| ● | establish criteria for prospective members, conduct candidate searches, interview prospective candidates, and oversee programs to introduce the candidate to us, our management, and operations; |
| ● | review planning for succession to the position of Chairman of the Board and Chief Executive Officer and other senior management positions; |
| ● | annually recommend to the Board persons to be nominated for election as directors; |
| ● | recommend to the Board the members of all standing Committees; |
| ● | adopt or develop for Board consideration corporate governance principles and policies; and |
| ● | periodically review and report to the Board on the effectiveness of corporate governance procedures and the Board as a governing body, including conducting an annual self-assessment of the Board and its standing committees. |
A copy of the charter of the Nominating and Governance Committee is available on our websitewww.secondsight.com (under “About Us – Corporate Governance”).
Policy with Regard to Security Holder Recommendations
The Nominating and Governance Committee does not presently have a policy with regard to consideration of any director candidates recommended by security holders. No security holder (other than members of the Nominating and Governance Committee) has recommended a candidate to date. The Nominating and Governance Committee plans to adopt a policy prior to the next Annual Meeting of our security holders.
Director Qualifications and Diversity
The Board seeks independent directors who represent a diversity of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions.decisions who each will represent the best interests of the Company and its stockholders. Candidates should have substantial experience with one or more publicly traded companies or should have achieved a high level of distinction in their chosen fields. The Board is particularly interested in maintaining a mix that includes individuals who are active or retired executive officers and senior executives, particularly those with experience in medical devices, bio-technology,biotechnology, intellectual property, early stage high technology companies, research and development, strategic planning, business development, compensation, finance, accounting andor banking.
In evaluating nominationsOur Board believes that the directors nominated collectively have the experience and skills effectively to oversee the Boardmanagement of Directors, the NominatingCompany, including a high level of personal and Governance Committee also looks for certain personal attributes, such asprofessional integrity, an ability to exercise sound business judgement on a broad range of issues, sufficient experience and background to have an appreciation of the issues facing the Company, a willingness to apply sound and independent business judgment, comprehensive understanding of a director’s role in corporate governance, availability for meetings and consultation on Company matters, anddevote the willingnessnecessary time to assume and carry out fiduciary responsibilities. The Nominating and Governance Committee took these specifications into account in formulating and re-nominating its present Board members.duties.
Compensation Committee Interlocks and Insider Participation
During 2015, Alfred E. Mann,2017, William Link, Gregg Williams and Matthew Pfeffer since his appointment on September 3, 2015, served on the Compensation Committee. Mr. Mann tendered his resignation as director on February 9, 2016. None of these individuals has ever been an executive officer or employee of ours. In addition, none of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or the Compensation Committee.
Code of Conduct
We adopted a Code of Business Conduct and Ethics (“Code of Ethics”) applicable to our principal executive officer and principal financial and accounting officer and any persons performing similar functions. In addition, the Code of Ethics applies to our employees, officers, directors, agents and representatives. The Code of Ethics requires, among other things, that our employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in our best interest. The Code of Ethics is available on our website at www.secondsight.com (under “About Us – Code of Business Conduct and Ethics”).
Risk Oversight
Enterprise risks are identified and prioritized by management and each prioritized risk is assigned to a Board committee or the full Board for oversight as follows:
Full Board — Risks and exposures associated with strategic, financial and execution risks and other current matters that may present material risk to our operations, plans, prospects or reputation.
Audit Committee— Risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, investment guidelines and credit and liquidity matters.
Governance Committee— Risks and exposures relating to corporate governance and management and director succession planning.
Compensation Committee— Risks and exposures associated with leadership assessment and compensation programs and arrangements, including incentive plans.
Board Leadership Structure
The Chairman of the Board presides at all meetings of the Board.
Review, Approval or Ratification of Transactions with Related Persons
The Nominating and Corporate Governance Committee reviews issues involving potential conflicts of interest, other than Related Party transactions, which are reviewed by the Audit Committee.
Compliance with Section 16 of the Exchange Act16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4 and 45 furnished to the Company, the Company believes that in 2017 all of its directors, officers and applicable stockholders timely filed these reports.
PROPOSALS
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF
PROPOSALS 1 THROUGH 4 BELOW.
PROPOSAL 1 — ELECTION OF DIRECTORS
Nominees for Election
The Board currently has sixfive members. Our Board has nominated eachfive of our incumbent directors for re-election at the Annual Meeting. Each nominee has agreed, if elected, to serve a one-year term or until the election and qualification of his successor. If any nominee is unable to stand for election, which circumstance we do not anticipate, the Board may designate a substitute. In the latter event, shares represented by proxies may be voted for a substitute nominee.
Our Director Qualifications and Diversity guidelines contain the current Board membership criteria that apply to nominees recommended for a position on the Board. Under those criteria, members of the Board should have the highest professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience at the policy-making level in business, government, education, technology or public service. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. In addition, the Nominating and Governance Committee takes into account a potential director’s ability to contribute to the diversity of background and experience represented on the Board, and it reviews its effectiveness in balancing these considerations when assessing the composition of the Board. Directors’ service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties. Each director must represent the interests of all of our stockholders. Although the Board uses these and other criteria as appropriate to evaluate potential nominees, it has no stated minimum criteria for nominees.
The Board believes that all the nominees named below are highly qualified and have the skills integrity,and experience and sound judgment required for effective service on the Board. The nominees’ individual biographies below contain information about their experience, qualifications and skills that led the Board to nominate them:
| Nominee’s or Director’s Name | Year First Became Director | Position with the Company | ||
| Jonathan Will McGuire | 2015 | President, Chief Executive Officer and Director | ||
| William J. Link | 2003 | Independent Director | ||
| Aaron Mendelsohn | 1998 | Independent Director | ||
| Gregg Williams | 2009 | Independent Director | ||
| Matthew Pfeffer | 2015 | Independent Director |
Jonathan Will McGuire, 53,55, Chief Executive Officer, President and Director
Biographical information for Mr. McGuire is set forth under “Executive Compensation and Related Information”. Our board believes that Mr. McGuire’sMcGuire’s executive and managerial experience together with his leadership skills make him well qualified to continue serving as one of our directors.
Robert J. Greenberg, 48, Chairman of the Board of Directors
Biographical information for Dr. Greenberg is set forth under “Executive Compensation and Related Information”. Our board believes that Dr. Greenberg’s extensive scientific and technical expertise, his executive and managerial experience together with his leadership skills and familiarity with our business as one of our founders, make him well qualified to continue serving as one of our directors.
William J. Link, 70,72, Director and Chairman of the Compensation Committee
Mr. Link has beenserved as a member of our Board of Directors since 2003. Mr. Link is a co-founder and managing director of Versant Ventures, a venture capital firm specializing in early-stage investing in healthcare companies, since its inception in 1999. Prior to co-founding Versant Ventures, Mr. Link was a general partner at Brentwood Venture Capital from 1998 to present. Mr. Link also founded and served as chairman and CEO of Chiron Vision, a subsidiary of Chiron Corporation specializing in ophthalmic surgical products, from 1986 to 1997 which was sold to Bausch and+ Lomb in 1997. Prior to Chiron Vision, Mr. Link founded in 1978 and served as President of American Medical Optics (AMO), a division of American Hospital Supply Corporation, which was sold to Allergan in 1986. Mr. Link also served on the Board of AMO’s successor company, Advanced Medical Optics (AMO) which was acquired by Abbott in 2009, from 2002 to 2009. Mr. Link was an Assistant Professor in the Department of Surgery at the Indiana University School of Medicine from 1973 to 1976. Mr. Link received his BSc, MSc and Ph.D. from Purdue University. Our board has concluded that Mr. Link’s senior executive history with a focus on medical products as well as his extensive financial and other experience with technology companies in general, including his experience of serving on other boards of directors make him a qualified and valued memberto continue serving as one of our board.directors.
Aaron Mendelsohn, 64,66, Director
Mr. Mendelsohn is a founder and has beenserved as a director of Second Sight since inception. Mr. Mendelsohn served on the board of Advanced Bionics since shortly after its founding in 1993 until its sale in 2004. Mr. Mendelsohn was also a founder and director of MRGMedical Research Group from its inception in 1998 until its sale in 2001 to Medtronic, Inc. Mr. Mendelsohn servespreviously served on the board of directors for the Alfred E. Mann Institute for Biomedical Engineering at the University of Southern California since its inception in 1998 and is a member of its Executive Committee.until mid-2016. Mr. Mendelsohn is a founder and, since 2007, a director of Nanoprecision Holding Company, Inc., a world leadercompany engaged in manipulating materials at nanometer scale. He is also a founder and director of Nanoprecision Medical, Inc,Inc., a drug delivery company working in nanotechnology, since its inception in 2011. Mr. Mendelsohn is a founder and serves as Chairman of the Maestro Foundation since it was organized in 1983. The Maestro Foundation is a leading non-profit musical philanthropic organization which hosts a premier chamber music series and lends professional-level instruments and bows to young, career-bound classical musicians. Mr. Mendelsohn received his B.A. from UCLA and J.D. from The Loyola University School of Law School Los Angeles at Loyola Marymount University.Angeles. Our board believes that Mr. Mendelsohn’s business experience, including his experience as a founder and board member and executive officer of medical device companies, combined with his financial experience, business acumen and judgment provide our Board with valuable managerial and operational expertise and leadership skills making him well qualified to continue serving as one of our directors.
Gregg Williams, 57, Director59, Chairman of the Board of Directors
Mr. Williams has beenserved as a member of our Board of Directors since June 2009.2009 and was appointed Chairman of our board in March 2018. Mr. Williams has beenserves as the Chief Executive Officer at Williams International, Corporation, a leading developer and manufacturer of small gas turbine engines, since April 2005. Mr. Williams serves as the Chairman and President of Williams International Corporation and served as its Chief Operating Officer. Mr. Williams received a Bachelor of Science in Engineering from the University of Utah in 1982. He is a board member of General Aviation Manufacturers Association. Our board believes that Mr. William’sWilliam’s executive and managerial experience together with his leadership skills make him well qualified to continue serving as one of our directors.
Matthew Pfeffer, 57,60, Director and Chairman of Audit Committee
Mr. Pfeffer servesserved as Chief Executive Officer and Chief Financial Officer of MannKind Corporation sincefrom January 2016.2016 to May 2017 and ceased being a director of that Company in October 2017. Previously, he served as the Corporate Vice President and Chief Financial Officer of MannKind Corporation from April 2008 until January 2016. Mr. Pfeffer served as Chief Financial Officer and Senior Vice President of Finance and Administration of VaxGen, Inc. from March 2006 until April 2008, with responsibility for finance, tax, treasury, human resources, IT,information technology, purchasing and facilities functions. Prior to VaxGen, Mr. Pfeffer served as Chief Financial Officer of Cell Genesys, Inc. During his nine yearnine-year tenure at Cell Genesys, Mr. Pfeffer served as Director of Finance before being named Chief Financial Officer in 1998. Prior to that, Mr. Pfeffer served in a variety of financial management positions at other companies, including roles as Corporate Controller, Manager of Internal Audit and Manager of Financial Reporting. Mr. Pfeffer began his career at Price Waterhouse. Mr. Pfeffer graduated from the University of California, Berkeley and is a Certified Public Accountant.Our board believes that Mr. Pfeffer’s executive and managerial experience as a chief executive officer, chief financial officer and director of a publicly traded company as well astogether with his other managerial, operational, financial and accounting expertiseleadership skills make him well qualified to continue serving as one of our directors.
Vote Required
Each director nominee who receives more “FOR” votes than “AGAINST” votes representing shares of our common stock present in person or represented by proxy and entitled to be voted at the Annual Meeting will be elected.
All of the nominees have indicated to us that they will be available to serve as directors. In the event that any nominee should become unavailable, the proxy holders, Will McGuire or Tom Miller,John T. Blake, will vote for a nominee or nominees designated by the Board.
There are no family relationships among our executive officers and directors.
If you sign your proxy or voting instruction card but do not give instructions with respect to voting for directors, your shares will be voted by Will McGuire or Tom Miller,John T. Blake, as proxy holders. If you wish to give specific instructions with respect to voting for directors, you may do so by indicating your instructions on your proxy or voting instruction card.
You may cumulate your votes in favor of one or more of the director nominees. If you wish to cumulate your votes, you will need to indicate explicitly your intent to cumulate your votes among the five persons who will be voted upon at the Annual Meeting. See “Questions and Answers—Voting Information—Is cumulative voting permitted for the election of directors?” for further information about how to cumulate your votes. Will McGuire or Tom MillerJohn T. Blake as proxy holders, reserve the right to cumulate votes and cast such votes in favor of the election of some or all of the applicable nominees in their sole discretion, except that a stockholder’s votes will not be cast for a nominee as to whom such stockholder instructs that such votes be cast “AGAINST” or “ABSTAIN.”
Our Board recommends a vote “FOR” each of the nominees.
Director Compensation for 20152017
During 20152017 our non-employee directors were paid an annual retainer of $50,000 and our Chairman of the Board an annual retainer of $75,000.$50,000. Each of our non-employee directors who serves as a committee chair also will receive,receives $6,000 per year for his or her service as committee chair and non-chair committee members will receive $4,000 per year for each committee on which he serves; provided, however, the additional retainer of the chair of the Audit Committee chair’s additional retainer is $16,000 per year and each non-chair Audit Committee member’s additional retainer is $8,000 per year. All fees will bewere paid for the period June 1, 2016 to May 31, 2017 in shares of our stock on June 1, of each year2017 and the stock price per share value shall bewas determined by an average closing price of our stock for the preceding twenty trading days of our common stock on its principal exchange. Mr. Mann resigned as Chairman
Starting January 1, 2018, our non-employee directors annual cash compensation for serving on the board and was appointed Chairman Emerituscommittees are payable on the first business day of every quarter. Additionally, our non-employee directors are awarded annual equity compensation retainer in the form of stock options, the number of shares equal to $25,000 divided by the Black-Scholes value of the stock on the date of our Boardannual shareholder meeting. The stock options shall (i) have 10 year term, (ii) fully vest on August 18, 2015. As Chairman Emeritus, Mr. Mann continued being paid anthe earlier of the one year anniversary of grant or the date of next shareholder meeting, no partial vesting is allowed and (iv) upon ceasing to be a board member, the options may be exercised (x) for 30 days in the event of resignation, (y) 60 days in the event of termination, and (z) 90 days in the event of death. Our non-employee directors may elect, on the date of our annual retainershareholder meeting, to receive their annual cash compensation in the form of $75,000.stock options calculated on the same basis as the aforementioned equity compensation retainer.
The following Director Compensation Table sets forth information concerning compensation for services rendered by our non-employee directors for fiscal year 2015. The amounts represented in the “Fees Earned or Paid in Cash” column reflects the stock compensation expense recorded by the Company and does not necessarily equate to the income that will ultimately be realized by the directors for such awards in lieu of actual cash fees, as noted above.2017.
| Name | Fees Earned or Paid in Cash ($) | Stock Award ($) | Total ($) | |||||||
| Matthew Pfeffer | — | 70,000 | 70,000 | |||||||
| William J. Link, Ph.D. | — | 68,000 | 68,000 | |||||||
| Gregg Williams | — | 66,000 | 66,000 | |||||||
| Aaron Mendelsohn | — | 58,000 | 58,000 | |||||||
| Name | Fees Earned or Paid in Cash ($) | Stock Award ($) | Total ($) | |||||||||
| Alfred E. Mann | 96,333 | 96,333 | ||||||||||
| William J. Link, Ph.D. | 67,083 | 67,083 | ||||||||||
| Aaron Mendelsohn | 52,000 | 52,000 | ||||||||||
| Gregg Williams | 67,583 | 67,583 | ||||||||||
| Matthew Pfeffer | 39,500 | 39,500 | ||||||||||
PROPOSAL 2 — APPROVALAPPROVe INCREASE IN NUMBER OF AN AMENDedSHARES OF COMMON STOCK THAT MAY BE ISSUED UNDER SECOND SIGHT’S 2011 EQUITY INCENTIVE PLAN TO 12 MILLION SHARES OF COMMON STOCK
We are asking our stockholders to consider and vote upon a proposal to approve an amendedamendment to the Second Sight Medical Products, Inc. 2011 Equity Incentive Plan (which, as(as amended from time to time, we refer to as the “Plan”).
On July 15, 2011, our Board adopted the Plan, and our stockholders approved the adoption of the Plan on July 21, 2011. The Plan was further amended in 20122011, 2015, 2016 and 20152017 to increase the maximum number of shares of common stock that may be issued under the Plan. OnIn April 4, 2016,2018, the Board adopted amendmentsan amendment to the Plan that, contingent on and subject to approval of our stockholders at the Annual Meeting, would among other things:increase the maximum number of shares of common stock that may be issued under the Plan to 12,000,000 shares.
If the stockholders approve the amendedamendment to the Plan, itthe amendment will become effective on the date of the Annual Meeting, which is scheduled for May 10, 2016.16, 2018. If the stockholders fail to approve the amendedamendment to the Plan, the Plan will continue and remain as isin effect without any changes to the authorized shares thereto, and compensatory option grants will continue to be granted thereunder to the extent of shares of common stock available for issuance. As of March 31, 2016,April 9, 2018, the record date, approximately 1,149,000256,475 shares of common stock remained available for issuance under the Plan (without giving effect to additional shares that may become available upon the future expiration, forfeiture, or cancellation of outstanding awards).Our Board believes that ifour ability to include equity compensation as part of a total compensation package aligns the amendedinterest of our employees with our stockholders. If the amendment to the Plan is not approved, our ability to align the interests of key service providers with stockholders through equity-based compensation would be compromised, disrupting our compensation program and impairing our ability to recruit, motivate and retain key employees or requiringwill be impaired and thus may require us to shift ourthe mix of total compensation plan to include morea greater amount of cash compensation.
Summary of the Material Terms of the Plan, As Amended
A summary of the material terms of the Plan, as amended Planin 2017, is set forth below. This summary is qualified in its entirety by the detailed provisions of the Plan, as amended, a copy of which is attached asAppendix A to thisthe Proxy Statement we filed with the SEC on May 1, 2017, and which is incorporated by reference into this proposal. We encourage our stockholders to read and refer to the complete plan document in Appendix A for a more complete description of the Plan, as amended.
Purpose
The Plan is intended to encourage the key service providerspersonnel of the Company to have a proprietary and vested interest in the growth and performance of the Company and to generate an increased incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of its equity owners.
Administration
The Plan is administered by the Compensation Committee, which consists of William J. Link, Gregg Williams and Matthew Pfeffer appointed by our Board. The Compensation Committee has the authority to determine the terms and conditions of awards and to interpret and administer the Plan.
Share Reserve and Limitations
The maximum number of shares of common stock reserved for issuance under the Plan is 6,000,0009,500,000 shares or,and, if the amendment to the Plan is approved, will be increased by 1,500,000 shares to 7,500,00012,000,000 shares of common stock.As of April 14, 201611, 2018, the fair market value of a share of common stock, was$5.37.based on the closing price reported on NASDAQ for that date, is $1.71.
No employee of the Company may be eligible to be granted options covering more than 1,000,000 shares of common stock during any calendar year.
Types of Awards; Eligibility
The Plan permits the Company to grant stock options and if the amended Plan is approved as presented in this Proposal 2, RSUsrestricted stock units (“awards”RSUs”) to our employees and to employees of our controlled subsidiaries. From time to time, the Company may also elect to grant awards to non-employees who are natural persons where it is determined that such grant is in the best interests of the Company.As of the date of this Proxy Statement, approximately 115119 employees of the Company and our controlled subsidiaries and approximately six non-employees arewere eligible to participate in the Plan.
Options
The Compensation Committee may grant options under the Plan. The term of an option may not exceed 10 years. The Compensation Committee determines the exercise price of an option. Payment of the exercise price may be made in cash, shares, or other property acceptable to the Compensation Committee, as well as other types of consideration permitted by applicable law. After the termination of service of a participant, he or she (or, if applicable, his or her estate or beneficiary) may exercise his or her option for the period of time stated in his or her award agreement. Generally, if termination is due to death or disability, the option will remain exercisable for at least six months. In all other cases, the option will generally remain exercisable for at least 30 days following the termination of service. However, in no event may an option be exercised later than the expiration of its term. Subject to the provisions of the Plan, the Compensation Committee determines the other terms of options. Unless the Compensation Committee provides otherwise, the Plan generally does not allow for the transfer of options, and only the participant may exercise an option during his or her lifetime.
RSUs
If the amended Plan is approved, theThe Compensation Committee may grant RSUs under the Plan. Subject to the provisions of the Plan, the Compensation Committee will determinedetermines the terms and conditions of RSUs, including the restricted period for all or a portion of the award and the restrictions and/or forfeiture events applicable to the award. RSUs may vest solely by the passage of time and/or pursuant to achievement of performance goals, and the restrictions and/or the restricted period may differ with respect to each award of RSUs. During the period, if any, when RSUs are non-transferable or forfeitable or prior to the satisfaction of any other restrictions prescribed by the Compensation Committee, a participant is prohibited from selling, transferring, assigning, pledging, or otherwise encumbering or disposing of his or her RSUs. Participants holding RSUs will have no voting or dividend rights or other rights associated with share ownership.
Adjustments to Awards
In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the Plan, the Compensation Committee will adjust (i) the aggregate number, class, and kind of shares that may be delivered under the Plan, in the aggregate or to any one participant, and/or (ii) the number, class, and kind of shares subject to outstanding awards and the option price of options.
Change in Control
Unless the Compensation Committee provides otherwise in an applicable award agreement, upon the occurrence of a “change in control” (as defined in the Plan): (i) the vesting of all outstanding awards shall accelerate automatically immediately prior to the consummation of the change in control and (ii) awards may either be assumed or substituted for or be cancelled in exchange for consideration. If options will be not assumed or substituted for, the Compensation Committee must provide written notice not less than 15 days prior to the effective date of the proposed change in control.
Term; Amendment and Termination
Our stockholders adopted theThe Plan on July 21,was originally effective as of June 1, 2011 and no options under the Plan may be granted afterwill automatically terminate on May 31, 2021.2021, unless earlier terminated pursuant to the Plan. Our Board has the authority to amend or terminate the Plan or an award agreement, provided such action does not impair the existing rights of any participant.
Repricing
If the amended Plan is approved, as presented in this Proposal 2, the Company may, at any time in its discretion, (i) amend the terms of outstanding options to reduce the exercise price; (ii) cancel outstanding options in exchange for or substitution of options with an exercise price that is less than the exercise price of the original options; or (iii) cancel outstanding options with an exercise price above the current fair market value in exchange for cash or other securities.
Summary of Certain Material U.S. Federal Income Tax Consequences
The U.S. federal income tax consequences of awards under the Plan for participants and the Company will depend on the type of award granted. The following summary description of certain material U.S. federal income tax consequences is intended only for the general information of our stockholders. This summary is not intended to be exhaustive, and the exact tax consequences to any participant depend upon his or her particular circumstances and other facts. Plan participants should consult their tax advisor with respect to any state, local and non-U.S. tax considerations or relevant federal tax implications of awards granted under the Plan.
Non-qualified Stock Options. An option holder generally recognizes no U.S. federal taxable income as a result of the grant of the option. On the exercise of a non-qualified stock option, the option holder normally recognizes ordinary income in the amount equal to the difference between the exercise price and the fair market value of the shares of common stock on the exercise date. Where the option holder is an employee, such ordinary income generally is subject to withholding of income and employment taxes. On the sale of shares of common stock acquired by the exercise of a non-qualified stock option, any gain or loss (based on the difference between the sale price and the fair market value on the exercise date), is taxed as a capital gain or loss. If we comply with applicable reporting requirements and with the restrictions of Section 162(m) of the Internal Revenue Code of 1986, as amended, we will be entitled to a business expense deduction in the same amount and generally at the same time as the option holder recognizes ordinary income.
RSUs.A holder of RSUs generally recognizes no U.S. federal taxable income as a result of the grant of the RSUs. A holder of RSUs will be required to recognize ordinary income in an amount equal to the fair market value of shares issued, or in the case of a cash-settled award, the amount of the cash payment made, to such holder at the end of the restriction period or, if later, the payment date. If we comply with applicable reporting requirements and with the restrictions ofSection 162(m) of the Internal Revenue Code of 1986, as amended, we will be entitled to a business expense deduction in the same amount and generally at the same time as the holder recognizes ordinary income.
New Plan Benefits
The benefits or amounts that aregrant of awards under Company plans is discretionary and neither the number of shares subject to be allocated to any participant or group of participants are indeterminable as of the date of this Proxy Statement because participation andawards nor the types of awards (including options) available under the Plan are subjectCompany plans to the discretionany particular eligible recipients or groups of the Compensation Committee. Therefore, no new plan benefits table can be provided at this time.eligible recipients is presently determinable.
Vote Required and Recommendation
The affirmative vote of the holders of shares of common stock entitled to vote must exceed the votes cast against the proposal for the proposal to be approved.
Our Board unanimously recommends that stockholders vote “FOR” the approval of the proposed amendedincrease of maximum number of shares of common stock that may be issued under Second Sight’s 2011 Equity Incentive Plan to 12 million shares of common stock as described in this Proposal 2.
PROPOSAL 3 – APPROVAL OF AN AMENDMENT TO SECOND SIGHT’S 2015 EMPLOYEE STOCK PURCHASE PLAN THAT WILL INCREASE THE MAXIMUM STATED NUMBER OF SHARES OF COMMON STOCK WHICH MAY BE ISSUED UNDER THE PLAN TO 1,550,000 SHARES and increase annual evergreen amount to 500,000 shares.
We are asking our stockholders to consider and vote upon a proposal to approve an amendment to the Second Sight Medical Inc. 2015 Employee Stock Purchase Plan (referred to as the “ESPP”). On March 25, 2015, our Board adopted the ESPP and our stockholders approved the adoption of the ESPP to be effective June 1, 2015. The Plan was further amended in 2017 to increase the maximum number of shares of common stock that may be issued under the ESPP. On April 10, 2018, the Board adopted amendments to the ESPP that, contingent on and subject to approval of our stockholders at the Annual Meeting, would increase the number of shares of common stock that may be issued under the ESPP by 500,000 shares and the number of shares available for annual automatic increases effected under the ESPP to the lesser of (a) 1% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, or (b) Five Hundred Thousand (500,000) shares of common stock on January 1st of each year, commencing January 1, 2019 and continuing until the expiration of the ESPP.
If the stockholders approve the amended ESPP, it will become effective on the date of Annual Meeting, which is scheduled for May 16, 2018. If the stockholders fail to approve the amended ESPP, the ESPP will continue and remain in effect without any changes to the authorized number of shares thereto. As of March 31, 2018, approximately 301,466 shares of common stock remained available for issuance under the ESPP. Our Board believes that the amended ESPP is in the best interests of the Company, as it provides a convenient way for the Company’s employees to purchase shares of the Company’s common stock at a discounted price, which stock ownership, in our Board’s opinion, aligns the interests of our employees with that of our stockholders.
The Company has previously reserved a total of 1,050,000 shares of common stock for issuance under the ESPP and, until the Board or the Committee determine otherwise, the number of shares of common stock available for purchase by participating employees under the ESPP automatically increases to an amount which is the lesser of (a) 1% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, or (b) One Hundred Thousand (100,000) shares of common stock on January 1st of each year. The total shares of common stock available for purchase under the ESPP represents less than 2% of the Company’s outstanding shares as of the Record Date.
Summary of the Amended ESPP
A summary of the material terms of the amended ESPP is provided below.
Stock Subject to the ESPP.Originally, subject to adjustment as provided in the ESPP, the maximum number of shares of common stock reserved for issuance pursuant to the ESPP was 250,000 shares. In 2017 the Board adopted, and shareholders approved an increase to the maximum number of shares of common stock reserved for issuance under the ESPP. If the current proposed amendment to the ESPP is approved by the stockholders, subject to adjustment as provided in the ESPP, the maximum number of shares of common stock reserved for issuance under the ESPP will be 1,550,000 shares. In addition, effective January 1, 2019 and continuing until the expiration of the ESPP, the number of shares of common stock available for purchase under the ESPP will automatically increase annually on January 1, in an amount equal to the lesser of (i) 1% of the total number of issued and outstanding shares of the Company’s common stock as of December 31 of the immediately preceding year, or (ii) 500,000 shares of the Company’s common stock, except that the Board or the Committee may act prior to January 1 of any calendar year to provide for an increase of a lesser number of shares (which may be zero). In the event of any stock dividend, stock split, recapitalization, or other change in the capital structure of the Company, the Compensation Committee of our Board of Directors (for purposes of this discussion as to the ESPP, the “Committee”) will make appropriate adjustments in the number and kind of shares subject to the ESPP, the maximum number of shares that may be delivered under the ESPP, and the selling price and any other relevant provision of the ESPP.
Administration.Subject to the express provisions of the ESPP, the Committee has authority to interpret and construe the provisions of the ESPP, to adopt rules and regulations for administering the ESPP, and to make all other determinations necessary or advisable for administering the ESPP. The ESPP will be administered in order to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).
Eligibility.In general, all employees employed by the Company and its participating subsidiaries at the beginning of a purchase period are eligible to participate in the ESPP. As of March 31, 2018, there were approximately 119 employees eligible to participate in the ESPP, including five executive officers. Employees must also be actively employed on the last day of the purchase period to purchase shares under the ESPP, except that in the event of a participant’s death, his or her legal representative may elect that such participant’s account balance be used to purchase shares on the purchase date for the then-current offering period. Participation in the ESPP is voluntary. The Committee may designate subsidiaries from time to time among a group consisting of the Company and its subsidiaries as eligible to participate in the ESPP as to its eligible employees. An employee who owns, or would own after the ESPP purchase, 5% or more of the Company’s outstanding shares, including rights to purchase stock as a result of ESPP participation, is ineligible to participate in the ESPP.
Plan Provisions.The ESPP is a broad-based plan that allows employees to purchase shares of the Company’s common stock at up to a 15% discount, measured at the lesser of the closing price of the Company’s Shares on (i) the first day of the Offering Period or (ii) on last day of the Purchase Period. The Committee shall determine the Offering Period and the Purchase Periods, and each Offering Period may consist of one or more Purchase Periods, as the Committee may determine. The ESPP, as initially administered, provides for six-month offering periods, the first day of which is an offering date under the ESPP. Employees fund their purchases through voluntary payroll deductions that accumulate, without interest, in accounts maintained in the employee’s name. A participant may contribute up to 15% of his or her gross base pay. All deductions are made on an after-tax basis.
Eligible employees may elect to become a participant in the ESPP by submitting a payroll deduction authorization form to the Committee or its designee, which will remain effective from offering period to offering period unless and until the participant files new enrollment documents or withdraws from the ESPP.
At the end of each purchase period, and unless the participant terminates employment or withdraws from the ESPP or an offering period on or before the purchase date, the amount credited to the employee’s account is applied to the purchase of Company shares at a price equal to the lesser of the closing price of the Company’s common stock on (i) the first day of the Offering Period or (ii) on last day of the Purchase Period, less the then-current discount. An employee may not purchase shares under the ESPP with a fair market value of more than $25,000 in any given calendar year. On April 11, 2018, the closing price of the Company’s common stock, as reported on the NASDAQ, was $1.71 per share. Shares purchased under the ESPP have the same voting, dividend and other rights as all other shares of Company common stock.
Shares of common stock purchased under the ESPP will be held in the custody of an agent appointed by the Board or the Committee. The Agent may hold the shares of common stock purchased under the ESPP in stock certificates in nominee names and may commingle shares held in its custody in a single account or in stock certificates without identification as to individual participating employees.
The Committee has the right to require any or all of the following with respect to shares of common stock purchased under the ESPP:
| (a) | that a participating employee may not request that all or part of the shares of common stock be reissued in the employee’s own name and the stock certificates delivered to the employee until two years (or such shorter period of time as the Committee may designate) have elapsed since the first day of the Offering Period in which the shares were purchased and one year has elapsed since the day the shares were purchased (the “Holding Period”); | |
| (b) | that all sales of shares of common stock during the Holding Period applicable to such purchased shares be performed through a licensed broker acceptable to the Company; and |
| (c) | that participating employees abstain from selling or otherwise transferring shares of common stock purchased pursuant to the ESPP for a period lasting up to two years from the date the shares of common stock were purchased pursuant to the ESPP. |
No participating employee may transfer or assign his or her rights to purchase shares of common stock under the ESPP, whether voluntarily, by operation of law, or otherwise. Any payment of cash or issuance of shares of common stock under the ESPP may be made only to the participating employee (or, in the event of the employee’s death, to the employee’s estate). Once a stock certificate has been issued to the employee or the employee’s estate for his or her account, such certificate may be assigned the same as any other stock certificate.
Amendment and Termination of the ESPP. The Board may, at any time, amend the ESPP in any respect; provided, however, that the stockholders must approve any amendment that would increase the number of shares of common stock that may be issued under the ESPP (other than an increase merely reflecting a change in the Company’s capitalization or in connection with the annual increases automatically effected under the ESPP) or any change in the designation of any corporation (other than a subsidiary of the Company) whose employees may participate in the ESPP. The Board may terminate the ESPP at any time. Upon termination of the ESPP, cash balances then credited to participants’ accounts will be distributed as soon as practicable.
Federal Income Tax Consequences to the Company and to Participants
The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. A general summary of the federal income tax consequences regarding the ESPP is stated below. The summary is based on the law as in effect on the Record Date. The tax consequences of participating in the ESPP may vary with respect to individual situations. Accordingly, participants should consult with their tax advisors in regard to the tax consequences of participating in the ESPP as to both federal and state income tax considerations.
Tax Treatment of ESPP Participants. Participants will not recognize income when they enroll in the ESPP or when they purchase shares. All tax consequences are deferred until the participant disposes of the shares. If the participant holds the shares acquired under the ESPP for at least two years after the offering date and at least one year after the purchase date (referred to as the Section 423 holding period), or if the participant dies while owning the shares, then the participant will generally recognize ordinary income upon sale or other disposition of the shares equal to the lesser of (a) the original discount on the share assuming the stock had been purchased on the offering date or (b) the excess of the fair market value of the share of common stock on the day of disposition over the price he or she paid for the share. Any additional gain will be taxed as long-term capital gain. If the shares are sold for less than the purchase price, there is no ordinary income, and the participant will have a long-term capital loss for the difference between the purchase price and the sale price. If a participant sells or otherwise disposes of the shares before the end of the Section 423 holding period, the participant will generally have ordinary income equal to the difference between the purchase price and the fair market value on the purchase date. The difference between the sale price and the fair market value on the purchase date will be a capital gain or loss, which will be long-term if the shares have been held for more than one year.
Tax Treatment of the Company. If a participant recognizes ordinary income by selling or otherwise disposing of shares before the end of the Section 423 holding period, the Company will generally be entitled to a tax deduction equal to the participant’s ordinary income. Otherwise, the Company will not be entitled to any income tax deduction with respect to shares purchased under the ESPP.
Benefits to Named Executive Officers and Others
The benefits that will be received by participants, including the named executive officers, under the ESPP will depend on each individual’s elections to participate and the fair market value of the Company’s common stock at various future dates. Therefore, it is not possible to determine the benefits that will be received by named executive officers or other employees under the ESPP in advance.
Vote Required and Recommendation
The affirmative vote of the holders of shares of stock entitled to vote must exceed the votes cast against the proposal for the proposal to be approved.
Our Board unanimously recommends that stockholders vote “FOR” the approval of the proposed increase to the maximum stated number of shares of common stock which may be issued under Second Sight’s 2015 Employee Stock Purchase Plan to 1,550,000 shares of common stock and increase of annual evergreen amount to 500,000 shares of common stock as described in this Proposal 3.
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee shall not be deemed incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent we specifically incorporate it by reference therein.
The Audit Committee of the Board has:
| ● | reviewed and discussed the Company’s audited consolidated financial statements for the year ended December 31, 2017 with management and with the Company’s independent registered public accounting firm, Gumbiner Savett Inc.; |
| ● | discussed with the Company’s independent auditors the matters required to be discussed by Statement on Auditing Standards No. 1301, “Communications with Audit Committees”, as adopted by the Public Company Accounting Oversight Board (“PCAOB”); and |
| ● | received and reviewed the written disclosures and letter from |
Members of the Audit Committee concerning independence, and has discussed with Gumbiner Savett Inc. matters relating to its independence.
In reliancerely, without independent verification, on the reviewinformation provided to them and on the representations made by management and the independent auditors. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles, or appropriate internal controls and procedures, designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audits of the Company’s consolidated financial statements have been carried out in accordance with generally accepted auditing standards, that the consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles or that the Company’s Independent Accountants are in fact “independent.”
Based upon the reviews and discussions described above, and subject to the limitations on the role and responsibilities of the Audit Committee referred to in this report and in the Audit Committee Charter, the Audit Committee recommended to the Board that the audited consolidated financial statements audited by Gumbiner Savett Inc. for the fiscal year ended December 31, 2015 be included in the Company’s Annual Report on Form 10-K for such fiscal year.the year ended December 31, 2017.
Audit Committee of the Board
Matthew Pfeffer
Gregg Williams
William J. Link, Ph.D.
Aaron Mendelsohn
PROPOSAL 34 — RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has reappointed Gumbiner Savett Inc. as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2016.2018. Gumbiner Savett Inc. has served as our independent registered public accounting firm since 2014.
Stockholder ratification of the selection of Gumbiner Savett Inc. as our independent registered public accounting firm is not required by our Bylaws or the California Corporations Code.otherwise. The Board seeks such ratification as a matter of good corporate practice. Should the stockholders fail to ratify the selection of Gumbiner Savett Inc. as our independent registered public accounting firm, the Board will reconsider whether to retain that firm for fiscal year 2016.2018. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
Principal Accounting Fees and Services
The following table represents aggregate fees billed to the Company for fiscal years ended December 31, 20152017 and 20142016 by Gumbiner Savett Inc.:
| December 31, | December 31, | |||||||||||||||
| 2015 | 2014 | 2017 | 2016 | |||||||||||||
| Audit Fees(1) | $ | 97,500 | $ | 165,000 | $ | 117,500 | $ | 124,716 | ||||||||
| Audit Related Fees(2) | — | — | — | — | ||||||||||||
| Tax Fees(3) | — | — | — | — | ||||||||||||
| All Other Fees(4) | 5,400 | 94,356 | 42,024 | 19,507 | ||||||||||||
| Total Fees | $ | 102,900 | $ | 259,356 | $ | 159,524 | $ | 144,223 | ||||||||
| 1. | “Audit Fees”are the aggregate fees of Gumbiner Savett Inc. attributable to professional services rendered to us for the audit of our annual financial statements and review of quarterly financial |
| 2. | “Audit-Related Fees”consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” Gumbiner Savett Inc. has not billed us for any Audit-Related Fees for each of the last two fiscal years. |
| 3. | “Tax Fees”consist of fees billed for services |
| 4. | “All Other Fees”consist of fees billed for services other than the services reported in Audit Fees, Audit-Related Fees, and Tax Fees. In |
Pre-Approval Policies and Procedures
The Audit Committee is required to review and approve in advance the retention of the independent auditors for the performance of all audit and lawfully permitted non-audit services and the fees for such services. The Audit Committee may delegate to one or more of its members the authority to grant pre-approvals for the performance of non-audit services, and any such Audit Committee member who pre-approves a non-audit service must report the pre-approval to the full Audit Committee at its next scheduled meeting. To date no such non-audit services have been requested of or performed by Gumbiner Savett, Inc.
Gumbiner Savett Inc. Representatives at Annual Meeting
We expect that representatives of Gumbiner Savett Inc. will not be present at the Annual Meeting.
Vote Required and Recommendation
The affirmative vote of a majority of the votes cast on this matter is required for the ratification of the appointment of Gumbiner Savett Inc. as our independent registered public accounting firm. Abstentions and broker non-votes, if any, will not be counted as votes cast.
The Board recommends that stockholders vote “FOR” ratification of the appointment of Gumbiner Savett Inc. as our independent registered public accounting firm for the fiscal year ending December 31, 20162018 as described in this Proposal 3.4.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation Discussion
Overview
The Compensation Committee of the Board of Directors administers our executive compensation and benefit programs. The Compensation Committee is comprised exclusively of independent directors and oversees all compensation and benefit programs and actions that affect our executive officers.
Compensation Process and Role of Management
The Compensation Committee is responsible for determining and approving all compensation for our executive officers. Pursuant to its charter, the Compensation Committee recommends to the full Board the salary, annual incentive compensation or bonus, long-term incentive compensation in the form of stock options or restricted stock grants,units, and all other employment, severance and change-in-control agreements applicable to executive officers. Our Chief Executive Officer assists the Compensation Committee in its deliberations with respect to the compensation payable to our other executive officers, and typically recommends specific compensation packages for our executive officers based upon his assessment and evaluation of their performance.
Following the end of each fiscal year, our Chief Executive Officer evaluates executive officer performance for the prior fiscal year, other than his own performance, and discusses the results of such evaluations with the Compensation Committee. The Chief Executive Officer assesses each executive officer’s performance for the prior fiscal year based upon subjective factors concerning such officer’s individual business goals and objectives, and the contributions made by the executive officer to our overall results. The Chief Executive Officer then makes specific recommendations to the Compensation Committee for adjustments to base salary and the grant of a target bonus and/or equity award, if appropriate, as part of the compensation packages for each executive officer, other than himself, for the next fiscal year.
The Compensation Committee reviews the performance of the Chief Executive Officer and determines all compensation for the Chief Executive Officer. The Chief Executive Officer is not present at the time the Compensation Committee reviews his performance and discusses his compensation.
Executive Officers
Robert J. Greenberg, 48, Chairman of the BoardJonathan Will McGuire
Dr. Greenberg has been Chairman of our Board from August 2015. Prior to that, Dr. Greenberg was a founder and served as the President, Chief Executive Officer and Director of Second Sight Medical Products, Inc. since its inception until August 2015. Prior to the formation of Second Sight, Dr. Greenberg worked co-managing the Alfred E. Mann Foundation and since February 2007 he has been chairman of that foundation. From 1997 to 1998, he served as lead reviewer for IDEs and 510(k)s at the Office of Device Evaluation at the US Food and Drug Administration in the Neurological Devices Division. In 1998, he received his medical degree from The Johns Hopkins School of Medicine. From 1991 to 1997, Dr. Greenberg conducted pre-clinical trials demonstrating the feasibility of retinal electrical stimulation in patients with retinitis pigmentosa. This work was done at the Wilmer Eye Institute at Johns Hopkins in Baltimore and led to the granting of his Ph.D. from the Johns Hopkins Department of Biomedical Engineering. His undergraduate degree was in Electrical Engineering and Biomedical Engineering from Duke University. Dr. Greenberg currently is also the chairman of the Board of Directors of the Southern California Biomedical Council and the Alfred Mann Foundations. In addition he is a member of the board of directors of Pulse Biosciences, a development stage medical device company .
Will McGuire, 53, President, Chief Executive Officer and Director
Mr. McGuire, 55, has beenserved as our President and Chief Executive Officer since August 2015.Prior to that, Mr. McGuire workedserved at Volcano Corporation, where he was President of Americas Commercial since 2014 and prior to that, Senior Vice President and General Manager of Coronary Imaging, Systems and Program Management since 2013. Volcano, a global leader in intravascular imaging for coronary and peripheral applications and physiology, was acquired by Royal Philips in February 2015. Prior to joining Volcano, Mr. McGuire served as Vice President and General Manager of Patient Monitoring at Covidien. He previously served as President and Chief Executive Officer of AtheroMed, Inc., a venture capital-backed peripheral atherectomy company, prior to which he was Chief Operating Officer at Spectranetics Corporation, a publicly-traded medical device company. In addition, Mr. McGuire held various positions at Guidant Corporation from 1998 to 2005 including General Manager of Guidant Latin America; Director of U.S. Marketing for Vascular Intervention (VI); Director of Global Marketing for VI; and, Production Manager for Coronary Stents. Prior to 1998, Mr. McGuire held positions in Finance and Production at IVAC Medical Systems. A graduate of the Georgia Institute of Technology, Mr. McGuire received his M.B.A. from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.
Tom Miller, 60, Chief Financial OfficerJohn T. Blake
Mr. MillerBlake, 41, has beenserved as our Chief Financial Officer since May 2014. From 2000March 2018. Prior to 2014 he was Chief Financial Officer of Ixia, a public company engaged in the designthat Mr. Blake served as Senior Vice President, Finance from February 2017 to March 2018, Vice President, Finance from October 2015 to February 2017 and manufacture of network test and monitoring products for the telecommunications industry. From 1997 to 1999 he was theSenior Director of Finance and Controller from March 2015 to October 2015 at aTyr Pharma, a publicly-traded biotechnology company. Mr. Blake served as the Director, Financial Planning and Analysis of CoCensys,Volcano Corporation, a public biotechnologypublicly-traded medical device company, engaged infrom March 2010 to March 2015 and as the discovery and development of new drugsSEC Reporting Manager from November 2008 to treat neurological and psychiatric disorders.March 2010. Mr. Miller receivedBlake is a MastersCertified Public Accountant, holds a Bachelor of Business Administration from National University and is a Beta Gamma Sigma scholar at Marshall School of Business at the University of Southern CaliforniaCalifornia. Mr. Blake also completed leadership executive education at Harvard Business School and a Bachelorthe Strategic Financial Leadership Program at Stanford Graduate School of Arts, Economics from the University of California, Berkeley.
Gregoire Cosendai, 44, Vice President of European Operations
Mr. Cosendai was our Director of European Operations from 2008 to 2010 and has since 2010 been our Vice President of European Operations. Between 2005 and 2008 he acted as a consultant for Second Sight. From 2001 to 2008 he was director of business development for the Alfred E. Mann Foundation. From 1995 to 2001 he was clinical engineer at the ENT clinic at the Geneva Hospital. Mr. Cosendai received a Ph.D. from EPFL Lausanne on developing new speech coding strategies for cochlear implants and a Master of Electrical Engineering (Ing. dipl. EPFL elec.) from EPFL Lausanne.Business.
Edward Randolph 58, Vice President of Manufacturing
Mr. Randolph, 60, has beenserved as our Vice President of Manufacturing since 2007. From 2003 to 2007, Mr. Randolph was Director of Manufacturing Engineering at Boston Scientific Corp., a worldwide manufacturer of medical devices and products. From 2001 to 2003, Mr. Randolph was a Director of Manufacturing Engineering at Cygnus, Inc., manufacturer of non-invasive transdermal drug delivery systems. Mr. Randolph received his Master of Science in Engineering from Stanford University and his Bachelor of Science in Architecture from Massachusetts Institute of Technology.
Stephen Okland 52, Commercial Vice President, U.S. and Canada
Mr. Okland, 54, has beenserved as our Commercial Vice President, U.S. and Canada since March 2016. Prior to that Mr. Okland was withSanford Rose Associates – Okland Group, Inc., where he served as President and specialized in commercial executive talent acquisition for early stage to mid-cap size companies in the medical device space. Previously, he served as Vice President, Worldwide Marketing and Sales, at Miramar Labs, Inc., a company that develops, manufactures, and distributes medical devices to treat dermatologic medical conditions, where he led all commercialization activities. At Medivance, Inc., Mr. Okland served as Vice President, Worldwide Marketing and U.S. Sales and directed the turnaround of all commercialization activities resulting in a $250 million acquisition by Bard Medical. At Spectranetics, Inc., as Vice President, U.S. Sales and Marketing, he directed all U.S. sales and marketing operations during a period when the company was named to Fortune’s 100 Fastest Growing Companies three years in a row. Mr. Okland also served as Chief Operating Officer of a medical device start-up company, directing and managing sales, marketing, R&D and manufacturing operations. He held positions of increasing responsibility during 12 years at Boston Scientific Corporation and at Johnson & Johnson Medical, Inc., where he began his career. He earned a Bachelor of Science degree from the University of Wisconsin and a Masters of Business Administration from Texas Christian University.
David Jacques
Mr. Jacques, 55, has served as our Vice President – Research & Development since March 2017. From 2012 through 2016 he was a principal of DMJ Consulting, LLC, a management consulting firm, where his clients included various high tech companies including Second Sight Medical Products, Inc. His duties and responsibilities included analyzing existing and leading edge technologies, aiding in assembly of world class engineering teams, working with management to devise innovative systems and continuous improvement of enterprise systems, and managing multiple complex projects. From 2012 to 2014 Mr. Jacques also was founder and Chief Technology Officer of AcuteTeleCare, LLC, a developer of a next generation, state of the art telemedicine platform to facilitate rapid diagnosis and treatment for patients with acute conditions, such as cerebral stroke. From 2006 to 2012 Mr. Jacques also served as Vice President, Research & Development at Stereotaxis, Inc. where he was the company leader of all engineering teams specializing in organizational evaluation, role identification and structural effectiveness for a high-tech leading edge medical manufacturer. He earned a Bachelor of Science, Electrical Engineering degree from the University of Arizona.
Former Officers
Robert J. Greenberg
Dr. Greenberg, 50, served as Chairman of our Board from August 2015 to March 2018. Prior to that, Dr. Greenberg served as the President, Chief Executive Officer and Director of Second Sight Medical Products, Inc. since its inception until August 2016. Prior to the formation of Second Sight, Dr. Greenberg worked co-managing the Alfred E. Mann Foundation and since February 2007, he has been chairman of that foundation. From 1997 to 1998, he served as lead reviewer for IDEs and 510(k)s at the Office of Device Evaluation at the US Food and Drug Administration in the Neurological Devices Division. In 1998, he received his medical degree from The Johns Hopkins School of Medicine. From 1991 to 1997, Dr. Greenberg conducted pre-clinical trials demonstrating the feasibility of retinal electrical stimulation in patients with retinitis pigmentosa. This work was done at the Wilmer Eye Institute at Johns Hopkins in Baltimore and led to the granting of his Ph.D. from the Johns Hopkins Department of Biomedical Engineering. His undergraduate degree was in Electrical Engineering and Biomedical Engineering from Duke University. Dr. Greenberg resigned from all of positions with the Company, including his position as director, in April 2018.
Thomas B. Miller
Mr. Miller, 61, served as our Chief Financial Officer since May 2014 to March 2018. From 2000 to 2014 he was Chief Financial Officer of Ixia, a public company engaged in the design and manufacture of network test and monitoring products for the telecommunications industry. From 1997 to 1999 he was the Director of Finance and Controller of CoCensys, a public biotechnology company engaged in the discovery and development of new drugs to treat neurological and psychiatric disorders. Mr. Miller received a Master of Business Administration from the University of Southern California and a Bachelor of Arts, Economics from the University of California, Berkeley. Mr. Miller resigned to pursue personal opportunities and ceased to be a full time employee of the Company in March 2018.
Gregoire Cosendai
Mr. Cosendai, 46, served as our Director of European Operations from 2008 to 2010 and has since 2010 been our Vice President of European Operations. Between 2005 and 2008 he acted as a consultant for Second Sight Medical Products, Inc.. From 2001 to 2008 he was director of business development for the Alfred E. Mann Foundation. From 1995 to 2001 he was clinical engineer at the ENT clinic at the Geneva Hospital. Mr. Cosendai received a PhD from EPFL Lausanne on developing new speech coding strategies for cochlear implants and a Master of Electrical Engineering (Ing. dipl. EPFL elec.) from EPFL Lausanne. Mr. Cosendai was released from work in January 2018. Under Swiss notice law he remains on payroll until April 30, 2018.
Summary Compensation Table for 20152017
The following table provides information regarding the compensation of our named executive officers during 2015.2017. As an emerging growth company, we have elected to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act of 1933, as amended, or the Securities Act, which require compensation disclosure for our principal executive officer and the two most highly compensated executive officers other than our principal executive officer. The amounts represented in the “Option Awards” column reflect the stock compensation expense recorded by the Company pursuant to ASC Topic 718 and does not necessarily equate to the income that will ultimately be realized by the named executive officers for such awards. Individuals listed in the table below are sometimes referred to in this report as the “Named Executive Officers” or “NEOs”.
The amounts represented in the “Option Awards” column reflect the aggregate grant date fair value of stock awards and option awards granted, calculated in accordance with ASC Topic 718, disregarding the estimate for forfeitures. The assumptions we used for calculating the grant date fair values are set forth in Note 9 of Notes to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and does not necessarily equate to the income that will ultimately be realized by the NEOs for such awards.
| Salary | Bonus | Option Awards | Other | Total | ||||||||||||||
| Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ||||||||||||
| (1) | (2) | (3) | (4) | |||||||||||||||
| Will McGuire | 2017 | 400,320 | 213,070 | 605,002 | 4,919 | 1,223,311 | ||||||||||||
| Chief Executive Officer(5) | 2016 | 394,000 | 86,680 | 42,154 | 5,451 | 528,285 | ||||||||||||
| Robert J. Greenberg, M.D., Ph.D. | 2017 | 439,178 | 147,820 | 246,154 | 13,596 | 846,748 | ||||||||||||
| Chairman(5) | 2016 | 394,000 | 86,680 | 113,975 | 13,410 | 608,065 | ||||||||||||
| 2015 | 338,821 | 62,411 | 210,000 | 8,572 | 619,804 | |||||||||||||
| Steve Okland | 2017 | 347,375 | — | 212,006 | 56,374 | 615,755 | ||||||||||||
| Commercial Vice President, U.S. and Canada(6) | 2016 | 235,467 | — | 370,500 | 2,108 | 608,075 |
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) | Other ($) | Total ($) | ||||||||||||||||||
| (1) | (2) | (3) | (4) | |||||||||||||||||||||
| Will McGuire, | 2015 | 128,523 | 66,426 | 4,936,300 | 644 | 5,131,893 | ||||||||||||||||||
| Chief Executive Officer (5) | ||||||||||||||||||||||||
| Robert J. Greenberg, M.D., Ph.D. | 2015 | 338,821 | 62,411 | 210,000 | 8,572 | 619,804 | ||||||||||||||||||
| Chairman (5) | 2014 | 343,647 | 33,882 | 2,795,320 | 437,058 | 3,609,907 | ||||||||||||||||||
| 2013 | 336,953 | 49,343 | — | 12,309 | 398,605 | |||||||||||||||||||
| Tom Miller, | 2015 | 225,000 | 41,445 | 86,735 | 4,705 | 357,885 | ||||||||||||||||||
| Chief Financial Officer | 2014 | 130,398 | 13,993 | 728,858 | 1,549 | 874,798 | ||||||||||||||||||
| Brian Mech, former Vice President | 2015 | 91,340 | — | — | 1,809 | 93,149 | ||||||||||||||||||
| Business Development (6) | 2014 | 192,114 | 15,440 | 389,902 | 4,554 | 602,010 | ||||||||||||||||||
| 2013 | 190,757 | 28,249 | — | 3,767 | 222,773 | |||||||||||||||||||
| Anthony Moses, former | 2015 | 150,804 | — | 978,000 | 51,109 | 1,179,913 | ||||||||||||||||||
| Commercial Vice President the Americas (7) | ||||||||||||||||||||||||
| Anne-Marie Ripley, former Vice | 2015 | 216,604 | 28,618 | 42,000 | 1,880 | 289,102 | ||||||||||||||||||
| President of Clinical and | 2014 | 203,983 | 15,536 | 403,052 | 3,514 | 626,085 | ||||||||||||||||||
| Regulatory (8) | 2013 | 178,645 | 26,397 | — | 3,527 | 208,569 | ||||||||||||||||||
| Edward Randolph, Vice President | 2015 | 192,775 | 26,632 | 42,000 | 3,690 | 265,097 | ||||||||||||||||||
| of Manufacturing | 2014 | 189,734 | 14,458 | 369,728 | 3,860 | 577,780 | ||||||||||||||||||
| 2013 | 187,160 | 15,655 | — | 3,706 | 206,521 | |||||||||||||||||||
| Gregoire Cosendai, Ph.D., Vice | 2015 | 234,150 | — | 42,000 | 13,657 | 289,807 | ||||||||||||||||||
| President of European Operations | 2014 | 205,491 | 15,129 | 319,552 | 13,925 | 554,097 | ||||||||||||||||||
| 2013 | 204,272 | 19,261 | — | 13,633 | 237,166 | |||||||||||||||||||
| Represents the amounts earned and payable as cash bonuses for the indicated year. |
| Represents the aggregate grant date fair value of stock option awards granted during the years shown as measured pursuant to ASC Topic 718 as stock-based compensation in our consolidated financial statements. This calculation does not give effect to any estimate of forfeitures related to service-based vesting but assumes that the executive will perform the requisite service for the award to vest in full. The assumptions we used in valuing equity awards are described in Note |
| Includes contributions to the |
| Effective August 18, | ||
| 6. | Mr. Okland became the Company’s Commercial Vice President, U.S. and Canada in March 2016. |
Executive Officer Employment Agreements
We have no long term employment agreements with any of our executive officers except as noted below and all of our executive officers are at will employees.
We entered into an at-will Executive Employment Agreement as of June 19, 2015 with Will McGuire, our Chief Executive Officer, by which principally we agreed to:
| ● | appoint him Chief Executive Officer and President effective no later than August 18, 2015, |
| ● | make him eligible for annual bonuses at Board discretion, |
| ● | provide him with various benefits including vacation and sick leave, |
| ● | provide life insurance in the amount of $300,000, |
| ● | reimburse reasonable commuting and relocation costs, |
| ● | provide him his annual base salary and targeted bonus if we terminate his employment without cause, or if such employment is terminated as |
A copy of our Executive Employment Agreement with Will McGuire is attached as an exhibit to our Form 8-K filed with the Commission on June 25, 2015 and the description above is qualified in its entirety by reference to that agreement.
We entered into an at-will Executive Employment Agreement as of March 21, 2018 with John T. Blake, our Chief Financial Officer, by which principally we agreed to:
| ● | pay him an annual starting salary of $300,000, |
| ● | grant him upon Board approval an option under our equity incentive plan to purchase 500,000 shares of our common stock, |
| ● | make him eligible for annual bonuses at Board discretion, |
| ● | provide him with various benefits including vacation and sick leave, |
| ● | provide life insurance in the amount of $350,000, |
| ● | reimburse reasonable commuting costs, |
| ● | provide him his annual base salary, targeted cash bonus in effect on date of separation from the company and a prorated portion of his target annual bonus for the portion of the calendar year completed prior to the termination date if we terminate his employment without cause, or if such employment is terminated as a result of a change of control, for a period of 12 months, | |
| ● | reimburse up to $100,000 to a prior employer for certain education expenses repayable on a prorated basis if he fails to stay with the company for at least three years. |
A copy of our Executive Employment Agreement with John T. Blake is attached as an exhibit to our Form 8-K filed with the Commission on March 27, 2018 and the description above is qualified in its entirety by reference to that agreement.
In December 2016 the Board of Directors approved the following executive and management compensation policies:
● Adopted a “double-trigger” change of control severance plan for the company’s then executive Chairman, Chief Executive Officer and officers who report directly to the Chief Executive Officer. The two triggers for payment of severance are (1) a change of control and (2) a “qualifying” termination, which would be termination without cause by a buyer or a voluntary resignation for good reason. A change of control is defined to include (i) an acquisition or merger in which 50% or more of outstanding voting power changes hands, and (ii) a transaction in which the sale of all or substantially all of the company’s assets occurs.
● For the company’s then executive Chairman and Chief Executive Officer, cash severance includes one year of salary continuation, bonus equal to a prorated amount for the year-to-date bonus earned but not yet paid, 100% of target bonus for the cash severance period, and a continuation of health insurance benefits for the severance period. For officers who report directly to the Chief Executive Officer, cash severance includes six months of salary continuation, bonus equal to a prorated amount for the year-to-date bonus earned but not yet paid, 100% of target bonus for the cash severance period, and a continuation of health insurance benefits for the severance period.
These severance provisions relate to company executives and not to the current non-executive Chairmen who is an outside director. All of the option awards and stock awards granted to the Company’s executives include change-in-control arrangements whereby any unvested stock options would vest as a result of change in control.
OUTSTANDING EQUITY AWARDS AT 20152017 FISCAL YEAR-END
The following table sets forth certain information concerning outstanding unexercised, unvested, and/or unearned equity awards that were heldoutstanding as of December 31, 20152017 by our named executive officers. Unless otherwise noted, all awards expire 10 years after the grant date.
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Executive Officer | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price ($) | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested($) | |||||||||||||||||||
| Will McGuire | 08/17/15 | — | 420,000 | (2) | 12.43 | 12/1/15 | 190,000 | (4) | 1,119,100 | |||||||||||||||||
| Robert J. Greenberg, M.D., Ph.D. | 05/01/06 | 8,223 | — | 5.00 | ||||||||||||||||||||||
| 01/01/07 | 30,625 | — | 5.00 | |||||||||||||||||||||||
| 02/01/08 | 23,750 | — | 5.00 | |||||||||||||||||||||||
| 11/01/08 | 150,000 | — | 5.00 | |||||||||||||||||||||||
| 02/01/09 | 33,750 | — | 5.00 | |||||||||||||||||||||||
| 02/01/10 | 103,750 | — | 5.00 | |||||||||||||||||||||||
| 03/01/11 | 41,563 | — | 5.00 | |||||||||||||||||||||||
| 03/01/12 | 29,063 | 9,687 | (1) | 5.00 | ||||||||||||||||||||||
| 01/01/14 | 125,000 | — | (3) | 4.25 | ||||||||||||||||||||||
| 04/01/14 | 11,719 | 35,156 | (1) | 5.00 | ||||||||||||||||||||||
| 09/26/14 | 103,665 | 310,994 | (1) | 9.00 | ||||||||||||||||||||||
| 03/25/15 | — | 31,250 | (1) | 13.09 | ||||||||||||||||||||||
| Tom Miller | 08/01/14 | 43,750 | 131,250 | (1) | 7.00 | |||||||||||||||||||||
| 03/25/15 | — | 12,907 | (1) | 13.09 | ||||||||||||||||||||||
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||
| Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price ($) | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested($) | |||||||||||||||||
| Will McGuire | 1/3/2017 | — | 571,330 | (2) | 1.97 | 8/17/2015 | 106,875 | (3) | 204,131 | |||||||||||||||
| 1/21/2016 | 9,315 | 11,975 | (2) | 4.10 | ||||||||||||||||||||
| 8/17/2015 | 236,250 | 183,750 | (2) | 12.43 | ||||||||||||||||||||
| Robert J. Greenberg, M.D., Ph.D. | 1/3/2017 | — | 256,410 | (2) | 1.97 | |||||||||||||||||||
| 1/21/2016 | 25,184 | 32,379 | (2) | 4.10 | ||||||||||||||||||||
| 3/25/2015 | 15,626 | 15,624 | (1) | 13.09 | ||||||||||||||||||||
| 9/26/2014 | 310,995 | 103,664 | (1) | 9.00 | ||||||||||||||||||||
| 4/1/2014 | 35,157 | 11,718 | (1) | 5.00 | ||||||||||||||||||||
| 3/1/2012 | 38,750 | — | 5.00 | |||||||||||||||||||||
| 3/1/2011 | 41,563 | — | 5.00 | |||||||||||||||||||||
| 2/1/2010 | 103,750 | — | 5.00 | |||||||||||||||||||||
| 2/1/2009 | 33,750 | — | 5.00 | |||||||||||||||||||||
| 11/1/2008 | 150,000 | — | 5.00 | |||||||||||||||||||||
| 2/1/2008 | 23,750 | — | 5.00 | |||||||||||||||||||||
| Stephen Okland | 1/3/2017 | — | 220,840 | (2) | 1.97 | |||||||||||||||||||
| 4/4/2016 | 56,250 | 93,750 | (2) | 5.16 | ||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Executive Officer | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price ($) | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested($) | |||||||||||||||||||
| Gregoire Cosendai | 11/01/08 | 20,000 | — | 5.00 | ||||||||||||||||||||||
| 02/01/09 | 5,081 | — | 5.00 | |||||||||||||||||||||||
| 05/01/09 | 10,000 | — | 5.00 | |||||||||||||||||||||||
| 02/01/10 | 14,475 | — | 5.00 | |||||||||||||||||||||||
| 06/01/10 | 2,125 | — | 5.00 | |||||||||||||||||||||||
| 12/01/10 | 25,000 | — | 5.00 | |||||||||||||||||||||||
| 03/01/11 | 6,650 | — | 5.00 | |||||||||||||||||||||||
| 03/01/12 | 5,813 | 1,937 | (1) | 5.00 | ||||||||||||||||||||||
| 04/01/14 | 2,735 | 8,202 | (1) | 5.00 | ||||||||||||||||||||||
| 09/26/14 | 12,753 | 38,256 | (1) | 9.00 | ||||||||||||||||||||||
| 03/25/15 | — | 6,250 | (1) | 13.09 | ||||||||||||||||||||||
| Edward Randolph | 08/01/07 | 50,000 | — | 5.00 | ||||||||||||||||||||||
| 02/01/08 | 2,290 | — | 5.00 | |||||||||||||||||||||||
| 11/01/08 | 25,000 | — | 5.00 | |||||||||||||||||||||||
| 02/01/09 | 6,750 | — | 5.00 | |||||||||||||||||||||||
| 02/01/10 | 20,750 | — | 5.00 | |||||||||||||||||||||||
| 03/01/11 | 8,313 | — | 5.00 | |||||||||||||||||||||||
| 03/01/12 | 5,813 | 1,937 | (1) | 5.00 | ||||||||||||||||||||||
| 04/01/14 | 2,735 | 8,202 | (1) | 5.00 | ||||||||||||||||||||||
| 09/26/14 | 16,474 | 49,421 | (1) | 9.00 | ||||||||||||||||||||||
| 03/25/15 | — | 6,250 | (1) | 13.09 | ||||||||||||||||||||||
| Anthony Moses | 05/25/15 | — | 150,000 | (2) | 12.73 | |||||||||||||||||||||
| Anne-Marie Ripley | 01/01/07 | 6,125 | — | 5.00 | ||||||||||||||||||||||
| 04/01/08 | 4,750 | — | 5.00 | |||||||||||||||||||||||
| 11/01/08 | 25,000 | — | 5.00 | |||||||||||||||||||||||
| 02/01/09 | 6,750 | — | 5.00 | |||||||||||||||||||||||
| 02/01/10 | 20,750 | — | 5.00 | |||||||||||||||||||||||
| 03/01/11 | 8,313 | — | 5.00 | |||||||||||||||||||||||
| 03/01/12 | 5,813 | 1,937 | (1) | 5.00 | ||||||||||||||||||||||
| 04/01/14 | 3,125 | 9,375 | (1) | 5.00 | ||||||||||||||||||||||
| 09/26/14 | 18,055 | 54,164 | (1) | 9.00 | ||||||||||||||||||||||
| 03/25/15 | — | 6,250 | (1) | 13.09 | ||||||||||||||||||||||
| 1. | Vest in equal annual tranches on the first four anniversary dates of the grant. |
| 2. | Vests over a four year term, with 25% vesting on the one year anniversary date of the grant and thereafter vesting in 12 equal quarterly installments of 6.25%. |
(1)Vests in equal annual tranches on the first four anniversary dates of the grant.
(2) Vests over a 4 year term, with 25% vesting on the one year anniversary date of the grant and thereafter vesting in 12 equal quarterly installments of 6.25%.
(3) Vested 100% on grant.
(4) Vests over a 4 year term, with 25% vesting on the one year anniversary of Mr. McGuire’s employment start date and thereafter vesting in 12 equal installments of 6.25% on the quarterly anniversaries of Mr. McGuire’s start date.
| 3. | Vests over a four year term, with 25% vesting on the one year anniversary of Mr. McGuire’s employment start date and thereafter vesting in 12 equal quarterly installments of 6.25% on the quarterly anniversaries of Mr. McGuire’s start date. |
Equity Compensation Plan Information
We currently maintain equity compensation plans that provide for the issuance of our Common Stockcommon stock to our officers, employees, and certain consultants upon the exercise or vesting of stock options and upon the vesting of restricted stock units. These plans are our:are:
| The |
| The 2011 Equity Incentive Plan (the “2011 Plan”). |
| 2015 Employee Stock Purchase Plan (the “2015 ESPP”). |
| Equity Incentive Plan – Restricted Stock Units (the “RSU Plan”). |
The 2003 Plan and the 2011 Plan and the 2015 ESPP have been approved by our shareholders. The RSU Plan was adopted by our Board on December 1, 2015, in connection with a grant of 190,000 inducement restricted stock units granted to the Will McGuire, the Company’s President and Chief Executive Officer, upon joining the Company. In January 2014, the Company granted a stock option to its current Chairman, who at that time was the Chief Executive Officer, to purchase 125,000 shares of common stock at an exercise price of $4.25 per share, exercisable for a period of three years from the date of grant. The stock option grant was fully vested on the date of issuance and was intended to replace an earlier stock option grant with the same exercise price that had expired in January 2014. The stock option was not granted pursuant to a plan approved by shareholders.
The following table summarizes information about outstanding stock options, restricted stock units, and shares reserved for future issuance as of December 31, 20152017 under the Company’s equity incentive plans described above:
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights(1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | Number of securities to be issued upon exercise of outstanding options, warrants and rights | 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)) | ||||||||||||||||||
| (a) | (b) | (c) | (a) | (b) | (c) | |||||||||||||||||||
| Equity compensation plans approved by security holders: | ||||||||||||||||||||||||
| 2003 Plan (2) | 8,223 | $ | 5.00 | 0 | ||||||||||||||||||||
| 2011 Plan(2) | 3,338,923 | $ | 8.15 | 1,429,064 | 5,675,446 | $ | 4.87 | 2,504,873 | ||||||||||||||||
| 2015 ESPP (3) | 0 | - | 197,531 | — | — | 301,466 | ||||||||||||||||||
| 3,347,146 | $ | 8.14 | 1,626,595 | |||||||||||||||||||||
| 5,675,446 | $ | 4.87 | 2,806,339 | |||||||||||||||||||||
| Equity compensation plans not approved by security holders: | ||||||||||||||||||||||||
| RSU Plan | 190,000 | $ | - | 0 | 83,125 | $ | — | — | ||||||||||||||||
| Other(2) | 125,000 | $ | 4.25 | 0 | ||||||||||||||||||||
| 315,000 | $ | 4.25 | 0 | |||||||||||||||||||||
| Total | 3,662,146 | $ | 8.00 | 1,626,595 | 5,758,571 | $ | 4.87 | 2,806,339 | ||||||||||||||||
| The weighted-average exercise price of outstanding options does not take into account outstanding RSUs since they do not have an exercise price. |
| All such shares are issuable upon the exercise of outstanding stock options. |
| On January 1 of each year, the number of shares authorized and reserved for issuance under the 2015 ESPP automatically increases by the lesser of (i) 100,000 shares; or (ii) a number of shares equal to 1.0% of the Company’s outstanding shares on the last day of our prior fiscal year. On January 1, |
Employment Contracts and Termination of Employment and Change-of-Control Arrangements
We entered into an at-will Executive Employment Agreement as of June 19, 2015 with Will McGuire, our Chief Executive Officer, by which principally we agreed to:
A copy of our Executive Employment Agreement with Will McGuire is attached as an exhibit to our Form 8-K filed with the Commission on June 25, 2015 and the description above is qualified in its entirety by reference to that agreement.
All of our executive officers are at will employees. All of the option awards and stock awards granted to the Company’s executives include change-in-control arrangements whereby any unvested stock options would vest as a result of change in control.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows information known to us about beneficial ownership of our common stock by:
| ● | each of our directors; |
| ● | each of our current named executive officers as well as any additional individuals identified as named executive officers in the section of this report titled “Executive Compensation”; |
| ● | all of our directors and executive officers as a group; and |
| ● | each person known by us to beneficially own 5% or more of our common stock. |
The column entitled “Percentage Beneficially Owned” is based on a total of36,019,086 59,875,717 shares of our common stock outstanding as of March 31, 2016.2018.
Beneficial ownership and percentage ownership are determined in accordance with the rules of the SEC. Under these rules, beneficial ownership generally includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares that an individual or entity has the right to acquire beneficial ownership of within 60 days of March 31, 20162018 through the exercise of any option, warrant, conversion privilege or similar right. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of our common stock that could be issued upon the exercise of outstanding options and warrants that are exercisable within 60 days of March 31, 20162018 are considered to be outstanding. These shares, however, are not considered outstanding as of March 31, 20162018 when computing the percentage ownership of each other person.
| Name of Beneficial Owner | Number of Shares | Percentage | ||||||
| Greater than 5% Stockholders | ||||||||
| Alfred E. Mann Living Trust(1) 12744 San Fernando Road Sylmar, California 91432 | 11,310,258 | 31.1 | % | |||||
| Directors and Executive Officers: | ||||||||
| Gregg Williams(2) | 6,270,540 | 17.2 | % | |||||
| William J. Link(3) | 4,498,414 | 12.5 | % | |||||
| Aaron Mendelsohn(4) | 978,725 | 2.7 | % | |||||
| Robert J. Greenberg, M.D., Ph.D.(5) | 855,015 | 2.3 | % | |||||
| Edward Randolph(6) | 144,359 | * | ||||||
| Gregoire Cosendai, Ph.D.(7) | 112,620 | * | ||||||
| Anne-Marie Ripley(8) | 98,681 | * | ||||||
| Brian Mech, Ph.D.(9) | 64,426 | * | ||||||
| Tom Miller(10) | 46,977 | * | ||||||
| Will McGuire | — | * | ||||||
| All current directors and executive officers as a group (10 persons)(11) | 13,069,757 | 34.7 | % | |||||
| Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage Beneficially Owned | ||||
| Gregg Williams(1) | 26,285,293 | 39.4 | % | |||
| William J. Link(2) | 4,573,643 | 7.6 | % | |||
| Robert J. Greenberg, M.D., Ph.D.(3) | 1,034,540 | 1.7 | % | |||
| Jonathan Will McGuire(4) | 586,934 | 1.0 | % | |||
| Edward Randolph(5) | 187,350 | * | ||||
| Steve Okland(6) | 167,654 | * | ||||
| Aaron Mendelsohn(7) | 104,365 | * | ||||
| Matthew Pfeffer(8) | 88,350 | * | ||||
| David Jacques(9) | 37,500 | * | ||||
| All current directors and executive officers as a group (9 persons)(10) | 33,065,629 | 48.3 | % |
* Represents beneficial ownership of less than one percent.
| * | Represents beneficial ownership of less than one percent. |
| 1. |
| Includes (i) 4,358,082 shares held by the Sam Williams Family Investments LLC, |
| Includes 4,370,964 shares held by Versant Venture Capital II, L.P.(“VVC”) |
| Includes |
| Includes |
| 5. | Includes 187,328 shares subject to options held by Mr. Randolph which are exercisable or become exercisable within 60 days of March 31, |
| Includes |
| Includes |
| 8. | Includes 5,582 shares of common stock issuable to Mr. Pfeffer upon exercise of warrants. |
| 9. | Includes |
| Includes all of the shares described in notes |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Office Lease
We lease our office and laboratory space in Sylmar, California under an operating lease originally entered into with Mann Biomedical Park, LLC, an entity affiliated with Alfred Mann, one of our co-founders and former member of our Board. We entered into the lease of our Sylmar facility effective February 2012, for a term of five years that was to expire on February 28, 2017. This lease included rental of additional space commencing January 1, 2013 and we obtained a five year option to renew. The lease required us to pay real estate taxes, insurance and common area maintenance each year, and was subject to periodic cost of living adjustments. In April 2014, we entered into a new lease with the term ending on February 28, 2022. The new lease provides us with a five year option to renew, requires us to pay real estate taxes, insurance and common area maintenance each year and includes automatic increases each year. In November 2014, the property of which are premises are a part was sold to non-affiliated third party. See Note 13 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. In the opinion of management the terms of this lease are no less favorable than those that might be obtained from an unaffiliated third party.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINATIONSAND STOCKHOLDER PROPOSALS
Stockholder proposals submitted to us pursuant to Rule 14a-8 promulgated under the Exchange Act for inclusion in our Proxy StatementOur principal office and form of proxy for our 2017 Annual Meeting of stockholders must be received by us no later than December 19, 2016, which is 120 calendar days before the one-year anniversary of the date on which the Company first mailed this Proxy Statement, and must comply with the requirements of the proxy rules promulgated by the SEC. Stockholder proposals should be addressed to our Corporate Secretaryfacilities are located at 12744 San Fernando Road, Suite 400, Sylmar, California 91342.91342, and consists of approximately 45,351 rentable square feet at a base rent of approximately $36,600 per month. Our lease expires in February 2022 and grants us an option to extend the lease term for an additional 60 months period. We believe that these premises are adequate for our foreseeable needs.
Recommendations from stockholders which are received afterOur European office is located on the deadline likely will not be considered timelyInnovation Park at EPFL, Rue Jean Daniel Colladon, CH 1015 Lausanne. The lease consists of 180 square meters at a base rent of 8,200 CHF per month, or currently about $8,700 per month. Our lease is currently monthly with a six month notice required for consideration bytermination, with the CommitteeFoundation for next year’s Annual Meeting.the Innovation Park at EPFL.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF
STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING
For any stockholder proposal, to be considered for inclusion in our proxy statement and form of proxy for submission to the stockholders at our 2019 annual meeting, it must be submitted in writing and comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934. Such proposals must be received by the Company at its offices at 12744 San Fernando Road, Suite 400, Sylmar, California 91342 on or before December 14, 2018. Our Board will review any proposals from eligible stockholders that it receives by that date and will make a determination whether any such proposals will be included in our proxy materials. Any proposal received after that date shall be considered untimely and shall not be made a part of our proxy materials.
A stockholder who wishes to make a proposal at the next annual meeting without including the proposal in our proxy statement must also notify us within a reasonable time before we print and mail the proxy materials. If a stockholder fails to give reasonable advance notice, then the persons named as proxies in the proxies solicited by us for the next annual meeting will have discretionary authority to vote on the proposal.
The Board does not intend to bring any other matters before the Annual Meeting and has no reason to believe any other matters will be presented. If other matters properly do come before the Annual Meeting, however, it is the intention of the persons named as proxy agents in the enclosed proxy card to vote on such matters as recommended by the Board, of if no recommendation is given, in their own discretion.
The Company’s Annual Report on Form 10-K for the year ended December 31, 20152017 is being mailed with this Proxy Statement to stockholders entitled to notice of the Annual Meeting. The Annual Report includes the financial statements and management’s discussion and analysis of financial condition and results of operations. The costs of preparing, assembling, mailing and soliciting the proxies will be borne by us. Proxies may be solicited, without extra compensation, by our officers and employees by mail, telephone, facsimile, personal interviews and other methods of communication.
If you and other residents at your mailing address own shares in street name, your broker or bank may have sent you a notice that your household will receive only one copy of proxy materials for each company in which you hold shares through that broker or bank. This practice of sending only one copy of proxy materials is known as householding. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. If the foregoing procedures apply to you, your broker has sent one copy of our Proxy Statement to your address. If you want to receive separate copies of the proxy materials in the future, or you are receiving multiple copies and would like to receive only one copy per household, you should contact your stockbroker, bank or other nominee record holder, or you may contact us at the address or telephone number below. In any event, if you did not receive an individual copy of this Proxy Statement, we will send a copy to you if you address your written request to, or call, Tom Miller,John T. Blake, Chief Financial Officer and Corporate Secretary of Second Sight Medical Products, Inc, 12744 San Fernando Road, Suite 400, Sylmar, California 91342, telephone number (818) 833-5000.
Copies of the documents referred to above that appear on our website are also available upon request by any stockholder addressed to our Corporate Secretary, Second Sight Medical Products, Inc,Inc., 12744 San Fernando Road, Suite 400, Sylmar, California 91342.
SECOND SIGHT MEDICAL PRODUCTS, INC.
2011 EQUITY INCENTIVE PLAN
Originally Effective June 1, 2011, and as Amended through [May 10, 2016]
1. PURPOSE. The Board of Directors of the Company has established and approved the Second Sight Medical Products, Inc. 2011 Equity Incentive Plan (the “Plan”). The purposes of the Plan are to encourage the officers and employees of the Company to have a proprietary and vested interest in the growth and performance of the Company and to generate an increased incentive to contribute to the Company's future success and prosperity, thus enhancing the value of the Company for the benefit of its equity owners.
2. DEFINITIONS. As used in this Plan, the following terms shall have the meanings set forth below:
a. “Award” shall mean a grant of an Option or a RSU under the Plan.
b. “Award Agreement” shall mean a written agreement evidencing any Award granted by the Company hereunder and signed by both the Company and the Participant.
c. “Change in Control” shall mean, subject to Section 6(k), the occurrence of any of the following:
i. The acquisition, directly or indirectly, in one transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company; provided, however, that a Change in Control shall not result upon such acquisition of beneficial ownership if such acquisition occurs as a result of a public offering of the Company’s securities or any financing transaction or series of financing transactions;
ii. The consummation of a merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold as a result of holding Company securities prior to such transaction, in the aggregate, securities possessing at least fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity immediately after such merger or consolidation;
iii. A reverse merger in which the Company is the surviving entity but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger; or
iv. The sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing at least fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s).
d. “Committee” shall mean the Directors.
e. “Company” shall mean Second Sight Medical Products, Inc., a California corporation.
f. “Directors” shall mean the board of directors of the Company as the same may be constituted from time to time.
g. “Eligible Person” shall mean any employee of the Company, any employee of any other entity that is a controlled subsidiary of the Company, and any manager or officer thereof. An entity shall be considered a controlled subsidiary of the Company if the Company owns more than fifty percent (50%) of its outstanding equity securities and has more than a fifty percent (50%) voting interest.
h. “Executive Employees” shall mean the President, each head of a functional portion of the Company, including each Vice President of the Company.
i. “Fair Market Value” shall mean the amount determined under Section 5(h) hereof.
j. “Option” shall mean any right granted to a Participant hereunder to purchase Shares of the Company.
k. “Participant” shall mean an Eligible Person who is selected by the Committee to receive an Award under the Plan.
l. “RSU” shall mean a bookkeeping entry representing the equivalent of one Share granted to a Participant hereunder that may be settled, subject to the terms and conditions of the applicable Award Agreement, in Shares, cash, or a combination thereof.
m. “Share” shall mean a share of the common stock of the Company.
3. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall have full power and authority to do all things necessary or desirable in connection with the administration of this Plan, including, without limitation, the following:
a. select those Eligible Persons to whom Awards may from time to time be granted hereunder;
b. determine the option price of each Option to be granted to a Participant hereunder;
c. determine the number of Shares of the Company to be covered by each Award granted hereunder;
d. determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder;
e. interpret and administer the Plan and any instrument or agreement entered into under the Plan;
f. establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and
g. make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.
All decisions and determinations of the Committee shall be by majority vote of its members and shall be set forth in writing. Each such writing shall hereinafter be referred to as a “Committee Action.” All such Committee Actions shall promptly be submitted to the Secretary of the Company who, upon receipt, shall place a copy of same in a record book maintained by the Secretary for that purpose and which shall be available for examination by the Directors at any time and from time to time. All Committee Actions that are within the scope of the Committee’s authority hereunder shall be deemed final, conclusive, and binding upon all persons including the Company, any Participant, and any Eligible Person of the Company or of any affiliate of the Company. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings.
4. LIABILITY. No members of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on such member’s part, including but not limited to the exercise of any power or discretion given to such member under the Plan, except those resulting from such member’s willful misconduct.
5. DURATION OF, AND SHARES SUBJECT TO, THE PLAN.
a. TERM. No Awards shall be granted under this Plan after May 31, 2021; provided, however, that Awards may be exercised or may vest in accordance with their terms after May 31, 2021 with respect to Awards granted prior to such date.
b. SHARES SUBJECT TO THE PLAN. The maximum number of Shares with respect to which Awards may be granted under the Plan, subject to adjustment as provided in Section 5(d) of this Plan, is 7,500,000 Shares (which takes into account 3,500,000 Shares reserved as of the original effective date, 500,000 Shares added in 2012, 2,000,000 Shares added in 2015, and 1,500,000 Shares added as of [May 10, 2016]). Said maximum shall be inclusive of, and offset and reduced by, any Awards granted under any other employee stock incentive plan maintained by the Company; provided, however, that to the extent that any awards granted under any prior plan are converted into Awards granted under this Plan, the awards that are so terminated under the prior plan and converted to new Awards granted under this Plan shall, in determining the maximum number of Awards that may be issued under this Plan, be disregarded.
c. SECTION 162(m) LIMITATION. No employee of the Company or an affiliate of the Company shall be eligible to be granted Options covering more than 1,000,000 Shares during any calendar year.
d. ADJUSTMENTS. In the event of any merger, reorganization, consolidation, recapitalization, Share split, reverse Share split, or similar transaction or other change in legal structure affecting the Shares, such adjustments and other substitutions shall be made to the Plan and to outstanding Awards as the Committee in its sole discretion deems equitable or appropriate, including without limitation such adjustments in (i) the aggregate number, class, and kind of Shares which may be delivered under the Plan, in the aggregate or to any one Participant and (ii) the number, class, and kind of Shares subject to outstanding Awards and option price of Options granted under the Plan.
e. ELIGIBILITY. Any Eligible Person shall be eligible to be selected as a Participant, except that no member of the Committee shall participate in his or her own selection as a Participant or in the grant of any Awards to him or her.
f. GRANT OF OPTIONS. From time to time the Committee may grant Options to Participants based on such criteria as may be established from time to time by the Committee. The Options shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve. Any such Award Agreement shall be subject to all of the terms and conditions set forth herein and to such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Committee shall deem desirable and approve from time to time.
i. OPTION PRICE. The purchase price per Share purchasable pursuant to an Award Agreement shall be determined by the Committee in its sole discretion; provided, however, that such option price shall not be less than the Fair Market Value of the Shares on the date of the grant of the Option.
ii. OPTION PERIOD. The term of each Option shall be fixed by the Committee in its sole discretion but shall in no event exceed ten (10) years.
iii. EXERCISABILITY. Options shall be exercisable at such time or times, and based upon such vesting and other conditions, as determined by the Committee from time to time on a case by case basis. The Committee shall have the right at any time, and from time to time, to accelerate the rate of vesting set forth in any issued and outstanding Option or Options.
iv. METHOD OF EXERCISE. Subject to the other provisions of this Plan and the applicable Award Agreement, any Option may be exercised by the Participant in whole or in part at such time or times, and the Participant may make payment of the option price in such form or forms, including, without limitation, payment by delivery of cash, a promissory note or other consideration acceptable to the Committee having a Fair Market Value on the exercise date equal to the total option price, or by any combination of cash and other consideration, as the Committee may specify in the applicable Award Agreement.
g. GRANT OF RSUS. From time to time the Committee may grant RSUs to Participants based on such criteria as may be established from time to time by the Committee. The RSUs shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve. Any such Award Agreement shall be subject to all of the terms and conditions set forth herein and to such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Committee shall deem desirable and approve from time to time.
i. RESTRICTIONS. At the time a grant of RSUs is made, the Committee may, in its sole discretion, (1) establish a restricted period applicable to such RSUs and (2) prescribe restrictions in addition to or other than the expiration of the restricted period, including the achievement of corporate or individual performance goals, which may be applicable to all or any portion of such RSUs. RSUs may not be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the restricted period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such RSUs.
ii. VOTING AND DIVIDEND RIGHTS. A Participant who holds RSUs shall have no rights as a stockholder of the Company (for example, the right to receive dividend payments or distributions attributable to the Shares underlying such RSUs, to direct the voting of the Shares underlying such RSUs, or to receive notice of any meeting of the Company’s stockholders).
iii. CREDITOR’S RIGHTS. A Participant who holds RSUs shall have no rights other than those of a general unsecured creditor of the Company. RSUs represent unfunded and unsecured obligations of the Company, subject to the terms and conditions of the applicable Award Agreement.
iv. SETTLEMENT. Upon the expiration or termination of any restricted period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to RSUs shall lapse, and, unless otherwise provided in the applicable Award Agreement, the RSU shall be settled by (1) the delivery of cash, (2) issuance of a book-entry or direct registration or a certificate evidencing ownership of Shares, free of all such restrictions, or (3) a combination of the foregoing, to the Participant or such Participant’s beneficiary or estate, as the case may be. Neither the Participant, nor the Participant’s beneficiary or estate, shall have any further rights with regard to a RSU once the cash, Shares, or combination thereof represented by such RSU have been delivered.
h. FAIR MARKET VALUE. For all purposes of the Plan and any Award Agreement, Fair Market Value shall mean that amount determined by the Committee from time to time. Such determination shall be based upon the most recent trades in any public market or, if there is no public market for the Shares, then as determined by the Committee, based on such criteria as it deems in its sole discretion to reflect the Fair Market Value, including reliance on a formal appraisal prepared by a qualified and experienced independent third party appraiser.
i. AMENDMENTS AND TERMINATION. The Committee may amend, alter, or discontinue this Plan, but no amendment, alteration, or discontinuation shall be made that would impair the rights of a Participant under an Award theretofore granted, without the Participant’s consent. The Committee may, from time to time amend, modify, or alter the Plan where such amendment, modification or alteration is required to assure that the Plan remains in compliance with the Securities Act of 1933 (the “Act”), the California Corporations Code (the “Code”), and any other then applicable federal or state securities laws. The Committee may amend the terms of any Award Agreement theretofore executed, prospectively or retroactively, but no such amendment shall impair the rights of any Participant without such Participant's written consent.
j. COMPLIANCE WITH SECURITIES LAWS. It is the intention of the Company that the Awards and the Shares thereunder being granted, offered, and sold be exempt from registration under the Act by satisfying the requirements of Rule 504, 506 and/or Rule 701, as promulgated under such Act, and be exempt from qualification under the Code by satisfying the requirements of Section 25102(o) of the Code including all rules and regulations promulgated thereunder. Unless the Company shall register the Shares under the Act, qualify the Shares under the Code, or satisfy the requirements for exemption from qualification and exemption under some other provision of the Code or Act, the aggregate option price of all Options granted within any twelve (12)-month period shall not exceed the greater of $1,000,000 or, alternatively, the amount of Shares that may be issued pursuant to Awards granted within any twelve (12)-month period shall not exceed fifteen percent (15%) of the then issued and outstanding Shares of the Company.
6. GENERAL PROVISIONS.
a. Unless the Committee determines otherwise at the time the Award is granted, no Award, and no Shares subject to Awards which have not been issued or as to which any applicable restriction, performance, or deferral period has not lapsed, may be sold, assigned, transferred, gifted, pledged, hypothecated, or otherwise encumbered, except by will or by the laws of descent and distribution or, for Options, to a revocable living trust of which the Participant is a primary beneficiary; provided that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary to exercise the rights of the Participant with respect to any Option or to receive settlement of RSUs, if applicable, upon the death of the Participant. Each Option shall be exercisable during the Participant’s lifetime only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative. Each Option shall provide that to the extent the Option is exercisable upon the date of a Participant’s termination of employment, it shall continue to be exercisable following the employment termination date for a period of at least six (6) months in the case of termination of employment on account of death or disability and at least thirty (30) days on account of termination of employment for any other reason. Unless the Award Agreement provides otherwise, upon a Participant’s termination of employment, any RSUs held by such Participant that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited.
b. The term of each Option shall be for such period of months or years from the date of its grant as may be determined by the Committee, but in no event longer than as provided herein.
c. No Eligible Person shall have any claim to be granted any Award under the Plan, and there shall be no requirement for uniformity of treatment of Eligible Persons under the Plan.
d. The prospective recipient of any Award under this Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an Award Agreement in such form as the Committee has approved and delivered a fully executed copy thereof to the Company, and otherwise complied with the then applicable terms and conditions.
e. In the case of any involuntary transfer of an Option including, but not limited to, transfers arising from bankruptcy, other insolvency or creditor proceedings, and dissolution of marriage, all rights in and to the Option or portion of the Option so transferred shall, as determined by the Committee on a case by case basis, immediately terminate, become null and void, and of no further force or effect.
f. Except as otherwise required in any applicable Award Agreement or by the terms of this Plan, recipients of Awards under the Plan shall not be required to make any payment or provide consideration for the grant of the Award other than the rendering of services.
g. The Company shall be authorized to withhold the amount of tax withholding required by applicable law on account of, or arising out of, any exercise of the Options and vesting of the RSUs and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. Such withholding may take the form of the Participant tendering to the Company, or the Company withholding, Shares with a value equal to the withholding taxes then due (a “Tender Payment”) or, alternatively, giving up Option rights which are then vested and that have a value (based upon the difference between the then Fair Market Value and the option price of the Shares purchasable under the Option) equal to the withholding taxes then due (an “Option Redemption Payment”). In the case of either a Tender Payment or an Option Redemption Payment, the Company shall be responsible for making payment to the relevant governmental taxing agencies of the cash amount of such withholding.
h. The validity, construction, and effect of this Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of California and applicable federal law.
i. If any provision of this Plan is or becomes or is deemed invalid, illegal, or unenforceable in any jurisdiction to which it is subject, would disqualify the Plan or any Award under any law deemed applicable by the Committee or disqualify the Plan from exemption under Rule 701 of the Act or Code section 25102(o), such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the sole and absolute determination of the Committee, materially altering the intent of the Plan, it shall be stricken, and the remainder of the Plan shall remain in full force and effect.
j. Awards may be granted to Eligible Persons who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Eligible Persons on assignments outside their home country.
k. Notwithstanding anything in this Plan to the contrary, the Plan and Awards granted hereunder are intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance thereunder (“Section 409A”) to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan and Awards granted hereunder will be interpreted and administered to be in compliance with Section 409A. Any adjustments made pursuant to Article 5 to Awards (i) that are considered “deferred compensation” (within the meaning of Section 409A) shall be made in compliance with the requirements of Section 409A and (ii) that are not considered “deferred compensation” subject to Section 409A shall be made in such a manner as to ensure that after such adjustment the Awards either (1) continue not to be subject to Section 409A or (2) comply with the requirements of Section 409A, and in any event, the Committee shall not have the authority to make any adjustments pursuant to Article 5 to the extent the existence of such authority would cause an Award that is not intended to be subject to Section 409A at the time of grant to be subject thereto.
Any payments described in the Plan that are due within the short-term deferral period (within the meaning of Section 409A) will not be treated as “deferred compensation” (within the meaning of Section 409A) unless applicable law requires otherwise. Notwithstanding any provision of the Plan to the contrary, to the extent required to avoid accelerated taxation and tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6)-month period immediately following the Participant’s separation from service (within the meaning of Section 409A) will instead be paid on the first payroll date after the six (6)-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier).
Furthermore, notwithstanding anything in the Plan to the contrary, in the case of an Award that is characterized as “deferred compensation” (within the meaning of Section 409A), and pursuant to which settlement and delivery of the cash or Shares subject to the Award is triggered based on a Change in Control, in no event will a Change in Control be deemed to have occurred for purposes of such settlement and delivery of cash or Shares if the transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder). No provision of this paragraph shall in any way affect the determination of a Change in Control for purposes of vesting in an Award that is characterized as “deferred compensation” within the meaning of Section 409A.
7. EFFECTIVE DATE OF PLAN. The Plan was originally effective June 1, 2011.
8. ISSUANCE OF AWARDS TO NON-EMPLOYEES. The Plan covers the grant of Awards to employees of the Company and other service providers of the Company only. From time to time, the Company may elect to grant Awards to non-employees, including, but not limited to, vendors, suppliers, independent contractors, and lenders, but in each such case only to natural persons, where, in the discretion of the Company, it is determined that such grant is in the best interests of the Company. Any such Awards that shall be granted to non-employees of the Company shall be on such terms and conditions as mutually agreed upon between the Company and the grantee and shall not be covered by, or subject to, the Plan except to the extent that such Award shall make specific reference to the Plan or any specific provision herein.
9. CHANGE IN CONTROL. In order to preserve a Participant’s rights with respect to any outstanding Award in the event of a Change in Control of the Company:
a. Vesting of all outstanding Awards shall accelerate automatically effective as of immediately prior to the consummation of the Change in Control whether or not the Awards are to be assumed by the acquiring or successor entity (or parent or subsidiary thereof) or new awards under a new stock incentive program (“New Incentives”) of comparable value are to be issued in exchange therefore, as provided in Section 9(b) below.
b. If vesting of outstanding Awards will accelerate pursuant to Section 9(a) above, the Committee in its discretion may provide, in connection with the Change in Control transaction, for the purchase or exchange of each such Award for an amount of cash or other property having a value, for Options, equal to the difference (or “spread”) between (i) the value of the cash or other property that the Participant would have received pursuant to the Change in Control transaction in exchange for the Shares issuable upon exercise of the Option had such Option been exercised immediately prior to the Change in Control, and (ii) the option price of the Option, or having a value, for RSUs, equal to the value of the cash or other property that the Participant would have received pursuant to the Change in Control transaction in exchange for the Shares issuable upon vesting of the RSUs had such RSU been vested immediately prior to the Change in Control.
c. Notwithstanding Section 9(a)-(b) above, the Committee shall have the discretion to provide in each Award Agreement other terms and conditions that relate to (i) vesting of the Award in the event of a Change in Control and (ii) assumption of such Award or issuance of comparable securities or New Incentives in the event of a Change in Control. The aforementioned terms and conditions may vary in each Award Agreement and may be different from and have precedence over the provisions set forth in Section 9(a)-(b) above.
d. Outstanding Awards shall terminate and cease to be exercisable upon consummation of a Change in Control except to the extent that the Awards are assumed by the successor entity (or parent or subsidiary thereof) pursuant to the terms of the Change in Control transaction.
e. If outstanding Options will not be assumed by the acquiring or successor entity (or parent or subsidiary thereof), the Committee shall cause written notice of a proposed Change in Control transaction to be given to Participants not less than fifteen (15) days prior to the anticipated effective date of the proposed transaction.
10. REPRICING. The Company may, at any time in its discretion, (i) amend the terms of outstanding Options to reduce the option price; (ii) cancel outstanding Options in exchange for or substitution of Options with an option price that is less than the option price of the original Options; or (iii) cancel outstanding Options with an option price above the current Fair Market Value in exchange for cash or other securities.
IN WITNESS WHEREOF, the Company has duly executed this Plan, as amended, on this _____ day of April, 2016.
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| CONTROL # | |
| * SPECIMEN * 1 MAIN STREET ANYWHERE PA 99999-9999 | VOTE BY MAIL Mark, sign and date your proxy card and |
VOTE IN PERSON If you would like to vote in person, please | |
Please Vote, Sign, Date and Return Promptly in the Enclosed Envelope.
Annual Meeting Proxy Card - Common Stock
▼ DETACH PROXY CARD HERE TO VOTE BY MAIL ▼
| (1) | Election of Directors: | |||
| ☐ | FOR ALL NOMINEES LISTED BELOW (except as marked to the contrary below) | ☐ | WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW | |
| | ||||
| INSTRUCTION:TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE INDIVIDUAL NOMINEES STRIKE A LINE THROUGH THE NOMINEES’ NAMES BELOW: | ||||
| 1a Will McGuire | 1b William J. Link 1c Gregg Williams | |||
| 1d Aaron Mendelsohn | 1e Matthew Pfeffer | |||
| Second Sight Medical Products, Inc. proxy holders reserve the right to cumulate votes and cast such votes in favor of the election of some or all of the nominees in their sole discretion. If you wish to cumulate your votes, please mark here and write in your instructions on the reverse side.☐ | ||||
| | ||||
| (2) | To approve an amendment to our 2011 Equity Incentive Plan that will increase the maximum number of shares of common stock that may be issued under the Plan to 12 million shares. | |||
| ☐ VOTE FOR ☐ VOTE AGAINST ☐ ABSTAIN | ||||
| (3) | To approve an amendment to the 2015 Employee Stock Purchase Plan that will increase the maximum stated number of shares of common stock which may be issued under the plan to 1,550,000 shares and increase annual evergreen amount to 500,000 shares. | |||
| ☐ VOTE FOR ☐ VOTE AGAINST ☐ ABSTAIN | ||||
| (4) | To ratify the appointment of Gumbiner Savett Inc. as our independent registered public accounting firm for 2018. | |||
| ☐ VOTE FOR ☐ VOTE AGAINST ☐ ABSTAIN | ||||
| Date | Signature | Signature, if held jointly | ||||
| | ||||||
Note: This proxy must be signed exactly as the name appears hereon. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by a duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by an authorized person.
| To change the address on your account, please check the box at right and indicate your new address. | ☐ |
SECOND SIGHT MEDICAL PRODUCTS, INC.
ANNUAL MEETING OF THE STOCKHOLDERS
May 16, 2018
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SECOND SIGHT MEDICAL PRODUCTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Will McGuire, President and Chief Executive Officer, and John T. Blake, Chief Financial Officer, or either of them, with full power of substitution to each of them, as proxies to represent and vote all shares of common stock of Second Sight Medical Products, Inc. (the “Company”), which the undersigned will be entitled to vote if personally present at the Annual Meeting of Stockholders of the Company to be held on May 16, 2018, at 10:00 a.m. at Second Sight Medical Products, Inc. offices, 12744 San Fernando Road, Suite 400, Sylmar, California, USA, 91342 and at any adjournments or postponements thereof. The proxies are further authorized to vote, in their discretion, upon such other business as may properly come before the meeting.
This proxy, when properly executed, will be voted as directed. If no direction is made, the proxy shall be votedFOR the election of the five (5) nominees,FOR approval of an amendment to the 2011 Equity Incentive Plan that will increase the maximum number of shares of common stock that may be issued under the Plan to 12 million shares of common stock,FOR approval of an amendment to the 2015 Employee Stock Purchase Plan that will increase the maximum stated number of shares of common stock which may be issued under the plan to 1,550,000 shares and increase annual evergreen amount to 500,000 shares,FOR ratification of the Company’s independent registered public accounting firm for 2018 and, in the case of other matters that legally come before the meeting, as said proxy(s) may deem advisable.
Please check here if you plan to attend the Annual Meeting of Stockholders on May 16, 2018 at 10:00 AM. ☐
(Continued and to be signed on Reverse Side)
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