UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
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 |
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material under § 240.14a-12 |
Outset Medical, 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 in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
Notice of 20222023 Annual Meeting of Stockholders
Dear Outset Stockholders:
You are invited to attend Outset Medical, Inc.’s 20222023 Annual Meeting of Stockholders (the “Annual Meeting”).
When | Where | Record Date | ||
May 31, At | Via live audio webcast: www.virtualshareholdermeeting.com/ | Close of business on April |
At the Annual Meeting, stockholders will be asked to vote on the following matters:
Items of Business* | Board Recommendation | |||
Proposal 1: | To elect the |
| FOR each nominee | |
Proposal 2: | To hold a non-binding advisory vote to approve the |
| FOR | |
Proposal 3: |
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| To ratify the appointment of KPMG LLP as our independent registered public accounting firm for |
| FOR |
*We will also conduct any other business properly brought before the meeting.
Attending the Annual Meeting | Voting | |
Stockholders of record at the close of business on April See page 5 of the accompanying proxy statement for additional information regarding participation in the virtual meeting. | Your vote is very important to us. Whether or not you plan to attend the virtual Annual Meeting, please ensure your shares are represented by voting promptly. For instructions on how to vote your shares, please refer to the instructions on the Internet Notice you received in the mail, the section entitled “Annual Meeting Information” beginning on page 1 of the accompanying proxy statement or, if you requested to receive printed copies of these materials, your enclosed proxy card. |
By order of the Board of Directors, | Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting to be Held on May 31, This Notice of are available on our website athttps://investors.outsetmedical.com/financial-information/annual-reports, as well as at www.proxyvote.com. | |
| ||
John L. Brottem | ||
General Counsel and Secretary | ||
Outset Medical, Inc. | ||
3052 Orchard Drive | ||
San Jose, California 95134 | ||
April |
Table of Contents
1 | 30 | |||
8 | Proposal Two: Advisory Vote on Named | 30 | ||
8 | 31 | |||
9 | 49 | |||
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| 50 | ||
16 | 52 | |||
16 | 53 | |||
16 | 54 | |||
17 | 55 | |||
19 | 57 | |||
19 | 57 | |||
19 | 58 | |||
20 | 64 | |||
20 | 64 | |||
21 | 65 | |||
Security Ownership of Certain Beneficial | 65 | |||
21 |
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| 67 | |||
23 |
| 68 | ||
24 |
| Proposal Three: Ratification of Appointment | 68 | |
25 | ||||
25 | ||||
26 | 69 | |||
26 | 70 | |||
26 | 70 | |||
26 |
| Stockholder Proposals and Nominations for | 70 | |
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28 |
| 70 | ||
28 |
| A-1 | ||
29 |
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Proxy Statement
For the 20222023 Annual Meeting of Stockholders
To be held on May 31, 20222023
Our Board of Directors (“Board”) is soliciting your proxy for the 20222023 Annual Meeting of Stockholders (the “Annual Meeting”) of Outset Medical, Inc. (“Outset,” the “Company,” “we,” “us” or “our”) and at any adjournment, continuation or postponement of the meeting for the purposes described in this proxy statement and the accompanying Notice of 20222023 Annual Meeting of Stockholders. The Annual Meeting will take place on May 31, 20222023 at 10:00 a.m.1:30 p.m. Pacific Time in a virtual format via live audio webcast. If you held shares of our common stock as of the close of business on the record date, April 5, 2022,4, 2023, you are invited to attend the meeting at www.virtualshareholdermeeting.com/OM2022OM2023 and vote on the proposals described in this proxy statement. On or about April 14, 2022,13, 2023, we will be mailing a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) to our stockholders. The Internet Notice will include instructions on how to access the proxy materials over the Internet, including our proxy statement, Notice of 20222023 Annual Meeting of Stockholders, proxy card and our 20212022 annual report on Form 10-K (the “2021“2022 annual report”). The Internet Notice will also describe how to vote online and, if desired, how to receive a printed set of proxy materials.
Why did I receive a Notice of Internet Availability of Proxy Materials in the mail instead of a full set of proxy materials?
Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending the Internet Notice to our stockholders as of the record date, beginning on or about April 14, 2022.13, 2023. The Internet Notice will instruct you as to how you may access and review the proxy materials on the Internet and, if desired, how to request a printed set of proxy materials. In addition, by following the instructions in the Internet Notice, you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We believe that these rules allow us to conserve natural resources and reduce our costs of printing and delivering proxy materials, while providing a convenient method for stockholders to access the materials and vote.
We provided some of our stockholders with a printed set of proxy materials instead of the Internet Notice if they previously requested to receive paper copies. If you received a printed set of proxy materials, we encourage you to consider helping us reduce the environmental impact of delivering printed materials by signing up to receive all of your future proxy materials electronically.
Who can vote?
If you were a stockholder of record as of the close of business on April 5, 20224, 2023 (the “record date”), you are entitled to vote your shares at the Annual Meeting. As of the record date, 47,784,41249,215,704 shares of our common stock were issued and outstanding. Each share of our common stock is entitled to one vote on each matter properly brought before the meeting.
2023 Proxy Statement | 1 |
What am I voting on?
You are being asked to vote on fourthree proposals:
Proposal One: To elect the two (2)three (3) Class IIIII directors named in this proxy statement to hold office until the 20252026 annual meeting of stockholders;
Proposal Two: To hold a non-binding advisory vote to approve the 20212022 compensation of our named executive officers as disclosed in this proxy statement (the “say-on-pay vote”);
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Proposal Three: To hold a non-binding advisory vote on the frequency (i.e., every one, two or three years) of future advisory votes to approve named executive officer compensation (the “say-on-frequency vote”); and
Proposal Four: To ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2022.
How does Outset’s Board recommend that I vote on each proposal?
Our Board recommends that our stockholders vote as follows:
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Proposal | Board Recommendation | |||
Proposal One: | Election of Directors |
| “FOR”the election of each of the | |
Proposal Two: | Say-on-Pay Vote |
| “FOR”the approval, on a non-binding advisory basis, of the | |
Proposal Three: |
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| Ratification of Appointment of Independent Registered Public Accounting Firm |
| “FOR”the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for |
What if another matter is properly brought before the meeting?
Our Board is not aware of any other matters that will be presented for consideration at the Annual Meeting. However, if any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy intend to vote on those matters in accordance with their best judgment.
The procedures for voting in advance of the Annual Meeting depend on whether your shares are registered in your name or are held by a bank, broker or other nominee (a “broker”). You may also vote your shares electronically during a designated portion of the virtual Annual Meeting after logging in as a “stockholder” with your 16-digit control number at www.virtualshareholdermeeting.com/OM2022.OM2023. Whether or not you plan to attend the Annual Meeting, we encourage you to vote and submit your proxy in advance of the Annual Meeting by one of the methods described below.
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Stockholders of Record: Shares Registered in Your Name
If, on the record date, your shares were registered directly in your name with Outset’s transfer agent, American Stock Transfer & Trust Company, then you are a “stockholder of record.” As a stockholder of record, you may vote by proxy in advance of the Annual Meeting in three ways:
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Vote by Internet Go to http://www.proxyvote.com to complete an electronic proxy card. You will be asked to provide the company number and control number from the Internet Notice or proxy card. Your vote must be received by 11:59 p.m. Eastern Time on May 30, | Vote by telephone Dial toll-free 1-800-690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Internet Notice or proxy card. Your vote must be received by 11:59 p.m. Eastern Time on May 30, | Vote by mail If you received printed copies of the proxy materials, complete, sign and date the enclosed proxy card, and return it promptly in the envelope provided. If your signed proxy card is received by 11:59 p.m. Eastern Time on May 30, |
Beneficial Owner: Shares Registered in the Name of Broker
If, on the record date, your shares were held not in your name, but in an account with a broker as custodian on your behalf, then you are considered the “beneficial owner” of shares held in “street name.” The Internet Notice or proxy materials, as applicable, are being forwarded to you by that broker who is considered the stockholder of record of those shares for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your broker on how to vote your shares by following the instructions for voting set forth on that organization’s voting instruction card.
What is the effect of giving a proxy?What if I return a proxy card or otherwise vote but do not make specific choices?
Proxies are solicited by and on behalf of our Board, and Leslie Trigg (our President and Chief Executive Officer (“CEO”)) and John Brottem (our General Counsel and Secretary) have been designated as proxy holders by our Board. If you properly grant your proxy, your shares will be voted as you instruct.
If you return a signed proxy card or otherwise vote without marking specific voting selections, your shares will be voted as the Board recommends: “For” the election of two (2)three (3) Class IIIII directors (Proposal One); “For” the approval of named executive officer compensation (Proposal Two); “Every One Year” as the frequency of future advisory votes on named executive officer compensation (Proposal Three); “For” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 20222023 (Proposal Four)Three); and in accordance with the best judgment of your proxy holder for any other matters properly brought before the meeting, if any.
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Can I change my vote or revoke my proxy?
Yes. If you are a stockholder of record, you can change your vote or revoke your proxy before the Annual Meeting in any of these ways:
Vote again over the Internet or by telephone as instructed above before 11:59 Eastern Time on May 30, 2022.2023. Only your latest Internet or telephone vote is counted.
Submit a properly signed proxy card with a later date that is received no later than 11:59 Eastern Time on May 30, 2022.2023. Only your latest dated proxy card will be counted.
Send a timely written notice that you are revoking your proxy to Outset’s Corporate Secretary at 3052 Orchard Drive, San Jose, California 95134.
Attend the virtual Annual Meeting and vote electronically during the meeting. Simply attending the meeting will not, by itself, revoke your proxy.
If you are the beneficial owner of shares held in street name, you should follow the instructions provided by your broker, bank or other nominee to revoke previously submitted voting instructions.
What are broker non-votes?
Brokers holding shares on behalf of a beneficial owner may vote those shares in their discretion on certain “routine” matters even if they do not receive timely voting instructions from the beneficial owner. With respect to “non-routine” matters, the broker is not permitted to voteshares for a beneficial owner without timely received voting instructions. The only routine matter to be presented at the Annual Meeting is the proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for 20222023 (Proposal Four)Three). The election of directors (Proposal One), and the say-on-pay vote (Proposal Two) and the say-on-frequency vote (Proposal Three) are non-routine matters.
A broker non-vote occurs when a broker does not vote on a non-routine matter because the beneficial owner of such shares has not provided voting instructions with regard to such matter. If a broker exercises discretionary voting authority on Proposal Four,Three, such shares will be considered present at the Annual Meeting for quorum purposes and broker non-votes will occur as to Proposal One, Proposal Two Proposal Three or any other non-routine matters that are properly presented at the Annual Meeting. Broker non-votes will have no impact on the voting results.
How many shares must be present to hold the Annual Meeting?
A quorum must be present at the Annual Meeting for any business to be conducted. A quorum will be present if the holders of at least a majority of the outstanding shares of our common stock entitled to vote are present at the Annual Meeting online or represented by proxy. On the record date, there were 47,784,41249,215,704 shares of our common stock outstanding and entitled to vote. For purposes of determining the presence of a quorum, abstentions, withheld votes and broker non-votes are counted. If there is no quorum, the holders of a majority of shares present or represented by proxy at the Annual Meeting may adjourn the meeting to a later date.
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What vote is required for the approval of each proposal? What effect do “withhold” votes, abstentions and broker non-votes have on the proposals?
The following chart summarizes the proposals to be considered at the Annual Meeting, the vote required for approval of each proposal, and the manner in which votes will be counted:
Proposal | Voting Options | Vote Required to Adopt the Proposal | Effect of “Withhold” Votes or Abstentions | Effect of “Broker Non-Votes” |
Proposal One: Election of Directors | Plurality of the votes cast. This means that the | “Withhold” votes have no effect; only “For” votes affect the outcome of the election. | Brokers do not have discretion to vote. Broker non-votes will have no effect; only “For” votes affect the outcome of the election. | |
Proposal Two: Say-on-Pay Vote | For, Against or Abstain | Affirmative vote of a majority of the shares present or represented by proxy and entitled to vote on the proposal. | Abstentions are considered shares present and entitled to vote, and therefore have the same impact as votes “Against” the proposal. | Brokers do not have discretion to vote. Broker non-votes will have no effect. |
Proposal Three:
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Ratification of Appointment Independent Registered Public Accounting Firm | For, Against or Abstain | Affirmative vote of a majority of the shares present or represented by proxy and entitled to vote on the proposal. | Abstentions are considered shares present and entitled to vote, and therefore have the same impact as votes “Against” the proposal. | Brokers have discretion to vote. Therefore, we do not expect any broker non-votes. |
Important Information About Our Virtual Annual Meeting:
Why is the Annual Meeting being held in a virtual format this year? Our Annual Meeting will again be held in a virtual meeting format via live audio webcast. We believe the virtual format enables usour stockholders to provide convenient access tosafely and conveniently attend the Annual Meeting, for our stockholders and facilitateswhile facilitating active and equal participation for all stockholders at no cost regardless of geographic location, while also supporting the health and safety of all participants.location. We have designed our virtual format to help ensure that our stockholders who attend the Annual Meeting virtually will be afforded similar rights and opportunities to participate as they would at an in-person meeting.
How can I attend the Annual Meeting online? To join the Annual Meeting online, visit www.virtualshareholdermeeting.com/OM2022OM2023 and log in as a stockholder with your 16-digit control number included on your Internet Notice, on your proxy card or on the instructions that accompanied your proxy materials.
When can I join the virtual Annual Meeting? The meeting will begin promptly at 10:00 a.m.1:30 p.m. Pacific Time on Tuesday,Wednesday, May 31, 2022.2023. You may access the meeting platform beginning at 9:45 a.m.1:15 p.m. Pacific Time, and we encourage you to join in advance of the meeting start time to allow sufficient time to log in and confirm your connection and audio are working properly.
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Can I ask questions during the virtual Annual Meeting? Yes. If you are logged in as a stockholder at the virtual Annual Meeting, you will have an opportunity to submit questions live via the Internet during a designated portion of the virtual Annual Meeting. Once you are logged in, type your question into the question box and click “submit.”
Subject to time constraints, we intend to answer questions pertinent to the Company and meeting matters submitted by stockholders during the Annual Meeting that comply with our rules of conduct for the Annual Meeting, which will be posted on the meeting website during the meeting as well as on the Investors section of our website prior to the meeting.
2023 Proxy Statement | 5 |
How do I vote during the virtual Annual Meeting? You will have an opportunity to vote your shares electronically during a designated portion of the virtual Annual Meeting after logging in as a stockholder with your 16-digit control number at www.virtualshareholdermeeting.com/OM2022.OM2023. Whether or not you plan to join the Annual Meeting, we encourage you to vote and submit your proxy in advance of the meeting by one of the methods described in these proxy materials.
What if I lost my 16-digit control number? If you do not have your 16-digit control number, you will still be able to log in to the virtual Annual Meeting as a guest. To join the meeting webcast, visit www.virtualshareholdermeeting.com/OM2022OM2023 and register as a guest. If you log in as a guest, you will not be able to vote your shares or ask questions during the meeting.
Will a list of stockholders be available for inspection prior to and during the meeting?Yes. A complete list of stockholders of record will be available for inspection by any stockholder for at least ten (10) days prior to the Annual Meeting during ordinary business hours at our headquarters located at 3052 Orchard Drive, San Jose, California 95134. In addition, the list will be available for inspection online during the virtual Annual Meeting if you logged in as a stockholder with your 16-digit control number.
Will a recording of the meeting be available? Yes, following the Annual Meeting, a recording of the meeting will be available on www.virtualshareholdermeeting.com/OM2022OM2023 for one year following the meeting date.
Who will count the votes?
Representatives of Broadridge Investor Communications Services (“Broadridge”) will tabulate the votes, and a representative of Broadridge will act as inspector of election.
Who is paying for this proxy solicitation?
We will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by our directors, officers or employees (for no additional compensation) in person, by telephone or by other means of communication, including by mail or e-proxy. We may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one Internet Notice?
If you receive more than one Internet Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each Internet Notice to ensure that all of your shares are voted.
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How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on form 8-K that we expect to file with the SEC within four business days after the Annual Meeting.
2023 Proxy Statement | 6 |
Why were my proxy materials included in the same envelope as other people at my address? How may I obtain an additional copy of the proxy materials?
We have adopted a procedure approved by the SEC called “householding.” Under this procedure, we deliver a single copy of the Internet Notice and, if applicable, our proxy materials to stockholders of record who share the same address, unless we have received contrary instructions from any stockholder at that address. This practice is designed to eliminate duplicate mailings, conserve natural resources and reduce our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. If you share an address with another stockholder and receive only a single copy of the Internet Notice or, if applicable, our proxy materials, but would like to request a separate copy of these materials, please contact our mailing agent, Broadridge Financial Solutions, Inc., by calling 1-866-540-7095 or writing to 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department and an additional copy of the materials will be promptly delivered to you. Similarly, if you receive multiple copies of the Internet Notice or, if applicable, the proxy materials but would prefer to receive a single copy in the future, you may also contact Broadridge Financial Solutions, Inc. at the above telephone number or address. Beneficial owners should contact their broker to request information about householding procedures.
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Board and Corporate Governance Matters
Proposal One: Election of Directors
General
Our Board currently consists of seveneight directors and is divided into three classes of directors that serve staggered three-year terms, currently Class I, with a term expiring in 2024, Class II, with a term expiring in 20222025 and Class III, with a term expiring in 2023. At the Annual Meeting, our stockholders will vote on the election of twothree Class IIIII directors for an additional three-year term expiring at our 20252026 annual meeting of stockholders. Each of our other current directors will continue to serve as a director until the expiration of his or her three-year term and the election and qualification of his or her successor.
The twothree directors currently serving on our Board in Class II,III, the class whose term of office expires in 2022,2023, have each been nominated by our Board, upon the recommendation of our Nominating and Corporate Governance Committee, to stand for election at the Annual Meeting: D. Keith GrossmanJim Hinrichs, Andrea L. Saia and Patrick T. Hackett.Catherine Szyman. Each of these twothree nominees has consented to being named as a nominee in this proxy statement and has agreed to serve, if elected, until our 20252026 annual meeting of stockholders and until the election and qualification of his successor.
For more information about each of the director nominees and continuing directors, including information regarding the experience, qualifications, attributes and skills that led to the conclusion that each director should serve as a member of our Board, please refer to the section below entitled “Overview of Our Nominees and Continuing Directors.”
Vote Required: | Directors are elected by a plurality of the votes cast by our stockholders at the Annual Meeting. This means that the | |
Board Recommendation: | OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE |
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Overview of Our Nominees and Continuing Directors
The following table and the brief biographies that follow provide information, as of the date of this proxy statement, about each director nominee and each continuing director:
| Current Committee Membership* | |||||||||
Age | Position(s) | Director Since | Class | Current Term Expires | Expiration of Term for Which Nominated | Independent | AC | CC(1) | NCG | |
Director Nominees | ||||||||||
Jim Hinrichs |
55
| Director | 2020 | III | 2023 | 2026 | Yes | Chair |
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Andrea L. Saia |
65
| Director | 2021 | III | 2023 | 2026 | Yes | X |
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Catherine Szyman | 56 | Director | 2021 | III | 2023 | 2026 | Yes |
| X |
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Continuing Directors | ||||||||||
Karen Drexler |
63
| Director | 2021 | I | 2024 | — | Yes |
| Chair | X |
Dale E. Jones | 63 | Director | 2022 | I | 2024 | — | Yes |
| X |
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Leslie Trigg |
52
| President, CEO and Chair of the Board | 2014 | I | 2024 | — | No |
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D. Keith Grossman |
63
| Lead Independent Director | 2014 | II | 2025 | — | Yes |
| X | X |
Patrick T. Hackett |
61
| Director | 2019 | II | 2025 | — | Yes | X |
| Chair |
* AC - Audit Committee; CC - Compensation Committee; NCG - Nominating and Corporate Governance Committee
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| Committee Membership* | ||||
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| Age |
| Position(s) |
| Director Since |
| Class |
| Current Term Expires |
| Expiration of Term for Which Nominated |
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| Independent |
| AC |
| CC |
| NCG | |
Director Nominees | ||||||||||||||||||||||
D. Keith Grossman |
| 62 |
| Lead Independent Director |
| 2014 |
| II |
| 2022 |
| 2025 |
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| Yes |
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| X |
| X | |
Patrick T. Hackett |
| 60 |
| Director |
| 2019 |
| II |
| 2022 |
| 2025 |
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| Yes |
| X |
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| Chair | |
Continuing Directors | ||||||||||||||||||||||
Jim Hinrichs |
| 54 |
| Director |
| 2020 |
| III |
| 2023 |
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| — |
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| Yes |
| Chair |
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Andrea L. Saia |
| 64 |
| Director |
| 2021 |
| III |
| 2023 |
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| — |
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| Yes |
| X |
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Catherine Szyman |
| 55 |
| Director |
| 2021 |
| III |
| 2023 |
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| — |
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| Yes |
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| X |
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Karen Drexler |
| 62 |
| Director |
| 2021 |
| I |
| 2024 |
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| — |
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| Yes |
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| Chair |
| X |
Leslie Trigg |
| 51 |
| President, CEO and Board Chair |
| 2014 |
| I |
| 2024 |
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| — |
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| No |
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Director Dashboard |
Our director nominees and continuing directors (which we refer to as our “directors” in these charts) bring diverse viewpoints and perspectives to our boardroom and exhibit a balance of tenure, skills, experiences and backgrounds that we believe enhances the deliberation and decision-making processes of our Board and allows our Board to effectively fulfill its oversight function. Our directors bring a balance of skills and experience, including those listed in the skills matrix on the following page. The matrix identifies the most prominent skills and core competencies of each director (reflected on an aggregate basis). Each director possesses numerous other skills and competencies not reflected in the matrix below, however, we believe that representing only the most prominent skills and core competencies of our Board provides a more meaningful presentation of the key contributions and value that our directors bring to their service on our Board and committees and to our stockholders. | Independence | Gender Diversity | |
1 7 of 8 directors are independent Independent Managementhe |
4 of 8 directors are women(incl. our Chair) Women Men 4 4 | ||
Tenure | Age | ||
2 1 5 3.5 yrs Average tenure of directors < 1 yr 1-4 yrs 5+ yrs |
5 3 59.8 yrs Average age of directors < 60 years 60+ years |
Director Dashboard
Our director nominees and continuing directors (which we refer to as our “directors” in these charts) bring diverse viewpoints and perspectives to our boardroom and exhibit a balance of tenure, skills, experiences and backgrounds that we believe enhances the deliberation and decision-making processes of our Board and allows our Board to effectively fulfill its oversight function.
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| Independence Gender Diversity Tenure Age
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Board Diversity Matrix (as of April 14, 2022)*
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Board Diversity Matrix (as of April 13, 2023)* | Board Diversity Matrix (as of April 13, 2023)* | |||||||||||||||||
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Board Size: |
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Total number of directors: |
| 7 |
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Total number of directors: 8 |
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Gender: |
| Female |
| Male |
| Non- Binary |
| Gender Undisclosed |
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| Female |
| Male |
| Non-Binary |
| Gender | |
Number of directors based on gender identity: |
| 4 |
| 3 |
| — |
| — |
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| 4 |
| 4 |
| — |
| — | |
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Number of directors who identify in any of the categories below: |
Number of directors who identify in any of the categories below: |
| Number of directors who identify in any of the categories below: | |||||||||||||||
African American or Black |
| — |
| — |
| — |
| — |
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| 1 |
| — |
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Alaskan Native or Native American |
| — |
| — |
| — |
| — |
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| — |
| — |
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Asian |
| — |
| 1 |
| — |
| — |
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| 1 |
| — |
| — | |
Hispanic or Latinx |
| — |
| — |
| — |
| — |
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| — |
| — |
| — |
| — | |
Native Hawaiian or Pacific Islander |
| — |
| — |
| — |
| — |
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| — |
| — |
| — |
| — | |
White |
| 4 |
| 2 |
| — |
| — |
| Independence Gender Diversity Tenure Age
|
| 4 |
| 1 |
| — |
| — |
Two or More Races or Ethnicities |
| — |
| — |
| — |
| — |
|
| — |
| — |
| — |
| — | |
LGBTQ+ |
| — |
| — |
| — |
| — |
|
| — |
| — |
| — |
| — | |
Undisclosed |
| — |
| — |
| — |
| — |
|
| — |
| 1 |
| — |
| — | |
* Self-identified diversity statistics for our Board in the format required by Nasdaq Listing Rule 5605(f).
Skills & Experience
Our seven directors bring a balance of relevant skills and experience including those listed above.
|
|
* Self-identified diversity statistics for our Board in the format required by Nasdaq Listing Rule 5605(f).
| 10 |
Director Nominees
Class II Directors – Nominees for Election at the Annual Meeting
Director
|
Skills Matrix
| Public Company Board Service |
|
A deep understanding of the Board’s oversight responsibilities enhances transparency and accountability for management and the Board | ||
| Public Company CEO or CFO Experience |
|
Critical to our | ||
| Other Senior Leadership Role |
|
Enhances our Board’s ability to oversee management’s performance, and understand organizations, processes and strategy | ||
| Healthcare / Medical Device Industries |
|
Enables our Board to understand strengths and challenges specific to the healthcare and medical device industries in which we operate | ||
| Financial Literacy / Accounting |
|
Crucial to our Board’s ability to advise on and oversee capital management, financial transactions, financial reporting and internal controls | ||
| FDA / Regulatory |
|
Critical to enable effective oversight by our Board of our | ||
| Sales & Marketing |
|
Crucial to our Board’s understanding of | ||
|
|
|
Helps our Board | ||
| Human Capital Management |
|
Enables effective oversight of | ||
| M&A / Strategic Transactions |
|
Essential to our Board’s ability to advise on and guide our strategic transactions and long-term growth | ||
| Risk Management |
|
Critical to our Board’s ability to oversee, understand and help mitigate key risks to Outset | ||
| International Business |
|
Important to our Board’s ability to advise on and help guide our long-term growth strategy | ||
| Environmental & Social |
|
Helps us operate within a |
|
|
| 11 |
Continuing Directors
Director Nominees at the Annual Meeting – Class III Directors – Term Expiring at the 2023 Annual Meeting
Jim Hinrichs Director since: 2020 Age: Committees:
Other Current Public Boards:
| BACKGROUND: Jim Hinrichs has served on our Board since February 2020. Mr. Hinrichs has served as Co-Founder of Atmas Health, a healthcare partnership focused on acquiring healthcare assets, since September 2022. He has also served on the board of directors of Orthofix Medical Inc., a spinal care solutions company, since April Key Qualifications: We believe that Mr. Hinrichs is qualified to serve on our Board because of his |
Andrea L. Saia Director since: 2021 Age: Committees:
Other Current Public Boards:
| BACKGROUND: Andrea L. Saia has served on our Board since March 2021. Ms. Saia has served on the board of directors of Align Technology, Inc., a global medical technology company, since July 2013, and on the board of directors of LivaNova PLC, a global medical technology company, since July 2016. She previously served as the Global Head of Vision Care in the Alcon division of Novartis AG, a global healthcare company, from 2011 until her retirement in 2012. Prior to that role, she served as President and Chief Executive Officer of CibaVision, a subsidiary of Novartis, from 2008 to 2011, and prior to that, she held various positions at CibaVision since joining in 2002, including President of Europe, Middle East and Africa operations, President of the Global Lens Key Qualifications: We believe that Ms. Saia is qualified to serve on our Board because of her significant global business experience, her corporate leadership, regulatory, industry and commercial experience |
2023 Proxy Statement | 12 |
Catherine Szyman Director since: 2021 Age: Committees:
Other Current Public Boards:
| BACKGROUND: Catherine Szyman has served on our Board since May 2021. Ms. Szyman has served as Corporate Vice President of Critical Care at Edwards Lifesciences Corporation, a global medical technology company, since January 2015, and on the board of directors of Inari Medical, Inc., a medical device company, since November 2019. She also currently serves on the board of directors of Endotronix, a private medical device company, on the board of directors of the American Heart Association of Orange County, and on the board of governors at Opus College of Business at the University of St. Thomas. Ms. Szyman worked at Medtronic plc from August 1991 to December 2014 in various leadership roles, including Senior Vice President and President of Global Diabetes, Senior Vice President of Corporate Strategy and Business Development, Vice President and General Manager for the endovascular business and Vice President of Finance for the vascular business. Ms. Szyman holds a B.A. from the University of St. Thomas and an M.B.A. from Harvard Business School. Key Qualifications: We believe that Ms. Szyman is qualified to serve on our Board because of her corporate leadership, regulatory and industry experience |
|
|
Continuing Class I Directors – Term Expiring at the 2024 Annual Meeting
Karen Drexler Director since: 2021 Age: Committees:
Other Current Public Boards:
| BACKGROUND: Karen Drexler has served on our Board since January 2021. Ms. Drexler has served on the board of directors of ResMed Inc., a medical device company, since November 2017, on the board of directors of Tivic Health Systems, Inc., a bioelectronic medicine company, since August 2019, and on the board of directors of EBR Systems, Inc., a cardiac pacing company, since October 2021. She also currently serves on the boards of directors of Key Qualifications: We believe that Ms. Drexler is qualified to serve on our Board because of her corporate leadership and industry experience gained through chief executive officer and other management roles at medical device companies, as well as her experience as a board |
13 |
Dale E. Jones Director since: 2022 Age: 63 Committees: ·Compensation | BACKGROUND: Dale E. Jones has served on our Board since April 2022. Mr. Jones has served as Chief Executive Officer of Magna Vista Partners, a global leadership consulting firm, since September 2022. He has also served as a senior advisor to Diversified Search Group, an executive search firm, since January 2022, where he previously served as President and Chief Executive Officer from January 2015 to December 2021 and as President from October 2013 to January 2015. Prior to that, Mr. Jones served as Vice Chairman and partner of the CEO and Board Practice in the Americas at Heidrick & Struggles from 2009 to 2013. From 2007 to 2009, he served as Chief Executive Officer of PlayPumps International and as Executive Vice President of Revolution LLC, a venture capital firm that funded a philanthropic initiative to provide clean drinking water to Africa. Mr. Jones held several executive leadership positions at Heidrick & Struggles from 1999 to 2007. Mr. Jones has served on the board of directors of Chick-fil-A, Inc. a fast food restaurant chain, since January 2021. Previously, he served on the boards of directors of Northwestern Mutual, a financial services company, from 2007 to May 2022, of Kohl’s Corporation, an omnichannel retailer, from 2008 to 2016, and of Hughes Supply from 2003 to 2006 (prior to its acquisition by The Home Depot). Mr. Jones holds a B.A. from Morehouse College. Key Qualifications: We believe Mr. Jones is qualified to serve on our Board because of his extensive experience as a senior advisor to chief executives, other senior leaders and boards of directors around the globe on human capital issues including executive recruiting, retention, succession planning, talent management and corporate governance. Mr. Jones also brings to the Board broad-based knowledge in the areas of consumer products and executive compensation, decades of experience in building diverse and dynamic teams, as well as experience as a corporate board member. |
Leslie Trigg Director since: 2014 President, CEO and Board Chair Age: Other Current Public Boards:
| Leslie Trigg has served as our President and CEO and a member of our Board since November 2014 and as Chair of our Board since February 2022. Ms. Trigg joined the Company from Warburg Pincus, a private equity firm, where she was an Executive in Residence from March 2012 to March 2014. Prior to that, Ms. Trigg served in several roles at Lutonix (acquired by CR Bard), a medical device company, from January 2010 to February 2012, most recently as Executive Vice President, and as Chief Business Officer of AccessClosure (acquired by Cardinal Health), a medical device company, from September 2006 to June 2009. She also previously held positions with FoxHollow Technologies (acquired by ev3/Covidien), a manufacturer of devices to treat peripheral artery disease, Cytyc, a diagnostic and medical device company, Pro-Duct Health (acquired by Cytyc), a medical device company, and Guidant, a cardiovascular medical device company. Ms. Trigg has served on the board of directors of Adaptive Biotechnologies Corporation, a biotechnology company, since March 2021, and on the board of directors of ARYA Sciences Acquisition Corp IV, a special purpose acquisition company, since March 2021. Ms. Trigg also serves Key Qualifications: We believe that Ms. Trigg is qualified to serve on our Board because of her corporate leadership, regulatory, commercial and industry experience |
|
|
Continuing Class II Directors – Term Expiring at the 2025 Annual Meeting
D. Keith Grossman Director since: 2014 Lead Independent Director Age: 63 Committees: ·Compensation ·Nominating & Corporate Governance Other Current Public Boards: ·Nevro Corp. ·Alcon Inc. | BACKGROUND: D. Keith Grossman has served as our Lead Independent Director since February 2022 and served as Chairman of our Board from April 2014 to February 2022. Mr. Grossman has served as Chairman and Chief Executive Officer of Nevro Corp. (“Nevro”), a global medical device company, since March 2019. In January 2023, Nevro announced that Mr. Grossman will be retiring as the company’s Chief Executive Officer in 2023 following selection of his successor, but will remain in his role as Chairman of the board. Mr. Grossman has also served as Vice Chairman of Alcon Inc., an eye care products company, since April 2019. Previously, he was Chief Executive Officer and President of Thoratec, a medical device company, from September 2014 to December 2015 and from January 1996 to January 2006; Chief Executive Officer and President of Conceptus, a manufacturer and developer of medical devices, from December 2011 to June 2013; and Managing Director for TPG, a private equity firm, from September 2007 to December 2011. He also previously held positions with Eon Labs, a pharmaceutical company, SulzerMedica, a manufacturer of implantable medical devices, and American Hospital Supply/McGaw Labs, a medical supply company. Mr. Grossman served on the board of directors of ViewRay, a medical device company in the field of cancer therapy, from July 2018 to February 2021; Zeltiq (acquired by Allergan), a company that markets and licenses devices used for cryolipolysis procedures, from October 2013 to May 2017; Kyphon (acquired by Medtronic plc), a medical device company, from May 2007 to November 2007; Intuitive Surgical, a medical device company, from April 2003 to April 2010; and Tandem Diabetes Care, a medical device company, from April 2010 to January 2012. Mr. Grossman has also served on the board of directors of a number of private companies. Mr. Grossman holds a B.S. from Ohio State University and an M.B.A. from the George L. Graziadio School of Business and Management, Pepperdine University. Key Qualifications: We believe that Mr. Grossman is qualified to serve on our Board because of his corporate leadership, regulatory, commercial and industry experience gained through chief executive officer roles at medical technology companies, including his experience as Chairman and Chief Executive Officer of a global public company in the medical device field. Mr. Grossman also brings to the Board experience as a board member and investor at a range of private and public companies in the medical technology industry, as well as experience in business development and strategic transactions. We believe Mr. Grossman’s extensive experience leading medical device companies through commercial growth aligns with our commercial strategies in both the acute and home markets. |
Patrick T. Hackett Director since: 2019 Age: 61 Committees: ·Audit ·Nominating & Corporate Governance (Chair) | BACKGROUND: Patrick T. Hackett has served on our Board since May 2019. Mr. Hackett has served on the board of directors of Intelligent Medical Objects, a private healthcare software company, since January 2017. Previously, Mr. Hackett served as a Managing Director at Warburg Pincus, a private equity firm, from June 1990 to July 2017, where he focused on investments in the technology and healthcare services fields across the firm’s global territories, and he currently serves as a senior advisor to Warburg Pincus. He previously held positions with Cove Capital Associates, a private merchant banking partnership, Acadia Partners, a private equity firm, and Donaldson, Lufkin and Jenrette, an investment bank. Mr. Hackett has served on the board of directors of Stamford Health System, a nonprofit community hospital in Connecticut, since May 2016, including as its Chair from October 2020 to September 2022. He also served on the board of directors of Bridgepoint Education, a provider of post-secondary education services, from February 2008 to November 2017; Yodlee (acquired by Envestnet), a data aggregation and data analytics platform company, from January 2008 to October 2015; and Nuance Communications (acquired by Microsoft), a provider of voice and language software, from January 2009 to September 2014. Mr. Hackett has also served on the board of directors of a number of private companies. Mr. Hackett holds a B.A. from the University of Pennsylvania and a B.S. from The Wharton School, University of Pennsylvania. Key Qualifications: We believe that Mr. Hackett is qualified to serve on our Board because of his industry knowledge and significant experience in business development and strategic transactions gained as a corporate board member and investor in healthcare services companies. Through his global private equity role, Mr. Hackett’s extensive involvement in the investment and transaction evaluation processes requires a deep understanding of the financial and operational performance of companies across various industries and geographic territories that we believe provides valuable insight to our Board. |
2023 Proxy Statement | 15 |
Board Structure and Composition
Our Board currently consists of seveneight members and is divided into three classes of directors that serve staggered three-year terms. At each annual meeting of stockholders, a class of directors is elected for a three-year term to succeed the same class whose term is then expiring. As a result, only one class of directors is elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our directors are divided among the three classes as follows:
the Class II directors are D. Keith Grossman and Patrick T. Hackett, whose terms expire at the Annual Meeting;
the Class III directors are Jim Hinrichs, Andrea L. Saia and Catherine Szyman, whose terms will expire at the 2023 annual meeting of stockholders; and
the Class I directors are Karen Drexler, Dale E. Jones and Leslie Trigg, and Karen Drexler, whose terms will expire at the 2024 annual meeting of stockholders; and
Each director’s term continues until the end of his or her three-year term and the election and qualification of his or her successor, or, if sooner, his or her death, resignation or removal. Our amended and restated certificate of incorporation and bylaws authorize only our Board to fill vacancies on our Board. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.
Our Board has undertaken a review of the independence of each director and considered whether each director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our Board determined that, with the exception of our CEO, Leslie Trigg, each member of our Board is an “independent director” as defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the Nasdaq stock market (“Nasdaq”). Ms. Trigg is not an independent director because she is an employee of the Company. In addition, Thomas J. Carella and Ali Osman, who served on the Board during a portion of 2021, were also determined to be independent. In making these determinations, our Board reviewed and discussed information provided by the directors and by us with regard to each director’s business and personal activities and relationships as they may relate to us and our management, including the beneficial ownership of our common stock by each non-employee director and the transactions involving them described in the section titled “Certain Relationships and Related PartyPerson Transactions.” There are no family relationships among any of our executive officers or directors.
Our bylaws provide our Board with the flexibility to determine the appropriate leadership structure of our Board, including by combining or separating the positions of Chair of the Board and CEO and/or implementing a Lead Independent Director position.
In February 2022, our Board reviewed its leadership structure and, upon the recommendation of our Nominating and Corporate Governance Committee, determined that it would be in the best interests of the Company and our stockholders to combine the roles of Board Chair and CEO and establish a new Lead Independent Director position. Effective February 2022, the Board appointed Ms. Trigg, who has served as our CEO and a member of our Board since 2014, as Chair of the Board, and the Board’s independent directors appointed Mr. Grossman, who previously served as Chairman of the Board since 2014, to transition to the position of Lead Independent Director.
Given the dynamic and competitive environment in which the Company operates, our Board believes that our stockholders are best served by a Board Chair who has broad and deep knowledge of the Company’s day-to-day business operations and the competitive landscape, the ability to identify strategic issues and the vision to create sustainable long-term value for our stockholders. Based on these considerations, our Board has determined that, at this time, Ms. Trigg, our CEO, is best qualified to serve in the role of Board Chair. Our Board believes that Ms. Trigg’s combined role enables decisive leadership and effective execution of our strategic initiatives and business plans, helps ensure clear accountability for
2023 Proxy Statement | 16 |
Company performance, enhances the Board’s ability to focus on the issues most critical to the Company’s success, creates a
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strong bridge between management and the Board by facilitating a regular flow of information, allows consistent communication and coordination throughout the Company and helps unify our stockholders, employees, customers and other stakeholders behind a consistent vision.
Our Board believes the Lead Independent Director position helps maintain an appropriate level of independent checks and balances, enables independent oversight of management and encourages objective oversight of management’s performance, reinforcing the independence of the Board as a whole and enhancing its overall effectiveness. In accordance with our bylaws and corporate governance guidelines, in the role of Lead Independent Director, Mr. Grossman will preside(i) presides over Board meetings at which the Board Chair is not present, preside(ii) presides over executive sessions of the independent directors, and serve(iii) serves as a liaison between the independent directors and the Board Chair. Chair, (iv) is authorized to call meetings of the independent directors, (v) leads the Board in discussions concerning our CEO’s performance and CEO succession, (vi) consults with the Board Chair regarding meeting agendas and meeting schedules for the Board, (vii) is available for consultation and direct communication if requested by major stockholders and (viii) performs such other duties as requested by the Board.
Our Board believescontinues to believe this leadership structure strikes an appropriate balance between strong Company leadership through a combined Board Chair and CEO, and independent oversight through a Lead Independent Director position.
While our Board has concluded that its current leadership structure is appropriate for us at this time, our Nominating and Corporate Governance Committee is charged with periodically reviewing the Board’s leadership structure. With the committee’s support, our Board will continue to regularly evaluate its leadership structure and may exercise its discretion to make changes designed to ensure an appropriate and effective framework of governance and accountability, taking into consideration the needs of our business and the long-term interests of our stockholders.
Role of our Board in Risk Oversight
One of the key functions of our Board is informed oversight of our risk management process. Our Board’s role in risk oversight is consistent with our leadership structure, with management having day-to-day responsibility for assessing and managing our risk exposure and our Board actively overseeing management of our risks – both at the Board and committee level. The risk oversight process includes receiving regular reports from committees and management to enable our Board to understand our risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, information technology (including cybersecurity and data privacy), finance, legal, regulatory, strategic and reputational risk.risks. Our Board focuses on the overall risks affecting us, and each of its standing committees has been delegated responsibility for oversight of specific risks that fall within its areas of responsibility. For example:
Our Nominating and Corporate Governance Committee oversees the management of risks associated with our overall compliance and corporate governance practices and the independence and composition of our Board, including monitoring the effectiveness of our corporate governance guidelines and other policies such as our code of conduct and overseeing our environmental and sustainability efforts and progress and associated risks.
Our Compensation Committee regularly assesses risks arising from our compensation plans, policies and programs, including whether any such plans encourage excessive or inappropriate risk-taking.
While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the full Board is regularly informed through committee reports about such risks.
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Environmental, Social and Governance Oversight and Highlights
Consistent with our commitment to patients and providers, we are committed to implementing and advancing various policies related to corporate responsibility, sustainability and environmental, social and governance (“ESG”) efforts.
At the Board level, our Nominating and Corporate Governance Committee, per its written charter, is responsible for overseeing our ESG efforts and the related risks, helping to ensure that we consistently execute on our ESG related priorities and initiatives, and providing regular updates to the full Board on related matters. To satisfy these oversight responsibilities, our Nominating and Corporate Governance Committee receives regular updates from management on progress and strategy. Relevant topics that have been discussed by our Nominating and Corporate Governance Committee and/or our Board include general corporate governance, environmental, health and safety matters, (including in connection with the COVID-19 pandemic), product quality and safety matters, environmental sustainability, access to care and health equity, and our diversity, equity and inclusion strategy.
As we continue to grow, we are committed to sharing information related to our corporate responsibility and ESG programs, priorities, goals and performance. In November 2021, we published our inaugural ESG Report, (“which we supplemented in September 2022 (as supplemented, our “ESG Report”). Our ESG Report”) whichReport is available on our website at https://investors.outsetmedical.com/environmental-social-and-governance and includes more detailed information on our ESG programs and initiatives. Our ESG Report represents the latest step on our ESG journey, and our commitment to transparency around these important topics. In preparing the report, we analyzed several ESG reporting frameworks, including the Sustainability Accounting Standards Board (SASB) framework. We developed the report with the aim of aligning our disclosures with ESG information we believe is most useful to investors and other stakeholders. In particular, and in response to input received from current and potential investors, ourOur ESG Report addresses specific SASBthe Sustainability Accounting Standards Board (SASB) standards for the Medical Equipment and Supplies industry.industry and is structured around relevant, industry-specific issues defined by SASB. Please note that nothing contained on or accessible through our website, including our ESG Report or sections thereof, shall be deemed incorporated by reference into this proxy statement.
Our ESG Report includes disclosures on our priority ESG issues and is structured across the following key areas:
our business;
the simplicity, savings and sustainability advantages of Tablo;
the Tablo data ecosystem;
corporate governance (including oversight of ESG issues);
ethics and compliance;
our advocacy and partnership efforts to improve access to care;
our people (culture; pay philosophy; training and development; diversity, equity and inclusion; health, safety and wellness, and actions taken in response to COVID-19);
product quality and patient safety, supply chain management, and research and development;
information security and privacy; and
environmental sustainability, particularly efforts at our new Outset Medical Mexico facility.
We look forward to continued engagement with our stockholders on these importantESG topics.
Cybersecurity and Data Privacy Oversight and Highlights
At the Board level,We continue to invest in and mature our Audit Committee, per its written charter, oversees the measures taken with respect to monitoringData Privacy and managing cybersecurity risk. Such measures include but are not limited to the following:
Information Security Council:programs. We have formedappointed a Director of Information Security Council comprised of executives from functions across the Company, includingwho reports into our Chief Technology Officer to manage our Information Security program, and Principalhave appointed an Associate General Counsel who reports into our General Counsel to lead our Data Privacy program.
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Data Privacy and Information Security StandardsCommittee:We have createdestablished a security architecture designed to be compliant with Health InsuranceData Privacy and Accountability Act (“HIPAA”)Information Security Committee comprised of leaders from key functions across the Company. This committee generally meets quarterly and is responsible for promoting a culture of awareness of and accountability for data privacy and information security; providing functional input and facilitating the development, articulation, implementation and operation of an effective information security, rules. Ourand data privacy program strategy; and data privacy and information security architecture is based upon frameworks designed to protect customer data, in particular, therisk management.
Technical Safeguards: On an annual basis, we performengage a specialized third-party firm to conduct a cybersecurity maturity assessment and penetration testing for thetest of our Tablo device, Tablo cloud, and office infrastructure. On a continuous basis,We continually perform managed vulnerability scans are conducted across core infrastructure and endpoints to identify potential vulnerabilities. Vulnerabilities if any, are assessed and prioritized for remediation.
2023 Proxy Statement | 18 |
Insurance: We maintain information security risk insurance coverage to mitigate potential losses in the event of a business disruption.
Continuous Improvement: In recognition of the evolving cybersecurity threat landscape, we aim to scale our investments in information security to continually improve the prevention, detection, containment, and mitigation of cybersecurity threats. We also continue to invest in our people by providing our workforce with cybersecurity and data privacy training, and we implement mechanisms designed to keep us compliant with the evolving data security and privacy laws that apply to our business.
Our Audit Committee will receive updates from members of our Security Council on matters related to cybersecurity on at least an annual basis.
Our Board held four (4)six (6) meetings during 2021.2022. Each incumbent director attended at least 75% of the aggregate total number of meetings of the Board and the committees on which he or she served, held during the portion of 20212022 for which he or she was a director or committee member. We encourage our directors to attend our annual meetings of stockholders.
Our Board has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Members serve on these committees until their resignation or until otherwise determined by our Board. Our Board may establish other committees as it deems necessary or appropriate from time to time. The composition and responsibilities of each of the committees of our Board are described below and copies of the charter of each committee are available on our corporate website at www.outsetmedical.com in the Investors section under “Corporate Governance.” Reference to our website does not constitute incorporation by reference of the information contained at or accessible through our website into this proxy statement.
Committee Composition and Meetings
The following table provides current membership and 20212022 meeting information for each committee of our Board:
Name: |
| Audit Committee |
| Compensation Committee(1) |
| Nominating and Corporate Governance Committee |
Karen Drexler |
|
|
| Chair |
| X |
D. Keith Grossman |
|
|
| X |
| X |
Patrick T. Hackett |
| X |
|
|
| Chair |
Jim Hinrichs |
| Chair |
|
|
|
|
Dale E. Jones |
|
|
| X |
|
|
Andrea L. Saia |
| X |
|
|
|
|
Catherine Szyman |
|
|
| X |
|
|
Total meetings held in 2022 |
| 7 |
| 7 |
| 4 |
Name: |
| Audit Committee |
| Compensation Committee |
| Nominating and Corporate Governance Committee |
Karen Drexler |
|
|
| Chair |
| X |
D. Keith Grossman |
|
|
| X |
| X |
Patrick T. Hackett |
| X |
|
|
| Chair |
Jim Hinrichs |
| Chair |
|
|
|
|
Andrea L. Saia |
| X |
|
|
|
|
Catherine Szyman |
|
|
| X |
|
|
Total meetings held in 2021 |
| 5 |
| 6 |
| 2 |
|
|
Our Audit Committee currently consists of Patrick T. Hackett, Jim Hinrichs and Andrea L. Saia, with JimMr. Hinrichs serving as the chairperson. Our Audit Committee met five (5)seven (7) times during 20212022 and operates under a written charter.
The general purpose of our Audit Committee is to assist the Board in its oversight of our accounting and financial reporting processes and audits of its financial statements. Specific responsibilities of our Audit Committee include:
appointing, retaining, compensating and overseeing the work of our independent registered public accounting firm, assessing the firm’s qualifications, independence and performance and, when appropriate, terminating our independent registered public accounting firm;
discussing with management and the independent registered public accounting firm our annual audited financial statements and quarterly financial statements, as well as related disclosures;
pre-approving audit and permitted non-audit and tax services to be provided to us by the independent public accounting firm;
reviewing with our independent registered public accounting firm the scope and results of the firm’s annual audit of our financial statements, including our critical accounting policies;
reviewing our financial reporting processes and internal controls over financial reporting, as well as compliance with legal and regulatory requirements;
establishing and reviewing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal accounting controls or auditing matters, and reviewing any significant complaints received with management;
reviewing and approving any transaction between us and any related person (as defined by the Securities Act of 1933, as amended) in accordance with our related partyperson transaction approval policy;
discussing policies with respect to risk assessment and risk management;management (including with respect to data privacy, cybersecurity and
such other matters that are specifically designated to the Audit Committee by our Board from time to time.
Our Board has determined that each member of our Audit Committee is independent within the meaning of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (“Exchange Act”) and Nasdaq listing rules, and that each member is also financially literate. Our Board has also determined that JimMr. Hinrichs is an “audit committee financial expert” as defined by the applicable SEC rules.
Our Compensation Committee currently consists of Karen Drexler, D. Keith Grossman, Dale E. Jones and Catherine Szyman, with KarenMs. Drexler serving as the chairperson. Following the Annual Meeting, our Compensation Committee will continue to consist of Karen Drexler, D. Keith Grossman, Dale E. Jones and Catherine Szyman, and the role of chairperson will transition to Mr. Jones. Our Compensation Committee met six (6)seven (7) times during 2021,2022 and operates under a written charter.
2023 Proxy Statement | 20 |
The general purpose of our Compensation Committee is to review, adopt or recommend and oversee our compensation plans, policies and programs. Specific responsibilities of our Compensation Committee include:
reviewing and approving corporate goals and objectives relevant to the compensation of our CEO, evaluating our CEO’s compensation in light of those goals, and determining and approving our CEO’s compensation based on this evaluation;
reviewing, determining and approving the compensation of our other executive officers;
reviewing and administering our employee and management compensation and benefit plans and policies;
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administering and approving grants of options and otherequity awards under our equity-based incentive plans;
reviewing and approving, for the CEO and other executive officers, employment agreements, severance agreements, consulting agreements and change in control or termination agreements;
evaluating and recommending compensation for our non-employee directors; and
such other matters that are specifically designated to the Compensation Committee by our Board from time to time.
Our Board has determined that each member of our Compensation Committee is independent under applicable Nasdaq listing standards and a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act.
Compensation Committee Interlocks and Insider Participation
None of the directors who are currently or who were members of our Compensation Committee during 2021,2022, are either currently, or have been at any time, one of our officers or employees. None of our executive officers currently serves, or served during 2021,2022, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee currently consists of Karen Drexler, D. Keith Grossman and Patrick T. Hackett, with Patrick T.Mr. Hackett serving as the chairperson. Our Nominating and Corporate Governance Committee met two (2)four (4) times during 2021. Our Nominating2022 and Corporate Governance Committee operates under a written charter.
2023 Proxy Statement | 21 |
The general purpose of our Nominating and Corporate Governance Committee is to oversee matters related to board composition, director nominations and corporate governance. Specific responsibilities of our Nominating and Corporate Governance Committee include:
identifying and evaluating candidates to serve as members of our Board;
making recommendations to our Board for selection of director nominees to stand for election or reelection at our annual stockholder meetings or to fill board vacancies;
considering and making recommendations to our Board regarding changes to the size, composition and leadership structure of our Board;
considering and making recommendations to our Board regarding the composition and chairmanship of the committees of our Board;
instituting plans or programs for the continuing education of our Board and orientation of new directors;
establishing procedures to exercise oversight of, and oversee the performance evaluation process of, our Board (including committees) and management;
developing and making recommendations to our Board regarding corporate governance guidelines and certain other policies such as our code of conduct, and monitoring compliance with such guidelines and policies;
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such other matters that are specifically designated to the Nominating and Corporate Governance Committee by our Board from time to time.
Our Board has determined that each member of our Nominating and Corporate Governance Committee is independent under the applicable Nasdaq listing standards.
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Director NominationNomination Process
Selection and Nomination Process
Our Board is responsible for nominating members for election to our Board by our stockholders at our annual meetings of stockholders. Whenever a vacancy occurs on our Board, whether due to a newly created director position or the death, resignation, removal or retirement of an existing director, our Board is authorized to select a person to fill the vacancy to serve as a director until the annual meeting of stockholders at which the director’s term expires and until the election and qualification of his or her successor or, if sooner, his or her death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.
Criteria for Board Membership
Our Nominating and Corporate Governance Committee is responsible for identifying, reviewing, evaluating and recommending to our Board candidates to serve as members of our Board, in accordance with its charter and board-approved criteria as set forth in our corporate governance guidelines.
Our Nominating and Corporate Governance Committee believes that director candidates should meet certain minimum qualifications, including being able to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. In assessing and selecting candidates and incumbent directors for service on our Board, our Nominating and Corporate Governance Committee also considers such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the Company’s affairs, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of our stockholders.
In conducting this assessment, our Nominating and Corporate Governance Committee considers diversity, age, skills and such other factors deemed appropriate given the current needs of our Board and the Company to maintain a balance of knowledge, experience and capability. While we do not have a formal policy regarding diversity on our Board, our Board and Nominating and Corporate Governance Committee value the importance of nominating persons with different perspectives and experiences to enhance the deliberation and decision-making processes of our Board and diversity attributes such as race and gender are among the factors considered. In the case of incumbent directors whose terms of office are set to expire, the committee reviews such directors’ overall service to the Company during their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair such directors’ independence. In the case of new director candidates, the committee also determines whether the nominee is independent under applicable Nasdaq listing standards. In addition, to help ensure that it has access to a broad range of qualified, experienced and diverse candidates, our Nominating and Corporate Governance Committee may use the services of an independent search firm to help identify and assist in the evaluation of candidates. The committee conducts any appropriate inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of our Board, and then selects a nominee for recommendation to our Board.
Our Board and Nominating and Corporate Governance Committee may modify the criteria used to assess director candidates and incumbent directors from time to time. Candidates for director nomination are reviewed in the context of the current composition of our Board, the operating requirements of the Company and the long-term interests of our stockholders, consistent with our commitment to maintaining a board of directors composed of members who can productively contribute to the Company’s success. Existing members of our Board will also be evaluated on the basis of any new criteria.
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Stockholder Recommendations and Nominations
Stockholders who wish to recommend candidates may contact the Nominating and Corporate Governance Committee in the manner described below under “Board and Corporate Governance Matters—Stockholder Communications with our Board.” Stockholder nominations must be made according to the procedures required under our bylaws and described in this proxy statement under the heading “Additional Information—Stockholder Proposals and Nominations for Next Year’s Annual Meeting of Stockholders.” Stockholder-recommended candidates and stockholder nominees whose nominations comply with these procedures will be evaluated by our Nominating and Corporate Governance Committee in the same manner as other nominees.
Stockholder Engagement
Stockholder Outreach Program
We value an open dialogue with our stockholders and believe that regular communication with our stockholders is a critical part of enabling our long-term success. We engage with our stockholders though a proactive stockholder outreach program designed to solicit and address feedback on matters relevant to our business, including corporate governance, executive compensation and ESG issues. Our goal is to better understand the views and interests of our stockholders, as well as share our perspectives on these important topics. Our stockholder outreach program is supplemented by our year-round investor relations program that includes quarterly financial and operational updates, post-earnings communications, investor meetings and presentations at conferences, and general availability to respond to investor inquiries.
Our stockholder outreach program is led by management and overseen by our Board. Our Board believes that, in most circumstances, members of our senior management are best positioned to speak with our stockholders on behalf of the Company. However, our Board and its committees receive regular reports on our stockholder engagement activities and are provided with the opportunity to discuss and ask questions about stockholder feedback we receive.
In 2022, we initiated outreach to our largest institutional stockholders representing approximately 80% of shares outstanding to specifically request feedback on various topics, including board composition and other governance matters, executive compensation and ESG issues. Of the stockholders we contacted, approximately 90% responded, and we met with or received direct feedback from more than half of those contacted. In these conversations, our Company was represented by senior leaders with responsibility for our investor relations and legal functions, and investor comments were discussed with the Nominating and Corporate Governance Committee and summarized for the Board.
Certain 2022 Annual Meeting Vote Results and Our Response
We regularly review vote results from our most recent annual meeting of stockholders and incorporate related insights into our stockholder engagement program.
At our 2022 annual meeting, our stockholders expressed strong support for our executive compensation program, with 99% of stockholder votes cast in favor of our say-on-pay proposal. The feedback we received from investors in connection with our stockholder outreach reinforced the strong support our stockholders expressed with their 2022 say-on-pay vote. For further information on our 2022 say-on-pay vote, please see the section of this proxy statement entitled “Compensation Discussion and Analysis – Executive Summary – Stockholder Advisory Votes on NEO Compensation.”
2023 Proxy Statement | 24 |
At our 2022 annual meeting, D. Keith Grossman, our Lead Independent Director, received 49.8% of votes cast “For” his re-election. Based on feedback we received from certain stockholders during our outreach efforts described above, we believe this was partially due to “overboarding” policies of certain institutional investors that set limits on the number of public company boards of directors on which a director nominee may serve, often with more stringent requirements for nominees that also serve as public company CEOs or executives. At the time of our 2022 annual meeting, Mr. Grossman served as Chairman and Chief Executive Officer of Nevro, while also serving on the boards of directors of two other public companies (Alcon Inc. and Outset), and this continues to be the case as of the date of this proxy statement. Subsequent to our stockholder outreach, Nevro announced that Mr. Grossman will be retiring as the company’s Chief Executive Officer in 2023 following the selection of his successor, but will remain in his role as Chairman of the company’s board of directors. Following his retirement as Nevro’s Chief Executive Officer, we believe his continued service on three public company boards (including Outset) will be considered satisfactory under the overboarding policies of our largest institutional stockholders, as well as proxy advisory firms.
Our Nominating and Corporate Governance Committee closely monitors and considers our directors’ outside commitments and recognizes that a director’s ability to fulfill his or her responsibilities can be impaired by excessive outside commitments. We have processes in our Corporate Governance Guidelines designed to ensure that the committee monitors these outside commitments, including service on other boards or committees, and considers whether any commitments may have an impact on a director’s ability to effectively fulfill his or her responsibilities to Outset.
In the case of Mr. Grossman, our Nominating and Corporate Governance Committee and our Board firmly believe that Mr. Grossman’s executive duties and other board memberships do not in any way impair his ability to effectively fulfill his responsibilities to Outset, and that his continued service as our Lead Independent Director, and as a member of the Compensation and Nominating and Corporate Governance Committees, remains in the best interests of Outset and its stockholders. Mr. Grossman is a highly engaged and committed member of our Board. Through his strong attendance record, active participation in Board and committee matters, and regular engagement with management, he has consistently demonstrated an ability to effectively balance outside commitments (including at Nevro and Alcon since early 2019) while devoting the necessary time, energy and attention to fulfill his duties to Outset. In addition, as a member of our Board since 2014, Mr. Grossman is our longest-tenured director, and his continuity of service and extensive knowledge of Outset remain critical to effectively balancing the fresh perspectives of our newer Board members. Furthermore, as discussed above, Mr. Grossman plans to retire as Nevro’s Chief Executive Officer later in 2023. For further information on Mr. Grossman’s qualifications and the value he brings to our Board, including through his extensive executive leadership and corporate board experience in the medical technology industry, please see his biography above in the section entitled “Board and Corporate Governance Matters – Overview of Our Nominees and Continuing Directors.”
In the discussions we had with investors as part of our stockholder outreach efforts described above, we sought feedback and took the opportunity to explain how our Board carefully monitors and considers our directors’ outside commitments, including our views on Mr. Grossman’s commitment and contributions to our Board.
Code of Ethics and Business Conduct
We have adopted a code of conduct applicable to our employees, officers and directors, including our principal executive, financial and accounting officers and all persons performing similar functions. A copy of our code of conduct is available on our corporate website at www.outsetmedical.com in the Investors section under “Corporate Governance.” We intend to post any required disclosures regarding an amendment to, or waiver from, a provision of our code of conduct on the same website. Reference to our website does not constitute incorporation by reference of the information contained at or accessible through our website into this proxy statement.
Corporate Governance Guidelines
We have adopted written corporate governance guidelines which provide the framework for our corporate governance, along with our amended and restated certificate of incorporation, bylaws, committee charters and other key governance practices and policies. Our corporate governance guidelines cover a range of topics including, but not limited to, board composition, independence and selection of directors, board membership criteria, conduct of board meetings, board committee composition and functions, board leadership, board assessment, director compensation and succession planning. Our corporate governance guidelines are reviewed at least annually by our Nominating and Corporate
2023 Proxy Statement | 25 |
Governance Committee and any proposed changes are recommended to our full Board for approval. A copy of our corporate governance guidelines is available on our corporate website at www.outsetmedical.com in the Investors section under “Corporate Governance.” Reference to our website does not constitute incorporation by reference of the information contained at or accessible through our website into this proxy statement.
Effective February 2, 2023, our Board adopted Stock Ownership Guidelines applicable to all of our executive officers designated as such for purposes of Section 16 of the Exchange Act (“covered executives”) and non-employee directors of our Board (“covered directors”). Pursuant to these guidelines, each covered executive and covered director is required to own shares of our common stock having an aggregate value of at least the following amount (as a multiple of the designated compensation):
Position | Stock Ownership Guidelines | |
Chief Executive Officer | 3 times annual base salary | |
Other Covered Executives | 1 times annual base salary | |
Covered Directors | 3 times annual cash retainer for Board service(1) |
In addition to shares owned outright by the covered executive or covered director, shares held in trust, unvested time-based RSUs and deferred stock units count towards required ownership levels. Covered executives and covered directors are required to achieve the applicable ownership level within five years from February 2, 2023, the effective date of the guidelines, or the date the individual becomes a covered executive or covered director, whichever is later. Compliance with these Stock Ownership Guidelines will be measured as of the last business day of each fiscal year.
Anti-Hedging and Anti-Pledging Policy
Our insider trading policy prohibits our directors, executive officers and other employees from engaging in hedging transactions or other inherently speculative transactions with respect to Company securities, such as short sales or transactions in put or call options. Our directors, executive officers and other employees are also prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan.
Stockholder Communications with our Board
Any stockholder or other interested party who wishes to communicate with our Board or any individual director may send written communications to our Board or such director c/o Corporate Secretary, Outset Medical, Inc., 3052 Orchard Drive, San Jose, California 95134. The communication must include the stockholder’s name, address and an indication that the person is our stockholder. The Corporate Secretary will review any communications received from stockholders and will forward such communications to the appropriate director or directors, or committee of our Board, based on the subject matter. Communications that are deemed inappropriate (such as communications that are commercial or frivolous in nature) will not be forwarded. In addition, communications that appear to be unduly hostile, intimidating, threatening, illegal or similarly inappropriate will not be forwarded.
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Certain Relationships and Related PartyRelated Person Transactions
The following is a summary of the transactions since January 1, 20212022 to which we have been a participant in which the amount involved in the transaction exceeds or will exceed $120,000 and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest, other than compensation arrangements which are under the sections of this proxy statement entitled “Director Compensation” and “Executive Compensation.”
2023 Proxy Statement | 26 |
Indemnification of Directors and Executive Officers
We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements and our bylaws require us to indemnify our directors against certain liabilities, costs and expenses to the fullest extent not prohibited by the Delaware General Corporation Law, and have purchased directors’ and officers’ liability insurance. Subject to very limited exceptions, our bylaws also require us to advance expenses incurred by our directors and officers.
Policies and Procedures for Related PartyPerson Transactions
Our Audit Committee has the primary responsibility for the review, approval and oversight of any “related partyperson transaction,” which is any transaction, arrangement or relationship (or series of similar transactions, arrangements or relationships) in which we are, were or will be a participant and the amount involved exceeds $120,000, and in which the related person has, had or will have a direct or indirect material interest. We have adopted a written related partyperson transaction policy under which our management is required to submit any related partyperson transaction not previously approved or ratified by our Audit Committee to our Audit Committee. In approving or rejecting the proposed transactions, our Audit Committee takes into account all of the relevant facts and circumstances available.
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Director CompensationCompensation
Non-Employee Director Compensation Policy
Our non-employee directors receive annual cash retainers and equity awards as compensation for Board and committee service in accordance with our non-employee director compensation policy (our “director compensation policy”). Our director compensation policy applies only to our non-employee directors; our employee directors receive no additional compensation for serving on our Board. Our Board originally adopted our director compensation policy in 2020 in connection with our initial public offering (“IPO”) after consultation with Aon Consulting, Inc., through its Aon Rewards Solution subdivision (“Aon”), an independent compensation consultant.
Our Compensation Committee periodically reviews our director compensation policy and recommends any adjustments to our Board for approval. In late 2020,2021, the Compensation Committee engaged Aon to review our director compensation policy and prepare an updated benchmarking analysis relative to our 20212022 peer group. In January 2021, after review and discussion of the updated benchmarking report prepared by Aon, the Compensation Committee recommended no changes to our then-current non-employee director compensation policy as it remained market-competitive. More recently, in February 2022, the Compensation Committee reviewed an updatedthe benchmarking report prepared by Aon and again recommended that no changes be made to our then-current director compensation policy, other than to clarify that the cash retainer for the Chair of the Board would also apply to a Lead Independent Director, which modification was approved by the Board.
During 2021,2022, each of our non-employee directors was entitled to compensation in accordance with the following director compensation policy:
Annual Cash Compensation: Each non-employee director is entitled to receive annual cash compensation in the amounts summarized in the table below. These amounts are payable in equal quarterly installments, in arrears following the end of each quarter in which the service was performed, and are pro-rated for any partial months of service.
Position |
| Annual Cash |
| |
Board Member |
| $ | 40,000 |
|
Chair of the Board or Lead Independent Director (additional) |
| $ | 45,000 |
|
Committee Chairs: |
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| |
Audit |
| $ | 20,000 |
|
Compensation |
| $ | 20,000 |
|
Nominating and Corporate Governance |
| $ | 10,000 |
|
Committee Members: |
|
|
| |
Audit |
| $ | 10,000 |
|
Compensation |
| $ | 10,000 |
|
Nominating and Corporate Governance |
| $ | 5,000 |
|
Position |
| Annual Cash Retainer |
| |
Board Member |
| $ | 40,000 |
|
Chair of the Board* (additional) |
| $ | 45,000 |
|
Committee Chairs: |
|
|
|
|
Audit |
| $ | 20,000 |
|
Compensation |
| $ | 20,000 |
|
Nominating and Corporate Governance |
| $ | 10,000 |
|
Committee Members: |
|
|
|
|
Audit |
| $ | 10,000 |
|
Compensation |
| $ | 10,000 |
|
Nominating and Corporate Governance |
| $ | 5,000 |
|
* In February 2022, our policy was amended to clarify that this retainer also applies to a Lead Independent Director.
Equity Compensation:
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Expense Reimbursement: Our non-employee directors are also reimbursed for their reasonable out-of-pocket travel expenses to cover in-person attendance at and participation in Board and committee meetings.
2021In February 2023, the Compensation Committee reviewed an updated benchmarking analysis prepared by Pearl Meyer & Partners LLC (“Pearl Meyer”), an independent compensation consultant, based on our 2023 peer group, and recommended the following changes to our director compensation policy, which were approved by the Board: (i) an increase in the annual cash retainer for non-employee directors for Board service from $40,000 to $45,000, effective January 1, 2023, and (ii) an increase in the value of the annual restricted stock unit grant for non-employee directors from $150,000 to $160,000.
2022 Director Compensation Table
The following table summarizes, for 2021,2022, certain information regarding the compensation of our non-employee directors. Ms. Trigg, our CEO, does not receive any separate compensation for her service on our Board. Please see “Executive Compensation—20212022 Summary Compensation Table” for a summary of the compensation received by Ms. Trigg in 2021.2022.
��
Name: |
| Fees Earned or |
|
| Stock Awards |
|
| Option Awards |
|
| Total |
| ||||
Karen Drexler |
|
| 65,000 |
|
|
| 149,984 |
|
|
| — |
|
|
| 214,984 |
|
D. Keith Grossman |
|
| 100,000 |
|
|
| 149,984 |
|
|
| — |
|
|
| 249,984 |
|
Patrick T. Hackett |
|
| 60,000 |
|
|
| 149,984 |
|
|
| — |
|
|
| 209,984 |
|
Jim Hinrichs |
|
| 60,000 |
|
|
| 149,984 |
|
|
| — |
|
|
| 209,984 |
|
Dale E. Jones |
|
| 34,583 |
|
|
| 412,465 |
|
|
| — |
|
|
| 447,048 |
|
Andrea L. Saia |
|
| 50,000 |
|
|
| 149,984 |
|
|
| — |
|
|
| 199,984 |
|
Catherine Szyman |
|
| 50,000 |
|
|
| 149,984 |
|
|
| — |
|
|
| 199,984 |
|
Name: |
| Fees Earned or Paid in Cash ($)(1) |
|
| Stock Awards ($)(2)(3) |
|
| Option Awards ($)(4) |
|
| Total ($) |
| ||||
Karen Drexler |
|
| 62,091 |
|
|
| 412,474 |
|
|
| — |
|
|
| 474,565 |
|
D. Keith Grossman |
|
| 100,000 |
|
|
| 149,999 |
|
|
| — |
|
|
| 249,999 |
|
Patrick T. Hackett |
|
| 60,000 |
|
|
| 149,999 |
|
|
| — |
|
|
| 209,999 |
|
Jim Hinrichs |
|
| 60,000 |
|
|
| 149,999 |
|
|
| — |
|
|
| 209,999 |
|
Andrea L. Saia |
|
| 38,710 |
|
|
| 412,487 |
|
|
| — |
|
|
| 451,197 |
|
Catherine Szyman |
|
| 30,780 |
|
|
| 412,464 |
|
|
| — |
|
|
| 443,244 |
|
Thomas J. Carella(5) |
|
| 1,333 |
|
|
| — |
|
|
| — |
|
|
| 1,333 |
|
Ali Osman(5) |
|
| 16,250 |
|
|
| — |
|
|
| — |
|
|
| 16,250 |
|
|
|
|
|
|
|
|
|
|
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EXECUTIVE COMPENSATIONCOMPENSATION
Proposal Two: Advisory Vote on Named Executive Officer Compensation
General
In accordance with Section 14A of the Exchange Act, we are requesting stockholder approval, on a non-binding advisory basis, of the compensation of our named executive officers (“NEOs”) during 2021,2022, as described in this proxy statement. This proposal, commonly known as a “say-on-pay” vote, gives our stockholders the opportunity to express their views on the design and effectiveness of our executive compensation program. This vote is not intended to address any specific element of compensation, but rather the overall compensation of our NEOs and the compensation philosophy, policies and practices described in this proxy statement. Consistent with the preference of our stockholders expressed at the 2022 annual meeting of stockholders, the Board has determined that say-on-pay votes will be held annually.
As discussed in further detail in the Compensation Discussion and Analysis (“CD&A”) section of this proxy statement, our executive compensation program is designed to achieve the following key objectives:
Attract, attract, mobilize and retain the right talent;
Incent incentivize a collective focus on corporate goals;
Reward reward and recognize outstanding performance; and create long-term stockholder value.
Align with stockholders’ interests.
Our Compensation Committee has created an executive compensation program that combines short-term and long-term components, cash and equity, as well as fixed, at-risk and variable compensation elements, in the proportions it believes achieve these guiding principles. For details on our executive compensation program, including our compensation philosophy and objectives and the 20212022 compensation of our NEOs, we urge you to carefully read the CD&A section of this proxy statement, the 20212022 Summary Compensation Table, as well as the other related tables and disclosure.
Accordingly, we are asking our stockholders to approve the following resolution at the Annual Meeting:
RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers as disclosed in the Company’s proxy statement for the 20222023 annual meeting of stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis section, the 20212022 Summary Compensation Table and the other related tables and disclosure.
Although this advisory vote is non-binding, our Board and Compensation Committee value the opinions of our stockholders and will consider the outcome of this say-on-pay vote when making future compensation decisions for our executive officers.
Vote Required: | Advisory approval of the | |
Board Recommendation: | Our Board unanimously recommends a vote “FOR” the approval, on a non-binding advisory basis, of the |
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Proposal Three: Advisory Vote on the Frequency of Future Advisory Votes on Named Executive Officer Compensation
General
In accordance with Section 14A of the Exchange Act, we are seeking our stockholders’ vote, on a non-binding advisory basis, on how often we should hold future advisory votes on NEO compensation, or say-on-pay votes. Stockholders may indicate their preference for future say-on-pay votes to be held at one, two or three year intervals, or may abstain from voting on this proposal. This proposal is commonly known as a “say-on-frequency” vote. The Board has approved a frequency of “every one year” for future say-on-pay votes, subject to the same frequency receiving the highest number of votes from stockholders at the Annual Meeting.
Our Board recommends that stockholders vote, on a non-binding advisory basis, for future say-on-pay votes to be held on an annual basis. Our Board believes that an annual say-on-pay vote will allow our stockholders to provide timely and direct input on our executive compensation program on a more consistent basis, promotes accountability and transparency by enabling the say-on-pay vote to correspond with the most recent executive compensation information presented in our proxy statement for each annual stockholder meeting, and reflects sound corporate governance principles.
Stockholders are not voting to approve or disapprove of the Board’s recommendation. Instead, stockholders are being presented with four choices with respect to this say-on-frequency proposal: “every one year,” “every two years,” “every three years” or abstention from voting on this proposal. For the reasons discussed above, our Board recommends that our stockholders vote for a frequency of “every one year” when voting at the Annual Meeting.
If the “every one year” frequency does not receive the highest number of votes from stockholders at the Annual Meeting, our Board and Compensation Committee will consider the outcome of this vote in determining the frequency of future say-on-pay votes. Although this advisory vote is non-binding, our Board and Compensation Committee value the opinions of our stockholders and will consider the outcome of this vote in determining the frequency of future say-on-pay votes. Nevertheless, our Board may decide that it is in the best interests of stockholders and the Company to hold future say-on-pay votes more or less frequently than the option recommended by our stockholders.
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Compensation Discussion and Analysis
This Compensation Discussion and Analysis provides an overview of our 20212022 executive compensation program, including a discussion of our executive compensation philosophies, objectives and practices, and a review of the compensation paid or awarded to our named executive officers (“NEOs”) during 2021. As we have ceased to be an “emerging growth company,” this is the first year that we are providing a Compensation Discussion and Analysis.2022.
Our NEOs consist of (i) our CEO during 2021, (ii) our Chief Executive Officer (“CEO”) and Chief Financial Officers serving during 2021Officer (“CFO”), and (iii) our three other most highly compensated executive officers as of December 31, 2021.2022. For 2021,2022, our NEOs were:
Leslie Trigg, our President, CEO and Board Chair;
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John Brottem, our General Counsel and Secretary;
|
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Martin Vazquez, our Chief Operating Officer;(1) and
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Executive Summary
Outset is a medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis. We believe the Tablo®Tablo® Hemodialysis System, cleared by the U.S. Food and Drug Administration (“FDA”) for use from the hospital to the home, represents a significant technological advancement that transforms the dialysis experience for patients and operationally simplifies it for providers. We designed Tablo from the ground up to be a single enterprise solution that can be utilized across the continuum of care, allowing dialysis to be delivered anywhere, anytime and by virtually anyone.
20212022 Business Highlights
During 2021,2022, we achieved the following:
We recorded net revenue of $102.6$115.4 million for the full year, of 2021, representing an increase of 105.5%12.4% compared to $49.9$102.6 million for 2020;
We achieved gross margin for the full year of 202115.5% (16.1% on a non-GAAP basis)(2), an increase of 7.4%, comparedmore than 800 basis points over 2021;
We completedAppendix A includes a follow-on public offering, raising approximately $149.7 millionreconciliation of gross margin as prepared and presented under accounting principles generally accepted in net proceedsthe United States (“GAAP”) to the Company;
We signed sales agreements with seven of the eight largest national health systems and approximately one-third of the largest 100 regional health systems;
We announced several multi-year sales agreements with innovative dialysis care providers to drive home hemodialysis adoption with Tablo;
We fully transitioned the production of Tablo consoles to our recently established manufacturing facility in Mexico;
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We received the first-ever approval for the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) program from the Centers for Medicare & Medicaid Services (CMS), which deemed Tablo a substantial clinical improvement over the incumbent home hemodialysis device;
We released our inaugural ESG report highlighting our ESG-related programs, priorities, goals, and performance; and
We grew our employee baseteam to 444518 full-time employees and 210 full-time team members at our manufacturing facility in Tijuana, Mexico as of the end of 2021, representing an increase of 42%2022, compared to 313444 full-time employees and 149 full-time team members at our Tijuana facility at the end of 2020.
2021In addition, following a shipment hold implemented during the second quarter of 2022 on the distribution of Tablo systems for home use (which we refer to as the “home shipment hold”) pending the FDA’s review and clearance of a 510(k) application for changes made since the device’s original March 2020 clearance, we resumed shipments to new home patients during the third quarter of 2022 upon the FDA’s clearance of the application.
2022 Executive Compensation Highlights
The Compensation Committee took the following key actions with respect to the compensation of our NEOs for 2021: 2022:
Base Salaries: No changes were made to theThe annual base salaries of our NEOs (excluding Mr. Ahmed) during 2021, as a resultwere increased in amounts ranging from 4.1% to 21.6% (with an average increase of recent11.8%) compared to prior year base salaries. In determining these increases, approved followingthe committee intended to better align our IPO that were effective asexecutives’ post-IPO salaries with competitive pay practices of September 16, 2020 in the case of Mses. Triggour publicly traded peers, and Chambersalso took into consideration individual performance and Mr. Vazquez and as of January 1, 2021 in the case of Mr. Brottem. Following an increase in connection with a promotion in May 2021, Mr. Ahmed’s annual base salary was increased by an additional 26.2% in connection with his promotion to CFO effective July 2021.
Annual Performance-Based Cash Bonuses:BasedThe Compensation Committee determined not to make any changes to the NEOs’ target annual cash bonus opportunities for 2022, as a percentage of base salary, as compared to the prior year, as they remained market competitive. Under our 2022 cash bonus program, bonuses could be earned based on strong achievement against multiple pre-established 20212022 corporate performance goals tied to revenue (weighted 50% plus an overachievement potential component)), gross margin (weighted 25%), home patient enrollment and retentionpatients (weighted 12.5%15%) and reduction in service hours per console (weighted 12.5%10%),. In response to the extraordinary impacts of the home shipment hold on our business that could not be anticipated at the time the original bonus plan was approved, in September 2022, the committee adjusted the achievement spectrum for three of the four performance goals to allow for a greater range of performance to be recognized, and adjusted down the achievement levels to account for the impacts of the home shipment hold on these three measures. Based on performance against the 2022 corporate performance goals, as adjusted, the Compensation Committee approved overall payouts under our annual cash bonus program equal to 174.5%89.1% of each NEO’s target bonus opportunity. This payout was the result of above target performance on the revenue goal (plus an overachievement component driven by strong, above target, year-end revenue and incremental backlog), as well as near target performance on the gross margin and service hours goals.
Long-Term Equity Incentives:
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In determining the size and structure of the annual 2021 equity award package for our CEO, the Compensation Committee considered, among other factors, the success of the Company’s recent IPO and her strong performance up to and through the IPO, increased responsibilities, her demonstrated growth and potential as the CEO of a newly public company, the criticality of retaining her strong and stable leadership during a period of high growth for the Company and its transition into the public company arena, as well as the retention value of her unvested equity holdings following the post-IPO accelerated vesting of a significant portion of her equity awards. Consistent with its pay-for-performance philosophy, instead of delivering the target value of our CEO’s equity entirely through equity that vests solely based on continued service, the committee determined that at least 50% of the target value should be in the
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form of performance-based equity in order to incentivize the creation of long-term value for our stockholders.
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Preview of 2022 Long-Term Equity Incentive Plan Design
Following our first full year as a public company, ourthe Compensation Committee made changescertain modifications to our long-term2022 equity incentive program in 2022designed to further enhance the program’s performance-based nature and increase the retention value of our overall executive compensation program in ways it believes are appropriate given our growth stage and relatively recent transition intoexecutives’ equity packages, while maintaining the public company arena. Most notably, as partat-risk or variable nature of a significant majority of our executives’ annual target pay. For 2022, equity program, the Compensation Committee hascommittee (i) discontinued the historical practice of granting time-based stock options, (ii) expanded ourthe issuance of PSUsperformance-based restricted stock units (“PSUs”) to a broader group of executive officers (including all of the NEOs) and certain other senior leaders withinand (iii) retained time-based restricted stock units (“RSUs”) as a component of our executives’ equity packages, moving from a four-year to a three-year vesting schedule to reflect competitive market practices.
2023 Proxy Statement | 32 |
TSR PSUs(1) Home PSUs(2) RSUs(3) 15% 35% 50% 50% 6% 14% 80% 20% CEO Other NEOs |
(1) TSR PSUs: Shares subject to these PSU awards are earned and vest based on achievement against our relative total stockholder return (“relative TSR”) over a two-year performance period as compared to companies in a pre-determined index of medical device companies, with 100% of earned units vesting at the end of 2024 (“TSR PSUs”). The number of TSR PSUs earned vary based on actual performance from 75% to 250% of the target number for our CEO and from 75% to 150% of the target number for the other NEOs. (2) Home PSUs: Shares subject to these PSU awards are earned and vest based on achievement against an operational metric tied to the number of patients treating at home on Tablo (“home patients”) as of the end of 2023, with 50% of earned units vesting after certification of the achievement level following the end of 2023 and the remaining 50% of earned units vesting at the end of 2024 (“Home PSUs”). The number of Home PSUs earned vary based on actual performance from 0% to 250% of the target number for our CEO and from 0% to 200% of the target number for our other NEOs. (3) RSUs: Shares subject to these RSU awards vest over a three-year period with one-third vesting on the first anniversary of the grant date and then vesting quarterly over the following two years. |
Executive Compensation Philosophy and Objectives
Our executive compensation program is designed to meet the following key objectives:
Attract, mobilize and retain the right talent. Executive compensation should be market-competitive in order to attract and retain highly qualified, experienced and motivated talent to act as inspirational leaders, drive our strategic initiatives, grow our business and help pave the way to a patient-centric dialysis service model.
IncentIncentivize a collective focus on corporate goals. Our work environment is goal-driven and we believe compensation is a critical tool in the successful execution of our business objectives. By tying elements of our executives’ pay to key corporate goals, we encourage our executives to focus their teams and execute on these goals.
Reward and recognize outstanding performance. We firmly believe that executive compensation should incentivize and reward outstanding performance that contributes to our overall growth and success as a company both in the short-termshort term and long-term.
Align with stockholders’ interestsCreate long-term stockholder value. Through the risks and rewards of owning Outset equity, we incentivize our executives to remain aligned with stockholders and focusstay focused collectively on long-term value creation.
2023 Proxy Statement | 33 |
Our Compensation Committee has created an executive compensation program that combines short-term and long-term components, cash and equity, as well as fixed, at-risk and variable compensation elements, in the proportions it believes achieve these guiding principles.
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Linking Pay to Performance; Our Program Design
Consistent with our philosophy of aligning executive pay with the short-term and long-term performance of the Company, and to align the interests of management and stockholders,, a significant majority of the overall compensation paid to each NEO is at-risk or variable in the form of annual cash bonuses and equity-based compensation: (i) ourcompensation. Our annual cash bonuses and PSUsare at-risk because they are earned or vest only upon the achievement of pre-established performance metrics; (ii)metrics. Our PSU awards are generally at-risk because the underlying shares are earned and vest only upon the achievement of performance metrics, with the exception of 22.5% of the target number of shares subject to each NEO’s PSU award (i.e., 75% of the target number of shares underlying the TSR PSU portion of such award) which are variable because they are earned and vest at the end of 2024 if achievement is at or below threshold. Our RSU awards are variable because the value (if any) earned from stock options depends on our stock price; and (iii) the value earned from RSUs varies based on our stock price.
As reflected in the charts below, for 2021,2022, approximately 92%88% of our CEO’s target pay, and 78%80% of our other NEOs’ (excluding Mr. Racine) target pay on average, was at-risk or variable. We believe this target pay mix reflects the strong pay-for-performance design of our executive compensation program.
CEO Target Pay(1) Mix | Other NEOs, Average Target Pay(1) Mix |
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88% At-Risk or Variable Annual Base Salary (12%) Target Cash Annual Cash Bonus (12%) PSUs (38%) RSUs (38%) 80% At-Risk or Variable Annual Base Salary (20%) Target Annual Cash Bonus (11%) PSUs (14%) RSUs (55%)
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Elements of Our Executive Compensation Program
For 2021,2022, the material elements of compensation for our NEOs were base salary, annual cash bonuses tied to corporate performance goals, and equity-based compensation in the form of time-based stock optionsRSUs and RSUs, as well as, in the case of our CEO, PSUs. The following table below outlines these principal elements, including the primary objectives of each element, any associated performance measures, and whether each element is categorized as “fixed,” “at-risk” or “variable” based on corporate performance (including stock price appreciation).
Compensation Element | Form | Type | Primary Objectives | Performance Measures | |||||
Base Salary | Cash | Fixed |
| Not applicable | |||||
Annual Cash Incentive | Cash | At-risk |
| Pre-established performance metrics based on achievement of multiple one-year financial, operational and strategic goals (tied to revenue, gross margin, home | |||||
Equity Incentive Awards |
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| Stock price appreciation | ||||||
PSUs |
| creation of long-term stockholder value |
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Our Executive Compensation Practices
During 2021,2022, our Compensation Committee maintained a number of practices designed to reinforce our executive compensation philosophy and objectives:
WHAT WE DO: | WHAT WE DON’T DO: | |
üA significant majority of our NEOs’ annual target pay is at-risk or variable in the form of annual cash bonuses and long-term equity compensation tied to corporate performance and/or stock price appreciation
üOur short-term and long-term incentive programs are tied to different measures of performance
üMeaningful stock ownership guidelines for our directors and executive officers |
ûNo guaranteed bonuses or base salary increases
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Stockholder Advisory Votes on NEO Compensation and Stockholder Engagement
At the Annual Meeting,our annual meeting of stockholders held in May 2022, we will be conducting the followingheld a non-binding stockholder advisory votes: (i) a non-binding vote on the compensation of our NEOs (commonly known as a “say-on-pay” vote). Our stockholders approved, on an advisory basis, the compensation of our NEOs, with approximately 99% of stockholder votes cast in favor of our say-on-pay resolution. In evaluating our compensation practices during the remainder of 2022 and (ii) ain early 2023, we were mindful of the strong support our stockholders expressed for our philosophy of linking executive pay to short-term and long-term performance of the Company and aligning the interests of management and stockholders. In light of this strong support, the Compensation Committee retained our general approach to executive compensation, has continued to apply the same general principles and philosophy in determining executive compensation and has not made any changes to our executive compensation program specifically in response to the 2022 say-on-pay vote.
We value the opinions of our stockholders, and our Board and Compensation Committee will continue to seriously consider the outcome of future say-on-pay votes when making future compensation decisions for our executive officers. Consistent with the preference of our stockholders as reflected in the non-binding, advisory vote on the frequency of future say-on-pay votes (commonly known as a “say-on-frequency” vote). See held at our 2022 annual meeting of stockholders, our Board has determined that we will hold a say-on-pay vote every year. Accordingly, we are holding a say on-pay vote at this Annual Meeting (see “Proposal Two” and “Proposal Three”, respectively, in this proxy statement for more detailed information.information).
We value the opinions
2023 Proxy Statement | 36 |
As part of our investor relations program, we engage in ongoing outreach to and discussions with our stockholders, including on matters related to our business strategy and ESG. Even outside of the formal proposals stockholders will be asked to vote on at the Annual Meeting, we remain open to continued input from and discussions with our stockholders, including on matters related to executive compensation and general corporate governance. Stockholders are welcome to reach out toPlease see the section above entitled “Board and Corporate Governance Matters – Stockholder Engagement” for further details on our investor relations team at investors@outsetmedical.com with any questions or requests.stockholder engagement efforts.
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How We Make Executive Compensation Decisions
Role of the Compensation Committee and Management
Our Board has delegated to the Compensation Committee responsibility for overseeing and administering our executive compensation program, including reviewing, determining and approving the compensation of our CEO and other executive officers (including our NEOs). In setting the compensation of our CEO, the Compensation Committee is charged with reviewing and approving corporate goals and objectives relevant to the compensation of our CEO, evaluating our CEO’s performance in light of those goals, and determining and approving our CEO’s compensation based on this evaluation and other factors. Our CEO does not participate in discussions regarding her own compensation.
Our Compensation Committee also approves the compensation of our executive officers other than our CEO. In doing so, the committee takes into account our CEO’s evaluation of each executive officer’s performance and her recommendations with respect to their compensation. While our Compensation Committee solicits and reviews our CEO’s recommendations and proposals with respect to compensation of our executive officers (other than herself), the committee uses these recommendations and proposals as one of several factors in making such compensation decisions, and exercises its discretion in accepting, rejecting or modifying any such recommendations and proposals. In addition, from time to time, various members of management and other employees may be invited by the Compensation Committee to provide financial or other information or advice to the committee or otherwise participate in committee meetings.
In setting executive compensation, the Compensation Committee considers a number of factors, including the recommendations of our CEO (other than with respect to herself), market data and competitive benchmarking assessments prepared by the Company’s independent compensation consultant (as discussed below in the section entitled “Benchmarking Comparison to Peer Group”), current and past total compensation, current equity holdings and the retention value thereof, overall forecast and budget considerations, current market conditions and the talent market environment, company performance and growth, the specific needs of the business at critical points in time, each executive’s role, criticality and relative scope of responsibility, individual performance and contributions, longevity and depth in role, overall experience and expertise, as well as internal equity considerations.
Guidance from Independent Compensation Consultant
In accordance with its written charter, the Compensation Committee has authority to retain or obtain the advice of an independent compensation consultant, legal counsel or other advisors to assist with the execution of its duties including as it relates to executive officer compensation. The committee believes that working with an independent compensation consultant furthers its objectives to recruit and retain qualified executives, align their interests with those of stockholders and help design compensation packages that will appropriately motivate and reward ongoing achievement of business goals.
The Compensation Committee engaged the services of Aon Consulting, Inc., through its Aon Rewards Solution subdivision (“Aon”), as an independent executive compensation consultant to assist in its evaluation of executive and director compensation for 2021.2022. At the request of the Compensation Committee, Aon advised on principal aspects of our 20212022 executive compensation program, including reviewing our executive compensation philosophy, developing a comparative group of peer companies, reviewing peer group trends with respect to levels and types of compensation elements, and performing competitive benchmarking assessments of executive officer compensation against our peer group. Aon also assisted with benchmarking and gathering market data with respect to compensation packages for Mr. Racine upon his hire and for Mr. Ahmed in connection with his promotions to Interim CFO and to CFO.
In addition, Aon assisted with reviewingreviewed and benchmarkingbenchmarked our policy with respect to non-employee director compensation reviewingpolicy, and reviewed competitive market practices and trends for equity compensation of our non-executive employees, conductingemployees.
2023 Proxy Statement | 37 |
In April 2022, the Compensation Committee transitioned from Aon to Pearl Meyer as its new independent compensation consultant. While Pearl Meyer did not advise the committee with respect to 2022 executive and director compensation, Pearl Meyer conducted pay for performance assessments with respect to our 2022 CEO compensation, and provided support on other ad hoc matters throughout the year.year, including advice in connection with the stock ownership guidelines we recently adopted.
During its tenure, Aon was retained by and reported to the Compensation Committee and, at the request of the committee, participated in committee meetings. Similarly, Pearl Meyer is retained by and reportscontinues to report to the Compensation Committee and, at the request of the committee, participates in committee meetings. Based on consideration of the various factors set forth in applicable Nasdaq and SEC rules, the Compensation Committee does not believe that its relationship with either Aon and theor Pearl Meyer or either firm’s work of Aon on behalf of the committee have
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has raised any conflicts of interest. The Compensation Committee reviews these factorsEach of Aon and receivesPearl Meyer provided written confirmation from Aon statingof its belief that it remains an independent compensation consultant to the Compensation Committee.independence.
Benchmarking Comparison to Peer Group
In order to obtain a broad view of compensation practices among industry peers and competitors for executive talent, and to help design a competitive executive compensation program to attract, motivate and retain effective leadership, our Compensation Committee worked closely with Aon to identify an appropriate group of comparable publicly traded peer companies against which to benchmark our 20212022 executive officer compensation.
In selecting the peer group to be used to help guide 20212022 executive compensation decisions, the Compensation Committee, in consultation with Aon, establishedreviewed and updated the following peer group selection criteria designed to capture a meaningful cross-section from which to benchmark executive officer compensation:compensation as follows:
Element | Selection Criteria | |
Sector and Stage |
| |
Geography | U.S.-based with a focus on companies headquartered in the San Francisco Bay Area and other | |
Revenue | Trailing twelve-month revenue ranging from | |
Market Capitalization | 30-day average market capitalization ranging from $600 million to $5 billion |
In November 2020,September 2021, following consultation with Aon and based on the above selection criteria, our Compensation Committee approved the following peer group of companies for evaluating 20212022 executive officer compensation (the “2021“2022 peer group”):
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AtriCure, Inc. | Inspire Medical Systems, Inc. |
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Axonics, Inc. | Intersect ENT, Inc. |
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Berkeley Lights, Inc. | iRhythm Technologies, Inc. |
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| Silk Road Medical, Inc. | ||
| NanoString Technologies, Inc. | STAAR Surgical Company | ||
Glaukos Corporation | Pacific Biosciences of California, Inc. |
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| Tactile Systems Technology, Inc. | ||
Inari Medical, Inc. | Pulmonx Corporation | Veracyte, Inc. |
Our 2021 peer group reflects certain changes to the prior peer group approved by the
2023 Proxy Statement | 38 |
The Compensation Committee in late 2019 that was used to evaluate base salary increases for our executive officers following our IPO in late 2020. These changes were primarily due to companies in the prior peer group falling outside of the updated revenue and market capitalization ranges that were reset based on Outset’s projected 2021 revenue and then-current market capitalization. Going forward, the Compensation Committee intends to reviewreviews our peer group on an annual basis to make adjustments if warranted based on changes in both our business and the businesses of the companies in our peer group, while maintaining year-over-year continuity in the list for comparability of competitive analysis.
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As part of this review process, the datecommittee made the Compensation Committee approved ourfollowing changes to the 2021 peer group our projected 2021in determining the 2022 peer group:
In earlylate 2021, Aon prepared reports summarizing a benchmarking review and assessment of our executive compensation program, including base salary, annual incentive bonus and equity award levels for our NEOs (other than Messrs. Racine and Ahmed) as compared to our 20212022 peer group. The Compensation Committee considered these reports, among other factors, in determining the size, components and mix of compensation elements for these NEOs in 2021. Mr. Racine was hired in June 2021 and his compensation levels, including his new hire equity grants, were determined by the Compensation Committee when he joined Outset. Mr. Ahmed’s compensation increases for 2021, including additional equity grants, in connection with his promotion to Interim CFO and subsequently to CFO, were determined by the Compensation Committee at the time of the promotions. In setting Mr. Racine’s new hire compensation and Mr. Ahmed’s promotion compensation increases for 2021, the Compensation Committee considered, among other factors, market data gathered by Aon based on companies in our 2021 peer group. 2022.
Our Compensation Committee believes competitive market data is a useful tool in its deliberations to help design an executive compensation program that is competitive in relation to our peers, enabling us to attract, motivate and retain a qualified leadership team. The committee generally considers the 25th, 50th and 75th percentiles of market data, and makes individual compensation decisions based on comparable positions at our peer group companies.group. However, the committee does not rely solely on competitive market data to determine any element of executive compensation or overall compensation. In making executive compensation decisions, the committee considers a number of additional factors, including those discussed above in the section entitled “Role of the Compensation Committee and Management” as well as below in the section entitled “Elements of NEO Compensation and 20212022 Determinations.”
Elements of NEO Compensation and 20212022 Determinations
The principal elements of our NEOs’ 20212022 compensation consisted of cash compensation in the form of base salary and annual cash bonuses tied to corporate performance goals, as well as equity-based compensation in the form of time-based stock options and RSUs and in the case of our CEO, PSUs. Each of these compensation elements is discussed in further detail below, including a description of how it fits into our overall executive compensation program and a discussion of the amounts of compensation paid or awarded to our NEOs during 20212022 under each of these elements.
In addition, our NEOs are eligible to participate in our standard retirement, health and welfare and other available employee benefit plans on the same basis as our other employees. We also maintain severance and change in control arrangements with our executive officers (including our NEOs) as described in detail below.
Base Salary
Base salary represents the fixed portion of our executive officers’ compensation, which we view as an important element to attract and retain an effective leadership team. As the only fixed component of our executive compensation program, base salaries are also intended to provide our executives with a reasonable degree of financial stability, predictability and security of compensation.
Our Compensation Committee generally reviews and determines the base salaries of our executive officers on an annual basis, as well as upon hire of a new executive and upon promotion to an executive position. In setting base salaries, the committee considers competitive market data for comparable positions within our peer group, while also taking into consideration other factors including current and past total compensation, each executive’s role, criticality and relative scope of responsibility, individual performance and contributions, longevity and depth in role, overall experience and expertise, company performance and growth, as well as the recommendations of our CEO (other than with respect to herself).
2023 Proxy Statement | 39 |
In connection with its annual review of executive compensation levels in late 2021 and early 2021,2022, the Compensation Committee reviewed the base salaries of our NEOs, (excluding Messrs. Ahmed and Racine), including against market data prepared by Aon based on our 20212022 peer group, and approved certain increases reflected in the table below. In determining these increases, the Compensation Committee intended to better align our executives’ post-IPO salaries with competitive pay practices of our publicly traded peers, and continue to narrow the gap between base salaries of certain NEOs and the 50th percentile based on comparable positions within our 2022 peer group. The committee determined not to make any changes toalso took into consideration individual performance, contributions, current and future duties and responsibilities within Outset, as well as the criticality of retaining strong and stable leadership at this stage of the Company’s growth in an increasingly challenging and highly competitive talent market environment.
The table below sets forth, for each NEO, 2021 and 2022 annual base salaries, of these NEOs, as it believedand the then-currentpercentage increase.
Name: |
| 2021 |
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| 2022 |
|
| Percentage Increase |
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Leslie Trigg |
|
| 560,000 |
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| 625,000 |
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| 11.6 | % |
Nabeel Ahmed |
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| 385,000 |
|
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| 430,000 |
|
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| 11.7 | % |
John Brottem |
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| 350,000 |
|
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| 385,000 |
|
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| 10.0 | % |
Martin Vasquez |
|
| 370,000 |
|
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| 450,000 |
|
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| 21.6 | % |
Steve Williamson |
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| 485,000 |
|
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| 505,000 |
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| 4.1 | % |
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the case of Mses. Trigg and Chambers and Mr. Vazquez) andfor each NEO as of January 1, 2021 (in(or, in the case of Mr. Brottem), and were intended to better align the total cash compensation opportunities of these NEOs with competitive pay practices at our publicly-traded peers based on market data gathered by Aon, and also taking into consideration their individual performance, contributions, duties and responsibilities and positions within Outset.
Annual base salaries for our NEOsAhmed, as of December 31, 2020 andJuly 30, 2021, are summarized inupon his promotion to CFO) through the table below, with any changes effected during 2021 described inend of the footnotes. Please seeyear.
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| Base Salary as of December 31, |
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Name: |
| 2020 ($) |
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| 2021 ($) |
|
| Percentage Increase (%) |
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Leslie Trigg |
|
| 560,000 |
|
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| 560,000 |
|
|
| — |
|
Nabeel Ahmed(1) |
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| 265,000 |
|
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| 385,000 |
|
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| 45.3 | % |
John Brottem(2) |
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| 325,000 |
|
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| 350,000 |
|
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| 7.7 | % |
Jean-Olivier Racine(3) |
|
| — |
|
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| 375,000 |
|
| N/A |
| |
Martin Vasquez |
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| 370,000 |
|
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| 370,000 |
|
|
| — |
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Rebecca Chambers(4) |
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| 380,000 |
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| 380,000 |
|
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| — |
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Annual Cash Incentive
We provide our executives with short-term incentive compensation through our annual cash bonus program. Consistent with our executive compensation philosophy, our annual incentive program is designed to focus our employees (including our executives) on key strategic corporate goals and motivate and reward performance in achievement of these goals, helping to create a goal-oriented and “pay for performance” environment. We believe that company-wide goals help to foster effective cross-functional performance and a culture of collaboration, in furtherance of our philosophy that we drive for success as a team, not as individuals.
Our annual cash bonus program provides cash incentive award opportunities based on the level of achievement of financial, operational and strategic corporate performance goals established by our Compensation Committee at the beginning of the fiscal year. Payout varies depending on company performance as compared to the threshold and target performance goals established by the committee. Our bonus program is designed to pay above-target bonuses when we exceed our target annual corporate objectives and below-target bonuses when we do not meet these objectives, with no payout in the event that we fail to meet any of the threshold objectives.
Target annual cash bonus opportunities for our NEOs were set by our Compensation Committee as a percentage of their respective base salaries. In connection with its annual review of our executives’ compensation in late 2021 and early 2021,2022, our Compensation Committee reviewed the 20212022 bonus targets of our NEOs, (excluding Messrs. Ahmed and Racine), taking into consideration market data prepared by Aon based on our 20212022 peer group, each executive’s scope of responsibilities and individual and company performance, as well as the recommendation of our CEO (except with respect to herself), with a
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view towards generally maintaining consistent bonus percentages amongst our non-CEO executive officers. The committee approved an increase in our CEO’s bonus target from 75% of her annual base salary for 2020 to 100% of her annual base salary for 2021, in recognition of her strong performance and contributions to date and growth as a public company CEO. The committee determined not to make any changes to the 2021NEOs’ 2022 bonus targets of the other NEOs as compared to the prior year.year, as they remained market competitive.
2023 Proxy Statement | 40 |
The following table sets forth the bonus targets (as a percentage of annual base salary) for each NEO during 2020 and2022, which were unchanged from the prior year as reflected below:
|
| 2021 |
|
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| 2022 |
|
| Increase |
| |||
Leslie Trigg |
|
| 100 | % |
|
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| 100 | % |
|
| — |
|
Nabeel Ahmed(1) |
|
| 50 | % | (1) |
|
| 50 | % |
|
| — |
|
John Brottem |
|
| 50 | % |
|
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| 50 | % |
|
| — |
|
Martin Vasquez |
|
| 50 | % |
|
|
| 50 | % |
|
| — |
|
Steve Williamson |
|
| 60 | % |
|
|
| 60 | % |
|
| — |
|
Name: |
| 2020 Bonus Target Percentage |
|
| 2021 Bonus Target Percentage |
|
| Increase |
| |||
Leslie Trigg |
|
| 75 | % |
|
| 100 | % |
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| 25 | % |
Nabeel Ahmed(1) |
|
| 35 | % |
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| 50 | % |
|
| 15 | % |
John Brottem |
|
| 50 | % |
|
| 50 | % |
|
| — |
|
Jean-Olivier Racine(2) |
|
| — |
|
|
| 50 | % |
| N/A |
| |
Martin Vazquez |
|
| 50 | % |
|
| 50 | % |
|
| — |
|
Rebecca Chambers(3) |
|
| 50 | % |
|
| 50 | % |
|
| — |
|
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Corporate Performance Goals
The payment of awards under our 20212022 annual cash bonus program applicable to our NEOs was subject to the attainment of several pre-established corporate milestones and goals relating to the Company’s financial and operational performance, which we refer to as “performance goals”. These performance goals were approved by our Compensation Committee in early 2021January 2022 and related to revenue (weighted 50% plus a potential overachievement component)), gross margin (weighted 25%), home dialysis patient enrollment and retentionpatients (weighted 12.5%15%) and a reduction in service hours per console (weighted 12.5%10%), all subject to achievement of a minimum cash threshold tied to year-end cash. cash holdings.
For each performance goal,At the same time, our Compensation Committee initially established “threshold” and “target” achievement levels for each performance goal with resulting payouts (forfor each such performance goal) as follows:
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Lastly,goal ranging from 75% (at threshold) to 100% (at target), plus an overachievement opportunity for achievement levels above target. The committee capped each individual’s maximum possible payout under the cash bonus program at 200% of such individual’s target bonus opportunity. In addition, payout under the bonus program was subject to achievement of a “minimum cash threshold” tied to year-end cash (including cash, cash equivalents, restricted cash and short-term investments) such that, even if one or more of the performance goals were met at or above threshold, no payouts would be made under the bonus program if 20212022 year-end cash fell below $213$200 million.
OurAt the time the original achievement levels were set for each performance goal in early 2022, our Compensation Committee designed these threshold and target corporate performance goals for 2021them to (i) be challenging, but attainable with superior performance as well as focused effort and execution by our executives given the business environment at the time, (ii) appropriately drive successful execution of key strategic company objectives, namely driving revenue growth, expanding gross margins to deliver improved profitability, expanding within the home dialysis market, improving the cost of service and customer experience, while effectively managing cash within our operating budget, and (iii) effectively balance near-term financial performance with strategic financial and operational objectives designed to increase long-term stockholder value consistent with our overall growth strategies.
Each performance goal was weighted according to the committee’s assessment of its relative significance to our short-term and long-term success and strategy. In order to incentivize and proportionately reward exceptional above target performance of each goal, while balancing fiscal responsibility and the desire to discourage excessive risk taking by our executives, the committee allowed for over-achievement opportunities for each goal based on pre-determined payout curves, while capping individual payouts under the 2022 cash bonus program at 200% of each executive’s target bonus opportunity.
In May 2021, we had submitted a 510(k) application to the FDA covering design changes for patient use in the home that we made to Tablo since its original March 2020 clearance. In May 2022, after further discussions with the FDA and receiving indications that the clearance of this 510(k) application would be delayed beyond our original expectations, we implemented a shipment hold on the distribution and marketing of Tablo for use in the home environment pending the FDA’s review and clearance of this 510(k) application. In late July 2022, the FDA cleared our 510(k) application of Tablo for patient use in the home and we resumed marketing and shipping Tablo for home use. The 2021 corporatehome shipment hold was a
2023 Proxy Statement | 41 |
highly disruptive and unplanned event that could not be anticipated, and had a significant negative impact on our business in areas tied directly to three of the four performance goals including(collectively weighted at 90%) under our cash bonus program:
The original performance targets were set by the Compensation Committee in January 2022 before the home shipment hold, and its extraordinary impacts on our business, could be anticipated. In early September 2022, in light of the significant negative impacts of the shipment hold on our business, and more specifically, on three of the four performance goals under our bonus program as described above, the committee determined that the original performance targets for these goals were no longer appropriate or achievable.The committee considered potential adjustments to the 2022 bonus plan intended to (i) ensure retention and stable leadership during a challenging and critical time, (ii) maintain meaningful aspiration and business focus for the remainder of the year, and (iii) continue to motivate and reward exceptional performance. With these key objectives in mind, the committee approved adjustments to the 2022 cash bonus program designed to isolate the impact of the home shipment hold on revenue for 2022, non-GAAP gross margin for 2022, and home patients at 2022 year-end. For these three goals, the payout range for below target performance was expanded to scale from 25% to 100% (instead of 75% to 100%) allowing for a greater range of performance to be recognized, and the threshold and target achievement levels were adjusted down to account for eachthe impacts of the home shipment hold on these measures. In particular, and relevant to the attainment of the threshold performance goals as described below, the threshold achievement level for 2022 revenue was reduced from $142 million (for a 75% payout) to $98.5 million (for a 25% payout) and the threshold achievement level for 2022 non-GAAP gross margin was reduced from 18.8% (for a 75% payout) to 12.1% (for a 25% payout). In addition, the target and overachievement levels for the revenue and gross margin goals, which were not attained, were similarly reduced, as shown below. For the home patient goal, arethe committee also lowered the threshold, target and over-achievement payout curve. When the committee approved these adjustments in early September 2022, it considered the adjusted threshold and target achievement levels to be challenging, but attainable with superior performance as well as focused effort and execution by our executives in light of the significantly altered business environment following the home shipment hold. No other changes were made to the 2022 bonus program, including no changes to the performance goal related to reduction in service hours.
2023 Proxy Statement | 42 |
The 2022 cash bonus program as adjusted by the committee in September 2022 is summarized in the following table:table below:
Performance Goal(1) |
| Weighting |
| Adjusted Threshold: |
| Adjusted Target: |
| Over-achievement Opportunity(3) |
Revenue |
| 50% |
| $98.5 million |
| $146.5 million |
| If 2022 revenue is achieved at or above target, each additional $1 million of (i) 2022 revenue above target plus (ii) incremental backlog at 2022 year-end above our 2022 operating plan, results in additional 6.25% attainment for this goal |
Gross margin |
| 25% |
| 12.1% |
| 20.5% |
| Each 1% of gross margin above target results in additional 35% attainment for this goal |
Home patients |
| 15% |
| Adjusted threshold goal |
| Adjusted target goal |
| Each specified number of patients above target results in additional 0.83% attainment for this goal |
Reduction in service hours per console per year(4) |
| 10% |
| Threshold goal |
| Target goal |
| Each specified number of hours of reduction above target results in additional 25% attainment for this goal |
Performance Goal(1) |
| Weighting |
|
| Threshold (75% Payout)(2) |
|
| Target (100% Payout)(2) |
|
| Overachievement |
Revenue (2021) |
| 50% |
|
| $70 million |
|
| $101 million |
|
| Yes(3) |
Gross Margin (non-GAAP Q4 2021) |
| 25% |
|
| 3.0% |
|
| 18.4% |
|
| N/A |
Home dialysis patient enrollment and retention(4) |
| 12.5% |
|
| Threshold goal |
|
| Target goal |
|
| N/A |
Service hours per console per year(4) |
| 12.5% |
|
| Threshold goal |
|
| Target goal |
|
| N/A |
|
|
|
|
|
|
|
|
20212022 Cash Bonus Payouts
In January 2022,February 2023, our Compensation Committee, based on achievement of our 20212022 corporate performance goals (as adjusted), approved overall payouts under our 20212022 annual cash bonus program equal to 174.5%89.1% of each NEO’s target bonus opportunity. This determination was based on the following:
Minimum Cash Threshold: 20212022 year-end cash (including cash, cash equivalents, restricted cash and short-term investments) of $372.8$290.8 million exceeded the minimum cash threshold and, therefore, bonuses would be paid out based on achievement of the corporate performance goals.
|
|
Achievement of Performance Goals: The table below reflects the achievement and corresponding payout levels (including the additional over-achievement levels), with respect to each of our 20212022 corporate performance goals as well as the additional contribution to, and the total payout level under the over-achievement component of the2022 cash bonus plan:
Corporate Performance Goal |
| Weighting |
| Attainment at 2022 Year-End |
| Over-achievement Contribution |
| Payout Level |
| Weighted Payout |
Revenue |
| 50% |
| Between threshold and target |
| None(1) |
| 51.3% |
| 25.7% |
Gross margin |
| 25% |
| Between threshold and target |
| None |
| 60.7% |
| 15.2% |
Home patients |
| 15% |
| Above target |
| 88.3% |
| 188.3% |
| 28.2% |
Service hours per console per year |
| 10% |
| Above target |
| 100.0% |
| 200.0% |
| 20.0% |
Total payout |
|
|
|
|
|
|
|
|
| 89.1% |
Corporate Performance Goal |
| Weighting |
|
| Attainment at 2021 Year-End |
| Payout Level |
|
| Weighted Payout |
| ||
Revenue (2021) |
| 50% |
|
| Above target ($102.6 million) |
| 100.0% |
|
| 50.0% |
| ||
Gross Margin (non-GAAP Q4 2021) |
| 25% |
|
| Between threshold and target (12.0%)(1) |
| 89.6% |
|
| 22.4% |
| ||
Home patient enrollment and retention |
| 12.5% |
|
| Below threshold |
| 0% |
|
| 0% |
| ||
Service hours |
| 12.5% |
|
| Between threshold and target |
| 98.5% |
|
| 12.3% |
| ||
Total payout (before over-achievement) |
|
|
|
|
|
|
|
| 84.7% |
| |||
Over-achievement contribution |
|
|
|
|
| Revenue above target ($1.6 million) Incremental backlog ($28.3 million) |
|
|
|
|
| 89.8%(2) |
|
Total payout (including over-achievement) |
|
|
|
|
|
|
|
| 174.5% |
|
|
|
|
|
( $1.6 million | + | $28.3 million ) | x | 3% | = | 89.8% |
Amount by which 2021 year-end revenue of $102.6 million exceeded revenue target of $101 million |
| Amount of incremental backlog generated as of the end of 2021 relative to the amount of backlog as of the end of 2020 |
|
|
| Over-achievement contribution |
The following table summarizes the 20212022 target bonus opportunities (assuming 100% payout at target) for each NEO, as well actual cash bonus amounts earned by each NEO during 20212022 under our cash bonus program that were paid in late February 2022. 2023.
Name: |
| Actual Base |
|
| 2022 Bonus |
| 2022 Target Bonus Opportunity at 100% Payout |
|
| 2022 Actual |
| 2022 Actual |
| |||
Leslie Trigg |
|
| 623,750 |
|
| 100% |
|
| 623,750 |
|
| 89.1% |
|
| 555,761 |
|
Nabeel Ahmed |
|
| 429,135 |
|
| 50% |
|
| 214,568 |
|
| 89.1% |
|
| 191,180 |
|
John Brottem |
|
| 384,327 |
|
| 50% |
|
| 192,164 |
|
| 89.1% |
|
| 171,218 |
|
Martin Vazquez |
|
| 448,462 |
|
| 50% |
|
| 224,231 |
|
| 89.1% |
|
| 199,790 |
|
Steve Williamson |
|
| 504,615 |
|
| 60% |
|
| 302,769 |
|
| 89.1% |
|
| 269,767 |
|
Name: (1) |
| Actual Base Salary Paid in 2021 ($)(2) |
|
| 2021 Bonus Target Percentage (%)(3) |
|
| 2021 Target Bonus Opportunity at 100% Payout ($) |
|
| 2021 Actual Bonus Payout Level (%) |
|
| 2021 Actual Bonus Amount ($)(4) |
| |||
Leslie Trigg |
|
| 560,000 |
|
| 100% |
|
|
| 560,000 |
|
| 174.5% |
|
|
| 977,200 |
|
Nabeel Ahmed |
|
| 323,000 |
|
| 44.2% |
|
|
| 142,766 |
|
| 174.5% |
|
|
| 249,235 |
|
John Brottem |
|
| 349,615 |
|
| 50% |
|
|
| 174,808 |
|
| 174.5% |
|
|
| 305,039 |
|
Jean-Olivier Racine |
|
| 194,712 |
|
| 50% |
|
|
| 97,356 |
|
| 174.5% |
|
|
| 169,886 |
|
Martin Vazquez |
|
| 370,000 |
|
| 50% |
|
|
| 185,000 |
|
| 174.5% |
|
|
| 322,825 |
|
|
|
|
|
|
|
| Actual |
|
|
Other than the payouts under our 2021 annual cash bonus program described in the table above, no other cash bonuses wereamounts earned by oreach NEO during 2022 were calculated based on such NEO’s actual salary paid to our NEOs during 2021, other than a one-time cash bonus paid to Mr. Ahmed in the amount of $75,000 in July 2021 in connection with his appointment as Interim CFO. This one-time cash bonus was approved2022, multiplied by the Compensation Committee in order to compensate Mr. Ahmed forproduct of (i) such NEO’s 2022 bonus target percentage and (ii) the increased responsibilities and accountability of his new role.
Preview of 2022 Annual Cash Incentive Plan Design
Following our first full year as a public company, our Compensation Committee reviewed the structure of our executive compensation program from a design and pay outcome perspective in determining the 2022 compensation of our executive officers. To continue its emphasis on linking executive pay to performance, the committee approved an annual cashactual bonus program for 2022 that is similar in design and structure to our 2021 cash bonus program, with payouts based on thepayout level of achievement against pre-established performance metrics tied to multiple one-year financial, operational and strategic corporate goals. Our 2022 cash bonus program again includes an overachievement component driven by revenue performance at levels above target. In addition, to help discourage excessive risk taking by our executives, the committee determined to cap individual payouts under the 2022 cash bonus programs at 200% of target.
Equity Incentive Awards
Our equity-based compensation is intended to attract, motivate and retain our executive officers, align the interests of our executive officers with the interests of our stockholders and focus our executive officers on performance that creates long-term value for our stockholders, using a mix of both time-based vesting and in certain cases, performance-based vesting. We typically grant equity awards to executive officers on an annual basis, as well as upon hire of a new executive and upon promotion to an executive position.
Evolution of our Long-Term Equity Incentive Program
The long-term equity incentive component of our executive compensation program has evolved over time up to and following our IPO, and our Compensation Committee continues to make adjustments it believes are appropriate given our growth stage and as we mature as a public company:
Pre-IPO: Prior to our IPO, we historically granted equity compensation in the form of time-based and performance-based stock options. The time-based stock options generally vest over a four-year period. The performance-based stock options were scheduled to vest once the value of a share of our common stock equaled or exceeded a certain value (the market-based vesting condition) following certain corporate events or our IPO (the performance-based vesting condition).
Post-IPO through 2021: Following our IPO, beginning in November 2020, our Compensation Committee began granting equity in the form of time-based RSUs that vest over a multi-year period and, in the case of certain executives, began granting PSUs (including to our CEO in 2021). As further described in the remainder of this section, for 2021, the committee targeted the following mix of equity awards based on target value (i) for our CEO: 50% PSUs (which vest only upon our stock price appreciating above two pre-determined thresholds), 25% stock options and 25% RSUs, and (ii) for our other NEOs: 50% stock options and 50% RSUs.
2022 Preview: Following our first full year as a public company, our Compensation Committee made certain modifications to our 2022 equity program.To further enhance the performance-based nature of our long-term equity incentive program and increase the retention value of our executive’s equity packages, while maintaining the at-risk or variable nature of a significant majority of our executive’sexecutives’ annual target pay, the committee (i) discontinued the historical practice of granting time-based stock options, (ii) expanded the issuance of PSUs to a broader group of executive officers and certain other senior leaders within the Company and (iii) retained RSUs as a component of our executive’s equity packages, moving to a three-year vesting schedule with one-third vesting on the first anniversary of the grant date and then quarterly over two years. For 2022, the committee approved a mix of 50% PSUs and 50% RSUs for our CEO, and a mix of 20% PSUs and 80% RSUs for our other executive officers and certain other senior leaders, in each case, based on target value. These PSUs granted in 2022 are earned and vest through 2024 based on achievement against two separateto reflect competitive market practices.
|
|
2022 |
2021 Equity Award Types
During 2021,2022, we granted equity-based compensation to our NEOs in the form of time-based stock options and RSUs and in the case of our CEO, PSUs. Key elements of equity awards granted to our NEOs during 2021,2022, including the target mix of equity awards and vesting schedules, are summarized in the following table:
|
|
|
| Target Equity Mix(1) |
|
|
|
| ||
Equity Award Type |
| Recipients |
| CEO |
| Other NEOs |
| At-Risk or Variable |
| Vesting(3) |
RSUs |
| All NEOs |
| 50% |
| 80% |
| Variable: Value varies based on stock price performance |
| Time-based vesting over three-years, with one third vesting on the first anniversary of the grant date and then vesting quarterly over the following two years |
PSUs |
| All NEOs |
| 50%(2) |
| 20%(2) |
| Generally at-risk: Generally no payout if threshold performance measure is not met(4) |
| Performance-based vesting, with PSUs earned and vesting through 2024 based on achievement against two separate metrics tied to: (1) home patients and (2) relative TSR |
Equity Award Type |
| Recipients |
| Target Equity Mix(1) |
| At-Risk or Variable |
| Vesting(2) | ||
CEO |
| Other NEOs | ||||||||
Stock Options |
| All NEOs |
| 25%
|
| 50% |
| At-Risk: No value if stock price remains below fair market value on grant date |
| Time-based vesting over four-years, with 25% vesting on the first anniversary of the grant date and in 36 equal monthly installments thereafter |
RSUs |
| All NEOs |
| 25% |
| 50% |
| Variable: Value varies based on stock price performance |
| Standard: Time-based vesting over four-years, with 25% vesting on the first anniversary of the grant date then quarterly over three years Other: Mr. Ahmed was granted RSUs in connection with his promotion to Interim CFO that vest in full one year from the grant date |
PSUs |
| CEO |
| 50% |
| None |
| At-risk: No payout if threshold performance measure is not met |
| Performance-based vesting: (i) 50% vest on the last day of any period of 30 consecutive trading days during which the closing price exceeds $75.00 per share on each trading day during such period, and (ii) 50% vest on the last day of any period of 30 consecutive trading days during which the closing price exceeds $90.00 per share on each trading day during such period |
|
|
|
|
Design of 2022 PSUs
In designing the PSUs awarded to the NEOs in early 2022, the Compensation Committee considered a number of factors, including a report prepared by Aon examining performance equity practices amongst the Company’s 2022 peer group. In consultation with Aon, the committee discussed various alternative structures for the PSUs, including metric types, performance periods, post-achievement vesting periods and other key features, and carefully weighed the merits of different structures.
|
|
The table below summarizes key features of the two types of PSUs awarded to the NEOs in 2022, and the committee’s rationale:
| Home PSUs | TSR PSUs | Rationale |
Performance metrics | Home patients | Relative TSR compared to companies in the Russell 2000 Medical Device Index | • Home patients is an operational metric the committee determined would appropriately incentivize, reward and drive focused execution and performance by our executives against the Company’s key strategic goal of expanding within the home hemodialysis market, a goal the committee considers to be a critical driver of the Company’s future growth and long-term stockholder value. • Relative TSR, in addition to being a common incentive metric amongst the 2022 peer group, is an effective measure of the Company’s long-term success and creation of stockholder value as compared to a pre-determined index of medical device companies which the committee determined to be most comparable in sector and company size. The relative nature of the metric helps normalize external macroeconomic factors that fall outside of management’s control. • The use of multiple metrics (one absolute and one relative) helps balance the PSU structure, focusing executives and incentivizing and rewarding performance based on more than a single metric. |
Weighting | 70% | 30% | • The committee determined the split between Home PSUs and TSR PSUs based on relative significance of the performance metrics to the Company’s short-term and long-term success and strategy, placing greater emphasis on home patients as a critical operational metric. |
Payout scale and maximum | 0% to 250% (CEO) 0% to 200% (other NEOs) | 75% to 250% (CEO) 75% to 150% (other NEOs) | • Incentivizes and proportionately rewards exceptional above target performance, while discouraging excessive risk-taking by our executives. |
Performance period | Nearly 2 years (through 12/31/23) | 2 Years (January 26, 2022 through January 26, 2024) | • The committee determined that a multi-year performance period of 2 years was the appropriate time horizon over which to measure performance, balancing the one-year performance period for the annual cash bonus program and the three-year vesting period for the time-based RSUs, for an overall compensation program that appropriately aligns executive pay with both short-term and long-term performance of the Company. |
Post-achievement vesting | 50% of earned units vest upon certification of achievement following the performance period, with the remaining 50% subject to approximately 1-year of additional vesting (at end of 2024) | 100% of earned units subject to approximately 1-year of additional vesting (at end of 2024) | • For additional retentive value and risk management beyond the 2-year performance period, the committee determined to require additional time-based vesting for 50% of Home PSUs earned and 100% of TSR PSUs earned. |
Home PSUs
Of the PSUs awarded to our NEOs in 2022, 70% were comprised of Home PSUs. Shares subject to Home PSUs awarded to our NEOs during 2022 are earned and vest based on achievement against an operational metric tied to the number of home patients as of the end of 2023, with 50% of earned units vesting after certification of the achievement level following the end of 2023 and the remaining 50% vesting at the end of 2024, subject to continued service through the applicable vesting date.
2023 Proxy Statement | 46 |
The number of Home PSUs earned at the end of the nearly two-year performance period ending December 31, 2023 (“Earned Home Units”) varies based on actual performance from 0% to 250% in the case of our CEO and from 0% to 200% in the case of our other NEOs. The table below summarizes the payout opportunities for the Home PSUs:
|
| Number of Home Patients at end of 2023 |
| Earned Home Units |
Level of Achievement |
| (as a Percentage of Target)(1) |
| (as a Percentage of Target) |
Below Threshold |
| Less than 62.5% |
| 0% |
Threshold |
| 62.5% |
| 75% |
Target |
| 100% |
| 100% |
Above Target | | Each additional 0.31% above Target | | Additional 1.25%, up to a maximum of 250% (for our CEO) or 200% (for our other NEOs) |
At the time the Home PSUs were granted to the NEOs in January and February 2022, the Compensation Committee determined that, given the Company’s relatively limited experience selling Tablo in the home care setting, it did not have sufficient visibility into future home patient enrollment following a nearly two-year performance period ending December 31, 2023 to be able to set a definitive and meaningful target number of home patients that would be challenging, but reasonably achievable with superior performance, and that would appropriately incentivize the NEOs. As a result, the committee determined to establish the 2023 home target by early 2023. On January 6, 2023, the Compensation Committee approved the 2023 target for the Home PSUs. The committee set a target it believed would be challenging, but attainable with superior performance as well as focused effort and execution by our executives.
TSR PSUs
2021Of the PSUs awarded to our NEOs in 2022, 30% were comprised of TSR PSUs. Shares subject to TSR PSUs awarded to our NEOs during 2022 are earned and vest based on our relative TSR over a two-year performance period (beginning January 26, 2022 and ending January 26, 2024) as compared to companies included in the Russell 2000 Medical Device Index as of January 26, 2022, with 100% of earned units vesting at the end of 2024, subject to continued service through the vesting date.
The number of TSR PSUs earned at the end of the two-year performance period ending January 26, 2024 (“Earned TSR Units”) will vary based on actual performance from 75% to 250% in the case of our CEO and from 75% to 150% in the case of our other NEOs. The table below summarizes the payout opportunities for the TSR PSUs:
Level of Achievement | TSR Percentile(1) | Earned TSR Units | ||
Threshold | 25th percentile or lower | 75% | ||
Target | 50th percentile | 100% | ||
Maximum | 75th percentile or above | 250% for our CEO; 150% for the other NEOs |
2022 Equity Award Determinations
For equity award grants to our NEOs during 2021,2022, the Compensation Committee approved the total target value of equity awards for each NEO, and then allocated such target value as applicable between stock options, RSUs and in the case of our CEO, PSUs (and between Home PSUs and TSR PSUs) to achieve the desired target equity award mix. TheAs approved by the Compensation Committee, also approved the following methods for determiningto determine the total number of shares underlying each type of equity award: (i) in the case of stock options, the number of shares underlying the optionRSU and PSU award, was determined by dividing the target value of the stock option award by the fair value of a stock option estimated by the Company on the grant date using the Black-Scholes option-pricing model and (ii) in the case of RSUs and PSUs, the number of shares underlying the stock award was determined by dividing the target value of the stock awarddivided by the average closing price of a share of the Company’s common stock over 3020 trading days ending on the last trading day preceding the grant date.
For the actual grant date fair values of the equity awards granted to our NEOs in 2021,2022, computed in accordance with ASC 718, please see the “Stock Awards” and “Option Awards” columnscolumn of the 20212022 Summary Compensation Table below.
In March 2021, our Compensation Committee approved annual equity award grants to our NEOs (excluding Messrs. Racine and Ahmed), targeting an equity award mix The terms of approximately 25% stock options, 25%the RSUs and 50% PSUs for our CEO, and 50% stock options and 50% RSUs for such other NEOs. Asare described in the table above in the section entitled “Equity“2022 Equity Award Types,Types.” stock options and RSUs granted to our NEOs in connection with these annual grants are subject to time-based vesting over a four-year period, and the PSUs granted to our CEO are subject to performance-based vesting tied to our stock price appreciating above two pre-determined thresholds.
2023 Proxy Statement | 47 |
In setting the target equity award values of the annual grants for each NEO, the Compensation Committee considered a number of factors, including competitive market data prepared by Aon based on our peer group, each executive’s current holdings and the retention value thereof, each executive’s scope of responsibilities and individual contributions and performance, the criticality of retaining strong and stable leadership at this stage of the company’s growth in an increasingly challenging and highly competitive talent market environment, and the recommendations of our CEO (except with respect to herself), with a view toward generally aligning executive equity compensation with.
Taking into consideration all of the 50th to 75th percentile of our peer group. With respect to our CEO, in addition to theseabove factors, the committee considered the success of the Company’s recent IPO and her strong performance up to and through the IPO, as well as increased responsibilities, and her demonstrated growth and potential as the CEO of a newly public company. Furthermore, following the accelerated vesting of a significant portion of our CEO’s equity awards upon our IPO or following the post-IPO lockup period, only 21% of her outstanding equity holdings remained unvested at the time our Compensation Committee grantedapproved the following annual equity awards to our CEONEOs on January 26, 2022 and, in 2021. In lightthe case of the criticality of retaining her strong and stable leadership during a period of high growth forPSUs awarded to Ms. Trigg, on February 2, 2022.
| Aggregate Target Value |
| Number of |
|
| Number of |
|
| Number of |
| ||||
Leslie Trigg |
| $4.0 million |
|
| 48,840 |
|
|
| 36,418 |
|
|
| 15,608 |
|
Nabeel Ahmed |
| $1.4 million |
|
| 27,350 |
|
|
| 4,786 |
|
|
| 2,051 |
|
John Brottem |
| $1.2 million |
|
| 23,443 |
|
|
| 4,102 |
|
|
| 1,758 |
|
Martin Vazquez(1) |
| $2.0 million |
|
| 39,072 |
|
|
| 6,838 |
|
|
| 2,930 |
|
Steve Williamson |
| $1.4 million |
|
| 27,350 |
|
|
| 4,786 |
|
|
| 2,051 |
|
In determining the target mix of our CEO’s 2021 equity award, our Compensation Committee determined that, instead of delivering the target value through equity that vests solely based on continued service, 50% of the target value of her equity award would be in the form of performance-based equity that would vest only upon the achievement of performance measures determined by the committee that directly tied to long-term stockholder value creation. The committee’s decision was driven by a desire to reinforce its commitment to a strong linkage between company performance and executive pay and to reflect the increased scope of Ms. Trigg’s responsibilities and accountability as the CEO of a high growth newly public company.
|
|
For the PSUs granted to our CEO in 2021, the committee selected two successively higher stock price triggers (with a “threshold” stock price of $75.00 and a “target” stock price of $90.00) each of which, if sustained over a 30-trading day period, would result in the performance criteria being met and trigger vesting of 50% of the award,consulting arrangement with the goal of incentivizing and rewarding performance that creates long-term stockholder value.Company for at least six months. The committee designed both the threshold and target stock price triggers to be rigorous and challenging in light of our historical stock price growth, but pivotal to the creation of long-term value for our stockholders and capable of being achieved over the long-term only with superior performance and exceptional leadership on the part of our CEO. AsRSUs reflected in the charts below, the threshold and target stock price triggers represented a 50% and 80% premium to the closing price of our common stock on the grant date (March 15, 2021), respectively, and represented a 58% and 90% premium to the closing price of our common stock on the record date (April 5, 2022), respectively. These PSUs granted to our CEO during 2021 have not yet met the target or threshold performance conditions and remain unvested.
PSUs Granted to CEO in 2021
In March 2021, prior to his appointment as CFO, Mr. Ahmed also received an annual grant (targeting a mix of 50% stock options and 50% RSUs, which was approved by a management committee pursuant to authority delegated by the Compensation Committee.
New Hire and Promotion Equity Grants
Mr. Racine’s new hire equity awards were approved by our Compensation Committee when he joined Outset in June 2021, and were determined in connection with a recruitment and hiring process, after consideration of market data prepared by Aon, his qualifications and prior experience, awards forfeited when he left his prior employer to join Outset, competing offers, as well as the recommendation of our CEO. Consistent with the target equity mix for the other NEOs’ annual grants (other than our CEO), the committee granted equity awards to Mr. Racine, targeting a mix of 50% stock options and 50% RSUs, each vesting over a four-year period as described in the table above inwill remain outstanding and continue to vest while he performs his consulting services, after which time any remaining unvested portion of the section entitled “Equity Award Types.”
In addition to Mr. Ahmed’s prior annual grant in March 2021, in connection with his promotion to Interim CFO in July 2021, our Compensation Committee approved an equity award grant to Mr. Ahmed consistingawards (including all of RSUs which vest in full one year from the grant date, in recognition of his increased responsibilities and accountability, and to motivate and retain him in his new role. In connection with Mr. Ahmed’s promotion to CFO, the committee approved an additional equity award grant to Mr. Ahmed, targeting a mix of 50% stock options and 50% RSUs, each vesting over a four-year period as described in the table above in the section entitled “Equity Award Types.” In setting the target equity award value of this promotion grant, the committee took into consideration a variety of factors, including market data prepared by Aon for chief financial officers at companies within our peer group and other recently-public comparable companies, his qualifications and prior experience, the value of other equity awards granted to him earlier in the year, his current holdings and retention value thereof, as well as the recommendation of our CEO.
|
|
Equity Awards Granted to Our NEOs During 2021
The following table sets forth the equity awards granted to our NEOs under our 2020 Equity Incentive Plan during 2021. See the table below entitled “Grant of Plan-Based Based Awards in 2021” for further details.
|
| Annual Grants |
|
| New Hire and Promotion Grants |
| ||||||||||||||
Name: |
| Number of Shares Underlying Stock Options(1) (2) |
|
| Number of RSUs(3) |
|
| Number of PSUs(4) |
|
| Number of Shares Underlying Stock Options(1)(5) |
|
| Number of RSUs(6)(7) |
| |||||
Leslie Trigg |
|
| 57,937 |
|
|
| 29,137 |
|
|
| 58,275 |
|
|
| — |
|
|
| — |
|
Nabeel Ahmed |
|
| 8,237 |
|
|
| 3,817 |
|
|
| — |
|
|
| 18,070 |
|
|
| 9,973 |
|
John Brottem |
|
| 22,209 |
|
|
| 11,169 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Jean-Olivier Racine |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 34,220 |
|
|
| 18,879 |
|
Martin Vazquez |
|
| 16,416 |
|
|
| 8,255 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Rebecca Chambers(8) |
|
| 27,037 |
|
|
| 13,597 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please see below the table entitled “Grant“Grants of Plan-Based Based Awards in 2021”2022” for further details on equity awards granted to our NEOs in 2021,2022, and the table entitled “Outstanding Equity Awards at 20212022 Fiscal Year-End” for a summary of the outstanding stock option and stock awards held by each of our NEOs as of December 31, 2021,2022, including a summary of the applicable vesting terms.
|
|
Stock Ownership Guidelines
Effective February 2, 2023, our Board adopted Stock Ownership Guidelines applicable to all of our executive officers designated as such for purposes of Section 16 of the Exchange Act (including our NEOs), as well as our non-employee directors of our Board. For additional details on our Stock Ownership Guidelines, please see the section of this proxy statement entitled “Board and Corporate Governance Matters – Stock Ownership Guidelines.”
Change in Control and Severance Agreements
During 2021,2022, we were party to Change in Control and Severance Agreements with each of our NEOs (effective as of June 2021 in the case of Mr. Racine and July 2021 in the case of Mr. Ahmed), that provide for severance benefits upon certain qualifying terminations of employment with the Company. Our Compensation Committee believes that these types of arrangements serve to minimize the distraction caused by a potential transaction, encourage retention through the conclusion of a transaction, enable our executives to focus on continuing normal business operations and on the success of a potential business combination, and help ensure stability and leadership continuity during a potentially uncertain period. Furthermore, our Compensation Committee believes these arrangements are important for attracting and retaining executive talent, as many of the companies with which we compete for executive talent have similar agreements in place for their senior management.
A description of these arrangements, as well as information on the estimated payouts and benefits that our NEOs would have been eligible to receive as of December 31, 2021,2022, are set forth below in the sections entitled “Additional Narrative Disclosure – Change in Control and Severance Arrangements” and “Additional Narrative Disclosure – Potential Payments Upon Termination or Change of Control.”
Ms. Chambers, who departed the Company in July 2021, did not receive any severance compensation in connection with her departure.
2023 Proxy Statement | 48 |
The Compensation Committee has reviewed and discussed with management the section entitled “Compensation Discussion and Analysis” contained in this proxy statement. Based on this review and discussion, the Compensation Committee has recommended to our Board that the section entitled “Compensation Discussion and Analysis” be included in this proxy statement and incorporated into our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
Submitted by the Compensation Committee of our Board: | |
Karen Drexler (Chair) | |
D. Keith Grossman | |
Dale E. Jones Catherine Szyman |
|
|
20212022 Summary Compensation Table
The following table shows information regarding the compensation awarded or paid to, or earned by, our NEOs for services performed in 2019, 2020, 2021 and 2021.2022.
Name and Principal Position |
| Year |
| Salary |
|
|
| Bonus |
|
|
| Stock Awards |
|
|
| Option Awards |
|
| Non-Equity Incentive Plan Compensation |
|
| All Other Compensation |
|
| Total |
| |||||||
Leslie Trigg |
| 2022 |
|
| 661,125 |
| (1) |
|
| — |
|
|
|
| 2,904,800 |
| (5) |
|
| — |
|
|
| 555,761 |
|
|
| 6,597 |
|
|
| 4,128,283 |
|
President, Chief Executive |
| 2021 |
|
| 560,000 |
|
|
|
| — |
|
|
|
| 4,101,079 |
| (6) |
|
| 1,499,496 |
|
|
| 977,200 |
|
|
| 506 |
|
|
| 7,138,281 |
|
Officer and Board Chair |
| 2020 |
|
| 483,039 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 1,921,078 |
|
|
| 391,546 |
|
|
| 497 |
|
|
| 2,796,160 |
|
Nabeel Ahmed |
| 2022 |
|
| 457,134 |
| (1) |
|
| — |
|
|
|
| 1,097,530 |
| (5) |
|
| — |
|
|
| 191,180 |
|
|
| 6,424 |
|
|
| 1,752,268 |
|
Chief Financial Officer |
| 2021 |
|
| 323,000 |
|
|
|
| 75,000 |
| (2) |
|
| 574,354 |
|
|
|
| 562,492 |
|
|
| 249,235 |
|
|
| 330 |
|
|
| 1,784,411 |
|
| 2020 |
|
| 156,962 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 195,204 |
|
|
| 68,450 |
|
|
| 189 |
|
|
| 420,805 |
| |
John Brottem |
| 2022 |
|
| 416,512 |
| (1) |
|
| — |
|
|
|
| 940,745 |
| (5) |
|
| — |
|
|
| 171,218 |
|
|
| 6,424 |
|
|
| 1,534,899 |
|
General Counsel and |
| 2021 |
|
| 349,615 |
|
|
|
| — |
|
|
|
| 558,562 |
|
|
|
| 574,802 |
|
|
| 305,039 |
|
|
| 330 |
|
|
| 1,788,348 |
|
Secretary |
| 2020 |
|
| 192,500 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 830,947 |
|
|
| 119,925 |
|
|
| 189 |
|
|
| 1,143,561 |
|
Martin Vazquez |
| 2022 |
|
| 484,039 |
| (1) |
|
| — |
|
|
|
| 1,567,921 |
| (5) |
|
| — |
|
|
| 199,790 |
|
|
| 6,597 |
|
|
| 2,258,347 |
|
Chief Operating Officer |
| 2021 |
|
| 370,000 |
|
|
|
| — |
|
|
|
| 412,833 |
|
|
|
| 424,871 |
|
|
| 322,825 |
|
|
| 3,165 |
|
|
| 1,533,694 |
|
| 2020 |
|
| 363,904 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 854,411 |
|
|
| 191,622 |
|
|
| 135,409 |
|
|
| 1,545,346 |
| |
Steve Williamson |
| 2022 |
|
| 512,144 |
| (1) |
|
| — |
|
|
|
| 1,097,530 |
| (5) |
|
| — |
|
|
| 269,767 |
|
|
| 6,597 |
|
|
| 1,886,038 |
|
Chief Commercial Officer |
| 2021 |
|
| 485,000 |
|
|
|
| — |
|
|
|
| — |
| (7) |
|
| — |
|
|
| 507,795 |
|
|
| 330 |
|
|
| 993,125 |
|
| 2020 |
|
| 65,288 |
|
|
|
| — |
|
|
|
| 1,576,500 |
| (8) |
|
| 1,618,590 |
|
|
| 53,690 |
|
|
| 27 |
|
|
| 3,314,095 |
|
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($)(1) |
|
| Stock Awards ($)(2) |
|
| Option Awards ($)(3) |
|
| Non-Equity Incentive Plan Compen-sation ($)(4) |
|
| All Other Compen- sation ($)(5) |
|
| Total ($) |
| |||||||
Leslie Trigg |
| 2021 |
|
| 560,000 |
|
|
| — |
|
|
| 4,101,079 |
|
|
| 1,499,496 |
|
|
| 977,200 |
|
|
| 506 |
|
|
| 7,138,281 |
|
President, Chief Executive |
| 2020 |
|
| 483,039 |
|
|
| — |
|
|
| — |
|
|
| 1,921,078 |
|
|
| 391,546 |
|
|
| 497 |
|
|
| 2,796,160 |
|
Officer and Board Chair |
| 2019 |
|
| 415,635 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 274,126 |
|
|
| 324 |
|
|
| 690,085 |
|
Nabeel Ahmed(6) |
| 2021 |
|
| 323,000 |
|
|
| 75,000 |
|
|
| 574,354 |
|
|
| 562,492 |
|
|
| 249,235 |
|
|
| 330 |
|
|
| 1,784,411 |
|
Chief Financial Officer |
| 2020 |
|
| 156,962 |
|
|
| — |
|
|
| — |
|
|
| 195,204 |
|
|
| 68,450 |
|
|
| 189 |
|
|
| 420,805 |
|
|
| 2019 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
John Brottem(7) |
| 2021 |
|
| 349,615 |
|
|
| — |
|
|
| 558,562 |
|
|
| 574,802 |
|
|
| 305,039 |
|
|
| 330 |
|
|
| 1,788,348 |
|
General Counsel and |
| 2020 |
|
| 192,500 |
|
|
| — |
|
|
| — |
|
|
| 830,947 |
|
|
| 119,925 |
|
|
| 189 |
|
|
| 1,143,561 |
|
Secretary |
| 2019 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Jean-Olivier Racine(8) |
| 2021 |
|
| 194,712 |
|
|
| — |
|
|
| 959,431 |
|
|
| 899,883 |
|
|
| 169,886 |
|
|
| 116 |
|
|
| 2,224,028 |
|
Chief Technology Officer |
| 2020 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2019 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Martin Vazquez |
| 2021 |
|
| 370,000 |
|
|
| — |
|
|
| 412,833 |
|
|
| 424,871 |
|
|
| 322,825 |
|
|
| 3,165 |
|
|
| 1,533,694 |
|
Chief Operating Officer |
| 2020 |
|
| 363,904 |
|
|
| — |
|
|
| — |
|
|
| 854,411 |
|
|
| 191,622 |
|
|
| 135,409 |
|
|
| 1,545,346 |
|
|
| 2019 |
|
| 315,000 |
|
|
| 50,000 |
|
|
| — |
|
|
| — |
|
|
| 133,876 |
|
|
| 92,617 |
|
|
| 591,493 |
|
Rebecca Chambers(9) |
| 2021 |
|
| 241,960 |
|
|
| — |
|
|
| 679,986 |
|
|
| 699,758 |
|
|
| — |
|
|
| 149 |
|
|
| 1,621,853 |
|
Former Chief Financial |
| 2020 |
|
| 375,673 |
|
|
| — |
|
|
| — |
|
|
| 1,743,855 |
|
|
| 197,157 |
|
|
| 107,989 |
|
|
| 2,424,674 |
|
Officer |
| 2019 |
|
| 191,154 |
|
|
| — |
|
|
| — |
|
|
| 408,046 |
|
|
| 150,876 |
|
|
| 7,278 |
|
|
| 757,354 |
|
|
|
|
|
|
|
|
|
|
|
| Life Insurance Premiums |
|
| 401(k) Matching Contributions |
| |||
Leslie Trigg |
|
| 497 |
|
|
| 6,100 |
|
Nabeel Ahmed |
|
| 324 |
|
|
| 6,100 |
|
John Brottem |
|
| 324 |
|
|
| 6,100 |
|
Martin Vazquez |
|
| 497 |
|
|
| 6,100 |
|
Steve Williamson |
|
| 497 |
|
|
| 6,100 |
|
|
|
|
|
|
|
|
|
The amounts reported in this column for each NEO in 2021 consist of Company-paid life insurance premiums and, in the case of Mr. Vazquez, the amount also includes $2,659 as a payment paid in 2021 relating to an administrative error with respect to his health savings account contributions in prior years. The amounts reported in this column for each NEO in 2020 consist of Company-paid life insurance premiums and, in the case of Mr. Vazquez, the amount reported also includes $104,726 of reimbursements for 2020 housing and commuting expenses and a related tax reimbursement payment, as well as $30,186 as a tax reimbursement payment paid in 2020 for housing and commuting costs reimbursed by the Company in prior years.
|
|
Grants of Plan-Based Awards in 20212022
The following table presents certain information regarding grants of plan-based awards to the NEOs during 2021:2022:
|
|
|
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
|
| Estimated Future Payouts Under |
|
|
|
|
|
|
| |||||||||||||||||||||
|
|
|
|
| Threshold |
|
| Target |
|
| Maximum |
|
| Threshold |
|
| Target |
|
| Maximum |
|
| All Other Stock Awards: Number of Shares of Stock or Units |
|
| Grant Date Fair Value of Stock and Option Awards(5) |
| ||||||||
Name |
| Grant Date |
|
| ($) |
|
| ($) |
|
| ($) |
|
| (#) |
|
| (#) |
|
| (#) |
|
| (#) |
|
| ($) |
| ||||||||
Leslie Trigg |
|
|
|
|
| 23,438 |
|
|
| 625,000 |
|
|
| 1,250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| 2/2/2022 | (3) |
|
|
|
|
|
|
|
|
|
|
| 11,706 |
|
|
| 15,608 |
|
|
| 39,020 |
|
|
|
|
|
| 1,120,186 |
| |||||
| 1/26/2022 | (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 48,840 |
|
|
| 1,784,614 |
| |||||||
Nabeel Ahmed |
|
|
|
|
| 8,063 |
|
|
| 215,000 |
|
|
| 430,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| 1/26/2022 | (3) |
|
|
|
|
|
|
|
|
|
|
| 1,538 |
|
|
| 2,051 |
|
|
| 3,077 |
|
|
|
|
|
| 98,161 |
| |||||
| 1/26/2022 | (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 27,350 |
|
|
| 999,369 |
| |||||||
John Brottem |
|
|
|
|
| 7,219 |
|
|
| 192,500 |
|
|
| 385,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| 1/26/2022 | (3) |
|
|
|
|
|
|
|
|
|
|
| 1,319 |
|
|
| 1,758 |
|
|
| 2,637 |
|
|
|
|
|
| 84,138 |
| |||||
| 1/26/2022 | (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23,443 |
|
|
| 856,607 |
| |||||||
Martin Vazquez |
|
|
|
|
| 8,438 |
|
|
| 225,000 |
|
|
| 450,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| 1/26/2022 | (3) |
|
|
|
|
|
|
|
|
|
|
| 2,198 |
|
|
| 2,930 |
|
|
| 4,395 |
|
|
|
|
|
| 140,230 |
| |||||
| 1/26/2022 | (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 39,072 |
|
|
| 1,427,691 |
| |||||||
Steve Williamson |
|
|
|
|
| 11,363 |
|
|
| 303,000 |
|
|
| 606,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| 1/26/2022 | (3) |
|
|
|
|
|
|
|
|
|
|
| 1,538 |
|
|
| 2,051 |
|
|
| 3,077 |
|
|
|
|
|
| 98,161 |
| |||||
| 1/26/2022 | (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 27,350 |
|
|
| 999,369 |
|
|
|
|
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
| Estimated Future Payouts Under Equity Incentive Plan Awards(4) |
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| |||||||||||||||
Name |
| Grant Date |
| Threshold ($) |
|
|
| Target ($) |
|
|
| Maximum ($) |
| Threshold ($) |
|
| Target ($) |
|
| All Other Stock Awards: Number of Shares of Stock or Units (#) |
|
|
| All Other Option Awards: Number Securities Underlying Options (#) |
|
|
| Exercise or Base Price of Option Awards ($) |
|
| Grant Date Fair Value of Stock and Option Awards ($)(5) |
| ||||||||
Leslie Trigg |
|
|
|
| 70,000 |
|
|
|
| 560,000 |
|
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|
|
|
|
|
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|
|
|
|
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|
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|
|
|
|
|
| 3/15/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 29,137 |
|
|
| 58,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,643,937 |
|
|
| 3/15/2021 |
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| 29,137 |
| (6) |
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| 1,457,141 |
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| 3/15/2021 |
|
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|
|
| 57,937 |
| (7) |
|
| 50.01 |
|
|
| 1,499,496 |
|
Nabeel Ahmed |
|
|
|
| 18,286 |
| (2) |
|
| 146,284 |
| (2) |
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|
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|
|
|
| 3/8/2021 |
|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
| 3,817 |
| (6) |
|
|
|
|
|
|
|
|
|
|
| 179,170 |
|
|
| 3/8/2021 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,237 |
| (7) |
|
| 46.94 |
|
|
| 199,981 |
|
|
| 7/16/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,575 |
| (8) |
|
|
|
|
|
|
|
|
|
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| 67,410 |
|
|
| 8/5/2021 |
|
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|
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|
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|
|
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| 8,398 |
| (6) |
|
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| 327,774 |
|
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| 8/5/2021 |
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|
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| 18,070 |
| (7) |
|
| 39.03 |
|
|
| 362,511 |
|
John Brottem |
|
|
|
| 21,875 |
|
|
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| 175,000 |
|
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|
|
| 3/15/2021 |
|
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| 11,169 |
| (6) |
|
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| 558,562 |
|
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| 3/15/2021 |
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|
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|
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| 22,209 |
| (7) |
|
| 50.01 |
|
|
| 574,802 |
|
Jean-Olivier Racine |
|
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| 12,457 |
| (3) |
|
| 99,658 |
| (3) |
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|
|
| 6/22/2021 |
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| 18,879 |
| (6) |
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| 959,431 |
|
|
| 6/22/2021 |
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|
|
| 34,220 |
| (7) |
|
| 50.82 |
|
|
| 899,883 |
|
Martin Vazquez |
|
|
|
| 23,125 |
|
|
|
| 185,000 |
|
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|
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|
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|
|
|
|
|
| 3/15/2021 |
|
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|
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|
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|
|
| 8,255 |
| (6) |
|
|
|
|
|
|
|
|
|
|
| 412,833 |
|
|
| 3/15/2021 |
|
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|
|
|
|
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|
|
|
|
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|
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|
|
| 16,416 |
| (7) |
|
| 50.01 |
|
|
| 424,871 |
|
Rebecca Chambers(9) |
|
|
|
| 23,750 |
|
|
|
| 190,000 |
|
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|
|
| 3/15/2021 |
|
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|
|
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|
|
|
| 13,597 |
| (6) |
|
|
|
|
|
|
|
|
|
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| 679,986 |
|
|
| 3/15/2021 |
|
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|
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|
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|
|
| 27,037 |
| (7) |
|
| 50.01 |
|
|
| 699,758 |
|
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|
Outstanding Equity Awards at 20212022 Year-End
The following table presents information regarding the outstanding stock options and restricted stock units held by each of the NEOs as of December 31, 2021.2022.
|
|
| Option Awards |
| Stock Awards | ||||||||||||||||
Name |
| Grant Date |
| Number of Securities Underlying Unexercised Options |
| Number of Securities Underlying Unexercised Options |
|
| Option Exercise Price |
| Option Expiration Date |
| Number of Units of Stock that Have Not Vested |
|
| Market Value of Units of Stock that Have Not Vested |
| Equity Incentive Plan Awards: Number of Unearned Units of Stock that Have Not Vested |
|
| Equity Incentive Plan Awards: Market Value of Unearned Units of Stock that Have Not Vested |
Leslie Trigg |
| 9/19/2017 |
| 100,508 |
| — |
|
| 3.88 |
| 9/19/2027 |
| — |
|
| — |
| — |
|
| — |
| 11/3/2018 |
| 152,365 |
| — |
|
| 4.11 |
| 11/3/2028 |
| — |
|
| — |
| — |
|
| — | |
| 11/3/2018 |
| 114,910 |
| — |
|
| 4.11 |
| 11/3/2028 |
| — |
|
| — |
| — |
|
| — | |
| 3/6/2019 |
| 240,968 |
| — |
|
| 4.11 |
| 3/6/2029 |
| — |
|
| — |
| — |
|
| — | |
| 2/3/2020 |
| 114,910 |
| 47,317 | (1) |
| 8.62 |
| 2/3/2030 |
| — |
|
| — |
| — |
|
| — | |
| 2/3/2020 |
| 108,151 |
| — |
|
| 8.62 |
| 2/3/2030 |
| — |
|
| — |
| — |
|
| — | |
| 3/15/2021 |
| 25,348 |
| 32,589 | (2) |
| 50.01 |
| 3/15/2031 |
| 16,389 | (3) |
| 423,164 |
| 29,138 | (6) |
| 752,330 | |
| 1/26/2022 |
| — |
| — |
|
| — |
| — |
| 48,840 | (4) |
| 1,261,049 |
| — |
|
| — | |
| 2/2/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 15,608 | (7) |
| 402,999 | |
Nabeel Ahmed |
| 5/26/2020 |
| 10,300 |
| 5,649 | (2) |
| 9.48 |
| 5/26/2030 |
| — |
|
| — |
| — |
|
| — |
| 5/26/2020 |
| 10,132 |
| — |
|
| 9.48 |
| 5/26/2030 |
| — |
|
| — |
| — |
|
| — | |
| 3/8/2021 |
| 3,604 |
| 4,633 | (2) |
| 46.94 |
| 3/8/2031 |
| 2,145 | (3) |
| 55,384 |
| — |
|
| — | |
| 8/5/2021 |
| 6,023 |
| 12,047 | (2) |
| 39.03 |
| 8/5/2031 |
| 5,775 | (3) |
| 149,111 |
| — |
|
| — | |
| 1/26/2022 |
| — |
| — |
|
| — |
| — |
| 27,350 | (4) |
| 706,177 |
| 2,051 | (7) |
| 52,957 | |
John Brottem |
| 5/26/2020 |
| 1,415 |
| 24,047 | (2) |
| 9.48 |
| 5/26/2030 |
| — |
|
| — |
| — |
|
| — |
| 5/26/2020 |
| 2,265 |
| — |
|
| 9.48 |
| 5/26/2030 |
| — |
|
| — |
| — |
|
| — | |
| 3/15/2021 |
| 9,717 |
| 12,492 | (2) |
| 50.01 |
| 3/15/2031 |
| 6,282 | (3) |
| 162,201 |
| — |
|
| — | |
| 1/26/2022 |
| — |
| — |
|
| — |
| — |
| 23,443 | (4) |
| 605,298 |
| 1,758 | (7) |
| 45,392 | |
Martin Vazquez |
| 12/19/2017 |
| 18,743 |
| — |
|
| 3.88 |
| 12/19/2027 |
| — |
|
| — |
| — |
|
| — |
| 12/19/2017 |
| 21,000 |
| — |
|
| 3.88 |
| 12/19/2027 |
| — |
|
| — |
| — |
|
| — | |
| 12/19/2017 |
| 57,007 |
| — |
|
| 3.88 |
| 12/19/2027 |
| — |
|
| — |
| — |
|
| — | |
| 11/3/2018 |
| 14,204 |
| — |
|
| 4.11 |
| 11/3/2028 |
| — |
|
| — |
| — |
|
| — | |
| 11/3/2018 |
| 17,721 |
| — |
|
| 4.11 |
| 11/3/2028 |
| — |
|
| — |
| — |
|
| — | |
| 3/6/2019 |
| 4,929 |
| — |
|
| 4.11 |
| 3/6/2029 |
| — |
|
| — |
| — |
|
| — | |
| 2/3/2020 |
| 41,107 |
| 21,044 | (1) |
| 8.62 |
| 2/3/2030 |
| — |
|
| — |
| — |
|
| — | |
| 2/3/2020 |
| 48,101 |
| — |
|
| 8.62 |
| 2/3/2030 |
| — |
|
| — |
| — |
|
| — | |
| 3/15/2021 |
| 7,182 |
| 9,234 | (2) |
| 50.01 |
| 3/15/2031 |
| 4,643 | (3) |
| 119,882 |
| — |
|
| — | |
| 1/26/2022 |
| — |
| — |
|
| — |
| — |
| 39,072 | (4) |
| 1,008,839 |
| 2,930 | (7) |
| 75,653 | |
Steve Williamson |
| 11/15/2020 |
| 31,250 |
| 28,750 | (2) |
| 52.55 |
| 11/15/2030 |
| 10,000 | (5) |
| 258,200 |
| — |
|
| — |
|
| 1/26/2022 |
| — |
| — |
|
| — |
| — |
| 27,350 | (4) |
| 706,177 |
| 2,051 | (7) |
| 52,957 |
|
|
|
| Option Awards |
|
| Stock Awards |
| |||||||||||||||||||||||||||||
Name |
| Grant Date |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
|
|
| Option Exercise Price ($) |
|
| Option Expiration Date |
|
| Number of Units of Stock That Have Not Vested (#) |
|
|
| Market Value of Units of Stock That Have Not Vested ($)(6) |
|
| Equity Incentive Plan Awards: Number of Unearned Units of Stock That Have Not Vested (#) |
|
|
| Equity Incentive Plan Awards: Market Value of Unearned Units of Stock That Have Not Vested (#)(6) |
| ||||||||
Leslie Trigg |
| 9/19/2017 |
|
| 158,211 |
|
|
| — |
|
|
|
| 3.88 |
|
| 9/19/2027 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 9/19/2017 |
|
| 95,572 |
|
|
| — |
|
|
|
| 3.88 |
|
| 9/19/2027 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 9/19/2017 |
|
| 109,225 |
|
|
| — |
|
|
|
| 3.88 |
|
| 9/19/2027 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 11/3/2018 |
|
| 132,864 |
|
|
| 39,501 |
| (1) |
|
| 4.11 |
|
| 11/3/2028 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 11/3/2018 |
|
| 114,910 |
|
|
| — |
|
|
|
| 4.11 |
|
| 11/3/2028 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 3/6/2019 |
|
| 240,968 |
|
|
| — |
|
|
|
| 4.11 |
|
| 3/6/2029 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 2/3/2020 |
|
| 74,354 |
|
|
| 87,873 |
| (1) |
|
| 8.62 |
|
| 2/3/2030 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 2/3/2020 |
|
| 108,151 |
|
|
| — |
|
|
|
| 8.62 |
|
| 2/3/2030 |
|
|
| — |
|
|
|
| — |
|
|
| ��� |
|
|
|
| — |
| |
|
| 3/15/2021 |
|
| — |
|
|
| 57,937 |
| (2) |
|
| 50.01 |
|
| 3/15/2031 |
|
|
| 29,137 |
| (3) |
|
| 1,342,924 |
|
|
| 58,275 |
| (4) |
|
| 2,685,895 |
| |
Nabeel Ahmed |
| 5/26/2020 |
|
| 6,313 |
|
|
| 9,636 |
| (2) |
|
| 9.48 |
|
| 5/26/2030 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 5/26/2020 |
|
| 10,632 |
|
|
| — |
|
|
|
| 9.48 |
|
| 5/26/2030 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 3/8/2021 |
|
| — |
|
|
| 8,237 |
| (2) |
|
| 46.94 |
|
| 3/8/2031 |
|
|
| 3,817 |
| (3) |
|
| 175,926 |
|
|
| — |
|
|
|
| — |
| |
|
| 7/16/2021 |
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 1,575 |
| (5) |
|
| 72,592 |
|
|
| — |
|
|
|
| — |
|
|
| 8/5/2021 |
|
| — |
|
|
| 18,070 |
| (2) |
|
| 39.03 |
|
| 8/5/2031 |
|
|
| 8,398 |
| (3) |
|
| 387,064 |
|
|
| — |
|
|
|
| — |
| |
John Brottem |
| 5/26/2020 |
|
| 18,206 |
|
|
| 41,022 |
| (2) |
|
| 9.48 |
|
| 5/26/2030 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 5/26/2020 |
|
| 10,265 |
|
|
| — |
|
|
|
| 9.48 |
|
| 5/26/2030 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 3/15/2021 |
|
| — |
|
|
| 22,209 |
| (2) |
|
| 50.01 |
|
| 3/15/2031 |
|
|
| 11,169 |
| (3) |
|
| 514,779 |
|
|
| — |
|
|
|
| — |
| |
Jean-Olivier Racine |
| 6/22/2021 |
|
| — |
|
|
| 34,220 |
| (2) |
|
| 50.82 |
|
| 6/22/2031 |
|
|
| 18,879 |
| (3) |
|
| 870,133 |
|
|
| — |
|
|
|
| — |
| |
Martin Vazquez |
| 12/19/2017 |
|
| 19,489 |
|
|
| — |
|
|
|
| 3.88 |
|
| 12/19/2027 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 12/19/2017 |
|
| 61,038 |
|
|
| — |
|
|
|
| 3.88 |
|
| 12/19/2027 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 12/19/2017 |
|
| 79,845 |
|
|
| — |
|
|
|
| 3.88 |
|
| 12/19/2027 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 11/3/2018 |
|
| 20,490 |
|
|
| 6,092 |
| (1) |
|
| 4.11 |
|
| 11/3/2028 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 11/3/2018 |
|
| 17,721 |
|
|
| — |
|
|
|
| 4.11 |
|
| 11/3/2028 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 3/6/2019 |
|
| 4,929 |
|
|
| — |
|
|
|
| 4.11 |
|
| 3/6/2029 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 2/3/2020 |
|
| 33,070 |
|
|
| 39,081 |
| (1) |
|
| 8.62 |
|
| 2/3/2030 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 2/3/2020 |
|
| 48,101 |
|
|
| — |
|
|
|
| 8.62 |
|
| 2/3/2030 |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
| |
|
| 3/15/2021 |
|
| — |
|
|
| 16,416 |
| (2) |
|
| 50.01 |
|
| 3/15/2031 |
|
|
| 8,255 |
| (3) |
|
| 380,473 |
|
|
| — |
|
|
|
| — |
| |
Rebecca Chambers | �� |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Exercises and Stock Vested in 20212022
The following table presents information regarding the exercise of stock options and vesting of stock awards during 20212022 for each of the NEOs on an aggregated basis. No
| Option Awards |
|
| Stock Awards |
| |||||||||||
Name: |
| Number of Shares Acquired on Exercise |
|
| Value Realized on Exercise |
|
| Number of Shares Acquired on Vesting |
|
| Value Realized on Vesting |
| ||||
Leslie Trigg |
|
| 282,500 |
|
|
| 8,360,050 |
|
|
| 12,748 |
|
|
| 412,241 |
|
Nabeel Ahmed |
|
| 500 |
|
|
| 15,817 |
|
|
| 5,870 |
|
|
| 131,282 |
|
John Brottem |
|
| 41,766 |
|
|
| 937,513 |
|
|
| 4,887 |
|
|
| 158,032 |
|
Martin Vazquez |
|
| 86,000 |
|
|
| 2,578,339 |
|
|
| 3,612 |
|
|
| 116,807 |
|
Steve Williamson |
|
| — |
|
|
| — |
|
|
| 19,205 |
|
|
| 548,404 |
|
|
| Option Awards |
| |||||
Name: |
| Number of Shares Acquired on Exercise (#) |
|
| Value Realized on Exercise ($)(1) |
| ||
Leslie Trigg |
|
| 292,500 |
|
|
| 14,344,940 |
|
Nabeel Ahmed |
|
| — |
|
|
| — |
|
John Brottem |
|
| 43,670 |
|
|
| 1,678,508 |
|
Jean-Olivier Racine |
|
| — |
|
|
| — |
|
Martin Vazquez |
|
| 97,500 |
|
|
| 4,645,232 |
|
Rebecca Chambers |
|
| 473,663 |
|
|
| 16,845,193 |
|
2023 Proxy Statement |
|
|
Additional Narrative Disclosure
Change in Control and Severance Agreements
We have entered into a Change in Control and Severance Agreement with each of our NEOs (the “CIC Agreements”) effective as of September 2020 (inin the case of Mses.Ms. Trigg and Chambers and Messrs. Brottem and Vazquez), June 2021Vazquez, November 2020 in the case of Mr. RacineWilliamson and July 2021 in the case of Mr. Ahmed.
Under the CIC Agreements, ifAgreements:
In the case of PSUs, the terms of the related equity award agreements provide the following:
2023 Proxy Statement | 55 |
Under the terms of the CIC Agreements, if the payments and benefits to an NEO under his or her CIC Agreement or another plan, arrangement or agreement would subject the NEO to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, then such payments will be reduced by the minimum amount necessary to avoid such excise tax, but only if such reduction will result in the NEO receiving a higher net after-tax amount.
|
|
Potential Payments Upon Termination or Change of Control
The table below summarizes the amount of compensation and benefits that would be payable to each NEO in the event of a qualifying non-CIC termination and a qualifying CIC termination assuming, in each case, that such a termination had occurred on December 31, 2021,30, 2022, the last trading day of the Company’s fiscal year. See the section above entitled “Change in Control and Severance Arrangements” for further details. The actual amount of compensation and benefits payable in any termination event can only be determined at the time of the termination of the NEO’s employment with us.
| Qualifying Non-CIC Termination |
|
| Qualifying CIC Termination |
| |||||||||||||||||||||||||||
Name: |
| Base Salary |
|
| COBRA Premiums |
|
| Total |
|
| Base Salary |
|
| Target Annual Cash Bonus |
|
| COBRA Premiums |
|
| Equity Award Vesting Acceleration |
|
| Total |
| ||||||||
Leslie Trigg |
|
| 625,000 |
|
|
| 41,621 |
|
|
| 666,621 |
|
|
| 937,500 |
|
|
| 625,000 |
|
|
| 62,432 |
|
|
| 3,825,257 |
|
|
| 5,450,189 |
|
Nabeel Ahmed |
|
| 322,500 |
|
|
| 31,609 |
|
|
| 354,109 |
|
|
| 430,000 |
|
|
| 215,000 |
|
|
| 42,146 |
|
|
| 1,177,389 |
|
|
| 1,864,535 |
|
John Brottem |
|
| 288,750 |
|
|
| 31,609 |
|
|
| 320,359 |
|
|
| 385,000 |
|
|
| 192,500 |
|
|
| 42,146 |
|
|
| 1,309,917 |
|
|
| 1,929,563 |
|
Martin Vazquez(5) |
|
| 337,500 |
|
|
| 25,719 |
|
|
| 363,219 |
|
|
| 450,000 |
|
|
| 225,000 |
|
|
| 34,291 |
|
|
| 1,739,862 |
|
|
| 2,449,153 |
|
Steve Williamson |
|
| 378,750 |
|
|
| 31,609 |
|
|
| 410,359 |
|
|
| 505,000 |
|
|
| 303,000 |
|
|
| 42,146 |
|
|
| 1,138,790 |
|
|
| 1,988,936 |
|
|
| Qualifying Non-CIC Termination |
|
| Qualifying CIC Termination |
| ||||||||||||||||||||||||||
Name:(1) |
| Base Salary ($)(2) |
|
| COBRA Premiums ($)(3) |
|
| Total ($) |
|
| Base Salary ($)(2) |
|
| Target Annual Cash Bonus ($)(4) |
|
| COBRA Premiums ($)(3) |
|
| Equity Award Vesting Acceleration ($)(5) |
|
| Total ($) |
| ||||||||
Leslie Trigg |
|
| 560,000 |
|
|
| 39,030 |
|
|
| 599,030 |
|
|
| 840,000 |
|
|
| 560,000 |
|
|
| 58,545 |
|
|
| 6,293,778 |
|
|
| 7,752,323 |
|
Nabeel Ahmed |
|
| 288,750 |
|
|
| 29,637 |
|
|
| 318,387 |
|
|
| 385,000 |
|
|
| 192,500 |
|
|
| 39,515 |
|
|
| 1,115,929 |
|
|
| 1,732,944 |
|
John Brottem |
|
| 262,500 |
|
|
| 29,637 |
|
|
| 292,137 |
|
|
| 350,000 |
|
|
| 175,000 |
|
|
| 39,515 |
|
|
| 2,016,595 |
|
|
| 2,581,110 |
|
Jean-Olivier Racine |
|
| 281,250 |
|
|
| 29,487 |
|
|
| 310,737 |
|
|
| 375,000 |
|
|
| 187,500 |
|
|
| 39,316 |
|
|
| 870,133 |
|
|
| 1,471,949 |
|
Martin Vazquez |
|
| 277,500 |
|
|
| 23,103 |
|
|
| 300,603 |
|
|
| 370,000 |
|
|
| 185,000 |
|
|
| 30,804 |
|
|
| 2,100,580 |
|
|
| 2,686,384 |
|
2023 Proxy Statement |
|
|
|
|
|
|
|
|
|
|
401(k) Plan
We maintain a qualified 401(k) savings plan which allows participantsour eligible employees, including the NEOs, to defer a percentage of their cash compensation up to the maximum amount allowed under Internal Revenue Service guidelines. We may make discretionary matching and nonelective contributions to the plan. We did not make any discretionaryEffective January 1, 2022, we began to match 100% of each employee’s contributions up to a maximum matching or nonelective contributions in 2021.contribution equal to 2% of such employee’s eligible compensation. Participants are always vested in their contributions to the plan. Participants vest in their company matching and nonelective contributions under a one to five-year graded vesting schedule.
Our Compensation Committee considers, on an annual basis, whether risks arising from our compensation plans, policies and programs for our employees are reasonably likely to have a material adverse effect on the Company, including whether our incentive compensation programs encourage excessive or inappropriate risk-taking. Based on this review, our Compensation Committee concluded that our incentive compensation programs, which include an appropriate mix of fixed and variable compensation elements, as well as short-term and long-term incentives aligned with corporate goals, do not encourage excessive or inappropriate risk-taking, and that risks arising from our compensation plans, policies and programs are not reasonably likely to have a material adverse effect on the Company.
CEO Pay Ratio
Presented below is a reasonable estimate of the ratio of the annual total compensation of our CEO to the annual total compensation of the median of our other employees, calculated in a manner consistent with Item 402(u) of Regulation S-K (“CEO Pay Ratio”).
We identified our median employee using our employee population on December 31, 2022 (including all employees, whether employed on a full-time, part-time, seasonal or temporary basis). For purposes of measuring the compensation of our employee population, we selected a “consistently applied compensation measure” (“CACM”). We chose a CACM that closely approximates the annual target total direct compensation of our employees. Specifically, we identified the median employee by aggregating, for each employee as of December 31, 2022: (1) annual base salary as of December 31, 2022, (2) annual target cash bonus or target commissions, in each case, assuming 100% achievement and (3) the grant date fair value of equity awards granted during 2022. After applying our CACM methodology, we identified our median employee.
For 2022: (i) the annual total compensation of Leslie Trigg, our President and CEO, was $4,128,283, as reflected in the Summary Compensation Table included in this proxy statement and (ii) the annual total compensation of our median employee was $168,058, using the same methodology required for calculating the annual total compensation of our NEOs for purposes of the Summary Compensation Table. As a result, our CEO Pay Ratio for 2022 was approximately 25 to 1.
This information is being provided for compliance purposes and is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to our pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Neither our Compensation Committee nor management used the CEO Pay Ratio measure in making compensation decisions.
|
|
Pay Versus Performance
Pay Versus Performance Table
As required by SEC rules, the following table summarizes certain information intended to illustrate the relationship between executive compensation “actually paid” and our financial performance in the last three fiscal years.
“Compensation actually paid”, as calculated pursuant to SEC disclosure rules, differs from the total compensation reported in the Summary Compensation Table in the applicable year due to the impact of changes in our stock price as well as the achievement of the underlying vesting conditions with respect to our equity awards, while compensation reported in the Summary Compensation Table calculates equity awards based on the grant date fair value of such equity awards and does not include any adjustments for failure to achieve the underlying vesting conditions or changes in our stock price. Amounts shown below as “compensation actually paid” do not reflect what was actually paid to or realized by our NEOs. Furthermore, these amounts are not taken into account by our Compensation Committee in making compensation decisions for our NEOs. For further information concerning our variable pay-for-performance philosophy and how we align executive compensation with the Company’s performance, please refer to the section of this proxy statement entitled “Compensation Discussion and Analysis—Executive Compensation Philosophy and Objectives.”
|
|
|
|
|
|
|
|
|
|
|
|
| Value of Initial Fixed $100 Investment Based on:(5) |
|
|
|
|
|
|
| ||||||||||||
Year(1) |
| Summary Compensation Table Total for PEO |
|
| Compensation Actually Paid to PEO |
|
| Average Summary Compensation Table Total for Non-PEO NEOs |
|
| Average Compensation Actually Paid to Non-PEO NEOs |
|
| Total Stockholder Return |
|
| Peer Group Total Stockholder Return |
|
| Net Income |
|
| Revenue |
| ||||||||
2022 |
|
| 4,128,283 |
|
|
| (1,465,408 | ) |
|
| 1,857,888 |
|
|
| 425,809 |
|
|
| 42.55 |
|
|
| 94.11 |
|
|
| (162,956,000 | ) |
|
| 115,375,000 |
|
2021 |
|
| 7,138,281 |
|
|
| 802,378 |
|
|
| 1,790,467 |
|
|
| (1,356,955 | ) |
|
| 75.96 |
|
|
| 122.80 |
|
|
| (131,935,000 | ) |
|
| 102,602,000 |
|
2020 |
|
| 2,796,160 |
|
|
| 46,428,956 |
|
|
| 2,869,385 |
|
|
| 16,468,798 |
|
|
| 93.67 |
|
|
| 118.65 |
|
|
| (121,492,000 | ) |
|
| 49,935,000 |
|
2023 Proxy Statement | 58 |
|
|
| PEO |
| ||||||||||
|
|
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||
| Summary Compensation Table - Total Compensation(a) |
|
| 4,128,283 |
|
|
| 7,138,281 |
|
|
| 2,796,160 |
| |
- |
| Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year(b) |
|
| (2,904,800 | ) |
|
| (5,600,575 | ) |
|
| (1,921,078 | ) |
+ |
| Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year(c) |
|
| 1,963,877 |
|
|
| 4,874,562 |
|
|
| 11,657,591 |
|
+ |
| Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years(d) |
|
| (2,894,318 | ) |
|
| (1,357,052 | ) |
|
| 26,071,687 |
|
+ |
| Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year(e) |
|
| — |
|
|
| — |
|
|
| 567,369 |
|
+ |
| Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year(f) |
|
| (1,758,449 | ) |
|
| (4,252,838 | ) |
|
| 7,257,226 |
|
- |
| Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year(g) |
|
| — |
|
|
| — |
|
|
| — |
|
= |
| Compensation Actually Paid |
|
| (1,465,408 | ) |
|
| 802,378 |
|
|
| 46,428,956 |
|
2023 Proxy Statement | 59 |
|
|
| Other Named Executive Officers Average(a) |
| ||||||||||
|
|
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||
| Summary Compensation Table - Total Compensation(b) |
|
| 1,857,888 |
|
|
| 1,790,467 |
|
|
| 2,869,385 |
| |
- |
| Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year(c) |
|
| (1,175,932 | ) |
|
| (1,269,394 | ) |
|
| (2,469,473 | ) |
+ |
| Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year(d) |
|
| 826,328 |
|
|
| 931,355 |
|
|
| 7,059,230 |
|
+ |
| Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years(e) |
|
| (612,082 | ) |
|
| (203,933 | ) |
|
| 7,778,663 |
|
+ |
| Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year(f) |
|
| — |
|
|
| — |
|
|
| 257,520 |
|
+ |
| Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year(g) |
|
| (464,855 | ) |
|
| (959,759 | ) |
|
| 973,473 |
|
- |
| Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year(h) |
|
| (5,538 | ) |
|
| (1,645,691 | ) |
|
| — |
|
= |
| Compensation Actually Paid |
|
| 425,809 |
|
|
| (1,356,955 | ) |
|
| 16,468,798 |
|
2023 Proxy Statement | 60 |
Relationship Between Pay and Performance
We believe the “compensation actually paid” in each of the fiscal years reported above and over the three-year cumulative period are generally reflective of the Compensation Committee’s emphasis on “pay-for-performance.” “Compensation actually paid” fluctuated year-over-year, primarily due to the result of our stock performance and our varying levels of achievement against pre-established performance goals under our annual cash bonus and long-term equity incentive programs. We also believe the following factors provide additional context to certain drivers of “Compensation Actually Paid” and the relationship between pay and performance as reported above and illustrated in the graphs below:
The below series of graphs illustrate the relationship between “compensation actually paid” (or “CAP”) to our PEO, and to our other named executive officers on average, in each of the last three fiscal years as reported above, and (i) our cumulative Total Stockholder Return and Peer Group Total Stockholder Return from September 15, 2020 through the end of 2022, (ii) net income for each of the reported fiscal years and (iii) revenue for each of the reported fiscal years.
2023 Proxy Statement | 61 |
Compensation Actually Paid versus Total Stockholder Return
Compensation Actually Paid Versus Net Income
Compensation Actually Paid (in thousands) $50,000 $40,000 $30,000 $20,000 $10,000 $0 $140 $120 $100 $80 $60 $40 $20 $0 Revenue (in millions) 2020 2021 2022 PEO CAP Average NEO CAP ($M) Revenue ($10,000) $46,429 $16,469 $802 ($1,357) ($1,465) $426
List of Performance Measures
The following table includes a list of financial performance measures, which in the Company’s assessment represent the most important financial performance measures used by the Company to link compensation actually paid to the NEOs to Company performance for 2022. More information about the ways in which these measures were integrated into the Company’s annual cash bonus and long-term equity incentive programs is included in the Compensation Discussion and Analysis section of this proxy statement.
PERFORMANCE MEASURES: |
✓ Revenue ✓ Gross margin (non-GAAP) ✓ Relative TSR compared to Russell 2000 Medical Device Index ✓ Number of patients treating at home on Tablo ✓ Reduction in service hours per console per year ✓ Incremental backlog (above operating plan) ✓ Stock price |
2023 Proxy Statement | 63 |
Equity Compensation Plan Information
The following table provides certain information as of December 31, 20212022 regarding our equity compensation plans.
| Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights |
| Weighted Average Exercise Price of Outstanding Options and Rights |
| Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | ||||||||||
Plan Category |
| (a) |
| (b) |
| (c) | |||||||||
Equity compensation plans approved by security holders(1) |
|
| 4,434,430 |
| (2) |
| $ | 13.97 |
| (3) |
|
| 6,373,292 |
| (4) |
Equity compensation plans not approved by security holders |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
|
Total |
|
| 4,434,430 |
|
|
| $ | 13.97 |
|
|
|
| 6,373,292 |
|
|
Plan Category |
| Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) |
|
|
| Weighted Average Exercise Price of Outstanding Options and Rights (b) |
|
|
| Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) |
|
| |||
Equity compensation plans approved by security holders(1) |
|
| 4,206,675 |
| (2) |
| $ | 12.63 |
| (3) |
|
| 5,413,447 |
| (4) |
Equity compensation plans not approved by security holders |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
|
Total |
|
| 4,206,675 |
|
|
| $ | 12.63 |
|
|
|
| 5,413,447 |
|
|
|
|
|
|
|
|
|
|
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 16, 20228, 2023 for: (i) each director and nominee for director, (ii) each of our NEOs; and (iii) each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock.
Beneficial ownership is determined in accordance with the rules of the SEC. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days of March 16, 2022,8, 2023, through the exercise of any options, warrants or other rights. In computing the percentage beneficial ownership of a person, common stock not outstanding and subject to options, warrants or other rights held by that person that are currently exercisable or exercisable within 60 days of March 16, 20228, 2023 are deemed outstanding for purposes of calculating the percentage ownership of that person, but are not deemed outstanding for computing the percentage ownership of any other person. Subject to the foregoing, percentage of beneficial ownership is based on 47,637,12349,052,739 shares of our common stock outstanding as of March 16, 2022.8, 2023.
To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name. Except as otherwise indicated, the address of each of the persons in this table is c/o Outset Medical, Inc., 3052 Orchard Drive, San Jose, California 95134.
|
| Beneficial Ownership |
|
| Beneficial Ownership |
| ||||||||||
| Number of Shares |
|
| Percentage of Total |
|
| Number of Shares |
|
| Percentage of Total |
| |||||
|
|
|
|
|
|
|
|
| ||||||||
Directors and Named Executive Officers: |
|
|
|
|
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Leslie Trigg(1) |
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| 1,181,406 |
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| 2.4 | % | ||||||||
Nabeel Ahmed(2) |
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| 24,106 |
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| * |
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John Brottem(3) |
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| 16,991 |
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| * |
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Karen Drexler(4) |
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| 2,245 |
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| * |
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D. Keith Grossman(5) |
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| 268,723 |
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| * |
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Patrick T. Hackett(6) |
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| 21,360 |
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| * |
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Jim Hinrichs(7) |
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| 81,423 |
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| * |
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Jean-Olivier Racine |
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| 500 |
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| * |
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Andrea L. Saia(8) |
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| 1,683 |
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| * |
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Leslie Trigg(1) |
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| 966,986 |
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| 1.9 | % | ||||||||
Nabeel Ahmed(2) |
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| 45,718 |
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| * |
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John Brottem(3) |
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| 18,526 |
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| * |
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Karen Drexler(4) |
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| 7,327 |
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| * |
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D. Keith Grossman(5) |
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| 287,042 |
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| * |
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Patrick T. Hackett(6) |
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| 34,142 |
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| * |
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Jim Hinrichs(7) |
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| 115,945 |
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| * |
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Dale E. Jones(8) |
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| 2,120 |
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| * |
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Andrea L. Saia(9) |
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| 6,651 |
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| * |
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Catherine Szyman |
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| 2,437 |
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| * |
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| 7,641 |
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| * |
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Martin Vazquez(9) |
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| 276,306 |
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| * |
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Rebecca Chambers |
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| — |
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| — |
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All executive officers and directors as a group (14 persons)(10) |
|
| 1,987,850 |
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| 4.0 | % | ||||||||
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Martin Vazquez(10) |
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| 218,554 |
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| * |
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Steve Williamson(11) |
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| 68,286 |
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| * |
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All executive officers and directors as a group (14 persons)(12) |
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| 1,897,643 |
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| 3.7 | % | ||||||||
5% Stockholders: |
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FMR LLC(11) |
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| 7,064,147 |
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| 14.8 | % | ||||||||
BlackRock, Inc. (12) |
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| 4,529,258 |
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| 9.5 | % | ||||||||
The Vanguard Group(13) |
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| 4,133,914 |
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| 8.7 | % | ||||||||
Entities affiliated with Partner Fund Management(14) |
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| 2,940,255 |
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| 6.2 | % | ||||||||
JPMorgan Chase & Co.(15) |
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| 2,910,874 |
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| 6.1 | % | ||||||||
AllianceBernstein L.P.(16) |
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| 2,614,182 |
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| 5.5 | % | ||||||||
FMR LLC(13) |
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| 7,246,182 |
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| 14.8 | % | ||||||||
The Vanguard Group (14) |
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| 4,579,656 |
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| 9.3 | % | ||||||||
JPMorgan Chase & Co.(15) |
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| 4,516,694 |
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| 9.2 | % | ||||||||
T. Rowe Price Investment Management, Inc.(16) |
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| 3,519,870 |
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| 7.2 | % | ||||||||
BlackRock, Inc.(17) |
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| 3,500,113 |
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| 7.1 | % | ||||||||
Bellevue(18) |
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| 2,843,679 |
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| 5.8 | % |
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* Indicates beneficial ownership of less than 1% of the outstanding shares of our common stock.
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Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers, directors and holders of more than 10% of our common stock to file with the SEC initial reports of ownership of our common stock on a Form 4 and reports of changes in such ownership on a Form 4 or Form 5. Executive officers, directors and holders of more than 10% of our common stock are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. We submit all applicable Section 16(a) filing requirements on behalf of our executive officers and directors. To our knowledge, based solely on the reports filed by us, copies of such reports furnished to us and written representations made by our executive officers and directors regarding their filing obligations, all Section 16(a) filing requirements applicable to our executive officers and directors were satisfied with respect to the fiscal year ended December 31, 2021, except for one Form 4 reporting a September 17, 2021 same day option exercise and sale of common stock by Mr. Grossman which was filed late on October 4, 2021 due to an administrative filing error.2022.
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Proposal Four:Three: Ratification of Appointment of Independent Registered Public Accounting Firm
Our Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022.2023. Although stockholder ratification of the appointment of KPMG LLP is not required by our bylaws, other governing documents or the law, our Board considers the appointment of our independent registered public accounting firm to be an important matter of stockholder concern and is submitting the appointment of KPMG LLP for ratification by our stockholders as a matter of good corporate practice. If our stockholders fail to ratify the appointment, our Audit Committee will review its future selection of KPMG LLP as its independent registered public accounting firm. Even if the appointment is ratified, our Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and our stockholders.
Our Board considers the appointment of KPMG LLP as our independent registered public accounting firm for 20222023 to be in the best interests of the Company and our stockholders. We expect representatives of KPMG LLP to attend the Annual Meeting. They will have an opportunity to make a statement if they wish and will be available to respond to appropriate questions from stockholders.
KPMG LLP has served as our independent registered public accounting firm since 2011.
Principal Accountant Fees and Services
The following is a summary of the fees and services provided by KPMG LLP to us for fiscal years 2022 and 2021.
| Year Ended December 31, |
| ||||||
| 2022 |
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| 2021 |
| |||
Audit Fees(1) |
| $ | 1,560,000 |
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| $ | 1,915,000 |
|
Audit-Related Fees |
| $ | — |
|
| $ | — |
|
Tax Fees |
| $ | — |
|
| $ | — |
|
All Other Fees |
| $ | — |
|
| $ | — |
|
Total |
| $ | 1,560,000 |
|
| $ | 1,915,000 |
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|
| Year Ended December 31, |
| |||||
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| 2021 |
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| 2020 |
|
Audit Fees(1) |
| $ | 1,915,000 |
|
| $ | 1,876,600 |
|
Audit-Related Fees |
| $ | — |
|
| $ | — |
|
Tax Fees |
| $ | — |
|
| $ | — |
|
All Other Fees(2) |
| $ | — |
|
| $ | 1,780 |
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Total |
| $ | 1,915,000 |
|
| $ | 1,878,380 |
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Pre-Approval Policies and Procedures
Our Audit Committee is responsible for appointing, setting compensation for, and overseeing the work of our independent registered public accounting firm. Our Audit Committee’s charter establishes a policy that all audit and permitted not-audit and tax services to be provided by our independent registered public accounting firm must be pre-approved by our Audit Committee. Our Audit Committee has pre-approved all such audit and permitted non-audit services in accordance with this policy for the years ended December 31, 20212022 and 2020.2021. As part of this review, our Audit Committee considers whether the provision of any such non-audit or tax services by KPMG LLP is compatible with maintaining the independence of our independent registered public accounting firm.
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Our Audit Committee may delegate authority to pre-approve services to one or more of its members, provided any decisions made by such member or members to grant pre-approvals must be presented to the full Audit Committee at its next scheduled meeting.
Vote Required: | Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for | |
Board Recommendation: | Our board and the audit committee of our board each Unanimously recommends a vote “For” the RatifiCation of the appointment of KPMG LLP as our independent registered public accounting firm for |
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The Audit Committee oversees our independent registered public accounting firm and assists our Board in fulfilling its oversight responsibilities on matters relating to the integrity of our financial statements, our compliance with legal and regulatory requirements and the independent registered public accounting firm’s qualifications and independence by meeting regularly with the independent registered public accounting firm and financial management personnel. Management is responsible for the preparation, presentation and integrity of our financial statements.
In fulfilling its oversight responsibilities, the Audit Committee:
reviewed and discussed our financial statements as of and for the fiscal year ended December 31, 20212022 with management and KPMG LLP;
discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC;
received the written disclosures and the letter from KPMG LLP required by the applicable requirements of the Public Company Accounting Oversight Board;Boardregarding KPMG LLP’s communications with the Audit Committee concerning independence; and
discussed the independence of KPMG LLP with that firm.
Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to our Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 for filing with the SEC. The Audit Committee also appointed KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022.2023.
Submitted by the Audit Committee of our Board: | |
Jim Hinrichs, Chair | |
Patrick T. Hackett | |
Andrea L. Saia |
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Our Board is not aware of any other matters that will be presented for consideration at the Annual Meeting. However, if any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy intend to vote on those matters in accordance with their best judgment.
Stockholder Proposals and Nominations for Next Year’s Annual Meeting of Stockholders
In order to be considered for inclusion in the proxy materials for our 20232024 annual meeting of stockholders, proposals submitted by stockholders pursuant to Rule 14a-8 under the Exchange Act must be received by our Corporate Secretary at Outset Medical, Inc., 3052 Orchard Drive, San Jose, California 95134 on or before December 15, 2022,2023, and also must otherwise comply with the procedures and requirements set forth in Rule 14a-8.
Alternatively, stockholders intending to present a proposal (outside of the process established in Rule 14a-8) or nominate a director for election at our 20232024 annual meeting of stockholders without having the proposal or nomination included in the proxy materials for the meeting must comply with the requirements set forth in our bylaws. Our bylaws require, among other things, that our Corporate Secretary receive the proposal or nomination no earlier than the close of business on the 120th day, and no later than the close of business on the 90th day, prior to the first anniversary of the preceding year’s annual meeting of stockholders. Accordingly, for our 20232024 annual meeting of stockholders, our Corporate Secretary must receive the proposal or nomination no earlier than January 31, 2023February 1, 2024 and no later than the close of business5:00 p.m. Eastern Time on March 2, 2023.2024. The proposal or nomination must contain the information required by our bylaws and otherwise comply with the requirements set forth in our bylaws.
In addition to satisfying the foregoing requirements under our bylaws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to our principal executive offices at Outset Medical, Inc., 3052 Orchard Drive, San Jose, California 95134, Attn: Corporate Secretary that sets forth the information required by Rule 14a-9 under the Exchange Act no later than April 1, 2023.2024.
Availability of Annual Report on Form 10-K
A copy of our annual report on Form 10-K for the fiscal year ended December 31, 20212022 as filed with the SEC is available free of charge on our website at www.outsetmedical.com or on the SEC’s website at www.sec.gov. Stockholders may also obtain a copy of our 20212022 annual report, including financial statements but excluding exhibits, without charge by sending a written request to: Outset Medical, Inc., Attention: Corporate Secretary, 3052 Orchard Drive, San Jose, California 95134.
By order of the Board of Directors, | |
/s/ John L. Brottem | |
John L. Brottem | |
General Counsel and Secretary | |
April |
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APPENDIX A – NON-GAAP RECONCILIATIONS
The following table shows our GAAP gross margin reconciled to our non-GAAP gross margin included in this proxy statement. This non-GAAP financial measure is in addition to, and not a substitute for, or superior to, financial measures calculated in accordance with GAAP. GAAP gross margin includes stock-based compensation expense, as listed in the table below. Management has excluded the effects of this non-cash expense item in non‐GAAP gross margin to assist investors in analyzing and assessing past and future operating performance and period-to-period comparisons. There are limitations related to the use of non-GAAP financial measures because they are not prepared in accordance with GAAP, may exclude significant expenses required by GAAP to be recognized in our financial statements, and may not be comparable to non-GAAP financial measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non‐GAAP information and the reconciliation between these presentations, to more fully understand our business.
Reconciliation Between GAAP and Non-GAAP Gross Margin
| ||||
GAAP gross margin |
| % | ||
Stock-based compensation expense |
| |||
Non-GAAP gross margin |
| % |
2022 Proxy Statement A-1
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. D66665-P67220 Nominees: The Board of Directors recommends you vote FOR Proposal 2, EVERY ONE YEAR on Proposal 3 and FOR Proposal 4: 2. Advisory vote to approve 2021 named executive officer compensation 3. Advisory vote on the frequency of future advisory votes to approve named executive officer compensation 4. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2022 1. Election of Class II Directors 1a. D. Keith Grossman 1b. Patrick T. Hackett For Against Abstain For Against Abstain OUTSET MEDICAL, INC. The Board of Directors recommends you vote FOR each of the following Class II director nominees: OUTSET MEDICAL, INC. 3052 ORCHARD DR. SAN JOSE, CA 95134 NOTE: In their discretion, the proxy holders are authorized to vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. ! ! ! ! ! ! ! ! ! ! Every 3 Years Every 1 Year Every 2 Years Abstain ! ! ! ! For Withhold VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on May 30, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/OM2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May 30, 2022. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. SCAN TO VIEW MATERIALS & VOTEw Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice of the Annual Meeting, Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com. D66666-P67220
OUTSET MEDICAL, INC. Annual Meeting of Stockholders May 31, 2022 10:00 AM Pacific Time This proxy is solicited by the Board of Directors The undersigned stockholder(s) hereby appoint(s) Leslie Trigg and John Brottem, or either of them, as proxies, each with the power to appoint his or her substitute, and authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of OUTSET MEDICAL, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held virtually via live audio webcast at 10:00 a.m. Pacific Time on May 31, 2022 at www.virtualshareholdermeeting.com/OM2022, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. (Continued and to be signed on reverse side)
2023 Proxy Statement | A-1 |
SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on May 30, 2023. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/OM2023 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May 30, 2023. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. OUTSET MEDICAL, INC. 3052 ORCHARD DR. SAN JOSE, CA 95134 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: V05784-P82998 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS PORTION ONLY OUTSET MEDICAL, INC. The Board of Directors recommends you vote FOR each of the following Class III director nominees: 1. Election of Class III Directors 1a. Jim Hinrichs 1b. Andrea L. Saia 1c. Catherine Szyman For Withhold The Board of Directors recommends you vote FOR Proposals 2 and 3: For Against Abstain 2. Advisory vote to approve 2022 named executive officer compensation 3. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2023 NOTE: In their discretion, the proxy holders are authorized to vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
2023 Proxy Statement | A-2 |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice of the Annual Meeting, Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com. V05785-P82998 OUTSET MEDICAL, INC. Annual Meeting of Stockholders May 31, 2023 1:30 PM Pacific Time This proxy is solicited by the Board of Directors The undersigned stockholder(s) hereby appoint(s) Leslie Trigg and John Brottem, or either of them, as proxies, each with the power to appoint his or her substitute, and authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of OUTSET MEDICAL, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held virtually via live audio webcast at 1:30 p.m. Pacific Time on May 31, 2023 at www.virtualshareholdermeeting.com/OM2023, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side
2023 Proxy Statement | A-3 |