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12701 Commonwealth Drive
Suite 9
To our Stockholders:
33912
NEO2024.
NeoGenomics, Inc.
Douglas M. VanOort
Chairman and Chief Executive Officer
April 15, 2021
Lynn Tetrault | ||
Non-Executive Chair of the Board of Directors |
Notice of 2021 Annual Meeting of Stockholders
ITEMS OF BUSINESS:
compensation.
restated).
2024.
RECORD DATE:
PROXY VOTING:
25, 2024.
By Mail | By Phone | By Internet |
Denise E. Pedulla
Corporate Secretary
2021
This Proxy Statement, including the notice of the 2024 Annual Meeting (the "Meeting Notice") and the proxy card, were first distributed to our stockholders on or about April 8, 2024.
Proposal 1 - Election of Directors | ||||||||||||||
•As of March 2024, eight of our nine Director nominees are independent, and all represent a diverse background of qualifications and experience. •Our Director nominees are 33% female and 22% racial/ethnic diverse. •All Board Committees are comprised solely of independent Directors. | ü | The Board recommends a vote FOR each Director nominee. | ||||||||||||
à | ||||||||||||||
Proposal 2 - Advisory Vote on Executive Compensation | ||||||||||||||
•We strive for pay-for-performance and believe that performance objectives should align with our strategy over the long term. •Our compensation philosophy is focused on providing compensation and benefits that are competitive and meet our goals of attracting, retaining, and motivating highly skilled teammates and management. | ü | The Board recommends a vote FOR this proposal. | ||||||||||||
à | ||||||||||||||
Proposal 3 - To Approve the Fourth Amendment of the Employee Stock Purchase Plan (as amended and restated) | ||||||||||||||
•To approve the Fourth Amendment of the Employee Stock Purchase Plan (as amended and restated) will increase the number of shares of common stock reserved for issuance under the ESPP by 1,000,000 shares to 3,500,000 shares. | ü | The Board recommends a vote FOR this proposal. | ||||||||||||
à | ||||||||||||||
Proposal 4 - Ratification of Independent Registered Accounting Firm | ||||||||||||||
•The Audit and Finance Committee of the Board has appointed Deloitte & Touche LLP to act as our independent registered public accounting firm for the fiscal year ending December 31, 2024. | ü | The Board recommends a vote FOR this proposal. | ||||||||||||
à |
NeoGenomics, Inc. | 1 | 2024 Proxy Statement |
Diversity, Equity, Inclusion & Belonging Vision | ||||||||||||||||||||
Cancer doesn’t discriminate, and neither do we. While placing the value of people at the heart of our organization, we challenge ourselves every day to be more inclusive with our teams, clients, and community. We create an environment where culture engenders growth and innovation. We champion diversity and inclusion and take action to create an equitable culture where everyone belongs. |
NeoGenomics, Inc. | 2 | 2024 Proxy Statement |
Corporate Governance |
NeoGREEN Vision | ||||||||||||||||||||
NeoGenomics is committed to seeking and upholding environmentally sustainable solutions that build trust with our employees, clients, and stakeholders. |
Corporate Governance Highlights | |||||
Independent Board Chair | •As of March 2024, Lynn Tetrault, NeoGenomics’ independent non-executive Chair of the Board, has nine years’ tenure on the Board and extensive healthcare leadership experience | ||||
Independent and diverse director nominees | •As of March 2024, eight of our nine directors are independent •All Board committees are entirely comprised of independent directors •Five of our nine directors, representing 56% of our directors are diverse (either gender or race/ethnicity) •Directors have a broad range of experience, skills, and qualifications (see "Director Diversity and Expertise"’ on page 12) | ||||
Executive sessions of independent directors | •Independent directors meet regularly without management | ||||
Active board refreshment | •Balanced mix of short and long-tenured directors •Four of our eight independent directors joined the Board within the last twenty-four months •Annual election of all directors | ||||
Continual assessments | •Board and Committees complete annual self-evaluation surveys •Annual Chief Executive Officer and executive management performance and potential evaluation in alignment with corporate goals and objectives, including achievement of business and strategic objectives •Continuously evaluate director capacity | ||||
Stock ownership guidelines | •No hedging or pledging of NeoGenomics stock •Minimum stock holding requirements for directors and executive officers |
NeoGenomics, Inc. | 3 | 2024 Proxy Statement |
Corporate Governance |
Role | Share Ownership Guideline | Current Share Ownership | ||||||||||||
Chair of the Board | 3.0 | 13.5 | ||||||||||||
Board Members(1) | 3.0 | 15.6 |
NeoGenomics, Inc. | 4 | 2024 Proxy Statement |
Corporate Governance |
NeoGenomics, Inc. | 5 | 2024 Proxy Statement |
Corporate Governance |
Board of Directors | ||||||||||||||||||||
•Stay informed of our risk profile and oversee our Enterprise Risk Management program •Consider risk in connection with strategic planning and other matters |
Audit & Finance | Nominating & Corporate Governance | Culture & Compensation | Compliance | Innovation, Pipeline & Technology | ||||||||||||||||||||||
•Enterprise risks, including but not limited to risks relating to IT use and protection, data governance, privacy, and cybersecurity •Independent auditor’s qualifications and independence •Financial reporting and processes, including internal control over financial reporting | •ESG matters •Investor engagement and communications •Review Board size, composition, function, duties, diversity, and Strategic Competencies •Develop and recommend to the Board the Corporate Governance Guidelines and oversee compliance with these Guidelines | •Review the risks associated with the Company’s compensation policies and practices •Oversee an annual review of the Company’s risk assessment of its compensation policies and practices for its employees •Diversity, equity, inclusion and belonging •Succession planning | •Assess management’s implementation of the Corporate Compliance Program elements •Assess adequacy and effectiveness of policies and programs to monitor compliance with laws and regulations •Monitor significant external and internal investigations •Implementation of Code of Business Conduct and Ethics •Confirmation of zero conflict of interests related to members of the Board of Directors and Named Executive Officers (as defined below under "Executive Compensation") and external consultants engaged by the Board | •Develop insights and recommendations regarding the Company's approach to product pipeline development and technical and commercial innovation •Support recruitment and interactions with the Company's scientific advisory board |
NeoGenomics Management | ||
NeoGenomics management advises the Board and its Committees of key risks and the status of ongoing efforts to address these risks. |
NeoGenomics, Inc. | 6 | 2024 Proxy Statement |
Corporate Governance |
NeoGenomics, Inc. | 7 | 2024 Proxy Statement |
Lynn Tetrault | Age: 61 | Non-Executive Chair of the Board | ||||||||||||||||||||
Lynn Tetrault has served as the non-executive Chair of the Board since August 2022. Prior to her holding this position, from May 2022, Ms. Tetrault served as our Interim Chief Executive Officer and Chair of the Board. From March 2022 to May 2022, Ms. Tetrault served as our Executive Chair of the Board and functioned as the Company's principal executive officer. From October 2021 to March 2022, she served as our non-executive Chair and from July 2020 to October 2021 she served as our Lead Independent Director. Ms. Tetrault has been a director since June 2015. She has also served as a director of Rhythm Pharmaceuticals, Inc. since 2020 and as a director of Acelyrin, Inc. since December 2023. Ms. Tetrault has more than 30 years of experience in the healthcare sector. She worked from 1993 to 2014 with AstraZeneca PLC, most recently as Executive Vice President of Human Resources and Corporate Affairs from 2007 to 2014. Ms. Tetrault was responsible for human resources strategy, talent management, executive compensation and related activities, internal and external communications, government affairs, corporate reputation, and corporate social responsibility for AstraZeneca. Prior to AstraZeneca Ms. Tetrault practiced healthcare and corporate law at Choate, Hall and Stewart in Boston. Ms. Tetrault has a BA from Princeton University and a JD from the University of Virginia Law School. Skills and Qualifications Lynn Tetrault is a dynamic, seasoned executive in the pharmaceutical industry. Having progressed through numerous senior management roles at AstraZeneca, she acquired extensive human resource and corporate governance experience at the highest level of that company. As the Company continues to grow, Ms. Tetrault’s experience is helping to shape human resource policies and operations as well as the make-up of the Board and its governance policies, and therefore we believe that Ms. Tetrault is well qualified to serve on our Board. |
Christopher Smith | Age: 61 | Board Member and Chief Executive Officer | ||||||||||||||||||||
Chris Smith was appointed Chief Executive Officer and a director in August 2022. Prior to joining NeoGenomics, from 2019 to 2022, Mr. Smith served as Chief Executive Officer of Ortho Clinical Diagnostics (“Ortho Clinical”). Under his leadership, Ortho Clinical raised $1.45 billion in funding for a 2021 initial public offering and achieved accelerated revenue growth while simultaneously improving profitability. Mr. Smith successfully guided the company through a combination with Quidel that closed in May 2022. Prior to Ortho Clinical, from 2004 to 2018, Mr. Smith served in key executive leadership positions, including CEO of Cochlear Limited (“Cochlear”), a global market leader in implantable hearing solutions. Having initially joined Cochlear as President of Cochlear Americas in 2004, Mr. Smith helped grow division revenue from $80 million to over $400 million before being named CEO in 2015. Before joining Cochlear, Mr. Smith served as a Chief Executive Officer in residence at global private equity firm Warburg Pincus and Global Group President at Gyrus Group Plc., a surgical products company. Prior to that he served in a variety of leadership roles at Abbott, KCI, Prism and Cardinal Health. Prior to 2023, Mr. Smith has served as a member of the board of directors at QuidelOrtho, a global provider of innovative in vitro diagnostic technologies, Akouos, Inc., Osler Diagnostics Limited and Results Physiotherapy. In addition, since mid-2023, Mr. Smith has served as a member of the board of directors of Laborie Medical Technologies Corp. Mr. Smith has a BS from Texas A&M University. Skills and Qualifications Mr. Smith is a dynamic leader with strong cultural values, vast diagnostic industry experience, and an extensive history of proven operating success. Because of Mr. Smith’s extensive industry knowledge and his experience serving on the boards of directors of other public companies, we believe Mr. Smith is well qualified to serve on our Board. |
NeoGenomics, Inc. | 8 | 2024 Proxy Statement |
Proposal 1 |
Dr. Alison Hannah | Age: 63 | Board Member and Chair of the Compliance Committee | ||||||||||||||||||||
Dr. Hannah has served as a director since June 2015. Dr. Hannah has over 30 years’ experience in the development of investigational cancer chemotherapies. She currently serves as a consultant to the pharmaceutical industry, working with over 30 companies over 20 years with a focus on molecularly targeted anti-cancer therapy. From 2020 to 2022, Dr. Hannah served as Senior Vice President and Chief Medical Officer at CytomX Therapeutics, an oncology-focused biopharmaceutical company. Previously, Dr. Hannah worked as Senior Medical Director at SUGEN (working on Sutent and other tyrokine kinase inhibitors) and Quintiles, a global contract research organization. Dr. Hannah has also served on the board of directors of Rigel Pharmaceuticals since 2021. Dr. Hannah specializes in clinical development strategy and has filed over 30 Investigational New Drug applications for new molecular entities and seven successful New Drug Applications (including talazoparib, enzalutamide, defibrotide, carfilzomib, and others). Dr. Hannah received her BA in biochemistry and immunology from Harvard University and her MD from the University of Saint Andrews. She is a member of ASCO, AACR, ASH, ESMO, SITC, and a Fellow with the Royal Society of Medicine. Skills and Qualifications Dr. Hannah has significant healthcare knowledge having spent over 20 years as a consultant in the field of oncology drug development and has over 30 years of experience working with biopharmaceutical companies. Dr. Hannah has extensive knowledge of the clinical trials marketplace, and we believe she will continue to offer valuable guidance on how the Company should position itself to obtain clinical trials diagnostic testing volumes as the Company continues to grow its revenue in that area. Because of this experience and knowledge, we believe Dr. Hannah is well qualified to serve on our Board. |
Stephen Kanovsky | Age: 61 | Board Member and Chair of the Nominating and Corporate Governance Committee | ||||||||||||||||||||
Mr. Kanovsky has served as a director since July 2017. Mr. Kanovsky is Deputy General Counsel and Chief Commercial Counsel of GE HealthCare, where he has served since 2012, which provides medical technologies and solutions to the global healthcare industry and supports customers throughout the world with a broad range of services and systems, from diagnostic imaging and healthcare IT to molecular diagnostics and life sciences. Prior to his service at GE HealthCare, Mr. Kanovsky held numerous legal, compliance, and research roles in several global pharmaceutical companies. Mr. Kanovsky earned his bachelor’s degree from the University of Pennsylvania. He subsequently graduated from Temple University’s School of Pharmacy with a master’s degree in Pharmacology and Temple University’s School of Law with a juris doctorate degree. Mr. Kanovsky also holds an MBA from Saint Joseph’s University’s Haub School of Business. Skills and Qualifications Mr. Kanovsky has over 25 years of legal and compliance experience in the global life sciences and pharmaceutical industry. Through his work as Deputy General Counsel and Chief Commercial Counsel of GE HealthCare, Mr. Kanovsky is able to provide continued knowledge of the life sciences space. He also brings valuable experience to our Board through his prior involvement with Clarient, Inc. (“Clarient”), prior to its acquisition by NeoGenomics in December 2015. Because of Mr. Kanovsky’s extensive legal and compliance background and long-term service to the Board, we believe Mr. Kanovsky is well qualified to serve on our Board. |
NeoGenomics, Inc. | 9 | 2024 Proxy Statement |
Proposal 1 |
Michael Kelly | Age: 67 | Board Member and Chair of the Audit and Finance Committee | ||||||||||||||||||||
Mr. Kelly has served as a director since July 2020 and served as the Board’s Lead Independent Director for the duration of Ms. Tetrault’s service as Executive Chair of the Board and Interim Chief Executive Officer in 2022. Mr. Kelly is a former senior executive of Amgen, Inc. ("Amgen") and is currently acting as Founder & President of Sentry Hill Partners, LLC, a global life sciences transformation and management consulting business he founded in 2018. Mr. Kelly has more than two decades of executive experience as a senior leader in the life sciences industry serving in various strategic finance and operations positions at Amgen from 2003 to 2017, most recently as Senior Vice President, Global Business Services and Vice President & CFO, International Commercial Operations. Mr. Kelly has also held positions at Biogen, Tanox, and Monsanto Life Sciences. Mr. Kelly currently serves as a director for Amicus Therapeutics, DMC Global, Inc., and Prime Medicine, Inc. Mr. Kelly serves on the Council of Advisors and was the former audit committee chair for Direct Relief, a humanitarian aid organization focused on health outcomes and disaster relief. Mr. Kelly holds a BS in business administration from Florida A&M University, concentrating in Finance and Industrial Relations. Skills and Qualifications Mr. Kelly has more than two decades of executive experience as a senior leader in the life sciences industry serving in various strategic finance and operations positions. We believe Mr. Kelly’s extensive experience managing and growing domestic and international organizations, as well as his track record in finance, operations and building differentiated product companies is highly valuable as we continue our long-term growth strategy, and therefore Mr. Kelly is well qualified to serve on our Board. In addition, we believe Mr. Kelly’s extensive knowledge and background in finance qualifies him to serve as a financial expert on the Audit and Finance Committee. |
David Perez | Age: 64 | Board Member | ||||||||||||||||||||
Mr. Perez has served as a director since November 2022. Mr. Perez has over 40 years of global executive leadership experience, leading the growth and operations of several businesses, growing and scaling organically through research and development and innovation, as well as through mergers and acquisitions. In March 2019, he retired from his position as president and CEO of Terumo BCT, a company dedicated to blood banking, transfusion medicine and cell-based therapies, following a comprehensive two-year succession and transition plan. Mr. Perez currently serves as a director on the following private company boards Laborie Medical Technologies Corp., Advanced Instruments, LLC and MoInlycke Health Care AB. During his nearly 20-year tenure, Mr. Perez guided Terumo BCT through several foreign ownership structures, leveraging his extensive experience leading complex, multinational businesses, and diverse, cross-cultural organizations. Under his leadership as CEO for 18.5 years, the company transformed from a single manufacturing and R&D site to a multi-national biomedical organization with five R&D centers and six manufacturing plants, as he helped drive global revenue growth from $160 million to $1 billion. Mr. Perez holds a BA in Political Science from Texas Tech University. Skills and Qualifications Mr. Perez has 40 years of executive leadership in medical device and health care services, He serves as an independent board member and advisor to several corporations and non-profit organizations. His expertise encompasses growing and scaling highly regulated global businesses organically through R&D and innovation and inorganically through M&A, leading within a variety of foreign, public, and private equity ownership structures, strategic planning, culture and talent development, succession planning, enterprise risk management, operations, compliance, and corporate governance. We believe Mr. Perez’s extensive knowledge and background as a chief executive and director qualifies him to service on our board. |
NeoGenomics, Inc. | 10 | 2024 Proxy Statement |
Proposal 1 |
Anthony Zook | Age: 63 | Board Member and Chair of the Culture and Compensation Committee | ||||||||||||||||||||
Mr. Zook has served as a director since June 2023. Mr. Zook served as Chief Executive Officer of Innocoll Pharmaceuticals, and prior to that Mr. Zook was Executive Vice President, Commercial Operations of AstraZeneca (AZ) where he held global P&L responsibility for all of AZ's brands and markets. Under Mr. Zook's leadership, AZ commercialized ten brands, each in excess of $1 billion in sales. Mr. Zook was also responsible for MedImmune, AZ's global biologics business. He also chaired the Commercial Investment Board, which identified and approved critical investments company-wide, including investments in plants, markets, and technology. Earlier in his career at AZ, Mr. Zook held various positions including CEO of North America and VP of Sales, where he helped lead the integrations of Astra US, Astra Merck, and Zeneca. Prior to joining AZ, Mr. Zook spent 14 years with Berlex Laboratories in a variety of positions. Skills and Qualifications Mr. Zook has significant experience as a brand and marketing executive with a focus on managing the interface between commercial and research and development aspects of an organization. Mr. Zook has served as a Chief Executive Officer of a large pharmaceutical company with global responsibilities, has significant sales and marketing experience, as well as operational and oncology experience. Because of Mr. Zook's industry knowledge, we believe Mr. Zook is well qualified to serve on our Board. |
Elizabeth Floegel | Age: 48 | Board Member | ||||||||||||||||||||
Ms. Floegel has served as a director since June 2023. Ms. Floegel is Chief Information & Digital Officer of Numotion and manages a significant digital and cybersecurity transformation with the strategic use of data and technology to drive value creation by creating efficient and compliant operations. Before joining Numotion, Ms. Floegel was the Global Vice President of Business Technology at Allergan (now part of Abbvie) where she led the technology portfolio across global commercial, retail, digital products, and marketing. Prior to Allergan, Ms. Floegel was Head of Commercial and Digital Technology for Regeneron Pharmaceuticals and Global Vice President of Commercial Technology for Baxter Healthcare. Ms. Floegel holds an MBA from Benedictine University. Skills and Qualifications Ms. Floegel has a track record for successfully leading technology and organizational transformation in highly matrixed environments. She has extensive experience in cybersecurity, data privacy, automation, compliance technology and digital technology transformation. Because of her experience and knowledge, we believe Ms. Floegel is well qualified to serve on our Board. |
Dr. Neil Gunn | Age: 63 | Board Member and Chair of the Innovation, Pipeline & Technology Committee | ||||||||||||||||||||
Dr. Neil Gunn has served as a director since June 2023. Most recently, Dr. Gunn was the Chief Executive Officer of IDbyDNA, which was acquired by Illumina in 2022. Prior to that, Dr. Gunn was President of Roche Sequencing Solutions ("RSS"), where he grew the organization from early initial concepts to over 900 employees across three continents while integrating nine acquisitions into one with a common vision and strategy. Before RSS, Dr. Gunn was Head of Global Business for Roche Molecular Diagnostics and was responsible of the development and execution of strategic plan that launched over 140 major assay, instrument, and software launches over six years. Dr. Gunn’s earlier roles include Vice President Commercial Operations for CaridianBCT and Vice President of Commercial Operations - Americas for Novartis Diagnostics. Skills and Qualifications Dr. Gunn is a veteran diagnostics senior executive with expertise in company organization to maximize efficiencies with a focus on value generators to drive growth. Dr. Gunn has multi-year executive experience in multinational diagnostic companies and startups. He also has technical expertise in oncology diagnostics, next generation sequencing and other relevant technologies. Because of this experience and knowledge, we believe Dr. Gunn is well qualified to serve on our Board. |
NeoGenomics, Inc. | 11 | 2024 Proxy Statement |
Proposal 1 |
Average Tenure of Directors | Average Age of Directors | % of Diverse Directors (Gender, Racial/Ethnic) | ||||||||||||
3.5 years | 62 years | 56% |
Board Diversity Matrix (as of April 8, 2024) | ||||||||||||||
Total Number of Directors | 9 | |||||||||||||
Female | Male | Non-Binary | Did Not Disclose Gender | |||||||||||
Part I: Gender Identity | ||||||||||||||
Directors | 3 | 6 | 0 | 0 | ||||||||||
Part II: Demographic Background | ||||||||||||||
African American or Black | 0 | 1 | 0 | 0 | ||||||||||
Alaskan Native or Native American | 0 | 0 | 0 | 0 | ||||||||||
Asian | 0 | 0 | 0 | 0 | ||||||||||
Hispanic or Latinx | 0 | 1 | 0 | 0 | ||||||||||
Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | ||||||||||
White | 3 | 4 | 0 | 0 | ||||||||||
Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | ||||||||||
LGBTQ+ | 0 | 0 | 0 | 0 | ||||||||||
Did not Disclose Demographic Background | 0 | 0 | 0 | 0 |
NeoGenomics, Inc. | 12 | 2024 Proxy Statement |
Proposal 1 |
Board Strategic Competencies Matrix | |||||||||||||||||||||||||||||
Competencies / Attributes | Lynn Tetrault | Dr. Alison Hannah | Stephen Kanovsky | Michael Kelly | David Perez | Dr. Neil Gunn | Chris Smith | Tony Zook | Elizabeth Floegel | ||||||||||||||||||||
Financial (Reporting, Auditing, Internal Controls) | X | X | X | X | X | ||||||||||||||||||||||||
Strategy/Business Development / M&A | X | X | X | X | X | X | X | X | X | ||||||||||||||||||||
Human Resources / Organizational Development | X | X | X | X | |||||||||||||||||||||||||
Legal / Governance / Business Conduct | X | X | X | X | X | ||||||||||||||||||||||||
Sales / Marketing | X | X | X | X | X | ||||||||||||||||||||||||
Risk Management | X | X | X | X | X | X | X | ||||||||||||||||||||||
Information Technology/Cybersecurity | X | X | |||||||||||||||||||||||||||
Research & Development | X | X | X | ||||||||||||||||||||||||||
Medical/Scientific Affairs | X | ||||||||||||||||||||||||||||
Sustainability | X | X | |||||||||||||||||||||||||||
Public Policy / Regulatory Affairs | X | X | X | X | X | X |
Director Name | Audit and Finance Committee | Compliance Committee | Culture and Compensation Committee | Nominating and Corporate Governance Committee | Innovation, Pipeline & Technology Committee | ||||||||||||
Lynn Tetrault (non-executive Chair of the Board) | X | X | |||||||||||||||
Bruce Crowther(1) | X | X | |||||||||||||||
Dr. Alison Hannah | Chair | X | X | ||||||||||||||
Stephen Kanovsky | X | Chair | |||||||||||||||
Michael Kelly | Chair | X | |||||||||||||||
David Perez | X | X | X | ||||||||||||||
Tony Zook(2) | X | Chair | X | ||||||||||||||
Elizabeth Floegel | X | X | |||||||||||||||
Dr. Neil Gunn | X | X | Chair | ||||||||||||||
Number of Meetings Held in 2023 | 8 | 4 | 8 | 6 | 0(3) |
NeoGenomics, Inc. | 13 | 2024 Proxy Statement |
Proposal 1 |
NeoGenomics, Inc. | 14 | 2024 Proxy Statement |
Proposal 1 |
NeoGenomics, Inc. | 15 | 2024 Proxy Statement |
Proposal 1 |
NeoGenomics, Inc. | 16 | 2024 Proxy Statement |
NeoGenomics, Inc. | 17 | 2024 Proxy Statement |
NeoGenomics, Inc. | 18 | 2024 Proxy Statement |
Proposal 3 |
NeoGenomics, Inc. | 19 | 2024 Proxy Statement |
Proposal 3 |
NeoGenomics, Inc. | 20 | 2024 Proxy Statement |
2023 ($) | 2022 ($) | ||||||||||||||||
Audit fees | 1,772,689 | 1,949,493 | |||||||||||||||
Audit related fees | 276,737 | 233,102 | |||||||||||||||
Tax fees | 58,261 | — | |||||||||||||||
All other fees | 4,140 | 4,140 | |||||||||||||||
Total | 2,111,827 | 2,186,735 |
NeoGenomics, Inc. | 21 | 2024 Proxy Statement |
Proposal 4 |
MEMBERS OF THE AUDIT AND FINANCE COMMITTEE | ||
Michael Kelly (Chair) | ||
Bruce Crowther | ||
Elizabeth Floegel | ||
David Perez | ||
Tony Zook |
NeoGenomics, Inc. | 22 | 2024 Proxy Statement |
Executive Officer | Age | Current Position | ||||||
Christopher Smith | 61 | Director and Chief Executive Officer | ||||||
Jeffrey Sherman | 58 | Chief Financial Officer | ||||||
Gregory Aunan | 54 | Chief Accounting Officer | ||||||
Alicia Olivo(1) | 40 | EVP, General Counsel & Business Development | ||||||
Melody Harris | 58 | President, Enterprise Operations | ||||||
Warren Stone | 51 | President, Clinical Services | ||||||
Vishal Sikri(2) | 48 | President, Advanced Diagnostics | ||||||
NeoGenomics, Inc. | 23 | 2024 Proxy Statement |
Executive Officers |
NeoGenomics, Inc. | 24 | 2024 Proxy Statement |
Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Option Awards(1) ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||
Lynn Tetrault | 125,000 | 168,000 | 72,000 | 365,000 | ||||||||||||||||||||||||||||||||||||||||
Bruce Crowther | 73,451 | 168,000 | 72,000 | 313,451 | ||||||||||||||||||||||||||||||||||||||||
David Daly(2) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Dr. Alison Hannah | 65,000 | 168,000 | 72,000 | 305,000 | ||||||||||||||||||||||||||||||||||||||||
Stephen Kanovsky(3) | 69,200 | 168,000 | 72,000 | 309,200 | ||||||||||||||||||||||||||||||||||||||||
Michael Kelly | 77,500 | 168,000 | 72,000 | 317,500 | ||||||||||||||||||||||||||||||||||||||||
David Perez(3) | 69,800 | 168,000 | 72,000 | 309,800 | ||||||||||||||||||||||||||||||||||||||||
Dr. Neil Gunn(3)(4) | 36,309 | 168,000 | 72,000 | 276,309 | ||||||||||||||||||||||||||||||||||||||||
Tony Zook(4) | 36,226 | 168,000 | 72,000 | 276,226 | ||||||||||||||||||||||||||||||||||||||||
Elizabeth Floegel(4) | 33,393 | 168,000 | 72,000 | 273,393 | ||||||||||||||||||||||||||||||||||||||||
Rachel Stahler(5) | 16,250 | — | — | 16,250 |
NeoGenomics, Inc. | 25 | 2024 Proxy Statement |
Independent Compensation Tables |
Name | Shares of Restricted Stock | Number of Shares Underlying Options | ||||||||||||
Lynn Tetrault | 11,336 | 8,353 | ||||||||||||
Bruce Crowther | 11,336 | 8,353 | ||||||||||||
David Daly(1) | — | — | ||||||||||||
Dr. Alison Hannah | 11,336 | 8,353 | ||||||||||||
Stephen Kanovsky | 11,336 | 8,353 | ||||||||||||
Michael Kelly | 11,336 | 8,353 | ||||||||||||
David Perez | 11,336 | 8,353 | ||||||||||||
Dr. Neil Gunn(2) | 11,336 | 8,353 | ||||||||||||
Tony Zook(2) | 11,336 | 8,353 | ||||||||||||
Elizabeth Floegel(2) | 11,336 | 8,353 | ||||||||||||
Rachel Stahler(3) | — | — |
NeoGenomics, Inc. | 26 | 2024 Proxy Statement |
Named Executive Officer | Title | Dates of Service as NEO | |||||||||
Christopher Smith | Director and Chief Executive Officer | August 2022 - Present | |||||||||
Jeffrey Sherman | Chief Financial Officer | December 2022 - Present | |||||||||
Melody Harris | President, Enterprise Operations | December 2022 - Present | |||||||||
Warren Stone | President, Clinical Services | November 2022 - Present | |||||||||
Vishal Sikri | President, Advanced Diagnostics(1), former President, Pharma Services and President and Chief Commercial Officer, Inivata | May 2022 - Present |
NeoGenomics, Inc. | 27 | 2024 Proxy Statement |
Executive Compensation |
NeoGenomics, Inc. | 28 | 2024 Proxy Statement |
Executive Compensation |
Metric | How we Use it | Why it Matters | |||||||||
Revenue | Financial metric | Our vision is to be the world’s leading cancer testing, information, and decision support company by providing uncompromising quality, exceptional service, and innovative solutions. Increases in revenue through the execution of strategic opportunities aligns management performance with the achievement of that vision and stockholder value realization. | |||||||||
Adjusted EBITDA | Financial metric | We continue to seek profitable growth to achieve outstanding performance for our stockholders. Adjusted EBITDA focuses our management team on balancing the profitability of our ongoing operations with the implementation of strategic initiatives to provide for future growth. | |||||||||
Strategic Critical Success Factors | Company metric | We believe that a culture of motivated and engaged employees will deliver superior service to our clients, leading to customer satisfaction and retention, which will continue to increase stockholder value. Annual focus areas are established each year to align with our strategic critical success factors. In 2023, our focus areas included: profitably grow our core business; accelerate Advanced Diagnostics; enhance our people and culture; and drive value creation. Measurement against the achievement of these focus areas provides for continuous alignment with our common purpose and vision. | |||||||||
Individual Performance | Individual metric | Each executive that participates in the Management Incentive Plan (“MIP”) plays a unique role in the Company’s strategic objectives. Including individual performance goals for each executive that are in line with the executive’s major responsibilities ensures that incentive payments relate to both Company performance as well as individual performance. |
NeoGenomics, Inc. | 29 | 2024 Proxy Statement |
Executive Compensation |
Element | Purpose | Key Features | |||||||||
Base Salary | Provide competitive baseline compensation for role | •Fixed cash compensation •Amounts informed by levels in the market, taking account of the role, scope of the position, experience, performance and strategic criticality •As a starting point, we review market median benchmark ranges, and position against that range based on a variety of factors, including performance, criticality, unique skills, experience, and other relevant factors | |||||||||
Annual Incentive | Reward for the achievement of both NeoGenomics and individual performance during the year | •Variable cash compensation •Target opportunity informed by levels in the market •Actual value based on financial performance, company-defined critical strategic success factors and the executive’s performance against individual objectives | |||||||||
Long-Term Incentives | Align with the long-term interests of NeoGenomics, our stockholders and our employees, while rewarding long-term sustainable value creation and driving retention | •Grants of stock option awards, restricted stock awards and performance share units generally made annually to Named Executive Officers •Variable equity-based compensation •Target opportunity informed by levels in the market •Options require stock price appreciation to yield value •Restricted stock and options have three-year ratable vesting, options have a ten-year term and performance share/stock units have 3-year growth vesting targets |
NeoGenomics, Inc. | 30 | 2024 Proxy Statement |
Executive Compensation |
Compensation Best Practices | |||||||||||||||||
What We Do: | What We Avoid: | ||||||||||||||||
ü | Pay for performance | û | No tax gross-ups on any change-in-control benefits | ||||||||||||||
ü | Deliver majority of executive compensation in the form of variable or performance-based pay | û | No hedging or pledging of NeoGenomics stock | ||||||||||||||
ü | Align annual performance objectives with our strategy | û | No excessive perquisites, benefits, or pension payments | ||||||||||||||
ü | Conduct annual assessment of Chief Executive Officer pay versus performance | û | No reloading or repricing of stock option awards | ||||||||||||||
ü | Take into consideration the compensation levels of a relevant peer group of companies when setting compensation | û | No option grants with an exercise price below fair market value | ||||||||||||||
ü | Cap payout opportunities under our incentive plans | ||||||||||||||||
ü | Impose share ownership and retention requirements | ||||||||||||||||
ü | Impose clawback policy | ||||||||||||||||
ü | Limit change-in-control benefits to double trigger | ||||||||||||||||
ü | Solicit an annual ‘say on pay’ vote | ||||||||||||||||
ü | Engage an independent compensation consultant |
NeoGenomics, Inc. | 31 | 2024 Proxy Statement |
Executive Compensation |
Quarter | Typical Meeting Topics | |||||||
Q1 | •Setting compensation for Company executive officers, including the review and approval of executive benchmarking and pay recommendations, salary adjustments, annual bonus payouts, and long-term incentive award values; •Approve annual company and individual performance goals for the year ahead; •Assess compliance versus stock ownership guidelines; •Review historical equity awards and resulting burn rates; and •Engage in various stockholder outreach and engagement activities. | |||||||
Q2 | •Review and finalize compensation discussion and analysis section of the proxy statement; and •Monitor the Company’s incentive and equity-based compensation plan, including the review and approval of annual equity grants. •Review and finalize Board of Director compensation with guidance from WTW, our independent outside compensation consultant. | |||||||
Q3 | •Review and discuss proxy advisor reports and any other investor feedback; •Receive update on legislative, regulatory and governance environments; •Review current compensation philosophy and benchmark against our peers various elements of compensation, including organizational culture programs and practices pertaining to diversity, equity and inclusion; and •Review Culture and Compensation Committee charter. | |||||||
Q4 | •Conduct annual peer group review; •Undertake Culture and Compensation Committee self-evaluation; •Discuss potential compensation design enhancements and review planning timeline; and •Succession planning. |
NeoGenomics, Inc. | 32 | 2024 Proxy Statement |
Executive Compensation |
Role | Share Ownership Guideline | Share Ownership(1) | ||||||||||||
Chief Executive Officer | 3.0 | 14.7 | ||||||||||||
Other Named Executive Officers | 1.0 | 6.1 |
NeoGenomics, Inc. | 33 | 2024 Proxy Statement |
Executive Compensation |
NeoGenomics, Inc. | 34 | 2024 Proxy Statement |
Executive Compensation |
Feedback Category | Specific Stockholder Commentary | Company Response | |||||||||
General Proxy-related | •Discuss stockholder outreach initiatives throughout proxy disclosures | •Included herein, and embedded throughout our broad proxy and CD&A commentary. •Many new leaders joined NeoGenomics in late 2022 and throughout 2023, which created a discernible upgrade in talent to sustainably run a complex organization. •Stockholders we engaged with were pleased to learn about leadership effectiveness directly from a Board member's perspective. | |||||||||
•Enhance understanding regarding Board member qualifications and refreshment | •Board Skills and Competencies Matrix now includes additional qualifications for Board members, including a focus on public company board experience and strategic competencies within the Cancer Diagnostics industry. •Stockholders were supportive of our Board refreshment approach, 10-year term limit guideline, and 2023 Board appointments. | ||||||||||
•Share actions around executive leadership transition planning | •Stockholders were supportive of succession planning and employee development, given that it is prevalent deeper than executive leadership. | ||||||||||
Compensation | •Changes to executive compensation mid performance period | •There were no mid-year changes to compensation packages in 2023. | |||||||||
•Increase emphasis of performance-based metrics in both annual bonus and long-term compensation | •The new annual bonus model features an increased focus on organizational-wide financials (revenue and AEBITDA) and strategic objectives (reduced weighting on individual performance). The shareholders we engaged were supportive of our short-term incentive plan changes. •2023 equity grants featured a PSU component (1/3 PSUs, 1/3 Options, 1/3 RSUs) tied to 3-year stock-price growth. There was generally positive feedback from investors on the addition of performance-based equity, though there is a preference for 50% of grants to be performance-based (there are inconsistent views on whether stock options are considered performance-based or purely time-based awards). •The PSU component for 2024 equity grants will feature both a stock-price growth metric as well as NeoGenomics revenue growth (both as measured over a 3-year period). | ||||||||||
•Ensure market-competitive and business success-driven CEO compensation | •Several stockholders expressed interest in executive compensation being benchmarked against performance relevant to peers. •Company turnaround/transformation outcomes will continue to drive variable cash compensation. Strong performance in 2023 directly contributed to named executive officer cash compensation above target, consistent with market norms. | ||||||||||
Environmental, Social, Governance | •Governance | •Positive feedback from investors regarding continued refinement of our Board Skills Matrix to align each Board member’s expertise against our core strategic objectives. Leveraged Board Skills Matrix to address future business needs and target complimentary skills and competencies in our new Directors. | |||||||||
•Sustainability | •We published our inaugural company Sustainability Report in March 2024 as a baseline and will continue to add additional disclosures going forward. We plan to report our information to EcoVadis and have our reduction targets validated by SBTI. •For further information on our future focus areas driven by business materiality and growth objectives, see our ESG and Sustainability Statement available under the Corporate Governance section of our website. | ||||||||||
•Social Focus | •Strengthened and introduced culture integration and engagement initiatives around diversity, equity, inclusion and belonging with the launch of our DEI&B Council. •Introduced new Leadership Attributes to augment our Core values, focused on driving the behaviors necessary to progress our business forward. •Our 2023 Employee Engagement Survey showed an increase in employee satisfaction and employee happiness, which are reflected in a decrease in voluntary employee turnover during the year. |
NeoGenomics, Inc. | 35 | 2024 Proxy Statement |
Executive Compensation |
•10x Genomics, Inc. | •Fulgent Genetics, Inc. | •Natera, Inc. | ||||||
•Adaptive Biotechnologies Corporation | •Invitae Corporation | •OPKO Health, Inc. | ||||||
•AtriCure, Inc. | •Maravai Life Sciences Holdings, Inc.(1) | •QuidelOrtho Corporation(2) | ||||||
•CareDx, Inc. | •Medpace Holdings, Inc. | •Veracyte, Inc. | ||||||
•Emergent BioSolutions, Inc. | •Myriad Genetics, Inc | |||||||
•Exact Sciences Corporation | •NanoString Technologies, Inc. |
NeoGenomics, Inc. | 36 | 2024 Proxy Statement |
Executive Compensation |
NeoGenomics, Inc. | 37 | 2024 Proxy Statement |
Executive Compensation |
Named Executive Officer | 2022 Base Salary ($) | 2023 Base Salary ($) | Increase (%) | Effective Date | |||||||||||||||||||
Christopher Smith | 1,000,000 | 1,000,000 | — | % | August 15, 2022 | ||||||||||||||||||
Jeffrey Sherman | 525,000 | 525,000 | — | % | December 7, 2022 | ||||||||||||||||||
Melody Harris | 525,000 | 525,000 | — | % | December 5, 2022 | ||||||||||||||||||
Warren Stone | 525,000 | 525,000 | — | % | November 21, 2022 | ||||||||||||||||||
Vishal Sikri | 510,000 | 536,000 | 5.1 | % | January 13, 2023 | ||||||||||||||||||
NeoGenomics, Inc. | 38 | 2024 Proxy Statement |
Executive Compensation |
Named Executive Officer | Target Bonus (% of annual salary) | Maximum Bonus (% of annual salary) | Actual Bonus (% of annual salary) | Actual Bonus (% of target) | ||||||||||||||||||||||
Christopher Smith | 100 | 200 | 185 | 185 | ||||||||||||||||||||||
Jeffrey Sherman | 70 | 140 | 119 | 171 | ||||||||||||||||||||||
Melody Harris | 60 | 120 | 101 | 169 | ||||||||||||||||||||||
Warren Stone | 60 | 120 | 104 | 174 | ||||||||||||||||||||||
Vishal Sikri | 60 | 120 | 100 | 167 | ||||||||||||||||||||||
Corporate Performance | Individual Performance | |||||||||||||||||||||||||
Named Executive Officer | Revenue (%) | Adjusted EBITDA (%) | Strategic Critical Success Factors (%) | Individual Goals (%) | ||||||||||||||||||||||
Christopher Smith | 40 | 40 | 10 | 10 | ||||||||||||||||||||||
Jeffrey Sherman | 40 | 40 | 10 | 10 | ||||||||||||||||||||||
Melody Harris | 40 | 40 | 10 | 10 | ||||||||||||||||||||||
Warren Stone | 40 | 40 | 10 | 10 | ||||||||||||||||||||||
Vishal Sikri | 40 | 40 | 10 | 10 | ||||||||||||||||||||||
NeoGenomics, Inc. | 39 | 2024 Proxy Statement |
Executive Compensation |
Named Executive Officer | Key Achievements | Individual Performance Factor Weighting (% of annual salary) | ||||||||||||
Christopher Smith | Developed a short and long-term sustainable strategy and approach to strong fiscal performance with favorable outcomes in 2023, drove cost opportunities to enable targeted re-investment and emphasized our customer and patient-first mindset. Oversaw introduction of a robust succession planning approach across various leadership levels. | 10 | ||||||||||||
Jeffrey Sherman | Implemented significant improvements across all key financial metrics, including cash flow operations, cost savings initiatives and oversaw key improvements in core financial and analytical capabilities. | 10 | ||||||||||||
Melody Harris | Drove critical targeted outcomes across lab operations, especially in the area of turnaround time, introduced and stabilized leadership and people operations, strong progress evidenced within our procurement and logistics environment. | 10 | ||||||||||||
Warren Stone | Delivered exceptional financial results and strong customer retention across the clinical division, established robust sustainable clinical strategy and comprehensive go-to-market design. | 10 | ||||||||||||
Vishal Sikri | Pharma business results were below plan for 2023, integrated R&D into the Advanced Diagnostics business and starting to see the benefits in that collaboration and leadership. | 10 | ||||||||||||
Named Executive Officer | 2023 Target Cash Incentive Opportunity | Revenue (40% Weight) @ 172% Performance | EBITDA (40% Weight) @ 200% Performance | Strategic Critical Success Factors (10% Weight) @ 98% Performance | 2023 Individual Performance Modifier | Individual Performance Modifier (10% Weight) | = | 2023 Actual Cash Incentive Award | |||||||||||||||||||||
Christopher Smith(1) | 1,000,000 | 688,000 | 800,000 | 98,000 | 200 | % | 200,000 | = | 1,850,000 | ||||||||||||||||||||
Jeffrey Sherman | 367,500 | 252,840 | 294,000 | 36,015 | 120 | % | 44,145 | = | 627,000 | ||||||||||||||||||||
Melody Harris | 315,000 | 216,720 | 252,000 | 30,870 | 105 | % | 33,110 | = | 532,700 | ||||||||||||||||||||
Warren Stone | 315,000 | 216,720 | 252,000 | 30,870 | 150 | % | 47,210 | = | 546,800 | ||||||||||||||||||||
Vishal Sikri | 321,600 | 221,261 | 257,280 | 31,517 | 80 | % | 25,242 | = | 535,300 |
NeoGenomics, Inc. | 40 | 2024 Proxy Statement |
Executive Compensation |
NeoGenomics, Inc. | 41 | 2024 Proxy Statement |
Executive Compensation |
MEMBERS OF THE CULTURE AND COMPENSATION COMMITTEE | ||
Tony Zook, Chair | ||
Bruce Crowther, former Chair | ||
Neil Gunn | ||
Michael Kelly | ||
Lynn Tetrault |
NeoGenomics, Inc. | 42 | 2024 Proxy Statement |
Executive Compensation |
Name and Principal Position | Year | Salary ($) | Bonus(1) ($) | Stock Award(2) ($) | Option Award(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||
Christopher Smith Director and Chief Executive Officer | 2023 | 1,000,000 | — | 5,986,768 | 2,816,870 | 1,850,000 | 12,308 | 11,665,946 | ||||||||||||||||||||||||||||||||||||||||||
2022 | 346,154 | — | 7,600,000 | 4,250,000 | 455,438 | 2,146,930 | 14,798,522 | |||||||||||||||||||||||||||||||||||||||||||
2021 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Jeffrey Sherman Chief Financial Officer | 2023 | 525,000 | — | 1,619,944 | 762,214 | 627,000 | 13,200 | 3,547,358 | ||||||||||||||||||||||||||||||||||||||||||
2022 | 16,154 | 250,000 | 1,500,000 | 1,500,000 | — | — | 3,266,154 | |||||||||||||||||||||||||||||||||||||||||||
2021 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Melody Harris President, Enterprise Operations | 2023 | 525,000 | — | 1,880,389 | 1,413,551 | 532,700 | 342,585 | 4,694,225 | ||||||||||||||||||||||||||||||||||||||||||
2022 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
2021 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Warren Stone President, Clinical Services | 2023 | 525,000 | — | 1,030,398 | 563,383 | 546,800 | 343,669 | 3,009,250 | ||||||||||||||||||||||||||||||||||||||||||
2022 | 40,385 | 350,000 | 1,000,000 | 1,000,000 | — | — | 2,390,385 | |||||||||||||||||||||||||||||||||||||||||||
2021 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Vishal Sikri President, Advanced Diagnostics | 2023 | 528,635 | — | 880,390 | 414,251 | 535,300 | 13,200 | 2,371,776 | ||||||||||||||||||||||||||||||||||||||||||
2022 | 294,231 | 500,000 | 1,250,000 | 1,250,000 | 255,000 | 12,750 | 3,561,981 | |||||||||||||||||||||||||||||||||||||||||||
2021 | — | — | — | — | — | — | — |
Named Executive Officer | Relocation Allowance(a) ($) | Severance ($) | Retirement Plan Company Contribution(b) ($) | Total All Other Compensation ($) | ||||||||||||||||||||||
Christopher Smith | — | — | 12,308 | 12,308 | ||||||||||||||||||||||
Jeffrey Sherman | — | — | 13,200 | 13,200 | ||||||||||||||||||||||
Melody Harris | 330,469 | — | 12,116 | 342,585 | ||||||||||||||||||||||
Warren Stone | 330,469 | — | 13,200 | 343,669 | ||||||||||||||||||||||
Vishal Sikri | — | — | 13,200 | 13,200 |
NeoGenomics, Inc. | 43 | 2024 Proxy Statement |
Executive Compensation |
Named Executive Officer | Equity Incentive Plan Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan(1) ($) | Estimated Future Payouts Under Equity Incentive Plan(2) (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) | Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price per Share of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards(3) ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Christopher Smith Director and Chief Executive Officer | 5/11/23 | — | 1,000,000 | 2,000,000 | — | — | — | 144,190 | — | — | 2,833,334 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | — | — | 269,841 | 19.65 | 2,816,870 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | 72,095 | 144,190 | 216,285 | — | — | — | 3,153,435 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey Sherman Chief Financial Officer | 5/11/23 | — | 367,500 | 735,000 | — | — | — | 39,016 | — | — | 766,664 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | — | — | 73,016 | 19.65 | 762,214 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | 19,508 | 39,016 | 58,524 | — | — | — | 853,280 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Melody Harris President, Enterprise Operations | 1/01/23 | — | 315,000 | 630,000 | — | — | — | 108,225 | — | — | 999,999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/01/23 | — | — | — | — | — | — | — | 201,613 | 9.24 | 999,300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | — | 21,204 | — | — | 416,659 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | — | — | — | 39,683 | 19.65 | 414,251 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | 10,602 | 21,204 | 31,806 | — | — | — | 463,731 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warren Stone President, Clinical Services | 5/11/23 | — | 315,000 | 630,000 | — | — | — | 28,838 | — | — | 566,667 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | — | — | 53,969 | 19.65 | 563,383 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | 10,602 | 21,204 | 31,806 | — | — | — | 463,731 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vishal Sikri President, Advanced Diagnostics | 5/11/23 | — | 321,600 | 642,600 | — | — | — | 21,204 | — | — | 416,659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | — | — | 39,683 | 19.65 | 414,251 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | 10,602 | 21,204 | 31,806 | — | — | — | 463,731 |
NeoGenomics, Inc. | 44 | 2024 Proxy Statement |
Executive Compensation |
NeoGenomics, Inc. | 45 | 2024 Proxy Statement |
Executive Compensation |
Stock Option Awards | Restricted Stock Awards | ||||||||||||||||||||||||||||
Name Executive Officer | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||||||||||||||||||||||
Christopher Smith | — | — | 84,191 | (1) | 1,173,623 | ||||||||||||||||||||||||
Jeffrey Sherman | — | — | 33,451 | (1) | 608,474 | ||||||||||||||||||||||||
Melody Harris | — | — | — | — | |||||||||||||||||||||||||
Warren Stone | — | — | 22,301 | (1) | 405,209 | ||||||||||||||||||||||||
Vishal Sikri | — | — | 59,381 | (1) | (1) | 1,020,166 | |||||||||||||||||||||||
NeoGenomics, Inc. | 46 | 2024 Proxy Statement |
Executive Compensation |
Stock Option Awards | Restricted Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
Name and Principal Position | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that have not Vested (#) | Market Value of Shares or Units of Stock that have not Vested(1) ($) | ||||||||||||||||||||||||||||||||||||||||||
Christopher Smith Director and Chief Executive Officer | 8/15/22 | 173,611 | 520,833 | (2) | — | 12.62 | 8/15/29 | 252,576 | 4,086,680 | (3) | ||||||||||||||||||||||||||||||||||||||||
8/15/22 | — | — | — | — | — | 265,452 | 4,295,013 | (6) | ||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | 269,841 | (7) | — | 19.65 | 5/11/30 | 144,190 | 2,332,994 | (8) | |||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | 144,190 | 2,332,994 | (10) | ||||||||||||||||||||||||||||||||||||||||||
Jeffrey Sherman Chief Financial Officer | 12/05/22 | 62,292 | 186,877 | (2) | — | 11.62 | 12/05/29 | 33,453 | 541,270 | (3) | ||||||||||||||||||||||||||||||||||||||||
12/05/22 | — | — | — | — | — | 66,905 | 1,082,523 | (9) | ||||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | 73,016 | (7) | — | 19.65 | 5/11/30 | 39,016 | 631,279 | (8) | |||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | 39,016 | 631,279 | (10) | ||||||||||||||||||||||||||||||||||||||||||
Melody Harris President, Enterprise Operations | 1/01/23 | — | 201,613 | (2) | — | 9.24 | 1/01/30 | 108,225 | 1,751,081 | (3) | ||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | 39,683 | (7) | — | 19.65 | 5/11/30 | 21,204 | 343,081 | (8) | |||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | 21,204 | 343,081 | (10) | ||||||||||||||||||||||||||||||||||||||||||
Warren Stone President, Clinical Services | 12/01/22 | 41,528 | 124,585 | (2) | — | 11.21 | 12/01/29 | 66,905 | 1,082,523 | (3) | ||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | 53,969 | (7) | — | 19.65 | 5/11/30 | 28,838 | 466,599 | (8) | |||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | 21,204 | 343,081 | (10) | ||||||||||||||||||||||||||||||||||||||||||
Vishal Sikri President, Advanced Diagnostics | 6/01/22 | 31,328 | 93,985 | (2) | — | 8.42 | 6/01/29 | 44,537 | 720,609 | (3) | ||||||||||||||||||||||||||||||||||||||||
6/01/22 | 96,899 | 96,900 | (4) | — | 8.42 | 6/01/29 | 44,537 | 720,609 | (5) | |||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | 39,683 | (7) | — | 19.65 | 5/11/30 | 21,204 | 343,081 | (8) | |||||||||||||||||||||||||||||||||||||||||
5/11/23 | — | — | — | — | — | 21,204 | 343,081 | (10) | ||||||||||||||||||||||||||||||||||||||||||
NeoGenomics, Inc. | 47 | 2024 Proxy Statement |
Executive Compensation |
Benefits and Payments Upon Termination | ||||||||||||||||||||
Named Executive Officer | Base Salary ($) | Target Bonus ($) | Benefits(1) ($) | |||||||||||||||||
Christopher Smith | 1,000,000 | 1,000,000 | 26,438 | |||||||||||||||||
Jeffrey Sherman | 525,000 | 367,500 | 26,641 | |||||||||||||||||
Melody Harris | 525,000 | 315,000 | 8,211 | |||||||||||||||||
Warren Stone | 525,000 | 315,000 | — | |||||||||||||||||
Vishal Sikri | 536,000 | 321,600 | 31,264 | |||||||||||||||||
Vesting Upon Termination | ||||||||||||||||||||||||||
Named Executive Officer | Unvested Stock Option (#) | Stock Option Awards Estimated Benefit(1) ($) | Unvested Restricted Stock (#) | Restricted Stock Estimated Benefit(1) ($) | ||||||||||||||||||||||
Christopher Smith | 263,558 | 618,055 | 132,255 | 2,139,886 | ||||||||||||||||||||||
Jeffrey Sherman | 86,630 | 284,052 | 46,457 | 751,674 | ||||||||||||||||||||||
Melody Harris | 63,630 | 349,797 | 34,124 | 552,126 | ||||||||||||||||||||||
Warren Stone | 59,517 | 206,394 | 31,913 | 516,352 | ||||||||||||||||||||||
Vishal Sikri | 141,455 | 995,049 | 66,450 | 1,075,161 | ||||||||||||||||||||||
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Executive Compensation |
Benefits and Payments Due to Change in Control | ||||||||||||||||||||
Named Executive Officer | Base Salary ($) | Target Bonus ($) | Benefits ($)(1) | |||||||||||||||||
Christopher Smith | 3,000,000 | 1,000,000 | 26,438 | |||||||||||||||||
Jeffrey Sherman | 1,050,000 | 367,500 | 26,641 | |||||||||||||||||
Melody Harris | 1,050,000 | 315,000 | 8,211 | |||||||||||||||||
Warren Stone | 1,050,000 | 315,000 | — | |||||||||||||||||
Vishal Sikri | 1,072,000 | 321,600 | 31,264 | |||||||||||||||||
Vesting Due to Change in Control | ||||||||||||||||||||||||||
Named Executive Officer | Unvested Stock Option (#) | Stock Option Awards Estimated Benefit(1) ($) | Unvested Restricted Stock (#) | Restricted Stock Estimated Benefit(1) ($) | ||||||||||||||||||||||
Christopher Smith | 790,674 | 1,854,165 | 662,218 | 10,714,687 | ||||||||||||||||||||||
Jeffrey Sherman | 259,893 | 852,159 | 139,374 | 2,255,071 | ||||||||||||||||||||||
Melody Harris | 241,296 | 1,399,194 | 129,429 | 2,094,161 | ||||||||||||||||||||||
Warren Stone | 178,554 | 619,187 | 95,743 | 1,549,122 | ||||||||||||||||||||||
Vishal Sikri | 230,568 | 1,481,268 | 110,278 | 1,784,298 | ||||||||||||||||||||||
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Executive Compensation |
Chief Executive Officer total compensation in 2023 | $ | 11,665,946 | ||||||
Median employee approximate total compensation in 2023 | $ | 89,324 | ||||||
Ratio of Chief Executive Officer compensation to median employee total compensation | 131:1 |
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Executive Compensation |
Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(1) | Summary Compensation Table Total for PEO ($)(2) | Compensation Actually Paid to PEO ($)(2) | Summary Compensation Table Total for PEO ($)(3) | Compensation Actually Paid to PEO ($)(3) | Summary Compensation Table Total for PEO ($)(4) | Compensation Actually Paid to PEO ($)(4) | ||||||||||||||||||||||||||||||||||||||||||
2023 | 11,665,946 | 16,407,815 | Not a PEO | Not a PEO | Not a PEO | Not a PEO | Not a PEO | Not a PEO | ||||||||||||||||||||||||||||||||||||||||||
2022 | 14,798,522 | 11,330,664 | 2,071,184 | 1,951,681 | 7,695,856 | (3,624,626) | Not a PEO | Not a PEO | ||||||||||||||||||||||||||||||||||||||||||
2021 | Not a PEO | Not a PEO | Not a PEO | Not a PEO | 11,479,855 | 9,094,405 | 7,227,002 | (3,903,431) | ||||||||||||||||||||||||||||||||||||||||||
2020 | Not a PEO | Not a PEO | Not a PEO | Not a PEO | Not a PEO | Not a PEO | 4,122,039 | 14,718,158 |
Year | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($)(5) | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($)(5) | Value of Initial Fixed $100 Investment Based On: | Net Income ($ millions) | Company-selected measure (Adjusted EBITDA) ($ millions)(7) | |||||||||||||||||||||||||||||||||
Total Stockholder Return ($) | Peer Group Total Stockholder Return ($)(6) | |||||||||||||||||||||||||||||||||||||
2023 | 2,999,799 | 4,429,543 | 55 | 119 | (88) | 3 | ||||||||||||||||||||||||||||||||
2022 | 2,688,029 | 1,906,745 | 32 | 114 | (144) | (48) | ||||||||||||||||||||||||||||||||
2021 | 4,041,472 | 2,553,526 | 117 | 126 | (8) | (4) | ||||||||||||||||||||||||||||||||
2020 | 972,616 | 2,315,879 | 184 | 126 | 4 | 35 |
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Executive Compensation |
Year | Summary Compensation Table Total ($) | Deductions from Summary Compensation Table Total Pay ($) | Additions to Summary Compensation Table Total Pay ($) | Compensation Actually Paid ($) | ||||||||||||||||||||||
Chief Executive Officer serving as PEO - Christopher Smith | ||||||||||||||||||||||||||
2023 | 11,665,946 | 8,803,638 | 13,545,507 | 16,407,815 | ||||||||||||||||||||||
2022 | 14,798,522 | 11,850,000 | 8,382,142 | 11,330,664 | ||||||||||||||||||||||
Interim Chief Executive Officer serving as PEO - Lynn Tetrault | ||||||||||||||||||||||||||
2022 | 2,071,184 | 180,000 | 60,497 | 1,951,681 | ||||||||||||||||||||||
Former Chief Executive Officer serving as PEO - Mark Mallon | ||||||||||||||||||||||||||
2022 | 7,695,856 | 5,947,510 | (5,372,972) | (3,624,626) | ||||||||||||||||||||||
2021 | 11,479,855 | 10,500,000 | 8,114,550 | 9,094,405 | ||||||||||||||||||||||
Former Chief Executive Officer serving as PEO - Douglas VanOort | ||||||||||||||||||||||||||
2021 | 7,227,002 | 6,577,675 | (4,552,758) | (3,903,431) | ||||||||||||||||||||||
2020 | 4,122,039 | 3,000,000 | 13,596,119 | 14,718,158 | ||||||||||||||||||||||
Average for other Named Executive Officers indicated above | ||||||||||||||||||||||||||
2023 | 2,999,799 | 1,772,770 | 3,202,514 | 4,429,543 | ||||||||||||||||||||||
2022 | 2,688,029 | 1,981,553 | 1,200,269 | 1,906,745 | ||||||||||||||||||||||
2021 | 4,041,472 | 3,350,000 | 1,862,054 | 2,553,526 | ||||||||||||||||||||||
2020 | 972,616 | 469,900 | 1,813,164 | 2,315,879 |
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Executive Compensation |
Year | Addition of fair value at fiscal year (FY) end, of equity awards granted during the FY that remained outstanding ($) | Addition of fair value at vesting date, of equity awards granted during the FY that vested during the FY ($) | Addition of change in fair value at FY end versus prior FY end for awards granted in prior FY that remained outstanding ($) | Addition of change in fair value at vesting date versus prior FY end for awards granted in prior FY that vested during the FY ($) | Deduction of the fair value at the prior FY end for awards granted in prior FY that failed to meet their vesting conditions ($) | Addition in respect of any dividends or other earnings paid during applicable FY prior to vesting date of underlying award ($) | Total Equity Adjustments Reflect in Compensation Actually Paid ($) | |||||||||||||||||||||||||||||||||||||
Chief Executive Officer serving as PEO - Christopher Smith | ||||||||||||||||||||||||||||||||||||||||||||
2023 | 6,614,037 | — | 5,989,957 | 941,513 | — | — | 13,545,507 | |||||||||||||||||||||||||||||||||||||
2022 | 8,382,142 | — | — | — | — | — | 8,382,142 | |||||||||||||||||||||||||||||||||||||
Interim Chief Executive Officer serving as PEO - Lynn Tetrault | ||||||||||||||||||||||||||||||||||||||||||||
2022 | 210,599 | — | (150,102) | — | — | — | 60,497 | |||||||||||||||||||||||||||||||||||||
Former Chief Executive Officer serving as PEO - Mark Mallon | ||||||||||||||||||||||||||||||||||||||||||||
2022 | — | — | — | 2,741,578 | (8,114,550) | — | (5,372,972) | |||||||||||||||||||||||||||||||||||||
2021 | 8,114,550 | — | — | — | — | — | 8,114,550 | |||||||||||||||||||||||||||||||||||||
Former Chief Executive Officer serving as PEO - Douglas VanOort | ||||||||||||||||||||||||||||||||||||||||||||
2021 | — | — | (4,381,981) | 11,265,258 | (11,436,035) | — | (4,552,758) | |||||||||||||||||||||||||||||||||||||
2020 | 8,485,218 | 9,145,571 | (4,034,670) | — | — | — | 13,596,119 | |||||||||||||||||||||||||||||||||||||
Average for other Named Executive Officers indicated above | ||||||||||||||||||||||||||||||||||||||||||||
2023 | 1,744,759 | 127,903 | 820,474 | 552,690 | (43,312) | — | 3,202,514 | |||||||||||||||||||||||||||||||||||||
2022 | 1,458,012 | — | (100,428) | 103,249 | (260,563) | — | 1,200,269 | |||||||||||||||||||||||||||||||||||||
2021 | 2,720,213 | (488,131) | (370,028) | — | — | — | 1,862,054 | |||||||||||||||||||||||||||||||||||||
2020 | 1,329,346 | 970,205 | (486,387) | — | — | — | 1,813,164 |
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Executive Compensation |
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Executive Compensation |
Adjusted EBITDA | ||
Revenue |
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Executive Compensation |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (#) | Weighted average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (#) | ||||||||||||||||||||
Equity compensation plans approved by security holders: | |||||||||||||||||||||||
Amended and Restated Equity Incentive Plan (“Equity Incentive Plan”)(1) | 3,437,486 | 16.84 | 7,588,221 | ||||||||||||||||||||
Employee Stock Purchase Plan (“ESPP”)(2) | — | N/A | 382,410 | ||||||||||||||||||||
Equity compensation plans not approved by security holders: | |||||||||||||||||||||||
Inducement Awards(3) | 943,613 | 12.36 | — | ||||||||||||||||||||
Total | 4,381,099 | 7,970,631 |
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Name And Address Of Beneficial Owner(1) | Amount and Nature Of Beneficial Ownership(1) | Percent Of Class(1) (%) | ||||||||||||
BlackRock, Inc.(2) | 19,980,993 | 15.7 | % | |||||||||||
The Vanguard Group(3) | 14,169,665 | 11.1 | % | |||||||||||
Brown Advisory Incorporated(4) | 9,536,307 | 7.5 | % | |||||||||||
T. Rowe Price Investment Management Inc.(5) | 6,382,515 | 5.0 | % | |||||||||||
Lynn Tetrault | 56,174 | * | ||||||||||||
Christopher Smith(6) | 740,229 | * | ||||||||||||
Bruce Crowther | 65,120 | * | ||||||||||||
Dr. Alison Hannah | 107,433 | * | ||||||||||||
Stephen Kanovsky | 24,754 | * | ||||||||||||
Michael Kelly | 20,419 | * | ||||||||||||
David Perez | 10,300 | * | ||||||||||||
Jeffrey Sherman(7) | 163,005 | * | ||||||||||||
Warren Stone(8) | 111,376 | * | ||||||||||||
Vishal Sikri(9) | 149,380 | * | ||||||||||||
Melody Harris(10) | 173,975 | * | ||||||||||||
Directors and executive officers as a group (16 persons)(11) | 1,708,161 | 1.3 | % |
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Security Ownership of Certain Beneficial Owners and Management |
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NeoGenomics, Inc. | 59 | 2024 Proxy Statement |
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8, 2024.
Q: What are the quorum requirements for the 20212024 Annual Meeting?
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Questions and Answers |
To elect nine members of our Board, each to hold office for a one year term ending on the date of the next succeeding annual meeting of stockholders or until such director’s successor shall have been duly elected and qualified.
restated).
Directors
Abstentions and broker non-votes will have no effect on the outcome of Proposal 1.
Officers
You may vote “for” or “against” or abstain from voting on Proposal 2. Because the proposal to approve the compensation paid to Named Executive Officers for the fiscal year ended December 31, 2023 is advisory, it will not be binding on us or the Board. However, our compensation committee intends to take into account the outcome of the vote when considering future executive compensation arrangements. Abstentions and broker non-votes will have no effect on the outcome of Proposal 2.
restated)
You may vote “for” or “against” or abstain from voting on Proposal 3. Abstentions and broker non-votes will have no effect on the outcome of Proposal 3.
Firm
You may vote “for” or “against” or abstain from voting on Proposal 4. Abstentions and broker non-votes will have no effect on the outcome of Proposal 4.
qualified;
Named Executive Officers;
independent registered public accounting firm for the year ending December 31, 2024.
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Questions and Answers |
instructions that accompanied your proxy materials. If your shares are held in “street name,” you should contact your bank or broker to obtain your 16-digit control number or otherwise vote through the bank or broker. If you lose your 16-digit control number, you may join the 2024 Annual Meeting as a “Guest” but you will not be able to vote, ask questions, or access the list of stockholders as of the Record Date.
proposal and will have no effect on the outcome of Proposal 4.
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Questions and Answers |
Q: Who is soliciting proxies and what is the cost?
PROPOSAL 1—ELECTION OF DIRECTORS
At the 2021 Annual Meeting, a board of nine directors will be elected, each to hold office until the next succeeding annual meeting of stockholders or until such director’s successor shall have been duly elected and qualified (or, if earlier, such director’s removal or resignation from our Board). Information concerning all director nominees appears below. Although management does not anticipate that any of the persons named below will be unable or unwilling to stand for election, in the event of such an occurrence, proxies may be voted for a substitute designated by the Board.
Information as to Nominees and Other Directors
Background information, as of April 15, 2021, about the Board’s nominees for election, as well as information regarding additional experience, qualifications, attributes or skills that led the Board to conclude that the nominee should serve on the Board, is set forth below. Raymond R. Hipp and Steven C. Jones have both decided to not stand for reelection in 2021.
Douglas M. VanOort, age 65. Mr. VanOort has served as the Chairman of the Board and Chief Executive Officer of the Company since October 28, 2009. For seven months prior to October 2009, he served as Chairman of the Board, Executive Chairman and Interim Chief Executive Officer. Prior to joining the Company, Mr. VanOort was a General Partner with a private equity firm, and a Founding Managing Partner of a venture capital firm. From 1982 through 1999, Mr. VanOort served in various positions at Corning Incorporated (“Corning”) and at its spin-off company, Quest Diagnostics, Inc. (“Quest Diagnostics”). During the period from 1995 through 1999, he served as the Senior Vice President Operations for Quest Diagnostics which was then a $1.5 billion newly formed NYSE-traded Company. During the period of 1989 to 1995, he held senior executive positions at Corning Life Sciences, Inc., including Executive Vice President. Corning Life Sciences Inc. had revenues of approximately $2 billion and was spun-off in a public transaction to create both Quest Diagnostics and Covance, Inc. From 1982 to 1989, Mr. VanOort served in various executive positions at Corning, including Director of Mergers & Acquisitions. Mr. VanOort served as the Chair of the American Clinical Laboratory Association through March 2021 where he previously served as a member of the Board. Mr. VanOort is a graduate of Bentley University.
Mark W. Mallon, age 58. Mr. Mallon has significant healthcare and pharmaceutical experience and a strong track record of success building industry-leading businesses in the U.S. and globally. Mr. Mallon has served as CEO of Ironwood Pharmaceuticals since January 2019. Prior to his role at Ironwood Pharmaceuticals, he spent twenty-four years at AstraZeneca in various roles of increasing scope and responsibility, including serving on the Executive Committee and as Executive Vice President of Global Product and Portfolio Strategy, Medical Affairs and Corporate Affairs from 2016 through January 2019. Prior to this role he held several senior sales and marketing roles at AstraZeneca, including Executive Vice President, International from 2013 through 2017. He started his career in the biopharmaceutical industry in management consulting. Mr. Mallon earned his B.S. in chemical engineering from the University of Pennsylvania and his master’s degree in business administration in marketing and finance from the Wharton School of Business.
Lynn A. Tetrault, age 58. Ms. Tetrault has served as a director since June 2015 and was appointed Lead Independent Director of the Company in July 2020. She also serves as a non-executive director of Rhythm Pharmaceuticals, Inc., a position to which she was appointed in December 2020. Ms. Tetrault has more than 25 years of experience in the healthcare sector. She worked from 1993 to 2014 with AstraZeneca, PLC, most recently as Executive Vice President of Human Resources and Corporate Affairs from 2007 to 2014. Ms. Tetrault was responsible for all human resources strategy,
talent management, executive compensation and related activities, internal and external communications, government affairs, corporate reputation and corporate social responsibility for the Company. Prior to AstraZeneca, Ms. Tetrault practiced healthcare and corporate law for five years at Choate, Hall and Stewart in Boston. Ms. Tetrault is founder and principal of Anahata Leadership, an advisory firm focused on supporting the leadership effectiveness and development of executive women. She is also a Fellow and member of the Advisory Board of Simmons University’s Institute for Inclusive Leadership. Ms. Tetrault has an undergraduate degree from Princeton University and a J.D. from the University of Virginia Law School.
Bruce K. Crowther, age 68. Mr. Crowther has served as a director since October 2014. Mr. Crowther retired in 2013 as President and Chief Executive Officer of Northwest Community Healthcare where he served for 23 years. Northwest Community Healthcare is an award winning hospital offering a complete system of care. Mr. Crowther has a B.S. in Biology and an Masters of Business Administration from Virginia Commonwealth University. Mr. Crowther serves on the board of directors of Wintrust Financial Corporation, a public financial holding company and has been a Director of Methode Electronics, Inc., a publicly traded company trading on the NYSE, since 2019. He was previously the Chairman and currently a Director of the Max McGraw Wildlife Foundation, a not for profit organization committed to conservation education and research. Mr. Crowther has also served on the board of directors of Gray Matter Analytics, Inc., a privately owned company, since 2018. Gray Matter provides analytical tools to health systems.
Dr. Alison L. Hannah, age 60. Dr. Hannah has served as a director since June 2015. Dr. Hannah has over 30 years’ experience in the development of investigational cancer chemotherapies. Dr. Hannah presently works as Senior Vice President and Chief Medical Officer at CytomX Therapeutics, an oncology-focused biopharmaceutical company. Prior to this position, she served as a consultant to the pharmaceutical industry, working with over 25 companies over 20 years with a focus on molecularly targeted anti-cancer therapy. Previously, Dr. Hannah worked as Senior Medical Director at SUGEN (working on Sutent and other tyrokine kinase inhibitors) and Quintiles, a global Contract Research Organization. Dr. Hannah specializes in clinical development strategy, and has filed over 30 Investigational New Drug applications for new molecular entities and 8 successful New Drug Applications (including talazoparib, enzalutamide, defibrotide, carfilzomib, and others). She has a bachelor’s degree in biochemistry and immunology from Harvard University and her medical degree from the University of Saint Andrews. She is a member of ASCO, AACR, ASH, ESMO, SITC and a Fellow with the Royal Society of Medicine.
Kevin C. Johnson, age 66. Mr. Johnson has served as a director since October 2010. Mr. Johnson was the Chief Executive Officer for United Allergy Services, a provider of allergy testing and immunotherapy services, from September 2014 through July 2015. From January 2003 until September 2014 and July 2015 to present, Mr. Johnson was retired. From May 1996 until January 2003, Mr. Johnson was Chairman, Chief Executive Officer and President of DIANON Systems, Inc. (“DIANON”), a publicly-traded cancer diagnostic services company providing anatomic pathology and molecular genetic testing services to physicians nationwide. During that time, DIANON grew annual revenues from approximately $56 million in 1996 to approximately $200 million in 2002. DIANON was sold to Laboratory Corporation of America (NYSE: LH) in January 2003. Prior to joining DIANON in 1996, Mr. Johnson was employed by Quest Diagnostics and Quest’s predecessor, the Life Sciences Division of Corning, for 18 years, and held numerous management and executive level positions.
Stephen M. Kanovsky, age 58. Mr. Kanovsky has served as a director since July 2017. Mr. Kanovsky, who has worked at General Electric since 2012, is General Counsel, Commercial of GE Healthcare, a business unit of General Electric that provides medical technologies and solutions to the global healthcare industry and supports customers in over 100 countries with a broad range of services and systems, from diagnostic imaging and healthcare IT through to molecular diagnostics and life
sciences. Prior to GE Healthcare, he held numerous roles in several global pharmaceutical companies. Mr. Kanovsky earned his bachelor’s degree from the University of Pennsylvania. He subsequently graduated from Temple University’s School of Pharmacy with a master’s degree in Pharmacology and Temple University’s School of Law with a juris doctorate degree. Mr. Kanovsky also holds a master’s degree in business administration from Saint Joseph’s University’s Haub School of Business.
Michael A. Kelly, age 64. Mr. Kelly has served as a director since July 2020. Mr. Kelly is a former senior executive of Amgen, Inc. and is currently acting as Founder & President of Sentry Hill Partners, LLC, a global life sciences transformation and management consulting business he founded in 2018. Mr. Kelly has more than two decades of executive experience as a senior leader in the life sciences industry serving in various strategic finance and operations positions at Amgen Inc. from 2003 to 2017, most recently as Senior Vice President, Global Business Services and Vice President & CFO, International Commercial Operations. Mr. Kelly has also held positions at Biogen, Tanox and Monsanto Life Sciences. Mr. Kelly is an independent member of the board of directors for publicly traded Amicus Therapeutics, Aprea Therapeutics, Inc., DMC Global, Inc., and Hookipa Pharma, Inc. Mr. Kelly serves on the Council of Advisors and was the former audit committee chairman for Direct Relief, a humanitarian aid organization focused on health outcomes and disaster relief. Mr. Kelly holds a BSc in business administration from Florida A&M University, concentrating in Finance and Industrial Relations.
Rachel A. Stahler, age 45. Ms. Stahler has served as a director since May 2020. Ms. Stahler is the Chief Information Officer at Organon, a new pharmaceutical company to be created in 2021 through the intended spin-off of Merck’s women’s health, legacy brands, and biosimilars businesses. Ms. Stahler has nearly two decades of global technology experience in the pharmaceutical industry. Previously, Mrs. Stahler was the Chief Information officer for Allergan, a global pharmaceutical leader focused on developing, manufacturing and commercializing branded pharmaceutical, device, biologic, surgical and regenerative medicine products for patients around the world with a focus on four key therapeutic areas: medical aesthetics, eye care, central nervous system and gastroenterology. Ms. Stahler also has experience at a leading CRO / CCO, Syneos Health, where she was Chief Information and Digital officer responsible for designing clinical and commercial systems for customers as an outsourcing leader. Ms. Stahler was also the Chief Information Officer at Optimer Pharmaceuticals and held various senior technology roles at Pfizer. Ms. Stahler holds a B.A. from the University of Pennsylvania and a master’s degree in business administration from Columbia Business School.
Nomination Criteria
The following is a summary of certain experience, qualifications, attributes and skills that led the Board to conclude that such person should serve as a director at the time each was nominated. This information supplements the biographical information provided above. Raymond R. Hipp and Steven C. Jones have both decided to not stand for reelection in 2021.
Douglas M. VanOort, Executive Chairman of the Board. Mr. VanOort has significant experience in the laboratory industry, including experience obtained as Chairman of the Board and Chief Executive Officer of the Company and as Senior Vice President Operations for Quest Diagnostics. Mr. VanOort also has significant financial experience, having served as Executive Vice President and Chief Financial Officer of Corning Life Sciences, Inc. and as an Operating Partner with a private equity firm and a Founding Managing Partner of a venture capital firm. Mr. VanOort is an experienced executive officer and manager as illustrated by the above described positions and others included in the biographical information provided above.
Mark W. Mallon, Board Member and Chief Executive Officer. Mr. Mallon has significant healthcare and pharmaceutical experience, including experience obtained as CEO of Ironwood
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Lynn A. Tetrault, Lead Director and Chairwoman of the Culture and Compensation Committee. Lynn Tetrault is a dynamic, seasoned executive in the pharmaceutical industry. Having progressed through numerous senior management roles at Astra Zeneca, she acquired extensive human resource and corporate governance experience at the highest level of that company. As the Company continues to grow, Ms. Tetrault’s experience is helping to shape human resource policies and operations as well as the make-up of the board of directors and its governance policies.
Bruce K. Crowther, Board Member and Chairman of the Compliance Committee. Mr. Crowther has experience in the healthcare industry and a strong knowledge of the hospital market having served as Chief Executive Officer of a healthcare system for 23 years. His experience in this role allows him to provide insight into how the Company should manage the hospital market. He also has experience serving on the board of directors of other public companies.
Dr. Alison L. Hannah, Board Member. Dr. Hannah has significant healthcare knowledge having spent over 20 years as a consultant in the field of oncology drug development with over 30 years of experience working with biopharmaceutical companies. Dr. Hannah presently works as Senior Vice President and Chief Medical Officer at CytomX Therapeutics, an oncology-focused biopharmaceutical company, giving her direct insight into current market dynamics. Dr. Hannah has extensive knowledge of the clinical trials marketplace and we believe she will be able to offer guidance on how the Company should position itself to obtain clinical trials diagnostic testing volumes as the Company continues to grow its revenue in that area.
Kevin C. Johnson, Board Member. Mr. Johnson spent the majority of his career in the laboratory business and was the Chief Executive Officer and President of DIANON before it was sold to Laboratory Corporation of America. His experience as a Chief Executive Officer of a rapidly growing laboratory company operating in a similar niche of our industry enables him to provide significant and valuable insights as to running a laboratory company and strategies we should pursue.
Stephen M. Kanovsky, Board Member and Chairman of the Nominating and Corporate Governance Committee. Mr. Kanovsky has over 25 years of legal experience in the global life sciences and pharmaceutical industry. Through his work at General Electric as General Counsel, Commercial of GE Healthcare, Mr. Kanovsky is able to provide continued knowledge of the life sciences space. He also brings valuable experience to our Board through his prior involvement with Clarient, Inc. (“Clarient”), prior to its acquisition by NeoGenomics in December of 2015.
Michael A. Kelly, Board Member and appointed Chairman of the Audit Committee. Mr. Kelly has more than two decades of executive experience as a senior leader in the life sciences industry serving in various strategic finance and operations positions. Mr. Kelly’s extensive experience managing and growing domestic and international organizations, as well as his track record in finance, operations and building differentiated product companies will be highly valuable as we continue the pursuit of our long-term growth strategy. Mr. Kelly’s extensive knowledge and background in finance allow him to serve as a financial expert on the Audit Committee.
Rachel A. Stahler, Board Member. Ms. Stahler is an experienced Chief Information Officer, having held several executive positions in the pharmaceutical industry, currently at Allergan, a global pharmaceutical leader focused on developing, manufacturing and commercializing branded pharmaceutical, device, biologic, surgical and regenerative medicine products for patients around the world. Ms. Stahler’s experience in designing clinical and commercial systems and prior senior technology roles will enhance the Company’s information technology policies and operations, as well as the composition and governance of the board of directors.
Director Independence. Under the NASDAQ Stock Market Rules, the Board has a responsibility to make an affirmative determination that those members of its Board that serve as independent directors do not have any relationships with the Company and its businesses that would impair their independence. In connection with these determinations, the Board reviews information regarding transactions, relationships and arrangements involving the Company and its businesses and each director that it deems relevant to independence, including those required by the NASDAQ Stock Market Rules.
The Board has determined that each of Ms. Tetrault, Mr. Crowther, Dr. Hannah, Mr. Hipp, Mr. Johnson, Mr. Kanovsky, Mr. Kelly, and Ms. Stahler are independent. The Audit Committee and the Culture and Compensation Committee are each composed entirely of directors who are independent under the NASDAQ Stock Market Rules and the applicable rules of the United States Securities and Exchange Commission (the “SEC”).
Director Nominations. Our Board has a standing Nominating and Corporate Governance Committee (the “Nominating Committee”). The Nominating Committee considers and recommends candidates for election to the Board and nominees for committee memberships and committee chairs.
Director candidates are considered based upon a variety of criteria, including demonstrated business and professional skills and experiences relevant to our business and strategic direction, concern for long-term stockholder interests, personal integrity and sound business judgment. The Nominating Committee seeks men and women from diverse professional backgrounds who combine a broad spectrum of relevant industry and strategic experience and expertise that, in concert, offer us and our stockholders diversity of opinion and insight in the areas most important to us and our corporate mission, including diversity, equity and inclusion with respect to gender, race and ethnicity, as set forth in the Company’s Skill Matrix. All director candidates must have time available to devote to the activities of the Board. We also consider the independence of director candidates, including the appearance of any conflict in serving as a director. A director who does not meet all of these criteria may still be considered for nomination to the Board if our independent directors believe that the candidate will make an exceptional contribution to us and our stockholders.
Generally, when evaluating and recommending candidates for election to the Board, the Nominating Committee will conduct candidate interviews, evaluate biographical information and background
material, and assess the skills and experience of candidates, against selection criteria set forth in the Company’s Skill Matrix in the context of the then-current needs of the Company. In identifying potential director candidates, the Board may also seek input from the executive officers and may also consider recommendations by employees, community leaders, business contacts, third-party search firms, and any other sources deemed appropriate by the Nominating Committee. The Nominating Committee will also consider director candidates recommended by stockholders to stand for election at the annual meeting of stockholders so long as such recommendations are submitted in accordance with the procedures described below under “Stockholder Recommendations for Board Candidates.”
Board Leadership Structure. Consistent with the Company’s Corporate Governance Guidelines, our Board has a policy that allows the offices of Chairman of the Board and Chief Executive Officer to be separate or combined and, if they are to be separate, allows Chairman of the Board role to be either selected from among the independent directors or an executive officer. Our Board believes that it should have the flexibility to make these determinations at any given time in the way that it believes best to provide appropriate leadership for the Company at that time. Our Board has reviewed our current Board leadership structure in light of the composition of the Board, the Company’s size, the nature of the Company’s business, the regulatory framework under which the Company operates, and other relevant factors. Considering these factors, through April 2021, the Company determined it was appropriate to have the same individual, Douglas VanOort, serve as Chief Executive Officer and Chairman of the Board. Beginning on July 16, 2020, Board Member Lynn Tetrault was appointed Lead Independent Director. On April 19, 2021, Mark W. Mallon will become Chief Executive Officer of the Company with Douglas VanOort retiring as Chief Executive Officer, and assuming the role of Executive Chairman of the Board.
Board Role in Risk Oversight.The Board administers its enterprise risk oversight function directly and through the Audit Committee. The Board and the Audit Committee regularly discuss with management the Company’s major risk exposures, including cybersecurity, their potential financial impact on the Company, and the steps taken to monitor, control and mitigate those risks. Please refer to the section “Information Regarding Meetings and Committees of the Board” below for a full description of the responsibilities of each Committee and their role in overseeing the Company’s major risk exposures.
Information Regarding Meetings and Committees of the Board
The Board. The Board met four times for regular meetings during 2020. All of such meetings were regularly scheduled meetings and telephonic calls were held as needed. In addition, the Board held five special meetings during 2020. During 2020, each incumbent director attended 75% or more of the Board and applicable committee meetings for the periods during which each such director served. Although not required, directors are invited to attend annual meetings of our stockholders. We held an annual meeting of stockholders on May 28, 2020, which was attended by six of the directors then serving on the Board.
The Board currently has four standing committees: the Audit Committee, the Nominating and Corporate Governance Committee, the Culture and Compensation Committee, and the Compliance Committee. The following is composition of the committees as of December 31, 2020.
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Audit Committee. The Audit Committee functions pursuant to a written charter adopted by the Board, a copy of which may be found at our website www.neogenomics.com under the heading Investors. The Audit Committee is appointed by the Board to assist the Board with a variety of matters described in its charter, which include monitoring (1) the quality and integrity of our financial statements, (2) the effectiveness of our internal controls over financial reporting, (3) the Company’s compliance with legal and regulatory requirements, (4) the Company’s enterprise risks, including but not limited to risks relating to the Company’s information technology use and protection, data governance, privacy, and cybersecurity, and the Company’s strategy to mitigate such risks, (5) the independent auditor’s qualifications and independence, (6) the performance of our independent registered public accounting firm, and (7) working in coordination with the Compliance Committee of the Board, the implementation and effectiveness of the Company’s ethics and compliance program. The formal report of the Audit Committee is set forth beginning on page 18 of this Proxy Statement. The Audit Committee met fourteen times during 2020.
The Board has determined that Ray Hipp, who served as the Audit Committee Chair through 2020, was independent and an “audit committee financial expert” as such term is defined under applicable SEC rules. Ray Hipp is not standing for re-election at the 2021 Annual Meeting. The Board has appointed Michael Kelly as the Audit Committee Chair, pending his re-election to the Board at the 2021 Annual Meeting. The Board has determined that Michael Kelly is independent and an “audit committee financial expert” as such term is defined under applicable SEC rules.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee functions pursuant to a written charter adopted by the Board, a copy of which may be found at our website www.neogenomics.com under the heading Investors. Our Nominating and Corporate Governance Committee is responsible for (1) reviewing and evaluating the size, composition, function, and duties of the Board consistent with its needs; (2) establishing criteria for the selection of candidates to the Board and its committees, and identifying individuals qualified to become Board members consistent with such criteria, including the consideration of nominees submitted by stockholders; (3) recommending to the Board, director nominees for election at the next annual or
special meeting of stockholders at which directors are to be elected or to fill any vacancies or newly created directorships that may occur between such meetings; (4) recommending directors for appointment to Board committees; (5) making recommendations to the Board as to determinations of director independence; (6) overseeing the evaluation of the Board; (7) developing and recommending to the Board the Corporate Governance Guidelines for the Company and overseeing compliance with such Guidelines; and (8) monitoring significant developments in the law and practice of corporate governance and of the duties and responsibilities of directors of public companies, including but not limited to overseeing the Company’s environmental, social and governance initiatives and investor engagement and communications. The Nominating and Corporate Governance Committee identifies and evaluates nominee candidates as described above under “Director Nominations”. The Nominating and Corporate Governance Committee met four times during 2020.
Culture and Compensation Committee. The Culture and Compensation Committee functions pursuant to a written charter adopted by the Board, a copy of which may be found at our website www.neogenomics.com under the heading Investors. The Culture and Compensation Committee is responsible for discharging the Board’s responsibilities relating to compensation of our Chief Executive Officer, other executive officers, and our directors and has overall responsibility for approving and evaluating all of our compensation plans, policies and programs as they affect our executive officers. All of the members of the committee are independent directors within the meaning of the applicable NASDAQ Stock Market Rules. The Culture and Compensation Committee met five times during 2020.
Specifically, the Culture and Compensation Committee is responsible for (1) setting compensation for Company executive officers and directors, (2) monitoring the Company’s incentive and equity-based compensation plans, (3) succession planning, and (4) organizational culture programs and practices to ensure that such programs are fair and appropriate and designed to attract, retain and motivate employees. Such programs include the Company’s diversity, equity and inclusion initiatives and Human Resources policies and practices relating to organizational engagement and effectiveness, employee development programs, fair pay and benefit programs and equal employment and equal opportunity.
The Culture and Compensation Committee engaged independent compensation consulting firm Willis Towers Watson (“WTW”) in 2020 to advise the Culture and Compensation Committee on peer development, market practices, industry trends, investor views and benchmark compensation data. In addition, WTW reviewed and provided the Culture and Compensation Committee with an independent perspective of management recommendations. These duties were consistent with those performed in prior years. For the year ended December 31, 2020, aggregate fees for WTW’s consulting services provided to the Culture and Compensation Committee were approximately $187,000. Approximately $174,000 of this aggregate amount was related to review of executive compensation.
The decision to engage this firm as a consultant was made by the Culture and Compensation Committee.
Compliance Committee. Our Compliance Committee functions pursuant to a written charter adopted by the Board, a copy of which may be found at our website www.neogenomics.com under the heading Investors. The Compliance Committee is responsible for overseeing the Company’s activities in the area of corporate compliance with applicable laws and regulations related to our provision of medical-related services and assessing management’s implementation of the Company’s Corporate Compliance Program, including but not limited to (1) the adequacy and effectiveness of policies and procedures to ensure the Company’s compliance with applicable laws and regulations, (2) the organization, responsibilities, plans, budget, staffing and performance of the Company’s Compliance Department, including its independence, authority and reporting obligations, (3) the appointment and review of the compliance officer, including the compliance officer’s reports and summaries, (4) the
monitoring of significant internal and external investigations, (5) the monitoring of the Company’s actions in response to applicable legislative, regulatory and legal developments, (6) the Company’s Code of Conduct and policies and procedures that guide the Company and employees, (7) the appropriate mechanisms for employees to seek guidance to report concerns, including anonymously through the Company’s compliance hotline, and (8) the Company’s compliance risk assessment activities and efforts to promote an ethical culture. The Compliance Committee met five times during 2020.
Stockholder Recommendations for Board Candidates
The Board will consider qualified candidates for director that are recommended and submitted by stockholders. Submissions that meet the current criteria for board membership are forwarded to the Nominating and Corporate Governance Committee for further review and consideration. The Committee will consider a recommendation only if appropriate biographical information and background material is provided on a timely basis, accompanied by a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than five percent of our common stock for at least one year as of the date that the recommendation is made. To submit a recommendation for a nomination, a stockholder may write to the Board at our principal executive office, Attention: Denise E. Pedulla, Corporate Secretary.
The Committee will evaluate any such candidates by following substantially the same process, and applying substantially the same criteria, as for candidates submitted by Board members, assuming that appropriate biographical and background material is provided for candidates recommended by stockholders and the process for submitting the recommendation is followed.
Stockholder Communications with the Board
Stockholders may, at any time, communicate with any of our directors by mailing a written communication to NeoGenomics, Inc., 12701 Commonwealth Drive, Suite 9, Fort Myers, Florida, 33913, Attention: Denise E. Pedulla, Corporate Secretary. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Stockholder-Board Communication” or “Stockholder-Director Communication.” All such letters must identify the author as a stockholder, provide evidence of the sender’s stock ownership and clearly state whether the intended recipients are all members of the Board or a particular director or directors. The Corporate Secretary will then forward such correspondence, without editing or alteration, to the Board or to the specified director(s) on or prior to the next scheduled meeting of the Board. The Board will determine the method by which such submission will be reviewed and considered. The Board may also request the submitting stockholder to furnish additional information it may reasonably require or deem necessary to sufficiently review and consider the submission of such stockholder.
The nine nominees receiving the majority of votes cast “FOR” by stockholders virtually or by proxy will be elected. Proposal 1 is a “non-discretionary” or “non-routine” item, meaning that brokerage firms cannot vote shares in their discretion on behalf of a client if the client has not given voting instructions. Accordingly, if you hold your shares in street name and fail to instruct your broker to vote your shares, your shares will not be counted as votes cast and will have no effect on the outcome of Proposal 1.
The Board unanimously recommends a vote “FOR” each nominee in Proposal 1.
PROPOSAL 2—ADVISORY VOTE ON THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS
We are providing our stockholders with the opportunity to express their views on our named executive officers’ compensation as set forth under “Executive and Director Compensation” by casting their vote on Proposal 2. This non-binding, advisory vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers as described in this Proxy Statement.
The Board believes our executive compensation program, which is described in detail in the “Executive and Director Compensation” section is designed to balance the goals of attracting and retaining talented executives who are motivated to achieve our annual and long-term strategic goals, while keeping the program affordable and appropriately aligned with stockholder interests. We believe that our executive compensation program accomplishes these goals in a way that is consistent with our purpose and core values, and the long-term interests of the Company and its stockholders. Our equity compensation (which is awarded in the form of stock options and restricted stock) is designed to build executive ownership and align financial incentives focused on the achievement of our long-term strategic goals (both financial and non-financial).
Although the vote on Proposal 2 regarding the compensation of our named executive officers is not binding, the Board and the Culture and Compensation Committee value the opinions of our stockholders and will consider the result of the vote when determining future executive compensation arrangements.
If this proposal is approved, our stockholders will be approving the following resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K in the Company’s Proxy Statement for the 2021 Annual Meeting of Stockholders, is hereby approved.
The compensation paid to our named executive officers will be considered approved if a majority of the votes cast by stockholders virtually or via proxy with respect to this matter are cast in favor of the proposal. Proposal 2 is a “non-discretionary” or “non-routine” item, meaning that brokerage firms cannot vote shares in their discretion on behalf of a client if the client has not given voting instructions. Accordingly, if you hold your shares in street name and fail to instruct your broker to vote your shares for the proposal, your shares will not be counted as votes cast for the proposal and will have no effect on the outcome of Proposal 2. Abstentions will have no effect on the outcome of the proposal.
The Board unanimously recommends a vote “FOR” Proposal 2.
The Company currently maintains the NeoGenomics, Inc. Amended and Restated Equity Incentive Plan, as most recently amended and subsequently approved by a majority of stockholders on May 25, 2017 (the “Equity Incentive Plan”). The Board believes that the Equity Incentive Plan has been effective in attracting and retaining highly-qualified employees and other key contributors to the Company’s business, and that the awards granted under the Equity Incentive Plan have provided an incentive that aligns the economic interests of Plan participants with those of our stockholders. The Culture and Compensation Committee has reviewed the Equity Incentive Plan to determine whether it remains a flexible and effective source of incentive compensation in terms of the number of shares of common stock available for awards and in terms of its design, as well as whether it generally conforms with best practices in today’s business environment.
At December 31, 2020, the Equity Incentive Plan had 1,022,401 shares remaining available for future issuance. In addition, a total of 4,077,832 options and stock awards in aggregate were outstanding, comprised of the following:
3,785,941 stock options (weighted average exercise price of $15.21, and weighted average remaining term of 3.24 years)
291,891 stock awards
Over the past three years, the Company has used options and stock awards judiciously, with a burn rate average of approximately 1.8% (of weighted average basic common shares outstanding) as compared to the Pharmaceuticals, Biotechnology & Life Sciences industry benchmark of 7.91%.
The Company has granted awards as follows:
Fiscal Year | Stock Options Granted | Stock Awards Granted | ||||||||||
2020 | 845,120 | 149,012 | ||||||||||
2019 | 969,720 | 230,980 | ||||||||||
2018 | 2,457,102 | 87,811 |
Based on its review, to ensure the Equity Incentive Plan has an adequate number of shares available, the Culture and Compensation Committee recommended that the Equity Incentive Plan be amended to add 6,975,000 shares of the Company’s common stock to the reserve available for new awards.
Accordingly, the Board approved, and is recommending that the Company’s stockholders approve, the Second Amendment of the Equity Incentive Plan (the “EIP Amendment”). Upon approval of the EIP Amendment by the Company’s stockholders, an additional 6,975,000 shares of the Company’s common stock will be available for issuance under the Equity Incentive Plan.
Apart from the increase in available shares and the increase in the individual annual award limits, the EIP Amendment does not otherwise materially change the Equity Incentive Plan. If the EIP Amendment is not approved by the Company’s stockholders, the Equity Incentive Plan will remain unchanged and in effect according to its current terms and the Company may continue to grant awards under the Equity Incentive Plan until no more shares are available for issuance.
The material features of the Equity Incentive Plan, as amended by the EIP Amendment, are summarized below. The summary is qualified in its entirety by reference to the specific provisions of
the Equity Incentive Plan, the full text of which is set forth as Exhibit 10.50 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on March 15, 2016, by reference to that certain amendment to the equity Incentive Plan approved by the Company’s stockholders on May 25, 2017, the full text of which is set forth as Annex A to the proxy statement filed with the SEC on April 25, 2017, and by reference to the specific provisions of the EIP Amendment, the full text of which is set forth as Annex A to this Proxy Statement.
Corporate Governance Aspects of the Plan
The Equity Incentive Plan has been designed to include a number of provisions that promote best practices by reinforcing the alignment between equity compensation arrangements for eligible employees and non-employee directors and stockholders’ interests. These provisions include, but are not limited to, the following:
Clawback Policy. In the event of a restatement of our financials due to material noncompliance with any financial reporting requirements under the law, participants will be required to reimburse us for any amounts earned or payable in connection with an award under the Equity Incentive Plan to the extent required by law and any applicable Company policies.
No Evergreen Provision. The Equity Incentive Plan does not contain an “evergreen” feature pursuant to which the shares authorized for issuance under the Plan will be automatically replenished.
Conservative Change in Control Provision. The Equity Incentive Plan does not provide for automatic vesting of awards solely upon a change in control of the Company.
No Discounted Stock Options or Stock Appreciation Rights. Stock options and stock appreciation rights may not be granted under the Equity Incentive Plan with exercise prices lower than the market value of the underlying shares on the grant date.
No Reload Grants. Reload grants, or the granting of stock options conditioned upon delivery of shares to satisfy the exercise price and/or tax withholding obligation under another stock option, are not permitted under the Equity Incentive Plan.
No Transferability. Equity Incentive Plan awards generally may not be transferred, except by will or the laws of descent and distribution, unless approved by the Culture and Compensation Committee of the Board.
No Automatic Grants. The Equity Incentive Plan does not provide for automatic grants to any participant.
No Repricings Without Stockholder Approval. The Equity Incentive Plan prohibits the repricing of stock options and SARs without prior stockholder approval, with customary exceptions for certain changes in capitalization. This provision applies to both direct repricings (lowering the exercise price or strike price of a stock option or stock appreciation right) as well as indirect repricings (canceling an outstanding stock option or stock appreciation right and granting a replacement stock option or stock appreciation right with a lower exercise price or exchanges or other substitutions for cash or other forms of awards).
No Tax Gross-Ups. The Equity Incentive Plan does not provide for any tax gross-ups.
Multiple Award Types. The Equity Incentive Plan permits the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock units, restricted stock awards and other types of equity grants, subject to the share limits of the Equity Incentive Plan. This breadth of award types will enable the Culture and Compensation Committee to tailor awards in light of the accounting, tax and other standards applicable at the time of grant. Historically, these standards have changed over time.
Independent Oversight. The Equity Incentive Plan is administered by the Culture and Compensation Committee, which is comprised of independent board members.
Administration
The Equity Incentive Plan is administered by the Culture and Compensation Committee. Subject to the express provisions of the Equity Incentive Plan, the Culture and Compensation Committee has the authority, in its discretion, to interpret the Equity Incentive Plan, establish rules and regulations for the Plan’s operation, select eligible individuals to receive awards and determine the form and amount and other terms and conditions of such awards.
Summary of Award Terms and Conditions
Awards under the Equity Incentive Plan may include incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, stock bonus awards, deferred stock awards and other stock-based awards.
Stock Options. The Culture and Compensation Committee may grant to an Equity Incentive Plan participant options to purchase our common stock that qualify as incentive stock options for purposes of Code Section 422, options that do not qualify as incentive stock options, or a combination thereof. The terms and conditions of stock option grants, including the quantity, price, vesting periods and other conditions on exercise will be determined by the Committee and will be reflected in a written award agreement or notice.
The exercise price for stock options will be determined by the Culture and Compensation Committee in its discretion, but with respect to incentive stock options may not be less than 100% of the fair market value of one share of our common stock on the date when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise price may not be less than 110% of the fair market value of one share of common stock on the date the stock option is granted.
Stock options must be exercised within a period fixed by the Culture and Compensation Committee that may not exceed 10 years from the date of grant, except that in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise period may not exceed five years. The Equity Incentive Plan provides for earlier termination of stock options upon the participant’s termination of service, unless extended by the Culture and Compensation Committee, but in no event may the options be exercised after the scheduled expiration date of the options.
At the Culture and Compensation Committee’s discretion, payment for shares of common stock on the exercise of stock options may be made in cash, shares of our common stock held by the participant or in any other form of consideration acceptable to the Culture and Compensation Committee (including one or more forms of “cashless” or “net” exercise).
Stock Appreciation Rights. The Culture and Compensation Committee may grant to an Equity Incentive Plan participant an award of stock appreciation rights, which entitles the participant to receive, upon its exercise, a payment equal to (a) the excess of the fair market value of a share of common stock on the exercise date over the stock appreciation right exercise price, multiplied by (b) the number of shares of common stock with respect to which the stock appreciation right is exercised. The terms and conditions of awards of stock appreciation rights, including the quantity, price, vesting periods and other conditions on exercise will be determined by the Culture and Compensation Committee and will be reflected in a written award agreement or notice.
The exercise price for a stock appreciation right will be determined by the Culture and Compensation Committee in its discretion, but may not be less than 100% of the fair market value of one share of our common stock on the date when the stock appreciation right is granted. Stock appreciation rights must be exercised within a period fixed by the Culture and Compensation Committee that may not exceed 10 years from the date of grant. Upon exercise of a stock appreciation right, payment may be made in cash, shares of our stock or a combination of cash and stock.
Restricted Stock. The Culture and Compensation Committee may grant to an Equity Incentive Plan participant shares of common stock subject to specified restrictions, which we refer to as restricted shares. Restricted shares are subject to forfeiture if the participant does not meet certain conditions such as continued employment over a specified forfeiture period or the attainment of specified performance targets over the forfeiture period. The terms and conditions of restricted share awards are determined by the Culture and Compensation Committee and will be reflected in a written award agreement or notice.
Stock Bonus Awards. The Culture and Compensation Committee may grant to an Equity Incentive Plan participant shares of common stock in the form of a stock bonus award that are not subject to any restrictions or forfeiture requirements. The terms and conditions of stock bonus awards are determined by the Culture and Compensation Committee and will be reflected in a written award agreement or notice.
Deferred Stock Awards. The Culture and Compensation Committee may grant to an Equity Incentive Plan participant deferred stock awards representing the right to receive shares of common stock (or the value of such shares) in the future subject to the achievement of one or more goals relating to the completion of service by the participant and/or the achievement of performance or other objectives. The terms and conditions of deferred stock awards are determined by the Culture and Compensation Committee and will be reflected in a written award agreement or notice.
Other Stock-Based Awards. The Culture and Compensation Committee may grant to an Equity Incentive Plan participant equity-based or equity-related awards, referred to as other stock-based awards, other than options, stock appreciation rights, restricted shares, stock bonus awards or deferred stock awards. Such awards may include restricted stock units, stock purchase rights, phantom stock arrangements or awards valued in whole or in part by reference to our common stock. The terms and conditions of each other stock-based award will be determined by the Culture and Compensation Committee and will be reflected in a written award agreement or notice. Payment under any other stock-based awards will be made in common stock or cash, as determined by the Culture and Compensation Committee.
Effect of a Change in Control or Similar Corporate Transactions
In the event of a merger, reorganization or consolidation between NeoGenomics and another person or entity (other than an affiliate) resulting in our stockholders prior to the transaction holding less than a majority of the outstanding voting stock of the surviving entity immediately after the transaction, or in the event of a sale of all or substantially all of our assets, outstanding awards will be subject to the specific terms as may be set forth in the applicable award agreement, which may include assumption or substitution of such awards with equivalent awards, accelerated vesting or settlement in cash or cash equivalents. Beginning with awards granted after April 20, 2017, award agreements have included “double trigger” vesting conditions. Under these conditions, stock option awards that are assumed or replaced as a result of a change in control will not automatically vest upon the change in control. Accelerated vesting of awards is permitted upon a change in control (as defined in the award agreement) if an employee experiences an involuntary termination (either by the Company without cause or by the employee for good reason, as defined in the award agreement) within 12 months after the change in control transaction.
Eligibility and Limitation on Awards
The Culture and Compensation Committee may grant awards under the Equity Incentive Plan to any employee, non-employee director or consultant of ours or any of our participating subsidiaries. While the selection of Equity Incentive Plan participants is within the discretion of the Culture and Compensation Committee, it is currently expected that participants will be primarily officers and key senior level employees, as well as our non-employee directors. As of the date of the filing of this Proxy Statement, all of our approximately 1,750 employees, and each of our nine non-employee directors, are eligible to participate in the Equity Incentive Plan.
The maximum amount of awards that can be granted under the Equity Incentive Plan to a single participant in any 12-month period in the form of stock options or stock appreciation rights is being increased by the EIP amendment from 1,000,000 shares to 2,000,000 shares.
Shares Subject to the Equity Incentive Plan
The number of shares of our common stock reserved for issuance for awards under the Equity Incentive Plan, before the approval of the proposed EIP Amendment, was 18,700,000, of which approximately 1,000,000 shares remain available for new awards. The Board has authorized pursuant to the EIP Amendment, subject to stockholder approval, an additional 6,975,000 shares of our common stock to be available for new awards under the Equity Incentive Plan, so that the aggregate number of shares reserved for issuance under the Equity Incentive Plan will be 25,625,000, with approximately 8,000,000 shares being available for new awards. All such shares of common stock available for issuance under the Equity Incentive Plan shall be available for issuance as incentive stock options.
Shares of common stock underlying awards granted under the Equity Incentive Plan that expire or are forfeited or terminated for any reason (as a result, for example, of the lapse of stock options or forfeiture of restricted shares), as well as any shares underlying an award that is settled in cash rather than stock, will be available for future grants under the Equity Incentive Plan. In addition, shares of stock that are surrendered to or withheld by us in payment or satisfaction of the exercise price of an award or any tax withholding obligation with respect to an award will be available for future grants. Shares to be issued under the Equity Incentive Plan will be authorized but unissued shares of common stock or shares of stock reacquired by us.
Anti-Dilution Protections
In the event of a change in the outstanding shares of our common stock, without the receipt by us of consideration, by reason of a stock dividend, stock split, reverse stock split or distribution, recapitalization, merger, reorganization, reclassification, consolidation, split-up, spin-off, combination of shares, exchange of shares or other similar event, the Culture and Compensation Committee will make appropriate and equitable adjustments to (a) the number and kind of shares of stock available under the Equity Incentive Plan, (b) the number and kind of shares of stock subject to outstanding Equity Incentive Plan awards, (c) the per-share exercise or other purchase price under any outstanding Equity Incentive Plan award and (d) the annual award or other maximum award limits applicable under the Equity Incentive Plan.
Clawback Provisions
The Equity Incentive Plan provides that in the event of a restatement of our financials due to material noncompliance with any financial reporting requirements under the law, a participant will be required to reimburse us for any amounts earned or payable in connection with an award under the Equity Incentive Plan to the extent required by law and any applicable Company policies.
No Repricings of Options or SARs
The Equity Incentive Plan prohibits the repricing of stock options and stock appreciation rights without the approval of our stockholders. This provision applies to both direct repricings (lowering the exercise price or strike price of a stock option or stock appreciation right) as well as indirect repricings (canceling an outstanding stock option or stock appreciation right and granting a replacement stock option or stock appreciation right with a lower exercise price or strike price or exchange for cash or other forms of awards).
Amendment and Termination
The Board may suspend, terminate, modify or amend the Equity Incentive Plan, provided that any amendment that would (a) increase the aggregate number of shares of stock that may be issued under the Equity Incentive Plan, (b) change the method of determining the exercise price of option awards or (c) materially modify the eligibility requirements for the Equity Incentive Plan, will be subject to the approval of our stockholders, except for modifications or adjustments relating to the anti-dilution protection described above.
In addition, no suspension, termination, modification or amendment of the Equity Incentive Plan may terminate a participant’s existing award or materially and adversely affect a participant’s rights under such award without the participant’s consent. However, these provisions do not limit the board’s authority to amend or revise the Equity Incentive Plan to comply with applicable laws or governmental regulations.
Federal Income Tax Consequences
THE FEDERAL INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF AWARDS UNDER THE PLAN GENERALLY ARE AS DESCRIBED BELOW. THE FOLLOWING INFORMATION IS ONLY A SUMMARY OF THE TAX CONSEQUENCES OF THE AWARDS, AND WE ENCOURAGE PARTICIPANTS TO CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES INHERENT IN THE OWNERSHIP OR EXERCISE OF THEIR AWARDS, AND THE OWNERSHIP AND DISPOSITION OF ANY UNDERLYING SECURITIES. TAX CONSEQUENCES FOR ANY PARTICULAR INDIVIDUAL OR UNDER STATE OR NON-U.S. TAX LAWS MAY BE DIFFERENT.
Incentive Stock Options. A participant who is granted an incentive stock option generally will not recognize any taxable income for federal income tax purposes on either the grant or exercise of the incentive stock option (except for AMT purposes, as described below). If the participant disposes of the shares purchased pursuant to the incentive stock option more than two years after the date of grant and more than one year after the exercise of the option by the participant, (a) the participant will recognize long-term capital gain or loss, as the case may be, equal to the difference between the selling price and the exercise price; and (b) we will not be entitled to a deduction with respect to the shares of stock so issued. If the two year holding period requirements are not met, any gain realized upon disposition will be taxed as ordinary income to the extent of the lesser of (1) the excess of the fair market value of the shares at the time of exercise over the exercise price, and (2) the gain on the sale. Also in that case, we will be entitled to a deduction in the year of disposition in an amount equal to the ordinary income recognized by the participant. Any additional gain will be taxed as short-term or long-term capital gain depending upon the actual holding period for the stock. A sale for less than the exercise price results in a capital loss. The excess of the fair market value of the shares on the date of exercise over the exercise price is includable in the participant’s income for alternative minimum tax purposes whether or not the statutory two year holding period requirements are met.
Nonqualified Stock Options. A participant who is granted a nonqualified stock option under the Equity Incentive Plan generally will not recognize any income for federal income tax purposes on the grant of the option. Generally, on the exercise of the option, the participant will recognize taxable ordinary income equal to the excess of the fair market value of the shares on the exercise date over the option price for the shares. We generally will be entitled to a deduction on the date of exercise in an amount equal to the ordinary income recognized by the participant. Upon disposition of the shares purchased pursuant to the stock option, the participant will recognize long-term or short-term capital gain or loss, as the case may be, equal to the difference between the amount realized on such disposition and the basis for such shares, which basis includes the amount previously recognized by the participant as ordinary income.
Stock Appreciation Rights. A participant who is granted stock appreciation rights generally will not recognize any taxable income on the receipt of the award. Upon the exercise of a stock appreciation right, (a) the participant will recognize ordinary income equal to the amount received (the increase in the fair market value of one share of our stock from the date of grant of the award to the date of exercise multiplied by the number of shares subject to the award), and (b) we will be entitled to a deduction on the date of exercise in an amount equal to the ordinary income recognized by the participant.
Restricted Stock. A participant generally will not recognize any taxable income on the grant date of an award of restricted shares, but will be taxed at ordinary income rates on the fair market value of any restricted shares as of the date that the restrictions lapse, unless the participant, within 30 days after transfer of such restricted shares to the participant, elects under Code Section 83(b) to include in income the fair market value of the restricted shares as of the date of such transfer. We generally will be entitled to a corresponding deduction. Any disposition of shares after the restrictions lapse will be subject to the regular rules governing long-term and short-term capital gains and losses, with the basis for this purpose equal to the fair market value of the shares at the end of the restricted period (or on the date of the transfer of the restricted shares, if the employee elects to be taxed on the fair market value upon such transfer). To the extent dividends are payable during the restricted period under the applicable award agreement, any such dividends will be taxable to the participant at ordinary income tax rates and will be deductible by us unless the participant has elected to be taxed on the fair market value of the restricted shares upon transfer, in which case they will thereafter be taxable to the participant as dividends and will not be deductible by us.
Deferred Stock Awards. A participant generally will not recognize taxable income upon grant of a deferred stock award, and we will not be entitled to a deduction until the lapse of the applicable restrictions. Upon the lapse of the restrictions and the issuance of the underlying shares or settlement of the award, the participant will recognize ordinary taxable income in an amount equal to the fair market value of the common stock or other value received, and we generally will be entitled to a deduction in the same amount. Any disposition of shares after restrictions lapse will be subject to the regular rules governing long-term and short-term capital gains and losses, with the basis for this purpose equal to the fair market value of the shares at the end of the restricted period.
Stock Bonus Awards and Other Stock-Based Awards. A participant generally will not recognize taxable income upon the grant of stock bonus awards or other stock-based awards under the Equity Incentive Plan unless and until the conditions and requirements for the grants have been satisfied and the payment determined. Once subject to tax, any cash received and the fair market value of any common stock received generally will constitute ordinary income to the participant. We generally will be entitled to a deduction in the same amount.
Code Section 162(m). Because we are a public company, special rules limit the deductibility of compensation paid to any “covered employee”. A covered employee is generally defined as the principal executive officer or principal financial officer at any time during the year, or any individual
acting in such a capacity, and the three other most highly compensated executive officers. An employee that was considered a covered employee after 2016 will always be considered a covered employee even if he or she is no longer the principal executive officer, principal financial officer, or one of the three other most highly compensated executive officers during the applicable year. Under Code Section 162(m), the annual compensation paid to each of these executives may not be deductible to the extent that it exceeds $1 million. The limitation on deductions does not apply, however, to qualified “performance-based compensation” under an arrangement that was in effect on November 2, 2017. Certain awards under the Equity Incentive Plan that were granted on or before November 2, 2017, including stock options, stock appreciation rights and stock-based performance awards, may constitute qualified performance-based compensation and, as such, would be exempt from the $1 million limitation on deductible compensation. The Culture and Compensation Committee may choose to grant awards under the Equity Compensation Plan that are not deductible under Code Section 162(m).
New Plan Benefits
Because awards under the Equity Incentive Plan are discretionary, awards are generally not determinable at this time.
Effective Date
The EIP Amendment will be effective as of the date approved by our stockholders. The Equity Incentive Plan is scheduled to expire on October 15, 2025, unless terminated earlier by the Board.
The EIP Amendment will be approved if a majority of the votes cast by stockholders in person or via proxy with respect to this matter are cast in favor of the proposal. The proposal to approve the EIP Amendment is a “non-discretionary” or “non-routine” item, meaning that brokerage firms cannot vote shares in their discretion on behalf of a client if the client has not given voting instructions. Accordingly, if you hold your shares in street name and fail to instruct your broker to vote your shares for the proposal, your shares will not be counted as votes cast for the proposal and will have no effect on the outcome of this Proposal 2. If the stockholders do not approve the EIP Amendment, it will not be implemented, but we reserve the right to adopt such other compensation plans and programs as we deem appropriate and in the best interests of NeoGenomics and its stockholders.
The Board unanimously recommends a vote “FOR” Proposal 3.
PROPOSAL 4—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board appointed Deloitte & Touche LLP on March 15, 2021 to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2021.
Although ratification of the appointment of our independent registered public accounting firm is not required by our Amended and Restated Bylaws or otherwise, the Board is submitting the appointment of Deloitte & Touche LLP to our stockholders for ratification because we value the views of our stockholders. In the event that stockholders fail to ratify the appointment of Deloitte & Touche LLP, the Audit Committee will review its future selection of its independent registered public accounting firm. Even if the appointment is ratified, the ratification is not binding and the Audit Committee may in its discretion select 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 our stockholders.
Representatives from Deloitte & Touche LLP are expected to be present at the virtual 2021 Annual Meeting.
The ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 will be approved if a majority of the votes cast by stockholders virtually or via proxy with respect to this matter are cast in favor of the proposal. Abstentions and broker non-votes, if any, will not be treated as votes cast and will have no impact on the proposal.
The Board unanimously recommends a vote “FOR” Proposal 4.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information, as of December 31, 2020, regarding the number of shares of Company common stock that may be issued under the Company’s equity compensation plans.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | |||||||||||
Equity compensation plans approved by security holders: | ||||||||||||||
Amended and Restated Equity Incentive Plan (“Equity Incentive Plan”) | 3,785,941 | $ | 15.21 | 1,022,401 | (a) | |||||||||
Employee Stock Purchase Plan (“ESPP”) | — | N/A | 236,651 | (b) | ||||||||||
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Total | 3,785,941 | $ | 15.21 | 1,259,052 | ||||||||||
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Currently, the Company’s Equity Incentive Plan, as amended on May 25, 2017 and the Company’s ESPP, as amended on June 1, 2018, are the only equity compensation plans in effect.
The Audit Committee operates under a written charter, which has been adopted by the Board. The Audit Committee charter governs the operations of the Audit Committee and sets forth its responsibilities, which include providing assistance to the Board with the monitoring of (1) the quality and integrity of our financial statements, (2) the effectiveness of our internal controls over financial reporting, (3) the Company’s compliance with legal and regulatory requirements, (4) Company’s enterprise risks, including but not limited to risks relating to the Company’s information technology use and protection, data governance, privacy, and cybersecurity, and the Company’s strategy to mitigate such risks, (5) the independent auditor’s qualifications and independence, (6) the performance of our independent registered public accounting firm, and (7) working in coordination with the Compliance Committee of the Board, the implementation and effectiveness of the Company’s ethics and compliance program. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete, accurate and have been prepared in accordance with generally accepted accounting principles and applicable rules and regulations. These responsibilities rest with management and the Company’s independent registered public accounting firm. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2020 with management and Deloitte & Touche LLP.
The Audit Committee has discussed with Deloitte & Touche LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board “PCAOB”. In addition, the Committee has received during the past fiscal year the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with Deloitte & Touche LLP its independence from the Company and its management.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements for the Company for the fiscal year ended December 31, 2020 be included in its Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the Securities and Exchange Commission.
MEMBERS OF THE AUDIT COMMITTEE
Raymond R. Hipp (Chair)
Bruce K. Crowther
Michael A. Kelly
Rachel A. Stahler
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(1) Effective April 19, 2021, Mr. VanOort will retire as Chairman of the Board and Chief Executive Officer and will transition to become Executive Chairman of the Board. Mr. Mallon will become the Company’s CEO and will join the Board at that time.
Non-Director Executive Officers
Background information as of April 15, 2021 about our executive officers who are not nominees for election as directors is set forth below.
Kathryn B. McKenzie
Chief Financial Officer
Ms. McKenzie was appointed Chief Financial Officer in February 2020. Prior to this appointment she served as Vice President of Finance and Chief Accounting Officer since October 2017. She also served as the Company’s Principal Financial Officer since August 2019. Prior to joining the Company, Ms. McKenzie served at Chico’s FAS, Inc. in various roles including Assistant Controller and Director of Financial Reporting and Treasury. Ms. McKenzie also previously served as Audit Manager for Ernst and Young. Ms. McKenzie is a Certified Public Accountant and holds a Master’s of Science in Accountancy from the University of North Carolina Wilmington.
Denise E. Pedulla
General Counsel and Corporate Secretary
Ms. Pedulla joined NeoGenomics in 2015 as the Company’s General Counsel. From 2011 to 2015, Ms. Pedulla served as a Principal at Berkeley Research Group in its Compliance and Regulatory Risk Management services division and was engaged in private law practice. Prior to that, from 2008 to 2011, Ms. Pedulla was the Senior Vice President and Chief Compliance Officer at Orthofix International NV, a global orthopedic medical device company. From 2000 to 2008, Ms. Pedulla, a health care lawyer, was engaged in private law practice and provided legal counsel to hospitals, clinical
laboratories, durable medical equipment suppliers and other health care providers in the areas of fraud and abuse, coverage, billing and reimbursement, regulatory compliance, corporate governance, contracting, and government affairs. From 1996 to 2000, Ms. Pedulla was employed at Fresenius Medical Care North America in positions of increasing responsibility, including Associate General Counsel and Vice President of Compliance, Regulatory and Government Affairs for its clinical laboratory division. Ms. Pedulla received a B.S. in Nursing and Psychology from Boston College, a J.D. from Suffolk Law School, and an M.P.H. in Health Policy and Management from Harvard University. She also holds a Certification in Health Care Compliance (CHC) from the Health Care Compliance Association. Ms. Pedulla is a licensed attorney in Massachusetts and Florida and is a member of the American Health Lawyers Association and the Health Law Sections of the American, Florida, and Massachusetts Bar Associations.
Robert J. Shovlin
President, Clinical Services
Mr. Shovlin has served as the President of our Clinical Services Division since September, 2016. Prior to this, he had served as our Chief Growth Officer since the acquisition of Clarient in 2015. From his hire date in October 2014 until the Clarient acquisition, Mr. Shovlin served as the Chief Operating Officer of NeoGenomics. From 2012 until October 2014, Mr. Shovlin served as Chief Development officer for Bostwick Laboratories, a provider of anatomic pathology testing services targeting urologists and other clinicians, where he was responsible for Sales, Marketing, Managed Care, Business Development, and Clinical Trials. From 2005 until 2011, he served in progressively more responsible positions, including President and Chief Executive Officer, for Aureon Biosciences, Inc., a venture-backed diagnostics company focused on developing novel and proprietary prostate cancer tests. Mr. Shovlin also served as Executive Director for Anatomic Pathology and Director of Managed Care for Quest Diagnostics from 2003 until 2005, and held sales leadership positions at Dianon Systems from 1997 until 2003. Mr. Shovlin served as a Captain, Infantry Officer in the United States Marine Corps from 1992 until 1997 where he served as a Platoon and Company Commander with 1st Battalion 4th Marines and as an Instructor and Staff Platoon Commander at the Basic School. He holds a Bachelor of Science Degree from Pennsylvania State University, and a Masters of Business Administration from Rutgers University.
George A. Cardoza
President, Pharma Services
Mr. Cardoza has served the Company as the President of Pharma Services since March 2018. He has been with NeoGenomics since November 2009, serving as the Company’s Chief Financial Officer through March 2018. Prior to that, he was the Chief Financial Officer at Protocol Integrated Direct Marketing. Mr. Cardoza spent fifteen years with Quest Diagnostics, including years when it was still part of Corning Inc. With Corning Inc. he worked with the Corning Life Sciences Division, which did several acquisitions in the Pharma services space. These acquisitions formed the pieces of Covance, which Corning spun out at the same time as Quest in 1996. Mr. Cardoza has worked closely with NeoGenomics Pharmaceutical Services and Clinical Trials division, which was combined into the Clinical Trials arm of Clarient Inc. when it was acquired from General Electric Healthcare in December 2015. Mr. Cardoza received his B.S. from Syracuse University in finance and accounting and has received his M.B.A. from Michigan State University.
William B. Bonello
President, Informatics
Mr. Bonello is President of our Informatics Division. Prior to leading the Informatics Division, Mr. Bonello most recently served as our Chief Strategy and Corporate Development Officer helping to formulate the
company’s growth strategy. Mr. Bonello also recently served as Director of Investor Relations. Prior to joining NeoGenomics in 2017, Mr. Bonello worked as a healthcare equity analyst covering diagnostic services and product stocks at Craig-Hallum and at a variety of firms, and was also Senior Vice President for Investor Relations at LabCorp. Mr. Bonello received his B.A. degree from Carleton College and his Masters of Business Administration from the Kellogg School of Management at Northwestern University.
Douglas M. Brown
Chief Strategy and Corporate Development Officer
Mr. Brown has served as our Chief Strategy and Corporate Development Officer since February 2020. Prior to joining NeoGenomics, from 2015 to 2020, Mr. Brown was a Senior Managing Director with SVB Leerink with significant expertise in the oncology diagnostic sector. During his career, he has advised clients in over 100 successful M&A and Corporate Financing transactions. Mr. Brown advised General Electric on the sale of Clarient, and recently advised NeoGenomics on the acquisition of Genoptix and the oncology assets of Human Longevity. Mr. Brown earned his Masters of Business Administration from the Fuqua School of Business at Duke University and received his undergraduate business degree from the University of Texas at Austin.
Cynthia J. Dieter
Chief Accounting Officer and Controller
Ms. Dieter joined NeoGenomics in June 2020 as the Company’s Chief Accounting Officer and Controller. Prior to joining NeoGenomics, from 2014 to 2020, Ms. Dieter served at Viasat, Inc. as Senior Director, Corporate Accounting. She previously served at DJO Global, Inc. from 2004 to 2014 in various roles including Vice President and Assistant Corporate Controller, Vice President and Vista Controller, and Director, Financial Reporting and Planning. Ms. Dieter also previously served as Manager of Financial Reporting at Captiva Software and Audit Manager for Ernst and Young. Ms. Dieter is a Certified Public Accountant and holds a Bachelor’s of Science in Business Administration, with a concentration in Accountancy, from California Polytechnic State University San Luis Obispo.
Jennifer M. Balliet
Chief Culture Officer
Ms. Balliet has served as our Chief Culture Officer since September 2016. Prior to that, she had served as our Vice President of Human Resources since April 2015. Ms. Balliet joined NeoGenomics in 2008 and has steadily increased her responsibilities; she also previously served as Director of Human Resources. Throughout her time with NeoGenomics, she has managed the human resources process as the Company has grown from 100 employees to approximately 1,750 employees. As Chief Culture Officer, Ms. Balliet has responsibility for all areas of our Human Resources including recruiting, training, development, compensation, incentive plans and organizational development. Ms. Balliet received her B.S. degree in Psychology and M.S. degree in Business Management from the University of Florida.
Lawrence M. Weiss, M.D.
Chief Medical Officer
Dr. Weiss has served the Company as Chief Medical Officer since November 2019. Previously, Dr. Weiss served as Chief Scientific Officer since December 2018 and Medical Director and Director of Pathology Services since December 2015. Prior to joining the Company, Dr. Weiss served at Clarient Diagnostic Services, Inc. as a Pathologist and subsequently as Laboratory Director from 2011 through 2016. Dr. Weiss received his B.S. and M.D. summa cum laude from the University of Maryland. He
was previously on the faculty of Stanford Medical School and was Chairman of Pathology at the City of Hope from 1997 to 2011. One of the most published pathologists in the world, Dr. Weiss was the recipient of the Benjamin Castleman Award from the International Academy of Pathology, the Arthur Purdy Stout Award from the APS Society of Surgical Pathologists, and the Ramzi Cotran Award from the United States-Canadian Academy of Pathology.
Stephanie K. Bywater
Chief Compliance Officer
Ms. Bywater has served the Company as the Compliance Officer since May 2017 and was appointed Chief Compliance Officer in March 2018. Prior to joining the Company, Ms. Bywater was the Global Compliance Operations & Americas Compliance Officer at Varian Medical Systems Inc., a radiation oncology medical device company. In this role, she was responsible for developing strategy for and overseeing global compliance operations and served as the compliance officer for one of three global regions, with a focus on international anti-corruption and anti-competition laws from 2015 to 2017. Prior to Varian, Ms. Bywater was the Compliance and Privacy Officer for Myriad Genetic Laboratories, where she implemented and provided oversight for programs supporting Anti-kickback Statute, Stark Law, billing and reimbursement, FDA, research, and global data privacy and protection requirements from 2010 to 2015. In addition to her private sector experience, since 2016, Ms. Bywater has served on the Advisory Board for the Center for Genomic Interpretation, a non-profit organization, where she consults and advises on compliance related matters. Ms. Bywater has a Bachelor of Science degree in Healthcare Administration from Northern Illinois University and is a Certified Healthcare Professional (CHP), Certified in Healthcare Privacy (CHP), and a Certified Internal Auditor (CIA).
Marcus B. Silva
Chief Marketing Officer
Mr. Silva has served the Company as Chief Marketing Officer since June 2020. Prior to joining the Company, Mr. Silva was the Director of Precision Medicine at Novartis Oncology. In this role, he led Precision Medicine efforts at Novartis resulting in the successful 2019 launch of PIQRAY® (alpelisib) and 2020 launch of TABRECTA™ (capmatinib). Prior to Novartis, Mr. Silva was with Becton Dickinson (“BD”) where he first led global strategic marketing excellence for their $1B global injection business and later was appointed head of Marketing and Analytics for their $700 million U.S. Diabetes Care business. Prior to BD, Mr. Silva was with Johnson & Johnson’s Ortho-Clinical Diagnostics franchise, where he held various leadership roles within Global Marketing, Strategic Marketing and Regional Marketing, including multiple product and campaign launches. Prior to this, Mr. Silva started his own healthcare company based in Southern California that focused on senior care, which he ran for almost 10 years and grew to over 100 employees. Additionally, Mr. Silva began his career as a practicing California plaintiff’s attorney, litigating employment law cases in Southern California. Mr. Silva earned his B.A. from Rutgers University, his J.D. from California Western School of Law, and his Masters of Business Administration from Rutgers Business School, with a focus on Marketing and Pharmaceutical Management.
COMPENSATION OF DIRECTORS
Each of our non-employee directors is entitled to receive compensation. For the year ended December 31, 2020, each eligible non-employee director received Board compensation of $45,000. The Director serving as Lead Independent Director receives additional annual compensation of $30,000. In addition, eligible non-employee directors who serve on committees receive the following compensation:
Directors serving as Audit Committee members receive annual compensation of $10,000. The Director serving as chair of the Audit Committee receives additional annual compensation of $10,000.
Directors serving as Culture and Compensation Committee members receive annual compensation of $7,500. The Director serving as chair of the Culture and Compensation Committee receives additional annual compensation of $7,500.
Directors serving as Compliance Committee members receive annual compensation of $5,000. The Director serving as chair of the Compliance Committee receives additional annual compensation of $5,000.
Directors serving as Nominating and Corporate Governance Committee members receive annual compensation of $5,000. The Director serving as chair of the Nominating and Corporate Governance Committee receives additional annual compensation of $5,000.
All directors are entitled to reimbursement of their reasonable out-of-pocket expenses for attendance at Board and Committee meetings.
The Board has the discretion to grant equity awards to non-employee directors as part of their compensation. All committee members, whether member or chair, received total annual equity compensation in the amount of $110,000. On May 28, 2020, the members of the Board, with the exception of Mr. Kelly, were granted 2,698 shares of restricted stock and 3,448 stock options to each non-employee director. Both the stock options and the restricted stock awards vest on May 28, 2021. Mr. Kelly was appointed to the Board effective July 15, 2020. The total dollar value of his grant and subsequent split between stock awards and option awards is prorated as of this date. Mr. Kelly was granted 1,782 shares of restricted stock and 2,223 stock options. Both the stock options and the restricted stock awards vest on May 28, 2021.
Share Ownership Guidelines and Share Retention Requirements
NeoGenomics has adopted share ownership guidelines for its directors and executive officers to further align the interests of our senior leaders with those of our stockholders. The guidelines require directors to hold NeoGenomics stock worth a value expressed as a multiple of their annual compensation within five years of the guideline applying to them.
The table below summarizes the current share ownership guidelines as well as the current share ownership of our board as a multiple of base compensation for Board services as of December 31, 2020:
Role | Share Ownership Guideline | Current Share Ownership (1) | ||||
Chairman of the Board | 3.0 | 212.8 | ||||
Board Members | 3.0 | 211.5 |
(1) Share ownership calculated as an average of all Board Members except the CEO who is shown separately.
Directors who are yet to achieve their share ownership amount are required to retain an amount equal to 25% of the net shares received as the result of the exercise, vesting, or payment of any equity awards they have received. If an individual’s amount is not attained by the end of the initial five-year period (or at any time thereafter), they will be required to retain an amount equal to 100% of the net shares received as the result of the exercise, vesting, or payment of any equity awards granted to them, until the applicable guideline level is achieved. As of December 31, 2020, all board members were in compliance with the share ownership guidelines.
DIRECTOR COMPENSATION TABLES
The following table provides information concerning the compensation of our non-employee directors for the year ended December 31, 2020:
Name | Fees Paid in Cash | Stock Awards (1) | Option Awards (1) | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||
Lynn A. Tetrault | $ | 76,250 | $ | 77,000 | $ | 33,000 | $ | — | $ | — | $ | — | $ | 186,250 | ||||||||||||||
Bruce K. Crowther | $ | 70,000 | $ | 77,000 | $ | 33,000 | $ | — | $ | — | $ | — | $ | 180,000 | ||||||||||||||
Dr. Alison L. Hannah (2) | $ | 61,500 | $ | 77,000 | $ | 33,000 | $ | — | $ | — | $ | — | $ | 171,500 | ||||||||||||||
Raymond R. Hipp | $ | 72,500 | $ | 77,000 | $ | 33,000 | $ | — | $ | — | $ | — | $ | 182,500 | ||||||||||||||
Kevin C. Johnson | $ | 58,125 | $ | 77,000 | $ | 33,000 | $ | — | $ | — | $ | — | $ | 168,125 | ||||||||||||||
Steven C. Jones (3) | $ | 85,363 | $ | 77,000 | $ | 33,000 | $ | — | $ | — | $ | — | $ | 195,363 | ||||||||||||||
Stephen M. Kanovsky | $ | 62,500 | $ | 77,000 | $ | 33,000 | $ | — | $ | — | $ | — | $ | 172,500 | ||||||||||||||
Michael A. Kelly (4) | $ | 13,750 | $ | 66,874 | $ | 28,660 | $ | — | $ | — | $ | — | $ | 109,284 | ||||||||||||||
Rachel A. Stahler (5) | $ | 20,137 | $ | 77,000 | $ | 33,000 | $ | — | $ | — | $ | — | $ | 130,137 |
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The aggregate number of stock awards and stock option awards granted to each of our non-employee directors for the year ended December 31, 2020 was as follows (in number of shares):
Name | Stock Awards(6) | Stock Option Awards(7) | ||||||||||||||
Lynn A. Tetrault | 2,698 | 3,448 | ||||||||||||||
Bruce K. Crowther | 2,698 | 3,448 | ||||||||||||||
Dr. Alison L. Hannah | 2,698 | 3,448 | ||||||||||||||
Raymond R. Hipp | 2,698 | 3,448 | ||||||||||||||
Kevin C. Johnson | 2,698 | 3,448 | ||||||||||||||
Steven C. Jones | 2,698 | 3,448 | ||||||||||||||
Stephen M. Kanovsky | 2,698 | 3,448 | ||||||||||||||
Michael A. Kelly (8)(9) | 1,782 | 2,223 | ||||||||||||||
Rachel A. Stahler | 2,698 | 3,448 |
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COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION DISCUSSION & ANALYSIS
The Culture and Compensation Committee strives to create a compensation structure that supports a pay-for-performance culture and strongly believes that executive compensation should be tied to the performance of the Company and stockholder returns.
Our compensation philosophy is focused on providing our executive officers with compensation and benefits that are competitive, and that meet our goals of attracting, retaining and motivating highly skilled management. The levels of compensation we provide should be competitive, reasonable and appropriate for our business needs and circumstances.
Our executive compensation program focuses on both short and long-term results and is composed of three key elements: (1) base salaries, which reflect various factors including market-competitive pay levels, scope of the position, experience, individual performance and strategic criticality; (2) annual cash incentive opportunities, which reflect Company and individual performance; and (3) longer-term stock-based incentive opportunities under our equity incentive plans, generally in the form of stock options and/or restricted stock grants, which link the interests of senior management with our other stockholders. Equity incentive grants are subject to three or four year vesting provisions. Each of our compensation elements is designed to simultaneously fulfill one or more of our core objectives.
Our compensation program is administered under a rigorous process that includes the solicitation by the Culture and Compensation Committee of advice of an independent third-party consultant (which reports directly to the Culture and Compensation Committee, not to management) and long-standing, consistently applied policies with respect to the timing of equity grants, the pricing of stock options, and the periodic review of peer group practices.
We believe our overall program, and, in particular, our focus on granting long-term awards, is consistent with current best practices in compensation design.
2020 Performance Highlights
In December 2019, a novel strain of coronavirus (“COVID-19”) was identified and the disease has since spread across the world, including the United States. The World Health Organization officially declared COVID-19 a pandemic in early March 2020.The impact from the COVID-19 pandemic and the related disruptions have had a material adverse impact on our results of operations, volume growth rates and test volumes in 2020.
We have taken significant actions to protect our employees and maintain a safe environment while ensuring continuity of critical oncology testing for cancer patients. Among other actions, we de-densified our laboratories and facilities, adjusted laboratory shifts, provided special bonuses for onsite essential laboratory employees, restricted visitors to facilities, restricted employee travel, implemented an Emergency Paid Time Off policy, provided remote work-environment training and support, and managed our supply chains.
In addition, a $50,000 COVID-19 Employee Emergency Relief Fund was created to provide assistance to those NeoGenomics employees experiencing temporary financial hardships due to the COVID-19 pandemic. Mr. VanOort and Mr. Jones each donated $25,000 to establish this fund.
Importantly, all main laboratory facilities remained open and we maintained uninterrupted continuity of high-quality testing services for clients. The Company’s top priority remains the health and safety of employees and continued quality and service for all clients with a focus on patient care.
Additionally, we responded quickly to the changing economic environment by fortifying our balance sheet through the completion of $322 million net convertible debt and equity offerings. We utilized certain proceeds from these offerings to retire our outstanding term debt and related interest rate swap agreements. We also responded to national COVID-19 testing needs by bringing up COVID-19 testing capabilities and providing overflow testing services as well as providing COVID-19 testing to our employees free of charge.
Despite the disruption during the year, we remained focused on long-term strategic initiatives as evidenced by the completion of the acquisition of the oncology assets of Human Longevity, Inc. (“HLI-Oncology”) in La Jolla, California as well as our minority investment in Inivata Limited (“Inivata”). We also expanded our offerings during the year, including the addition of the InVisionFirst®-Lung liquid biopsy test, NeoLab Solid Tumor Liquid Biopsy test and mobile phlebotomy services. We believe that we are well-positioned to recover from the effects of the COVID-19 pandemic as our core broad testing menu enables our sales teams to identify opportunities for increasing revenues.
Most compensation decisions related to the year ended December 31, 2020 were determined in the first quarter of the 2021 fiscal year, after the evaluation of the Company’s performance and the performance of our Chief Executive Officer and other executive officers. We believe the compensation of all of our Named Executive Officers for 2020 aligned with both our performance in 2020 and the objectives of our executive compensation policies.
The Culture and Compensation Committee believes that compensation should be tied to the performance of the Company as well as the return to stockholders. Revenue and adjusted EBITDA, shown below, are the primary metrics used in the evaluation of financial performance of the Company.
Measure (in thousands, except for percentages) | 2020 | 2019 | % Change from Prior Year | |||||||||||||||||||||
Clinical Services Revenue | $ | 382,337 | $ | 361,161 | 5.9% | |||||||||||||||||||
Pharma Services Revenue | 62,111 | 47,669 | 30.3% | |||||||||||||||||||||
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Total Revenue | $ | 444,448 | $ | 408,830 | 8.7% | |||||||||||||||||||
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Net Income | $ | 4,172 | $ | 8,006 | (47.9)% | |||||||||||||||||||
EBITDA (non-GAAP) | $ | 28,684 | $ | 37,629 | (23.8)% | |||||||||||||||||||
Adjusted EBITDA (non-GAAP) (1) | $ | 34,842 | $ | 57,217 | (39.1)% |
(1) Adjusted EBITDA is defined by NeoGenomics as net income from continuing operations before: (i) interest expense, (ii) tax expense, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation expense, and, if applicable in a reporting period, (v) acquisition and integration related expenses, (vi) non-cash impairments of intangible assets, (vii) and other significant non-recurring or non-operating (income) or expenses.
Record Revenue for both Clinical and Pharma Segments. Consolidated revenues increased $35.6 million, or 8.7%, year-over-year. Growth in our Clinical Services segment year-over-year, was $21.2 million, or 5.9%. This increase was primarily driven by COVID-19 PCR testing revenue of $27.8 million for the year ended December 31, 2020. In addition, our Pharma Services backlog of signed contracts has continued to grow from $130.3 million as of December 31, 2019 to $208.9 million as of December 31, 2020.
Fortified the Balance Sheet. In April 2020, the Company completed an equity offering and issuance of convertible debt to increase its cash position given the uncertainties in the market and allow continued strategic investment. The Company utilized a portion of these proceeds to retire its existing term loan and related interest rate swap agreements. The net proceeds of the concurrent offering, following termination of the term loan and related interest rate swap agreement were approximately $221 million.
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Execution of Critical Success Factors and Continued Actions to Drive Growth. The Company remains focused on its key critical success factors, which include: maintaining a world-class culture, delivering uncompromising quality, and providing exceptional service and growth.
Compensation Strategy
We believe that having the right management team leading NeoGenomics and our employees globally is critical in our ability to achieve our financial and strategic objectives. Our compensation philosophy is to offer our executive officers compensation and benefits that are competitive and meet our goals of attracting, retaining, and motivating highly skilled management, which is necessary to create long-term value for our stockholders. We believe the levels of compensation we provide should be competitive, reasonable, and appropriate for our business needs and circumstances.
Alignment with NeoGenomics’ Strategy
NeoGenomics is a premier cancer diagnostics and pharma services company serving oncologists, pathologists, pharmaceutical companies, academic centers, and others with innovative diagnostic, prognostic and predictive testing. By providing uncompromising quality, exceptional service, and innovative solutions, we will be the world’s leading cancer testing and information company.
Underpinned by our values of Quality, Integrity, Accountability, Teamwork, and Innovation, we believe that focusing on saving lives by improving patient care will drive profitable growth for our stockholders to the benefit of all our stakeholders.
This vision is reflected in how we have designed our compensation programs, with performance metrics that focus on our achievements.
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Compensation Elements
Our compensation program is purposefully straightforward. In accordance with our compensation philosophy, we provide competitive fixed cash compensation, an annual incentive program that aligns pay with in-year progress against our longer term goals, and stock options and/or restricted stock that provide clear and transparent alignment to sustainable stockholder value creation, while retaining our executives over the long-term. The aggregate value of base salary, target bonus and long-term incentives is generally positioned within a competitive range around market median.
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The aggregate value of base salary, target bonus and long-term incentives is generally positioned within a competitive range around market median.
As the following charts show, the majority of our CEO’s and other named executive officers’ compensation for the year ended December 31, 2020 is variable and performance based:
Culture and Compensation Governance
Culture and Compensation Oversight
The Culture and Compensation Committee, chaired by Lynn A. Tetrault and comprised of five total independent Directors, is responsible for discharging the Board’s responsibilities relating to compensation of our executive officers, including the Chief Executive Officer. The Committee has overall responsibility for approving and evaluating all of our compensation plans, policies and programs as they affect our executive officers. This includes reviewing and approving the compensation of the Named Executive Officers, approving performance goals, and reviewing the achievement of performance goals at year end.
In exercising its duties, the Culture and Compensation Committee receives information and support from management, and guidance from an independent advisor.
The Culture and Compensation Committee is wholly accountable for any changes in compensation for the Chief Executive Officer, and the Chief Executive Officer is not included in any discussions regarding changes to his own compensation. For other Named Executive Officers, recommendations are made by the Chief Executive Officer and subsequently reviewed and approved by the Culture and Compensation Committee.
The Annual Process
The Culture and Compensation Committee typically meets four times a year to consider the following items:
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Additional meetings are scheduled on an as needed basis.
Use of an Independent Advisor
As outlined in its Charter, the Culture and Compensation Committee has the authority to select, retain, and/or replace, as needed, compensation and benefits consultants and other outside consultants to provide independent advice to the Culture and Compensation Committee.
In 2016, the Culture and Compensation Committee appointed Willis Towers Watson (“WTW”) as an independent outside compensation consultant. During 2020, WTW advised the Culture and Compensation Committee on peer group development, market practices, industry trends, investor views and benchmark compensation data. In addition, they reviewed and provided the Culture and Compensation Committee with an independent perspective of management recommendations. These duties were consistent with those performed in prior years.
The Culture and Compensation Committee considered the six factors specified by the Securities and Exchange Commission to monitor the independence of their compensation advisors. As was the case in prior years, the Culture and Compensation Committee determined that WTW’s services during 2020 did not raise a conflict of interest.
Managing Compensation-Related Risks
NeoGenomics operates in a highly regulated, competitive and fast-moving field, meaning that risk management is core to our success. It is the common purpose of all NeoGenomics employees to save lives by improving patient care, and this shared common purpose underscores our commitment to performance excellence in a risk-appropriate manner.
The Culture and Compensation Committee’s role relative to risk mitigation is to review the risks associated with NeoGenomics’ compensation policies and practices to determine whether any risks associated with such policies and practices encourage unnecessary or excessive risk-taking or are reasonably likely to have a material adverse effect on the Company. The Culture and Compensation Committee also oversees an annual review of the Corporation’s risk assessment of its compensation policies and practices for its employees.
The risk-mitigating features that NeoGenomics has adopted within our executive compensation programs are summarized below.
Clawback
In the event of a restatement of the NeoGenomics’ financial statements due to material noncompliance with any financial reporting requirement under the law, whether such noncompliance is the result of misconduct or other circumstances, a Participant shall be required to reimburse the Company for any amounts earned or payable with respect to an Award to the extent required by law and any applicable Company policies.
Share Ownership Guidelines and Share Retention Requirements
NeoGenomics has adopted share ownership guidelines to further align the interests of our senior executives with those of our stockholders. The guidelines require covered roles to hold NeoGenomics stock worth a value expressed as a multiple of their salary within five years of the guideline applying to them.
The table below summarizes the current share ownership guidelines for our Named Executive Officers as a multiple of salary as of December 31, 2020:
Role
| Share Ownership Guideline
| Share Ownership(1)
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Chief Executive Officer | 3.0 | 212.8 | ||
Named Executive Officers | 1.0 | 11.7 |
(1) Share ownership calculated as an average of all Named Executive Officers except for the CEO who is shown separately.
Individuals who are yet to achieve their required ownership amounts are required to retain an amount equal to 25% of the net shares received as the result of the exercise, vesting, or payment of any equity awards they have received. If an individual’s share ownership level is not attained by the end of the initial five-year period (or at any time thereafter), they will be required to retain an amount equal to 100% of the net shares received as the result of the exercise, vesting, or payment of any equity awards granted to them, until the applicable guideline level is achieved. As of December 31, 2020, all Named Executive Officers were either in compliance with the share ownership guidelines or not yet required to be in compliance due to hire date.
Views of our Stockholders
Starting in 2019, the Company moved to an annual vote on Named Executive Officers’ compensation. This change enables the Culture and Compensation Committee to have more regular insight on stockholder views which inform discussions on program design and disclosure.
In 2020, 96.4% of the votes cast were in favor of our Named Executive Officers’ compensation. This positive vote and feedback, coupled with alignment of pay and performance under NeoGenomics’
compensation programs, reinforces the current approach to executive compensation. The outcomes of these advisory votes will continue to inform the Culture and Compensation Committee’s thinking as it evaluates the appropriateness and effectiveness of NeoGenomics’ approach to executive compensation.
Compensation Peer Group
In evaluating executive compensation, the Culture and Compensation Committee considers a number of factors including:
Absolute Company performance;
Company performance relative to our established peer group;
Compensation practices observed in our established peer group; and
Stockholder views.
Given the fast-changing nature of our industry, the Culture and Compensation Committee reviews the compensation peer group annually, with input from WTW. Consideration is given to relative size (revenue, number of employees and market capitalization) and nature of business (business focus and model) of the organizations.
The Culture and Compensation Committee has consciously chosen to adopt a compensation peer group that is, on the whole, different from the group of companies with which our business competes. This is primarily due to the fact that many of our direct business competitors are either much larger or smaller than us in terms of size and scope, meaning the compensation data would not necessarily be appropriate to inform decision-making regarding executive compensation levels at NeoGenomics.
The 2020 compensation peer group comprised the following 16 companies:
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* Indicates companies excluded from CEO pay vs. performance graph below as three years of stock data is not available.
Peers included in 2020 met industry selection criteria and fell within the Life Sciences Tools & Services industry and desired ranges for revenue and market capitalization.
Assessment of the Chief Executive Officer’s Compensation
As noted above, one of the Culture and Compensation Committee’s annual activities is to assess the total compensation of the Chief Executive Officer related to our compensation peer group. The peer group used for this purpose is our compensation peer group as defined above.
The following graph shows the relationship of our CEO’s total compensation as set forth in the 2020 Summary Compensation Table and the change in stock price for the three years ended December 31, 2017, 2018 and 2019 (annualized) as compared to the companies included in our peer group, as defined above. Data for the most recent year ended December 31, 2020 was not used in this graph as the CEO compensation was not available for this period for all companies presented.
Establishing Performance Targets
Performance targets are set in the first quarter at the time of the Board’s annual budgeting session to ensure that our executives’ compensation opportunities are aligned with our short and long-term strategic goals. The performance targets are designed to reward achievement of specific financial, strategic and individual performance goals. We use an annual performance management process for our executives to assess individual performance, as well as a variety of distinct performance metrics that are shared among the executive team. As part of this process, each executive, including each of our Named Executive Officers, establishes his or her performance goals with input and approval from the CEO. Shared performance metrics are reviewed and approved by the Culture and Compensation Committee.
2020 Compensation Decisions and Outcomes
The decisions described below in relation to 2020 pay levels and outcomes for our Named Executive Officers were made before the full global extent of the COVID-19 pandemic became apparent. The Culture and Compensation Committee considered the business and financial impact of COVID-19 pandemic to NeoGenomics, our stockholders, our employees, our customers and other stakeholders, in evaluating 2020 performance.
An Overview of Performance in 2020
The Culture and Compensation Committee considers the financial performance of the Company in making compensation decisions. The Culture and Compensation Committee believes that compensation should be tied to the performance of the Company as well as the return to stockholders.
The primary metrics used in the evaluation of financial performance of the Company are revenue and adjusted EBITDA. Consolidated revenue for the year ended December 31, 2020 was $444.4 million, an increase of 8.7% over 2019. Adjusted EBITDA for the year ended December 31, 2020 was $34.8 million compared to $57.2 million in 2019. For the year ended December 31, 2020, special considerations related to revenue and adjusted EBITDA were made due to the unique challenges and circumstances of the COVID-19 pandemic. The diligent efforts and dedication of the named executive officers were recognized by the Culture and Compensation Committee. This resulted in weighting
revenue and adjusted EBITDA results with 25% of the weight being placed on the first half of 2020 and 75% on the second half of the year.
These performance achievements in addition to Company and individual goals, resulted in annual incentive awards ranging from 65.9% - 100.0% of target.
We have presented below the cumulative total return to our stockholders of $100 during the period from December 31, 2015, through December 31, 2020 in comparison to the cumulative return on the S&P 500 Index and a customized peer group of five publicly traded companies during that same period. The peer group is made up of Invitae Corporation, Exact Sciences Corporation, Laboratory Corporation of America Holdings, Natera, Inc., and Quest Diagnostics, Inc. Several of our closest competitors are part of large pharmaceutical or other multi-national firms, or are privately held and, as such, we are unable to obtain financial information for them.
The results assume that $100 (with reinvestment of all dividends) was invested in our common stock, the index and in the peer group and its relative performance tracked through December 31, 2020. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.
Our Named Executive Officers in 2020
The following individuals were Named Executive Officers in 2020.
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2020 Base Salary
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(1) Mr. VanOort voluntarily reduced his annual salary in April 2020 from $700,000 to $665,000 to align with management’s decision not to implement merit pay increases for all employees due to the COVID-19 pandemic. Had this voluntary reduction not been made, his salary would have been the base salary stated above as of the related effective date.
(2) Mr. Shovlin voluntarily reduced his annual salary in May 2020 from $425,000 to $400,000 to align with management’s decision not to implement merit pay increases for all employees due to the COVID-19 pandemic. Had this voluntary reduction not been made, his salary would have been the base salary stated above as of the related effective date.
Annual Incentive
The annual incentive is a performance bonus, paid in cash that is designed to incentivize and reward Named Executive Officers for operating results, both financial and strategic. The 2020 performance goals were approved by the Culture and Compensation Committee at the start of the fiscal year and communicated to each of our Named Executive Officers. In 2020, bonus opportunities and outcomes for the Named Executive Officers were as follows:
Named Executive Officer | Target Bonus (% of salary) | Maximum Bonus (% of salary) | Actual Bonus (% of salary) | Actual Bonus (% of target) | ||||
Douglas M. VanOort | 80% | 160% | 64% | 80% | ||||
Kathryn B. McKenzie | 50% | 100% | 47% | 93% | ||||
Robert J. Shovlin | 50% | 100% | 33% | 66% | ||||
Douglas M. Brown | 50% | 100% | 50% | 100% | ||||
Dr. Lawrence M. Weiss | 40% | 80% | 31% | 77% |
The 2020 annual incentive is determined based on a combination of NeoGenomics’ financial performance as well as individual performance, including attainment of strategic critical success objectives and individual performance. The relative weightings of each have been carefully established to reflect the role of each Named Executive Officer and the areas on which they are able to have the most influence and impact. For the year ended December 31, 2020, special considerations related to revenue and adjusted EBITDA were made due to the unique challenges and circumstances of the COVID-19 pandemic. This resulted in weighting revenue and adjusted EBITDA results with 25% of the weight being placed on the first half of 2020 and 75% on the second half of the year. All Named Executive Officers have a corporate financial performance component, reflecting the importance of our senior management working collectively as a team to deliver results, and their collective accountability to our stockholders.
The weight of each measure for 2020 was as follows:
Corporate Performance
| Individual Performance
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Named Executive Officer
| Revenue
| Adjusted EBITDA
| Strategic Critical Success Factors
| Individual
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Douglas M. VanOort | 40%
| 40%
| 10%
| 10%
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Kathryn B. McKenzie | 30%
| 30%
| 10%
| 30%
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Robert J. Shovlin (1) | 10%
| 30%
| 10%
| 50%
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Douglas M. Brown | 30%
| 30%
| 10%
| 30%
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Dr. Lawrence M. Weiss | 35%
| 35%
| 10%
| 20%
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(1) The individual goal for Mr. Shovlin is largely tied to the financial performance of the Clinical Services division. 15% of Mr. Shovlin’s annual incentive in 2020 is based on achieving the Clinical Services revenue goals set forth.
Corporate Performance
For the year ended December 31, 2020, special considerations related to revenue and adjusted EBITDA were made due to the unique challenges and circumstances of the COVID-19 pandemic. This resulted in weighting revenue and adjusted EBITDA results with 25% of the weight being placed on the first half of 2020 and 75% on the second half of the year. With this weighting, the corporate performance component of the Annual Bonus Plan resulted in a payout of 141% of target for revenue and no payment for adjusted EBITDA. For the first half of 2020, threshold performance metrics were not achieved. The following chart shows the achievement for the second half of 2020.
Financial Performance Metric (in millions) | Threshold | Target | Maximum | Achievement | ||||||||||||||||||||
Revenue | $ | 233,000 | $ | 243,000 | $ | 253,000 | $ | 251,441 | ||||||||||||||||
Adjusted EBITDA | $ | 35,900 | $ | 39,400 | $ | 42,900 | $ | 34,993 |
Strategic Critical success factors paid out at 83% of target, driven by:
Strengthening our world class culture by improving teamwork and emphasizing effective communication;
Providing uncompromising quality through Company-wide leadership, training, and employee engagement; and
Pursuing exceptional service and growth through customer engagement.
Individual Performance
The individual performance component of the Annual Bonus Plan includes specific goals for each Named Executive Officer. Key achievements in the following areas were factored into determining the performance outcomes:
Acquired the Oncology Division assets of HLI - Oncology;
Established strategic collaboration and minority investment in Inivata;
Expanded testing menu to include suite of liquid biopsy tests;
Operationalized high-capacity COVID-19 testing lab resulting in $27 million in revenue and approximately 538,000 tests performed;
Achieved operating segment revenue goals (where indicated in table above); and
Achieved 2020 Company-wide focus initiatives and critical success factors including:
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Our Culture and Compensation Committee approved the CEO’s recommendations for the individual performance ratings of executives (other than the CEO). Individual performance ratings of the CEO were approved based on an evaluation of performance by the Culture and Compensation Committee. Individual performance ratings were based on individual goals; some of the key achievements included the following:
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The combination of corporate and individual performance resulted in the following awards based on 2020 performance:
Named Executive Officer | Actual Bonus | Actual Bonus (% of salary) | Actual Bonus (% of target) | |||||||||||||
Douglas M. VanOort | $ | 450,000 | 64% | 80% | ||||||||||||
Kathryn B. McKenzie | $ | 175,000 | 47% | 93% | ||||||||||||
Robert J. Shovlin | $ | 140,000 | 33% | 66% | ||||||||||||
Douglas M. Brown (1) | $ | 200,000 | 50% | 100% | ||||||||||||
Dr. Lawrence M. Weiss | $ | 185,000 | 31% | 77% |
(1) Mr. Brown’s actual bonus as a percentage of his target reflects a high level of achievement of individual performance objectives related to acquisition opportunities.
Although the formulaic outcome for the Chief Executive Officer would have resulted in an actual bonus payout equal to 60% of salary (or 75% of his target bonus), the Culture and Compensation Committee felt it appropriate to apply positive discretion (as permitted by the Annual Incentive Plan) to increase the payout to 64% for special considerations related to the unique challenges and circumstances of the COVID-19 pandemic. As outlined above, the actual payout of 64% of salary for the Chief Executive Officer was materially lower than the target bonus opportunity.
2020 Long-Term Incentive Awards
2020 long-term incentive (“LTI’”) awards to our named executive officers were primarily made in the form of a combination of stock options and time-based restricted stock. This directly reflects our strategy, and, in turn, our compensation philosophy by delivering an appropriate balance of retention and motivation to deliver strong strategic performance, with a view to long-term value creation for our stockholders. The Culture and Compensation Committee views stock options as a performance-based incentive given the inherent requirement for sustained stock price appreciation for awards to yield
value. This is clearly aligned with the interests of our stockholders. The Culture and Compensation Committee also considers it appropriate to grant restricted stock to our named executive officers because they provide a degree of retention in our LTI program, aligned with one of the goals of our compensation philosophy, which is to retain our highly skilled management team.
The amount of LTI awards granted to each executive is determined based on his or her individual performance, potential future contributions, market competitiveness, and other factors. Our Culture and Compensation Committee reviews our LTI awards against LTI awards of our peer group and also reviews the overall total compensation of our executive officers against our peer group. On average, annual LTI grant awards for our Named Executive Officers position their overall compensation at or around the median values of our peer group, in cases where there are comparable positions at the peer companies.
Other Elements of Compensation
Perquisites
We do not provide significant perquisites or personal benefits to Named Executive Officers. We provide competitive relocation benefits to newly hired officers, in keeping with industry practices. We value perquisites at their incremental cost to us in accordance with SEC regulations. These amounts, if applicable, are reflected in the Summary Compensation Table below under the column entitled “All Other Compensation” and the related footnotes.
Benefits
Named Executive Officers are provided with health benefits and access to our 401(k) Plan. Under the 401(k) Plan, NeoGenomics matches contributions at the rate of 100% of every dollar contributed up to 3% of the respective employee’s compensation and an additional 50% of every dollar contributed on the next 2% of compensation (4% maximum Company match). The Named Executive Officers participate in the same plan as the broader employee population.
Tax and Accounting Considerations
Section 162(m) of the Code limits the tax deductibility of compensation in excess of $1 million paid to any employee in any calendar year that is considered to a Covered Employee. A Covered Employee is generally defined as the principal executive officer or principal financial officer at any time during the year, or any individual acting in such a capacity, and the three other most highly compensated executive officers. An employee that was considered a covered employee after 2016 will always be considered a covered employee even if he or she is no longer the principal executive officer, principal financial officer, or one of the three other most highly compensated executive officers during the applicable year. Under the tax rules in effect before 2018, compensation that qualified as “performance-based” under Section 162(m) was deductible without regard to this $1 million limit. However, the Tax Cuts and Jobs Act, which was signed into law December 22, 2017, repealed the performance-based compensation exception for tax years beginning after December 31, 2017, subject to a transition rule that “grandfathers” certain awards and arrangements that were in effect under a written binding contract on or before November 2, 2017 and were not materially modified after this date. As a result, certain compensation that is paid on or after January 1, 2018 may not be fully deductible, depending on the application of the grandfather rules. Moreover, from and after January 1, 2018, compensation paid in excess of $1 million in any calendar year to a Covered Employee generally will not be deductible.
While the Tax Cuts and Jobs Act limits the deductibility of compensation paid to Covered Employees, the Culture and Compensation Committee will, consistent with its past practice, design compensation programs that are intended to be in the best long-term interests of the Company and our stockholders, with deductibility of compensation being one of a variety of considerations taken into account.
Culture and Compensation Committee Report
The members of the Company’s Culture and Compensation Committee hereby state:
We have reviewed and discussed the Compensation Discussion & Analysis contained in this Proxy Statement with NeoGenomics’ management and, based on such review and discussions, we have recommended to the Board that the Compensation Discussion & Analysis be included in this Proxy Statement.
MEMBERS OF THE CULTURE AND COMPENSATION COMMITTEE
Lynn A. Tetrault, Chair
Raymond R. Hipp
Kevin C. Johnson
Stephen M. Kanovsky
Michael A. Kelly
The following Summary Compensation Table sets forth all compensation earned and accrued, in all capacities, during the fiscal years ended December 31, 2020, 2019, and 2018, by the principal executive officer, principal financial officer, and our three other most highly compensated executive officers in 2020, together “Named Executive Officers” (in dollars).
Name and Principal Position | Year | Salary | Bonus (1) | Stock Award (2) | Option Award (2) | Non-Equity Incentive Plan Compensation (3) | Non- qualified Deferred Compensation Earnings | All Other Compensation (4) | Total | |||||||||||||||||||||||||||
Douglas M. VanOort (5) | 2020 | $ | 669,039 | $ | — | $ | 990,000 | $ | 2,010,000 | $ | 450,000 | $ | — | $ | 3,000 | $ | 4,122,039 | |||||||||||||||||||
Chairman of the Board & Chief Executive Officer
| 2019 | 665,000 | — | 742,507 | 1,338,225 | 900,000 | — | 3,000 | 3,648,732 | |||||||||||||||||||||||||||
2018 | 641,923 | — | 650,006 | 1,278,290 | 774,000 | — | 3,000 | 3,347,219 | ||||||||||||||||||||||||||||
Kathryn B. McKenzie (6) | 2020 | 359,616 | — | 165,000 | 335,000 | 175,000 | — | — | 1,034,616 | |||||||||||||||||||||||||||
Chief Financial Officer
| 2019 | 250,000 | — | 44,551 | 80,293 | 150,000 | — | — | 524,844 | |||||||||||||||||||||||||||
2018 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Sharon A. Virag (7)(8) | 2020 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Chief Financial Officer | 2019 | 257,723 | — | 214,502 | 386,597 | 182,823 | — | — | 1,041,645 | |||||||||||||||||||||||||||
2018 | 298,462 | 120,000 | — | 485,100 | 190,000 | — | — | 1,093,562 | ||||||||||||||||||||||||||||
Robert J. Shovlin (9) | 2020 | 404,808 | — | 247,500 | 502,000 | 140,000 | — | 3,000 | 1,297,308 | |||||||||||||||||||||||||||
President of Clinical Services
| 2019 | 400,000 | — | 214,502 | 386,597 | 280,000 | — | 3,000 | 1,284,099 | |||||||||||||||||||||||||||
2018 | 375,385 | — | — | 737,598 | 212,756 | — | 3,000 | 1,328,739 | ||||||||||||||||||||||||||||
Douglas M. Brown (10) | 2020 | 346,154 | — | 198,000 | 402,000 | 200,000 | — | 100,000 | 1,246,154 | |||||||||||||||||||||||||||
Chief Strategy and Corporate Development Officer | 2019 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
2018 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Dr. Lawrence M. Weiss (11) | 2020 | 600,000 | — | 165,000 | 335,000 | 185,000 | — | — | 1,285,000 | |||||||||||||||||||||||||||
Chief Medical Officer | 2019 | 600,000 | — | 115,503 | 208,171 | 260,000 | — | — | 1,183,674 | |||||||||||||||||||||||||||
2018 | 571,519 | 100,000 | — | 152,100 | 32,276 | — | — | 855,895 |
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Narrative to the Summary Compensation Table
Grants of Plan Based Awards
The following table shows information regarding grants of non-equity and equity awards that we made during the fiscal year ended December 31, 2020 to each of our Named Executive Officers.
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan (1) | All Other Stock Awards: Number of Shares of Stock or Units | Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards (2) | ||||||||||||||||||||||||||
Threshold | Target | Maximum | ||||||||||||||||||||||||||||||
Douglas M. VanOort | 3/2/2020 | — | 80 | % | 160 | % | — | 225,084 | $ | 28.33 | $ | 2,010,000 | ||||||||||||||||||||
Chief Executive Officer and Chairman of the Board | 3/2/2020 | — | — | — | 34,945 | — | $ | — | $ | 990,000 | ||||||||||||||||||||||
Kathryn B. McKenzie (3) | 3/2/2020 | — | 50 | % | 100 | % | — | 37,514 | $ | 28.33 | $ | 335,000 | ||||||||||||||||||||
Chief Financial Officer | 3/2/2020 | — | — | — | 5,824 | — | $ | — | $ | 165,000 | ||||||||||||||||||||||
Robert J. Shovlin | 3/2/2020 | — | 50 | % | 100 | % | — | 56,271 | $ | 28.33 | $ | 502,500 | ||||||||||||||||||||
President, Clinical Services | 3/2/2020 | — | — | — | 8,736 | — | $ | — | $ | 247,500 | ||||||||||||||||||||||
Douglas M. Brown (4) | 3/2/2020 | — | 50 | % | 100 | % | — | 45,017 | $ | 28.33 | $ | 402,000 | ||||||||||||||||||||
Chief Strategy and Corporate Development Officer | 3/2/2020 | — | — | — | 6,989 | — | $ | — | $ | 198,000 | ||||||||||||||||||||||
Dr. Lawrence M. Weiss (5) | 3/2/2020 | — | 40 | % | 80 | % | — | 37,514 | $ | 28.33 | $ | 335,000 | ||||||||||||||||||||
Chief Medical Officer | 3/2/2020 | — | — | — | 5,824 | — | $ | — | $ | 165,000 |
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Outstanding Equity Awards at December 31, 2020
The Culture and Compensation Committee has been given the authority to set all performance metrics for the vesting of performance-based equity awards and has the authority to adjust any target financial metrics used for such vesting if it deems it appropriate to do so. The following table sets forth information with respect to outstanding equity awards held by our Named Executive Officers as of December 31, 2020:
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||
Name and Principal Position | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options Exercisable | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock that have not Vested | Market Value of Shares or Units of Stock that have not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested | |||||||||||||||||||||||||||||||||
Douglas M. VanOort | 333,333 | 166,667 | (1) | — | $ | 8.03 | 2/26/2023 | 15,477 | $ | 833,282 | | (2 (3 | ) ) | — | — | |||||||||||||||||||||||||||
Chief Executive | 57,891 | 173,676 | (4) | — | $ | 19.60 | 3/1/2024 | 28,413 | $ | 1,529,756 | | (3 (5 | ) ) | — | — | |||||||||||||||||||||||||||
— | 225,084 | (6) | — | $ | 28.33 | 3/2/2027 | 34,945 | $ | 1,881,439 | | (3 (7 | ) ) | — | — | ||||||||||||||||||||||||||||
Kathryn B. McKenzie | 25,000 | — | (8) | — | $ | 9.07 | 10/18/2022 | 1,705 | $ | 91,797 | | (3 (5 | ) ) | — | — | |||||||||||||||||||||||||||
Chief Financial Officer | 24,000 | 16,000 | (1) | — | $ | 8.03 | 2/26/2023 | 5,824 | $ | 313,564 | | (3 (7 | ) ) | — | — | |||||||||||||||||||||||||||
3,473 | 10,421 | (4) | — | $ | 19.60 | 3/1/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||
— | 37,514 | (6) | — | $ | 28.33 | 3/2/2027 | — | — | — | — | ||||||||||||||||||||||||||||||||
Robert J. Shovlin | — | 96,167 | (1) | — | $ | 8.03 | 2/26/2023 | 8,208 | $ | 441,919 | | (3 (5 | ) ) | — | — | |||||||||||||||||||||||||||
President of Clinical Services | — | 50,173 | (4) | — | $ | 19.60 | 3/1/2024 | 8,736 | $ | 470,346 | | (3 (7 | ) ) | — | — | |||||||||||||||||||||||||||
— | 56,271 | (6) | — | $ | 28.33 | 3/2/2027 | — | — | — | — | ||||||||||||||||||||||||||||||||
Douglas M. Brown | — | 45,017 | (6) | — | $ | 28.33 | 3/2/2027 | 6,989 | $ | 376,288 | | (3 (7 | ) ) | — | — | |||||||||||||||||||||||||||
Chief Strategy and Corporate Development Officer | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Dr. Lawrence M. Weiss | — | 6,667 | (9) | — | $ | 9.22 | 4/19/2023 | 4,420 | $ | 237,973 | | (3 (5 | ) ) | — | — | |||||||||||||||||||||||||||
Chief Medical Officer | — | 8,334 | (10) | — | $ | 13.87 | 12/12/2023 | 5,824 | $ | 313,564 | | (3 (7 | ) ) | — | — | |||||||||||||||||||||||||||
— | 27,017 | (4) | — | $ | 19.60 | 3/1/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||
— | 37,514 | (6) | — | $ | 28.33 | 3/2/2027 | — | — | — | — |
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Options Exercised and Stock Vested
The options exercised by and stock vested for our Named Executive Officers during the fiscal year ended December 31, 2020 were as follows:
Option Awards
| Stock Awards
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Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | ||||||||||||||
Douglas M. VanOort | 500,000 | $ | 17,365,834 | 65,681 | (1) | $ | 1,850,891 | |||||||||||
Chief Executive Officer and Chairman of the Board | — | $ | — | 15,476 | (1) | $ | 591,647 | |||||||||||
— | $ | — | 9,470 | (1) | $ | 268,285 | ||||||||||||
Kathryn B. McKenzie | — | $ | — | 568 | (1) | $ | 16,091 | |||||||||||
Chief Financial Officer | — | $ | — | — | $ | — | ||||||||||||
Robert J. Shovlin | 66,667 | $ | 2,034,700 | 16,667 | (1) | $ | 469,676 | |||||||||||
President of Clinical Services | 96,167 | $ | 2,195,646 | 2,736 | (1) | $ | 77,511 | |||||||||||
16,724 | $ | 310,523 | — | $ | — | |||||||||||||
Douglas M. Brown | — | $ | — | — | $ | — | ||||||||||||
Chief Strategy and Corporate Development Officer | — | $ | — | — | $ | — | ||||||||||||
Dr. Lawrence M. Weiss | 50,000 | $ | 2,194,738 | 1,473 | $ | 41,730 | ||||||||||||
Chief Medical Officer | 20,000 | $ | 869,600 | — | $ | — | ||||||||||||
13,333 | $ | 553,719 | — | $ | — | |||||||||||||
16,666 | $ | 614,642 | — | $ | — | |||||||||||||
9,005 | $ | 280,506 | — | $ | — |
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Employment Agreements and Potential Payments Upon Termination or Change in Control
The Company is a party to employment contracts that contain provisions for payment upon termination.
The following table shows the Named Executive Officers with such provisions and the estimated financial impact assuming these Named Executive Officers were terminated without cause at December 31, 2020:
Benefits and Payments
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Named Executive Officer | Base Salary(1) | Benefits(2) | ||||||
Douglas M. VanOort | $ | 700,000 | $ | 14,484 | ||||
Chief Executive Officer and Chairman of the Board | ||||||||
Kathryn B. McKenzie | $ | 375,000 | $ | 13,573 | ||||
Chief Financial Officer | ||||||||
Robert J. Shovlin | $ | 425,000 | $ | 20,557 | ||||
President of Clinical Services | ||||||||
Douglas M. Brown | $ | 400,000 | $ | 15,757 | ||||
Chief Strategy and Corporate Development Officer | ||||||||
Dr. Lawrence M. Weiss | $ | 600,000 | $ | 27,048 | ||||
Chief Medical Officer |
(1) Represents 12 months continuation of base salary.
(2) Represents the estimated incremental cost to the Company for continuation of health care benefits for 12 months.
The following Named Executive Officers have stock options and/or restricted stock agreements that contain provisions providing for accelerated vesting upon change in control.
The following table shows the estimated benefit to the Named Executive Officer assuming a change in control and qualifying termination based on “double trigger” provisions at December 31, 2020:
| Vesting Upon Change in Control
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Named Executive Officer | | Unvested Stock Options # |
| | Stock Options Estimated | | | Unvested Restricted Stock # |
| | Restricted Stock Estimated | | ||||
Douglas M. VanOort, Chief Executive Officer and Chairman of the Board | 565,427 | $ | 19,323,574 | 78,835 | $ | 4,244,476 | ||||||||||
Kathryn B. McKenzie, Chief Financial Officer | 63,935 | $ | 2,046,757 | 7,529 | $ | 405,361 | ||||||||||
Robert J. Shovlin, President of Clinical Services | 202,611 | $ | 7,558,807 | 16,944 | $ | 912,265 | ||||||||||
Douglas M. Brown, Chief Strategy and Corporate Development Officer | 45,017 | $ | 1,148,384 | 6,989 | $ | 376,288 | ||||||||||
Dr. Lawrence M. Weiss, Chief Medical Officer | 79,532 | $ | 2,512,636 | 10,244 | $ | 551,537 |
(1) Estimated benefit based on stock price at December 31, 2020.
The Culture and Compensation Committee reviewed a comparison of our CEO’s total annual compensation to the total annual compensation of our median employee for the fiscal year ended December 31, 2020. The total annual compensation of our CEO for this period was $4,122,039 compared to the total annual compensation of our median employee which was $76,844. The resulting ratio of our CEO’s pay to the pay of our median employee for the fiscal year ended December 31, 2020 was 54:1; which is relatively consistent with the 49:1 reported for the fiscal year ended December 31, 2019. The pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
In determining the median employee, the Company used a consistently applied compensation measure. The compensation measure included salary received in fiscal year 2020 including commissions and bonuses (if applicable). The compensation measure excluded the following pay elements: grant date fair value of stock option granted in fiscal year 2020, Company-paid 401(k) match made during fiscal year 2020 and Company-paid insurance premiums during fiscal year 2020. For purposes of determining the median employee, the Company used the employee population as of December 31, 2020 including all active full-time, part-time and per diem employees.
The median employee was selected by (i) calculating the compensation for each of our employees (excluding the CEO) using the consistently applied compensation measure as defined above, (ii) ranking the employees based on that compensation from lowest to highest, and (iii) selecting the employee that falls in the middle of that population.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 1, 2021 with respect to the beneficial ownership of our common stock by:
each person or group known by the Company to own beneficially more than five percent of the Company’s outstanding common stock.
each director and Named Executive Officer of the Company;
the directors and executive officers of the Company as a group;
Title of Class | Name And Address Of Beneficial Owner | Amount and Nature Of Beneficial Ownership (1) | Percent Of Class (1) | |||||||
5% Stockholders | ||||||||||
Common | Blackrock, Inc. 55 East 52nd Street New York, NY 10055 | 17,246,570 | 14.7% | |||||||
Common | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 11,167,578 | 9.5% | |||||||
Named Executive Officers and Directors | ||||||||||
Common | Douglas M. VanOort (2) | 3,161,770 | 2.7% | |||||||
Common | Steven C. Jones (3) | 1,389,899 | 1.2% | |||||||
Common | Raymond R. Hipp (4) | 77,851 | * | |||||||
Common | Kevin C. Johnson (5) | 42,034 | * | |||||||
Common | Bruce K. Crowther (6) | 67,217 | * | |||||||
Common | Dr. Alison L. Hannah (7) | 99,530 | * | |||||||
Common | Lynn A. Tetrault (8) | 42,283 | * | |||||||
Common | Stephen M. Kanovsky (9) | 13,834 | * | |||||||
Common | Michael A. Kelly (10) | 4,005 | * | |||||||
Common | Rachel A. Stahler (11) | 6,146 | * | |||||||
Common | Kathryn B. McKenzie (12) | 94,859 | * | |||||||
Common | Douglas M. Brown (13) | 122,898 | * | |||||||
Common | Robert J. Shovlin (14) | 280,705 | * | |||||||
Common | Dr. Lawrence M. Weiss (15) | 130,847 | * | |||||||
Common | Directors and Named Executive Officers as a Group (16) | 5,533,878 | 4.7% |
* Less than 1%
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DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act requires our officers and directors, and persons who beneficially own more than ten percent (10%) of our outstanding common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with all copies of Section 16(a) forms they file.
Based solely on our review of the forms furnished to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and persons who own more than 10% of our common stock were complied with in fiscal year 2020, except that Ms. Stahler filed one late Form 4 due to administrative timing.
To have a proposal intended to be presented at our 2022 Annual Meeting of Stockholders be considered for inclusion in the Proxy Statement and form of proxy relating to that meeting, a stockholder must deliver written notice of such proposal in writing to the Corporate Secretary at our corporate headquarters no later than December 31, 2021 (unless the date of the 2022 Annual Meeting of Stockholders is not within 30 days of May 27, 2022, in which case the proposal must be received no later than a reasonable period of time before we begin to print and send our proxy materials for our 2022 Annual Meeting). Such proposal must also comply with the requirements as to form and substance established by the SEC for such a proposal to be included in the Proxy Statement. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
If a stockholder wishes to present a proposal before the 2022 Annual Meeting of Stockholders, but does not wish to have the proposal considered for inclusion in the Proxy Statement and form of proxy in accordance with Rule 14a-8, the stockholder must also give written notice to the Corporate Secretary at our corporate headquarters. Our Corporate Secretary must receive the notice not less than 90 days nor more than 120 days prior to May 27, 2022, the anniversary date of the 2021 Annual Meeting of Stockholders; provided, however, that in the event that the 2022 Annual Meeting of Stockholders is called for a date that is not within 30 days before or after May 27, 2022, notice by the stockholder in order to be timely must be received not later than the close of business on the 10th day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs. The proposal must also comply with the other requirements contained in our Amended and Restated Bylaws.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Summarized below is the aggregate amount of various professional fees billed by our principal accountant, Deloitte & Touche LLP, for the year ended December 31, 2020. For the year ended December 31, 2019, the aggregate amount of various professional fees includes fees billed by our principal accountant, Deloitte & Touche LLP, and our prior principal accountant, Crowe LLP.
2020
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Audit fees | $ | 1,455,725 | $ | 1,402,118 | ||||
Audit related fees | 95,356 | 71,840 | ||||||
Tax fees | — | — | ||||||
All other fees | 9,755 | 1,895 | ||||||
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Total | $ | 1,560,836 | $ | 1,475,853 | ||||
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(1) Aggregate amounts for 2019 include $50,000 of audit fees and $52,580 of audit related fees billed by our prior principal accountant, Crowe LLP.
Audit fees are limited to audit and review services related to the Company’s annual and quarterly reports filed with the SEC, as well as regulatory filings. For 2020, audit related fees related to stand alone audits of subsidiaries and permissible services related to cyber security. For 2019, audit related fees related to stand alone audits of subsidiaries. Tax fees include those related to tax compliance, tax advice and tax planning. All other fees consist primarily of programs and subscription services.
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm, including the estimated fees and other terms of any such engagement.
TRANSACTIONS WITH RELATED PERSONS
Consulting Agreements
On May 3, 2010, the Company entered into a consulting agreement (the “Consulting Agreement”) with Steven C. Jones, a director, officer and stockholder of the Company, whereby Mr. Jones would provide consulting services to the Company in the capacity of Executive Vice President. On May 3, 2010, the Company also entered into a warrant agreement with Mr. Jones and issued a warrant to purchase 450,000 shares of the Company’s common stock, which were all vested as of December 31, 2016 and fully exercised at December 31, 2017.
On November 4, 2016, the Company amended and restated the Consulting Agreement with Mr. Jones, (the “Amended and Restated Consulting Agreement”). The Amended and Restated Consulting Agreement had an initial term of November 4, 2016 through April 30, 2020, which automatically renews for additional one year periods unless either party provides notice of termination at least three months prior to the expiration of the initial term or any renewal term. Mr. Jones relinquished the title of Executive Vice President effective as of April 4, 2019. In addition, on May 6, 2019, the Company and Mr. Jones entered into a letter agreement to modify certain provisions of the Amended and Restated Consulting Agreement which modifications included, by mutual agreement of the parties, the following: automatic expiration of the Amended and Restated Consulting Agreement on April 30, 2020 unless the parties mutually agree to renew it in writing; a description of consulting services to be provided to the Company (the “Services”) with a target of up to 15 hours per month of working time and attention to the Company; a fixed monthly cash consulting fee in the amount of $5,000 per month for the provision of the Services; and continuation of health insurance coverage at the levels currently in effect. The agreement was terminated on April 30, 2020.
During the years ended December 31, 2020, 2019 and 2018, Mr. Jones earned approximately $24,000, $93,000 and $163,000, respectively, for various consulting work performed and reimbursement of incurred expenses. Mr. Jones also earned $0, $0 and $58,013 as payment of bonuses for the periods indicated above. During the years ended December 31, 2020, 2019 and 2018, Mr. Jones earned approximately $57,000, $51,250, and $50,000, respectively as compensation for his services on the Board.
The following table summarizes stock options and restricted stock granted to Mr. Jones during the years ended December 31, 2020, 2019 and 2018:
Grant Date | Common Stock Shares Granted | Restricted Common Stock Shares Granted | Fair Value | Fair Value per Share | Grant Price | |||||||||||||||
May 28, 2020 | 3,448 | — | $ | 33,000 | $ | 9.57 | $ | 28.54 | ||||||||||||
May 28, 2020 | — | 2,698 | $ | 77,000 | $ | 28.54 | $ | — | ||||||||||||
June 6, 2019 | 4,269 | — | $ | 34,762 | $ | 8.14 | $ | 22.52 | ||||||||||||
June 6, 2019 | — | 3,419 | $ | 76,996 | $ | 22.52 | $ | — | ||||||||||||
June 1, 2018 | 3,017 | — | $ | 11,284 | $ | 3.74 | $ | 11.60 | ||||||||||||
June 1, 2018 | — | 6,897 | $ | 80,005 | $ | 11.60 | $ | — |
Corporate Policies as to Related Party Transactions
The Company reviews related party transactions. Related party transactions are transactions that involve the Company’s directors, executive officers, director nominees, 5% or more beneficial owners of the Company’s common stock, immediate family members of these persons, or entities in which one of these persons has a direct or indirect material interest. Transactions that are reviewed as related party transactions by the Company are transactions that involve amounts that would be required to be disclosed in our filings under SEC regulations and certain other similar transactions. Pursuant to the Company’s Code of Ethics, employees and directors have a duty to report any potential conflicts of interest to the appropriate level of management or legal counsel as appropriate in the circumstances. The Company evaluates these reports, along with responses to the Company’s annual director and officer questionnaires, for any indication of possible related party transactions. If a transaction is deemed by the Company to be a related party transaction, the information regarding the transaction is reviewed and subject to approval by our Board. The Company makes efforts to ensure that any related party transaction is on substantially the same terms as those prevailing at the time for comparable transactions with other persons.
Our Board adopted a code of business ethics and conduct (the “Code of Ethics”), applicable to all of our executives, directors, and employees. The Code of Ethics is available in print to any stockholder that requests a copy. Copies may be obtained by contacting Investor Relations at our corporate headquarters. Our Code of Ethics is also available in the Investors section of our website at www.neogenomics.com. We intend to make any disclosures regarding amendments to, or waivers from, the Code of Business Conduct required under Form 8-K by posting such information on our website.
We know of no other matters to be submitted to the stockholders at the 2021 Annual Meeting. If any other matters properly come before the stockholders at the meeting, the persons named in the enclosed form of proxy will vote the shares they represent in their discretion.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The rules of the SEC allow the Company to “incorporate by reference” into this Proxy Statement certain information that we have filed with the SEC. This means that we can disclose important information to our stockholders by referring the stockholders to another document. The information incorporated by reference into this Proxy Statement is an important part of this Proxy Statement and is considered to be part of this Proxy Statement from the date we file that information with the SEC. Any reports filed by us with the SEC after the date of this Proxy Statement will automatically update and, where applicable, supersede any information contained in this Proxy Statement or incorporated by reference into this Proxy Statement.
A copy of any of the documents referred to above will be furnished, without charge, by writing to NeoGenomics, Inc., Attention: Investor Relations, 12701 Commonwealth Drive, Suite 9, Fort Myers, Florida 33913. The documents referred to above are also available from the EDGAR database that can be obtained through the SEC’s website at http://www.sec.gov or our website at www.neogenomics.com.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 27, 2021
FORM 10-K ANNUAL REPORT TO STOCKHOLDERS
On February 25, 2021, the Company filed with the SEC its Annual Report on Form 10-K for the fiscal year ended December 31, 2020. We have enclosed the Annual Report with this Proxy Statement. The Annual Report includes our audited financial statements for the fiscal year ended December 31, 2020, along with other financial information and management discussion, which we urge you to read carefully.
You can also obtain, free of charge, a copy of our Annual Report by:
writing to:
NeoGenomics, Inc.
12701 Commonwealth Drive, Suite 9, Fort Myers, Florida 33913
Attention: Denise E. Pedulla, Corporate Secretary
telephoning us at: (866) 776-5907
You can obtain a copy of our Annual Report and other periodic filings that we make with the SEC at www.neogenomics.com or from the SEC’s EDGAR database at http://www.sec.gov.
2021 ANNUAL MEETING PROXY MATERIALS RESULTS
Copies of this Proxy Statement and proxy materials ancillary hereto may be found on our website at www.neogenomics.com. We intend to publish final results from the 2021 Annual Meeting in a Current Report on Form 8-K, which will be filed with the SEC within four business days from the 2021 Annual Meeting, or as amended thereafter. You may obtain a copy of this and other reports free of charge from the SEC’s EDGAR database at http://www.sec.gov.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
Only one Proxy Statement is being delivered to two or more stockholders who share an address, unless the Company has received contrary instruction from one or more of such stockholders. The Company will promptly deliver, upon written or oral request, a separate copy of the Proxy Statement to a stockholder at a shared address to which a single copy of the document was delivered. If you would like to request additional copies of the Proxy Statement, or if in the future you would like to receive multiple copies of information or Proxy Statements, or annual reports, or, if you are currently receiving multiple copies of these documents and would, in the future, like to receive only a single copy, please so instruct the Company, by writing to us at 12701 Commonwealth Drive, Suite 9, Fort Myers, Florida 33913, Attention: Denise E. Pedulla, Corporate Secretary, or calling (866) 776-5907.
SECOND AMENDMENT OF THE
NEOGENOMICS, INC. AMENDED AND RESTATED EQUITY INCENTIVEEMPLOYEE STOCK PURCHASE PLAN
(AMENDED (AMENDED AND RESTATED EFFECTIVE AS OF OCTOBER 15, 2015)
APRIL 16, 2013, AND FURTHER AMENDED ON APRIL 20, 2017, APRIL 20, 2018, AND APRIL 14, 2022)
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follows, subject to approval by the stockholders of the Company:
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“4.3 Limitation on Awards. The total number of shares of Common Stock for which Stock Optionsexpressly or by necessary implication amended hereby, the Plan shall remain in full force and Stock Appreciation Rights may be granted to any employee during any 12 month period shall not exceed 2,000,000 shares in the aggregate (as adjusted pursuant to Section 22). The total number of shares of Common Stock for which Restricted Stock Awards, Deferred Stock Awards, Stock Bonus Awards and Other Stock-Based Awards may be granted to any employee during any twelve month period shall not exceed 2,000,000 shares in the aggregate (as adjusted pursuant to Section 22).”
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[signature page follows]
IN WITNESS WHEREOF, I hereby certify that the foregoing Second Amendment was duly adopted by the Board of Directors of NeoGenomics, Inc. on April , 2021.
* * * * *
IN WITNESS WHEREOF, I hereby certify that the foregoing Second Amendment was approved by the stockholders of NeoGenomics, Inc. on May , 2021.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D44151-P47100 KEEP THIS PORTION FOR YOUR RECORDS
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
D44152-P47100
NEOGENOMICS, INC.
Annual Meeting of Stockholders
May 27, 2021 10:00 AM (Eastern Time)
This proxy is solicited by the Board of Directors
The undersigned hereby appoints Denise E. Pedulla and Kathryn B. McKenzie, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of NeoGenomics, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN PROPOSAL 1, FOR THE ADVISORY VOTE ON THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS IN PROPOSAL 2, FOR THE SECOND AMENDMENT OF THE AMENDED AND RESTATED EQUITY INCENTIVE PLAN IN PROPOSAL 3, AND FOR THE RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM IN PROPOSAL 4.
Continued and to be signed on reverse side