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
Filed by
the Registrant
x
Filed
by a Party other than the Registrant
¨
Check the
appropriate box:
¨
|
Preliminary
Proxy Statement
|
¨
|
Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
|
x
|
Definitive
Proxy Statement
|
¨
|
Definitive
Additional Materials
|
¨
|
Soliciting
Material Pursuant to §14a-11(c) or Rule
14a-12
|
SENORX,
INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
|
(1)
|
Title
of each class of securities to which transaction applies:
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
¨
|
Fee
paid previously with preliminary
materials.
|
¨
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount
Previously Paid:
|
|
(2)
|
Form,
Schedule, or Registration Statement No.:
|
NOTICE
OF
2009
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON JUNE 9, 2009
To
our Stockholders:
You are
cordially invited to attend the 2009 Annual Meeting of Stockholders of SenoRx,
Inc. (“
SenoRx
”). The
meeting will be held at our principal executive offices located at 3 Morgan,
Irvine, California 92618 at 9:00 a.m. local time on June 9, 2009, for the
following purposes:
|
1.
|
To
elect two Class II directors, each to serve for a three-year term which
will expire at the 2012 Annual Meeting of Stockholders or until such time
as a successor has been duly elected and
qualified;
|
|
2.
|
To
ratify the appointment of Deloitte & Touche LLP as our
independent registered public accounting firm for the fiscal year ending
December 31, 2009; and
|
|
3.
|
To
transact such other business as may properly come before the Annual
Meeting, including any motion to adjourn to a later date to permit further
solicitation of proxies, if necessary, or before any adjournment
thereof.
|
The
foregoing items of business are more fully described in the proxy statement
accompanying this Notice.
The
meeting will begin promptly at 9:00 a.m. local time, and check-in will begin at
8:30 a.m. local time. Only those who are SenoRx (Nasdaq: SENO) common
stockholders of record at the close of business on April 14, 2009 will be
entitled to receive notice of, and vote at, the Annual Meeting and any
postponements or adjournments of the meeting. If you are a stockholder of
record, you will be asked to present proof of identification for admission to
the annual meeting. If your shares are held in the name of a broker, bank or
other nominee, you may be asked to present a statement from your broker, bank or
other nominee, reflecting your beneficial ownership of SenoRx common stock as of
April 14, 2009 as well as a proxy from the record-holder to you, for admission
to the 2009 Annual Meeting. Please be prepared to provide this
documentation
if
requested.
For a
period of at least 10 days prior to the meeting, during normal business hours,
at our principal executive offices located at 3 Morgan, Irvine, California
92618, a complete list of stockholders entitled to vote at the meeting will be
available for examination by any stockholder, for any purpose in connection with
the Annual Meeting.
|
|
|
|
By
order of the Board of Directors,
|
|
|
|
|
By:
|
|
|
Lloyd
H. Malchow
|
|
|
President,
Chief Executive Officer and Director
|
|
Irvine,
California
May 6,
2009
YOUR
VOTE IS IMPORTANT!
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE PROMPTLY. YOU MAY VOTE
THROUGH THE INTERNET OR BY TELEPHONE, IN EACH CASE AS INSTRUCTED ON THE ENCLOSED
PROXY CARD; OR, YOU MAY COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. NO ADDITIONAL POSTAGE IS NECESSARY IF
THE PROXY IS MAILED IN THE UNITED STATES. YOU MAY REVOKE YOUR PROXY AT ANY TIME
BEFORE IT IS VOTED AT THE MEETING.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 9, 2009.
The Company’s Proxy Statement, form
of proxy card and Annual Report on Form 10-K are available at
http://investor.senorx.com/annuals.cfm
.
TABLE
OF CONTENTS
|
Page
|
QUESTIONS
AND ANSWERS REGARDING THIS SOLICITATION AND VOTING AT THE
ANNUAL
MEETING
|
1
|
|
|
Why
am I receiving these proxy materials?
|
1
|
What
is the purpose of the annual meeting?
|
1
|
Who
is entitled to attend the meeting?
|
1
|
Who
is entitled to vote at the meeting?
|
1
|
How
many shares must be present or represented to conduct
business?
|
1
|
What
will be voted on at the meeting?
|
2
|
How
does the Board of Directors recommend that I vote?
|
2
|
What
shares can I vote at the meeting?
|
2
|
What
is the difference between holding shares as a stockholder of record and as
a beneficial owner?
|
2
|
How
can I vote my shares without attending the meeting?
|
3
|
How
can I vote my shares in person at the meeting?
|
3
|
Can
I change my vote?
|
3
|
Is
my vote confidential?
|
3
|
How
are votes counted?
|
3
|
What
is a “broker non-vote”?
|
4
|
How
are “broker non-votes” counted?
|
4
|
How
are abstentions counted?
|
4
|
What
happens if additional matters are presented at the
meeting?
|
4
|
Who
will serve as inspector of election?
|
4
|
What
should I do if I receive more than one proxy?
|
4
|
Who
is soliciting my vote and who is paying the costs?
|
4
|
How
can I find out the results of the voting?
|
4
|
What
is the deadline for proposing action or director
candidates?
|
5
|
How
can I obtain the Proxy Materials on the Internet?
|
5
|
|
|
MANAGEMENT
|
6
|
|
|
Executive
Officers and Directors
|
6
|
Executive
Officers
|
8
|
|
|
STOCK
OWNERSHIP
|
9
|
|
|
Security
Ownership of Certain Beneficial Owners and Management
|
9
|
|
|
CORPORATE
GOVERNANCE AND BOARD MATTERS
|
11
|
|
|
Director
Independence
|
11
|
Board
and Committee Meetings
|
11
|
Policies
and Procedures for Related Party Transactions
|
11
|
Indemnification
Agreements of Officers and Directors
|
11
|
Code
of Business and Ethical Conduct
|
12
|
Communications
with the Board of Directors
|
12
|
Consideration
of Director Nominees
|
12
|
|
|
REPORT
OF THE AUDIT COMMITTEE
|
14
|
|
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
15
|
|
|
Securities
Authorized for Issuance Under Equity Compensation Plans
|
21
|
2008
Summary Compensation Table
|
22
|
Grants
of Plan-Based Awards in 2008
|
23
|
Equity
Incentive Awards Outstanding as of December 31, 2008
|
24
|
Option
Exercise and Stock Vested in 2008
|
25
|
Employment
Agreements
|
25
|
Nonqualified
Deferred Compensation
|
25
|
2008
Director Compensation
|
25
|
Director
Compensation
|
26
|
Change
in Control Benefits
|
28
|
2009
Compensation
|
30
|
Limits
on Liability and Indemnification
|
30
|
Board
of Directors and Compensation Committee Interlocks and Insider
Participation
|
30
|
REPORT
OF COMPENSATION COMMITTEE
|
31
|
|
|
PROPOSAL
ONE—ELECTION OF DIRECTOR
|
32
|
|
|
Classes
of the Board of Directors
|
32
|
Nominee
for Director for Three-Year Term Ending 2011
|
32
|
Board
of Directors’ Recommendation
|
32
|
Directors
Continuing in Office Until 2009
|
32
|
Directors
Continuing in Office Until 2010
|
32
|
|
|
PROPOSAL
TWO—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
|
33
|
|
|
Board
of Directors’ Recommendation
|
33
|
Fees
Paid to Independent Auditors
|
33
|
Audit
Fees
|
33
|
Pre-Approval
Policy
|
33
|
|
|
OTHER
MATTERS
|
34
|
PROXY
STATEMENT
FOR
2009
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON JUNE 9, 2009
The Board
of Directors of SenoRx, Inc., a Delaware corporation, is soliciting the enclosed
proxy from you. The proxy will be used at our 2009 Annual Meeting of
Stockholders to be held on June 9, 2009, beginning at 9:00 a.m., local time, at
our principal executive offices located at 3 Morgan, Irvine, California 92618,
and at any postponements or adjournments thereof. This proxy statement contains
important information regarding the meeting. Specifically, it identifies the
matters upon which you are being asked to vote, provides information that you
may find useful in determining how to vote and describes the voting
procedures.
In this
proxy statement: the terms “
we,
” “
our,
” “
SenoRx
” and the “
Company
” each refer to
SenoRx, Inc.; the term “
Board
” means our Board of
Directors; the term “
proxy
materials
” means this proxy statement, the enclosed proxy card and our
Annual Report on Form 10-K for the year ended December 31, 2008, filed
with the U.S. Securities and Exchange Commission on March 16, 2009, which
you should read; and the term “
Annual Meeting
” means our
2009 Annual Meeting
of
Stockholders.
We are
sending these proxy materials on or about May 6, 2009 (the “
Proxy Date
”), to all
stockholders of record at the close of business on April 14, 2009 (the “
Record Date
”).
QUESTIONS
AND ANSWERS REGARDING THIS SOLICITATION
AND
VOTING AT THE ANNUAL MEETING
|
|
Why
am I receiving
these proxy materials?
|
You
are receiving these proxy materials from us because you were a stockholder
of record at the close of business on the Record Date which was April 14,
2009. As a stockholder of record, you are invited to attend the meeting
and are entitled to and requested to vote on the items of business
described in this proxy statement.
|
|
|
What
is the purpose of
the
annual meeting?
|
At
our meeting, stockholders of record will vote upon the items of business
outlined in the notice of meeting (on the cover page of this proxy
statement), each of which is described more fully in this proxy statement.
In addition, management will report on the performance of our Company and
respond to questions from stockholders.
|
|
|
Who
is entitled to
attend
the meeting?
|
You
are entitled to attend the meeting
only
if you were a
SenoRx stockholder (or joint holder) of record as of the close of business
on April 14, 2009, or if you hold a valid proxy for the meeting. You
should be prepared to present photo identification for
admittance.
Please
also note that if you are not a stockholder of record but hold shares in
street name
(that
is, through a broker or nominee), you will need to provide proof of
beneficial ownership as of the Record Date, such as your most recent
brokerage account statement, a copy of the voting instruction card
provided by your broker, trustee or nominee, or other similar evidence of
ownership.
The
meeting will begin promptly at 9:00 a.m., local time. Check-in will begin
at 8:30 a.m.
local
time.
|
|
|
Who
is entitled to vote
at
the meeting?
|
Only
stockholders who owned our common stock at the close of business on the
Record Date are entitled to notice of the Annual Meeting and to vote at
the meeting, and at any postponements or adjournments
thereof.
|
|
|
How
many shares
must
be present or
represented
to
conduct
business?
|
The
presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of our common stock at the close of business on the
Record Date will constitute a quorum. A quorum is required to conduct
business at the meeting. Both abstentions and broker non-votes are counted
for the purpose of determining the presence of a
quorum.
|
|
|
What
will be voted on
at
the meeting?
|
The
items of business scheduled to be voted on at the meeting are as
follows:
1.
the election of two nominees to serve as Class II directors on our
Board; and
2.
the ratification of the appointment of our independent registered public
accounting firm for the 2009 fiscal year.
These
proposals are described more fully below in this proxy statement. As of
the date of this proxy statement, the only business that our Board intends
to present or knows of that others will present at the meeting is set
forth in this proxy statement. If any other matter or matters are properly
brought before the meeting, it is the intention of the persons who hold
proxies to vote the shares they represent in accordance with their best
judgment.
|
|
|
How
does the Board of Directors
recommend
that
I
vote?
|
Our
Board recommends that you vote your shares “FOR” the two director nominees
and “FOR” the ratification of the appointment of the independent
registered public accounting firm for the 2009 fiscal
year.
|
|
|
What
shares can I
vote
at the meeting?
|
You
may vote all shares owned by you as of the Record Date, including
(1) shares held directly in your name as the
stockholder of record
,
and (2) shares held for you as the
beneficial owner
through a broker, trustee or other nominee such as a
bank.
|
|
|
What
is the difference
between
holding
shares
as a
stockholder
of record
and
as a
beneficial
owner?
|
Most
of our stockholders hold their shares through a broker or other nominee
rather than directly in their own name. As summarized below, there are
some distinctions between shares held of record and those owned
beneficially.
Stockholders of Record.
If your shares are registered directly in your name with our transfer
agent, Computershare Trust Company, N.A., you are considered to be, with
respect to those shares, the
stockholder of record
,
and these proxy materials are being sent directly to you by us. As the
stockholder of
record
, you have the right to grant your voting proxy directly to
SenoRx or to vote in person at the meeting. We have enclosed a proxy card
for you to use.
Beneficial Owner.
If
your shares are held in a brokerage account or by another nominee, you are
considered the
beneficial owner
of
shares held
in street
name
, and these proxy materials are being forwarded to you together
with a voting instruction card. As the beneficial owner, you have the
right to direct your broker, trustee or nominee how to vote and are also
invited to attend the meeting. Please note that since a beneficial owner
is not the
stockholder
of record
, you may not vote these shares in person at the meeting
unless you obtain a “legal proxy” from the broker, trustee or nominee that
holds your shares, giving you the right to vote the shares at the meeting.
Your broker, trustee or nominee has enclosed or provided voting
instructions for you to use in directing the broker, trustee or nominee
how to vote your shares.
|
|
|
How
can I vote my
shares
without
attending
the
meeting?
|
Whether
you hold shares directly as the stockholder of record or beneficially in
street name, you may direct how your shares are voted without attending
the meeting. Stockholders of record of our common stock may submit proxies
by completing, signing and dating their proxy cards and mailing them in
the accompanying pre-addressed envelope. SenoRx stockholders who hold
shares beneficially in street name may vote by mail by completing, signing
and dating the voting instruction cards provided by the broker, trustee or
nominee and mailing them in the accompanying pre-addressed envelope. In
addition, if you are a stockholder of record, you may grant a proxy to
vote your shares at the annual meeting by telephone, by calling
1-800-652-8683 and following the simple recorded instructions, twenty-four
hours a day, seven days a week, at any time prior to 10:59 p.m. Pacific
Time on June 8, 2009, the day before the annual meeting.
Alternatively, as a stockholder of record, you may vote via the Internet
at any time prior to 10:59 p.m. Pacific Time on June 8, 2009, the day
before the annual meeting, by going to http://www.investorvote.com to
create an electronic ballot. If you vote by telephone or the Internet, you
will be required to provide the control number contained on your proxy
card. If your shares are held in street name, your proxy card may contain
instructions from your broker, bank or nominee that allow you to vote your
shares using the Internet or by telephone. Please consult with your
broker, bank or nominee if you have any questions regarding the electronic
voting of shares held in street name. The granting of proxies
electronically is allowed by Section 212(c)(2) of the Delaware
General Corporation Law.
|
|
|
How
can I vote my
shares
in person at
the
meeting?
|
Shares
held in your name as the stockholder of record may be voted in person at
the meeting. Shares held beneficially in street name may be voted in
person only if you obtain a legal proxy from the broker, trustee or
nominee that holds your shares giving you the right to vote the shares.
Even
if you plan to attend the meeting, we recommend that you also submit your
proxy card or voting instructions as described above so that your vote
will be counted if you later decide not to, or are unable to, attend the
meeting.
|
|
|
Can
I change
my
vote?
|
You
may change your vote at any time prior to the vote at the meeting. If you
are the stockholder of record, you may change your vote by granting a new
proxy bearing a later date (which automatically revokes the earlier
proxy), by providing a written notice of revocation to our Secretary prior
to your shares being voted, or by attending the meeting and voting in
person. Attendance at the meeting will not cause your previously granted
proxy to be revoked unless you specifically so request.
For
shares you hold beneficially in street name, you may change your vote by
submitting new voting instructions to your broker, trustee or nominee, or,
if you have obtained a legal proxy from your broker, trustee or nominee
giving you the right to vote your shares, by attending the meeting and
voting in person.
|
|
|
Is
my
vote
confidential?
|
Proxy
instructions, ballots and voting tabulations that identify individual
stockholders are handled in a manner that protects your voting privacy.
Your vote will not be disclosed either within SenoRx or to third parties,
except: (1) as necessary to meet applicable legal requirements,
(2) to allow for the tabulation of votes and certification of the
vote, and (3) to facilitate a successful proxy solicitation.
Occasionally, stockholders provide written comments on their proxy card,
which are then forwarded to SenoRx management.
|
|
|
How
are
votes
counted?
|
The
vote required to approve each item of business and the method for counting
votes is set
forth
below:
Election of Director.
You may vote “FOR” the director nominee, “AGAINST” the director nominee,
or you may choose to “WITHHOLD” your vote for the director nominee by
striking through the nominee’s name on your proxy. The two director
nominees receiving the highest number of affirmative “FOR” votes at the
meeting (a plurality of votes cast) will be elected to serve as the
Class II directors. A properly executed proxy marked “WITHHOLD” with
respect to the election of one or more directors will not be voted with
respect to the director or directors indicated, although it will be
counted for purposes of determining whether there is a
quorum.
Ratification of Independent
Registered Public Accounting Firm.
For the ratification of the
appointment of our independent registered public accounting firm, the
affirmative “FOR” vote of a majority of the shares represented in person
or by proxy and entitled to vote on the item will be required for
approval. You may vote “FOR,” “AGAINST” or “ABSTAIN” for this item of
business. If you choose to “ABSTAIN,” your abstention has the same effect
as a vote “AGAINST.”
If
you provide specific instructions with regard to certain items, your
shares will be voted as you
instruct
on such items. If you sign your proxy card or voting instruction card
without giving specific instructions, your shares will be voted in
accordance with the recommendations of the Board (“FOR” our nominee to the
Board and “FOR” ratification of the independent registered public
accounting firm, and in the discretion of the proxy holders on any other
matters that properly come before the meeting).
|
What
is a
“broker
non-vote”?
|
Under
the rules that govern brokers who have record ownership of shares that are
held in street name for their clients, who are the beneficial owners of
the shares, brokers have the discretion to vote such shares on routine
matters. The election of a director and the ratification of the
appointment of independent registered public accounting firm are
considered routine matters. Therefore, if you do not otherwise instruct
your broker, the broker may turn in a proxy card voting your shares “FOR”
our nominee to the Board and “FOR” ratification of the independent
registered public accounting firm. A “
broker non-vote
” occurs
when a broker expressly instructs on a proxy card that it is not voting on
a matter, whether routine or non-routine.
|
|
|
How
are “broker
non-votes”
counted?
|
Broker
non-votes will be counted for the purpose of determining the presence or
absence of a quorum for the transaction of business, but they will
not
be counted in
tabulating the voting result for any particular
proposal.
|
|
|
How
are
abstentions
counted?
|
If
you return a proxy card that indicates an abstention from voting on all
matters, the shares represented will be counted for the purpose of
determining both the presence of a quorum and the total number of votes
cast with respect to a proposal (other than the election of directors),
but they will not be voted on any matter at the meeting. In the absence of
controlling precedent to the contrary, we intend to treat abstentions in
this manner. Accordingly, abstentions will have the same effect as a vote
“
AGAINST
” a
proposal.
|
|
|
What
happens if
additional
matters are
presented
at
the
meeting?
|
Other
than the two proposals described in this proxy statement, we are not aware
of any other business to be acted upon at the meeting. If you grant a
proxy, the persons named as proxy holders, Kevin Cousins (our Vice
President, Finance and Chief Financial Officer) and Lloyd H. Malchow (our
President and Chief Executive Officer), will have the discretion to vote
your shares on any additional matters properly presented for a vote at the
meeting. If, for any unforeseen reason, the nominee for director is not
available as a candidate, the persons named as proxy holders will vote
your proxy for such other candidate as may be nominated by our
Board.
|
|
|
Who
will serve as
inspector
of election?
|
We
expect a representative of Computershare Trust Company, N.A., our transfer
agent, to tabulate the votes and act as inspector of election at the
meeting.
|
|
|
What
should I do if I
receive
more than
one
proxy?
|
You
may receive more than one set of these proxy solicitation materials,
including multiple copies of this proxy statement and multiple proxy cards
or voting instruction cards. For example, if you hold your shares in more
than one brokerage account, you may receive a separate voting instruction
card for each brokerage account in which you hold shares. In addition, if
you are a stockholder of record and your shares are registered in more
than one name, you may receive more than one proxy card. Please complete,
sign, date and return each SenoRx proxy card and voting instruction card
that you receive to ensure that all your shares are
voted.
|
|
|
Who
is soliciting my
vote
and who is paying
the
costs?
|
Your
vote is being solicited on behalf of our Board and we will pay the costs
associated with the solicitation of proxies, including preparation,
assembly, printing and mailing of this
proxy
statement.
|
|
|
How
can I find out the results of
the
voting?
|
We
intend to announce preliminary voting results at the meeting and publish
final results in our quarterly report on Form 10-Q for the second
quarter of fiscal 2009.
|
|
|
|
|
What
is the deadline
for
proposing
action
or
director
candidates?
|
As
a stockholder, you may be entitled to present proposals for action at a
future meeting of stockholders, including director
nominations.
Stockholder Proposals:
For a stockholder proposal to be considered for inclusion in the SenoRx
proxy statement for the annual meeting to be held in 2010, the written
proposal must be received by the Secretary of the Company at our principal
executive offices no earlier than February 24, 2010 and not
later than March 25, 2010. If the date of next year’s annual meeting
is moved more than 30 days before or after the anniversary date of this
year’s annual meeting, the deadline for inclusion of proposals in our
proxy statement will instead be a reasonable time before we begin to print
and mail next year’s proxy materials. Stockholder proposals must comply
with the requirements of Rule 14a-8 of the Securities Exchange Act of
1934, as amended (the “
Exchange Act
”), and any
other applicable rules established by the U.S. Securities and Exchange
Commission (the “
SEC
”). Proposals should
be addressed to:
Secretary
SenoRx,
Inc.
3
Morgan
Irvine,
California 92618
Nomination of Director
Candidates:
If you wish to propose a director candidate for
consideration by our Board, your recommendation should include information
required by the Bylaws of SenoRx and should be directed to the Secretary
of SenoRx at the address of our principal executive offices set forth
above. In addition, the stockholder must submit the recommendation within
the time period set forth above for Stockholder Proposals.
Copy of Bylaw
Provisions:
You may contact the Corporate Secretary at our
principal executive offices for a copy of the relevant bylaw provisions
regarding the requirements for making stockholder proposals and nominating
director candidates.
|
|
|
How
can I obtain the
Proxy
Materials on
the
Internet?
|
This Proxy Statement, the form of
proxy card and the Annual Report on Form 10-K are available at
http://investor.senorx.com/annuals.cfm
.
|
MANAGEMENT
Executive
Officers and Directors
The
following table sets forth certain information concerning our executive officers
and directors as of March 31, 2009:
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
Lloyd
H. Malchow
|
|
55
|
|
President,
Chief Executive Officer and Director
|
Kevin
J. Cousins
|
|
54
|
|
Vice
President, Finance and Chief Financial Officer
|
Paul
Lubock
|
|
53
|
|
Senior
Vice President and Chief Technology Officer
|
John
T. Buhler
|
|
48
|
|
Senior
Vice President and Chief Commercial Officer
|
William
F. Gearhart
|
|
61
|
|
Vice
President, Global Marketing and Corporate Development
|
Kim
D. Blickenstaff(2)
|
|
56
|
|
Director
|
Vickie
L. Capps(1)
|
|
47
|
|
Director
|
Frederick
J. Dotzler(2)
|
|
63
|
|
Director
|
John
L. Erb(1)
|
|
60
|
|
Director
|
A.
Thomas Bender(2)
|
|
70
|
|
Director
|
Gregory
D. Waller(1)
|
|
59
|
|
Director
|
(1)
|
Member
of our audit committee.
|
(2)
|
Member
of our compensation committee.
|
Lloyd H.
Malchow
.
Mr. Malchow joined us as our President and Chief Executive Officer and
director in May 1999. From 1993 to 1999, Mr. Malchow held various
positions at Penederm, a publicly traded drug delivery company acquired by Mylan
Laboratories in 1998, including Chief Executive Officer, President and Chief
Operating Officer. Prior to Mr. Malchow’s employment with Penederm,
Mr. Malchow held various positions at Allergan, a pharmaceutical and
medical device company, including corporate Operating Committee member, vice
president positions in sales and business development for Allergan’s
ophthalmology and dermatology divisions, and skin care division General Manager.
Prior to this time, Mr. Malchow was the Director of Sales at the American
Medical Optics Division of American Hospital Supply, a provider of medical
supplies and medical devices. Mr. Malchow serves on the board of directors of
Rox Medical, a privately held medical device company that develops products for
the treatment of respiratory disease. Mr. Malchow earned his
B.A. in Government and Communication from Carroll College, his M.A. from the
University of Maryland and his M.B.A. from Pepperdine University.
Kevin J.
Cousins
.
Mr. Cousins has served as our Chief Financial Officer and Vice President,
Finance since March 2002. From May 2001 to March 2002,
Mr. Cousins served as a financial consultant to us. From January 2000
to May 2001, Mr. Cousins served as Director of Finance at IntraLase, a
manufacturer of laser products for vision correction. Prior to
January 2000, Mr. Cousins was the Director of Finance at Biopsys
Medical, a manufacturer of products for the diagnosis of breast cancer, and held
various finance positions at BBI Source Scientific and T-Chem Products.
Mr. Cousins earned his B.A. in Business Administration from California
State University, Fullerton, and his M.S. in Taxation from Golden Gate
University, and was certified as a C.P.A. in 1980.
Paul
Lubock
.
Mr. Lubock is one of our co-founders and has served as our Chief Technical
Officer since October 1999 and Senior Vice President since April 2009.
Mr. Lubock also served on our Board from our inception in January 1998
to December 2001 and served as our Chief Operating Officer from
January 1998 to October 1999. Prior to January 1998,
Mr. Lubock was the co-founder and a principal at Abacus Design &
Development, a medical product development company, and the founder of
Laparomed, a laparoscopic medical device company acquired by Advanced Surgical
in 1994. Mr. Lubock held various positions at Laparomed, including
President, Vice President, Engineering and served on its board of directors.
Mr. Lubock earned his B.A. in Applied Mechanics and Engineering Science
from the University of California, San Diego and his M.S. in Mechanical
Engineering from the University of California, Berkeley.
John T.
Buhler
.
Mr.
Buhler has served as our Senior Vice President and Chief Commercial Officer
since April 2009. From May 2008 to October 2008, he served as our Vice President
of International Sales and Business Development and from October 2008 until
April 2009 he served as our Vice President of Global Sales and Business
Development. From August 2005 to May 2008, Mr. Buhler served as President and
Chief Executive Officer at Ultrasonix Medical Corporation, a privately held
manufacturer of high-quality diagnostic ultrasound imaging equipment. >From
1998 to 2005, Mr. Buhler held various positions at General Electric, last
serving as Vice President and General Manager of GE's Ultrasound Performance
Technologies Division. Prior to 1998, Mr. Buhler held various positions with
Diasonics Inc., a global medical imaging device manufacturer, last serving as
Vice President of Operations. Mr. Buhler earned his B.S. in Business
Administration and Human Resources at Dominican College, Blauvelt, New York, and
is completing the M.B.A. program at the University of Wisconsin,
Milwaukee.
William
F. Gearhart
.
Mr. Gearhart has served as our
Vice President, Global Marketing and Corporate Development since October 2008.
>From December 1999 to October 2008, he served as our Vice President, Sales
and Marketing
.
Prior to December 1999,
Mr. Gearhart held management positions at a number of medical device
companies, including Vice President, Sales and Marketing at Micro Therapeutics,
a manufacturer of devices for the treatment of neuro and peripheral vascular
diseases, Vice President of Sales and Marketing at Interventional Technologies,
a manufacturer of devices for use in interventional cardiology, which was
acquired by Boston Scientific in 2001, and Vice President of Sales and Marketing
at Pfizer, a pharmaceutical company. Mr. Gearhart earned his B.S. in
Business from the University of Pennsylvania, his M.B.A. from the University of
Michigan and his J.D. from William Mitchell College of Law.
Kim D.
Blickenstaff
.
Mr. Blickenstaff has served on our Board since March 2002. Since
September 2007, Mr. Blickenstaff has served as the Chief Executive Officer
and as a member of the board of directors of Tandem Diabetes Care, a
privately-held medical device company. Mr. Blickenstaff currently serves as
chairman of the board of directors of Medivation, a publicly-traded drug
development company. From April 1988 until its acquisition in June 2007,
Mr. Blickenstaff served as Chief Executive Officer and as a member of the
board of directors of Biosite Incorporated, a publicly-traded manufacturer of
medical diagnostic products. From 2001 to September 2007, Mr. Blickenstaff
served as a member of the board of directors of DexCom, a publicly-traded
developer of glucose monitoring devices. Prior to 1998, Mr. Blickenstaff
held various positions in finance, operations, research management, sales
management, strategic planning, and marketing with Baxter, National Health
Laboratories and Hybritech. Mr. Blickenstaff earned his B.A. in Political
Science at Loyola University, Chicago and his M.B.A. at the Graduate School of
Business, Loyola University, Chicago.
Vickie L.
Capps.
Ms. Capps has served on our Board since June 2007. Since July
2002, Ms. Capps has been a senior executive at DJO Incorporated, a medical
device company that recently was taken private, serving as its Executive Vice
President and Chief Financial Officer since April 2006. From September 2001 to
July 2002, Ms. Capps served as Senior Vice President, Finance and
Administration and Chief Financial Officer at AirFiber, a privately held
provider of broadband wireless solutions. From June 1999 to June 2001,
Ms. Capps served as Vice President of Finance and Administration and CFO
for Maxwell Technologies, Inc. Ms. Capps also served ten years as a senior
audit and accounting professional for Ernst & Young LLP and is a
California Certified Public Accountant. Ms. Capps earned her B.S. in
Business Administration/Accounting from San Diego State University.
Frederick J.
Dotzler
.
Mr. Dotzler has served on our Board since March 2003 and previously
served on our board of directors from March 1998 to March 2002.
Mr. Dotzler has been a Managing Director of De Novo Ventures, a venture
capital firm he co-founded, since March 2000 and a General Partner of
Medicus Venture Partners, a venture capital firm, since February 1989.
Prior to February 1989, Mr. Dotzler was a General Partner of Crosspoint
Venture Partners, a venture capital firm. Mr. Dotzler previously held
management positions in marketing, sales, manufacturing and acquisitions with
IBM, Millipore, Searle, and Merrimack Laboratories. Mr. Dotzler serves on
the board of directors of several privately-held companies. Mr. Dotzler
earned his B.S.I.E. in Industrial Engineering at Iowa State University, his
M.B.A. at the University of Chicago and an advanced degree in Economics at the
University of Louvain, Belgium.
John L.
Erb
.
Mr. Erb
has served on our Board since December 2001. Since January 2008, Mr. Erb
has served as the Chief Executive Officer of Cardia Access, Inc., a
privately-held medical device developer. From January 2007 until January of
2008, Mr. Erb served as Executive Chairman of the Board of CHF Solutions, a
privately-held manufacturer of products for the treatment of congestive heart
failure. From November 2001 through December 2006, Mr. Erb served as
Chief Executive Officer of CHF Solutions and served as a member of its board of
directors until January 2008. From March 1997 through November 2001,
Mr. Erb was President and Chief Executive Officer of IntraTherapeutics, a
manufacturer of peripheral stents, which was acquired by Sulzer Medica in
February 2001. Mr. Erb serves on the board of directors of one
publicly-traded company, Vascular Solutions, a developer of devices for the
treatment of peripheral vascular disease, and serves on the board of directors
of several privately-held companies. Mr. Erb earned his B.A. in Business
Administration at California State University, Fullerton.
A. Thomas
Bender
.
Mr.
Bender has served on our Board since June 2008. Since July 2002, Mr. Bender has
been Chairman of the Board of The Cooper Companies, Inc., a publicly traded
global specialty medical products company. From May 1995 through his retirement
in October 2007, Mr. Bender served as President and Chief Executive Officer of
The Cooper Companies, Inc. From June 1991 to December 2004, he also served as
President of CooperVision, the contact lens subsidiary of The Cooper Companies,
Inc. Between 1966 and 1991, Mr. Bender held a variety of positions at Allergan,
Inc. (a manufacturer of eye and skin care products), including Corporate Senior
Vice President, and President and Chief Operating Officer of Herbert
Laboratories, Allergan's dermatology division. Mr. Bender serves of the board of
directors for iScience Interventional, Inc., and their compensation committee,
as well as the board of directors for Mission Hospital Foundation in Mission
Viejo, CA. Mr. Bender is also on the Advisory Boards of a number of Orange
County, California non-profit organizations. Mr. Bender earned his B.A. in
History and English from the University of St. Thomas.
Gregory D.
Waller.
Mr. Waller has served on our Board since May 2006. Since
March 2006, Mr. Waller has been the Chief Financial Officer at Universal
Building Products, a manufacturer of concrete construction accessories. From
August 1993 to May 2005, Mr. Waller held various positions, including Chief
Financial Officer, Vice President, Finance and Treasurer, at Sybron Dental
Specialties, a publicly-traded company that manufactures dental products. From
July 1989 to August 1993, Mr. Waller was the Vice President, European
Operations at Kerr and from December 1980 to July 1989, was the Vice President
and Controller at Ormco, each a wholly-owned subsidiary of Sybron Dental
Specialties. Mr. Waller serves on the board of directors of Alsius,
Cardiogenesis, Clarient and Endologix, all publicly-traded life science
companies, and on the board of directors of one privately-held company.
Mr. Waller earned both his B.A. in Political Science and his M.B.A. from
California State University, Fullerton.
Executive
Officers
Our
executive officers are elected by, and serve at the discretion of, our Board.
There are no family relationships among our directors
and officers.
STOCK
OWNERSHIP
Security
Ownership of Certain Beneficial Owners and Management
The
following table provides information relating to the beneficial ownership of
SenoRx common stock as of March 31, 2009, except where otherwise noted,
by:
|
•
|
each
stockholder known by us to own beneficially more than 5% of our common
stock;
|
|
•
|
each
of our executive officers named in the summary compensation table on
page 22 of this Proxy Statement (our Chief Executive Officer, Chief
Financial Officer and our three other most highly compensated
executive
officers);
|
|
•
|
each
of our directors; and
|
|
•
|
all
of our directors and executive officers as a
group.
|
The
number of shares beneficially owned by each entity, person, director or
executive officer is determined in accordance with the rules of the SEC, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares over which
the individual has the sole voting power, shared voting power, or investment
power and includes any shares that the individual has the right to acquire
within 60 days of March 31, 2009 through the exercise of any stock option
or other right. The number and percentage of shares “beneficially owned” is
computed on the basis of 17,332,022 shares of SenoRx common stock outstanding as
of March 31, 2009. Shares of our common stock that a person has the right to
acquire within 60 days of March 31, 2009 are deemed outstanding for purposes of
computing the percentage ownership of the person holding such rights, but are
not deemed outstanding for purposes of computing the percentage ownership of any
other person, except with respect to the percentage ownership of all directors
and executive officers as a group. To our knowledge, except as set forth in the
footnotes to this table and subject to applicable community property laws, each
person or entity named in the table has sole voting and dispositive power with
respect to the shares set forth opposite such person’s or entity’s name. The
address for those persons for whom an address is not otherwise provided is c/o
SenoRx, Inc., 3 Morgan, Irvine, California 92618.
|
|
Beneficial
Ownership
|
|
|
Percentage
of Shares
Outstanding
|
Name
and Address of Beneficial Owner
|
|
Shares
|
|
|
Options
and Warrants
Exercisable Within 60 Days
|
|
|
Approximate
Percentage
Owned
(1)
|
Funds
affiliated with MPM Capital
The
John Hancock Tower
200
Clarendon Street, 54
th
Floor
Boston,
MA 02116
|
|
|
2,242,379
|
(2)
|
|
|
—
|
|
|
|
12.9%
|
|
Funds
affiliated with Paragon Associates
500
Crescent Court, Suite 260
Dallas,
TX 75201
|
|
|
906,245
|
(3)
|
|
|
—
|
|
|
|
5.2%
|
|
Funds
affiliated with Wells Fargo & Company
420
Montgomery Street
San
Francisco, CA 94163
|
|
|
1,464,483
|
|
|
|
—
|
|
|
|
8.4%
|
|
Lloyd
H. Malchow
|
|
|
469,769
|
|
|
|
236,657
|
|
|
|
4.1%
|
|
Kevin
J. Cousins
|
|
|
48,999
|
|
|
|
61,146
|
|
|
|
*
|
|
Paul
Lubock
|
|
|
258,141
|
|
|
|
44,211
|
|
|
|
1.7%
|
|
William
F. Gearhart
|
|
|
—
|
|
|
|
131,302
|
|
|
|
*
|
|
John
T. Buhler
|
|
|
2,200
|
|
|
|
47,142
|
|
|
|
*
|
|
A.
Thomas Bender
|
|
|
17,000
|
|
|
|
7,111
|
|
|
|
*
|
|
Kim
D. Blickenstaff
|
|
|
—
|
|
|
|
41,737
|
|
|
|
*
|
|
Vickie
L. Capps
|
|
|
15,000
|
|
|
|
15,839
|
|
|
|
*
|
|
Frederick
J. Dotzler
|
|
|
734,515
|
(4)
|
|
|
21,818
|
|
|
|
4.4%
|
|
John
L. Erb
|
|
|
10,000
|
|
|
|
41,737
|
|
|
|
*
|
|
Gregory
D. Waller
|
|
|
—
|
|
|
|
33,928
|
|
|
|
*
|
|
All
directors and named executive officers as a
group
(11 persons)
|
|
|
1,555,624
|
|
|
|
681,628
|
|
|
|
12.9%
|
|
_____________________
*
|
Represents
beneficial ownership of less than one percent (1%) of the outstanding
shares of our common stock.
|
(1)
|
Based
upon 17,322,022 shares of common stock outstanding as of March 31,
2009.
|
(2)
|
Includes
1,511,814 shares held by MPM BioVentures II-QP, L.P. (“BV II QP”), 166,833
shares held by MPM BioVentures II, L.P. (“BV II”), 31,392 shares held by
MPM Asset Management Investors 2001 LLC (“AM 2001”) and 532,340 shares
held by MPM BioVentures GmbH & Co. Parallel-Beteiligungs KG (“BV
KG”). MPM Asset Management II, L.P. and MPM Asset Management II LLC (“AM
II LLC”) are the direct and indirect general partners of BV II QP, BV II
and BV KG. Ansbert Gadicke, Luke Evnin, Nicholas Galakatos, Michael
Steinmetz and Kurt Wheeler are members of AM II LLC and AM 2001. Each
individual disclaims beneficial ownership of all such shares, except to
the extent of his proportionate pecuniary interest
therein.
|
(3)
|
The
906,245 shares are held by Paragon Associates and Paragon Associates II
Joint Venture, a joint venture formed by Paragon Associates, Ltd., a Texas
limited partnership and Paragon Associates II, Ltd. a Texas limited
partnership.
|
(4)
|
Includes
570,423 shares held by De Novo (Q) Ventures I, L.P. and 112,872
shares held by De Novo Ventures I, L.P. De Novo Management, L.L.C. is the
general partner of De Novo (Q) Ventures I, L.P. and De Novo Ventures
I, L.P. Frederick Dotzler, David Mauney, Richard Ferrari and Jay Watkins
are managing directors of De Novo Management, L.L.C. and share voting and
investment power with respect to shares held by De Novo (Q) Ventures
I, L.P. and De Novo Ventures I, L.P. Each managing director disclaims
beneficial ownership of these shares, except to the extent of his
pecuniary interest therein.
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires our directors, officers and beneficial owners of
more than 10% of our common stock to file reports of ownership and reports of
changes in ownership with the SEC. Such persons are required by SEC regulations
to furnish us with copies of all Section 16(a) forms they
file.
Based
solely on our review of the copies of such forms received by us, or written
representations from reporting persons that no Forms 3, 4 or 5 were
required of such persons, we believe that during our fiscal year ended
December 31, 2008, all reports were timely filed.
CORPORATE
GOVERNANCE AND BOARD MATTERS
Director
Independence
As of the
date of this Proxy Statement, our Board consists of seven directors. Our Board
has the authority to further increase the size of the Board from time to time.
The current directors are Lloyd H. Malchow, Vickie L. Capps, Kim D.
Blickenstaff, Frederick J. Dotzler, John L. Erb, A. Thomas Bender and Gregory D.
Waller. Our Board has determined that Ms. Capps and Messrs. Blickenstaff,
Dotzler, Erb, Bender and Waller are independent directors under the listing
standards established by the rules of the Nasdaq Stock Market, Inc.
(“Nasdaq”).
Board
and Committee Meetings
In the
year ended December 31, 2008, the Board of Directors held four regular
meetings. The Board has two standing committees: the audit committee and the
compensation committee. None of the members of the audit or compensation
committees were an officer or employee of our company in 2008. From time to
time, our Board may also create ad hoc committees for special purposes. The
Audit Committee met five times during 2008. The Compensation Committee met six
times during 2008. Each of our directors attended at least 75% of the aggregate
meetings of the Board and the committees on which he or she served that were
held in 2008. We also encourage, but do not require our Board members to attend
the annual meetings of our stockholders. We held an annual meeting of the
stockholders on June 5, 2008 and all of our directors were in attendance. The
function and membership, as of March 31, 2009, of each of these committees is
described below.
|
|
|
|
|
Name
of Director
|
|
Audit Committee
|
|
Compensation
Committee
|
Lloyd
H. Malchow
|
|
—
|
|
—
|
Vickie
L. Capps
|
|
member
|
|
—
|
Kim
D. Blickenstaff
|
|
—
|
|
member
|
Frederick
J. Dotzler
|
|
—
|
|
member
|
John
L. Erb
|
|
member
|
|
—
|
A.
Thomas Bender
|
|
—
|
|
member*
|
Gregory
D. Waller
|
|
member*
|
|
—
|
*
|
Indicates
the chairman of each standing committee of the
Board.
|
Audit
Committee.
Our audit committee is a standing
committee of, and operates under a written charter adopted by our Board and
subsequently amended twice in 2008, a copy of this amended charter is attached
hereto as Appendix A and is also available at
http://files.shareholder.com/downloads/SENO/592751596x0x88976/21b05a19-a510-4f40-9c97-d2b0a80a4e90/SENO_WebDoc_1662.pdf
. The audit committee recommends the
appointment of our independent auditors, reviews our internal accounting
procedures and financial statements and consults with and reviews the services
provided by our independent auditors, including the results and scope of their
financial statement audit. The audit committee is chaired by Mr. Waller and
also includes Mr. Erb and Ms. Capps, each of whom is independent
within the meaning of applicable SEC and Nasdaq rules. The composition and
functioning of our audit committee comply with all applicable requirements of
the Sarbanes-Oxley Act of 2002, The Nasdaq Global Market and SEC rules and
regulations. We intend to comply with additional requirements to the extent they
become applicable to us in the future.
Compensation
Committee.
Our compensation committee is a
standing committee of, and operates under a written charter adopted by, our
Board. A copy of this charter is available at
http://files.shareholder.com/downloads/SENO/592751596x0x88977/b8b9cd39-e51d-4695-bc5d-61ee916b03f9/SENO_WebDoc_1664.pdf
. The compensation committee reviews,
makes recommendations to our Board and determines compensation and benefits for
all of our executive officers, administers our stock plans, and establishes and
reviews general policies relating to compensation and benefits for our
employees. The compensation committee is chaired by Mr. Bender and is
currently comprised of Messrs. Bender, Blickenstaff and Dotzler, each of whom is
independent within the meaning of applicable SEC and Nasdaq
rules. Additionally, the compensation committee may delegate its
authority to subcommittees and to a non-officer stock option committee comprised
of at least one member of our Board, who may be our Chief Executive Officer. The
composition and functioning of our compensation committee comply with all
applicable requirements of the Sarbanes-Oxley Act of 2002, The Nasdaq Global
Market and SEC rules and regulations. We intend to comply with additional
requirements to the extent they become applicable to us in the
future.
Policies
and Procedures for Related Party Transactions
As
provided by our audit committee charter, our audit committee must review and
approve in advance any related party transaction. All of our directors, officers
and employees are required to report to our audit committee any such related
party transaction prior to its completion.
There
were no transactions or series of similar transactions that occurred in 2008 to
which we were a party that:
|
•
|
the
amounts involved exceeded or will exceed $120,000;
and
|
|
•
|
a
director, executive officer, holder of more than 5% of our common stock or
any member of their immediate families had or will have a direct or
indirect material interest.
|
Indemnification
Agreements of Officers and Directors
Effective
upon the completion of our initial public offering, we entered into an
indemnification agreement with each of our then current directors and executive
officers. Following the completion of our initial public offering, we have
entered into an indemnification agreement with each new director and executive
officer. These indemnification agreements and our amended and restated
certificate of incorporation and bylaws will indemnify each of our directors and
officers to the fullest extent permitted by the Delaware General Corporation
Law.
Code
of Business and Ethical Conduct
We are
committed to maintaining the highest standards of business conduct and ethics.
We have adopted a Code of Business and Ethical Conduct (the “Code”) for our
directors, officers (including our principal executive officer and principal
financial officer) and employees. The Code reflects our values and the business
practices and principles of behavior that support this commitment. We expect all
directors, as well as officers and employees, to act ethically at all times. The
Code sets forth specific ethical policies and principles that will apply to our
directors, officers and employees designed to prevent wrongdoing and to
promote:
|
•
|
honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
|
|
•
|
full,
fair, accurate, timely and understandable disclosure in reports and
documents that a registrant files with, or submits to, the SEC and in
other public communications made by the
registrant;
|
|
•
|
compliance
with applicable governmental laws, rules and
regulations;
|
|
•
|
the
prompt internal reporting of violations of the Code to an appropriate
person or persons identified in the Code;
and
|
|
•
|
accountability
for adherence to the Code.
|
The Code
satisfies SEC rules for a “code of ethics” required by Section 406 of the
Sarbanes-Oxley Act of 2002, as well as the Nasdaq listing standards requirement
for a “code of conduct.” The Code is available on our Company’s website at
www.SenoRx.com under “Investor Relations—Corporate Governance.” We will post any
amendment to the Code, as well as any waivers that are required to be disclosed
by the rules of the SEC or the Nasdaq, on our website.
Communications
with the Board of Directors
Stockholders
wishing to communicate with the Board or with an individual Board member
concerning SenoRx may do so by writing to the Board or to the particular Board
member, and mailing the correspondence to Attn: Board of Directors, c/o
Secretary, SenoRx, Inc., 3 Morgan, Irvine, California 92618. The envelope should
indicate that it contains a stockholder communication. All such stockholder
communications will be forwarded to the director or directors to whom the
communications are addressed.
Consideration
of Director Nominees
Nominations.
Our Board does
not currently have a nominating committee or other committee performing a
similar function nor do we have any formal written policies outlining the
factors and process relating to the selection of nominees for consideration for
Board membership. Our Board has adopted resolutions in accordance with the
Nasdaq Marketplace Rules authorizing a majority of its independent members to
recommend qualified nominees for consideration by the full Board. We do not have
a standing nominating committee because of a number of factors, including the
number of independent directors who want to participate in consideration of
candidates for membership on the Board. Our Board consists of seven members, six
of whom are independent. Forming a committee consisting of less than all of the
independent members would have omitted the other independent members of our
Board who wanted to participate in considering qualified candidates for Board
membership. The independent members of our Board do not have a nominating
committee charter, but act pursuant to Board resolutions as described above.
Each of the members of our Board authorized to recommend nominees to the full
Board is independent within the meaning of the current “independent director”
standards established by Nasdaq’s rules. Our Board is currently reviewing this
matter, and may in 2009 designate a formal nominating committee.
Identifying and Evaluating Director
Nominees
. Typically new candidates for nomination to the Board are
suggested by existing directors or by our executive officers, although
candidates may initially come to our attention through professional search
firms, stockholders or other parties. The independent members of the Board shall
carefully review the qualifications of any candidates who have been properly
brought to its attention. Such a review may, in the Board’s discretion, include
a review solely of information provided to the Board or may also include
discussion with persons familiar with the candidate, an interview with the
candidate or other actions that the Board deems proper. The candidates for Board
membership should have the highest professional and personal ethics and values,
and conduct themselves consistent with our Code of Ethics. While the independent
members of the Board have not formalized specific minimum qualifications they
believe must be met by a candidate to be recommended by the independent members,
the independent members of the Board believe that candidates and nominees must
reflect a Board that is comprised of directors who (i) have broad and
relevant experience, (ii) are predominantly independent, (iii) are of
high integrity, (iv) have qualifications that will increase overall Board
effectiveness and enhance long-term stockholder value, and (v) meet other
requirements as may be required by applicable rules, such as financial literacy
or financial expertise with respect to audit committee members.
Stockholder Nominations and
Recommendations.
As described above in the Question and Answer section of
this Proxy Statement under “What is the deadline to propose actions for
consideration at next year’s Annual Meeting of Stockholders or to nominate
individuals to serve as directors?,” our Bylaws set forth the procedure for the
proper submission of stockholder nominations for membership on our Board. In
addition, the independent members of our Board may consider properly submitted
stockholder recommendations (as opposed to formal nominations) of director
candidates for membership on the Board. A stockholder may make such a
recommendation by submitting the following information to our Secretary at 3
Morgan, Irvine, California 92618: the candidate’s name, home and business
contact information, detailed biographical data, relevant qualifications,
professional and personal references, information regarding any relationships
between the candidate and SenoRx within the last three years and evidence of
ownership of SenoRx common stock by the recommending stockholder.
REPORT
OF THE AUDIT COMMITTEE
The
material in this section is not deemed filed with the SEC and is not
incorporated by reference in any filing of our Company under the Securities Act
of 1933 or the Securities Exchange Act of 1934, whether made before or after the
date of this Proxy Statement and irrespective of any general incorporation
language in those filings.
The audit
committee is responsible for providing oversight to the Company’s accounting and
financial reporting processes and the audit of the Company’s financial
statements The audit committee monitors SenoRx’s external audit process,
including auditor independence matters, the scope and fees related to audits,
and the extent to which the independent registered public accounting firm may be
retained to perform non-audit services. The audit committee also reviews the
results of the external audit with regard to the adequacy and appropriateness of
SenoRx’s financial, accounting and internal controls over financial reporting.
In addition, the audit committee generally oversees SenoRx’s internal compliance
programs. The function of the audit committee is not intended to duplicate or to
certify the activities of management and the independent registered public
accounting firm, nor can the audit committee certify that the independent
registered public accounting firm is “independent” under applicable rules. The
audit committee members are not professional accountants or auditors. Under its
Charter, the audit committee has authority to retain outside legal, accounting
or other advisors as it deems necessary to carry out its duties and to require
SenoRx to pay for such expenditures.
The audit
committee provides counsel, advice and direction to management and the
independent registered public accounting firm on matters for which it is
responsible, based on the information it receives from management and the
independent registered public accounting firm and the experience of its members
in business, financial and
accounting
matters.
SenoRx’s
management is responsible for the preparation and integrity of its financial
statements, accounting and financial reporting principles, and internal controls
and procedures designed to ensure compliance with accounting standards,
applicable laws and regulations.
In this
context, the audit committee hereby reports as follows:
1. The
audit committee has reviewed and discussed the audited financial statements for
2008 with
SenoRx’s
management.
2. The
audit committee has discussed with the independent registered public accounting
firm the matters required to be discussed under the Statement on Auditing
Standards No. 61, as amended, as adopted by the Public Accounting Oversight
Board in Rule 3200T.
3. The
audit committee has received written disclosures and a letter from the
independent registered public accounting firm, Deloitte & Touche LLP,
required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountant’s communications with the audit
committee concerning independence.
4. Based
on the review and discussion referred to above, the audit committee recommended
to the Board, and the Board has approved, that the audited financial statements
be included in SenoRx’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2008.
The
foregoing report is provided by the undersigned members of the audit
committee.
|
Gregory
D. Waller, Chair
|
Vickie
C. Capps
|
John
L. Erb
|
COMPENSATION
DISCUSSION AND ANALYSIS
One goal
of our compensation programs is to help us attract and retain talented,
qualified employees. Executive compensation is comprised of a cash-based salary
component, adjusted annually after review by our compensation committee of the
individual performance for each of our executive officers, annual cash incentive
bonus payments upon achievement of personal or corporate objectives and an
equity component providing long-term compensation based on company performance.
The long-term component of executive compensation is designed to align
management’s incentives with the generation of long-term stockholder value.
Additionally, our compensation programs are designed to be competitive with
other companies in
our
industry.
During
2008, our compensation committee relied on commissioned third-party industry
compensation surveys and their experience with and knowledge of other companies
in our industry to make recommendations to the non-employee members of our
Board, which we refer to as our outside directors, on cash and equity
compensation for our executive officers and, for each individual, their
individual experience level related to their position with us. Our compensation
committee utilized this data to set compensation for our executive officers at
levels targeted at or around the average of the compensation amounts provided to
executives at comparable companies. It also relied on management to make
recommendations for it to review and consider in connection with determining
compensation recommendations. We have in the past retained a compensation
consultant, and may continue to do so in the future, to help us evaluate our
compensation philosophy and provide guidance to us in administering our
compensation program. Historically, we have benchmarked compensation information
that we obtain against the compensation we offer our executive officers to
ensure that our compensation programs are competitive. In the past we have had a
compensation consultant provide market data, and we have also provided other
publicly available market data, to our compensation committee for consideration
in its analysis of annual cash and stock compensation.
In
connection with a detailed compensation survey that the compensation consultant
prepared for us in 2007, the Compensation Committee worked with the consultant
to select an appropriate comparative peer group for compensation comparisons.
Recommendations for the peer group are selected from publicly traded companies
headquartered in the United States based on similarity of product and business,
size of company, market capitalization, and other financial measures of
organizational scope and complexity. Since 2007, we have not updated this formal
peer group comparison, but may do so again in the future. The peer group we used
in 2007 is composed of the following companies:
Accuray
Inc
|
NxStage
Medical Inc
|
CardioDynamics
International Corp
|
PhotoMedex
Inc
|
Celsion
Corp
|
Somanetics
Corp
|
Cholestech
Corp
|
Stereotaxis
Inc
|
Criticare
Systems Inc
|
Solta
Medical Inc
|
Digirad
Corp
|
Urologix
Inc
|
EP
MedSystems Inc
|
Vision-Sciences
Inc
|
HemoSense
Inc
|
VNUS
Medical Technologies
|
IRIDEX
Corp
|
|
Our compensation committee intends to allocate total compensation
between cash and equity based on benchmarking to the peer group, while
considering the balance between short- and long-term incentives. Our
compensation committee expects to continue to compensate our executive officers
at levels targeted at or around the average of the compensation amounts provided
to executives at comparable companies.
Compensation
Components
Executive
compensation consists of the following:
Base
Salary
We
determine our executive salaries based on job responsibilities and individual
experience and also benchmark the amounts we pay against comparable market data
for similar positions within our industry. Our compensation committee has
reviewed the salaries of our executives annually and made recommendations to our
outside directors regarding any increases in salaries based on individual
performance during the prior calendar year and cost of living adjustments, as
appropriate. Base salaries were increased by 2% for 2009.
Incentive
Bonus Plans
Annual
cash bonuses are paid to our executive officers on the basis of our achievement
of pre-established targets. Our compensation committee has recommended the
performance-based targets for these bonuses, which our outside directors then
approved. In fiscal 2008, we had a Cash Bonus Plan, the payout of which was
based on a revenue component and a net loss component. The targets under the
2008 Cash Bonus Plan as originally constituted were based on our fiscal 2008
Annual Operating Plan. The compensation committee also determined that it was
necessary to take into account the forecasted Hologic patent litigation costs
that were not in the original fiscal 2008 Annual Operating Plan in order to
accurately determine the payout under the 2008 Cash Bonus Plan related to the
net loss component. As a result, the net loss component of the 2008 Cash Bonus
Plan achieved approximately 50% of the target. Additionally, the revenue
component achieved approximately 30% of the target. Our Chief Executive
Officer’s target bonus for the 2008 Cash Bonus Plan was 40% of base salary at
the achievement, but not overachievement, of all goals under the 2008 Cash Bonus
Plan. His actual payout under the 2008 Cash Bonus Plan was 15.2% of base salary.
Each of the other named executive officer target bonus for the 2008 Cash Bonus
Plan was 30% of base salary at the achievement, but not overachievement, of all
goals under the 2008 Cash Bonus Plan. Each of their actual payout under the 2008
Cash Bonus Plan was 11.4% of base salary (pro-rated for the May 2008 hire date
in the case of John Buhler).
The
compensation committee approved an incentive bonus plan for fiscal 2009 pursuant
to which the following executive officers are eligible to receive a cash bonus
of up to the following amounts: Lloyd Malchow, President and Chief Executive
Officer, 50% of base salary, and for all other named executive officers, 40% of
base salary. The maximum bonuses described above assume the achievement of
certain corporate performance results; underachievement or overachievement of
the corporate performance goals may result in lower or higher bonus payments.
Our compensation committee retains the discretion to modify the bonuses that are
paid based on actual performance.
We have established a bonus program for our director level employees
and our manager level and other key employees. Our compensation committee will
continue to assess the need to implement additional non-equity incentive
programs for other employees as a means of adding specific incentives towards
achievement of specific departmental goals that could be key factors in our
success.
Stock
Options and Restricted Stock Units
We
believe that equity ownership in our company is important to provide our
executive officers with long-term incentives to build value for our
stockholders. Stock options and/or Restricted Stock Units, or RSUs, for our
executives are granted by our Board at regularly scheduled meetings and the
exercise price of our options is the closing price of our common stock on the
date of grant. Each executive officer is initially provided with an option grant
and, commencing in 2009, RSUs when they join our company based upon their
position with us and their relevant prior experience. The initial option grants
generally vest over four years and no shares vest before the one-year
anniversary of the option grant and the RSUs vest over two years. We generally
spread the vesting of our options over four years to compensate executives for
their contribution over a period of time.
In
addition to the initial grants, our compensation committee grants additional
awards to retain our executive officers and to help align the achievement of
corporate goals with strong individual performance. Such awards are granted
based on a combination of individual contributions to our company and on general
corporate achievements, including meeting product development milestones, sales
forecasts and attaining annual corporate goals and objectives. For example, if
we were to hire a new vice president, we would provide such executive with an
initial grant of options and RSUs for a number of shares that represents a
percentage stock ownership level in our company that is consistent with
information we receive from third-party compensation surveys and targeted at or
around the average of the levels found at such comparable companies. On an
annual basis, our compensation committee would assess the appropriate individual
and corporate goals for this executive and provide additional grants based upon
the achievement by the executive of both individual and corporate goals. We
expect that we will continue to provide new employees with initial option grants
and/or RSU awards in the future to provide long-term compensation incentives and
will continue to rely on performance-based and retention grants to provide
additional incentives for current employees. Additionally, in the future, our
compensation committee or Board may consider awarding additional or alternative
forms of equity incentives, such as grants of restricted stock, and other
performance-based awards, but has not done so to date.
On
February 26, 2009 we granted stock options and RSUs to our executive officers,
as well as other officers, as part of our long-term equity compensation
strategy. These grants are outside of our historical practice of granting
long-term equity compensation to our executive officers once annually near the
end of the fiscal year, which we did in November 2008. In addition, it has been
our historical practice only to issue stock options.
After
discussion by our compensation committee and the full Board at a number of
meetings, it was proposed and recommended that a special long-term equity
incentive grant, including a grant of RSUs, be made to executive officers. It is
intended that the grants made on February 26, 2009 not be in addition to our
normal compensation, but instead, a one-time “acceleration” of the annual grants
that would have otherwise been made later in 2009. Although the compensation
committee will retain the discretion to reconsider whether any further grants
will be made in 2009, it continues to be the compensation committee's intention
not to grant additional long-term equity awards in 2009 and instead return to
historical practices with grants near the end of 2010. In connection with the
grants of RSUs, it is the compensation committee's intention to continue to use
such instruments on a going-forward basis. The compensation committee's
rationale for making the February 2009 grants were as follows:
|
·
|
Provide
immediate and meaningful additional economic alignment of management
incentives with the building of long-term shareholder
value
|
|
·
|
Provide
meaningful additional retention and incentives for key employees who are
building the business and achieving key corporate
goals
|
|
·
|
Take
advantage of potential deferred compensation expense savings by granting
awards now instead of at the end of 2009, and, in the case of RSUs, a
complete savings of such expense
|
|
·
|
In
the case of the RSUs, since the exercise price of many of our prior year
grants of stock options now exceed the market price of stock underlying
the awards, the compensation committee determined that a grant
of RSUs, full-value awards with guaranteed value, would provide
additional and necessary retention value for our executive
officers
|
|
·
|
Achieve
the average of total compensation targets established in our benchmarking
of comparable companies
|
The
specific provisions of our option plans are as provided for below.
1998
Stock Plan
Our 1998
Stock Plan was adopted by our Board and approved by our stockholders in
April 1998. Our 1998 Stock Plan provides for the grant of incentive stock
options, within the meaning of Section 422 of the Internal Revenue Code, to
our employees and any parent and subsidiary corporations’ employees, and for the
grant of nonstatutory stock options to our employees, directors and consultants
and any parent and subsidiary corporations’ employees and consultants. The 1998
Stock Plan also allows for awards of stock purchase rights. We have not granted
any awards under our 1998 Stock Plan since the completion of our initial public
offering. Instead, we now grant options under our 2006 Equity Incentive
Plan.
As of
December 31, 2008, options to purchase 683,377 shares of common stock were
outstanding and no shares were available for future grant under this plan. Any
shares returned to this plan automatically roll-over into our 2006 Equity
Incentive Plan.
Our Board
or a committee appointed by our Board may administer our 1998 Stock Plan. Our
compensation committee is responsible for administering all of our equity
compensation plans, including outstanding awards under our 1998
Stock
Plan.
With
respect to all incentive stock options, the exercise price must at least be
equal to the fair market value of our common stock on the date of grant. With
respect to all nonstatutory stock options, the exercise price must at least be
equal to 85% of the fair market value of our common stock on the date of grant.
The term of an option may not exceed ten years, except that with respect to any
participant who owns 10% of the combined voting power of all classes of our
outstanding stock as of the grant date, the term must not exceed five years and
the exercise price must equal at least 110% of the fair market value on the
grant date. The administrator determines all of the other terms of the
options.
After
termination of an employee, director or consultant, he or she may exercise his
or her option for the period of time as specified in the stock option agreement
subject to the following limitations:
|
•
|
If
the participant is terminated for any reason other than death, disability,
or for cause, then the participant may exercise options vested as of the
termination date within 90 days of the termination date (or within a
shorter period not to be less than 30 days or a longer period not to
exceed 5 years after the termination date as determined by the
administrator), but in no event later than the expiration date of the
options; and
|
|
•
|
If
the participant is terminated because of death or disability or dies
within 3 months after a termination other than for cause, then the
participant (or the participant’s beneficiary or estate) may exercise
options vested as of the termination date within 12 months of the
termination date (or within a shorter period not to be less than 6 months
or within a longer period not to exceed 5 years after the termination date
as may be determined by the administrator), but in no event later than the
expiration date of the options.
|
Unless
the administrator provides otherwise, our 1998 Stock Plan does not allow for the
transfer of awards other than by will or the laws of descent and distribution
and only the recipient of an award may exercise an award during his or
her
lifetime.
Our 1998
Stock Plan provides that in the event of our change in control, as defined in
the 1998 Stock Plan, the successor corporation or its parent or subsidiary may
assume, substitute, or replace an equivalent award for each outstanding award.
If there is no assumption, substitution, or replacement of outstanding awards,
the awards will be, unless otherwise provided in any applicable option document,
fully vested and exercisable, and if not exercised prior to the consummation of
the transaction, shall terminate.
The 1998
Stock Plan terminated as of the effective date of our initial public
offering.
2006
Equity Incentive Plan
Our 2006
Equity Incentive Plan was adopted by our Board in May 2006 and approved by our
stockholders in June 2006. Our 2006 Equity Incentive Plan provides for the grant
of incentive stock options, within the meaning of Section 422 of the
Internal Revenue Code, to our employees and any parent and subsidiary
corporations’ employees, and for the grant of nonstatutory stock options,
restricted stock, restricted stock units, stock appreciation rights, performance
units and performance shares to our employees, directors and consultants and our
parent and subsidiary corporations’ employees
and
consultants.
As of
March 31, 2009, we have reserved a total of 3,658,531 shares of our common stock
for issuance pursuant to the 2006 Equity Incentive Plan, which includes
(i) 2,399,553 shares initially approved by our Board, (ii) 50,444
shares returned to our 1998 Stock Plan on or after the effective date of our
initial public offering through March 31, 2009 as a result of termination of
options or the repurchase of shares issued under the 1998 Stock Plan and
(iii) 1,208,534 shares pursuant to the “evergreen” provision detailed
below. The "evergreen" provision in our 2006 Equity Incentive Plan
provides for annual increases in the number of shares available for issuance
thereunder on the first day of each fiscal year, beginning with our 2008 fiscal
year, equal to the lesser of:
|
•
|
3.5%
of the outstanding shares of our common stock on the first day of the
fiscal year;
|
|
•
|
such
other amount as our Board may
determine.
|
Our
compensation committee will be responsible for administering all of our equity
compensation plans, including our 2006 Equity Incentive Plan. In the case of
options intended to qualify as performance-based compensation within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended, the
committee will consist of two or more outside directors within the meaning of
Section 162(m) of the Internal Revenue Code. The administrator has the
power to determine the terms of awards under our 2006 Equity Incentive Plan,
including the exercise price, the number of shares subject to each such award,
the exercisability of the awards and the form of consideration payable upon
exercise. The administrator also has the authority to institute an exchange
program whereby the exercise prices of outstanding awards may be reduced,
outstanding awards may be surrendered in exchange for awards with a lower
exercise price, or outstanding awards may be transferred to a third
party.
The
exercise price of options granted under our 2006 Equity Incentive Plan must at
least be equal to the fair market value of our common stock on the date of
grant. The term of an incentive stock option may not exceed ten years, except
that with respect to any participant who owns 10% of the combined voting power
of all classes of our outstanding stock as of the grant date, the term must not
exceed five years and the exercise price must equal at least 110% of the fair
market value on the grant date. The administrator determines all of the other
terms of the options.
After
termination of an employee, director or consultant, he or she may exercise any
outstanding vested options held by him or her within the period of time stated
in the applicable option agreement. Generally, if termination is due to death or
disability, the option will remain exercisable by the participant (or in the
event of termination due to the participant’s death, his or her beneficiary or
estate) for 12 months. In all other cases, the option will generally remain
exercisable for three months. However, an option generally may not be exercised
later than the expiration of its term.
Stock
appreciation rights may be granted under our 2006 Equity Incentive Plan. Stock
appreciation rights allow the recipient to receive the appreciation in the fair
market value of our common stock between the exercise date and the date of
grant. The administrator determines the terms of stock appreciation rights,
including when such rights become exercisable and whether to pay the increased
appreciation in cash or with shares of our common stock, or a combination
thereof. Stock appreciation rights expire in accordance with the same rules that
apply to stock options.
Restricted
stock may be granted under our 2006 Equity Incentive Plan. Restricted stock
awards are shares of our common stock that vest in accordance with terms and
conditions established by the administrator. The administrator will determine
the number of shares of restricted stock granted to any employee. The
administrator may impose whatever conditions to vesting it determines to be
appropriate. For example, the administrator may set restrictions based on the
achievement of specific performance goals. Shares of restricted stock that do
not vest are subject to our right of repurchase
or
forfeiture.
Restricted
stock units may be granted under our 2006 Equity Incentive Plan. Restricted
stock units are awards of restricted stock, performance shares or performance
units that are paid out in installments or on a deferred basis. The
administrator determines the terms and conditions of restricted stock units,
including the vesting criteria and the form and timing of payment.
Performance
units and performance shares may be granted under our 2006 Equity Incentive
Plan. Performance units and performance shares are awards that will result in a
payment to a participant only if performance goals established by the
administrator are achieved or the awards otherwise vest. The administrator will
establish organizational or individual performance goals in its discretion,
which, depending on the extent to which they are met, will determine the number
and/or the value of performance units and performance shares to be paid out to
participants. Performance units shall have an initial dollar value established
by the administrator prior to the grant date. Performance shares shall have an
initial value equal to the fair market value of our common stock on the grant
date. Payment for performance units and performance shares may be made in cash
or in shares of our common stock with equivalent value, or in some combination,
as determined by
the
administrator.
Our 2006
Equity Incentive Plan also provides for the automatic grant of non-statutory
options to our outside directors. Each person who was an outside director on or
after the closing date of our initial public offering and was elected or
appointed to our Board before February 26, 2009, except for those directors who
become outside directors by ceasing to be employee directors, received an
initial option to purchase 20,000 shares of our common stock. Effective as of
February 26, 2009, each person who is elected or appointed for the first time to
be an outside director will be granted an initial option to purchase 15,000
shares of our common stock and an initial RSU grant of 6,522 share of our common
stock. Our 2006 Equity Incentive Plan was amended to implement these changes.
This option will vest as to 1/36 of the shares subject to the option each month
following the date of grant, subject to the director’s continued service on each
relevant vesting date. The shares subject to the RSU grants will vest as
follows: 50% on the first anniversary of the date of grant and 50% on the second
anniversary of the date of grant, subject to the director’s continued service on
each relevant vesting date. In addition, outside directors who have
been directors for at least six months received a subsequent option to purchase
6,750 shares on June 1 for 2008. On February 26, 2009, all of our outside
directors who had been directors for at least six months (which were all such
directors) were granted an annual option to purchase 12,000 shares of our common
stock and an annual RSU grant for 1,305 share of our common stock. Commencing
with the grant on February 26, 2009, we permanently moved the annual director
equity award date of June 1 to the first open trading window each fiscal year.
The grant on February 26, 2009 replaced any grant that may have otherwise been
made pursuant to our 2006 Equity Incentive Plan on the date of our annual
meeting in 2009. The annual option grants and annual RSUs have the
same vesting schedule as the initial awards. Our 2006 Equity Incentive Plan was
amended to implement these changes. Historically, all options granted under the
automatic grant provisions have a term of ten years and an exercise price equal
to the closing price of our common stock on the date of grant. Effective
commencing in June 2007 the term of all option grants pursuant to our 2006
Equity Incentive Plan was decreased to seven years, which will result in FAS123R
expense savings over this time period.
Unless
the administrator provides otherwise, our 2006 Equity Incentive Plan does not
allow for the transfer of awards and only the recipient of an award may exercise
an award during his or her lifetime.
Our 2006
Equity Incentive Plan provides that in the event of our change in control, as
defined in the 2006 Equity Incentive Plan, the successor corporation or its
parent or subsidiary will assume or substitute an equivalent award for each
outstanding award. If there is no assumption or substitution of outstanding
awards, the awards will fully vest, all restrictions shall lapse and all
outstanding options and stock appreciation rights will become fully exercisable.
Any participant who holds outstanding options or stock appreciation rights will
have the right to exercise such awards within a period of time determined by the
administrator, after which all such options or stock appreciation rights will
terminate. In addition, for awards granted to a non-employee director, in the
event such awards are assumed or substituted for in connection with a change in
control and the director’s service is subsequently terminated, other than
pursuant to a voluntary resignation, his or her options and stock appreciation
rights will fully vest and become immediately exercisable, all restrictions on
restricted stock will lapse, and with respect to performance shares and units
all performance goals or other vesting requirements will be deemed achieved and
all other terms and conditions will be deemed to have been met.
Our 2006
Equity Incentive Plan will automatically terminate in 2016, unless we terminate
it sooner. In addition, our Board has the authority to amend, suspend or
terminate the 2006 Equity Incentive Plan provided such action does not impair
the rights of any participant.
Section 162(m)
of the Code
Under
Section 162(m) of the Internal Revenue Code, a public company generally may
not deduct compensation in excess of $1 million paid to its chief executive
officer and the four next most highly compensated executive officers. Due to the
prior approval of our stock plans by our stockholders, until the annual meeting
of our stockholders in 2010, or until a plan is materially amended, if earlier,
we expect that the awards granted under the plans will be exempt from the
deduction limits of Section 162(m) if issued in compliance with certain
rules thereunder.
Tax
Consequences
The
following summary is intended as a general guide to the United States federal
income tax consequences relating to the issuance and exercise of stock options
granted under our 1998 Stock Plan and our 2006 Equity Incentive Plan. This
summary does not attempt to describe all possible federal or other tax
consequences of such grants or tax consequences based on particular
circumstances.
Incentive Stock Options.
Optionees recognize no taxable income for regular income tax purposes as the
result of the grant or exercise of an incentive stock option qualifying under
Section 422 of the Internal Revenue Code (unless the optionee is subject to
the alternative minimum tax). Optionees who neither dispose of their shares
acquired upon the exercise of an incentive stock option, or ISO shares, within
two years after the stock option grant date nor within one year after the
exercise date normally will recognize a long-term capital gain or loss equal to
the difference, if any, between the sale price and the amount paid for the ISO
shares. If an optionee disposes of the ISO shares within two years after the
stock option grant date or within one year after the exercise date (each a
“disqualifying disposition”), the optionee will realize ordinary income at the
time of the disposition in an amount equal to the excess, if any, of the fair
market value of the ISO shares at the time of exercise (or, if less, the amount
realized on such disqualifying disposition) over the exercise price of the ISO
shares being purchased. Any additional gain will be capital gain, taxed at a
rate that depends upon the amount of time the ISO shares were held by the
optionee. A capital gain will be long-term if the optionee’s holding period is
more than 12 months. We will be entitled to a deduction in connection with the
disposition of the ISO shares only to the extent that the optionee recognizes
ordinary income on a disqualifying disposition of the ISO shares.
Nonstatutory Stock Options.
Optionees generally recognize no taxable income as the result of the grant of a
nonstatutory stock option. Upon the exercise of a nonstatutory stock option, the
optionee normally recognizes ordinary income equal to the difference between the
stock option exercise price and the fair market value of the shares on the
exercise date. If the optionee is an employee of ours, such ordinary income
generally is subject to withholding of income and employment taxes. Upon the
sale of stock acquired by the exercise of a nonstatutory stock option, any
subsequent gain or loss, generally based on the difference between the sale
price and the fair market value on the exercise date, will be taxed as capital
gain or loss. A capital gain or loss will be long-term if the optionee’s holding
period is more than 12 months. We generally should be entitled to a deduction
equal to the amount of ordinary income recognized by the optionee as a result of
the exercise of a nonstatutory stock option, except to the extent such deduction
is limited by applicable provisions of the Internal Revenue Code.
401(k)
Plan
We
maintain a retirement plan, the 401(k) Plan, which is intended to be a
tax-qualified retirement plan. The 401(k) Plan covers substantially all of our
employees. Currently, employees may elect to defer up to 100% of their
compensation, or the statutorily prescribed limit, if less, to the 401(k) Plan.
We do not match employee contributions. The 401(k) Plan has a discretionary
profit-sharing component, which to date we have not implemented, whereby we can
make a contribution in an amount to be determined annually by our Board. An
employee’s interests in his or her deferrals are 100% vested when contributed.
The 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the
Internal Revenue Code. As such, contributions to the 401(k) Plan and earnings on
those contributions are not taxable to the employees until distributed from the
401(k) Plan, and all contributions are deductible by us when made.
Executive
Time Off
All of
our full-time employees, including our executive officers, receive 12 days
vacation each year, which increases to 17 days after three years of service,
accruing up to 1.3 times the annual amount. Upon termination, all employees are
paid their accrued benefits that existed as the date of termination.
Additionally, all employees receive three sick days each year that expire if
unused as of the date of termination or the end of a calendar year.
Employee
Stock Purchase Plan
Our
Employee Stock Purchase Plan was adopted by our Board in May 2006 and approved
by our stockholders in June 2006. A total of 550,000 shares of our common stock
has been made available for sale.
Our
compensation committee is responsible for administering all of our equity
compensation plans, including the Employee Stock Purchase Plan. Our Board or its
committee has full and exclusive authority to interpret the terms of the
Employee Stock Purchase Plan and to determine eligibility to participate in the
Employee Stock Purchase Plan.
All of
our employees will be eligible to participate if they are customarily employed
by us or any participating subsidiary for at least 20 hours per week and more
than five months in any calendar year. However, an employee may not be granted
rights to purchase stock if:
|
•
|
such
employee immediately after the grant would own stock possessing 5% or more
of the total combined voting power or value of all classes of our capital
stock, or
|
|
•
|
such
employee’s rights to purchase stock under all of our employee stock
purchase plans would accrue at a rate that exceeds the equivalent of
$25,000 in our stock for each calendar year in which such rights are
outstanding.
|
Our
Employee Stock Purchase Plan is intended to qualify under Section 423 of
the Internal Revenue Code, and provides for consecutive, non-overlapping,
six-month offering periods. The initial offering period started on April 1,
2007, immediately after the effective date of our initial public offering, and
ended on September 30, 2007. Following an amendment to our Employee Stock
Purchase Plan approved by our Board in June 2007, subsequent offering periods
were set to start on the first trading day on or after November 15 and
May 15 of each year.
Our
Employee Stock Purchase Plan permits participants to purchase common stock
through payroll deductions of up to 10% of their eligible compensation, which
includes a participant’s straight-time gross earnings, commissions, overtime and
shift premiums but does not include incentive compensation, bonuses and other
compensation. A participant may purchase a maximum of 1,000 shares of common
stock during a 6-month offering period.
Amounts
deducted and accumulated by the participant are used to purchase shares of our
common stock at the end of each 6-month offering period. The purchase price is
the lower of 85% of the fair market value of our common stock as of the exercise
date and the first day of the offering period. Participants may end their
participation at any time during an offering period, and will be paid their
payroll deductions (to the extent not already used to purchase shares) to the
date of such termination. Participation ends automatically upon termination of
employment with us.
A
participant may not transfer rights granted under the Employee Stock Purchase
Plan other than by will, the laws of descent and distribution or as otherwise
provided under the Employee Stock Purchase Plan.
In the
event of our change of control, as defined under the Employee Stock Purchase
Plan, a successor corporation may either assume or substitute an equivalent
right for each outstanding purchase right. If the successor corporation refuses
to assume or substitute for the outstanding purchase rights, the offering period
then in progress will be shortened, a new exercise date will be set, which shall
be prior to the change of control, and participants’ purchase rights will
automatically be exercised on the new exercise date.
Our
Employee Stock Purchase Plan will automatically terminate in 2016, unless we
terminate it sooner. In addition, our Board has the authority to amend, suspend
or terminate our Employee Stock Purchase Plan, except that, subject to certain
exceptions described in the Employee Stock Purchase Plan, no such action may
adversely affect any outstanding rights to purchase stock under our Employee
Stock Purchase Plan without the consent of the employees so
affected.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table gives information regarding common stock that may be issued upon
the exercise of options, warrants and rights under our 1998 Stock Plan, 2006
Equity Incentive Plan, Employee Stock Purchase Plan, and certain other
individual compensation arrangements. All our equity compensation plans have
been approved by our stockholders.
|
|
|
|
|
|
|
|
|
|
Plan
category
|
|
Number of securities
to
be issued
upon
exercise of
outstanding
options,
warrants and
rights
|
|
|
Weighted-average
exercise
price of
outstanding options,
warrants and
rights
|
|
|
Number of securities
remaining available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column
(a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity
compensation plans approved by
|
|
|
|
|
|
|
|
|
|
security
holders
|
|
|
2,967,795
|
|
|
$
|
4.98
|
|
|
|
1,366,615
|
|
Equity
compensation plan not approved by
|
|
|
|
|
|
|
|
|
|
|
|
|
security
holders
|
|
|
135,714
|
(1)
|
|
$
|
6.86
|
|
|
|
0
|
|
Total
|
|
|
3,103,509
|
|
|
$
|
5.06
|
|
|
|
1,366,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Shares
are exercisable pursuant to a warrant issued by us in October 2004 to
Lloyd H. Malchow, our President, Chief Executive Officer and director, as
part of his compensation package. We did not obtain stockholder approval
for this warrant.
|
2008
Summary Compensation Table
The
following table sets forth summary compensation information for the years ended
December 31, 2007 and 2008 for our Chief Executive Officer, Chief Financial
Officer and each of our other three most highly compensated executive officers
as of the end of the last fiscal year. We refer to these persons as our named
executive officers elsewhere in this Proxy Statement. Except as provided below,
none of our named executive officers received any other compensation required to
be disclosed by law or in excess of $10,000 annually.
Name
and Principal Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Option
Awards (1)
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
Lloyd
H. Malchow
|
|
2008
|
|
$
|
334,460
|
|
|
$
|
—
|
|
|
$
|
274,768
|
|
|
$
|
50,828
|
|
|
|
|
|
$
|
660,056
|
|
President,
Chief Executive
|
|
2007
|
|
|
315,528
|
|
|
|
—
|
|
|
|
222,937
|
|
|
|
51,904
|
|
|
|
—
|
|
|
|
590,369
|
|
Officer
and Director
|
|
2006
|
|
|
297,672
|
|
|
|
45,000
|
|
|
|
72,060
|
|
|
|
—
|
|
|
|
—
|
|
|
|
414,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
J. Cousins
|
|
2008
|
|
|
228,800
|
|
|
|
—
|
|
|
|
149,704
|
|
|
|
26,083
|
|
|
|
—
|
|
|
|
404,587
|
|
Vice
President, Finance and
|
|
2007
|
|
|
209,656
|
(2)
|
|
|
—
|
|
|
|
120,914
|
|
|
|
25,850
|
|
|
|
—
|
|
|
|
356,420
|
|
Chief
Financial Officer
|
|
2006
|
|
|
189,526
|
|
|
|
28,000
|
|
|
|
58,930
|
|
|
|
—
|
|
|
|
—
|
|
|
|
276,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Buhler (2)
Senior
Vice President and Chief Commercial Officer
|
|
2008
|
|
|
159,333
|
|
|
|
—
|
|
|
|
173,209
|
|
|
|
18,164
|
|
|
|
88,774
|
(3)
|
|
|
439,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Lubock
|
|
2008
|
|
|
239,327
|
|
|
|
—
|
|
|
|
138,352
|
|
|
|
27,283
|
|
|
|
—
|
|
|
|
404,962
|
|
Senior
Vice President and
|
|
2007
|
|
|
225,781
|
|
|
|
—
|
|
|
|
114,277
|
|
|
|
26,529
|
|
|
|
—
|
|
|
|
366,587
|
|
Chief
Technical Officer
|
|
2006
|
|
|
213,005
|
|
|
|
24,000
|
|
|
|
63,966
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
F. Gearhart
|
|
2008
|
|
|
242,198
|
|
|
|
—
|
|
|
|
130,230
|
|
|
|
27,611
|
|
|
|
—
|
|
|
|
400,039
|
|
Vice
President, Sales and
|
|
2007
|
|
|
231,770
|
|
|
|
—
|
|
|
|
110,409
|
|
|
|
27,233
|
|
|
|
—
|
|
|
|
369,412
|
|
Marketing
|
|
2006
|
|
|
218,640
|
|
|
|
20,000
|
|
|
|
68,920
|
|
|
|
—
|
|
|
|
—
|
|
|
|
307,560
|
|
(1)
|
For
2007 and 2008, the amount of option awards represents the portion of the
grant date fair value of the option awards that we expensed in 2007 and
2008 using the modified prospective transition method under SFAS 123(R).
Pursuant to SEC rules, we do not include an estimate of forfeitures
related to services-based vesting as one of the assumptions in calculating
fair value. Under the SFAS 123(R) modified prospective transition method,
we would not have recorded any amounts for prior years with respect to
these awards. We use the unmodified prospective transition method under
SFAS 123(R) in our audited financial statements. See notes to our audited
financial statements, included in our Annual Report on Form 10-K for
the year ended December 31, 2008, filed with the U.S. Securities and
Exchange Commission on March 16, 2009, for a discussion of the
assumptions we use in the above fair value
calculations.
|
(2)
|
Mr.
Buhler joined us in May 2008 at an annual salary of
$239,000.
|
(3)
|
Mr.
Buhler received $20,000 in relocation fees paid in 2008 and $68,774 for
commissions earned based on 2% of international sales in excess of budget,
which we paid in March 2009.
|
Grants
of Plan-Based Awards in 2008
The
following table lists grants of plan-based awards made to our named executive
officers in 2008 and related total fair value compensation for
2008.
Name
|
|
Grant
Date
|
|
Estimated
Payouts Under
Non-Equity
Incentive
Plan
Awards
|
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
|
|
|
Exercise
or
Base
Price
of
Option
Awards
|
|
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards(1)
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
Lloyd
H. Malchow
|
|
2/27/08
|
|
|
—
|
|
|
|
—
|
|
|
$
|
170,575
|
|
|
|
53,707
|
|
|
$
|
8.30
|
|
|
$
|
186,208
|
|
|
|
11/19/08
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
273,910
|
|
|
|
2.28
|
|
|
|
263,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
J. Cousins
|
|
2/27/08
|
|
|
—
|
|
|
|
—
|
|
|
|
93,350
|
|
|
|
25,995
|
|
|
|
8.30
|
|
|
|
90,127
|
|
|
|
11/19/08
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
64,839
|
|
|
|
2.28
|
|
|
|
62,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
T. Buhler
|
|
6/5/08
|
|
|
—
|
|
|
|
—
|
|
|
|
97,512
|
|
|
|
150,000
|
|
|
|
6.98
|
|
|
|
468,120
|
|
|
|
11/19/08
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
70,131
|
|
|
|
2.28
|
|
|
|
67,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Lubock
|
|
2/27/08
|
|
|
—
|
|
|
|
—
|
|
|
|
97,646
|
|
|
|
23,020
|
|
|
|
8.30
|
|
|
|
79,813
|
|
|
|
11/19/08
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
70,131
|
|
|
|
2.28
|
|
|
|
67,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
F. Gearhart
|
|
2/27/08
|
|
|
—
|
|
|
|
—
|
|
|
|
98,817
|
|
|
|
25,183
|
|
|
|
8.30
|
|
|
|
87,312
|
|
|
|
11/19/08
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,419
|
|
|
|
2.28
|
|
|
|
31,177
|
|
(1)
|
Amounts
represent the dollar amount of compensation expense recorded in our income
statement for the 2008 fiscal year in accordance with FAS 123R, as
discussed in Notes to our audited financial statements, included in our
Annual Report on Form 10-K for the year ended December 31, 2008,
filed with the U.S. Securities and Exchange Commission on March 16,
2009. Amounts include compensation expense recognized with respect to
awards granted in previous fiscal years, as well as those granted, if any,
in the 2008 fiscal year.
|
Equity
Incentive Awards Outstanding as of December 31, 2008
The
following table lists the outstanding equity incentive awards held by our named
executive officers as of December 31, 2008.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Unearned
Options(3)
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or
Units
of Stock
that
Have
Not
Vested
|
|
|
Market
Value
of
Shares or
Units
of
Stock
that
Have
Not
Vested
|
|
Lloyd
H. Malchow
|
|
|
135,714
|
(1)
|
|
|
—
|
|
|
$
|
6.86
|
|
|
10/31/11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
26,190
|
(2)(3)
|
|
|
30,952
|
|
|
|
12.005
|
|
|
2/16/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
13,333
|
(3)
|
|
|
26,667
|
|
|
|
8.89
|
|
|
8/20/14
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
11,188
|
(3)
|
|
|
42,519
|
|
|
|
8.30
|
|
|
2/27/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
5,706
|
(3)
|
|
|
268,204
|
|
|
|
2.28
|
|
|
11/19/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
J. Cousins
|
|
|
16,427
|
(2)(3)
|
|
|
715
|
|
|
|
1.75
|
|
|
2/16/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,305
|
(2)(3)
|
|
|
1,250
|
|
|
|
3.71
|
|
|
2/17/16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,690
|
(2)(3)
|
|
|
2,024
|
|
|
|
7.95
|
|
|
5/9/16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
9,821
|
(2)(3)
|
|
|
11,607
|
|
|
|
12.005
|
|
|
2/16/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,666
|
(3)
|
|
|
13,334
|
|
|
|
8.89
|
|
|
8/20/14
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
5,415
|
(3)
|
|
|
20,580
|
|
|
|
8.30
|
|
|
2/27/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,350
|
(3)
|
|
|
63,489
|
|
|
|
2.28
|
|
|
11/19/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
T. Buhler
|
|
|
—
|
(3)
|
|
|
150,000
|
|
|
|
6.98
|
|
|
6/5/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,461
|
(3)
|
|
|
68,670
|
|
|
|
2.28
|
|
|
11/19/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Paul
Lubock
|
|
|
7,083
|
(2)(3)
|
|
|
2,917
|
|
|
|
3.71
|
|
|
2/17/16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
9,821
|
(2)(3)
|
|
|
11,607
|
|
|
|
12.005
|
|
|
2/16/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,666
|
(3)
|
|
|
13,334
|
|
|
|
8.89
|
|
|
8/20/14
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
4,795
|
(3)
|
|
|
18,225
|
|
|
|
8.30
|
|
|
2/27/15
|
|
|
|
|
|
|
|
|
|
|
|
|
1,461
|
(3)
|
|
|
68,670
|
|
|
|
2.28
|
|
|
11/19/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
F. Gearhart
|
|
|
2,571
|
(2)(3)
|
|
|
—
|
|
|
|
0.875
|
|
|
1/16/11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
31,428
|
(2)(3)
|
|
|
—
|
|
|
|
0.875
|
|
|
12/9/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
35,714
|
(2)(3)
|
|
|
—
|
|
|
|
0.875
|
|
|
8/23/11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
24,642
|
(2)(3)
|
|
|
1,072
|
|
|
|
1.75
|
|
|
2/16/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
7,083
|
(2)(3)
|
|
|
2,917
|
|
|
|
3.71
|
|
|
2/17/16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
9,821
|
(2)(3)
|
|
|
11,607
|
|
|
|
12.005
|
|
|
2/16/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,333
|
(3)
|
|
|
6,667
|
|
|
|
8.89
|
|
|
8/20/14
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
5,246
|
(3)
|
|
|
19,937
|
|
|
|
8.30
|
|
|
2/27/15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
675
|
(3)
|
|
|
31,744
|
|
|
|
2.28
|
|
|
11/19/15
|
|
|
|
—
|
|
|
|
—
|
|
__________________________
(1)
|
Exercisable
pursuant to the warrant issued to Mr. Malchow in October
2004.
|
(2)
|
All
options to purchase common stock granted under our 1998 Stock Plan held by
our named executive officers may be early
exercised.
|
(3)
|
1
/
48
of the shares shall
vest each month.
|
(4)
|
The
shares listed in this column were issued pursuant to exercise of
early-exercise stock options to purchase shares of our common stock. These
shares are subject to a right of repurchase held by us that lapses over
time.
|
Option
Exercise and Stock Vested in 2008
The
following table lists the options exercised and stock vested by our named
executive officers in 2008.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of Shares
Acquired
on
Exercise
|
|
|
Value
Realized
on
Exercise
|
|
|
Number
of Shares
Acquired
on
Vesting
|
|
|
Value
Realized
Upon
Vesting
|
|
Lloyd
H. Malchow
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Kevin
J. Cousins
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
John
T. Buhler
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Paul
Lubock
|
|
|
—
|
|
|
|
—
|
|
|
|
5,561
|
|
|
$
|
36,086.30
|
|
William
F. Gearhart
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Employment
Agreements
Employment
with us is at will. We have entered into an employment agreement with Lloyd
Malchow, our President and Chief Executive Officer. This agreement provides,
among other things, that in the event of a change of control, Mr. Malchow
will receive accelerated vesting of all then-unvested shares subject to
outstanding stock options. See “—Change in Control Benefits.”
We have
change of control agreements, but not employment agreements, with each of our
other executive officers. See “Change in Control Benefits.”
Nonqualified
Deferred Compensation
None of
our named executive officers participate in non-qualified defined contribution
plans or, except for our 401(k) Plan, other deferred compensation plans
maintained by us. Our compensation committee, which is comprised solely of
“outside directors” as defined for purposes of Section 162(m) of the Code,
may elect to provide our officers and other employees with non-qualified defined
contribution or deferred compensation benefits if the compensation committee
determines that doing so is in our best interests.
2008
Director Compensation
The
following table sets forth a summary of the compensation we paid to our
non-employee directors that held office during 2008.
Name
|
|
Fees Earned
or
Paid in
Cash
|
|
|
Option
Awards(1)
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Total
|
|
Kim
D. Blickenstaff
|
|
$
|
13,500
|
|
|
$
|
20,493
|
|
|
|
—
|
|
|
$
|
33,992
|
|
A.
Thomas Bender
|
|
|
16,729
|
|
|
|
60,720
|
|
|
|
—
|
|
|
|
77,449
|
|
Vickie
L. Capps
|
|
|
18,000
|
|
|
|
20,493
|
|
|
|
—
|
|
|
|
38,492
|
|
Fredrick
J. Dotzler
|
|
|
19,000
|
|
|
|
20,493
|
|
|
|
—
|
|
|
|
39,492
|
|
John
L. Erb
|
|
|
17,500
|
|
|
|
20,493
|
|
|
|
—
|
|
|
|
37,992
|
|
Jess
I. Treu (2)
|
|
|
6,021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,021
|
|
Gregory
D. Waller
|
|
|
24,750
|
|
|
|
20,493
|
|
|
|
—
|
|
|
|
45,242
|
|
(1)
|
Amounts
represent the dollar amount of compensation expense recorded in our income
statement for the 2008 fiscal year in accordance with FAS 123R. Amounts
include compensation expense recognized with respect to awards granted in
previous fiscal years, as well as those granted, if any, in the 2008
fiscal year.
|
(2)
|
Dr. Treu
has did not stand for re-election at our 2008 Annual Meeting of
Stockholders held on June 5,
2008.
|
The
following table sets forth the options to purchase shares of our common stock
issued to our non-employee directors that held office during 2008.
Name
|
|
Grant
Date
|
|
|
Number
of
Securities
Underlying
Options
|
|
|
Exercise or
Base Price of
Option
Awards
|
|
|
Grant Date
Fair Value of
Option
Awards(1)
|
|
Kim
D. Blickenstaff
|
|
June
5, 2008
|
|
|
|
6,750
|
|
|
$
|
6.98
|
|
|
$
|
20,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vickie
L. Capps
|
|
June
5, 2008
|
|
|
|
6,750
|
|
|
|
6.98
|
|
|
|
20,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fredrick
J. Dotzler
|
|
June
5, 2008
|
|
|
|
6,750
|
|
|
|
6.98
|
|
|
|
20,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
L. Erb
|
|
June
5, 2008
|
|
|
|
6,750
|
|
|
|
6.98
|
|
|
|
20,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jesse
I. Treu
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.
Thomas Bender
|
|
June
5,2008
|
|
|
|
20,000
|
|
|
|
6.98
|
|
|
|
60,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
D. Waller
|
|
June
5, 2008
|
|
|
|
6,750
|
|
|
|
6.98
|
|
|
|
20,493
|
|
(1)
|
Amounts
represent the dollar amount of compensation cost recognized over the
requisite service period, in accordance with FAS 123R, which include both
the amounts recorded as compensation expense in our income statement for
the 2008 fiscal year as well as amounts to be recognized in future
requisite service periods.
|
Director
Compensation
We refer
to each of our non-employee directors as an outside director. Effective upon the
closing of our initial public offering until February 26, 2009, each outside
director began receiving, for his or her service on our Board, $3,750 per
meeting attended in person, or $1,500 per meeting attended telephonically. Each
outside director who served on our audit committee or compensation committee
also began receiving, for his or her service on such committee, $1,000 per
meeting attended in person, or $500 per meeting attended telephonically. In
addition, the chairpersons of our audit committee and compensation committee
each began receiving annually $8,500 and $4,250, respectively, which was paid on
a quarterly basis, in consideration for their services in these respective
roles. Directors may be reimbursed for expenses incurred in connection with
their attendance at Board and committee meetings.
In
addition, effective as of the closing of our initial public offering until
February 26, 2009, each person who was an outside director or who was elected or
appointed for the first time to be an outside director was be granted an initial
option, on the date of the closing of our initial public offering for then
incumbent outside directors and thereafter on the date of his or her election or
appointment to the board, to purchase 20,000 shares of our common stock. The
initial option grants became exercisable as to
1
/
36
of the shares each month
following the date of grant, subject to the director’s continued service on each
relevant vesting date. In 2008, outside directors who had been directors for at
least six months also received a subsequent option to purchase 6,750 shares of
our common stock on June 1 for 2008 for each year thereafter, and on the
date of each annual meeting of our stockholders, was to continue to receive such
grants, and such options will also become exercisable as to
1
/
36
of the shares each month
following the date of grant, subject to the director’s continued service on each
relevant vesting date. Options are granted with an exercise price equal to the
fair market value of our common stock on the date of grant. See “—Compensation
Components—Stock Options—2006 Equity Incentive Plan.”
Upon the
recommendation of our compensation committee, and formal approval of such
recommendations by the Board at its meeting held on February 26, 2009, we
adjusted the annual compensation for our outside directors, as summarized in the
chart below.
|
Previous
Level of
Compensation
(Fees/Awards)
|
Newly
Approved Level of
Compensation
(Fees/Awards)
|
Annual
Board Retainer Fees
(1)
|
|
|
Board
of Directors Meeting Fees
(2)
In
Person
Telephonic
|
|
|
Committee
Retainer Fees
(1)
Audit
Committee Chairperson
Compensation
Committee Chairperson
Governance
Committee Chairperson
(4)
Non-chair
committee members
|
|
$8,500
$4,250
$2,500
$1,000
|
Committee
Meeting Fees
(2)
In
Person
Telephonic
|
|
|
Annual
Equity Awards
(5)
Stock
Options
RSUs
|
|
12,000
shares
1,305
shares
|
Initial
Equity Awards
(6)
Stock
Options
RSUs
|
|
15,000
shares
6,522
shares
|
(1) The
Board and committee retainer fees are retroactive to January 1, 2009 and will be
paid on a quarterly basis.
(2) These
meeting attendance fees are for all of our current and any future committees
that our Board may create. Directors will also be reimbursed for expenses
incurred in connection with their in-person attendance at Board and committee
meetings.
(3) In
the event that an outside director does not reside in Southern California and is
required to overnight in the area for an in-person Board meeting, an additional
$750 meeting attendance fee will be paid.
(4) We do
not currently have a corporate governance or nominating committee, but may
institute such a committee in the future and the fees referenced above shall
apply at such a time.
(5) On
February 26, 2009, all of our outside directors who had been directors for at
least six months (which were all such directors) were granted an annual option
to purchase 12,000 shares of our common stock and an annual RSU grant for 1,305
share of our common stock. We had previously granted an annual stock option
award of 6,750 shares on the date of each annual meeting of our stockholders,
and have, commencing with this grant, permanently moved the annual director
equity award date to the first open trading window each fiscal year. The grant
on February 26, 2009 replaces any grant that may have otherwise been made
pursuant to our 2006 Equity Incentive Plan on the date of our annual meeting in
2009. These option grants become exercisable as to 1/36 of the shares each
month following the date of grant, subject to the director’s continued service
on each relevant vesting date. The shares subject to the RSU grants will vest as
follows: 50% on the first anniversary of the date of grant and 50% on the second
anniversary of the date of grant, subject to the director’s continued service on
each relevant vesting date. Our 2006 Equity Incentive Plan was amended to
implement these changes.
(6)
Effective as of February 26, 2009, each person who is elected or appointed for
the first time to be an outside director will be granted an initial option to
purchase 15,000 shares of our common stock and an initial RSU grant of 6,522
share of our common stock. The initial option grants and initial RSUs have the
same vesting schedule as the annual awards. Our 2006 Equity Incentive Plan was
amended to implement these changes.
Our
compensation committee relied on a commissioned third-party industry
compensation survey and their experience with and knowledge of other companies
in our industry to make recommendations to our Board on cash fee and long-term
equity compensation for our outside directors. Our compensation committee
utilized this data to set compensation for our outside directors at levels
targeted at or around the average of the compensation amounts provided to
outside directors at comparable companies. Our compensation
committee also relied on management to make recommendations for it to
review and consider in connection with determining appropriate compensation
levels. We retained a compensation consultant to help us determine and implement
these changes in outside director compensation, and may continue to do so in the
future, to help us evaluate our compensation philosophy and provide guidance to
us in administering our compensation program.
In this
regard, the Compensation Committee worked with the compensation consultant on a
formal benchmarking process for determining director compensation. As part of
this process, a peer group of comparable companies was chosen in a manner
similar to what we did for executive compensation described
above. The present peer group is composed of the following
companies:
Accuray
Inc
|
PhotoMedex
Inc
|
CardioDynamics
International Corp
|
Solta
Medical Inc
|
Celsion
Corp
|
Somanetics
Corp
|
Digirad
Corp
|
Stereotaxis
Inc
|
EP
MedSystems Inc
|
Urologix
Inc
|
IRIDEX
Corp
|
Vision-Sciences
Inc
|
NxStage
Medical Inc
|
VNUS
Medical Technologies
|
We expect
to continue to compensate our outside directors at levels targeted at or around
the average of the compensation amounts provided to outside directors at
comparable companies.
Change
in Control Benefits
The
following summaries set forth potential payments payable to our executive
officers upon a change in control of us under their current option or employment
agreement with us. The compensation committee of our Board, at its discretion,
may amend or add benefits to these arrangements as it deems
advisable.
Upon his
initial employment with us, we entered into an employment agreement with our
Chief Executive Officer, Lloyd H. Malchow, which provides for a change of
control benefit. All of Mr. Malchow’s unvested options are subject to such
benefits. Additionally, each of the option agreements we have entered into with
Paul Lubock, our Chief Technology Officer, provides for a change of control
benefit.
Upon a
change of control, with or without any termination, each of the above-listed
individuals will immediately vest in 100% of the unvested shares underlying
options then held by him and our right to repurchase 100% of shares previously
purchased by him that are subject to vesting, will lapse.
In August
2008, the compensation committee, with the approval of our outside directors,
approved a form in change in control agreement and authorized entering into such
agreements with each of our executive officers and other members of our
management. The purpose of these agreements is to provide incentives to our
executive officers to continue their employment with us and not be distracted by
the possibility of loss of employment as a result of an
acquisition.
Acceleration
of Vesting Upon a Change in Control
|
·
|
For Messrs. Cousins,
Gearhart and Buhler only
: Upon a change in control, 50%
of the executive officer’s then outstanding and unvested equity awards
will fully vest and will otherwise remain subject to the terms and
conditions of the applicable equity award
agreement.
|
|
·
|
For Messrs. Malchow
and Lubock only
: Pursuant to the terms of their existing
employment arrangements, upon a change in control, 100% of the executive
officer’s then outstanding and unvested equity awards will fully vest and
will otherwise remain subject to the terms and conditions of the
applicable equity award agreement.
|
These
stock acceleration benefits are designed to align management’s incentives with
obtaining value for our stockholders.
Severance
Benefits
If within
twelve (12) months following a change in control, an executive officer
terminates his or her employment with us for good reason (as such term is
defined in the change in control agreement) or we terminate the executive
officer’s employment without cause (as such term is defined in the executive
officer agreement), the executive officer will receive the following severance
benefits:
|
·
|
Continuing
payments of severance pay (less applicable withholding taxes) for a period
of twelve (12) months (twenty-four (24) months in the case of Mr. Malchow
and eighteen (18) months in the case of Mr. Lubock) from the date of the
termination at a rate equal to the executive officer’s base salary rate as
in effect immediately prior to the change in control or the executive
officer’s termination date, whichever is
greater.
|
|
·
|
A
lump sum cash payment (less applicable withholding taxes) in an amount
equal to the current year’s target annual incentive, pro-rated to the date
of termination.
|
|
·
|
100%
of executive officer’s then outstanding and unvested equity awards will
fully vest and will otherwise remain subject to the terms and conditions
of the applicable equity award
agreement.
|
|
·
|
If
the executive officer elects continuation coverage pursuant to COBRA, and
provided that the named executive officer constitutes a qualified
beneficiary under the Internal Revenue Code of 1986, as amended, we will
reimburse the named executive officer for the same level of health
coverage and benefits as in effect for the named executive officer on the
day immediately preceding the date of termination for the duration of the
severance period.
|
Conditions
to Receipt of Severance
The
receive of any severance benefits discussed above will be subject to the
following conditions: (i) the executive officer signing and not revoking a
release of claims in favor of us (ii) the executive officer not soliciting any
of our employees for employment during the severance period, (iii) the executive
officer not disparaging us during the severance period, and (iv) for Mr. Malchow
only, Mr. Malchow not competing with us during the severance
period.
Excise
Tax
|
·
|
For Messrs. Cousins,
Gearhart and Buhler only
: In the event that the severance payments
and other benefits payable to an executive officer constitute “parachute
payments” under Section 280G of the U.S. tax code and would be subject to
the applicable excise tax, then the executive officer’s severance benefits
will be either (i) delivered in full or (ii) delivered to such lesser
extent which would result in no portion of such benefits being subject to
the excise tax, whichever results in the receipt by the executive officer
on an after-tax basis of the greatest amount of
benefits.
|
|
·
|
For Mr. Lubock
only
: In the event that the severance payments and other
benefits payable to Mr. Lubock constitute “parachute payments” under
Section 280G of the U.S. tax code and would be subject to the applicable
excise tax, then Mr. Lubock will receive (i) a payment from us sufficient
to pay such excise tax, and (ii) an additional payment from us sufficient
to pay the federal and state income and employment taxes and additional
excise taxes arising from the payments made to Mr. Lubock by us; provided,
however, that in no event will the foregoing payments exceed
$300,000.
|
|
·
|
For Mr. Malchow
only
: In the event that the severance payments and other benefits
payable to Mr. Malchow constitute “parachute payments” under Section 280G
of the U.S. tax code and would be subject to the applicable excise tax,
then Mr. Malchow will receive (i) a payment from us sufficient to pay such
excise tax, and (ii) an additional payment from us sufficient to pay the
federal and state income and employment taxes and additional excise taxes
arising from the payments made to Mr. Malchow by us; provided, however,
that in no event will the foregoing payments exceed
$600,000.
|
For the
purpose of such change of control benefits, “change of control” means: upon our
merger or consolidation with or into another corporation, entity or person, or
the sale of more than 50% of our voting securities in one or a series of related
transactions to another corporation, person or entity, or a sale of all or
substantially all of our assets to another corporation, entity or person;
provided that our stockholders, determined immediately before such transaction,
own less than 50% of the voting securities of the surviving or acquiring
corporation, entity or person (or parent thereof) immediately after
such
transaction.
Based on
a share price of $2.34 per share as of December 31, 2008, and the number of
options and shares held by each of the above-named individuals that were
unvested as of December 31, 2008, we estimate the market value of
acceleration of these options and shares held by each executive officer to be as
follows:
Name
|
|
|
Market Value of
Accelerated
Options
and
Shares
|
|
Lloyd
H. Malchow
|
|
$
|
861,920
|
|
Kevin
J. Cousins
|
|
|
264,418
|
|
John
T. Buhler
|
|
|
511,688
|
|
Paul
Lubock
|
|
|
269,889
|
|
William
F. Gearhart
|
|
|
173,029
|
|
Each of
our 1998 Stock Plan, 2006 Equity Incentive Plan and 2006 Employee Stock Purchase
Plan also contains change of control provisions as described above. See
“—Compensation Components—Stock Options.”
2009
Compensation
Salaries
for 2009 have been established, increasing by approximately 2% on average.
Milestones for the incentive bonus plan payments for 2009 for our executive
officers have been determined by our compensation committee. Options to purchase
an aggregate of 418,675 shares of our common stock with an exercise price of
$3.00 per share were issued to our executive officers in February 2009. In
addition, we also awarded 63,483 RSUs in February 2009. Our compensation
committee approved these awards as part of the ongoing long-term incentive
component of our compensation program for our executive officers. See
“—Compensation Components—Incentive Bonus Plans.”
Limitations
on Liability and Indemnification
Our
amended and restated certificate of incorporation contains provisions that
eliminate the personal liability of directors and executive officers to the
fullest extent permitted by the Delaware General Corporation Law and provides
that we may fully indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was our director, executive officer, employee
or agent or is or was serving at our request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, for expenses, including attorneys’ fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
Sections
145 and 102(b)(7) of the Delaware General Corporation Law empower a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of their capacity or status as directors and officers,
provided that these provisions do not eliminate or limit the personal liability
of a director for monetary damages:
|
•
|
for
any breach of the director’s duty of loyalty to the corporation or its
stockholders;
|
|
•
|
for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of
law;
|
|
•
|
arising
under Section 174 of the Delaware General Corporation Law;
or
|
|
•
|
for
any transaction from which the director derived an improper personal
benefit.
|
We have
entered into agreements to indemnify our directors and officers in addition to
the indemnification provided for in our amended and restated certificate of
incorporation and bylaws. We believe that these provisions and agreements are
necessary to attract and retain qualified directors and officers. Our bylaws
also permit us to secure insurance on behalf of any officer, director, employee
or other agent for any liability arising out of his or her actions, regardless
of whether Delaware General Corporation Law would permit indemnification. We
have directors’ and officers’ liability insurance in place. We are not currently
aware of any pending litigation or proceeding involving any of our directors,
officers, employees or agents in which indemnification will be required or
permitted. Moreover, we are not currently aware of any threatened litigation or
proceeding that might result in a claim for such indemnification.
Board
of Directors and Compensation Committee Interlocks and Insider
Participation
None of
the members of our compensation committee has at any time been one of our
officers or employees. None of our executive officers currently serves, or in
the past year has served, as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving on our
Board or compensation committee.
REPORT
OF COMPENSATION COMMITTEE
The
compensation committee has reviewed and discussed the Compensation Discussion
and Analysis included in this Proxy Statement with management of the Company,
and based upon those discussions, the compensation committee has recommended to
our Board that the Compensation Discussion and Analysis be included in this
Proxy Statement.
The
foregoing report is provided by the undersigned members of the compensation
committee.
|
A.
Thomas Bender, Chair
|
Kim
D. Blickenstaff
|
Frederick
J. Dotzler
|
PROPOSAL
ONE—ELECTION OF DIRECTOR
Classes
of the Board of Directors
Our Board
currently consists of seven directors, divided among the three classes
designated as Class I, Class II and Class III of approximately
equal size. The members of each class are usually elected to serve three-year
terms with the term of office for each class ending in successive years. Our
Class II directors that are standing for re-election, Federick J. Dotzler and
John L. Erb, are directors whose terms expire at this Annual
Meeting.
NOMINEE
FOR DIRECTOR FOR THREE-YEAR TERM ENDING 2012
Frederick J.
Dotzler
.
Mr. Dotzler has served on our Board since March 2003 and previously
served on our board of directors from March 1998 to March 2002.
Mr. Dotzler has been a Managing Director of De Novo Ventures, a venture
capital firm he co-founded, since March 2000 and a General Partner of
Medicus Venture Partners, a venture capital firm, since February 1989.
Prior to February 1989, Mr. Dotzler was a General Partner of Crosspoint
Venture Partners, a venture capital firm. Mr. Dotzler previously held
management positions in marketing, sales, manufacturing and acquisitions with
IBM, Millipore, Searle, and Merrimack Laboratories. Mr. Dotzler serves on
the board of directors of several privately-held companies. Mr. Dotzler
earned his B.S.I.E. in Industrial Engineering at Iowa State University, his
M.B.A. at the University of Chicago and an advanced degree in Economics at the
University of Louvain, Belgium.
John L.
Erb
.
Mr. Erb
has served on our Board since December 2001. Since January 2008, Mr. Erb
has served as the Chief Executive Officer of Cardia Access, Inc., a
privately-held medical device developer. From January 2007 until January of
2008, Mr. Erb served as Executive Chairman of the Board of CHF Solutions, a
privately-held manufacturer of products for the treatment of congestive heart
failure. From November 2001 through December 2006, Mr. Erb served as
Chief Executive Officer of CHF Solutions and served as a member of its board of
directors until January 2008. From March 1997 through November 2001,
Mr. Erb was President and Chief Executive Officer of IntraTherapeutics, a
manufacturer of peripheral stents, which was acquired by Sulzer Medica in
February 2001. Mr. Erb serves on the board of directors of one
publicly-traded company, Vascular Solutions, a developer of devices for the
treatment of peripheral vascular disease, and serves on the board of directors
of several privately-held companies. Mr. Erb earned his B.A. in Business
Administration at California State University, Fullerton.
Messrs. Dotzler
and Erb have been nominated for re-election to our Board to serve until the 2012
Annual Meeting or until his respective successor has been appointed or elected.
We expect each of Messrs. Dotzler and Erb to be able to serve if elected.
If a director nominee is not able to serve, proxies may be voted in favor of any
other person our Board may select.
Board
of Directors’ Recommendation
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE TWO NOMINEES FOR
CLASS II DIRECTOR LISTED ABOVE.
Directors
Continuing in Office Until 2010
Messrs.
Malchow, Blickenstaff, and Waller continue to hold office until our annual
meeting in 2010. For biographies of each of these individuals, please see pages
6, 7 and 8 of this Proxy Statement.
Directors
Continuing in Office Until 2011
Ms. Capps
and Mr. Bender continue to hold office until our annual meeting in 2011. For the
biographies of each of these individuals, please see pages 7 and 8 of this
Proxy Statement.
PROPOSAL
TWO—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM
The audit
committee of the Board has selected Deloitte & Touche LLP as the
independent registered public accounting firm to perform the audit of our
financial statements for the fiscal year ending December 31, 2009.
Deloitte & Touche audited our financial statements for 2008.
Deloitte & Touche is an independent registered public accounting firm.
Our Board is asking the stockholders to ratify the selection of
Deloitte & Touche as our independent auditor for 2009. Although not
required by law, the rules of Nasdaq, or our Company’s Bylaws, our Board is
submitting the selection of Deloitte & Touche to the stockholders for
ratification as a matter of good corporate practice. Even if the selection is
ratified, the audit committee may, in its discretion, select a different
independent registered public accounting firm at any time during the year if it
determines such a change would be in the best interests of our Company and our
stockholders. If the stockholders fail to ratify the selection of
Deloitte & Touche as our independent auditor for 2009, the audit
committee will consider whether to retain that firm for the year ending
December 31, 2009. A majority of the shares present in person or by proxy
and entitled to vote at the 2009 Annual Meeting is required for approval of this
proposal.
Representatives
of Deloitte & Touche are expected to be present at the meeting. They
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from our
Company’s
stockholders.
Board
of Directors’ Recommendation
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE
SELECTION OF DELOITTE & TOUCHE AS OUR COMPANY’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2009.
Fees
Paid to Independent Auditors
The
following table sets forth the fees paid to Deloitte & Touche, the
member firms of Deloitte & Touche, and their respective affiliates
(collectively, “D&T”):
|
|
|
|
|
|
|
Service
Category
|
|
2008
|
|
|
2007
|
|
Audit
Fees
|
|
$
|
608,000
|
|
|
$
|
642,645
|
|
Audit-Related
Fees
|
|
|
—
|
|
|
|
—
|
|
Tax
Services Fees
|
|
|
—
|
|
|
|
—
|
|
All
Other Fees
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
608,000
|
|
|
$
|
642,645
|
|
Audit
Fees
The
aggregate Audit Fees billed by D&T in the years ended December 31, 2007
and 2008 included fees for services rendered for the audits of our annual
financial statements, the review of quarterly financial statements during 2008
and services related to the Registration Statement filed in connection with our
initial public offering.
Pre-Approval
Policy
To help
ensure the independence of the independent registered public accounting firm,
the audit committee has adopted a policy for the pre-approval of all audit and
non-audit services to be performed for our Company by the independent registered
public accounting firm, with the exception of up to $20,000 in fees, which may
be approved by the audit committee Chairman alone. Pursuant to this policy and
subject to this exception, all audit and non-audit services to be performed by
the independent auditor during 2009 must be approved in advance by the audit
committee. The audit committee may delegate to one or more of its members the
authority to grant the required approvals, provided that any exercise of such
authority is presented to the full audit committee at its next regularly
scheduled meeting.
In the
above table, in accordance with the SEC’s definitions and rules, “audit fees”
are fees for professional services for the audit of a company’s financial
statements and for services that are normally provided by the accountant in
connection with other statutory and regulatory filings or engagements;
“audit-related fees” are fees for assurance and related services that are
reasonably related to the performance of the audit or review of a company’s
financial statements; “tax services fees” are fees for tax compliance, tax
advice and tax planning; and “all other fees” are fees for any services not
included in the first three categories.
All of
the services provided by D&T described in the table above were approved by
the audit committee.
OTHER
MATTERS
We are
not aware of any other business to be presented at the meeting. As of the date
of this proxy statement, no stockholder had advised us of the intent to present
any business at the meeting. Accordingly, the only business that our Board
intends to present at the meeting is as set forth in this proxy
statement.
If any
other matter or matters are properly brought before the meeting, the proxies
will use their discretion to vote on such matters in accordance with their best
judgment.
|
By
order of the Board of Directors,
|
|
|
President,
Chief Executive Officer and
Director
|
Irvine,
California
May 6,
2009
APPENDIX
A
CHARTER
OF THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS OF
SENORX,
INC.
(As
adopted June 19, 2006 and amended August 27, 2008 and December 17,
2008)
PURPOSE
The
purpose of the Audit Committee of the Board of Directors of SenoRx, Inc. (the
“Company”) shall be to:
|
·
|
provide
oversight of the Company’s accounting and financial reporting processes
and the audit of the Company’s financial
statements;
|
|
·
|
assist
the Board in monitoring (1) the integrity of the Company’s financial
statements, (2) the Company’s internal accounting and financial
controls, (3) the Company’s compliance with legal and regulatory
requirements, and (5) the independent auditor’s qualifications,
independence and performance; and
|
|
·
|
provide
to the Board such information and materials as it may deem necessary to
make the Board aware of significant financial matters that require the
attention of the Board.
|
The Audit
Committee shall also prepare the report required by the rules of the Securities
and Exchange Commission (the “SEC”) to be included in the Company’s annual proxy
statement.
MEMBERSHIP
REQUIREMENTS
The Audit
Committee members will be appointed by, and will serve at the discretion of, the
Board. Audit Committee members may be replaced by the
Board. The Audit Committee will consist of at least three members of
the Board. Members of the Audit Committee must meet the following
criteria (as well as any additional criteria required by the Nasdaq Stock
Market, Inc. Marketplace Rules (the “Nasdaq Rules”) and the SEC):
|
·
|
each
member must be an independent director in accordance with (i) the
Audit Committee requirements of the Nasdaq Rules and (ii) the rules
of the SEC;
|
|
·
|
each
member must not have participated in the preparation of the financial
statements of the Company or any current subsidiary of the Company at any
time during the past three (3)
years;
|
|
·
|
each
member must be able to read and understand fundamental financial
statements, including the Company’s balance sheet, income statement and
cash flow statement; and
|
|
·
|
at
least one member must have accounting or related financial management
expertise, as the Board interprets such qualification in its business
judgment, by virtue of such member’s past employment experience in finance
or accounting, requisite professional certification in finance or
accounting, or any other comparable experience or background which results
in such individual’s financial
sophistication.
|
The Board
may designate one member of the Audit Committee as its chairperson.
AUTHORITY
AND RESPONSIBILITIES
Independent
Auditor
·
|
The
Audit Committee shall appoint and oversee the work of the independent
auditors, approve the compensation of the independent auditors and review
and, if appropriate, discharge the independent auditors. In
this regard, the independent auditors shall report directly to the Audit
Committee, and the Audit Committee shall have the sole authority to
approve the hiring and discharging of the independent auditors, all audit
engagement fees and terms and all permissible non-audit engagements with
the independent auditors.
|
·
|
The
Audit Committee shall pre-approve (or, where permitted under the rules of
the SEC, subsequently approve) engagements of the independent auditors to
render audit services and permitted non-audit services, subject to the de
minimus exceptions for non-audit services described in Section
10A(i)(1)(B) of the Exchange Act of 1934, as amended (the “Exchange Act”),
that are approved by the Audit Committee prior to the completion of the
audit, and/or establish pre-approval policies and procedures for such
engagements, provided that (i) such policies and procedures are detailed
as to the particular services rendered, (ii) the Audit Committee is
informed of each such service and (iii) such policies and procedures do
not include delegation to management of the Audit Committee’s
responsibilities under the Exchange
Act.
|
·
|
The
Audit Committee shall review the independence of the independent auditors,
including (i) obtaining on a periodic basis a formal written statement
from the independent auditors delineating all relationships or services
between the independent auditors and the Company, consistent with all
applicable legal and regulatory standards, including any guidelines
published by the Public Company Accounting Oversight Board (PCAOB), (ii)
maintaining an active dialogue with the independent auditors, covering any
disclosed relationship or services that may impair their objectivity and
independence, (iii) presenting this statement to the Board and (iv) to the
extent there are any such relationships, monitoring and investigating them
and, if necessary, taking, or recommending to the Board that the Board
take, appropriate action to oversee the independence of the outside
auditors.
|
·
|
The
Audit Committee shall evaluate, at least annually, the independent
auditors’ qualifications, performance and independence, which evaluation
shall include a review and evaluation of the lead partner of the
independent auditors and consideration of whether there should be rotation
of the lead audit partner or the auditing firm, and take appropriate
action to oversee the independence of the independent
auditors.
|
·
|
The
Audit Committee shall review, in consultation with the independent
auditors, the annual audit plan and scope of audit activities and monitor
such plan’s progress.
|
·
|
The
Audit Committee shall review on a regular basis with the Company’s
independent auditors any problems or difficulties encountered by the
independent auditors in the course of any audit work, including
management’s response with respect thereto, any restrictions on the scope
of the independent auditors’ activities or on access to requested
information, and any significant disagreements with
management. The Audit Committee shall resolve any disagreements
between management and the independent auditors regarding financial
reporting.
|
·
|
The
Audit Committee shall obtain and review a report by the independent
auditors describing their internal quality control procedures and any
material issues raised by the most recent internal quality review or peer
review of the firm or by any inquiry or investigation by government or
professional authorities, within the preceding five years and any steps
taken to deal with such issues.
|
·
|
The
Audit Committee shall set hiring policies with regard to employees and
former employees of the independent
auditor.
|
Financial
Reporting
·
|
The
Audit Committee shall discuss and, as appropriate, review with management
and the independent auditors the Company’s annual and quarterly financial
statements and annual and quarterly reports on Forms 10-K and 10-Q,
including the Company’s disclosures under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” discuss with
the independent auditors any other matters required to be discussed by
Statement on Auditing Standards 61, and recommend to the Board whether the
audited financial statements and Management’s Discussion and Analysis
should be included in the Company’s Form 10-K or
10-Q.
|
·
|
The
Audit Committee shall discuss with management, the internal auditor and
the independent auditors significant financial reporting issues raised and
judgments made in connection with the preparation of the Company’s
financial statements, including the review of (i) major issues regarding
accounting principles and financial statement presentation, including any
significant changes in the Company’s selection or application of
accounting principles; (ii) analyses prepared by management and/or the
independent auditors setting forth significant financial reporting issues
raised and judgments made in connection with the preparation of the
financial statements, including analyses of the effects of alternative
GAAP methods on the financial statements; (iii) the effect of regulatory
and accounting initiatives, as well as off-balance sheet arrangements, on
the Company’s financial statements; (iv) the type and presentation of
information to be included in earnings press releases, as well as any
financial information and earnings guidance to be provided to analysts and
rating agencies; and (v) any significant deficiencies in the design or
operation of internal controls or material weaknesses therein and any
fraud involving management or other employees who have a significant role
in the Company’s internal controls.
|
·
|
The
Audit Committee shall receive, review and discuss periodic reports from
the independent auditors on (i) the major critical accounting policies and
practices to be used; (ii) significant alternative treatments of financial
information within GAAP that have been discussed with management; (iii)
ramifications of the use of such alternative disclosures and treatments;
(iv) any treatments preferred by the independent auditors; and (v) other
material written communications between the independent auditors and
management, such as any management letter or schedule of unadjusted
differences.
|
·
|
The
Audit Committee shall discuss, in a general manner, earnings press
releases and financial information and earnings guidance to be provided to
analysts and rating agencies, including any proposed use of “pro forma” or
“adjusted” non-GAAP information.
|
Management
Discussions
·
|
The
Audit Committee shall discuss with management and the independent auditors
any correspondence with regulators or governmental agencies and any
published reports that raise material issues regarding the Company’s
financial statements or accounting
policies.
|
·
|
The
Audit Committee shall discuss guidelines and policies with respect to risk
assessment and risk management.
|
·
|
The
Audit Committee shall discuss with the Company’s general counsel legal
matters that may have a material impact on the financial statements or the
Company’s compliance procedures.
|
·
|
Periodically,
the Audit Committee shall meet separately with the Company’s management,
with the internal auditors and with the independent
auditors.
|
·
|
Review
any Management decision to seek a second opinion from independent auditors
other than the Company’s regular independent auditors with respect to any
accounting issues.
|
Internal
Controls
·
|
The
Audit Committee shall review the adequacy and effectiveness of the
Company’s internal control policies and procedures on a regular basis,
including the responsibilities, budget and staffing of the Company’s audit
function, as well as the need for any special audit procedures in response
to material control deficiencies, through inquiry and discussions with the
Company’s independent auditors and management. In addition, the
Audit Committee shall review the reports prepared by management, and
attested to by the Company’s independent auditors, assessing the adequacy
and effectiveness of the Company’s internal controls and procedures, prior
to the inclusion of such reports in the Company’s periodic filings as
required under SEC rules. The Audit Committee shall review
disclosures regarding the Company’s internal controls that are required to
be included in SEC reports.
|
·
|
The
Audit Committee shall establish procedures for receiving, retaining and
treating complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and procedures for the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing
matters.
|
·
|
The
Audit Committee shall have the power to investigate any matter brought to
its attention, with full access to all Company books, records, facilities
and employees.
|
·
|
The
Audit Committee shall act as the Company’s Qualified Legal Compliance
Committee (“QLCC”) for the purposes of internal and external attorney
reporting under SEC rules. The Audit Committee shall establish
procedures for the confidential receipt, retention and consideration of
any attorney report to the QLCC.
|
·
|
The
Audit Committee shall review, approve and monitor the portions of the
Company’s code of ethics applicable to its senior financial
officers.
|
·
|
The
Audit Committee shall review and approve in advance any proposed related
party transaction.
|
·
|
The
Audit Committee shall oversee compliance with the SEC requirements for
disclosure of auditor’s services and Audit Committee member qualifications
and activities.
|
Internal
Audit
·
|
Review
and concur with the appointment, replacement, reassignment, or dismissal
of the Director of Internal Audit.
|
·
|
Consider,
in consultation with the Director of Internal Audit and the independent
auditor, the audit scope and plan of the internal auditors and the
independent auditors
|
·
|
Review
with the Director of Internal Audit and the independent auditor the
coordination of audit efforts to assure completeness of coverage,
reduction of redundant efforts and the effective use of audit
resources.
|
·
|
Consider
and review with Management and the Director of Internal
Audit:
|
|
o
|
Significant
findings during the year and Management’s responses
thereto.
|
|
o
|
Any
difficulties encountered in the course of their audits, including any
restrictions on the scope of their work or access to required
information.
|
|
o
|
Any
changes required in the planned scope of their audit
plan.
|
|
o
|
The
Internal Audit department budget and
staffing.
|
Other
·
|
The
Audit Committee shall review and reassess the adequacy and scope of this
Charter annually and recommend any proposed changes to the Board for
approval.
|
·
|
At
least annually, the Audit Committee shall evaluate its
performance.
|
·
|
The
Audit Committee shall have the authority to engage independent counsel and
other advisers, as it determines necessary to carry out its
duties. The Company shall provide for appropriate funding, as
determined by the Audit Committee, for payment of (i) compensation to the
independent auditors engaged for the purpose of preparing or issuing an
audit report or performing other audit review or attest services for the
Company, (ii) compensation to any advisers employed by the Audit Committee
and (iii) ordinary administrative expenses of the Audit Committee that are
necessary or appropriate for carrying out its
duties.
|
·
|
The
Audit Committee shall perform such other functions as assigned by law, the
Company’s certificate of incorporation or bylaws or the
Board.
|
LIMITATION
OF AUDIT COMMITTEE’S ROLE
While the
Audit Committee has the responsibilities and powers set forth in this Charter,
it is not the duty of the Audit Committee to plan or conduct audits or to
determine that the Company’s financial statements and disclosures are complete,
accurate and in accordance with GAAP and applicable rules and
regulations. These are the responsibilities of management and the
independent auditors.
It is
recognized that the members of the Audit Committee are not full-time employees
of the Company, that it is not the duty or responsibility of the Audit Committee
or its members to conduct “field work” or other types of auditing or accounting
reviews or procedures or to set auditor independence standards, and that each
member of the Audit Committee shall be entitled to rely on (i) the integrity of
those persons and organizations within and outside the Company from which the
Audit Committee receives information and (ii) the accuracy of the financial and
other information provided to the Audit Committee, in either instance absent
actual knowledge to the contrary.
Meetings
and Procedures
·
|
The
Audit Committee may form subcommittees for any purpose that the Audit
Committee deems appropriate and may delegate to such subcommittees such
power and authority as the Audit Committee deems
appropriate. The Audit Committee shall not delegate to a
subcommittee any power or authority required by law, regulation or listing
standard to be exercised by the Audit Committee as a
whole.
|
·
|
The
Audit Committee will set its own schedule of meetings and will meet at
least four times each year, with the option of holding additional meetings
at such times as it deems necessary. The Audit Committee will
maintain written minutes of its meetings, which minutes will be filed with
the minutes of the meetings of the
Board.
|
COMPENSATION
Members
of the Audit Committee shall receive such fees, if any, for their service as
Audit Committee members as may be determined by the Board in its sole
discretion. Such fees may include retainers, per meeting fees and
fees for service as Chair of the Audit Committee. Fees may be paid in
such form of consideration as is determined by the Board.
Except as
permitted under the applicable laws and regulations of the SEC and the Nasdaq
Rules, members of the Audit Committee may not receive any compensation from the
Company except the fees that they receive for service as a member of the Board
or any committee thereof or as a Chairman of the Board or Chair of any committee
of the Board.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SENORX,
INC.
2009
ANNUAL MEETING OF STOCKHOLDERS
The
undersigned stockholder of SenoRx, Inc., a Delaware corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement each dated May 6, 2009 and hereby appoints Lloyd H. Malchow and
Gregory D. Waller, each as proxy and attorney-in-fact, with full power of
substitution, on behalf and in the name of the undersigned to represent the
undersigned at the 2009 Annual Meeting of Stockholders of SenoRx, Inc. to be
held on June 9, 2009, at 9:00 a.m., local time, at SenoRx’s offices
located at 3 Morgan, Irvine, California 92618, and at any postponement or
adjournment thereof, and to vote all shares of common stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below:
SEE
REVERSE SIDE
FOLD
AND DETACH HERE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please Mark
your votes as indicated
|
|
x
|
|
|
|
|
|
|
|
1.
|
Election
of Directors
|
FOR
|
AGAINST
|
2.
|
Proposal
to ratify the appointment of Deloitte & Touche LLP as independent
registered public accounting firm of our Company for the fiscal year
ending December 31, 2009.
|
FOR
o
|
AGAINST
o
|
ABSTAIN
o
|
|
|
|
|
|
|
CLASS II
NOMINEES
:
|
|
|
|
|
|
|
Frederick
J. Dotzler
|
o
|
o
|
|
|
|
|
|
John
L. Erb
|
o
|
o
|
|
|
|
|
|
|
|
THE
STOCKHOLDER MAY WITHHOLD AUTHORITY TO VOTE FOR THE NOMINEE BY STRIKING
THROUGH THE INDIVIDUAL’S NAME ABOVE
|
THIS PROXY WILL BE VOTED AS
DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED AS
FOLLOWS: (1) FOR THE ELECTION OF THE NOMINATED CLASS II DIRECTORS;
(2) FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND AS THE PROXY HOLDERS
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
PLEASE
SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE,
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SIGNATURE(S)
|
|
SIGNATURE(S)
|
|
Date:
|
|
, 2009
|
|
|
|
NOTE
: This Proxy should
be marked, signed by the stockholder(s
)
exactly as his or her name appears hereon
, and returned promptly in
the enclosed envelope. If the stock you are voting is registered in the
name of two or more persons, each should sign. Persons signing
in a fiduciary capacity should use their respective
titles. If shares are held by joint tenants or as
community property, both parties should sign. If shares are
held by a corporation, please give the full corporate name and have a duly
authorized officer sign, stating title, and if the shares are held by a
partnership, please have an authorized person sign in the name of the
partnership.
|
|
Important
notice regarding the Internet availability
of
proxy materials for the 2009 Annual Meeting of
Stockholders
This
Proxy Statement, the form of proxy card and the Annual Report on
Form
10-K are
available
at
http://investor.senorx.com/annuals.cfm
.
|
FOLD
AND DETACH HERE
Vote
by Internet or Telephone or Mail
24 Hours
a Day, 7 Days a Week
Internet
and telephone voting is available until 10:59 PM Pacific Time
the
day prior to annual meeting day.
Your
Internet or telephone vote authorizes the named proxies to vote your shares in
the same manner
as
if you marked, signed and returned your proxy card.
|
|
|
|
|
Internet
|
|
Telephone
|
|
Mail
|
|
|
|
|
|
http://www.investorvote.com
|
|
1-800-652-8683
|
|
Mark,
sign and date your proxy card and return it in the enclosed postage-paid
envelope.
|
Use
the internet to vote your proxy. Have your proxy card in hand when you
access the web site.
|
OR
|
Use
any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call.
|
OR
|
If
you vote your proxy by Internet or by telephone, you do NOT need to mail back
your proxy card.
Senorx (MM) (NASDAQ:SENO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Senorx (MM) (NASDAQ:SENO)
Historical Stock Chart
From Jul 2023 to Jul 2024