UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
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☐ | Confidential,for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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OraSure Technologies, Inc.
(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):
☒ | No fee required. |
☐ | Fee paid previously with preliminary materials | |
☐ | Fee computed on table |
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| Proxy Statement
Notice of Annual Meeting of Stockholders Tuesday, May |
Interim Chief Executive | April Dear Fellow Stockholders: You are cordially invited to attend the Pursuant to the Securities and Exchange Commission (“SEC”) rule allowing companies to furnish proxy materials to their stockholders over the internet, a Notice of Internet Availability of Proxy Materials (the “Notice”) was sent to stockholders on or about April At the Annual Meeting, you will be asked to (i) elect The Board of Directors has approved the nominees for Class Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting online, we urge you to submit your vote as soon as possible.You will have the option to vote by telephone, via the internet, or by completing, signing, dating and returning a paper
Thank you for your cooperation and your ongoing support of, and continued interest in, OraSure Technologies, Inc.
Sincerely yours,
Nancy J. Gagliano, M.D., M.B.A. Interim Chief Executive Officer |
NOTICE OF 20212022 ANNUAL MEETING OF STOCKHOLDERS
OF ORASURE TECHNOLOGIES, INC.
DATE AND TIME
Tuesday May 17, 2022
10:00 a.m. (Eastern Time)
To be held virtually by visiting
www.virtualshareholdermeeting.com/OSUR2022
ITEMS OF BUSINESS
The 2022 Annual Meeting of Stockholders will be held for the following purposes:
To elect two (2) Class I Directors, each to serve for a term expiring at the Company’s Annual Meeting of Stockholders in 2025;
To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022;
To approve, by an advisory (non-binding) vote, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement accompanying this Notice;
To approve an amendment and restatement of the Company’s Stock Award Plan to increase the number of shares of Common Stock authorized to be granted under the Plan; and
To consider such other business as may properly come before the meeting, and any adjournment(s) or postponement(s) thereof.
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Via the Internet.Go to www.proxyvote.com
By Phone.Call the toll-free number on your Notice of Internet Availability of Proxy Materials or Proxy Card and follow the prompts.
By Mail.You can vote by mail by requesting a paper copy of the materials, which will include a Proxy Card. Please review your Notice of Internet Availability of Proxy Materials for instructions on how to request a paper copy of the materials. Mark, sign and date your Proxy Card and return it as indicated on the Proxy Card. |
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Who Can Vote: Only holders of shares of the Company’s Common Stock of record at the close of business on March A complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose germane to the meeting beginning 10 days before the meeting at the Company’s headquarters at 220 East First Street, Bethlehem, PA 18015 during ordinary business hours. In addition, such list will be available for inspection during the meeting in the virtual meeting room at: www.virtualshareholdermeeting.com/OSUR2022. |
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By Order of the Board of Directors,
Jack E. JerrettAgnieszka M. Gallagher
Secretary
April 8, 20217, 2022
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PROXY STATEMENTSTATEMENT SUMMARY
We are providing these proxy materials to stockholders of OraSure Technologies, Inc., a Delaware corporation (as used herein, “we,” “us,” “our”, “OraSure” or the “Company”), in connection with the Company’s solicitation of proxies (each, a “Proxy”) for use at the Annual Meeting of Stockholders to be held on May 18, 202117, 2022 at 10:00 a.m. Eastern Time, and at any adjournment(s) or postponement(s) thereof (the “Annual Meeting”).
As a stockholder, you are invited to participate in the Annual Meeting and are requested to vote on the matters described in this Proxy Statement. The Annual Meeting
webcast that you can access online by going to www.virtualshareholdermeeting.com/OSUR2021OSUR2022. The webcast will not include a presentation by management. A question and answer session will be provided at the Annual Meeting only for questions that are germane to the matters being discussed and voted on at the meeting.
This summary highlights information contained elsewhere in this Proxy Statement, but does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting your shares.
Date and Time:Tuesday, May 18, 202117, 2022 at 10:00 a.m. (ET)
• | Location: Online by visiting www.virtualshareholdermeeting.com/OSUR2022 |
Location: Online by visiting www.virtualshareholdermeeting.com/OSUR2021
Record Date: March 26, 202123, 2022
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| Proposals | Board Recommendation | Page Reference for More Detail | ||||||
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| Proposals | Board Recommendation | Page Reference for More Detail | |||
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| Election of three Class III Directors | FOR EACH NOMINEE | 60 | Election of two Class I Directors | FOR EACH NOMINEE | 61 | |||
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2.) |
| Ratification of Appointment of Independent Registered Public Accounting Firm for 2021 | FOR | 65 | Ratification of Appointment of Independent Registered Public Accounting Firm for 2022 | FOR | 67 | |||
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| Advisory (Non-Binding) Vote to Approve Executive Compensation | FOR | 65 | Advisory (Non-Binding) Vote to Approve Executive Compensation | FOR | 67 | |||
4.) | Approval of Amendment and Restatement of our Stock Award Plan To Increase the Shares Authorized for Issuance Thereunder | FOR | 68 |
Proposal No. 1 – Election of Directors
The table below provides summary information about each of our nominees for Class IIII Directors, whose new terms will expire at the 20242025 Annual Meeting of Stockholders. The Board of Directors (the “Board”) is recommending that stockholders vote for each Director nominee.
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| Committee Memberships1 | Other | ||
Name and Principal Occupation | Age | Director Since | Independent | AC | CC | N& CG | Public Boards |
Michael Celano2 Chief Financial Officer, Larimar Therapeutics, Inc. | 62 | 2006 | Yes | √ | √ |
| No |
James A. Datin President and Chief Executive Officer, BioAgilytix Labs, LLC | 58 | 2019 | Yes | √ | √ |
| Yes |
Lelio Marmora President, The Management Lab | 54 | 2020 | Yes | √ |
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2 Mr. Celano is Chairman of our Board of Directors.
Committee Memberships1 | Other Public Boards | |||||||||||||
Name and Principal Occupation | Age | Director Since | Independent | AC | CC | N& CG | ||||||||
Eamonn P. Hobbs | 63 | 2016 | Yes | √ | C | No | ||||||||
David J. Shulkin, M.D. | 62 | 2020 | Yes | √ | √ | Yes |
1 AC = Audit Committee; CC = Compensation Committee; N&CG = Nominating & Corporate Governance Committee; C = Chairman; √ = Member.
Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm
Our Audit Committee has selected KPMG LLP (“KPMG”) to be our independent registered public accounting firm for the 20212022 fiscal year. The Board believes KPMG is well qualified to serve in this capacity and is
and is recommending that the engagement of KPMG be ratified by our stockholders. The Board is recommending that stockholders vote for the appointment of KPMG as provided above.
Proposal No. 3 – Advisory (Non-Binding) Vote to Approve Executive Compensation
Our compensation program is designed to focus and reward our executives for balancing both short and long-term priorities. To fulfill this mission, we have adopted a pay-for-performance philosophy that forms the foundation for executive compensation decisions made by our Board and the Compensation Committee of the Board (the “Compensation Committee”).
The Compensation Discussion and Analysis portion of this Proxy Statement (the “CD&A”) contains a detailed description of our executive compensation philosophy and program, the compensation decisions the Board and Compensation Committee have made under that program and the factors considered in making those decisions, focusing on the compensation of our named executive officers (“NEOs”) for the year ended December 31, 2020,2021, who were:
Name | Position | |
Stephen S. Tang, Ph.D. | Former President and Chief Executive Officer | |
Scott Gleason2 | Interim Chief Financial Officer, Senior Vice President Corporate Communications & Investor Relations | |
Roberto Cuca3 | Former Chief Financial Officer | |
| Executive Vice President, | |
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Jack E. Jerrett4 | Former Senior Vice President, General Counsel and Chief Compliance Officer | |
| President of Molecular Solutions |
1 | Dr. Tang served until March 31, 2022. Effective April 1, 2022, Nancy J. Gagliano, M.D., M.B.A. was appointed to replace Dr. Tang as the Company’s Interim Chief Executive Officer. Because Dr. Gagliano did not become an executive officer until after December 31, 2021, she is not considered an NEO and her compensation is not reported herein. |
2 | Mr. Gleason joined the Company in May 2021 as the Senior Vice President |
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3 Mr. Cuca served until September 17, 2021. 4 Mr. Jerrett retired from the Company effective December 31, 2021 and was replaced by Ms. Gallagher who joined the Company on November 26, 2021. As described further in the CD&A and elsewhere in this Proxy Statement, the following should be considered by stockholders in evaluating the compensation of our NEOs for OraSure is a diverse and growing business operating in highly competitive and evolving markets; this We annually solicit input from our stockholders on executive compensation matters. The We maintain and adhere by a full suite of good governance policies and processes. We achieved We made no COVID-19 related adjustments to our 1 Ms. Nibauer was appointed as the Company’s Executive Vice President, Business Unit Leader, Diagnostics, effective as of May 11, 2020, replacing Anthony Zezzo, II who retired effective as of June 30, 2020.2020:2021:washas proven especially true in 2020throughout 2021 given the challenges and opportunities presented by the ongoing COVID-19 pandemic.2020 2021 Say-on-Pay results (94%(95% approval), combined with feedback from stockholders, suggest strong support for our programs and policies.strong financial performancerecord revenue during 2020 despite2021 for both our diagnostics and molecular solutions businesses, with our total company growing at a 25% compound annual growth rate since the challenges posed by the COVID-19 pandemic.pre-pandemic period in 2019.20202021 incentive bonus plan or performance-vested restricted unitunits (“PRUs”) performance measures and the Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs.
The Board is recommending that stockholders vote in favor of the compensation of our NEOs, as described in this Proxy Statement.
Proposal No. 4 – Amendment and Restatement of Stock Award Plan
In order to enable the Company to continue to attract qualified directors, officers, employees and outside advisors, and to compensate these individuals in a manner that is competitive with compensation provided by other medical diagnostic and healthcare companies, the Board has determined that additional shares of Common Stock are needed to be available for grants under the Company’s Stock Award Plan. In addition, the Board wants to ensure that sufficient shares are available, if needed, to provide retention or other equity awards in connection with potential acquisitions or other business development activities.
DespiteAccordingly, subject to stockholder approval, the negative impactBoard approved an amendment and restatement of the COVID-19 pandemic had on our core businesses, we delivered a strong year in 2020. New COVID related revenues generatedOraSure Technologies, Inc. Stock Award Plan (last amended and restated, April 4, 2020) (the “Stock Award Plan” or the “Plan”) to increase the number of shares to be authorized for grant under the Plan by our Molecular Solutions business unit, coupled with increased international HIV sales, more than offset a decline in our core diagnostics business and our core molecular business caused by the COVID pandemic. We believe that compensation awarded for 2020 was closely aligned with our performance.
During 2020, we actively engaged with several laboratories and researchers to demonstrate the effectiveness of several of our existing collection products for use with molecular COVID-19 testing.1,500,000 shares. As a result of this increase there will be a total of 3,621,685 shares available in the Stock Award Plan for future issuance on or after April 1, 2022, subject to stockholder approval. A copy of the Amended and Restated Stock Award Plan reflecting this amendment is attached as Exhibit A to this Proxy Statement.
2021 PERFORMANCE HIGHLIGHTS |
In 2021, we delivered record revenue for both our diagnostics and molecular collection kits have been includedsolutions businesses, with our total company growing at a 25% compound annual growth rate since the pre-pandemic period in eight Emergency Use Authorizations (“EUA”) granted2019. We experienced increased sales across all existing product lines, other than our international HIV self-test, and we generated $22.7 million in revenues from our new rapid COVID-19 antigen test, InteliSwab®. We also achieved significant business milestones that we believe position the Company for growth in 2022 and beyond.
First, the company achieved a major milestone by receiving three new emergency use authorizations for our InteliSwab®COVID-19 test from the U.S. Food and Drug Administration (“FDA”(the “FDA”) for the professional, prescription self-test, and over-the-counter settings. We also received three major government contracts to certainsupport the launch of InteliSwab® including a $205 million procurement contract from the Defense Logistics Agency, a $109 million contract from the Department of Defense to expand our customers. Separately, we received EUAsInteliSwab® manufacturing capacity, and a $14 million contract from the Biomedical Advanced Research and Development Authority to obtain 510-k clearance from the FDA for two of our collection devices which will allow them to be used for unsupervised collection at home or in a healthcare setting when used as part of an approved or validated COVID-19InteliSwab® test. We also made significant progress in the development of a new COVID-19 rapid antigen test and a lab-based oral fluid antibody test during the year, which we believe could generate significant future revenues once the applicable EUAs have been obtained.
We continued to advance our innovation growth strategy in 20202021 with the acquisitiondevelopment of UrSure, Inc. This company develops laboratoryseveral new products in our molecular solutions business including our FDA approved Omnigene®-Gut collection kit, our metatranscriptome services launch through our Diversigen subsidiary, and rapid tests to measure an individual’s adherence to HIV medication, including pre-exposure prophylaxis, or PrEP, a daily medication to prevent HIV.new cancer chemistry on our Collipee® urine collection device. We believe these products will be an important contributor to our future diagnosticsmolecular solutions business.
While we generated $22.7 million in revenues from the sale of our InteliSwab® test, the manufacturing scale-up required to produce a new diagnostic test at levels significantly higher than our historical production levels resulted in delays which negatively impacted our cost of goods sold and our ability to fulfill demand during the calendar year. Starting in 2022 we were able to identify production and process improvements that we believe will improve production output and operational efficiency.
Our consolidated revenues of $171.7$233.7 million in 20202021 represented an 11%a 36% increase over 2019.2020. Our total diagnostic revenues were $87.0 million during 2021, an increase of 37% from 2020. This was largely driven by salesincrease includes the $22.7 million of collection devices for molecular COVID-19 testing and growth in sales of our HIV Self-Test primarily in Africa.InteliSwab® sales. Our total molecular product and services revenues were $102.8$139.9 million during 2020,2021, an increase of 45%36% from 2019.2020. This increase included almost $50reflects the growth and recovery of our core molecular business from the COVID-19 pandemic.
Cash used by operating activities was $35.4 million in sales of oral fluid sample collection devices for COVID-19 molecular testing. International sales of our HIV diagnostic products grew 16% for the year, largely driven by a 24% increase in HIV Self-Test sales in Africa.
We generated cash from operations of $5.8 million in 20202021 as we acquired and webuilt inventory levels to meet anticipated demand to support COVID-19 testing programs. We ended the year with approximately $257$170 million in cash and short-term investments on our balance sheet, which we can use for future investment and growth.
We have structured the components of our executive compensation program to be directly tied to the performance of both the Company and our executives and aligned with the best interests of our stockholders. These components consist of the following:
Base Salary | Salaries are based on the individual executive’s position relative to market and the executive’s individual performance and contribution.
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Annual Cash Incentive Plan Bonuses | Annual incentive cash bonuses reflect market-based targets and are contingent upon (i) our achievement of corporate financial and/or strategic objectives, which are used to determine overall bonus pool funding, and (ii) the executive’s individual performance against pre-determined objectives, for such executive, which are used to determine individual bonus payouts.
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Equity Awards under our Long-Term Incentive Policy (“LTIP”) | Long-term incentive equity compensation reflects market-based targets with the value of individual awards contingent upon each executive’s individual performance against pre-determined objectives during the fiscal year prior to award. Fifty percent (50%) of each NEO’s annual LTIP award consists of PRUs which require achievement of certain financial performance measures selected by the Board and Compensation Committee and the satisfaction of a 3-year service period for vesting of the award. The other fifty percent (50%) consists of time-vested restricted stock (“RS”) which vests in equal installments over a three-year service period.
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Key features of our compensation program illustrate our commitment to pay-for-performance, the strong alignment of our executives’ interests with those of our stockholders and strong corporate governance. Several of the more significant of these features are summarized below:
• | Compensation is market driven with total compensation of our executives targeted at the 50th percentile of the | • | Regular stockholder outreach on compensation/ governance matters. | ||
• | Compensation is predominantly variable or performance-based. |
| • Use of a third-party compensation consultant to provide executive compensation market assessment and independent advice on compensation matters. | ||
• | Balanced mix of cash/equity, fixed/variable, short-term/long-term compensation components. | • | Strong stock ownership/retention requirements for executives and Directors. | ||
• | In order to incentivize growth, performance objectives for annual bonus pool funding target key financial measures and/or important strategic goals. |
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| As a general matter, no perquisites for NEOs that are not offered to all employees of the Company. | |
• | The Board’s discretionary ability to adjust annual incentive bonus pool funding is limited to +/- 10% of pool amount in order to avoid excessive discretionary bonus pool adjustments. | • | Use of peer company benchmarking. | ||
• | Long-term equity incentive awards include 50% PRUs that vest | • | Compensation recoupment policy or “clawback” policy, under which we may recover excess compensation paid to an executive if our financial statements are restated. | ||
• | No excise tax gross-up in any of our NEO employment agreements and no “single trigger” change-in-control severance in any of our new executive employment | • | No hedging or pledging of our Common Stock. |
QUESTIONS AND ANSWERS ABOUTABOUT THE 20212022 ANNUAL MEETING AND VOTING
Our Board of Directors (the “Board”) is furnishing proxy materials, including this Proxy Statement, a Proxy Card and the Company’s Annual Report to Stockholders for the year ended December 31, 20202021 (the “2020“2021 Annual Report”), to our stockholders in order to solicit proxies to be voted at the Annual Meeting (each, a “Proxy”). Each stockholder can access these documents on the internet in accordance with the rules and regulations of the SEC.Securities and Exchange Commission (the “SEC”). On or about April 8, 2021,7, 2022, we mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to each stockholder at the holder’s address of record, indicating that this Proxy Statement is now available to our stockholders of record entitled to vote at the Annual Meeting.
SEC rules permit us to deliver only one copy of the Notice or a single set of proxy materials to multiple stockholders sharing the same address. Upon written or oral request, we will deliver separate Notices and/or copies of our 20202021 Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of the Notice was delivered. Stockholders may notify the
Company of their requests by calling or writing us at OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary; (610) 882-1820.
All stockholders and beneficial holders have the ability to access a copy of our proxy materials on the internet at the website referred to in the Notice. Stockholders will not receive printed copies of the proxy materials unless they request those copies.The Notice also instructs stockholders as to how to submit a Proxy through the internet. If you would like to receive a paper or e-mail copy of your proxy materials, you should follow the instructions for requesting such materials included in the Notice. We will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the internet, you are responsible for any internet access charges you may incur.
A Proxy is your legal designation of another person to vote the shares of Common Stock you own. That other person is called a “proxy.” If you designate someone as your proxy in a written document, that document also is called a Proxy or a Proxy Card.
Jack E. JerrettAgnieszka M. Gallagher and Michele Miller, each of whom are officers of the Company, have been designated as proxies by the Board of Directors as proxies to vote on behalf of stockholders for the Annual Meeting.
The record date for the Annual Meeting is March 26, 202123, 2022 (the “record date”). The record date is established by the Board as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to:
(a) | receive notice of the Annual Meeting; and |
(b) | vote at the Annual Meeting and any adjournment(s) or postponement(s) of the meeting. |
Each stockholder of record on the record date is entitled to one vote for each share of Common Stock held.
On the record date, there were 72,646,48073,916,495 shares of our Common
Stock outstanding and entitled to vote at the Annual Meeting.
A list of stockholders will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the meeting at our principal executive offices at 220 East First Street, Bethlehem, PA 18015, and electronically during the Annual Meeting at www.virtualshareholdermeeting.com/OSUR2021www.virtualshareholder-meeting.com/OSUR2022 when you enter the control number provided in the Notice sent to you.
4. WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A STOCKHOLDER WHO HOLDS STOCK IN STREET NAME? |
If your shares of stock are registered in your name on the books and records of our transfer agent, Computershare, Inc., you are a stockholder of record.
If your shares of stock are held for you in the name of your broker, bank or other nominee, your shares are held in street“street name.” The answer to Question 7 describes brokers’ discretionary voting authority and when your broker, bank or
or other nominee is permitted to vote your shares of stock without instructions from you.
It is important that you vote your shares if you are a stockholder of record and, if you hold shares in street name, that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 7.
All stockholders have a choice of voting via the internet, over the telephone or by completing and mailing a paper Proxy Card, as described below.
Voting via the Internet or by Telephone.Stockholders of record desiring to vote online via the internet or by telephone prior to the Annual Meeting, should go to www.proxyvote.com or call the toll free number indicated on the Proxy Card or Notice. You may vote via the internet or by telephone provided you do so by 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 17, 2021.16, 2022. Stockholders who attend the Annual Meeting via the internet may vote their shares at that time up to and during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/OSUR2021OSUR2022.
Street name holders may vote via the internet or by telephone if their brokers, banks or other nominees make those methods available. If that is the case, each broker, bank or nominee will include instructions with the Notice or Proxy Statement.
The telephone and internet voting procedures, including the use of control numbers, are designed to authenticate your identity, to allow you to give your voting instructions and
instructions and to confirm that your instructions have been recorded properly.
If you vote via the internet, you should understand that you will be responsible for any costs associated with this method of voting, such as usage charges from internet access providers and telephone companies.
Voting by Mail. If you desire to vote prior to the Annual Meeting by mail by using a paper Proxy Card instead of by telephone or via the internet, you will need to either print a copy of the Proxy Card from the website indicated in your Notice or follow the instructions in your Notice to request that a paper copy be sent to you. You will then need to complete, sign, date and return the Proxy Card, as described on the Proxy Card. Street name holders should complete and return the voting card provided by their broker, bank or nominee.
Voting at the Annual Meeting. All stockholders of record may vote online during the Annual Meeting, as described above. Submitting a Proxy via the internet, over the telephone or by mail will not affect your right to withdraw your Proxy and vote during the Annual Meeting.
Stockholders of Record: If you are a stockholder of record, your shares will not be voted if you do not provide your Proxy, unless you vote online during the Annual Meeting. It is, therefore, important that you vote your shares.
Street Name Holders:If your shares are held in street name and you do not provide your signed and dated voting instruction form to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under rules of the NASDAQNasdaq Stock Exchange (“NASDAQ”Nasdaq”), shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain “routine” matters if you do not provide voting instructions.
At the upcoming Annual Meeting, only the ratification of the selection of KPMG LLP as the Company’s independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at our Annual Meeting (specifically, the election of Director nominees, and the advisory vote to approve the compensation of the Company’s NEOs and the vote to approve the amendment and restatement of the Company’s Stock Award Plan are not considered “routine” under NASDAQNasdaq rules, so the broker, bank or other nominee cannot vote your shares on either of these proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on these matters, your shares will not be voted on the matter, which is referred to as a “broker non-vote.”It is, therefore, important that you vote your shares.
Your shares are counted as present at the meeting if you attend the meeting and vote online or if you properly return a Proxy by internet, telephone or mail. In order for us to conduct our Annual Meeting, a majority of our outstanding shares of Common Stock as of the March 26, 2021 record23,
2022 record date, must be present online or by Proxy at the meeting. This is referred to as a quorum. Broker non-votes, votes withheld and abstentions are included in determining whether there are a sufficient number of shares present to constitute a quorum.
You can revoke a Proxy before the completion of voting at the Annual Meeting by:
(a) | Giving written notice to the Corporate Secretary of the Company to revoke your Proxy; or |
(b) | Delivering a later-dated Proxy that indicates the change in your vote; or |
(c) | Logging on to www.proxyvote.com in the same manner you would to submit your Proxy electronically or calling the telephone number indicated in your Notice, and in each case, following the instructions to revoke or change your vote; or |
(d) | Attending the Annual Meeting online and voting, which will automatically cancel any Proxy previously given. Attendance alone will not revoke any Proxy that you have given previously. |
If you choose any of the first three methods, you must take the described action no later than 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on May 17, 2021.16, 2022. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your Proxy or change your vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change or revoke your vote.
At the Annual Meeting, action will be taken on the matters set forth in the accompanying Notice and described in this Proxy Statement. The Board knows of no other matters to be presented for action at the Annual Meeting.
If any other matters do properly come before the Annual Meeting, the persons named in the Proxy Card will have discretionary authority to vote on those matters in accordance with their best judgment.
Solicitation of Proxies is made on behalf of the Board. The cost of soliciting Proxies will be borne by the Company. In addition to solicitations by e-proxy and/or by mail, certain
of our Directors, officers and regular employees may solicit
Proxies personally or by telephone or other means without additional compensation.
We have also engaged Morrow Sodali LLC, 470 West Ave., Stamford, CT 06902, to provide proxy solicitation services at an estimated fee of $7,500 plus expenses. Arrangements will be made with brokerage firms and other
custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of stock held of record by such persons, and we will, upon request, reimburse them for their reasonable expenses in so doing.
This year’s Annual Meeting will be a completely virtual meeting of stockholders, and will be conducted via live webcast on the Internet. You are entitled to participate in the Annual Meeting only if you were a stockholder of the Company as of the close of business on March 26, 2021,23, 2022, the record date for the meeting, or if you hold a valid Proxy for the Annual Meeting.
You will be able to participate in the Annual Meeting online and submit your questions during the meeting by
visiting www.virtualshareholdermeeting.com/OSUR2021.OSUR2022. To participate in the Annual Meeting, you will need the control number that is included on your Notice, on our proxy cardProxy Card or on the instructions that accompanied your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m. Eastern Time, and you should allow ample time to complete the online check-in procedures.
We have technicians ready to assist you with any technical difficulties during the virtual Annual Meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the
or duringtechnical support number that will be posted on the meeting, please call one of the following numbers:
Toll-Free: (844) 986-0822
International: (303) 562-9302Virtual Shareholder Meeting log in page.
We will continue our long-standing practice of holding the votes of each stockholder in confidence from Directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in the case of a contested
contested proxy solicitation; (c) if a stockholder makes a written comment on the Proxy Card or otherwise communicates his or her vote to the Company; or (d) as needed to allow the independent inspectors of election to certify the results of the vote.
We will continue, as we have for many years, to retain an independent inspector of election to receive and tabulate
tabulate the Proxies and certify the results. These activities will be handled electronically.
Yes. The Chairman of the Board will answer stockholders’ written questions submitted during the question and answer period of the meeting. Stockholders should confine their questions to matters that relate to the business of the meeting. The Chairman will determine which questions are appropriate to answer during the meeting.
We reserve the right to edit or reject any questions we deem profane or otherwise inappropriate. Detailed
guidelines for submitting written questions during the meeting are available at www.virtualshareholdermeeting.com/OSUR2021OSUR2022.
STOCK OWNERSHIP OF CERTAIN BENEFICIALBENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of the March 26, 202123, 2022 record date (except for Mr. Zezzo,Cuca and Mr. Jerrett, as described below), regarding the beneficial ownership of the Company’s Common Stock by (a) each person who is known by us to be the beneficial owner of more than five percent of the Common Stock outstanding; (b) each Director and nominee for election as Director; (c) each of our executive officers named in the Summary Compensation Table in this Proxy Statement; and (d) all of our Directors and executive officers as a group. Unless otherwise indicated, the address of each person identified below is c/o OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015.
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shares of Common Stock which a person has a right to acquire pursuant to the exercise of stock options held by that person that are exercisable within 60 days of March 26, 202123, 2022 are deemed to be outstanding for the purpose of computing the ownership percentage of that person, but are not deemed outstanding for computing the ownership percentage of any other person.
Name and Address of Beneficial Owner | Amount and Nature of the Beneficial Ownership1,2 | Percent of Class |
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Black Rock, Inc.3 55 East 52nd Street New York, NY 10055 |
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| 11,031,726 |
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| 15.2% |
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The Vanguard Group4 100 Vanguard Blvd. Malvern, PA 19355 |
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| 4,964,223 |
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| 6.8% |
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American Capital Management, Inc.5 551 Madison Ave., Suite 902 New York, NY 10022 |
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| 4,308,685 |
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| 5.9% |
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Managed Account Advisors, LLC6 101 Hudson Street, 9th Floor Jersey City, NJ 073302 |
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| 3,949,904 |
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| 5.4% |
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Stephen S. Tang, Ph.D. |
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| 260,201 |
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| * |
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Jack E. Jerrett |
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| 164,932 |
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| * |
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Lisa Nibauer |
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| 33,840 |
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| * |
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Kathleen G. Weber |
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| 128,167 |
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| * |
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Michael Celano |
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| 106,942 |
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| * |
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Eamonn P. Hobbs |
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| 74,355 |
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| * |
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Mara Aspinall |
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| 66,760 |
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| * |
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Roberto Cuca |
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| 108,838 |
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| * |
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Ronny B. Lancaster |
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| 23,830 |
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| * |
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James A. Datin |
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| 18,331 |
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| * |
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David J. Shulkin, M.D. |
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| 15,542 |
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| * |
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Lelio Marmora |
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| 7,015 |
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| * |
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Anthony Zezzo II7 |
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| 205,674 |
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| * |
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All Directors and executive officers as a group (14 people) |
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| 1,268,258 |
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| 1.7% |
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2 Includes shares subject to options exercisable within 60 days of March 26, 2021, as follows: Mr. Jerrett, 20,057 shares; Ms. Weber, 14,533 shares; Mr. Celano, 40,000 shares; Mr. Hobbs, 40,000 shares; and Ms. Aspinall, 40,000 shares; and all Directors and executive officers as a group, 191,537 shares. Also includes unvested RS, as follows: Dr. Tang, 130,007 shares; Mr. Cuca, 56,645 shares; Mr. Jerrett, 40,564 shares; Ms. Nibauer 33,840 shares; Ms. Weber, 39,895 shares; Mr. Celano, 8,143 shares; Mr. Hobbs, 6,577 shares; Ms. Aspinall, 6,577 shares;; shares; Mr. Lancaster, 6,577 shares; Mr. Datin, 6,577 shares; Dr. Shulkin, 15,542 shares; and Mr. Marmora 7,015 shares; and all Directors and executive officers as a group, 366,399 shares. Does not include unvested PRUs.
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7Mr. Zezzo, who served as the Company’s Executive Vice President, Business Unit Leader, Infectious Disease retired on June 30, 2020. The indicated shares reflect Mr. Zezzo’s ownership as of his retirement date and do not include a RS award granted with immediate vesting on February 1, 2021, net of shares withheld to cover taxes, for 5,175 shares or PRUs vested on February 1, 2021, net of shares withheld to cover taxes, for 4,900 shares.
The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The Company’s management is responsible for the day-to-day operations of the Company.
The Board is divided into three classes with each class consisting of one-third of the total number of Directors on the Board. There are currently eight Directors serving on the Board. At each annual meeting of stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the annual meeting of stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at our upcoming Annual Meeting currently serves as a Director.
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The Board has adopted Corporate Governance Principles which, along with the Charters for each of its Committees and the Company’s Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees and non-employee Directors. Copies of the current Corporate Governance Principles and Code of Business Conduct and Ethics are available on the Company’s website, www.orasure.com.
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We believe that conducting our business in a socially, environmentally and ethically responsible manner, and in compliance with applicable legal requirements, is important to our long-term success and the health and well-being of our employees, customers, the communities that we serve and other stakeholders. As a result, environmental, social and governance (“ESG”) issues have become an increasingly important focus for our management team and our Board.
ESG Oversight
Historically, ESG issues have been addressed by the management teams in our various companies with the primary focus on regulatory and legal compliance, ethical operations and development of our human capital resources. Material risks in these areas have been regularly reviewed with our Board, either directly or through the Audit Committee. Beginning
in 2021, our management will be forming a cross functional team to review ESG issues more formally in order to identify material ESG risks impacting our business and determining appropriate mitigation and corrective strategies. These risks will be discussed with our Board beginning in 2021 and at least annually thereafter as part of the Board’s oversight of risk management.
Environmental
We endeavor to implement responsible and sustainable environmental practices throughout our organization. Our goal is to eliminate or minimize any harm to our employees, the communities that we serve and the environment.
We follow practices to reduce our energy usage and operate more efficiently, including through the use of motion detectors and timers to reduce electricity usage. We also have implemented a Company-wide waste recycling program under which recyclable materials are segregated for removal and appropriate handling. Hazardous and medical waste is also segregated and disposed of in accordance with applicable laws and regulations.
During 2020, our management team formed a Sustainability Committee to focus on identifying additional steps we can take to reduce our carbon footprint, including through the use of solar and renewable energy sources and promoting clean communities by encouraging the use of bicycles and public transportation by our employees to commute to work.
Social
We believe our employees are among our most important resources and are critical to our continued success. The health and safety of our workforce is a critical priority across our organization. We safeguard our people, projects and reputation by striving for zero employee injuries and illnesses, while operating and delivering our work responsibly and sustainably. We provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented. Personal protective equipment is provided to those employees where needed for the employees to safely perform their job function. We have formed a Safety Committee consisting of employees from various functional departments to administer our internal safety inspection program, investigate safety incidents and oversee the effectiveness of our safety procedures and policies.
During 2020, in response to the COVID-19 pandemic, we implemented safety protocols and new procedures to protect our employees, our subcontractors and our customers. These protocols include complying with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines from the Centers for Disease Control and Prevention and other public health authorities. In addition, we modified the way we conduct many aspects of our business to reduce the number of in-person interactions. For example, we significantly expanded the use of virtual interactions in all aspects of our business, including customer facing activities, and we eliminated or substantially reduced the need for our employees to travel. Many of our administrative and operational functions during this time have required modification as well, including much of our workforce working remotely.
As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefits programs for our employees in order to attract and retain superior talent. In addition to competitive base wages, additional programs include annual bonus opportunities, a Company matched 401(k) Plan or other savings plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, flexible work schedules, and employee assistance programs.
We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates at various levels of the organization. Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of issues.
The OraSure family of companies is committed to creating and fostering a diverse, equitable, and inclusive workplace that reflects and contributes to the global communities in which we do business and the customers and partners we serve. This includes all communities impacted by our corporate presence. Our management teams and all of our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination. We strive to recruit the best people for the job regardless of gender, ethnicity or other protected trait and it is our policy to fully comply with all laws (domestic and foreign) applicable to discrimination in the workplace. We have established a hotline and other communication methods that employees can use to anonymously submit discrimination or other complaints.
We have an active Diversity, Equity and Inclusion Council that strives to drive diversity, equity and inclusion within the workplace. At OraSure, we believe a variety of perspectives are critical to achieving success, and that diversity, equity and inclusion are key drivers to growth-based innovation and profitability. We are committed to creating a culture where all people feel valued, supported, and inspired to be themselves fearlessly, without judgement. We believe that when all voices are heard, we honor and exemplify our core values and best serve our customers and communities.
Governance
Our overall corporate mission is to do good and help solve the world’s greatest health challenges. We are committed to making a difference in the world of individual and public health by enabling access to discovery and diagnostics. Our innovative diagnostic and specimen collection devices have significantly contributed to public health on a global basis.
In pursuing our mission, we are committed to operating our business in accordance with the highest moral, legal and ethical standards. As previously mentioned, we have adopted a Code of Business Conduct and Ethics in order to define the high standards under which all members of our Board and all of our employees are expected to operate. We also have an Anti-Corruption Policy, a Policy on Interactions with Healthcare Professionals and other policies which further require honest, ethical and lawful behavior. These policies are part of a broader compliance program designed to ensure that all policies and legal requirements are followed, that we make and sell high-quality products in accordance with applicable regulatory requirements and that we otherwise operate in a responsible, ethical and compliant manner.
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and the Company. As a result of this review, the Board determined that Mara Aspinall, Michael Celano, James A. Datin, Eamonn P. Hobbs, Ronny B. Lancaster, Lelio Marmora and David J. Shulkin, M.D., are “independent,” as that term is defined in the applicable rules of NASDAQ and the SEC. Stephen S. Tang, Ph.D., was determined by the Board not to be independent because he is currently an executive officer employed by the Company. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. All standing Committees of the Board are also comprised solely of independent Directors.
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its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.”
The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on annual meeting attendance is provided on our website, at www.orasure.com. As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. Our 2020 Annual Meeting was attended by all members of the Board.
Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com.
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The Board currently has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and NASDAQ rules applicable to such Committees. In addition, the Board has determined that Michael Celano is an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at www.orasure.com. Additional information on each standing committee is provided below:
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C – Committee Chair
– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules.
I – Determined by the Board to be independent under applicable SEC and NASDAQ rules.
* - In April 2020, Dr. Shulkin was appointed as a Class I Director and a member of the Audit Committee and Nominating and Corporate Governance Committee. Ms. Aspinall was appointed as Chairman of the Audit Committee in May 2020. In June 2020, Mr. Marmora was appointed as a Director and a member of the Audit Committee and Nominating and Corporate Governance Committee.
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C – Committee Chair
I – Determined by the Board to be independent under applicable SEC and NASDAQ rules.
* - In April 2020, Dr. Shulkin was appointed as a Director and a member of the Audit Committee and Nominating and Corporate Governance Committee. In June 2020, Mr. Marmora was appointed as a Director and a member of the Audit Committee and Nominating and Corporate Governance Committee.
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(100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company.
The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the stockholder makes a recommendation in accordance with the advance notification provisions set forth in the Company’s Bylaws.
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Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance Committee considers diversity as one of many factors in identifying new candidates for the Board. Such diversity includes personal characteristics such as race and gender as well as diversity in background and skills and experience that relate to our Board’s performance of its responsibilities. Currently, of the eight Directors on the Board, one is a woman, one is African-American and one is Chinese-American. The Nominating and Corporate Governance Committee does not assign specific weight to any particular criteria when reviewing candidates and may not apply the same criteria to all prospective nominees.
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Any individual who becomes subject to the guidelines is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2020, all covered officers and non-employee Directors were in compliance with the stock ownership guidelines.
The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing.
The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee management’s conduct of the Company’s financial reporting process, including monitoring (1) the participation of management and the outside independent registered public accounting firm in the financial reporting process, (2) the Company’s systems of internal accounting and financial controls, (3) the annual independent audit of the Company’s financial statements and (4) the qualifications, independence and performance of the outside independent registered public accounting firm. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of five (5) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on May 18, 2020 (which can be found on the Company’s website at www.orasure.com).
Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews.
In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 1301, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public accounting firm the firm’s independence.
Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2021. The Board is recommending that stockholders ratify that selection at the Annual Meeting.
Submitted by the Audit Committee of the Company’s Board of Directors:
Mara G. Aspinall, Chairman
Michael Celano
James A. Datin
Name and Address of Beneficial Owner | Amount and Nature of the Beneficial Ownership1,2 | Percent of Class | ||
Black Rock, Inc.3 | 13,893,887 | 18.8% | ||
The Vanguard Group4 | 4,899,750 | 6.6% | ||
Earnest Partners, LLC5 | 4,871,379 | 6.6% | ||
Managed Account Advisors, LLC6 | 4,321,379 | 5.9% | ||
American Capital Management, Inc.7 | 4,308,685 | 5.8% | ||
Camber Capital Management, LP8 | 4,250,000 | 5.8% | ||
Stephen S. Tang, Ph.D. | 349,793 | * | ||
Kathleen G. Weber | 220,592 | * | ||
Jack E. Jerrett9 | 124,555 | * | ||
Roberto Cuca10 | 108,838 | * | ||
Scott Gleason | 98,505 | * | ||
Agnieszka Gallagher | 90,584 | * | ||
Michael Celano | 118,460 | * | ||
Eamonn P. Hobbs | 83,861 | * | ||
Mara G. Aspinall | 75,937 | * | ||
Ronny B. Lancaster | 34,782 | * | ||
James A. Datin | 29,388 | * | ||
David J. Shulkin, M.D. | 24,846 | * | ||
Lelio Marmora | 17,967 | * | ||
Nancy Gagliano, M.D. | 10,563 | * | ||
Anne Whitaker | 10,563 | * | ||
All Directors and executive officers as a group (17 people) | 1,641,997 | 2.2% |
* | Less than 1%. |
1 | Subject to community property laws where applicable, beneficial ownership consists of sole voting and investment power except as otherwise indicated. |
2 | Includes shares subject to options exercisable within 60 days of March 23, 2022, as follows: Ms. Weber, 14,533 shares; Mr. Celano, 40,000 shares; Mr. Hobbs, 40,000 shares; and Ms. Aspinall, 40,000 shares; and all Directors and executive officers as a group, 187,586 shares. Also includes unvested RS, as follows: Dr. Tang, 143,129 shares; Ms. Weber, 107,107 shares; Mr. Gleason, 98,505 shares; Ms. Gallagher, 90,584 shares; Mr. Celano, 13,559 shares; Mr. Hobbs, 10,952 shares; Ms. Aspinall, 10,952 shares; Mr. Lancaster, 10,952 shares; Mr. Datin, 10,952 shares; Dr. Shulkin, 10,952 shares; Mr. Marmora, 10,952 shares; Dr. Gagliano, 10,563 shares; and Ms. Whitaker 10,563 shares; and all Directors and executive officers as a group, 700,034 shares. Does not include unvested PRUs. |
3 | Based on information contained in a Schedule 13G/A filed January 28, 2022. The filing person has sole voting power with respect to 13,510,616 shares and sole dispositive power with respect to all of the indicated shares. |
4 | Based on information contained in a Schedule 13G/A filed February 10, 2022. The filing person has shared voting power with respect to 57,552 shares, sole dispositive power with respect to 4,784,919 shares and shared dispositive power with respect to 114,831 shares. |
5 | Based on information contained in a Schedule 13G filed February 8, 2022. The filing person has sole voting power with respect to 4,281,630 shares and sole dispositive power with respect to all of the indicated shares. |
6 | Based on information contained in a Schedule 13G/A filed January 26, 2022. The filing person has sole dispositive power with respect to 4,255,738 shares and shared dispositive power with respect to 65,641 shares. |
7 | Based on information contained in a Schedule 13G filed February 16, 2021. The filing person has sole voting power with respect to 18,828 shares and sole dispositive power with respect to all of the indicated shares. |
8 | Mr. Jerrett, who served as the Company’s Senior Vice President, General Counsel and Chief Compliance Officer, retired on December 31, 2021. The indicated shares reflect Mr. Jerrett’s ownership as of his retirement date and do not include a RS award granted with immediate vesting on February 1, 2022, net of shares withheld to cover taxes, for 18,984 shares or PRUs vested on February 1, 2022, net of shares withheld to cover taxes, for 8,825 shares. |
9 | Mr. Cuca, who served as the Company’s Chief Financial Officer, resigned from the Company on September 17, 2021. The indicated shares reflect Mr. Cuca’s ownership as of his resignation date. |
BOARD RESPONSIBILITIES, OPERATION AND COMPOSITION |
The primary responsibility of the Board of Directors is to promote the long-term success of the Company. In fulfilling this role, each Director must exhibit good faith business judgment as to what is in the best interests of the Company. The Board is responsible for establishing broad corporate policies, setting strategic direction and overseeing management. The Company’s management is responsible for the day-to-day operations of the Company.
The Board is divided into three classes with each class consisting of one-third of the total number of Directors on the Board. There are currently eight Directors serving on the Board. At each annual meeting of stockholders, the nominees for the class of Directors whose term is expiring at that annual meeting are elected for a three-year term. A Director holds office until the annual meeting of stockholders for the year in which his or her term expires or until his or her successor is elected and duly qualified, subject to prior death, resignation, retirement, disqualification or removal. Each nominee for election at our upcoming Annual Meeting currently serves as a Director.
The Board typically holds regular meetings in February, May, August and November of each year, with special meetings held as needed. The Board’s organizational meeting follows the annual meeting of stockholders. The Board usually meets in executive session at all regularly scheduled meetings. The Board held 13 meetings and acted by written consent on four occasions during the fiscal year ended December 31, 2021. Each member of the Board attended more than 75 percent of the combined total of meetings of the Board and of the Committees of the Board on which such member served during the period in the year in which he or she served as a Director. | The Board holds four regularly scheduled meetings each year and special meetings as needed. Directors attended greater than 75% of all Board and Committee meetings during 2021. |
GOVERNANCE GUIDELINES AND CODE OF CONDUCT |
The Board has adopted Corporate Governance Principles which, along with the Charters for each of its Committees and the Company’s Amended and Restated Code of Business Conduct and Ethics, provide a framework for the governance of the Company. The Company’s Corporate Governance Principles address matters such as the responsibilities and composition of the Board, Director independence and the conduct of Board and Committee meetings. The Company’s Amended and Restated Code of Business Conduct and Ethics sets forth guiding principles of business ethics and certain legal requirements applicable to all Company employees, contractors and non-employee Directors. Copies of the current Corporate Governance Principles and Amended and Restated Code of Business Conduct and Ethics are available on the Company’s website, www.orasure.com. Upon request, the Company will provide a copy of each policy free of charge to any shareholder.
If we make substantive amendments to or grant any waiver from the Amended and Restated Code of Business Conduct and Ethics applicable to our directors or executive officers, we will disclose the nature of such amendments or waiver to our stockholders to the extent and in the manner required by applicable exchange listing standards or any other regulation. For conduct involving an executive officer or Board member, only the Board of Directors or the Audit Committee of the Board has the authority to waive a provision of the Amended and Restated Code of Business Conduct and Ethics. Should the Company grant a waiver to its Amended and Restated Code of Business Conduct and Ethics, the Company intends to post notice of the waiver to its website at orasure.gcs-web.com/governance. Any waivers granted to the Amended and Restated Code of Business Conduct and Ethics will be available on the website for at least a 12-month period.
We operate under a Code of Business Conduct and Ethics and Corporate Governance Principles, which apply to all employees, contractors and non-employee Board members. |
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES |
We believe that conducting our business in a socially, environmentally and ethically responsible manner, and in compliance with applicable legal requirements, is important to our long-term success and the health and well-being of our employees, customers, the communities that we serve and other stakeholders. As a result, environmental, social and governance (“ESG”) issues have become an increasingly important focus for our management team and our Board.
ESG Oversight
Historically, ESG issues have been addressed by the management teams in our various companies with the primary focus on regulatory and legal compliance, ethical operations and development of our human capital resources. Material risks in these areas have been regularly reviewed with our Board, either directly or through the Audit Committee. In 2021, our management formed a cross functional team to review ESG issues more formally in order to identify material ESG risks impacting our business and determining appropriate mitigation and corrective strategies. These risks were discussed by the Board in 2021 and will be discussed by the Board at least annually as part of the Board’s oversight of risk management.
This year, we are proud to publicly share our first “OraSure Cares” ESG report, which provides a snapshot of the many ways that we are preserving the environment, empowering our people, modeling integrity and positively impacting the communities that we serve and in which we are located. A copy of the report may be accessed on our website at www.orasure.com.
Environmental
We endeavor to implement responsible and sustainable environmental practices throughout our organization. Our goal is to eliminate or minimize any harm to our employees, the communities that we serve and the environment.
We follow practices to reduce our energy usage and operate more efficiently, including through the use of motion detectors and timers to reduce electricity usage. We also have implemented a Company-wide waste recycling program under which recyclable materials are segregated for removal and appropriate handling. Hazardous and medical waste is also segregated and disposed of in accordance with applicable laws and regulations.
Formed in 2020, our Sustainability Committee focuses on identifying additional steps we can take to reduce our carbon footprint, including through the use of solar and renewable energy sources and promoting clean communities by encouraging the use of bicycles and public transportation by our employees to commute to work.
Social
We believe our employees are our most important resource and are critical to our continued success. The health and safety of our workforce is a critical priority across our organization. We safeguard our people, projects and reputation by striving for zero employee injuries and illnesses, while operating and delivering our work responsibly and sustainably. We provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented. Personal protective equipment is provided to those employees where needed for the employees to safely perform their job function. We have formed a Safety Committee consisting of employees from various functional departments to administer our internal safety inspection program, investigate safety incidents and oversee the effectiveness of our safety procedures and policies.
During 2021, we continued our enhanced safety protocols and procedures to protect our employees, our subcontractors and our customers from the ongoing COVID-19 pandemic. These protocols included complying with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines from the Centers for Disease Control and Prevention and other public health authorities. In addition, we continued to conduct many aspects of our business virtually to reduce the number of in-person interactions. Many of our administrative and operational functions have continued to function virtually as well, including much of our workforce working remotely.
As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefits programs for our employees in order to attract and retain superior talent. In addition to competitive base wages, additional programs include annual bonus opportunities, a Company matched 401(k) Plan or other savings plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, flexible work schedules, and employee assistance programs.
We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates at various levels of the organization. Management also reviews employee engagement and satisfaction surveys to monitor employee morale and receive feedback on a variety of issues.
The OraSure family of companies is committed to creating and fostering a diverse, equitable, and inclusive workplace that reflects and contributes to the global communities in which we do business and the customers and partners we serve. This includes all communities impacted by our corporate presence. Our management teams and our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination. We strive to recruit the best people for the job regardless of gender, ethnicity or other protected trait and it is our policy to fully comply with all laws (domestic and foreign) applicable to discrimination in the workplace. We have established a hotline and other communication methods that employees can use to anonymously submit discrimination or other complaints.
We have an active Diversity, Equity and Inclusion Council that strives to drive diversity, equity and inclusion within the workplace. At OraSure, we believe a variety of perspectives are critical to achieving success, and that diversity, equity and inclusion are key drivers to growth-based innovation and profitability. We are committed to creating a culture where all people feel valued, supported, and inspired to be themselves fearlessly, without judgement. We believe that when all voices are heard, we honor and exemplify our core values and best serve our customers and communities.
Governance
Our overall corporate mission is to do good and help solve the world’s greatest health challenges. We are committed to making a difference in the world of individual and public health by enabling access to discovery and diagnostics. Our innovative diagnostic and specimen collection devices have significantly contributed to public health on a global basis.
In pursuing our mission, we are committed to operating our business in accordance with the highest moral, legal and ethical standards. As previously mentioned, we have adopted an Amended and Restated Code of Business Conduct and Ethics in order to define the high standards under which all members of our Board and all of our employees are
expected to operate. We also have an Anti-Corruption Policy, a Policy on Interactions with Healthcare Professionals and other policies which further require honest, ethical and lawful behavior. These policies are part of a broader compliance program designed to ensure that all policies and legal requirements are followed, that we make and sell high-quality products in accordance with applicable regulatory requirements and that we otherwise operate in a responsible, ethical and compliant manner.
INDEPENDENT BOARD CHAIRMAN |
The positions of Chairman of the Board and CEO of the Company are held by different individuals, with the Chairman being independent of management. | The Board has carefully considered its leadership structure and believes that the Company and its stockholders are best served by having the positions of Chairman and Interim CEO filled by different individuals. This allows the Interim CEO to, among other things, focus on the Company’s day-to-day business, while allowing the Chairman to lead the Board in its fundamental role of providing strategic advice and oversight of management. In the future, however, the Board may reconsider whether its CEO should also serve as Board Chairman or may elect to rotate the position of Board Chairman to other independent Directors. |
DIRECTOR INDEPENDENCE |
Our Corporate Governance Guidelines require, among other things, that a majority of the members of the Board meet the independence requirements of the SEC and Nasdaq, on which our Common Stock is listed. Each year our Board, with assistance from the Nominating and Corporate Governance Committee, conducts a review of Director independence. The most recent annual review occurred in the first quarter of 2022, during which the Board considered | A majority of our Directors are independent as required under applicable SEC and Nasdaq rules. All standing Board Committees consist of independent Directors. | |
transactions and relationships, if any, between each Director and any member of such Director’s immediate family and the Company. As a result of this review, the Board determined that Mara G. Aspinall, Michael Celano, James A. Datin, Eamonn P. Hobbs, Ronny B. Lancaster, Lelio Marmora, David J. Shulkin, M.D. and Anne C. Whitaker, are “independent,” as that term is defined in the applicable rules of Nasdaq and the SEC. Stephen S. Tang, Ph.D., was determined by the Board not to be independent because he was serving as an executive officer employed by the Company until his termination on March 31, 2022. As of April 1, 2022, Nancy J. Gagliano, M.D., M.B.A. is no longer independent because she became an executive officer employed by the Company on April 1, 2022, following Dr. Tang’s departure. Prior to such time, Dr. Gagliano was considered an independent director of the Board. Based on the foregoing, the Board of Directors is comprised of a majority of independent Directors. All standing Committees of the Board are also comprised solely of independent Directors. |
OVERSIGHT OF RISK MANAGEMENT |
As part of its oversight of the Company’s operations, the Board and Audit Committee monitor the management of risks by the Company’s executives. The Audit Committee reviews the risks that the Company may face and receives reports from senior management on the nature of these risks and the procedures and processes in place to manage and mitigate such risks. Substantive areas of risk reviewed by the Audit Committee include financial, legal, regulatory, operational, information technology, cybersecurity and employment matters. The Audit | The Board and Audit Committee |
Committee provides a report to the full Board on the matters covered during each of its meetings, including its risk monitoring activities. In addition, senior management provides periodic reports to the full Board on the major risks facing the Company and the processes and procedures in place to manage such risks. Management also conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program, as described in greater detail in the Section of this Proxy Statement entitled, “Compensation Committee Matters.”
ANNUAL MEETING ATTENDANCE AND STOCKHOLDER COMMUNICATIONS |
The Board has approved a policy concerning Board members’ attendance at our Annual Meeting of Stockholders and a process for security holders to send communications to members of the Board. A description of the Board’s policy on Annual Meeting attendance is provided on our website, at www.orasure.com. As a general matter, each Board member is required to attend each Annual Meeting of Stockholders. Our 2021 Annual Meeting was attended by all members of the Board.
Security holders may communicate with the Board by sending their communications to OraSure Technologies, Inc., 220 East First Street, Bethlehem, Pennsylvania 18015, Attention: Corporate Secretary, fax: (610) 882-2275, email: corporatesecretary@orasure.com.
All Board members are required to attend each Annual Meeting of Stockholders. The entire Board attended the 2021 Annual Meeting. |
COMMITTEES OF THE BOARD |
The Board currently has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Members of these committees are each “independent,” as defined in the Exchange Act and Nasdaq rules applicable to such Committees. In addition, the Board has determined that Michael Celano is an “audit committee financial expert,” as that term is defined by applicable rules of the SEC. Each committee operates pursuant to a written charter, copies of which are available on our website, at www.orasure.com. Additional information on each standing committee is provided below:
AUDIT COMMITTEE |
Committee Members*: | Responsibilities: • Oversees accounting and financial reporting process, internal controls and audits. • Consults with management and the Company’s independent registered public accounting firm on, among other items, matters related to the annual audits, the published financial statements and the accounting principles applied. • Appoints, evaluates and retains our independent registered public accounting firm. • Responsible for the compensation, termination and oversight of our independent registered public accounting firm. | |||
Mara G. Aspinall | (C, I) | |||
Michael Celano | ( , I) | |||
James A. Datin | (I) | |||
Lelio Marmora | (I) | |||
Anne C. Whitaker* | (I) | |||
Number of Meetings during | • Evaluates the independent registered public accounting firm’s qualifications, performance and independence. • Approves all services provided by the independent registered public accounting firm. • Monitors the Company’s major risk exposures and reviews risk assessment and mitigation policies and determines the appropriate levels and types of insurance policies to be purchased by the Company. • Maintains procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. • Reviews the Company’s cybersecurity program and risks, as identified by Company management, and the steps that the Company management has taken to protect against threats to the Company’s assets including information systems and data security. |
C | – Committee Chair |
– Determined by the Board to be an audit committee financial expert as defined under applicable SEC Rules.
I | – Determined by the Board to be independent under applicable SEC and Nasdaq rules. |
* | – In November 2021, Ms. Whitaker was appointed as a Class II Director and a member of the Audit Committee, replacing Dr. Shulkin as a member of the Audit Committee. |
COMPENSATION COMMITTEE | ||||
Committee Members*: | Responsibilities: • Oversees compensation for executives and non-employee Directors. • Reviews and recommends to the Board for approval the performance criteria and goals and objectives for CEO compensation. • In consultation with other independent non-employee Directors, evaluates the CEO’s annual performance. • Evaluates and recommends to the Board for approval the CEO’s compensation. • In consultation with the CEO, reviews and approves the compensation of other executive officers. | |||
Ronny B. Lancaster | (C, I) | |||
Mara G. Aspinall | (I) | |||
Michael Celano | (I) | |||
James A. Datin | (I) | |||
Eamonn P. Hobbs | (I) | |||
David J. Shulkin, M.D.* | (I) | |||
Number of Meetings during fiscal 2021: 6 | • Establishes performance measures and goals and evaluates the attainment of such goals under performance-based incentive compensation plans. • Reviews compensation and benefits issues relating to the Company. • Reviews and recommends for Board approval, the terms of any employment or retirement agreements between the Company and each executive officer. • Periodically reviews and administers the Company’s Compensation Recoupment Policy for executive officers and non-employee Directors. • Reviews compliance with the Company’s Stock Ownership Guidelines. |
C | – Committee Chair |
I | – Determined by the Board to be independent under applicable SEC and Nasdaq rules. |
* | – In November 2021, Dr. Shulkin was appointed as a member of the Compensation Committee. |
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | ||||
Committee Members*: | Responsibilities: • Identifies, evaluates and recommends candidates for nomination or re-election to the Board. • Reviews and makes recommendations to the Board on the range of skills, qualifications and expertise required for service as a Director. • Reviews and recommends for Board approval the appropriate structure of the Board and Board committees. | |||
Eamonn P. Hobbs | (C, I) | |||
Ronny B. Lancaster | (I) | |||
Lelio Marmora | (I) | |||
David J. Shulkin, M.D.
| (I) | |||
Number of Meetings during fiscal 2021: 4 | ||||
• Recommends committee assignments and candidates for the position of Chairman of each committee. • Develops and recommends for Board approval Corporate Governance Guidelines and a Code of Business Conduct and Ethics, and procedures for the implementation thereof. • Periodically reviews and recommends for Board approval the Board’s leadership structure, including whether the same person should serve as both CEO and Chairman of the Board. • Assists in the development of succession plans for the Company’s CEO and other executives. • Assists the Board in evaluating the independence of individual Directors for purposes of Board and committee service. • Develops and implements an annual self-evaluation process for the Board and its committees |
C | – Committee Chair |
I | – Determined by the Board to be independent under applicable SEC and Nasdaq rules. |
* | – Dr. Gagliano was a member of the Nominating and Corporate Governance Committee from November 2021 until her appointment as Interim Chief Executive Officer in April 2022. |
NOMINATION OF DIRECTORS |
Our Bylaws provide that nominations for election to the Board may be made by the Board or by any stockholder entitled to vote for the election of Directors at the Annual Meeting. A stockholder’s notice of nomination must be made in writing to the Company’s Corporate Secretary and must be delivered to or received at our principal executive offices not less than ninety (90) days nor more than one hundred twenty (120) days prior to the meeting. Accordingly, in order to submit a notice of nomination for the 2023 Annual Meeting, notice must be delivered to or received at our principal executive offices between January 17, 2023 and February 16, 2023. | Stockholders can nominate individuals to serve on the Board by following the procedures described in the Company’s Bylaws. | |
However, in the event that less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, in order for notice by the stockholder to be timely, notice must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. The notice to the Corporate Secretary must set forth, with respect to the nominee, the name, age, business address, residence address, principal occupation or employment of the person, the class and number of shares of capital stock of the Company which are beneficially owned by the person, and any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Regulation 14A under the Exchange Act. The notice must also include, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made: (i) the name and address of the stockholder and such beneficial owner; (ii) the class and number of shares of capital stock of the Company which are held of record or beneficially owned by such stockholder and such beneficial owner and any other direct or indirect pecuniary or economic interest in any capital stock of the Company of such stockholder and beneficial owner, including without limitation, any derivative instrument, swap, option, warrant, short interest, hedge, profit sharing arrangement or borrowed or loaned shares; (iii) a description of any arrangements or understandings between such stockholder and beneficial owner and each proposed nominee and any other person (including their names) pursuant to which the nomination(s) are to be made by such stockholder and such beneficial owner or with respect to actions to be proposed or taken by such nominee if elected as a Director; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder and such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors, or may otherwise be required pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. We may also require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director of the Company. |
The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates. Candidates recommended by stockholders will be considered by the Nominating and Corporate Governance Committee in the same manner as candidates recommended by other sources, but only if the stockholder makes a recommendation in accordance with the advance notification provisions set forth in the Company’s Bylaws.
DIRECTOR QUALIFICATIONS |
The Board considers diversity, including personal factors such as race and gender, and other relevant factors in evaluating Director candidates. In determining whether an incumbent Director will be nominated for re-election, we evaluate the individual’s background, experience and prior service as a Director. |
Although there is no formal policy governing Board diversity, the Nominating and Corporate Governance Committee considers diversity as one of many factors in identifying new candidates for the Board. Such diversity includes personal characteristics such as race and gender as well as diversity in background and skills and experience that relate to our Board’s performance of its responsibilities. The Nominating and Corporate Governance Committee does not assign specific weight to any particular criteria when reviewing candidates and may not apply the same criteria to all prospective nominees.
As presently constituted, the Board represents a deliberate mix of members who have a deep understanding of our business as well as members who have different skill sets and points of view. The recently adopted listing requirements of Nasdaq requires each listed company to have, or explain why it does not have, two diverse directors on the board, including at least one diverse director who self-identifies as female and at least one diverse director who self-identifies as an underrepresented minority or LGBTQ+. Each term used above and in the matrix below has the meaning given to it in Nasdaq Listing Rule 5605(f).
As a company listed on the Nasdaq Global Select Market, we are required to have, or explain why we do not have, at least one diverse director by the later of (i) August 7, 2023 or (ii) the date we file our proxy statement for our 2023 Annual Meeting of Stockholders, and at least two diverse directors by the later of (i) August 6, 2025 or (ii) the date we file our proxy statement for our 2025 Annual Meeting of Stockholders. We currently have five diverse directors on our Board. The matrix below provides certain highlights of the composition of our Board members based on self-identification.
Board Diversity Matrix (As of March 23, 2022) | ||||||||||||||
Total Number of Directors | 9 | |||||||||||||
Female | Male | Non-Binary | Did Not Disclose Gender | |||||||||||
Part I: Gender Identity | ||||||||||||||
Directors | 3 | 6 | — | — | ||||||||||
Part II: Demographic Background | ||||||||||||||
African American or Black | — | 1 | — | — | ||||||||||
Alaskan Native or Native American | 1 | — | — | — | ||||||||||
Asian | — | — | — | — | ||||||||||
Hispanic or Latinx | — | 1 | — | — | ||||||||||
Native Hawaiian or Pacific Islander | — | — | — | — | ||||||||||
White | 2 | 4 | — | — | ||||||||||
Two or More Races or Ethnicities | — | — | — | — | ||||||||||
LGBTQ+ | — | |||||||||||||
Did Not Disclose Demographic Background | — |
INSIDER TRADING |
Our Insider Trading Policy prohibits trading by Directors, executive officers or employees who are in possession of material nonpublic information about the Company. | We have a policy designed to prevent any trading in the Company’s Common Stock or other securities by Directors, executive officers and certain other employees of the Company and its affiliates while such person is in possession of material nonpublic information. The policy prohibits trading in the Company’s securities on the basis of material nonpublic information, requires preapproval of transactions in Company securities for Directors, executive officers and all other employees and establishes regular trading windows after each calendar quarter following the Company’s announcement of its quarterly financial results. |
PROHIBITION AGAINST SHORT SALES, HEDGING AND PLEDGING |
We believe it is inappropriate for any employee of the Company or its affiliates or any member of the Board to engage in short-term or speculative transactions involving Company securities, including entering into financial instruments or engaging in other transactions that hedge or offset, or that are designed to hedge or offset, any decrease in the market value of our Common Stock. As a result, our insider trading policy prohibits Directors, executive officers and all other employees from entering into transactions involving our Common Stock, such as short sales, the buying or selling of puts or calls, the purchase of securities on margin, prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar financial instruments. Our policy also prohibits employees and Directors from pledging shares of our Common Stock as collateral. | We have implemented several governance policies related to our Common Stock. Our policies prohibit short-term, speculative transactions in our stock, such as hedging, pledging and short sales. |
STOCK OWNERSHIP AND RETENTION GUIDELINES |
We have implemented stock ownership and retention guidelines for our CEO, other executives and members of the Board. | The Board has adopted stock ownership and retention guidelines applicable to our President and CEO, our CFO and all of our other executive officers and all non-employee members of the Board. Under these guidelines, the covered individuals must meet the following ownership requirements, expressed either as a multiple of base salary (in the case of Company officers) or annual cash fees (in the case of non-employee Board members): |
Covered Individual | Multiple of Base Salary or Director Fees | |||
President and Chief Executive Officer | 6x | |||
Chief Financial Officer | 2x | |||
Other Executive Officers | 1x | |||
Non-Employee Directors | 3x |
Any individual who becomes subject to the guidelines is required to meet the guidelines within five years. Any individual already subject to the guidelines who becomes subject to a higher ownership requirement, due to a promotion, a further amendment to the guidelines or an increase in compensation, is required to meet the new ownership requirement within five years following the effective date of promotion, change in compensation or guideline amendment. In determining whether an individual meets the required ownership requirement, shares owned directly or indirectly, restricted stock (including both time and performance-based) and shares deferred under our deferred compensation plan will be counted. Compliance will be determined as of December 31 of each fiscal year. The guidelines also require each covered individual to retain at least 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until the individual’s holdings of Common Stock equal or exceed the applicable ownership requirement. As of December 31, 2021, all covered officers and non-employee Directors were in compliance with the stock ownership guidelines.
REPORT OF THE AUDIT COMMITTEE FOR THE YEAR ENDED DECEMBER 31, 2021 |
The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liability under that Section. This report shall not be deemed “incorporated by reference” into any document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing.
The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities to oversee (i) the integrity of the Company’s financial statements, (ii) management’s conduct of the Company’s accounting and financial reporting processes, (iii) the Company’s systems of internal control over financial reporting and disclosure controls and procedures, (iv) the outside auditor’s qualifications, engagement, compensation, independence and performance, (v) the Company’s compliance with legal and regulatory requirements and management of financial and other risks, including insurance review and cybersecurity, (vi) the annual independent audit of the Company’s financial statements, (vii) the application of the Company’s related person transaction policy and (viii) such other matters as directed by the Board or as set forth in the Audit Committee Charter. The Audit Committee selects the Company’s outside independent registered public accounting firm, and once selected, the outside independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee is responsible for approving both audit and non-audit services to be provided by the outside independent registered public accounting firm. The Audit Committee is composed of five (5) non-employee directors and operates pursuant to a Charter that was last amended and restated by the Board on May 21, 2021 (which can be found on the Company’s website at www.orasure.com).
Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews.
In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management, which included a discussion of not only the quality, but also the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee met with the independent registered public accounting firm, with and without management, to discuss the results of their audit and their judgments regarding the Company’s accounting policies. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed under applicable standards, including those in Public Company Accounting Oversight Board Auditing Standard No. 1301, as currently in effect. Finally, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board as currently in effect, has considered whether the provision of non-audit services by the independent registered public accounting firm to the Company is compatible with maintaining the firm’s independence and has discussed with the independent registered public accounting firm the firm’s independence.
Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee’s Charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the SEC and selected KPMG LLP as the independent registered public accounting firm for fiscal year 2022. The Board is recommending that stockholders ratify that selection at the Annual Meeting.
Submitted by the Audit Committee of the Company’s Board of Directors:
Mara G. Aspinall, Chairman
Michael Celano
James A. Datin
Lelio Marmora
Anne C. Whitaker
April 7, 2022
AUDIT FEES; AUDIT RELATED FEES; TAX FEES; ALL OTHER FEES |
The following table presents fees for professional audit services rendered by KPMG LLP (i) for the audits of our annual consolidated financial statements and review of the financial statements in our Quarterly Reports on Form 10-Q for the fiscal years ended December 31, 2021 and 2020, and (ii) for the audits of our internal control over financial reporting as of December 31, 2021 and 2020. The following table also includes fees billed for other services rendered by KPMG:
2021 | 2020 | |||||||
Audit fees1 | $ | 1,056,643 | $ | 1,231,138 | ||||
Audit-related fees2 | $ | 0 | $ | 50,000 | ||||
Tax fees3 | $ | 347,382 | $ | 250,408 | ||||
Total fees | $ | 1,404,025 | $ | 1,531,546 |
1 | Includes fees related to the audits of our consolidated annual
|
| Includes fees for due diligence related to one acquisition in 2020. |
3 | During the |
PRE-APPROVAL PROCEDURES |
The Audit Committee has adopted a general practice of pre-approving all audit and non-audit services provided to the Company by our independent registered public accounting firm. The Chairman of the Audit Committee has been delegated the authority to pre-approve audit and non-audit services having an aggregate value of up to $50,000 between meetings of the Audit Committee, provided that such pre-approval is communicated to the Audit Committee at its next scheduled meeting. All services by KPMG in 2021 and 2020 were approved in accordance with these practices.
COMPENSATION COMMITTEE MATTERS
The Compensation Committee assists the Board in developing and managing the compensation provided to executive officers of the Company and non-employee members of the Board. The Compensation Committee is responsible for developing and overseeing the implementation of the Company’s compensation philosophy and for setting executive compensation at levels that are sufficiently competitive so that the Company can attract, retain, motivate and reward high quality executives who can contribute to the Company’s success.
Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy established under its charter as set forth in the CD&A Section of this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, internal pay equity, the compensation practices of the Company’s peer group (as set forth in the CD&A) (“Peer Group”),
Compensation for executives is established by the Compensation Committee in accordance with the compensation philosophy established under its charter as set forth in the CD&A Section of this Proxy Statement. In setting executive compensation, the Compensation Committee considers the Company’s and each executive’s performance against previously established objectives, internal pay equity, the compensation practices of the Company’s Peer Group, the Company’s industry position and general industry compensation data. The Compensation Committee periodically retains independent compensation consultants to review our executive compensation practices and to assist in establishing competitive compensation levels for our executives.
ANNUAL PERFORMANCE EVALUATIONS |
On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible.
On an annual basis, the Compensation Committee and other non-employee Directors evaluate the performance of the CEO, based on the overall performance of the Company. The CEO also evaluates the performance of the other NEOs against their respective predetermined performance objectives. Annual performance objectives for the NEOs are established at the beginning of the applicable year and generally include two parts: (1) the Company’s overall target financial objectives, and (2) individual objectives in the functional areas for which the executive is responsible.
Depending on the Company’s overall performance and the extent to which an executive achieves his or her individual objectives for a particular year, the executive will be rated as “Does Not Meet,” “Does Not Consistently Meet,” “Meets Expectations,” “Exceeds Expectations” or “Outstanding.” On occasion, a blended rating such as “Meets/Exceeds” or “High Meets” will be used to indicate performance between the foregoing performance rating levels. The Compensation Committee uses the performance ratings and other factors to determine base salary adjustments, incentive cash bonuses and long-term incentive equity awards. Although this approach was also followed in evaluating Dr. Tang’s performance for 2021, Dr. Tang’s performance assessment was also followed in evaluating Dr. Tang’s performance for 2020, Dr. Tang’s performance assessment is primarily based on the Company’s overall performance.
The Compensation Committee is comprised of independent non-employee Directors who oversee our executive compensation program. Each year, the Compensation Committee determines or recommends (in the case of the CEO) the appropriate level of compensation for all NEOs. As an initial guideline, the Compensation Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term incentive equity target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent.
The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations to the Board for the CEO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market compensation data. Compensation for the CEO is approved by the independent members of the Board of Directors.
Beyond determining and recommending (in the case of the CEO) specific compensation for the NEOs, the Compensation Committee works with the executive management team to review and adjust compensation policies and practices to ensure that they remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. The Compensation Committee also determines a market-based level of compensation for
The Compensation Committee is comprised of independent non-employee Directors who oversee our executive compensation program. Each year, the Compensation Committee determines the appropriate level of compensation for all NEOs other than the CEO, and in the case of the CEO, recommends to the Board the appropriate level of compensation for the CEO. As an initial guideline, the Compensation Committee sets the total direct compensation opportunity (base salary, annual incentive bonus target, and long-term incentive equity target) for each of our executive officers within a range around the 50th percentile of comparable medical diagnostics and healthcare companies. The variation of actual pay relative to the market data is dependent on the executive officer’s performance, experience, knowledge, skills, level of responsibility, potential to impact our performance and future success, and the need to retain and motivate strategic talent.
The Compensation Committee generally determines an executive officer’s compensation based upon the objectives of our executive compensation program. The Compensation Committee makes compensation recommendations to the Board for the CEO and approves decisions for the other NEOs after careful review and analysis of appropriate performance information and market compensation data. Compensation for the CEO is approved by the independent members of the Board of Directors.
Beyond determining and recommending (in the case of the CEO) specific compensation for the NEOs, the Compensation Committee works with the executive management team to review and adjust compensation policies and practices to ensure that they remain consistent with the Company’s values and philosophy, support the recruitment and retention of executive talent, and help the Company achieve its business objectives. The Compensation Committee also determines a market-based level of compensation for non-employee Directors.
The CEO provides performance assessments and recommendations to the Compensation Committee on the compensation for each executive of the Company. The CEO’s recommendations are based on his
The CEO provides performance assessments and recommendations to the Compensation Committee on the compensation for each executive of the Company. The CEO’s recommendations are based on their review of each executive’s performance, job responsibilities, importance to our overall business strategy, and our compensation philosophy. Although the CEO’s recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation.
To assist in the review of executive compensation and to obtain information regarding market trends and governance best practices, the Compensation Committee engages independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether our compensation program is competitive and supports our goal of aligning the interests of our executive officers with those of our stockholders. Such consultants also provide the Compensation Committee with the Peer Group and other market data that is discussed in the CD&A, which the Compensation Committee evaluates when establishing programs and features and determining compensation for executive officers. In connection with its 2020 compensation decisions, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) to provide market assessments of the target compensation for our executives and consult on the preparation of this Proxy Statement.
The Compensation Committee has the sole authority to approve any independent compensation consultant’s fees and terms of engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure their independence. The process in 2020 included a review of the services Pay Governance provides, the quality of those services, and the fees associated with those services during the fiscal year as well as consideration of the factors impacting independence that NASDAQ
To assist in the review of executive compensation and to obtain information regarding market trends and governance best practices, the Compensation Committee engages independent executive compensation consultants to analyze our executive compensation structure and plan designs, and to assess whether our compensation program is competitive and supports our goal of aligning the interests of our executive officers with those of our stockholders. Such consultants also provide the Compensation Committee with the Peer Group and other market data that is discussed in the CD&A, which the Compensation Committee evaluates when establishing programs and features and determining compensation for executive officers. In connection with its 2021 compensation decisions, the Compensation Committee engaged Pay Governance LLC (“Pay Governance”) to provide market assessments of the target compensation for our executives and consult on the preparation of this Proxy Statement.
The Compensation Committee has the sole authority to approve any independent compensation consultant’s fees and terms of engagement. The Compensation Committee annually reviews its relationship with each consultant to ensure their independence. The process in 2021 included a review of the services Pay Governance provides, the quality of those services, and the fees associated with those services during the fiscal year as well as consideration of the factors impacting independence that Nasdaq rules require and a review of Pay Governance’s independence policy. The Compensation Committee concluded that there were no conflicts of interest that prevented Pay Governance from serving as an independent consultant to the Compensation Committee on executive compensation matters.
Mara G. Aspinall, Michael Celano, James A., Datin, Eamonn P. Hobbs and Ronny B. Lancaster each served as members of the Compensation Committee during 2020,
Mara G. Aspinall, Michael Celano, James A., Datin, Eamonn P. Hobbs, Ronny B. Lancaster and David J. Shulkin, M.D., each served as members of the Compensation Committee during 2021, with Mr. Lancaster serving as Chairman. None of these Directors has served or is currently serving as an officer or employee of the Company, nor have they engaged in any transactions involving the Company which would require disclosure as a transaction with a related person. There are no Compensation Committee interlocks between the Company and any other entity involving the Company’s or such entity’s executive officers or board members.
The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “incorporated by reference” into any document filed under the Securities Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing.
The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis, contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing Compensation Discussion and Analysis be included in the Company’s 2020 Annual Report on Form 10-K Report and Proxy Statement for the 2021 Annual Meeting of Stockholders.
COMPENSATION COMMITTEE:
Ronny B. Lancaster, Chairman
Mara G. Aspinall
Michael Celano
James A. Datin
Eamonn P. Hobbs
March 28, 2021
The table below provides information about the executive officers of the Company as of March 26, 2021.
The information contained in this report shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This report shall not be deemed to be “incorporated by reference” into any document filed under the Securities Act or the Exchange Act, whether such filing occurs before or after the date hereof, regardless of any general incorporation language in such filing.
The Compensation Committee of OraSure Technologies, Inc. has reviewed and discussed with the Company’s management the CD&A, contained in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that the foregoing CD&A be included in the Company’s 2021 Annual Report on Form 10-K Report and Proxy Statement for the 2022 Annual Meeting of Stockholders.
COMPENSATION COMMITTEE:
Ronny B. Lancaster, Chairman
Mara G. Aspinall
Michael Celano
James A. Datin
Eamonn P. Hobbs
David J. Shulkin, M.D.
April 7, 2022
The table below provides information about the executive officers of the Company as of April 1, 2022. Officers of the Company hold office at the discretion of the Board.
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| 48 | Senior Vice President, Controller, Chief Accounting Officer and Assistant Secretary |
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Nancy J. Gagliano, M.D., MBA, has been a member of the Board since November 2021 and previously served on the Nominating and Corporate Governance Committee. In April 2022, Dr. Gagliano became our Interim Chief Executive Officer. Since July 2020, she has served as Managing Director at Granite Healthcare Advisors. From May 2020 to November 2021, Dr. Gagliano served as an executive leader of the National Institute of Health’s Rapid Acceleration of Diagnostics (RADx Tech) program, helping to oversee more than $1 billion of sponsored programs to bring millions of new COVID-19 tests to market. She previously served as Chief Medical Officer of Culbert Healthcare Solutions from September 2016 to May 2020, providing strategic guidance on healthcare consulting services. Dr. Gagliano has also held senior leadership positions at CVS Health, including as Chief Medical Officer of Minute Clinic, and as a Senior Vice President overseeing key programs such as the enterprise smoking cessation program and the development of the company’s telemedicine program. Dr. Gagliano previously was a practicing physician in internal medicine and held numerous leadership positions at Massachusetts General Hospital and Massachusetts General Physicians Organization. She holds an M.D. from Harvard Medical School, an MBA from Northeastern University, and a BS in Computer Science and Biology from Union College. |
Scott Gleason, Interim Chief Financial Officer, Senior Vice President, Corporate Communications & Investor Relations |
Scott Gleason has served as our Interim Chief Financial Officer since September 2021, and as our Senior Vice President, Corporate Communications and Investor Relations since May 2021. Prior to joining the Company, Mr. Gleason served as the Senior Vice President of Investor Relations and Corporate Strategy for Myriad Genetics, Inc., a leading specialty diagnostic laboratory in the United States focused on genetic testing and precision medicine from January 2013 to April 2021. At Myriad Genetics, he managed the investor relations and corporate communications functions, led the annual strategic planning process, and was a member of the Company’s strategic committee. Prior to his tenure at Myriad Genetics, Mr. Gleason was a senior publishing analyst at Stephens, Inc. from 2005 to 2013, covering the life science tools and diagnostics industry. Before joining Stephens, Mr. Gleason was a United States Air Force aircraft maintenance officer and participated in two wartime deployments. Mr. Gleason received a Bachelor of Science degree in Economics from the U.S. Air Force Academy in Colorado Springs, Colorado. |
Lisa Nibauer, President of Diagnostics |
TRANSACTIONS WITH RELATED PERSONS
Since January 1, 2021 there have been no transactions with related persons that would require disclosure in this Proxy Statement. The Audit Committee is required to review and approve in advance all transactions with related persons involving the Company. The Audit Committee may approve a related party transaction if the transaction is on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party. The Audit Committee also reviews any public disclosures of a related party transaction contained in our SEC filings. These responsibilities are described in the Audit Committee’s charter, a copy of which is available on our website at www.orasure.com..
Information regarding employment, severance and retirement agreements between our executive officers and the Company is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement.
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COMPENSATION DISCUSSION AND ANALYSIS
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This Compensation Discussion and Analysis, or CD&A, describes the material elements of the compensation of our NEOs and describes the objectives and principles underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions.
Our NEOs for 2020
This CD&A describes the material elements of the compensation of our NEOs and describes the objectives and principles underlying the Company’s executive compensation program, the compensation decisions we have recently made under this program and the factors we considered in making these decisions.
Our NEOs for 2021 who are covered in this CD&A include:
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1 | Dr. Tang served until March 31, 2022. Effective April 1, 2022, Nancy J. Gagliano, M.D., M.B.A. was appointed to replace Dr. Tang as the Company’s Interim Chief Executive Officer. Because Dr. Gagliano did not become an executive officer until after December 31, 2021, she is not considered an NEO and her compensation is not reported herein. |
2 | Mr. |
3 | Mr. Gleason joined the Company in May 2021 as the Senior Vice President Corporate Communications & Investor Relations and assumed the role of Interim Chief Financial Officer in September 2021 following Mr. Cuca’s resignation. |
4 | Mr. Jerrett retired from the Company |
The following charts describe our consolidated financial performance during the last three fiscal years, expressed in dollars (thousands).
1 2019 operating income includes a $10.1 million gain related to the sale of the Company’s cryosurgical systems business, $664,000 of income associated with the change in the fair value of acquisition-related contingent consideration, and $1.8 million of transaction costs associated with the acquisitions in 2019. 2020 operating loss includes $1.1 million of income associated with the change in the fair value of acquisition-related contingent consideration, and $393,000 of transaction costs associated an acquisition in 2020. 2020 operating loss also reflects a significant investment in research and development activities associated with the development of COVID-19 testing products. 2021 operating loss includes $1.5 million of income associated with the change in the fair value of acquisition-related contingent consideration, a $5.7 million Employee Retention Credit under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) and also reflects a significant investment to launch our InteliSwab® rapid COVID-19 test including high inventory scrap expense associated with production and tech transfer issues and marketing and advertising expenses.
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12018 operating income includes $9.6In 2021, we delivered recorded revenue for both our Diagnostics and Molecular Solutions businesses, with our total company growing at a 25% compound annual growth rate since the pre-pandemic period in 2019. We experienced increased sales across all existing product lines, other than our international HIV self-test. We generated $22.7 million in executive transitionrevenues from our new rapid COVID-19 antigen test, InteliSwab®. Our net loss and operating loss reflect the negative impact of scale up costs and $1.2 millionthe increased sales and marketing spend to get InteliSwab® to market and inefficiencies in transaction costs associated with two acquisitions. 2019 operating income includes a $10.1 million gain related to the sale of the Company’s cryosurgical systems business, $664,000 of income associated with the change in the fair value of acquisition-related contingent consideration, and $1.8 million of transaction costs associated with the acquisitions in 2019. 2020 operating loss includes $1.1 million of income associated with the change in the fair value of acquisition-related contingent consideration, and $393,000 of transaction costs associated an acquisition in 2020. 2020 operating loss also reflects a significant investment in research and development activities associated with the development of COVID-19 testing products.our InteliSwab® manufacturing process as we worked on our tech transfer issues.
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Business highlights from 2020
Business highlights from 2021 and the principal factors driving our financial performance are summarized below:
• Total net consolidated revenues NEO 2019 Performance Rating 2019 Salary 2020 Salary Change (%) Stephen S. Tang, Ph.D. Meets $ 609,000 $ 624,225 2.50% Roberto Cuca High Meets $ 426,413 $ 439,205 3.00% Lisa Nibauer1 N/A N/A $ 410,000 N/A Kathleen G. Weber High Meets $ 355,000 $ 365,650 3.00% Jack E. Jerrett2 Exceeds $ 380,152 $ 415,358 9.26% Anthony Zezzo, II3 Low Meets $ 418,726 $ 418,726 0.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• Total 2021 product and services revenues for our Diagnostics business were $87.0 million, an increase of 37% over 2020. This includes $22.7 million of InteliSwab | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• Total 2021 product and services revenues for our Molecular Solutions business were $139.9 million, an increase of 36% over 2020. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• During 2021, our core Molecular Solutions business, serving the Genomics, Microbiome, and Laboratory Services markets grew 65% over 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• We received three new emergency use authorizations for our InteliSwab®COVID-19 test from the FDA for the professional, prescription self-test, and over-the-counter settings. |
• We received three major government contracts to support the launch of InteliSwab® including a |
• We continued to advance our innovation growth strategy with the development of several new products in our Molecular Solutions business including our FDA approved Omnigene®-Gut collection kit, our metatranscriptome services launch through our Diversigen subsidiary, and new cancer chemistry on our Collipee® urine collection device. |
2021 NEO Compensation at a Glance
NEO compensation for 2021 was as follows:
• | Base Salary: The base salaries paid to our senior management (including the NEOs) during 2021 increased from 2020 by 4.6% on average. Salary adjustments for 2021 were based on the performance of each executive and the Company during 2020, the marketplace compensation data provided to the Compensation Committee in 2020 by its compensation consultant and the Company-wide average salary merit increase
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NEO | 2020 Performance Rating | 2020 Salary | 2021 Salary | Change (%) | ||||||||
Stephen S. Tang, Ph.D. | Outstanding | $ 624,225 | $ 667,921 | 7.00% | ||||||||
Scott Gleason1 | N/A | N/A | $400,000 | N/A | ||||||||
Roberto Cuca | Outstanding | $439,205 | $461,165 | 5.00% | ||||||||
Agnieszka Gallagher1 | N/A | N/A | $465,000 | N/A | ||||||||
Jack E. Jerrett | Meets | $415,358 | $423,665 | 2.00% | ||||||||
Kathleen G. Weber2 | Outstanding | $365,650 | $416,246 | 13.84% |
1Mr. Gleason and Ms. Gallagher joined the Company in May 2021 and November 2021, respectively, and the 2021 salary reflects their annualized salary for the full year.
2Ms. Weber’s 2021 salary reflects a combined merit, performance and market-based adjustment.
• | Annual Incentive Bonuses: Incentive cash bonus awards for 2021 performance were based on pre-established funding financial goals consistent with our operating plan, together with individual performance results. Payouts determined based on actual performance during 2021 ranged from 60% to 140% of target for each of the NEOs based on a combination of Company and individual results. |
NEO | 2021 | 2021 Target | Actual 2021 Bonus Payments | |||||||
($) | (% Salary) | (% Target) | ||||||||
Stephen S. Tang, Ph.D. | Low Meets | 85% | $ 340,640 | 51% | 60% | |||||
Scott Gleason | Exceeds | 35% | $ 182,000 | 46% | 130% | |||||
Agnieszka Gallagher | High Meets | 45% | $ 240,638 | 52% | 115% | |||||
Jack E. Jerrett1 | N/A | 40% | $ 169,466 | 40% | 100% | |||||
Kathleen G. Weber | Outstanding | 40% | $ 233,098 | 56% | 140% |
1Pursuant to his retirement agreement, Mr. Jerrett’s bonus payment under the 2021 Incentive Plan was equal to 40% of his base salary, subject to adjustment to reflect the actual bonus pool funding approved by the Board.
• | Long-Term Incentive Awards: Incentive equity awards granted to Dr. Tang and the other NEOs (except for Mr. Gleason and Ms.
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NEO | 2020 | Target Range | 2021 Equity Awards | |||||||
($) | (% Salary) | |||||||||
Stephen S. Tang, Ph.D. | Outstanding | 250%-350% | $ | 2,281,666 | 366% | |||||
Scott Gleason1 | N/A | 70%-130% | $ | 400,000 | 100% | |||||
Roberto Cuca | Outstanding | 105%-175% | $ | 768,609 | 175% | |||||
Agnieszka Gallagher2 | N/A | 95%-155% | $ | 1,000,000 | 215% | |||||
Jack E. Jerrett | Meets | 95%-155% | $ | 519,423 | 125% | |||||
Kathleen G. Weber | Outstanding | 95%-155% | $ | 566,758 | 155% |
1Mr. Gleason received an onboarding equity award when he joined the company in May 2021 consisting of 50% time-vested RS and 50% PRUs, with terms substantially the same as the terms of awards made to the Company’s other executives in February 2021. The indicated amount reflects the aggregate grant date fair value of the award on May 17, 2021.
2Ms. Gallagher received an onboarding equity award when she joined the company in November 2021 consisting of $250,000 of time-vested RS, with cliff vesting occurring five years after date of grant; $250,000 time-vested RS vesting in equal amounts over three years, and $500,000 of stock options vesting over four years.
Additional information regarding NEO compensation for 2021 is provided below in this CD&A and in the accompanying tables, including the Summary Compensation Table (“SCT”) set forth below.
We follow a pay-for-performance approach in compensating executives. Our program pays executives for performance by rewarding the achievement of predetermined financial and/or strategic objectives.
A significant portion of each NEO’s compensation is paid out in variable and long-term compensation that is intended to align such compensation with the long-term interests of our stockholders. Both our annual and long-term compensation are tied to the Company’s overall performance in a variety of ways, including our financial results and share price performance. A further discussion of our pay mix for the NEOs is set forth in the “Pay Mix” Section, below.
One aspect of our compensation program is the use of performance targets to incentivize management to achieve improved financial results on a year-to-year basis. For many years, annual financial objectives have been used to determine the amount of pool funding available to pay individual awards under our annual cash bonus plan. These objectives are generally set at levels intended to incentivize annual financial growth. A combination of financial and strategic objectives may also be considered, and in the past have been used, where the Compensation Committee and the Board desire to incentivize management to meet certain near-term strategic objectives which could help drive improved financial performance in a year with increased financial uncertainty. Each year the Compensation Committee and the Board evaluate whether financial objectives, strategic objectives, or some combination thereof, would provide the most appropriate near-term incentives for our NEOs to achieve improved financial performance.
In addition, for the past several years we have followed a policy of granting annual equity awards to executives that consist of 50% PRUs and 50% time-vested RS. The PRUs will only vest if (i) the NEO remains employed by the Company for three years following the date of grant and (ii) the performance criteria determined by the Compensation Committee and the Board are met. For the PRUs granted in 2021, a cumulative three-year revenue target for the period 2021-2023 with a relative TSR modifier was established as the performance criteria. The time-vested RS portion of the award vests in equal annual installments over the three-year period following the grant date, subject to the NEO’s continued employment by the Company.
We believe the performance targets in the PRUs and the three-year service periods applicable to both the RS and PRU awards complement the short-term incentives in our annual bonus plan. We also believe the combination of the
structure of our annual bonus plan and the structure of our equity award policy appropriately incentivize management to deliver substantially improved financial performance both on an annual basis and over a longer term period and help drive long-term growth in stockholder value.
As noted above, despite the significant pandemic-related impact on our business, we made no COVID-19 adjustments to the funding objectives for our 2021 incentive bonus plan or PRU performance measures and the Compensation Committee applied no positive discretion in determining performance and payouts for our NEOs.
Compensation Governance Practices
We are committed to maintaining good corporate governance and practices. As a result, and in response to input from stockholders, the Compensation Committee and the Board have adopted a number of changes over the past several years to specifically respond to stockholder concerns and better align our compensation program with performance. The most significant of these changes was the adoption of PRUs for 50% of the value of annual long-term equity awards for our executives. These changes and certain other important aspects of our compensation practices are summarized below:
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Performance Mix – The vast majority of our NEOs’ compensation is performance-based. For example, for our NEOs other than our former CEO, 64% of their aggregate annual compensation consists of performance-based compensation. Diversified and Performance Based Portfolio – Our executive compensation consists of a mix of cash/equity, fixed/variable and short-term/long-term compensation. Performance Vested Equity – 50% of our NEOs’ annual equity awards consist of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during the three-year period. Long-Term Focus – Equity awards are subject to long-term vesting requirements, with time-vested RS vesting over 3 years. PRUs also vest only after three years. Structuring our equity awards in this manner helps | |||||||||||||||||||
Target Bonus Objectives – Our annual bonus pool is funded based on the | |||||||||||||||||||
Limited Bonus Pool Discretion – The aggregate bonus pool funding for annual cash bonuses is determined pursuant to a plan funding formula tied to the Company’s achievement of specific financial objectives. The Board and Compensation Committee can make discretionary adjustments to the pool, but such adjustments are limited to +/– 10% of the pool amount determined under | |||||||||||||||||||
Balanced Performance Metrics – Variable compensation is based on a combination of | |||||||||||||||||||
Change-in-Control Severance and Tax Gross Ups – Our policy is that | |||||||||||||||||||
Strong Stock Ownership and Retention Conditions – We have implemented stock ownership requirements of six (6) times salary for our President and CEO, two (2) times salary for our CFO and one (1) times salary for other NEOs. | |||||||||||||||||||
Prudent Benchmarking – The total compensation paid to our executives is targeted at the 50th percentile of our Peer Group of comparable companies based on | |||||||||||||||||||
Independent Compensation Consultants – The Compensation Committee regularly utilizes independent compensation consultants to provide compensation governance, design and benchmarking advice. During 2021, the Compensation Committee engaged Pay Governance as its independent consultant. | |||||||||||||||||||
Recoupment Policy – The Company maintains a compensation recoupment or “clawback” policy, under which we will seek to recover excess compensation paid to an executive if our financial statements are restated due to misconduct by that executive. |
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No Perquisites – As a general matter, we do not provide executives with any perquisites that are not offered to all employees of the |
Risk Review Process – We periodically assess the |
No Hedging - Our policy prohibits Directors and NEOs from engaging in |
No Pledging – Our Directors and NEOs are not permitted to pledge our |
Confidentiality/Non-Compete Agreements – Our NEOs are subject to confidentiality and
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To ensure that our executive compensation program and compensation levels are consistent with our pay-for-performance philosophy, we evaluated the degree of alignment between our former CEO’s total realizable pay (“RP”) versus our total shareholder returns (“TSR”) over the prior three fiscal years (2019 to 2021) relative to our Peer Group. The graph below shows the comparison of our three-year TSR and RP relative to our Peer Group.
Dr. Tang’s compensation for 2019 to 2021 each year includes base salary, incentive cash bonus and all other compensation reported in the SCT. Equity awards are valued using the closing stock price on December 31, 2021 for each company in our Peer Group. Restricted stock and restricted unit awards are valued by multiplying the number of shares or units by the applicable closing stock price. The number of restricted units included in the calculations for Dr. Tang reflects a payout based on the Company’s currently expected performance against the applicable performance measures for those awards. Option awards are valued as the difference between the closing stock price on December 31, 2021 and the exercise price multiplied by the number of option shares granted during the period. An option award with an exercise price greater than the closing stock price on December 31, 2021 is valued at $0.
As indicated by the graphical display of this RP versus performance analysis relative to peers, there was reasonable alignment between our TSR performance (which is only one perspective in assessing our performance) and the RP for our CEO relative to our Peer Group companies. This analysis confirms the strong link between pay and performance embedded in our compensation program.
Realizable Pay vs. SCT Compensation
As described further below, we believe long-term equity awards are a key incentive for our executives to drive the Company’s long-term growth and align the interests of our executives with those of our stockholders. The SCT includes the estimated value of long-term incentive equity awards at the time of grant based on the accounting valuation determined under Financial Accounting Standards Board ASC Topic 718 (“FASB ASC Topic 718”). The actual value of these awards that may be realizable by our executives may vary from these accounting-based estimates depending on the Company’s financial and stock performance and can differ significantly from what is reported in the SCT.
A comparison of the realizable value of long-term equity incentive awards as of December 31, 2021 against the values reported in the SCT indicates how compensation outcomes may be impacted by our performance. Such a comparison also shows the degree of alignment between our stock performance and the level of compensation provided to executives.
The table below compares the compensation values reported in the SCT and the value of RP for the compensation awarded during the three-year period 2019 to 2021 for our former CEO, Dr. Tang.
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Pay vs. Other Company Measures of Performance
While TSR is a common measure of performance that is often used to evaluate a company’s compensation practices, we consider other performance measures to be, at times, more reflective of the success of our business and more important as an incentive to focus our leaders on key priorities. It is important to recognize that TSR can be extremely volatile. TSR can be, and often is, influenced by a variety of macro-economic factors that are outside the control of our executives. The following summarizes our one-year TSR during the period 2014 to 2021:
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||||
TSR | 61% | (37%) | 36% | 115% | (38%) | (31%) | 32% | (18%) |
The foregoing price changes were not solely tied to our underlying performance. For example, our stock price declined in 2015 and 2018 even though we achieved record financial performance with substantial growth and strong profitability in those years.
As a result, while our executive compensation opportunities do not follow a linear relationship with TSR, the pay realizable to our executives (as noted above for our former CEO) should and does demonstrate a clear relationship with both TSR and financial results. We have tried to align our executive compensation with performance results that are part of our overall business strategy that we believe will drive stock price improvement and increased value for our stockholders over the longer term.
Say-on-Pay Results in 2021 and the Company’s Response
At our 2021 Annual Meeting, stockholders were asked to vote on an advisory (non-binding) basis on the compensation paid to our NEOs for 2020. We obtained strong stockholder support for our NEO compensation for 2020 with approximately 95% of stockholder votes cast in favor of our “Say-on-Pay” or SOP resolution. Even with this overwhelmingly positive response, we continued our historical approach to contact certain of our major stockholders in order to continue to understand their views regarding our compensation practices. Overall, we attempted to contact stockholders who, in the aggregate, beneficially held approximately 94.9% of our outstanding Common Stock. As a general matter, our stockholders either did not respond or indicated that they saw no need to meet with us at that time. Feedback that we have received over the past several years has consistently supported our historical compensation
designs and practices and for this reason we have made limited changes. As noted above, however, we recognize the importance of aligning executive rewards with the experience of shareholders, and so for PRU awards granted in 2021, we added a payout modifier based on how our TSR compares with peers over the 2021 to 2023 performance cycle.
We believe our stockholder engagement has been and continues to be beneficial for the Company and our stockholders. The feedback we received reaffirms that the compensation changes we made in recent years were responsive to stockholder concerns and our executive compensation is strongly aligned with performance. Based on this feedback, no material changes to our executive compensation program were made, although the Board intends to consider the specific stockholder feedback received in making future compensation decisions. We also intend to continue ongoing dialogue with our stockholders to ensure that our executive compensation programs are well understood by all stakeholders and that we remain responsive to stockholder concerns.
Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including:
The mix of fixed and variable compensation opportunities;
The balance between annual and long-term performance opportunities;
The corporate and individual performance objectives established for annual and long-term incentive compensation;
The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and stock ownership guidelines; and
Management periodically conducts a risk assessment of the Company’s compensation policies and practices, including its executive compensation program. In its review, management considers the attributes of the Company’s policies and practices and other factors, including:
The mix of fixed and variable compensation opportunities;
The balance between annual and long-term performance opportunities;
The corporate and individual performance objectives established for annual and long-term incentive compensation;
The internal controls and procedures in place to mitigate risks facing the Company, including the Company’s “clawback” policy and stock ownership guidelines; and
The risk that unintended consequences could result from various aspects of the Company’s compensation policies and practices.
Based on its consideration of the foregoing, management believes that the Company’s policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentivize employees to take unnecessary or excessive risks. The Company has also concluded that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
The primary objectives of our compensation program for executive officers are to:
Set compensation opportunities at levels sufficient to attract and retain high quality executives, to motivate them to contribute to our success and to reward them for performance. |
Ensure the compensation opportunities provided align the interests of executives with the interests of our stockholders. |
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Focus our executives on both short and longer-term individual and Company priorities established |
The total direct compensation provided to each executive consists of an annual base salary, an annual incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance.
We believe it is useful to regularly compare our compensation program against compensation paid to executives at other comparable medical diagnostic and healthcare companies. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, we have selected a Peer Group of companies using criteria based on industry, revenuesBoard and market capitalization and a competitive assessment of our executive compensation was prepared.
The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50th) percentile of amounts paid by the Peer Group of companiesappropriately reward them for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50th) percentile is intended as a market-based reference and not as a strict target or limit. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50th) percentile depending on the experience and individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors.against these objectives.
The total direct compensation provided to each executive consists of an annual base salary, an annual incentive cash bonus and long-term incentive equity awards. The amount of the incentive cash bonus and the size of annual incentive equity awards are variable and depend on an executive’s and the Company’s achievement of predetermined financial and other objectives. As a result, a substantial portion of each executive’s annual compensation is based on performance.
BENCHMARKING |
Among various other internal and external considerations, the Compensation Committee uses the practices and policies at other comparable medical diagnostic and healthcare companies as one piece of context in annually assessing the reasonableness and appropriateness of our executive compensation programs. With the assistance of Pay Governance, an independent compensation consultant engaged by the Compensation Committee, we annually review and select a Peer Group of companies using criteria primarily based on industry and company size.
Based on advice from Pay Governance, the Compensation Committee modified the Peer Group used for benchmark purposes to (i) increase the size of the peer group from 15 to 20 companies, (ii) remove 8 of the companies from the prior year’s Peer Group and (iii) add 13 new companies to the current Peer Group. This revision ensured that our peer group, which was last revised in 2018, is comprised of similarly sized companies relevant to our business (healthcare supplies, tools and services companies with particular focus on diagnostics) and reflective of the market in which we compete for executive talent. The following provides information about the Peer Group used by the Compensation Committee in assessing the competitiveness of executive compensation (all dollars in millions):
Company1 | FY2021 Revenue2 | Primary Industry | ||||||
AngioDynamics, Inc. | $ | 291 | Health Care Equipment | |||||
AtriCure, Inc. | $ | 274 | Health Care Equipment | |||||
Atrion Corporation | $ | 165 | Health Care Supplies | |||||
Avanos Medical, Inc. | $ | 745 | Health Care Supplies | |||||
BioLife Solutions, Inc. | $ | 119 | Health Care Supplies | |||||
Cerus Corporation | $ | 131 | Health Care Supplies | |||||
CONMED Corporation | $ | 1,011 | Health Care Equipment | |||||
Fluidigm Corporation | $ | 131 | Life Sciences Tools and Services | |||||
Haemonetics Corporation | $ | 870 | Health Care Supplies | |||||
Heska Corporation | $ | 254 | Health Care Equipment | |||||
Lantheus Holdings, Inc. | $ | 425 | Health Care Supplies | |||||
Meridian Bioscience, Inc. | $ | 318 | Health Care Supplies | |||||
Merit Medical Systems, Inc. | $ | 1,075 | Health Care Supplies | |||||
Mesa Laboratories, Inc. | $ | 134 | Health Care Equipment | |||||
NanoString Technologies, Inc. | $ | 145 | Life Sciences Tools and Services | |||||
Natus Medical Incorporated | $ | 473 | Health Care Equipment | |||||
Neogen Corporation | $ | 468 | Health Care Supplies | |||||
Quanterix Corporation | $ | 111 | Life Sciences Tools and Services | |||||
Quidel Corporation | $ | 1,699 | Health Care Supplies | |||||
Surmodics, Inc. | $ | 105 | Health Care Equipment | |||||
Summary Statistics: | ||||||||
25th Percentile | $ | 133 | ||||||
Median | $ | 283 | ||||||
75th Percentile | $ | 541 | ||||||
OraSure Technologies, Inc. | $234 | Health Care Supplies | ||||||
Percentile Rank | 41% |
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| All data
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The Compensation Committee seeks to set total direct compensation opportunity levels for each executive near the fiftieth (50th) percentile of amounts paid by the Peer Group of companies for performance consistent with the Company’s target financial and other business plans for the applicable year. Use of the fiftieth (50th) percentile is intended as a market-based reference and not as a strict target or limit. As a result, the total direct compensation opportunity and the value of specific compensation components for individual executives may fall below or exceed the fiftieth (50th) percentile depending on the experience and individual performance of the executive, the criticality of his or her role, the executive’s contribution to our business, and other factors.
In preparing its 2021 competitive assessment of executive compensation, Pay Governance compared the compensation of our NEOs with the pay practices of similar roles at companies within the Peer Group and using data for comparable positions reported in the 2021 Radford Global Life Sciences Survey. Since compensation market data can be volatile from year to year, the Compensation Committee considers both samples to ensure a thorough understanding of the competitive market.
2021 EXECUTIVE COMPENSATION COMPONENTS
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Our compensation program consists of the following components:
Compensation | Form of Compensation | Purpose | |||
Base Salary | Cash | ||||
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Annual Incentive Bonus Awards | Cash | Annual incentive bonus awards provide performance-based incentives to our executives to achieve both Company-wide financial and strategic goals and the executives’ individual performance objectives. | |||
Long-Term Incentive Awards | Performance-Vested Restricted Units (PRU) and Time-Vested Restricted Stock (RS) | The largest component | |||
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We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives.
The following charts illustrate the relative proportion of 2020 base salaries compared to the performance-based elements of our executive compensation is paid in equity. Annual LTIP awards for Dr. Tangthe NEOs consist of 50% PRUs and the other NEOs (except for Mr. Zezzo).
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Benefits
401(k) Plan
Retirement and health and welfare benefits provide a complete compensation package that is competitive with the market and addresses the needs of all employees and their families, including our executives.
Annual base salaries paid in 2020
Employment Agreements
Cash severance and
accelerated equity vesting
Severance and accelerated equity vesting are provided to our NEOs were established byexecutive officers in order to ensure continued focus on the Compensation Committee at the beginning of 2020 based on a reviewstrategic matters of the Company during potentially uncertain times.
We follow a pay-for-performance approach to executive compensation, with a significant portion of our executives’ compensation consisting of annual incentive cash bonuses and long-term equity awards that are based on the executives’ and the Company’s achievement of predetermined performance objectives.
The following charts illustrate the relative proportion of 2021 base salaries compared to the performance-based elements of our executive compensation for Dr. Tang and the other NEOs (except for Mr. Cuca who resigned in September 2021 and did not receive any performance-based compensation prior to his departure).
Approximately 77% of Dr. Tang’s aggregate compensation and 64% of the consisted of
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Compensation Components in Detail
2021 Base Salaries
Annual base salaries paid in 2021 to our NEOs were established by the Compensation Committee at the beginning of 2021 based on a review of the Company’s performance and the individual contributions of each officer compared to pre-established performance objectives for 2020. The Compensation Committee also considered the Company’s budget for expected salary adjustments and salary levels for comparable roles in the annual benchmarking review prepared by the Committee’s independent compensation consultant.
Based on these factors, the Compensation Committee approved an annual base salary increase for our senior management averaging approximately 4.6%. Individual salary increases for 2021 were determined by using the following guidelines:
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Does Not Meet Requirements | 0% |
In evaluating Dr. Tang’s and the Company’s performance, the Compensation Committee recognized the strategic accomplishments achieved during 2020, including the Company’s response to and overall strong revenue performance during the first year of the COVID-19 pandemic, the Company’s progress in developing COVID-19 products, the Company’s acquisition of UrSure and the integration of Diversigen.
In view of the foregoing, the Compensation Committee determined that Dr. Tang should receive an Outstanding performance rating for 2020 as a reflection of the mix of achievements during 2020. The remaining NEOs were evaluated based on individual objectives established for their respective positions.
As a result of these performance ratings, the Compensation Committee approved the 2021 salary levels set forth below for the NEOs. Dr. Tang’s salary reflected a combined merit plus performance adjustment of 7.0% in recognition of his Outstanding performance rating.
NEO | 2020 Performance Rating | 2020 Salary | 2021 Salary | % Increase | ||||
Stephen S. Tang, Ph.D. | Outstanding | $624,225 | $667,921 | 7.00% | ||||
Scott Gleason | N/A | N/A | $400,0001 | N/A | ||||
Roberto Cuca | Outstanding | $439,205 | $461,1652 | 5.00% | ||||
Agnieszka Gallagher | N/A | N/A | $465,0001 | N/A | ||||
Jack E. Jerrett | Meets | $415,358 | $423,665 | 2.00% | ||||
Kathleen G. Weber | Outstanding | $365,650 | $416,2463 | 13.84% |
1Represents annualized salary for Mr. Gleason and Ms. Gallagher because they joined the Company in May 2021 and November 2021, respectively and, therefore, were employed for only a portion of 2021.
2Represents annualized salary for Mr. Cuca because he resigned from his employment with the Company in September 2021 and was, therefore, employed for only a portion of 2021.
3Represents a 7% merit increase plus $25,000 as a result of a market-based compensation adjustment.
2021 Annual Incentive Cash Bonuses
Annual cash bonuses are included as part of executive compensation because the Compensation Committee and Board believe that a significant portion of each executive’s compensation should be structured as a variable incentive focused on short-term priorities relating to both the overall performance of the Company and the individual contributions of the executive. On an annual basis, the Compensation Committee has adopted, with approval of the Board, an incentive plan (the “Incentive Plan”), which is intended to be the principal vehicle for incentive cash bonus awards.
When establishing the terms of the Incentive Plan, the Compensation Committee and the Board evaluate which funding objectives will provide the most appropriate incentives for our NEOs to improve our annual financial performance. In recent years, bonus pool funding has been based solely on the achievement of annual financial objectives. Strategic objectives may also be (and in the past have been) used in combination with annual financial objectives where there is greater financial uncertainty facing the Company and the Compensation Committee and the Board desires to incentivize our NEOs to take near-term strategic steps required to drive annual financial growth and stability. In general, the Compensation Committee and the Board will choose those funding objectives, whether they be financial, strategic, or a combination thereof, which in their judgement provide the most appropriate incentive for management to drive improved financial performance on a year-over-year basis.
Where funding is based on the achievement of financial objectives, if the Company meets the Target levels for all funding objectives, the pool is initially funded at 100% of the aggregate projected bonuses for all participants in the Incentive Plan adjusted to reflect a normal range or mix of performance assessments (i.e., Outstanding, Exceeds, Meets, Does Not Meet), which increases or decreases the total amount of individual bonuses to be paid to participants. Unless circumstances require otherwise, the pool generally is initially funded at 50% of the aggregate projected bonuses if all of the Threshold levels are met and at 100% of the aggregate projected bonuses if all of the Target levels are met. High and Maximum objective levels may also be set, which would result in funding up to 150% and 200%, respectively, of the aggregate projected bonuses. A linear interpolation of the amount of funding for each target objective is made where a particular performance is between the pre-established performance levels. To the extent the performance level for a funding objective is below the Threshold level, generally there is no funding for that particular objective.
The amount of the cash bonus pool is determined by the Compensation Committee and recommended for Board approval. The Compensation Committee and Board also retain discretion to increase or decrease the size of the pool in order to reflect differences in the mix of actual performance assessments of the participants or market conditions affecting the Company or other factors. However, the Compensation Committee and Board have limited their ability to make discretionary bonus pool adjustments to +/- 10% of the pool size otherwise determined pursuant to the funding formula under the Incentive Plan. The cash bonus pool is used to pay bonuses not only to the Company’s NEOs, but also to all other officers and certain higher-level employees of the Company and its subsidiaries.
Individual payments from the bonus pool to executives are generally calculated using a formula that considers the size of the bonus pool, the executive’s achievement of individual performance objectives, the number of individuals participating in the Incentive Plan at the time bonuses are awarded and the executive’s target bonus percentage. Bonuses are paid based on an assessment of each executive’s performance for the applicable year, using targets expressed as a percentage of the executive officer’s annual base salary.
If an executive officer has met or exceeded his or her individual performance objectives and/or the Company’s expectations for the applicable year, he or she may be eligible to receive up to 150% of his or her target bonus, depending on the size of the bonus pool. The Compensation Committee and Board retain the discretion to adjust an individual executive’s performance evaluation and to increase or decrease the bonus paid to such individual to reflect the specific contributions of that executive, the Company’s overall performance, market conditions or other circumstances. The following guidelines are used to determine the multiple of an executive’s target bonus, or individual performance factor, to be used to calculate a bonus payout based on the executive’s performance rating for the applicable year:
Performance Rating | % Target Bonus | |
Outstanding | 125%-150% | |
Exceeds | 101% - 175% | |
Meets | 100% | |
Does Not Meet | 0% | |
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The Compensation Committee recommends for Board approval any bonus award for the CEO based on an assessment of the Company’s overall performance. The CEO recommends individual awards for the other executive officers for approval by the Compensation Committee based on an assessment of each executive’s performance against his or her applicable individual performance objectives. The Compensation Committee and Board have the right, in their sole discretion, to reject any or all of the recommended bonus awards, even if the bonus pool has been funded and any or all applicable performance criteria have been satisfied, based on the business conditions of the Company or other factors deemed relevant by the Compensation Committee or the Board.
In establishing the 2020 Incentive Plan, the Board and Compensation Committee decided that the amount of bonus pool funding should be based on the achievement of two financial objectives. Specific financial objectives were established for consolidated revenues and operating loss.
Under the 2020 Incentive Plan, Threshold, Target and Maximum performance levels were established for the financial objectives to be used to fund the bonus pool. The Target levels for each objective were set at the performance reflected in our Operating Plan or budget for 2020. The Threshold levels were set at 90% of the Target levels and the Maximum levels were set at 110% of the Target levels. It is important to note that these performance levels were selected before the impact of the COVID-19 pandemic was known or could be reasonably predicted.
Based on feedback from our stockholders, the Board decided that it would be appropriate to provide a greater incentive for revenue growth in the 2020 Incentive Plan. Accordingly, a Maximum performance level was established only for the consolidated revenue objective. As a result, additional bonus pool funding could only be provided if revenues
exceeded the Target performance level. No additional pool funding would be provided for exceeding the Target for the operating loss objective.
The following sets forth the financial objectives and potential bonus pool funding amounts (dollars in millions) under the 2020 Incentive Plan:
In establishing the 2021 Incentive Plan, the Board and Compensation Committee decided that the amount of bonus pool funding should be based on the achievement of one financial objective: consolidated revenues.
Under the 2021 Incentive Plan, Threshold, Target and Maximum performance levels were established for the financial objective to be used to fund the bonus pool. The Target levels for the objective were set at the performance reflected in our Operating Plan or budget for 2021. The Threshold levels were set at 91% of the Target levels and the Maximum levels were set at 114% of the Target levels.
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1Revenues exclude the financial impact of acquisitions or divestitures during 2020.
2Operating Loss excludes the financial impact of (1) acquisitions or divestitures during 2020, (ii) any change in value of contingent acquisition consideration and (iii) unrealized gains/losses on our non-qualified deferred compensation plan.
As indicated above, the maximum pool funding under the 2020 Incentive Plan (assuming no discretionary adjustment) is $6.7 million. During 2020, we recorded revenues for purposes of the Incentive Plan totaling $170.9 million after eliminating revenues from the UrSure, Inc. (“UrSure”) acquisition which occurred in mid-2020. This revenue level fell below the Maximum performance level, but above the Target performance level, resulting in pro-rated pool funding of $4.2 million for that objective. The Company’s 2020 operating loss for purposes of the Incentive Plan was $(4.8) million after eliminating the impact of the UrSure acquisition and certain other adjustments. This amount exceeded the Target performance level, and resulted in funding of $1.7 million for that objective. As a result, the aggregate pool funding under the 2020 Incentive Plan was calculated to be $5.9 million.
The final bonus pool amount was approved by the Compensation Committee and the full Board and was used to pay bonuses to the Company’s NEOs and other members of our management team. Neither the Compensation Committee nor the Board elected to make any discretionary adjustments under the 2020 Incentive Plan funding formula. The specific target payouts for NEO bonuses for 2020
The following sets forth the financial objectives and potential bonus pool funding amounts (dollars in millions) under the 2021 Incentive Plan:
Financial Objectives | Threshold | Target | Maximum | |||
Consolidated Net Revenues | $210.4 | $231.3 | $263.2 | |||
Incentive Plan Pool Funding (% of Target) | 50% | 100% | 200% |
As indicated above, the maximum pool funding under the 2021 Incentive Plan (assuming no discretionary adjustment) is $9.2 million. During 2021, we recorded revenues totaling $233.7 million. This revenue level fell below the Maximum performance level, but above the Target performance level, resulting in pro-rated pool funding of 101% of the target or $4.9 million.
The final bonus pool amount was approved by the Compensation Committee and the full Board and was used to pay bonuses to the Company’s NEOs and other members of our management team. Based on an assessment of each participant’s performance as well as the Company’s overall performance during 2021, the Compensation Committee recommended, and the Board approved, a 10% discretionary downward adjustment under the 2021 Incentive Plan funding formula. The specific target payouts for NEO bonuses for 2021 (expressed as a percentage of annual base salary) are shown below:
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Chief Executive Officer | 85% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Financial Officer (and Chief Operating Officer) | 50% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Senior Vice President
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In January 2022, the Compensation Committee authorized the payout of individual bonus awards to executive officers from the bonus pool for 2021 based on the target bonus amounts described above and an assessment of each officer’s performance during 2021 against pre-established performance objectives (except for Dr. Tang whose assessment was based on the Company’s overall performance). The calculation of individual bonus awards was based on a formula that adjusted the foregoing target payments for both the executives’ individual performance during 2021 and the degree to which the final approved bonus pool funding exceeded the Target funding amounts under the plan formula.
In evaluating Dr. Tang‘s and the Company‘s performance, the Compensation Committee recognized that management delivered strong revenue performance in 2021. Consolidated revenues were $233.7 million in 2021, representing a 36% increase over 2020. The Compensation Committee noted that this increase was primarily driven by increased sales across all product lines except sales of the Company’s International HIV self-test, and included the launch its InteliSwab®COVID-19 Rapid Test which contributed first time revenues of $22.7 million despite significant challenges in operations and scale up that prohibited the Company from meeting all of its goals in this area. Total molecular products and services revenues reached $143.6 million during 2021, an increase of 35% from 2020, and included almost $54 million in sales of oral fluid sample collection devices for COVID-19 molecular testing. The Compensation Committee further noted that although the Company exceeded its revenue targets, the Company did not meet other important objectives specifically related to InteliSwab scale up.
In view of the foregoing, the Compensation Committee determined that Dr. Tang should receive a “low meets” performance rating for 2021. The remaining NEOs were evaluated based on individual objectives established for their respective positions.
Using these performance ratings, the Compensation Committee next considered individual performance factors to adjust the bonuses for Dr. Tang, the other NEOs and the other participants in the 2021 Incentive Plan to reflect their performance assessments for 2021. As a final step, the Compensation Committee adjusted the bonuses further by a pool funding factor reflecting the amount by which pool funding exceeded Target funding amounts under the plan formula.
Using the approach described above, a final 2021 incentive cash bonus was calculated for Dr. Tang, representing approximately 60% of his target bonus, as follows:
2020 Base Salary | Target Bonus% | 2021 Individual Performance Factor | 2021 Bonus | |||||||||
X | X | = | ||||||||||
$667,921 | 85% | 60% | $340,640 |
This same formula was used to calculate the 2021 bonus awards for all other NEOs, as follows:
2021 Bonus Payments
NEO | 2021 Salary | Bonus Target (% Salary) | 2021 Performance Rating | Original Performance Rating | Adjusted 2021 Performance Factor1 | 2021 Bonus | ||||||
Stephen S. Tang, Ph.D. | $667,921 | 85% | Low Meets | 60% | N/A | $340,640 | ||||||
Scott Gleason | $400,000 | 35% | Exceeds | 140% | 130% | $182,000 | ||||||
Agnieszka Gallagher | $465,000 | 45% | High Meets | 115% | N/A | $240,638 | ||||||
Jack E. Jerrett | $423,665 | 40% | N/A2 | N/A1 | N/A1 | $169,466 | ||||||
Kathleen G. Weber | $416,246 | 40% | Outstanding | 150% | 140% | $233,098 |
1 Based on an assessment of each participant’s performance as well as the Company’s overall performance during 2021, the Compensation Committee recommended, and the Board approved, a 10% discretionary downward adjustment under the 2021 Incentive Plan funding formula to certain members of the executive team, including the NEOs, who did not have existing contractual agreements related to the 2021 bonus.
2 Pursuant to his retirement agreement, Mr. Jerrett received an incentive cash bonus for 2021 under the 2021 Incentive Plan.
2021 Long-Term Incentive Equity Awards
An additional way that we promote the long-term growth of the Company and align the interests of our executives with those of our stockholders is by compensating executives with equity in the Company that vests over a multi-year period. To accomplish this, the Compensation Committee administers the Company’s LTIP (Long-Term Incentive Policy), pursuant to which grants of time-vested restricted shares (RS) and performance-vested restricted units (PRUs) are made to executive officers.
Incentive equity awards under the LTIP are made on an annual basis, and are discretionary and subject to approval by the Compensation Committee and/or the Board. Awards to individual participants under the LTIP are based on an evaluation of a number of factors, including:
Performance of the participant for the applicable year;
The participant’s level of responsibilities and relative contribution to the Company’s business;
A competitive assessment of awards at Peer Group companies;
History of equity awards to the participant; and
Other factors deemed relevant by the Compensation Committee and/or the Board.
Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year, except for Dr. Tang who is evaluated based on total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board.
The value of potential incentive equity awards that could have been granted in 2020 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2019, are summarized below:
2020 LTIP Award Ranges (% of salary) | |||
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Position | Lower End | Target | Maximum |
President/CEO | 150% | 200% | 250% |
CFO | 105% | 140% | 175% |
EVP | 95% | 125% | 155% |
SVP and General Counsel | 95% | 125% | 155% |
Other SVPs | 70% | 90% | 115% |
The percentages set forth above were established at levels that the Compensation Committee believed represented an appropriate long-term incentive compensation value for each executive, based on the results of a competitive assessment of long-term incentive awards at the Peer Group companies. Once the aggregate dollar value of an award has been established by applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the NASDAQ Stock Market.
In January 2020, the range of percentages set forth above for annual incentive equity awards were increased by the Compensation Committee for Dr. Tang, the Company’s President and CEO to 250%/300%/350%, based on recommendations to the Compensation Committee from Pay Governance, in order to bring the range more closely in line with market levels. The new percentage ranges were effective beginning with the incentive equity awards made in 2021 for performance during 2020.
Under the LTIP, 50% of an executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. The awards made in 2020 incorporate two performance metrics: (i) a compound annual growth rate (“CAGR”) for consolidated revenues during the three-year period beginning with the year in which the award was made and (ii) a one-year income before income tax
(“IBIT”), performance measure followed by a further two-year vesting requirement. Because increased revenues are believed to be more directly tied to increased stockholder value, the Compensation Committee decided to consider a stronger incentive to drive revenues by tying 30% of the PRUs to the revenue CAGR performance measure and 20% of the PRUs to the IBIT performance measure. The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies.
The structure of the equity awards reflects market-based good governance practices as well as input from our stockholders, several of whom advocated that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group. In addition, although some stockholders have mentioned TSR as a possible performance target, most of the stockholders we have contacted in recent years indicated that other measures such as financial or operational objectives would also be appropriate. The Board decided to use consolidated revenue and IBIT targets because they are important for our business, especially as we continue improving our profitability, and because of the Board’s belief that these measures will directly influence the performance of our stock price over time. As discussed above, the Board does not believe that the use of TSR as a performance measure in the long-term incentive plan is appropriate at this time, although the choice of performance measures will be reviewed each year.
The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the remaining 50% of each award achieves the equally important goal of share ownership/accumulation that directly promotes alignment with stockholders and further supports executive retention. Overall, the Compensation Committee and Board believe that this approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best practices.
Equity awards are generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board.
Effective February 1, 2020, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2019, as summarized below. A description of the basis for each of the NEO’s 2019 performance evaluation is set forth above under the Section entitled, “2020 Base Salaries,” in this CD&A.
The following summarizes the equity awards provided to the NEOs during 2020:
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1 Ms. Nibauer received an onboarding equity award when she joined the Company in May 2020.
Compensation Developments in 2021
Pay Out Under 2018 PRUs. The PRU portion of equity awards made to executives in early 2018 based on performance during 2017 did not vest until three years after the grant date, based 50% on the achievement of a three-year product revenue CAGR target and 50% based on a one-year IBIT target. The three-year service period for these PRUs expired on February 1, 2021. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures:
Achievement Level of Applicable Performance Target | Percentage of PRUs To Become Vested |
80% | 50% |
90% | 75% |
100% | 100% |
110% | 125% |
120% | 150% |
For the 2018 PRUs, Company performance fell short of the three-year product revenue CAGR target and exceeded the one-year IBIT performance measure by more than 120%. This resulted in no payout on shares associated with the three-year product revenue CAGR measurement and in the maximum payout of 150% on shares associated with the one-year IBIT measurement. The following summarizes the three-year revenue CAGR and one-year IBIT targets for the 2018 PRUs, our performance against these targets and the resulting number of shares delivered to the NEOs upon settlement of the PRUs:
| Performance Target | Actual Performance | % of Target | % Vested |
CAGR | 8.50% | (0.07)% | (0.88)% | 0% |
IBIT | $33.7 million | $44.4 million | 132% | 150% |
Final Vesting |
|
|
| 75% |
| 2018 PRU’s Target and Actual Payout | |||
CAGR Target (# of shs) | CAGR Actual (# of shs) | IBIT Target (# of shs) | IBIT Actual (# of shs) | |
Stephen S. Tang, Ph.D.1 | N/A | N/A | N/A | N/A |
Roberto Cuca1 | N/A | N/A | N/A | N/A |
Lisa Nibauer1 | N/A | N/A | N/A | N/A |
Kathleen G. Weber | 4,004 | 0 | 4,004 | 6,006 |
Jack E. Jerrett | 4,377 | 0 | 4,378 | 6,567 |
Anthony Zezzo, II2 | 4,857 | 0 | 4,857 | 7,286 |
___________
1Dr. Tang, Mr. Cuca and Ms. Nibauer did not receive any 2018 PRU’s because they joined the Company after these awards were made.
2Under the terms of Mr. Zezzo’s retirement agreement, PRUs granted to Mr. Zezzo but unvested as of his retirement date of June 30, 2020 continue to vest without the employment requirement.
We provide minimal additional benefits outside of our primary elements of compensation, as follows:
All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Payments of employer-provided benefits accrued for a 401(k) Plan participant will be made upon retirement or upon termination of employment prior to retirement, provided certain vesting conditions have been met by the participant prior to termination. Our subsidiary DNA Genotek, which is located in Canada, offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $4,000 per year in 2020.
The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. A further description of these benefits is set forth in the Section entitled “Nonqualified Deferred Compensation.”
Perquisites and Other Compensation
As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. Executive officers generally do not receive any additional perquisites, except for Ms. Weber who receives certain benefits under her employment agreement in connection with her international assignment at our Canadian subsidiary, DNA Genotek, Inc. A further description of these benefits is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control.”
Performance of the participant for the applicable year;
The participant’s level of responsibilities and relative contribution to the Company’s business;
A competitive assessment of awards at Peer Group companies;
History of equity awards to the participant; and
Other factors deemed relevant by the Compensation Committee and/or the Board.
Each participant’s individual performance for the applicable year is evaluated against his or her individual performance objectives for that year, except for our CEO who is evaluated based on total Company performance. A “Meets Expectations” performance is typically the threshold requirement to receive an equity award under the LTIP. Awards below this performance level may be considered on an exception basis at the discretion of the Compensation Committee and/or the Board.
The value of potential incentive equity awards that could have been granted in 2021 under the LTIP (expressed as a percentage of annual base salary) based on performance during 2020, are summarized below:
2021 LTIP Award Ranges (% of salary) | ||||||||||||
Performance | ||||||||||||
Position | Lower End | Target | Maximum | |||||||||
President/CEO | 250 | % | 300 | % | 350 | % | ||||||
CFO | 105 | % | 140 | % | 175 | % | ||||||
EVP | 95 | % | 125 | % | 155 | % | ||||||
Business Unit Leads and General Counsel | 95 | % | 125 | % | 155 | % | ||||||
Other SVPs | 70 | % | 100 | % | 130 | % |
The percentages set forth above were established at levels that the Compensation Committee believed represented an appropriate long-term incentive compensation value for each executive, based on the results of the benchmarking review prepared by its independent consultant. Once the aggregate dollar value of an award has been established by applying the Compensation Committee approved award percentage to a participant’s base salary, the value is converted into shares or units based on a valuation of the restricted stock and restricted unit portions of the award using the average of the high and low stock price on the grant date as reported on the Nasdaq Stock Market.
Under the LTIP, 50% of an executive’s total equity award consists of PRUs that will not vest until three years after the grant date and only if certain performance measures are met during that three-year period. The awards made in 2021 incorporate one performance metric: cumulative revenues during the three-year period beginning with 2021, and are further subject to a modifier of up to +/- 15% based on relative TSR against the TSRs of companies included in the Peer Group used by the Board and Committee for executive compensation benchmarking purposes.
| PRU Payout Modifier | |
P25 or lower | -15% | |
P50 | 0% | |
P75 or higher | +15% |
* intermediate results are interpolated on a straight line basis
The remaining 50% of each executive’s incentive equity award consists of grants of time-vested RS that vest in equal annual installments over a three-year period. These vesting restrictions serve to promote the Company’s long-term growth by restricting executives’ ability to realize short-term gains from their awards. The Compensation Committee believes the
terms of its incentive equity awards to executives are competitive with the terms of equity awards offered at comparable medical diagnostics and healthcare companies.
The structure of the equity awards reflects market-based good governance practices as well as historical input from our stockholders reflecting that a meaningful portion of the equity awards should have performance-based vesting. We believe 50% is a meaningful portion and is consistent with or exceeds the performance orientation of our Peer Group.
The adoption of performance-based vesting conditions with a three-year service requirement for 50% of an executive’s annual equity award substantially strengthens the link between pay and performance and creates an appropriate long-term incentive for our executives. At the same time, the use of time-based vesting conditions for the
remaining 50% of each award achieves the equally important goal of share ownership/accumulation that directly promotes alignment with stockholders and further supports executive retention. Overall, the Compensation Committee and Board believe that this approach represents a balanced performance-based approach to our executive compensation program that is appropriate for our Company, directly responds to feedback from our stockholders, and is consistent with executive pay governance best practices.
Equity awards are generally made by the Compensation Committee each year as part of the normal annual compensation cycle. The awards for a particular year generally occur in late January or early February of the following year after the Company’s full year financial results are known and performance evaluations for the executive officers have been prepared. Equity awards approved by the Compensation Committee for the CEO are then reviewed and approved by the Board. In addition to the annual equity awards, the Compensation Committee may approve equity awards for newly hired officers or in recognition of an executive’s promotion or expansion of responsibilities. These latter grants may have vesting or other terms that differ from the terms generally approved for annual equity awards. Notwithstanding the terms of the LTIP, equity awards are made at the discretion of the Compensation Committee or Board.
Effective February 1, 2021, the Compensation Committee approved equity awards for the NEOs under the LTIP based on the performance evaluations of such officers for 2020, as summarized below. A description of the basis for each of the NEO’s 2020 performance evaluation is set forth above under the Section entitled, “2021 Base Salaries,” in this CD&A.
The following summarizes the equity awards provided to the NEOs during 2021:
Executive Officer | 2020 Performance Assessment | Time Vested Restricted Stock | Performance-Vested Restricted Units | Non-Qualified |
(% of Base Salary) | |||||
Stephen S. Tang, Ph.D. | Outstanding | 73,342 Shs | 73,342 Shs | N/A | 366% | |||||
Scott Gleason1 | N/A | 20,439 Shs | 20,439 Shs | N/A | 100% | |||||
Roberto Cuca | Outstanding | 24,706 Shs | 24,706 Shs | N/A | 175% | |||||
Agnieszka Gallagher2 | N/A | 52,534 Shs | 0 Shs | 113,448 Shs | 215% | |||||
Jack E. Jerrett | Meets | 16,689 Shs | 16,689 Shs | N/A | 125% | |||||
Kathleen G. Weber | Outstanding | 18,218 Shs | 18,218 Shs | N/A | 155% |
1 Mr. Gleason received an onboarding equity award when he joined the company in May 2021 consisting of 50% time-vested RS and 50% PRUs, with terms substantially the same as the terms of awards made to the Company’s other executives in February 2021. The indicated amount reflects the aggregate grant date fair value of the award on May 17, 2021.
2 Ms. Gallagher received an onboarding equity award when she joined the company in November 2021 consisting of $250,000 of time-vested RS, with cliff vesting occurring five years after date of grant; $250,000 time-vested RS vesting in equal amounts over three years, and $500,000 of stock options vesting over four years.
2019 PRU Payout in 2021
Pay Out Under 2019 PRUs. The PRU portion of equity awards made to executives in early 2019 based on performance during 2018 did not vest until three years after the grant date, based 50% on the achievement of a three-year product revenue compound annual growth rate (“CAGR”) target and 50% based on a one-year IBIT target. The three-year service period for these PRUs expired on February 1, 2022. The following table summarizes the potential range of shares that could be delivered based upon the degree of achievement of the applicable performance measures:
Achievement Level of Applicable Performance Target | Percentage of PRUs To Become Vested | |
80% | 50% | |
90% | 75% | |
100% | 100% | |
110% | 125% | |
120% | 150% |
For the 2019 PRUs, Company performance exceeded the three-year product revenue CAGR target by more than 120% and fell short of the one-year IBIT performance measure. This resulted in a maximum payout of 150% on shares associated with the three-year product revenue CAGR measurement and no payout on shares associated with the one-year IBIT measurement. The following summarizes the three-year revenue CAGR and one-year IBIT targets for the 2019 PRUs, our performance against these targets and the resulting number of shares delivered to the NEOs upon settlement of the PRUs:
| Performance Target | Actual Performance | % of Target | % Vested | ||||
CAGR | 9.79% | 21.13% | 216% | 150% | ||||
IBIT | $27.1 million | $20.2 million | 75% | 0% | ||||
Final Vesting | 75% |
2019 PRU’s Target and Actual Payout | ||||||||
CAGR Target (# of shs) | CAGR Actual (# of shs) | IBIT Target (# of shs) | IBIT Actual (# of shs) | |||||
Stephen S. Tang, Ph.D. | 23,936 | 35,904 | 23,936 | 0 | ||||
Scott Gleason1 | N/A | N/A | N/A | N/A | ||||
Roberto Cuca1 | N/A | N/A | N/A | N/A | ||||
Agnieszka Gallagher1 | N/A | N/A | N/A | N/A | ||||
Jack E. Jerrett2 | 9,262 | 13,893 | 9,262 | 0 | ||||
Kathleen G. Weber | 6,514 | 9,771 | 6,514 | 0 |
1Mr. Cuca, Mr. Gleason and Ms. Gallagher did not receive any 2019 PRU’s because they joined the Company after these awards were made.
2Under the terms of Mr. Jerrett’s retirement agreement, PRUs granted to Mr. Jerrett but unvested as of his retirement date of December 31, 2021 continue to vest without the employment requirement.
|
We provide minimal additional benefits outside of our primary elements of compensation, as follows:
All of our U.S. employees, including executive officers, are eligible to participate in our 401(k) profit sharing plan (the “401(k) Plan”). We make matching contributions for participants on a dollar-for-dollar basis up to $4,000 per year. Our subsidiary DNA Genotek, which is located in Canada, offers a registered retirement plan to its employees, which similarly allows employee contributions for retirement savings, with matching contributions by DNA Genotek of up to CAD $4,000 per year.
The Company also maintains the OraSure Technologies, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) for the benefit of the Company’s highly compensated employees, including all of the NEOs, and its non-employee Directors. The Deferred Compensation Plan allows participants to defer up to 100% of their annual base salaries (or fees in the case of non-employee Directors) and up to 100% of annual incentive cash bonuses and, upon vesting, restricted shares of the Company’s Common Stock awarded to the participant. The Company may also make discretionary contributions to the participants’ accounts that vest over one or more years as determined by the Company, as well as upon death, disability or a change of control. Since the Deferred Compensation Plan was put in place, the Company has made no discretionary contributions. Participants may elect to receive distributions of deferred amounts on a specified date, separation from service, a change of control, disability and/or death. A further description of these benefits is set forth in the Section entitled “Nonqualified Deferred Compensation.”
Perquisites and Other Compensation
As a general matter, the Compensation Committee and Board do not believe that executive officers should be treated differently than other employees by receiving special perquisites unrelated to our general compensation program. Therefore, our healthcare, disability, and other insurance programs and benefits are the same for all eligible employees, including executive officers. Executive officers generally do not receive any additional perquisites, except for Ms. Weber who receives certain benefits under her employment agreement in connection with her international assignment at our Canadian subsidiary, DNA Genotek, Inc. A further description of these benefits is set forth in the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control.”
Potential Payments Upon Termination or Change of Control Pursuant to Employment Agreements
The Company has entered into employment agreements with each of the NEOs. In addition to the compensation elements discussed above, these agreements provide for post-employment severance payments and benefits in the event of termination of employment by the Company without “cause” or by the executive for “good reason” and provide enhanced severance payments upon such terminations in connection with a “change of control” of the Company. The terms of these arrangements are discussed in more detail under the Section entitled, “Employment Agreements and Potential Payments Upon Termination or Change of Control,” in this Proxy Statement. The Compensation Committee believes that these arrangements are generally consistent with industry practice at the Peer Group companies, provide an incentive to the applicable executive to remain with the Company, and serve to align the interests of stockholders and the executives in the event of a change of control of the Company.
Accounting and Tax Treatment of Compensation.
In approving the amount and form of compensation for the NEOs, the Compensation Committee considers all elements of the cost to the Company of providing such compensation, including accounting and tax implications. In particular, it considers the potential impact of Section 162(m) of the Internal Revenue Code (the “Code”), which disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1 million in any taxable year for certain covered employees. Notwithstanding these deductibility limitations, the Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable.
Compensation Recoupment Policy
The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted awards, stock options or other compensation, which was awarded to a covered officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the Company shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for recoupment of any compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“the Dodd-Frank Act”), this performance-based compensation exemption was eliminated. Thus, bonuses paid under the LTIP will be subject to the cap on deductibility described above. Notwithstanding the Tax Act, the Compensation Committee intends to maintain flexibility to pay compensation that is not entirely deductible when the best interests of the Company would make that advisable.
Compensation Recoupment Policy
The Board has adopted a compensation recoupment or “clawback” policy, applicable to all officers subject to Section 16 of the Exchange Act. Under this policy, the Company will pursue recoupment of any excess compensation, including incentive cash bonuses, restricted awards, stock options or other compensation, which was awarded to a covered officer based on financial statements of the Company where such statements are required to be restated as a result of the gross negligence, intentional misconduct or fraud of the covered officer. In addition to recoupment, the Company shall take such other remedial actions deemed necessary against a covered employee, including recommending disciplinary actions up to and including termination and other available remedies. The recovery period for recoupment of any compensation is up to three fiscal years preceding the date on which the Company is required to prepare and file the restated financial statements. This policy has been proactively adopted in advance of final guidance under Section 954 of the Dodd-Frank Act and will be amended to conform with this Section when final guidance is available.
As required by applicable law and SEC regulations, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Stephen S. Tang, Ph.D., our President and CEO.
For the 2020 fiscal year, (i) the median of the annual total compensation of all employees of the Company (other than Dr. Tang) and its subsidiaries was $62,735; and (ii) the annual total compensation of Dr. Tang, as reported in the Summary Compensation Table included immediately after this CD&A, was $3,085,421. Based on this information, for 2020 the ratio of the annual total compensation of Dr. Tang, our President and CEO, to the median of the annual total compensation for employees was 49
As required by applicable law and SEC regulations, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of Stephen S. Tang, Ph.D., our former President and CEO.
For the 2021 fiscal year, (i) the median of the annual total compensation of all employees of the Company (other than Dr. Tang) and its subsidiaries was $58,959; and (ii) the annual total compensation of Dr. Tang, as reported in the SCT included immediately after this CD&A, was $2,959,781. Based on this information, for 2021 the ratio of the annual total compensation of Dr. Tang, our President and CEO, to the median of the annual total compensation for employees was 50 to 1.
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, we took the following steps:
We determined that, as of December 31, 2021, our world-wide employee population consisted of 736 people.
To identify the “median employee” from our employee population, we compared the amount of salary, wages, overtime, commissions and bonuses of our employees as reflected in our payroll records. In making this determination, we did not annualize the compensation of employees who were hired in 2021 but did not work for us for the entire fiscal year. Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure.
Once we identified our median employee, we combined all of the elements of this employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation as described above.
COMPENSATION TABLES |
The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, 2021, 2020 and 2019:
Name & Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards3,4 ($) | Option Awards ($) | Non- Equity Incentive Plan Compen- sation5 ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All other Compen- sation6 ($) | Total ($) | |||||||||||||||||||||||||||
Stephen S. Tang, Ph.D. | 2021 | $ | 667,921 | — | $ | 1,946,860 | — | $ | 341,000 | — | $ | 4,000 | $ | 2,959,781 | ||||||||||||||||||||||
Former President and Chief | 2020 | $ | 624,225 | — | $ | 1,218,000 | — | $ | 1,239,196 | — | $ | 4,000 | $ | 3,085,421 | ||||||||||||||||||||||
Executive Officer | 2019 | $ | 609,000 | — | $ | 1,242,996 | — | $ | 258,825 | — | $ | 4,000 | $ | 2,114,821 | ||||||||||||||||||||||
Scott Gleason | 2021 | $ | 178,846 | 1 | — | $ | 424,620 | — | $ | 182,000 | — | $ | 2,077 | $ | 787,544 | |||||||||||||||||||||
Interim CFO, Senior Vice President, | 2020 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Corporate Communications & | 2019 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Investor Relations | ||||||||||||||||||||||||||||||||||||
Roberto Cuca | 2021 | $ | 381,475 | 1 | — | — | — | — | — | $ | 4,000 | $ | 385,476 | |||||||||||||||||||||||
Former Chief Financial Officer | 2020 | $ | 439,205 | — | $ | 686,522 | — | $ | 493,886 | — | $ | 4,000 | $ | 1,623,613 | ||||||||||||||||||||||
2019 | $ | 426,413 | — | $ | 639,102 | — | $ | 132,188 | — | $ | 4,000 | $ | 1,201,703 | |||||||||||||||||||||||
Agnieszka Gallagher | 2021 | $ | 26,827 | 1 | — | $ | 500,000 | $ | 500,000 | $ | 240,638 | — | — | $ | 1,267,466 | |||||||||||||||||||||
Executive Vice President, | 2020 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
General Counsel and | 2019 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Chief Compliance Officer | ||||||||||||||||||||||||||||||||||||
Jack E. Jerrett | 2021 | $ | 423,665 | 1 | $ | 169,466 | 2 | $ | 855,013 | — | — | — | $ | 4,000 | $ | 1,452,144 | ||||||||||||||||||||
Former Senior Vice President, | 2020 | $ | 415,358 | — | $ | 513,207 | — | 287,428 | — | $ | 4,000 | $ | 1,219,993 | |||||||||||||||||||||||
General Counsel and | 2019 | $ | 380,152 | — | $ | 480,976 | — | 93,137 | — | $ | 4,000 | $ | 958,265 | |||||||||||||||||||||||
Chief Compliance Officer | ||||||||||||||||||||||||||||||||||||
Kathleen G. Weber | 2021 | $ | 416,246 | — | $ | 483,596 | — | $ | 233,098 | — | $ | 465,898 | $ | 1,598,838 | ||||||||||||||||||||||
President, Molecular Solutions | 2020 | $ | 365,650 | — | $ | 465,940 | — | $ | 354,242 | — | $ | 524,121 | $ | 1,709,953 | ||||||||||||||||||||||
2019 | $ | 355,000 | — | $ | 338,272 | — | $ | 88,040 | — | $ | 342,773 | $ | 1,124,085 |
1 | The 2021 salaries shown for Mr. Gleason and Ms. Gallagher represent the amounts paid after they joined the Company on May 17, 2021 and November 29, 2021, respectively. The 2021 salary shown for Mr. Cuca represents the amount paid to Mr. Cuca during his service with the Company prior to his resignation date of September 17, 2021. The 2021 salary shown for Mr. Jerrett represents the amount paid to Mr. Jerrett during his service with the Company prior to his retirement date of December 31,
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The following table summarizes the compensation of our CEO and the other NEOs, for the fiscal years ended December 31, 2020, 2019 and 2018:
Name & Principal Position |
| Year |
| Salary ($) |
|
|
| Bonus ($) |
|
| Stock Awards3,4 ($) |
|
| Option Awards ($) |
|
| Non- Equity Incentive Plan Compen- sation5 ($) |
|
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
|
| All other Compen- sation6 ($) |
|
| Total ($) |
| ||||||||
Stephen S. Tang, Ph.D. |
| 2020 |
| $ | 624,225 |
|
|
|
| — |
|
| $ | 1,218,000 |
|
|
| — |
|
| $ | 1,239,196 |
|
|
| — |
|
| $ | 4,000 |
|
| $ | 3,085,421 |
|
President and Chief |
| 2019 |
| $ | 609,000 |
|
|
|
| — |
|
| $ | 1,242,996 |
|
|
| — |
|
| $ | 258,825 |
|
|
| — |
|
| $ | 4,000 |
|
| $ | 2,114,821 |
|
Executive Officer |
| 2018 |
| $ | 412,885 |
| 1 |
| $ | 230,000 |
| 2 | $ | 623,363 |
|
|
| — |
|
| $ | 818,346 |
|
|
| — |
|
| $ | 15,000 |
|
| $ | 2,099,594 |
|
Roberto Cuca |
| 2020 |
| $ | 439,205 |
|
|
|
| — |
|
| $ | 686,522 |
|
|
| — |
|
| $ | 493,886 |
|
|
| — |
|
| $ | 4,000 |
|
| $ | 1,623,613 |
|
Chief Financial Officer |
| 2019 |
| $ | 426,413 |
|
|
|
| — |
|
| $ | 639,102 |
|
|
| — |
|
| $ | 132,188 |
|
|
| — |
|
| $ | 4,000 |
|
| $ | 1,201,703 |
|
|
| 2018 |
| $ | 263,365 |
| 1 |
|
| — |
|
| $ | 435,758 |
|
|
| — |
|
| $ | 353,580 |
|
|
| — |
|
|
| — |
|
| $ | 1,052,703 |
|
Lisa Nibauer |
| 2020 |
| $ | 160,385 |
| 1 |
| $ | 50,000 |
| 2 | $ | 499,995 |
|
|
| — |
|
| $ | 340,464 |
|
|
| �� |
|
| $ | 4,000 |
|
| $ | 1,054,844 |
|
Executive Vice President, |
| 2019 |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Business Unit Leader |
| 2018 |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Diagnostics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathleen G. Weber |
| 2020 |
| $ | 365,650 |
|
|
|
| — |
|
| $ | 465,940 |
|
|
| — |
|
| $ | 354,242 |
|
|
| — |
|
|
| 399,468 |
|
| $ | 1,585,300 |
|
Executive Vice President, |
| 2019 |
| $ | 355,000 |
|
|
|
| — |
|
| $ | 338,272 |
|
|
| — |
|
| $ | 88,040 |
|
|
| — |
|
|
| 342,773 |
|
| $ | 1,124,085 |
|
Business Unit Leader, |
| 2018 |
| $ | 341,695 |
|
|
|
| — |
|
| $ | 346,666 |
|
|
| — |
|
| $ | 203,787 |
|
|
| — |
|
|
| 4,000 |
|
| $ | 896,148 |
|
Molecular Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack E. Jerrett |
| 2020 |
| $ | 415,358 |
|
|
|
| — |
|
| $ | 513,207 |
|
|
| — |
|
| $ | 287,428 |
|
|
| — |
|
| $ | 4,000 |
|
| $ | 1,219,993 |
|
Senior Vice President, |
| 2019 |
| $ | 380,152 |
|
|
|
| — |
|
| $ | 480,976 |
|
|
| — |
|
| $ | 93,137 |
|
|
| — |
|
| $ | 4,000 |
|
| $ | 958,265 |
|
General Counsel and |
| 2018 |
| $ | 369,804 |
|
|
|
| — |
|
| $ | 379,004 |
|
|
| — |
|
| $ | 220,654 |
|
|
| — |
|
| $ | 4,000 |
|
| $ | 973,462 |
|
Chief Compliance Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony Zezzo, II |
| 2020 |
| $ | 248,820 |
| 1 |
| $ | 289,758 |
|
| $ | 1,668,881 |
|
|
| — |
|
|
| — |
|
|
| — |
|
| $ | 193,258 |
|
| $ | 2,400,718 |
|
Former Executive Vice President, |
| 2019 |
| $ | 418,726 |
|
|
|
| — |
|
| $ | 510,641 |
|
|
| — |
|
| $ | 75,371 |
|
|
| — |
|
|
| — |
|
| $ | 1,004,738 |
|
Business Unit Leader, |
| 2018 |
| $ | 408,359 |
|
|
|
| — |
|
| $ | 420,519 |
|
|
| — |
|
| $ | 232,035 |
|
|
| — |
|
|
| — |
|
| $ | 1,060,913 |
|
Infectious Disease |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________________________2
|
|
2 The indicated amounts represent the onboarding cash bonuses paid to Dr. Tang and Ms. Nibauer pursuant to the terms of their respective employment agreements. The amount for Mr. ZezzoJerrett represents the cash bonus paid under the terms of his retirement agreement.
3 | The indicated amounts reflect the aggregate grant date fair value of RS and PRU awards made to the NEOs during the applicable year, computed in accordance with FASB ASC Topic 718. The value of the PRUs reflect the assumption that 100% of target will be achieved for each of the performance measures reflected in the terms of the PRUs. Certain assumptions used in the calculation of the indicated amounts are set forth for the applicable year of award in footnote 12 to the Company’s audited consolidated financial statements for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022 (the “2021 10-K Report”). The maximum grant-date fair value of the PRU awards made in 2021, assuming the highest level of performance measures will be achieved (120% of target resulting in a 150% payout), are as follows: Mr. Gleason, $336,927; Ms. Weber $300,324; and Mr. Jerrett, $275,118. Pursuant to his Transition Agreement, 50% of the PRU awards made in 2021 to Dr. Tang will vest at 100% of target on the eighth day following his termination date of March 31, 2022, representing a grant-date fair value of $403,014. |
4 |
|
4 The amount indicated for Mr. ZezzoJerrett for 20202021 also includes compensation resulting from the acceleration of unvested RS upon his retirement in the amount of $518,425$412,004 and value of unvested PRU which will continue to vest without the employment requirements in the amount of $590,218.$774,697
|
5 | The indicated amounts reflect |
|
|
The following table summarizes information concerning possible incentive cash bonuses and possible and actual RS and PRU awardspaid to the NEOs pursuant to an Incentive Plan, based on performance during the applicable year. For a description of incentive cash bonus payments for performance during 2021, see the Section entitled, “2021 Annual Incentive Cash Bonuses,” in the CD&A.
6 | The indicated amounts of $4,000 or $2,077 reflect cash contributed to a 401(k) profit sharing plan as an employer-matching contribution, which was offered to U.S. employees of the Company during each of the indicated years. The amount indicated for Ms. Weber in 2019 represents $4,000 in matching contributions to a 401(k) profit sharing plan, $14,347 for the |
|
The following table summarizes information concerning possible incentive cash bonuses and possible and actual RS and PRU awards for the NEOs during the fiscal year ended December 31, 2021:
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards2 | Estimated Possible Payouts Under Equity Incentive Plan Awards3 | |||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (# Shs.) | Target (# Shs.) | Maximum (# Shs.) | All other Stock Awards: Number of Shares of Stock or Units4 (#Shs.) | All other Option Awards: Number of Securities Underlying Options (#Shs.) | Exercise of Base Price of Option awards ($/Sh) | Grant Date Fair Value of Stock Awards5 ($) | |||||||||||||||||||
Stephen S. Tang, Ph.D. | 2/1/20211 | — | — | — | — | — | — | 73,342 | RS | — | — | $1,140,831 | ||||||||||||||||||
Former President and | 2/1/20211 | — | — | — | — | — | — | 73,342 | PRU | — | — | $806,029 | ||||||||||||||||||
Chief Executive Officer | N/A | $283,866 | $567,733 | $851,599 | 50,163 | RS | 60,195 | RS | 70,228 | RS | — | — | — | N/A | ||||||||||||||||
N/A | — | — | — | 50,163 | PRU | 60,195 PRU | 70,228 | PRU | — | — | — | N/A | ||||||||||||||||||
Scott Gleason | 5/21/20211 | — | — | — | — | — | — | 20,439 | RS | — | — | $199,996 | ||||||||||||||||||
Interim CFO, Senior Vice President, Corporate Communications & Investor Relations | 5/21/20211 | — | — | — | — | — | — | 20,439 | PRU | — | — | $224,625 | ||||||||||||||||||
N/A | $70,000 | $140,000 | $210,000 | N/A | N/A | N/A | — | — | — | N/A | ||||||||||||||||||||
N/A | N/A | N/A | N/A | — | — | — | N/A | |||||||||||||||||||||||
Roberto Cuca | 2/1/20211 | — | — | — | — | — | — | 24,706 | RS | — | — | $384,301 | ||||||||||||||||||
Former Chief Financial Officer | 2/1/20211 | — | — | — | — | — | — | 24,706 | PRU | — | — | $271,519 | ||||||||||||||||||
N/A | $115,291 | $230,583 | $345,874 | 14,824 | RS | 19,765 | RS | 24,706 | RS | — | — | — | N/A | |||||||||||||||||
N/A | — | — | — | 14,824 | PRU | 19,765 PRU | 24,706 | PRU | — | — | — | N/A | ||||||||||||||||||
Agnieszka Gallagher | 11/29/20211 | — | — | — | — | — | — | 52,534 | RS | — | — | $499,992 | ||||||||||||||||||
Executive Vice President, | 11/29/20211 | — | — | — | — | — | — | 113,448 | $9.52 | $1,079,741 | ||||||||||||||||||||
General Counsel and | N/A | $104,625 | $209,250 | $313,875 | N/A | N/A | N/A | — | — | — | N/A | |||||||||||||||||||
Chief Compliance Officer | N/A | N/A | N/A | N/A | — | — | — | N/A | ||||||||||||||||||||||
Jack E. Jerrett | 2/1/20211 | — | — | — | — | — | — | 16,689 | RS | — | — | $259,597 | ||||||||||||||||||
Former Senior Vice President, | 2/1/20211 | — | — | — | — | — | — | 16,689 | PRU | — | — | $183,412 | ||||||||||||||||||
General Counsel, and | N/A | $84,733 | $169,466 | $254,199 | 12,684 | RS | 16,689 | RS | 20,694 | RS | — | — | — | N/A | ||||||||||||||||
Chief Compliance Officer | N/A | — | — | — | 12,684 | PRU | 16,689 PRU | 20,694 | PRU | — | — | — | N/A | |||||||||||||||||
Kathleen G. Weber | 2/1/20211 | — | — | — | — | — | — | 18,218 | RS | — | — | $283,380 | ||||||||||||||||||
President, Molecular Solutions | 2/1/20211 | — | — | — | — | — | — | 18,218 | PRU | — | — | $200,216 | ||||||||||||||||||
N/A | $83,249 | $166,498 | $249,748 | 11,166 | RS | 14,692 | RS | 18,218 | RS | — | — | — | N/A | |||||||||||||||||
N/A | — | — | — | 11,166 | PRU | 14,692 PRU | 18,218 | PRU | — | — | — | N/A |
1 | Annual incentive equity awards to NEOs consisted of a combination of time-vested RS and PRUs that were granted in
|
|
4 | The indicated amounts represent the actual number of shares of RS or PRUs granted to the NEOs |
5 | The indicated amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718. |
|
| Option Awards1 |
| Stock Awards1 |
| |||||||||||||||||||||||||||||||
Name |
| Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options2 (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($/Sh.) |
| Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested2(#) | Market Value of Shares or Units of Stock That Have Not Vested 9($) |
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested 2(#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights That Have Not Vested9($) |
| |||||||||||||||||||||||
Stephen S. Tang, Ph.D. |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 37,116 |
| 3(a) |
| $ | 392,873 |
|
|
| — |
|
|
|
| — |
| |
President and Chief |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 31,915 |
| 3(b) |
| $ | 337,820 |
|
|
| — |
|
|
|
| — |
| |
Executive Officer |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 84,997 |
| 3(c) |
| $ | 899,693 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 23,936 |
| 3(d) |
| $ | 253,363 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 33,998 |
| 3(e) |
| $ | 359,869 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 50,998 |
| 3(f) |
| $ | 539,814 |
| |
Roberto Cuca |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 4,773 |
| 4(a) |
| $ | 50,522 |
|
|
| — |
|
|
|
| — |
| |
Chief Financial Officer |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 16,409 |
| 4(b) |
| $ | 173,689 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 47,908 |
| 4(c) |
| $ | 507,106 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 10,740 |
| 4(d) |
| $ | 113,683 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 12,307 |
| 4(e) |
| $ | 130,270 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 19,163 |
| 4(f) |
| $ | 202,840 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 28,745 |
| 4(g) |
| $ | 304,266 |
| |
Lisa Nibauer |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 14,071 |
| 5(a) |
| $ | 148,942 |
|
|
| — |
|
|
|
| — |
| |
Executive Vice President, |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 5,628 |
| 5(d) |
| $ | 59,572 |
| |
Business Unit Leader, |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 8,442 |
| 5(e) |
| $ | 89,359 |
| |
Diagnostics |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
Kathleen Weber |
|
| 4,129 |
|
|
|
| — |
|
|
| — |
| $ | 5.71 |
|
| 2/3/2024 |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
|
Executive Vice President |
|
| 10,404 |
|
|
|
| — |
|
|
| — |
| $ | 9.31 |
|
| 2/3/2025 |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
|
Business Unit Leader, |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 2,669 |
| 6(a) |
| $ | 28,251 |
|
|
| — |
|
|
|
| — |
| |
Molecular Solutions |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 8,685 |
| 6(b) |
| $ | 91,931 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 32,516 |
| 6(c) |
| $ | 344,182 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 6,006 |
| 6(d) |
| $ | 63,574 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 6,514 |
| 6(d) |
| $ | 68,951 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 13,006 |
| 6(e) |
| $ | 137,669 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 19,508 |
| 6(f) |
| $ | 206,492 |
| |
Jack E. Jerrett |
|
| 6,407 |
|
|
|
| — |
|
|
| — |
| $ | 5.71 |
|
| 2/3/2024 |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
|
Senior Vice President, |
|
| 13,650 |
|
|
|
| — |
|
|
| — |
| $ | 9.31 |
|
| 2/3/2025 |
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
|
General Counsel, and |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 2,918 |
| 7(a) |
| $ | 30,887 |
|
|
| — |
|
|
|
| — |
| |
Chief Compliance Officer |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 12,349 |
| 7(b) |
| $ | 130,714 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| 35,813 |
| 7(c) |
| $ | 379,081 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 6,567 |
| 7(d) |
| $ | 69,512 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 9,262 |
| 7(e) |
| $ | 98,038 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 14,326 |
| 7(f) |
| $ | 151,641 |
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 21,488 |
| 7(g) |
| $ | 227,450 |
| |
Anthony Zezzo, II |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 7,286 |
| 8(a) |
| $ | 77,122 |
| |
Former Executive Vice President |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 9,833 |
| 8(b) |
| $ | 104,082 |
| |
Business Unit Leader, |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 13,880 |
| 8(c) |
| $ | 146,920 |
| |
Infectious Disease |
|
| — |
|
|
|
| — |
|
|
| — |
| — |
|
| — |
|
| — |
|
|
|
| — |
|
|
| 20,820 |
| 8(d) |
| $ | 220,380 |
|
|
The following table summarizes information regarding unexercised stock options and unvested RS and PRUs held by the NEOs as of December 31, 2021:
Option Awards1 | Stock Awards1 | |||||||||||||||||
Name | Number of (#) | Number of (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($/Sh.) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested2(#) | Market Value of Shares or Units of Stock That Have Not Vested9($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested2(#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights That Have Not Vested9($) | |||||||||
Stephen S. Tang, Ph.D. Former President and Chief Executive Officer | — | — | — | — | — | 18,558 3(a) | $161,269 | — | — | |||||||||
— | — | — | — | — | 15,957 3(b) | $138,666 | — | — | ||||||||||
— | — | — | — | — | 42,499 3(c) | $369,316 | — | — | ||||||||||
— | — | — | — | — | 36,671 3(d) | $318,671 | — | — | ||||||||||
— | — | — | — | — | — | — | 35,904 3(e) | $312,006 | ||||||||||
— | — | — | — | — | — | — | 16,999 3(f) | $147,721 | ||||||||||
— | — | 25,499 3(g) | $221,586 | |||||||||||||||
— | — | — | — | — | — | — | 36,671 3(h) | $318,671 | ||||||||||
Scott Gleaon | — | — | — | — | — | 20,439 4(a) | $177,615 | — | — | |||||||||
— | — | — | — | — | — | — | 26,267 4(b) | $228,260 | ||||||||||
— | — | — | — | — | — | — | — | — | ||||||||||
— | — | — | — | — | — | — | — | — | ||||||||||
Agnieszka Gallagher Executive Vice President, General Counsel and Chief Compliance Officer | — | 113,448 | — | $9.52 | 11/29/2031 | — | — | — | — | |||||||||
— | — | — | — | — | — | — | 26,267 8(a) | $228,260 | ||||||||||
26,267 8(b) | $228,260 | |||||||||||||||||
Jack E. Jerrett | 6,407 | — | — | $5.71 | 2/3/2024 | — | — | — | — | |||||||||
13,650 | — | — | $9.31 | 2/3/2025 | — | — | — | — | ||||||||||
— | — | — | — | — | — | — | 13,893 7(a) | $120,730 | ||||||||||
— | — | — | — | — | — | — | 14,326 7(b) | $124,493 | ||||||||||
— | — | — | — | — | — | — | 21,488 7(c) | $186,731 | ||||||||||
— | — | — | — | — | — | — | 16,689 7(d) | $145,027 | ||||||||||
Kathleen Weber | 4,129 | — | — | $5.71 | 2/3/2024 | — | — | — | — | |||||||||
10,404 | — | — | $9.31 | 2/3/2025 | — | — | — | — | ||||||||||
— | — | — | — | — | 4,343 6(a) | $37,741 | — | — | ||||||||||
— | — | — | — | — | 21,677 6(b) | $188,373 | — | — | ||||||||||
— | — | — | — | — | 18,218 6(c) | $158,314 | — | — | ||||||||||
— | — | — | — | — | — | — | 9,771 6(d) | $84,910 | ||||||||||
— | — | — | — | — | — | — | 13,006 6(e) | $113,022 | ||||||||||
— | — | — | — | — | — | — | 19,508 6(f) | $169,525 | ||||||||||
— | — | — | — | — | — | — | 18,218 6(g) | $158,314 |
1 | The table does not include RS and PRUs awarded to the NEOs in February 2022 pursuant to the LTIP in respect of performance during 2021. |
2 | Stock options vest over four years, with the first 25% vesting on the first anniversary of the grant date and the remaining 75% vesting on a monthly basis over the next three years following the first anniversary of the grant date. Grants of RS vest over a three-year period, with one-third vesting on the first anniversary of the grant date, a second third vesting on the second anniversary and the final third vesting on the third anniversary. PRUs will not vest until three years from the grant date and only if certain performance measures are met during the three-year service period. |
3 | The indicated RS, and PRUs vest as follows: |
1
The table does not include RS and PRUs awarded to the NEOs in February 2021 pursuant to the LTIP in respect of performance during 2020.
(a) | 18,558 restricted shares on April 8, 2022 pursuant to the terms of Dr. Tang’s transition agreement; |
(b)
|