainer" or "Base Salary" for purposes of both the Base Salary Multiple, "stock value"Target and Fixed Share Target is the director's annual retainer or the executive's base salary, as applicable, on June 30 of each fiscal year.
"Stock Value" for purposes of the Base Salary Target is calculated annually at the end of each fiscal year based on the average of the closing prices of our common stock for the last 30 trading days of the fiscal year.
Under"Stock Value" for purposes of the Fixed Share Target "stock value" is calculated as of the later of (1) April 21, 2016,January 1, 2012, and (2) the date the director or senior executive officer originally becomes subject to the Stock Ownership Guidelines, as the case may be, based on the average of the closing prices of our common stock for the 30 days leading up to, and inclusive of, the applicable date.
UnderEach director and executive officer is expected to continuously own sufficient shares to satisfy either the Base Salary Multiple andTarget or the Fixed Share Target "annual retainer"ownership target once attained for as long as he or "base salary" is the director's annual retainer or the senior executive's base salary, as applicable, at the end of each fiscal year (at which time each director's and senior executive's compliance withshe remains subject to the Stock Ownership Guidelines is assessed).Guidelines. Vested "in the money" stock options count as owned shares for this purpose but unvested stock options, restricted shares, restricted stock units, and deferred stock units and vested "out of the money" stock options do not. If an individual's ownership target increases because of a change in position or compensation, the individual will have a three-year period to achieve the incremental amount of shares beginning on the effective date of the change in position or compensation.
Following the initial three-year period that the director or senior executive officer is afforded to achieve his or her individual ownership target under the Stock Ownership Guidelines, until a director or senior executive officer has satisfied the applicable ownership target, the director or senior executive officer is required to retain an amount equal to 25%50% of the net shares received as the result of the exercise, vesting or payment ofunder any Company equity awards granted to the director or executive. This amount is calculated using the closing price of our common stock on the trading day immediately preceding the date of exercise, vesting or payment of suchunder the equity award. Once a director or senior executive officer achieves his or her individual ownership target, the retention requirements as described above no longer will apply to such director or senior executive officer unless a disposition by such director or senior executive officer would cause such individual's stock ownership to fall below his or her ownership target.
Shares of our common stock that count toward satisfaction of the ownership targets include:
Shares that do not count toward the ownership targets include:
As of April 21, 2016,17, 2020, each of our directors and senior executivesexecutive officers was in compliance with, or was in the process of compliance with the Stock Ownership Guidelines.
Restrictions on Hedging and Pledging of Company Securities
Restrictions on Hedging and Pledging of Company Securities |
Our Insider Trading Policy prohibits short sales of our securities, including a "sale against the box," by our directors and executives. Our Insider Trading Policy also prohibits directors and executivesemployees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, as they involve the establishment of a short position in our securities. Our Insider Trading Policy also prohibits directors and executives from holding our securities in a margin account or pledging such securities as collateral for a loan. Provisions
Section 162(m) |
Section 162(m) of the Internal Revenue Code generally limits our annual corporate tax deduction for compensation paid to each of our "covered employees" to $1 million. "Covered employees" include anyone who served as chief executive officer or chief financial officer during any part of a year and the next three most highly compensated named executive officers for that year. In addition, once a person is considered a "covered employee," that person remains a covered employee in all subsequent years (including after the person leaves our Insider Trading Policyservice or changes roles). Consequently, we generally will not be entitled to a U.S. tax deduction for compensation paid in any year to our named executive officers and our other "covered employees" in excess of $1 million. While considering tax deductibility as only one of several considerations in determining compensation, we believe that previously would have in certain limited circumstances permittedthe tax deduction limitation should not compromise our ability to structure compensation programs that provide benefits to the Company that outweigh the potential benefit of a tax deduction and, therefore, may approve compensation that is not deductible for exceptions from the hedging and pledging restrictions were eliminated in 2015.tax purposes.
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Exact Sciences 2020 Proxy Statement | | 35 |
Employment Agreements with Named Executive OfficersTable of Contents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
Our NEOs |
In April 2009, Kevin T. Conroy and Maneesh K. Arora joined us as our President & Chief Executive Officer and Senior Vice President & Chief Financial Officer, respectively. In February 2012, Mr. Arora was promoted to Chief Operating Officer in addition to his title of Chief Financial Officer. In August 2013, William J. Megan joined us as Senior Vice President, Finance and Mr. Arora dropped the title of Chief Financial Officer. In JanuaryNovember 2016, John K. Bakewell joined us asJeffrey T. Elliott became our Chief Financial Officer, and, in February 2016, Mr. Megan left the Company. In August 2009, Graham P. Lidgard joined us as our Senior Vice President & Chief Science Officer. In January 2015, D. Scott Coward joined us as Senior Vice President, General Counsel & Secretary. In connection with eachJuly 2018, Mr. Coward was appointed Chief Administrative Officer in addition to his titles of these appointments weSenior Vice President, General Counsel and Secretary. In April 2018, Mark Stenhouse joined us as President, Cologuard and was named General Manager, Screening in November 2019. Mr. Cole joined us General Manager, Precision Oncology following the Company's acquisition of Genomic Health in November 2019. Mr. Orville joined us as Senior Vice President, Pipeline in February 2019 and was named General Manager, Pipeline in November 2019. Ms. Hooker joined us in 2013 to start our clinical laboratory pending FDA approval of Cologuard and has served as our Senior Vice President, Operations since 2015.
Employment Agreements with our NEOs |
We have entered into an employment agreementagreements with our NEOs under which we have agreed to certain compensation arrangements and severance and change of control benefits. At this time,In connection with his commencement of employment with the Board does not intendCompany in November 2019, we entered into a letter agreement with Mr. Cole, under which we have agreed to provide any additional tax gross-up payments to employees it may hire in the future.certain retention arrangements, as described below.
Each of these packages was determined based on negotiations with the applicable named executive officerNEO and taking into account his or her background and qualifications and the nature of his or her position. We believe that these compensation packages are appropriate in light of the intense competition for top executives in the biotechnology field and among similarly-situated companies, and that the terms of these arrangements are consistent with our executive compensation goals, including the balancing of short-term and long-term compensation to properly motivate our named executive officers.NEOs.
Conroy Employment Agreement
Conroy Employment Agreement |
Mr. Conroy's employment agreement, dated March 18, 2009, provides for a minimum base salary and for a minimum target bonus opportunity equal to at least 50% of his base salary, with the exact
amount of any such bonus to be based upon the achievement of corporate and individual performance goals to be determined by our Compensation and Management Development Committee. At the Compensation Committee. For 2015,end of 2019, Mr. Conroy's base salary was $575,000$800,200 and his target bonus opportunity was 70%125% of his base salary. Pursuant to his employment agreement, Mr. Conroy was also granted an option to purchase 2.5 million shares of our common stock at an exercise price of $0.83 (the closing price of our common stock on the NASDAQ Capital Market on the date Mr. Conroy was hired).
Under his agreement, Mr. Conroy would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under "Potential Benefits upon Termination or Change of Control" beginning on page 3637 below. The agreement also prohibits Mr. Conroy from engaging in certain activities involving competition with us and from soliciting our employees for an 18-month period following termination of his employment with the Company.
Arora Employment Agreement
Elliott Employment Agreement |
Mr. Arora'sElliott's employment agreement, dated March 18, 2009,November 8, 2016, provides for a minimum base salary and for a minimum target bonus opportunity equal to at least 40% of his base salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual performance goals, to be determined by the Chief Executive Officer and our Compensation and Management Development Committee. For 2015,At the end of 2019, Mr. Arora'sElliott's base salary was $440,000$460,000 and his target bonus opportunity was 60%50% of his base salary. Pursuant to his employment agreement, Mr. Arora was also granted an option to purchase 1.25 million shares of our common stock, at an exercise price of $0.83 (the closing price of our common stock on the NASDAQ Capital Market on the date Mr. Arora was hired).
Under his agreement, Mr. AroraElliott would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under "Potential Benefits upon Termination or Change of Control" beginning on page 3637 below. The agreement also prohibits Mr. AroraElliott from engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for an 18-montha 12-month period following termination of his employment with the Company.
Lidgard Employment Agreement
Stenhouse Employment Agreement |
Dr. Lidgard'sMr. Stenhouse's employment agreement, dated August 1, 2009,April 2, 2018, provides for a minimum base salary and for a minimum target bonus opportunity equal to at least 40%50% of his base salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual performance goals, to be determined by the Chief Executive Officer and our Compensation and Management Development Committee. For 2015, Dr. Lidgard'sAt the end of 2019, Mr. Stenhouse's base salary was $380,000$515,000 and his target bonus opportunity was 40%50% of his base salary. Pursuant to his employment agreement, Dr. Lidgard was also granted an option to purchase 600,000 shares of our common stock, at an exercise price of $2.88 (the closing price of our common stock on the NASDAQ Capital Market on the date Dr. Lidgard was hired).
Under his agreement, Dr. LidgardMr. Stenhouse would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under "Potential Benefits upon Termination or Change of Control" beginning on page 3637 below. The agreement also prohibits Dr. LidgardMr. Stenhouse from engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for an 18-montha 12-month period following termination of his employment with the Company.
Coward Employment Agreement
Coward Employment Agreement |
Mr. Coward's employment agreement, dated October 30, 2014, provides for a minimum base salary and for a minimum target bonus opportunity equal to 40% of his base salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our Compensation and Management Development Committee. At the Compensation Committee. For 2015,end of 2019, Mr. Coward's base salary began at $350,000 and was raised to $360,000 in January 2015 by the
Compensation Committee,$484,100, and his target bonus opportunity was 40%50% of this base salary. Mr. Coward also received a relocation stipend in connection with the employment agreement. Pursuant to his employment agreement, Mr. Coward was granted a restricted stock unit award 75,000 shares of our common stock, which vests as follows: 25% on the first anniversary of the date of grant and the balance on a ratable quarterly basis over a three-year period beginning on the first anniversary of the date of grant.
Under his agreement, Mr. Coward would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under "Potential Benefits upon Termination or Change of Control" beginning on page 3637 below. The agreement also prohibits Mr. Coward from engaging in certain activities involving competition with us and from soliciting our employeescustomers for a 12-month period following termination of his employment with the Company.
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36 | | Exact Sciences 2020 Proxy Statement |
Megan Employment AgreementTable of Contents
| COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
Cole Letter Agreement |
On November 15, 2019, the Company entered into a letter agreement with Mr. Megan'sCole setting forth the terms and conditions of a retention arrangement following the Company's acquisition of Genomic Health. The letter agreement provides for a cash retention bonus of $550,000, subject to Mr. Cole's continued employment through December 31, 2020, a further cash retention bonus of $450,000, subject to Mr. Cole's continued employment through May 8, 2021, and a retention RSU award with a target value of $800,000, vesting on December 31, 2020, subject to Mr. Cole's continued employment through such date. At the end of 2019, Mr. Cole's base salary was $557,293, and his target bonus opportunity was 55% of this base salary.
Orville Employment Agreement |
Mr. Orville's employment agreement, dated November 10, 2014, was terminated on February 29, 2016, when Mr. Megan terminated his employment with the Company. Mr. Megan's employment agreement provided18, 2019, provides for a minimum base salary and for a minimum target bonus opportunity equal to at least 40%50% of his base salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual performance goals, to be determined by the Chief Executive Officer and our Compensation and Management Development Committee. For 2015,At the end of 2019, Mr. Megan'sOrville's base salary began at $275,000was $375,000 and was raised to $283,300 by the Compensation Committee in January 2015. Mr. Megan'shis target bonus opportunity for 2015 was 40%50% of his base salary. Mr. Orville also received a RSU grant (described above), a signing bonus in the amount of $200,000, and a one-time relocation payment in the amount of $325,000 in connection with his employment agreement.
Under his agreement, Mr. MeganOrville would have beenbe entitled to certain payments and benefits in connection with certain termination events or a change of control as described under "Potential Benefits upon Termination or Change of Control" beginning on page 3637 below. The agreement also prohibitedprohibits Mr. MeganOrville from engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for a 12-month period following termination of his employment with the Company. In
Hooker Employment Agreement |
Ms. Hooker's employment agreement, dated August 28, 2017, provides for a minimum base salary and for a minimum target bonus opportunity, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our Compensation and Management Development Committee. At the end of 2019, Ms. Hooker's base salary was $371,700 and her target bonus opportunity was 50% of her base salary.
Under her agreement, Ms. Hooker would be entitled to certain payments and benefits in connection with Mr. Megan's separation from the Company in February 2016, the Company entered intocertain termination events or a Separation Agreement and General Release with Mr. Megan that provided certain severance payments to Mr. Meganchange of control as described in the Company's most recently filed annual report on Form 10-K.under "
Potential Benefits upon Termination or Change of Control" beginning on page 37 below. The agreement also prohibits Ms. Hooker from engaging in certain activities involving competition with us and Severancefrom soliciting our employees or certain of our customers for a 12-month period following termination of her employment with the Company.
Potential Benefits upon Termination or Change of Control |
We believe that providing executives with severance and change of control protection is important for the following reasons:
Accordingly, the Company's employment agreements and equity awards generally provide for salary continuation in the event of certain employment terminations beyond the control of the executive, as well as varying degrees of accelerated vesting of equity awards in the event of a change of control of the Company.
For further information see"PotentialThis "Potential Benefits upon Termination or Change of Control" beginning on page 36 below.
Summary Compensation Table for 2015
The following table represents summary information regarding the compensation of each of Kevin T. Conroy, our Chairman, President and Chief Executive Officer, Maneesh K. Arora, our Senior Vice President and Chief Operating Officer, Graham P. Lidgard, our Senior Vice President and Chief Science Officer, D. Scott Coward, our Senior Vice President, General Counsel and Secretary, and William J. Megan, our former Senior Vice President, Finance for the three years ended December 31, 2015. Compensation information for 2014 and 2013 is presented for officers who were also our named executive officers section should be read in those years.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Kevin T. Conroy | 2015 | 575,000 | 277,725 | 3,668,391 | 1,119,844 | 15,900 | (3) | 5,656,860 | ||||||||||||||
Chairman, President and | �� | 2014 | 493,833 | 367,250 | 1,088,880 | 1,084,537 | 15,600 | (3) | 3,050,100 | |||||||||||||
Chief Executive Officer | 2013 | 460,650 | 277,800 | 2,484,648 | 819,380 | 15,300 | (3) | 4,057,778 | ||||||||||||||
Maneesh K. Arora | 2015 | 440,000 | 182,160 | 1,823,678 | 517,336 | 15,900 | (3) | 2,979,075 | ||||||||||||||
Senior Vice President | 2014 | 390,000 | 248,600 | 614,240 | 621,144 | 15,600 | (3) | 1,889,584 | ||||||||||||||
and Chief Operating Officer | 2013 | 338,333 | 170,000 | 1,507,602 | 305,335 | 15,300 | (3) | 2,336,570 | ||||||||||||||
Graham P. Lidgard | 2015 | 381,704 | 104,880 | 1,229,810 | 386,425 | 15,900 | (3) | 2,118,719 | ||||||||||||||
Senior Vice President and | 2014 | 357,017 | 161,364 | 460,680 | 463,393 | 15,600 | (3) | 1,458,054 | ||||||||||||||
Chief Science Officer | 2013 | 338,333 | 136,000 | 1,507,602 | 305,335 | 15,300 | (3) | 2,302,570 | ||||||||||||||
D. Scott Coward | 2015 | 360,000 | 99,360 | 3,000,583 | 276,018 | 15,900 | (3) | 3,751,861 | ||||||||||||||
Senior Vice President, | ||||||||||||||||||||||
General Counsel and Secretary | ||||||||||||||||||||||
William J. Megan | 2015 | 283,300 | 78,191 | 392,791 | 123,025 | 15,900 | (3) | 893,207 | ||||||||||||||
Former Senior Vice President, Finance | 2014 | 258,792 | 124,300 | 753,840 | 128,173 | 15,600 | (3) | 1,280,704 | ||||||||||||||
and Principal Financial Officer | 2013 | 84,615 | — | 165,300 | — | 5,077 | (3) | 254,992 | ||||||||||||||
Grants of Plan-Based Awards in 2015
The following table sets forth all plan-based awards made to our named executive officers in 2015.
| | | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | | | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Estimated Future Payouts Under Equity Incentive Plan Awards | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(1) | ||||||||||||||||||||||
Name | Award Type | Grant Date | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||
Kevin T. Conroy | Stock Option(2) | 03/09/15 | 71,000 | 23.38 | 1,119,844 | ||||||||||||||||||||||
| Restricted Stock Units(3) | 03/09/15 | 97,600 | 2,281,888 | ||||||||||||||||||||||||
| Performance Share Units(5) | 03/09/15 | 29,647 | 59,303 | 88,950 | 1,386,503 | ||||||||||||||||||||||
Maneesh K. Arora | Stock Option(2) | 03/09/15 | 32,800 | 23.38 | 517,336 | ||||||||||||||||||||||
| Restricted Stock Units(3) | 03/09/15 | 45,100 | 1,054,438 | ||||||||||||||||||||||||
| Performance Share Units(5) | 03/09/15 | 16,448 | 32,902 | 49,350 | 769,240 | ||||||||||||||||||||||
Graham P. Lidgard | Stock Option(2) | 03/09/15 | 24,500 | 23.38 | 386,425 | ||||||||||||||||||||||
| Restricted Stock Units(3) | 03/09/15 | 33,700 | 787,906 | ||||||||||||||||||||||||
| Performance Share Units(5) | 03/09/15 | 9,449 | 18,901 | 28,350 | 441,904 | ||||||||||||||||||||||
D. Scott Coward | Restricted Stock Units(4) | 01/01/15 | 75,000 | 2,009,250 | |||||||||||||||||||||||
| Stock Option(2) | 03/09/15 | 17,500 | 23.38 | 276,018 | |||||||||||||||||||||||
| Restricted Stock Units(3) | 03/09/15 | 24,100 | 563,458 | ||||||||||||||||||||||||
| Performance Share Units(5) | 03/09/15 | 9,149 | 18,301 | 27,450 | 427,875 | ||||||||||||||||||||||
William J. Megan | Stock Option(2) | 03/09/15 | 7,800 | 23.38 | 123,025 | ||||||||||||||||||||||
| Restricted Stock Units(3) | 03/09/15 | 10,800 | 252,504 | ||||||||||||||||||||||||
| Performance Share Units(5) | 03/09/15 | 3,000 | 6,000 | 9,000 | 140,287 | ||||||||||||||||||||||
2015 Performance RSU Awards
In March 2015, we awarded Mr. Conroy, Mr. Arora, Dr. Lidgard, Mr. Coward and Mr. Megan performance stock unit awards covering, (i) at the target amounts, 59,300, 32,900, 18,900, 18,300 and 6,000 shares, respectively and (ii) upon achievement of all performance-based vesting terms contained therein, 88,950, 49,350, 28,350, 27,450 and 9,000 shares, respectively. Each performance-based RSU represented a contingent right to receive one share of our common stock. These RSUs were made subject to performance-based vesting requirements tied to revenue thresholds for the Company's 2015 fiscal year and were subject to forfeiture to the extent these requirements were not satisfied. Based on the Compensation Committee's evaluation of the achievement of these goals, none of the performance-based RSUs were earned and the executives will not realize any value in connection with the awards.
Outstanding Equity Awards at December 31, 2015
The following table presents information about unexercised options and unvested restricted stock units and shares of restricted stock that were held by our named executive officers as of December 31, 2015.
| | Options Awards | | | Stock Awards | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($)(1) | |||||||||||||
Kevin T. Conroy | 1,618,076 | — | 0.83 | 03/18/19 | 219,850 | (2) | 2,029,216 | ||||||||||||
| 95,625 | 31,875 | (3) | 9.07 | 02/27/22 | |||||||||||||||
| 53,000 | 53,000 | (4) | 10.82 | 02/22/23 | |||||||||||||||
| 27,500 | 82,500 | (5) | 13.96 | 02/24/24 | |||||||||||||||
| — | 71,000 | (6) | 23.38 | 03/09/25 | |||||||||||||||
Maneesh K. Arora | 807,500 | — | 0.83 | 03/18/19 | 117,550 | (7) | 1,084,987 | ||||||||||||
| 39,375 | 13,125 | (3) | 9.07 | 02/27/22 | |||||||||||||||
| 19,750 | 19,750 | (4) | 10.82 | 02/22/23 | |||||||||||||||
| 15,750 | 47,250 | (5) | 13.96 | 02/24/24 | |||||||||||||||
| — | 32,800 | (6) | 23.38 | 03/09/25 | |||||||||||||||
Graham P. Lidgard | 375,000 | — | 2.88 | 08/03/19 | 97,900 | (8) | 903,617 | ||||||||||||
| 39,375 | 13,125 | (3) | 9.07 | 02/27/22 | |||||||||||||||
| 19,750 | 19,750 | (4) | 10.82 | 02/22/23 | |||||||||||||||
| 11,750 | 35,250 | (5) | 13.96 | 02/24/24 | |||||||||||||||
| — | 24,500 | (6) | 23.38 | 03/09/25 | |||||||||||||||
D. Scott Coward | — | 17,500 | (6) | 23.38 | 03/09/25 | 99,100 | (9) | 914,693 | |||||||||||
William J. Megan | 3,250 | 9,750 | (5) | 13.96 | 02/24/24 | 47,550 | (10) | 438,887 | |||||||||||
| — | 7,800 | (6) | 23.38 | 03/09/25 | |||||||||||||||
installments beginning on February 24, 2016; and (4) 45,100 shares that vest in four equal annual installments beginning on March 9, 2016.
2015 Option Exercises and Stock Vested Table
The following table sets forth information for each of our named executive officers regarding stock option exercises and vesting of stock awards during 2015.
| | Option Awards | Stock Awards | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | |||||||||
Kevin T. Conroy | 81,000 | 718,470 | 84,341 | 1,736,114 | |||||||||
Maneesh K. Arora | 50,000 | 426,500 | 49,791 | 1,101,398 | |||||||||
Graham P. Lidgard | — | — | 47,041 | 1,038,423 | |||||||||
D. Scott Coward | — | — | — | — | |||||||||
William J. Megan | — | — | 17,250 | 367,425 | |||||||||
Potential Benefits"Potential Payments upon Termination or Change of Control
Severance and Change of Control ArrangementsControl" section beginning on page 46 below, which provides a table that quantifies the benefits described in Generalthis section.
Severance and Change of Control Arrangements in General |
We have entered into employment agreements and maintain certain plans that will require us to provide compensation and other benefits to our executive officers in connection with certain events related to a termination of employment or change of control.
Conroy Employment Agreement
Conroy Employment Agreement |
Under his employment agreement, Mr. Conroy would, upon termination without "cause," resignation for "good reason" or certain "change of control" events (in each case as defined in Mr. Conroy's agreement), be entitled to receive certain benefits, as described below.
Under Mr. Conroy's employment agreement, upon termination without cause or resignation for good reason, Mr. Conroy would become entitled to receive the following:
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Exact Sciences 2020 Proxy Statement | | 37 |
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
Under Mr. Conroy's employment agreement, in connection with a change of control, Mr. Conroy would become entitled to receive the following:
agreement as though he remained an employee of the Company as of the effective date of such change of control; and
Arora, Lidgard, Coward and Megan Employment Agreements
Elliott, Stenhouse, Coward, Orville and Hooker Employment Agreements |
Under their employment agreements, Mr. Arora, Dr. Lidgard,Elliott, Mr. Stenhouse, Mr. Coward, Mr. Orville and Mr. MeganMs. Hooker would, upon termination without "cause," resignation for "good reason" or certain "change of control" events (in each case as defined in their respective agreements), receive certain benefits, as described below.
Under their employment agreements, upon termination without cause or resignation for good reason, Mr. Arora, Dr. Lidgard,Elliott, Mr. Stenhouse, Mr. Coward, Mr. Orville and Mr. MeganMs. Hooker would become entitled to receive the following:
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| COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
Under theirour employment agreements in connection with a change of control, Mr. Arora and Dr. Lidgard would become entitled to receive the following:
employment by the Company without cause or by the executive with good reason within the 12 months preceding a change of control will be credited against any such lump-sum payment;
UnderElliott, Mr. Coward's and Mr. Megan's employment agreements,Stenhouse, Mr. Coward, Mr. Orville and Mr. MeganMs. Hooker, all such executives would become entitled to accelerated vesting of all outstanding unvested equity awards (whether stock options, restricted stock, restricted stock unitsRSUs or stock purchase rights under the Company's equity compensation plans, or other equity awards) if (1) within 12 months after a change of control, hethe executive is terminated by the Company (or any successor) without cause or hethe executive terminates the executive's employment for good reason, (2) a change of control happens within four months after the Company terminates himthe executive without cause or hethe executive terminates the executive's employment for good reason or (3) solely with respect to Mr. Elliott and Mr. Coward, he remains employed by the Company (or any successor) for at least six months following a change of control.
Conditions Solely with respect to ReceiptMr. Stenhouse, Mr. Orville and Ms. Hooker, any Performance Awards held by them as of Severancesuch change of control will be deemed to have been fully vested and Changeearned based upon the greater of Control Benefits(A) an assumed achievement of all relevant performance goals at the "target" level or (B) the "actual" level of achievement of all relevant performance goals as of the change of control.
Conditions to Receipt of Severance and Change of Control Benefits |
Under Mr. Conroy's employment agreement, the Company's obligations to provide Mr. Conroy with the severance benefits described above are contingent on:
Under Mr. Arora's, Dr. Lidgard's,Elliott's, Mr. Stenhouse's, Mr. Coward's, Mr. Orville's and Mr. Megan'sMs. Hooker's employment agreements, the Company's obligations to provide the severance benefits described above are contingent on:
Death or Disability
Death or Disability |
In accordance with each named executive officer'sNEO's employment agreement, in the event of the death or disability of the executive during the executive's employment term, the following will occur:
Cole Letter Agreement |
Mr. Cole's letter agreement provides that if his employment is terminated by the Company or an affiliate of the Company without cause (as defined in the letter agreement), he would become entitled to payment of any unvested cash retention bonus thereunder, subject to his execution of a release of claims in favor of the Company and its affiliates. The letter agreement also provides that if Mr. Cole's employment terminates for any reason other than cause during calendar year 2020, he will receive a pro-rata portion of the 2020 annual bonus he would otherwise have received had his employment continued through December 31, 2020. Further, the letter agreement provides that if Mr. Cole's employment terminates for any reason other than cause between January 1, 2021 and May 8, 2021, he will receive a pro-rata portion of the 2021 annual bonus he would have otherwise received had his employment continued through December 31, 2021. Finally, the letter agreement provides that if Mr. Cole's employment is terminated by the Company or an affiliate of the Company without cause, the unvested portion of the retention RSU award granted to him under the letter agreement will vest in full.
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Exact Sciences 2020 Proxy Statement | | 39 |
Long Term IncentiveTable of Contents
COMPENSATION AND OTHER INFORMATION CONCERNING NAMED EXECUTIVE OFFICERS |
Change in Control Benefits under 2010 Plan and 2019 Plan |
Under both the 2010 Plan and 2019 Plan, except as otherwise specifically provided in the applicable award agreement or in an executive's employment agreement, upon the consummation of a change in control (as defined in each of the 2010 Plan and 2019 Plan): all outstanding awards will remain the obligation of the Company or be assumed by the surviving or acquiring entity, and there will be automatically substituted for the shares of our common stock then subject to the awards the consideration payable with respect of the outstanding shares of our common stock in connection with the change in control, the time vesting and exercisability of all outstanding awards will immediately accelerate by a period of twelve months, provided that, with respect to Performance Awards (as defined in each of the 2010 Plan and 2019 Plan), such acceleration will apply to Performance Awards such that if the applicable performance period is scheduled to end within 12 months following the Change in Control, the Performance Award will be deemed to have been fully vested and earned as of the Change in Control based upon the greater of (A) an assumed achievement of all relevant performance goals at the "target" level or (B) the actual level of achievement of all relevant performance goals as of the Change in Control. In addition to the foregoing, with respect to awards granted prior to the consummation of the change in control, in the event that any grantee who remains an employee of the Company or the acquiring or surviving entity immediately following the consummation of the change in control is terminated without cause (as defined in each of the 2010 Plan and 2019 Plan) or terminates his or her own employment for good reason (as defined in each of the 2010 Plan and 2019 Plan) prior to the first anniversary of the consummation of the change in control: (1) all options and SARs outstanding on the date the grantee's employment is terminated, will become immediately exercisable in full and will terminate, to the extent unexercised, on their scheduled expiration date, and if the shares of our common stock subject to the options are subject to repurchase provisions then the repurchase restrictions will immediately lapse; (2) all restricted stock awards outstanding on the date the grantee's employment is terminated, will become vested in full and free of all repurchase provisions; (3) all restricted stock units that are not Performance Awards outstanding on the date the grantee's employment is terminated will become vested in full, and if the shares of common stock subject to such Restricted Stock Units are subject to repurchase provisions then such repurchase provisions will immediately lapse; (4) all other stock-based awards (as defined in each of the 2010 Plan and 2019 Plan) that are not Performance Awards will become exercisable, realizable or vested in full, and will be free of all repurchase provisions, as the case may be; and (5) all restricted stock awards, restricted stock units and other stock-based awards that are Performance Awards will become fully vested and earned based upon the greater of (A) an assumed achievement of all relevant performance goals at the "target" level or (B) the actual level of achievement of all relevant performance goals as of the change in control.
The PSUs granted to our NEOs in 2019 provide that upon the consummation of a change in control (as defined in the 2019 Plan) prior to the NEO's separation from service (as defined in the 2019 Plan), or upon a separation from service initiated by the Company or an affiliate in anticipation of the change in control and other than for cause (as defined in the 2019 Plan) during the six-month period preceding the change in control, the PSUs will vest based upon the higher of "target" achievement or actual performance achieved through the change in control (or as otherwise determined by the Compensation and Management Development Committee).
The summary of the foregoing benefits arising out of a change in control under the 2010 Plan and the 2019 Plan are subject to and qualified by the terms and conditions of all applicable award agreements and employment agreements to which our named executive officers are a party, in each case, as described in this Proxy Statement.
Payments under the Executive Deferred Compensation Plan |
Participants in our executive deferred compensation plan, including the named executive officers, generally may elect to receive their account balances under the plan upon attaining an age specified by the applicable participant or upon the participant's retirement, in either case in lump-sum or in annual installments as specified in the plan, provided that the participant's remaining account balance generally would be paid to the participant in lump-sum in the event of the participant's separation from service with us prior to retirement or in the event of death or disability. In addition, any unvested amounts in a participant's account would vest upon the participant's death, disability, a change in control of us or the participant becoming eligible for retirement under the plan.
Long Term Incentive Plan |
As part of theirMr. Conroy's employment agreements,agreement, we have established a Long Term Incentive Plan pursuant to which Mr. Conroy Mr. Arora and Dr. Lidgard would be entitled to receive a cash payment upon a change of control based on the equity value of the Company as reflected in the following table.
| | Portion of Equity Value | ||||||||||||
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Name | From $100 million to $500 million | Each incremental $50 million from $500 million to $1 billion | Each incremental $50 million from $1 billion to $2 billion | Any amount over $2 billion | |||||||||
Kevin T. Conroy | 1.00 | % | 0.50 | % | 0.25 | % | 0.00 | % | |||||
Maneesh K. Arora | 0.50 | % | 0.25 | % | 0.125 | % | 0.00 | % | |||||
Graham P. Lidgard | 0.50 | % | 0.25 | % | 0.125 | % | 0.00 | % | |||||
| LONG TERM INCENTIVE PLAN | |||||||||||||
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| | PORTION OF EQUITY VALUE | ||||||||||||
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| NAME | FROM $100 MILLION TO $500 MILLION | EACH INCREMENTAL $50 MILLION FROM $500 MILLION TO $1 BILLION | EACH INCREMENTAL $50 MILLION FROM $1 BILLION TO $2 BILLION | ANY AMOUNT OVER $2 BILLION | |||||||||
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Kevin T. Conroy | 1.00 | % | 0.50 | % | 0.25 | % | 0.00 | % | |||||
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For example, in connection with a change of control transaction having an equity value of $400,000,000, Mr. Conroy would receive a cash payout of $4,000,000, and in the case of a change of control transaction having an equity value of $600,000,000, Mr. Conroy would receive a cash payout of $5,500,000 ($5,000,000 + $250,000 + $250,000).
Potential Payments upon Termination or Change of Control
The following table sets forth the estimated post-employment compensation and benefits that would have been payable to our named executive officers under their employment agreements, assuming that each covered circumstance occurred on December 31, 2015.
Where amounts are reflected in multiple columns in the table, this does not mean that the officer would be entitled to duplicate payments. For example, the executive would be entitled to receive up to,
but no more than,
| REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE |
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE |
The Compensation and Management Development Committee has reviewed and discussed with management the maximum amount reflectedCompensation Discussion and Analysis (the "CD&A") for the year ended December 31, 2019, as contained in the Cash Severance row upon a severance or a changeforegoing section of control (or a combinationthis Proxy Statement. In reliance on the reviews and discussions referred to above, the Compensation and Management Development Committee recommended to the Board of Directors, and the two events).
Name and Benefit | Severance Eligible Termination** ($) | Change of Control ($) | Severance Eligible Termination and Change of Control Within 12 Months** ($) | Death or Disability ($) | |||||||||
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Kevin T. Conroy | |||||||||||||
Cash Severance | 862,500 | (1) | 1,150,000 | (2) | 1,150,000 | (2) | — | ||||||
Bonus | 277,725 | (3) | 277,725 | (3) | 277,725 | (3) | — | ||||||
Options and Restricted Stock | 819,878 | (4) | 2,034,316 | (4) | 2,034,316 | (4) | 2,034,316 | (4) | |||||
Long-Term Incentive Plan | — | 6,750,000 | (5) | 6,750,000 | (5) | — | |||||||
COBRA Benefits | 10,310 | (6) | — | 10,310 | (6) | — | |||||||
Outplacement Consulting | 10,000 | — | 10,000 | — | |||||||||
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Total estimated value | 1,980,413 | 10,212,041 | 10,232,351 | 2,034,316 | |||||||||
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Maneesh K. Arora | |||||||||||||
Cash Severance | 550,000 | (7) | 660,000 | (1) | 660,000 | (1) | — | ||||||
Bonus | 182,160 | (3) | 182,160 | (3) | 182,160 | (3) | — | ||||||
Options and Restricted Stock | 505,135 | (4) | 1,087,087 | (4) | 1,087,087 | (4) | 1,087,087 | (4) | |||||
Long-Term Incentive Plan | — | 3,375,000 | (5) | 3,375,000 | (5) | — | |||||||
COBRA Benefits | 10,310 | (6) | — | 10,310 | (6) | — | |||||||
Outplacement Consulting | 10,000 | — | 10,000 | — | |||||||||
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Total estimated value | 1,257,605 | 5,304,247 | 5,324,557 | 1,087,087 | |||||||||
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Graham P. Lidgard | |||||||||||||
Cash Severance | 477,130 | (7) | 572,556 | (1) | 572,556 | (1) | — | ||||||
Bonus | 104,880 | (3) | 104,880 | (3) | 104,880 | (3) | — | ||||||
Options and Restricted Stock | 453,447 | (4) | 905,717 | (4) | 905,717 | (4) | 905,717 | (4) | |||||
Long-Term Incentive Plan | — | 3,375,000 | (5) | 3,375,000 | (5) | — | |||||||
COBRA Benefits | 7,589 | (6) | — | 7,589 | (6) | — | |||||||
Outplacement Consulting | 10,000 | — | 10,000 | — | |||||||||
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Total estimated value | 1,053,046 | 4,958,153 | 4,975,742 | 905,717 | |||||||||
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D. Scott Coward | |||||||||||||
Cash Severance | 360,000 | (8) | — | 360,000 | (8) | — | |||||||
Bonus | 99,360 | (3) | 99,360 | (3) | 99,360 | (3) | — | ||||||
Options and Restricted Stock | 401,736 | (4) | 914,693 | (4) | 914,693 | (4) | 914,693 | (4) | |||||
COBRA Benefits | 10,310 | (6) | — | 10,310 | (6) | — | |||||||
Outplacement Consulting | 10,000 | — | 10,000 | — | |||||||||
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Total estimated value | 881,406 | 1,014,053 | 1,394,363 | 914,693 | |||||||||
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William J. Megan | |||||||||||||
Cash Severance | 283,300 | (8) | — | 283,300 | (8) | — | |||||||
Bonus | 78,191 | (3) | 78,191 | (3) | 78,191 | (3) | — | ||||||
Options and Restricted Stock | 184,139 | (4) | 438,887 | (4) | 438,887 | (4) | 438,887 | (4) | |||||
COBRA Benefits | 0 | (6) | — | 0 | (6) | — | |||||||
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Total estimated value | 545,630 | 517,078 | 800,378 | 438,887 | |||||||||
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Compensation Policy for Non-Employee Directors
We maintain a compensation package for our non-employee directors (the "Director Compensation Policy") to enable us to attract and retain, on a long-term basis, high-caliber non-employee directors.
Pursuant to the Director Compensation Policy, on the date of each annual stockholders meeting, each non-employee director who continues to serve as a director following such meeting is paid an annual cash retainer as follows:this Proxy Statement.
| Katherine S. Zanotti, Chairperson James E. Doyle Daniel J. Levangie | |||
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In lieu of cash, each non-employee director may elect to receive shares of restricted stock having an equivalent dollar value.
In addition, non-employee directors are paid cash compensation of $1,500 per meeting in unusual circumstances when (1) the Board or any committee has met more than 10 times per year or (2) the Board creates a special committee.
Pursuant to the Director Compensation Policy, on the date of each annual stockholders meeting, each non-employee director who is continuing to serve as a director following such meeting is also granted restricted stock or deferred stock units having a value of $200,000 with the number of restricted stock or deferred stock units to be issued being determined based on the closing sale price of the Company's common stock on the date of grant. These annual equity grants vest upon the earlier of the first anniversary of the grant date or the date of the next annual stockholders meeting; provided upon the death of a director such director's awards vest in full, upon a director's ceasing to serve for any other reason such director's awards vest pro rata based on the number of days since the grant date and upon a change of control all awards vest in full.
Pursuant to the Director Compensation Policy, if a director is elected or appointed to the Board of Directors other than on the date of the Company's annual meeting of stockholders, such director's annual cash and equity compensation as described above, for the period between the date of such election or appointment and the date of the Company's next annual meeting of stockholders, shall be granted in a pro rata amount on the date of such annual meeting to reflect the date of such director's election or appointment and the date of the Company's following annual meeting of stockholders. The number of restricted stock or deferred stock units to be issued to the director based on the foregoing pro rata compensation is determined based on the closing sale price of the Company's common stock on the date of such director's appointment, and such restricted stock or deferred stock units shall be fully vested upon grant.
EXECUTIVE COMPENSATION TABLES |
Upon his or her initial election to the Board of Directors, a new director receives stock options having a grant date fair value computed in accordance with ASC 718 equal to $300,000. Such options vest in three equal annual installments.
EXECUTIVE COMPENSATION TABLES |
The foregoing compensation is in addition to reimbursement of all out-of-pocket expenses incurred by directors in attending meetings of the Board of Directors.
Summary Compensation Table for 2019 |
Non-Employee Director Compensation in 2015
The following table providesrepresents summary information regarding the compensation informationof each of our NEOs for the one-year periodthree years ended December 31, 2015 for each non-employee member of our Board of Directors. No member of our Board employed by us receives separate compensation for services rendered as a member of our Board.2019.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Total ($) | |||||||||
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Thomas D. Carey | 71,801 | (2) | 233,370 | — | 305,171 | ||||||||
Sally W. Crawford | — | (3) | — | — | — | ||||||||
James E. Doyle | 55,000 | 200,000 | — | 255,000 | |||||||||
Daniel J. Levangie | 60,000 | (2) | 200,000 | — | 260,000 | ||||||||
Lionel N. Sterling | 70,000 | (4) | 200,000 | — | 270,000 | ||||||||
David A. Thompson | 80,000 | (2) | 200,000 | — | 280,000 | ||||||||
Michael S. Wyzga | 93,849 | (2) | 288,767 | 300,000 | 682,616 | ||||||||
Katherine S. Zanotti | 77,500 | (2) | 200,000 | — | 277,500 | ||||||||
| NAME AND PRINCIPAL POSITION | YEAR | SALARY ($) | BONUS ($) | STOCK AWARDS ($)(1) | OPTION AWARDS ($)(2) | ALL OTHER COMPENSATION ($) | TOTAL ($) | |||||||||||||||
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Kevin T. Conroy | 2019 | 792,169 | 1,000,250 | (3) | 14,949,979 | 1,948,193 | 25,952 | (4) | 18,716,543 | |||||||||||||
Chairman, President and | 2018 | 695,800 | 794,952 | 3,651,651 | 1,833,094 | 16,500 | (5) | 6,991,997 | ||||||||||||||
Chief Executive Officer | 2017 | 632,500 | 920,920 | 5,207,789 | (6) | 6,487,680 | (6) | 16,200 | (5) | 13,265,089 | ||||||||||||
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Jeffrey T. Elliott | 2019 | 455,385 | 230,000 | 3,772,876 | 648,884 | 16,385 | (5) | 5,123,530 | ||||||||||||||
Chief Financial Officer | 2018 | 400,000 | 228,500 | 891,837 | 448,209 | 15,317 | (5) | 1,983,863 | ||||||||||||||
| 2017 | 350,000 | 254,800 | 1,410,996 | (6) | 1,757,080 | (6) | 15,351 | (5) | 3,788,227 | |||||||||||||
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Mark Stenhouse(7) | 2019 | 513,846 | 677,500 | (8) | 3,708,412 | 616,042 | 29,250 | (9) | 5,545,050 | |||||||||||||
General Manager, Screening | 2018 | 375,000 | 285,625 | 2,910,000 | — | 291,631 | (10) | 3,862,256 | ||||||||||||||
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D. Scott Coward | 2019 | 483,016 | 242,050 | 3,708,412 | 616,042 | 16,800 | (5) | 5,066,320 | ||||||||||||||
Senior Vice President, General Counsel, | 2018 | 446,923 | 268,488 | 891,837 | 448,209 | 29,857 | (11) | 2,085,314 | ||||||||||||||
Chief Administrative Officer and Secretary | 2017 | 400,300 | 364,273 | 1,949,602 | (6) | 2,027,400 | (6) | 51,949 | (12) | 4,793,525 | ||||||||||||
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G. Bradley Cole(13) | 2019 | 81,272 | 389,270 | 871,861 | — | 757,468 | (14) | 2,099,871 | ||||||||||||||
Former General Manager, Precision Oncology | ||||||||||||||||||||||
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Jacob Orville(15) | 2019 | 57,692 | 370,137 | (16) | 3,291,960 | — | 341,800 | (17) | 4,061,589 | |||||||||||||
General Manager, Pipeline | ||||||||||||||||||||||
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Ana Hooker | 2019 | 407,054 | 203,636 | 2,872,609 | 444,926 | 16,800 | (5) | 3,945,025 | ||||||||||||||
Senior Vice President, Operations | ||||||||||||||||||||||
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42 | | Exact Sciences 2020 Proxy Statement |
| EXECUTIVE COMPENSATION TABLES |
| NAME | 2017 EQUITY AWARD | NUMBER OF SECURITIES UNDERLYING OPTIONS AND UNITS (#) | ASC 718 GRANT DATE FAIR VALUE AS OF JULY 27, 2017 (AS REFLECTED IN SUMMARY COMPENSATION TABLE) ($) | ASC 718 GRANT DATE FAIR VALUE AS OF FEBRUARY 23, 2017 ($) | DIFFERENCE IN GRANT DATE FAIR VALUES ($) | TOTAL 2017 COMPENSATION IN SUMMARY COMPENSATION TABLE (WITH FEBRUARY 23, 2017 GRANT DATE FAIR VALUE) ($) | ||||||||||||
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Kevin T. Conroy | Stock Option | 240,000 | 6,487,680 | 3,168,000 | 3,319,680 | 7,714,284 | ||||||||||||
| Restricted Stock Units | 137,300 | 5,207,789 | 2,976,664 | 2,231,125 | ||||||||||||||
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Jeffrey T. Elliott | Stock Option | 65,000 | 1,757,080 | 858,000 | 899,080 | 2,284,647 | ||||||||||||
| Restricted Stock Units | 37,200 | 1,410,996 | 806,496 | 604,500 | ||||||||||||||
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D. Scott Coward | Stock Option | 75,000 | 2,027,400 | 990,000 | 1,037,400 | 2,920,875 | ||||||||||||
| Restricted Stock Units | 51,400 | 1,949,602 | 1,114,352 | 835,250 | ||||||||||||||
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Exact Sciences 2020 Proxy Statement | | 43 |
EXECUTIVE COMPENSATION TABLES |
Grants of Plan-Based Awards in 2019 |
The following table sets forth all plan-based awards made to our NEOs in 2019.
| | | | | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS (#) | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#) | | | ||||||||||||||||||
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| | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS | | | ||||||||||||||||||||||
| | | | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SH) | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($)(1) | |||||||||||||||||||||||
| NAME | AWARD TYPE | GRANT DATE | THRESHOLD (#) | TARGET (#) | MAXIMUM (#) | ||||||||||||||||||||||
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Kevin T. Conroy | Stock Option(2) | 2/26/2019 | 34,110 | 92.62 | 1,948,193 | ||||||||||||||||||||||
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| Restricted Stock Units(3) | 2/26/2019 | 37,248 | 3,449,910 | ||||||||||||||||||||||||
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| Performance Share Units(4) | 2/26/2019 | 31,041 | 62,082 | 124,164 | 11,500,070 | ||||||||||||||||||||||
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Jeffrey T. Elliott | Stock Option(2) | 2/26/2019 | 11,361 | 92.62 | 648,884 | ||||||||||||||||||||||
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| Restricted Stock Units(3) | 2/26/2019 | 13,747 | 1,273,247 | ||||||||||||||||||||||||
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| Performance Share Units(4) | 2/26/2019 | 6,747 | 13,494 | 26,988 | 2,499,629 | ||||||||||||||||||||||
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Mark Stenhouse | Stock Option(2) | 2/26/2019 | 10,786 | 92.62 | 616,042 | ||||||||||||||||||||||
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| Restricted Stock Units(3) | 2/26/2019 | 13,051 | 1,208,784 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance Share Units(4) | 2/26/2019 | 6,747 | 13,494 | 26,988 | 2,499,629 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
D. Scott Coward | Stock Option(2) | 2/26/2019 | 10,786 | 92.62 | 616,042 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Restricted Stock Units(3) | 2/26/2019 | 13,051 | 1,208,784 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance Share Units(4) | 2/26/2019 | 6,747 | 13,494 | 26,988 | 2,499,629 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
G. Bradley Cole | Restricted Stock Units(5) | 12/18/2019 | 9,620 | 871,861 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jacob Orville | Restricted Stock Units(6) | 2/18/2019 | 14,595 | 1,292,387 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance Share Units(4) | 2/26/2019 | 5,398 | 10,794 | 21,589 | 1,999,573 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ana Hooker | Stock Option(2) | 2/26/2019 | 7,790 | 92.62 | 444,926 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Restricted Stock Units(3) | 2/26/2019 | 9,426 | 873,036 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance Share Units(4) | 2/26/2019 | 5,398 | 10,794 | 21,589 | 1,999,573 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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44 | | Exact Sciences 2020 Proxy Statement |
| EXECUTIVE COMPENSATION TABLES |
Outstanding Equity Awards at December 31, 2019 |
The following table presents information about information about unexercised options and unvested RSUs and PSUs that were held by our NEOs as of December 31, 2019.
| | OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| NAME | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | OPTION EXERCISE PRICE ($) | OPTION EXPIRATION DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)(1) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)(2) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($)(1) | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Kevin T. Conroy | 94,425 | — | 9.07 | 02/27/22 | 187,648 | (3) | 17,353,687 | 31,041 | 2,870,672 | ||||||||||||||||
| 96,758 | — | 10.82 | 02/22/23 | ||||||||||||||||||||||
| 102,837 | — | 13.96 | 02/24/24 | ||||||||||||||||||||||
| 66,723 | — | 23.38 | 03/09/25 | ||||||||||||||||||||||
| 185,475 | 61,825 | (4) | 5.70 | 02/26/26 | |||||||||||||||||||||
| 120,000 | 120,000 | (5) | 21.68 | 02/23/27 | |||||||||||||||||||||
| 17,075 | 51,225 | (6) | 44.37 | 02/27/28 | |||||||||||||||||||||
| — | 34,110 | (7) | 92.62 | 02/26/29 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Jeffrey T. Elliott | 32,500 | 32,500 | (5) | 21.68 | 02/23/27 | 66,172 | (8) | 6,119,587 | 6,747 | 623,963 | |||||||||||||||
| 4,175 | 12,525 | (6) | 44.37 | 02/27/28 | |||||||||||||||||||||
| — | 11,361 | (7) | 92.62 | 02/26/29 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Mark Stenhouse | — | 10,786 | (7) | 92.62 | 02/26/29 | 63,051 | (9) | 5,830,956 | 6,747 | 623,963 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
D. Scott Coward | — | 13,750 | (4) | 5.70 | 02/26/26 | 75,226 | (10) | 6,956,900 | 6,747 | 623,963 | |||||||||||||||
| — | 37,500 | (5) | 21.68 | 02/23/27 | |||||||||||||||||||||
| — | 12,525 | (6) | 44.37 | 02/27/28 | |||||||||||||||||||||
| — | 10,786 | (7) | 92.62 | 02/26/29 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
G. Bradley Cole | 3,934 | — | 35.28 | 02/16/26 | 9,620 | (11) | 889,658 | — | — | ||||||||||||||||
| 13,422 | — | 35.91 | 01/31/27 | ||||||||||||||||||||||
| 22,527 | — | 43.40 | 01/31/28 | ||||||||||||||||||||||
| 21,230 | — | 94.76 | 01/29/29 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Jacob Orville | 14,595 | (12) | 1,349,746 | 5,398 | 499,207 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Ana Hooker | 15,000 | — | 23.38 | 03/09/25 | 43,876 | (13) | 4,057,652 | 5,398 | 499,207 | ||||||||||||||||
| 10,150 | 5,050 | (4) | 5.03 | 02/28/26 | �� | ||||||||||||||||||||
| 15,000 | 15,000 | (5) | 21.68 | 02/23/27 | |||||||||||||||||||||
| 2,925 | 8,775 | (6) | 44.37 | 02/27/28 | |||||||||||||||||||||
| — | 7,790 | (7) | 92.62 | 02/26/29 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
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Exact Sciences 2020 Proxy Statement | | 45 |
As
EXECUTIVE COMPENSATION TABLES |
2019 Option Exercises and Stock Vested Table |
The following table sets forth information for each of our BoardNEOs regarding stock option exercises and vesting of Directors held unexercised stock options and unvested shares of restricted stock and restricted stock units and deferred stock units as follows:awards during 2019.
Name | Number of Securities Underlying Unexercised Options | Unvested Shares of Restricted Stock and Restricted Stock Units | Unvested Shares of Deferred Stock Units | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Thomas D. Carey | 15,620 | 7,984 | — | |||||||
Sally W. Crawford | — | — | — | |||||||
James E. Doyle | 18,477 | 7,984 | — | |||||||
Daniel J. Levangie | 52,472 | 7,984 | — | |||||||
Lionel N. Sterling | 52,472 | 7,984 | — | |||||||
David A. Thompson | 52,472 | 7,984 | — | |||||||
Michael S. Wyzga | 12,608 | — | 7,984 | |||||||
Katherine S. Zanotti | 33,304 | 7,984 | — | |||||||
| | 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) | |||||||||
| | | | | | | | | | | | | | |
Kevin T. Conroy | 11,440 | 845,395 | 99,325 | 9,082,504 | |||||||||
| | | | | | | | | | | | | | |
Jeffrey T. Elliott | — | — | 33,075 | 3,551,885 | |||||||||
| | | | | | | | | | | | | | |
Mark Stenhouse | — | — | 25,000 | 2,296,500 | |||||||||
| | | | | | | | | | | | | | |
D. Scott Coward | 100,425 | 6,597,352 | 45,300 | 4,164,049 | |||||||||
| | | | | | | | | | | | | | |
G. Bradley Cole | — | — | — | — | |||||||||
| | | | | | | | | | | | | | |
Jacob Orville | — | — | — | — | |||||||||
| | | | | | | | | | | | | | |
Ana Hooker | — | — | 25,600 | 2,359,635 | |||||||||
| | | | | | | | | | | | | | |
2019 Nonqualified Deferred Compensation |
| NAME | EXECUTIVE CONTRIBUTIONS IN LAST FY ($)(1) | REGISTRANT CONTRIBUTIONS IN LAST FY ($) | AGGREGATE EARNINGS IN LAST FY ($) | AGGREGATE WITHDRAWALS/ DISTRIBUTIONS ($) | AGGREGATE BALANCE AT LAST FYE ($)(2) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | |
Kevin T. Conroy | 1,000,250 | — | — | — | 1,000,250 | |||||||||||
| | | | | | | | | | | | | | | | | |
Jeffrey T. Elliott | — | — | — | — | — | |||||||||||
| | | | | | | | | | | | | | | | | |
Mark Stenhouse | — | — | — | — | — | |||||||||||
| | | | | | | | | | | | | | | | | |
D. Scott Coward | — | — | — | — | — | |||||||||||
| | | | | | | | | | | | | | | | | |
G. Bradley Cole | — | — | — | — | — | |||||||||||
| | | | | | | | | | | | | | | | | |
Jacob Orville | — | — | — | — | — | |||||||||||
| | | | | | | | | | | | | | | | | |
Ana Hooker | — | — | — | — | — | |||||||||||
| | | | | | | | | | | | | | | | | |
We maintain an executive non-qualified deferred compensation plan pursuant to which certain employees, including our named executive officers, may defer up to 90% of their cash compensation other than bonuses and 100% of their cash bonuses, and pursuant to which we may make matching and other contributions in our discretion. Any matching contributions made by us generally would be subject to continued service for services renderedone year, subject to earlier vesting upon death, disability, a change in control of us or the participant becoming eligible for retirement under the plan. A participant generally may elect to receive his or her account balance under the plan upon attaining an age specified by the participant or upon the participant's retirement, in either case in lump-sum or in annual installments as a director.
Potential Payments upon Termination or Change of Control |
The following table sets forth the estimated post-employment compensation and in accordance with the Director Compensation Policy was paid in shares of common stock having an equivalent dollar value.
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46 | | Exact Sciences 2020 Proxy Statement |
| EXECUTIVE COMPENSATION TABLES |
For further information regarding the following table, see the "Potential Benefits upon Termination or Change of Control" section of the Compensation Discussion & Analysis in this Proxy Statement.
| NAME AND BENEFIT | SEVERANCE ELIGIBLE TERMINATION* ($) | CHANGE OF CONTROL ($) | DEATH OR DISABILITY ($) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | |
Kevin T. Conroy | ||||||||||
Cash Severance | 1,200,300 | (1) | — | — | ||||||
Bonus | 1,000,250 | (2) | — | — | ||||||
Options and Restricted Stock | 18,224,890 | (3) | 39,420,639 | (4) | 39,420,639 | (5) | ||||
Long-Term Incentive Plan | 10,000,000 | (6) | ||||||||
COBRA Benefits | 20,226 | (7) | — | — | ||||||
Outplacement Consulting | 10,000 | — | — | |||||||
Total Estimated Value | 20,455,666 | 49,420,639 | 39,420,639 | |||||||
| | | | | | | | | | | |
Jeffrey T. Elliott | ||||||||||
Cash Severance | 460,000 | (8) | — | — | ||||||
Bonus | 230,000 | (2) | — | — | ||||||
Options and Restricted Stock | 4,727,989 | (3) | 10,271,089 | (4) | 10,271,089 | (5) | ||||
COBRA Benefits | 20,226 | (7) | — | — | ||||||
Outplacement Consulting | 10,000 | — | — | |||||||
Total Estimated Value | 5,448,215 | 10,271,089 | 10,271,089 | |||||||
| | | | | | | | | | | |
Mark Stenhouse | ||||||||||
Cash Severance | 515,000 | (8) | — | — | ||||||
Bonus | 257,500 | (2) | — | — | ||||||
Options and Restricted Stock | 2,613,762 | (9) | 2,613,762 | (10) | 7,078,881 | (5) | ||||
COBRA Benefits | 18,393 | (7) | — | — | ||||||
Outplacement Consulting | 10,000 | — | — | |||||||
Total Estimated Value | 3,414,655 | 2,613,762 | 7,078,881 | |||||||
| | | | | | | | | | | |
D. Scott Coward | ||||||||||
Cash Severance | 484,100 | (8) | — | — | ||||||
Bonus | 242,050 | (2) | — | — | ||||||
Options and Restricted Stock | 6,655,498 | (3) | 12,655,628 | (4) | 12,655,628 | (5) | ||||
COBRA Benefits | 20,226 | (7) | — | — | ||||||
Outplacement Consulting | 10,000 | — | — | |||||||
Total Estimated Value | 7,411,874 | 12,655,628 | 12,655,628 | |||||||
| | | | | | | | | | | |
G. Bradley Cole | ||||||||||
Cash Severance | — | — | — | |||||||
Bonus | — | — | — | |||||||
Options and Restricted Stock | — | — | — | |||||||
COBRA Benefits | — | — | — | |||||||
Outplacement Consulting | — | — | — | |||||||
Total Estimated Value | — | — | ||||||||
| — | ||||||||||
| | | | | | | | | | | |
Jacob Orville | ||||||||||
Cash Severance | 400,000 | (8) | — | — | ||||||
Bonus | 170,137 | (2) | — | — | ||||||
Options and Restricted Stock | 337,460 | (11) | 337,460 | (10) | 2,347,975 | (5) | ||||
COBRA Benefits | 20,226 | (7) | — | — | ||||||
Outplacement Consulting | 10,000 | — | — | |||||||
Total Estimated Value | 937,823 | 337,460 | 2,347,975 | |||||||
| | | | | | | | | | | |
Ana Hooker | ||||||||||
Cash Severance | 410,000 | (8) | — | — | ||||||
Bonus | 203,636 | (2) | — | — | ||||||
Options and Restricted Stock | 3,467,608 | (12) | 3,467,608 | (10) | 6,981,670 | (5) | ||||
COBRA Benefits | 15,113 | (7) | — | |||||||
Outplacement Consulting | 10,000 | — | — | |||||||
Total Estimated Value | 4,106,357 | 3,467,608 | 6,981,670 | |||||||
| | | | | | | | | | | |
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Exact Sciences 2020 Proxy Statement | | 47 |
EXECUTIVE COMPENSATION TABLES |
defined in the NEO's employment agreement) (1) within four months prior to the consummation of such Change of Control or (2) within 12 months following such Change of Control. In accordance with the terms of such NEO's employment agreement and the award agreement governing such NEO's PSU award, this amount reflects the acceleration of such PSUs based upon the achievement of the performance metrics to which such PSUs are subject at the "target" level.
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48 | | Exact Sciences 2020 Proxy Statement |
EQUITY COMPENSATION PLAN INFORMATIONTable of Contents
| EQUITY COMPENSATION PLAN INFORMATION |
EQUITY COMPENSATION PLAN INFORMATION |
We maintain the following equity compensation plans under which our equity securities that have been issued or are authorized for issuance to our employees and/or directors:directors, in each case, as amended: the 2000 Stock Option and Incentive Plan, the 2010 Omnibus Long-Term Incentive Plan, and the 2010 Employee Stock Purchase Plan. Each ofPlan, the foregoing equity compensation plans was approved by our stockholders.2016 Inducement Award Plan and the 2019 Omnibus Long-Term Incentive Plan. The following table presents information about these plans as of December 31, 2015.
Equity Compensation Plan Information
2019.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities outstanding) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 8,089,535 | (1) | $ | 4.80 | (2) | 6,522,474 | (3) | |||
Equity compensation plans not approved by security holders | 243,849 | (4) | N/A | — | ||||||
Total | 8,333,384 | $ | 4.80 | 6,522,474 | ||||||
PLAN CATEGORY(1) | | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS | | WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS | | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES OUTSTANDING) | | |||||||||
| | | | | | | | | |||||||||
Equity compensation plans approved by security holders | | | 5,549,490 | (2) | | | $ | 25.76 | (3) | | | 14,851,832 | (4) | | ||
| | | | | | | | | |||||||||
Equity compensation plans not approved by security holders | | | 360,744 | (5) | | | N/A | | | | 1,640,063 | (6) | | |||
| | | | | | | | | |||||||||
Total | | | 5,910,234 | | | | $ | 25.76 | | | | 16,491,895 | | | ||
| | | | | | | | | |||||||||
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Exact Sciences 2020 Proxy Statement | | 49 |
CEO PAY RATIO |
CEO PAY RATIO |
As required by SEC rules, we are providing the following information about the relationship of the annual total compensation for 2019 of our employees and our CEO, Mr. Conroy. The pay ratio provided below is a reasonable estimate calculated in accordance with SEC rules and methods for disclosure.
For 2019, the median of the annual total compensation of all our employees (other than our CEO) was $113,869; and the annual total compensation of our CEO, for purposes of this pay ratio disclosure (as discussed below), was $18,729,996. As a result, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees was approximately 164 to 1. As discussed further beginning on page 33, during 2019 Mr. Conroy was granted one-time performance-contingent Performance Stock Units intended to provide performance incentives over a three-year period. In order to provide a more accurate assessment of Mr. Conroy's compensation for 2019 relative to our median employee, and in order to account for the long-term intent of that award, as a supplemental ratio we deducted 2/3 of the value of that award, which would result in a supplemental pay ratio of 97:1.
Consistent with prior years' disclosure, we identified our median employee by (A) aggregating for each of our employees (other than our CEO) as of December 13, 2019 (our median employee determination date): (1) for permanent salaried employees, annual base salary, and solely for hourly employees, hourly rate multiplied by expected annual work schedule, including overtime (adjusted for the portion of the year actually worked for non-permanent employees), (2) target bonus for 2019, and (3) estimated grant date fair value of equity awards granted during 2019, and (B) ranking our employees from lowest to highest using this compensation measure. Amounts paid in currencies other than US Dollars were converted based on the average annual exchange rate as of the determination date.
For the annual total compensation of our median employee, we identified and calculated the elements of that employee's compensation for 2019 in accordance with the requirements of Item 402(c)(2)(x), and then added the Company's annual share of the cost of medical, dental, disability, and life insurance for the employee, resulting in annual total compensation of $113,869. For the annual total compensation of our CEO, we used the amount reported in the "Total" column of our 2019 Summary Compensation Table, adjusted as follows: to maintain consistency between the annual total compensation of our CEO and our median employee, we added the Company's annual share of the cost of medical, dental, disability, and life insurance for our CEO (estimated at $13,453) to the amount reported in the Summary Compensation Table. This resulted in annual total compensation for purposes of determining the CEO pay ratio of $18,729,996, which exceeded the amount reported for our CEO in the Summary Compensation Table.
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50 | | Exact Sciences 2020 Proxy Statement |
| PROPOSAL 4—APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION |
PROPOSAL 4—APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION |
WHAT YOU ARE VOTING ON:
At the 2020 Annual Meeting, stockholders are being asked to approve an amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares.
Our Board is seeking stockholder approval of an amendment to our Certificate of Incorporation that would increase the number of authorized shares of common stock from 200,000,000 to 400,000,000. The proposed Certificate of Amendment to the Certificate of Incorporation (the "Certificate of Amendment") is attached hereto as Appendix A.
The newly authorized shares of common stock would have the same rights as the currently outstanding shares of our common stock. As of March 31, 2020, 149,443,103 shares of our common stock were issued and outstanding, 4,767,961 shares were subject to outstanding restricted stock unit awards, 2,840,592 options to purchase shares of our common stock were issued and outstanding under our equity compensation plans, 13,360,645 shares of our common stock were reserved for future issuance under our equity compensation plans, and 26,291,240 shares were reserved for issuance upon the conversion of our outstanding convertible notes. Accordingly, 196,703,541 of the 200,000,000 authorized shares of our common stock are currently issued or reserved while 3,296,459 of the authorized shares of our common stock remain available for future issuance.
Reasons for the Increase in Authorized Shares
Our Board believes it would be prudent and advisable to have the additional shares available to provide additional flexibility regarding the potential use of shares of common stock for business and financial purposes in the future. Having an increased number of authorized but unissued shares of common stock would allow us to take prompt action with respect to corporate opportunities that develop, without the delay and expense of convening a special meeting of stockholders for the purpose of approving an increase in our authorized shares. The additional shares could be used for various purposes without further stockholder approval. These purposes may include: (i) raising capital, if we have an appropriate opportunity, through offerings of common stock or securities that are convertible into common stock; (ii) expanding our business through potential strategic transactions, including mergers, acquisitions, and other business combinations or acquisitions of new technologies or products; (iii) establishing strategic relationships with other companies; (iv) exchanges of common stock or securities that are convertible into common stock for other outstanding securities; (v) providing equity incentives to attract and retain employees, officers or directors; and (vi) other purposes.
Potential Effects of the Proposed Amendment
If the proposed amendment is approved by our stockholders, the additional authorized shares of common stock would have rights identical to our currently outstanding common stock. Our Certificate of Incorporation also currently authorizes the issuance of 5,000,000 shares of preferred stock, none of which are issued or outstanding.
The proposed amendment to the Certificate of Incorporation would not change the authorized number of shares of preferred stock. Future issuances of shares of common stock or securities convertible into shares of common stock could have a dilutive effect on our earnings per share, book value per share and the voting interest and power of current stockholders since holders of common stock are not entitled to preemptive rights.
SEC rules require disclosure of the possible anti-takeover effects of an increase in authorized capital stock and other charter and bylaw provisions that could have an anti-takeover effect. Although we have not proposed the increase in the number of authorized shares of common stock with the intent of using the additional shares to prevent or discourage any actual or threatened takeover of the Company, under certain circumstances, such shares could have an anti-takeover effect. The additional shares could be issued to dilute the stock ownership or voting rights of persons seeking to obtain control of the Company or could be issued to persons allied with the Board of Directors or management and thereby have the effect of making it more difficult to remove directors or members of management by diluting the stock ownership or voting rights of persons seeking to effect such a removal. Accordingly, if the proposed amendment is approved, the additional shares of authorized common stock may render more difficult or discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of common stock, or the replacement or removal of members of the Board of Directors or management.
Implementation of the Authorized Share Increase
Following stockholder approval of this proposal, the authorized share increase would be implemented by our filing the Certificate of Amendment with the Secretary of State of the State of Delaware. However, at any time prior to the effectiveness of the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, the Board of Directors reserves the right to abandon this proposal and to not file the Certificate of Amendment, even if approved by the stockholders of the Corporation, if the Board of Directors, in its discretion, determines that such amendment is no longer in the best interests of the Corporation or its stockholders.
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Exact Sciences 2020 Proxy Statement | | 51 |
PROPOSAL 4—APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION |
This Proposal 2 enables our stockholders to cast a non-binding, advisory vote to approve the compensation of our named executive officers as disclosed in this proxy statement.
As described in detail under the heading "Compensation and Other Information Concerning Directors and Officers—Compensation Discussion and Analysis" beginning on page 21, our executive compensation program is designed to attract, motivate and retain our executive officers, who are critical to our success. Please read the "Compensation and Other Information Concerning Directors and Officers" section beginning on page 21 for additional details about our executive compensation programs, including information about the 2015 compensation of our named executive officers.
We are asking our stockholders to indicate their support for our executive compensation programs as described in this proxy statement. This vote is not intended to address any specific term of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we are asking our stockholders to vote FOR the following resolution at the annual meeting:
Although the vote on this Proposal 2 regarding the compensation of our named executive officers is not binding on our Board of Directors, we value the opinions of our stockholders and will consider the result of the vote when determining future executive compensation arrangements.
Vote Required for Approval
The foregoing resolutionamendment to our Certificate of Incorporation will be approved if holders of a majority of the issued and outstanding shares present or represented atof common stock as of the 2016 annual meeting, in person or by proxy, and voting on Proposal 2record date vote in favor of such resolution.the proposal.
Board Recommendation
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52 | | Exact Sciences 2020 Proxy Statement |
| SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
The Board recommendsfollowing table sets forth certain information regarding beneficial ownership of our common stock as of April 27, 2020 by:
Unless otherwise noted below, the address of each person listed on the table is c/o Exact Sciences Corporation at 441 Charmany Drive, Madison, Wisconsin 53719. To our knowledge, each person listed below has sole voting and investment power over the shares shown as beneficially owned except to the extent jointly owned with spouses or otherwise noted below.
Beneficial ownership is determined in accordance with the rules of the SEC. The information does not necessarily indicate ownership for any other purpose. Under these rules, shares of common stock issuable by us to a person pursuant to restricted stock unit awards expected to vest within 60 days of April 27, 2020 and options which may be exercised within 60 days after April 27, 2020 are deemed to be beneficially owned and outstanding for purposes of calculating the number of shares and the percentage beneficially owned by that our stockholders voteFOR approvalperson. However, these shares are not deemed to be beneficially owned and outstanding for purposes of this Proposal 2.computing the percentage beneficially owned by any other person. The applicable percentage of common stock outstanding as of April 27, 2020 is based upon 149,564,305 shares outstanding on that date.
| | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | ||||||||||
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NAME AND ADDRESS OF BENEFICIAL OWNER | | NUMBER OF ISSUED SHARES | | NUMBER OF SHARES ISSUABLE(1) | | TOTAL SHARES BENEFICIALLY OWNED | | PERCENTAGE OF COMMON STOCK OUTSTANDING | |||
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Directors and Executive Officers | | | | | |||||||
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Thomas D. Carey | | 34,181 | | 18,850 | | 53,031 | | * | |||
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Eli Casdin | | 6,712 | (2) | 8,888 | | 15,600 | | * | |||
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G. Bradley Cole | | 10,194 | | 43,757 | | 53,951 | | * | |||
| | | | | | | | | | |||
Kevin T. Conroy | | 1,019,268 | (3) | 830,721 | (4) | 1,849,989 | | 1.3% | |||
| | | | | | | | | | |||
D. Scott Coward | | 54,313 | (5) | 2,697 | (4) | 57,010 | | * | |||
| | | | | | | | | | |||
James E. Doyle | | 32,440 | | 18,477 | | 50,917 | | * | |||
| | | | | | | | | | |||
Jeffrey T. Elliott | | 60,015 | (6) | 59,940 | (4) | 119,955 | | * | |||
| | | | | | | | | | |||
Ana Hooker | | 208,687 | (7) | 60,498 | (4) | 269,185 | | * | |||
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Pierre Jacquet | | 5,982 | | — | | 5,982 | | * | |||
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Daniel J. Levangie | | 12,458 | | 16,545 | | 29,003 | | * | |||
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Freda Lewis-Hall | | 5,064 | | — | | 5,064 | | * | |||
| | | | | | | | | | |||
Jacob Orville | | 2,688 | (8) | — | (4) | 2,688 | | * | |||
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Kathleen Sebelius | | 8,200 | | — | | 8,200 | | * | |||
| | | | | | | | | | |||
Andrew Slavitt | | 6,887 | | — | | 6,887 | | * | |||
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Mark Stenhouse | | 29,926 | (9) | 2,697 | (4) | 32,623 | | * | |||
| | | | | | | | | | |||
Michael S. Wyzga | | 8,913 | | 26,595 | | 35,508 | | * | |||
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Katherine S. Zanotti | | 77,513 | (10) | 25,637 | | 103,150 | | * | |||
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All directors and executive officers as a group (18 persons)(11) | | 1,589,355 | | 1,118,912 | | 2,708,267 | | 1.8% | |||
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Stockholders | | | | | |||||||
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BlackRock, Inc.(12) | | 7,784,507 | | — | | 7,784,507 | | 5.3% | |||
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T. Rowe Price(13) | | 18,698,591 | | — | | 18,698,591 | | 12.6% | |||
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The Vanguard Group(14) | | 13,428,104 | | — | | 13,428,104 | | 9.1% | |||
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Exact Sciences 2020 Proxy Statement | | 53 |
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
The Company currently maintains the 2010 Employee Stock Purchase Plan (the "Stock Purchase Plan"), which was adopted by our Board of Directors on April 15, 2010 and approved by stockholders at our 2010 Annual Meeting, on July 16, 2010, and subsequently amended with the approval of our stockholders, effective April 29, 2014.
We are asking stockholders to approve a second amendment to the Stock Purchase Plan (the "Stock Purchase Plan Amendment No. 2") to add 2,000,000 shares of common stock to the pool of shares available for purchase by employees. Under the Stock Purchase Plan, the Company initially reserved 300,000 shares of common stock for issuance to eligible employees. In 2014, the Company, with stockholder approval, increased the number of shares of common stock reserved under the Stock Purchase Plan to 800,000. The Stock Purchase Plan is scheduled to expire on October 31, 2020.
The Stock Purchase Plan is meant to encourage stock ownership by all eligible employees of the Company so that they may share in the growth of the Company, and it is designed to encourage employees to remain in the employ of the Company. The Stock Purchase Plan is intended to qualify as an "employee stock purchase plan" as defined under Section 423 of the Code.
As of April 29, 2016, 363,392 shares of common stock remained reserved for issuance under the Stock Purchase Plan. Under the proposed Stock Purchase Plan Amendment No. 2, upon approval, an additional 2,000,000 shares would be made available for sale under the Stock Purchase Plan, increasing the aggregate number of shares authorized for sale to 2,800,000 shares. Other than the proposed increase to the share pool, the Stock Purchase Plan Amendment No. 2 does not make any other changes to the existing Stock Purchase Plan. We currently anticipate that if the Stock Purchase Plan Amendment No. 2 is approved, the number of shares reserved for issuance under the Stock Purchase Plan will provide us with a sufficient number of shares available for sale for at least the next two years.
The material terms of the Stock Purchase Plan, as amended by the Stock Purchase Plan Amendment No. 2, are summarized below. This summary of the Stock Purchase Plan is not intended to be a complete description of the Stock Purchase Plan, as amended by the Stock Purchase Plan Amendment No. 2, and is qualified in its entirety by the actual text of the Stock Purchase Plan, as amended by the Stock Purchase Plan Amendment No. 2, which is attached as Appendix A to this proxy statement. The proposed changes to the Stock Purchase Plan as a result of the Stock Purchase Plan Amendment No. 2 are set forth in Appendix A.
Material Features of the Stock Purchase Plan, as Amended by the Stock Purchase PlanAmendment No. 2
Plan Administration. The Stock Purchase Plan is administered by the Compensation Committee. The Compensation Committee has the authority to interpret and construe the Stock Purchase Plan and any option granted under it, and such interpretation or construction shall be final unless otherwise determined by the Board of Directors. The Compensation Committee may adopt rules and regulations it deems appropriate for administering the Stock Purchase Plan so long as any such rules and regulations are applied on a uniform basis to all employees under the Stock Purchase Plan.
Audit Fees(1) Audit-Related Fees(2) Tax Fees All Other Fees Total SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all such filings. Based solely on our review of copies of such filings, we believe that all reporting persons complied on a timely basis with all Section 16(a) filing requirements during the year ended December 31, 2019, except that Eli Casdin filed one late Form 4 with respect to shares of common stock Mr. Casdin received in exchange for shares of Genomic Health he held indirectly prior to the Company's acquisition of Genomic Health. OTHER BUSINESS Our Board of Directors knows of no business that will be presented for consideration at the IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 23, 2020 The proxy statement and annual report to stockholders are available at QUESTIONS AND ANSWERS QUESTIONS AND ANSWERS Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials? Under rules adopted by the SEC, we are furnishing proxy materials to our stockholders primarily via the Internet, instead of mailing printed copies of those materials to each stockholder. On or about June 11, 2020, we will mail to our stockholders of record as of June 1, 2020 (other than those who previously requested electronic or paper delivery on an ongoing basis) a Notice of Meeting and Important Notice Regarding the Availability of Proxy Materials (the "Notice") containing instructions on how to access our proxy materials, including our proxy statement and our 2020 Annual Report, which includes our Annual Report on Form 10-K for the year ended December 31, 2019. All stockholders will have the ability to access our proxy materials on the website referred to in the Notice or request a printed set of the proxy materials. Instructions on how to access our proxy materials on the Internet or to request printed versions are provided in the Notice. The Notice also instructs you on how to access your proxy card to vote through the Internet or by telephone. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via email until you elect otherwise. What does it mean if I receive more than one Notice or more than one set of proxy materials? It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that all of your shares are voted, for each Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating and returning the enclosed proxy card in the enclosed envelope. How do I receive a paper copy of the materials? If you prefer to receive paper copies of the proxy materials, you can still do so. You may request a paper copy by following the instructions provided in the Notice. The Notice also provides you with instructions on how to request paper copies of the proxy materials on an ongoing basis. There is no charge to receive the materials by mail. You may request printed copies of the materials until one year after the date of the Annual Meeting. If you have previously elected to receive printed proxy materials, you will continue to receive these materials in paper format until you elect otherwise. What is a proxy? Our Board of Directors is asking for your proxy. This means you authorize persons selected by us to vote your shares at the annual meeting in the way that you instruct. All shares represented by valid proxies received before the annual meeting will be voted in accordance with the stockholder's specific voting instructions. What items will be voted on at the Annual Meeting? There are four proposals scheduled to be voted on at the annual meeting: Our Board of Directors is not aware of any other matters to be brought before the meeting. If other matters are properly raised at the meeting, the proxy holders may vote any shares represented by proxy in their discretion. What are our Board of Directors' voting recommendations? Our Board of Directors recommends that you vote your shares: When is the record date and who is entitled to vote? Our Board of Directors set June 1, 2020 as the record date. Holders of record of shares of our common stock as of the close of business on the record date will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement or adjournment thereof. At the close of business on the record date, there were shares of our common stock issued and outstanding and entitled to vote. Each share of our common stock is entitled to one vote on any matter presented to stockholders at the Annual Meeting. You will need to obtain your own Internet access if you choose to attend the Annual Meeting online and/or vote over the Internet. To attend and participate in the Annual Meeting, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompanied your proxy materials. If your shares are held in "street name," you should contact your bank or broker to obtain your 16-digit control number or otherwise vote through the bank or broker. The meeting webcast will begin promptly at 10:00 a.m. Central Time. We encourage you to access the meeting prior to the start time. Online check-in will begin shortly before the meeting on July 23, 2020. Why hold a virtual meeting? Virtual meeting technology provides expanded access, improved communication and cost savings for our stockholders and the Company while providing stockholders the same rights and opportunities to participate as they would have at an in-person meeting. A virtual meeting enables stockholder participation from any location around the world with Internet access. Furthermore, as part of our effort to maintain the health and safety of our directors, members of management, employees and stockholders who wish to attend the Annual Meeting, in light of the novel coronavirus disease, COVID-19, we believe that hosting a virtual meeting is in the best interest of the Company and its stockholders. What is a stockholder of record? A stockholder of record or registered stockholder is a stockholder whose ownership of Exact Sciences stock is reflected directly on the books and records of our transfer agent, American Stock Transfer and Trust Company, LLC. If you hold stock through an account with a bank, broker or similar organization, you are considered the beneficial owner of shares held in "street name" and are not a stockholder of record. For shares held in street name, the stockholder of record is your bank, broker or similar organization. We only have access to ownership records for the registered shares. If you are not a stockholder of record, we will require additional documentation to evidence your stock ownership as of the record date, such as a copy of your brokerage account statement, a letter from your broker, bank or other nominee or a copy of your notice or voting instruction card. As described below, if you are not a stockholder of record, you will not be able to vote your shares unless you have a proxy from the stockholder of record authorizing you to vote your shares. How do I vote my shares without attending the Annual Meeting? We recommend that stockholders vote by proxy even if they plan to attend the Annual Meeting and vote electronically. If you are a stockholder of record, there are three ways to vote by proxy: Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on July 22, 2020. If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions on how to vote from the bank, broker or holder of record. You must follow the instructions of such bank, broker or holder of record in order for your shares to be voted. How can I attend and vote at the Annual Meeting? We will be hosting the Annual Meeting live via audio webcast. Any stockholder can attend the Annual Meeting live online at https://www.virtualshareholdermeeting.com/EXAS2020. If you were a stockholder as of the record date, or you hold a valid proxy for the Annual Meeting, you can vote at the Annual Meeting. A summary of the information you need to attend the Annual Meeting online is provided below: To attend and participate in the Annual Meeting, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompanied your proxy materials. If your shares are held in "street name," you should contact your bank or broker to obtain your 16-digit control number or otherwise vote through the bank or broker. QUESTIONS AND ANSWERS What if during the check-in time or during the Annual Meeting I have technical difficulties or trouble accessing the virtual meeting website? We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting website during the check-in or meeting time, please call the technical support number that will be posted on the Annual Meeting login page. How can I change or revoke my vote? You may change or revoke your vote as follows: Your most recent proxy card or telephone or Internet proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to the Company before your proxy is voted or you vote at the Annual Meeting. What happens if I do not give specific voting instructions? Beneficial owners of shares held in "street name." If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is referred to as a "broker non-vote." What ballot measures are considered "routine" or "non-routine?" The election of directors ("Proposal 1") and the advisory vote on the compensation paid to our executive officers ("Proposal 3") are considered to be non-routine matters under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore there may be broker non-votes on Proposals 1 and 3. The ratification of the appointment of PWC as our independent registered public accounting firm for 2020 ("Proposal 2") and the approval of the amendment to our Certificate of Incorporation increasing the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares ("Proposal 4") are considered to be routine matters under applicable rules. A broker or other nominee may generally vote on routine matters, and we do not expect there to be any broker non-votes with respect to Proposals 2 or 4. What is the quorum for the annual meeting? The presence, in person or by What is the voting requirement to approve each of the proposals? The following are the voting requirements for each proposal: How are abstentions and broker non-votes treated? Broker non-votes and abstentions are counted for purposes of determining whether a quorum is present. Broker non-votes and abstentions are not counted as votes cast on any proposal considered at the annual meeting and, therefore, will have no effect on the proposals regarding the election of directors and the advisory vote on the compensation of our named executive officers. We expect no broker non-votes on the proposals regarding the appointment of PWC as our independent registered public accounting firm for 2020 and the amendment to our Certificate of Incorporation to increase the number of authorized shares. Abstentions will have no effect on the proposal ratifying the appointment of PWC as our independent registered public accounting firm for 2020. Abstentions will have the same effect as "no" votes on the proposal approving the amendment to the Certificate of Incorporation. Who pays for solicitation of proxies? We are paying the cost of soliciting proxies. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to stockholders and obtaining their votes. In addition to soliciting the proxies by mail, certain of our directors, officers and regular employees, without compensation, may solicit proxies personally or by telephone, facsimile and email. Where can I find the voting results of the annual meeting? We will announce preliminary or final voting results at the annual meeting and publish final results in a Form 8-K filed with the SEC within four business days following the meeting. What is the deadline to propose actions for consideration or to nominate individuals to serve as directors at the 2021 annual meeting of stockholders? Requirements for Stockholder Proposals to Be Considered for Inclusion in the Company's Requirements for Stockholder Nominations or Proposals to Be Brought Before the 2021 Annual Meeting of Stockholders. Notice of any director nomination or other proposal that you intend to present at the 2021 annual meeting of stockholders, but do not intend to have included in the proxy statement and form of proxy relating to the 2021 annual meeting of stockholders, must be delivered to the Company's Secretary at 441 Charmany Drive, Madison, Wisconsin 53719 not earlier than the close of business on March 25, 2021 and not ANNEX A CERTIFICATE OF AMENDMENT TO SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EXACT SCIENCES CORPORATION ANNEX A CERTIFICATE OF AMENDMENT TO SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EXACT SCIENCES CORPORATION SECOND: Pursuant to the Section 242 of the Delaware General Corporation Law, this "FOURTH The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 405,000,000 shares, consisting of 400,000,000 shares of Common Stock with a par value of $0.01 per share (the "Common Stock") and 5,000,000 shares of Preferred Stock with a par value of $0.01 per share (the "Preferred Stock")." THIRD: This Certificate of Amendment has been duly adopted by the stockholders of the Corporation in accordance with the provisions of Section 242 of the Delaware General Corporation Law. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its officer thereunto duly authorized this day of VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on July 22, 2020 for shares held directly and by 11:59 p.m. Eastern Time on July 21, 2020 for shares held in a Plan. 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. EXACT SCIENCES CORPORATION 441 CHARMANY DRIVE MADISON, WI 53719 ATTN: LEGAL DEPARTMENT During The Meeting - Go to www.virtualshareholdermeeting.com/EXAS2020 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on July 22, 2020 for shares held directly and by 11:59 p.m. Eastern Time on July 21, 2020 for shares held in a Plan. 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. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D14223-P40404 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. EXACT SCIENCES CORPORATION For Withhold For All AllAllExcept 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. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES FOR DIRECTOR AND "FOR" PROPOSALS 2, 3 AND 4. ! ! ! 1. To elect four members of the board of directors to serve for three-year terms as Class II Directors. NOMINEES: 01) Eli Casdin 02) James E. Doyle 03) Freda Lewis-Hall 04) Kathleen Sebelius For Against Abstain ! ! ! ! ! ! ! ! ! 2. To ratify the appointment of PricewaterhouseCoopers, LLP as the Company's independent registered public accounting firm for 2020. 3. To approve on an advisory basis the compensation of the Company's named executive officers. 4. To approve an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of common stock from 200,000,000 shares to 400,000,000 shares. 5. To transact such other business as may properly come before the Annual Meeting and any adjournment thereof. ! For address changes and/or comments, please check this box and write them on the back where indicated. Note:Please sign exactly as your name or names 2020 Annual Meeting of the Stockholders EXACT SCIENCES CORPORATION www.virtualshareholdermeeting.com/EXAS2020 Date: July 23, 2020 Time: 10:00 a.m. Central Time IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 23, 2020. THE PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE AT www.proxyvote.com. Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. D14224-P40404 EXACT SCIENCES CORPORATION Proxy for Annual Meeting of Stockholders July 23, 2020 SOLICITED BY THE BOARD OF DIRECTORS The undersigned hereby reverse side.) CONTINUED AND TO BE SIGNED ON REVERSE SIDE Address Changes/Comments: Stock Subject to the Stock Purchase Plan. The stock subject to the options under the Stock Purchase Plan shall be shares of the Company's authorized but unissued common stock or shares of common stock reacquired by the Company, including shares purchased in the open market. Subject to adjustment, the aggregate number ofissuedexercised within 60 days after April 17, 2020. As of April 17, 2020, Mr. Hoof did not hold any shares of common stock issuable by us pursuant to Stock Purchase Planrestricted stock unit awards expected to vest within 60 days of April 17, 2020.2,800,000. Eligibility55 East 52nd Street, New York, New York 10055. This information has been obtained from Schedule 13G filed by BlackRock with the SEC on February 10, 2020.Participation. All employeesthe sole power to dispose or to direct the disposition of 18,698,591 shares. As disclosed by T. Rowe Price, these securities are owned by various individual and institutional investors for which T. Rowe Price serves as an investment advisor. For purposes of reporting requirements of the Exchange Act, T. Rowe Price is deemed to be the beneficial owner of such securities. The principal address of T. Rowe Price is 100 E. Pratt Street, Baltimore, MD 21202. This information has been obtained from Amendment No. 2 to Schedule 13G filed by T. Rowe Price with the SEC on February 14, 2020.anyto direct the vote of its participating subsidiaries whose customary employment115,578 shares, the shared power to vote or to direct the vote of 37,980 shares, the sole power to dispose or to direct the disposition of 13,289,134 shares and shared power to dispose or to direct the disposition of 138,970 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, is more than 20 hours per weekthe beneficial owner of 62,530 shares, and for more than five months in anyVanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, is the beneficial owner of 127,145 shares. The principal address of Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. This information has been obtained from Amendment No. 7 to Schedule 13G filed by Vanguard with the SEC on February 12, 2020.calendar year are eligible to receive options under the Stock Purchase Plan. In no event may an employee be granted an option if such employee, immediately after the option was granted, would:•Own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or of any parent corporation or subsidiary corporation; or•Be permitted the right to purchase stock under the Stock Purchase Plan, and under all other employee stock purchase plans, as defined in Section 423(b)(8) of the Code, of the Company and any parent or subsidiary corporations, to accrue at a rate that exceeds $25,000 worth of fair market value of such stock for each calendar year. As of April 29, 2016, approximately 726 employees would have been eligible to receive options under the Stock Purchase Plan. Offering Periods. The Stock Purchase Plan provides for offering periods of 24 months commencing on November 1 and May 1 of each calendar year. The Company will designate one or more dates within each offering period on which shares of our common stock may be purchased by participants in an offering period. Unless and until otherwise determined by the Compensation Committee, there shall be four exercise dates occurring on each April 30 and October 31 within each offering period. Unless otherwise specified by the Compensation Committee, a participant may purchase a maximum of 10,000 shares of common stock during an offering period. Grant of Options. On the first business day of each offering period, the Company will grant to each participant in the Stock Purchase Plan an option to purchase shares on the exercise dates for a maximum of 10,000 shares, on the condition that such participant remains eligible to participate in the Stock Purchase Plan on the exercise date. Payroll Deductions. The Stock Purchase Plan permits participants to authorize payroll deductions in an amount not less than 1% but not more than 15% of the participant's total compensation, including base pay or salary and any overtime, bonuses or commissions. If the participant's accumulated payroll deductions on the last date of the offering period would enable the participant to purchase more than the maximum of 10,000 shares, the excess of the amount of the accumulated payroll deductions over the aggregate purchase price shall be promptly refunded to the participant. In the event that there are unused payroll deductions remaining in a participant's account at the end of an exercise date or an offering period by reason of the inability to purchase a fractional share, such payroll deductions shall be carried forward to the next exercise date or offering period. Exercise of Options. Amounts deducted and accumulated by the participant are used to exercise the options granted to the participant. The participant shall be entitled to exercise the option so granted only to the extent of the participant's accumulated payroll deductions on the exercise date. For each share, the exercise price of the option shall be the lesser of 85% of the average market price of our common stock on the first business day of the offering period and 85% of the average market price of our common stock on the applicable exercise date. Each employee who continues to be a participant on an exercise date within an offering period shall be deemed to have exercised his or her option and shall be deemed to have purchased as many shares as the participant's accumulated payroll deductions will pay for at the exercise price, subject to the 10,000 maximum share limit described above. Withdrawal from Participation. A participant may withdraw from the Stock Purchase Plan (in whole but not in part) at any time prior to the last day of an offering period by delivering a withdrawal notice to the Company. Any participant who withdraws during an offering period will not be permitted to exercise his or her options. An employee who has previously withdrawn may re-enter the Stock Purchase Plan by filing a new authorization at least ten days before the first day of the next offering period in which he or she wishes to participate. The employee's re-entry into the Stock Purchase Plan becomes effective at the beginning of such offering period, provided that he or she is an eligibleemployee on the first business day of the offering period. A participant's participation in the Stock Purchase Plan will also cease if: the participant ceases to be an eligible employee or the Stock Purchase Plan is terminated. Changes in Capitalization and Similar Changes. In the event of any change in the outstanding shares of our common stock by reason of any reorganization, split-up, liquidation, recapitalization or otherwise, each participant shall be entitled to purchase such number of shares of our common stock or amount of other securities of the Company as were exchangeable for the number of shares of our common stock that such participant would have been entitled to purchase except for such action. The purchase price per share shall be appropriately adjusted to reflect such action. In the event of any stock dividend upon or with respect to shares of stock of the class which shall at the time subject to an option pursuant to the Stock Purchase Plan, each participant exercising such an option shall be entitled to receive the shares as to which the participant is exercising his or her option. In such event, the participant is also entitled to such number of shares of the class or classes in which such stock dividend was declared or paid, and such amount of cash in lieu of fractional shares, as is equal to the number of shares thereof and the amount of cash in lieu of fractional shares which the participant would have received if the participant had been the holder of the shares as to which the participant is exercising his or her option at all times between the date of the granting of such option and the date of such option's exercise. Upon the happening of any of the foregoing events, the class and aggregate number of shares which are subject to options which have been or may be granted under the Stock Purchase Plan shall be appropriately adjusted to reflect the occurrence of the relevant event. Acquisition. The Stock Purchase Plan provides that in the event of an "acquisition" (as defined in the Stock Purchase Plan), the Compensation Committee or the successor board (as defined in the Stock Purchase Plan) shall, with respect to the options outstanding under the Stock Purchase Plan, either: (1) make appropriate provision for the continuation of such options by arranging for the substitution on an equitable basis for the shares then subject to such options either (a) the consideration payable with respect to the outstanding shares of our common stock in connection with the acquisition, (b) shares of stock of the successor corporation, or a parent or subsidiary of such successor corporation, or (c) such other securities as the successor board deems appropriate, the fair market value of which shall not materially exceed the fair market value of the shares of our common stock subject to such options immediately preceding the acquisition; or (2) terminate each participant's options in exchange for a cash payment equal to the excess of (a) the fair market value on the date of the acquisition of the number of shares of our common stock that the participant's accumulated payroll deductions as of the date of the acquisition could purchase, at an option price determined with reference only to the first business day of the applicable offering period, over (b) the result of multiplying such number of shares by such option price. Term of the Stock Purchase Plan. Unless sooner terminated, the Stock Purchase Plan shall terminate on October 31, 2020. The Stock Purchase Plan may be terminated at any time by the Board of Directors but such termination shall not affect options then outstanding under the Stock Purchase Plan. The Stock Purchase Plan will terminate when all or substantially all of the unissued shares of stock reserved for the purposes of the Stock Purchase Plan have been purchased. The Compensation Committee or the Board of Directors may from time to time adopt amendments to the Stock Purchase Plan provided that, without the approval of the stockholders of the Company, no amendment may (1) increase the number of shares that may be issued under the Stock Purchase Plan; (2) change the class of employees eligible to receive options under the Stock Purchase Plan, if such action would be treated as the adoption of a new plan for purposes of Section 423(b) of the Code; or (3) cause Rule 16b-3 under the Exchange Act to become inapplicable to the Stock Purchase Plan. Federal Income Tax Consequences. The following is a general summary of the federal income tax consequences to the Company and to U.S. taxpayers of options purchased under the Stock PurchasePlan. Tax consequences for any particular individual or under state or non-U.S. tax laws may be different. The amounts deducted from a participant's pay under the Stock Purchase Plan are included in his or her compensation that is subject to federal income taxes, and the Company will withhold taxes on these amounts. Generally, a participant will not recognize any taxable income (1) when options are granted pursuant to the Stock Purchase Plan, (2) when the shares of our common stock are purchased under the Stock Purchase Plan or (3) at the beginning or end of any offering period. If the participant transfers shares of our common stock received upon the exercise of an option within a period of two years from the beginning of an offering period or one year from the date of receipt of the shares of our common stock (the "holding period"), then, in general, the participant will have taxable ordinary income in the year in which the transfer occurs in an amount equal to the excess of the fair market value at the end of the offering period over the exercise price. The participant will have long-term or short-term capital gain (or loss) in an amount equal to the amount by which the amount received for such common stock exceeds (is less than) the participant's tax basis in the common stock as increased by the amount of any ordinary income recognized as a result of the disqualifying disposition, if any. If the participant transfers the shares of our common stock after the expiration of the holding period, he or she will generally have taxable ordinary income in the year in which the transfer occurs in an amount equal to the lesser of (a) any excess of the fair market value at the beginning of the offering period over the exercise price on that same date, and (b) any excess of the fair market value on the date on which the transfer occurs over the amount paid for the shares of our common stock. The participant will recognize capital gain (or loss) equal to the difference between the fair market value on the date of such transfer and the participant's tax basis in the common stock as increased by the amount of any ordinary income recognized as a result of such transfer. Tax Effect for the Company. We generally will be entitled to a tax deduction for any ordinary income recognized by a participant in respect of options granted pursuant to the Stock Purchase Plan. The participant must remit to the Company an amount sufficient to satisfy all federal (including social security), state, and local withholding taxes incurred in connection with any recognition of ordinary income under the Stock Purchase Plan.Vote Required for Approval The affirmative vote of the holders of a majority of the shares present or represented at the 2016 Annual Meeting, in person or by proxy, and voting on the Second Amendment to the Stock Purchase Plan is required to approve the Second Amendment to the Stock Purchase Plan.Board Recommendation The Board recommends that the stockholders voteFOR approval of the Second Amendment to the Stock Purchase Plan.PROPOSAL 4—RATIFICATION OF APPOINTMENT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee of the Board of Directors has appointed BDO USA, LLP ("BDO") as our independent registered public accounting firm for the fiscal year ending December 31, 2016. We are presenting this selection to our stockholders for ratification at the annual meeting. BDO audited our consolidated financial statements for 2015. A representative of BDO is expected to be present at the 2016 Annual Meeting. In addition to having the opportunity to make a statement, the BDO representative will be available to respond to any appropriate questions.Vote Required for Approval Ratification of the appointment of our independent registered public accounting firm requires the affirmative vote of a majority of the shares present or represented at the 2016 Annual Meeting, in person or by proxy, and voting on such ratification. If our stockholders fail to ratify the selection of BDO as the independent registered public accounting firm for 2016, the Audit Committee will reconsider whether to retain that firm. Even if the selection is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year.Board Recommendation The Board recommends that our stockholders voteFOR ratification of the appointment of BDO as our independent registered public accounting firm for 2016.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Other than compensation agreements and other arrangements which are described in"Compensation And Other Information Concerning Directors And Officers" beginning on page 21, in 2015 there was not, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of their immediate family had or will have a direct or indirect material interest. In October 2009, our Board of Directors adopted a written policy with regard to related person transactions, which sets forth our procedures and standards for the review, approval or ratification of any transaction required to be reported in our filings with the SEC or in which one of our executive officers or directors has a direct or indirect material financial interest, with limited exceptions. Our policy is that the Audit Committee shall review the material facts of all related person transactions (as defined in the related person transaction approval policy) and either approve or disapprove of the entry into any related person transaction. In the event that obtaining the advance approval of the Audit Committee is not feasible, the Audit Committee shall consider the related person transaction and, if the Audit Committee determines it to be appropriate, may ratify the related person transaction. In determining whether to approve or ratify a related person transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the related person transaction is on terms comparable to those available from an unaffiliated third-party under the same or similar circumstances and the extent of the related person's interest in the transaction.INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The following table sets forth the aggregate fees billed or expected to be billed by BDO for 2015 and 2014 for audit and non-audit services, including "out-of-pocket" expenses incurred in rendering these services. The nature of the services provided for each category is described following the table.Fee Category 2015 2014 $ 463,994 $ 437,608 15,450 — — — — — $ 479,444 $ 437,608 (1)Audit fees include fees for professional services rendered for the audit of our consolidated annual statements, quarterly reviews, consents and assistance with and review of documents filed with the SEC.(2)Audit-related fees include fees for professional services rendered for the audit of our 401(k) Plan.SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE PRE-APPROVAL POLICIES AND PROCEDURES The Audit Committee has adopted a policy that requires that all services to be provided by the Company's independent public accounting firm, including audit services and permitted non-audit services, to be pre-approved by the Audit Committee. The Audit Committee pre-approved all audit and permitted non-audit services provided by BDO during 2015 pursuant to this policy.SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE2015.OTHER BUSINESS The20162020 Annual Meeting other than those items stated above. If any other business should come before the 20162020 Annual Meeting, votes may be cast pursuant to proxies in respect to any such business in the best judgment of the person or persons acting under the proxies.IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 28, 2016http://www.astproxyportal.com/ast/11534/.www.proxvote.com.
QUESTIONS AND ANSWERS
Appendix A
Beneficial owners of shares held in "street name." You may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker. AMENDMENT NO. 2TOEXACT SCIENCES CORPORATION2010 EMPLOYEE STOCK PURCHASE PLAN AMENDMENT NO. 2 (the "AmendmentStockholders of record."), dated April 21, 2016, to If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions then the 2010 Employee Stock Purchase Plan (the "Existing Plan"; as amended hereby,proxy holders will vote your shares in the "Plan"), of EXACT SCIENCES CORPORATION, a Delaware corporation (the "Company"). The Existing Plan was originally approvedmanner recommended by the Company'sour Board of Directors on April 15, 2010,all matters presented in this proxy statement and as the proxy holders may determine in their discretion for any other matters properly presented for a vote at the meeting.its stockholders on July 16, 2010,proxy, of the holders of a majority of the shares entitled to vote is necessary for the transaction of business at the annual meeting. This is called a quorum.
became effective on such stockholder approval. The Existing Plan was previously amended pursuantNominating Committee of our Board of Directors. Upon receipt of this offer of resignation, our Corporate Governance and Nominating Committee will consider the offer of resignation and recommend to that certain Amendment No. 1, which was approved by the Company'sour Board of Directors on April 29, 2014 and by its stockholders on July 24, 2014, and became effective asaction to be taken with respect to the offer of April 29, 2014resignation, including whether or not to accept such offer of resignation. Our Board of Directors will then act upon such stockholder approval.recommendation and promptly disclose its decision, together with an explanation of the reasons behind such decision.Company wishesratification of our Audit and Finance Committee's appointment of PWC as our independent registered public accounting firm for 2020 will be approved if a majority of the votes of stockholders present or represented, in person or by proxy, and voting on this matter are cast in favor of the proposal.amend furtherour named executive officers will be considered approved if a majority of the Existing Planvotes of stockholders present or represented, in person or by proxy, and voting on this matter, are cast in favor of the proposal.
QUESTIONS AND ANSWERS common stock, par value $.01, authorized for issuance under the Plan. NOW, THEREFORE, the Existing Plan is hereby amended as follows: 1. Capitalized Terms.Proxy Materials. All capitalized terms usedStockholder proposals to be considered for inclusion in the proxy statement and form of proxy relating to the 2021 annual meeting of stockholders must be received no later than February 11, 2021. In addition, all proposals will need to comply with Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which lists the requirements for the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals must be delivered to the Company's Secretary at 441 Charmany Drive, Madison, Wisconsin 53719.defined herein shall havelater than the meanings given thereto inclose of business on April 24, 2021. In addition, your notice must set forth the Existing Plan.information required by our by-laws with respect to each director nomination or other proposal that you intend to present at the 2021 annual meeting of stockholders.
2.ANNEX A
CERTIFICATE OF AMENDMENT
TO SIXTH AMENDED AND RESTATED CERTIFICATE
OF
INCORPORATION OF EXACT SCIENCES CORPORATION Amendment to Existing Plan."Article 4—Stock Subject to the Plan" is hereby deleted in its entiretyEXACT SCIENCES CORPORATION, a corporation organized and replaced with the following: "Article 4—Stock Subject to the Plan. The stock subject to the optionsexisting under the Plan shall be shares of the Company's authorized but unissued common stock, par value $.01 per share (the "Common Stock"), or shares of Common Stock reacquired by the Company, including shares purchased in the open market. The aggregate number of shares which may be issued pursuant to the Plan is the sum of (i) 800,000 plus (ii) effective upon April 21, 2016 (subject to stockholder approval), 2,000,000, all subject to adjustment as provided in Article 12. If any option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject thereto shall again be available under the Plan." 3. Reference to and Effect on the Plan. The Plan, as amended hereby, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. 4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware.* * *Delaware (the "Corporation"), hereby certifies that:EffectiveFIRST: This Certificate of Amendment amends the provisions of the Corporation's Sixth Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation").21stCertificate of Amendment hereby amends the provisions of the Corporation's Certificate of Incorporation by deleting the first paragraph of Article "FOURTH" and substituting therefor a new first paragraph to read in its entirety as follows:April, 2016.2020.ANNUAL MEETING OF STOCKHOLDERS OFEXACT SCIENCES CORPORATIONJuly 28, 2016GO GREENe-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FORTHE STOCKHOLDER MEETING TO BE HELD ON JULY 28, 2016.THE PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE AThttp://www.astproxyportal.com/ast/11534/.Please sign, date and mailyour proxy card in theenvelope provided as soonas possible.
Please detach along perforated line and mail in the envelope provided.
20433030000000001000 1072816THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES FOR DIRECTORAND "FOR" EACH OTHER PROPOSAL.PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x1.To elect four members of the board of directors to serve for three-year terms as Class I Directors, each such director to serve for such term and until his or her respective successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.FORAGAINSTABSTAIN2.Proposal to approve on an advisory basis the compensation of the Company's named executive officers.oooThe Board recommends a vote FOR all nominees.NOMINEES:3.Proposal to approve the Second Amendment to the 2010 Employee Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 2,000,000 shares.ooooFOR ALL NOMINEES
Kevin T. Conroy John A. Fallon M.D. David A. Thompson Katherine S. Zanotti4.Proposal to ratify the selection of BDO USA, LLP as our independent registered public accounting firm for 2016.ooooWITHHOLD AUTHORITYFOR ALL NOMINEES5.To transact such other business as may properly come before the annual meeting and any adjournment thereof.ooooFOR ALL EXCEPT(See instructions below)THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR EACH OTHER PROPOSAL.INSTRUCTIONS: To withhold authority to vote for any individual nominee(s),mark “FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here:
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. oTo change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.o
EXACT SCIENCES CORPORATION
By:Name: Title: Signature of StockholderDate: Signature of Stockholder Date:appearappear(s) on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
28, 2016appointsappoint(s) Kevin T. Conroy and Maneesh K. AroraJeffrey T. Elliott together, and each of them singly, proxies, with full power of substitution to vote all shares of stock of Exact Sciences Corporation (the "Company") which the undersigned isis/are entitled to vote at the Annual Meeting of Stockholders of Exact Sciences Corporation to be held on Thursday, July 28, 2016,23, 2020, at 10:00 a.m. local time, at the Monona Terrace Community and Convention Center, 1 John Nolen Drive, Madison, Wisconsin 53703Central Time, and at any adjournments or postponements thereof, upon matters set forth in the Notice of Annual Meeting of Stockholders and Proxy Statement dated June 17, 2016, a copy of which has been received byStatement. THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3 AND 4. PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (If you noted any Address Changes/Comments above, please mark corresponding box on the undersigned.
1.114475 ANNUAL MEETING OF STOCKHOLDERS OFEXACT SCIENCES CORPORATIONJuly 28, 2016PROXY VOTING INSTRUCTIONSINTERNET- Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.
TELEPHONE- Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call.Vote online/phone until 11:59 PM EST the day before the meeting.COMPANY NUMBERMAIL- Sign, date and mail your proxy card in the envelope provided as soon as possible.ACCOUNT NUMBERIN PERSON- You may vote your shares in person by attending the Annual Meeting.GO GREEN- e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FORTHE STOCKHOLDER MEETING TO BE HELD ON JULY 28, 2016.THE PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE AThttp://www.astproxyportal.com/ast/11534/.
Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet.
20433030000000001000 1072816THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES FOR DIRECTORAND "FOR" EACH OTHER PROPOSAL.PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x1.To elect four members of the board of directors to serve for three-year terms as Class I Directors, each such director to serve for such term and until his or her respective successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.FORAGAINSTABSTAIN2.Proposal to approve on an advisory basis the compensation of the Company’s named executive officers.oooThe Board recommends a vote FOR all nominees.NOMINEES:3.Proposal to approve the Second Amendment to the 2010 Employee Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 2,000,000 shares.ooooFOR ALL NOMINEES
Kevin T. Conroy John A. Fallon M.D. David A. Thompson Katherine S. Zanotti4.Proposal to ratify the selection of BDO USA, LLP as our independent registered public accounting firm for 2016.ooooWITHHOLD AUTHORITYFOR ALL NOMINEES5.To transact such other business as may properly come before the annual meeting and any adjournment thereof.ooooFOR ALL EXCEPT(See instructions below)THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR EACH OTHER PROPOSAL.INSTRUCTIONS: To withhold authority to vote for any individual nominee(s),mark “FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here:
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. oTo change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.oSignature of StockholderDate: Signature of Stockholder Date:Note:Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
