SECURITIES AND EXCHANGE COMMISSION
PACIFIC BIOSCIENCES OF CALIFORNIA, INC.
§240.14a-12
required
(1)Title of each class of securities to which transaction applies: Common Stock, par value $[______]
(2)Aggregate number of securities to which transaction applies: [________] shares of Common Stock
(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11(Set forth the amount on which the filing fee is calculated and state how it was determined): $[____]
(4)Proposed maximum aggregate value of transaction: $[____]
(5)Total fee paid: $[____]
☐
materials
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
14, 2022
virtual meeting, please have your notice or proxy card in hand when you visit the website. If you have difficulty accessing the virtual Annual Meeting, please call (888) 724-2416 or (781) 575-2748 for assistance.
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PacBio.
Michael Hunkapiller, Ph.D.
Chairman, President and
Chief Executive Officer
May 25, 2022
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If you received notice
materials.
Stephen M. Moore
Vice President,
General Counsel and Corporate Secretary
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_______________________
_______________________
This Proxy Statement and the accompanying proxy card or voting instruction form will first be made available to our stockholders on or about May 9, 2019. See the section titled “Fiscal Year 2018 Annual Report and SEC Filings” for information on accessing our 2018 Annual Report to Stockholders.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THESE PROXY MATERIALS
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Beneficial Owner. You are a beneficial owner if at the close of business5:00 p.m. Pacific Time on the record date your shares were held by a brokerage firm, bank or other nominee and not in your name. Being a beneficial owner means that, like many of our stockholders, your shares are held in “street name.” As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote your shares by following the voting instructions your broker, bank or other nominee provides. If you do not provide your broker, bank or nominee with instructions on how to vote your shares, your broker, bank or nominee will not be able to vote your shares with respect to the proposals. Please see “What if I do not specify how my shares are to be voted?” for more information. Beneficial owners are also invited to attend the Annual Meeting. However, since a beneficial owner is not the stockholder of record, you may not vote your shares of our common stock at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy.
Meeting?
answered.
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What is the effect of a broker non-vote?
Proposal | | | Vote Required | | | Broker Discretionary Voting Allowed | | |
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Proposal 1 | | | Majority of the | | | No | | |
Proposal 2 | | | Majority of the voting power of the shares | | | Yes | | |
Proposal 3 – Increase in the number of shares of common stock authorized for issuance under the 2020 Equity Incentive Plan | | | Majority of the voting power of the shares present virtually or represented by proxy and entitled to vote on the subject matter | | | No | |
beneficial owners. We have hired Alliance Advisors, LLC (“Alliance”) to help us solicit proxies. We expect to pay Alliance a base fee of $14,999 plus reimbursement of reasonable out-of-pocket expenses. Proxy solicitations will be made primarily through the mail, but may be supplemented by telephone, facsimile, Internet, or personal solicitation by Alliance.
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Pursuant to
Combining the roles of ChairmanChair of the Board of Directors and Chief Executive Officer promotes unifiedand President was appropriate as it allows our Chief Executive Officer and President to focus primarily on management responsibilities and corporate strategy, while allowing the Chair to focus on leadership and direction for us, allowing for operational effectiveness and efficiencies that ensureof the implementation of strategic initiatives and business plans to optimize stockholder value.
The Board of Directors, believesproviding feedback and advice to the combined role of Chairman and Chief Executive Officer togetherand President and providing a channel of communication between the members of the Board of Directors and the Chief Executive Officer and President. The Chair of the Board of Directors presides over all meetings of our Board of Directors and works with the roleChief Executive Officer and President to develop agendas for meetings of the Lead Independent Director, appropriately balances our leadership. The role of our Lead Independent Director helps ensure a strong, independent, and active Board of Directors. The Chair also works with the Board of Directors to drive decisions about particular strategies and policies and, in concert with the independent committees of the Board of Directors, facilitates a performance evaluation process of the Board of Directors.
Board Diversity Matrix (As of April 14, 2022) | | ||||||||||||||||||||||||
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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 | | | | | 1 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Alaskan Native or Native American | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Asian | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Hispanic or Latinx | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Native Hawaiian or Pacific Islander | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
White | | | | | 2 | | | | | | 6 | | | | | | 0 | | | | | | 0 | | |
Two or More Races or Ethnicities | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
LGBTQ+ | | | 0 | | |||||||||||||||||||||
Did Not Disclose Demographic Background | | | 0 | |
use this feedback in continuing to refine our ESG priorities.
7
8Delinquent Section 16(a) Reports
Although we do not have a formal policy regarding attendance by members of our Board of Directors at annual meetings of stockholders, we encourage, but do not require, our directors to attend. NoneEight of the nine members of our eight then board membersBoard of Directors attended our 2018 annual meeting.
June 16, 2021 Annual Meeting of Stockholders.
Name of Director | |
| Age |
| | Position | | | Class and Current Term | |
David Botstein, Ph.D. | |
| 79 |
| | Director | | | Class III, term expires | |
William Ericson | |
| 63 |
| | Director | | | Class III, term expires | |
Christian O. Henry | |
| 54 |
| | Chief Executive Officer and President | | | Class I, term expires | |
| | | 68 | | | Director | | | Class II, term expires 2024 | |
John F. Milligan, Ph.D. | |
| 61 |
| | Chair of the Board of Directors | | | Class I, term expires 2023 | |
Marshall Mohr | | | 66 | | | Director | | | Class II, term expires | |
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| 71 |
| | Director | | | Class III, term expires 2022 | |
Lucy Shapiro, Ph.D. | | | 81 | | | Director | | | Class I, term expires 2023 | |
Hannah A. Valantine, M.D. | | | 70 | | | Director | | | Class II, term expires | |
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The principal occupations and positions and directorships for at least the past five years of our directors and director nominees, as well as certain information regarding their individual experience, qualifications, attributes and skills that led our Board of Directors to conclude that they should serve on the Board of Directors, are described below. There are no family relationships among any of our directors or executive officers.
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David Botstein, Ph.D. has been a member of our Board of Directors since 2012. SinceFrom January 2014 through December 2021, Dr. Botstein has beenserved as the Chief Scientific Officer at Calico Life Sciences, L.L.C. Dr. Botstein was formerly Director of the Lewis-Sigler Institute for Integrative Genomics and Anthony B. Evnin Professor of Genomics at Princeton University, where he served from 2003 to 2013. From 1990 to 2003 he was Chairman of the Department of Genetics at Stanford University. Previously, he was Vice President for Science at Genentech, Inc. He is a member of the National Academy of Sciences and the Institute of Medicine and has received numerous awards for his achievements in science. Dr. Botstein has made fundamental contributions to modern genetics, including the discovery of many yeast and bacterial genes and the establishment of key techniques that are commonly used today. In 1980, Dr. Botstein and three colleagues proposed a method for mapping genes that laid the groundwork for the Human Genome Project. Dr. Botstein holds a Ph.D. in Human Genetics from the University of Michigan and an A.B. in Biochemical Sciences from Harvard. We believe that Dr. Botstein possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his extensive experience in the life sciences industry.
Christian O. Henry has been a member of our Board of Directors since 2018. Mr. Henry served as Executive Vice President & Chief Commercial Officer of Illumina, Inc. from 2015 through January 2017, and previously served as Senior Vice President & Chief Commercial Officer from 2014 to 2015, Senior Vice President & General Manager Genomic Solutions from 2012 to 2014, Senior Vice President, Chief Financial Officer & General Manager Life Sciences from 2010 to 2012, Senior Vice President, Corporate Development & Chief Financial Officer from 2009 to 2010, Senior Vice President & Chief Financial Officer from 2007 to 2009, and Vice President & Chief Financial Officer from 2005 to 2006. Prior to joining Illumina, Inc., Mr. Henry served as the Chief Financial Officer of Tickets.com, Inc. from 2003 to 2005. From 1999 to 2003, Mr. Henry served as Vice President, Finance & Corporate Controller of Affymetrix, Inc. (acquired by Thermo Fisher Scientific in 2016). In 1997, Mr. Henry joined Nektar Therapeutics (formerly Inhale Therapeutic Systems, Inc.), as Corporate Controller, and later as its Chief Accounting Officer from 1997 to 1999. In 1996, Mr. Henry served as General Accounting Manager of Sugen, Inc. Mr. Henry began his career in 1992 at Ernst & Young LLP, where he was a Senior Accountant through 1996. Mr. Henry currently serves as a director and chairman of the board of WAVE Life Sciences Ltd. Mr. Henry holds a B.A. in biochemistry and cell biology from the University of California, San Diego and an M.B.A., with a concentration in finance, from the University of California, Irvine. We believe that Mr. Henry possesses specific attributes that qualify him to serve as a member of our Board of Directors including his over 20 years of experience in growing companies in the life sciences industry.
Randy Livingston has been a member of our Board of Directors since 2009. He has served as Vice President for Business Affairs and Chief Financial Officer of Stanford University since March 2001. In October 2017 he was also named University Liaison for Stanford Medicine and a director of Stanford Health Care and Lucile Packard Children’s Hospital at Stanford. Before joining Stanford University, Mr. Livingston served as chief financial officer for multiple technology and life science companies in Silicon Valley. Mr. Livingston currently serves as a director of eHealth, Inc. Mr. Livingston holds a B.S. in Mechanical Engineering and an M.B.A. from Stanford University. We believe that Mr. Livingston possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his executive experience and his financial and accounting expertise with public companies.
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John F. Milligan, Ph.D. has been a member of our Board of Directors since 2013. Dr. Milligan joined Gilead Sciences Inc. in 1990 as a research scientist and was made Director of Project Management and Project Team Leader for the Gilead Hoffmann-La Roche Tamiflu® collaboration in 1996. In 2002, Dr. Milligan was appointed Chief Financial Officer of Gilead. He was named Gilead’s Chief Operating Officer in 2007 and President in 2008. Dr. Milligan was appointed Chief Executive Officer and elected to the board of directors of Gilead in 2016. On December 31, 2018 Dr. Milligan retired as Chief Executive Officer of Gilead and resigned from the Board of Directors. Dr. Milligan is the Chair of the board of trustees of Ohio Wesleyan University. Dr. Milligan received his B.A. from Ohio Wesleyan University, his Ph.D. in biochemistry from the University of Illinois and was an American Cancer Society postdoctoral fellow at the University of California at San Francisco. We believe that Dr. Milligan possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his executive experience and his financial expertise in the life sciences industry.
Marshall Mohr has been a member of our Board of Directors since 2012. Since March 2006, he has been Senior Vice President and Chief Financial Officer of Intuitive Surgical, Inc., a provider of surgical robotics. Prior to joining Intuitive Surgical, Mr. Mohr served as Vice President and Chief Financial Officer of Adaptec, Inc. Before 2003, Mr. Mohr was an audit partner with PricewaterhouseCoopers LLP where he was most recently the managing partner of the firm’s West Region Technology Industry Group and led its Silicon Valley accounting and audit advisory practice. Since 2005, Mr. Mohr has been a member of the board of directors and chairman of the audit committee of Plantronics, Inc., a provider of lightweight communications headsets and telephone headset systems, and also served as a member of the board of directors and chairman of the audit committee of Atheros Communications, Inc., a developer of semiconductor system solutions for wireless communications products, from November 2003 to May 2011 when Atheros was sold to Qualcomm, Inc. Mr. Mohr holds a Bachelor of Business Administration in Accounting and Finance from Western Michigan University. We believe that Mr. Mohr possesses specific attributes that qualify him to serve as a member of our Board of Directors, including his experience in financial and accounting matters.
Kathy Ordoñez has been a member of our Board of Directors since December 2014. She served as our Chief Commercial Officer and Executive Vice President from October 2017 to October 2018. Ms. Ordoñez brings more than 30 years of experience in the life sciences and diagnostics industries. From January 2012 until June 2013, Ms. Ordoñez was a Senior Vice President at Quest Diagnostics Incorporated, a leading provider of diagnostic information services, where she was initially responsible for leading their R&D effort and later provided oversight to multiple businesses commercializing diagnostic products and testing services. Ms. Ordoñez joined Quest Diagnostics as part of its acquisition in 2011 of Celera Corporation, a leading provider of genetic testing products for HIV resistance, cystic fibrosis and high complexity tissue transplantation. From April 2002 until May 2011, Ms. Ordoñez was the Chief Executive Officer at Celera, and she founded Celera Diagnostics in December 2000. From 1985 until 2000, Ms. Ordoñez held several senior positions at Hoffmann-La Roche, overseeing the formation of Roche Molecular Systems, where she served as President and Chief Executive Officer, and led the wide-scale commercial application of the Polymerase Chain Reaction (PCR) technology to the research, diagnostic and forensic fields. Ms. Ordoñez has been a member of the board of directors of Quidel Corporation since July 2019 and serves on its compensation committee. Ms. Ordoñez also served as a Director, non-executive Chairman, and Chief Executive Officer of RainDance Technologies, Inc., which was sold to Bio-Rad Laboratories, Inc. in February 2017. We believe that Ms. Ordoñez possesses specific attributes that qualify her to serve as a member of our Board of Directors, including her extensive experience in the life sciences and diagnostic industries. Ms. Ordoñez holds a B.A. in Chemistry and honorary Doctorate of Science from Hartwick College.
12Continuing Class I Directors (Term Expires in 2023)
Name of Director | | | Audit | | | Compensation | | | Corporate Governance and Nominating | | | Science and Technology | |
David Botstein, Ph.D. | | | | | | | | | | | | X | |
William Ericson | | | | | | X (chair) | | | X | | | | |
Michael Hunkapiller, Ph.D. | | | | | | | | | | | | X(1) | |
Randy Livingston | | | X (chair) | | | | | | X | | | | |
John F. Milligan, Ph.D. | | | X | | | X | | | | | | | |
Marshall Mohr | | | X | | | X | | | | | | | |
Kathy Ordoñez | | | | | | X(2) | | | | | | X (chair) | |
Lucy Shapiro, Ph.D. | | | | | | | | | X (chair) | | | X | |
Hannah A. Valantine, M.D. | | | | | | | | | X(3) | | | X(3) | |
Number of meetings held during 2021 | | | 6 | | | 6 | | | 4 | | | 4 | |
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Name of Director |
| Audit |
| Compensation |
| Corporate Governance and Nominating |
| Science and Technology | ||
David Botstein, Ph.D. |
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| X | ||
William Ericson |
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| X (chair) |
| X |
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Randy Livingston (1) |
| X (chair) |
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| X |
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John F. Milligan, Ph.D. |
| X |
| X |
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Marshall Mohr |
| X |
| X |
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Kathy Ordoñez |
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| X (chair) | ||
Lucy Shapiro, Ph.D. |
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| X (chair) |
| X | ||
Number of meetings held during 2018 |
| 6 |
| 13 |
| 3 |
| 4 | ||
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Christian O. Henry (2) |
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| X |
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| X |
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Dr. Hunkapiller did not stand for re-election as a director nominee in 2021 but continued to serve as a member of our Board of Directors until the expiration of his term as a director at the Company’s 2021 annual meeting of stockholders, which was held on June 16, 2021.
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Our Board of Directors has determined that each member of our Compensation Committee is independent within the meaning of the independent director guidelines of the NASDAQNasdaq Stock Market. We believe that the composition of our Compensation Committee meets the requirements for independence under, and the functioning of our Compensation Committee complies with, all applicable requirements of the NASDAQNasdaq Stock Market and SEC rules and regulations.
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On April 11, 2019, Mr. Henry was appointed to serve on the Science and Technology Committee of the Board, effective immediately after the Company’s 2019 Annual Meeting of Stockholders.
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Director Compensation
The following table sets forth information concerning compensation paid or accrued for services rendered to us by
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| Fees earned or |
| Option |
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Name |
| paid in cash ($) |
| Awards ($) (1) |
| Total ($) |
David Botstein, Ph.D. |
| 40,000 |
| 37,405 |
| 77,405 |
William Ericson |
| 69,000 |
| 37,405 |
| 106,405 |
Christian O. Henry (2) |
| 14,583 |
| 73,273 |
| 87,856 |
Randy Livingston |
| 58,750 |
| 37,405 |
| 96,155 |
John F. Milligan, Ph.D. |
| 52,000 |
| 37,405 |
| 89,405 |
Marshall Mohr |
| 52,000 |
| 37,405 |
| 89,405 |
Kathy Ordoñez (3) |
| 7,500 |
| — |
| 7,500 |
Lucy Shapiro, Ph.D. |
| 50,000 |
| 37,405 |
| 87,405 |
__________________
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The aggregate number of shares subject to stock options outstanding and exercisable, restricted stock units with time-based vesting (“RSUs”) and restricted stock units with performance-based vesting (“PSUs”) outstanding at December 31, 2018 for each non-employee director is as follows:
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Name |
| Aggregate Number of Stock Options Outstanding as of December 31, 2018 | Aggregate Number of Stock Options Exercisable as of December 31, 2018 |
| Aggregate Number of RSUs Outstanding as of December 31, 2018 | Aggregate Number of PSUs Outstanding as of December 31, 2018 |
David Botstein, Ph.D. |
| 185,000 | 174,583 |
| — | — |
William Ericson |
| 212,500 | 202,083 |
| — | — |
Christian O. Henry |
| 35,000 | — |
| — | — |
Randy Livingston |
| 257,500 | 247,083 |
| — | — |
John F. Milligan, Ph.D. |
| 160,000 | 149,583 |
| — | — |
Marshall Mohr |
| 210,000 | 199,583 |
| — | — |
Kathy Ordoñez (1) |
| 547,500 | 204,788 |
| 43,750 | 87,500 |
Lucy Shapiro, Ph.D. |
| 83,334 | 72,917 |
| — | — |
__________________
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Cash compensationcompensation:: Each non-employee member of the Board of Directors was eligible to receive the following cash compensation:
meetings. This cash compensation will be paid quarterly in equal installments in advance.
$35,000.
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Equity Compensation:compensation:
The 2020 Equity Incentive Plan provides that, in the event of our merger with or into another corporation or other entity or our “change in control” (as defined in the 2020 Plan), the administrator will have authority to determine the treatment of outstanding awards (without participants’ consent), including, without limitation, that:
Name | | | Fees earned or paid in cash ($) | | | Option Awards ($) | | | All Other Compensation Reimbursement for Income Taxes ($) | | | Total ($) | | ||||||||||||
David Botstein, Ph.D. | | | | | 42,917 | | | | | | 199,993 | | | | | | — | | | | | | 242,910 | | |
William Ericson | | | | | 56,917 | | | | | | 199,993 | | | | | | — | | | | | | 256,910 | | |
Michael Hunkapiller, Ph.D.(1) | | | | | 14,583 | | | | | | 199,993 | | | | | | 21,838(2) | | | | | | 236,414 | | |
Randy Livingston | | | | | 62,917 | | | | | | 199,993 | | | | | | — | | | | | | 262,910 | | |
John F. Milligan, Ph.D. | | | | | 92,834 | | | | | | 199,993 | | | | | | — | | | | | | 292,827 | | |
Marshall Mohr | | | | | 54,917 | | | | | | 199,993 | | | | | | — | | | | | | 254,910 | | |
Kathy Ordoñez | | | | | 49,083 | | | | | | 199,993 | | | | | | — | | | | | | 249,076 | | |
Lucy Shapiro, Ph.D. | | | | | 52,917 | | | | | | 199,993 | | | | | | — | | | | | | 252,910 | | |
Hannah A. Valantine, M.D.(3) | | | | | 29,167 | | | | | | 449,996 | | | | | | — | | | | | | 479,163 | | |
Name | | | Aggregate Number of Stock Options Outstanding | | | Aggregate Number of Stock Options Exercisable | | | Aggregate Number of RSUs Outstanding | | |||||||||
David Botstein, Ph.D. | | | | | 84,384 | | | | | | 77,941 | | | | | | — | | |
William Ericson | | | | | 209,384 | | | | | | 202,941 | | | | | | — | | |
Michael Hunkapiller, Ph.D.(1) | | | | | 37,887 | | | | | | 27,275 | | | | | | 162,500 | | |
Randy Livingston | | | | | 184,384 | | | | | | 177,941 | | | | | | — | | |
John F. Milligan, Ph.D. | | | | | 144,384 | | | | | | 116,552 | | | | | | — | | |
Marshall Mohr | | | | | 269,384 | | | | | | 262,941 | | | | | | — | | |
Kathy Ordoñez(2) | | | | | 421,005 | | | | | | 410,914 | | | | | | 10,938 | | |
Lucy Shapiro, Ph.D. | | | | | 142,718 | | | | | | 136,275 | | | | | | — | | |
Hannah A. Valantine, M.D. | | | | | 28,992 | | | | | | — | | | | | | — | | |
Name of Director | | | Age | | | Principal Occupation | | | Director Since | |
Class III Nominees (term for which nominated expires in 2025) | | |||||||||
David Botstein, Ph.D. | | | 79 | | | Chief Scientific Officer of Calico Life Sciences | | | 2012 | |
William Ericson | | | 63 | | | Founding Partner of Wildcat Venture Partners | | | 2004 | |
Kathy Ordoñez | | | 71 | | | Director | | | 2014 | |
Class I Directors (term expires in 2023) | | |||||||||
Christian O. Henry | | | 54 | | | Chief Executive Officer and President of Pacific Biosciences of California, Inc. | | | 2018 | |
John F. Milligan, Ph.D. | | | 61 | | | Chair of the Board of Directors of Pacific Biosciences of California, Inc. | | | 2013 | |
Lucy Shapiro, Ph.D. | | | 81 | | | Virginia and D.K. Ludwig Professor of Cancer Research and the Director of the Beckman Center for Molecular and Genetic Medicine at Stanford University’s School of Medicine | | | 2012 | |
Class II Nominees (term expires in 2024) | | |||||||||
Randy Livingston | | | 68 | | | Vice President for Business Affairs and Chief Financial Officer of Stanford University | | | 2009 | |
Marshall Mohr | | | 66 | | | Executive Vice President, Global Business Services of Intuitive Surgical, Inc. | | | 2012 | |
Hannah A. Valantine, M.D. | | | 70 | | | Professor of Medicine (Cardiovascular) at the Stanford University Medical Center | | | 2021 | |
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Name of Director |
| Age |
| Principal Occupation |
| Director Since | ||
Class III Directors (term to expire in 2019) |
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David Botstein, Ph.D. |
| 76 |
| Chief Scientific Officer of Calico Life Sciences |
| 2012 | ||
William Ericson |
| 60 |
| Managing Partner of Mohr Davidow Ventures and Founding Partner of Wildcat Venture Partners |
| 2004 | ||
Kathy Ordoñez |
| 68 |
| Director |
| 2014 | ||
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Class II Directors (term to expire in 2021) |
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Michael Hunkapiller, Ph.D. |
| 70 |
| Chairman, President and Chief Executive Officer of Pacific Biosciences of California, Inc. |
| 2005 | ||
Randy Livingston |
| 65 |
| Vice President for Business Affairs and Chief Financial Officer of Stanford University |
| 2009 | ||
Marshall Mohr |
| 63 |
| Senior Vice President and Chief Financial Officer of Intuitive Surgical, Inc. |
| 2012 | ||
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Class I Nominees (term to expire in 2020) |
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Christian O. Henry |
| 50 |
| Director |
| 2018 | ||
John F. Milligan, Ph.D. |
| 58 |
| President & Chief Operating Executive Officer of Gilead Sciences, Inc. |
| 2013 | ||
Lucy Shapiro, Ph.D. |
| 78 |
| Virginia and D.K.Ludwig Professor of Cancer Research and the Director of the Beckman Center for Molecular and Genetic Medicine at Stanford University's School of Medicine |
| 2012 |
There are no family relationships among any of the nominees, directors and/or any of our executive officers. Our executive officers serve at the discretion of the Board of Directors. Further information about our directors, including each of the Class IIIII director nominees, is provided in the “Board of Directors and Committees of the Board” section above.
Fee Category | | | 2021 | | | 2020 | | ||||||
Audit Fees | | | | $ | 2,035 | | | | | $ | 1,255 | | |
Audit-related Fees | | | | | 260 | | | | | | — | | |
Tax Fees | | | | | — | | | | | | — | | |
All Other Fees | | | | | 4 | | | | | | — | | |
Total Fees | | | | $ | 2,299 | | | | | $ | 1,255 | | |
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Fee Category |
| 2018 |
| 2017 | ||
Audit Fees |
| $ | 1,117 |
| $ | 1,273 |
Audit-related Fees |
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| — |
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| — |
Tax Fees |
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| — |
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| — |
All Other Fees |
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| 2 |
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| 2 |
Total Fees |
| $ | 1,119 |
| $ | 1,275 |
Audit Fees consisted of professional services rendered in connection with the audit of our annual consolidated financial statements, including the audit of internal control over financial reporting, and quarterly review of our condensed financial statements. This category also includes advice on accounting matters that arose during the audit or the review of interim financial statements. statements, comfort letters, consents, and statutory audits required in non-U.S. jurisdictions.
Equity Plan(1) | | | Number of Shares Subject to Outstanding Options (#) | | | Weighted Average Exercise Price of Outstanding Options ($) | | | Weighted Average Remaining Term of Outstanding Options (Years) | | | Number of Shares Subject to Outstanding Restricted Stock Units (#) | | ||||||||||||
2020 Plan | | | | | 5,943,499 | | | | | | 11.56 | | | | | | 9.3 | | | | | | 5,271,095 | | |
2010 Plan(2) | | | | | 6,111,123 | | | | | | 5.09 | | | | | | 4.2 | | | | | | 1,559,025 | | |
Director Plan(2) | | | | | 688,334 | | | | | | 4.64 | | | | | | 4.2 | | | | | | — | | |
Omniome Plan | | | | | 861,358 | | | | | | 6.83 | | | | | | 9.0 | | | | | | 1,110,386 | | |
Inducement Plan | | | | | 2,246,874 | | | | | | 30.48 | | | | | | 8.8 | | | | | | 935,750 | | |
All Equity Plans | | | | | 15,851,188 | | | | | | 11.19 | | | | | | 7.0 | | | | | | 8,876,256 | | |
Name of Non-Employee Director or Group | | | Grant Date Fair Value of Stock Options ($) | | | Number of Shares Subject to Stock Options (#)(1) | | ||||||
David Botstein, Ph.D. | | | | | 200,000 | | | | | | — | | |
William Ericson | | | | | 200,000 | | | | | | — | | |
Randy Livingston | | | | | 200,000 | | | | | | — | | |
John F. Milligan, Ph.D. | | | | | 200,000 | | | | | | — | | |
Marshall Mohr | | | | | 200,000 | | | | | | — | | |
Kathy Ordoñez | | | | | 200,000 | | | | | | — | | |
Lucy Shapiro, Ph.D. | | | | | 200,000 | | | | | | — | | |
Hannah A. Valantine, M.D. | | | | | 200,000 | | | | | | — | | |
All current non-employee directors, as a group (8) people | | | | | 1,600,000 | | | | | | | | |
Name of Individual and Positions, or Group | | | Grant Date Fair Value of Stock Options ($) | | | Number of Shares Subject to Stock Options (#) | | | Aggregate Grant Date Fair Value of Restricted Stock Units ($) | | | Number of Shares Subject to Restricted Stock Units (#) | | ||||||||||||
Christian O. Henry, Chief Executive Officer and President | | | | | 752,502 | | | | | | 30,000 | | | | | | 695,550 | | | | | | 15,000 | | |
Susan G. Kim, Chief Financial Officer | | | | | 316,051 | | | | | | 12,600 | | | | | | 292,131 | | | | | | 6,300 | | |
Mark Van Oene, Chief Operating Officer(1) | | | | | 14,889,375 | | | | | | 750,000 | | | | | | 12,294,500 | | | | | | 335,000 | | |
Peter Fromen, Chief Commercial Officer(1) | | | | | 6,352,800 | | | | | | 320,000 | | | | | | 5,872,000 | | | | | | 160,000 | | |
Denis Zaccarin, Ph.D., Senior Vice President, Product Development | | | | | 504,176 | | | | | | 20,100 | | | | | | 466,019 | | | | | | 10,050 | | |
All current executive officers, as a group (4 people)(1) | | | | | 22,310,728 | | | | | | 1,112,600 | | | | | | 19,154,181 | | | | | | 516,300 | | |
All current directors, who are not executive officers, as a group (8 people)(2) | | | | | 1,849,949 | | | | | | 119,187 | | | | | | — | | | | | | — | | |
All employees, including all current officers who are not executive officers, as a group(3) | | | | | 36,611,527 | | | | | | 1,887,085 | | | | | | 112,687,102 | | | | | | 3,207,209 | | |
During 2018,
We employ
Director, previously served as our Senior Director, Market Development. Ms. Keho was grantedseparated from the following options to purchase sharesCompany on March 15, 2021. During 2021, Ms. Keho received an aggregate salary and severance of our common stock during 2016, 2017 and 2018:
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| All other option awards: |
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| number of securities |
| Exercise or base price |
Grant Date |
| underlying options (#) (1) |
| of option award ($) |
2/16/2016 |
| 18,000 |
| 8.90 |
2/15/2017 |
| 20,000 |
| 5.27 |
2/15/2018 |
| 20,000 |
| 2.54 |
___________________
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We believe that Ms. Keho’s compensation, which is periodically reviewed by the Compensation Committee, is comparable with compensation paid to other employees with similar levels of responsibility and years of experience.
22
Stanford University
Calico Life Sciences LLC
David Botstein, Ph.D. is the Chief Scientific Officer of Calico Life Sciences, LLC. For the years ended December 31, 2018, 2017
Name and address of beneficial owner (1) | | | Number of Shares Owned(2) | | | Right to Acquire Shares(3) | | | Total Beneficial Ownership | | | Percent of Class(4) | | ||||||||||||
5% Stockholders: | | | | | | | | | | | | | | | | | | | | | | | | | |
ARK Investment Management, LLC(5) | | | | | 26,383,103 | | | | | | — | | | | | | 26,383,103 | | | | | | 11.8% | | |
Jackson Square Partners, LLC(6) | | | | | 22,423,915 | | | | | | — | | | | | | 22,423,915 | | | | | | 10.0% | | |
SB Northstar LP(7) | | | | | 1,886,107 | | | | | | 20,689,650 | | | | | | 22,575,757 | | | | | | 9.2% | | |
The Vanguard Group(8) | | | | | 19,854,876 | | | | | | — | | | | | | 19,854,876 | | | | | | 8.9% | | |
BlackRock Inc.(9) | | | | | 16,569,244 | | | | | | — | | | | | | 16,569,244 | | | | | | 7.4% | | |
Capital International Investors(10) | | | | | 12,106,318 | | | | | | — | | | | | | 12,106,318 | | | | | | 5.4% | | |
Nikko Asset Management Americas, Inc.(11) | | | | | 11,915,025 | | | | | | — | | | | | | 11,915,025 | | | | | | 5.3% | | |
Named executive officers, directors, and director nominees: | | | | | | | | | | | | | | | | | | | | | | | | | |
Christian O. Henry | | | | | 98,608 | | | | | | 767,908 | | | | | | 866,516 | | | | | | * | | |
David Botstein, Ph.D. | | | | | — | | | | | | 83,310 | | | | | | 83,310 | | | | | | * | | |
William Ericson | | | | | 1,336 | | | | | | 208,310 | | | | | | 209,646 | | | | | | * | | |
Randy Livingston | | | | | — | | | | | | 183,310 | | | | | | 183,310 | | | | | | * | | |
John F. Milligan, Ph.D. | | | | | 110,000 | | | | | | 126,782 | | | | | | 236,782 | | | | | | * | | |
Marshall Mohr | | | | | 25,000 | | | | | | 243,310 | | | | | | 268,310 | | | | | | * | | |
Kathy Ordoñez | | | | | 36,093 | | | | | | 419,931 | | | | | | 456,024 | | | | | | * | | |
Lucy Shapiro, Ph.D. | | | | | — | | | | | | 141,644 | | | | | | 141,644 | | | | | | * | | |
Hannah A. Valantine, M.D. | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Peter Fromen | | | | | 20,280 | | | | | | 119,111 | | | | | | 139,391 | | | | | | * | | |
Susan G. Kim | | | | | 19,229 | | | | | | 172,227 | | | | | | 191,456 | | | | | | * | | |
Mark Van Oene | | | | | 43,778 | | | | | | 268,048 | | | | | | 311,826 | | | | | | * | | |
Denis Zaccarin, Ph.D. | | | | | 59,279 | | | | | | 232,505 | | | | | | 291,784 | | | | | | * | | |
All current directors and executive officers as a group (12 people)(12) | | | | | 354,324 | | | | | | 2,733,891 | | | | | | 3,088,215 | | | | | | 1.4% | | |
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Name and address of beneficial owner (1) |
| Number of Shares Owned (2) |
| Right to Acquire Shares (3) |
| Total Beneficial Ownership |
| Percent of Class (4) | |||||||||
5% Stockholders: |
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BlackRock Inc. (5) |
| 11,256,330 |
| — |
| 11,256,330 |
| 7.4% | |||||||||
Magnetar Financial LLC. (6) |
| 9,421,984 |
| — |
| 9,421,984 |
| 6.2% | |||||||||
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Named executive officers and directors: |
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Michael Hunkapiller, Ph.D. (7) |
| 4,959,211 |
| 2,573,739 |
| 7,532,950 |
| 4.9% | |||||||||
William Ericson (8) |
| 5,598,397 |
| 212,500 |
| 5,810,897 |
| 3.8% | |||||||||
David Botstein, Ph.D. |
| — |
| 185,000 |
| 185,000 |
| * | |||||||||
Christian O. Henry |
| — |
| — |
| — |
| * | |||||||||
Randy Livingston |
| — |
| 257,500 |
| 257,500 |
| * | |||||||||
John F. Milligan, Ph.D. |
| — |
| 160,000 |
| 160,000 |
| * | |||||||||
Marshall Mohr |
| — |
| 210,000 |
| 210,000 |
| * | |||||||||
Lucy Shapiro, Ph.D. |
| 101,666 |
| 83,334 |
| 185,000 |
| * | |||||||||
Susan K. Barnes |
| 683,308 |
| 1,355,800 |
| 2,039,108 |
| 1.3% | |||||||||
Kathy Ordoñez (9) |
| 23,955 |
| 252,965 |
| 276,920 |
| * | |||||||||
Michael Phillips |
| 217,213 |
| 685,372 |
| 902,585 |
| * | |||||||||
Kevin Corcoran (10) |
| 163,115 |
| — |
| 163,115 |
| * | |||||||||
All directors and executive officers as a group (12 people) |
| 11,746,865 |
| 5,976,210 |
| 17,723,075 |
| 11.6% |
______________
RSUs.
2022.
(6)
(7) Number of shares owned includes 2,637,246 shares held of record by funds affiliated with Alloy Ventures where Dr. Hunkapiller is a General Partner. Dr. Hunkapiller disclaims beneficial ownership of any shares held of record by funds affiliated with Alloy Ventures except to the extent of his pecuniary interest therein.
(8) Number of shares owned includes 5,598,397 shares held of record by funds affiliated with Mohr Davidow Ventures where Mr. Ericson is a Managing Partner. Mr. Ericson disclaims beneficial ownership of any shares held of record by funds affiliated with Mohr Davidow Ventures except to the extent of his pecuniary interest therein.
(9) EffectiveDr. Zaccarin because Dr. Zaccarin ceased to serve as of October 30, 2018, Ms. Ordoñez ceased being Chief Commercial Officer and Executive Vice President for the Company and returned back to be a member of Board of Director.
(10) On February 10, 2018, our board of directors determined that Mr. Corcoran no longer met the definition of an executive officer under the Exchange Act. Mr. Corcoran continued in his role as Senior Vice President, Market Development, and reported to Ms. Ordoñez who was our then Executive Vice President and Chief Commercial Officer. Mr. Corcoran terminated his employment with the Company in November 2018. Mr. Corcoran exercised all his vested options in February 2019. The balance of shares owned by Mr. Corcoran was 163, 115 shares as of November 2018, his termination date.
CHANGE IN CONTROL
On November 1, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Illumina, Inc., a Delaware corporation (“Illumina”), and FC Ops Corp., a Delaware corporation and a wholly owned subsidiary of Illumina (“Merger Subsidiary”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger and becoming a wholly owned subsidiary of Illumina.
Under the Merger Agreement, at the effective time of the Merger, (a) each issued and outstanding share of the Company’s common stock (other than shares (i) owned or held in treasury by the Company or owned by Illumina or Merger Subsidiary, (ii) held by any subsidiary of the Company or Illumina (other than Merger Subsidiary) or (iii) held by stockholders who have properly exercised and perfected appraisal rights under Delaware law) and (b) each outstanding share of the Company’s restricted stock, will be cancelled and automatically converted into the right to receive a price of $8.00 per share in cash, without interest (the “Merger Consideration”). This price represents a total enterprise value of approximately $1.2 billion. In addition, subject to certain exceptions, each share of the Company’s common stock underlying restricted stock units and stock options (whether vested or unvested) will be converted into the right to receive the Merger Consideration (or, in the case of a stock option, the spread between the Merger Consideration and the applicable exercise price), without interest.
The Company has made customary representations, warranties and covenants in the Merger Agreement, including covenants not to, during the pendency of the Merger, solicit alternative transactions or, subject to certain exceptions, not to enter into discussions concerning, or provide confidential information in connection with, an alternative transaction. Each of Illumina and Merger Subsidiary has also made customary representations, warranties and covenants in the Merger Agreement.
The Merger Agreement contains certain customary termination rights for Illumina and the Company, including a right to terminate the Merger Agreement if the Merger is not completed by November 1, 2019, unless otherwise extended pursuant to the terms of the Merger Agreement. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances, the Company will be obligated to pay Illumina a termination fee of $43.00 million. Specifically, if the Merger Agreement is terminated in connection with the Company accepting a superior offer or due to the withdrawal by the Company’s board of directors of its recommendation of the Merger, then the termination fee will be payable by the Company to Illumina upon termination. The termination fee will also be payable in certain circumstances if the Merger Agreement is terminated and, prior to such termination, a proposal to acquire greater than 50% of the common stock or assets of the Company is publicly announced, and the Company enters into an agreement for, or completes, any transaction involving the acquisition of greater than 50% of its stock or assets within one year of the termination. In certain other circumstances related to antitrust approvals, Illumina may be required to pay the Company a termination fee of $98.00 million. Specifically, if the Merger Agreement is terminated after November 1, 2019 (as such date may be extended pursuant to the Merger Agreement), then the termination fee will be payable by Illumina upon termination of the Merger Agreement if the other conditions to closing not relating to antitrust or competition laws have been satisfied or validly waived. In no event will either party be entitled to receive more than one termination fee payment. In addition to the termination fees described above, each party remains liable to the other for any additional damages if such party (i) intentionally fails to fulfill a condition to the performance of the obligations of the other party, (ii) commits a material breach of the covenants required to be performed by it, or (ii) commits a willful and intentional breach of any of its representations and warranties.
Consummation of the Merger is subject to the satisfaction or waiver of customary closing conditions, including (i) approval of the Merger Agreement by the Company’s stockholders, (ii) the absence of any law or order in certain jurisdictions restraining, enjoining or otherwise prohibiting the Merger, (iii) the expiration or termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and clearance under the antitrust laws of certain non-United States jurisdictions. The transaction is not subject to any financing condition.
26
At a Special Meeting of Stockholders held on January 24, 2019, the Company’s stockholders, among other things, approved the adoption of the Merger Agreement. the Company and Illumina have each received a request for additional information and documentary material, commonly referred to as a “second request,” from the United States Federal Trade Commission (the “FTC”) in connection with the Merger. The FTC’s “second request” has the effect of extending the waiting period applicable to the consummation of the Merger until the 30th day after substantial compliance by the Company and Illumina with the “second request,” unless the waiting period is extended voluntarily by the parties or terminated sooner by the FTC. The parties have entered into a timing agreement with the FTC that extends the waiting period of the “second request” to mid-2019. the Company and Illumina continue to expect the Merger to be completed in mid-2019, at which time the Company will become a wholly owned subsidiary of Illumina and will cease to be a publicly traded company.
Illumina does not beneficially own directly or indirectly any percentage of the Company’s voting securities.
27
Executive Officers
Population Genomics and Precision Health of Illumina since 2019. Since joining Illumina in 2007, Mr. Fromen held various positions, including Global Vice President of Population Genomics, Senior Director of Investor Relations, Senior Director of Product Marketing Applications, Services and Automation, and Senior Director of Market Development and Product Marketing Genomic Solutions. Mr. Fromen holds a B.A. in History from Kenyon College and an M.B.A. from Arizona State University, W.P. Carey School of Business.
Michael Phillips, age 68, joined us in 2005 as our Vice President of Product Development and since February 2010, has served as our Senior Vice President of Research and Development. Prior to joining us, Mr. Phillips held various management roles at Applied Biosystems spanning research and development, test, manufacturing operations and service support from 1986 to April 2005. His most recent position at Applied Biosystems was Senior Director, Research and Development. Mr. Phillips earned a B.S. in Bacteriologybiochemistry from the University of California, Davis.Western University.
Compensation Committee Report
The following report of the Compensation Committee shall not be deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act except to the extent that the Company specifically incorporates it by reference into such filing.
The Compensation Committee has reviewed and discussed with management the disclosures contained in the following section entitled “Compensation Discussion and Analysis”. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting.
Members of the Compensation Committee
William Ericson (Chair)
Marshall Mohr
John F. Milligan, Ph.D.
Name | | | Position | |
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Susan | |
| Chief Financial Officer | |
| |
| Chief Operating Officer | |
Peter Fromen | | | Chief Commercial Officer | |
| | | Senior Vice President, | |
Element | | | Performance Period | | | Objective | |
| |
| Annual | | | • Recognizes an individual’s contribution and performance • Rewards for the experience, education and criticality to the business • Serves as an important retention vehicle | |
___________________
Short-term Cash Incentives |
| |
| | | • Rewards achievement of financial and • In 2021, the cash incentive goals included financial measures, advancement of the research and development portfolio, quality related objectives, commercial and customer success and other operational goals. | |
Annual Equity Awards (stock options and RSUs) | | | Long-term | | | • Supports the achievement of strong stock price growth • Aligns the interests of executives and stockholders over time • Serves as an important retention tool with awards vesting over time tied to continued service • Options may vest over one to four years, with a ten-year term • RSUs vest in equal installments over two to four years, on each anniversary of the grant date | |
| | | What We Do | | | | | What We Avoid | | ||
| | | Pay for performance philosophy and culture | | | | | Excise tax gross-ups | | ||
| | | Majority of pay is performance-based and variable | | | | | Significant perquisites | | ||
| | | Double-trigger change-in-control equity provisions | | | | | Guaranteed salary increases | | ||
| | | Compensation recoupment (“clawback”) policy | | | | | Contracts that guarantee employment | | ||
| | | Engage an independent compensation consultant | | | | | Margin accounts, hedging, pledging, derivatives or short sale transactions in Company | | ||
| | | Responsible use of shares in our long-term incentive program | | | | | Repricing stock options without stockholder approval | | ||
| | | Annually assesses compensation risk | | | | | | | |
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In May 2017,
Because of our voting schedule, a say-on-pay vote was not on the ballot during the 2021 annual meeting and is not on the ballot for the 2022 annual meeting, however, stockholders will be able to participate in a say-on-pay vote during the 2023 annual meeting. We value the opinions of our stockholders.
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30Process for Setting Executive Compensation
Radford provided
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within a revenue range of $50 million to $300 million and a market capitalization between $250 million and $2.5 billion, to reflect the market for talent at companies of a similar profile as the Company.
The Compensation Committee does not rely on a specific named peer group at this time, instead relying on custom survey data from Radford Global Life Science
Radford reports directly to Aon provided the Compensation Committee with market data and analysis to help guide the Compensation Committee’s decision making regarding the compensation packages for each of the named executive officers, including Mr. Henry, Ms. Kim and Dr. Zaccarin. In connection with the hires of Mr. Van Oene and Mr. Fromen in January 2021, Aon updated such Survey Data in order to assist the Compensation Committee maintains sole authorityin setting appropriate new-hire compensation for such named executive officers.
| 10x Genomics, Inc. | | | GenMark Diagnostics, Inc. | | | Natera, Inc. | |
| Axonics, Inc. | | | Guardant Health, Inc. | | | NeoGenomics, Inc. | |
| Berkeley Lights, Inc. | | | Invitae Corporation | | | Personalis, Inc. | |
| CareDx, Inc. | | | iRhythm Technologies, Inc. | | | Quanterix Corporation | |
| Castle Biosciences, Inc. | | | Luminex Corporation | | | Twist Bioscience Corporation | |
| Codexis, Inc. | | | NanoString Technologies, Inc. | | | Veracyte, Inc. | |
| Fluidigm Corporation | | | | | | | |
For
Compensation of the Chief Executive Officer, Chief Financial Officer and Chief Commercial Officer
For 2018, to reward performance and for shareholder alignment, the Compensation Committee introduced a performance-based equity plan for the three roles whereby shares would be earned based on achievement of the Company’s performance goals for 2018 under the cash incentive plan for the broader company, as well as based on two, 3-year operating metrics relating to cash flow. These changes were implemented to reinforce our commitment to pay for performance and to ensure that equity was being earned based on performance that the executives could directly impact. With respect to the one-year performance goals, the Compensation Committee considered that the Chief Executive Officer, Chief Financial Officer and then Chief Commercial Officer did not participate in the cash incentive plan. Given the importance of the performance goals under the cash incentive plan, the Compensation Committee believed that it would be appropriate for a portion of their equity awards to be subject to the same performance criteria. In determining the performance goals for the 3-year operating metrics relating to cash flow, the Compensation Committee considered the importance of increasing shareholder value in part by driving profitability in 2018. In addition, given the broader roles of the Chief Executive Officer, Chief Financial Officer, and Chief Commercial Officer in driving the Company’s business, the Compensation Committee believed that these performance goals were appropriate for a portion of their equity awards. The Compensation Committee was assisted by Radford and reviewed Survey Data provided by Radford to consider the appropriateness of the awards and award sizes in relation to market practices.
32
In November 2018, the Board of Directors approved a one-time, discretionary, cash bonus of $1,030,000 to our Chief Executive Officer and $617,500 to our Chief Financial Officer, as compensation for their services. These named executive officers previously had received $1 per year as cash compensation for their services and the bonuses were intended to recognize their commitment to the best interests of the Company and to appropriately compensate them for their services. In approving these amounts, the Board of Directors considered the Survey Data that Radford previously had provided in early 2018 as part of the annual executive compensation review process. The Board of Directors generally considered cash compensation (salary and target cash incentive) at approximately the 50th percentile of the Survey Data for setting the bonus amounts to be paid to the Chief Executive Officer and Chief Financial Officer. In addition, on July 26, 2018, the Compensation Committee of the Board approved a cash bonus of $170,000 to Ms. Ordoñez as compensation and recognition for her work as our Chief Commercial Officer and Executive Vice President. In approving this one‑time bonus for our then Chief Commercial Officer, the Compensation Committee considered Survey Data from Radford, certain expenses incurred by her in relation to the performance of her duties, and her performance and responsibilities, including with respect to efforts with certain strategic partnerships.
As part of its annual executive compensation review process, on February 15, 2019, the Board of Directors decided to reinstate base salaries and target bonus opportunities of our Chief Executive Officer and Chief Financial Officer, effective January 1, 2019 as follows:
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Name |
| 2019 Base Salary |
| 2018 Base Salary | ||
Michael Hunkapiller, Ph.D. |
| $ | 582,900 |
| $ | 1 |
Susan K. Barnes |
| $ | 401,500 |
| $ | 1 |
The Board reinstated base salaries and incentive cash compensation for our Chief Executive Officer and Chief Financial Officer in light of the transaction with Illumina, and the desire to return to more standard market practices with respect to executive compensation by providing a mix of cash and equity compensation to these executives. In recommending to the Board the amount of the base salaries for the Chief Executive Officer and Chief Financial Officer, the Compensation Committee engaged Radford to review relevant Survey Data, as well as considered subjective assessments of each of the Chief Executive Officer’s and Chief Financial Officer’s position, experience, responsibilities, and performance.
In connection with the annual base salary increases, for the Company’s 2019 fiscal year, Dr. Hunkapiller’s annual target bonus opportunity was set at 100% of his base salary and Ms. Barnes’ annual target bonus opportunity was set at 65% of her base salary. Consistent with prior years, Dr. Hunkapiller and Ms. Barnes did not participate in the Company’s 2018 bonus plan. The 2019 bonuses for both Dr. Hunkapiller and Ms. Barnes will be based upon the achievement of seven categories of performance objectives, each with separate, varied weightings ranging between 6% and 38% (inclusive) per category, that consist of corporate operational, product performance and financial metrics, and that are aggressive, but attainable, and align the compensation of Dr. Hunkapiller and Ms. Barnes with the priorities for the Company.
The Compensation Committee expects to review this compensation structure annually as part of the normal course review of executive compensation. The Board of Directors has the authority to approve changes to such compensation of the Chief Executive Officer and Chief Financial Officer at any time.
33
Compensation of Our Named Executive Officers Other than Our CEO, CFO and CCO
Name | | | As of Fiscal Year End 2020 ($) | | | As of Fiscal Year End 2021 ($) | | | Change (%) | | |||||||||
Christian O. Henry | | | | | 650,000 | | | | | | 650,000 | | | | | | 0% | | |
Susan G. Kim | | | | | 415,000 | | | | | | 430,000 | | | | | | 3.6% | | |
Mark Van Oene(1) | | | | | — | | | | | | 550,000 | | | | | | — | | |
Peter Fromen(2) | | | | | — | | | | | | 425,000 | | | | | | — | | |
Denis Zaccarin | | | | | 330,000 | | | | | | 345,000 | | | | | | 4.5% | | |
As part of its annual executive compensation review process, the Board of Directors decided to reinstate base salaries and target bonus opportunities of our Chief Executive Officer and Chief Financial Officer, effective January 1, 2019.
Variable8, 2021.
Name | | | Target Incentive Opportunity for 2021 as Percentage of Base Salary | | | Target Incentive Opportunity for 2021 ($) | | ||||||
Christian O. Henry | | | | | 100% | | | | | | 650,000 | | |
Susan G. Kim | | | | | 50% | | | | | | 215,000 | | |
Mark Van Oene | | | | | 60% | | | | | | 330,000 | | |
Peter Fromen | | | | | 50% | | | | | | 212,500 | | |
Denis Zaccarin | | | | | 45% | | | | | | 155,250 | | |
34
Variable cash incentives offered to these named executive officers during 2018 afforded the opportunity for the executives to earn up to 45% of their base salary (which remained the same as in 2017 and 2016)awards based on the achievement of certain corporate operational, productpreestablished performance and financial metrics, each with separate, varied weightings.criteria. These performance goalscriteria included:
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| Percentage of Corporate |
| Bonus Payout As a Percentage |
Fiscal Year |
| Objectives Achieved |
| of Target Bonus Opportunity |
2018 |
| 46% |
| 46% |
2017 |
| 17% |
| 17% |
2016 |
| 49% |
| 49% |
The Compensation Committee believes that this approach appropriately motivates the participants to deliver on the in-year operating performance to earn additional cash and equity compensation. The annual goals are set byFollowing 2021, the Compensation Committee and approved by the Board of Directors and are aligned withreviewed the Company’s strategic plan. Similarextent to 2018,which the 2019performance objectives were achieved under our variable cash incentive plan for all of our executive officers will be based on the achievement of corporate operational and financial metrics. The goals and objectives we have established are aggressive, but attainable, and are based on goals we believe align the compensation of our senior management team and executives with the prioritiesprogram for the Company that we anticipate will drive additional valueyear with respect to primary goal and secondary goals. The Compensation Committee recommended, and the Board of Directors approved, the following achievements:
| Performance Objectives | | | Achievement | |
| Primary Goal (Weighted at 75%) | | | | |
| Exceeding $115 million in fiscal year 2021 revenue | | | $130.5 million, resulting in achievement at 100% | |
| Secondary Goals (Weighted at 25%) | | | | |
| Achieving quarterly revenue | | | Score of 100, based on achieving or exceeding quarterly revenue targets of $27.0 million for Q1, $30.1 million for Q2, $33.3 million for Q3, and $36.0 million for Q4 | |
| Increasing our Sequel II installed base by over 150 units | | | Score of 110 based on an increase of Sequel II installed base by 171 units (from 203 systems in 2020 to 374 in 2021) | |
| Accelerating certain product development portfolios | | | 5 goals achieved at total score of 400 | |
| Improving certain tools necessary in managing our business | | | 3 goals achieved at total score of 280 | |
| Improving certain product yield | | | 3 goals achieved at total score of 185 | |
| Increasing hiring threshold of direct sales personnel | | | Score of 100 | |
| Driving certain research efforts | | | Score of 85 | |
| Performance Objectives | | | Achievement | |
| Developing an inspired workforce, optimizing organizational structure including performing a research and development organization assessment during the first half of the year, and expanding commercial footprint | | | 5 goals achieved at total score of 480 | |
| Total Score for Secondary Goals: | | | 1740 (out of possible 2000), or 87% achievement | |
Name | | | 2021 Target Bonus Opportunity (as a % of salary) | | | 2021 Salary | | | 2021 Actual Bonus (as a % of Target Bonus Opportunity) | | | 2021 Actual Bonus ($) | | ||||||||||||
Christian O. Henry | | | | | 100% | | | | | $ | 650,000 | | | | | | 116.1% | | | | | $ | 754,650 | | |
Susan G. Kim | | | | | 50% | | | | | $ | 430,000 | | | | | | 116.1% | | | | | $ | 249,615 | | |
Mark Van Oene | | | | | 60% | | | | | $ | 550,000 | | | | | | 116.1% | | | | | $ | 375,782(1) | | |
Peter Fromen | | | | | 50% | | | | | $ | 425,000 | | | | | | 116.1% | | | | | $ | 241,981(1) | | |
Denis Zaccarin | | | | | 45% | | | | | $ | 345,000 | | | | | | 116.1% | | | | | $ | 180,245 | | |
35
Equity Incentives
In determining equity awards for named executive officers, the Compensation Committee and the Board of Directors considerconsidered the Survey DataPeer Group data provided by RadfordAon outlining equity compensation practices in the technology and life sciences industries, including the size of the awards as a percent of the Company as well as on a grant date value basis. This information
In early 2018,
36
In determining the size of the equity awards for these named executive officers, the Compensation Committee generally considered the levels of targeted total direct compensation (i.e., basemay be allocated among salary, cash bonuses,incentives and equity awards) of the Survey Data to ensure the overall compensation package is competitive.long-term compensation. The Compensation Committee also consideredconsiders the criticality of these roles to the Company as well as the retention objectives for maintaining leadership stability for leading the business forward. Generally, compensation to the named executive officers is designed to deliver pay in the range around theThe 25th percentile, 50th percentile. Equity awardspercentile and 75th percentile pay range was provided to our other named executive officers, are considered by the Compensation Committee which in the context of the total compensation mix that may be issued between salary, cash incentives and long-term compensation. Generally,turn used this data as a guide in determining equity awards for our named executive officers, other than our Chief Executive Officer, Chief Financial Officerhowever, discretion was still observed by the Compensation Committee.
| | | New Hire Equity Grants(2) | | |||||||||||||||||||||
Name | | | RSUs (#) | | | Stock Options (#) | | | RSUs (#) | | | Stock Options (#) | | ||||||||||||
Christian O. Henry | | | | | 15,000 | | | | | | 30,000 | | | | | | — | | | | | | — | | |
Susan G. Kim | | | | | 6,300 | | | | | | 12,600 | | | | | | — | | | | | | — | | |
Mark Van Oene(3) | | | | | — | | | | | | — | | | | | | 335,000 | | | | | | 750,000 | | |
Peter Fromen(4) | | | | | — | | | | | | — | | | | | | 160,000 | | | | | | 320,000 | | |
Denis Zaccarin | | | | | 10,050 | | | | | | 20,100 | | | | | | — | | | | | | — | | |
Employees
loans; and (4) holding the Company’s common stock in margin accounts.
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37
Tax Considerations
2021.
38
Summary Compensation Table
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| Option Awards | Stock Awards |
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| |||||||||||||||||
| Name and principal position |
| Year |
| Salary ($) |
| Bonus ($) |
| ($) (1) |
| ($) (2) |
| Other ($) |
| Total ($) | ||||||||||||||||
| Michael Hunkapiller, Ph.D. |
| 2018 |
| 1 |
| 1,030,000 |
| 153,490 |
| 427,375 |
| — |
| 1,610,866 | ||||||||||||||||
| President, Chief Executive Officer |
| 2017 |
| 1 |
| — |
| 1,343,160 |
| — |
| — |
| 1,343,161 | ||||||||||||||||
| and Chairman of the Board of |
| 2016 |
| 1 |
| — |
| 1,985,160 |
| — |
| — |
| 1,985,161 | ||||||||||||||||
| Directors |
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| Susan K. Barnes |
| 2018 |
| 1 |
| 617,500 |
| 134,304 |
| 373,953 |
| — |
| 1,125,758 | ||||||||||||||||
| Executive Vice President and Chief |
| 2017 |
| 1 |
| — |
| 839,475 |
| — |
| — |
| 839,476 | ||||||||||||||||
| Financial Officer |
| 2016 |
| 1 |
| — |
| 1,240,725 |
| — |
| — |
| 1,240,726 | ||||||||||||||||
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| ||||||||||||||||
| Kathy Ordoñez (3) |
| 2018 |
| 1 |
| 170,000 (4) |
| 134,304 |
| 373,953 |
| — |
| 678,258 | ||||||||||||||||
| Chief Commercial Officer and member |
| 2017 |
| 1 |
| — |
| 693,338 |
| — |
| — |
| 693,339 | ||||||||||||||||
| of the Board of Directors |
| 2016 |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||
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| Michael Phillips |
| 2018 |
| 345,000 |
| 35,397 |
| 103,768 |
| 132,826 |
| — |
| 616,991 | ||||||||||||||||
| Senior Vice President of Research |
| 2017 |
| 336,800 |
| 24,515 |
| 335,790 |
| — |
| — |
| 697,105 | ||||||||||||||||
| and Development |
| 2016 |
| 327,000 |
| 66,218 |
| 561,240 |
| — |
| — |
| 954,458 | ||||||||||||||||
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| Kevin Corcoran (5) |
| 2018 |
| 336,800 |
| — |
| 118,592 |
| 139,176 |
| — |
| 594,568 | ||||||||||||||||
| Senior Vice President of Market |
| 2017 |
| 336,800 |
| 24,515 |
| 335,790 |
| — |
| — |
| 697,105 | ||||||||||||||||
| Development |
| 2016 |
| 327,000 |
| 66,218 |
| 561,240 |
| — |
| — |
| 954,458 |
__________________
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39
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Grants of Plan-Based Awards
The following table presents information concerning grants of plan-based awards to each of the named executive officers that were so designated during the fiscal year ended December 31, 2018:
Grants of Plan-Based Awards
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| Estimated Future Payouts Under Equity Incentive Plan Awards (1) |
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Name |
| Grant date |
| Threshold (#) | Target (#) | Maximum (#) |
| All other option awards: number of securities underlying options (#) (2) |
| All other awards: number of shares of stock or units (#) (3) |
| Exercise or base price of option awards ($/Sh) |
| |||||||||||||
Michael Hunkapiller, Ph.D. |
| 3/15/2018 |
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| 100,000 |
|
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| 2.63 |
| |||||||||||||
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| 3/15/2018 |
| — | 100,000 | 112,500 |
|
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| 50,000 |
| 2.63 |
| |||||||||||||
Susan K. Barnes |
| 3/15/2018 |
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| 87,500 |
|
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| 2.63 |
| |||||||||||||
|
| 3/15/2018 |
| — | 87,500 | 98,438 |
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| 43,750 |
| 2.63 |
| |||||||||||||
Kathy Ordoñez |
| 3/15/2018 |
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| 87,500 |
|
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| 2.63 |
| |||||||||||||
|
| 3/15/2018 |
| — | 87,500 | 98,438 |
|
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| 43,750 |
| 2.63 |
| |||||||||||||
Michael Phillips (4) |
| 2/15/2018 |
|
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| 70,000 |
|
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| 2.54 |
| |||||||||||||
|
| 2/15/2018 |
| — | 29,835 | 37,294 |
|
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| 15,000 |
| 2.54 |
| |||||||||||||
Kevin Corcoran (5) |
| 2/15/2018 |
|
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| 80,000 |
|
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| 2.54 |
| |||||||||||||
|
| 2/15/2018 |
| — | 29,835 | 37,294 |
|
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| 17,500 |
| 2.54 |
|
____________
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Name and principal position | | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1) | | | Option Awards ($)(2) | | | Non-equity Incentive Plan Compensation ($)(3) | | | All Other Compensation ($) | | | Total ($) | | ||||||||||||||||||||||||
Christian O. Henry(4) President, Chief Executive Officer | | | | | 2021 | | | | | | 650,000 | | | | | | — | | | | | | 695,550 | | | | | | 752,502 | | | | | | 754,650 | | | | | | 14,229(5) | | | | | | 2,866,931 | | |
| | | 2020(6) | | | | | | 194,583 | | | | | | 31,677 | | | | | | 5,490,000 | | | | | | 6,345,900 | | | | | | 183,323 | | | | | | 233,287 | | | | | | 12,478,770 | | | ||
Susan G. Kim(7) Chief Financial Officer | | | | | 2021 | | | | | | 421,875 | | | | | | — | | | | | | 292,131 | | | | | | 316,051 | | | | | | 249,615 | | | | | | — | | | | | | 1,279,672 | | |
| | | 2020 | | | | | | 108,538 | | | | | | 95,224(8) | | | | | | 1,440,000 | | | | | | 2,219,320 | | | | | | 35,109 | | | | | | — | | | | | | 3,898,191 | | | ||
Mark Van Oene(9) Chief Operating Officer | | | | | 2021 | | | | | | 539,776 | | | | | | 200,000(10) | | | | | | 12,294,500 | | | | | | 14,889,375 | | | | | | 375,782 | | | | | | — | | | | | | 28,299,433 | | |
Peter Fromen(11) Chief Commercial Officer | | | | | 2021 | | | | | | 417,099 | | | | | | 125,000(10) | | | | | | 5,872,000 | | | | | | 6,352,800 | | | | | | 241,981 | | | | | | 329,010(12) | | | | | | 13,337,890 | | |
Denis Zaccarin, Ph.D. Senior Vice President, Product Development | | | | | 2021 | | | | | | 330,529 | | | | | | — | | | | | | 466,019 | | | | | | 504,176 | | | | | | 180,245 | | | | | | — | | | | | | 1,480,969 | | |
| | | 2020 | | | | | | 321,625 | | | | | | 43,421(13) | | | | | | 270,600 | | | | | | — | | | | | | 75,379 | | | | | | — | | | | | | 711,025 | | |
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40
The following table presents information concerning grants of plan-based awards made to each of the named executive officers that were so designated through March 31, 2019 for the fiscal year ending December 31, 2019:
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Name |
| Grant date |
| Time-based RSUs (1) |
| Exercise or base price of stock awards ($/Sh) |
| Grant date fair value of option awards ($) (2) |
Michael Hunkapiller, Ph.D. |
| 2/15/2019 |
| 38,750 |
| 7.13 |
| 276,288 |
Susan K. Barnes |
| 2/15/2019 |
| 21,250 |
| 7.13 |
| 151,513 |
Michael Phillips |
| 2/15/2019 |
| 8,000 |
| 7.13 |
| 57,040 |
Michael Phillips |
| 3/15/2019 |
| 7,500 |
| 7.36 |
| 55,200 |
___________
(1) The RSUs will vest on the earlier of the (i) one-year anniversary of the date of grant of the RSU awards and (ii) the completion of the Merger, subject to the recipient's continued service with us through the vesting date.
(2) The Amounts shown represent the aggregate grant date fair value of the stock awards granted, determined in accordance with ASC 718, Compensation — Stock Compensation. For assumptions used in determining the fair value of stock awards, see the notes to our financial statements included our annual report on Form 10-K for the year ended December 31, 2021.
| | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(1) | | | Estimated Future Payments Under Equity Incentive Plan Awards (#) | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||
Name | | | Grant Date | | | Threshold | | | Target | | | Maximum | | | Threshold | | | Target | | | Maximum | | | Other Stock Awards: Number of Shares of Stock or Units (#) | | | Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards ($)(2) | | |||||||||||||||||||||||||||||||||
Christian O. Henry........ | | | | | 02/03/2021(3) | | | | | | 195,000 | | | | | | 650,000 | | | | | | 1,137,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 02/16/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,000(4) | | | | | | — | | | | | | — | | | | | | 695,550 | | | ||
| | | 02/16/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 30,000(4) | | | | | | 46.37 | | | | | | 752,502 | | | ||
Susan G. Kim................ | | | | | 02/03/2021(3) | | | | | | 64,500 | | | | | | 215,000 | | | | | | 376,250 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 02/16/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,300(4) | | | | | | — | | | | | | — | | | | | | 292,131 | | | ||
| | | 02/16/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12,600(4) | | | | | | 46.37 | | | | | | 316,051 | | | ||
Mark Van Oene............. | | | | | 01/08/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 335,000(5) | | | | | | — | | | | | | — | | | | | | 12,294,500 | | |
| | | 01/08/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 750,000(5) | | | | | | 36.70 | | | | | | 14,889,375 | | | ||
| | | 02/03/2021(3) | | | | | | 99,000 | | | | | | 330,000 | | | | | | 577,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Peter Fromen................. | | | | | 01/08/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 160,000(5) | | | | | | — | | | | | | — | | | | | | 5,872,000 | | |
| | | 01/08/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 320,000(5) | | | | | | 36.70 | | | | | | 6,352,800 | | | ||
| | | 02/03/2021(3) | | | | | | 63,750 | | | | | | 212,500 | | | | | | 371,875 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Denis Zaccarin, Ph.D..... | | | | | 02/03/2021(3) | | | | | | 46,575 | | | | | | 155,250 | | | | | | 271,688 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | 02/16/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 10,050(4) | | | | | | — | | | | | | — | | | | | | 466,019 | | | ||
| | | 02/16/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,100(4) | | | | | | 46.37 | | | | | | 504,176 | | |
2021:
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| Option Awards |
| Stock Awards | ||||||||||
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| Number of securities underlying outstanding options (#) |
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| |||
Name |
| Grant Date |
| exercisable |
| unexercisable |
|
| Option exercise price ($/sh) |
| Option expiration date |
| Number of unearned Shares/Units That Have Not Vested (#) (1) |
| Market or Payout Value of Unearned Shares/Units That have Not Vested (2) | |
Michael Hunkapiller, Ph.D. |
| 10/26/2010 |
| 25,000 |
| — |
|
| 16.00 |
| 10/26/2020 |
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| |
|
| 6/23/2011 |
| 12,500 |
| — |
|
| 10.58 |
| 6/23/2021 |
|
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| |
|
| 1/9/2012 |
| 500,000 |
| — |
|
| 3.01 |
| 1/9/2022 |
|
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| |
|
| 3/15/2013 |
| 555,000 |
| — |
|
| 2.27 |
| 3/15/2023 |
|
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| |
|
| 3/17/2014 |
| 483,314 |
| 16,686 | (3) |
| 6.14 |
| 3/17/2024 |
|
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| |
|
| 3/16/2015 |
| 383,327 |
| 16,673 | (4) |
| 5.72 |
| 3/16/2025 |
|
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| |
|
| 3/15/2016 |
| 283,328 |
| 116,672 | (4) |
| 7.87 |
| 3/15/2026 |
|
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| |
|
| 2/15/2017 |
| 183,330 |
| 216,670 | (4) |
| 5.27 |
| 2/15/2027 |
|
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| |
|
| 3/15/2018 |
| 20,833 |
| 79,167 | (4) |
| 2.63 |
| 3/15/2028 |
| 162,500 |
| 1,202,500 | |
Susan K. Barnes |
| 2/22/2010 |
| 327,942 |
| — |
|
| 8.50 |
| 2/22/2020 |
|
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| |
|
| 12/15/2010 |
| 125,000 |
| — |
|
| 13.72 |
| 12/15/2020 |
|
|
|
| |
|
| 3/17/2014 |
| 289,988 |
| 10,012 | (3) |
| 6.14 |
| 3/17/2024 |
|
|
|
| |
|
| 3/16/2015 |
| 239,579 |
| 10,421 | (4) |
| 5.72 |
| 3/16/2025 |
|
|
|
| |
|
| 3/15/2016 |
| 177,080 |
| 72,920 | (4) |
| 7.87 |
| 3/15/2026 |
|
|
|
| |
|
| 2/15/2017 |
| 114,581 |
| 135,419 | (4) |
| 5.27 |
| 2/15/2027 |
|
|
|
| |
|
| 3/15/2018 |
| — |
| 69,272 | (4) |
| 2.63 |
| 3/15/2028 |
| 142,188 |
| 1,052,191 | |
Kathy Ordoñez |
| 12/17/2014 |
| 35,000 |
| — |
|
| 6.98 |
| 12/17/2024 |
|
|
|
| |
|
| 5/20/2015 |
| 25,000 |
| — |
|
| 5.79 |
| 5/20/2025 |
|
|
|
| |
|
| 5/17/2016 |
| 25,000 |
| — |
|
| 8.98 |
| 5/17/2026 |
|
|
|
| |
|
| 5/24/2017 |
| 25,000 |
| — |
|
| 3.81 |
| 5/24/2017 |
|
|
|
| |
|
| 11/15/2017 |
| 76,560 |
| 273,440 | (4) |
| 2.90 |
| 11/15/2027 |
|
|
|
| |
|
| 3/15/2018 |
| 18,228 |
| 69,272 | (4) |
| 2.63 |
| 3/15/2028 |
| 142,188 |
| 1,052,191 | |
Michael Phillips |
| 2/17/2010 |
| 87,501 |
| — |
|
| 8.50 |
| 2/17/2020 |
|
|
|
| |
|
| 7/29/2010 |
| 5,000 |
| — |
|
| 12.74 |
| 7/29/2020 |
|
|
|
| |
|
| 6/15/2011 |
| 6,000 |
| — |
|
| 11.64 |
| 6/15/2021 |
|
|
|
| |
|
| 2/15/2012 |
| 150,000 |
| — |
|
| 4.79 |
| 2/15/2022 |
|
|
|
| |
|
| 2/15/2013 |
| 77,500 |
| — |
|
| 2.18 |
| 2/15/2023 |
|
|
|
| |
|
| 2/18/2014 |
| 100,000 |
| — |
|
| 7.05 |
| 2/18/2024 |
|
|
|
| |
|
| 2/17/2015 |
| 95,831 |
| 4,169 | (4) |
| 6.91 |
| 2/17/2025 |
|
|
|
| |
|
| 2/16/2016 |
| 70,832 |
| 29,168 | (4) |
| 8.90 |
| 2/16/2026 |
|
|
|
| |
|
| 2/15/2017 |
| 45,832 |
| 54,168 | (4) |
| 5.27 |
| 2/15/2027 |
|
|
|
| |
|
| 2/15/2018 |
| 14,583 |
| 55,417 | (4) |
| 2.54 |
| 2/15/2028 |
| 52,294 |
| 386,976 |
_____________
|
|
|
|
| | | | | | | | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||
| | | | | | | | | Number of Securities Underlying Unexercised Options | | | Option Exercise Price ($/sh) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | |||||||||||||||||||||
Name | | | Grant Date | | | Exercisable (#) | | | Unexercisable (#) | | |||||||||||||||||||||||||||||||||
Christian O. Henry................................ | | | | | 7/27/2018 | | | | | | 35,000 | | | | | | — | | | | | | 3.66 | | | | | | 7/27/2028 | | | | | | | | | | | | | | |
| | | 3/16/2020 | | | | | | 20,416 | | | | | | 14,584(3) | | | | | | 2.45 | | | | | | 3/16/2030 | | | | | | | | | | | | | | | ||
| | | 8/4/2020 | | | | | | 46,499 | | | | | | — | | | | | | 3.89 | | | | | | 8/4/2030 | | | | | | | | | | | | | | | ||
| | | 9/15/2020 | | | | | | 468,748 | | | | | | 1,031,252(4) | | | | | | 7.32 | | | | | | 9/15/2030 | | | | | | | | | | | | | | | ||
| | | 9/15/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 562,500(5) | | | | | | 11,508,750 | | | ||
| | | 2/16/2021 | | | | | | 6,249 | | | | | | 23,751(6) | | | | | | 46.37 | | | | | | 2/16/2031 | | | | | | | | | | | | | | | ||
| | | 2/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,000(5) | | | | | | 306,900 | | | ||
Susan G. Kim........................................ | | | | | 9/28/2020 | | | | | | 124,999 | | | | | | 275,001(4) | | | | | | 9.60 | | | | | | 9/28/2030 | | | | | | | | | | | | | | |
| | | 9/28/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 112,500(5) | | | | | | 2,301,750 | | | ||
| | | 2/16/2021 | | | | | | 2,624 | | | | | | 9,976(6) | | | | | | 46.37 | | | | | | 2/16/2031 | | | | | | | | | | | | | | | ||
| | | 2/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,300(5) | | | | | | 128,898 | | | ||
Mark Van Oene..................................... | | | | | 1/8/2021 | | | | | | 750,000 | | | | | | — | | | | | | 36.70 | | | | | | 1/8/2031 | | | | | | | | | | | | | | |
| | | 1/8/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 335,000(5) | | | | | | 6,854,100 | | | ||
Peter Fromen......................................... | | | | | 1/8/2021 | | | | | | 320,000 | | | | | | — | | | | | | 36.70 | | | | | | 1/8/2031 | | | | | | | | | | | | | | |
| | | 1/8/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 160,000(5) | | | | | | 3,273,600 | | | ||
Denis Zaccarin, Ph.D............................. | | | | | 2/17/2015 | | | | | | 50,000 | | | | | | — | | | | | | 6.91 | | | | | | 2/17/2025 | | | | | | | | | | | | | | |
| | | 2/16/2016 | | | | | | 60,000 | | | | | | — | | | | | | 8.90 | | | | | | 2/16/2026 | | | | | | | | | | | | | | | ||
| | | 2/15/2017 | | | | | | 65,000 | | | | | | — | | | | | | 5.27 | | | | | | 2/15/2027 | | | | | | | | | | | | | | | ||
| | | 2/15/2018 | | | | | | 43,124 | | | | | | 1,876(6) | | | | | | 2.54 | | | | | | 2/15/2028 | | | | | | | | | | | | | | | ||
| | | 2/15/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,500(5) | | | | | | 51,150 | | | ||
| | | 2/18/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,000(5) | | | | | | 613,800 | | | ||
| | | 2/18/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,000(7) | | | | | | 204,600 | | | ||
| | | 2/16/2021 | | | | | | 4,187 | | | | | | 15,913(6) | | | | | | 46.37 | | | | | | 2/16/2031 | | | | | | | | | | | | | | | ||
| | | 2/16/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,050(5) | | | | | | 205,623 | | |
|
|
|
|
Includes RSUs that are subject to continued service-based vesting.
| | | Option Awards | | | Stock Awards | | ||||||||||||||||||
Name | | | Number of Shares Acquired on Exercises (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | ||||||||||||
Christian O. Henry | | | | | — | | | | | | — | | | | | | 187,500 | | | | | | 5,182,500 | | |
Susan G. Kim | | | | | — | | | | | | — | | | | | | 37,500 | | | | | | 932,625 | | |
Mark Van Oene | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Peter Fromen | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Denis Zaccarin, Ph.D. | | | | | 103,000 | | | | | | 4,337,040 | | | | | | 22,500 | | | | | | 835,200 | | |
|
|
|
|
|
|
|
|
|
|
Name |
| Number of shares Acquired on Exercises (#) |
| Value Realized on Exercise ($) |
Susan K. Barnes |
| 316,990 |
| 992,767 |
Kathy Ordoñez |
| 25,000 |
| 116,000 |
Employment Agreements and Change in Control Arrangements
each of our named executive officers.
|
|
|
|
|
|
|
|
43•
|
|
|
|
|
• “Change in control” generally means, with certain exceptions as detailed in the change in control and severance agreement, a change in our ownership that occurs upon acquisition by a person, or persons acting as a group, of our stock resulting in such person(s) having more than 50% of the total voting power of our stock, or a change in our effective control due to a majority of the members of our Board of Directors being replaced during a 12-month period by members of our Board of Directors whose appointments or elections are not endorsed by the majority of the members of the 60 Board of Directors before the date of appointment or election, or a change in a substantial portion of our assets that occurs when a person or persons acting as a group acquires or has acquired within 12 months our assets having a total gross fair market value equal to at least 50% of the total gross fair market value of all of our assets. • “Change in control period” generally means (1) for each of Mr. Henry, Ms. Kim, Mr. Van Oene and Mr. Fromen the period beginning upon the occurrence of a change in control (as defined in the change in control and severance agreement) through the date 12 months following a change in control and (2) for Dr. Zaccarin, the period beginning upon the date that is three months prior to a change in control (as defined in the change in control and severance agreement) and continuing through the date that is 12 months following a change in control. • “Disability” generally means an executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; and • “Good reason” generally means an executive’s termination of employment within 30 days following the expiration of any cure period (discussed below) following the occurrence of one or more of the following, without his or her express written consent: (1) (i) for each of Ms. Kim, Mr. Van Oene, Mr. Fromen and Dr. Zaccarin, a material reduction of his or her duties, authority, or responsibilities, relative to the executive’s duties, authority, or responsibilities as in effect immediately prior to such reduction; provided, however, that a reduction in duties, authority, responsibilities solely by virtue of our being acquired and made part of a larger entity (for example, where he or she retains essentially the same responsibility and duties of the subsidiary, business unit or division substantially containing our business following a change in control) shall not constitute good reason; (ii) for Mr. Henry, a material reduction of his duties, authority, or responsibilities, relative to his duties, authority, or responsibilities as in effect immediately prior to such reduction; (2) (i) for each of Ms. Kim, Mr. Van Oene, Mr. Fromen and Dr. Zaccarin, a material reduction by the Company in his or her annualized base pay as in effect immediately prior to such reduction (in other words, a reduction of more than 10 percent of his or her annualized base compensation in any one year, other than a reduction applicable to executives generally that does not adversely affect him or her to a greater extent than other similarly-situated executives); (ii) for Mr. Henry, a material reduction by the Company in his annualized base pay as in effect immediately prior to such reduction (in other words, a reduction of more than 10 percent of his or her annualized base compensation in any one year; (3) for each of the named executive officers, the relocation of his or her principal place of performing his or her duties as an employee of the Company by more than 50 miles; or (4) for each of the named executive officers, the Company’s failure to obtain the assumption |
The closing of the transactions contemplated under the merger agreement with Illumina will constitute a “change in control” under the change in control agreements.
44
Treatment of Equity Awards in Merger Agreement
At or immediately prior to the effective time of the completion of the Merger, each in-the-money company option, including any that are held by our named executive officers, will be canceled and converted into the right to receive a cash amount equal to the product of (1) the excess of the per share Merger Consideration over the applicable per share exercise price of such canceled company option, multiplied by (2) the aggregate number of shares of common stock subject to the in-the-money company option immediately before the effective time of the Merger. Any company option that is not an in-the-money company option will be canceled as of the effective time of the Merger without any amount payable in exchange. Holders of unvested company options (including company options that are not in-the-money company options) will be given an opportunity to exercise any unvested company options prior to, and contingent upon the consummation of the transactions contemplated by the Merger Agreement.
At or immediately prior to the effective time of the Merger, each company RSU award, including any that are held by our named executive officers, will be canceled and converted into the right to receive a cash amount equal to the product of (1) the per share Merger Consideration, multiplied by (2) the total number of shares of common stock subject to such company RSU award immediately prior to the effective time of the merger. At or immediately prior to the effective time of the Merger, each company performance-based RSU award, including any that are held by our named executive officers, will be canceled and converted into the right to receive a cash amount equal to the product of (1) the per share Merger Consideration, multiplied by (2) the number of shares of common stock that would be payable if such company performance-based RSU award had vested at target performance.
Each of Dr. Hunkapiller, Mses. Barnes and Ordoñez, and Mr. Phillips holds awards of company performance-based RSUs that provide that, if a “change in control” (as defined in the applicable company equity incentive plan under which the award was granted) occurs during the applicable performance period (or during the period after the end of the applicable performance period but before the applicable determination date), then effective as of immediately before the completion of the change in control alland severance agreement by a successor; except that, in order for an event to qualify as good reason, he or she must not terminate employment without first providing PacBio with written notice of the applicableacts or omissions constituting the grounds for good reason within 90 days of the initial existence of the grounds for good reason and a reasonable cure period of not less than 30 days following the date of such notice.
terminate upon expiration of such period.
45
Potential Payments upon Involuntary Termination or Change in Control
Compensation and Benefits | | | Involuntary Termination ($) | | | Involuntary Termination On or Within 12 Months Following Change In Control ($) | | ||||||
Christian O. Henry Salary Performance-based cash bonus Equity acceleration(1) Health care benefits Total | | | | ||||||||||
| | | 975,000 | | | | | | 975,000 | | | ||
| | | — | | | | | | 650,000 | | | ||
| | | 200,831 | | | | | | 25,628,959 | | | ||
| | | 52,759 | | | | | | 52,759 | | | ||
| | | 1,228,590 | | | | | | 27,306,718 | | | ||
Susan G. Kim Salary Performance-based cash bonus Equity acceleration(1) Health care benefits Total | | | | ||||||||||
| | | 430,000 | | | | | | 430,000 | | | ||
| | | — | | | | | | 215,000 | | | ||
| | | — | | | | | | 5,417,159 | | | ||
| | | — | | | | | | — | | | ||
| | | 430,000 | | | | | | 6,062,159 | | | ||
Mark Van Oene Salary Performance-based cash bonus Equity acceleration(1) Health care benefits Total | | | | ||||||||||
| | | 550,000 | | | | | | 550,000 | | | ||
| | | — | | | | | | 330,000 | | | ||
| | | — | | | | | | 6,854,100 | | | ||
| | | 31,291 | | | | | | 31,291 | | | ||
| | | 581,291 | | | | | | 7,765,391 | | | ||
Peter Fromen Salary Performance-based cash bonus Equity acceleration(1) Health care benefits Total | | | | ||||||||||
| | | 425,000 | | | | | | 425,000 | | | ||
| | | — | | | | | | 212,500 | | | ||
| | | — | | | | | | 3,273,600 | | | ||
| | | 39,070 | | | | | | 39,070 | | | ||
| | | 464,070 | | | | | | 3,950,170 | | | ||
Denis Zaccarin, Ph.D. Salary Performance-based cash bonus Equity acceleration(1) Health care benefits Total | | | | ||||||||||
| | | 172,500 | | | | | | 258,750 | | | ||
| | | — | | | | | | 155,250 | | | ||
| | | — | | | | | | 1,108,791 | | | ||
| | | 11,313 | | | | | | 16,969 | | | ||
| | | 183,813 | | | | | | 1,539,760 | | |
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______________
|
|
Plan category | | | Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) (#) | | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($)(1) | | | Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected In Column (a)) (#) | | |||||||||
Equity compensation plans approved by security holders(2) | | | | | 15,413,037(3) | | | | | | 4.25 | | | | | | 14,284,782 | | |
Equity compensation plans not approved by security holders(4) | | | | | 4,439,618 | | | | | | 16.73 | | | | | | 1,640,870 | | |
Total equity compensation plans | | | | | 19,852,655 | | | | | | 7.04 | | | | | | 15,925,652 | | |
of Regulation S-K under the Securities Act of 1933.
46
In 2018,2021, the annual total compensation of our median employee was approximately $166,966,$257,461, and our CEO’s annual total compensation was $1,610,866$2,866,931 using the amount reported in the “Total” column of our Summary Compensation Table for 2018.2021. The resulting ratio of the total annual compensation of our CEO to our median employee was approximately 10:11:1.
Equity Compensation Plan Information
The following table presents information about the Company’s equity compensation plans as of December 31, 2018 (in thousands, except price data):
|
|
|
|
|
|
| |||||||
|
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|
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|
|
| |||||||
Plan category |
| Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
| Weighted average exercise price of outstanding options, warrants and rights ($)(1) |
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||
Equity compensation plans approved by security holders (2) |
| 26,157,584 |
| 5.66 |
| 11,298,000 | |||||||
Equity compensation plans not approved by security holders |
| — |
| — |
| — |
______________
(2) Includes the following plans: the 2010 Equity Incentive Plan (the “2010 Plan”) and the 2010 Outside Director Equity Incentive Plan (the “2010 Director Plan”), both of which we adopted upon the effectiveness of our initial public offering in October 2010. Our 2010 Plan provides that the number of shares available for issuance thereunder will be increased on the first day of each fiscal year beginning with the 2012 fiscal year in an amount equal to the least of (i) 10,000,000 shares, (ii) 5% of the outstanding shares of our common stock as of the last day of our immediately preceding year, or (iii) such number of shares of common stock determined by our board of directors. On January 1, 2019, the number of shares available for issuance under our 2010 Plan increased by 7,512,221 shares pursuant to these provisions. The increase is not reflected in the table above.
47
www.pacb.com.
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LLP and further to the matters specified above, had discussed with Ernst & Young LLP the overall scope, plans, and estimated costs of its audits. The Audit Committee met with Ernst & Young LLP periodically to discuss the results of their examinations, the overall quality of our financial reporting, and their reviews of the quarterly financial statements.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our common stock, to file with the SEC reports about their ownership of common stock and other equity securities of the Company. Such directors, officers and 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the reports provided to us and on representations received from our directors and executive officers, we believe that all of our executive officers, directors and persons who beneficially own more than 10% of our common stock complied with all Section 16(a) filing requirements applicable to them with respect to transactions during fiscal year 2018.
49
Stockholders Sharing the Same Address
51
52