TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
​
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
​
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 Pursuant to §240.14a-12
​
VOCERA COMMUNICATIONS, 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 computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
​
(1)
Title of each class of securities to which transaction applies:
​
​
(2)
Aggregate number of securities to which transaction applies:
​
​
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
​
​
(4)
Proposed maximum aggregate value of transaction:
​
​
(5)
Total fee paid:
​
​
☐
Fee paid previously with preliminary materials.
​
☐
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing:filing.
​
(1)
Amount previously paid:Previously Paid:
​
​
(2)
Form, Schedule or Registration Statement No.:
​
​
(3)
Filing party:Party:
​
​
(4)
Date Filed:
​
​
TABLE OF CONTENTS
[MISSING IMAGE: logo_vocera.jpg]
April 18, 2019​16, 2020​
Dear Fellow Stockholder:
You are cordially invited to attend the 20192020 Annual Meeting of Stockholders of Vocera Communications, Inc. to be held at our offices located at 525 Race Street, San Jose, CA 95126 on Friday, May 31, 2019June 5, 2020 at 10:00 a.m. (Pacific Time). We are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described herein) or may decide to hold the 2020 Annual Meeting of Stockholders in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on the investors relations portion of our website at https://investors.vocera.com, and we encourage you to check this website prior to the 2020 Annual Meeting of Stockholders if you plan to attend.
Whether or not you plan to attend the meeting, I encourage you to review the enclosed information and vote your shares.
Our mission isThis year marks Vocera’s 20th anniversary. In our twenty years, we have built a mission-driven company with diverse and passionate employees. We have created the leading product portfolio in our space, and our solutions are used globally by a set of world-class customers. We have been able to simplify and improvemake a positive impact on the lives of patients and the healthcare professionalsteams that care for them, and patients, while enabling hospitals to enhance qualityour influence is broadening every year. We have accomplished a tremendous amount over the last twenty years, and we feel like we are only getting started.
2019 was a year of caregreat accomplishment and operational efficiency. Our continued investments in products and services, combined with strong execution, are paying off, resulting in growth and profitabilityimportant transitions for our business. In addition to significant new product introductions, we enhanced our global sales capability to pursue growth opportunities domestically and in our target international markets. We also made significant progress in markets outside of healthcare, and we believe there is even more opportunity going forward. Overall, I am proud of what Vocera has accomplished in 2019 and am excited about the momentum we have created for the future.
2018 produced record revenue and continued progress towards our long-term profitability goals. We made tremendous progress winning large enterprise accounts, completed significant expansions of our solution within existing customers, and achieved another solid year in the Federal space. We had an unprecedented year of product innovation as well. I believe our continued success underscores the strategic importance customers are seeing in our products.
We hit many milestones in serving each of our major stakeholders: employees, customers, investors and our community. I’d like to comment briefly on each one:
•
Employees:   We now have a combined workforce of approximately 630over 650 employees around the world. Our differentiated technology and our large, greenfield opportunity inspire us to pursue our goals of transforming healthcare and making a lasting difference for patients and caregivers. This mission to enable the Quadruple Aim resonates internally across the company, and our high employee engagement and loyalty reflect theour amazing team of people that we have assembled globally to address an underserved market and achieve our shared goals.commitment to fulfill our mission.
​
•
Customers:   We continuedonce again had an unprecedented year of product innovation. We brought to innovate new solutions for our customers, and in 2018 we completed the development ofmarket our new Smartbadge, an unprecedented advancement in product innovation for Vocera. Our progress in cultivating and harvesting our pipeline of large deals ina unique hands-free wearable device that showcases the U.S. and internationally also continues to be a bright spot for our business. We made continued progress in adding large, enterprise accounts in both the commercial market as well as with the Departments of Defense and Veterans Affairs. The capabilityfull power of our solutionssoftware platform. Additionally, we launched our new smartphone app, Vina, demonstrating our unique ability to deliver intelligent communication and our ROI-based sales approach are resonating withworkflow across a large market that we believe is primed for growth.variety of mobile devices. We also continueintroduced new analytics tools to empower our customers with actionable insights from our software into their workflows. On the go-to-market side, 2019 was a record for closing large, Enterprise healthcare deals. We also had success outside of healthcare with Nordstrom, one of the nation’s largest luxury retailers. Meanwhile, we continued to maintain extremely high customer loyalty within our installed base, as measured by our maintenance renewal rates and Net Promoter scores, and our customers view us as a trusted partner. As I write this letter, we are in the midst of the COVID-19 coronavirus pandemic. As you know, safety has always been core to the Vocera mission. We provide solutions that can help hospitals better communicate and respond in times of crisis and help them keep their employees safe.
​
TABLE OF CONTENTS
•
Investors:   While annual revenue growth was not what we initially hoped, 2019 was still a year of great accomplishment for us, and I believe the strategic bets we have placed will be important to our long-term success. I believe the large market opportunity for our solutions is validated by the large systems selecting our solution. We grew revenues again significantly, while advancing towards our target profitability goals, demonstratingfinished the leverage in our business model.year strong and drove bookings growth of over 10% for the year compared to 2018. Our balance sheet positions us well to capitalize on new growth opportunities. We also completedcontinue to see a successful capital raise with our convertible debt offering, which provides us with an enhanced capital base to pursue our growth initiatives. Our financial performance translated to strong Vocera stock performance in 2018, welllarge opportunity ahead of us and feel we are making the majorright moves to align the organization to drive long-term growth and industry-specific indices.enhanced profitability. We value the relationships we have built with the investment community and were proudlook forward to be recognized by our investors and analysts for investor relations awardsa year of progress in 2018.2020.
​
•
Community:   In addition to the commitments we make to our employees, customers and investors, we give back to the communities we live in. I am proud of the work we have done this year to share our success with the broader community, and that work continues. Our commitment to our communities continued with volunteering, giving, and assistance to local and international communitiesthose in need.
​
​
TABLE OF CONTENTS
As we now look forward, we begin 2019 on very solid financial footing, withneed via a strong balance sheet, an expanded sales pipeline and a scalable operating structure. With our broadened software platform, a devicewide variety of choice strategy that showcases our software functionality, andcharitable organizations throughout the increasing strategic importance of improving communication in healthcare, we are excited about the growth potential of our business in 2019 and beyond.
Our 2019 priorities include:
•
We will continue to focus on winning new hospital systems and driving system-wide expansions in our existing customers. We’ll pursue cross selling opportunities within our installed base, and we will pursue growth in our international markets.world.
​
Based on the strategic moves we made in 2019 around new products and enhanced sales capabilities, we believe we are well positioned for 2020. Given the market opportunity we see ahead for us, we are investing to drive long-term growth. I’d like to take a moment to highlight our key priorities for the coming year. Our priorities for 2020 include:
•
OnContinue to make progress in enterprise deals with large, new customers.
​
•
Expand our presence in the product side, we will continueFederal market by adding new facilities and successfully cross-selling our solution.
​
•
Continue to invest indrive expansions - as our solutionscustomers look to extendstandardize on communications platforms and broaden the ROI benefits.
​
•
Extend our clinical relevance both withininternational success and pursue opportunities outside of the four walls of the hospital. We expect the recently launched Smartbadge to be a catalysthealthcare, for growth of both hardware and software, particularlyexample, in the back half of this year. We will continue to invest in product innovation and will work to extend our clinical relevance across the care continuum by building, buying, or partnering with solutions that further enable the real-time health system.
​
•
We will strive to grow the business and accelerate towards our profitability goals.school safety.
​
As we begin 2019, cost savingsnow transition to 2020, I find it so fitting that we not only celebrate our 20th anniversary but also that we have the unique opportunity to recognize nurses this year in “The Year of the Nurse.” We have over 50 nurses who are employees of Vocera, and efficiency remain top priorities for IT spending in healthcare. The functionality and scalabilitythey are a tremendous asset of our differentiated software platform is unmatched incompany. We have a long track record of providing nurses with tools to improve resiliency, reduce toil and burnout, and return a sense of joy back into their time with patients. I’m proud of our lasting connection with nurses and the marketplace,broader healthcare community, and our solution provides a compelling value proposition for hospitals of all sizes. Wewe look forward to partnering with customers to solve workflow bottlenecks by mobilizing data to speed decision making with improved context about patients and caregivers. Our unified solution, combining real-time voice, secure texting, and deep clinical integration, is succeeding because it delivers on these challenges.celebrating the Year of the Nurse.
Thank you for your support and interest in Vocera’s success. As always, we value your ongoing participation and support of Vocera, and we are committed to delivering world-class solutions and to creating sustainable long-term value for our shareholders.stockholders.
Sincerely,
[MISSING IMAGE: sig_brentdlang.jpg]
Brent D. Lang
President and Chief Executive Officer
TABLE OF CONTENTS
VOCERA COMMUNICATIONS, INC.
525 Race Street
San Jose, CA 95126
​
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 31, 2019June 5, 2020
​
April 18, 2019​16, 2020​
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 20192020 Annual Meeting of Stockholders of Vocera Communications, Inc. will be held at our offices located at 525 Race Street, San Jose, CA 95126 on Friday, May 31, 2019,June 5, 2020, at 10:00 a.m. (Pacific Time). We are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described above and herein) or may decide to hold the 2020 Annual Meeting of Stockholders in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on the investors relations portion of our website at https://investors.vocera.com, and we encourage you to check this website prior to the 2020 Annual Meeting of Stockholders if you plan to attend.
We are holding the meeting for the following purposes, which are more fully described in the accompanying proxy statement:
1.
To elect three (3) Class III directors to serve terms of three years through the third annual meeting of stockholders following this meeting and until, in each case, a successor has been elected and qualified, subject to earlier resignation or removal.
​
2.
To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.2020.
​
3.
To conduct a non-binding advisory vote on the compensation of our named executive officers as disclosed in the accompanying materials.
​
4.
To approve a new 2020 Equity Incentive Plan.
​
In addition, stockholders may be asked to consider and vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 8, 2019,2020, are entitled to notice of, and to vote at, the meeting and any adjournments thereof. For ten days prior to the meeting, a complete list of the stockholders entitled to vote at the meeting will be available for examinationupon request by any stockholder for any purpose relating to the meeting. Requests should be sent to:
Vocera Communications, Inc.
525 Race Street
San Jose, CA 95126
Attn: Corporate Secretary
(408) 882-5100
If the meeting is held by means of remote communication, then the stockholder list will also be available during ordinary business hours at our headquarters.such virtual-only meeting.
Your vote as a Vocera Communications, Inc. stockholder is very important. Each share of stock that you own represents one vote.
For questions regarding your stock ownership, you may contact Investor Relations at (408) 882-5971 or investorrelations@vocera.com or, if you are a registered holder, our transfer agent, Computershare Trust Company, N.A., by email through their website at www.computershare.com/contactus or by phone at (877) 373-6374. Whether or not you expect to attend the meeting, we encourage you to read the proxy
TABLE OF CONTENTS
statement and vote through the Internet or by telephone, or request, sign and return your proxy card as soon as possible, so that your shares may be represented at the meeting. For specific instructions on how to vote your shares, please refer to the section entitled “General Information about the Meeting” beginning on page 1 of the proxy statement and the instructions on the Notice of Internet Availability of Proxy Materials.
The Securities and Exchange Commission rules allow companies to furnish proxy materials to stockholders over the Internet. We have elected to do so, thus reducing the environmental impact and lowering the costs of printing and distributing proxy materials without impacting your timely access to this important information. On or about April 18, 2019,16, 2020, we expect to mail to stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) containing instructions on how to access our
TABLE OF CONTENTS
proxy statement for our 20192020 Annual Meeting of Stockholders and our 20182019 annual report on Form 10-K to stockholders. The Notice of Internet Availability also provides instructions on how to vote through the Internet or by telephone and includes instructions on how to receive paper copies of the proxy materials by mail, if desired.
By Order of the Board of Directors,
[MISSING IMAGE: sig_douglasacarlen.jpg]
Douglas A. Carlen
General Counsel and Corporate Secretary
San Jose, California
April 18, 201916, 2020
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on May 31, 2019:June 5, 2020: the Proxy Statement and our 20182019 Annual Report on Form 10-K is available at www.envisionreports.com/vcra.
TABLE OF CONTENTS​
VOCERA COMMUNICATIONS, INC.
PROXY STATEMENT FOR 20192020 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
​
PROXY INFORMATION
​​​​12​​
​
Information about Solicitation and Voting
​​​​12​​
​
Internet Availability of Proxy Materials
​​​​12​​
​
General Information about the Meeting
​​​​12​​
​
General Proxy Information
​​​​13​​
​
CORPORATE GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCE
​​​​56​​
​
Corporate Governance Guidelines
​​​​56​​
​
Stock Ownership Guidelines
​​​​56​​
​
Recoupment Policy
​​​​56​​
​
Board Leadership Structure
​​​​56​​
​
Lead Independent Director
​​​​67​​
​
Risk Oversight
​​​​67​​
​
Director Independence
​​​​67​​
​
Committees of Our Board of Directors
​​​​7​​
​
Codes of Business Conduct and Ethics and other Corporate Policies
​​​​89​​
​
Compensation Committee Interlocks and Insider Participation
​​​​89​​
​
Board and Committee Meetings and Attendance
​​​​910​​
​
Board Evaluations
​​​​910​​
​
Board Attendance at Annual Stockholders’ Meeting
​​​​910​​
​
Presiding Director of Independent Director Meetings
​​​​910​​
​
Communication with Directors
​​​​910​​
​
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS
​​​​1012​​
​
Nominations to the Board of Directors
​​​​1012​​
​
Director Qualifications
​​​​1012​​
​
PROPOSAL NO. 1 ELECTION OF CLASS III DIRECTORS
​​​​1113​​
​
Nominees to the Board of Directors
​​​​1113​​
​
Director Resignation Policy
​​​​1214​​
​
Directors Not Standing for Election
​​​​12​​
​
Director Compensation
​​​​15​​
​
2018 Director Compensation
​​​​17​​
​
PROPOSAL NO. 2 RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
​​​​1819​​
​
Principal Accountant Fees and Services
​​​​1819​​
​
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
​​​​19​​
​
PROPOSAL NO. 3 NON-BINDING ADVISORY VOTE ON THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
​​​​21​​
​
20PROPOSAL NO. 4 APPROVAL OF THE 2020 EQUITY INCENTIVE PLAN
​​​​22​​
​
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
​​​​2131​​
i
TABLE OF CONTENTS​
​
EXECUTIVE COMPENSATION
​​​​2333​​
​
Compensation Discussion and Analysis
​​​​2333​​
i
TABLE OF CONTENTS​
​
Report of the Compensation Committee
​​​​3544​​
​
Executive Compensation Tables
​​​​3645​​
​
CEO Pay Ratio
​​​​3948​​
​
Employment, Severance and Change of Control Agreements
​​​​3948​​
​
EQUITY COMPENSATION PLAN INFORMATION
​​​​4251​​
​
TRANSACTIONS WITH RELATED PARTIES, FOUNDERS AND CONTROL PERSONS
​​​​4352​​
​
Review, Approval or Ratification of Transactions with Related Parties
​​​​4352​​
​
REPORT OF THE AUDIT COMMITTEE
​​​​4453​​
​
ADDITIONAL INFORMATION
​​​​4554​​
​
Stockholder Proposals to be Presented at Next Annual Meeting
​​​​45​​
​
Section 16(a) Beneficial Ownership Reporting Compliance
​​​​4554​​
​
Available Information
​​​​4554​​
​
“Householding” — Stockholders Sharing the Same Last Name and Address
​​​​4554​​
​
OTHER MATTERS
​​​​4655​​
​APPENDIX A​​
​
Vocera Communications, Inc. 2020 Equity Incentive Plan (effective June 5, 2020, subject to approval by stockholders)
​​​​A-1​​
ii
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement and the letter from our Chief Executive Officer contain forward-looking statements reflecting our current expectations that involve risks and uncertainties which are subject to safe harbors under the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning our anticipated growth, profitability, priorities, integration of acquisitions, customer deployments and business plans, objectives, expectations and intentions. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the growth, profitability, priorities, integration of acquisitions, customer deployments, business plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements.
iii1
TABLE OF CONTENTS​​​​​
VOCERA COMMUNICATIONS, INC.
525 Race Street
San Jose, CA 95126
​
PROXY STATEMENT FOR THE 20192020 ANNUAL MEETING OF STOCKHOLDERS
​
May 31, 2019June 5, 2020
Information About Solicitation and Voting
The accompanying proxy is solicited on behalf of the Board of Directors of Vocera Communication, Inc. (“we,” “us,” “our” or the “company”) for use at Vocera’s 20192020 Annual Meeting of Stockholders (the “annual meeting” or the “meeting”) to be held on May 31, 2019,June 5, 2020, at 10:00 a.m. (Pacific Time), and any adjournment or postponement thereof. We currently intend to hold the annual meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described above and herein) or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on the investor relations portion our website at https://investors.vocera.com, and we encourage you to check this website prior to the meeting if you plan to attend.
Internet Availability of Proxy Materials
Under rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), we are furnishing proxy materials to our stockholders primarily via the Internet, instead of mailing printed copies to each stockholder. On or about April 18, 2019,16, 2020, we expect to send to our stockholders a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) containing instructions on how to access our proxy materials, including our proxy statement and our annual report on Form 10-K. The Notice of Internet Availability also provides instructions on how to vote through the Internet or by telephone and includes instructions on how to receive paper copies of the proxy materials by mail or an electronic copy of the proxy materials by email.
This process is designed to reduce our environmental impact and lower the costs of printing and distributing our proxy materials without impacting our stockholders’ timely access to this important information. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability.
General Information about the Meeting
Purpose of the Meeting
At the meeting, stockholders will act upon the proposals described in this proxy statement. In addition, we will consider any other matters that are properly presented for a vote at the meeting. We are not aware of any other matters to be submitted for consideration at the meeting. If any other matters are properly presented for a vote at the meeting, the persons named in the proxy, who are officers of the company, have the authority in their discretion to vote the shares represented by the proxy.
Record Date; Quorum
Only holders of record of common stock at the close of business on April 8, 2019,2020, the record date, will be entitled to vote at the meeting. At the close of business on April 8, 2019,2020, Vocera had 31,113,14432,011,182 shares of common stock outstanding and entitled to vote.
The holders of a majority of the voting power of the shares of stock entitled to vote at the meeting as of the record date must be present or represented by proxy at the meeting in order to hold the meeting and conduct business. This presence is called a quorum. Your shares are counted as present at the meeting if you are present and vote in person at the meeting or if you have properly submitted a proxy.
2
TABLE OF CONTENTS​
General Proxy Information
Voting Rights
Each holder of shares of common stock is entitled to one vote for each share of common stock held as of the close of business on April 8, 2019,2020, the record date. You may vote all shares owned by you at such date, including (1)(i) shares held directly in your name as the stockholder of record, and (2)(ii) shares held for you as the beneficial owner in street name through a broker, bank, trustee or other nominee.
1
TABLE OF CONTENTS
Stockholder of Record: Shares Registered in Your Name.Name. If on April 8, 2019,2020, your shares were registered directly in your name with Vocera’s transfer agent, Computershare Trust Company, N.A., then you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the meeting, or vote in advance through the Internet or by telephone, or if you request to receive paper proxy materials by mail, by filling out and returning the proxy card.
Beneficial Owner: Shares Registered in the Name of a Broker or Nominee.Nominee. If on April 8, 2019,2020, your shares were held in an account with a brokerage firm, bank or other nominee, then you are the beneficial owner of the shares held in street name. As a beneficial owner, you have the right to direct your broker on how to vote the shares held in your account, and your broker has enclosed or provided voting instructions for you to use in directing it on how to vote your shares. Because the brokerage firm, bank or other nominee that holds your shares is the stockholder of record, if you wish to attend the meeting and vote your shares, you must obtain a valid proxy from the firm that holds your shares giving you the right to vote the shares at the meeting.
Required Vote
Proposal 1:   Each director will be elected by a majority of the votes cast, which means that each of the three individuals nominated for election to the Board of Directors at the meeting will be elected if the number of votes cast “FOR” that nominee exceeds the number of votes “AGAINST” that nominee. You may either vote “FOR” or “AGAINST” one or more of the nominees. You may not cumulate votes in the election of directors.
Proposal 2:   Approval of the ratification of the appointment of our independent registered public accounting firm will be obtained if the number of votes cast “FOR” the proposal at the meeting exceeds the number of votes “AGAINST” the proposal.
Proposal 3:   Approval, on an advisory basis, of the named executive officer compensation will be obtained if the number of votes cast “FOR” the proposal at the meeting exceeds the number of votes “AGAINST” the proposal. This vote is advisory and non-binding in nature.
Proposal 4:   Approval of a new 2020 Equity Incentive Plan will be obtained if the number of votes cast “FOR” the proposal at the meeting exceeds the number of votes “AGAINST” the proposal.
Abstentions (shares present at the meeting and voted “abstain”) are counted for purposes of determining whether a quorum is present, and have no effect on the outcome of the matters voted upon. Broker non-votes occur when shares held by a broker for a beneficial owner are represented at the meeting but not voted on the particular proposal either because (i) the broker did not receive voting instructions from the beneficial owner or (ii) the broker lacked discretionary authority to vote the shares. Broker non-votes are counted for purposes of determining whether a quorum is present, and have no effect on the outcome of the matters voted upon, except with regards to Proposal 2, which is considered a routine proposal and is subject to the discretionary vote of the holder. Note that if you are a beneficial holder and do not provide specific voting instructions to your broker, the broker that holds your shares will not be authorized to vote on the election of directors. Accordingly, we encourage you to provide voting instructions to your broker, whether or not you plan to attend the meeting.
3
TABLE OF CONTENTS
Recommendations of the Board of Directors on Each of the Proposals Scheduled to be Voted on at the Meeting
The Board of Directors recommends that you vote:
•
FOR the Class III director nominees named in this proxy statement (Proposal 1);
​
•
FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20192020 (Proposal 2); and
​
•
FOR the non-binding advisory vote on named executive officer compensation (Proposal 3); and
​
•
FOR the 2020 Equity Incentive Plan (Proposal 4).
​
Voting Instructions; Voting of Proxies
If you received a Notice of Internet Availability, please follow the instructions included on the notice on how to access your proxy card and vote by telephone or through the Internet.
If you are a stockholder of record, you may:
2
TABLE OF CONTENTS
•
Vote in person — - we will provide a ballot to stockholders who attend the meeting and wish to vote in person;
​
•
Vote through the Internet or by telephone — - in order to do so, please follow the instructions shown on your Notice of Internet Availability or proxy card; or
​
•
Vote by mail — - if you request or receive a paper proxy card and voting instructions by mail, simply complete, sign and date the proxy card and return it as soon as possible before the meeting in the envelope provided.
​
Votes submitted through the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on May 30, 2019.June 4, 2020. Submitting your proxy, whether by telephone, through the Internet or by mail if you request or received a paper proxy card, will not affect your right to vote in person should you decide to attend the meeting. If you are not the stockholder of record, please refer to the voting instructions provided by your nominee to direct it how to vote your shares. You may either vote “FOR” or “AGAINST” or “ABSTAIN” from voting for each of the nominees to the Board of Directors. For Proposal 2, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. For Proposal 3, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. For Proposal 4, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. Your vote is important. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure that your vote is counted.
In light of the evolving COVID-19 situation, we strongly recommend that you vote your shares in advance of the meeting as instructed above, even if you plan to attend the meeting.
All proxies will be voted in accordance with the instructions specified on the proxy card. If you sign a physical proxy card and return it without instructions as to how your shares should be voted on a particular proposal at the meeting, your shares will be voted in accordance with the recommendations of our Board of Directors stated above.
If you receive more than one proxy card or Notice of Internet Availability, your shares are registered in more than one name or are registered in different accounts. To make certain all of your shares are voted, please follow the instructions included on the Notice of Internet Availability on how to access each proxy card and vote each proxy card by telephone or through the Internet. If you requested or received paper proxy materials by mail, please complete, sign and return each proxy card to ensure that all of your shares are voted.
Expenses of Soliciting Proxies
We have engaged Kingsdale Shareholder Services U.S., Inc. to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements that are expected to be approximately $20,000 in the aggregate.
4
TABLE OF CONTENTS
The expenses of soliciting proxies will be paid by Vocera. Following the original distribution and mailing of the solicitation materials, we or our agents may solicit proxies by mail, electronic mail, telephone, facsimile, by other similar means, or in person. Our directors, officers, and other employees, without additional compensation, may solicit proxies personally or in writing, by telephone, e-mail, or otherwise. Following the original distribution and mailing of the solicitation materials, we will request brokers, custodians, nominees and other record holders to forward copies of those materials to persons for whom they hold shares and to request authority for the exercise of proxies. In such cases, we, upon the request of the record holders, will reimburse such holders for their reasonable expenses. If you choose to access the proxy materials and/or vote through the Internet, you are responsible for any Internet access charges you may incur.
Revocability of Proxies
A stockholder who has given a proxy may revoke it at any time before the closing of the polls by the inspector of elections at the meeting by:
•
delivering to the Corporate Secretary (by any means, including facsimile) a written notice stating that the proxy is revoked;
​
•
signing and delivering a proxy bearing a later date;
​
•
voting again through the Internet or by telephone; or
​
•
attending and voting at the meeting (although attendance at the meeting will not, by itself, revoke a proxy).
​
Please note, however, that if your shares are held of record by a brokerage firm, bank or other nominee and you wish to revoke a proxy, you must contact that firm to revoke or change any prior voting instructions.
3
TABLE OF CONTENTS
Electronic Access to the Proxy Materials
The Notice of Internet Availability will provide you with instructions regarding how to:
•
view our proxy materials for the meeting through the Internet;
​
•
instruct us to mail paper copies of our current or future proxy materials to you; and
​
•
instruct us to send our current or future proxy materials to you electronically by email.
​
Choosing to receive your future proxy materials by email will reduce the impact of our annual meetings of stockholders on the environment and lower the costs of printing and distributing our proxy materials. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.
Voting Results
Voting results will be tabulated and certified by the inspector of elections appointed for the meeting. The final results will be tallied by the inspector of elections and filed with the SEC in a current report on Form 8-K within four business days of the meeting.
Annual Meeting Location
We will hold the meeting at our offices located at 525 Race Street, San Jose, CA 95126 on Friday, May 31, 2019,June 5, 2020, at 10:00 a.m. (Pacific Time).
45
TABLE OF CONTENTS​​​​​
CORPORATE GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCE
We are strongly committed to good corporate governance practices. These practices provide an important framework within which our Board of Directors and management pursue our strategic objectives for the benefit of our stockholders. Our Governance and Nominating Committee periodically reviews our corporate governance practices and in 2016, based on discussions with our stockholders and recent developments in corporate governance, our Board of Directors amended our Restated Bylaws to adopt majority voting. This means that for a nominee to be elected to the Board in an uncontested election, the votes cast for such nominee’s election must exceed the votes cast against such nominee’s election.
Corporate Governance Guidelines
Our Board of Directors has adopted Corporate Governance Guidelines that set forth expectations for directors, director independence standards, board committee structure and functions, stock ownership guidelines, and other policies for the governance of the company. In connection with the amendment to the Restated Bylaws to adopt majority voting, our Board also approved a revision to the Corporate Governance Guidelines to require that a director nominee (or new appointee) tender his or her resignation in the event of an adverse vote, and, following the recommendation of the Governance and Nominating Committee, the Board shall act upon such resignation within 30 days following the stockholder vote. Our Corporate Governance Guidelines are available without charge on the investor relations section of our website at www.vocera.com.
Stock Ownership Guidelines
Our Board of Directors has adopted stock ownership guidelines as set forth in the Corporate Governance Guidelines. For our directors, with the exception of our Chief Executive Officer, not later than five years from the later of (i) July 30, 2012 or (ii) the date that an individual is initially elected as a director, such individual should beneficially own a number of shares of our common stock and vested equity awards with a value of not less than five times the then annual cash retainer for general board service paid by us to such director. For our Chief Executive Officer, not later than five years from the later of (i) July 30, 2012 or (ii) the date that the individual is hired or promoted to serve as our Chief Executive Officer, such individual should beneficially own a number of shares of our common stock and vested equity awards with a value of not less than six times the then annual base salary paid to such individual. We measure compliance with these stock ownership guidelines at the end of each fiscal year. All directors currently comply with these stock ownership guidelines.
Recoupment Policy
In April 2018, our Board of Directors adopted a clawback provision that provides our Board with the authority to recoup past incentive compensation from an executive officer in the event of a material restatement of our company’s financial results due to fraud or intentional misconduct of that executive officer.
Board Leadership Structure
Our Board of Directors does not have a policy on whether the roles of the Chair of the Board of Directors and Chief Executive Officer should be separate. Our Governance and Nominating Committee periodically considers the Board’s leadership structure and makes recommendations to the Board on what it believes is appropriate. The Board currently believes that it should maintain flexibility in determining the Board leadership structure appropriate for the company.
Brent D. Lang currently serves as our President and Chief Executive Officer and as Chairman of our Board. Our Board of Directors believes that this Board leadership structure, coupled with a strong emphasis on Board independence and the role of the lead independent director, provides effective independent oversight of management while allowing the Board and management to benefit from Mr. Lang’s extensive executive leadership and operational experience and his experience and familiarity with our business, growth strategy and key issues. Independent directors and management sometimes have different perspectives and roles in strategy development. Our independent directors bring experience,
56
TABLE OF CONTENTS​​​​
oversight and expertise from outside of our company, while Mr. Lang brings company-specific experience and expertise. Our Board of Directors believes that Mr. Lang’s combined role enables strong leadership, creates clear accountability, and enhances our ability to communicate our message and strategic vision clearly and consistently to stockholders.
Lead Independent Director
Because Mr. Lang is a current executive officer, he is not deemed independent for corporate governance purposes, and the Board has appointed Howard E. Janzen as Lead Independent Director. As Lead Independent Director, Mr. Janzen, among other responsibilities, attends and chairs most of the regularly scheduled meetings at which only our independent directors are present, serves as a liaison between the Chief Executive Officer and Chairman and the independent directors, and performs such additional duties as our Board of Directors may otherwise determine and delegate.
Risk Oversight
Our Board of Directors is primarily responsible for overseeing our risk management processes. Our Board exercises its risk oversight function both directly and indirectly through its various committees and reviews strategic and operational risks, including but not limited to cybersecurity risk, in the context of reports from the management team, receives reports on all significant committee activities at each regular meeting, and evaluates the risks inherent in significant transactions. Our Board, as a whole, determines the appropriate level of risk for our company, assesses the specific risks that we face and reviews management’s strategies for adequately mitigating and managing the identified risks.
Our Audit Committee, Governance and Nominating Committee and Compensation Committee support our Board in discharging its risk oversight duties and address risks inherent in their respective areas. Our Audit Committee assists our Board in fulfilling its oversight responsibilities relating to the company’s financial accounting, reporting and controls, legal and regulatory compliance and oversees the accounting and financial reporting processes of the company, the audits of the company’s financial statements by the independent auditors and our internal audit function and monitors the periodic reviews of the adequacy of such processes and systems of internal control. Our Governance and Nominating Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, and corporate governance. Our Compensation Committee assesses risks created by the incentives inherent in our compensation policies. See “Compensation Policies and Practices as they relate to Risk Management” under the Compensation Discussion and Analysis section elsewhere in this Proxy Statement for additional information. We believe this division of responsibilities is an effective approach for addressing the risks we face and that our Board leadership structure supports this approach.
Director Independence
Our common stock is listed on the New York Stock Exchange. The listing rules of the New York Stock Exchange require that a majority of the members of our Board of Directors be independent. In 2019,February 2020, our Board of Directors confirmed that all of our directors and director nominees are independent, except Brent D. Lang. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, our Board of Directors determined each of Michael Burkland, John B. Grotting, Jeffrey H. Hillebrand,Julie Iskow, Howard E. Janzen, Alexa King, John N. McMullen, Sharon L. O’Keefe, Ronald A. Paulus and Bharat Sundaram and Julie Iskow does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors or director nominees is “independent” as that term is defined under the rules of the New York Stock Exchange and the Securities and Exchange Commission. In making this determination, our Board of Directors considered the relationships that each director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including certain contracts for products or services in place between Vocera and entities affiliated with our directors.
6
TABLE OF CONTENTS​
Committees of Our Board of Directors
Our Board of Directors has established an Audit Committee, a Compensation Committee and a Governance and Nominating Committee. The composition and responsibilities of each committee are
7
TABLE OF CONTENTS
described below. Copies of the charters for each committee are available without charge on the investor relations section of our website at www.vocera.com. Members serve on these committees until their resignations or until otherwise determined by the Board of Directors.
Audit Committee.Committee. Our Audit Committee is comprised of John N. McMullen, who is the chair of the Committee, Michael Burkland and Howard E. Janzen and Ronald A. Paulus, each of whom, our Board of Directors has determined, meets the requirements for independence under the current New York Stock Exchange and SEC rules and regulations. Each member of our Audit Committee is financially literate. In addition, our Board of Directors has determined that Mr. McMullen is an Audit Committee financial expert within the meaning of Item 407(d) of Regulation S-K of the Securities Act.
All audit services to be provided to us and all permissible non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm will be approved in advance by our Audit Committee. Our Audit Committee, among other things:
•
oversees the accounting and financial reporting processes of our company, the audits of our company’s financial statements by our company’s independent registered public accounting firm and our company’s internal audit function;
​
•
monitors the periodic reviews of the adequacy of the accounting and financial reporting processes and systems of internal control that are conducted by our company’s independent registered public accounting firm and our company’s financial and senior management, and internal audit function;
​
•
appoints our company’s independent registered public accounting firm, determines and approves the fees paid to our independent accounting firm and reviews and evaluates the qualifications, independence and performance of our independent accounting firm;
​
•
reviews and evaluates the organization and performance of our company’s internal audit function;
​
•
facilitates communications among our company’s independent registered public accounting firm, financial and senior management and internal audit function, and our Board of Directors; and
​
•
assists our Board of Directors in oversight of our company’s compliance with legal and regulatory requirements.
​
Compensation Committee.   Our Compensation Committee is comprised of Jeffrey H. Hillebrand,Michael Burkland, who is the chair of the Committee, Alexa King and John B. Grotting and Alexa King. Upon Mr. Hillebrand’s departure at the annual meeting, another member of our Board of Directors will be appointed to replace him as a member and chair of our Compensation Committee.Sharon L. O’Keefe. Our Board of Directors has determined that each member of our Compensation Committee meets the requirements for independence under the current New York Stock Exchange rules, is a non-employee director within the meaning of Section 16 of the Exchange Act, and is an outside director within the meaning of Section 162(m) of the Internal Revenue Code. Our Compensation Committee, among other things:
•
reviews and determines the compensation of our executive officers;
​
•
oversees our cash-based and equity-based compensation plans, policies and programs;
​
•
reviews and makes recommendations to our Board with respect to non-employee director compensation; and
​
•
reviews general plans, policies and programs relating to compensation and benefits of our employees.
​
Our executive compensation program is administered by our Compensation Committee. In determining the compensation of each of our named executive officers, other than our President and Chief Executive Officer, our Compensation Committee considers the performance evaluations and compensation
7
TABLE OF CONTENTS​​
recommendations of our President and Chief Executive Officer. In the case of our President and Chief Executive Officer, our Compensation Committee evaluates his performance and independently determines whether to make any adjustments to his compensation.
8
TABLE OF CONTENTS​​
Our Compensation Committee retained an independent compensation consultant, Compensia, Inc., to assist in structuring our executive officer compensation for 2018.2019 and 2020. Compensia provided our Compensation Committee with market data and analyses from a peer group of similarly-sized technology companies with similar business and financial characteristics. Compensia has not provided our company or our Compensation Committee with any other services during fiscal year 20182019 or 2020 (to date) that would compromise its independence or pose a conflict of interest.
In accordance with applicable laws, rules and regulations and our certificate of incorporation, bylaws and Compensation Committee charter, the Compensation Committee has delegated to an equity awards committee, comprised of certain executive officers of our company, the authority to make certain types of equity awards under our 2012 Equity Incentive Plan and proposed new 2020 Equity Incentive Plan to any employee who is not an executive officer or director, pursuant to the terms of such plan and the equity award guidelines approved by our Compensation Committee.
Governance and Nominating Committee.   Our Governance and Nominating Committee is comprised of Alexa King, who is the chair of the Committee, John B. GrottingJulie Iskow and Sharon L. O’Keefe. Upon Mr. Grotting’s departure upon the completion of the annual meeting, another member of our Board of Directors will be appointed to replace him on our Nominating Committee.Bharat Sundaram. Our Board of Directors has determined that each member of our Governance and Nominating Committee meets the requirements for independence under the current New York Stock Exchange rules and regulations. Our Governance and Nominating Committee, among other things:
•
identifies, evaluates and recommends nominees to our Board of Directors and its committees;
​
•
oversees the evaluation of the performance of our Board of Directors and its committees;
​
•
reviews our corporate governance policies and proposed waivers of the policies;
​
•
reviews developments in corporate governance practices;
​
•
evaluates the adequacy of our corporate governance practices;
​
•
oversees continuing education for our directors; and
​
•
makes recommendations to our Board of Directors concerning corporate governance matters.
​
Codes of Business Conduct and Ethics and other Corporate Policies
Our Board of Directors has adopted codes of business conduct and ethics that apply to all of our employees, officers and directors. We intend to disclose any future amendments to certain provisions of our codes of business conduct and ethics, or waivers of these provisions, on our website and/or in public filings. Our employees, officers and directors are also subject to our Policy Prohibiting Insider Trading and our Related Person Transactions Policy. We provide training to our employees regarding our codes and various company policies, which all employees are required to complete. In addition, we have adopted a Whistleblower and Complaint Policy that is designed to provide a forum to which our employees, officers and directors may report violations or suspected violations of our company policies without fear of harassment, retaliation or adverse employment consequences. We also have adopted a Transparency in Supply Chains Act Transparency Statement that outlines our opposition to all forms of human trafficking and details the steps we take to ensure that slavery and human trafficking is not taking place in any of our supply chains or in any part of our business. The full text of our policies are posted on the investor relations section of our website at www.vocera.com.
Derivatives Trading and Anti-Hedging Policy
Our Policy Prohibiting Insider Trading prohibits our employees, including our executive officers and members of our Board of Directors, from purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company common stock, such as prepaid variable forward contracts, equity swaps, collars, forward sale contracts and exchange funds.
Compensation Committee Interlocks and Insider Participation
The directors who were members of our Compensation Committee during 20182019 were Michael Burkland, John B. Grotting, Jeffrey H. Hillebrand, Alexa King and John B. Grotting.Sharon L. O’Keefe. Mssrs. Grotting and
9
TABLE OF CONTENTS​​​​​
Hillebrand are no longer members of the Board. None of them at any time has been one of our officers or employees. None of our executive officers serves, or in the past has served, as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving on our Board of Directors or our Compensation Committee.
8
TABLE OF CONTENTS​​​​​
Board and Committee Meetings and Attendance
The Board of Directors and its committees meet throughout the year on a pre-determined schedule and also hold special meetings and act by written consent from time to time. During 2018,2019, the Board of Directors held six meetings, including telephonic meetings,meetings; the Audit Committee held eight meetings; the Compensation Committee held four meetingsmeetings; and the Governance and Nominating Committee held eightfive meetings. During 2018,2019, none of the current directors attended fewer than 75% of the aggregate of the total number of meetings held by the Board of Directors during his or her tenure and the total number of meetings held by all committees of the Board of Directors on which such director served during his or her tenure.
Typically, in conjunction with the regularly scheduled meetings of the Board, the independent directors meet in executive sessions outside the presence of management.
Board Evaluations
The Board and each of its committees conduct self-evaluations annually. The Governance and Nominating Committee oversees the annual self-assessment of the Board’s performance and the composition and performance of each committee of the Board. Each committee assesses its own performance relative to its charter and best practices. The Governance and Nominating Committee utilizes the results of this self-evaluation process to determine if the Board and its committees are functioning effectively, to assess and determine the characteristics, expertise, qualifications and skills required of prospective candidates for election to the Board, and to make recommendations to the Board regarding assignments of Board members to various committees. The full Board then discusses the evaluation results to determine what action, if any, would improve Board and committee performance and whether any changes to the process would be appropriate.
In accordance with its charter and our Corporate Governance Guidelines, the Governance and Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this proxy statement for election to the Board.
Board Attendance at Annual Stockholders’ Meeting
We encourage each member of our Board of Directors to attend our annual meetings of stockholders. FiveSix directors were in attendance at our 20182019 annual meeting of stockholders. We do not have a formal policy regarding attendance of annual meetings by the members of our Board of Directors. We may consider in the future whether our company should adopt a more formal policy regarding director attendance at our annual meetings.
Presiding Director of Independent Director Meetings
The independent directors meet in regularly scheduled executive sessions without management. Our lead independent director is currently Mr. Janzen.
Communication with Directors
Stockholders and interested parties who wish to communicate with our Board of Directors, non-management members of our Board of Directors as a group, a committee of the Board of Directors, or a specific member of our Board of Directors (including our chairman or lead independent director) may do so by letters addressed to the attention of our Corporate Secretary.
All communications are reviewed by the Corporate Secretary and provided to the members of the Board of Directors consistent with a screening policy providing that unsolicited items, sales materials and other routine items and items unrelated to the duties and responsibilities of the Board of Directors not be relayed on to directors. Any communication that is not relayed is recorded in a log and made available to our Board of Directors.
10
TABLE OF CONTENTS
The address for these communications is:
Corporate Secretary
Vocera Communications, Inc.
525 Race Street
San Jose, CA 95126
911
TABLE OF CONTENTS​​​
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS
Nomination to the Board of Directors
Candidates for nomination to our Board of Directors are selected by our Board of Directors based on the recommendation of the Governance and Nominating Committee. In recommending candidates for nomination, the Governance and Nominating Committee considers candidates recommended by directors, officers, employees, stockholders and outside consultants, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected candidates as appropriate.
Additional information regarding the process for properly submitting stockholder nominations for candidates for membership on our Board of Directors is set forth below under “Stockholder Proposals to be Presented at Next Annual Meeting.”
Director Qualifications
With the goal of developing a diverse, experienced and highly-qualified Board of Directors, the Governance and Nominating Committee is responsible for developing and recommending to the Board of Directors the desired qualifications, expertise and characteristics of members of our Board of Directors.
Since the identification, evaluation and selection of qualified directors is a complex and subjective process that requires consideration of many factors, and will be significantly influenced by the particular needs of our Board of Directors that are likely to evolve and change over time, our Board of Directors has not adopted a specific set of minimum qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory and New York Stock Exchange listing requirements; and the provisions of our certificate of incorporation, bylaws, Corporate Governance Guidelines and charters of our board committees. In addition, neither our Board of Directors nor our Governance and Nominating Committee have a formal policy with regard to the consideration of diversity in identifying nominees. When considering nominees, our Governance and Nominating Committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, skills, financial and other business expertise, breadth of experience, soundness of judgment, diversity of viewpoints and experience and knowledge about our business or industry, as well as ability to devote adequate time and effort to responsibilities of our Board of Directors in the context of its existing composition. Through the nomination process, the Governance and Nominating Committee seeks to promote board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds and other characteristics that are expected to contribute to the Board of Directors’ overall effectiveness. While we do not have a formal policy relative to diversity in identifying director nominees, we believe that it is desirable for Board members to possess diverse characteristics of gender, race, ethnicity and age, and we consider such factors in Board evaluation and in the identification of candidates for Board membership.
1012
TABLE OF CONTENTS​​
PROPOSAL NO. 1
ELECTION OF CLASS III
DIRECTORS
Our Board of Directors is divided into three classes. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. Class III director nominees will stand for election at this meeting. The terms of office of directors in Class III and Class III do not expire until the annual meetings of stockholders to be held in 20202022 and 2021, respectively.
Our Class III directors, whose terms will expire at this annual meeting, are Michael Burkland, Jeffrey H. HillebrandJulie Iskow, Howard E. Janzen and Brent D. Lang. Following discussions with Mr. Hillebrand regarding his interest in remaining on our Board of Directors, our Governance and Nominating Committee decided not to recommend that Mr. Hillebrand be nominated for re-election at the annual meeting.Alexa King. At the recommendation of our Governance and Nominating Committee, our Board of Directors nominated Michael BurklandJulie Iskow, Howard E. Janzen and Brent D. Lang,Alexa King, each an incumbent director, and Bharat Sundaram, a director nominee, for election as Class III directors at the 20192020 annual meeting, for a three-year term expiring at the 20222023 annual meeting of stockholders, and until such director’s successor is duly elected and qualified, subject to such director’s earlier resignation or removal.
If any nominee for any reason is unable to serve, the proxies may be voted for such substitute nominee as the proxy holders, who are officers of our company, might determine. Each nominee has consented to being named in this proxy statement and to serve if elected. Proxies may not be voted for more than two directors. Stockholders may not cumulate votes in the election of directors.
NomineesLead Independent Director
Because Mr. Lang is a current executive officer, he is not deemed independent for corporate governance purposes, and the Board has appointed Howard E. Janzen as Lead Independent Director. As Lead Independent Director, Mr. Janzen, among other responsibilities, attends and chairs most of the regularly scheduled meetings at which only our independent directors are present, serves as a liaison between the Chief Executive Officer and Chairman and the independent directors, and performs such additional duties as our Board of Directors may otherwise determine and delegate.
Risk Oversight
Our Board of Directors is primarily responsible for overseeing our risk management processes. Our Board exercises its risk oversight function both directly and indirectly through its various committees and reviews strategic and operational risks, including but not limited to cybersecurity risk, in the context of reports from the management team, receives reports on all significant committee activities at each regular meeting, and evaluates the risks inherent in significant transactions. Our Board, as a whole, determines the appropriate level of risk for our company, assesses the specific risks that we face and reviews management’s strategies for adequately mitigating and managing the identified risks.
Our Audit Committee, Governance and Nominating Committee and Compensation Committee support our Board in discharging its risk oversight duties and address risks inherent in their respective areas. Our Audit Committee assists our Board in fulfilling its oversight responsibilities relating to the company’s financial accounting, reporting and controls, legal and regulatory compliance and oversees the accounting and financial reporting processes of the company, the audits of the company’s financial statements by the independent auditors and our internal audit function and monitors the periodic reviews of the adequacy of such processes and systems of internal control. Our Governance and Nominating Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, and corporate governance. Our Compensation Committee assesses risks created by the incentives inherent in our compensation policies. See “Compensation Policies and Practices as they relate to Risk Management” under the Compensation Discussion and Analysis section elsewhere in this Proxy Statement for additional information. We believe this division of responsibilities is an effective approach for addressing the risks we face and that our Board leadership structure supports this approach.
Director Independence
Our common stock is listed on the New York Stock Exchange. The listing rules of the New York Stock Exchange require that a majority of the members of our Board of Directors be independent. In February 2020, our Board of Directors confirmed that all of our directors and director nominees are independent, except Brent D. Lang. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, our Board of Directors determined each of Michael Burkland, Julie Iskow, Howard E. Janzen, Alexa King, John N. McMullen, Sharon L. O’Keefe, Ronald A. Paulus and Bharat Sundaram does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors or director nominees is “independent” as that term is defined under the rules of the New York Stock Exchange and the Securities and Exchange Commission. In making this determination, our Board of Directors considered the relationships that each director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including certain contracts for products or services in place between Vocera and entities affiliated with our directors.
Committees of Our Board of Directors
Our Board of Directors has established an Audit Committee, a Compensation Committee and a Governance and Nominating Committee. The composition and responsibilities of each committee are
7
TABLE OF CONTENTS
described below. Copies of the charters for each committee are available without charge on the investor relations section of our website at www.vocera.com. Members serve on these committees until their resignations or until otherwise determined by the Board of DirectorsDirectors.
The nominees,Audit Committee. Our Audit Committee is comprised of John N. McMullen, who is the chair of the Committee, Howard E. Janzen and their ages,Ronald A. Paulus, each of whom, our Board of Directors has determined, meets the classrequirements for independence under the current New York Stock Exchange and SEC rules and regulations. Each member of our Audit Committee is financially literate. In addition, our Board of Directors has determined that Mr. McMullen is an Audit Committee financial expert within the meaning of Item 407(d) of Regulation S-K of the Securities Act.
All audit services to be provided to us and all permissible non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm will be approved in which theyadvance by our Audit Committee. Our Audit Committee, among other things:
•
oversees the accounting and financial reporting processes of our company, the audits of our company’s financial statements by our company’s independent registered public accounting firm and our company’s internal audit function;
​
•
monitors the periodic reviews of the adequacy of the accounting and financial reporting processes and systems of internal control that are being nominated, their occupationsconducted by our company’s independent registered public accounting firm and their lengthour company’s financial and senior management, and internal audit function;
​
•
appoints our company’s independent registered public accounting firm, determines and approves the fees paid to our independent accounting firm and reviews and evaluates the qualifications, independence and performance of board service are providedour independent accounting firm;
​
•
reviews and evaluates the organization and performance of our company’s internal audit function;
​
•
facilitates communications among our company’s independent registered public accounting firm, financial and senior management and internal audit function, and our Board of Directors; and
​
•
assists our Board of Directors in oversight of our company’s compliance with legal and regulatory requirements.
​
Compensation Committee.   Our Compensation Committee is comprised of Michael Burkland, who is the table below. Additional biographical descriptionschair of the Committee, Alexa King and Sharon L. O’Keefe. Our Board of Directors has determined that each nominee are set forth inmember of our Compensation Committee meets the text belowrequirements for independence under the table. These descriptions includecurrent New York Stock Exchange rules, is a non-employee director within the primary individual experience, qualifications, qualitiesmeaning of Section 16 of the Exchange Act, and skillsis an outside director within the meaning of Section 162(m) of the Internal Revenue Code. Our Compensation Committee, among other things:
•
reviews and determines the compensation of our executive officers;
​
•
oversees our cash-based and equity-based compensation plans, policies and programs;
​
•
reviews and makes recommendations to our Board with respect to non-employee director compensation; and
​
•
reviews general plans, policies and programs relating to compensation and benefits of our employees.
​
Our executive compensation program is administered by our Compensation Committee. In determining the compensation of each of our nomineesnamed executive officers, other than our President and Chief Executive Officer, our Compensation Committee considers the performance evaluations and compensation recommendations of our President and Chief Executive Officer. In the case of our President and Chief Executive Officer, our Compensation Committee evaluates his performance and independently determines whether to make any adjustments to his compensation.
8
TABLE OF CONTENTS​​
Our Compensation Committee retained an independent compensation consultant, Compensia, Inc., to assist in structuring our executive officer compensation for 2019 and 2020. Compensia provided our Compensation Committee with market data and analyses from a peer group of similarly-sized technology companies with similar business and financial characteristics. Compensia has not provided our company or our Compensation Committee with any other services during fiscal year 2019 or 2020 (to date) that ledwould compromise its independence or pose a conflict of interest.
In accordance with applicable laws, rules and regulations and our certificate of incorporation, bylaws and Compensation Committee charter, the Compensation Committee has delegated to an equity awards committee, comprised of certain executive officers of our company, the authority to make certain types of equity awards under our 2012 Equity Incentive Plan and proposed new 2020 Equity Incentive Plan to any employee who is not an executive officer or director, pursuant to the conclusionterms of such plan and the equity award guidelines approved by our Compensation Committee.
Governance and Nominating Committee.   Our Governance and Nominating Committee is comprised of Alexa King, who is the chair of the Committee, Julie Iskow and Bharat Sundaram. Our Board of Directors has determined that each director should servemember of our Governance and Nominating Committee meets the requirements for independence under the current New York Stock Exchange rules and regulations. Our Governance and Nominating Committee, among other things:
•
identifies, evaluates and recommends nominees to our Board of Directors and its committees;
​
•
oversees the evaluation of the performance of our Board of Directors and its committees;
​
•
reviews our corporate governance policies and proposed waivers of the policies;
​
•
reviews developments in corporate governance practices;
​
•
evaluates the adequacy of our corporate governance practices;
​
•
oversees continuing education for our directors; and
​
•
makes recommendations to our Board of Directors concerning corporate governance matters.
​
Codes of Business Conduct and Ethics and other Corporate Policies
Our Board of Directors has adopted codes of business conduct and ethics that apply to all of our employees, officers and directors. We intend to disclose any future amendments to certain provisions of our codes of business conduct and ethics, or waivers of these provisions, on our website and/or in public filings. Our employees, officers and directors are also subject to our Policy Prohibiting Insider Trading and our Related Person Transactions Policy. We provide training to our employees regarding our codes and various company policies, which all employees are required to complete. In addition, we have adopted a Whistleblower and Complaint Policy that is designed to provide a forum to which our employees, officers and directors may report violations or suspected violations of our company policies without fear of harassment, retaliation or adverse employment consequences. We also have adopted a Transparency in Supply Chains Act Transparency Statement that outlines our opposition to all forms of human trafficking and details the steps we take to ensure that slavery and human trafficking is not taking place in any of our supply chains or in any part of our business. The full text of our policies are posted on the investor relations section of our website at www.vocera.com.
Derivatives Trading and Anti-Hedging Policy
Our Policy Prohibiting Insider Trading prohibits our employees, including our executive officers and members of our Board of Directors, from purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company common stock, such as prepaid variable forward contracts, equity swaps, collars, forward sale contracts and exchange funds.
Compensation Committee Interlocks and Insider Participation
The directors who were members of our Compensation Committee during 2019 were Michael Burkland, John B. Grotting, Jeffrey H. Hillebrand, Alexa King and Sharon L. O’Keefe. Mssrs. Grotting and
9
TABLE OF CONTENTS​​​​​
Hillebrand are no longer members of the Board. None of them at any time has been one of our officers or employees. None of our executive officers serves, or in the past has served, as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving on our Board of Directors or our Compensation Committee.
Board and Committee Meetings and Attendance
The Board of Directors and its committees meet throughout the year on a pre-determined schedule and also hold special meetings and act by written consent from time to time. During 2019, the Board of Directors held six meetings, including telephonic meetings; the Audit Committee held eight meetings; the Compensation Committee held four meetings; and the Governance and Nominating Committee held five meetings. During 2019, none of the current directors attended fewer than 75% of the aggregate of the total number of meetings held by the Board of Directors during his or her tenure and the total number of meetings held by all committees of the Board of Directors on which such director served during his or her tenure.
Typically, in conjunction with the regularly scheduled meetings of the Board, the independent directors meet in executive sessions outside the presence of management.
Board Evaluations
The Board and each of its committees conduct self-evaluations annually. The Governance and Nominating Committee oversees the annual self-assessment of the Board’s performance and the composition and performance of each committee of the Board. Each committee assesses its own performance relative to its charter and best practices. The Governance and Nominating Committee utilizes the results of this self-evaluation process to determine if the Board and its committees are functioning effectively, to assess and determine the characteristics, expertise, qualifications and skills required of prospective candidates for election to the Board, and to make recommendations to the Board regarding assignments of Board members to various committees. The full Board then discusses the evaluation results to determine what action, if any, would improve Board and committee performance and whether any changes to the process would be appropriate.
In accordance with its charter and our Corporate Governance Guidelines, the Governance and Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this proxy statement for election to the Board.
Board Attendance at Annual Stockholders’ Meeting
We encourage each member of our Board of Directors to attend our annual meetings of stockholders. Six directors were in attendance at this time.
Name of Director/Nominee​​Age​​Class​​Principal Occupation​​Director Since​
Michael Burkland(1)​​​​56​​​​​I​​​Chairman of the Board, Five9, Inc.​​June 2016​
Brent D. Lang​​​​51​​​​​I​​​President and Chief Executive Officer​​June 2013​
Bharat Sundaram​​​​41​​​​​I​​​President, Performance Improvement Services, Vizient​​New Nominee
​
​
our 2019 annual meeting of stockholders. We do not have a formal policy regarding attendance of annual meetings by the members of our Board of Directors. We may consider in the future whether our company should adopt a more formal policy regarding director attendance at our annual meetings.
(1)
Presiding Director of Independent Director Meetings
Member of the Audit CommitteeThe independent directors meet in regularly scheduled executive sessions without management. Our lead independent director is currently Mr. Janzen.
​Communication with Directors
Michael Burkland has served onStockholders and interested parties who wish to communicate with our Board of Directors, since June 2016. He is currently the executive chairmannon-management members of our Board of Directors as a group, a committee of the Board of Directors, of Five9 and has held that position since December 2017 and the position of chairman since February 2014. He has beenor a member of the Five9 Board since January 2008. Mr. Burkland served as Five9’s chief executive officer from January 2008 until December of 2017 and its president from January 2012 to December 2017. From 2002 to 2007, Mr. Burkland worked with the Interim CEO Network, serving as an interim CEO for venture-backed technology companies, as well as heading up the firm’s strategic advisory practice. From 2000 to 2001, Mr. Burkland served as chief executive officer of Omniva Policy Systems Inc., a pioneer in enterprise policy management and e-mail security, where he built and implemented the company’s initial go to market strategy for the enterprise market. From 1994 to 1998, Mr. Burkland served as chief executive officer of Eventus Software, Inc., a leading developer of web content management software which was acquired by Segue Software, Inc. in 1998. Earlier in his career, he held various positions at Oracle, Patrol Software and BMC. Mr. Burkland holds B.A. and M.B.A. degrees from the University of California at Berkeley. We believe Mr. Burkland should serve as aspecific member of our Board of Directors based(including our chairman or lead independent director) may do so by letters addressed to the attention of our Corporate Secretary.
All communications are reviewed by the Corporate Secretary and provided to the members of the Board of Directors consistent with a screening policy providing that unsolicited items, sales materials and other routine items and items unrelated to the duties and responsibilities of the Board of Directors not be relayed on his experience leadingto directors. Any communication that is not relayed is recorded in a log and providing strategic oversightmade available to our Board of Directors.
10
TABLE OF CONTENTS
The address for public and private technology companies.these communications is:
Corporate Secretary
Vocera Communications, Inc.
525 Race Street
San Jose, CA 95126
11
TABLE OF CONTENTS​​​
Brent D. Lang has served as our President and Chief Executive Officer and onNOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS
Nomination to the Board of Directors
Candidates for nomination to our Board of Directors since June 2013. He assumed the role of chairman of the board in June 2018. From October 2007 to May 2013, he served as our President and Chief Operating Officer. From February 2007 to October 2007, he served as our Executive Vice President, from January 2007 to June 2007, as our Acting Chief Executive Officer, and from June 2001 through January 2007, as our Vice President of Marketing and Business Development. From September 1995 to June 2001, Mr. Lang worked for 3Com Corporation, a networking company, where he served in a variety of roles including senior director of marketing responsible for 3Com’s digital home products. From June 1991 to June 1993, Mr. Lang worked as a strategy consultant for Monitor Company, Inc., a consulting firm, advising Fortune 500 companies. Mr. Lang earned a B.S. degree in Industrial and Operations Engineering from the University of Michigan and an M.B.A. degree from the Stanford University Graduate School of Business. We believe Mr. Lang should serve as a member ofare selected by our Board of Directors based on his positionthe recommendation of the Governance and Nominating Committee. In recommending candidates for nomination, the Governance and Nominating Committee considers candidates recommended by directors, officers, employees, stockholders and outside consultants, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected candidates as appropriate.
Additional information regarding the Company’s Presidentprocess for properly submitting stockholder nominations for candidates for membership on our Board of Directors is set forth below under “Stockholder Proposals to be Presented at Next Annual Meeting.”
Director Qualifications
With the goal of developing a diverse, experienced and Chief Executive Officerhighly-qualified Board of Directors, the Governance and his extensive corporate management experience at VoceraNominating Committee is responsible for developing and other companies.recommending to the Board of Directors the desired qualifications, expertise and characteristics of members of our Board of Directors.
Bharat Sundaram Since the identification, evaluation and selection of qualified directors is a new director nominee. Since February 2016, Mr. Sundaram has served as presidentcomplex and subjective process that requires consideration of performance improvement services for Vizient, a healthcare performance improvement company. From February 2009 to January 2016, Mr. Sundaram was at MedAssets, a healthcare services company, as a member ofmany factors, and will be significantly influenced by the corporate development team and served in a number of roles with increasing responsibility, including senior vice president of enterprise operations, general manager of supply chain solutions and, most recently, president, spend and clinical resource management segment. Prior to MedAssets, he was with the Boston Consulting Group. Mr. Sundaram earned his bachelor’s degree in industrial engineering from the University of California at Berkeley and a master’s degree from the Wharton School at the University of Pennsylvania. We believe Mr. Sundaram should serve as a memberparticular needs of our Board of Directors based on his broad backgroundthat are likely to evolve and business experience in strategy, operations, acquisitionschange over time, our Board of Directors has not adopted a specific set of minimum qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory and integration,New York Stock Exchange listing requirements; and large-scale business transformation in both technology and service industries.
Director Resignation Policy
Ourthe provisions of our certificate of incorporation, bylaws, Corporate Governance Guidelines provide that if a nominee receives a greater numberand charters of votes against than for election, such nominee will tender a resignation toour board committees. In addition, neither our Board of Directors nor our Governance and Nominating Committee which will promptly makehave a recommendation regarding such resignation to our Board of Directors. The Board of Directors will act on the Committee’s recommendation within 30 days following the certification of the stockholder vote.
The Board of Directors will only nominate for election or re-election as director candidates who agree to tender, promptly following the annual meeting at which they are elected or re-elected as director, irrevocable resignations that will be effective upon (i) the failure to receive the required vote at the next annual meeting at which they face re-election and (ii) Board acceptance of such resignation. In addition, the Board shall fill director vacancies and new directorships onlyformal policy with candidates who agree to tender, promptly following their appointmentregard to the Board, the same formconsideration of resignation tendered bydiversity in identifying nominees. When considering nominees, our Governance and Nominating Committee may take into consideration many factors including, among other directors in accordance with this Board practice.
Directors Not Standing for Election
The directors who are servingthings, a candidate’s independence, integrity, skills, financial and other business expertise, breadth of experience, soundness of judgment, diversity of viewpoints and experience and knowledge about our business or who have been appointed for terms that end following the meeting,industry, as well as ability to devote adequate time and their ages, occupations and length of board service are provided in the table below. Additional biographical descriptions of each such director are set forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of each of our nominees that ledeffort to the conclusion that each director should serve as a memberresponsibilities of our Board of Directors at this time. As noted above, Mr. Hillebrand,in the context of its existing composition. Through the nomination process, the Governance and Nominating Committee seeks to promote board membership that reflects a Class Idiversity of business experience, expertise, viewpoints, personal backgrounds and other characteristics that are expected to contribute to the Board of Directors’ overall effectiveness. While we do not have a formal policy relative to diversity in identifying director will not standnominees, we believe that it is desirable for re-election atBoard members to possess diverse characteristics of gender, race, ethnicity and age, and we consider such factors in Board evaluation and in the annual meeting; we have included information about Mr. Hillebrand in this proxy statementidentification of candidates for reference only.Board membership.
12
TABLE OF CONTENTS​​
Name of Director/Nominee​​Age​​Class​​Principal Occupation​​Director Since​
Class II Directors​​​​​​​​​​​​​​​​
John B. Grotting*(1)(2)
​​69​​​​II​​​Operating Partner, Frazier Health Ventures​​February 2010​
Julie Iskow*​​57​​​​II​​​Chief Technology Officer, Medidata
Solutions, Inc.		​​New Director​
Howard E. Janzen**(3)
​​65​​​​II​​​President and Chief Executive Officer, Janzen
Ventures, Inc.		​​May 2007​
Alexa King(1)(4)​​51​​​​II​​​Executive Vice President and General
Counsel, FireEye		​​July 2016​
Class III Directors​​​​​
John N. McMullen(5)​​60​​​​III​​​Executive Vice President and Chief Financial
Officer, 3D Systems		​​June 2011​
Sharon L. O’Keefe(2)​​66​​​​III​​​President, University of Chicago Medical
Center		​​March 2012​
Ronald A. Paulus​​58​​​​III​​​Strategic Advisor, HCA Healthcare and
former President and Chief Executive Officer,
Mission Health		​​July 2018​
​
PROPOSAL NO. 1
*ELECTION OF CLASS II
DIRECTORS
In April 2019, Mr. Grotting resigned as a member of ourOur Board of Directors effective uponis divided into three classes. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. Class II director nominees will stand for election at this meeting. The terms of office of directors in Class I and Class III do not expire until the annual meeting.meetings of stockholders to be held in 2022 and 2021, respectively.
Our Class II directors, whose terms will expire at this annual meeting, are Julie Iskow, Howard E. Janzen and Alexa King. At the recommendation of our Governance and Nominating Committee, our Board of Directors nominated Julie Iskow, to replace Mr. Grotting as aHoward E. Janzen and Alexa King, each an incumbent director, for a one-year term expiringelection as Class II directors at the 2020 annual meeting, for a three-year term expiring at the 2023 annual meeting of stockholders. Ms. Iskow’s biographystockholders, and until such director’s successor is duly elected and qualified, subject to such director’s earlier resignation or removal.
If any nominee for any reason is unable to serve, the proxies may be voted for such substitute nominee as set forth below.the proxy holders, who are officers of our company, might determine. Each nominee has consented to being named in this proxy statement and to serve if elected. Proxies may not be voted for more than two directors. Stockholders may not cumulate votes in the election of directors.
​
**
Lead Independent Director
​
(1)
MemberBecause Mr. Lang is a current executive officer, he is not deemed independent for corporate governance purposes, and the Board has appointed Howard E. Janzen as Lead Independent Director. As Lead Independent Director, Mr. Janzen, among other responsibilities, attends and chairs most of the regularly scheduled meetings at which only our independent directors are present, serves as a liaison between the Chief Executive Officer and Chairman and the independent directors, and performs such additional duties as our Board of Directors may otherwise determine and delegate.
Risk Oversight
Our Board of Directors is primarily responsible for overseeing our risk management processes. Our Board exercises its risk oversight function both directly and indirectly through its various committees and reviews strategic and operational risks, including but not limited to cybersecurity risk, in the context of reports from the management team, receives reports on all significant committee activities at each regular meeting, and evaluates the risks inherent in significant transactions. Our Board, as a whole, determines the appropriate level of risk for our company, assesses the specific risks that we face and reviews management’s strategies for adequately mitigating and managing the identified risks.
Our Audit Committee, Governance and Nominating Committee and Compensation Committee support our Board in discharging its risk oversight duties and address risks inherent in their respective areas. Our Audit Committee assists our Board in fulfilling its oversight responsibilities relating to the company’s financial accounting, reporting and controls, legal and regulatory compliance and oversees the accounting and financial reporting processes of the company, the audits of the company’s financial statements by the independent auditors and our internal audit function and monitors the periodic reviews of the adequacy of such processes and systems of internal control. Our Governance and Nominating Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, and corporate governance. Our Compensation Committee assesses risks created by the incentives inherent in our compensation policies. See “Compensation Policies and Practices as they relate to Risk Management” under the Compensation Discussion and Analysis section elsewhere in this Proxy Statement for additional information. We believe this division of responsibilities is an effective approach for addressing the risks we face and that our Board leadership structure supports this approach.
Director Independence
Our common stock is listed on the New York Stock Exchange. The listing rules of the New York Stock Exchange require that a majority of the members of our Board of Directors be independent. In February 2020, our Board of Directors confirmed that all of our directors and director nominees are independent, except Brent D. Lang. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, our Board of Directors determined each of Michael Burkland, Julie Iskow, Howard E. Janzen, Alexa King, John N. McMullen, Sharon L. O’Keefe, Ronald A. Paulus and Bharat Sundaram does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors or director nominees is “independent” as that term is defined under the rules of the New York Stock Exchange and the Securities and Exchange Commission. In making this determination, our Board of Directors considered the relationships that each director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including certain contracts for products or services in place between Vocera and entities affiliated with our directors.
Committees of Our Board of Directors
Our Board of Directors has established an Audit Committee, a Compensation Committee and a Governance and Nominating Committee. The composition and responsibilities of each committee are
7
TABLE OF CONTENTS
described below. Copies of the charters for each committee are available without charge on the investor relations section of our website at www.vocera.com. Members serve on these committees until their resignations or until otherwise determined by the Board of Directors.
Audit Committee. Our Audit Committee is comprised of John N. McMullen, who is the chair of the Committee, Howard E. Janzen and Ronald A. Paulus, each of whom, our Board of Directors has determined, meets the requirements for independence under the current New York Stock Exchange and SEC rules and regulations. Each member of our Audit Committee is financially literate. In addition, our Board of Directors has determined that Mr. McMullen is an Audit Committee financial expert within the meaning of Item 407(d) of Regulation S-K of the Securities Act.
All audit services to be provided to us and all permissible non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm will be approved in advance by our Audit Committee. Our Audit Committee, among other things:
•
oversees the accounting and financial reporting processes of our company, the audits of our company’s financial statements by our company’s independent registered public accounting firm and our company’s internal audit function;
​
•
monitors the periodic reviews of the adequacy of the accounting and financial reporting processes and systems of internal control that are conducted by our company’s independent registered public accounting firm and our company’s financial and senior management, and internal audit function;
​
•
appoints our company’s independent registered public accounting firm, determines and approves the fees paid to our independent accounting firm and reviews and evaluates the qualifications, independence and performance of our independent accounting firm;
​
•
reviews and evaluates the organization and performance of our company’s internal audit function;
​
•
facilitates communications among our company’s independent registered public accounting firm, financial and senior management and internal audit function, and our Board of Directors; and
​
•
assists our Board of Directors in oversight of our company’s compliance with legal and regulatory requirements.
​
Compensation Committee.   Our Compensation Committee is comprised of Michael Burkland, who is the chair of the Committee, Alexa King and Sharon L. O’Keefe. Our Board of Directors has determined that each member of our Compensation Committee meets the requirements for independence under the current New York Stock Exchange rules, is a non-employee director within the meaning of Section 16 of the Exchange Act, and is an outside director within the meaning of Section 162(m) of the Internal Revenue Code. Our Compensation Committee, among other things:
•
reviews and determines the compensation of our executive officers;
​
•
oversees our cash-based and equity-based compensation plans, policies and programs;
​
•
reviews and makes recommendations to our Board with respect to non-employee director compensation; and
​
•
reviews general plans, policies and programs relating to compensation and benefits of our employees.
​
Our executive compensation program is administered by our Compensation Committee. In determining the compensation of each of our named executive officers, other than our President and Chief Executive Officer, our Compensation Committee considers the performance evaluations and compensation recommendations of our President and Chief Executive Officer. In the case of our President and Chief Executive Officer, our Compensation Committee evaluates his performance and independently determines whether to make any adjustments to his compensation.
8
TABLE OF CONTENTS​​
Our Compensation Committee retained an independent compensation consultant, Compensia, Inc., to assist in structuring our executive officer compensation for 2019 and 2020. Compensia provided our Compensation Committee with market data and analyses from a peer group of similarly-sized technology companies with similar business and financial characteristics. Compensia has not provided our company or our Compensation Committee with any other services during fiscal year 2019 or 2020 (to date) that would compromise its independence or pose a conflict of interest.
In accordance with applicable laws, rules and regulations and our certificate of incorporation, bylaws and Compensation Committee charter, the Compensation Committee has delegated to an equity awards committee, comprised of certain executive officers of our company, the authority to make certain types of equity awards under our 2012 Equity Incentive Plan and proposed new 2020 Equity Incentive Plan to any employee who is not an executive officer or director, pursuant to the terms of such plan and the equity award guidelines approved by our Compensation Committee.
Governance and Nominating Committee.   Our Governance and Nominating Committee is comprised of Alexa King, who is the chair of the Committee, Julie Iskow and Bharat Sundaram. Our Board of Directors has determined that each member of our Governance and Nominating Committee meets the requirements for independence under the current New York Stock Exchange rules and regulations. Our Governance and Nominating Committee, among other things:
•
identifies, evaluates and recommends nominees to our Board of Directors and its committees;
​
•
oversees the evaluation of the performance of our Board of Directors and its committees;
​
•
reviews our corporate governance policies and proposed waivers of the policies;
​
•
reviews developments in corporate governance practices;
​
•
evaluates the adequacy of our corporate governance practices;
​
•
oversees continuing education for our directors; and
​
•
makes recommendations to our Board of Directors concerning corporate governance matters.
​
Codes of Business Conduct and Ethics and other Corporate Policies
Our Board of Directors has adopted codes of business conduct and ethics that apply to all of our employees, officers and directors. We intend to disclose any future amendments to certain provisions of our codes of business conduct and ethics, or waivers of these provisions, on our website and/or in public filings. Our employees, officers and directors are also subject to our Policy Prohibiting Insider Trading and our Related Person Transactions Policy. We provide training to our employees regarding our codes and various company policies, which all employees are required to complete. In addition, we have adopted a Whistleblower and Complaint Policy that is designed to provide a forum to which our employees, officers and directors may report violations or suspected violations of our company policies without fear of harassment, retaliation or adverse employment consequences. We also have adopted a Transparency in Supply Chains Act Transparency Statement that outlines our opposition to all forms of human trafficking and details the steps we take to ensure that slavery and human trafficking is not taking place in any of our supply chains or in any part of our business. The full text of our policies are posted on the investor relations section of our website at www.vocera.com.
Derivatives Trading and Anti-Hedging Policy
Our Policy Prohibiting Insider Trading prohibits our employees, including our executive officers and members of our Board of Directors, from purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company common stock, such as prepaid variable forward contracts, equity swaps, collars, forward sale contracts and exchange funds.
Compensation Committee Interlocks and Insider Participation
The directors who were members of our Compensation Committee during 2019 were Michael Burkland, John B. Grotting, Jeffrey H. Hillebrand, Alexa King and Sharon L. O’Keefe. Mssrs. Grotting and
9
TABLE OF CONTENTS​​​​​
Hillebrand are no longer members of the Board. None of them at any time has been one of our officers or employees. None of our executive officers serves, or in the past has served, as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving on our Board of Directors or our Compensation Committee.
Board and Committee Meetings and Attendance
The Board of Directors and its committees meet throughout the year on a pre-determined schedule and also hold special meetings and act by written consent from time to time. During 2019, the Board of Directors held six meetings, including telephonic meetings; the Audit Committee held eight meetings; the Compensation Committee held four meetings; and the Governance and Nominating Committee held five meetings. During 2019, none of the current directors attended fewer than 75% of the aggregate of the total number of meetings held by the Board of Directors during his or her tenure and the total number of meetings held by all committees of the Board of Directors on which such director served during his or her tenure.
Typically, in conjunction with the regularly scheduled meetings of the Board, the independent directors meet in executive sessions outside the presence of management.
Board Evaluations
The Board and each of its committees conduct self-evaluations annually. The Governance and Nominating Committee oversees the annual self-assessment of the Board’s performance and the composition and performance of each committee of the Board. Each committee assesses its own performance relative to its charter and best practices. The Governance and Nominating Committee utilizes the results of this self-evaluation process to determine if the Board and its committees are functioning effectively, to assess and determine the characteristics, expertise, qualifications and skills required of prospective candidates for election to the Board, and to make recommendations to the Board regarding assignments of Board members to various committees. The full Board then discusses the evaluation results to determine what action, if any, would improve Board and committee performance and whether any changes to the process would be appropriate.
In accordance with its charter and our Corporate Governance Guidelines, the Governance and Nominating Committee has evaluated and recommended to the full Board each of the nominees named in this proxy statement for election to the Board.
Board Attendance at Annual Stockholders’ Meeting
We encourage each member of our Board of Directors to attend our annual meetings of stockholders. Six directors were in attendance at our 2019 annual meeting of stockholders. We do not have a formal policy regarding attendance of annual meetings by the members of our Board of Directors. We may consider in the future whether our company should adopt a more formal policy regarding director attendance at our annual meetings.
Presiding Director of Independent Director Meetings
The independent directors meet in regularly scheduled executive sessions without management. Our lead independent director is currently Mr. Janzen.
Communication with Directors
Stockholders and interested parties who wish to communicate with our Board of Directors, non-management members of our Board of Directors as a group, a committee of the Board of Directors, or a specific member of our Board of Directors (including our chairman or lead independent director) may do so by letters addressed to the attention of our Corporate Secretary.
All communications are reviewed by the Corporate Secretary and provided to the members of the Board of Directors consistent with a screening policy providing that unsolicited items, sales materials and other routine items and items unrelated to the duties and responsibilities of the Board of Directors not be relayed on to directors. Any communication that is not relayed is recorded in a log and made available to our Board of Directors.
10
TABLE OF CONTENTS
The address for these communications is:
Corporate Secretary
Vocera Communications, Inc.
525 Race Street
San Jose, CA 95126
11
TABLE OF CONTENTS​​​
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS
Nomination to the Board of Directors
Candidates for nomination to our Board of Directors are selected by our Board of Directors based on the recommendation of the Governance and Nominating Committee. In recommending candidates for nomination, the Governance and Nominating Committee considers candidates recommended by directors, officers, employees, stockholders and outside consultants, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected candidates as appropriate.
Additional information regarding the process for properly submitting stockholder nominations for candidates for membership on our Board of Directors is set forth below under “Stockholder Proposals to be Presented at Next Annual Meeting.”
Director Qualifications
With the goal of developing a diverse, experienced and highly-qualified Board of Directors, the Governance and Nominating Committee is responsible for developing and recommending to the Board of Directors the desired qualifications, expertise and characteristics of members of our Board of Directors.
Since the identification, evaluation and selection of qualified directors is a complex and subjective process that requires consideration of many factors, and will be significantly influenced by the particular needs of our Board of Directors that are likely to evolve and change over time, our Board of Directors has not adopted a specific set of minimum qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory and New York Stock Exchange listing requirements; and the provisions of our certificate of incorporation, bylaws, Corporate Governance Guidelines and charters of our board committees. In addition, neither our Board of Directors nor our Governance and Nominating Committee have a formal policy with regard to the consideration of diversity in identifying nominees. When considering nominees, our Governance and Nominating Committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, skills, financial and other business expertise, breadth of experience, soundness of judgment, diversity of viewpoints and experience and knowledge about our business or industry, as well as ability to devote adequate time and effort to responsibilities of our Board of Directors in the context of its existing composition. Through the nomination process, the Governance and Nominating Committee seeks to promote board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds and other characteristics that are expected to contribute to the Board of Directors’ overall effectiveness. While we do not have a formal policy relative to diversity in identifying director nominees, we believe that it is desirable for Board members to possess diverse characteristics of gender, race, ethnicity and age, and we consider such factors in Board evaluation and in the identification of candidates for Board membership.
12
TABLE OF CONTENTS​​
PROPOSAL NO. 1
ELECTION OF CLASS II
DIRECTORS
Our Board of Directors is divided into three classes. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. Class II director nominees will stand for election at this meeting. The terms of office of directors in Class I and Class III do not expire until the annual meetings of stockholders to be held in 2022 and 2021, respectively.
Our Class II directors, whose terms will expire at this annual meeting, are Julie Iskow, Howard E. Janzen and Alexa King. At the recommendation of our Governance and Nominating Committee, our Board of Directors nominated Julie Iskow, Howard E. Janzen and Alexa King, each an incumbent director, for election as Class II directors at the 2020 annual meeting, for a three-year term expiring at the 2023 annual meeting of stockholders, and until such director’s successor is duly elected and qualified, subject to such director’s earlier resignation or removal.
If any nominee for any reason is unable to serve, the proxies may be voted for such substitute nominee as the proxy holders, who are officers of our company, might determine. Each nominee has consented to being named in this proxy statement and to serve if elected. Proxies may not be voted for more than two directors. Stockholders may not cumulate votes in the election of directors.
Nominees to the Board of Directors
The nominees, and their ages, the class in which they are being nominated, their occupations and their length of board service are provided in the table below. Additional biographical descriptions of each nominee are set forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of each of our nominees that led to the conclusion that each director should serve as a member of our Board of Directors at this time.
Name of Director/Nominee​​Age​​Class​​Principal Occupation​​Director Since​
Julie Iskow(1)​​58​​II​​Chief Operating Officer, Workiva, Inc.​​May 2019​
Howard E. Janzen*(2)​​66​​II​​President and Chief Executive Officer, Janzen Ventures, Inc.​​May 2007​
Alexa King(3)(4)​​52​​II​​Executive Vice President and General Counsel, FireEye​​July 2016​
​
(1)
Member of the Governance and Nominating Committee
​
(3)(2)
Member of the Audit Committee
​
(3)
Member of the Compensation Committee
​
(4)
Chair of the Governance and Nominating Committee
​
(5)*
Chair of the Audit CommitteeLead Independent Director
​
John B. GrottingJulie Iskow has served on our Board of Directors since February 2010. Since May 2010, Mr. Grotting has served as an operating partner for Frazier Healthcare Ventures, a provider of venture and growth equity capital to emerging biopharma, medical device and healthcare services companies. From January 2010 through April 2010, Mr. Grotting was an independent consultant. From 2006 to December 2009, Mr. Grotting served as chief executive officer of Ascent Healthcare Solutions, Inc. (now Stryker Corporation), a medical device reprocessor, and from February 2004 to December 2006, he served as its chairman and chief executive officer. From May 1999 to December 2002, Mr. Grotting served as chairman and chief executive officer of Bridge Medical, Inc., a medical software company. Mr. Grotting also served in senior executive positions at Minnesota-based Allina Health System and Oregon-based Legacy Health System. Currently, Mr. Grotting serves on the board of directors of Vizient, Solis Mammography and Northfield Repair. Mr. Grotting earned a B.A. degree in Economics from St. Olaf College and a Master’s degree in Hospital and Healthcare Management from the University of Minnesota. We believe Mr. Grotting should serve as a member of our Board of Directors based on his management and corporate governance experience with other healthcare companies.
Julie Iskow has been appointed a new director effective as of the annual meeting.2019. Ms. Iskow has been the chief operating officer of Workiva, Inc. since October 2019. Previously, Ms. Iskow served as the chief technology officer of Medidata Solutions, Inc. sincefrom April 2015 to October 2019 and has been its executive vice president of product development sincefrom July 2016.2016 to October 2019. Ms. Iskow also served as senior vice president of global product development at Medidata from April 2015 to July 2016. From December 2013 to April 2015, Ms. Iskow served as chief information officer and senior vice president at WageWorks, Inc., and prior to that as its senior vice president of product development. Ms. Iskow has also served as vice president of engineering
13
TABLE OF CONTENTS
and operations at Asyst Technologies and GW Associates, Inc., managing software research and development, quality assurance, technical support and management information systems. Prior to joining GW Associates, she was a member of the faculty of the University of Vermont where she
13
TABLE OF CONTENTS​
specialized in business management and development. Ms. Iskow earned a B.S. degree from U.C. Berkeley and an M.S. degree from U.C. Davis. We believe Ms. Iskow should serve as a member of our Board of Directors based on her extensive training and experience in business, product development and engineering with other technology companies.
Howard E. Janzen has served on our Board of Directors since May 2007. Since October 2002, Mr. Janzen has served as the president and chief executive officer of Janzen Ventures, Inc., a private investment business. Mr. Janzen served as president and chief executive officer of CoolPlanet Energy Systems, a clean energy technology company, from May 2012 to December 2016, as executive chairman from December 2016 to January 2018 and as chairman from January 2018 to January 2019. From March 2007 through April 2011, Mr. Janzen served as the chief executive officer of One Communications Corporation, a supplier of integrated advanced telecommunications solutions to business. From January 2004 to September 2005, Mr. Janzen served as president of Sprint Business Solutions, the business unit serving Sprint Corporation’s business customer base. From May 2003 to January 2004, he was president of Sprint Corporation’s global markets group responsible for Sprint’s long distance business. From 1994 until October 2002, Mr. Janzen served as president and chief executive officer, and chairman of the board of directors from 2001, of Williams Communications Group, Inc., a network solutions provider. Mr. Janzen served on the board of directors of Sonus Networks Inc. from January 2006 to October 2017 and has served as a director of Global Telecom & Technology, Inc., since October 2006, CoolPlanet Energy Systems since May 2012, and Bye Aerospace since November 2015. Mr. Janzen also served on the board of directors of MacroSolve, Inc. from April 2006 to May 2012. Mr. Janzen earned his B.S. and M.S. degrees in Metallurgical Engineering from the Colorado School of Mines and completed the Harvard Business School PMD program. We believe Mr. Janzen should serve as a member of our Board of Directors based on his extensive business experience and his experience on the boards of directors of other technology and communication companies.
Alexa King has served on our Board of Directors since July 2016. Ms. King is the executive vice president and general counsel at FireEye, where she has led the legal, stock and privacy team since 2012. Before FireEye, Ms. King was vice president, general counsel, and secretary of Aruba Networks, Inc. Her early career included working at Siebel Systems, Pillsbury Madison & Sutro (now Pillsbury Winthrop) and Fenwick & West. Additionally, Alexa served as founding director of Pathbrite, Inc. (formerly known as RippleSend, Inc.) from 2008 to 2009 and as advisor from 2009 to 2011. Alexa graduated magna cum laude from Harvard College with a degree in Eastern European Studies and received her J.D. from the University of California, Berkeley School of Law, where she was named to the Order of the Coif. We believe Ms. King should serve as a member of our Board of Directors based on her experience advising technology companies on legal, cybersecurity and strategic matters.
Director Resignation Policy
Our Corporate Governance Guidelines provide that if a nominee receives a greater number of votes against than for election, such nominee will tender a resignation to our Governance and Nominating Committee, which will promptly make a recommendation regarding such resignation to our Board of Directors. The Board of Directors will act on the Committee’s recommendation within 30 days following the certification of the stockholder vote.
The Board of Directors will only nominate for election or re-election as director candidates who agree to tender, promptly following the annual meeting at which they are elected or re-elected as director, irrevocable resignations that will be effective upon (i) the failure to receive the required vote at the next annual meeting at which they face re-election and (ii) Board acceptance of such resignation. In addition, the Board shall fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors in accordance with this Board practice.
14
TABLE OF CONTENTS​
Directors Not Standing for Election
The directors who are serving or who have been appointed for terms that end following the meeting, and their ages, occupations and length of board service are provided in the table below. Additional biographical descriptions of each such director are set forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of each of our nominees that led to the conclusion that each director should serve as a member of our Board of Directors at this time.
Name of Director/Nominee​​Age​​Class​​Principal Occupation​​Director Since​
Class I Directors​​​​​​​​​​​​​
Michael Burkland(1)​​57​​I​​Executive Chairman of the Board, Five9, Inc.​​June 2016​
Brent D. Lang​​52​​I​​Chairman, President and Chief Executive Officer​​June 2013​
Bharat Sundaram(2)​​42​​I​​President and Chief Operating Officer, Vizient​​May 2019​
Class III Directors​​​​​​​​​​​​​
John N. McMullen(3)​​61​​III​​Former Executive Vice President and Chief Financial Officer, 3D Systems​​June 2011​
Sharon L. O’Keefe(4)​​67​​III​​President, University of Chicago Medical Center​​March 2012​
Ronald A. Paulus(5)​​59​​III​​Strategic Advisor, HCA Healthcare and former President and Chief Executive Officer, Mission Health​​July 2018​
​
(1)
Chair of the Compensation Committee
​
(2)
Member of the Governance and Nominating Committee
​
(3)
Chair of the Audit Committee
​
(4)
Member of the Compensation Committee
​
(5)
Member of the Audit Committee
​
Michael Burkland has served on our Board of Directors since June 2016. He is currently the executive chairman of the Board of Directors of Five9 and has held that position since December 2017 and the position of chairman since February 2014. He has been a member of the Five9 Board since January 2008. Mr. Burkland served as Five9’s chief executive officer from January 2008 until December of 2017 and its president from January 2012 to December 2017. From 2002 to 2007, Mr. Burkland worked with the Interim CEO Network, serving as an interim CEO for venture-backed technology companies, as well as heading up the firm’s strategic advisory practice. From 2000 to 2001, Mr. Burkland served as chief executive officer of Omniva Policy Systems Inc., a pioneer in enterprise policy management and e-mail security, where he built and implemented the company’s initial go to market strategy for the enterprise market. From 1994 to 1998, Mr. Burkland served as chief executive officer of Eventus Software, Inc., a leading developer of web content management software which was acquired by Segue Software, Inc. in 1998. Earlier in his career, he held various positions at Oracle, Patrol Software and BMC. Mr. Burkland holds B.A. and M.B.A. degrees from the University of California at Berkeley. We believe Mr. Burkland should serve as a member of our Board of Directors based on his experience leading and providing strategic oversight for public and private technology companies.
Brent D. Lang has served as our President and Chief Executive Officer and on our Board of Directors since June 2013. He assumed the role of chairman of the board in June 2018. From October 2007 to May 2013, he served as our President and Chief Operating Officer. From February 2007 to October 2007, he served as our Executive Vice President, from January 2007 to June 2007, as our Acting Chief Executive Officer, and from June 2001 through January 2007, as our Vice President of Marketing and Business Development. From September 1995 to June 2001, Mr. Lang worked for 3Com Corporation, a networking company, where he served in a variety of roles including senior director of marketing responsible for 3Com’s digital home products. From June 1991 to June 1993, Mr. Lang worked as a strategy consultant for Monitor Company, Inc., a consulting firm, advising Fortune 500 companies. Mr. Lang earned a B.S. degree in
15
TABLE OF CONTENTS
Industrial and Operations Engineering from the University of Michigan and an M.B.A. degree from the Stanford University Graduate School of Business. We believe Mr. Lang should serve as a member of our Board of Directors based on his position as the Company’s President and Chief Executive Officer and his extensive corporate management experience at Vocera and other companies.
John N. McMullen has served on our Board of Directors since June 2011. In July 2016,September 2019, Mr. McMullen was namedretired from his position as executive vice president and chief financial officer for 3D Systems.Systems, which he had held since July 2016. Prior to his position with 3D Systems, Mr. McMullen was the executive vice president and chief financial officer of Kodak from June 2014 to June 2016. From March 2007 to July 2013, Mr. McMullen served as the senior vice president and treasurer of Hewlett-Packard Company, an electronics and information technology company. From May 2002 to March 2007, he served as vice president of finance for Hewlett-Packard’s imaging and printing group. From June 1998 to May 2002, Mr. McMullen held a variety of executive positions with Compaq Computer Corporation, (now a division of Hewlett-Packard), including vice president of finance and strategy, vice president of finance (North America Sales and Services) and director of finance. Over a seventeen-year period, Mr. McMullen held a variety of finance positions with Digital Equipment Corporation, a computer manufacturer. Mr. McMullen earned a B.A. degree in Finance from the University of Massachusetts. We believe Mr. McMullen should serve as a member of our Board of Directors based on his extensive corporate management experience.
Sharon L. O’Keefe has served on our Board of Directors since March 2012. Since February 2011, Ms. O’Keefe has served as president of the University of Chicago Medical Center. From April 2009 through February 2011, Ms. O’Keefe served as president of Loyola University Medical Center. Prior to her
14
TABLE OF CONTENTS​
role at Loyola, she served from July 2002 to April 2009 as chief operating officer for Barnes Jewish Hospital, a member hospital of BJC Healthcare, St. Louis. In addition, Ms. O’Keefe has served in a variety of senior management roles at the Johns Hopkins Hospital, Montefiore Medical Center, University of Maryland Medical System and Beth Israel Deaconess Medical Center in Boston, a teaching affiliate of Harvard Medical School. She has also served as a healthcare consultant with Ernst & Young. In addition, Ms. O’Keefe has served on the National Institutes of Health Advisory Board for Clinical Research, the Finance Committee of the National Institutes of Health Advisory Board, the Board of Trustees of the Illinois Hospital Association, and an examiner for the Malcolm Baldrige National Quality Award. Ms. O’Keefe holds an M.S. degree in nursing from Loyola University of Chicago and a B.S. degree in nursing from Northern Illinois University. We believe Ms. O’Keefe should serve as a member of our Board of Directors based on her extensive management experience in medical institutions and experience in the healthcare sector.
Ronald A. Paulus, MD,has served on our Board of Directors since July 2018. Dr. Paulus is a strategic advisor for HCA Healthcare and the former president and chief executive officer of Mission Health, a $1.9 billionlarge regional integrated delivery system serving western North Carolina that was recently acquired by HCA Healthcare. He was at Mission Health and in this role from September 2010 to February 2019. Prior to joining Mission Health, Dr. Paulus served as executive vice president of clinical operations at Geisinger Health System. Dr. Paulus also served as Geisinger’s chief innovation officer, where he was responsible for ensuring system-wide innovation. Before his tenure at Geisinger, Dr. Paulus was co-founder, president and chief executive officer of CareScience, a clinical solutions and data analytics provider now part of Premier, Inc., which is listed on the NASDAQ. In 2018, Dr. Paulus co-founded and launched the National Taskforce for Humanity in Healthcare (NTH). This taskforce is convening physicians, nurses, and other leaders from healthcare and social change to explore solutions to the crisis of clinician burnout and create a movement to help care team members achieve their highest healing potential. Dr. Paulus received his bachelor’s degree, medical degree and MBAan M.B,A. degree in healthcare management from the University of Pennsylvania. We believe Dr. Paulus should serve as a member of our Board of Directors based on his extensive experience managing companies in the healthcare industry and his expertise in clinical operations and innovations.
Bharat Sundaram has served on our Board of Directors since May 2019. Mr. Sundaram has been the president and chief operating officer at Vizient, a healthcare performance improvement company, since July 2019. In this role, he has oversight for the development and delivery of the company’s products and services. Prior to this, Mr. Sundaram served as Vizient’s president of performance improvement services, which encompassed the company’s analytics, networks and advisory areas, since February 2016. From February 2009 to January 2016, Mr. Sundaram was at MedAssets, a healthcare services company, as a
16
TABLE OF CONTENTS​
member of the corporate development team and served in a number of roles with increasing responsibility, including senior vice president of enterprise operations, general manager of supply chain solutions and, most recently, president, spend and clinical resource management segment. Prior to MedAssets, he was with the Boston Consulting Group. Mr. Sundaram earned his bachelor’s degree in industrial engineering from the University of California at Berkeley and an M.B.A. degree from the Wharton School at the University of Pennsylvania. We believe Mr. Sundaram should serve as a member of our Board of Directors based on his broad background and business experience in strategy, operations, acquisitions and integration, and large-scale business transformation in both technology and service industries.
There are no familial relationships among our directors and officers.
Director Compensation
We compensate our non-employee directors with a combination of cash and equity. The form and amount of compensation paid to our non-employee directors for serving on our Board and its committees is designed to be competitive in light of industry practices and the obligations imposed by such service. In order to align the long-term interests of our directors with those of our stockholders, a portion of the director compensation is provided in equity-based compensation. The value of total annualized compensation of our non-employee directors is targeted to be at approximately the median of a peer group of similarly-sized technology companies with similar business and financial characteristics. The director compensation practice of this peer group of companies was the benchmark used when considering the competitiveness of our director compensation. In 2018, ourOur Compensation Committee’s independent compensation consultant, Compensia, previously collected and developed the competitive data and analyses that the Committee used to benchmark and establish our director compensation and based on advice from Compensia, the Compensation Committee determined that our non-employee director compensation is reasonable and appropriate, and the Board approved the director compensation as set forth below. The Compensation Committee periodically reviews market data in consultation with its independent advisor Compensia and recommended no changes to the director compensation for 2019.
Annual Cash Retainer.Retainer. Each director receives an annual base cash retainer of $35,000 for general board service, to be paid quarterly. Additionally, we compensate our Board of Directors for service on our committees and for service as our lead independent director and the chair of our Board as follows:
•
The chair of our Audit Committee receives an annual cash retainer of $20,000 for such service, paid quarterly, and each of the other members of the Audit Committee receives an annual cash retainer of $7,500, paid quarterly.
​
•
The chair of our Compensation Committee receives an annual cash retainer of $10,000 for such service, paid quarterly, and each of the other members of the Compensation Committee receives an annual cash retainer of $5,000, paid quarterly.
​
​
15
TABLE OF CONTENTS
•
The chair of our Governance and Nominating Committee receives an annual cash retainer of $8,000 for such service, paid quarterly, and the other member of the Governance and Nominating Committee receives an annual cash retainer of $4,000, paid quarterly.
​
•
Our lead independent director receives an additional annual cash retainer of $15,000 for such service, paid quarterly.
​
•
The non-executive chair of our Board of Directors receives an additional annual cash retainer of $25,000 for such service, paid quarterly. Since our current chair, Mr. Lang, is an executive officer of the Company, he does not receive this cash retainer.
​
Equity Awards.In April 2018,2019, the Compensation CommitteeBoard approved the annual equity grant to non-employee directors effective June 1, 2018May 31, 2019 of a number of restricted stock units calculated as $145,000 divided by the average daily closing price of our common stock as reported by the New York Stock Exchange during May 20182019 (rounded down to the nearest share). Each restricted stock unit will vest in full on June 1 of the next calendar year after the year of the award, subject to the director’s continuous service through such vesting date, and will automatically vest in full upon a change of control of our company. Equity Awards for new
17
TABLE OF CONTENTS
non-employee directors shall be determined by the Compensation Committee. Notwithstanding the foregoing, no non-employee director shall receive equity awards with a fair market value on the date of grant of more thanthat exceeds (i) $600,000 in value in the year of such director’s initial appointment to the Board or (ii) $400,000 in value in any other calendar year.
Other. We reimburse all of our directors for travel, director continuing education programs and other business expenses incurred in connection with their services as a member of our Board of Directors and its committees, and extend coverage to them under our travel accident and directors’ and officers’ indemnification insurance policies.
The following table provides information for the year ended December 31, 20182019 regarding all compensation awarded to, earned by or paid to each person who served as a non-employee director during 2018, except for Robert J. Zollars, who did not stand for re-election at the 2018 annual meeting and is no longer a director.2019. Mr. Lang, our current Chairman and Chief Executive Officer, did not receive any compensation for his service as director during the year ended December 31, 2018.
2019.
16
TABLE OF CONTENTS​
20182019 Director Compensation
Name​Fees Earned
or Paid
in Cash
($)		​
Stock
Awards(1)
($)
​
Total(2)
($)
​​
Fees Earned
or Paid
in Cash
($)
​
Stock
Awards(1)
($)
​
Total(2)
($)
​
Michael Burkland​​​41,000​​​​148,512​​​​189,512​​​​​43,750​​​​140,216​​​​183,966​​
John B. Grotting​​​42,000​​​​148,512​​​​190,512​​
Jeffrey H. Hillebrand​​​43,500​​​​148,512​​​​192,012​​
Julie Iskow​​​22,750​​​​140,216​​​​162,966​​
Howard E. Janzen​​​54,750​​​​148,512​​​​203,262​​​​​57,500​​​​140,216​​​​197,716​​
Alexa King​​​46,250​​​​148,512​​​​194,762​​​​​48,000​​​​140,216​​​​188,216​​
John N. McMullen​​​51,500​​​​148,512​​​​200,012​​​​​55,000​​​​140,216​​​​195,216​​
Sharon L. O’Keefe​​​37,000​​​​148,512​​​​185,512​​​​​39,500​​​​140,216​​​​179,716​​
Ronald A. Paulus*​​​14,583​​​​117,862​​​​132,445​​
Ronald A. Paulus​​​38,750​​​​140,216​​​​178,966​​
Bharat Sundaram​​​22,750​​​​140,216​​​​162,966​​
Jeffrey H. Hillebrand(3)​​​18,750​​​​—​​​​18,750​​
John B. Grotting(4)​​​18,333​​​​—​​​​18,333​​
​
(1)
Amounts shown in this column reflect the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 for awards granted during the fiscal year.
​
(2)
Our non-employee directors held the following number of outstanding stock options and restricted stock units as of December 31, 2018:2019:
​
Name​Option
Awards		​Stock
Awards		​​
Option
Awards
​Stock Awards​
Michael Burkland​​​—​​​​11,479​​​​​—​​​​4,333​​
John B. Grotting​​​—​​​​5,600​​
Jeffrey H. Hillebrand​​​—​​​​5,600​​
Julie Iskow​​​—​​​​4,333​​
Howard E. Janzen​​​—​​​​5,600​​​​​—​​​​4,333​​
Alexa King​​​—​​​​10,536​​​​​—​​​​4,333​​
John McMullen​​​13,714​​​​5,600​​​​​13,714​​​​4,333​​
Sharon L. O’Keefe​​​21,333​​​​5,600​​​​​9,333​​​​4,333​​
Ronald A. Paulus​​​—​​​​3,774​​​​​—​​​​4,333​​
Bharat Sundaram​​​—​​​​4,333​​
Jeffrey H. Hillebrand(3)​​​—​​​​—​​
John B. Grotting(4)​​​—​​​​—​​
*
​
(3)
Dr. Paulus joinedJeffrey H. Hillebrand did not stand for re-election at the board in July 2018, and his initial equity award was pro-rated based on the number of months since the continuing directors received their2019 annual award of restricted stock units.meeting.
​
(4)
John B. Grotting resigned effective upon the 2019 annual meeting.
​
18
TABLE OF CONTENTS​​​
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE THREE NOMINATED DIRECTORS.
17
TABLE OF CONTENTS​​
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has selected Deloitte & Touche LLP as our principal independent registered public accounting firm to perform the audit of our consolidated financial statements for the fiscal year ending December 31, 2019.2020. As a matter of good corporate governance, our Audit Committee has decided to submit its selection of the principal independent registered public accounting firm to our company’s stockholders for ratification. In the event that Deloitte & Touche LLP is not ratified by our stockholders, our Audit Committee will reconsider whether to retain that firm. Even if the selection is ratified, our Audit Committee in its discretion may direct the selection of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of our company and stockholders.
Representatives of Deloitte & Touche LLP are expected to be present at the meeting, will be given an opportunity to make a statement at the meeting if they desire to do so, and will be available to respond to appropriate questions.
Principal Accountant Fees and Services
We regularly review the services and fees from our independent registered public accounting firm. These services and fees are also reviewed with our Audit Committee annually. In accordance with standard policy, Deloitte & Touche LLP will periodically rotate the individuals responsible for our audit.
In addition to performing the audit of our consolidated financial statements, Deloitte & Touche LLP had provided various other services during fiscal 2018.year 2019. Our Audit Committee determined that Deloitte & Touche LLP’s provisioning of these services, which are described below, did not impair its independence from us. The aggregate fees billed for fiscal 2018years 2019 and 20172018 for each of the following categories of services are as follows:
Fees Billed to Vocera​Fiscal Year
2018		​Fiscal Year
2017		​​
Fiscal Year
2019
​
Fiscal Year
2018
​
Audit fees(1)​​$1,565,491​​​$1,594,100​​​​$1,402,844​​​$1,565,491​​
Audit-related fees​​​—​​​​—​​​​​—​​​​—​​
Tax fees(2)​​$47,651​​​​—​​​​$38,980​​​$47,651​​
All other fees​​​—​​​​—​​​​​—​​​​—​​
Total fees​​$1,613,142​​​$1,594,100​​​​$1,441,824​​​$1,613,142​​
​
(1)
“Audit fees” include fees for audit services primarily related to the audit of our annual consolidated financial statements; the review of our quarterly consolidated financial statements; registration statements, consents, and assistance with and review of documents filed with the SEC; and other accounting and financial reporting consultation and research work billed as audit fees or necessary to comply with the standards of the Public Company Accounting Oversight Board (United States).
​
(2)
“Tax fees” include fees for tax compliance and advice. Tax advice fees encompass a variety of permissible services, including technical tax advice related to federal and state income tax matters; assistance with sales tax; assistance with tax matters related to acquisitions and assistance with tax audits.
​
​
18
TABLE OF CONTENTS​
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of
19
TABLE OF CONTENTS
services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. Our Audit Committee may also pre-approve particular services on a case-by-case basis. All of the services relating to the fees described in the table above were approved by our Audit Committee.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF PROPOSAL NO. 2 TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
1920
TABLE OF CONTENTS​
PROPOSAL NO. 3
NON-BINDING ADVISORY VOTE ON COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS
We are seeking a non-binding, advisory stockholder vote on the compensation awarded to our named executive officers for the fiscal year ended December 31, 2018,2019, known as a “Say on Pay” vote.
In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders have the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement. This non-binding advisory vote is commonly referred to as a “Say-on-Pay” vote.
As described in detail in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this proxy statement, our compensation program is designed to reward our executive officers at a level consistent with our overall strategic and financial performance and to provide remuneration sufficient to attract, retain and motivate them to exert their best efforts and create a successful company. Our philosophy is to tie a greater percentage of an executive officer’s compensation to stockholder returns and to keep cash compensation at a competitive level while providing the opportunity to be well-rewarded through equity if we perform well over time. We believe that our executive compensation program, with its balance of short-term incentives (including base salary and annual cash incentives tied to performance measures) and long-term incentives (including equity awards), reward sustained performance that is aligned with long-term stockholder interests. Stockholders are encouraged to read the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure for a comprehensive explanation and analysis of our executive compensation policies and practices.
Based on the above, we request that stockholders approve, on a non-binding advisory basis, the compensation of our named executive officers as described in this proxy statement pursuant to the following resolution:
RESOLVED, that the compensation paid to Vocera’s named executive officers, as disclosed in this proxy statement, including the “Compensation Discussion and Analysis” and “Executive Compensation” sections, compensation tables and narrative discussion, is hereby APPROVED.
Vote Required
Approval of named executive officer compensation requires the approval of a majority of the votes present or represented by proxy and entitled to vote thereon.
As an advisory vote, this proposal is non-binding. Although the vote is non-binding, the Board of Directors and the Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL NO. 3 TO APPROVE THE COMPENSATION AWARDED TO OUR NAMED EXECUTIVE OFFICERS.
2021
TABLE OF CONTENTS​
PROPOSAL NO. 4
APPROVAL OF THE VOCERA COMMUNICATIONS, INC.
2020 EQUITY INCENTIVE PLAN
Summary of the Proposal
We are asking our stockholders to approve our new Vocera Communications, Inc. 2020 Equity Incentive Plan (the “Plan”) to replace our 2012 Equity Incentive Plan (the “2012 Plan”) and enable us to grant shares of our common stock reserved for issuance under the Plan after the expiration of the 2012 Plan on March 6, 2022.
Our Board of Directors approved the Plan on March 23, 2020, subject to approval by stockholders. If stockholders do not approve the Plan, the 2012 Plan will continue in its current form.
General
We are asking our stockholders to approve the Vocera 2020 Equity Incentive Plan, referred to as the Plan, which was approved by the Board on March 23, 2020. If approved by our stockholders, the Plan will replace our 2012 Plan. We are asking our stockholders to approve the Plan because, among other things, the 2012 Plan expires on March 6, 2022. Outstanding awards under the 2012 Plan will remain outstanding, unchanged and subject to the terms of the 2012 Plan and the respective award agreements, until the expiration of such awards in accordance with their terms.
We are requesting approval of 300,000 shares for the Plan. In addition, shares are available for grant under the Plan if they: (a) are subject to issuance upon exercise of a stock option or stock appreciation right granted under the Plan but which cease to be subject to the option or stock appreciation right for any reason other than exercise of the stock option or stock appreciation right; (b) are subject to awards granted under the Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to awards granted under the Plan that otherwise terminate without such shares being issued; (d) shares surrendered pursuant to an Exchange Program and (e) shares surrendered to satisfy the withholding provisions for restricted stock or restricted stock units. Shares used to pay the exercise price of an option or a stock appreciation right or to satisfy the tax withholding obligations related to an option or stock appreciation right will not become available for future grant or sale under the Plan. Any (i) reserved shares not issued or subject to outstanding awards granted under the 2012 Plan on the effective date of the Plan, (ii) shares that are subject to stock options or other awards granted under the 2012 Plan that cease to be subject to such stock options or other awards on and after the effective date, (iii) shares issued under the 2012 Plan before or after the effective date pursuant to the exercise of stock options that are, after the effective date, forfeited, (iv) shares issued under the 2012 Plan that are repurchased by the Company at or below the original issue price, and (v) shares issued under the 2012 Plan that are used to satisfy the tax withholding obligations under a restricted stock unit award, will also become available for grant under the Plan. Shares that otherwise become available for grant and issuance because of the above provisions shall not include shares subject to awards that initially became available because of the substitution of awards.
Approval of the Plan will allow us to continue to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to our success, by offering them an opportunity to participate in our future performance. We believe that the adoption of the Plan is in the best interests of Vocera because of the continuing need to provide stock options, restricted stock units and other equity-based incentives to attract and retain qualified personnel and to respond to relevant market changes in equity compensation practices. The use of equity compensation has historically been a significant part of our overall compensation philosophy and is a practice that we plan to continue. The Plan will serve as an important part of this practice and is a critical component of the overall compensation package that we offer to retain and motivate our service providers. In addition, awards under the Plan will provide our service providers an opportunity to acquire or increase their ownership stake in us, and we believe this aligns their interests with those of our stockholders, creating strong incentives for our employees to work hard for our future growth and success. If Proposal No. 4 is not approved by our stockholders, our 2012
22
TABLE OF CONTENTS
Plan will remain in effect, with only approximately two years remaining in its term and, as of March 31, 2020, only 1,855,146 shares remaining to be granted. In this event, we believe our ability to attract and retain the talent we need to compete in our industry would be seriously and negatively impacted, and this could affect our long-term success.
We firmly believe that a broad-based equity program is a necessary and powerful employee incentive and retention tool that benefits all of our stockholders. Equity ownership programs put employees’ interests directly into alignment with those of other stockholders, as they reward employees based upon stock price performance. Without a sizable but market-based equity incentive program, we believe we would be at a disadvantage against competitor companies to provide the total compensation package necessary to attract, retain and motivate the employee talent critical to our future success.
A broad-based equity incentive plan focuses our employees who receive grants on achieving strong corporate performance, and we have embedded in our culture the necessity for employees to think and act as stockholders. We currently grant restricted stock units to the majority of our newly hired employees and to all of our executives and non-employee directors. This is an important component of our long-term employee incentive and retention plan and has been very effective in enabling us to attract and retain the talent critical for an innovative and growth-focused company. We also have granted, and in the future may grant, options, restricted stock units and shares of restricted stock, subject to time- and, in the future, performance-based vesting, to certain employees on a targeted basis to incentivize retention and performance objectives.
As of March 31, 2020, the Company has outstanding approximately 528,418 stock options to purchase common shares and 1,635,318 unvested restricted stock units. As of March 31, 2020, the Company’s outstanding stock options have a weighted average per share exercise price of $14.01 and a weighted average remaining contractual term of 3.4 years. Accordingly, our approximately 2,163,736 outstanding awards (not including awards under our employee stock purchase plan) plus 300,000 shares proposed to be available for future grant under our Plan (not including under our employee stock purchase plan) as of March 31, 2020 represent approximately 7.7% of our total outstanding shares.
Approval of the Plan is intended to enable us to achieve the following objectives:
The continued ability to offer stock-based incentive compensation to our eligible employees and non-employee directors.   By its terms, the 2012 Plan terminates on March 6, 2022. Without stock options, restricted stock units or other forms of equity incentives, we would be forced to consider cash replacement alternatives to provide a market-competitive total compensation package necessary to attract, retain and motivate the employee talent critical to our future successes. These cash replacement alternatives could, among other things, reduce the cash available for investment in growth and development of new and existing products, cause a loss of motivation by employees to achieve superior performance over the longer term and reduce the incentive of employees to remain employed with Vocera during the vesting of the equity grant. Equity-based awards also directly align a portion of the compensation of our employees with the economic interests of our stockholders.
The ability to maintain an equity incentive plan that can attract and retain employee talent while keeping the rate of dilution low.   We are requesting approval of 300,000 shares in connection with approval of the Plan. After carefully forecasting our anticipated growth rate for the next few years and considering our historical forfeiture rates, we currently believe that the proposed share reserve under the Plan will be sufficient for us to make anticipated grants of equity incentive awards under our current compensation program through 2021. However, a change in business conditions, Company strategy or equity market performance could alter this projection. The number of employees has increased by 12.7% over the past two years due to our rapid growth. Notwithstanding such increase, our burn rate has decreased over the same period, and we plan to continue to reduce our burn rate over time.
The ability to offer a variety of stock compensation awards including stock options, restricted stock awards, stock bonus awards, stock appreciation rights, restricted stock units, and performance awards.   The variety of awards available under the Plan continues to give us flexibility to respond to market-competitive changes in equity compensation practices.
The ability to provide a new equity plan that reflects best current compensation practices.   Given that the 2012 Equity Incentive Plan expires on March 6, 2022, we have revisited the terms of our equity plan to
23
TABLE OF CONTENTS
include provisions that we believe reflect the best current compensation practices and that implement strong governance-related protections for our stockholders, as described in the “Summary of the 2020 Equity Incentive Plan” section.
In evaluating the number of shares initially reserved for grant under the Plan, our Board of Directors considered a number of factors, including the costs of the share request as well as an analysis of certain burn rate, dilution and overhang metrics as summarized below:
•
Historical Grant Practices.   During the fiscal years 2017, 2018 and 2019, we granted equity awards pursuant to the 2012 Plan for 979,387, 868,956 and 845,437 shares, and returned 479,387, 503,331 and 495,947 shares, respectively, to the 2012 Plan in connection with withheld shares and canceled awards related to employee terminations. This represents net burn rates of 1.7%, 1.2% and 1.1% for the years 2017, 2018 and 2019, respectively, and a three-year average net burn rate of 1.4% of the weighted average shares of common stock outstanding.
​
•
Potential Dilution.   Our fiscal year-end fully-diluted overhang rate, calculated by dividing (i) the number of shares subject to equity awards outstanding at the end of the fiscal year, plus the number of shares remaining available for issuance under the 2012 Plan by (ii) the sum of the number of shares outstanding at the end of the fiscal year, the number of shares subject to equity awards outstanding at the end of the fiscal year, and the number of shares remaining available for issuance under the 2012 Plan, was 11.6% for 2019, which falls below the 50th percentile compared to our compensation peer group (such peer group as described in detail in the “Compensation Discussion and Analysis” section of this proxy statement). If approved, the new shares reserved for issuance under the Plan would represent an additional potential equity dilution of approximately 0.8%. Estimated dilution rates noted herein exclude potential dilution resulting from shares issued pursuant to our employee stock purchase plan.
​
•
Anticipated Future Share Utilization.   As of March 31, 2020, 1,855,146 shares of our common stock remained available for future grant of awards under the 2012 Plan. We are requesting the 300,000 shares, representing 0.9% of our outstanding shares of common stock as of March 31, 2020 in connection with the approval of the Plan. If approved, we expect this additional share request would allow us to maintain our regular equity compensation programs without interruption to the end of 2021. If stockholders do not approve the proposed share request, we believe we may be unable to make grants, including our annual grants, during fiscal year 2021 and future years, and lose an important compensation tool aligned with stockholder interests to attract and retain key executives and employees.
​
Summary of the 2020 Equity Incentive Plan
The material terms of the Plan are summarized below. The summary is qualified in its entirety by reference to the full text of the amended Plan, which is attached as Appendix A to this proxy statement.
Purpose
The Plan allows us, under the direction of our Compensation Committee or those persons to whom administration of the Plan, or part of the Plan, has been delegated or permitted by law, to make grants of stock options, restricted stock awards, stock bonus awards, stock appreciation rights, restricted stock units, performance shares and performance units to employees, directors, consultants, independent contractors and advisors. The purpose of these equity awards is to attract and retain talented employees, directors, consultants, independent contractors and advisors and further align their interests and those of our stockholders by continuing to link a portion of their compensation with our performance.
24
TABLE OF CONTENTS
Key Terms
The following is a summary of the key provisions of the Plan.
​Plan Term:​​June 5, 2020 (subject to approval by stockholders) to March 22, 2030​
​Eligible Participants:​​Only employees, including officers and directors who are also employees, are eligible to receive grants of incentive stock options. All other awards may be granted to any of our employees, directors, consultants, and independent contractors, provided that the grantee renders bona fide services to us. Our Compensation Committee determines which individuals will participate in the Plan. As of March 31, 2020, there are approximately 665 employees and eight non-employee directors who are eligible to participate in the Plan.​
​Shares Authorized:​​If the Plan is approved, there will be Three Hundred Thousand (300,000) shares authorized under the Plan, subject to adjustment only to reflect stock splits and similar events. In addition, the following shares are available for grant under the Plan: (a) are subject to issuance upon exercise of a stock option or stock appreciation right granted under the Plan but which cease to be subject to the option or stock appreciation right for any reason other than exercise of the stock option or stock appreciation right; (b) are subject to awards granted under the Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to awards granted under the Plan that otherwise terminate without such shares being issued; (d) shares surrendered pursuant to an Exchange Program and (e) shares surrendered to satisfy the withholding provisions for restricted stock or restricted stock units. Shares used to pay the exercise price of an option or a stock appreciation right or to satisfy the tax withholding obligations related to an option or stock appreciation right will not become available for future grant or sale under the Plan. Any (i) reserved shares not issued or subject to outstanding awards granted under the 2012 Plan on the effective date of the Plan, (ii) shares that are subject to stock options or other awards granted under the 2012 Plan that cease to be subject to such stock options or other awards on and after the effective date, (iii) shares issued under the 2012 Plan before or after the effective date pursuant to the exercise of stock options that are, after the effective date, forfeited, (iv) shares issued under the 2012 Plan that are repurchased by the Company at or below the original issue price will also become available for grant under the Plan and (v) shares issued under the 2012 Plan that are used to satisfy the tax withholding obligations under a restricted stock unit award. Shares that otherwise become available for grant and issuance because of the above provisions shall not include shares subject to awards that initially became available because of the substitution of awards.​
​Award Types:​​
(1) Non-qualified and incentive stock options
(2) Restricted stock awards
(3) Stock bonus awards
(4) Stock appreciation rights
(5) Restricted stock units
(6) Performance awards
​
25
TABLE OF CONTENTS
​Limits on Awards:​​No more than 1,000,000 shares may be granted to any individual under the Plan during any calendar year, other than new employees, who are eligible to receive up to 2,000,000 shares in the calendar year during which they begin employment.​
​Vesting:​​Vesting schedules are determined by our Compensation Committee when each award is granted. However, in no event shall any award have a vesting schedule pursuant to which such awards vest in less than 12 months from the date of grant (or 360 days if necessary for administrative convenience); provided, however, that up to five (5%) of shares available under the Plan may provide for vesting in less than 12 months. Options generally vest over four years, other than options for our non-employee director stock which vest in full on the one-year anniversary of the date of grant. Restricted stock units generally vest over three years and restricted stock amounts granted only to non-employee directors generally vest in full on the one-year anniversary of the date of grant.​
​Award Terms:​​Stock options have a term of ten years from the date the options were granted, except in the case of incentive stock options granted to holders of more than 10% of our voting power, which have a term no longer than five years. Stock appreciation rights have a term of ten years from the date they were granted.​
​
Terms applicable to Stock
Options and Stock
Appreciation Rights
​​The exercise price of grants made under the Plan of stock options or stock appreciation rights may not be less than the fair market value (the closing price of our common stock on the date of grant, and if that is not a trading day, the closing price of our common stock on the trading day immediately after the date of grant) of our common stock. On the record date, the closing price of our common stock was $21.41 per share. Our Compensation Committee determines at the time of grant the other terms and conditions applicable to such award, including vesting and exercisability.​
​
Terms applicable to Restricted
Stock Awards, Restricted
Stock Unit Awards,
Performance Shares,
Performance Units and
Stock Bonus Awards
​​Our Compensation Committee determines the terms and conditions applicable to the granting of restricted stock awards, restricted stock unit awards, performance shares, performance units and stock bonus awards. Our Compensation Committee may make the grant, issuance, retention and/or vesting of restricted stock awards, restricted stock unit awards, performance shares, performance units and stock bonus awards contingent upon continued employment with us, the passage of time, or such performance criteria and the level of achievement versus such criteria as it deems appropriate. Awards of performance shares or performance units may be settled in shares or in cash.​
​Repricing Prohibited:​​Repricing, or reducing the exercise price of outstanding options or stock appreciation rights, is prohibited without stockholder approval under the Plan. Such prohibited repricing includes substituting, or exchanging outstanding options or stock appreciation rights in exchange for cash, other awards or options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights, unless approved by stockholders.​
​Limited Recycling Provisions:​​Shares surrendered to satisfy the withholding provisions for restricted stock or restricted stock units will be available for further grant under the Plan.​
26
TABLE OF CONTENTS
​Prohibition on Dividend
Payments on Unvested
Shares:		​​Shares of common stock subject to unvested awards shall not be eligible for payment of dividends.​
​CEO stock holding requirements:​​Shares acquired (net of taxes) under the Plan by our CEO upon exercise of a stock option or vesting of a full-value equity award such as restricted stock or a restricted stock unit will be held for at least 12 months from the exercise or vest date. We adopted this policy to further align our CEO’s interests with the long-term interests of our stockholders.​
​Director Awards:​​Non-employee directors may not receive an award of more than (i) $600,000 in value of shares of common stock in the year of any such director’s initial appointment to the Board, or (ii) $400,000 in value of shares of common stock in any other calendar year.​
New Plan Benefits
The following table shows the dollar value of shares subject to restricted stock units that will be granted, subject to Board approval, under our existing director equity grant program in fiscal year 2020 to each of our eight non-employee directors pursuant to the equity incentive grant formula set forth below if the Plan is approved by the stockholders.
Name and Position​​Dollar Value​
Non-Employee Director Group (8 persons)​​​$145,000(1)​​
​
(1)
The number of shares of restricted stock units granted annually to each non-employee director under our existing director equity grant program is calculated as $145,000 divided by the average daily closing price of our common stock as reported by the New York Stock Exchange during May 2020 (rounded down to the nearest share).
​
Future awards under the Plan to executive officers, employees or other eligible participants, and any additional future discretionary awards to non-employee directors in addition to those granted pursuant to the grant formula described above, are discretionary and cannot be determined at this time. We therefore have not included any such awards in the table above.
The following awards have been previously granted under the Plan and remain outstanding as of March 31, 2020:
Name​​
Number of
Options
Granted
​​
Number of
Shares
of Restricted
Stock
Units Granted
​
Brent D. Lang, President and Chief Executive Officer​​​​—​​​​​—​​
Justin R. Spencer, Chief Financial Officer​​​​—​​​​​—​​
Paul T. Johnson, Executive Vice President of Sales and Services​​​​—​​​​​—​​
M. Bridget Duffy, Chief Medical Officer​​​​—​​​​​—​​
Douglas A. Carlen, Vice President, Legal and General Counsel​​​​—​​​​​—​​
All current executive officers as a group (5 persons)​​​​—​​​​​—​​
All current non-employee directors as a group (8 persons)​​​​—​​​​​—​​
All employees, excluding current executive officers​​​​—​​​​​—​​
Administration
Our Compensation Committee administers the Plan. Subject to the terms and limitations expressly set forth in the Plan, our Compensation Committee selects the persons who receive awards, determines the number of shares covered thereby, and establishes the terms, conditions and other provisions of the grants. Our
27
TABLE OF CONTENTS
Compensation Committee may construe and interpret the Plan and prescribe, amend and rescind any rules and regulations relating to the Plan. Our Compensation Committee may delegate to a committee of two or more directors the ability to grant awards to Plan participants, so long as such participants are not officers, members of our Board of Directors, or any other person who is subject to Section 16 of the Securities Exchange Act of 1934, as amended, and to take certain other actions with respect to participants who are not executive officers.
Amendments
The Board may terminate or amend the Plan at any time, provided that no action may be taken by the Board (except those described in “Adjustments”) if stockholder approval is required.
Adjustments
In the event of an extraordinary cash dividend, stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change of our capital structure without consideration, the Board may approve, in its discretion, an adjustment of the number and kind of shares available for grant under the Plan, and subject to the various limitations set forth in the Plan, the number of shares subject to outstanding awards under the Plan, and the exercise price of outstanding stock options and of other awards.
In the event of a merger or asset sale, any or all outstanding awards may be assumed or an equivalent award substituted by a successor corporation. Substitute awards shall not reduce the number of shares authorized for grant under the Plan or authorized for grant to an individual in a calendar year. In the event the successor corporation refuses to assume or substitute the awards outstanding under the Plan, the outstanding awards shall accelerate in full. All awards need not be treated similarly. Awards held by non-employee directors shall accelerate in full.
Recoupment
All awards under the Plan shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of individual’s employment or other service with our company that is applicable to our executive officers, employees, directors or other service providers, and in addition to any other remedies available under such policy and applicable law, may require the cancellation of outstanding awards and the recoupment of any gains realized with respect to awards.
U.S. Tax Consequences
The following is a general summary as of the date of this proxy statement of the United States federal income tax consequences to us and participants in the Plan. The federal tax laws may change and the federal, state and local tax consequences for any participant will depend upon his or her individual circumstances. Each participant has been, and is, encouraged to seek the advice of a qualified tax advisor regarding the tax consequences of participation in the Plan.
Non-Qualified Stock Options
A participant will realize no taxable income at the time a non-qualified stock option is granted under the Plan, but generally at the time such non-qualified stock option is exercised, the participant will realize ordinary income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the stock option exercise price. Upon a disposition of such shares, the difference between the amount received and the fair market value on the date of exercise will generally be treated as a long-term or short-term capital gain or loss, depending on the holding period of the shares. We will generally be entitled to a deduction for federal income tax purposes at the same time and in the same amount as the participant is considered to have realized ordinary income in connection with the exercise of the non-qualified stock option.
Incentive Stock Options
A participant will realize no taxable income, and we will not be entitled to any related deduction, at the time any incentive stock option is granted. If certain employment and holding period conditions are satisfied,
28
TABLE OF CONTENTS
then no taxable income will result upon the exercise of such option, and we will not be entitled to any deduction in connection with the exercise of such stock option. Upon disposition of the shares after expiration of the statutory holding periods, any gain realized by a participant will be taxed as long-term capital gain and any loss sustained will be long-term capital loss, and we will not be entitled to a deduction in respect to such disposition. While no ordinary taxable income is recognized at exercise (unless there is a “disqualifying disposition,” see below), the excess of the fair market value of the shares over the stock option exercise price is a preference item that is recognized for alternative minimum tax purposes.
Except in the event of death, if shares acquired by a participant upon the exercise of an incentive stock option are disposed of by such participant before the expiration of the statutory holding periods (i.e., a “disqualifying disposition”), such participant will be considered to have realized as compensation taxed as ordinary income in the year of such disposition an amount, not exceeding the gain realized on such disposition, equal to the difference between the stock option price and the fair market value of such shares on the date of exercise of such stock option. Generally, any gain realized on the disposition in excess of the amount treated as compensation or any loss realized on the disposition will constitute capital gain or loss, respectively. If a participant makes a “disqualifying disposition,” generally in the fiscal year of such “disqualifying disposition,” we will be allowed a deduction for federal income tax purposes in an amount equal to the compensation realized by such participant.
Stock Appreciation Rights
A grant of a stock appreciation right (which can be settled in cash or our common stock) has no federal income tax consequences at the time of grant. Upon the exercise of stock appreciation rights, the value received is generally taxable to the recipient as ordinary income, and we generally will be entitled to a corresponding tax deduction.
Restricted Stock
A participant receiving restricted stock may be taxed in one of two ways: the participant (i) pays tax when the restrictions lapse (i.e., they become vested) or (ii) makes a special election to pay tax in the year the grant is made. At either time the value of the award for tax purposes is the excess of the fair market value of the shares at that time over the amount (if any) paid for the shares. This value is taxed as ordinary income and is subject to income tax withholding. We receive a tax deduction at the same time and for the same amount taxable to the participant. If a participant elects to be taxed at grant, then, when the restrictions lapse, there will be no further tax consequences attributable to the awarded stock until the recipient disposes of the stock, at which point any gain or loss will be short-term or long-term capital gain or loss, depending on the holding period of the stock prior to such disposition.
Restricted Stock Units
In general, no taxable income is realized upon the grant of a restricted stock unit award. The participant will generally include in ordinary income the fair market value of the award of stock at the time shares of stock are delivered to the participant or at the time the restricted stock unit vests. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. Restricted stock units usually vest over a time period specified by the Board.
Performance Stock Units
Similar to restricted stock units, in general, no taxable income is realized upon the grant of a performance stock unit award. The participant will generally include in ordinary income the fair market value of the award of stock at the time shares of stock are delivered to the participant or at the time the performance stock unit vests. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. Performance stock units usually vest upon the achievement of metrics established by the Board.
Performance Shares
The participant will not realize income when a performance share is granted, but will realize ordinary income when shares are transferred to him or her. The amount of such income will be equal to the fair
29
TABLE OF CONTENTS
market value of such transferred shares on the date of transfer. We will be entitled to a deduction for federal income tax purposes at the same time and in the same amount as the participant is considered to have realized ordinary income as a result of the transfer of shares.
ERISA Information
The plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended.
Approval of the Plan
If the Plan is approved by the stockholders, it will become effective on the date of the Annual Meeting. Our Board of Directors intends to cause the additional shares of common stock that would become available for issuance to be registered on a Form S-8 Registration Statement to be filed with the SEC at our expense. If stockholders do not approve this proposal, the Plan will not become effective and the 2012 Plan will continue in its current form.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE VOCERA COMMUNICATIONS, INC. 2020 EQUITY INCENTIVE PLAN.
30
TABLE OF CONTENTS​
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 31, 2019,2020, by:
•
each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
​
•
each of our directors or director nominees;
​
•
each of our named executive officers; and
​
•
all of our directors and executive officers as a group.
​
Percentage ownership of our common stock is based on 30,891,11731,802,779 shares of our common stock outstanding on March 31, 2019.2020. We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. We have deemed all shares of common stock subject to options, restricted stock units or other convertible securities held by that person or entity that are currently exercisable or releasable or that will become exercisable or releasable within 60 days of March 31, 20192020 to be outstanding and to be beneficially owned by the person or entity holding the option for the purpose of computing the percentage ownership of that person or entity but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person or entity.
Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Vocera Communications, Inc., 525 Race Street, San Jose, California 95126.
Name of Beneficial Owner​​Number of Shares
Beneficially Owned		​​Percentage​
5% or greater stockholders​​​​​​​​​​​​​
Brown Capital Management, LLC(1)​​​​5,427,450​​​​​17.6%​​
Blackrock, Inc.(2)​​​​2,200,316​​​​​7.1%​​
Conestoga Capital Advisors, LLC(3)​​​​2,061,329​​​​​6.7%​​
AllianceBernstein L.P.(4)​​​​1,564,635​​​​​5.1%​​
Named Executive Officers, Directors and Director Nominees​​​​​​​​​​​​​
Michael Burkland​​​​17,038​​​​​*​​
Douglas A. Carlen​​​​11,735​​​​​*​​
M. Bridget Duffy(5)​​​​7,500​​​​​*​​
John B. Grotting(6)(7)​​​​81,498​​​​​*​​
Jeffrey H. Hillebrand(7)​​​​69,998​​​​​*​​
Julie Iskow​​​​—​​​​​*​​
Howard E. Janzen​​​​42,331​​​​​*​​
Paul T. Johnson(8)​​​​123,081​​​​​*​​
Alexa King​​​​15,152​​​​​*​​
Brent D. Lang(9)​​​​477,457​​​​​1.5%​​
John N. McMullen(10)​​​​34,664​​​​​*​​
Sharon L. O’Keefe(11)​​​​45,460​​​​​*​​
Ronald A. Paulus​​​​—​​​​​—​​
Justin R. Spencer(12)​​​​82,537​​​​​*​​
Bharat Sundarm​​​​—​​​​​*​​
All officers and directors as a group (13 persons)(12)​​​​1,008,451​​​​​3.2%​​
21
TABLE OF CONTENTS
Name of Beneficial Owner​​
Number of Shares
Beneficially Owned
​​Percentage​
5% or greater stockholders​​​​​​​​​​​​​
Brown Capital Management, LLC(1)​​​​5,399,806​​​​​17.0%​​
Conestoga Capital Advisors, LLC(2)​​​​3,299,664​​​​​10.4%​​
Alger Associates, Inc. (3)​​​​3,077,242​​​​​9.7%​​
Blackrock, Inc.(4)​​​​2,369,703​​​​​7.5%​​
Clearbridge Investments, LLC(5)​​​​1,635,704​​​​​5.1%​​
The Vanguard Group(6)​​​​1,624,833​​​​​5.1%​​
Named Executive Officers, Directors and Director Nominees​​​​​​​​​​​​​
Michael Burkland​​​​28,517​​​​​*​​
Douglas A. Carlen​​​​22,631​​​​​*​​
M. Bridget Duffy(7)​​​​7,500​​​​​*​​
Julie Iskow​​​​—​​​​​​​​
Howard E. Janzen​​​​44,381​​​​​*​​
Paul T. Johnson(8)​​​​118,041​​​​​*​​
Alexa King​​​​25,688​​​​​*​​
Brent D. Lang(9)​​​​481,119​​​​​1.5%​​
John N. McMullen​​​​20,950​​​​​*​​
Sharon L. O’Keefe(10)​​​​47,060​​​​​*​​
Ronald A. Paulus​​​​3,774​​​​​*​​
Justin R. Spencer​​​​78,057​​​​​—​​
Bharat Sundaram​​​​—​​​​​*​​
​​​​​​​​​​​*​​
All officers and directors as a group (13 persons)(11)
​​​​877,718​​​​​2.7%​​
​
*
Represents beneficial ownership of less than 1% of our outstanding shares of common stock.
​
31
TABLE OF CONTENTS
(1)
Based solely on the information set forth in a Schedule 13G filed with the SEC on February 14, 20192020 by Brown Capital Management, LLC. Represents 5,427,4505,399,806 shares beneficially owned by Brown Capital Management, LLC, over which it has sole voting power with respect to 3,203,6783,176,034 shares and sole dispositive power with respect to 5,427,4505,399,806 shares. Included in the shares beneficially owned by Brown Capital Management, LLC are 2,135,0692,292,529 shares beneficially owned by The Brown Capital Management Small Company Fund, a registered investment company, which is managed by Brown Capital Management, LLC. The Brown Capital Management Small Company Fund has sole voting and dispositive power over the shares it beneficially owns. The address of Brown Capital Management, LLC is 1201 N. Calvert Street, Baltimore, MD 21202.
​
(2)
Based solely on the information set forth in a Schedule 13G filed with the SEC on February 6, 2019 by Blackrock, Inc. Represents 2,200,316 shares beneficially owned by Blackrock, Inc. and its affiliated entities, over which it has sole voting power with respect to 2,121,565 shares and sole dispositive power with respect to 2,200,316 shares. The address of Blackrock, Inc. is 55 East 52nd Street, New York, NY 10055.
​
(3)
Based solely on the information set forth in a Schedule 13G filed with the SEC on January 9, 201917, 2020 by Conestoga Capital Advisors, LLC. Represents 2,061,3293,299,664 shares beneficially owned by Conestoga Capital Advisors, LLC and its affiliated entities, over which it has sole voting power with respect to 1,842,2293,006,899 shares and sole dispositive power with respect to 2,061,3293,299,664 shares. The address of Conestoga Capital Advisors, LLC is 550 E. Swedesford Rd. Ste 120, Wayne, PA 19087.
​
(4)(3)
Based solely on the information set forth in a Schedule 13G filed with the SEC on February 13, 201914, 2020 by AllianceBernstein L.P.Alger Associates, Inc. Represents 1,564,6353,077,242 shares beneficially owned by AllianceBernstein L.P.Alger Associates, Inc. and its affiliated entities, over which it has sole voting power and sole dispositive power with respect to all 3,077,242 shares. The address of Alger Associates, Inc. is 360 Park Avenue South, New York, NY 10010.
​
(4)
Based solely on the information set forth in a Schedule 13G filed with the SEC on February 6, 2020 by Blackrock, Inc. Represents 2,369,703 shares beneficially owned by Blackrock, Inc. and its affiliated entities, over which it has sole voting power with respect to 1,501,0452,267,493 shares and sole dispositive power with respect to 2,369,703 shares. The address of Blackrock, Inc. is 55 East 52nd Street, New York, NY 10055.
​
(5)
Based solely on the information set forth in a Schedule 13G filed with the SEC on February 14, 2020 by Clearbridge Investments, LLC. Represents 1,635,704 shares beneficially owned by Clearbridge Investments, LLC and its affiliated entities, over which it has sole voting power with respect to 1,634,448 shares and sole dispositive power with respect to 1,635,704 shares. The address of Clearbridge Investments, LLC is 620 8th Avenue, New York NY 10018.
​
(6)
Based solely on the information set forth in a Schedule 13G filed with the SEC on February 11, 2020 by The Vanguard Group. Represents 1,624,833 shares beneficially owned by The Vanguard Group and its affiliated entities, over which it has sole voting power with respect to 64,502 shares, shared voting power with respect to 2,200 shares, sole dispositive power with respect to 1,522,0511,561,205 shares and shared dispositive power with respect to 42,58463,628 shares. The address of AllianceBernstein L.P.The Vanguard Group is 1345 Avenue of the Americas, New York NY 10105.100 Vanguard Blvd., Malvern, PA 19355.
​
(5)(7)
Represents 7,500 options that are exercisable within 60 days of March 31, 2019.2020.
​
(6)(8)
Represents 81,498 shares held by the Grotting Family Trust dtd 04/02/2004.
​
(7)
As noted above, upon the conclusion of our annual meeting, each of Mr. Hillebrand and Mr. Grotting will no longer be members of our Board of Directors.
​
(8)
Represents 44,52939,489 shares held by Mr. Johnson and 78,552 options that are exercisable within 60 days of March 31, 2019.2020.
​
(9)
Represents 191,530242,196 shares held by the Lang Van Schaack Family Revocable Trust and 285,927238,923 options held by Mr. Lang that are exercisable within 60 days of March 31, 2019.2020.
​
(10)
Represents 20,950 shares held by Mr. McMullen and 13,714 options that are exercisable within 60 days of March 31, 2019.
​
(11)
Represents 32,12737,727 shares held by Ms. O’Keefe and 13,3339,333 options held by Ms. O’Keefe that are exercisable within 60 days of March 31, 2018.2020.
​
(12)
Represents 57,537 shares held by Mr. Spencer and 25,000 options held by Mr. Spencer that are exercisable within 60 days of March 31, 2019.
​
(13)(11)
Includes 424,026334,308 options that are exercisable within 60 days of March 31, 2019.2020.
​
​
2232
TABLE OF CONTENTS​​
EXECUTIVE COMPENSATION
20182019 Financial Performance
We saw significant momentumIn 2019, we continued the trend toward large, new customer wins and sizeable expansions, demonstrating both our continued high win rate and the value our existing customers see in our business in 2018, adding over 130 healthcare facilities, which helped fuel our annual revenue growth. Total revenue grew 8% and adjusted EBITDA increased 29%solution. We also drove bookings growth of 10% compared to last2018. It was also an important transitional year for the company as we continued to drive improved profitability. We also successfully raised $144 million of capital with attractive terms in the form of convertible debt to supportrevamped our ongoing growth initiatives. We continued our focus on transforming communicationssales organization and workflow in the healthcare space and recently introduced ourseveral strategically important new Smartbadge, an unprecedented advancement in product innovation that enhances our ability to deliver patient context to care teams and further extends our leadership position in enabling the real-time health system.products.
Highlights of our financial performance in 20182019 include:
•
Total revenue of $179.6$180.5 million, an increase of 8%0.5% compared to 2017;2018;
​
•
Adjusted EBITDA(1) of $21.2$16.9 million;
​
•
Deferred revenue of  $58.6 million and backlog combined of $120.4$136.3 million as of December 31, 2018;2019; and
​
•
Cash, cash equivalents and short-term investments of $221.2$229.9 million as of December 31, 2018; and
​
•
Net debt of  $110.5 million.2019.
​
Compensation Discussion and Analysis
This compensation discussion and analysis provides an overview of the material components of our executive compensation program during 20182019 for our chief executive officer, chief financial officer and our three other most highly compensated executive officers (collectively referred to as our “named executive officers”). For 2018,2019, our named executive officers were as follows:
•
Brent D. Lang, our President, Chief Executive Officer and Director;
​Chairman;
•
Justin R. Spencer, our Executive Vice President and Chief Financial Officer;
​
•
Paul T. Johnson, our Executive Vice President of Sales and Services;
​
•
M. Bridget Duffy, our Chief Medical Officer; and
​
•
Douglas A. Carlen, our General Counsel.
​
The compensation provided to our named executive officers for 20182019 is set forth in detail in the Summary Compensation Table and other tables that follow this section, as well as the accompanying footnotes and narrative discussions relating to those tables. This section also discusses our executive compensation philosophy, objectives and design; how and why the Compensation Committee of our Board of Directors arrived at the specific compensation policies and decisions for our named executive officers during 2018;2019; the role of Compensia, our outside compensation consultant for executive compensation decisions for 2018;2019; and the peer companies used in evaluating executive officer compensation.
Executive Compensation Philosophy, Objectives and Design
Philosophy
We operate in a highly competitive and rapidly evolving market, and we expect competition among companies in our market to continue to increase. Our ability to compete and succeed in this environment is directly correlated to our ability to recruit, incentivize and retain talented individuals in the areas of product
​
(1)
Adjusted EBITDA is a non-GAAP financial measure. Refer to the company’s current report on Form 8-K filed on February 7, 2019 for a discussion of the definition and use of this non-GAAP measure, including its limitations, and a reconciliation of this non-GAAP measure to its closest comparable GAAP measure.
​
​
23
TABLE OF CONTENTS
development, sales, marketing, services and general and administrative functions. The market for skilled personnel in these areas is very competitive. Additionally, as we are headquartered in San Jose, CA, we face intense competition among large and small firms in the Silicon Valley market. Our compensation philosophy is designed to establish and maintain a compensation program that attracts and rewards talented individuals who possess the skills necessary to support our near-term objectives, create long-term value for our stockholders, expand our business and assist in the achievement of our strategic goals.
​
(1)
Adjusted EBITDA is a non-GAAP financial measure. Refer to the company’s current report on Form 8-K filed on February 6, 2020 for a discussion of the definition and use of this non-GAAP measure, including its limitations, and a reconciliation of this non-GAAP measure to its closest comparable GAAP measure.
​
33
TABLE OF CONTENTS
Objectives
We have designed our executive compensation program to reward our executive officers, including our named executive officers, at a level consistent with our overall strategic and financial performance and to provide remuneration sufficient to attract, retain and motivate them to exert their best efforts in the highly competitive environment in which we operate. We believe in providing competitive compensation packages consisting of a combination of base salaries, annual cash bonuses and long-term incentive opportunities in the form of equity awards that are earned over a multi-year period. We believe the approach that has been adopted by our Compensation Committee, with an emphasis on variable cash compensation and equity awards, enables us to attract top talent, motivate successful short-term and long-term performance, satisfy our retention objectives and align the compensation of our executive officers with our performance and long-term value creation for our stockholders.
In 2018,2019, the Compensation Committee reviewed, and will continue to review, evaluate and modify, our executive compensation program to support the company’s business strategies and align our compensation program with executive compensation best practices, market trends and the success of our business.
Stockholder Engagement
We believe in the importance of engaging with and listening to our stockholders. In recent years, we have proactively reached out to many of our largest stockholders to solicit their feedback on our executive compensation, corporate governance, or our disclosure practices, and in 2018 and early 2020, we engaged in extensive conversations with stockholders holding a majority of our outstanding shares regarding our new equity plan proposal.practices. We expect to continue to engage in an open dialogue with our stockholders through a combination of email exchanges, conference calls and in-person meetings. We received valuable feedback from stockholders, as well as appreciation of our ongoing outreach efforts and acknowledgment of our increased engagement fromwith stockholders, and we believe we have addressed many of the topics raised by our stockholders.
Key Features of our Executive Compensation Program
The Compensation Committee reviews on an ongoing basis our executive compensation and benefits programs to evaluate whether these programs support the company’s compensation philosophy and objectives, as described herein, and serve the interests of our stockholders. The company’s practices include the following, each of which the committee believes reinforces our executive compensation philosophy and objectives:
​WHAT WE DO​​WHAT WE DO NOT DO​
​
☑
Pay for Performance: We link pay to performance and stockholder interests by heavily weighting total compensation to long-term equity awards that align executive interests with our stockholders and encourage retention.
​
​​
☒
No Single Trigger Acceleration: We do not provide for single trigger acceleration of equity awards following a change of control.
​
​
​
☑
Linkage Between Bonus and Performance Measures: Our cash bonus program allows our executives to earn a target cash bonus only if specified performance metrics are met.
​
​​
☒
No Guaranteed Bonuses; Bonus Payout Caps: We do not provide guaranteed minimum bonus amounts, and maximum payout levels apply to all amounts payable under the executive bonus plans.
​
​
​
☑
Independent Compensation Advisor: The Compensation Committee selects and engages its own independent advisors.
​
​​
☒
No Special Perquisites: We do not provide special perquisites for executives.
​
​
​
☑
Thoughtful Peer Group Analysis: The Compensation Committee reviews external market data when making compensation decisions and annually reviews our peer groups with its independent compensation consultant.
​
​​
☒
No Hedging in Company Securities: Executives, directors and all employees are prohibited from engaging in any hedging transaction with respect to company equity securities.
​
​
2434
TABLE OF CONTENTS
​WHAT WE DO​​WHAT WE DO NOT DO​
​
☑
Independent Compensation Advisor: The Compensation Committee selects and engages its own independent advisors.
​
​​
☒
No Special Perquisites: We do not provide special perquisites for executives.
​
​
​
☑
Thoughtful Peer Group Analysis: The Compensation Committee reviews external market data when making compensation decisions and annually reviews our peer groups with its independent compensation consultant.
​
​​
☒
No Hedging in Company Securities: Executives, directors and all employees are prohibited from engaging in any hedging transaction with respect to company equity securities.
​
​
​
☑
Thorough Compensation Risk Assessment: The Compensation Committee conducts an annual assessment of our executive and broad-based compensation programs to ensure prudent risk management.
​
​​
☒
No Discounted Options/SARs or Option Repricing: We do not provide discounted stock options or stock appreciation rights, and we do not reprice underwater stock options.
​
​
​
☑
Compensation Committee Independence and Experience: The Compensation Committee is comprised solely of independent directors who have extensive experience.
​
​​
☒
No Tax Gross-Ups: We do not provide tax gross-ups for “excess parachute payments.”
​
​
​
☑
Stock Ownership Guidelines: Our non-executive directors are subject to stock ownership guidelines equal to a value of not less than five times the then annual cash retainer for general board service, and our chief executive officer is subject to stock ownership guidelines equal to a value of not less than six times his then annual base salary.
​
​​
☒
No Service-Based Defined Benefit Pension Plan or Other Similar Benefits: We do not maintain a pension plan or provide other similar benefits.
​
​
​
☑
Recoupment Policy: In April 2018, our Board of Directors adopted a clawback provision that provides our Board with the authority to recoup past incentive compensation (both cash and equity) paid to an executive officer in the event of a material restatement of our company’s financial results due to fraud or intentional misconduct of that executive officer.
​
​​
Design
Our executive compensation program has been heavily weighted towards equity. The Compensation Committee believes that compensation in the form of equity helps to align the interests of our executive officers with the long-term interests of our stockholders by driving achievement of our strategic and financial goals. We use restricted stock units (“RSUs”) as our primary equity vehicle for our executive officers, including our named executive officers. We believe that RSU awards align the interests of executive officers with stockholders and provide a longer-term focus through a multi-year vesting schedule, while managing dilution to existing investors and providing greater predictability to our executive officers in the value of their compensation. On an annual basis, our Compensation Committee has reviewed, and will continue to review and evaluate, the types of equity vehicles best aligned with the company’s business needs and priorities. To maintain a competitive compensation program, we also offer cash compensation in the form of base salaries and semi-annual cash bonuses tied to specific performance measures. We do not specifically target or benchmark our cash or equity compensation to align with those of our peer companies, but instead use the peer group information for general guidance. Further, when making compensation decisions for our executive officers, including our named executive officers, the Compensation Committee seeks to set both individual pay elements and target total direct compensation at competitive levels, using a balanced and flexible approach that is not restricted by adherence to specific percentile-based target levels. In other words, while competitive market data is an important reference in understanding general market practice, our actual compensation decisions reflect the Compensation Committee’s exercise of its business judgment after considering the following key factors:
25
TABLE OF CONTENTS
•
to the extent there are gaps to market in target pay positioning for cash compensation, alignment may occur over multiple years;
​
•
the number of equity awards we grant will be subject to adjustment year-over-year to reflect dilution considerations, our retention objectives, company and individual performance, and other relevant factors; and
​
35
TABLE OF CONTENTS
•
actual pay opportunities and outcomes will vary among executive officers and relative to market based on company performance and our position relative to our peers based on financial and other relevant criteria.
​
The following charts illustrate the 20182019 pay mix of our chief executive officer and the average pay mix of our other named executive officers. For purposes of the charts, the salary amounts include base salaries as well as one-time payout amounts for accrued paid time-off in connection with our conversion to a flexible time-off system. The annual cash incentive amounts include bonus and commission amounts earned in 20182019 but paid in 2019.2020. The long term equity incentive amounts consist of the grant date fair value of the restricted stock units granted in 2018,2019, computed in accordance with FASB ASC Topic 718. The charts do not account for payments we make for health and life insurance benefits and 401(k) matching contributions that are generally available to our employees.
​
Chief Executive Officer
2018 Pay Mix
[MISSING IMAGE: tv539105-pie_pay.jpg]
[MISSING IMAGE: tv518572-pie_ceomix.jpg]
​​
Other Named Executive Officers
2018 Pay Mix
[MISSING IMAGE: tv518572-pie_neomix.jpg]
​
During 2018,2019, our Compensation Committee, with the assistance of its compensation consultant, Compensia, reviewed our executive compensation, including base salaries, bonuses, equity awards, and benefit programs, to ensure that our compensation program promotes stockholder interests and provides appropriate rewards and incentives for our executive officers.
Our Compensation-Setting Process
Oversight of Executive Compensation
Pursuant to its charter and in accordance with New York Stock Exchange rules, the Compensation Committee is responsible for reviewing, evaluating and approving the compensation arrangements of our executive officers and for establishing, benchmarking and maintaining our executive compensation policies and practices. Our Compensation Committee seeks input and receives recommendations from other members of our executive team when discussing the performance and compensation of other executive officers, and in determining the financial and accounting implications of our compensation programs and hiring decisions. The Compensation Committee is authorized to engage its own independent advisors to provide advice on matters related to executive compensation and general compensation programs.
26
TABLE OF CONTENTS
Currently, our Compensation Committee is comprised solely of independent directors. For additional information on the Compensation Committee, see “Committees of Our Board of Directors — Compensation Committee” elsewhere in this proxy statement.
The initial compensation arrangements with our named executive officers were the result of arm’s-length negotiations between us and each individual executive officer at the time of his or her hire or appointment. In 2018,2019, the Compensation Committee and our Board of Directors considered numerous factors in determining whether to make adjustments to the cash and equity compensation of our executive officers, including our named executive officers. The Compensation Committee and our Board of Directors reviewed the performance of our executive officers, taking into consideration financial, operational, customer, strategic, product and competitive factors, as well as the succession planning objectives for our various executive officer positions. The Compensation Committee and our Board of Directors also reviewed a study by Compensia regarding the compensation of executives at companies in our compensation peer groups to provide context and general guidance. However, as noted above, we do not
36
TABLE OF CONTENTS
target or benchmark the compensation levels of our executive officers to align with any specific percentile relative to our peer companies. Except with respect to his own compensation, our chief executive officer made recommendations to the Compensation Committee regarding the compensation for our executive officers, which was also taken into account by the Compensation Committee in making its decisions regarding executive compensation. Our chief executive officer was not present for the discussions of our Board of Directors regarding his performance and compensation. Following deliberation, the Compensation Committee approved the cash compensation to be paid to our named executive officers and granted RSU awards to our named executive officers, each as described below and in the Summary Compensation Table.
Role of Human Resources Team
The role of our Human Resources team and management is to design our executive compensation programs, policies and governance and make recommendations to the Compensation Committee regarding these matters. Management is responsible for, among other things:
•
Reviewing the effectiveness of our compensation programs, including competitiveness and alignment with our objectives;
​
•
Recommending changes to compensation programs, as may be required, to ensure achievement of all program objectives;
​
•
Recommending base salaries, bonuses and other awards for our executive officers, including our named executive officers other than the chief executive officer; and
​
•
Reviewing and making recommendations with respect to the adoption and approval of, or amendments to, company-wide incentive compensation plans.
​
Role of the Compensation Consultant
The Compensation Committee retained Compensia, Inc., an outside compensation expert, to advise on our 20182019 executive compensation programs and practices and our executive compensation decisions given Compensia’s expertise in the technology industry and its knowledge of our peer companies. During 2018,2019, Compensia provided the following services as requested by the Compensation Committee:
•
Assisted in the development of the compensation peer groups we used to understand market competitive compensation practices;
​
•
Reviewed and assessed our compensation practices and the cash and equity compensation levels of our executive officers (including an equity retention analysis), including our named executive officers, and also for members of our Board of Directors;officers;
​
•
Reviewed and assessed our current compensation programs to determine any changes that may need to be implemented in order to remain competitive with the market, as well as conducting an equity burn rate and overhang analysis;market; and
​
•
Advised on regulatory developments relating to executive compensation.
​
​
27
TABLE OF CONTENTS
All other analyses related to executive compensation for 20182019 were conducted internally. Internal analyses included gathering and analyzing data, conducting a risk assessment relating to employee compensation and reviewing and advising on principal aspects of executive compensation. Base salaries, bonuses and equity awards for our executive officers were among the items reviewed based on market data provided by Compensia.
During 2018,2019, the Compensation Committee reviewed the fees provided to Compensia relative to Compensia’s revenues, the services provided by Compensia to the Compensation Committee, the relationships between Compensia and its consultants and our executive officers, and other factors relating to Compensia’s independence, and concluded that Compensia is independent within the meaning of the listing standards of The New York Stock Exchange and that its engagement did not present any conflict of interest.
37
TABLE OF CONTENTS
Compensation Peer Group
The Compensation Committee analyzes competitive market data on executive compensation levels and practices. This data is drawn from a select group of peer companies, as well as compensation survey data. Our Compensation Committee engaged Compensia, who provided an analysis of executive pay, including equity compensation, and an evaluation of the type of equity instruments being awarded.
The Compensation Committee, with the assistance of Compensia, developed a group of peer companies, as detailed below, to be used as a reference for market positioning and for assessing competitive market compensation practices. In developing this peer group, consideration was given to our industry sector, geographies of the locations where our executives are based, company size (based on revenues and market capitalization) relative to our size and growth rate, and the comparability of business model and focus.
Following this review, Compensia recommended and the Compensation Committee approved use of a peer group of 16 publicly-traded companies for 2018:2019:
​   AppFolio, Inc.Aerohive Networks*​​HealthStream, Inc.​
​   ApptioAppFolio, Inc.*​​LivePerson Inc.​
​Carbonite, Inc.​​MINDBODY, Inc.​
​   Castlight Health, Inc.​​MobileIron, Inc.​
​   Computer Programs and Systems,Castlight Health, Inc.​​Model N, Inc.​
​   Control4 CorporationComputer Programs and Systems, Inc.​​Omnicell, IncInc.​
​   Evolent Health, Inc.Control4​​Rapid7, Inc.​
​Evolent Health, Inc.​​Tabula Rasa HealthCare*​
​Five9, Inc.​​Workiva Inc.*​
​
*
Added to the compensation peer group for 20182019
​
These companies had revenues for the most recently completed four quarters ranging from approximately $131$151 million to $716$787 million, with a median of approximately $204$244 million, and market capitalizations ranging from approximately $410$257 million to $1,817$3,347 million, with a median of approximately $952$988 million.
In addition, we deleted the following companies from our 20182019 peer group as they did not meet one or more of the criteria discussed above or were otherwise not considered to be a good fit based on geography or business:
​   BroadSoft,Apptio Inc.​​Xactly CorporationMINDBODY, Inc.​
This peer group was used by the Compensation Committee in connection with its annual review of our executive compensation program in April 2018.2019. Specifically, the Compensation Committee reviewed the compensation data drawn from the compensation peer group, in combination with industry-specific compensation survey data, to develop an objective, independent representation of the “competitive market” with respect to current executive compensation levels and related policies and practices. The Compensation Committee then evaluated how our pay practices and the compensation levels of our executive officers compared to the competitive market.
28
TABLE OF CONTENTS
Elements of Our Executive Compensation Program
The key elements of our executive compensation program include base salary, semi-annual cash bonuses, equity-based awards, and health and welfare programs. Except with respect to target semi-annual cash bonuses, which typically are expressed as a pre-determined percentage of each executive officer’s base salary, we do not use specific formulas or weightings in determining the allocation of the various pay elements. Rather, each executive officer’s compensation has been designed to provide a combination of pay elements that are tied to achievement of our short-term and long-term financial and operational objectives. In particular, our use of RSU awards, which generally vest over three years, promotes a culture of long-term value creation, while cash bonuses are payable based upon semi-annual corporate performance.
38
TABLE OF CONTENTS
In 2018,2019, the Compensation Committee conducted its regular annual review of our executive compensation program, including an evaluation of competitive market practices; conducted annual performance reviews for our executive officers; madeconsidered adjustments to our executive officers’ base salaries and target annual bonus opportunities as needed; and made annual equity awards after taking account of any then currently unvested equity held by executive officers. Following deliberation and consideration of the factors discussed below, our Board of Directors and Compensation Committee determined that equity awards should continue to be a significant portion of executive compensation, and that cash compensation (including base salary and bonuses) should remain consistent with market norms at or above the 50th percentile.
Base Salary
We offer base salaries that are intended to provide a stable level of fixed compensation to our executive officers, including our named executive officers, for performance of their day-to-day responsibilities. Each named executive officer’s base salary was established as the result of arm’s-length negotiation with the individual at the time of his or her initial hiring or appointment. Base salaries for our executive officers are reviewed annually to determine whether an adjustment is warranted or required, taking into account the responsibilities required by the executive’s position, the executive’s length of service in a position and at our company, and the amount of other elements of compensation. The amount of any increase or decrease in base salary is considered based on the above-mentioned factors, as well as the company’s financial performance and, in the discretion of the Compensation Committee, the compensation paid by our competitors and/or other comparable-sized companies.
For 2018,2019, the Compensation Committee reviewed the base salaries of our named executive officers, after considering a compensation analysis performed by Compensia. The base salaries paid to our named executive officers for 20182019 are set forth in the Summary Compensation Table below.
Annual Cash Bonuses
In addition to the payment of salaries that it believes are competitive and assist in the retention of our executive officers, our Compensation Committee believes that a significant portion of our executive officers’ cash compensation should be tied to corporate performance. Our cash bonus program, payments under which are included as “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table below, allows our executives to earn a target cash bonus if specified metrics are satisfied at the target level, to earn a reduced level of bonus if the metrics achieved are below the target level but above a specified threshold level, and to receive a larger bonus if metrics are achieved at a level above the target. The target bonus is set as a percentage of each officer’s base salary:
Name​​Target Bonus
(as% of Base
Salary)		​​Target Bonus
Amount
($)		​
Brent D. Lang​​​​100%​​​​​500,000​​
Justin R. Spencer​​​​60%​​​​​212,400​​
Paul T. Johnson​​​​36%​​​​​127,440​​
M. Bridget Duffy​​​​25%​​​​​85,250​​
Douglas A. Carlen​​​​40%​​​​​115,600​​
29
TABLE OF CONTENTS
Name​​
Target Bonus
(as % of Base
Salary)
​​
Target Bonus
Amount
($)
​
Brent D. Lang​​​​100%​​​​​500,000​​
Justin R. Spencer​​​​60%​​​​​212,400​​
Paul T. Johnson​​​​36%​​​​​127,440​​
M. Bridget Duffy​​​​25%​​​​​85,250​​
Douglas A. Carlen​​​​40%​​​​​115,600​​
For 2018,2019, the payment of cash bonuses was based on the achievement of a revenue target, with the bonus calculation being further conditioned on achievement of an adjusted EBITDA threshold. This structure is based on our Compensation Committee and Board decision that the most important factor in increasing stockholder value in 20182019 was growth of our revenue. The Compensation Committee further determined that the inclusion of an earnings metric, such as the adjusted EBITDA threshold, would help to ensure that revenue growth was sought in a fiscally prudent manner. These revenue and adjusted EBITDA measures are provided below and were established by the Compensation Committee based on the corresponding amounts in the annual financial plan approved by the Board of Directors. Executives were eligible to receive the bonuses in two payments, based on company performance against the targets in the first and second half of the year. Additionally, the cash bonus amounts are capped at 75% of target if adjusted EBITDA fell below the threshold levels for each half of the year.
​​​H1
Target		​​H1
Threshold		​​H1
Actual		​​Attainment​​H2
Target		​​H2
Threshold		​​H2
Actual		​​Attainment​
Revenue​​​$
​		83.6
million		​​​—​​​$
​		82.9
million		​​​​​99.2%​​​​$
​		99.2
million		​​​—​​​$
​		96.7
million		​​​97.5%​
Adjusted EBITDA​​—​​​($
​		1.8
million)		​​​​$
​		5.2
million		​​​​​Met​​​—​​​$
​		9.5
million		​​​​$
​		15.9
million		​​​Met​
39
TABLE OF CONTENTS
​​​​
H1
Target
​​
H1
Threshold
​​
H1
Actual
​​Attainment​​
H2
Target
​​
H2
Threshold
​​
H2
Actual
​​Attainment​
​Revenue​​
$80.4
million
​​—​​
$80.1
million
​​99.6%​​
$113.4
million
​​—​​
$100.4
million
​​88.6%​
​Adjusted EBITDA​​—​​
($6.4
million)
​​
$0.4
million
​​Met​​—​​
$17.3
million
​​
$16.5
million
​​Not Met​
The following table presents the aggregate annual bonus that could be earned by each named executive officer if the metrics were achieved at the minimum threshold level, the target level and the maximum payout level, based upon achievement of 90%, 100% and 110%, respectively, of the company’s revenue targets for the relevant performance period, as well as the actual bonus amounts that were paid for 2018.2019. For the second half of 2019, as the actual revenue was below the minimum threshold, no cash bonuses were earned for such period.
Name​Cash Bonus at
Minimum
Threshold
($)		​Cash Bonus
at Target
($)		​Cash
Maximum
Bonus
($)		​Cash Actual
Bonus
($)		​​
Cash Bonus at
Minimum
Threshold
($)
​
Cash Bonus
at Target
($)
​
Cash
Maximum
Bonus
($)
​
Cash Actual
Bonus
($)
​
Brent D. Lang​​​100,000​​​​500,000​​​​1,000,000​​​​433,546​​​​​100,000​​​​500,000​​​​1,000,000​​​​241,745​​
Justin R. Spencer​​​42,480​​​​212,400​​​​424,800​​​​184,170​​​​​42,480​​​​212,400​​​​424,800​​​​102,693​​
Paul T. Johnson(1)​​​25,488​​​​127,440​​​​254,880​​​​110,502​​​​​25,488​​​​127,440​​​​254,880​​​​61,616​​
M. Bridget Duffy(2)​​​17,050​​​​85,250​​​​170,500​​​​73,920​​​​​17,050​​​​85,250​​​​170,500​​​​41,218​​
Douglas A. Carlen​​​23,120​​​​115,600​​​​231,200​​​​100,236​​​​​23,120​​​​115,600​​​​231,200​​​​55,891​​
​
(1)
Mr. Johnson is also compensated through a performance-based sales commission plan. Under that plan, his 20182019 target commission was $81,600 and his actual commission was $81,902.$69,571.
​
(2)
Ms. Duffy is also compensated through a performance-based sales commission plan. Under that plan, her 20182019 target commission was $80,000 and her actual commission was $72,802.$101,385.
​
In addition to the foregoing bonus payments, each of Mr. Spencer and Mr. Carlen was awarded a one-time bonus amount of  $5,000 in connection with their work related to the convertible debt offering.
Equity-Based Awards
The majority of the target total direct compensation of our executive officers, including our named executive officers, is provided through equity awards. By having a significant percentage of our executive officers’ target total direct compensation payable in the form of equity that vests over a number of years and, thus, subject to higher risk and longer vesting than cash compensation, our executive officers are motivated to focus on long-term performance. This approach also helps retain key employees because the restricted stock units we have granted are not fully vested for a specified period, and unvested awards are forfeited by the employee when employment ends. We have received feedback from some of our stockholders indicating a preference for performance-based equity awards. Our Compensation Committee considered this feedback, but ultimately determined that time-based equity awards were better aligned with the interests of our stockholders at this time. Our Compensation Committee will continue to review elements of the executive compensation program to best align the interests of our employees and stockholders to maximize the value of our common stock.
30
TABLE OF CONTENTS
We make annual equity grants to our executive officers in order to align their interests with those of our stockholders and to ensure appropriate incentives are in place to promote a focus on our long-term strategic and financial objectives. The sizes of these awards were not determined based on a specific formula, but rather through the exercise of the collective judgment of the Compensation Committee and after considering the following factors:
•
each executive officer’s individual performance, including financial, operational, customer, strategic, product and competitive factors;
​
•
the appropriate level of compensation for the position;
​
•
the need to hire or retain an individual in a particular position and the perceived retentive value of the proposed awards;
​
40
TABLE OF CONTENTS
•
the size and vesting schedule of outstanding and unvested equity awards;
​
•
the level of each executive officer’s target total cash compensation (base salary plus target annual cash bonus opportunity); and
​
•
the recommendations of the chief executive officer (except with respect to his award).
​
For the chief executive officer, executive leadership factors were also considered. In addition, the Compensation Committee reviews and considers the equity awards granted to the executives at the companies in the compensation peer groups, although it does not specifically target or benchmark to those companies.
The restricted stock unit awards granted to our named executive officers in 20182019 were as follows:
Named Executive Officer​
Number of Shares
Subject to RSU
Award(1)
(#)
​
Grant Date
Fair Value of RSU
Award(2)
($)
​​
Number of Shares
Subject to RSU
Award(1)
(#)
​
Grant Date
Fair Value of RSU
Award(2)
($)
​
Brent D. Lang​​​115,874​​​$3,072,978​​​​​89,659​​​​2,901,365​​
Justin R. Spencer​​​38,624​​​​1,024,308​​​​​29,886​​​​967,111​​
Paul T. Johnson​​​38,624​​​​1,024,308​​​​​29,886​​​​967,111​​
M. Bridget Duffy​​​28,968​​​​768,231​​​​​22,414​​​​725,317​​
Douglas A. Carlen​​​28,968​​​​768,231​​​​​22,414​​​​725,317​​
​
(1)
The RSU awards vest in three equal annual installments with the first installment vesting on June 1, 2019.2020.
​
(2)
The amounts reported represent the grant date fair value of the RSU awards without regards to forfeitures as computed in accordance with FASB ASC Topic 718. These amounts do not reflect the actual economic value that may ultimately be realized by the named executive officers.
​
The Compensation Committee reviewed the size and vesting schedule for the remaining unvested portion of all outstanding equity awards held by our executive officers, including our named executive officers, and agreed that the existing equity awards, together with the 20182019 equity grants, appropriately satisfied our motivation and retention goals for each individual.
Benefits Programs
Our employee benefit programs, including our 401(k) plan, employee stock purchase plan, and health and welfare programs, including health savings accounts and flexible spending arrangements, are designed to provide a competitive level of benefits to our employees generally, including our executive officers and their families. We adjust our employee benefit programs as needed based upon regular monitoring of applicable laws and practices and the competitive market. Our executive officers are eligible to participate in the same employee benefit plans and programs, and on the same terms and conditions, as all other U.S. full-time employees.
31
TABLE OF CONTENTS
Perquisites and Other Personal Benefits
Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not generally provide perquisites to our executive team. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual executive in the performance of his or her duties, to make our executive team more efficient and effective and for recruitment, motivation or retention purposes. All future practices with respect to perquisites or other personal benefits will be subject to review and approval by the Compensation Committee.
Post-Employment Compensation
Certain of our executive officers have post-employment compensation arrangements, which provide for severance payments and benefits in the event of a termination of employment under certain conditions,
41
TABLE OF CONTENTS
including following a change of control of the company. The Compensation Committee determined that these arrangements were both competitively reasonable and necessary to recruit and retain key executives. The material terms of these post-employment payments to named executive officers are set forth in “Employment, Severance and Change of Control Agreements” below. We do not provide for single trigger equity acceleration following a change of control and do not provide tax gross-ups for “excess parachute payments.”
Other Compensation Policies and Practices
Executive Officer Recoupment Policy
In April 2018, our Board of Directors adopted a clawback provision that provides our Board with the authority to recoup past incentive compensation from an executive officer in the event of a material restatement of our company’s financial results due to fraud or intentional misconduct of that executive officer.
Equity Administration Committee
Our Compensation Committee provides that the Equity Administration Committee, consisting of the chief executive officer, the chief financial officer and the general counsel, may make equity awards to non-executive employees within prescribed limits. Generally, equity awards will be effective on the 1st market day of the month following approval by the Equity Administration Committee, unless otherwise approved by counsel. While we do not generally grant stock options at this time, the exercise price of all stock options must be equal to or greater than the fair market value of our common stock, as defined in the 2012 Equity Incentive Plan, on the date of grant.
Derivatives Trading and HedgingAnti-Hedging Policy
Our Policy Prohibiting Insider Trading prohibits the trading of derivatives or the hedging of our equity securities by our employees, including our executive officers and members of our Board of Directors.Directors, from purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company common stock, such as prepaid variable forward contracts, equity swaps, collars, forward sale contracts and exchange funds.
Stock Ownership Guidelines
We maintain stock ownership guidelines that require our chief executive officer, as well as our non-executive directors, to maintain a specified level of stock ownership. For information on our stock ownership guidelines, see “Corporate Governance Standards and Director Independence — Stock Ownership Guidelines” elsewhere in this proxy statement.
32
TABLE OF CONTENTS
Compensation Policies and Practices as they relate to Risk Management
The Compensation Committee has reviewed our executive and employee compensation programs and does not believe that our compensation policies and practices encourage undue or inappropriate risk taking or create risks that are reasonably likely to have a material adverse effect on us. The reasons for the Compensation Committee’s determination include the following:
•
We structure our compensation program to consist of both fixed and variable components. The fixed (or base salary) component of our compensation programs is designed to provide income independent of our stock price performance so that employees will not focus exclusively on stock price performance to the detriment of other important business metrics. The variable (cash bonus and equity) components of our compensation programs are designed to reward both short-term and long-term company performance, which we believe discourages employees from taking actions that focus only on our short-term success and helps align our employees with our stockholders and on our longer-term success. Our restricted stock units have time-based vesting.
​
42
TABLE OF CONTENTS
•
We maintain internal controls over the measurement and calculation of financial information, which are designed to prevent this information from being manipulated by any employee, including our executive officers.
​
•
While we generally do not cap the cash incentive award for our Sales Compensation Plan to maximize the incentive for our sales force to meet and exceed their revenue objectives, we do maintain internal controls over the determination of sales incentive awards which we believe help prevent problematic behaviors.
​
•
Our employees are required to comply with our Employee Code of Conduct and Ethics, which covers, among other things, accuracy in keeping financial and business records.
​
•
The Compensation Committee approves the employee annual and new hire equity award guidelines as well as the overall annual equity pool. Any recommended equity awards outside these guidelines require approval by the Compensation Committee. We believe that this helps ensure we grant equity compensation appropriately and in a sustainable manner.
​
•
A significant portion of the compensation paid to our executive officers and the members of our Board of Directors is in the form of restricted stock units to align their interests with the interests of stockholders.
​
•
We maintain Stock Ownership Guidelines for our chief executive officer and the members of the Board of Directors to ensure that they retain specified levels of equity in the company.
​
•
As part of our Policy Prohibiting Insider Trading, we prohibit the trading of derivatives or hedging transactions involving our securities so that our executive officers and other employees cannot insulate themselves from the effects of poor stock price performance.
​
Tax and Accounting Considerations
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (Code), limits the amount that we may deduct from our federal income taxes for remuneration paid to our named executive officers (other than our CFO) to $1 million dollars per executive officer per year. “Grandfather” provisions of the Code provide exceptions from this deduction limitation and may apply to certain compensation arrangements, including certain grants of stock options and certain restricted stock units, that were entered into before the Company was publicly traded and through November 2, 2017. However, becauseExcept for compensation attributable to option exercise of the lack of formal guidancemost options granted prior to November 2, 2017 under the “grandfather provisions,” we cannot guarantee that any compensation arrangements intended to qualify for exemption under Section 162(m)in excess of $1 million will actually receive this treatment.likely not be deductible.
33
TABLE OF CONTENTS
No Tax Reimbursement of Parachute Payments and Deferred Compensation
We did not provide any executive officer, including any named executive officer, with a “gross-up” or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Sections 280G, 4999, or 409A of the Code during 2018,2019, and we have not agreed and are not otherwise obligated to provide any named executive officer with such a “gross-up” or other reimbursement.
Accounting Treatment
We account for stock compensation in accordance with the authoritative guidance set forth in FASB ASC Topic 718, which requires companies to measure and recognize the compensation expense for all share-based awards made to employees and directors, including stock options, restricted stock unit awards and shares acquired through our Employee Stock Purchase Plan (“ESPP”), over the period during which the award recipient is required to perform services in exchange for the award (for executive officers, generally the three-year or four-year vesting period of the award). We estimate the fair value of stock options and shares acquired through our ESPP using the Black-Scholes option pricing model. This calculation is performed for accounting purposes and reported in the compensation tables included in this proxy statement.
3443
TABLE OF CONTENTS​
Report of the Compensation CommitteeREPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management and, based on such review and discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be incorporated by reference in our Annual Report on Form 10-K for fiscal year 20182019 and included in this proxy statement.
Submitted by the Compensation Committee
Jeffrey H. Hillebrand,Michael Burkland, Chair
John B. Grotting
Alexa King
Sharon L. O’Keefe
3544
TABLE OF CONTENTS​
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table provides information regarding all compensation awarded to, earned by or paid to our named executive officers serving as such at December 31, 20182019 for all services rendered in all capacities to us during the fiscal years ended December 31, 2019, 2018 2017 and 2016.2017.
Name and Principal Position​Year​
Salary
($)(1)
​Bonus
($)		​
Stock
Awards
($)(2)
​
Non-Equity
Incentive Plan
Compensation
($)(3)
​Total
($)		​​Year​
Salary
($)(1)
​
Bonus
($)
​
Stock
Awards
($)(2)
​
Non-Equity
Incentive Plan
Compensation
($)(3)
​
Total
($)
​
Brent D. Lang
President and Chief Executive Officer		​​​​2018​​​​505,538(1)​​​​—​​​​3,072,978​​​​433,546​​​​4,012,062​​​​​​2019​​​​500,000​​​​—​​​​2,901,365​​​​241,745​​​​3,643,110​​
​​​2017​​​​408,000​​​​—​​​​2,637,022​​​​453,211​​​​3,498,233​​​​​2018​​​​505,538(1)​​​​—​​​​3,072,978​​​​433,546​​​​4,012,062​​
​​​2016​​​​400,000​​​​—​​​​2,064,731​​​​694,262​​​​3,158,993​​​​​2017​​​​408,000​​​​—​​​​2,637,022​​​​453,211​​​​3,498,233​​
Justin R. Spencer
Chief Financial Officer		​​​​2018​​​​363,926(1)​​​​5,000(4)​​​​1,024,308​​​​184,170​​​​1,577,405​​​​​​2019​​​​354,000​​​​—​​​​967,111​​​​102,693​​​​1,423,804​​
​​​2017​​​​336,667​​​​—​​​​896,590​​​​224,405​​​​1,457,662​​​​​2018​​​​363,926(1)​​​​5,000(4)​​​​1,024,308​​​​184,170​​​​1,577,405​​
​​​2016​​​​330,000​​​​—​​​​774,277​​​​315,021​​​​1,419,298​​​​​2017​​​​336,667​​​​—​​​​896,590​​​​224,405​​​​1,457,662​​
Paul T. Johnson
Executive Vice President of Sales and Services		​​​​2018​​​​349,333​​​​—​​​​1,024,308​​​​192,404(5)​​​​1,566,046​​​​​​2019​​​​354,000​​​​—​​​​967,111​​​​131,187(5)​​​​1,452,298​​
​​​2017​​​​336,667​​​​—​​​​896,590​​​​223,670(5)​​​​1,456,927​​​​​2018​​​​349,333​​​​—​​​​1,024,308​​​​192,404(5)​​​​1,566,046​​
​​​2016​​​​330,000​​​​—​​​​702,015​​​​289,458(5)​​​​1,321,473​​​​​2017​​​​336,667​​​​—​​​​896,590​​​​223,670(5)​​​​1,456,927​​
M. Bridget Duffy
Chief Medical Officer		​​​​2018​​​​351,935(1)​​​​—​​​​768,231​​​​146,722(6)​​​​1,266,887​​​​​​2019​​​​341,000​​​​—​​​​725,317​​​​142,603(6)​​​​1,208,920​​
​​​2017​​​​325,333​​​​—​​​​632,874​​​​169,343(6)​​​​1,127,550​​​​​2018​​​​351,935(1)​​​​—​​​​768,231​​​​146,722(6)​​​​1,266,887​​
​​​2016​​​​320,000​​​​—​​​​516,189​​​​227,027(6)​​​​1,063,216​​​​​2017​​​​325,333​​​​—​​​​632,874​​​​169,343(6)​​​​1,127,550​​
Douglas A. Carlen
Vice President, Legal and General Counsel		​​​​2018​​​​289,751(1)​​​​5,000(4)​​​​768,231​​​​100,236​​​​1,163,218​​​​​​2019​​​​289,000​​​​—​​​​725,317​​​​55,891​​​​1,070,209​​
​​​2017​​​​276,000​​​​—​​​​632,874​​​​122,323​​​​1,031,198​​​​​2018​​​​289,751(1)​​​​5,000(4)​​​​768,231​​​​100,236​​​​1,163,218​​
​​​2016​​​​134,082(7)​​​​10,000​​​​822,162​​​​103,154​​​​1,069,398​​​​​2017​​​​276,000​​​​—​​​​632,874​​​​122,323​​​​1,031,198​​
​
(1)
Amounts reported for fiscal year 2018 for Mr. Lang, Mr. Spencer, Ms. Duffy and Mr. Carlen include payout for accrued paid time-off in the amounts of $34,871, $14,593, $15,268 and $4,417, respectively, in connection with the Company’s conversion to a flexible time-off system.
​
(2)
Amounts reported for fiscal years 2019, 2018 2017 and 20162017 represent the grant date fair value of the stock options and restricted stock units granted during each applicable year, computed in accordance with FASB ASC Topic 718. The valuation assumptions used in calculating the fair value of the stock options and restricted stock units are set forth in Note 810 of our “Notes to consolidated financial statements” included in our annual report on Form 10-K for the year ended December 31, 2018.2019.
​
(3)
Represents performance-based cash incentive awards earned for services rendered under the executive incentive compensation plan, and in the case of Mr. Johnson and Ms. Duffy, additional amounts under the 2019, 2018 2017 and 20162017 sales commission plans. For more information about the 20182019 executive bonus plan compensation for our named executive officers, see “Elements of Our Executive Compensation Program –— Annual Cash Bonuses” under the Compensation Discussion and Analysis section above.
​
(4)
Represents one-time bonus amounts awarded in fiscal year 2018 to each of Mr. Spencer and Mr. Carlen in connection with their work related to the convertible debt offering.
​
(5)
Represents $61,616, $110,502 $134,643 and $189,013,$134,643, respectively, awarded pursuant to our 2019, 2018 2017 and 20162017 executive incentive plans and 69,571, $81,902 $89,026 and $100,446,$89,026, respectively, awarded pursuant to our 2019, 2018 2017 and 20162017 sales commission plans. For more information, see “Elements of Our Executive Compensation Program — Annual Cash Bonuses.”
​
(6)
Represents $41,218, $73,920 $90,202 and $138,852,$90,202, respectively, awarded pursuant to our 2019, 2018 2017 and 20162017 executive incentive plan and $101,385, $72,802 $79,141 and $88,174,$79,141, respectively, awarded pursuant to our 2019, 2018 2017 and 20162017 sales commission plans. For more information, see “Elements of Our Executive Compensation Program –— Annual Cash Bonuses.”
​
​
3645
TABLE OF CONTENTS
(7)
Represents partial year base salary, as Mr. Carlen joined the company mid-year in July 2016.
​
Grant of Plan-Based Awards
The following table provides information with regard to potential cash bonuses paid or payable in 20182019 under our performance-based, non-equity incentive plan, and with regard to each equity award granted to each named executive officer during fiscal 2018.year 2019.
​​​​​​​
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards(1)
​​
Number of
Shares of
Restricted
Stock Units
(#)(2)
​
Grant Date
Fair Value of
Restricted
Stock Unit
Awards
($)(3)
​​​Grant Date​​
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards(1)
​​
Number of
Shares of
Restricted
Stock Units
(#)(2)
​
Grant Date
Fair Value of
Restricted
Stock Unit
Awards
($)(3)
​
Name​Grant Date​Threshold
($)		​Target
($)		​Maximum
($)		​​
Threshold
($)
​
Target
($)
​
Maximum
($)
​
Brent D. Lang​​​​​​​​​100,000​​​​500,000​​​​1,000,000​​​​​​​​​​​​​​​​​​​​100,000​​​​500,000​​​​1,000,000​​​​​​​​​​​​
​​​6/1/2018​​​​​​​​​​​​​​​​​​​115,874​​​​3,072,978​​
​​​​5/31/2019​​​​​​​​​​​​​​​​​​​89,659​​​​2,901,365​​
Justin R. Spencer​​​​​​​​​42,480​​​​212,400​​​​424,800​​​​​​​​​​​​​​​​​​​​42,480​​​​212,400​​​​424,800​​​
​​​6/1/2018​​​​​​​​​​​​​​​​​​​38,624​​​​1,024,308​​
​​​​5/31/2019​​​​​​​​​​​​​​​​​​​29,886​​​​967,111​​
Paul T. Johnson​​​​​​​​​25,488​​​​127,440​​​​254,880​​​​​​​​​​​​​​​​​​​​25,488​​​​127,440​​​​254,880​​​​​​​​​​​​
​​​6/1/2018​​​​​​​​​​​​​​​​​​​38,624​​​​1,024,308​​
​​​​5/31/2019​​​​​​​​​​​​​​​​​​​29,886​​​​967,111​​
M. Bridget Duffy​​​​​​​​​17,050​​​​85,250​​​​170,500​​​​​​​​​​​​​​​​​​​​17,050​​​​85,250​​​​170,500​​​
​​​6/1/2018​​​​​​​​​​​​​​​​​​​28,968​​​​768,231​​
​​​​5/31/2019​​​​​​​​​​​​​​​​​​​22,414​​​​725,317​​
Douglas A. Carlen​​​​​​​​​23,120​​​​115,600​​​​231,200​​​​​​​​​​​​​​​​​​​​23,120​​​​115,600​​​​231,200​​​​���​​​​​​​
​​​6/1/2018​​​​​​​​​​​​​​​​​​​28,968​​​​768,231​​
​​​​5/31/2019​​​​​​​​​​​​​​​​​​​22,414​​​​725,317​​
​
(1)
These amounts consist of the threshold, target and maximum cash award levels set in 20182019 under the company’s executive incentive cash bonus plan. The amount actually earned by each named executive officer is included in the Non-Equity Incentive Plan Compensation column in the 20182019 Summary Compensation Table. For more information about the 20182019 executive bonus plan compensation for our named executive officers, see “Elements of Our Executive Compensation Program — Annual Cash Bonuses” under the Compensation Discussion and Analysis section above.
​
(2)
These restricted stock units vest in equal annual installments over three years from the vesting commencement date set forth in the award agreement until all shares subject to the RSUs are vested.
​
(3)
The amounts reported in this column represent the aggregate grant date fair value of the restricted stock unit awards, calculated in accordance with FASB ASC Topic 718, except that no forfeiture assumptions were included. For a discussion of the assumptions made in the valuations reflected in this column, see Note 810 of the Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2018.2019. Note that amounts reported in this column reflect the accounting cost for these equity awards, and do not correspond to the actual economic value that may be received by the recipients of these equity awards.
​
​
3746
TABLE OF CONTENTS
Outstanding Equity Awards at December 31, 20182019
The following table provides information regarding each unexercised stock option and unvested restricted stock unit held by each of our named executive officers as of December 31, 2018:2019:
​​
RESTRICTED STOCK UNIT AWARDS(1)
​
OPTION AWARDS(2)(3)
​​
RESTRICTED STOCK UNIT AWARDS(1)
​
OPTION AWARDS(2)(3)
​
Name​Award
Grant
Date		​Number of
RSU Shares
That Have
Not Vested
(#)		​
Market Value
of RSU Shares
That Have Not
Vested
($)(4)
​Shares
Underlying
Unexercised
Options –
Exercisable
(#)		​Shares
Underlying
Unexercised
Options –
Unexercisable
(#)		​
Option
Exercise
Price
($)(5)
​Option
Expiration
Date		​​
Award
Grant
Date
​
Number of
RSU Shares
That Have
Not Vested
(#)
​
Market Value
of RSU Shares
That Have Not
Vested
($)(4)
​
Shares
Underlying
Unexercised
Options –
Exercisable
(#)
​
Shares
Underlying
Unexercised
Options –
Unexercisable
(#)
​
Option
Exercise
Price
($)(5)
​
Option
Expiration
Date
​
Brent D. Lang​​​​5/5/2011​​​​​​​​​​​​​​4,500​​​​—​​​​5.04​​​​5/5/2021​​​​​5/31/2013​​​​​​​​​​​​​​109,896​​​​—​​​​14.76​​​​5/31/2023​​
​​​5/31/2013​​​​​​​​​​​​​​157,728​​​​—​​​​14.76​​​​5/31/2023​​
​​​6/1/2014​​​​​​​​​​​​​​157,699​​​��—​​​​12.92​​​​6/1/2024​​
​​​6/1/2016​​​​58,786​​​​2,313,229​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2017​​​​65,260​​​​2,567,981​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2018​​​​115,874​​​​4,559,642​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2014​​​​​​​​​​​​​​157,699​​​​—​​​​12.92​​​​6/1/2024​​
​​​​6/1/2017​​​​32,635​​​​677,503​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2018​​​​77,254​​​​1,603,793​​​​​​​​​​​​​​​​​​​​​​
​​​​5/31/2019​​​​89,659​​​​1,861,321​​​​​​​​​​​​​​​​​​​​​​
Justin R. Spencer​​​​9/2/2014​​​​​​​​​​​​​​40,000​​​​—​​​​9.01​​​​9/1/2024​​​​​9/2/2014​​​​​​​​​​​​​​20,000​​​​—​​​​9.01​​​​9/1/2024​​
​​​6/1/2016​​​​22,045​​​​867,471​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2017​​​​22,189​​​​873,137​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2018​​​​38,624​​​​1,519,854​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2017​​​​11,096​​​​230,353​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2018​​​​25,751​​​​534,591​​​​​​​​​​​​​​​​​​​​​​
​​​​5/31/2019​​​​29,886​​​​620,433​​​​​​​​​​​​​​​​​​​​​​
Paul T. Johnson​​​​11/1/2013​​​​​​​​​​​​​​60,000​​​​—​​​​17.31​​​​11/1/2023​​​​​11/1/2013​​​​​​​​​​​​​​60,000​​​​—​​​​17.31​​​​11/1/2023​​
​​​6/1/2014​​​​​​​​​​​​​​37,105​​​​—​​​​12.92​​​​6/1/2024​​
​​​6/1/2016​​​​19,988​​​​786,528​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2017​​​​22,189​​​​873,137​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2018​​​​38,624​​​​1,519,854​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2014​​​​​​​​​​​​​​18,552​​​​—​​​​12.92​​​​6/1/2024​​
​​​​6/1/2017​​​​11,096​​​​230,353​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2018​​​​25,751​​​​534,591​​​​​​​​​​​​​​​​​​​​​​
​​​​5/31/2019​​​​29,886​​​​620,433​​​​​​​​​​​​​​​​​​​​​​
M. Bridget Duffy​​​​5/31/2012​​​​​​​​​​​​​​7,500​​​​—​​​​24.15​​​​5/31/2022​​​​​5/31/2012​​​​​​​​​​​​​​7,500​​​​—​​​​24.15​​​​5/31/2022​​
​​​5/31/2013​​​​​​​​​​​​​​31,545​​​​—​​​​14.76​​​​5/31/2023​​
​​​6/1/2016​​​​14,697​​​​578,327​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2017​​​​15,663​​​​616,339​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2018​​​​28,968​​​​1,139,891​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2017​​​​7,833​​​​162,613​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2018​​​​19,313​​​​400,938​​​​​​​​​​​​​​​​​​​​​​
​​​​5/31/2019​​​​22,414​​​​465,315​​​​​​​​​​​​​​​​​​​​​​
Douglas A. Carlen​​​​8/1/2016​​​​18,509​​​​728,329​​​​​​​​​​​​​​​​​​​​​​​​​6/1/2017​​​​7,833​​​​162,613​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2017​​​​15,663​​​​616,339​​​​​​​​​​​​​​​​​​​​​​
​​​6/1/2018​​​​28,968​​​​1,139,891​​​​​​​​​​​​​​​​​​​​​​
​​​​6/1/2018​​​​19,313​​​​400,938​​​​​​​​​​​​​​​​​​​​​​
​​​​5/31/2019​​​​22,414​​​​465,315​​​​​​​​​​​​​​​​​​​​​​
​
(1)
Except as otherwise described in these footnotes, all restricted stock units granted under our 2012 Equity Incentive Plan vest in three equal installments commencing on the first anniversary of the first day of the month following the award grant date.
​
(2)
All options granted to our named executive officers under the 2006 Stock Option Plan or the 2000 Stock Option Plan are immediately exercisable, regardless of vesting schedule.
​
(3)
Except as otherwise described in these footnotes, all options vest as to 1/4th of the shares of common stock underlying the options on the first anniversary of the vesting commencement date and as to 1/48th of the shares of common stock underlying the option each month thereafter.
​
(4)
The market value of the shares of RSUs that have not vested is calculated by multiplying the number of unvested shares held by the applicable named executive officer by the closing price of our common stock on December 31, 2018,2019, the last trading day of our fiscal year, which was $39.35.
​
$20.76.
​
38
TABLE OF CONTENTS​​
(5)
ForThe exercise price of our equity awards granted prior to March 28, 2012, the exercise price represents the fair market value of a share of common stock as determined by our Board of Directors on the grant date. For equity awards granted on and after March 28, 2012 the exercise price is the closing price of our common stock on the date of grant.
​
2018
47
TABLE OF CONTENTS​​
2019 Option Exercises and Stock Vested
The following table shows stock options exercised by our named executive officers in fiscal 2018year 2019 as well as stock awards that vested during fiscal 2018.year 2019.
​​Option Awards​Stock Awards​​Option Awards​Stock Awards​
Name​Number of
Shares Acquired
on Exercise
(#)		​
Value Realized
on Exercise
($)(1)
​Number of
Shares Acquired
on Vesting
(#)		​
Value Realized
on Vesting
($)(2)
​​
Number of
Shares Acquired
on Exercise
(#)
​
Value Realized
on Exercise
($)(1)
​
Number of
Shares Acquired
on Vesting
(#)
​
Value Realized
on Vesting
($)(2)
​
Brent D. Lang​​​110,000​​​​1,944,598​​​​149,313​​​​3,959,781​​​​​52,332​​​​1,140,483​​​​130,031​​​​4,193,500​​
Justin R. Spencer​​​10,000​​​​177,027​​​​53,922​​​​1,430,011​​​​​20,000​​​​490,350​​​​46,011​​​​1,483,855​​
Paul T. Johnson​​​37,106​​​​670,876​​​​51,865​​​​1,375,460​​​​​18,553​​​​481,636​​​​43,954​​​​1,417,517​​
M. Bridget Duffy​​​16,427​​​​282,648​​​​37,372​​​​991,105​​​​​31,545​​​​560,239​​​​32,182​​​​1,037,870​​
Douglas A. Carlen​​​—​​​​—​​​​26,332​​​​785,474​​​​​—​​​​—​​​​35,994​​​​1,061,043​​
​
(1)
The value realized on exercise is calculated as the difference between the market price of our common stock at the time of exercise on the exercise date and the applicable exercise price of those options.
​
(2)
The value realized on vesting is calculated by multiplying the number of shares vesting by the closing price of our common stock as traded on the NYSE on the applicable vesting date or, if the vesting date was not a trading day, the next trading date.
​
CEO Pay Ratio
The 20182019 annual total compensation of our CEO was $4,012,062,$3,643,110, the 20182019 annual total compensation of our median compensated employee was $123,824,$139,741, and the ratio of these amounts is 3226 to 1.
We determined our median compensated employee by using base salary, bonuses, commissions, and grant date fair value of equity awards granted to employees in 2018.2019. We applied this measure to our global employee population as of the last day of our 20182019 fiscal year and annualized base salaries, bonuses and commissions for permanent full-time and part-time employees that did not work the full year. Once we determined our median compensated employee using these measures, we calculated the employee’s 20182019 annual total compensation using the same methodology that is used to calculate our CEO’s annual total compensation in the table entitled “Summary Compensation Table.”
Because SEC rules for identifying the median of the annual total compensation of all employees allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their employee population and compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies have different employee populations and compensation practices and may have used different methodologies, exclusions, estimates and assumptions in calculating their pay ratios. As explained by the SEC when it adopted these rules, the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather to allow stockholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures.
Employment, Severance and Change of Control Agreements
Brent D. Lang.   We entered into an offer letter agreement with Brent D. Lang, our President and Chief Executive Officer, dated June 8, 2012, which superseded an offer letter agreement, dated November 12, 2007. The offer letter agreement has no specific term and constitutes at-will employment.
39
TABLE OF CONTENTS
In addition, in April 2013 our Compensation Committee authorized that we enter into a revised change of control severance agreement, in the form previously approved by our Board of Directors, with Mr. Lang to reflect his transition to our Chief Executive Officer in June 2013. The agreement with Mr. Lang provides that, in the event of Mr. Lang’s termination without cause or resignation for good reason, he will be entitled to receive cash severance payments equal to one year of his annual base salary, plus the greater of his target bonus for the year of termination or the amount of bonus paid to him in the prior year, plus
48
TABLE OF CONTENTS
12 months of acceleration of outstanding equity awards and 12 months of COBRA coverage. For a termination without cause or resignation for good reason occurring within two months prior to, or 12 months following, a change of control of Vocera (the “Change of Control Period”), the agreement provides that Mr. Lang will be entitled to receive a cash severance payment equal to 150% of his annual base salary plus 150% of the greater of his target bonus for the year of termination or the amount of bonus paid to him in the prior year, plus acceleration of 100% of his outstanding equity awards in addition to 18 months of COBRA coverage.
Justin R. Spencer.   We entered into an offer letter agreement with Justin R. Spencer, our Chief Financial Officer and Executive Vice President, dated July 30, 2014. The offer letter agreement has no specific term and constitutes at-will employment.
In addition, we have entered into a change of control severance agreement with Mr. Spencer in August 2014. The agreement with Mr. Spencer provides that, in the event of Mr. Spencer’s termination without cause, he will be entitled to receive cash severance payments equal to 75% of his annual base salary, plus 12 months of acceleration of outstanding equity awards and 9 months of COBRA coverage. For a termination without cause or resignation for good reason occurring within a Change of Control Period, the agreement provides that Mr. Spencer will be entitled to receive a cash severance payment equal to 100% of his annual base salary plus 100% of the greater of his target bonus for the year of termination or the amount of bonus paid to him in the prior year, plus acceleration of 100% of his outstanding equity awards in addition to 12 months of COBRA coverage.
Paul T. Johnson.   We entered into an offer letter agreement with Paul T. Johnson, our Executive Vice President of Sales and Services, dated September 27, 2013. The offer letter agreement has no specific term and constitutes at-will employment.
In addition, we have entered into a change of control severance agreement with Mr. Johnson in October 2013. The agreement with Mr. Johnson provides that, in the event of Mr. Johnson’s termination without cause, he will be entitled to receive cash severance payments equal to 75% of his annual base salary, plus 12 months of acceleration of outstanding equity awards and 9 months of COBRA coverage. For a termination without cause or resignation for good reason occurring within a Change of Control Period, the agreement provides that Mr. Johnson will be entitled to receive a cash severance payment equal to 100% of his annual base salary plus 100% of the greater of his target bonus for the year of termination or the amount of bonus paid to him in the prior year, plus acceleration of 100% of his outstanding equity awards in addition to 12 months of COBRA coverage.
M. Bridget Duffy.   We entered into an offer letter agreement with M. Bridget Duffy, our Chief Medical Officer, dated November 3, 2010. The offer letter agreement has no specific term and constitutes at-will employment.
In addition, we have entered into a change of control severance agreement with Ms. Duffy in August 2011. The agreement with Ms. Duffy provides that, in the event of Ms. Duffy’s termination without cause, she will be entitled to receive cash severance payments equal to 50% of her annual base salary, plus 12 months of acceleration of outstanding equity awards and 6 months of COBRA coverage. For a termination without cause or resignation for good reason occurring within a Change of Control Period, the agreement provides that Ms. Duffy will be entitled to receive a cash severance payment equal to 75% of her annual base salary plus 75% of the greater of her target bonus for the year of termination or the amount of bonus paid to her in the prior year, plus acceleration of 50% of her outstanding equity awards in addition to 9 months of COBRA coverage.
Douglas A. Carlen.   We entered into an offer letter agreement with Douglas A. Carlen, our General Counsel, dated May 19, 2016. The offer letter agreement has no specific term and constitutes at-will employment.
40
TABLE OF CONTENTS
In addition, we have entered into a change of control severance agreement with Mr. Carlen in July 2016. The agreement with Mr. Carlen provides that, in the event of Mr. Carlen’s termination without cause, he will be entitled to receive cash severance payments equal to 50% of his annual base salary, plus 12 months of acceleration of outstanding equity awards and 6 months of COBRA coverage. For a termination without cause or resignation for good reason occurring within a Change of Control Period, the agreement provides
49
TABLE OF CONTENTS
that Mr. Carlen will be entitled to receive a cash severance payment equal to 75% of his annual base salary plus 75% of the greater of his target bonus for the year of termination or the amount of bonus paid to him in the prior year, plus acceleration of 50% of his outstanding equity awards in addition to 9 months of COBRA coverage.
The following table sets forth quantitative estimates of the benefits that would have accrued to our named executive officers pursuant to the terms of each of their respective severance agreements, assuming that such executive officer’s employment terminated on December 31, 20182019 and the conditions for such benefits were satisfied:
​​​​​​​​​​​​Value of Accelerated Equity
Awards		​​​​​​​​​​​​​
Value of Accelerated Equity
Awards
​​
Name​Cash
Severance
($)		​Benefit
Continuation
($)		​
Stock
Awards(1)
($)
​
Option
Awards(2)
($)
​Total
($)		​​
Cash
Severance
($)
​
Benefit
Continuation
($)
​
Stock
Awards(1)
($)
​
Option
Awards(2)
($)
​
Total
($)
​
Brent D. Lang​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Termination​​​1,000,000​​​​33,649​​​​5,116,720​​​​—​​​​6,150,369​​​​​1,000,000​​​​34,715​​​​2,099,646​​​​—​​​​3,134,360​​
Within Change of Control Period​​​1,500,000​​​​50,473​​​​9,440,852​​​​—​​​​10,991,326​​​​​1,500,000​​​​52,072​​​​4,142,616​​​​—​​​​5,694,689​​
Justin R. Spencer​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Termination​​​265,500​​​​27,020​​​​1,810,533​​​​—​​​​2,103,053​​​​​265,500​​​​18,129​​​​704,387​​​​—​​​​988,016​​
Within Change of Control Period​​​566,400​​​​36,026​​​​3,260,462​​​​—​​​​3,862,888​​​​​566,400​​​​24,172​​​​1,385,377​​​​—​​​​1,975,949​​
Paul T. Johnson​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Termination​​​265,500​​​​27,020​​​​1,729,590​​​​—​​​​2,022,110​​​​​265,500​​​​25,819​​​​704,387​​​​—​​​​995,706​​
Within Change of Control Period​​​481,440​​​​36,026​​​​3,179,519​​​​—​​​​3,696,985​​​​​481,440​​​​34,425​​​​1,385,377​​​​—​​​​1,901,242​​
M. Bridget Duffy​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Termination​​​170,500​​​​12,654​​​​1,266,362​​​​—​​​​1,449,516​​​​​170,500​​​​17,213​​​​518,128​​​​—​​​​705,841​​
Within Change of Control Period​​​319,688​​​​18,981​​​​1,167,279​​​​—​​​​1,505,948​​​​​319,688​​​​25,819​​​​514,433​​​​—​​​​859,939​​
Douglas A. Carlen​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Termination​​​144,500​​​​18,013​​​​1,416,364​​​​—​​​​1,578,877​​​​​144,500​​​​17,213​​​​518,128​​​​—​​​​679,841​​
Within Change of Control Period​​​303,450​​​​27,020​​​​1,242,280​​​​—​​​​1,572,749​​​​​303,450​​​​25,819​​​​514,433​​​​—​​​​843,702​​
​
(1)
The value of accelerated restricted stock units is calculated by multiplying the number of shares being accelerated by the closing price of our common stock on December 31, 2018,2019, the last trading day of our fiscal year, which was $39.35.$20.76.
​
(2)
As of December 31, 2018,2019, all options are fully vested, and the underlying shares are no longer subject to acceleration under change of control severance agreements.
​
The severance payments under the change of control severance agreements with each of our executive officers are contingent upon such executive officer’s execution, delivery and non-revocation of a release and waiver of claims satisfactory to us within 45 days of such executive officer’s separation from service.
4150
TABLE OF CONTENTS​
EQUITY COMPENSATION PLAN INFORMATION
The following table presents information as of December 31, 20182019 with respect to compensation plans under which shares of our common stock may be issued. The category “Equity compensation plans approved by security holders” in the table below consists of the 2006 Stock Option Plan, 2012 Equity Incentive Plan and 2012 Employee Stock Purchase Plan.
Plan Category​Number of Securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(#)		​
Weighted average
exercise price of
outstanding options
($)(1)
​Number of securities
remaining available for
future issuance under
equity compensation
plans
(#)		​​
Number of Securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(#)
​
Weighted average
exercise price of
outstanding options(1)
($)
​
Number of securities
remaining available for
future issuance under
equity compensation plans
(#)
​
Equity compensation plans approved by security
holders		​​​2,516,087(2)​​​​13.36​​​​3,099,191​​​​​2,140,086(2)​​​​13.48​​​​2,906,990​​
Equity compensation plans not approved by security holders​​​88,594​​​​11.10​​​​—​​​​​—​​​​—​​​​—​​
Total​​​2,604,681​​​​13.31​​​​3,099,191​​​​​2,140,086​​​​13.48​​​​2,906,990​​
​
(1)
The weighted average exercise prices relateprice relates solely to outstanding stock option shares since shares subject to restricted stock units have no exercise price.
​
(2)
Excludes purchase rights accruing under our 2012 Employee Stock Purchase Plan.
​
​
4251
TABLE OF CONTENTS​​
TRANSACTIONS WITH RELATED PARTIES, FOUNDERS AND CONTROL PERSONS
From January 1, 20182019 to the present, there have been no transactions, and there are currently no proposed transactions, in which the amount involved exceeds $120,000 to which we or any of our subsidiaries was (or is to be) a party and in which any director, director nominee, executive officer, holder 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, except for payments set forth under “Proposal 1” and “Executive Compensation” above.above and revenue transactions in the amount of $1.3 million for fiscal year 2019 with the University of Chicago Medical Center (“UCMC”) relating to consulting services and technology solutions. One of our directors, Sharon L. O’Keefe, is the President of UCMC. These transactions were based on an arms-length agreement entered into in the ordinary course of business.
Review, approval or ratification of transactions with related parties
Our Board of Directors recognizes that transactions between our company and persons or entities that may be deemed related persons can present potential or actual conflicts of interest and create the appearance of impropriety. Accordingly, our Board has delegated authority for the review and approval of all related person transactions to the Governance and Nominating Committee of our Board of Directors. We have adopted a Related Person Transactions Policy to provide procedures for reviewing, approving and ratifying any transaction involving our company or any of its subsidiaries in which a 5% or greater stockholder, director, executive officer or members of their immediate family have or will have a material interest as determined by our Governance and Nominating Committee. This policy is intended to supplement, and not to supersede, our company’s other policies that may be applicable to or involve transactions with related persons. The full text of this policy is posted on the investor relations section of our website at www.vocera.com.
4352
TABLE OF CONTENTS​
REPORT OF THE AUDIT COMMITTEE
The information contained in the following report of the Audit Committee is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by us under the Securities Exchange Act of 1934 or the Securities Act of 1933 unless and only to the extent that we specifically incorporate it by reference.
The Audit Committee has reviewed and discussed with our management and Deloitte & Touche LLP our audited consolidated financial statements as of and for the year ended December 31, 2018.2019. The Audit Committee has also discussed with Deloitte & Touche LLP the matters required to be discussed by Auditing Standard No. 1301 adopted bythe applicable requirements of the Public Company Accounting Oversight Board (United States) regarding “Communication with Audit Committees.”and the Securities and Exchange Commission.
The Audit Committee has received and reviewed the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche LLP its independence.
Based on the review and discussions referred to above, the Audit Committee recommended to our Board of Directors that the audited consolidated financial statements as of and for the year ended December 31, 20182019 be included in our annual report on Form 10-K for the year ended December 31, 20182019 for filing with the Securities and Exchange Commission.
Submitted by the Audit Committee
John N. McMullen, Chair
Michael Burkland
Howard E. Janzen
Ronald A. Paulus
4453
TABLE OF CONTENTS​​​​​
ADDITIONAL INFORMATION
Stockholder Proposals to be presented at Next Annual Meeting
Requirements for Stockholder Proposals to be Brought Before an Annual Meeting.Meeting. Our bylaws provide that for stockholder nominations to our Board of Directors or other proposals to be considered at an annual meeting, the stockholder must give timely notice thereof in writing to the Corporate Secretary at Vocera Communications, Inc., 525 Race Street, San Jose, California 95126, Attn: Corporate Secretary.
To be timely for our company’s 20202021 Annual Meeting of Stockholders, a stockholder’s notice must be delivered to or mailed and received by our Corporate Secretary at our principal executive offices not earlier than 5:00 p.m. Pacific Time on February 16, 202020, 2021 and not later than 5:00 p.m. Pacific Time on March 17, 2020.22, 2021. A stockholder’s notice to the Corporate Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by applicable law and our bylaws. In no event will the public announcement of an adjournment or a postponement of our annual meeting commence a new time period for the giving of a stockholder’s notice as provided above.
Requirements for Stockholder Proposals to be Considered for Inclusion in our Proxy Materials. Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our 20202021 annual meeting must be received by us not later than December 20, 201917, 2020 in order to be considered for inclusion in our proxy materials for that meeting. A stockholder’s notice to the Corporate Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by applicable law and our bylaws.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Exchange Act requires our directors, executive officers and any persons who own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file. Based solely on our review of the copies of such forms furnished to us and written representations from the directors and executive officers, we believe that all Section 16(a) filing requirements were timely met in 2018, other than with respect to M. Bridget Duffy, who filed a single late Form 4 reporting one transaction in June 2018 and Jeffrey Hillebrand, who filed a single late Form 4 reporting one transaction in February 2018.
Available Information
We will mail without charge, upon written request, a copy of our annual report on Form 10-K for the year ended December 31, 2018,2019, including the financial statements and list of exhibits, and any exhibit specifically requested. Requests should be sent to:
Vocera Communications, Inc.
525 Race Street
San Jose, California 95126
Attn: Investor Relations
The annual report on Form 10-K is also available at http://investors.vocera.com.
“Householding” — Stockholders Sharing the Same Address
The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our annual report on Form 10-K and proxy materials, including the Notice of Internet Availability, unless the affected stockholder has provided other instructions. This procedure reduces printing costs and postage fees, and helps protect the environment as well.
We expect that a number of brokers with account holders who are our stockholders will be “householding” our annual report on Form 10-K and proxy materials, including the Notice of Internet Availability. A single Notice of Internet Availability and, if applicable, a single set of annual report on Form 10-K and other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions
45
TABLE OF CONTENTS​
have been received from one or more of the affected stockholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by contacting your broker.
Upon written or oral request, we will undertake to promptly deliver a separate copy of the Notice of Internet Availability and, if applicable, annual report on Form 10-K and other proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice of Internet Availability and, if applicable, annual report on Form 10-K and other proxy materials, you may write or call our Investor Relations department at 525 Race Street, San Jose, California 95126, Attn: Investor Relations, telephone number (408) 882-5737.
54
TABLE OF CONTENTS​
Any stockholders who share the same address and currently receive multiple copies of our Notice of Internet Availability or annual report on Form 10-K and other proxy materials who wish to receive only one copy in the future can contact their bank, broker or other holder of record to request information about householding or our Investor Relations department at the address or telephone number listed above.
OTHER MATTERS
Our Board of Directors does not presently intend to bring any other business before the meeting and, so far as is known to the Board of Directors, no matters are to be brought before the meeting except as specified in the notice of the meeting. As to any business that may arise and properly come before the meeting, however, it is intended that proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.
4655
TABLE OF CONTENTS​
Appendix A​
VOCERA COMMUNICATIONS, INC.
2020 EQUITY INCENTIVE PLAN
1.   PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents, Subsidiaries and Affiliates that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 28.
2.   SHARES SUBJECT TO THE PLAN.
2.1.Number of Shares Available. Subject to Section 2.4, Section 2.5 and Section 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board is Three Hundred Thousand (300,000) Shares, plus (a) any reserved shares not issued or subject to outstanding grants under the Company’s 2012 Equity Incentive Plan (the “Prior Plan”) on the Effective Date, (b) shares that are subject to stock options or other awards granted under the Prior Plan that cease to be subject to such stock options or other awards by forfeiture or otherwise after the Effective Date, (c) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited, (d) shares issued under the Prior Plan that are repurchased by the Company at the original issue price and (e) shares issued under the Prior Plan that are used to satisfy the tax withholding obligations related to an RSU.
2.2.Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Shares used to satisfy the tax withholding obligations related to an RSU will become available for future grant or sale under the Plan. Shares used to pay the exercise price of an Award or withheld to satisfy the tax withholding obligations related to an Option or SAR will not become available for future grant or sale under the Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.
2.3.Minimum Share Reserve. At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all outstanding Awards granted under this Plan.
2.4.ISO Limitation. No more than One Hundred Million (100,000,000) Shares shall be issued pursuant to the exercise of ISOs (as defined below) under the Plan.
2.5.Adjustment of Shares. If the number of outstanding Shares is changed by a stock dividend, extraordinary dividend or distribution (whether in cash, shares or other property, other than a regular cash dividend), recapitalization, stock split, reverse stock split, subdivision, combination, consolidation, reclassification, spin-off or similar change in the capital structure of the Company, without consideration, then (a) the number and class of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, including shares reserved under sub-clauses (a)-(e) of Section 2.1, (b) the Exercise Prices of and number and class of Shares subject to outstanding Options and SARs, (c) the number and class of Shares subject to other outstanding Awards and (d) the maximum number and class of Shares that may be issued
A-1
TABLE OF CONTENTS
[MISSING IMAGE: tv518572_pc1.jpg]as ISOs set forth in Section 2.4 and (e) the maximum number of Shares that may be issued to an individual in any one calendar year set forth in Section 3, will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.
01 - Michael Burkland 02 - Brent D. Lang 03 - Bharat SundaramFor Against AbstainIf, by reason of an adjustment pursuant to this Section 2.5, a Participant’s Award Agreement or other agreement related to any Award or the Shares subject to such Award covers additional or different shares of stock or securities, then such additional or different shares, and the Award Agreement or such other agreement in respect thereof, will be subject to all of the terms, conditions and restrictions which were applicable to the Award or the Shares subject to such Award prior to such adjustment.
2.6.Vesting Restriction. Awards shall not provide for any initial vesting prior to at least twelve (12) months from grant (or 360 days if necessary for administrative convenience); provided that the Committee may permit the initial vesting of Awards prior to twelve (12) months from grant representing up to an aggregate of five percent (5%) of the Shares reserved and available for grant under the Plan.
3.ELIGIBILITY. ISOs may be granted only to Employees of the Company, Parent or Subsidiary. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors; provided such Consultants and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No Participant will be eligible to receive more than One Million (1,000,000) Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of the Company, Parent, Subsidiary or Affiliate of the Company (including new Employees who are also officers and directors of the Company or any Parent, Subsidiary or Affiliate of the Company) are eligible to receive up to a maximum of Two Million (2,00,000) Shares in the calendar year in which they commence their employment.
4.ADMINISTRATION.
4.1.Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board will establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to:
(a)
construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;
​
(b)
prescribe, amend and rescind rules and regulations relating to this Plan or any Award;
​
(c)
select persons to receive Awards;
​
(d)
determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the Exercise Price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;
​
(e)
determine the number of Shares or other consideration subject to Awards;
​
(f)
determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary;
​
(g)
determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent, Subsidiary or Affiliate;
​
(h)
grant waivers of Plan or Award conditions;
​
(i)
determine the vesting, exercisability and payment of Awards;
​
A-2
TABLE OF CONTENTS
(j)
correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;
​
(k)
determine whether an Award has been vested and/or earned;
​
(l)
determine the terms and conditions of any, and to institute any Exchange Program;
​
(m)
reduce, waive or modify any criteria with respect to Performance Factors;
​
(n)
adjust Performance Factors;
​
(o)
adopt terms and conditions, rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States or to qualify Awards for special tax treatment under laws of jurisdictions other than the United States;
​
(p)
exercise discretion with respect to Performance Awards;
​
(q)
make all other determinations necessary or advisable for the administration of this Plan; and
​
(r)
delegate any of the foregoing to a subcommittee or to one or more executive officers pursuant to a specific delegation as permitted by applicable law.
​
4.2.Committee Interpretation and Discretion. Any determination made by the Committee with respect to any Award will be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination will be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement will be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee will be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution will be final and binding on the Company and the Participant.
4.3.Section 16 of the Exchange Act. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act).
4.4.Documentation. The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.
4.5.Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws and practices in other countries in which the Company and its Subsidiaries or Affiliates operate or have Employees or other individuals eligible for Awards, the Committee, in its sole discretion, will have the power and authority to: (a) determine which Subsidiaries and Affiliates will be covered by the Plan; (b) determine which individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to individuals outside the United States or foreign nationals to comply with applicable foreign laws, policies, customs and practices; (d) establish subplans and modify exercise procedures, vesting conditions, and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications will be attached to this Plan as appendices, if necessary); provided, however, that no such subplans and/or modifications will increase the share limitations contained in Section 2.1 hereof; and (e) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards will be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.
5.   OPTIONS. An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable. The Committee may grant Options to eligible Employees, Consultants and Directors of any Parent, Subsidiary or Affiliate and will determine whether such Options will be Incentive
A-3
TABLE OF CONTENTS
Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the following terms of this section.
5.1.Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option; and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.
5.2.Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement will be delivered to the Participant within a reasonable time after the granting of the Option.
5.3.Exercise Period. Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.
5.4.Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (a) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (b) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company.
5.5.Method of Exercise. Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option (and/or via electronic execution through the authorized third-party administrator), and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
5.6.Termination of Service. If the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant date Participant’s Service
A-4
TABLE OF CONTENTS
terminates no later than three (3) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond three (3) months after the date Participant’s employment terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options.
(a)
Death. If the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the date Participant’s Service terminates (or such shorter time period or longer time periodas may be determined by the Committee), but in any event no later than the expiration date of the Options.
​
(b)
Disability. If the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond (a) three (3) months after the date Participant’s employment terminates when the termination of Service is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participant’s employment terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options.
​
(c)
Cause. If the Participant’s Service terminates for Cause, then Participant’s Options (whether or not vested) will expire on the date of termination of Participant’s Service if the Committee has reasonably determined in good faith that such cessation of Services has resulted in connection with an act or failure to act constituting Cause (or such Participant’s Services could have been terminated for Cause (without regard to the lapsing of any required notice or cure periods in connection therewith) at the time such Participant’s Services terminated), or at such later time and on such conditions as are determined by the Committee, but in any event no later than the expiration date of the Options. Unless otherwise provided in an employment agreement, Award Agreement, or other applicable agreement, Cause will have the meaning set forth in the Plan.
​
5.7.Limitations on Exercise. The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.
5.8.Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NSOs. For Against Abstainpurposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.
5.9.Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted, unless such action is necessary to comply with applicable law or rule. Any outstanding
A-5
TABLE OF CONTENTS
ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants; provided, however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.
5.10.No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.
6.   RESTRICTED STOCK AWARDS. A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant, or Director or any Parent, Subsidiary or Affiliate Shares that are subject to restrictions (“Restricted Stock”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan.
6.1.Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within one month from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within one month, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.
6.2.Purchase Price. The Purchase Price, if any, for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company.
6.3.Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria. The Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.
6.4.Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
7.   STOCK BONUS AWARDS. A Stock Bonus Award is an award to an eligible Employee, Consultant, or Director or any Parent, Subsidiary or Affiliate of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent, Subsidiary or Affiliate. All Stock Bonus Awards shall be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.
7.1.Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance
A-6
TABLE OF CONTENTS
in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.
7.2.Form of Payment to Participant. Payment, if any, may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.
7.3.Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
8.   STOCK APPRECIATION RIGHTS. A Stock Appreciation Right (“SAR”) is an award to an eligible Employee, Consultant, or Director or any Parent, Subsidiary or Affiliate that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise less the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement.
8.1.Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s termination of Service on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.
8.2.Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.
8.3.Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (a) the difference between the Fair Market Value of a Share on the date of exercise less the Exercise Price; times (b) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code to the extent applicable.
8.4.Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
A-7
TABLE OF CONTENTS
9.   RESTRICTED STOCK UNITS. A Restricted Stock Unit (“RSU”) is an award to an eligible Employee, Consultant, or Director or any Parent, Subsidiary or Affiliate covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award Agreement.
9.1.Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the Participant’s termination of Service on each RSU; provided that no RSU shall have a term longer than ten (10) years. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and Participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria. The Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.
9.2.Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee may also permit a Participant to defer payment under an RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code to the extent applicable.
9.3.Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee).
10. PERFORMANCE AWARDS. A Performance Award is an award to an eligible Employee, Consultant, or Director of the Company or any Parent, Subsidiary or Affiliate that is based upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee, and may be settled in cash, Shares (which may consist of, without limitation, Restricted Stock), other property, or any combination thereof. Grants of Performance Awards shall be made pursuant to an Award Agreement.
10.1.   Performance Awards shall include Performance Shares, Performance Units, and cash-based Awards as set forth in Sections 10.1(a), 10.1(b), and 10.1(c) below.
(a)
Performance Shares. The Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be awarded and determine the number of Performance Shares and the terms and conditions of each such Award. Performance Shares shall consist of a unit valued by reference to a designated number of Shares, the value of which may be paid to the Participant by delivery of Shares or, if set forth in the instrument evidencing the Award, of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. The amount to be paid under an Award of Performance Shares may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.
​
(b)
Performance Units. The Committee may grant Awards of Performance Units, designate the Participants to whom Performance Units are to be awarded and determine the number of
​
A-8
TABLE OF CONTENTS
Performance Units and the terms and conditions of each such Award. Performance Units shall consist of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee.
(c)
Cash-Settled Performance Awards. The Committee may grant cash-settled Performance Awards to Participants under the terms of this Plan. Such awards will be based on the attainment of performance goals using the Performance Factors within this Plan that are established by the Committee for the relevant performance period.
​
10.2.Terms of Performance Awards. Performance Awards will be based on the attainment of performance goals using the Performance Factors within this Plan that are established by the Committee for the relevant Performance Period. The Committee will determine, and each Award Agreement shall set forth, the terms of each Performance Award including, without limitation: (a) the amount of any cash bonus, (b) the number of Shares deemed subject to an award of Performance Shares; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (d) the consideration to be distributed on settlement, and (e) the effect of the Participant’s termination of Service on each Performance Award. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares. Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned. Performance Periods may overlap, and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria.
10.3.Value, Earning and Timing of Performance Shares. Any Performance Share bonus will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of a Performance Share bonus will be entitled to receive a payout of the number of Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay an earned Performance Share bonus in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof. Performance Share bonuses may also be settled in Restricted Stock. The Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.
10.4.Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee).
11. PAYMENT FOR SHARE PURCHASES. Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):
(a)
by cancellation of indebtedness of the Company to the Participant;
​
(b)
by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;
​
(c)
by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company, Parent, Subsidiary or Affiliate;
​
A-9
TABLE OF CONTENTS
(d)
by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan;
​
(e)
by any combination of the foregoing; or
​
(f)
by any other method of payment as is permitted by applicable law.
​
12.   GRANTS TO NON-EMPLOYEE DIRECTORS.
12.1.Grant and Eligibility. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. No Non-Employee Director may receive Awards under the Plan that exceeds (x) $400,000 in value (as described below) in any calendar year for continuing directors, or (y) $600,000 in value (as described below) in the initial calendar year for a new Non-Employee Director. The value of Awards for purposes of complying with this maximum shall be determined as follows: (a) for Options and SARs, grant date fair value will be calculated using the Black-Scholes valuation methodology on the date of grant of such Option or SAR, and (b) for all other Awards other than Options and SARs, grant date fair value will be determined by either (i) calculating the product of the Fair Market Value per Share on the date of grant and the aggregate number of Shares subject to the Award, or (ii) calculating the product using an average of the Fair Market Value over a number of trading days and the aggregate number of Shares subject to the Award as determined by the Committee. Awards granted, or cash compensation paid, to an individual while he or she was serving in the capacity as an Employee or while he or she was a Consultant but not a Non-Employee Director will not count for purposes of the limitations set forth in this Section 12.1. Awards under the Plan may be granted to Non-Employee Directors may be automatically made pursuant to a policy adopted by the Board, or made from time to time as determined in the discretion of the Board.
12.2.Vesting, Exercisability and Settlement. Except as set forth in Section 21, Awards will vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors will not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.
12.3.Election to Receive Awards in Lieu of Cash. A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, if permitted, and as determined, by the Committee. Such Awards shall be issued under the Plan. An election under this Section 12.3 shall be filed with the Company on the form prescribed by the Company.
13.   WITHHOLDING TAXES.
13.1.Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or a taxable or tax-withholding event occurs, the Company may require the Participant to remit to the Company, or to the Parent, Subsidiary or Affiliate, as applicable, to which the Participant provides services, an amount sufficient to satisfy applicable U.S. and non-U.S. federal, state, local income tax, social insurance liability, payroll tax fringe benefits, tax payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (the “Tax-Related Items”) required to be withheld from the Participant. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable withholding obligations for Tax-Related Items, provided, however, that any Tax-Related Items may also be withheld by other methods. Unless otherwise required by applicable law or determined by the Committee, the Fair Market Value of the Shares will be determined as of the date that the taxes are required to be withheld and such Shares will be valued based on the value of the actual trade or, if there is none, the Fair Market Value of the Shares as of the next trading day.
13.2.Withholding Methods. The Committee, or its delegate(s), as permitted by applicable law, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy any withholding obligations for such Tax-Related Items in whole or in part by (without limitation) (a) paying cash, (b) having the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the Tax-Related Items to be
A-10
TABLE OF CONTENTS
withheld, (c) delivering to the Company already-owned shares having a Fair Market Value equal to the Tax-Related Items required to be withheld or (d) having the Company withhold from the proceeds of the sale of Shares acquired pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company. The Company may withhold or account for these Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates, including up to (but not in excess of) the maximum permissible statutory tax rate for the applicable tax jurisdiction, to the extent consistent with applicable laws.
14.   TRANSFERABILITY. Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner (other than by will or by the laws of descent or distribution). If the Committee makes an Award transferable, including, without limitation, by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted Transferee, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards will be exercisable: (a) during the Participant’s lifetime only by the Participant, or the Participant’s guardian or legal representative; (b) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees; and (c) in the case of all awards except ISOs, by a Permitted Transferee. Shares held pursuant to Awards to the Company’s chief executive officer may not be sold, pledged, assigned, hypothecated, transferred or disposed of (other than by will, or by the laws of descent or inheritance, or by gift or domestic relations order) for a period of twelve (12) months following the date of vesting of such Shares, provided that Shares may be sold or transferred to satisfy any withholding taxes as set forth in Section 13 of the Plan or in response to any medical or other personal emergency.
15.   PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.
15.1.Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. Any Dividend Equivalent Rights will be subject to the same vesting or performance conditions as the underlying Award. In addition, the Committee may provide that any Dividend Equivalent Rights permitted by an applicable Award Agreement will be deemed to have been reinvested in additional Shares or otherwise reinvested. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to such stock dividends or stock distributions with respect to Unvested Shares, and any such dividends or stock distributions will be accrued and paid only at such time, if any, as such Unvested Shares become vested Shares. The Committee, in its discretion, may provide in the Award Agreement evidencing any Award that the Participant will be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Shares underlying an Award during the period beginning on the date the Award is granted and ending, with respect to each Share subject to the Award, on the earlier of the date on which the Award is exercised or settled or the date on which it is forfeited provided, that no Dividend Equivalent Right will be paid with respect to the Unvested Shares, and such dividends or stock distributions will be accrued and paid only at such time, if any, as such Unvested Shares become vested Shares. Such Dividend Equivalent Rights, if any, will be credited to the Participant in the form of additional whole Shares as of the date of payment of such cash dividends on Shares.
15.2.Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan, for cash and/​or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be.
A-11
TABLE OF CONTENTS
16.   CERTIFICATES. All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject.
17.   ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.
18.   REPRICING; EXCHANGE AND BUYOUT OF AWARDS. Without prior stockholder approval, the Committee may not pursuant to an Exchange Program or otherwise (a) reprice Options or SARs, and (b) pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.
19.   SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, exchange control laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.
20.   NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent, Subsidiary or Affiliate or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate to terminate Participant’s employment or other relationship at any time.
21.   CORPORATE TRANSACTIONS.
21.1.Assumption or Replacement of Awards by Successor. In the event of a Corporate Transaction any or all outstanding Awards may be (a) continued by the Company, if the Company is the successor entity; or (b) assumed or substituted by the successor corporation, or a parent or subsidiary of the successor corporation, for substantially equivalent Awards (including, but not limited to, a payment in cash or the right to acquire the same consideration paid to the stockholders of the Company pursuant to the Corporate Transaction), in each case after taking into account appropriate adjustments for the number and kind of shares and exercise prices. The successor corporation may also issue, as replacement of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to
A-12
TABLE OF CONTENTS
repurchase restrictions no less favorable to the Participant. In the event such successor corporation refuses to assume, substitute or replace any Award in accordance with this Section 21, then notwithstanding any other provision in this Plan to the contrary, each such Award shall become fully vested and, as applicable, exercisable and any rights of repurchase or forfeiture restrictions thereon shall lapse, immediately prior to the consummation of the Corporation Transaction. Performance Awards not assumed pursuant to the foregoing shall be deemed earned and vested at 100% of target level, unless otherwise indicated pursuant to the terms and conditions of the applicable Award Agreement.
If an Award vests in lieu of assumption or substitution in connection with a Corporate Transaction as provided above, the Committee will notify the holder of such Award in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period without consideration. Any determinations by the Committee need not treat all outstanding Awards in an identical manner, and shall be final and binding on each applicable Participant.
21.2.Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards will not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in a calendar year.
21.3.Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non-Employee Directors will accelerate and such Awards will become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.
22.   ADOPTION AND STOCKHOLDER APPROVAL. This Plan will be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.
23.   TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date of Board approval. This Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of laws rules).
24.   AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; provided further, that a Participant’s Award will be governed by the version of this Plan then in effect at the time such Award was granted. No termination or amendment of the Plan or any outstanding Award may adversely affect any then outstanding Award without the consent of the Participant, unless such termination or amendment is necessary to comply with applicable law, regulation or rule.
A-13
TABLE OF CONTENTS
25.   NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
26.   INSIDER TRADING POLICY. Each Participant who receives an Award will comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or Directors of the Company, as well as with any applicable insider trading or market abuse laws to which the Participant may be subject.
27.   ALL AWARDS SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT POLICY. All Awards, subject to applicable law, shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of Participant’s employment or other service with the Company that is applicable to Employees, Directors or other service providers of the Company, and in addition to any other remedies available under such policy and applicable law, may require the cancellation of outstanding Awards and the recoupment of any gains realized with respect to Awards.
28.   DEFINITIONS. As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:
28.1.   “Affiliate” means any person or entity that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Company, including any general partner, managing member, officer or director of the Company, in each case as of the date on which, or at any time during the period for which, the determination of affiliation is being made. For Against Abstain3 2 B MUsingpurposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such person or entity, whether through the ownership of voting securities or by contract or otherwise.
28.2.   “Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or Performance Award.
28.3.   “Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, and country-specific appendix thereto for grants to non-U.S. Participants, which will be in substantially a form (which need not be the same for each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committee’s delegate(s)) has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.
28.4.   “Board” means the Board of Directors of the Company.
28.5.   “Cause” means a determination by the Company (and in the case of Participant who is subject to Section 16 of the Exchange Act, the Committee) that the Participant has committed an act or acts constituting any of the following: (a) dishonesty, fraud, misconduct or negligence in connection with Participant’s duties to the Company, (b) unauthorized disclosure or use of the Company’s confidential or proprietary information or trade secrets, (c) misappropriation of a business opportunity of the Company, (d) materially aiding Company competitor, (e) a conviction or plea of nolo contendere to a felony or crime involving moral turpitude, (f) failure or refusal to attend to the duties or obligations of the Participant’s position (g) violation or breach of, or failure to comply with, the Company’s code of ethics or conduct, any of the Company’s rules, policies or procedures applicable to the Participant or any agreement in effect between the Company and the Participant or (h) other conduct by such Participant that could be expected to be harmful to the business, interests or reputation of the Company. The determination as to whether Cause for a Participant’s termination exists will be made in good faith by the Company and will be final and binding on the Participant. This definition does not in any way limit the Company’s or any Parent’s, Subsidiary’s or Affiliate’s ability to terminate a Participant’s employment or services at any time as provided
A-14
TABLE OF CONTENTS
in Section 20 above. Notwithstanding the foregoing, the foregoing definition of “Cause” may, in part or in whole, be modified or replaced in each individual employment agreement, Award Agreement, or other applicable agreement with any Participant provided that such document specifically supersedes this definition.
28.6.   “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
28.7.   “Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law.
28.8.   “Company” means Vocera Communications, Inc., a Delaware corporation, or any successor corporation.
28.9.   “Consultant” means any natural person, including an advisor or independent contractor, engaged by the Company or a Parent, Subsidiary or Affiliate to render services to such entity.
28.10.   “Corporate Transaction” means the occurrence of any of the following events: (a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; provided, however, that for purposes of this subclause (a) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will not be considered a Corporate Transaction; (b) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (c) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company) or (e) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by members of the Board whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purpose of this subclause (e), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Corporate Transaction. For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount will become payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time.
28.11.   “Director” means a member of the Board.
28.12.   “Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
28.13.   “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in
A-15
TABLE OF CONTENTS
an amount equal to the cash, stock or other property dividends in amounts equivalent to cash, stock or other property dividends for each Share represented by an Award held by such Participant.
28.14.   “Effective Date” means the date the Plan is approved by the Company’s stockholders.
28.15.   “Employee” means any person, including officers and Directors, providing services as an employee to the Company or any Parent, Subsidiary or Affiliate. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
28.16.   “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
28.17.   “Exchange Program” means a program pursuant to which (a) outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof) or (b) the exercise price of an outstanding Award is increased or reduced, each as described in Section 18.
28.18.   “Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.
28.19.   “Fair Market Value” means, as of any date, the value of a share of the Company’s common stock determined as follows:
(a)
if such common stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the common stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable;
​
(b)
if such common stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
​
(c)
by the Board or the Committee in good faith.
​
28.20.   “Insider” means an officer or Director of the Company or any other person whose transactions in the Company’s common stock are subject to Section 16 of the Exchange Act.
28.21.   “IRS” means the United States Internal Revenue Service.
28.22.   “Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary.
28.23.   “Option” means an Award as defined in Section 5 and granted under the Plan.
28.24.   “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
28.25.   “Participant” means a person who holds an Award under this Plan.
28.26.“Performance Award” means an Award as defined in Section 10 and granted under the Plan.
28.27.“Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective or subjective measures, either individually, alternatively or in any combination applied to the Participant, the Company, any business unit or Subsidiary or Affiliate, either individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied:
(a)
Profit Before Tax;
​
A-16
TABLE OF CONTENTS
(b)
Sales;
​
(c)
Expenses;
​
(d)
Billings;
​
(e)
Revenue;
​
(f)
Net revenue;
​
(g)
Earnings (which may include earnings before interest and taxes, earnings before taxes, net earnings, stock-based compensation expenses, depreciation and amortization);
​
(h)
Operating income;
​
(i)
Operating margin;
​
(j)
Operating profit;
​
(k)
Controllable operating profit, or net operating profit;
​
(l)
Net Profit;
​
(m)
Gross margin;
​
(n)
Operating expenses or operating expenses as a percentage of revenue;
​
(o)
Net income;
​
(p)
Earnings per share;
​
(q)
Total stockholder return;
​
(r)
Market share;
​
(s)
Return on assets or net assets;
​
(t)
The Company’s stock price;
​
(u)
Growth in stockholder value relative to a pre-determined index;
​
(v)
Return on equity;
​
(w)
Return on invested capital;
​
(x)
Cash Flow (including free cash flow or operating cash flows);
​
(y)
Balance of cash, cash equivalents and marketable securities;
​
(z)
Cash conversion cycle;
​
(aa)
Economic value added;
​
(bb)
Individual confidential business objectives;
​
(cc)
Contract awards or backlog;
​
(dd)
Overhead or other expense reduction;
​
(ee)
Credit rating;
​
(ff)
Completion of an identified special project;
​
(gg)
Completion of a joint venture or other corporate transaction;
​
(hh)
Strategic plan development and implementation;
​
(ii)
Succession plan development and implementation;
​
(jj)
Improvement in workforce diversity;
​
(kk)
Employee satisfaction;
​
A-17
TABLE OF CONTENTS
(ll)
Employee retention;
​
(mm)
Customer indicators and/or satisfaction;
​
(nn)
New product invention or innovation;
​
(oo)
Research and development expenses;
​
(pp)
Attainment of research and development milestones;
​
(qq)
Improvements in productivity;
​
(rr)
Bookings;
​
(ss)
Working-capital targets and changes in working capital;
​
(tt)
Attainment of operating goals and employee metrics; and
​
(uu)
Any other metric as determined by the Committee.
​
The Committee may provide for one or more equitable adjustments to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant, such as but not limited to, adjustments in recognition of unusual or non-recurring items such as acquisition related activities or changes in applicable accounting rules. It is within the sole discretion of the Committee to make or not make any such equitable adjustments.
28.28.   “Performance Period” means one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Factors will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance Award.
28.29.   “Performance Share” means an Award as defined in Section 10 and granted under the Plan.
28.30.   “Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests.
28.31.“Performance Unit” means an Award as defined in Section 10 and granted under the Plan.
28.32.   “Plan” means this Vocera Communications, Inc. 2020 Equity Incentive Plan.
28.33.   “Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.
28.34.   “Restricted Stock Award” means an Award as defined in Section 6 and granted under the Plan (or issued pursuant to the early exercise of an Option).
28.35.   “Restricted Stock Unit” means an Award as defined in Section 9 and granted under the Plan.
28.36.   “SEC” means the United States Securities and Exchange Commission.
28.37.   “Securities Act” means the United States Securities Act of 1933, as amended.
28.38.   “Service” means service as an Employee, Consultant, Director or Non-Employee Director, to the Company or a Parent, Subsidiary or Affiliate, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide Service in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence approved by the Company; provided, that such leave is for a period of not more than 90 days unless reemployment upon the expiration of such leave is guaranteed by contract or statute. In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension or
A-18
TABLE OF CONTENTS
modification of vesting of the Award while on leave from the employ of the Company or a Parent, Subsidiary or Affiliate or during such change in working hours as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. An Employee will have terminated employment as of the date he or she ceases to provide Service (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment will not be extended by any notice period or garden leave mandated by local law, provided however, a change in status from an Employee to a Consultant or a Non-Employee Director (or vice versa) will not terminate a Participant’s Service, unless determined by the Committee, in its discretion or to the extent set forth in the applicable Award Agreement. The Committee will have sole discretion to determine whether a Participant has ceased to provide Service and the effective date on which the Participant ceased to provide Service.
28.39.   “Shares” means shares of the common stock of the Company.
28.40.   “Stock Appreciation Right” means an Award as defined in Section 8 and granted under the Plan.
28.41.   “Stock Bonus” means an Award granted pursuant to Section 7 of the Plan.
28.42.   “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
28.43.   “Treasury Regulations” means regulations promulgated by the United States Treasury Department.
28.44.   “Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).
A-19
TABLE OF CONTENTS
[MISSING IMAGE: tv539105_pc-1.jpg]
Your vote matters – here’s how to vote!You may vote online or by phone instead of mailing this card.Votes submitted electronically must be received by 11:59 p.m. (Eastern) on June 4, 2020.OnlineGo to www.envisionreports.com/VCRA or scan the QR code — login details are located in the shaded bar below.Using a black ink pen, mark your votes with an X as shown in this example.Pleaseexample. Please do not write outside the designated areas.031LAB++areas.PhoneCall toll free 1-800-652-VOTE (8683) within the USA, US territories and CanadaSave paper, time and money!Sign up for electronic delivery at envisionreports.com/VCRA2020 Annual Meeting Proxy Cardq IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. qA Proposals — The Board of Directors recommend a vote FOR A all the nominees listed and FOR Proposals 2, 3 and 3.2.4.For Against Abstain For Against Abstain For Against Abstain +1. Election of Directors:01 - Julie Iskow 02 - Howard E. Janzen 03 - Alexa King2. Proposal to ratify appointment of Deloitte & Touche LLP as ourindependentour independent registered public accounting firm for the fiscalyearfiscal year ending December 31, 2019.3.2020.For Against Abstain3. Advisory vote on named executive officer compensation.1. Election of Directors:Forcompensation.For Against AbstainPleaseAbstain4. Proposal to adopt Vocera’s 2020 Equity Incentive Plan.B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please givefullgive full title.Date (mm/dd/yyyy) — Please print date below. Signaturebelow.Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.B Authorized Signatures — This section must be completedbox.038EJA3 3 B M +
TABLE OF CONTENTS
[MISSING IMAGE: tv539105_pc-2.jpg]
Important notice regarding the Internet availability of proxy materials for your votethe Annual Meeting of Shareholders.The material is available at: www.envisionreports.com/VCRASmall steps make an impact.Help the environment by consenting to count. Please date andreceive electronic delivery, sign below.qIFup at www.envisionreports.com/VCRAq IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q2019 Annual Meeting Proxy CardFor Against AbstainYou may vote online or by phone insteadENVELOPE. qVocera Communications, Inc. +Notice of mailing this card.OnlineGo to www.envisionreports.com/VCRA orscan the QR code — login details arelocated in the shaded bar below.Save paper, time and money!Sign up for electronic delivery atenvisionreports.com/VCRAPhoneCall toll free 1-800-652-VOTE (8683) withinthe USA, US territories and CanadaVotes submitted electronically must be receivedby 11:59 p.m. (Eastern) on May 30, 2019.Your vote matters – here’s how to vote!
TABLE OF CONTENTS
[MISSING IMAGE: tv518572_pc2.jpg]
Small steps make an impact.Help the environment by consenting to receive electronicdelivery, sign up at www.envisionreports.com/VCRANotice of 20192020 Annual Meeting of StockholdersProxy Solicited by Board of Directors for Annual Meeting — May 31, 2019June 5, 2020 at 10:00 a.m. (Pacific Time)Brent D. Lang, Justin R. Spencer and Douglas A. Carlen, or any of them, each with the power of substitution, are hereby authorized to represent and votethevote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders ofVoceraof Vocera Communications, Inc. to be held on May 31, 2019June 5, 2020 or at any postponement or adjournment thereof.Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FORthe election of the Board of Directors and FOR Proposals 2, 3 and 3.In4.In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.(Items (Items to be voted appear on reverse side)Vocera Communications, Inc.qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qChangeC Non-Voting ItemsChange of Address — Please print new address below. Comments — Please print your comments below.C Non-Voting Items+below.+Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.The material is available at: www.envisionreports.com/VCRA