On July 16, 2022, the Board approved the following compensation arrangements for Mr. Knight: (i) an annual base salary of $750,000; (ii) a target amount of 150% of such base salary (i.e., $1,125,000) pursuant to the management incentive compensation plan for the Company’s executive officers for the 2022 fiscal year (the “2022 MIP”) pursuant to which such officers and other specified senior level employee participants may be eligible to receive incentive compensation in the form of cash payments based on the level of achievement of specified 2022 performance goals related to cash burn, revenue, and gross margin, with actual award amounts not guaranteed and determined at the discretion of the independent members of the Board or its Compensation Committee, and with the Board retaining sole discretion to modify, change, or terminate the 2022 MIP and having full discretion to modify payout amounts; (iii) an option to acquire 1,000,000 shares of the Company’s common stock (the “Common Stock”) vesting over a four-year period, subject to continued service, with 25% of the shares vesting on the first anniversary of the grant date and the remaining 75% vesting monthly over the following three years, with an exercise price of $2.85 per share (i.e., the closing price for the Common Stock on The New York Stock Exchange on Friday, July 15, 2022); (iv) a Change of Control and Severance Agreement (the “Knight Severance Agreement”) in the same form previously provided to Dr. George in his role as the Company’s Chief Executive Officer providing that (A) upon a change in control, Mr. Knight’s performance-based equity awards will be deemed achieved at target for any unfinished performance period, will convert to time-vesting at target, and will continue to vest in accordance with any service-based vesting condition specified in the award agreement, subject to acceleration upon an involuntary termination within three months prior to or 12 months following the change in control, (B) if Mr. Knight is terminated by the Company without cause or otherwise involuntarily terminated, as such terms are defined in the Knight Severance Agreement, within three months prior to or 12 months following a change in control, he will be entitled to receive (subject to execution and delivery of an effective release of claims) (w) a lump sum cash severance payment equal to 150% of his annual base salary, (x) any earned but unpaid annual bonus, (y) a lump sum cash payment equal to 18 months of COBRA premiums, and (z) acceleration of vesting as to 100% of his then outstanding unvested equity awards subject to time-based vesting, (C) if Mr. Knight is terminated without cause or otherwise involuntarily terminated other than in connection with a change in control, he will be entitled to receive (subject to execution and delivery of an effective release of claims) (x) a lump sum cash payment equal to 150% of his annual base salary, (y) any earned but unpaid annual bonus, and (z) a lump sum payment equal to 18 months of COBRA premiums, and (D) if any portion of Mr. Knight’s severance or other benefits constitute a “parachute payment” under Section 280G of the Internal Revenue Code, and therefore become subject to an excise tax under Section 4999 of the Internal Revenue Code, then Mr. Knight shall receive the better of (x) the full amount of the severance and other benefits under the Knight Severance Agreement or (y) a lesser amount of the severance and other benefits such that no portion of such benefits is subject to an excise tax, in each case on an after-tax basis.
Dr. Scott
Dr. Scott, age 64, is a Co-Founder of the Company and served as its Chairman of the Board and Chief Executive Officer from 2012 to 2017 and its Executive Chairman from 2017 to 2019. Prior to his involvement with the Company, Dr. Scott cofounded Genomic Health, Inc., a genomic-based diagnostic testing company (Nasdaq: GHDX), where he served as the chairman and chief executive officer from 2000 to 2009 and the executive chairman from 2009 to 2012. Dr. Scott serves as a director and as a member of the audit committee of BridgeBio Pharma, Inc. (Nasdaq: BBIO) and as a director, chair of the audit committee and member of the nominating and corporate governance committee of Talis Biomedical Corporation (Nasdaq: TLIS), and he also serves on the boards of directors of and/or as an advisor to several private companies in the life sciences/biotech industry. Dr. Scott holds a B.S. in Chemistry from Emporia State University and a Ph.D. in Biochemistry from the University of Kansas. With respect to Genomic Life, Inc. (focused on accelerating access to affordable and engaging genomics-based, proactive health solutions), one of the private companies for which Dr. Scott serves on the board of directors (including as executive co-chair) and in which he is also a significant stockholder, the Company invested $1,000,000 in the Series B Preferred Stock of such entity as part of a financing in 2021.
On July 16, 2022, the Board approved the following compensation arrangements for Dr. Scott: (i) for his appointment as a Director, (A) a restricted stock unit (“RSU”) grant for 45,325 shares of Common Stock, with one quarter of the RSUs vesting on each of the first four anniversaries of a vesting start date of August 15, 2022, but subject to acceleration in the event of a “Change in Control” (as defined in the Company’s 2015 Stock Incentive Plan), (B) an option to acquire 22,730 shares of Common Stock, with 25% of the shares vesting on the first anniversary of the grant date and the remaining 75% vesting monthly over the following three years, but subject to acceleration in the event of a Change in Control, with an exercise price of $2.85 per share (i.e., the closing price for
