Schedule 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Soliciting Material Pursuant to §240.14a-12 |
Luminex Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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LUMINEX CORPORATION
12212 Technology Boulevard
Austin, Texas 78727
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 20, 2010
Luminex Corporation (the Company) will hold its 2010 annual meeting of stockholders (the
Meeting) on Thursday, May 20, 2010, at 10:00 a.m., local time, at the Hilton Austin Airport
Hotel, 9515 New Airport Drive, Austin, Texas 78719. At the Meeting, stockholders will act on the
following matters:
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election of three persons nominated by the board of directors to serve for
three-year terms as Class I Directors (designated as Proposal 1 in the accompanying
proxy statement); |
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ratification of the appointment by the Companys Audit Committee of Ernst &
Young LLP as the Companys independent registered public accounting firm for fiscal
2010 (designated as Proposal 2 in the accompanying proxy statement); and |
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such other business as may properly come before the Meeting or any adjournment
or postponement thereof. |
The board of directors has fixed the close of business on March 25, 2010 as the record date
for the determination of stockholders entitled to notice of, and to vote at, the Meeting or any
adjournment or postponement thereof. A complete list of such stockholders will be available for
examination at our offices in Austin, Texas, during normal business hours for a period of ten days
prior to the Meeting.
This year, we are pleased to again be using the U.S. Securities and Exchange Commission rule
that allows companies to furnish their proxy materials over the Internet. As a result, we are
mailing to many of our stockholders a notice instead of a paper copy of our proxy statement and our
annual report. The notice contains instructions on how to access those documents over the Internet.
The notice also contains instructions on how each of those stockholders can receive a paper copy of
our proxy materials, including the proxy statement, our 2009 Annual Report and a form of proxy card
or voting instruction card. All stockholders who do not receive a notice will receive a paper copy
of the proxy materials by mail.
Your attention is directed to the proxy statement for a more complete statement regarding the
matters to be acted upon at the Meeting. Our annual report to stockholders is being mailed or made
available to our stockholders along with our proxy solicitation materials, but it is not part of
the proxy solicitation materials. All stockholders are cordially invited to attend the Meeting.
Whether or not you plan to attend the annual meeting, we hope you will vote as soon as possible.
You may vote your shares via a toll-free telephone number or over the Internet. If you received a
paper copy of a proxy or voting instruction card by mail, you may submit your proxy or voting
instruction card for the annual meeting by completing, signing, dating and returning your proxy or
voting instruction card in the pre-addressed envelope provided.
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By Order of the Board of Directors, |
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David S. Reiter |
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Vice President, General |
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Counsel and Corporate Secretary |
Austin, Texas
April 7, 2010
LUMINEX CORPORATION
12212 Technology Boulevard
Austin, Texas 78727
PROXY STATEMENT
For Annual Meeting of Stockholders
To Be Held May 20, 2010
This proxy statement is being furnished to the stockholders of Luminex Corporation (the
Company, Luminex, we or us) in connection with the solicitation by the board of directors
of proxies for use at the 2010 annual meeting of stockholders (the Meeting) to be held at the
time and place and for the purposes set forth in the accompanying notice, and at any and all
adjournments or postponements thereof. This proxy statement and the accompanying proxy card are
being distributed and made available on or about April 7, 2010.
Important Notice Regarding the Availability of Proxy materials for the Stockholder Meeting To
Be Held on May 20, 2010: This proxy statement and our annual report to stockholders are available
at http://phx.corporate-ir.net/phoenix.zhtml?c=79403&p=proxy.
Voting Procedures; General Information
Proposals 1 and 2 will be presented by management at the Meeting. With regard to Proposal 1,
the form of proxy permits votes for or withholding of votes as to all nominees for director or for
withholding votes for any specific nominee, and permits votes for, against, or abstention with
regard to Proposal 2. If the form of proxy is properly executed, returned, and not revoked, it
will be voted in accordance with the specifications, if any, made by the stockholder and, if
specifications are not made, will be voted FOR the election of the nominees named in this proxy
statement to the Companys board of directors, and FOR the ratification of the appointment of Ernst
& Young LLP as the Companys independent registered public accounting firm for fiscal 2010.
If your shares are held by your broker or other nominee, often referred to as in street
name, you will receive a form from your broker seeking instructions as to how your shares should
be voted. If you are a registered stockholder and received a notice of availability of our proxy
materials over the Internet, you may vote by telephone or electronically through the Internet by
following the instructions included in the notice. If you are a registered stockholder and
received paper proxy materials through the mail, you may vote by telephone or electronically
through the Internet by following the instructions included with your proxy card. If your shares
are held in street name, you should contact your broker or nominee to determine whether you will be
able to vote by telephone or electronically. If your shares are held in street name and you do not
issue instructions to your broker, your broker may vote your shares in its discretion on routine
matters, but may not vote your shares on non-routine matters. The ratification of Ernst & Young
LLP as our independent registered public accounting firm for fiscal 2010 (Proposal 2) is deemed a
routine matter. Therefore, your broker has discretionary authority to vote your shares on such
matter absent specific instructions from you. However, the election of directors (Proposal 1) is a
non-routine matter. If your broker turns in a proxy card expressly stating that the broker is not
voting on a non-routine matter (Proposal 1) as a result of your failure to provide specific
instructions, such action is referred to as a broker nonvote and your shares will not be voted on
Proposal 1.
It is not expected that any matter not referred to herein will be presented for action at the
Meeting. If any other matters are properly brought before the Meeting, including, without
limitation, a motion to adjourn the Meeting to another time and/or place for the purpose of, among
other things, permitting dissemination of information regarding material developments relating to
any of the Proposals, or soliciting additional proxies in favor of the approval of any of the
Proposals, the persons named on the accompanying proxy card will vote the shares represented by
such proxy upon such matters in their discretion. Should the Meeting be reconvened, all proxies
will be voted in the same manner as such proxies would have been voted when the Meeting was
originally convened, except for the proxies effectively revoked or withdrawn prior to the time
proxies are voted at such reconvened meeting.
Any stockholder giving a proxy may revoke it at any time before it is voted by communicating
such revocation in writing to our Corporate Secretary at the address indicated above, by executing
and delivering a later-dated proxy or by voting in person at the Meeting.
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Quorum; Required Votes and Recommendations
Our only outstanding voting security is our common stock. Holders of record of common stock
at the close of business on March 25, 2010, the record date for the Meeting, are entitled to notice
of and to vote at the Meeting. On the record date for the Meeting, there were 41,898,495 shares of
common stock outstanding and entitled to vote at the Meeting. In deciding all matters, a holder of
common stock on the record date shall be entitled to cast one vote for each share of common stock
then registered in such holders name or otherwise beneficially owned.
The holders of a majority of the outstanding shares of the Companys common stock as of the
record date must be present in person or be represented by proxy to constitute a quorum and act
upon the proposed business. Failure of a quorum to be represented at the Meeting will necessitate
an adjournment or postponement and will subject the Company to additional expense. Votes withheld
from any nominee for director, abstentions and broker nonvotes are counted as present or
represented for purposes of determining the presence or absence of a quorum.
Proposal 1 discussed in this Proxy Statement requires the affirmative vote of a plurality of
the votes cast at the Meeting. Accordingly, the three nominees receiving the highest number of
affirmative votes of the shares present or represented and entitled to vote at the Meeting shall be
elected as Class I directors. Proposal 2 requires the affirmative vote of the holders of a
majority of the outstanding shares represented at the Meeting and entitled to vote thereon. Votes
will be counted by the Companys transfer agent or our Corporate Secretary. Under Delaware law,
abstentions are not counted as voting for or against a particular matter. However, abstentions
are included in the number of shares present or represented at the Meeting and entitled to vote,
and therefore, abstentions will have the same effect as a vote cast against Proposal 2.
Abstentions and withhold votes will have no effect on the outcome of Proposal 1. Additionally, if
a broker turns in a proxy card expressly stating that the broker is not voting on a nonroutine
matter, such action is referred to as a broker nonvote. Broker nonvotes are counted for the
purpose of determining the presence or absence of a quorum, but are not counted for determining the
number of votes cast, as a broker nonvote is not considered entitled to vote on a matter.
Accordingly, for purposes of Proposal 2, broker nonvotes have the effect of reducing the number of
affirmative votes required to achieve a majority of the shares present and entitled to vote for
such matter by reducing the total number of shares from which such majority is calculated. Broker
nonvotes will have no effect on the outcome of Proposal 1.
The Board of Directors unanimously recommends that you vote:
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FOR the Class I Director nominees named in this proxy statement; and |
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FOR the ratification of the appointment of Ernst & Young LLP as the Companys
independent registered public accounting firm for fiscal 2010. |
CORPORATE GOVERNANCE
We believe that effective corporate governance is critical to our long-term prospects and
ability to create value for our stockholders. Our board of directors believes that we have in
place appropriate charters, policies (including a comprehensive Code of Compliance and corporate
governance guidelines), procedures and controls that promote and enhance corporate governance,
accountability and responsibility with respect to the Company and a culture of honesty and
integrity. We will continue to monitor emerging developments and best practices in corporate
governance and augment these charters, policies, procedures and controls when required or when our
board determines it would benefit the Company and our stockholders. Our corporate governance
policies, including our various board committee charters, can be viewed at the Investor Relations
section of our website at www.luminexcorp.com. Information contained on our website, other than
the electronic version of our proxy statement provided on our website, is not incorporated into
this proxy statement by this or any other reference to our website in this proxy statement, and we
do not intend for such information on or linked to our website to constitute part of this proxy
statement.
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Director Independence
Our board of directors consults with the Companys counsel to ensure that the boards
independence determinations are consistent with all relevant securities and other laws and
regulations regarding the definition of independent director, including but not limited to those
set forth in pertinent listing standards of The NASDAQ Stock Market LLC as in effect from time to
time. To assist in the boards independence determinations, each director completed materials
designed to identify any relationships that could affect the directors independence. In addition,
through discussion among the directors a subjective analysis of independence was reviewed. The
board has determined that each of the following directors is an independent director consistent
with the objective requirements of applicable laws and regulations, and that such persons do not
otherwise have any relationship that, in the opinion of the board of directors, would interfere
with the exercise of such persons independent judgment in carrying out the responsibilities of a
director: Robert J. Cresci; Thomas W. Erickson; Fred C. Goad, Jr.; Jay B. Johnston; Jim D. Kever;
Kevin M. McNamara; Edward A. Ogunro, Ph.D.; and Gerard Vaillant. The board has not established
categorical standards or guidelines to make the subjective aspect of these determinations, but
considers all relevant facts and circumstances known to the board.
Director Qualifications
The Nominating and Corporate Governance Committee may consider whatever factors it deems
appropriate in its assessment of a candidate for board membership; however, candidates nominated to
serve as directors, at a minimum, will in the committees judgment:
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be able to represent the interests of the Company and all of its stockholders and not be
disposed by affiliation or interest to favor any individual, group or class of stockholders
or other constituency; and |
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possess the background and demonstrated ability to contribute to the boards performance
of its collective responsibilities, through senior executive management experience,
relevant professional or academic distinction, and/or a record of relevant civic and
community leadership. |
The consideration of a candidate for director will include the Nominating and Corporate
Governance Committees assessment of the individuals background, skills and abilities, and whether
such characteristics fulfill the needs of the board of directors at that time. As part of the
Nominating and Corporate Governance Committees consideration of a candidate, the committee also
believes that the candidate must:
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be of high ethical character and share the core values of Luminex as reflected in our
Code of Compliance; |
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have a reputation, both personal and professional, consistent with the image and
reputation of Luminex; |
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be highly accomplished in the candidates field; |
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be an active or former chief executive officer of a public company or a biotechnology
company or an active or former leader of another complex organization; |
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otherwise have relevant expertise and experience, and be able to offer advice and
guidance to the chief executive officer based on that expertise and experience; and/or |
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have the ability to exercise sound business judgment. |
The Nominating and Corporate Governance Committees goal is to assemble a board that brings a
variety of perspectives and skills derived from high quality business and professional experience
and which complies with the NASDAQ and Securities and Exchange Commission (SEC) rules. While we
do not have a formal policy on the consideration of diversity in identifying director nominees, our
Nominating and Corporate Governance Committee considers the diversity of the composition of our
board and the skill set, background, reputation, and type and length of business experience of our
board members as well as a particular nominees contributions to that mix.
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Process for Identifying Director Candidates
The Nominating and Corporate Governance Committee may utilize a variety of methods for
identifying nominees for director. Candidates may come to the attention of the Nominating and
Corporate Governance Committee through current board members, professional search firms,
stockholders or other persons. The Nominating and Corporate Governance Committee considers
nominees proposed by the Companys stockholders in accordance with the provisions contained in our
bylaws. Pursuant to our bylaws, any stockholder may nominate a person for election to our board of
directors, provided that the nomination is received by the Corporate Secretary not less than 30
days nor more than 90 days prior to the first anniversary of the preceding years Meeting. Each
nomination submitted in this manner shall include the name and address of the nominee(s) and all
other information with respect to the nominee as required to be disclosed in the proxy statement
for the election of directors under applicable rules of the SEC, including the nominees consent to
being named as a nominee and to serving as a director, if elected.
The nominating stockholder shall also provide a completed written questionnaire with respect
to the background and qualification of each nominee and any other person or entity that each
nominee may represent (which questionnaire shall be provided by the Corporate Secretary) and a
written representation and agreement (in the form provided by the Corporate Secretary) that each
nominee:
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has no undisclosed commitment, agreement or understanding with any person or entity
as to how such nominee will act or vote on any issue or question as a director; |
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is not a party to any undisclosed commitment, agreement or understanding with any
person or entity other than Luminex with respect to compensation, reimbursement or
indemnification in connection with service or action as a director; |
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will comply with any director stock ownership and trading guidelines of Luminex; and |
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in such nominees individual capacity and on behalf of any person or entity for whom
such nominee may be a representative, has complied and will comply with all applicable
corporate governance, conflicts, confidentiality and other policies of Luminex. |
Additionally, the nominating stockholder must provide:
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his or her name and address as it appears in the stock records of Luminex; |
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the number and type of shares of Luminex capital stock beneficially owned by the
stockholder and a description in reasonable detail of any hedging, derivative, swap,
profit interests, option or other transactions or series of transactions engaged in,
directly or indirectly, by such stockholder, or any agreement, arrangement or
understanding (including any short position, or any borrowing or lending of shares) to
which such stockholder is a party, in each case, the effect or intent of which is to
mitigate loss to, manage the risk or benefit of share price changes for, or increase or
decrease the voting power of, such stockholder with respect to shares of capital stock
of Luminex, or otherwise to reduce the economic risk or benefit of ownership of shares
of capital stock of Luminex to such stockholder (including where the value of any
agreement, arrangement or understanding to which such stockholder is a party is
determined by reference to the price or value of shares of Luminex capital stock), and
the agreement of the stockholder to notify Luminex in writing within five business days
after the record date for the meeting of any changes to the above information in effect
as of the record date for the meeting; |
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all contracts, arrangements, understandings and relationships with respect to the
stockholders investment in Luminex, including with other stockholders, potential
investors in Luminex, transaction counterparties, directors or proposed director
nominees and potential transaction advisers such as financial advisers, legal counsel
and proxy solicitation firms, and the agreement of the stockholder to notify Luminex in
writing within five business days after the record date for the meeting of any changes
to the above information in effect as of the record date for the meeting; |
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any material agreement such stockholder may have with any other person or entity in
connection with the nomination, and the agreement of the stockholder to notify Luminex
in writing within five business days after the record date for the meeting of any
changes to the above information in effect as of the record date for the meeting; and |
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a representation as to whether such stockholder intends to deliver a proxy statement
and/or form of proxy to holders of at least the percentage of Luminexs outstanding
shares required to approve the nomination and/or otherwise to solicit proxies from
stockholders in support of the nomination, and as to whether the stockholder intends to
appear in person or by proxy at the meeting to propose such nomination. |
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Our bylaws also provide that certain of the above information also be provided with respect to
certain other persons associated with the nominating stockholder. The foregoing is a summary of
the requirements for stockholders to nominate persons for election to our board of directors, which
requirements are set out fully in our bylaws and the foregoing description is qualified by
reference to the full text of our bylaws.
Evaluation of Director Candidates
The chair of the Nominating and Corporate Governance Committee will preliminarily assess a
candidates qualifications and suitability, working with management support and seeking board
input, and report such assessment to the Nominating and Corporate Governance Committee members.
When feasible, the chair of the Nominating and Corporate Governance Committee will interview
candidates whom the chair believes are likely to meet the criteria for board membership as part of
the preliminary assessment process. The report may be made to the Nominating and Corporate
Governance Committee at a meeting of the committee or informally to each committee member between
meetings.
If it is the consensus of the Nominating and Corporate Governance Committee that a candidate
is likely to meet the criteria for board membership, the chair of the committee will advise the
candidate of the committees preliminary interest. If the candidate expresses sufficient interest,
the committee will arrange interviews of the candidate with one or more members of the committee,
and request such additional information from the candidate as the committee deems appropriate. The
Nominating and Corporate Governance Committee will consider the candidates qualifications,
background, skills and abilities, and whether such characteristics fulfill the needs of the board
at that time, and confer and reach a collective assessment as to the qualifications and suitability
of the candidate for board membership.
If the Nominating and Corporate Governance Committee determines that the candidate is suitable
and meets the criteria for board membership, the candidate will be invited to meet with the senior
management of the Company and other members of the board of directors, both to allow the candidate
to obtain further information about the Company and to give management and the other directors a
basis for input to the Nominating and Corporate Governance Committee regarding the candidate. On
the basis of its assessment, and taking into consideration input from other board members and
senior management, the Nominating and Corporate Governance Committee will formally consider whether
to recommend the candidates nomination for election to the board of directors.
Code of Compliance
We have a Code of Compliance that applies to all of the employees, officers and directors of
the Company and its subsidiaries. The purpose of our Code of Compliance is to provide written
standards that are reasonably designed to deter wrongdoing and to promote honest and ethical
conduct; full, fair, accurate, timely and understandable disclosure in reports and documents that
the Company files with the SEC and other public communications by the Company; compliance with
applicable governmental laws, rules and regulations; prompt internal reporting of violations of the
Code of Compliance; and accountability for adherence to the Code of Compliance. Our Code of
Compliance also includes a formal policy regarding the approval of related party transactions,
which is administered by our Audit Committee. This policy is described more fully below under
Certain Relationships and Related Party Transactions. Each director, officer and employee is
required to read and certify that he or she has read, understands and will comply with the Code of
Compliance.
Under the Sarbanes-Oxley Act of 2002 and the SECs related rules, the Company is required to
disclose whether it has adopted a code of ethics that applies to the Companys principal executive
officer, principal financial officer, principal accounting officer or controller or persons
performing similar functions. The NASDAQ Stock Market LLC rules also require the Company to adopt
a code of conduct applicable to the Companys directors, officers and employees that meets the
SECs definition of code of ethics. Our Code of Compliance meets the SECs definition of code
of ethics. The Companys employees, including our Chief Executive Officer and senior financial
officers, are bound by our Code of Compliance.
A copy of our Code of Compliance can be obtained from the Investor Relations section of our
website at www.luminexcorp.com. We intend to disclose amendments to, or waivers from, the Code of
Compliance (to the extent applicable to our directors, Chief Executive Officer, principal financial
officer, principal accounting officer or persons performing similar functions) on our website.
5
Communications with Members of the Board
Our board of directors has established procedures for the Companys stockholders to
communicate with members of the board of directors. Stockholders may communicate with any of the
Companys directors, including the chairperson of any of the committees of the board of directors
or the presiding director, if any, by writing to a director, care of Corporate Secretary, Luminex
Corporation, 12212 Technology Boulevard, Austin, Texas 78727. Appropriate communications will be
forwarded to such director(s) by the Corporate Secretary. The Corporate Secretary maintains a log
of such communications and transmits such communications to identified director addressee(s) as
soon as practical, unless there are safety or security concerns that mitigate against further
transmission of the communication, as determined by our Corporate Secretary in consultation with
counsel, when necessary. The board of directors or individual directors so addressed are advised of
any communication withheld for safety or security reasons as soon as practical. If multiple
communications are received on a similar topic, the Corporate Secretary may, in his discretion,
forward only representative correspondence.
Communications Regarding Accounting Matters
Communications expressing concerns or complaints relating to accounting matters, internal
disclosure controls or controls over financial reporting, or auditing matters are handled in
accordance with procedures established by the Audit Committee, including, without limitation, a
dedicated hot line and email address. Under those procedures, concerns having to do with
accounting matters, internal disclosure controls or controls over financial reporting, or auditing
matters are presented by the Companys compliance officer to the Audit Committee for consideration
and, if appropriate, corrective action.
Board Member Attendance at Annual Meeting of Stockholders
The Company strongly encourages each member of the board of directors to attend each annual
meeting of stockholders. Accordingly, we expect most, if not all, of the Companys directors to be
in attendance at the Meeting. All of our directors attended the 2009 annual meeting of
stockholders.
Meetings and Committees of the Board of Directors
The board of directors and its committees meet periodically during the year as deemed
appropriate. During 2009, the board of directors met six times. No director attended fewer than
75% of all the 2009 meetings of the board of directors and its committees on which each such
director served.
The board of directors is generally responsible for establishing our broad corporate policies
and reviewing and assessing our corporate objectives and strategies, and other major transactions
and capital commitments. The board of directors currently has five standing committees: the Audit
Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the
Executive Committee and the Development and Strategy Committee. Each of our committees operates
under a charter adopted by our board of directors. It is the policy of the board and each
committee to periodically review its performance and the effectiveness of its charter and policies,
as applicable.
Audit Committee
The Audit Committee, which met seven times in 2009, currently consists of Mr. McNamara, who
serves as Chairman, Mr. Cresci, and Mr. Erickson. The board of directors has determined that each
member of the Audit Committee meets the independence requirements of the applicable rules of The
NASDAQ Stock Market LLC and the SEC and has a basic understanding of finance and accounting and is
able to read and understand fundamental financial statements. The board of directors has further
determined that Mr. McNamara is an audit committee financial expert as such term is defined in
Item 407(d)(5)(ii) of Regulation S-K promulgated by the SEC. The Audit Committees primary duties
and responsibilities are to oversee the Companys accounting and financial reporting processes and
audits of the Companys financial statements; oversee the integrity of the Companys systems of
internal controls regarding finance, accounting and legal compliance, including the oversight of
the Companys internal audit function; oversee the qualifications, independence and performance of
the Companys independent registered public accounting firm; pre-approve all audit and permitted
non-audit services to be performed by such firm; provide an avenue of free and open communication
among the independent registered public accountants, management, internal audit and the board of
directors; and to approve related party transactions. It is the function of the Audit Committee to
help ensure the Companys financial statements accurately reflect the Companys financial position
and results of operations. In addition, the Audit Committee, following its review of the audited
financial statements, is charged with recommending the audited financial statements to the board of
directors for inclusion in the Companys annual reports. Additional information regarding the
purpose and functions of the Audit Committee is set forth in the Report of the Audit Committee
provided below.
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Compensation Committee
The Compensation Committee, which met eleven times in 2009, currently consists of Mr.
Johnston, who serves as Chairman, Mr. Goad, Mr. Kever, and Mr. Vaillant. The board of directors
has determined that each member of the Compensation Committee is a non-employee director as
defined in Rule 16b-3 of the rules promulgated under the Securities Exchange Act of 1934, an
outside director for the purposes of the Internal Revenue Code of 1986, as amended (the Code),
and an independent director as defined by the applicable rules of The NASDAQ Stock Market LLC. The
Compensation Committees function is to establish and apply our compensation policies and
philosophies to assure that the executive officers, directors and other officers and key employees
are compensated in a manner consistent with the compensation policies and objectives adopted by the
Compensation Committee, competitive practice and the requirements of the appropriate regulatory
bodies. The Compensation Committee also administers our equity incentive plans. Additionally, the
Compensation Committee is charged with recommending the Compensation Discussion and Analysis to
the board of directors for inclusion in the Companys proxy statement and incorporated by reference
into the Companys Annual Report on Form 10-K. Additional information regarding the functions
performed by the Compensation Committee and the process undertaken by the Compensation Committee in
the determination of executive compensation is included under Executive and Director
CompensationCompensation Discussion and Analysis.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee, which met five times in 2009, currently
consists of Mr. Cresci, who serves as Chairman, Mr. Goad and Mr. Ogunro. The board of directors
has determined that each member of the Nominating and Corporate Governance Committee is independent
as defined by the applicable rules of The NASDAQ Stock Market LLC. The Nominating and Corporate
Governance Committee provides assistance to the board of directors in identifying and recommending
individuals qualified to serve as directors of the Company, reviews the composition of the board of
directors, periodically evaluates the performance of the board of directors and its committees, and
reviews and recommends corporate governance policies for the Company. In addition, the Nominating
and Corporate Governance Committee recommends our various committee memberships based upon, among
other considerations, a directors available time commitment, background and/or skill set it deems
appropriate to adequately perform the responsibilities of the applicable committee.
Executive Committee
The Executive Committee, which met three times in 2009, currently consists of Mr. Erickson,
who serves as Chairman, Mr. Balthrop and Mr. Loewenbaum. The Executive Committee is authorized to
act on behalf of the board of directors as a whole, to the extent delegated to the committee and
otherwise permitted by law. The Executive Committee primarily meets to discuss Company performance
and strategy. No formal actions on behalf of the board were taken in 2009 by the Executive
Committee.
Strategy and Development Committee
The Strategy and Development Committee, which met four times in 2009, currently consists of
Mr. Balthrop, Mr. Vaillant, Dr. Ogunro and Mr. Johnston. The Strategy and Development Committee
was formed for the purpose of overseeing the Companys technology-related initiatives, including
strategic decisions with respect to existing and new platforms and product offerings, research and
development, and intellectual property issues.
Executive Sessions of Non-employee Directors
Generally, an executive session of non-employee directors is held in conjunction with each
regularly scheduled board meeting and other times as deemed appropriate. The executive sessions
are generally led by Mr. Loewenbaum in his capacity as Chairman of the board. At least two
meetings per year are also held by solely our independent directors, led by the presiding director.
In 2009, our independent directors held four such meetings. The presiding director is the then
chair of the Nominating and Corporate Governance Committee (currently Mr. Cresci), as further
described in our corporate governance guidelines.
7
Board Leadership Structure
Our Chairman of the board position is a non-executive position. Separating the positions of
Chairman of the board and Chief Executive Officer allows our Chief Executive Officer to focus on
our day-to-day business, while allowing the Chairman of the board to lead our board in its
fundamental role of providing advice to and oversight of management. Our board recognizes the time,
effort and energy that the Chief Executive Officer is required to devote to his position in the
current business environment, as well as the commitment required to serve as our Chairman,
particularly as the boards oversight responsibilities continue to grow. Our board believes that
having separate positions, with a non-executive director serving as Chairman, is the appropriate
leadership structure for our Company at this time and demonstrates our commitment to good corporate
governance.
Our Chairman is also a member of the Executive Committee and provides guidance and takes an
active role in evaluating our executive officers and corporate strategies. Our Chairman acts as a
regular liaison between our board and our executive management, consulting regularly with our
executives over business matters and providing our executives with immediate consultation and
advice on material business decisions.
Board Role in Risk Oversight
Risk is inherent with every business. Management is responsible for the day-to-day management
of risks the Company faces, while the board, as a whole and through its committees, has
responsibility for the oversight of risk management. In its risk oversight role, the board of
directors has the responsibility to satisfy itself that the risk management processes designed and
implemented by management are adequate and functioning as designed. Our board of directors oversees
an enterprise-wide approach to risk management, designed to support the achievement of
organizational objectives, including strategic objectives, to improve long-term organizational
performance and enhance stockholder value. A fundamental aspect of risk management is not only
understanding the risks a company faces and what steps management is taking to manage those risks,
but also understanding what level of risk is appropriate for the Company. The involvement of the
full board of directors in setting the Companys business strategy is a key part of its assessment
of managements appetite for risk and also a determination of what constitutes an appropriate level
of risk for the Company.
In 2009 we conducted and in the future we intend to conduct an annual enterprise risk
management assessment, which is facilitated by the Companys management team who collaborates with
the Companys internal audit department. In this process, we assess risk throughout the Company by
conducting surveys and interviews of Company employees and directors soliciting information
regarding business risks that could significantly adversely affect the Company, including the
achievement of its strategic plan. We then identify any controls or initiatives in place to
mitigate any material risk and the effectiveness of any such controls or initiatives. Management
then prepares a report for the board of directors regarding the key identified risks and how the
Company manages these risks to review and analyze both on an annual and ongoing basis. Management
attends board meeting and is available to address any questions or concerns raised by the board
regarding risk management and any other matters. Additionally, the board of directors and its
committees regularly receive presentations from management and key personnel on strategic matters
involving our operations.
While the board of directors has the ultimate oversight responsibility for the risk management
process, various committees of the board assist the board in fulfilling its oversight
responsibilities in certain areas of risk. In particular, the Audit Committee focuses on financial
and enterprise risk exposures, including internal controls, discusses with management and the
independent auditor the Companys policies with respect to risk assessment and risk management.
The Audit Committee and the Nominating and Corporate Governance Committee also focus on the
Companys compliance with applicable laws and regulations, the Companys Code of Compliance, and
related Company policies and procedures. The Compensation Committee assists the board in fulfilling
its oversight responsibilities with respect to the management of risks arising from our
compensation policies and programs. The Nominating and Corporate Governance Committee in
fulfilling its risk oversight responsibility assists the board in fulfilling its duties and
oversight responsibilities relating to the Companys compliance with and implementation of new
corporate governance principles. The Strategy and Development Committee assists the board in
fulfilling its risk oversight responsibility in reviewing the Companys risks associated with
technology-related initiatives, including strategic decisions with respect to existing and new
platforms and product offerings and intellectual property related risks.
8
Scientific Advisory Board
The Scientific Advisory Board (the Advisory Board), which met one time in 2009, was created
in 2005 to, among other responsibilities, provide strategic advice regarding our research and
development efforts and to evaluate and provide new scientific and technological perspectives
relating to the current and future application of our technologies. Our former director, Dr. C.
Thomas Caskey, was the initial member of the Advisory Board, which now also includes Dr. Andrea
Ferreira-Gonzalez, Dr. Thomas Joos, Christine C. Ginocchio and Dr. Gary Procop. Richard Janeczko
also serves on the Advisory Board as a management representative. It is expected that each member
of our Advisory Board will be qualified and experienced in the markets and/or industries in which
our products are or may be utilized and, with the exception of Mr. Janeczko, are neither employees
nor directors of Luminex. Additionally, Luminex may invite members of our board of directors to
serve on the Advisory Board in their capacity as members of our board of directors in order to help
oversee and direct the Advisory Board and help communicate the Advisory Boards conclusions and
recommendations to our board of directors. The Advisory Board operates at the discretion of the
board of directors.
Compensation Committee Interlocks and Insider Participation
During 2009, the Compensation Committee of the board of directors consisted of Mr. Johnston,
who served as Chairman, Mr. Goad, Mr. Kever and Mr. Vaillant, none of whom has ever been an officer
or employee of the Company or its subsidiaries. No interlocking relationship existed during 2009
between any officer, member of our board of directors or the Compensation Committee and any
officer, member of the board of directors or compensation committee of any other company.
PROPOSAL 1 ELECTION OF CLASS I DIRECTORS
The number of directors on our board of directors is currently fixed at ten. Our certificate
of incorporation divides our board of directors into three classes which serve staggered three-year
terms. The terms of the Class I, Class II and Class III directors will expire upon the election
and qualification of directors at the annual meeting of stockholders to be held in 2010, 2011 and
2012, respectively.
Currently, our board of directors is composed of three Class I directors (consisting of Robert
J. Cresci, Thomas W. Erickson and Gerard Vaillant), three Class II directors (consisting of Fred C.
Goad, Jr., Jim D. Kever and Jay B. Johnston) and four Class III directors (consisting of Patrick J.
Balthrop, Sr., G. Walter Loewenbaum II, Edward A. Ogunro, and Kevin M. McNamara).
At the Meeting, the stockholders will elect three Class I directors nominated by the board of
directors. Each of these directors is to serve a three-year term until the 2013 annual meeting of
stockholders and until a successor is elected and qualified or until the directors earlier
resignation or removal. The board of directors and its Nominating and Corporate Governance
Committee, pursuant to and consistent with the nomination procedures described above under
Corporate Governance, have nominated Messrs. Robert J. Cresci, Thomas W. Erickson and Gerard
Vaillant for re-election as Class I directors. It is the intention of the persons named in the
proxy to vote the proxies for the election of the aforementioned nominees. Proxies may not be
voted for persons other than those, or for more persons than, named in the proxy. If any nominee
should be unwilling or become unavailable to serve as a director for any reason, the persons named
as proxies reserve full discretion to vote for such other person or persons as may be properly
nominated by the board of directors. The board of directors has no reason to believe that any of
the nominees will be unable or unwilling to serve as a director if elected.
Certain information about the Class I nominees for the board of directors, and those directors
whose terms do not expire at the Meeting, is furnished below.
Class I Director Nominees
Robert J. Cresci, age 66. Mr. Cresci has served as a member of the board of directors since
December 1996. He has been a Managing Director of Pecks Management Partners Ltd., an investment
management firm, since September 1990. Mr. Cresci currently serves on the boards of directors of j2
Global Communications, Inc., a provider of outsourced, value-added messaging and communications
services, and ContinuCare Corporation, a provider of outpatient primary care physician services.
Within the past five years, Mr. Cresci has served on the board of directors of Sepracor Inc., a
research-based pharmaceutical company, and SeraCare Life Sciences, Inc, a provider of a broad scope
of biological products and services. Mr. Cresci holds an undergraduate degree in Engineering from
the United States Military Academy at West Point and holds a M.B.A. in Finance from the Columbia
University Graduate School of Business.
9
Mr. Cresci originally became involved with Luminex as an early investor in Luminex. Mr. Cresci
has extensive experience serving on the boards of directors of private and public companies within
the broader healthcare industry and brings a significant depth of knowledge in capital markets
considerations. Mr. Crescis knowledge of the operations of public company boards is particularly
useful in his current role as chairman of the Nominating and Corporate Governance Committee. Mr.
Cresci also brings continuity to the board of directors, given his service on the board since
Luminexs earliest years of operation.
Thomas W. Erickson, age 59. Mr. Erickson has served as a member of the board of directors
since May 2004. Mr. Erickson served as our Interim President and Chief Executive Officer from
September 2002 until our hiring of Mr. Balthrop in May 2004. He is currently chairman of the board
of Inmar, Inc., a reverse logistics and revenue recovery company. Previously, he served as a
Senior Advisor to New Mountain Capital, LLC, a private equity firm, chairman and interim president
of National Medical Health Card Systems, Inc., a pharmacy benefits manager, chairman of the board
of PATHCare, Inc., chairman of the board of TransHealthcare, Inc., a health care services company,
chairman and interim president and chief executive officer of LifeCare Holdings, Inc., an operator
of long-term acute care hospitals, and interim president and chief executive officer and director
of Omega Healthcare Investors, Inc., a healthcare focused real estate investment trust. Mr.
Erickson was also co-founder, president and chief executive officer of CareSelect Group, Inc., a
physician practice management company. Earlier in his career, he held several management positions
at American Hospital Supply Corporation. Mr. Erickson holds a Bachelors degree from University of
Iowa and an M.B.A. from Southern Methodist University.
Mr. Erickson brings to the board of directors extensive experience managing and growing
healthcare industry companies, as well as significant general experience serving in leadership
roles on boards and board committees of other public companies. Through his experience serving as
Luminexs Interim President and Chief Executive Officer from September 2002 until May 2004, Mr.
Erickson offers to the board detailed insight into the Companys business and management
considerations. Through his substantial experience in the healthcare industry, in particular
healthcare services and delivery, Mr. Erickson offers valuable insight on Luminex and its product
offerings from the perspective of healthcare providers.
Gerard Vaillant, age 68. Mr. Vaillant has served as a member of the board of directors since
February 2005. Mr. Vaillant held a number of positions within Johnson & Johnson, a manufacturer of
health care products, from 1981 through 2004. Most recently, Mr. Vaillant served as company group
chairman of Johnson & Johnson until he retired. He also served as chairman for Ortho-Clinical
Diagnostics, Inc., a provider of total solutions for screening, diagnosing, monitoring and
confirming diseases, Veridex LLC, a provider of high-value oncology products, and Therakos, Inc., a
provider of innovative cellular therapy products, and as a member of several other operating
committees within Johnson & Johnson during that period. In addition, from 1992-1995, he was the
worldwide president of LifeScan, a company dedicated to improving the quality of life for people
with diabetes by developing, manufacturing and marketing a wide range of blood glucose monitoring
systems and software. He currently serves on the board of directors of Sensors for Medicine and
Science, Inc., a developer of biosensor technologies, Tecan AG, a provider of laboratory
instruments and solutions in biopharmaceuticals, forensics, and clinical diagnostics, and
OncoMethylome Sciences, a molecular diagnostics company. He holds a Masters Degree & Superior
Certificate in Biochemistry & Industrial Chemistry from Paris University of Sciences and a Degree
in Marketing from Ecole Superieure de Commerce de Paris.
Mr. Vaillant brings to the board of directors significant directly relevant industry
experience in managing businesses in the diagnostics and life sciences industry. Mr. Vaillant has
extensive experience in leading the strategic and operational aspects of large, complex,
international organizations. Mr. Vaillant also brings to the board of directors valuable
experience serving on boards and board committees of other public companies. He is also able to
provide particularly valuable insight and direction into the strategic direction of Luminex and its
technology and product pipeline through his role on the Strategy and Development Committee.
10
Class II Directors (Terms Expire in 2011)
Fred C. Goad, Jr., age 69. Mr. Goad has served as a member of the board of directors since
September 1997. Since August 2001, he has been a member in Voyent Partners, L.L.C. (Voyent), a
private investment company. Mr. Goad served as co-chief executive officer of the transaction
services division of WebMD Corporation (WebMD), a provider of healthcare transaction, information
and technology services, from June 2000 through March 2001. From March 1999 through May 2000, Mr.
Goad served as senior advisor to the office of the president of the transaction services division
of Quintiles Transnational Corporation (Quintiles), a contract research company providing a wide
range of clinical research services for biotech and pharmaceutical clients. Mr. Goad served as
co-chief executive officer and chairman of Envoy from June 1996 until Envoy was acquired by
Quintiles in March 1999. From 1985 to June 1996, Mr. Goad served as president and chief executive
officer of Envoy Corporation (Envoy), a provider of electronic transaction processing services
for the healthcare industry. Within the past five years, Mr. Goad has served on the board of
directors of Emageon Inc., a provider of information technology systems for hospitals, healthcare
networks and imaging facilities, until its sale in 2008, Performance Food Group Company, a
foodservice distributor, and on the boards of directors of several private companies. Mr. Goad
holds a B.S. in business from the University of Virginia.
Mr. Goad brings to the board of directors extensive experience managing and growing healthcare
industry companies, as well as significant general experience serving on boards of other public
companies. Through his vast experience in the healthcare industry, in particular healthcare
services and delivery, Mr. Goad offers valuable insights on Luminex and its product offerings and
sales and marketing strategies from the perspective of healthcare providers. Mr. Goad also brings
continuity to the board of directors, given his service on the board since Luminexs earliest years
of operation.
Jim D. Kever, age 57. Mr. Kever has served as a member of the board of directors since
December 1996. He has been a member in Voyent since August 2001. Mr. Kever served as co-chief
executive officer of the transaction services division of WebMD from June 2000 to March 2001. From
March 1999 through May 2000, Mr. Kever served as chief executive officer of the transaction
services division of Quintiles. From August 1995 through March 1999, Mr. Kever was the president
and co-chief executive officer of Envoy. Mr. Kever serves on the boards of directors of Emdeon,
Inc., a provider of healthcare revenue and payment cycle management solutions, 3D Systems
Corporation (3D Systems), a provider of 3-D printing, rapid prototyping and manufacturing
solutions, and Tyson Foods, Inc., a food production company (Tyson). Within the past five years,
Mr. Kever has served on the board of directors of ACI Worldwide, Inc., a global provider of
electronic payments solutions for financial institutions. Mr. Kever holds a B.S. in business
administration from the University of Arkansas and a J.D. from the Vanderbilt University School of
Law.
Mr. Kever brings to the board of directors extensive experience managing and growing
healthcare industry companies. Mr. Kever brings experience in serving on public and private
boards. Mr. Kever, through his more recent investment experiences with Voyent, also brings depth of
knowledge in managing and growing companies and in capital markets considerations. Mr. Kever also
brings continuity to the board of directors, given his service on the board since Luminexs
earliest years of operation.
Jay B. Johnston, age 67. Mr. Johnston has served as a member of the board of directors since
February 2005. Mr. Johnston currently serves as chairman of QuesTek Innovations, LLC, a
privately-held company that designs and markets high tech materials, a position he has held since
August 2001. From 1975-1999, he held numerous positions at Abbott Laboratories, a global,
broad-based health care company (Abbott), most recently as corporate vice president for
diagnostic assays and systems. He held numerous other positions with Abbott, including president of
Dainabot Co. Ltd. and vice president Asia Pacific. Mr. Johnston has experience in general
management, product development, technology management, strategic marketing and business
development. He holds an M.B.A. in General Management from the Amos Tuck School of Business
Administration and a B.A. degree in Public Administration from Dartmouth College.
Mr. Johnston brings to the board of directors significant directly relevant industry
experience in managing businesses in the diagnostics and life sciences industries. Mr. Johnston
has extensive experience in leading the strategic and operational aspects of large complex,
international organizations. Mr. Johnstons knowledge of effective compensation processes for
management helps him to guide the Companys compensation programs and policies in his role as Chair
of the Compensation Committee. Mr. Johnston also offers particular experience and perspective to
the board of directors in the areas of product development and marketing strategies through his
role on the Strategy and Development Committee.
11
Class III Director (Terms Expire in 2012)
Patrick J. Balthrop, Sr., age 53. Mr. Balthrop joined Luminex in May 2004 as President and
Chief Executive Officer and has served as a member of the board of directors since September 2004.
He served as president of Fisher Healthcare, a Fisher Scientific International company, a
manufacturer and supplier of products and services principally to the scientific and laboratory
markets from 2002 to May 2004. Prior to Fisher Scientific International, Mr. Balthrop served in a
number of leadership positions for over 20 years with Abbott, primarily in Abbotts Diagnostics
Division. Mr. Balthrops most recent positions at Abbott were as head of worldwide commercial
diagnostics operations and as head of Abbott Vascular. Mr. Balthrop holds an M.B.A. from the
Kellogg Graduate School of Management of Northwestern University, and a B.S. in Biology from Spring
Hill College.
Mr. Balthrop brings to the board of directors significant experience in managing businesses in
the diagnostics and laboratory equipment industries. Mr. Balthrop has extensive experience in
leading the strategic and operational aspects of large and complex, international organizations,
with experience in managing manufacturing, research and development, sales and marketing,
intellectual property and technology management and international operations. As the President and
Chief Executive Officer of Luminex, Mr. Balthrop is responsible for managements execution of
operational objectives and serves as an integral connection between the board of directors and
Luminexs management team, enabling alignment between the Boards strategic expectations and the
Companys current and future strategy and operations.
G. Walter Loewenbaum II, age 65. Mr. Loewenbaum has served as a member of the board of
directors since May 1995 and as Chairman of the board of directors since September 2002. He served
as Vice Chairman of the board of directors from April 1998 until January 2000. Mr. Loewenbaum
currently serves as Chairman and chief executive officer of Mumboe Corp. (f/k/a Finetooth Corp.), a
provider of contract management solutions, a position that he has held since February 2002.
Additionally, from July 1999 through 2003, he served as a member of LeCorgne Loewenbaum & Co., LLC,
an investment banking firm. From April 1990 until June 1999, he served as the president, chairman
and chief executive officer of Loewenbaum & Company, Inc. (f/k/a Southcoast Capital), an investment
banking company. Mr. Loewenbaum also has served as chairman of the board of directors of 3D Systems
since September 1999, and was previously chairman of the board of directors of Envoy. He holds a
B.A. from the University of North Carolina.
Mr. Loewenbaum originally became involved with Luminex as an original investor in Luminex
prior to our initial public offering. As an investment banker and private equity investor, Mr.
Loewenbaum has worked with multiple companies in a variety of different industries at different
phases of organizational development, ranging from startup to publicly traded. He brings depth of
knowledge in serving as chairman for public and private companies, building stockholder value and
capital market considerations. Mr. Loewenbaum also brings continuity to the board of directors,
given his service on the board since Luminexs earliest years of operation.
Kevin M. McNamara, age 54. Mr. McNamara has served as a member of the board of directors since
May 2003. In addition, he provided financial and strategic consulting services to the Company from
October 2001 through December 2002. Mr. McNamara served as executive vice president, chief
financial officer and treasurer of HealthSpring, Inc., a managed care company, from April 2005
through May 2009. Mr. McNamara also served as non-executive chairman from April 2005 through
January 2006 of MedAvant Healthcare Solutions (f/k/a ProxyMed, Inc.), a provider of automated
healthcare business and cost containment solutions for financial, administrative and clinical
transactions in the healthcare payments marketplace, and served as interim chief executive officer
and as a director of ProxyMed, Inc. from December 2004 through June 2005. Mr. McNamara previously
served as chief financial officer of HCCA International, Inc., a healthcare management and
recruitment company from October 2002 to April 2005. Mr. McNamara currently serves on the board of
directors of Tyson. Within the past five years, Mr. McNamara has served on the board of directors
of COMSYS IT Partners, Inc. (f/k/a Personnel Group of America, Inc.), an information technology
staffing and solutions provider. Mr. McNamara is a Certified Public Accountant (inactive) and holds
a B.S. in Accounting from Virginia Commonwealth University and a M.B.A. from the University of
Richmond.
Mr. McNamara brings to the board of directors extensive financial expertise, experience
managing and growing healthcare industry companies, as well as significant general experience
serving on boards and board committees of other public companies. Mr. McNamaras experience
overseeing risk assessment, accounting and financial reporting for public and other healthcare
companies provides equally valuable experience in his role as chair of our Audit Committee. Mr.
McNamara also has experience overseeing public and private capital markets and mergers and
acquisitions transactions.
12
Edward A. Ogunro, Ph.D., age 57. Dr. Ogunro has served as a member of our board of directors
since May 2009. Dr. Ogunro served as senior vice president, R&D and medical affairs and chief
scientific officer at Hospira Inc., a global specialty pharmaceutical and medication delivery
company, from April 2004 until December 2007. Prior to Abbotts spin-off of Hospira in 2004, Dr.
Ogunro served in a number of leadership positions for over 20 years with Abbott, primarily in
Abbotts Diagnostics Division, and most recently served as corporate vice president, R&D, medical
and regulatory affairs in Abbotts Hospital Products Division. He held numerous other positions
with Abbott, including program director for AxSym, one of the most successful analyzers in the
diagnostic industry, and divisional vice president for Abbotts Immunodiagnostics and Chemistry R&D
Organization. Dr. Ogunro serves on the board of directors of Applied NeuroSolutions, Inc., a
company focused on the development of an integrated portfolio of products for the treatment and
diagnosis of Alzheimers disease. Previously, Dr. Ogunro pursued postdoctoral studies and served as
an assistant professor at Northwestern University Medical School in Chicago from 1977 to 1982. Dr.
Ogunro holds a B.S. in Physiology and Biochemistry from Reading University and a Ph.D. in
Biochemistry from London University.
Dr. Ogunro brings to the board of directors significant directly relevant technical and
operational industry experience in the diagnostics and medical device industry. Dr. Ogunro has
substantial experience in managing complex research and development initiatives for large, evolving
portfolios of diagnostic and medical device products, and in securing and maintaining regulatory
clearance for such products both domestically and internationally. Dr. Ogunros technical
background and direct experience with project management is of particular relevance in his role on
the Strategy and Development Committee and in guiding Luminex in its research and development
investments on new products and markets.
Required Vote; Recommendation of the Board
Election of Class I directors will be determined by a plurality of the votes cast at the
Meeting.
The board of directors unanimously recommends that stockholders vote FOR the election of its
nominees for Class I directors.
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP as the Companys independent registered
public accounting firm to audit the financial statements of the Company and to perform other
accounting services, if appropriate, for the year ending December 31, 2010. Such appointment will
be presented to the stockholders for ratification at the Meeting. A representative of Ernst &
Young LLP is expected to be present at the Meeting to respond to questions from stockholders and
will be given the opportunity to make a statement if so desired.
Stockholder ratification of the selection of Ernst & Young LLP as the Companys independent
registered public accountants is not required by the Companys bylaws or otherwise. However, the
Audit Committee is submitting the selection of Ernst & Young LLP to the stockholders for
ratification. If the stockholders fail to ratify the selection, the Audit Committee will
reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit
Committee 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.
Fees paid to Ernst & Young LLP for services provided during the years ended December 31, 2009
and 2008 are presented below.
Audit Fees. The aggregate audit fees billed to us by Ernst & Young LLP for professional
services rendered for the audit of our annual consolidated financial statements, for the reviews of
the consolidated financial statements included in our quarterly reports on Form 10-Q, for the audit
of managements report on the effectiveness of our internal control over financial reporting, as
required under Section 404 of the Sarbanes-Oxley Act of 2002, and other services that are normally
provided by the independent auditor in connection with statutory and regulatory filings totaled
$577,840 for 2009 and $645,000 for 2008.
Audit-Related Fees. There were no other fees billed to us by Ernst & Young LLP for assurance
and related services with regard to the performance of the audit or review of the Companys
consolidated financial statements, and for the review of the Companys internal controls over
financial reporting, not described above under Audit Fees, for 2009 and 2008.
13
Tax Fees. The aggregate tax fees billed to us by Ernst & Young LLP for professional services
rendered for tax compliance, tax advice and tax planning totaled $55,000 for 2009 and $0 for 2008.
All Other Fees. There were no fees billed by Ernst & Young LLP for products or services other
than those described above for 2009 and 2008.
The Restated Audit Committee Charter, among other things, requires the Audit Committee to
pre-approve all audit and permitted non-audit services (including the fees and terms thereof) to be
performed for the Company by its independent auditor. The Audit Committee has adopted a
pre-approval policy in order to ensure that the performance of audit and non-audit services by the
independent auditor does not impair the auditors independence. The policy provides for the
general pre-approval of specific types of services, gives guidance to management as to the specific
type of services that are eligible for pre-approval and provides cost limits for each such service
on an annual basis. The policy requires specific pre-approval of all other permitted services.
Requests or applications to provide services that require separate approval by the Audit Committee
are submitted by the Companys chief financial officer to the Audit Committee and must include a
statement as to whether, in the chief financial officers view, the request or application is
consistent with the SECs rules on auditor independence. The Audit Committee may delegate
pre-approval authority to one or more of its members who shall report any pre-approval decisions to
the Audit Committee at its next scheduled meeting.
All audit related services, tax services and other services provided in 2009 and 2008 were
pre-approved by the Audit Committee. The Audit Committee concluded that the provision of such
services by Ernst & Young LLP was compatible with the maintenance of the firms independence in the
conduct of its auditing functions.
Required Vote; Recommendation of the Board
Approval of this proposal requires the affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote on the matter.
The board of directors unanimously recommends that stockholders vote FOR Proposal 2.
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee does not constitute soliciting material and should
not be deemed filed or incorporated by reference into any other Company filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this Report by reference therein.
To the Stockholders of Luminex Corporation:
The board of directors maintains an Audit Committee comprised of three independent directors.
The board of directors and the Audit Committee believe that the Audit Committees current member
composition satisfies the rules of The NASDAQ Stock Market LLC that govern audit committee
composition, including the requirement that audit committee members meet the heightened
independence requirements as contemplated by the applicable rules of The NASDAQ Stock Market LLC.
The Audit Committee operates under a written charter, which was adopted by the board of directors
(as amended to date, the Restated Audit Committee Charter). A copy of the Restated Audit
Committee Charter may be viewed on the Investor Relations section of our website at
www.luminexcorp.com.
Pursuant to the Restated Audit Committee Charter, the Audit Committee oversees the financial
reporting process on behalf of the entire board of directors. The Audit Committee is responsible
for the appointment, compensation and oversight of the work of Luminexs independent registered
public accountants. Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. Our independent registered public
accountants are responsible for performing an independent audit of Luminexs financial statements
in accordance with standards established by the Public Company Accounting Oversight Board,
expressing an opinion on the conformity of our audited financial statements to generally accepted
accounting principles and auditing the effectiveness of Luminexs internal control over financial
reporting and issuing a report thereon. In fulfilling its oversight responsibilities, the Audit
Committee reviews and discusses with management and the independent registered public accountants
the audited and interim financial statements included in our reports filed with the SEC in advance
of the filings of such reports.
14
The Audit Committee has reviewed and discussed the audited financial statements with
management and the independent registered public accountants. Furthermore, the Audit Committee has
discussed with the independent registered public accountants the matters required to be discussed
by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1,
AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The
Audit Committee has also received the written disclosures and the letter from the independent
registered public accountants required by applicable requirements of the Public Company Accounting
Oversight Board, regarding the independent registered public accountants communications with the
audit committee concerning independence, and has discussed with the independent registered public
accountants the independent registered public accountants independence.
The Audit Committee discussed with the independent registered public accountants the overall
scope and plans for their audit. The Audit Committee met with the independent registered public
accountants, with and without management present, to discuss the results of their examination,
their evaluation of Luminexs internal controls requirements under Section 404 of the
Sarbanes-Oxley Act of 2002, and the overall quality of Luminexs financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended
to the board of directors (and the board of directors approved) that the audited financial
statements be included in our Annual Report on Form 10-K for the year ended December 31, 2009, as
filed with the SEC.
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SUBMITTED BY THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS |
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Kevin M. McNamara (Chairman) |
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Robert J. Cresci |
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Thomas W. Erickson |
15
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Risk Assessment
The Committee, with Hewitt and management, conducted a risk assessment of the Companys
compensation programs. As part of this assessment, the Committee reviewed our compensation
programs for certain design features identified by the Committees advisors as having the
potential to encourage excessive risk-taking, and considered our compensation programs in light
of our key enterprise and business strategy risks. The Committee noted that our programs are
designed so that they do not include compensation mix overly weighted toward annual incentives,
highly leveraged short-term incentives, uncapped or all or nothing bonus payouts or
unreasonable performance goals. The Committee also noted several design features of our cash and
equity incentive programs that reduce the likelihood of excessive risk-taking, including the use
of reasonably obtainable and balanced performance metrics, maximum payouts at levels deemed
appropriate, a carefully considered peer group to assure our compensation practices are
measured and appropriately competitive, and significant weighting towards long-term incentives
that promote longer-term goals and reward sustainable stock, financial, and operating
performance, especially when combined with our executive stock ownership guidelines.
Additionally, our recently adopted executive compensation clawback policy allows the Company to
recover bonus payments and certain equity awards under certain circumstances, and compliance and
ethical behaviors are factors considered in all performance and bonus assessments. Based on its
assessment, the Committee believes that our compensation programs do not motivate risk taking
that could reasonably be expected to have a material adverse effect on the Company.
Compensation Discussion and Analysis
Overview of Compensation Process. The Compensation Committee of the board of directors (the
Committee) is primarily responsible for establishing the compensation programs for the
Companys Chief Executive Officer (the CEO) and all other executive officers. In addition, the
Committee reviews and makes recommendations to the full board regarding non-employee director
compensation. The Committee administers the Companys Amended and Restated 2006 Equity Incentive
Plan (the Equity Plan) under which equity-based and other incentive awards may be made to key
employees, directors and consultants.
The Committee reviews executive compensation and the Companys compensation policies and
costs in an attempt to ensure that our compensation programs are consistent with our compensation
philosophy and promote the objectives of our organization and stockholder interests. The
Committee also periodically reviews tally sheets quantifying the aggregate compensation,
current or contingent, of our executives, together with additional compensation analyses prepared
by management and the Committees compensation consultants. These materials assist the Committee
in confirming that executives are compensated, as a whole, in a manner consistent with the design
and objectives of our compensation programs. The Committee also utilizes this information to
understand internal pay equity and external market positioning among the Companys executives.
This information, however, is only one of numerous factors considered by the Committee consistent
with our flexible compensation philosophy described below.
The Committee seeks the advice and analyses of compensation consultants as and when it deems
appropriate. The Committee engaged Hewitt Associates, LLC (Hewitt) as its compensation
consultant for 2009 and has done so for 2010. The Committee annually examines the appropriateness
of our peer group and collects peer group net total compensation data, based to the extent
possible upon positions of comparable scope and complexity, in order to assess our executive
compensation in relation to our general compensation benchmarks. In 2009, Hewitt prepared peer
compensation studies to assist the Committee in this analysis, which focused on the core direct
elements of our executive compensation program. Hewitt also assisted the Committee in the design
of our executive equity grant policies, as well as our senior executive long-term incentive plan
(the LTIP).
Finally, given the CEOs insight into internal pay equity issues as well as executive
performance versus expectations, skill sets, potential and past and projected responsibilities,
the views and recommendations of the CEO are solicited by the Committee with respect to executive
compensation. The CEOs recommendations are given significant weight. The Committee also solicits
the views of other board members with particular insight into relevant matters, who may, upon
request, attend Committee meetings in an observer capacity. The Committee makes all final
decisions regarding executive compensation. The CEO is excused from meetings prior to the
Committees approval of his compensation and discussion of his performance in relation to his
compensation decisions. The Committee does not delegate the authority to make equity or other
compensatory awards to our executive officers.
16
Compensation Objectives. The Committee has established the following primary objectives in
designing and reviewing compensation for our CEO and the other executive officers:
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Offer competitive and effective total compensation for executives to enable the
company to attract, reward and retain skilled executives in a competitive
recruiting environment; |
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Provide a substantial portion of executive compensation through
performance-contingent compensation, where annual incentives are based on achieving
designated and pre-approved quantitative and qualitative measures of performance; |
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Encourage and share superior and sustained corporate performance based on
performance measures that create value for stockholders, reward corporate growth
and encourage measured risk-taking in support of our corporate objectives; and |
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Align the long-term financial interests of our executives with those interests
of our stockholders by creating incentives that deliver value based on long-term
performance and stock price appreciation. |
We believe these objectives reflect our strong desire to specify and reward executive
behavior that is aligned with stockholder interests, effective corporate governance and the
successful execution of the Companys business plan and strategies.
Compensation Philosophy. Our compensation programs and objectives are designed around five
core philosophies:
1. Each element of compensation should support our compensation objectives and should,
when viewed collectively, work together to appropriately support all of these objectives. The
Committee believes that each element of our compensation program should be designed to
simultaneously fulfill one or more of our compensation objectives described above, and that
each element should work together as a whole to appropriately support all of these objectives.
2. Our compensation programs should create a management culture that is
performance-driven and has a vested interest in increasing stockholder value and the successful
execution of our corporate goals and strategies. Accordingly, our philosophy emphasizes
performance-based incentives for our executive officers, in part by having a substantial portion
of each officers cash compensation contingent upon the successful financial, operating and
strategic performance of the Company, as well as upon the successful execution of an executives
individual goals or directives. Equity incentives that vest over several years and/or upon the
achievement of performance targets will also play a prominent role in our program.
3. Our compensation decisions should support the Companys anticipated growth and
executive development. The Committee anticipates the Company will have significant future
growth, in terms of both revenue and the expansion and complexity of our operations. Therefore,
our compensation policies must primarily be designed to attract and retain the required talent to
support our anticipated growth and increasing operational complexity. Simultaneously, our
policies should foster and reward the growth and development, in terms of competency,
responsibilities and leadership, of our executive team.
4. Our compensation decisions should be flexible to reflect the unique attributes of the
Company and each executive. The Committees compensation philosophy for an executive officer
allows for flexibility in assessing an overall analysis of the executives performance for the
prior year, projected role and responsibilities, required impact on execution of Company
strategy, external pay practices and competitive market conditions, total cash compensation and
relative equity positioning internally, recommendations from our CEO and compensation consultants
it may engage, and other factors the Committee deems appropriate. Our philosophy also considers
an officers prior experience and professional status, employee retention, vulnerability to
recruitment by other companies and the difficulty and costs associated with replacing executive
talent. The weighting of these and other relevant factors is determined on a case by case basis
for each executive in the context of the relevant facts and circumstances. The Committee believes
this flexibility is important in order to make individual compensation decisions that
appropriately reflect the unique attributes of our Company, particularly our stage of
development, evolving business plan and diverse operational focus (including research, medical
device and product development, diagnostic and administrative focuses), and the unique
contributions and qualifications of each executive. We believe our ability to offer fair and
competitive compensation packages is essential in increasing executive satisfaction and
decreasing the distraction that may result from a management team that perceives itself as
undercompensated versus its peers, internally or externally. We believe that this approach will
result in a more productive management team, focused on achieving or exceeding our business
objectives, which should help create value for our stockholders.
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5. Our compensation programs and policies should consider external perceptions and good
governance and should not provide incentives for excessive risk taking for short-term gains.
The Committee believes that it is important to undertake a specific review of our compensation
programs and policies each year to be sure that they follow good governance practices in the
Committees view and that they do not incentivize excessive or inappropriate risk taking in the
Committees view.
Program Design
What are the primary compensation elements? The Committee has designed our
executives compensation packages around three primary elements:
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annual variable performance awards payable in cash (with the individual
executive having the right to take such awards in restricted stock pursuant to the
MSPP); and |
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long-term stock-based incentive awards, including, in addition to annual time
vested equity awards, RSUs under our LTIP for our most senior executive officers
that are subject to both performance- and time-based vesting. |
How do we use benchmarks? While we do not support rigid adherence to compensatory
formulas, there are general pay positioning policies, or benchmarks, we refer to which have been
derived, in part, based on the market-based recommendations from Hewitt. Our benchmark for base
salary is to be generally competitive with market pay levels, usually defined as the median
(50th percentile) of our peer group. The Committees desire is to provide total
short-term cash opportunities near the peer group median (50th percentile) for meeting
targeted annual goals, but allow for upside for meeting or exceeding performance goals approved
by the Committee. The Committee also targets total potential compensation opportunities
(including equity awards) with an upside between the 50 th and the 75th
percentile of our peer group (and approximating the 75th percentile for LTIP
participants), provided the Company and the executive deliver superior performance.
We chose the base salary benchmark primarily to target a market competitive base salary as
the norm. Our benchmarks for short-term cash bonus and total compensation opportunities reflect
our desire that target performance results in median, market competitive incentives similar to
our base salary objective, but, consistent with our goal of driving the achievement of business
and financial objectives that help create stockholder value and share price appreciation, rewards
above-average performance with above-average cash and total compensation. These benchmarks also
reflect that we compete with larger companies for executive talent that may offer base and total
target compensation opportunities above the market median.
To help assess how our executives are compensated in relation to our benchmarks, the
Committee collects compensation data from our peer group. However, these survey results will be
used by the Committee solely as a baseline reference, in part due to the fact that the survey
data does not provide full insight as to actual performance, responsibilities, tenure, prior
experience and other relevant information needed to accurately assess position comparability and
the competitiveness of our compensation packages. Accordingly, certain executives may be
compensated below or above the Committees benchmarks based on various factors consistent with
our flexible compensation philosophy. Our process and rationale for determining our peer group
for 2009 are described below under Executive Compensation for 2009.
Do we have a target compensation mix? We have also derived, with the assistance of
Hewitt, general guidelines with respect to compensation allocation or mix. We generally believe
at least 60% of an executives total compensation opportunity, typically increasing with level of
responsibility, should be performance and equity based, with the equity component approximating
at least 60% of target total compensation opportunities at the CEO level (split equally between
traditional time-based equity grants and LTIP grants), and ranging from approximately 40% to 60%
for the other named executive officers. We believe emphasis on equity appropriately focuses our
executives on long-term performance and value creation. Additionally, we generally believe 15% to
20% of an executives total compensation opportunities should be allocated to short-term
performance bonus opportunities. This reflects our desire to reward and encourage the achievement
of short-term business objectives and performance which should also benefit our stockholders.
However, as with our use of benchmarks (and for similar reasons), our targeted compensation mix
thresholds are only intended to be reference points.
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How does our compensation design support our compensation objectives and
philosophies?
Base Salary. The primary goal for base salary is to be market competitive and to
compensate an executives short-term contributions, as well as to provide current financial
stability. The minimum base compensation for our executive officers has historically been
established by the terms of employment agreements between the Company and the executives
negotiated at the time of hire. The Committees goal when reviewing salary adjustments on an
annual basis is to initially target base salaries at or near our benchmark and then adjust this
target based on other relevant considerations, including the impact of base salary on short-term
performance bonus opportunities.
Short-Term Performance Incentive Opportunity. The Committee believes that a significant
portion of an executives total cash compensation should be linked to Company operating
performance and individual contributions to our strategic and growth objectives. Accordingly, our
cash-based incentive opportunities will generally be targeted as a percentage of base salary
based on specific financial and individual accountability performance goals. Though our benchmark
is market median, the minimum target incentive opportunities are generally as set forth in the
executives employment agreement. Individual goals based on an executives specific
responsibilities are typically a significant portion of the bonus opportunities (weighted up to
50% of the total target bonus opportunity). While certain individual goals can be measured
objectively, others, such as leadership and teamwork, involve subjective assessment that will
ultimately be left to the Committee, based primarily on recommendations of our CEO. Additionally,
where an executives primary responsibility may be in a particular business unit or function (for
example, marketing, R&D, Luminex Bioscience Group or Luminex Molecular Diagnostics), the
performance goals may be more heavily weighted towards specific financial or other critical
business outcomes and achievements in that unit or function. In the case of strategic and other
tangible non-financial goals, such as product milestones or FDA clearances for new products, we
attempt to target individual goals with respect to which the executive can directly influence the
successful execution.
Accordingly, our annual incentive programs are designed to focus our executives on
organizational priorities and performance, including accomplishing organizational strategies and
financial goals. The potential payouts under the incentive plans are currently based on a sliding
scale designed to relate the annual incentive payout to a range. For superior performance, there
is a maximum range of payout, with a reduced payout for below target performance and no payout
for performance below a minimum level. Accordingly, significant underachievement is not rewarded
in the design of our plan, which promotes our goal of executive accountability with respect to
their role in the collective success of our organization.
The performance goals are determined near the beginning of each fiscal year. Our CEO
typically recommends performance goals to the Committee, which are then reviewed and approved or
modified in the Committees sole discretion. Pursuant to our incentive plans, these goals can be
adjusted during the year for litigation or claim judgments or settlements and certain other
extraordinary non-recurring items (such as a material acquisition).
Long-Term Stock-Based Incentive Compensation. We believe that stock-based compensation
helps to create a culture that encourages our executives to think and act as stockholders. We
believe long-term equity incentives also hold executives accountable for decisions that may have
a long-term impact and thus focus executives on the implications of their decisions over an
extended time frame. At the same time, these awards allow our executives to share in the
Companys long-term success when their efforts were a substantial factor in that value creation.
Finally, we believe equity incentives are necessary to be competitive in our recruitment and
retention efforts.
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Time-based Equity Awards. In conjunction with the 2009 equity awards, the Committee
determined the desired value to be delivered to an executive pursuant to the time-based equity
component of his or her total compensation opportunity, and allocated 75% of that value to
restricted shares and 25% to stock options. We believe our use of restricted shares, in addition
to limiting dilution, serves our compensation objectives of retention and alignment interests
with our stockholders given the five year vesting. Additionally, providing a substantial portion
of the equity award as full value restricted shares will add to the perceived value, as a
whole, of the annual equity award, given the volatility of our stock and our stage of development
can create uncertainty of value with respect to stock options. We believe a significant long-term
stake in our equity will also help reduce excessive or inappropriate risk-taking principally
motivated by short-term share price appreciation. At the same time, having 25% of the annual
equity award in the form of options makes a material portion of the value of each annual award
linked solely to long-term share price appreciation to help ensure our executives are
appropriately motivated and focused on delivering long-term stockholder value. The use of stock
options also contributes to the competitiveness of our compensation packages and promotes
entrepreneurial decision making. The Committee believes its policy to utilize a portfolio
approach, or a combination of restricted shares and options, provides it the flexibility to set
what it believes to be optimal combinations of retention- and performance-focused equity
incentives based on, among other factors, the dilutive effect of our equity program, the
Companys stage of development and size and the competitive practices of our peers.
The Committee makes annual equity awards based on a target dollar amount. While this results
in an uncertain share usage, it results in a predictable expense for the Company and allows the
Committee to tailor the value of the awards more precisely to reflect its compensation
philosophies, objectives and design. The Committee determines the target dollar amount for
stock-based awards to the executive officers on a discretionary basis and takes into account,
among other factors, the recommendations of the CEO and any compensation consultants the
Committee may engage, together with our compensation benchmarks, prior equity grants and current
equity holdings, and seniority and internal pay equity considerations.
The actual number of restricted shares granted is generally determined by dividing the
dollar amount allocated to the restricted share component by the fair market value of the shares
on the date of grant. For 2009, the Committee did not apply a discount to the value of these
shares to reflect the forfeiture restrictions associated with service-based vesting. The number
of shares subject to options granted is generally determined by dividing the dollar amount
allocated to the option component by the value of an option share with reference to the fair
market value of the shares on the date of grant calculated pursuant to a modified Black-Scholes
model specific to the Company. For 2009, this calculation resulted in an option share value of
approximately 50% of the fair market value of our common stock on the grant date.
The restricted shares currently are generally subject to time vesting over five years in
equal annual increments on the anniversary date of such grants, while 2009 stock option grants
vest over three years in equal annual increments. Except with respect to Mr. Balthrops initial
hire grants (as described below) and in connection with the LTIP commencing in 2008 for certain
key executives, we have not utilized performance-based vesting restrictions with respect to
equity awards, though the Committee periodically assesses the merits of performance-based
vesting. We believe, however, that time-based equity awards appropriately align the interests of
our executives with those of our stockholders. Time-based vesting of restricted shares and stock
options provide economic benefit only to the extent the employee maintains a long-term business
relationship with and commitment to the Company. Additionally, stock price appreciation is
required in order to realize value from stock options, and is required to create significant
additional value with respect to restricted shares.
Long Term Incentive Plan. The primary goals of the design of the LTIP are to offer
an additional long-term performance driven incentive to certain of our most senior executives who
can most directly influence key performance metrics, as well as serving as a retention vehicle
for these key officers. For LTIP participants, the Committee typically allocates approximately
50% of the total targeted value for all equity-based compensation to the target LTIP award
amount. The LTIP award, taken together with all compensation opportunities, is intended to offer
participating executives total compensation opportunities exceeding the 75th
percentile of our peer group as a reward for maximum performance under the LTIP (which
performance would reflect, in our view, exceptional performance and value creation). For 2009,
the participants in the LTIP were Mr. Balthrop and Mr. Currie.
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Awards under the LTIP are granted by the Committee in the form of RSUs and are treated as
performance awards under the Equity Plan. Grants of RSUs under the LTIP shall initially be
unvested and represent the maximum amount of shares that participants may receive under the LTIP,
assuming achievement of the maximum level of performance goals established for the grant. The
vesting and value of the LTIP awards are dependent on continued service, but also on company
performance over a three-year period measured by, for 2009, (i) appreciation in our share price
and (ii) operating cash flows per share. The Committee believes that by making an LTIP grant
every year, with vesting tied to financial and share price performance over a three-year period
and continued service over a five-year period (as a result of 50% of the value of the award
earned vesting at the end of the three-year performance period and the remaining 50% vesting on
the two-year anniversary of the initial vesting date), our participating executives are given a
powerful incentive to focus on long-term, sustained improvement in Company performance and
stockholder value.
Each year, the Committee determines the levels of performance that will represent target,
threshold and maximum performance levels for each goal.
The metrics for determining performance against operating cash flow goals follow generally
accepted accounting principles; however, the Committee may consider certain items or events as
extraordinary when determining the Companys performance against cash flow goals (and share price
goals) and make what it deems to be appropriate adjustments, in each case subject to certain
limitations.
The specific design of the 2009 LTIP is more fully described on page 25 below. Additionally,
in the event that any settlement of RSUs causes the aggregate payments or benefits to be made or
afforded to an LTIP participant under the RSU agreement, together with any other payments or
benefits received or to be received by such participant, in connection with a change in control
to exceed 110% of the maximum amount permitted under the Code to be received without incurring an
excise tax, then we shall pay to such participant an additional amount, in cash, necessary to
reimburse such participant on an after-tax basis for any excise tax payable by such participant,
as further described in the form of RSU agreement previously filed with the SEC. The Company is
not party to any other 280G gross-up arrangements with its named executive officers, but
believed it was appropriate in the case of the LTIP to ensure the award maintained its full
motivational value by preserving to the maximum extent deemed reasonable the intended value of
the award to each participant, resulting in the modified gross-up structure described above and
recommended by Hewitt.
Accelerated Vesting upon Change in Control. Our employment agreements with our named
executive officers provide for acceleration of vesting, or lapse of restrictions, in connection
with a change in control. We believe this is appropriate in order to avoid being at a competitive
disadvantage in our recruiting and retention efforts, as employees often consider equity upside
opportunities in a change in control transaction a critical element of compensation.
Additionally, accelerated vesting provisions provide security that equity related consideration
will be earned in the event the Company is sold or the subject of a hostile takeover. The
absence of such an agreement could impact an employees willingness to work through a merger
transaction which could be beneficial to our stockholders. The outstanding restricted shares and
stock options of our named executive officers also vest in full upon their death or disability.
We have been advised by Hewitt that this is not an uncommon practice among our peer group.
With respect to LTIP awards, if a change in control occurs prior to the end of the
performance period, the Committee shall determine the vested units by (i) applying the
performance criteria set forth in the LTIP using the effective date of the change in control as
the end of the performance period, and by appropriately and proportionately adjusting the
performance criteria for such shortened performance period, and (ii) multiplying the number of
units so determined by .3333 if the change in control occurs in the first year of the performance
period, .6667 if the change in control occurs in the second year of the performance period, and 1
if the change in control occurs in the third year of the performance period. Additionally, upon a
change in control, the restricted period for any units awarded following the end of the
applicable performance periods shall automatically terminate.
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Timing of Equity Grants. Except with respect to new hires or promotions, we
generally determine annual executive equity compensation awards each year in the first quarter
and no earlier than the meeting in which we approve the prior years annual performance bonuses.
This allows us to assess the prior years total compensation and performance when considering
current year grants. It is the Companys current policy that annual grants to existing employees
shall be effective on the tenth trading day following the filing of the Companys Annual Report
on Form 10-K. In the event of a new hire, promotional or other ad hoc equity award, that
equity award shall not be approved except at a meeting of the Committee and it shall be effective
on the first trading day of the month that immediately follows the month in which the start date,
promotion or other event triggering an ad hoc award occurs. The per share exercise price of an
option award shall be the closing price of the Companys common stock on the NASDAQ Global Market
on the applicable effective date as specified above. This policy applies to awards to all
employees, not just our executive officers. The Committee may make an exception to the general
policies above when it determines an exception is in the best interest of the Company based on
the recommendation of our CEO.
Executive Compensation for 2009. Our named executive officers for 2009 consisted of
Patrick J. Balthrop, CEO and President; Harriss T. Currie, Vice President, Finance, Chief
Financial Officer and Treasurer; Jeremy Bridge-Cook, Senior Vice President, Assay Group; Michael
F. Pintek, Senior Vice President, Operations; and David S. Reiter, Vice President, General
Counsel and Corporate Secretary.
For 2009, Hewitt prepared for the Committee a peer group compensation survey of peer
companies selected, with the concurrence of the Committee, from within the relevant biotechnology
(including research, medical device and diagnostic) industries and a group of larger companies
targeted by the Committee and our CEO that were believed to be relevant peers. The Company peers
were selected primarily based on market capitalization and/or revenue (generally within a range
of approximately one half to four times the Companys market capitalization and/or revenue), as
well as similar organizational and operational complexity and stage of development where
practicable. The size of the peer group (31 companies) is also reflective of the diverse nature
of our industries, and industry and sector volatility as a result of mergers and acquisitions.
The goal of the peer group selection was to find an appropriate peer group reflecting our view of
our growth expectations and the likely companies who we do and will compete with for executive
talent. The survey focused primarily on public companies due to the lack of reliable data with
respect to potentially similar private companies.
The following peer companies were included in the analysis:
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Affymetrix, Inc.
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Immucor, Inc.
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Neurocrine Biosciences, Inc. |
Array BioPharma Inc.
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Inverness Medical Innovations, Inc.
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PAREXEL International Corporation |
Celera Corporation
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Invitrogen Corporation
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PharmaNet Development Group, Inc. |
Cepheid
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Kendle International Inc.
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PRA International |
Charles River Laboratories International, Inc.
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Lexicon Pharmaceuticals, Inc.
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QIAGEN N.V. |
Cogent, Inc.
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Lifecell Corporation
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Quidel Corporation |
Enzo Biochem, Inc.
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Medarex, Inc.
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Regeneron Pharmaceuticals, Inc. |
Gen-Probe Incorporated
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Meridian Bioscience, Inc.
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Savient Pharmaceuticals, Inc. |
Hologic, Inc.
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Myriad Genetics, Inc.
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Sequenom, Inc. |
Idenix Pharmaceuticals, Inc.
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Nanosphere, Inc.
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SurModics, Inc. |
Illumina, Inc. |
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The analysis reviewed the most recent publicly available proxy statement data of the peer
companies. A proprietary Hewitt executive compensation database was also utilized to validate
and supplement peer group data, though significantly more weight was given to the peer group
compensation survey. Specific executive position matches within the peer group were based, to the
extent practicable, on the degree of compatibility of the positions roles and responsibilities.
The survey results were presented on a comparative basis to our then current compensation, on
both an actual basis from proxy statement data from the peer companies (i.e., actual medians and
percentiles) and based on a regression analysis (i.e., using Luminexs revenues and average 2008
market capitalization to reflect company size) that attempted to normalize the results by
adjusting for significant differences in the size of our peers and/or the scope of the position
comparables.
The Committee considered the information from Hewitts peer group compensation survey,
together with tally sheets and summary compensation tables prepared by management. The Committee
assessed this information relative to the policies and objectives described above and the
recommendations of our CEO and
made the following determinations regarding 2009 named executive officer compensation, as
further detailed under the Summary Compensation Table below.
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Base Salary. The results of the market analysis performed by Hewitt revealed that
base salaries of our named executive officers (other than Mr. Pintek who was hired in July 2009)
were generally below our benchmark for our peer group. Additionally, the peer group compensation
survey indicated that base salaries together with cash bonus opportunities were below our
benchmark for our named executive officers, primarily driven by base salaries less than the
25th percentile for these named executive officers except for Dr. Bridge-Cook. It was
determined that these executives base salaries should be increased to reflect both merit
adjustments and market-based adjustments, with merit-based adjustments at approximately 3% and
market adjustments ranging from 16% to 19%, designed to bring our executive salaries more in line
with the market median. The CEO recommended these increases in large part for retention purposes,
but also based on performance, anticipated responsibilities for 2009 and the increasing
complexity of the Companys operations. With respect to our CEO, the survey indicated his base
salary to be below our benchmark, while bonus, equity and total compensation opportunities were
higher than market median, though below the 75th percentile. Mr. Balthrops salary was
increased to $495,000 per annum from $450,000, or approximately 9%, for reasons similar to the
other named executive officer salary increases. Pursuant to an employment agreement negotiated
with Mr. Pintek, his annualized base salary for 2009 was $315,000 (pro rated for 2009).
Performance-based Cash Awards. Hewitts market analysis indicated that performance
bonus opportunities for our named executive officers (other than our CEO and Mr. Pintek) were
generally slightly below the market median. However, in light of the base salary increases, the
Committee determined it was reasonable and consistent with our compensation philosophies to
maintain the target performance bonus opportunities (expressed as a percentage of base salary)
the same for 2009, as compared with 2008. Accordingly, the bonus programs were substantially the
same in 2009 for our named executive officers (including our CEO), subject to modifications to
applicable performance objectives and corresponding weighting under our cash-based bonus plans to
reflect updates to responsibilities and our business plan and strategic and other initiatives for
2009. Accordingly, as in 2008, target bonus amounts, expressed as a percentage of base salary,
were 50% for each named executive officer, except for our CEO whose target bonus percentage was
100%, consistent with 2008 and as required by his employment agreement. Mr. Pinteks bonus
opportunity, also set at a 50% target level, was pro-rated for 2009 (as result of the fact he was
hired in July 2009). In addition, he received a sign-on bonus of $144,965 negotiated in
connection with his hiring.
2009 Performance-based Cash Awards for Named Executive Officers Other than CEO
The Committee approved 2009 performance award opportunities based upon achievement of
Company performance goals (Company Goals) as well as personal business objectives (Individual
Goals). For named executive officers (other than the CEO), the total target awards under the
performance-based cash bonus plan were weighted 50% for the achievement of Company Goals and 50%
for the achievement of Individual Goals. The weighting of specific components of the Individual
Goals varied for each executive taking into account, among other factors, responsibilities,
seniority and other strategic initiatives in which an executive may be involved. The Company
Goals were subject to an over/underachievement scale with possible payouts of 0% to 200% of the
potential bonus for Company Goals based on financial results in relation to the applicable
performance targets, with minimum payouts starting at 50% of the target value for each goal for
minimum threshold performance. Individual Goals were not subject to an overachievement scale.
Accordingly, total annual cash performance awards could range from 0% to a maximum of 150% of the
target bonus (which was 50% of the named executive officers base salary).
The Company Goals and weight afforded to each goal in 2009 were as set forth in the table
below:
|
|
|
|
|
Goal |
|
Percentage Weight* |
|
A. Achieve Consolidated Revenue of $132 million ($121 million actual) |
|
|
12.5 |
|
B. Achieve Consolidated High Margin Revenue of $86 million ($78 million actual) |
|
|
12.5 |
|
C. Achieve Consolidated Quarterly Operating Expense Control of 59% of Total Revenue (61% actual) |
|
|
12.5 |
|
D. Achieve Consolidated EBITDASC** of $28 million ($10 million actual) |
|
|
12.5 |
|
|
|
|
|
Total |
|
|
50 |
|
|
|
|
|
|
|
|
* |
|
Expressed as a percentage of total target bonus amount. |
|
** |
|
Earnings before interest, taxes, depreciation and amortization, and after stock compensation. |
23
The Individual Goals varied by executive (and according to areas of responsibility) and were
based on specified management initiatives and projects for 2009 (including business and product
development milestones, partnership and strategic goals and leadership objectives), with each
objective given a specified weight (out of the total target award opportunity), typically 40% (of
the total bonus opportunity) for projects and 10% for leadership and team contributions. The
project goals were graded 100% for on time completion, 75% for completed late, 50% for partially
complete and 0% for failure to produce even partial completion, in each case in the subjective
judgment of the Committee based, in part, upon the recommendation of the CEO. The maximum number
of points a named executive officer was eligible to receive for completion of his Individual
Goals was 50.
At a Committee meeting in February 2010, our CEO reviewed in detail both the Companys
financial and operating performance relative to the Company Goals for 2009, as well as the
performance of the individual named executive officers relative to the applicable Individual
Goals. Achievement of actual, individual performance goals under the bonus plan for named
executive officers was determined and certified by management to be as follows:
|
|
|
|
|
Name |
|
Individual Goals |
|
Harriss T. Currie |
|
|
44.125/50 |
|
Dr. Jeremy Bridge-Cook |
|
|
40.5/50 |
|
David R. Reiter |
|
|
50/50 |
|
Michael F. Pintek |
|
|
46.1/50 |
|
The Company Goals were not met, in part, due to unforeseen decline in consumables sales and
broader, global economic conditions affecting the Company and its partners. However, based in
part on the recommendation of our CEO, the Committee believed it was appropriate to reward
management for overachievement on anticipated assay revenues and approximately target royalties
revenue (in each case per the financial plan underlying the initial consolidated aggregate high
margin revenues target), and very successful expense management (as an aggregate dollar amount,
rather than percentage of revenue) for 2009. As a result of these two positive results, the
Committee provided partial credit for these Company Goals (equal to 4.2 points for each of assay
and royalties revenue and 12.5 points for expense management). Adjusting for partial credit, the
Committee, with the recommendation of the CEO, credited the management team with achievement of
20.9 of 50 points for the Company Goals. Based on the foregoing, the Committee approved a cash
bonus amount in 2009 for each named executive officer ranging from approximately 31% to 34% of
their base salary (or approximately 61% to 71% of the target bonus amounts), except for Mr.
Pintek who received incentive compensation of approximately 17% of his base salary in addition to
a signing bonus equal to approximately 46% of his base salary. By way of comparison, the
Committee approved cash bonus amounts in 2008 for each named executive officer (other than our
CEO) ranging from approximately 58% to 60% of their base salary (or approximately 113% to 120% of
the target bonus amounts), generally resulting from overachievement of the Company Goals in 2008.
2009 Performance-based Cash Award for CEO
For 2009, the CEO incentive plan was based upon achievement of certain financial, project
and R&D targets. The target Company performance goals were the same as the corresponding
objectives for our other named executive officers. The project and R&D objectives were based on
specified management initiatives as recommended by Mr. Balthrop and approved by the Committee
with input from our Executive Committee, with each objective given a specific weight. The total
target awards under the CEO incentive plan were weighted 50% for the achievement of the Company
performance goals and 50% for the achievement of Mr. Balthrops project and R&D objectives.
Mr. Balthrops 2009 incentive plan included an over/underachievement feature with possible
payouts between 0% and 150% with respect to Company financial objectives based on financial
results between specified threshold minimum and maximum performance levels of the applicable
performance targets, calculated on a linear basis. The project and R&D goals that are not
financial were graded 100% for on time completion, 75% for completed late, 50% for partially
completed and 0% for failure to produce partial completion, with potential overachievement
payouts for certain of these objectives. For 2009, Mr. Balthrops total award opportunity under
the CEO incentive plan ranged from zero to a maximum of 132.5% of his target bonus amount. The
actual target bonus established by the Committee was 100% of Mr. Balthrops base salary as
described above.
24
At the Committee meeting approving incentive payouts for 2009 for our other executive
officers, the Committee also reviewed our CEOs performance generally and relative to his plan
for 2009. After consideration of this without the CEO present, and the Committees overall view
of the CEOs performance and contributions in 2009, the Committee determined to award Mr.
Balthrop approximately 65% of his target incentive for 2009. By way of comparison, the Committee
approved a cash bonus amount for 2008 for our CEO of approximately 89% of his target amount,
generally resulting from overachievement of the Company goals and underachievement of certain
individual goals for 2008. The following table breaks down Mr. Balthrops incentive plan goals
per goal, which were partially or not achieved on the Company performance metrics (20 points out
of a targeted 50 points), and generally achieved on the project and R&D goals (45 points out of a
targeted 50 points). For the reasons described above with respect to our other named executive
officers, Mr. Balthrop was given partial credit for the achievement of the combined high margin
revenue goal, and for his EBITDASC goal to reflect the Companys favorable expense management
control (given that Mr. Balthrop did not have a corresponding expense management goal).
|
|
|
|
|
|
|
Achievement/ |
|
Goal |
|
(Total Possible) |
|
Achieve Consolidated Revenue of $132 million* ($121 million actual) |
|
|
0/(15 |
) |
Achieve Consolidated High Margin Revenue of $86 million* ($78 million actual) |
|
|
15/(20 |
) |
Achieve Consolidated EBITDASC** of $28 million* ($10 million actual) |
|
|
5/(15 |
) |
Project and R&D Goals, including customer contracts, product launch, project
implementation and project milestones (including clinical and regulatory)*** |
|
|
45/(50 |
) |
|
|
|
|
|
Total |
|
|
65/(100 |
) |
|
|
|
|
|
|
|
* |
|
Subject to overachievement. If actual results were over maximum performance level then bonus is increased by
150% and on a linear basis in between. |
|
** |
|
Earnings before interest, taxes, depreciation and amortization, and after stock compensation. |
|
*** |
|
Committee had discretion to award up to 150% of target for certain objectives. |
Long-Term Stock-Based Incentive Compensation. The market survey generally indicated
that our executives were historically compensated above the market median in terms of equity
compensation. The 2009 targeted value of equity awards for our named executive officers (other
than Mr. Pintek) were based on various factors reflecting the Committees application of our
flexible compensation philosophy. In particular, the CEOs recommendations were the most
significant factor and were based on his assessment of performance, potential, internal pay
positioning and market competitiveness based on our compensation survey. The value of these
grants, split 75/25 between RSAs and options, are as follows: Mr. Balthrop $800,000; Mr.
Currie $300,000; Dr. Bridge-Cook $350,000 and Mr. Reiter $300,000. The Company also
agreed to grant Mr. Pintek 27,445 restricted shares (or $507,000 in value) and a non-qualified
option to acquire 18,334 shares (or $193,000 in value) of the Companys common stock pursuant to
the Equity Plan in connection with his hiring, in each case subject to the Companys standard
vesting policies.
In addition to continuing to include our CEO in our LTIP program, the Committee determined
to expand the LTIP program to include Mr. Currie in 2009. This decision was largely based on the
recommendation of our CEO in recognition of Mr. Curries performance reviews, role with the
Company and for retention purposes. For Mr. Balthrop and Mr. Currie, the Committee determined it
was appropriate to have increased levels of equity and total compensation opportunities through
participation in the LTIP. As indicated above, a primary goal of implementing the LTIP program
was to provide a significantly performance-based incentive structure that allows the
participating executive an opportunity for total compensation at or exceeding the 75th
percentile as a reward for exceptional long-term performance and value creation, as well as the
Committees view as to the participants performance and anticipated future contributions, and
for its potential retention value. The target amount for total equity compensation was determined
to be $1,600,000 for Mr. Balthrop and $600,000 for Mr. Currie, reflecting a decrease of 3% for
Mr. Balthrop and an increase of 140% for Mr. Currie from 2008 equity amounts. For Mr. Balthrop
approximately $800,000 of this target amount was allocated to time-based restricted stock and
options on the same basis as for our other executives, and approximately $800,000 was allocated
to the target LTIP awards. For Mr. Currie, approximately $300,000 of this target amount was
allocated to time-based restricted stock and options on the same basis as for our other
executives, and approximately $300,000 was allocated to the target LTIP awards.
25
The restricted shares granted in 2009 are generally subject to time vesting over five years,
and the options over three years, in equal annual increments on the anniversary date of such
grants. See above under Program DesignLong-Term Stock-Based Incentive Compensation.
For 2009, each LTIP participant was assigned a target award amount expressed in dollars (the
Target Amount). The potential payout amounts are based on Threshold, Target and Maximum
levels of payout based on the aggregate weighted achievement of the corresponding performance
targets for the LTIP participants and were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Dollar |
|
|
|
|
|
|
|
|
|
|
Participant |
|
Amount |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
Patrick J. Balthrop |
|
$ |
800,000 |
|
|
|
60 |
% |
|
|
100 |
% |
|
|
275 |
% |
|
|
|
|
|
|
(30,631 shares |
) |
|
(51,052 shares |
) |
|
(140,395 shares |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harriss T. Currie |
|
$ |
300,000 |
|
|
|
60 |
% |
|
|
100 |
% |
|
|
275 |
% |
|
|
|
|
|
|
(11,486 shares |
) |
|
(19,144 shares |
) |
|
(52,648 shares |
) |
The potential payout amounts are expressed above both as a percentage of the applicable
Target Amount and the number of shares eligible to be vested (determined by dividing the
specified amount of the Threshold, Target or Maximum Amount by the closing price of the Companys
common stock as reported by The NASDAQ Stock Market LLC on the grant date), in each case at the
applicable weighted aggregate performance level. Payouts between Threshold and Maximum for
Participants shall be calculated by the Committee in its sole discretion using straight-line
interpolation.
Accordingly, for 2009, Mr. Balthrop was granted an unvested RSU award under the LTIP for
140,396 shares of our common stock, and Mr. Currie was granted an unvested RSU award under the
LTIP for 52,648 shares of our common stock. Partial or complete vesting of the RSUs for Mr.
Balthrop and Mr. Currie shall be dependent upon their continued employment and the achievement of
the specific performance goals described below, extending from the date of grant through December
31, 2011. The Committee, in its sole discretion, shall determine whether and to what extent
performance goals have been achieved under outstanding awards on or before March 15, 2012 (the
Determination Date). In the event that Mr. Balthrop or Mr. Currie achieves less than the
maximum level of the performance goals, the total number of shares represented by his RSU shall
be reduced to reflect where actual interpolated performance lies in the range of performance
goals and weighted aggregate corresponding payout opportunities established for the grant,
including up to 51,052 and 19,144 shares for Mr. Balthrop and Mr. Currie, respectively, if
target performance is achieved, 30,631 and 11,486 shares, respectively, in the event that
minimum threshold goals are achieved, and zero shares in the event that minimum threshold goals
are not achieved. Calculation of shares between threshold and maximum performance shall be
determined based on straight-line interpolation. Vesting of the RSU (after giving effect to the
adjustment above) shall occur as follows: 50% on the Determination Date and 50% on December 31,
2013. The Committee reserves the right to make certain adjustments to awards under the LTIP from
time to time, in its sole discretion, to accommodate for certain unusual or nonrecurring events,
or to avoid unwarranted penalties or windfalls for participants.
Performance goals under the grants are based on the following components, with the following
weights given to each: 50% on the trading price of our common stock at the end of the performance
period (the Trading Price Goal) and 50% on our operating cash flows per diluted share at the
end of the performance period (the Operating Cash Flow Goal), each as described more fully
below and in the LTIP.
Partial or complete achievement of the Trading Price Goal is dependent upon the average
closing price of our common stock for the twenty consecutive trading days ending December 30,
2011, inclusive, subject to certain adjustments as described in the LTIP. Each of Mr. Balthrop
and Mr. Currie was assigned a range of trading price targets as follows: a minimum threshold of
$32.38 per share, a target of $36.79 per share, and a maximum goal of $58.42 per share.
Partial or complete achievement of the Operating Cash Flow Goal is dependent upon the
average quarterly total operating cash flows per diluted share (as defined in the LTIP) for the
four quarters ended December 31, 2011 (Average CFPS), as further described in the LTIP. Total
operating cash flows means Luminexs GAAP net cash provided by operating activities as shown on
its financial statements for the 12 month period ended December 31, 2011, as further described in
the LTIP. Each of Mr. Balthrop and Mr. Currie was assigned a range of Average CFPS targets as
follows: a minimum threshold of $0.134 per share, a target of $0.152 per share, and a maximum
goal of $0.241 per share.
26
These goals should not be viewed as predictions or estimates of future performance, and the
actual achievement of these targets are subject to numerous known and unknown risks and
uncertainties including, without limitation, those described under forward looking statements,
risk factors or similar headings in our quarterly and annual reports filed with the SEC.
When considering the design of the LTIP for 2009 grants, the Committee determined that share
price appreciation and operating cash flows per share were the most appropriate performance
metrics for the following reasons:
Share price appreciation is likely the most readily quantifiable metric to confirm an
increase in total value and investment return from a stockholder perspective over the performance
period; and
Cash flow per share measures the true value of our business. Our ability to translate
earnings to cash indicates the health of our business and allows our company to invest for the
future of the business as well as returning value to shareowners.
The foregoing summary of the 2009 LTIP is qualified in its entirety by reference to the
complete texts of the 2009 LTIP and form of RSU award agreement previously filed by the Company
with the SEC.
Executive Compensation for 2010. The Committee again engaged Hewitt to serve as the
Committees compensation consultant for 2010. Hewitt, among other matters, was asked to update
its detailed peer group compensation analyses, including a further refinement of the chosen peer
group with the assistance of the Committee.
Hewitts updated survey indicated that base salaries for our named executive officers (other
than our CEO and CFO), as well as our total cash compensation opportunities, were generally below
the market median. However, primarily as a result of equity compensation levels in 2009 and our
emphasis on restricted share grants, the equity component and total compensation (including
equity) were only modestly below our median benchmarks. With respect to our CEO, the revised
survey indicated his base salary to be below our benchmark, while bonus, equity and total
compensation opportunities were higher than market median, in part due to his LTIP award in 2009,
though below the 75th percentile. With respect to our CFO, the revised survey indicated his base
salary and total cash opportunities to be significantly below our benchmark, while equity and
total compensation opportunities were higher than market median, also due to his LTIP award in
2009, though below the 75th percentile.
Based, in part, on the foregoing survey results and following a review process substantially
similar to that conducted in 2009, the Committee made the following determinations regarding 2010
named executive officer compensation:
It was determined that our executive base salaries (including our CEO) should be increased
to reflect merit-based adjustments at approximately 2.5% to 3% and, with respect to our CFO,
additional market-based adjustment of 7%, designed to bring his salary more in line with the
market median based on Hewitts survey results. The CEO recommended these increases in large part
for retention purposes, but also based on performance and anticipated responsibilities for 2010.
In light of the salary increases, the Committee determined it was reasonable and consistent
with our compensation philosophies to maintain the target performance bonus opportunities
(expressed as a percentage of base salary) the same for 2010, as compared with 2009. Accordingly,
the bonus programs will be substantially the same in 2010 for our named executive officers
(including for our CEO), subject to modifications to applicable performance objectives and
corresponding weighting under our cash-based bonus plans to reflect updates to responsibilities
and our business plan and strategic and other initiatives for 2010. Accordingly, as in 2009,
target bonus amounts, expressed as a percentage of base salary earned in 2010, were confirmed to
be 50% for each executive officer, except for our CEO (which was approved at 100% of base salary
earned in 2010, consistent with 2009 and as required by his employment agreement).
27
The 2010 targeted value of equity awards for our named executive officers were based on
various factors reflecting the Committees application of our flexible compensation philosophy.
In particular, the CEOs recommendations were the most significant factor and were based on his
assessment of performance, potential, internal pay positioning and market competitiveness based
on our compensation survey. The Committee also considered the desire for an appropriately
significant long-term incentive aligned with our stockholders interests, consistent with our
performance-based compensation philosophy. The value of these grants, split 70/30 between RSAs
and options, are follows: Mr. Currie $350,000; Mr. Bridge-Cook $350,000; Mr. Reiter
$250,000; and Mr. Pintek $350,000. The Committee determined to include Messrs. Balthrop and
Currie in the LTIP program for 2010 (which plan is designed with a similar structure as in 2009).
Mr. Curries target grant value is $300,000 (which was the same level as in 2009). This was
largely based on the recommendation of our CEO in recognition of Mr. Curries performance reviews
and for retention purposes. Mr. Balthrops target equity award remained the same in 2010, at
$800,000 for time-based equity (split 70/30 between RSAs and options) and $800,000 under the
LTIP.
Change in Control; Termination Benefits. We believe that reasonable and appropriate
severance and change in control benefits are necessary in order to be competitive in our
executive recruiting and retention efforts. We also believe that a change in control arrangement
will provide an executive security that will likely reduce the reluctance of an executive to
pursue a change in control transaction that could be in the best interests of our stockholders.
Finally, while we have not conducted a study to confirm this, we believe formalized severance and
change in control arrangements are common benefits offered by employers competing for similar
executive talent. While the Committee will receive this information as part of its review of
annual tallies of total executive compensation (including contingent compensation), we do not
typically consider the value of potential severance and change in control payments when assessing
annual compensation as these payouts are contingent and have a primary purpose unrelated to
ordinary compensation matters and objectives. The Committee generally assesses these potential
payouts only in view of their reasonableness during negotiations with a new hire, and
periodically in light of competitive market conditions or in respect of internal equity
considerations as described below.
Therefore, upon their joining the Company, we entered into employment agreements with our
named executive officers. These agreements generally provide for severance payments (including
premiums for certain continuing health and insurance benefits) where the executive is terminated
without cause (including the Companys failure to renew the employment agreement) or as a
result of incapacity or death, or if the executive resigns for good reason. Although the
definitions may vary slightly across these agreements, good reason generally means certain
demotions in responsibilities or title, decreases in compensation, the Companys continued
material breach of the employment agreement and/or relocation requirements, while cause
typically means a material fraud by the executive upon the Company or the executives continued
material breach of the employment agreement (or, for Mr. Balthrop, failure to perform the duties
outlined in his employment agreement, conduct likely to cause injury to the Company, conviction
of a felony or a criminal act involving moral turpitude, violation of a Company policy or a
breach of his employment agreement).
Severance generally consists of an amount equal to the executives base salary at the
highest rate in effect for the six month period prior to termination (or, for Mr. Balthrop the
amount of base salary that would have been paid over the remainder of the then-current term if
greater and for Dr. Bridge-Cook 1.5x his base salary) and the prior years bonus amount, less any
payment or payments received during the 12 month period from the time of termination under any
long-term disability plan if the executive was terminated by reason of incapacity. In addition,
health or other employee benefits (other than bonus and incentive compensation benefits) for the
executive (and the executives family) generally continue for a period of twelve months following
an executives termination to the extent permitted by the applicable plans and law. If the
termination occurs other than for cause or voluntary termination, Mr. Balthrop is entitled to
additional severance in an amount equal to the pro rated portion of the current-year bonus to the
extent the performance measures are achieved.
The severance payments are paid in semi-monthly installments for a period of twelve months
following the date of termination. If the executive is terminated without cause, the severance
payments are generally made upfront at the time of termination (or within six months as described
below) in a lump payment in order to make a clean separation from, and avoid continued
entanglement with, the employee. Additionally, certain of the employment agreements, including
Mr. Balthrops, were amended in 2006 to provide that in the event the payment of any severance
amounts payable pursuant to the employment agreements within six months of the date of the
applicable executives termination of employment would cause such executive to incur any
additional tax under Section 409A of the Code, then payment of such amounts shall be delayed
until the date that is six months following such executives termination date.
28
In addition, as described above, upon a change of control, all unvested options or other
restricted shares, and upon a termination without cause or as a result of death or disability,
all unvested restricted shares held by the executive will immediately become vested and
exercisable, as applicable, pursuant to these agreements.
Each named executive officer has agreed to limitations on his ability to disclose
confidential information relating to us and acknowledges that all discoveries, inventions and
other work product relating to his employment belong to us. Also, during the one year period
following an executives termination of employment, each executive has agreed not to compete,
directly or indirectly, with the core business of the Company. Furthermore, during the
non-compete period, each executive has agreed not to solicit our employees or consultants.
The foregoing summaries are qualified in their entireties by reference to the complete texts
of the employment agreements previously filed by the Company with the SEC.
Historically, while each agreement has been the result of an arms-length negotiation, we
have tried to utilize a similar form of agreement where possible (apart from minimum salary and
cash bonus targets). Accordingly, Messrs. Currie, Bridge-Cook, Reiter and Pintek have a similar
form. Mr. Balthrops agreement varies to some extent from the forms above and again reflects an
arms-length negotiation following a lengthy CEO search, and we believe the terms are appropriate
in light of Mr. Balthrops background, skill set, the difficulty in replacing Mr. Balthrop and
the competitive nature of his recruitment process.
Clawback Policy. The Company can recover incentive compensation pursuant to our executive
incentive bonus plans and LTIP that was based on (i) achievement of financial results that were
subsequently the subject of a restatement, other than as a result of changes to accounting rules
and regulations, or (ii) financial information or performance metrics subsequently found to be
materially inaccurate, in each case regardless of individual fault. The recovery policy applies
to any incentive compensation earned or paid (or LTIP RSUs vested) to an employee at a time when
he or she is an employee after the effective date of the policy. Subsequent changes in status,
including retirement or termination of employment, do not affect the Companys rights to recover
compensation (or vested LTIP RSUs) under the policy. The Committee may also provide for
incremental additional payments to (or vesting of LTIP RSUs of) then-current executives in the
event any restatement or error indicates that such executives should have received higher bonus
payouts or LTIP RSU vesting in the effected periods. This policy is administered by the Committee
in the exercise of its discretion and business judgment based on the relevant facts and
circumstances.
Retirement Plans. We match contributions by our named executive officers to our 401(k) plan
up to the maximum amount permitted under the Code.
MSPP. In 2006, the Committee approved, and the stockholders adopted, the Luminex Corporation
2006 Management Stock Purchase Plan (the MSPP) to encourage stock ownership and further align
the long-term economic interests of our senior officers and our stockholders. Another goal of the
MSPP is to enable us to utilize the cash saved in lieu of paying a portion of annual performance
bonuses for research and development and other productive corporate purposes. The MSPP allows
select executives to elect to receive, in lieu of a specified portion of his or her annual
performance bonus, a number of restricted shares equal to the amount of such specified portion of
the annual bonus divided by a dollar amount equal to 80% of the fair market value of a share on
the date on which such restricted shares are granted. Any participant who makes such an election
will be entitled to a grant of restricted shares generally by March 15 of each calendar year
following the year for which the election is in effect. The restricted period for restricted
shares granted under the MSPP is generally three years from the date of grant. The Committee may,
in its discretion, accelerate the lapse of such restrictions upon a participants retirement or a
change in control.
Perquisites and Other Benefits. The Company does not generally provide perquisites that are
not, in the Committees view, integrally and directly related to the named executive officers
duties. While we have no formal relocation policy for new hires, we will on occasion agree to
reimbursement of certain relocation and related costs as part of a negotiation for an executive
based on the particular facts and circumstances of the negotiation. Senior management also
participates in our other broad-based benefit programs available to our salaried employees
including health, dental and life insurance programs. The Company generally does not provide tax
gross-up perquisites to its named executive officers, except to LTIP participants as described
on page 21 above. Except as otherwise discussed herein, other welfare and employee-benefit
programs are generally the same for all eligible Company employees, including our executive
officers, with some variation as required by law with respect to our international employees.
While the Committee believes the existing benefits to be reasonable, the Committee intends to
periodically reassess our perquisite and benefits programs to help ensure that these programs are
appropriately competitive with market medians and effective as a recruiting and retention tool.
29
Stock Ownership/Retention Guidelines. The board expects each officer and director to
demonstrate a long-term commitment to the Company and to the Companys stockholders by acquiring
and holding a meaningful investment in the Companys common stock. We believe requiring directors
and officers to hold a significant long-term stake in our equity accomplishes the following
principle goals: (i) further aligning long-term economic interests of our executives and our
stockholders by encouraging our management to think and act like long-term investors; and (ii)
helping to reduce excessive or inappropriate risk-taking motivated principally by short-term
share price appreciation. Therefore, the board has established specific ownership and retention
guidelines for the Companys officers and directors, summarized below.
Over time each officer and director is expected to build his or her ownership of the
Companys common stock. The targeted ownership levels are expected to be achieved over five years
from June 13, 2005, the effective date of the program, or from the time they are named an officer
or a director, as applicable, and maintained thereafter. The targeted ownership levels are as
follows: CEO: five (5) times annual salary; executive officers: two and one half (2 1/2 ) times
annual salary; non-employee directors: three (3) times annual cash retainer. Each officer and
director who has not yet achieved the targeted ownership levels is expected to retain certain
shares of common stock acquired upon exercise of stock options or from restricted share grants
pursuant to the Companys equity plans as follows: (1) a minimum of one-half the net number of
shares acquired upon option exercises; and (2) in the case of restricted shares, after each
vesting date of the award, at least one half of the net vested shares. The board of directors is
authorized to make temporary exemptions to the foregoing ownership guidelines in its discretion
where compliance would impose a severe economic hardship or otherwise prevent the officer or
director from complying with a court order.
Accounting and Tax Matters. In part because of our lack of supplemental or top hat
retirement or deferred compensation plans (apart from the MSPP) typical of larger companies, we
do not presently consider the tax or accounting consequences to be a material factor in the
design of our executive compensation packages, except as to the applicability of Section 162(m)
of the Code and to the extent of the Section 280 gross-up protection described on page 21 above
with respect to LTIP participants. Other than the compensation for our CEO, the compensation paid
to our officers for 2009 did not exceed the $1 million limit per officer for qualifying executive
compensation for deductibility under Section 162(m) of the Code. Our Equity Plan is structured so
that any compensation deemed paid to an officer when he or she exercises an outstanding option
under the Equity Plan with an exercise price equal to the fair market value of the option shares
on the grant date will qualify as performance-based compensation which will not be subject to the
$1 million limitation. Restricted share grants, for which the vesting restrictions are solely
time-based, may not qualify as performance-based compensation and could be subject to the $1
million limitation. The Balthrop Option (see Narrative to Summary Compensation Table below) was
not issued pursuant to a stockholder approved plan and, if exercised while Mr. Balthrop is a
covered employee, will not qualify as performance-based compensation and will therefore be
subject to the $1 million limitation. We have also attempted to structure the LTIP and our cash
performance bonus program for 2010 to qualify for deductibility under Section 162(m) of the Code
for future years, primarily in light of the current and projected compensation expense for our
CEO and our growth expectations. It is import to note, however, that the Company is carrying
forward significant net operating losses based on historical operations in a net loss position.
Although it will consider the tax implications of its compensation decisions, the Committee
believes its primary focus should be to attract, retain, and motivate executives and to align the
executives interests with those of the Companys stakeholders. Accordingly, because the amount
and mix of individual compensation are based on competitive considerations as well as Company and
individual performance, executive officer compensation that is not performance-based may exceed
$1 million in a given year.
Additional Compensation Consultant Disclosures. As described above, the Committee has
engaged Hewitt as its compensation consultant. During 2009, the Company (on behalf of the
Committee) paid Hewitt $74,557 in consulting fees directly related to services performed for the
Committee. During the same period, the Company engaged and paid Hewitt $140,999 for a variety of
human resources and employee benefits services unrelated to executive compensation. While the
Committee discussed and did not object to the other services provided by Hewitt, the Committee
did not recommend or formally approve these services as they were approved by management in the
normal course of business and unrelated to Hewitts assignments for the Committee and the scope
of the Committees responsibilities. However, Hewitt is engaged by and reports directly to the
Committee for matters of executive compensation. Based on the foregoing and, in part, on
policies and procedures implemented by Hewitt to ensure the objectivity of Hewitts individual
executive compensation consultant to the Committee, the Committee believes that the consulting
advice it receives from Hewitt is objective and not influenced by Hewitts other relationships
with the Company. The Committee intends to periodically review this dual utilization to ensure
Hewitts objectivity is not impaired in the Committees view and to consider if more formal
pre-approval policies are warranted for management directed services.
30
Compensation Committee Report
The Compensation Committee has reviewed the Compensation Discussion and Analysis and
discussed it with management and, based on such review and discussion, recommended to the board
of directors that the Compensation Discussion and Analysis be included in this proxy statement
and incorporated by reference into the Companys Annual Report on Form 10-K.
Submitted by the Compensation Committee of the board of directors,
|
|
|
|
|
Jay B. Johnston (Chairman) |
|
|
Fred C. Goad, Jr. |
|
|
Jim D. Kever |
|
|
Gerard Vaillant |
31
Summary Compensation Table
The following table sets forth certain summary information for the years ending December 31,
2009, 2008 and 2007, with respect to the compensation awarded to, earned by, or paid to our named
executive officers. Compensation information for each executive officer below has only been
provided for years during which such executive officers qualified as named executive officers as
defined by SEC rules.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
Plan |
|
|
All Other |
|
|
|
|
Name and |
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Compensation |
|
|
|
|
Principal Position |
|
Year |
|
|
Salary ($) |
|
|
Bonus ($) |
|
|
($) (1) |
|
|
($) (2) |
|
|
($) (3) |
|
|
($) (4) |
|
|
Total ($) |
|
Patrick J. Balthrop, Sr. |
|
|
2009 |
|
|
|
483,750 |
|
|
|
|
|
|
|
2,455,322 |
|
|
|
290,982 |
|
|
|
314,438 |
|
|
|
11,000 |
|
|
|
3,555,492 |
|
President and |
|
|
2008 |
|
|
|
445,500 |
|
|
|
75,851 |
(5) |
|
|
3,122,624 |
|
|
|
211,273 |
|
|
|
394,691 |
|
|
|
8,073 |
|
|
|
4,258,012 |
|
Chief Executive Officer |
|
|
2007 |
|
|
|
408,000 |
|
|
|
92,496 |
(5) |
|
|
637,491 |
|
|
|
253,053 |
|
|
|
432,000 |
|
|
|
7,062 |
|
|
|
1,830,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harriss T. Currie |
|
|
2009 |
|
|
|
280,234 |
|
|
|
|
|
|
|
920,733 |
|
|
|
109,112 |
|
|
|
91,111 |
|
|
|
2,000 |
|
|
|
1,403,190 |
|
Vice President, Finance, |
|
|
2008 |
|
|
|
239,199 |
|
|
|
|
|
|
|
187,501 |
|
|
|
62,145 |
|
|
|
143,089 |
|
|
|
5,000 |
|
|
|
636,934 |
|
Chief Financial Officer |
|
|
2007 |
|
|
|
230,754 |
|
|
|
|
|
|
|
224,988 |
|
|
|
89,306 |
|
|
|
111,204 |
|
|
|
4,800 |
|
|
|
661,052 |
|
and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael F. Pintek |
|
|
2009 |
|
|
|
157,500 |
|
|
|
144,965 |
(6) |
|
|
507,184 |
|
|
|
192,932 |
|
|
|
52,763 |
|
|
|
158,563 |
(7) |
|
|
1,213,907 |
|
Senior Vice President,
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy Bridge-Cook |
|
|
2009 |
|
|
|
310,375 |
|
|
|
|
|
|
|
262,488 |
|
|
|
127,306 |
|
|
|
90,111 |
|
|
|
15,000 |
|
|
|
805,280 |
|
Senior Vice President, |
|
|
2008 |
|
|
|
253,750 |
|
|
|
|
|
|
|
187,501 |
|
|
|
62,135 |
|
|
|
152,872 |
|
|
|
14,162 |
|
|
|
670,420 |
|
Assay Group |
|
|
2007 |
|
|
|
230,930 |
(8) |
|
|
85,600 |
(9) |
|
|
346,750 |
|
|
|
82,628 |
|
|
|
125,000 |
(10) |
|
|
11,762 |
(11) |
|
|
882,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Reiter |
|
|
2009 |
|
|
|
266,951 |
|
|
|
|
|
|
|
224,990 |
|
|
|
109,112 |
|
|
|
94,634 |
|
|
|
8,250 |
|
|
|
703,937 |
|
Vice President, General |
|
|
2008 |
|
|
|
226,110 |
|
|
|
|
|
|
|
187,501 |
|
|
|
62,135 |
|
|
|
136,220 |
|
|
|
7,750 |
|
|
|
619,716 |
|
Counsel and Corporate |
|
|
2007 |
|
|
|
216,431 |
|
|
|
|
|
|
|
168,737 |
|
|
|
66,978 |
|
|
|
111,384 |
|
|
|
7,750 |
|
|
|
571,280 |
|
Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown in this column represent the aggregate grant date fair value of awards
calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of
these amounts are described in Note 14 to the Companys audited financial statements for the
fiscal year ended December 31, 2009, included in the Companys Annual Report on Form 10-K that
was filed with the SEC on February 25, 2010. All LTIP grants and grants of restricted stock
were made under the Companys Amended and Restated 2006 Equity Incentive Plan (the 2006
Plan), and are subject to individual award agreements, the forms of which were previously
filed with the SEC. During 2009, there were no forfeitures of restricted stock awards related
to service-based vesting conditions for the named executive officers. |
|
(2) |
|
The amounts shown in this column represent the aggregate grant date fair value of awards
calculated in accordance with FASB ASC Topic 718 (calculated, per the SEC rules, without
consideration of the impact of estimated forfeitures related to service-based vesting
conditions). Assumptions used in the calculation of these amounts are described in Note 14 to
the Companys audited financial statements for the fiscal year ended December 31, 2009,
included in the Companys Annual Report on Form 10-K that was filed with the SEC on February
25, 2010. All grants of options to purchase the Companys common stock were made under the
2006 Plan, and are subject to individual award agreements, the forms of which were previously
filed with the SEC, except that the Balthrop Option (see below under Narrative to Summary
Compensation Table and Grants of Plan-Based Awards in 2009 Table) was not issued pursuant to
a stockholder approved plan. During 2009, there were no forfeitures of option awards related
to service-based vesting conditions for the named executive officers. |
|
(3) |
|
The amounts shown in this column reflect annual cash-based incentive bonuses earned by each
of the named executive officers pursuant to the Companys 2007, 2008 and 2009 management
incentive plans, respectively, which are discussed in further detail under Compensation
Discussion and AnalysisExecutive Compensation for 2009. The potential payouts under the
2009 plan at the time the plan was established in 2009 are provided below under Grants of
Plan-Based Awards in 2009. |
32
|
|
|
(4) |
|
This column includes matching payments under our 401(k) Plan and the Registered Retirement
Savings Plan in Canada. |
|
(5) |
|
This amount includes the 2008 and 2007 installments, respectively, of the payments to Mr.
Balthrop in connection with the repricing of his sign-on option grant in 2005. |
|
(6) |
|
This amount consists of a signing bonus granted to Mr. Pintek in connection with the
Companys hiring Mr. Pintek on July 1, 2009. |
|
(7) |
|
This amount includes $154,762 of relocation expenses associated with the Companys hiring Mr.
Pintek on July 1, 2009. |
|
(8) |
|
Dr. Bridge-Cooks base salary, which is paid in Canadian dollars, has been translated to
United States dollars using an average of the currency exchange rate for each reported
calendar year. |
|
(9) |
|
Represents a one-time cash bonus paid to Dr. Bridge-Cook in connection with entering into an
employment agreement with the Company in March 2007. This amount, which was paid in Canadian
dollars, has been translated to United States dollars using the currency exchange rate on the
date the payment was made. |
|
(10) |
|
Dr. Bridge-Cooks annual cash bonus, which was paid in Canadian dollars, has been translated
to United States dollars using the currency exchange rate on the date the payment was made. |
|
(11) |
|
Matching payments made under our Registered Retirement Savings Plan in Canada for Dr.
Bridge-Cook, which were paid in Canadian dollars, have been translated to United States
dollars using an average of the currency exchange rate for each reported calendar year. |
33
Grants Of Plan-Based Awards in 2009
The following table summarizes grants of plan-based awards made to our named executive
officers in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Awards: |
|
|
Exercise |
|
|
Date |
|
|
|
|
|
|
|
Estimated Future Payouts |
|
|
Estimated Future Payouts |
|
|
Number |
|
|
Number of |
|
|
or Base |
|
|
Fair Value |
|
|
|
|
|
|
|
Under Non-Equity Incentive |
|
|
Under Equity Incentive Plan |
|
|
of Shares |
|
|
Securities |
|
|
Price of |
|
|
of Stock |
|
|
|
|
|
|
|
Plan Awards(1) |
|
|
Awards(2) |
|
|
of Stock |
|
|
Underlying |
|
|
Option |
|
|
and Option |
|
|
|
Grant |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
or Units |
|
|
Options |
|
|
Awards |
|
|
Awards |
|
Name |
|
Date |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
($/Sh) |
|
|
($)(3) |
|
Patrick J.
Balthrop, Sr. |
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,289 |
|
|
|
|
|
|
|
|
|
|
|
599,989 |
|
|
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,610 |
|
|
|
15.67 |
|
|
|
290,982 |
|
|
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,632 |
|
|
|
51,052 |
|
|
|
140,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,855,333 |
|
|
|
|
N/A |
|
|
|
247,500 |
|
|
|
495,000 |
|
|
|
655,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harriss T. Currie |
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,358 |
|
|
|
|
|
|
|
|
|
|
|
224,990 |
|
|
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,228 |
|
|
|
15.67 |
|
|
|
109,112 |
|
|
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,486 |
|
|
|
19,144 |
|
|
|
52,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
695,743 |
|
|
|
|
N/A |
|
|
|
73,184 |
|
|
|
146,367 |
|
|
|
219,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael F. Pintek |
|
|
7/1/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,445 |
|
|
|
|
|
|
|
|
|
|
|
507,184 |
|
|
|
|
7/1/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,334 |
|
|
|
18.48 |
|
|
|
192,932 |
|
|
|
|
N/A |
|
|
|
78,750 |
|
|
|
157,500 |
|
|
|
236,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy Bridge-Cook |
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,751 |
|
|
|
|
|
|
|
|
|
|
|
262,488 |
|
|
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,267 |
|
|
|
15.67 |
|
|
|
127,306 |
|
|
|
|
N/A |
|
|
|
67,672 |
|
|
|
135,345 |
|
|
|
203,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Reiter |
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,358 |
|
|
|
|
|
|
|
|
|
|
|
224,990 |
|
|
|
|
5/12/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,228 |
|
|
|
15.67 |
|
|
|
109,112 |
|
|
|
|
N/A |
|
|
|
69,863 |
|
|
|
139,726 |
|
|
|
209,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown in these columns reflect the threshold, target and maximum amounts
(assuming threshold, target and maximum performance across all performance objectives were
achieved) that each of the named executive officers (other than our CEO) could have earned
for the fiscal year ended December 31, 2009 pursuant to the Companys 2009 management
incentive plans. The terms of our named executive officer bonus plans are discussed in
further detail in Compensation Discussion and AnalysisExecutive Compensation for 2009
The amounts actually awarded to each of the named executive officers are reflected in the
Summary Compensation Table above. |
|
(2) |
|
The amounts shown in these columns reflect the threshold, target and maximum number of
shares underlying restricted stock units (assuming threshold, target and maximum performance
across all performance objectives were achieved) that our CEO and CFO could earn pursuant to
the Companys LTIP. The terms of the 2009 LTIP grants are discussed in further detail in
Compensation Discussion and Analysis Long-Term Stock-Based Incentive Compensation. |
|
(3) |
|
The amounts shown in this column reflect the grant date fair value of the respective stock
and option awards calculated in accordance with FASB ASC Topic 718. |
34
Narrative to Summary Compensation Table and Grants of Plan-Based Awards in 2009 Table
The following discussion is intended to be read as a supplement to the Summary Compensation
Table and the Grants of Plan-Based Awards in 2009 table (including the notes to such tables),
and to the disclosure under Compensation Discussion and Analysis, and the following discussion
should be read in conjunction with such other disclosures.
Compensation Mix
As reflected in the Summary Compensation Table and Grants of Plan-Based Awards in 2009
table, the primary components of the Companys 2009 compensation program for our named executive
officers were cash compensation, consisting of a mix of base salary and cash incentive plan
compensation, and equity incentive compensation, consisting of a mix of stock options and
restricted stock with time-based vesting. Generally, and excluding the Companys CEO, cash
incentive plan compensation for 2009 was 6% to 14% of the total of these elements (not including
LTIP awards), while the value of 2009 equity awards, valued at fair market value on the date of
grant, for 2009 represented 47% to 77% of the total compensation opportunities for 2009 (not
including LTIP awards). As for the CEO, Mr. Balthrops cash incentive compensation for 2009 was
19% of the total of these elements (not including LTIP awards) and his equity award, valued at fair
market value on the date of grant, for 2009 was 53% of the total compensation elements (not
including LTIP awards). For Mr. Balthrop, bonus compensation for 2009 was 9% of these elements,
including the LTIP award (assuming Target payouts), while the value of 2009 equity awards,
including the LTIP award (assuming Target payouts), valued at fair market value on the date of
grant, for 2009 represented approximately 73% of these elements. For a detailed discussion of each
of these components, including the LTIP, and explanation of how the level of each of these elements
of compensation is generally determined in relation to an executives total compensation, see
Compensation Discussion and Analysis Program Design.
For information regarding the annual incentive and LTIP awards to our named executive officers
for our 2009 fiscal year, please see Compensation Discussion and Analysis Annual Incentive Plan
for Named Executive Officers Other than CEO, Compensation Discussion and Analysis Long-Term
Stock-Based Incentive Compensation.
Option Repricing
Mr. Balthrop was hired as the Companys chief executive officer and president on May 15, 2004.
In connection therewith, Mr. Balthrop was granted a non-qualified stock option to purchase 500,000
shares of common of the Company (the Balthrop Option). The Balthrop Option is subject to
time-based vesting, provided Mr. Balthrop continues in the employment of the Company, with 125,000
shares vested as of May 15, 2005, and the remaining shares vested in equal increments over the
following 36 months. The Balthrop Option was initially granted at an exercise price of $9.36 per
share. As previously reported, at a meeting of the Committee on February 10, 2005, the Committee
approved resolutions to increase the exercise price of the Balthrop Option from $9.36 per share to
$10.10 per share (the closing market price on the date immediately preceding the original grant
date). This modification was made in order to eliminate the potential application of certain
adverse tax implications in light of tax law changes created as a result of the American Jobs
Creation Action of 2004. In connection therewith, the Compensation Committee of our board of
directors approved a cash bonus payable to Mr. Balthrop to be paid consistent with the vesting
period of the Balthrop Option, subject to Mr. Balthrops continued employment, equal to $370,000.
According to the vesting schedule and assuming no acceleration event contemplated by the Balthrop
Option, one quarter of the cash bonus was paid as of May 15, 2005 (the first vesting date and under
the Balthrop Option) and the balance of such payments were made in equal monthly installments over
the 36 months thereafter and are reflected in the Bonus column of the Summary Compensation
Table.
Employment Agreements
We have entered into employment agreements with each of our named executive officers, each
previously filed with the SEC. The employment agreements provide for certain salary, annual bonus
opportunities and other benefits, including potential severance entitlements. The employment
agreements with Messrs. Balthrop, Currie, Pintek, Bridge-Cook, and Reiter are generally
automatically renewable on an annual basis unless either party provides the other written notice of
its intent not to renew the agreement at least 60 (in the case of Messrs. Currie, Pintek, and
Reiter), or 180 (for Mr. Balthrop), days prior to the end of the then-current term of their
agreements. The agreement with Dr. Bridge-Cook is for an indefinite term and thus does not provide
a non-renewal notice/option, but it may be terminated by us at any time, subject to our severance
payment obligations. These agreements are described in more detail under Compensation Discussion
and AnalysisChange in Control; Termination Benefits. The potential payouts under these
agreements in connection with the termination of these executives is provided under Potential
Payments Upon Termination or Change in Control.
35
Outstanding Equity Awards at 2009 Fiscal Year-End
The following table summarizes the number of outstanding equity awards held by each of our named
executive officers as of December 31, 2009. The market value of shares was calculated using the
year-end closing price of $14.93 as reported on the NASDAQ Global Market.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards; |
|
|
Incentive Plan |
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
Number of |
|
|
Awards; |
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
Unearned |
|
|
Market Value |
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Shares or |
|
|
Shares or |
|
|
of Unearned |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
Option |
|
|
Option |
|
|
Shares or Units |
|
|
Units That |
|
|
Units That |
|
|
Shares or Units |
|
|
|
Options (#) |
|
|
Options (#) |
|
|
Exercise |
|
|
Grant |
|
|
Expiration |
|
|
That Have Not |
|
|
Have Not |
|
|
Have Not |
|
|
That Have Not |
|
Name |
|
Exercisable |
|
|
Unexercisable (1) |
|
|
Price ($) |
|
|
Date |
|
|
Date |
|
|
Vested (#) (2) |
|
|
Vested ($) |
|
|
Vested (#) |
|
|
Vested ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick J. Balthrop, Sr. |
|
|
500,000 |
(3) |
|
|
|
|
|
|
10.10 |
|
|
|
05/15/04 |
|
|
|
05/15/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,689 |
|
|
|
9,845 |
|
|
|
14.39 |
|
|
|
03/25/07 |
|
|
|
03/25/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,703 |
|
|
|
11,407 |
|
|
|
20.70 |
|
|
|
05/13/08 |
|
|
|
05/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,610 |
|
|
|
15.67 |
|
|
|
05/12/09 |
|
|
|
05/12/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,800 |
|
|
|
191,104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,581 |
|
|
|
396,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,638 |
|
|
|
367,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,289 |
|
|
|
571,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,564 |
(4) |
|
|
1,531,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,396 |
(5) |
|
|
2,096,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harriss T. Currie |
|
|
10,000 |
|
|
|
|
|
|
|
17.00 |
|
|
|
03/15/00 |
|
|
|
03/15/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
|
|
|
|
|
13.05 |
|
|
|
04/25/01 |
|
|
|
04/25/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
6.52 |
|
|
|
05/23/02 |
|
|
|
05/23/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
|
|
|
|
4.68 |
|
|
|
03/17/03 |
|
|
|
03/17/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,000 |
|
|
|
|
|
|
|
8.41 |
|
|
|
10/13/03 |
|
|
|
10/13/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
|
|
|
|
8.22 |
|
|
|
03/25/04 |
|
|
|
03/25/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,948 |
|
|
|
3,475 |
|
|
|
14.39 |
|
|
|
03/25/07 |
|
|
|
03/25/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,677 |
|
|
|
3,355 |
|
|
|
20.70 |
|
|
|
05/13/08 |
|
|
|
05/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,228 |
|
|
|
15.67 |
|
|
|
05/12/09 |
|
|
|
05/12/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,871 |
|
|
|
57,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,910 |
|
|
|
88,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,381 |
|
|
|
140,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,247 |
|
|
|
108,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,358 |
|
|
|
214,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,648 |
(5) |
|
|
786,035 |
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
Incentive Plan |
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
Awards; |
|
|
Awards; |
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
Number of |
|
|
Market Value of |
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Shares or |
|
|
Unearned |
|
|
Unearned |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
Option |
|
|
Option |
|
|
Shares or Units |
|
|
Units That |
|
|
Shares or Units |
|
|
Shares or Units |
|
Name and Principal |
|
Options (#) |
|
|
Options (#) |
|
|
Exercise |
|
|
Grant |
|
|
Expiration |
|
|
That Have Not |
|
|
Have Not |
|
|
That Have Not |
|
|
That Have Not |
|
Position |
|
Exercisable |
|
|
Unexercisable (1) |
|
|
Price ($) |
|
|
Date |
|
|
Date |
|
|
Vested (#) (2) |
|
|
Vested ($) |
|
|
Vested (#) |
|
|
Vested ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael F.Pintek |
|
|
|
|
|
|
18,334 |
|
|
|
18.48 |
|
|
|
07/01/09 |
|
|
|
07/01/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,445 |
|
|
|
409,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy Bridge-Cook |
|
|
502 |
|
|
|
|
|
|
|
31.34 |
|
|
|
02/28/07 |
|
|
|
01/05/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
514 |
|
|
|
|
|
|
|
28.49 |
|
|
|
02/28/07 |
|
|
|
08/18/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,248 |
|
|
|
3,813 |
(6) |
|
|
25.65 |
|
|
|
02/28/07 |
|
|
|
09/05/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
352 |
|
|
|
88 |
(7) |
|
|
21.09 |
|
|
|
02/28/07 |
|
|
|
05/20/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,677 |
|
|
|
3,355 |
|
|
|
20.70 |
|
|
|
05/13/08 |
|
|
|
05/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,267 |
|
|
|
15.67 |
|
|
|
05/12/09 |
|
|
|
05/12/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
223,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,247 |
|
|
|
108,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,751 |
|
|
|
250,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Reiter |
|
|
110,000 |
|
|
|
|
|
|
|
8.41 |
|
|
|
10/13/03 |
|
|
|
10/13/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,211 |
|
|
|
2,606 |
|
|
|
14.39 |
|
|
|
03/25/07 |
|
|
|
03/25/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,677 |
|
|
|
3,355 |
|
|
|
20.70 |
|
|
|
05/13/08 |
|
|
|
05/13/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,228 |
|
|
|
15.67 |
|
|
|
05/12/09 |
|
|
|
05/12/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,871 |
|
|
|
57,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,542 |
|
|
|
52,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,036 |
|
|
|
105,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,247 |
|
|
|
108,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,358 |
|
|
|
214,365 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Except as provided in footnote (3) with respect to the Balthrop Option and footnotes (6)
and (7) with respect to options granted to Dr. Bridge-Cook in exchange for employee stock
options in connection with the Companys acquisition of Tm Bioscience in March 2007, all
options vest in equal 1/3rd increments on each anniversary of the grant date over
the first three years of the option term. |
|
(2) |
|
The restrictions applicable to these awards lapse with respect to 1/5th of the
total shares subject to the grant each year on each anniversary of the grant date, beginning
on the anniversary of the grant date. |
37
|
|
|
(3) |
|
The Balthrop Option was subject to time-based vesting, with an initial 125,000 shares
vested as of May 15, 2005, and the remaining shares vesting in equal monthly increments over
the following 36 months. |
|
(4) |
|
Represents restricted stock units granted under the LTIP, subject to various performance
related vesting criteria over a period of two years as follows: (i) one half of the grant is
conditioned upon Luminexs average common stock trading price for the last twenty consecutive
trading days of 2010; and (ii) one half of the grant is conditioned upon the achievement of
certain operating cash flow goals for the year ended December 31, 2010. Vesting of the grant
(after giving effect to the aforementioned performance conditions) will occur 50% upon the
date on which the determination is made as to the satisfaction of performance criteria and
the remaining 50% of the RSUs earned on the determination date will vest on December 31,
2012. |
|
(5) |
|
Represents restricted stock units granted under the LTIP, subject to various performance
related vesting criteria over a period of two years as follows: (i) one half of the grant is
conditioned upon Luminexs average common stock trading price for the last twenty consecutive
trading days of 2011; and (ii) one half of the grant is conditioned upon the achievement of
certain operating cash flow goals for the year ended December 31, 2011. Vesting of the grant
(after giving effect to the aforementioned performance conditions) will occur 50% upon the
date on which the determination is made as to the satisfaction of performance criteria and
the remaining 50% of the RSUs earned on the determination date will vest on December 31,
2013. |
|
(6) |
|
The unvested portion of this option, granted in connection with the Companys acquisition
of Tm Bioscience in exchange for an employee stock option, vests in three equal installments
on September 5, 2008, 2009 and 2010. |
|
(7) |
|
The unvested portion of this option, granted in connection with the Companys acquisition
of Tm Bioscience in exchange for an employee stock option, vests in three equal installments
on May 20, 2008, 2009 and 2010. |
38
Option Exercises And Stock Vested in 2009
The following table sets forth information regarding the exercise of stock options and the
vesting of restricted stock awards during the fiscal year ended December 31, 2009 for each of the
named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of |
|
|
|
|
|
|
Number |
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
of Shares |
|
|
Value |
|
|
|
Acquired |
|
|
Value Realized |
|
|
Acquired |
|
|
Realized on |
|
Name |
|
on Exercise (#) |
|
|
on Exercise ($) |
|
|
on Vesting (#) |
|
|
Vesting ($) (1) |
|
Patrick J.
Balthrop, Sr. |
|
|
|
|
|
|
|
|
|
|
221,419 |
|
|
|
3,468,608 |
|
Harriss T. Currie |
|
|
|
|
|
|
|
|
|
|
11,763 |
|
|
|
203,418 |
|
Michael F. Pintek |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy Bridge-Cook |
|
|
|
|
|
|
|
|
|
|
6,811 |
|
|
|
110,726 |
|
David S. Reiter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The value realized upon the vesting of restricted shares shown in the table is calculated
based upon the closing price of our common stock on the NASDAQ Global Market on the vesting
date. |
39
Potential Payments Upon Termination or Change in Control
The following tables show for each of our named executive officers the estimated amount of
potential payments, as well as estimated value of continuing benefits, assuming the executives
employment terminated or a change in control occurred, in either case effective December 31, 2009
and based on compensation and benefit levels in effect on December 31, 2009. Due to the numerous
factors involved in estimating these amounts, the actual benefits and amounts payable can only be
determined at the time of an executives termination from the Company.
Patrick J. Balthrop, Sr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause |
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary |
|
|
|
|
|
|
or Termination |
|
|
|
|
|
|
in Connection |
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
|
Termination or |
|
|
|
|
|
|
for Good |
|
|
For Cause |
|
|
with a Change |
|
|
Change in |
|
|
|
|
|
|
|
Payments Upon Separation |
|
Retirement ($) |
|
|
Retirement ($) |
|
|
Reason ($) |
|
|
Termination ($) |
|
|
in Control ($) |
|
|
Control ($) |
|
|
Disability ($) |
|
|
Death ($) |
|
Cash Severance (1) |
|
|
|
|
|
|
|
|
|
|
495,000 |
|
|
|
|
|
|
|
495,000 |
|
|
|
|
|
|
|
495,000 |
|
|
|
495,000 |
|
Non-equity Incentive
Compensation (Bonus) (1) |
|
|
|
|
|
|
|
|
|
|
889,691 |
|
|
|
|
|
|
|
889,691 |
|
|
|
|
|
|
|
889,691 |
|
|
|
889,691 |
|
Accelerated Vesting of
Options (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,316 |
|
|
|
5,316 |
|
|
|
5,316 |
|
Accelerated Vesting of
Restricted Stock (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,246,997 |
|
|
|
5,154,851 |
|
|
|
5,154,851 |
|
Continuation of Insurance
Benefits (3) |
|
|
|
|
|
|
|
|
|
|
12,581 |
|
|
|
|
|
|
|
12,581 |
|
|
|
|
|
|
|
12,581 |
|
|
|
12,581 |
|
Excise Tax Gross-Up |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
1,397,272 |
|
|
|
|
|
|
|
1,397,272 |
|
|
|
3,252,313 |
|
|
|
6,557,440 |
|
|
|
6,557,440 |
|
|
|
|
(1) |
|
The cash severance entitlement is described under Compensation Discussion and
AnalysisChange in Control; Termination Benefits. |
|
(2) |
|
Accelerated vesting of stock options and restricted stock is triggered upon a change of
control (whether or not the executives employment is terminated), with respect to stock
options and restricted stock (other than restricted stock units granted under the LTIP), or
the death or disability of the executive, with respect to restricted stock (including
restricted stock units granted under the LTIP). With respect to the unvested restricted
stock units granted under the LTIP, if a change of control occurs prior to the end of the
performance period, performance criteria (as adjusted appropriately and proportionately for
such shorter period) will be measured as of the effective date of the change of control, with
the number of restricted stock units reduced, depending upon the year in which the change of
control occurs. For purposes of the above table, the number of restricted stock units
granted to Mr. Balthrop under the LTIP commencing in 2008 has been reduced by a factor of
0.3333 and under the LTIP commencing in 2009 has been reduced by a factor of 0.6667, in each
case assuming a change of control occurred on December 31, 2009. The above table assumes
that Mr. Balthrop would be deemed to have achieved all adjusted performance criteria under
the LTIP as of the effective date of the change of control. Accelerated vesting of stock
option amounts are calculated as the difference between the closing market price of our
common stock on December 31, 2009 ($14.93 per share as reported on the NASDAQ Global Market)
and the respective exercise prices of in-the-money unvested stock options. The closing
market price on December 31, 2009 is also used to calculate accelerated vesting of restricted
stock and restricted stock unit amounts |
|
(3) |
|
Reflects the present value of the medical premiums the executive would be entitled to for a
period of 12 months following the termination date. Amounts are based upon the types of
insurance coverage the Company carried for such executive as of December 31, 2009 and the
premiums in effect on such date. |
40
Harriss T. Currie
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause |
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary |
|
|
|
|
|
|
or Termination |
|
|
|
|
|
|
in Connection |
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
|
Termination or |
|
|
|
|
|
|
for Good |
|
|
For Cause |
|
|
with a Change |
|
|
Change in |
|
|
|
|
|
|
|
Payments Upon Separation |
|
Retirement ($) |
|
|
Retirement ($) |
|
|
Reason ($) |
|
|
Termination ($) |
|
|
in Control ($) |
|
|
Control ($) |
|
|
Disability ($) |
|
|
Death ($) |
|
Cash Severance (1) |
|
|
|
|
|
|
|
|
|
|
292,734 |
|
|
|
|
|
|
|
292,734 |
|
|
|
|
|
|
|
292,734 |
|
|
|
292,734 |
|
Non-equity Incentive
Compensation (Bonus) (1) |
|
|
|
|
|
|
|
|
|
|
143,089 |
|
|
|
|
|
|
|
143,089 |
|
|
|
|
|
|
|
143,089 |
|
|
|
143,089 |
|
Accelerated Vesting of
Options (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,877 |
|
|
|
1,877 |
|
|
|
1,877 |
|
Accelerated Vesting of
Restricted Stock (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
870,637 |
|
|
|
1,394,686 |
|
|
|
1,394,686 |
|
Continuation of Insurance
Benefits (3) |
|
|
|
|
|
|
|
|
|
|
20,026 |
|
|
|
|
|
|
|
20,026 |
|
|
|
|
|
|
|
20,026 |
|
|
|
20,026 |
|
Excise Tax Gross-Up |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
455,849 |
|
|
|
|
|
|
|
455,849 |
|
|
|
872,514 |
|
|
|
1,852,412 |
|
|
|
1,852,412 |
|
|
|
|
(1) |
|
The cash severance entitlement is described under Compensation Discussion and
AnalysisChange in Control; Termination Benefits. |
|
(2) |
|
Accelerated vesting of stock options and restricted stock is triggered upon a change of
control (whether or not the executives employment is terminated), with respect to stock
options and restricted stock (other than restricted stock units granted under the LTIP), or
the death or disability of the executive, with respect to restricted stock (including
restricted stock units granted under the LTIP). With respect to the unvested restricted
stock units granted under the LTIP, if a change of control occurs prior to the end of the
performance period, performance criteria (as adjusted appropriately and proportionately for
such shorter period) will be measured as of the effective date of the change of control,
with the number of restricted stock units reduced, depending upon the year in which the
change of control occurs. For purposes of the above table, the number of restricted stock
units granted to Mr. Currie under the LTIP commencing in 2009 has been reduced by a factor
of 0.6667 assuming a change of control occurred on December 31, 2009. The above table
assumes that Mr. Currie would be deemed to have achieved all adjusted performance criteria
under the LTIP as of the effective date of the change of control. Accelerated vesting of
stock option amounts are calculated as the difference between the closing market price of
our common stock on December 31, 2009 ($14.93 per share as reported on the NASDAQ Global
Market) and the respective exercise prices of in-the-money unvested stock options. The
closing market price on December 31, 2009 is also used to calculate accelerated vesting of
restricted stock and restricted stock unit amounts. |
|
(3) |
|
Reflects the present value of the medical premiums the executive would be entitled to
for a period of 12 months following the termination date. Amounts are based upon the types
of insurance coverage the Company carried for such executive as of December 31, 2009 and
the premiums in effect on such date. |
41
Michael F. Pintek
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause |
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary |
|
|
|
|
|
|
or Termination |
|
|
|
|
|
|
in Connection |
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
|
Termination or |
|
|
|
|
|
|
for Good |
|
|
For Cause |
|
|
with a Change |
|
|
Change in |
|
|
|
|
|
|
|
Payments Upon Separation |
|
Retirement ($) |
|
|
Retirement ($) |
|
|
Reason ($) |
|
|
Termination ($) |
|
|
in Control ($) |
|
|
Control ($) |
|
|
Disability ($) |
|
|
Death ($) |
|
Cash Severance (1) |
|
|
|
|
|
|
|
|
|
|
315,000 |
|
|
|
|
|
|
|
315,000 |
|
|
|
|
|
|
|
315,000 |
|
|
|
315,000 |
|
Non-equity Incentive
Compensation (Bonus) (1) |
|
|
|
|
|
|
|
|
|
|
144,965 |
|
|
|
|
|
|
|
144,965 |
|
|
|
|
|
|
|
144,965 |
|
|
|
144,965 |
|
Accelerated Vesting of
Options (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of
Restricted Stock (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409,754 |
|
|
|
409,754 |
|
|
|
409,754 |
|
Continuation of Insurance
Benefits (3) |
|
|
|
|
|
|
|
|
|
|
17,796 |
|
|
|
|
|
|
|
17,796 |
|
|
|
|
|
|
|
17,796 |
|
|
|
17,796 |
|
Excise Tax Gross-Up |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
477,761 |
|
|
|
|
|
|
|
477,761 |
|
|
|
409,754 |
|
|
|
887,515 |
|
|
|
887,515 |
|
|
|
|
(1) |
|
The cash severance entitlement is described under Compensation Discussion and
AnalysisChange in Control; Termination Benefits. |
|
(2) |
|
Accelerated vesting of stock options and restricted stock is triggered upon a change of
control (whether or not the executives employment is terminated), with respect to stock
options and restricted stock, or the death or disability of the executive, with respect to
restricted stock. Accelerated vesting of stock option amounts are calculated as the
difference between the closing market price of our common stock on December 31, 2009 ($14.93
per share as reported on the NASDAQ Global Market) and the respective exercise prices of
in-the-money unvested stock options. The closing market price on December 31, 2009 is also
used to calculate accelerated vesting of restricted stock amounts. |
|
(3) |
|
Reflects the present value of the medical premiums the executive would be entitled to for a
period of 12 months following the termination date. Amounts are based upon the types of
insurance coverage the Company carried for such executive as of December 31, 2009 and the
premiums in effect on such date. |
42
Jeremy Bridge-Cook
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause |
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary |
|
|
|
|
|
|
or Termination |
|
|
|
|
|
|
in Connection |
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
|
Termination or |
|
|
|
|
|
|
for Good |
|
|
For Cause |
|
|
with a Change |
|
|
Change in |
|
|
|
|
|
|
|
Payments Upon Separation (1) |
|
Retirement ($) |
|
|
Retirement ($) |
|
|
Reason ($) |
|
|
Termination ($) |
|
|
in Control ($) |
|
|
Control ($) |
|
|
Disability ($) |
|
|
Death ($) |
|
Cash Severance (2) |
|
|
|
|
|
|
|
|
|
|
322,420 |
|
|
|
|
|
|
|
322,420 |
|
|
|
|
|
|
|
322,420 |
|
|
|
322,420 |
|
Non-equity Incentive
Compensation (Bonus) (2) |
|
|
|
|
|
|
|
|
|
|
152,872 |
|
|
|
|
|
|
|
152,872 |
|
|
|
|
|
|
|
152,872 |
|
|
|
152,872 |
|
Accelerated Vesting of
Options (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated Vesting of
Restricted Stock (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
582,240 |
|
|
|
582,240 |
|
|
|
582,240 |
|
Continuation of Insurance
Benefits (4) |
|
|
|
|
|
|
|
|
|
|
2,477 |
|
|
|
|
|
|
|
2,477 |
|
|
|
|
|
|
|
2,477 |
|
|
|
2,477 |
|
Excise Tax Gross-Up |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
477,769 |
|
|
|
|
|
|
|
477,769 |
|
|
|
582,240 |
|
|
|
1,060,009 |
|
|
|
1,060,009 |
|
|
|
|
(1) |
|
The amounts listed in this table, which would have been paid in Canadian dollars, have
been translated to United States dollars using the currency exchange rate on December 31,
2009. |
|
(2) |
|
The cash severance entitlement is described under Compensation Discussion and
AnalysisChange in Control; Termination Benefits. |
|
(3) |
|
Accelerated vesting of stock options and restricted stock is triggered upon a change of
control (whether or not the executives employment is terminated), with respect to stock
options and restricted stock, or the death or disability of the executive, with respect to
restricted stock. Accelerated vesting of stock option amounts are calculated as the
difference between the closing market price of our common stock on December 31, 2009
($14.93 per share as reported on the NASDAQ Global Market) and the respective exercise
prices of in-the-money unvested stock options. The closing market price on December 31,
2009 is also used to calculate accelerated vesting of restricted stock amounts. |
|
(4) |
|
Reflects the present value of the medical premiums the executive would be entitled to
for a period of 12 months following the termination date. Amounts are based upon the types
of insurance coverage the Company carried for such executive as of December 31, 2009 and
the premiums in effect on such date. |
43
David S. Reiter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause |
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary |
|
|
|
|
|
|
or Termination |
|
|
|
|
|
|
in Connection |
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
|
Termination or |
|
|
|
|
|
|
for Good |
|
|
For Cause |
|
|
with a Change |
|
|
Change in |
|
|
|
|
|
|
|
Payments Upon Separation |
|
Retirement ($) |
|
|
Retirement ($) |
|
|
Reason ($) |
|
|
Termination ($) |
|
|
in Control ($) |
|
|
Control ($) |
|
|
Disability ($) |
|
|
Death ($) |
|
Cash Severance (1) |
|
|
|
|
|
|
|
|
|
|
279,451 |
|
|
|
|
|
|
|
279,451 |
|
|
|
|
|
|
|
279,451 |
|
|
|
279,451 |
|
Non-equity Incentive
Compensation (Bonus) (1) |
|
|
|
|
|
|
|
|
|
|
136,220 |
|
|
|
|
|
|
|
136,220 |
|
|
|
|
|
|
|
136,220 |
|
|
|
136,220 |
|
Accelerated Vesting of
Options (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,407 |
|
|
|
1,407 |
|
|
|
1,407 |
|
Accelerated Vesting of
Restricted Stock (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
538,286 |
|
|
|
538,286 |
|
|
|
538,286 |
|
Continuation of Insurance
Benefits (3) |
|
|
|
|
|
|
|
|
|
|
17,796 |
|
|
|
|
|
|
|
17,796 |
|
|
|
|
|
|
|
17,796 |
|
|
|
17,796 |
|
Excise Tax Gross-Up |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
433,467 |
|
|
|
|
|
|
|
433,467 |
|
|
|
539,693 |
|
|
|
973,161 |
|
|
|
973,161 |
|
|
|
|
(1) |
|
The cash severance entitlement is described under Compensation Discussion and
AnalysisChange in Control; Termination Benefits. |
|
(2) |
|
Accelerated vesting of stock options and restricted stock is triggered upon a change of
control (whether or not the executives employment is terminated), with respect to stock
options and restricted stock, or the death or disability of the executive, with respect to
restricted stock. Accelerated vesting of stock option amounts are calculated as the
difference between the closing market price of our common stock on December 31, 2009
($14.93 per share as reported on the NASDAQ Global Market) and the respective exercise
prices of in-the-money unvested stock options. The closing market price on December 31,
2009 is also used to calculate accelerated vesting of restricted stock amounts. |
|
(3) |
|
Reflects the present value of the medical premiums the executive would be entitled to
for a period of 12 months following the termination date. Amounts are based upon the types
of insurance coverage the Company carried for such executive as of December 31, 2009 and
the premiums in effect on such date. |
44
Director Compensation for 2009
The following table summarizes the compensation paid with respect to the fiscal year ended
December 31, 2009 to each of the Companys non-employee directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in |
|
|
Stock |
|
|
Option |
|
|
All Other |
|
|
|
|
Name |
|
Cash ($) |
|
|
Awards ($) (1) |
|
|
Awards ($) (2) |
|
|
Compensation ($) |
|
|
Total ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Walter Loewenbaum
II |
|
|
120,320 |
|
|
|
182,630 |
|
|
|
|
|
|
|
|
|
|
|
302,950 |
|
Robert J. Cresci |
|
|
63,320 |
|
|
|
80,621 |
|
|
|
|
|
|
|
|
|
|
|
143,941 |
|
Thomas W. Erickson |
|
|
6,000 |
|
|
|
149,361 |
|
|
|
|
|
|
|
|
|
|
|
155,361 |
|
Fred C. Goad, Jr. |
|
|
10,000 |
|
|
|
114,386 |
|
|
|
|
|
|
|
|
|
|
|
124,386 |
|
Jay B. Johnston |
|
|
8,000 |
|
|
|
149,361 |
|
|
|
|
|
|
|
|
|
|
|
157,361 |
|
Jim D. Kever |
|
|
7,000 |
|
|
|
114,386 |
|
|
|
|
|
|
|
|
|
|
|
121,386 |
|
Kevin M. McNamara |
|
|
6,000 |
|
|
|
164,375 |
|
|
|
|
|
|
|
|
|
|
|
170,375 |
|
Edward A. Ogunro |
|
|
23,880 |
|
|
|
68,616 |
|
|
|
|
|
|
|
|
|
|
|
92,496 |
|
J. Stark Thompson (3) |
|
|
27,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000 |
|
Gerard Vaillant |
|
|
63,320 |
|
|
|
80,621 |
|
|
|
|
|
|
|
|
|
|
|
143,941 |
|
|
|
|
(1) |
|
The amounts shown in this column represent aggregate grant date fair value of awards
calculated in accordance with FASB ASC Topic 718. All grants of restricted shares were made
under the 2006 Plan and are subject to individual award agreements, the forms of which were
previously filed with the SEC. As of December 31, 2009, the aggregate number of unvested
restricted shares outstanding for each of the Companys non-employee directors was as
follows: Loewenbaum 20,641, Cresci 5,198, Erickson 16,083, Goad 12,793, Johnston
16,083, Kever 12,793, McNamara 14,316, Ogunro 4,421, Thompson 0, and Vaillant
5,198. |
|
(2) |
|
All prior option awards vested before 2009. As of December 31, 2009, the aggregate
number of shares subject to option awards outstanding for each of the Companys non-employee
directors was as follows: Loewenbaum 100,000, Cresci 35,000, Erickson 262,500, Goad
10,000, Johnston 15,000, Kever 35,000, McNamara 80,000, Thompson 0, and Vaillant
15,000. |
|
(3) |
|
Mr. Thompson ceased being a director on May 21, 2009 upon the expiration of his term. |
45
Narrative to Director Compensation Table
Following the completion of its review of the appropriateness of our non-employee director
compensation policy in light of our objectives described below, the compensation policy for our
non-employee directors for 2009 was recommended by our Compensation Committee and approved by our
board of directors. This policy was designed to fairly pay our directors for work required for a
company of our size, scope and complexity, be competitive within an appropriate peer group, and
incorporate an equity component to help align our directors interests with the long-term interests
of our stockholders. We also have adopted stock ownership guidelines for our directors to further
promote this alignment of interests, which can be found in our corporate governance guidelines.
The Director Compensation Table reflects the following compensation policy for our
non-employee directors for 2009 (the Policy), and the individual choices made by each
non-employee director with respect to compensation for their services during 2009 based on the
Policy:
|
|
|
|
|
|
|
Annual Retainer |
|
Annual Cash Retainer for Board and Committee Meetings |
|
$ |
45,760 |
|
|
|
|
|
|
Additional Annual Retainers |
|
|
|
|
Chairman of the Board of Directors |
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$ |
72,000 |
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Executive Committee Chair |
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$ |
14,000 |
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Compensation Committee Chair |
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$ |
14,000 |
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Audit Committee Chair |
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$ |
20,000 |
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Nominating and Corporate Governance Committee Chair |
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$ |
8,000 |
|
Annual retainers for non-employee directors and board and committee chairs are payable
quarterly in arrears. Non-employee directors have the option of accepting all or any part of the
foregoing cash retainer payments in the form of restricted stock. Restricted stock received in
lieu of cash retainers is granted at the annual meeting and vests quarterly on the quarterly cash
payment dates, subject to continued services by directors as a director or chairperson, as
applicable. Non-employee directors may also elect to defer receipt of such restricted stock in
lieu of cash payments and the annual stock retainer as described below.
Non-employee directors do not receive additional compensation for attendance at board
meetings. Each non-employee board member receives $1,000 per meeting for attendance at committee
meetings (to the extent not held in conjunction with a full board meeting), including formal
telephonic meetings and Executive Committee meetings. Non-employee directors do not have the
option of accepting all or any part of cash meeting payments in the form of restricted stock or
deferring such fees as described below.
Non-employee directors also are eligible to receive restricted share awards in the amounts
below. The restricted shares are issued pursuant and subject to the terms of the Companys 2006
Plan and the form of award agreement previously filed with the SEC and vest one year from the date
of grant. Annual grants of restricted stock are made on the date of the annual meeting of
stockholders.
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Fair Market Value of |
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|
|
Restricted Stock Award |
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|
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on Date of Grant |
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Each Continuing Board Member |
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$ |
68,640 |
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Additional Grants |
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|
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Chairman of the Board of Directors |
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$ |
114,000 |
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Executive Committee Chair |
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$ |
21,000 |
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Compensation Committee Chair |
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$ |
21,000 |
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Audit Committee Chair |
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$ |
30,000 |
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Nominating and Corporate Governance Committee Chair |
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$ |
12,000 |
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46
Non-employee directors may annually make an election to defer (i) the annual restricted stock
award and (ii) all or a portion of the annual cash retainers by electing to receive restricted
stock units settled at a future date, generally retirement from the board of directors or other
termination of service. Such restricted stock units vest one year from the date of grant.
In addition, non-employee directors are reimbursed for reasonable expenses incurred to attend
board and committee meetings and other Company-related business meetings if a board members
presence is requested, as well as director education programs.
Our director who is also an employee (Mr. Balthrop) received no additional compensation for
his services as a director for 2009.
For 2010, the Compensation Committee has recommended, and the board of directors has approved
substantially similar compensation opportunities for our non-employee directors with the only
substantive change being that all committee chairs will receive the same annual cash and restricted
stock awards as follows: $12,000 cash, and $18,000 in equity.
47
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us regarding the ownership of the
common stock of the Company as of the record date (except as otherwise indicated below) by (i) each
director and director nominee, (ii) each named executive officer, (iii) all directors and executive
officers as a group and (iv) each person known to us to own beneficially 5% or more of our
outstanding common stock.
The information set forth below includes shares of common stock directly and indirectly owned
and shares of common stock underlying currently exercisable options, as well as those options which
will become exercisable within 60 days of March 29, 2010. Except as otherwise indicated, the named
persons below have sole voting and dispositive power with respect to beneficially owned shares.
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Common Stock Beneficially Owned |
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Total as a |
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Number of Shares |
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Percentage of |
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Beneficial Owner |
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Owned (1) |
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Shares Outstanding |
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Directors and Named Executive Officers (2) |
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G. Walter Loewenbaum II (3) |
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1,547,383 |
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3.7 |
% |
Robert J. Cresci (4) |
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237,594 |
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* |
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Thomas W. Erickson |
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307,787 |
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* |
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Fred C. Goad, Jr. |
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315,120 |
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* |
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Jay Johnston |
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90,513 |
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* |
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Jim D. Kever |
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178,286 |
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* |
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Kevin M. McNamara |
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112,502 |
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* |
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Edward A. Ogunro |
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5,424 |
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* |
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Gerard Vaillant |
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67,386 |
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* |
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Patrick J. Balthrop, Sr. |
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907,446 |
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2.1 |
% |
Harriss T. Currie |
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307,056 |
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* |
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Michael F. Pintek |
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42,248 |
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* |
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Jeremy Bridge-Cook |
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82,136 |
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* |
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David S. Reiter |
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193,977 |
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* |
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All directors and executive officers
as a group (16 persons) |
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4,642,642 |
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7.3 |
% |
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Other 5% Stockholders |
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St. Denis J. Villere & Company, LLC (5)
210 Baronne Street, Suite 808
New Orleans, LA 70112 |
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4,119,340 |
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9.8 |
% |
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Sectoral Asset Management, Inc. (6)
2120-1000 Sherbrooke St.
West Montreal
PQ H3A 3G4 Canada |
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3,617,249 |
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8.6 |
% |
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Pictet & CIE Europe SA. (7)
1 Boulevard Royal
Luxembourg
Luxembourg L-2016 N4 2016 |
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2,822,392 |
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6.7 |
% |
|
BlackRock, Inc. (8)
40 East 52nd Street
New York, New York 10022 |
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2,502,912 |
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6.0 |
% |
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* |
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Less than 1%. |
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(1) |
|
Includes shares attributable to shares of common stock not outstanding but subject to
currently exercisable options (as well as those options which will become exercisable within
60 days of March 29, 2010) as follows: Mr. Loewenbaum 100,000 shares; Mr. Cresci 35,000
shares; Mr. Erickson 262,500 shares; Mr. Goad 10,000 shares; Mr. Johnston 15,000 shares;
Mr. Kever 35,000 shares; Mr. McNamara 80,000 shares; Dr. Ogunro 0 shares; Mr. Vaillant
15,000 shares; Mr. Balthrop 551,810 shares; Mr. Currie 215,176 shares; Mr. Pintek 0
shares; Dr. Bridge-Cook 23,048 shares; Mr. Reiter 123,570 shares; and all directors and
executive officers as a group 1,568,690 shares. |
48
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(2) |
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The applicable address for all directors and named executive officers is c/o Luminex
Corporation, 12212 Technology Boulevard, Austin, Texas 78727. |
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(3) |
|
Does not include 1,109,910 shares held by Mr. Loewenbaums wife, Lillian Loewenbaum; 17,153
shares held by a trust for the benefit of Lillian Loewenbaum of which Lillian Loewenbaum is
the trustee; 50,472 shares held by trusts for Mr. Loewenbaums descendants for which Mr.
Loewenbaum is the trustee; and, 127,472 shares held by a trust for the benefit of
Mr. Loewenbaums descendants which has an independent trustee and over which Mr. Loewenbaum
neither has nor shares investment or voting power. |
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(4) |
|
Mr. Cresci has granted a security interest in 160,650 shares directly owned by him as
collateral for a loan. |
|
(5) |
|
This information is as of December 31, 2009, and is based solely on a Schedule 13G/A filed by
St. Denis J. Villere & Company on March 5, 2009. St. Denis J. Villere & Company is an
investment advisor registered under Section 203 of the Investment Advisors Act of 1940 and
reports sole voting and dispositive power as to 724,123 shares and shared voting and
dispositive power as to 3,395,217 shares. |
|
(6) |
|
This information is as of December 31, 2009, and is based solely on a Schedule 13G/A filed by
Sectoral Asset Management, Inc. on February 12, 2010. Sectoral Asset Management Inc. is an
investment advisor registered under Section 203 of the Investment Advisors Act of 1940 and
reports sole voting power as to 2,906,325 shares and sole dispositive power as to 3,617,249
shares. |
|
(7) |
|
This information is as of December 31, 2009, and is based solely on a Schedule 13G filed by
Pictet & CIE Europe SA on January 12, 2009 Pictet & CIE Europe SA is an investment company
registered under Section 8 of the Investment Company Act of 1940. |
|
(8) |
|
This information is as of December 31, 2009, and is based solely on a Schedule 13G filed by
BlackRock, Inc. on January 29, 2010. BlackRock, Inc. is a holding company as defined in Rule
13d-1(b)(1)(ii)(G) of the Securities Exchange Act of 1934 and reports sole voting power as to
2,502,912 shares and sole dispositive power as to 2,502,912 shares. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since the beginning of the last fiscal year, we are aware of no related party transactions
between us and any of our directors, nominees for director, executive officers, 5% stockholders or
their immediate family members which require disclosure under Item 404 of Regulation S-K under the
Securities Exchange Act of 1934.
We have adopted a written related party transaction policy, administered by our Audit
Committee, that requires the Audit Committee (or the chair of the Audit Committee in certain
instances with respect to de minimus transactions) to review and either ratify, approve or
disapprove all Interested Transactions, subject to certain exceptions for specified pre-approved
transactions not believed to create a material interest with respect to a Related Party.
Interested Transactions are generally defined to include any transaction, arrangement or
relationship or series of similar transactions, arrangements or relationships (including any
indebtedness or guarantee of indebtedness) in which:
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the aggregate amount involved exceeded, or will or may be expected to exceed, $120,000
in any calendar year; |
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the Company was, is or will be a participant; and |
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any Related Party had, has or will have a direct or indirect interest. |
For purposes of the policy, a Related Party is any:
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person who is or was (since the beginning of the last fiscal year for which the Company
has filed a Form 10-K and proxy statement, even if they do not presently serve in that
role) an executive officer, director or nominee for election as a director; |
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greater than 5% beneficial owner of the Companys common stock; |
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immediate family member of any of the foregoing; or |
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firm, corporation or other entity in which any of the foregoing persons is employed or
is a general partner, managing member or principal or in a similar position or in which
such person has a 10% or greater beneficial ownership interest. |
In determining whether to approve or ratify an Interested Transaction under the policy, the
Audit Committee is to consider all relevant information and facts available to it regarding the
Interested Transaction and take into account factors such as the Related Partys relationship to
the Company and interest (direct or indirect) in the transaction, the terms of the transaction and
the benefits to the Company of the transaction. No director is to participate in the approval of
an Interested Transaction for which he or she is a Related Party or otherwise has a direct or
indirect interest.
49
In addition, the Audit Committee is to review and assess ongoing Interested Transactions, if
any, on at least an annual basis to determine whether any such transactions remain appropriate or
should be modified or terminated.
Our related party transaction policy has been incorporated into our Code of Compliance, which
can be viewed at the Investor Relations section of our website at www.luminexcorp.com.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, our directors, executive officers and any
persons holding more than ten percent of our common stock are required to report their initial
ownership of our common stock and any subsequent changes in their ownership to the SEC. Specific
due dates have been established by the SEC, and we are required to disclose in this Proxy Statement
any failure of such persons to file by those dates. Based solely upon the copies of Section 16(a)
reports that we have received from such persons for their transactions in 2009 and written
representations to the Company that we have received from such persons that no other reports were
required, we believe that there has been compliance with all Section 16(a) filing requirements
applicable to such directors, executive officers and ten-percent beneficial owners for 2009, except
that Gerard Vaillant filed a Form 4 late on December 3, 2009 which did not timely disclose one
transaction and on multiple occasions executive officers reported the withholding of shares by the
Company for purposes of settling taxes due upon the vesting of restricted shares on a subsequent
Form 4 or Form 5, rather than filing a Form 4 on or before the second business day following such
withholding. Specifically, David S. Reiter filed a Form 5 on February 12, 2010 related to shares
withheld for taxes on May 13, 2009, Russell W. Bradley filed a Form 5 on February 12, 2010 related
to shares withheld for taxes on May 26, 2009, Patrick J. Balthrop filed a Form 5 on February 12,
2010 related to shares withheld for taxes on May 15, 2009, David S. Reiter filed a Form 4 on May
14, 2009 reporting (among other things) shares withheld for taxes on March 25, 2009, Gregory J.
Gosch and Harriss T. Currie each filed a Form 4 on May 14, 2009 reporting (among other things)
shares withheld for taxes for each of them on March 25, 2009, March 31, 2009, and April 5, 2009,
Jeremy Bridge-Cook filed a Form 4 on May 14, 2009 reporting (among other things) shares withheld
for taxes on March 1, 2009, and Patrick J. Balthrop and Russell W. Bradley filed a Form 4 on May
14, 2009 reporting (among other things) shares withheld for taxes on March 25, 2009 and April 5,
2009. The Company and such officers have revised their filing practices to now file a Form 4
reporting such withholding of shares for settling taxes on or prior to the second business day
following such withholding.
EXPENSES AND SOLICITATION
We will bear the cost of soliciting proxies. Proxies may be solicited in person or by
telephone, facsimile, electronic mail, Internet, or other electronic medium by certain of our
directors, officers and regular employees, without additional compensation. The Company requests
that brokerage houses and other custodians, nominees and fiduciaries forward solicitation materials
to the beneficial owners of shares of the Companys common stock held of record by such persons,
and the Company will reimburse such brokers and other fiduciaries for their reasonable
out-of-pocket expenses incurred when the solicitation materials are forwarded.
STOCKHOLDER PROPOSALS FOR 2011 ANNUAL MEETING
It is contemplated that our 2011 annual meeting of stockholders will take place in May 2011.
Stockholders proposals will be eligible for consideration for inclusion in the proxy statement for
the 2011 annual meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 if such
proposals are received by us before the close of business on December 8, 2010. Notices of
stockholders proposals submitted outside the processes of Rule 14a-8 will be considered timely
(but not considered for inclusion in our proxy statement), pursuant to the advance notice
requirement set forth in our bylaws, if such notices are filed with our Secretary not earlier than
February 20, 2011 nor later than April 21, 2011 in the manner specified in the bylaws. For
proposals that are not timely filed, we retain discretion to vote proxies that we receive. For
proposals that are timely filed, we retain discretion to vote proxies that we receive provided (1)
we include in our proxy statement advice on the nature of the proposal and how we intend to
exercise our voting discretion and (2) the proponent does not issue a proxy statement. In order to
curtail any controversy as to the date on which a proposal was received by us, we suggest that
stockholders submit their proposals by certified mail, return receipt requested.
50
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the board of directors intends to
present or knows that others will present at the Meeting is as set forth above. If any other
matter or matters are properly brought before the Meeting, or an adjournment or postponement
thereof, it is the intention of the persons named in the accompanying form of proxy to vote the
proxy on such matters in accordance with their best judgment.
UPON WRITTEN REQUEST OF ANY STOCKHOLDER TO DAVID REITER, CORPORATE SECRETARY, LUMINEX
CORPORATION, 12212 TECHNOLOGY BOULEVARD, AUSTIN, TEXAS 78727, THE COMPANY WILL PROVIDE WITHOUT
CHARGE A COPY OF THE COMPANYS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2009, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
Austin, Texas
April 7, 2010
51
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LUMINEX CORPORATION
12212 TECHNOLOGY BLVD.
AUSTIN, TX 78727
ATTN: KENDEL MARTIN |
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VOTE BY INTERNET - www.proxyvote.com Use the
Internet to transmit your voting instructions and
for electronic delivery of information up until
11:59 p.m. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand
when you access the web site and follow the
instructions to obtain your records and to create
an electronic voting instruction form. |
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If
you would like to reduce the costs incurred by our
company in mailing proxy materials, you can consent
to receiving all future proxy statements, proxy
cards and annual reports electronically via e-mail
or the Internet. To sign up for electronic
delivery, please follow the instructions above to
vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy
materials electronically in future years. |
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VOTE BY PHONE - 1-800-690-6903 Use any touch-tone
telephone to transmit your voting instructions up
until 11:59 p.m. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card
in hand when you call and then follow the
instructions. |
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VOTE BY MAIL Mark, sign and date your proxy card
and return it in the postage-paid envelope we have
provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS: |
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M22772-P92013 |
KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION
ONLY |
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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LUMINEX CORPORATION |
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For All |
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Withhold All |
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For All Except |
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To withhold authority to vote for any individual
nominee(s), mark For All Except and write the number(s) of the
nominee(s) on the line below.
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The Board of Directors recommends
that you vote FOR the following: |
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o |
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1. |
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Election of Directors |
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Nominees: |
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01) Robert J. Cresci
02) Thomas W. Erickson
03) Gerard Vaillant |
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The Board of Directors
recommends you vote FOR the following proposal: |
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For |
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Against |
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Abstain |
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2. |
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Proposal to ratify the appointment of Ernst & Young LLP as the Companys independent registered public accounting firm for
fiscal 2010. |
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NOTE: Such other business as
may properly come before the meeting or any adjournment thereof. |
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Please sign exactly as your name(s)
appear(s) hereon. When signing as attorney, executor, administrator, or
other fiduciary, please give full title as such. Joint owners should each
sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] |
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Signature
(Joint Owners) |
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Important Notice
Regarding the Availability of Proxy Materials for the Annual Meeting:
The
Notice & Proxy Statement and Annual Report are available at
www.proxyvote.com.
M22773-P92013
REVOCABLE PROXY
LUMINEX CORPORATION
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF LUMINEX CORPORATION FOR USE ONLY AT THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 2010 AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned hereby appoints Harris T. Currie and David S. Reiter, or either of them, or any successors in their respective positions, as proxies
with full power of substitution, and hereby authorizes them to represent the undersigned and to vote, as designated on the reverse side, all the
shares of common stock of Luminex Corporation (the Company) held of record by the undersigned as of March 25, 2010 at the Annual Meeting
of Stockholders (the Annual Meeting) to be held at The Hilton Austin Airport Hotel, 9515 New Airport Drive, Austin, Texas 78719 on
Thursday, May 20, 2010 at 10:00 a.m. local time, or at any adjournment or postponement thereof. The Board of Directors recommends a vote
FOR The Boards Class I Director nominees and FOR the ratification of the appointment of Ernst & Young LLP as the Companys independent
registered public accounting firm for fiscal 2010. Shares of common stock of the Company will be voted as specified. If not otherwise specified,
this proxy will be voted FOR the election of the Board of Directors Class I Director nominees to the Board of Directors and FOR the ratification
of the appointment of Ernst & Young LLP as the Companys independent registered public accounting firm for fiscal 2010 and on other matters
properly presented at The Annual Meeting or any postponement or adjournment thereof, at the discretion of the proxies. You may revoke this
proxy at any time prior to the time it is voted at the Annual Meeting in the manner described in the Proxy Statement. This proxy may not be voted
for any person who is not a nominee of the Board of Directors of the Company.
Continued and to
be signed on reverse side