SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Filed by the Registrant
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Filed by a party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission
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Definitive Proxy Statement
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Only (as permitted by Rule 14a-6(e)(2))
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Definitive Additional Materials
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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Inverness Medical Innovations, 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):
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No fee required.
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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:
(5) Total fee paid:
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Fee paid previously with preliminary materials:
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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 of the Form or Schedule and the date of its filing.
(1) Amount Previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[ ],
2010
Dear Fellow Stockholder:
You are cordially invited to attend Inverness Medical
Innovation, Inc.s Annual Meeting of Stockholders on
Wednesday, July 14, 2010 at 12:30 p.m., local time, at
our corporate headquarters located at 51 Sawyer Road,
Suite 200, Waltham, MA 02453.
In addition to the matters described in the attached proxy
statement, we will report on our activities for our fiscal year
ended December 31, 2009. You will have an opportunity to
ask questions and to meet your directors and executives.
We are pleased to be able to offer to our stockholders the
option to access our proxy materials on the Internet. We believe
this option will be preferred by many of our stockholders, as it
allows us to provide our stockholders the information they need
in a convenient and efficient format.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted.
Accordingly, please review our proxy materials and request a
proxy card to sign, date, and return or submit your proxy or
voting instruction card, as applicable, by telephone or through
the Internet. Instructions for each type of voting are included
in the Notice of Internet Availability of Proxy Materials that
you received and on the proxy card. If you attend the meeting
and prefer to vote at that time, you may do so.
We look forward to seeing you at the meeting. Your vote is
important to us.
Cordially,
Ron Zwanziger
Chairman, Chief Executive Officer and President
INVERNESS
MEDICAL INNOVATIONS, INC.
51 Sawyer Road, Suite 200
Waltham, Massachusetts 02453
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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Date:
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Wednesday, July 14, 2010
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Time:
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12:30 p.m., local time
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Place:
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Inverness Medical Innovations, Inc.
51 Sawyer Road, Suite 200
Waltham, MA 02453
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Purpose:
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1.
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Elect four Class III Directors to serve until the 2013
annual meeting of stockholders;
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2.
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Approve an amendment to Inverness Medical Innovations,
Inc.s Amended and Restated Certificate of Incorporation,
as amended, to change the name of the Company;
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3.
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Approve the Inverness Medical Innovations, Inc. 2010 Stock
Option and Incentive Plan;
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4.
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Approve an amendment to Inverness Medical Innovations,
Inc.s Amended and Restated Certificate of Incorporation,
as amended, to increase the number of authorized shares of
common stock by 50,000,000, from 150,000,000 to
200,000,000; and
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5.
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Conduct such other business as may properly come before the
annual meeting and at any adjournment or postponement thereof.
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Only stockholders of record on May 25, 2010 may vote
at the annual meeting and at any adjournment or postponement
thereof. We will begin mailing the Notice of Internet
Availability of Proxy Materials on or before June 4, 2010.
Our proxy materials, including this proxy statement and our 2009
Annual Report, which includes financial statements for the
period ended December 31, 2009, will also be available on
or before June 4, 2010 on the website referred to in the
Notice of Internet Availability of Proxy Materials.
Our Board of Directors unanimously recommends you vote
FOR each of the proposals presented to you in this
proxy statement.
Your vote is important. Please cast your vote by mail, telephone
or over the Internet by following the instructions included in
the Notice of Internet Availability of Proxy Materials and on
your proxy card.
Paul T. Hempel, Esq.
Secretary
[ ],
2010
[ ],
2010
INVERNESS
MEDICAL INNOVATIONS, INC.
51 Sawyer Road, Suite 200
Waltham, Massachusetts 02453
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Inverness
Medical Innovations, Inc. for use at our 2010 Annual Meeting of
Stockholders to be held on Wednesday, July 14, 2010, at
12:30 p.m., local time, at our corporate headquarters
located at 51 Sawyer Road, Suite 200, Waltham, MA 02453,
and at any adjournments or postponements of the annual meeting.
References in this proxy statement to us,
we, our and Company refer to
Inverness Medical Innovations, Inc., except where otherwise
indicated, such as in the Compensation Committee
Report and the 2009 Audit Committee Report.
General
Information
Delivery
of Proxy Materials
We are providing access to our proxy materials (including this
proxy statement, together with a notice of meeting and our
annual report) on the Internet pursuant to rules adopted by the
Securities and Exchange Commission (the SEC).
Accordingly, we are sending a Notice of Internet Availability of
Proxy Materials (the Notice) to stockholders
entitled to vote at the meeting. You may also request a printed
copy of the proxy materials by mail. If you do so, these
materials will also include the proxy card for the annual
meeting. The Notice that you received via mail provides
instruction for accessing the current proxy materials over the
Internet, requesting a printed copy of the proxy materials,
establishing your future preferences for proxy material delivery
and casting your vote via the Internet. To facilitate timely
delivery, all requests for a paper copy of the proxy materials
must be received by July 5, 2010.
All stockholders will have the ability to access the proxy
materials on a website referred to in the Notice or request to
receive a printed copy of the proxy materials at no charge. If
you request a printed copy of the proxy materials, we will mail
them to you within three business days of your request. The
Notice includes instructions on how to access the electronic
proxy materials, as well as instructions for requesting a
printed copy. In addition, stockholders may permanently elect to
receive future proxy materials in either electronic form by
email or printed form by mail. If you make such an election, we
will continue to send you the materials pursuant to your
election, until you notify us otherwise.
Who May
Vote
Holders of our common stock, as recorded in our stock register
at the close of business on May 25, 2010, may vote at the
annual meeting on matters properly presented at the meeting. As
of that date, there were
[ ] shares
of our common stock outstanding and entitled to one vote per
share. A list of stockholders will be available for inspection
for at least ten days prior to the meeting at the principal
executive offices of the Company at 51 Sawyer Road,
Suite 200, Waltham, MA 02453.
Electronic
Access to Proxy Materials and Annual Report
The Notice includes instructions regarding how to:
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view your proxy materials for the annual meeting on the
Internet; and
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instruct us to send you all future proxy materials by email.
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If you choose to receive future proxy materials by email, next
year you will receive an
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email with a link to the proxy materials and proxy voting site.
Your election to receive future proxy materials by email will
remain in effect until you terminate your election. Choosing to
receive your future proxy materials by email will save us the
cost of producing and mailing these documents.
How to
Vote
Your vote is important. Your shares can be voted at the annual
meeting only if you are present in person or represented by
proxy. Even if you plan to attend the meeting, we urge you to
authorize your proxy in advance. We encourage you to authorize
your proxy electronically by going to the website identified on
the Notice or on your proxy card, or by calling the toll-free
number (for residents of the United States and Canada) listed on
your proxy card. Please have your proxy card in hand when going
online or calling.
If you authorize your proxy
electronically, you do not need to return your proxy card.
If you received proxy materials by mail and choose to
authorize your proxy by mail, simply mark your proxy card, and
then date, sign and return it in the postage-paid envelope
provided.
If you hold your shares beneficially in street name, i.e.,
through a nominee (such as a bank or broker), you may be able to
authorize your proxy by telephone or the Internet as well as by
mail. You should follow the instructions you receive from your
broker or other nominee to vote these shares.
How
Proxies Work
Our Board of Directors (the Board) is asking for
your proxy. Giving us your proxy means you authorize our
designated proxy holders, Ron Zwanziger and Paul T. Hempel (or
their substitutes), to vote your shares at the meeting, or at
any adjournment or postponement thereof, in the manner you
direct. With respect to the election of directors, you may vote
for all, some or none of our director candidates. With respect
to the other proposals, you may vote for or against the proposal
or abstain from voting.
Your shares will be voted at the annual meeting as directed by
your electronic proxy, the instructions on your proxy card or
voting instructions if: (1) you are entitled to vote,
(2) your proxy was properly executed or properly authorized
electronically, (3) we received your proxy prior to the
annual meeting and (4) you did not revoke your proxy prior
to or at the meeting.
If you authorize your proxy electronically or send a properly
executed proxy without specific voting instructions, the
designated proxy holders will vote your shares in favor of our
director candidates and in favor of the other proposals.
As of the date hereof, we do not know of any other business that
will be presented at the meeting. If other business shall
properly come before the meeting, including any proposal
submitted by a stockholder that was omitted from this proxy
statement in accordance with applicable federal securities laws,
the designated proxy holders will vote your shares according to
their best judgment.
Solicitation
In addition to this mailing, our employees may solicit proxies
personally, electronically or by telephone. We pay all of the
costs of soliciting this proxy. We also reimburse brokers,
banks, nominees and other fiduciaries for their expenses in
sending these materials to you and getting your voting
instructions. We have also engaged The Altman Group to assist us
with the solicitation of proxies, and we expect to pay The
Altman Group approximately $6,000 for its services, plus
out-of-pocket
expenses incurred during the course of its work.
Revoking
a Proxy
You may revoke your proxy at any time before it is voted at the
meeting by:
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voting again on the Internet or telephone (only the latest
Internet or telephone proxy will be counted);
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properly executing and delivering a later-dated proxy card;
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voting by ballot at the meeting; or
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notifying the Companys Secretary in writing.
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Quorum
In order to carry on the business of the meeting, we must have a
quorum. Under our bylaws, this means at least a majority of the
voting power of all outstanding shares entitled to vote
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must be represented at the meeting, either by proxy or in
person. Proxies marked as abstaining or withheld, limited
proxies and proxies containing broker non-votes with respect to
any matter to be acted upon by stockholders will be treated as
present at the meeting for purposes of determining a quorum, but
will not be counted as votes cast on such matter. A broker
non-vote is a proxy submitted by a broker or other nominee
holding shares on behalf of a client in which the broker or
other nominee indicates that it does not have discretionary
authority to vote such shares on a particular matter.
Vote
Required
Each proposal sets forth the vote required for approval of the
matter.
Dissenters
Rights
Under Delaware law, you will not have dissenters,
appraisal or other similar rights with respect to any of the
proposals set forth in this proxy statement.
Multiple
Stockholders Sharing the Same Address
Please note that brokers may deliver only one Notice, annual
report and proxy statement to multiple security holders sharing
an address. This practice, known as householding, is
designed to reduce printing and postage costs. If any
stockholder residing at such an address wishes to receive a
separate Notice, annual report or proxy statement, we will
promptly deliver a separate copy to any stockholder upon written
or oral request to Doug Guarino at Inverness Medical
Innovations, Inc., 51 Sawyer Road, Suite 200, Waltham, MA
02453, by telephone at
(781) 647-3900
or by
e-mail
at doug.guarino@invmed.com.
3
Corporate
Governance
The Board
of Directors
Our Board of Directors currently consists of ten members who are
divided into three classes as follows: three Class I
Directors (John F. Levy, Jerry McAleer, Ph.D. and John A.
Quelch, Ph.D.), three Class II Directors (Carol R.
Goldberg, James Roosevelt, Jr. and Ron Zwanziger) and four
Class III Directors (Robert P. Khederian, David
Scott, Ph.D., Peter Townsend and Eli Y. Adashi, M.D.).
The members of each class serve for a staggered three-year term
and, at each annual meeting of stockholders, a class of
directors is elected for a three-year term to succeed the
directors of the same class whose terms are expiring. The
current terms of the Class I Directors, Class II
Directors and Class III Directors will expire at the annual
meetings of stockholders held following the end of calendar
years 2010, 2011 and 2009, respectively. The Board has
determined that the following directors are independent under
the rules of the New York Stock Exchange (NYSE):
Dr. Adashi, Ms. Goldberg, Mr. Khederian,
Mr. Levy, Dr. Quelch, Mr. Roosevelt and
Mr. Townsend.
The Board held 10 meetings during the last fiscal year. We have
no formal policy regarding Board members attendance at
annual meetings of stockholders. Last year, no members of the
Board attended our annual meeting of stockholders.
The Board has an Audit Committee, a Compensation Committee and a
Nominating and Corporate Governance Committee, each composed
solely of directors who satisfy the applicable independence
requirements of the NYSEs listing standards. All three
committees operate pursuant to written charters which are posted
on the
Corporate Governance
page on our website at
www.invmed.com
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The Audit
Committee
The Audit Committee consists of Mr. Levy, its Chairperson,
Mr. Townsend and Mr. Khederian. Among other things,
the Audit Committee oversees our accounting and financial
reporting processes, including the selection, retention and
oversight of our independent registered public accountant and
the pre-approval of all auditing and non-auditing services
provided by the independent registered public accountant. The
Audit Committees 2009 Audit Committee Report is included
in this proxy statement beginning on page 46. The Board has
determined that Mr. Levy is an audit committee
financial expert, as defined by SEC rules adopted pursuant
to the Sarbanes-Oxley Act. The Audit Committee held 10 meetings
during fiscal year 2009.
The
Compensation Committee
The Compensation Committee consists of Ms. Goldberg, its
Chairperson, Dr. Adashi and Mr. Khederian. The
Compensation Committee develops and implements executive officer
and director compensation policies and plans that are
appropriate for us in light of all relevant circumstances and
which provide incentives that further our long-term strategic
plans and are consistent with our culture and the overall goal
of enhancing enduring stockholder value. Under its charter, the
Compensation Committee may delegate any or all of its
responsibilities to a subcommittee, but to date it has not
chosen to do so. During fiscal year 2009, the Compensation
Committee held 7 meetings. The Compensation Discussion and
Analysis recommended by the Compensation Committee to be
included in this proxy statement begins on page 28. Among
other things, the Compensation Discussion and Analysis describes
in greater detail the Compensation Committees role in the
executive compensation process. In addition, the Compensation
Committees role in establishing director compensation is
described in more detail under Compensation of
Directors beginning on page 43 of this proxy
statement.
The
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee currently
consists of Dr. Quelch, its Chairperson,
Mr. Khederian, Mr. Levy and Mr. Roosevelt. The
Nominating and Corporate Governance Committee is charged with
recommending nominees for election to the Board, overseeing the
selection and composition of committees to the Board, developing
and recommending corporate governance principles and overseeing
our continuity planning process. The Nominating and Corporate
Governance Committee conducts all necessary and appropriate
inquiries
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into the backgrounds and qualifications of possible director
candidates and has the authority to retain any search firm or
other advisors to assist in identifying candidates to serve as
directors. The Nominating and Corporate Governance Committee has
established a policy with regard to the consideration of
director candidates recommended by holders of our voting stock.
The material elements of this policy are set forth and discussed
below under Stockholder Proposals beginning on
page 48 and the full policy can be viewed on the
Corporate Governance
page of our website at
www.invmed.com. Pursuant to the committees charter, in
identifying and evaluating director candidates, including
candidates proposed or recommended by stockholders, the
Nominating and Corporate Governance Committee takes into account
all factors it considers appropriate, which may include strength
of character, mature judgment, career specialization, relevant
technical skills, diversity and the extent to which the
candidate would fill a present need on the Board. While the
Company does not have a formal diversity policy for Board
membership, the Board seeks directors who represent a mix of
backgrounds and experiences that will enhance the quality of the
Boards discussions and decisions. The Nominating and
Corporate Governance Committee considers diversity with respect
to viewpoints, accomplishments, skills, experiences and
community involvement, among other factors such as gender, race,
national origin and age, in its evaluation of candidates for
Board membership. Such diversity considerations are discussed by
the Nominating and Corporate Governance Committee in connection
with the general qualifications of each potential nominee. In
considering candidates for the Board, the Nominating and
Corporate Governance Committee considers the entirety of each
candidates credentials in the context of these standards
and whether the candidate would bring a unique perspective to
the Board, which is consistent with the committees goal of
creating a board of directors that best serves the needs of the
Company and the interest of its shareholders. During fiscal year
2009, the Nominating and Corporate Governance Committee held
2 meetings.
Executive
Sessions
The non-management directors meet at regularly scheduled
executive sessions without management participation, generally
in connection with regularly scheduled Board meetings. At each
such session, the non-management directors select a director to
preside over such session.
Board
Leadership Structure and Role in Risk Oversight
The Board has determined that a board leadership structure
featuring a single leader as Chairman and Chief Executive
Officer (CEO) best serves the interests of the
Company and its shareholders. The combined role promotes
consistent and unified leadership, timely decision-making,
strategy development and execution and effective management of
company resources. The combined role also facilitates
information flow between management and the Board. Combining the
roles of Chairman and CEO makes clear that the individual
serving in these roles has primary responsibility for managing
the Companys business, under the oversight and review of
the Board. The CEO is the individual with primary responsibility
for implementing the Companys strategy, directing the work
of other executive officers and leading implementation of the
Companys strategic plans as approved by the Board. This
structure results in a single leader being directly accountable
to the Board and, through the Board, to shareholders, and
enables the CEO to act as the key link between the Board and
other members of management.
We do not have a lead director, but our non-management directors
meet in executive session without management present regularly,
generally after all regular meetings of the Board. Prior to each
meeting in executive session a presiding director is selected by
the non-management directors. All of the directors on each of
the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee are independent
directors.
Management is responsible for the
day-to-day
management of the risks that we face, while the Board, as a
whole and through its committees, has responsibility for the
oversight of risk management. In its risk oversight role, the
Board is responsible for satisfying itself that the risk
management processes are adequate and functioning as designed.
The Boards involvement in risk oversight includes
receiving regular reports from members of senior management and
evaluating areas of material risk to the Company,
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including operational, financial, legal, regulatory, strategic
and reputational risks. In addition, the Board has delegated
risk oversight to each of its key committees within their areas
of responsibility. The Audit Committee, the Compensation
Committee and the Nominating and Corporate Governance Committee
each report at the next meeting of the Board all significant
items discussed at each committee meeting, which includes a
discussion of items relating to risk oversight. The Compensation
Committee assists the Board in its risk oversight function by
overseeing strategies related to our incentive compensation
programs and key employee retention issues. The Audit Committee
assists the Board in its risk oversight function by reviewing
our system of disclosure controls and our internal controls over
financial reporting. The Nominating and Corporate Governance
Committee assists the Board in its risk oversight function by
managing risks associated with director candidate selection,
governance and succession matters.
Communications
with the Board
Stockholders and interested parties wishing to communicate with
the Board or any director or group of directors (including only
the non-management directors) should direct their communications
to: Secretary, Inverness Medical Innovations, Inc., 51 Sawyer
Road, Suite 200, Waltham, MA 02453. Stockholder
communications must state the number of shares of our stock
beneficially owned by the stockholder sending the communication.
The Secretary will forward the stockholder or interested party
communication to the Board or to any individual director or
directors to whom the communication is directed; provided,
however, that if the communication is unduly hostile, profane,
threatening, illegal or otherwise inappropriate, the Secretary
has the authority to discard the communication and take any
appropriate legal action.
Code of
Ethics
Our Board has adopted a code of ethics that applies to all of
our employees and agents worldwide, including our chief
executive officer, our chief financial officer, our other
executive officers and the members of the Board. Known as The
Inverness Medical Innovations Business Conduct Guidelines, this
code of ethics is posted in its entirety on the
Corporate
Governance
page of our website at
www.invmed.com
.
6
Proposal 1
At the 2010 annual meeting, the term of the Class III
Directors will expire. The Board proposes, at the recommendation
of the Nominating and Corporate Governance Committee, that at
the 2010 annual meeting of stockholders the following nominees
be elected as Class III Directors:
Robert P. Khederian
David Scott, Ph.D.
Peter Townsend
Eli Y. Adashi, M.D.
As noted above, each of these nominees is currently serving as a
member of the Board. The proxies granted by stockholders will be
voted individually at the annual meeting for the election of
these four nominees. In the event that Mr Khederian,
Dr. Scott, Mr. Townsend or Dr. Adashi shall be
unable to serve, it is intended that the proxy will be voted for
any replacements nominated by the Board. Mr. Khederian,
Dr. Scott, Mr. Townsend and Dr. Adashi have
indicated that they will serve on the Board, if elected. For
information regarding these nominees, see Information
Regarding Nominees, Other Directors and Executive Officers
beginning on page 19 of this proxy statement.
Vote
Required
The Class III Directors must be elected by a plurality of
the votes properly cast at the annual meeting. This means that
the four nominees receiving the highest number of FOR votes will
be elected as Class III Directors. Votes may be cast FOR or
WITHHELD FROM each nominee. Votes that are WITHHELD FROM the
nominees will be excluded entirely from the vote and will have
no effect. Furthermore, if you hold your shares in your own name
as a holder of record, and you fail to vote your shares, either
in person or by proxy, the votes represented by your shares will
be excluded entirely from the vote and will have no effect.
Under NYSE rules, if you do not give instructions to your
broker, it is permitted to vote any shares it holds for your
account in its discretion with respect to routine
proposals, but it is not allowed to vote your shares with
respect to certain non-routine proposals.
Starting this year,
the election of directors is a non-routine proposal.
If you do not instruct your broker how to vote with respect to
the election of directors, your broker will not vote with
respect to this proposal and those votes will be counted as
broker non-votes. If your shares are held by a
broker, bank or other nominee (i.e., in street name)
and you fail to give instructions as to how you want your shares
voted, the broker, bank or other nominee will not vote your
shares in the election of directors and the votes represented by
your shares will be excluded entirely from the vote and will
have no effect.
Recommendation
The Board unanimously recommends a vote FOR the election of
the nominees listed above.
7
Proposal 2
Incorporation to Change the
Name of the Company
Introduction
The Board has adopted and is seeking stockholder approval of an
amendment to our Amended and Restated Certificate of
Incorporation, as amended (the Certificate of
Incorporation), to change our name from Inverness
Medical Innovations, Inc. to Alere Inc. (the
Name Change). The Board recommends this action in
order to create a more unified company identity under a single,
global brand, and to better serve medical professionals, health
plans, employers, and consumers in the process.
Rationale
for the Proposed Name Change
A strong brand name is a powerful commercial
differentiatoran important driver of growth.
Since our inception, we have grown our business based on our
goal of becoming the world-leader in enabling individuals to
take charge of their health at home. A component of this
strategy has been the acquisition of numerous companies,
products and technologies. Through our acquisitions and internal
initiatives, we have built a complementary portfolio of
innovative diagnostic products and differentiated health
management services which will allow us to provide extensive
support to health care professionals and patients across the
globe.
In order to best leverage the strength of our combined
offerings, which currently include products and services offered
by numerous companies under several brand names, we believe that
an alignment of our core brands and customer-facing companies is
required to maximize our visibility and growth potential. We
thoroughly evaluated a number of potential names, including new
potential names and names already in use by us. Based on
extensive research with investors, customers, and industry
experts in the United States and abroad, we selected the name
Alere. We currently utilize the Alere brand for our health
management services offerings and, therefore, the brand already
benefits from recognition within the healthcare community by
providers and patients alike. Alere is a Latin verb meaning, in
the greater sense, to nurture, to care
for, or to support. As a company focused on
changing the future of healthcare through advances in individual
patient care, the name Alere clearly reflects our goals and our
strategy.
We therefore intend to launch future products under the Alere
brand, rebrand core products under the Alere name by 2012 and
change the names of our local sales companies and many of the
other businesses that we operate to Alere. By unifying our core
operations under a single, global brand, customers, business
affiliates, and employees will be able to identify Alere as a
world leader in enabling individuals to take charge of improving
their health and quality of life. Building a highly recognized
brand will facilitate acceptance of our products, new and
existing, across the globe and particularly in new markets as
well as reinforce our vision of bringing healthcare closer to
the home. We believe that changing our corporate name to Alere
will further support the understanding and acceptance of our
newly unified brand.
How the
Proposed Name Change would be Implemented
If the Name Change is approved by stockholders, it will be
implemented through, and become effective upon, the filing of an
amendment to our Certificate of Incorporation with the Secretary
of State of the State of Delaware. This amendment will change
Article I of the Certificate of Incorporation to read in
its entirety as follows:
Article I
The name of the Corporation is Alere Inc.
No changes will be made to the other provisions of the
Certificate of Incorporation pursuant to this Proposal 2. A
copy of the proposed amendment to our Certificate of
Incorporation is set forth in
Appendix A
hereto.
If the Name Change becomes effective, the rights of stockholders
holding certificated shares under currently outstanding stock
certificates and
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the number of shares represented by those certificates will
remain unchanged. The Name Change will not affect the validity
or transferability of any currently outstanding stock
certificates nor will it be necessary for stockholders with
certificated shares to surrender or exchange any stock
certificates they currently hold as a result of the name change.
Regardless of whether the name change is approved, we will
continue our product and services rebranding efforts under the
Alere brand as described above.
Vote
Required
A quorum being present, the affirmative vote of a majority of
the outstanding shares of common stock entitled to vote on this
Proposal 2 is required to approve the Name Change. Votes
may be cast for or against the proposal or may abstain; votes
that abstain and broker non-votes will have the effect of a vote
against the proposal.
Recommendation
The Board is of the opinion that the change of the Company name
from Inverness Medical Innovations, Inc. to
Alere Inc. is in the interest of the Company and its
stockholders as a whole.
Accordingly, the Board unanimously
recommends a vote FOR the approval of the amendment to change
the Company name from Inverness Medical Innovations,
Inc. to Alere Inc.
9
Proposal 3
Approval of the Inverness
Medical Innovations, Inc.
2010 Stock Option and Incentive
Plan
Introduction
The Board has adopted, subject to stockholder approval, the
Inverness Medical Innovations, Inc. 2010 Stock Option and
Incentive Plan (the 2010 Plan). The Board believes
it is in the best interest of the Company to adopt the 2010 Plan
because, as of May 12, 2010, only 529,386 shares of
our common stock remained available for future grants or awards
under the Inverness Medical Innovations, Inc. 2001 Stock Option
and Incentive Plan (the 2001 Plan) and because no
incentive stock options are able to be granted under the 2001
Plan after August 14, 2011. While some additional shares may
become available under the 2001 Plan through employee
terminations, this number is not expected to be significant.
The Board recommends this action in order to enable the Company
to continue to provide a source of stock to attract and retain
talented personnel, especially in the event of future
acquisitions and anticipated future growth. The Board believes
that stock options promote growth and provide a meaningful
incentive to employees of successful companies.
The 2010 Plan would authorize the Company to issue shares of
Inverness common stock pursuant to various stock incentive
awards. The total number of shares of Inverness common stock
issuable pursuant to the 2010 Plan would equal 1,000,000, plus
an additional number of shares equal to the number of shares
remaining available for new grants or awards under the 2001 Plan
as of the date this Proposal 3 is approved by our
stockholders. The number of shares of Inverness common stock
reserved for issuance under the 2010 Plan is subject to
adjustment for stock splits, stock dividends and similar events.
The 2001 Plan will terminate as to new grants or awards as of
the date this Proposal 3 is approved by our stockholders.
The following description of material terms of the 2010 Plan is
intended to be a summary only. This summary is qualified in its
entirety by reference to the complete text of the 2010 Plan.
Stockholders are urged to read the actual text of the 2010 Plan,
as proposed, in its entirety which is set forth as
Appendix B
to this proxy statement.
Summary
of the 2010 Stock Option and Incentive Plan
Administration.
The 2010 Plan provides for
administration by the Board or by a committee of not fewer than
two independent directors, referred to as the
administrator, provided that, for purposes of awards
to directors and officers who are subject to the requirements to
Section 16 of the Securities Exchange Act of 1934, the
administrator shall be deemed to include only directors who are
independent directors and for purposes of performance based
awards, the administrator shall be a committee of the Board
composed of two or more outside directors, as appointed by the
Board from time to time. As proposed, the Board of Directors
will serve as the administrator of the 2010 Plan.
The administrator has full power to select, from among the
individuals eligible for awards, the individuals to whom awards
will be granted, to make any combination of awards to
participants, and to determine the specific terms and conditions
of each award, subject to the provisions of the 2010 Plan. The
administrator may permit common stock, and other amounts payable
pursuant to an award, to be deferred. In such instances, the
administrator may permit interest, dividends or deemed dividends
to be credited to the amount of deferrals.
Eligibility and Limitations on Grants.
All of
our officers, employees, directors, consultants and other key
persons (including prospective employees) are eligible to
participate in the 2010 Plan, subject to the discretion of the
administrator. We currently have approximately
9,400 employees, excluding temporary and contract
employees. In no event may any one participant receive options
to purchase more than 1,000,000 shares of common stock,
subject to adjustment for stock splits and similar events,
during any one calendar year. The 2010 Plan will provide that
different types of awards will count differently against the
total number of shares available. Full value awards settled in
stock, other than an award that is a stock option or other award
that requires the grantee to purchase shares for an amount not
less than their fair market value at the time of grant, will be
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counted against the overall share limitation as 3 shares.
All other awards will continue to be counted against the overall
share limitation as 1 share.
Stock Options.
Options granted under the 2010
Plan may be either incentive stock options, referred to as
incentive options, within the definition of
Section 422 of the Internal Revenue Code, or non-qualified
stock options, referred to as non-qualified options.
Options granted under the 2010 Plan will be non-qualified
options if they fail to meet the Internal Revenue Code
definition of incentive options, are granted to a person not
eligible to receive incentive options under the Internal Revenue
Code, or otherwise so provide. Incentive options may be granted
only to officers or other employees of the Company or its
subsidiaries. Non-qualified options may be granted to persons
eligible to receive incentive options and to non-employee
directors and other key persons.
Other Option Terms.
The administrator has
authority to determine the terms of options granted under the
2010 Plan. Options are granted with an exercise price that is
not less than the fair market value of our common stock on the
date of the option grant. In addition, the repricing of stock
options shall not be permitted without shareholder approval.
The life of each option will be fixed by the administrator and
may not exceed ten years from the date of grant. The
administrator will determine at what time or times each option
may be exercised and the period of time, if any, after
retirement, death, disability or termination of employment
during which options may be exercised. Options may be made
exercisable in installments, and the exercisability of options
may be accelerated by the administrator; provided that the
administrator may not accelerate the exercisability of options,
other than by reason of, or in connection with, the death,
disability or retirement of the optionee, the termination
without cause of the optionees employment or a change of
control of the Company, if the number of options so accelerated
when combined with the number of unrestricted stock awards
granted would exceed 10% of the maximum number of shares
issuable under the 2010 Plan. In general, unless otherwise
permitted by the administrator, no option granted under the 2010
Plan is transferable by the optionee other than by will or by
the laws of descent and distribution, and options may be
exercised during the optionees lifetime only by the
optionee, or by the optionees legal representative or
guardian in the case of the optionees incapacity.
Options granted under the 2010 Plan may be exercised for cash or
by the transfer to us of shares of common stock which are not
then subject to restrictions under the 2010 Plan or any other
stock plan that we maintain, and which have a fair market value
equivalent to the option exercise price of the shares being
purchased. Such options may also be exercised by compliance with
certain provisions pursuant to which a securities broker
delivers the purchase price for the shares to us on behalf of
the optionee. In addition, non-qualified options granted under
the 2010 Plan may be exercised under a net exercise
arrangement between the Company and the optionee pursuant to
which the number of shares of common stock issued upon exercise
of the option will be reduced by a number of shares with an
aggregate fair market value equal to the aggregate exercise
price of the option.
To qualify as incentive options, options must meet additional
federal tax requirements, including a $100,000 limit on the
value of shares subject to incentive options which first become
exercisable in any one calendar year, and a shorter term and
higher minimum exercise price in the case of certain large
stockholders.
Stock Appreciation Rights.
The administrator
may award stock appreciation rights to participants subject to
such terms and conditions as the administrator may determine.
The exercise price for a stock appreciation right shall not be
less than the fair market value of our common stock on the date
of grant and the term of a stock appreciation right may not be
longer than ten (10) years. A stock appreciation right is
an award entitling the recipient to receive shares of stock
having a value on the date of exercise calculated as follows:
(i) the grant date exercise price of a share of Stock is
(ii) subtracted from the fair market value of the Stock on
the date of exercise and (iii) the difference is multiplied
by the number of shares of stock with respect to which the stock
appreciation right shall have been exercised.
Restricted Stock Awards.
The administrator may
grant or sell shares of common stock to any participant subject
to such conditions and restrictions as the administrator may
determine. The shares may be sold for a price determined by
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the administrator. These conditions and restrictions may include
the achievement of pre-established performance goals
and/or
continued employment with us through a specified vesting period.
The vesting period shall be determined by the administrator but
shall be at least one year for attainment of pre-established
performance goals or at least three years for other conditions
and restrictions, including the participants continued
employment with us. If the applicable performance goals and
other restrictions are not attained, or if the
participants employment with the Company terminates for
any reason, the Company shall have the right to repurchase
restricted stock that has not vested at its original purchase
price from the participant or the participants legal
representative.
Unrestricted Stock Awards.
The administrator
may also grant shares of common stock which are free from any
restrictions under the 2010 Plan. Unrestricted stock may be
granted to any participant in recognition of past services or
other valid consideration, and may be issued in lieu of cash
compensation due to such participant. The aggregate number of
unrestricted stock awards that may be granted under the plan,
when combined with stock underlying options that were
accelerated other than by reason of, or in connection with,
death, disability or retirement of the participant, the
termination without cause of the participants employment
or change of control of the Company, may not exceed 10% of the
maximum number of shares issuable under the plan.
Restricted Stock Units.
The administrator may
also award phantom stock units to participants as restricted
stock units. The restricted stock units are ultimately payable
in the form of shares of common stock and may be subject to such
conditions and restrictions as the administrator may determine.
These conditions and restrictions may include the achievement of
certain performance goals
and/or
continued employment with us through a specified vesting period.
The vesting period shall be determined by the administrator but
shall be at least one year for attainment of pre-established
performance goals or at least three years for other conditions
and restrictions, including the participants continued
employment with us. During the deferral period, subject to terms
and conditions imposed by the administrator, the restricted
stock units may be credited with dividend equivalent rights with
respect to the phantom stock units underlying the restricted
stock units. Subject to the consent of the administrator and in
accordance with the requirements of Section 409A of the
Internal Revenue Code, a participant may make an advance
election to receive a portion of his compensation or restricted
stock award otherwise due in the form of restricted stock units.
If the participants employment with the Company terminates
for any reason, the participants right in all restricted
stock units that have not vested shall automatically terminate.
Performance Share Awards.
The administrator
may grant performance share awards to any participant which
entitle the recipient to receive shares of common stock upon the
achievement of individual or company performance goals and such
other conditions as the administrator shall determine. The
periods during which performance is to be measured shall not be,
in the aggregate, less than one year.
Dividend Equivalent Rights.
The administrator
may grant dividend equivalent rights, which entitle the
recipient to receive credits for dividends that would be paid if
the grantee held specified shares of common stock. Dividend
equivalent rights may be settled either in cash or shares of
common stock. Dividend equivalent rights may be granted as a
component of another award or as a freestanding award.
Performance-Based Awards.
Grants of
performance-based awards enable us to treat restricted stock
awards, restricted stock units and performance share awards
granted under the 2010 Plan to covered persons, as defined in
Section 162(m) under the Internal Revenue Code as
performance-based compensation under
Section 162(m) and preserve the deductibility of these
awards for federal income tax purposes. Participants are only
entitled to receive payment for a performance-based award for
any given performance period to the extent that pre-established
performance goals set by the administrator for the period are
satisfied. These pre-established performance goals may include:
earnings before interest, taxes, depreciation and amortization;
net income or loss (either before or after interest, taxes,
depreciation
and/or
amortization); changes in the market price of our common stock;
cash flow; funds from operations or similar measure; sales or
revenue; acquisitions or strategic transactions; operating
income or loss;
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return on capital, assets, equity, or investment; total
stockholder returns or total returns to stockholders; gross or
net profit levels; productivity; expense; margins; operating
efficiency; customer satisfaction; working capital; earnings per
share of stock; or lease up performance, net operating income
performance or yield on development or redevelopment
communitiesany of which may be measured either in absolute
terms with or as compared to any incremental increase or as
compared to results of a peer group. With regard to a particular
performance period, the administrator will have the discretion
to select the length of the performance period, the type of
performance-based awards to be granted, and the goals that will
be used to measure the performance for the period. In
determining the actual size of an individual performance-based
award for a performance period, the administrator may reduce or
eliminate (but not increase) the award. Generally, a participant
will have to be employed on the date the performance-based award
is paid to be eligible for a performance-based award for that
period.
Section 409A Awards.
To the extent that
any award granted under the 2010 Plan is determined to
constitute nonqualified deferred compensation within
the meaning of Section 409A of the Internal Revenue Code,
the administrator shall impose additional rules and requirements
as may be necessary in order to comply with Section 409A.
In this regard, if any amount under an award subject to
Section 409A is payable upon a separation from
service (within the meaning of Section 409A) to a
participant who is then considered a specified
employee (also within the meaning of Section 409A),
then no such payment shall be made prior to the date that is the
earlier of (i) six months and one day after the
participants separation from service, or (ii) the
participants death, but only to the extent such delay is
necessary to prevent such payment from being subject to
interest, penalties
and/or
additional tax imposed pursuant to Section 409A. The
settlement of any Section 409A award may not be accelerated
or postponed except to the extent permitted by Section 409A.
Change of Control Provisions.
The 2010 Plan
provides that in the event of a change of control as
defined in the 2010 Plan, all stock options will automatically
become fully exercisable and the restrictions and conditions on
all other awards will automatically be deemed waived, unless
otherwise provided in the applicable award agreement.
Adjustments for Stock Dividends, Mergers,
etc.
The 2010 Plan authorizes the administrator
to make appropriate adjustments to the number of shares of
common stock that are subject to the 2010 Plan and to any
outstanding awards to reflect stock dividends, stock splits and
similar events. In the event of certain transactions, such as a
merger, consolidation, dissolution or liquidation of our
Company, the 2010 Plan and all awards will terminate unless the
parties to the transaction, in their discretion, provide for
appropriate substitutions or adjustments of outstanding stock
options or awards. Before any outstanding stock options or other
awards terminate, the option holders will have an opportunity to
exercise their outstanding options, and holders of other awards
will receive a cash or in kind payment of such appropriate
consideration as determined by the administrator in its sole
discretion after taking into account the consideration payable
per share of common stock pursuant to the business combination.
The administrator may adjust the number of shares subject to
outstanding awards and the exercise price and the terms of
outstanding awards to take into consideration material changes
in accounting practices or principles, extraordinary dividends,
acquisitions or dispositions of stock or property or any other
event if it is determined by the administrator that such
adjustment is appropriate to avoid distortion in the operation
of the 2010 Plan, provided that no such adjustment shall be made
in the case of an incentive stock option, without the consent of
the grantee, if it would constitute a modification, extension or
renewal of the option within the meaning of Section 424(h)
of the Code.
Amendments and Termination.
Subject to
requirements of law or the rules of any stock exchange, the
Board may at any time amend or discontinue the 2010 Plan and the
administrator may at any time amend or cancel any outstanding
award for the purpose of satisfying changes in law or for any
other lawful purpose, but no such action shall adversely affect
the rights under any outstanding awards without the
holders consent. To the extent required by the Internal
Revenue Code to ensure that options granted under the 2010 Plan
qualify as incentive options or that compensation earned under
the options granted
13
under the 2010 Plan qualifies as performance-based compensation
under the Internal Revenue Code, plan amendments shall be
subject to approval by our stockholders.
Forfeiture of Awards under Sarbanes-Oxley
Act.
If the Company is required to prepare an
accounting restatement due to the material noncompliance of the
Company, as a result of misconduct, with any financial reporting
requirement under state or federal securities laws, then, to the
extent required by law, any participant who is one of the
individuals subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002 shall
reimburse the Company for the amount of any award received by
that individual under the 2010 Plan during the
12-month
period following the first public issuance or filing with the
United States Securities and Exchange Commission, of the
financial document embodying such financial reporting
requirement.
Future Plan Benefits.
Approximately
9,400 employees, including our named executive officers,
and all of our non-employee directors will be eligible to
receive awards under the 2010 Plan. Because the granting of
awards under the 2010 Plan is discretionary, we cannot now
determine the number or type of awards to be granted in the
future to any particular person or group if the 2010 Plan is
approved.
Material
Federal Income Tax Consequences
The following discussion describes the material federal income
tax consequences of transactions under the 2010 Plan. It does
not describe all federal tax consequences under the 2010 Plan,
nor does it describe state or local tax consequences.
Incentive Options.
No taxable income is
generally realized by the optionee upon the grant or exercise of
an incentive option. If shares of common stock issued to an
optionee pursuant to the exercise of an incentive option are
sold or transferred after two years from the date of grant and
after one year from the date of exercise, then upon sale of such
shares, any amount realized in excess of the option price will
be taxed to the optionee as a long-term capital gain, and any
loss sustained will be a long-term capital loss, and we will not
have a deduction for federal corporate income tax purposes. The
exercise of an incentive option will give rise to an item of tax
preference that may result in alternative minimum tax liability
for the optionee.
If shares of common stock acquired upon the exercise of an
incentive option are disposed of prior to the expiration of the
two-year and one-year holding periods described above, a
disqualifying disposition, generally the optionee
will realize ordinary income in the year of disposition in an
amount equal to the excess, if any, of the fair market value of
the shares of common stock at exercise (or, if less, the amount
realized on a sale of such shares of common stock) over the
option price thereof, and we will be entitled to deduct such
amount. Special rules will apply where all or a portion of the
exercise price of the incentive option is paid by tendering
shares of common stock.
If an incentive option is exercised at a time when it no longer
qualifies for the tax treatment described above, the option is
treated as a non-qualified option. Generally, an incentive
option will not be eligible for the tax treatment described
above if it is exercised more than three months following
termination of employment, or one year in the case of
termination of employment by reason of disability. In the case
of termination of employment by reason of death, the three-month
rule does not apply.
Non-qualified Options.
With respect to
non-qualified options under the 2010 Plan, no income is realized
by the optionee at the time the option is granted. Generally,
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at exercise, ordinary income is realized by the optionee in an
amount equal to the difference between the option price and the
fair market value of the shares of common stock on the date of
exercise, and we receive a tax deduction for the same
amount, and
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at disposition, appreciation or depreciation after the date of
exercise is treated as either short-term or long-term capital
gain or loss depending on how long the shares of common stock
have been held.
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Special rules will apply where all or a portion of the exercise
price of the non-qualified option is paid by tendering shares of
common stock.
Stock Appreciation Rights.
The grantee of a
stock appreciation right recognizes no income for federal income
tax purposes on the grant thereof. On the exercise of a stock
appreciation right, the
14
grantee will recognize as ordinary income the difference between
the fair market value of our common stock on the date of
exercise and the exercise price of the stock appreciation right,
multiplied by the number of shares of common stock subject to
the stock appreciation right. If the grantee of a stock
appreciation right does not exercise such right, the grantee
will recognize as ordinary income the excess of the fair market
value of our common stock on the last day of the term of the
stock appreciation right over the exercise price of the stock
appreciation right, if any, multiplied by the number of shares
of common stock subject to the stock appreciation right.
Restricted and Unrestricted Stock Awards.
The
grantee of a restricted or unrestricted stock award recognizes
no income for federal income tax purposes on the grant thereof.
A grantee of a restricted stock award recognizes no income for
federal income tax purposes upon the receipt of common stock
pursuant to that award, unless, as described below, the grantee
otherwise elects. Instead, the grantee will recognize ordinary
income in an amount equal to the fair market value of the common
stock on the date that it is no longer subject to a substantial
risk of forfeiture less the amount, if any, the grantee paid for
such stock. Such fair market value becomes the basis for the
underlying shares and will be used in computing any capital gain
or loss upon the disposition of such shares (which will be
long-term capital gain if the grantee held the shares for more
than one year after the date on which the shares are no longer
subject to a substantial risk of forfeiture).
Alternatively, the grantee of a restricted stock award may
elect, pursuant to Section 83(b) of the Internal Revenue
Code, within 30 days of the acquisition of common stock
pursuant to the restricted stock award, to include in gross
income as ordinary income for the year in which the common stock
is received, the fair market value of the common stock on the
date it is received less the amount, if any, the grantee paid
for such stock. Such fair market value will become the basis for
the shares and will be used in determining any capital gain or
loss upon the disposition of such shares (which will be
long-term capital gain if the disposition is more than one year
after the date the shares are received). Grantees of restricted
stock awards are advised to consult their own tax advisors with
regard to elections pursuant to Section 83(b) of the
Internal Revenue Code.
Upon receipt of common stock pursuant to an unrestricted stock
award, the grantee will recognize as ordinary income the
difference between the fair market value of the common stock
less the amount, if any, the grantee paid for such stock. The
grantees basis in such shares will be equal to the fair
market value of the shares on the date of receipt, and this
basis will be used in determining any capital gain or loss upon
a subsequent disposition of the shares (which will be long-term
capital gain if the disposition is more than one year after the
date the shares are received).
Subject to certain limitations, we may deduct an amount equal to
the amount recognized by the grantee of a restricted or
unrestricted stock award as ordinary income for the year in
which such income is recognized.
Restricted Stock Units.
The grantee of a
restricted stock unit recognizes no income for federal income
tax purposes on the grant thereof. Upon the receipt of common
stock pursuant to a restricted stock unit, the federal income
tax laws applicable to restricted stock awards, described above,
will apply if the stock is restricted stock, and the federal
income tax laws applicable to unrestricted stock awards,
described above, will apply if the stock is unrestricted common
stock.
Subject to certain limitations, we may deduct an amount equal to
the amount recognized by the grantee of a restricted stock unit
as ordinary income for the year in which the restricted stock
unit is exercised or lapses.
Performance Share Awards.
The federal income
tax laws applicable to performance share awards are the same as
those applicable to restricted stock awards, described above.
Dividend Equivalent Rights.
There generally
will be no tax consequences as a result of the award of a
dividend equivalent right. When payment is made, the holder of
the dividend equivalent rights generally will recognize ordinary
income, and we will be entitled to a deduction, equal to the
amount received in respect of the dividend equivalent.
Parachute Payments.
The vesting or
exercisability of any portion of any option or other award that
is accelerated due to the occurrence of a change of control may
cause a portion of the
15
payments with respect to such accelerated awards to be treated
as parachute payments as defined in
Section 280G of the Internal Revenue Code. Any such
parachute payments may be non-deductible to us, in whole or in
part, and may subject the recipient to a non-deductible 20%
federal excise tax on all or a portion of such payment in
addition to other taxes ordinarily payable.
Limitation on our Deductions.
As a result of
Section 162(m) of the Internal Revenue Code, our deduction
for certain awards under the stock option plan may be limited to
the extent that a covered employee receives compensation in
excess of $1,000,000 in such taxable year, other than
performance-based compensation that otherwise meets the
requirements of Section 162(m) of the Internal Revenue Code.
Vote
Required
The approval of the proposal to adopt the 2010 Stock Option and
Incentive Plan requires the affirmative vote of a majority of
the votes properly cast on the proposal, provided that, in
accordance with the rules of the NYSE, the total votes cast on
the proposal represent over 50% in interest of all securities
entitled to vote on the proposal (the NYSE Voting
Requirement). Under the rules of the NYSE, abstentions
will count as votes casts with respect to this matter;
accordingly, abstentions will be included in determining whether
the NYSE Voting Requirement has been achieved, but will have the
effect of a vote against the proposal. Broker
non-votes will not be counted as votes cast on this matter;
accordingly, broker non-votes will make it more difficult for
the NYSE Voting Requirement to be achieved (as they will not be
included), but if the NYSE Voting Requirement is achieved, they
will have no effect on the outcome of the vote.
Recommendation
The Board unanimously recommends a vote FOR the approval of
the 2010 Stock Option and Incentive Plan.
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Proposal 4
Incorporation to Increase the
Authorized Common Stock
Our Certificate of Incorporation currently authorizes the
issuance of up to 150,000,000 shares of common stock, and
5,000,000 shares of preferred stock. On April 7, 2010,
the Board unanimously adopted a resolution setting forth a
proposed amendment to Article IV of the Certificate of
Incorporation, subject to stockholder approval, to increase the
shares of common stock that are authorized for issuance by
50,000,000 shares (the Amendment), bringing the
total number of shares of common stock authorized for issuance
to 200,000,000. No change will be made to the other provisions
of the Certificate of Incorporation pursuant to this
Proposal 4. The additional authorized shares of common
stock, if and when issued, would have the same rights and
privileges as the shares of common stock previously authorized.
As of May 12, 2010, there were 84,081,927 shares of
common stock issued and outstanding, including
23,863 shares of common stock held in treasury,
8,591,912 shares of common stock reserved for issuance
under our 2001 Stock Option and Incentive Plan (including
outstanding options), 944,932 shares reserved for issuance
under our 2001 Employee Stock Purchase Plan, 398,507 shares
of common stock reserved for issuance upon the exercise of
outstanding warrants, 1,973,846 shares of common stock
reserved for issuance under other outstanding stock options that
were not issued under our 2001 Stock Option and Incentive Plan,
3,410,641 shares of common stock reserved for issuance
under our $150.0 million, 3% senior subordinated
convertible notes, convertible at $43.98 per share,
27,647 shares of common stock reserved for issuance under
our $1.7 million of subordinated convertible promissory
notes, convertible at $61.49 per share and
23,157,911 shares of common stock reserved for issuance
upon conversion of, or as dividends on, the Series B
Convertible Perpetual Preferred Stock (Series B Preferred
Stock). Accordingly, as of May 12, 2010, there were
an aggregate of 122,587,323 shares reserved for issuance,
leaving only 27,412,677 shares available for future
issuance. If Proposal 3 to this proxy statement is
approved, the shares available for future issuance will be
further reduced by 1,000,000 shares.
The additional shares of common stock authorized by the
Amendment could be issued at the direction of the Board from
time to time for any proper corporate purpose, including,
without limitation, the acquisition of other businesses, the
raising of additional capital for use in our business, a split
of or dividend on then outstanding shares or in connection with
any employee stock plan or program. The holders of shares of
common stock do not presently have preemptive rights to
subscribe for any of our securities and holders of common stock
will not have any such rights to subscribe for the additional
common stock proposed to be authorized.
To implement the Amendment, the first paragraph of
Article IV of our Certificate of Incorporation would be
amended to read as follows: The total number of shares of
capital stock which the Corporation shall have authority to
issue is Two Hundred Five Million (205,000,000) shares, of which
(i) Two Hundred Million (200,000,000) shares shall be a
class designated as common stock, par value $0.001 per share
(the Common Stock), and (ii) Five Million
(5,000,000) shares shall be a class designated as preferred
stock, par value $0.001 per share (the Preferred
Stock). A copy of the proposed Amendment is set
forth in
Appendix C
hereto.
The proposed increase in the number of authorized shares of
common stock could have a number of effects on our stockholders
depending upon the exact nature and circumstances of any actual
issuances of authorized but unissued shares. The increase could
have an anti-takeover effect, in that additional shares could be
issued (within the limits imposed by applicable law) in one or
more transactions that could make a change in control or
takeover of our Company more difficult. For example, additional
shares could be issued by us so as to dilute the stock ownership
or voting rights of persons seeking to obtain control of us.
Similarly, the issuance of additional shares to certain persons
allied with our management could have the effect of making it
more difficult to remove our current management by diluting the
17
stock ownership or voting rights of persons seeking to cause
such removal. The subsequent issuance of additional common stock
could result in dilution of net income per share and book value
per share and the dilution of the voting rights of the common
stock. The Board is not aware of any attempt, or contemplated
attempt, to acquire control of our company, and this proposal is
not being presented with the intent that it be utilized as a
type of anti-takeover device.
Except as described herein, there are currently no definitive
plans, arrangements, commitments or understandings for the
issuance of the additional shares of common stock which are to
be authorized.
Except for (i) shares of common stock reserved for issuance
upon exercise of outstanding stock options under our 2001 Stock
Option and Incentive Plan and other outstanding stock options,
(ii) shares reserved for issuance under our 2001 Employee
Stock Purchase Plan, (iii) shares of common stock the
Company would be required to issue upon the exercise of
outstanding warrants, (iv) shares of common stock that may
be issued upon conversion of our 3% senior subordinated
convertible notes, (v) shares of common stock that may be
issued upon conversion of our subordinated convertible
promissory notes, (vi) shares of common stock that may be
issued upon conversion of, or as dividends on, the Series B
Preferred Stock, and (vii) shares of common stock reserved
for issuance upon exercise of outstanding stock options under
our 2010 Stock Option and Incentive Plan, if Proposal 3 to
this proxy statement is approved, the Board has no current plans
to issue additional shares of common stock. However, the Board
believes that the benefits of providing it with the flexibility
to issue shares without delay for any proper business purpose
outweigh the possible disadvantages of dilution and discouraging
unsolicited business combination proposals, and that it is
prudent and in the best interests of stockholders to provide the
advantage of greater flexibility which will result from the
Amendment.
Vote
Required
A quorum being present, the affirmative vote of a majority of
the outstanding shares of common stock entitled to vote on this
proposal is required to approve the Amendment. Votes may be cast
for or against the proposal or may abstain; votes that abstain
and broker non-votes will have the effect of a vote against the
proposal.
Recommendation
The Board unanimously recommends a vote FOR the approval of
the amendment to our Certificate of Incorporation increasing the
number of shares of common stock available thereunder.
18
Information
Regarding Nominees, Other Directors and Executive
Officers
The following biographical descriptions set forth certain
information with respect to the four nominees for election as
Class III Directors, the incumbent, continuing directors
who are not up for election at this annual meeting and our
current executive officers who are not directors. This
information has been furnished by the respective individuals.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Ron Zwanziger
|
|
|
56
|
|
|
Chairman of the Board, Chief Executive Officer and President
|
David Scott, Ph.D.
|
|
|
53
|
|
|
Director, Chief Scientific Officer
|
Jerry McAleer, Ph.D.
|
|
|
54
|
|
|
Director, Vice President, Research and Development and Vice
President, Cardiology
|
John Bridgen, Ph.D.
|
|
|
63
|
|
|
Senior Vice President, Business Development
|
Gordon Norman, M.D.
|
|
|
61
|
|
|
Chief Innovation Officer
|
Hilde Eylenbosch, M.D.
|
|
|
46
|
|
|
Senior Vice President, Marketing
|
John Yonkin
|
|
|
50
|
|
|
Vice President, Operations
|
Dan Delaney
|
|
|
49
|
|
|
President, North America
|
David Toohey
|
|
|
53
|
|
|
President, Europe/Middle East
|
David Walton
|
|
|
57
|
|
|
Vice President, Asia-Pacific
|
Emmanuel Hart
|
|
|
60
|
|
|
Vice President, LAmARCIS
|
Tom Underwood
|
|
|
51
|
|
|
Chief Executive Officer, Alere Health, LLC
|
David Teitel
|
|
|
46
|
|
|
Chief Financial Officer, Vice President and Treasurer
|
Jon Russell
|
|
|
45
|
|
|
Vice President, Finance
|
Robert Di Tullio
|
|
|
56
|
|
|
Vice President, Global Regulatory and Clinical Affairs
|
Paul T. Hempel
|
|
|
61
|
|
|
Senior Vice President, Leadership Development and Special
Counsel, Secretary
|
Ellen Chiniara
|
|
|
51
|
|
|
Vice President, General Counsel and Assistant Secretary
|
Eli Y. Adashi, M.D.
|
|
|
65
|
|
|
Director
|
Carol R. Goldberg
|
|
|
79
|
|
|
Director
|
Robert P. Khederian
|
|
|
58
|
|
|
Director
|
John F. Levy
|
|
|
63
|
|
|
Director
|
John A. Quelch, Ph.D.
|
|
|
58
|
|
|
Director
|
James Roosevelt, Jr.
|
|
|
64
|
|
|
Director
|
Peter Townsend
|
|
|
75
|
|
|
Director
|
Our
Class III DirectorsTerm Expiring 2010
Eli Y. Adashi, MD, MS, CPE, FACOG,
joined the Board on
April 1, 2009. The outgoing Dean of Medicine and Biological
Sciences and the Frank L. Day Professor of Biology at Brown
University, Dr. AdashiHarvard-educated in Health Care
Management (MS; 2005; HSPH)is presently a Professor of
Medical Science at The Warren Alpert Medical School of Brown
University and has been since 2004. A
Physician-Scientist-Executive with over 25 years of
experience in Health Care and in the Life Sciences,
Dr. Adashi is a member of the Institute of Medicine of the
National Academy of Sciences and of its Board on Health Sciences
Policy. Dr. Adashi is the founder and former leader of the
multidisciplinary Ovarian Cancer Program of the NCI-designated
Huntsman Cancer Research Institute. Dr. Adashi also served
on sabbatical on the Quality Improvement Group of the Office of
Clinical Standards and Quality, Centers for Medicare and
Medicaid Services (CMS) and is a current
ad hoc
member of
the Reproductive Health Drugs Advisory Committee of the
U.S. Food & Drug Administration. A fellow of the
American Association for the Advancement of Science and a member
of the Association of American Physicians, Dr. Adashi is
the author or co-author of over 250 peer-reviewed publications,
over 120 book chapters/reviews, and 13 books focusing
19
on ovarian biology, ovarian cancer and reproductive health.
Dr. Adashi is a member of the Boards Compensation
Committee. Dr. Adashi brings to our Board senior management
experience and immense knowledge and experience in medicine and
science from the provider perspective.
Robert P. Khederian
has served on the Board since
July 31, 2001. Mr. Khederian is the Chairman of
Belmont Capital, a venture capital firm he founded in 1996, and
Provident Corporate Finance, an investment banking firm he
founded in 1998. From 1984 through 1996, he was founder and
Chairman of Medical Specialties Group, Inc., a nationwide
distributor of medical products which was acquired by Bain
Capital. Mr. Khederian had been the Chairman of the Board
of Cambridge Heart, Inc. from August 2006 to August 2008.
Mr. Khederian also served as the interim CEO of Cambridge
Heart, Inc. from December 2006 to December 2007.
Mr. Khederian is a member of the Company Boards Audit
Committee, Compensation Committee and Nominating and Corporate
Governance Committee. A former chief executive officer,
Mr. Khederian has extensive knowledge of the capital
markets and brings to the Board significant and valuable
financial and investment expertise.
David Scott, Ph.D.
has served on the Board since
July 31, 2001 and has served as our Chief Scientific
Officer since our inception in May 2001. Dr. Scott served
as Chairman of Inverness Medical Limited, a subsidiary of our
predecessor company, Inverness Medical Technology, from July
1999 through November 2001, when that company was acquired by
Johnson & Johnson, and as a managing director of
Inverness Medical Limited from July 1995 to July 1999.
Dr. Scott served as Managing Director of Great Alarm
Limited, a consulting company, from October 1993 to April 1995.
Between October 1984 and September 1993, he held several
positions at MediSense UK, serving most recently as Managing
Director, where he was responsible for managing product
development, as well as the mass manufacture of one of its
principal products, ExacTech. Dr. Scotts scientific
and management background in our industry provides our Board
with valuable general business and research and development
expertise.
Peter Townsend
has served on the Board since May 30,
2001. Mr. Townsend served as a director of our predecessor
company, Inverness Medical Technology, from August 1996 through
November 2001, when that company was acquired by
Johnson & Johnson. From 1991 to 1995, when he retired,
Mr. Townsend served as Chief Executive Officer and a
director of Enviromed plc, a medical products company.
Mr. Townsend is a member of the Boards Audit
Committee. As a former chief executive officer of a medical
products company, Mr. Townsend brings to the Board
financial expertise, significant industry experience and an
international business perspective.
Our
Class I DirectorsTerm Expiring 2011
John A. Quelch, Ph.D.
joined the Board on
March 10, 2003. Since June 2001, Dr. Quelch has been a
professor and Senior Associate Dean at the Harvard Business
School. From July 1998 through June 2001, he was Dean of the
London Business School. Dr. Quelch also serves as a
director of WPP plc, the worlds largest marketing and
media services company, and as Chairman of the Massachusetts
Port Authority. Dr. Quelch served as a director of Pepsi
Bottling Group from 2005 to 2010 and of Gentiva Health Services,
Inc. from 2006 to 2009. He is Chairperson of the Boards
Nominating and Corporate Governance Committee. Through his
general business experience and academic credentials,
Dr. Quelch brings to our Board both industry and academic
expertise in marketing and organizational management.
John F. Levy
has served on the Board since May 30,
2001. Mr. Levy served as director of Inverness Medical
Technology from August 1996 through November 2001, when that
company was acquired by Johnson & Johnson. Since 1993,
he has been an independent consultant. Mr. Levy served as
President and Chief Executive Officer of Waban, Inc., a
warehouse merchandising company, from 1989 to 1993.
Mr. Levy is Chairperson of the Boards Audit Committee
and is a member of the Boards Compensation Committee and
Nominating and Corporate Governance Committee. A former chief
executive officer, Mr. Levy brings to our Board financial
expertise, investment experience and knowledge of distribution
systems.
Jerry McAleer, Ph.D.
joined the Board on
March 10, 2003. Dr. McAleer has also served as our
Vice President, Research and Development since our inception in
May 2001 and has served as our Vice President, Cardiology since
early 2006. Dr. McAleer served as Vice President of
Research and Development of our
20
predecessor company, Inverness Medical Technology, from 1999
through November 2001, when that company was acquired by
Johnson & Johnson. From 1995 to 1999, Dr. McAleer
served as Director of Development of Inverness Medical Limited,
Inverness Medical Technologys primary research and
development unit, where he headed the development of Inverness
Medical Technologys electrochemical glucose strips. Prior
to joining Inverness Medical Technology, Dr. McAleer held
senior research and development positions at MediSense, a
medical device company, and Ecossensors, Inc., an environmental
research company. Dr. McAleers scientific background
in our industry provides our Board with valuable research and
development expertise.
Our
Class II DirectorsTerm Expiring 2012
Carol R. Goldberg
has served on the Board since
May 30, 2001. Ms. Goldberg served as a director of our
predecessor company, Inverness Medical Technology, from August
1992 through November 2001, when that company was acquired by
Johnson & Johnson. Since December 1989, she has served
as President of The AVCAR Group, Ltd., an investment and
management consulting firm in Boston, Massachusetts.
Ms. Goldberg is Chairperson of the Boards
Compensation Committee and a member of the Boards
Nominating and Corporate Governance Committee. As the former
President and Chief Operating Officer of Stop & Shop
Companies, Inc., Ms. Goldberg brings a wealth of financial,
marketing and consumer expertise to the Board.
James Roosevelt, Jr.
joined the Board on
February 6, 2009. Mr. Roosevelt has served as the
President and Chief Executive Officer of Tufts Health Plan since
2005. From 1999 to 2005, Mr. Roosevelt was Senior Vice
President and General Counsel of Tufts Health Plan.
Mr. Roosevelt also serves as Co-Chair of the Rules and
By-laws Committee of the Democratic National Committee, Co-Chair
of the Board of Directors for the Tufts Health Care Institute,
and member of the Board of Directors at American Health
Insurance Plans, Emmanuel College and PointRight Inc., where he
serves as a member of the Compensation Committee.
Mr. Roosevelt is a member of the Boards Nominating
and Corporate Governance Committee. Mr. Roosevelt brings to
our Board extensive senior management, policy-making and
financial experience within the health insurance industry, which
includes important customers of the Company and is a driving
force behind the demand for control of healthcare costs, which
is reshaping the diagnostic and health management industries in
which we operate.
Ron Zwanziger
has served as our Chairman, Chief Executive
Officer and President since our inception on May 11, 2001.
Mr. Zwanziger served as Chairman, Chief Executive Officer
and President of our predecessor company, Inverness Medical
Technology, from its inception in 1992 through November 2001
when that company was acquired by Johnson & Johnson.
From 1981 to 1991, he was Chairman and Chief Executive Officer
of MediSense, a medical device company. Mr. Zwanziger also
serves as a director and Chairperson of the Nominating and
Corporate Governance Committee of AMAG Pharmaceuticals, Inc.,
and served a portion of 2009 as a member of the Compensation
Committee for AMAG Pharmaceuticals, Inc. As the Chief Executive
Officer of the Company, as well as the founder and chief
executive officer of two other successful medical diagnostic
companies, Mr. Zwanziger brings strategic vision,
leadership, extensive business and operating experience and an
immense knowledge of our Company and the industry to the Board.
Executive
Officers Who Are Not Directors
John Bridgen, Ph.D.
recently assumed the title of
Senior Vice President, Business Development, after serving as
our Vice President, Business Development since June 2006. Prior
to that, he served as our Vice President, Strategy since
September 2005. Dr. Bridgen joined our Company in September
2002 upon our acquisition of Wampole Laboratories, LLC.
Dr. Bridgen served as President of Wampole from August 1984
until September 2005. Prior to joining Wampole, Dr. Bridgen
had global sales and marketing responsibility for the hematology
and immunology business units of Ortho Diagnostic Systems Inc.,
a Johnson & Johnson company.
Gordon Norman, M.D.
has served as our Chief
Innovation Officer since February 2010. Dr. Norman
continues to serve as Executive Vice President, as well as Chief
Innovation Officer, at our subsidiary, Alere Health, LLC, where
he held the title of EVP, Science & Innovation from
May 2008 to February 2010. From June 2007 to May 2008,
Dr. Norman served as EVP, Chief Science Officer of Alere
Medical, Inc., which we
21
acquired in November 2007. Prior to June 2007, Dr. Norman
served Alere Medical as EVP and Chief Medical Officer. Prior to
joining Alere Medical in July 2005, Dr. Norman served in a
variety of executive medical management roles for PacifiCare
Health Services since July 1994.
Hilde Eylenbosch, M.D.
recently assumed the title of
Senior Vice President, Marketing, after serving as our Vice
President, Marketing since April 1, 2009. Prior to that,
she served as Chief Executive Officer of SPD Swiss Precision
Diagnostics GmbH, our
50
/
50
joint venture with Procter & Gamble, since its
inception on May 18, 2007. Dr. Eylenbosch has also
served as our President, Consumer Diagnostics since June 2006.
Prior to assuming that title she served as Vice President,
Consumer Diagnostics from July 2005 to June 2006, Vice
President, Consumer Marketing from October 2004 to July 2005 and
Vice President of International Womens Health from
November 2001 to October 2004. Dr. Eylenbosch served in the
same capacity for our predecessor company, Inverness Medical
Technology, from August 2001 until that company was acquired by
Johnson & Johnson in November 2001. Prior to that, she
held various positions at Inverness Medical Technology,
including Director of U.S. Womens Health from
September 1998 through October 2000. When she joined Inverness
Medical Technology in January 1995, Dr. Eylenbosch was
responsible for marketing that companys womens
health products in Europe. Before joining Inverness Medical
Technology, Dr. Eylenbosch was employed by Synthelabo, a
French pharmaceutical company, where she held various marketing
positions.
John Yonkin
was appointed Vice President, Operations in
July 2009. Previously, he served as President, Inverness Medical
Innovations North America, Inc. from January 2008. Prior to
that, he served as President, U.S. Point of Care from June
2006. Mr. Yonkin also served as President, Nutritionals, a
role he had from June 2006 until we sold that business in
2010. Prior to that, he served as our Vice President,
Nutritionals from April 2005 to June 2006 and Vice President,
U.S. Sales and Marketing from November 2001 to April 2005.
Mr. Yonkin served as Vice President of U.S. Sales of
our predecessor company, Inverness Medical Technology, from
October 1998 through January 2000 and as its General Manager
from January 2000 through November 2001, when that company
was acquired by Johnson & Johnson. He also served as
Manager of Product Development for Inverness Medical Technology
from October 1997 until October 1998. From January 1995 to
September 1997, Mr. Yonkin was Director of National
Accounts for Genzyme Genetics, a subsidiary of Genzyme, Inc., a
leader in genetic testing services for hospitals, physicians and
managed healthcare companies.
Daniel Delaney
has served as President, Inverness Medical
Innovations North America, Inc. since August 2009.
Previously, he served as Vice President and General Manager,
Acute Care from July 2008 and as Vice President and General
Manager of Clinical Products from July 2007. Mr. Delaney
joined us in December 2004 as Vice President and General Manager
of Wampole Laboratories, LLC. In his more than 20 years of
health care industry experience prior to joining Inverness
Medical Innovations, Mr. Delaney held various commercial
leadership roles of increasing responsibility with Abbott
Laboratories Diagnostics Division, Abbott Hospital Products
Division and Hospira, Inc. from 1984 through 2004.
David Toohey
was appointed President, Europe/Middle East
in January 2008. Prior to that, he served as President,
Professional Diagnostics from December 2005, as Vice President,
Professional Diagnostics from October 2002, as Vice President,
European Operations from February 2002, and as Vice President,
New Products from November 2001. He also served as Managing
Director of our Unipath Limited subsidiary from December 2001
through October 2002. Mr. Toohey was employed by our
predecessor company, Inverness Medical Technology, as its Vice
President, New Products from May 2001 through November 2001,
when that company was acquired by Johnson & Johnson.
Prior to joining Inverness Medical Technology, Mr. Toohey
served as Vice President of Operations at Boston Scientific
Corporations Galway, Ireland facility where he oversaw its
growth, from a
start-up
to
Boston Scientific Corporations largest manufacturing
facility, between 1995 and 2001. Prior to that time he held
various executive positions at Bausch & Lomb, Inc.,
Digital Equipment Corp. and Mars, Inc.
David Walton
serves as Vice President, Asia
Pacific. Mr. Walton joined us in December 2001
when we acquired the Unipath business from Unilever, where he
was previously International Director for the Consumer and
Professional Diagnostic business units. Prior to this,
Mr. Walton held various senior global sales and
22
marketing roles in the Diagnostics Division of Eli Lilly based
at Hybritech in San Diego, California and Liege, Belgium,
Biorad U.K. and Corning Medical U.K.
Emanuel Hart
served as Chief Executive Officer and
President of Orgenics Ltd. (Israel), one of our subsidiaries,
from July 1997 through 2007. Orgenics Ltd. includes
manufacturing, research and development and marketing business
units. In August 2007, Mr. Hart was appointed Vice
President for International Business responsible for the Latin
America, Africa, Russia, ex-Soviet Union countries and Israel
territories (LAmARCIS) for all of our products.
Tom Underwood
has served as Chief Executive Officer of
Alere Health, LLC since February 2010. Mr. Underwood served
as President of the Technology Solutions Division of Alere from
May 2008 and then as our Chief Information Officer since
September 2009. Mr. Underwood served as President and Chief
Operating Officer of Matria Healthcare from January 2008 until
May 2008 when we acquired Matria. Prior to this role and since
joining Matria Healthcare in June 2007, he served as Executive
Vice President of Technology. Mr. Underwood came to Matria
from First Consulting Group (FCG), where he last served as
President of Global Shared Services. During his tenure with FCG,
Mr. Underwood served in various executive leadership roles,
including President of Global Shared Services, Executive Vice
President of Healthcare, Executive Vice President of Government
and Technology, and President of FCG Software Services.
Previously, Mr. Underwood was Chief Executive Officer and
President of Paragon Solutions, an offshore software development
business that was acquired by FCG. Prior to his employment with
Paragon and FCG, Mr. Underwood was the technology executive
for IMNET Systems, an electronic medical record solutions
company, which was acquired by McKesson HBOC. Earlier in his
career, Mr. Underwood held numerous management and
technology roles within Perceptics, a division of the
Westinghouse Company, and AT&T Bell Laboratories.
David Teitel
has served as our Chief Financial Officer
and Treasurer since December 2006. Mr. Teitel has over
20 years of public and private company finance experience,
including nine years of audit experience at Arthur Andersen and
senior financial positions with Thermo Electron Corp., which is
now Thermo Fisher Scientific Inc. and Deknatel Snowden Pencer
Inc. Mr. Teitel joined the Company in December 2003 as
Director of Finance Operations and assumed the title Vice
President, Finance in December 2004.
Jon Russell
has served as our Vice President, Finance
since December 2006. In this role, Mr. Russell oversees
financial systems management and integration and shares
responsibility for external communications with the Chief
Executive Officer. Previously, Mr. Russell was Chief
Financial Officer of Wampole Laboratories, LLC. He has more than
20 years of experience in finance and operations
management, including senior operational finance positions in
North America and Europe with Precision Castparts Corporation,
Vertex Interactive, Inc. and Genicom Corporation.
Mr. Russell began his career at Ernst & Young LLP.
Robert Di Tullio
joined us as Vice President, Global
Regulatory and Clinical Affairs in March 2010. He has over
36 years experience in the in vitro diagnostics
industry, the last 25 of which is in quality and regulatory
management. Mr. Di Tullio served as Vice President,
Regulatory Affairs and Quality at ProteoGenix, Inc. from July
2008 to March 2010. He held the position of Vice President,
Regulatory and Clinical Affairs and Quality at Sequenom, Inc.
from June 2007 to July 2008. Prior to that time, Mr. Di
Tullio served as Vice President, Regulatory Affairs and Quality
Systems from June 1991 to June 2007 at Diagnostic Products
Corporation, or DPC, and then Siemens Medical Solutions
Diagnostics once DPC was acquired.
Paul T. Hempel
served as our General Counsel and
Secretary from our inception on May 11, 2001 until April
2006, when Mr. Hempel became Senior Vice President in
charge of Leadership Development, while retaining his role as
Secretary. Mr. Hempel also retained oversight of our legal
affairs until May 2007. Mr. Hempel served as General
Counsel and Assistant Secretary of our predecessor company,
Inverness Medical Technology, from October 2000 through November
2001, when that company was acquired by Johnson &
Johnson. Prior to joining Inverness Medical Technology, he was a
founding stockholder and Managing Director of Erickson Schaffer
Peterson Hempel & Israel PC from 1996 to 2000. Prior
to 1996, Mr. Hempel was a partner and managed the business
practice at Bowditch & Dewey LLP.
23
Ellen Chiniara
serves as Vice President, General Counsel
and Assistant Secretary and is responsible for managing legal
matters for our Company. Ms. Chiniara joined us in October
2006 as General Counsel of the Professional Diagnostics
strategic business unit and became our General Counsel in May
2007. From 2002 to 2006, Ms. Chiniara was Associate General
Counsel, Neurology of Serono, Inc., a biopharmaceutical company.
Previously, she served as General Counsel to a healthcare
venture capital fund and a healthcare management services
organization, where she also was Chief Operating Officer of its
clinical trial site management division. From 1994 to 1997,
Ms. Chiniara was Assistant General Counsel at Value Health,
a specialty managed healthcare company. Prior to 1994,
Ms. Chiniara was a corporate attorney in Boston with Hale
and Dorr (now Wilmer Cutler Pickering Hale and Dorr LLP).
24
Principal
Stockholders
The following table furnishes information as to shares of our
common stock beneficially owned by:
|
|
|
|
|
each person or entity known by us to beneficially own more than
five percent of our common stock;
|
|
|
|
each of our directors;
|
|
|
|
each of our named executive officers (as defined in
Compensation of Executive Officers and Directors on
page 38); and
|
|
|
|
all of our directors and executive officers as a group.
|
Unless otherwise stated, beneficial ownership is calculated as
of May 1, 2010. For the purpose of this table, a person,
group or entity is deemed to have beneficial
ownership of any shares that such person, group or entity
has the right to acquire within 60 days after such date
through the exercise of options or warrants.
Security
Ownership of Certain Beneficial Owners and Management
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Amount and
|
|
|
|
|
Nature of
|
|
|
|
|
Beneficial
|
|
Percent of
|
Name and Address of Beneficial Owner (1)
|
|
Ownership (2)
|
|
Class (3)
|
|
FMR LLC(4)
|
|
|
8,882,827
|
|
|
|
10.57
|
%
|
Capital Research Global Investors(5)
|
|
|
7,594,177
|
|
|
|
9.04
|
%
|
Ron Zwanziger(6)
|
|
|
3,815,843
|
|
|
|
4.52
|
%
|
David Scott, Ph.D.(7)
|
|
|
795,543
|
|
|
|
*
|
|
Jerry McAleer, Ph.D.(8)
|
|
|
708,694
|
|
|
|
*
|
|
David Teitel(9)
|
|
|
57,184
|
|
|
|
*
|
|
Ron Geraty, M.D.(10)
|
|
|
164,901
|
|
|
|
*
|
|
John Bridgen, Ph.D.(11)
|
|
|
140,258
|
|
|
|
*
|
|
Tom Underwood(12)
|
|
|
15,750
|
|
|
|
*
|
|
Eli Y. Adashi, M.D(13)
|
|
|
2,667
|
|
|
|
*
|
|
Carol R. Goldberg(14)
|
|
|
122,197
|
|
|
|
*
|
|
Robert P. Khederian(15)
|
|
|
37,656
|
|
|
|
*
|
|
John F. Levy(16)
|
|
|
198,593
|
|
|
|
*
|
|
John A. Quelch, Ph.D.(17)
|
|
|
66,136
|
|
|
|
*
|
|
James Roosevelt, Jr(18)
|
|
|
2,667
|
|
|
|
*
|
|
Peter Townsend(19)
|
|
|
10,902
|
|
|
|
*
|
|
All current executive officers and directors
(24 persons)(20)
|
|
|
6,767,872
|
|
|
|
7.83
|
%
|
|
|
|
*
|
|
Represents less than 1%
|
|
(1)
|
|
The address of each director or executive officer (and any
related persons or entities) is
c/o the
Company at its principal office.
|
|
(2)
|
|
Unless otherwise indicated, the stockholders identified in this
table have sole voting and investment power with respect to the
shares beneficially owned by them.
|
|
(3)
|
|
The number of shares outstanding used in calculating the
percentage for each person, group or entity listed includes the
number of shares underlying options and warrants held by such
person or group that were exercisable within 60 days from
May 1, 2010, but excludes shares of stock underlying
options and warrants held by any other person.
|
25
|
|
|
(4)
|
|
This information is based on information contained in a
Schedule 13G/A filed with the SEC on February 16, 2010
by FMR LLC. Of this amount, FMR LLC has (i) sole voting
power with respect to 589,881 shares and (ii) sole
investment power with respect to 8,882,827 shares. The
address provided therein for FMR LLC is 82 Devonshire Street,
Boston, MA 02109.
|
|
(5)
|
|
This information is based on information contained in a
Schedule 13G/A filed with the SEC on February 9, 2010
by Capital Research Global Investors, a division of Capital
Research and Management Company. The address provided therein
for Capital Research Global Investors is 333 South Hope Street,
Los Angeles, CA 90071.
|
|
(6)
|
|
Consists of 3,408,908 shares of common stock and
406,935 shares of common stock underlying options and
warrants exercisable within 60 days from April 1,
2010. Of the shares attributed to Mr. Zwanziger,
224,276 shares of common stock are owned by Orit Goldstein
as Trustee of the Zwanziger Family 2004 Irrevocable Trust and
1,769,902 shares of common stock and 36,794 shares of
common stock issuable upon the exercise of warrants are owned by
Zwanziger Family Ventures, LLC, a limited liability company
managed by Mr. Zwanziger and his spouse. Of the other
shares attributed to him, Mr. Zwanziger disclaims
beneficial ownership of (i) 2,600 shares owned by his
wife, Janet M. Zwanziger, and (ii) 9,450 shares owned
by the Zwanziger Goldstein Foundation, a charitable foundation
for which Mr. Zwanziger and his spouse, along with three
others, serve as directors, (iii) 190,561 shares owned
by Ron Zwanziger as Trustee of the Zwanziger 2004 Revocable
Trust, and (iv) 191,830 shares owned by Orit Goldstein
as the Trustee of the Zwanziger Family Trust.
|
|
(7)
|
|
Consists of 433,066 shares of common stock and
362,477 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(8)
|
|
Consists of 257,114 shares of common stock and
451,580 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(9)
|
|
Consists of 2,538 shares of common stock and
54,646 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(10)
|
|
Consists of 98,383 shares of common stock and
66,518 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(11)
|
|
Consists of 2,633 shares of common stock and
137,625 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(12)
|
|
Consists of 15,750 shares of common stock underlying
options exercisable within 60 days from May 1, 2010.
|
|
(13)
|
|
Consists of 2,667 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(14)
|
|
Consists of 74,645 shares of common stock and
47,552 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(15)
|
|
Consists of 20,000 shares of common stock and
17,656 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(16)
|
|
Consists of 126,302 shares of common stock,
4,391 shares of common stock issuable upon the exercise of
warrants and 67,900 shares of common stock underlying
options exercisable within 60 days from May 1, 2010.
Mr. Levy disclaims beneficial ownership of 741 shares of
common stock and 266 shares of common stock issuable upon
the exercise of warrants owned by a charitable remainder
unitrust.
|
|
(17)
|
|
Consists of 66,136 shares of common stock underlying
options exercisable within 60 days from May 1, 2010.
|
|
(18)
|
|
Consists of 2,667 shares of common stock underlying options
exercisable within 60 days from May 1, 2010.
|
|
(19)
|
|
Consists of 10,902 shares of common stock underlying
options exercisable within 60 days from May 1, 2010.
|
|
(20)
|
|
Includes 2,375,238 shares of common stock underlying
options or warrants exercisable within 60 days from
May 1, 2010.
|
26
In addition, the Zwanziger Family Trust, a trust for the benefit
of Mr. Zwanzigers children the trustee of which is
Mr. Zwanzigers sister, and Mr. Underwood own,
respectively, 11,984 shares and 4,104 shares of our
Series B Preferred Stock. The shares of Series B
Preferred Stock owned by the Zwanziger Family Trust and
Mr. Underwood represent, both individually and in the
aggregate, less than 1% of the outstanding shares of the
Series B Preferred Stock. Mr. Zwanziger disclaims
beneficial ownership of the Series B Preferred Stock owned
by the Zwanziger Family Trust. We are not aware that any of our
directors or executive officers beneficially own any other
shares of Series B Preferred Stock.
27
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis discusses the
compensation paid to our key executives, our chief financial
officer, or our CFO, and our three other most highly-compensated
executive officers. These officers are collectively referred to
as the named executive officers for purposes of this discussion.
We refer to Ron Zwanziger, or our CEO; David Scott, Ph.D.,
our Chief Scientific Officer; and Jerry McAleer, Ph.D., our
Vice President, Research and Development, as our key
executives.
Philosophy
and Objectives
The objective of our executive compensation program is to
attract, retain and motivate the talented and dedicated
executives who are critical to our goals of continued growth,
innovation, increasing profitability and ultimately maximizing
shareholder value. Specifically, we seek to attract and reward
executives who display certain fundamental leadership
characteristics for hiring and promotion that we have identified
as consistent with our Company goals and culture. We provide
these executives with what we believe to be a competitive total
compensation package consisting primarily of base salary,
long-term equity incentive compensation and a broad-based
benefits program. Our compensation program is designed to reward
each executives individual performance by considering
generally their past and potential contribution to our
achievement of key strategic goals such as revenue generation,
margin improvement and the establishment and maintenance of key
strategic relationships. Our executive compensation program aims
to provide a risk-balanced compensation package which is
competitive in our market sector and, more importantly, relevant
to the individual executive.
Our policy for allocating between long-term and currently-paid
compensation is to ensure adequate base compensation to attract
and retain personnel, while providing incentives to maximize
long-term value for our Company and our stockholders.
Accordingly, (i) we provide cash compensation in the form
of base salary to meet competitive cash compensation norms and
(ii) we provide non-cash compensation, primarily in the
form of stock-based awards, to reward superior performance
against long-term strategic goals. Although we did grant cash
bonuses during 2009, as discussed below, we do not provide a
formal short-term incentive plan, as our strategic philosophy is
to focus on the long-term goals discussed above. Because we do
not have an annual cash incentive compensation plan, we set the
base salaries for our named executive officers at a level higher
than the average base salaries for executives in similar
positions with similar responsibilities at comparable companies.
In general, we target our base salaries at the average of the
range of annual cash compensation (base salary plus annual
non-equity incentive compensation) for competitive positions.
Our Compensation Committee believes this compensation structure
focuses our executives attention primarily on long-term
stock price appreciation, rather than short-term results, and
yet enables us to recruit and retain talented executives by
ensuring that their annual cash compensation in the form of base
salary is competitive with the aggregate annual cash
compensation paid by other companies through base salaries and
short-term cash incentive plans.
Executive
Compensation Process
The compensation of our named executive officers, as well as our
other executive officers, is reviewed by our Compensation
Committee at least annually for consistency with the objectives
described above. Our management, including our CEO, participates
in this review by making its own recommendations as to the
compensation of our executive officers to the Compensation
Committee. The Compensation Committee considers the
recommendations of management in assessing executive
compensation but also relies on other data and resources and may
utilize the services of a compensation consultant in reviewing
and determining executive compensation.
In reviewing executive compensation, the Compensation Committee
and management also consider the practices of comparable
companies of similar size, geographic location and market focus.
In 2009, management and the Compensation Committee utilized the
2009 Radford Global Life Sciences Survey, or the 2009 Radford
Survey, which provided comprehensive baseline compensation data
on positions at the executive, management and professional
levels, including salary, total cash compensation, options and
equity
28
compensation. Management and the Compensation Committee
occasionally collect and analyze publicly available compensation
data and other subscription compensation survey data. While
benchmarking may not always be appropriate as a standalone tool
for setting compensation due to the aspects of our business and
objectives that may be unique to us, we generally believe that
gathering this compensation information is an important part of
our compensation-related decision-making process.
In addition, during 2009 the Compensation Committee engaged a
compensation consultant, Aon Consultings Radford Surveys +
Consulting, or Radford, to assist the committee in assessing
total compensation of our key executives. As part of its
engagement, Radford assisted the Compensation Committee in
selecting a new peer group to utilize in assessing the
competitiveness of the compensation of our key executives. The
peer group the Compensation Committee had used in assessing 2008
compensation was considered out of date due to the fact that a
number of the peer companies had been acquired, merged or no
longer fit our peer criteria. The peer group selected by the
Compensation Committee for purposes of evaluating 2009 executive
compensation of the key executives consisted of nineteen
publicly traded companies in a similar industry space and with
similar revenues and market capitalizations. Of the 2009 peer
group companies, 26% are health management companies and 74% are
diagnostics/medical equipment companies. Specifically, the peer
group is comprised of the following companies:
|
|
|
|
|
Beckman Coulter, Inc.
|
|
|
|
Becton Dickinson and Company
|
|
|
|
Bio-Rad Laboratories, Inc.
|
|
|
|
Catalyst Health Solutions, Inc.
|
|
|
|
C.R. Bard, Inc.
|
|
|
|
Gen-Probe Incorporated
|
|
|
|
Healthways, Inc
|
|
|
|
Hologic, Inc.
|
|
|
|
Hospira, Inc.
|
|
|
|
IDEXX Laboratories, Inc.
|
|
|
|
Kinetic Concepts, Inc.
|
|
|
|
Life Technologies Corporation
|
|
|
|
Lincare Holdings, Inc.
|
|
|
|
Magellan Health Services, Inc.
|
|
|
|
Myriad Genetics, Inc.
|
|
|
|
PerkinElmer, Inc.
|
|
|
|
RehabCare Group, Inc.
|
|
|
|
St. Jude Medical, Inc.
|
|
|
|
Varian Medical Systems, Inc.
|
In connection with this engagement, Radford provided a detailed
report, the 2009 Radford Report, which included summary
observations and considerations regarding our compensation
philosophy and methodology, as well as detailed competitive
assessments of the cash and equity compensation of the key
executives.
The Compensation Committee considered the 2009 Radford Survey
and, in connection with the compensation of the key executives,
the 2009 Radford Report, in its assessment of each element of
2009 executive compensation, as well as overall compensation.
In determining each component of an executives
compensation, numerous factors particular to the executive are
considered, including:
|
|
|
|
|
The individuals particular background, including prior
relevant work experience;
|
|
|
|
The demand for individuals with the executives specific
expertise and experience;
|
|
|
|
The individuals role with us and the compensation paid to
similar persons determined through benchmark studies;
|
|
|
|
The individuals performance and contribution to our
achievement of company goals and objectives; and
|
|
|
|
Comparison to other executives within our Company.
|
Elements
of Compensation
Executive compensation consists of the following elements:
Base Salary.
Base Salary is established based
on the factors discussed above. Our general
29
compensation philosophy, as described above, is to offer a
competitive base salary plus long-term, equity-based incentive
compensation, Because of this, we ensure that the cash
compensation of our executives is competitive by targeting
annual base salary for a particular individual near the average
of the range of annual cash compensation (base salary plus
annual non-equity incentive compensation) for executives in
similar positions with similar responsibilities at comparable
companies. Other elements of compensation, including past and
present grants of stock-based awards, may also be considered.
The Compensation Committee believes that a competitive base
salary is necessary to attract and retain a management team with
the requested skills to lead our Company. Despite this general
philosophy, due to uncertainties facing the Companys
businesses, including poor economic conditions and severe
disruptions in the capital and credit markets stemming from the
recent worldwide financial crisis, the Compensation Committee
decided to freeze 2009 base salaries of the named executives, as
well as the Companys other executive officers and most
managers, at 2008 levels. As a result, the Compensation
Committee anticipated that 2009 salaries might fall behind the
targeted average levels.
Bonuses.
Cash bonuses and non-equity incentive
compensation are generally not a regular or important element of
our executive compensation strategy, and we focus instead on
stock-based awards designed to reward long-term performance.
Consistent with this approach, the Compensation Committee did
not implement any bonus or non-equity incentive plan for 2009.
However, in light of the fact that no increases in base salary
had been made for 2009 in anticipation of uncertain performance
during the year, when the Companys financial performance
for 2009 turned out to be significantly more positive than
originally anticipated, our Compensation Committee decided in
March 2010 to award discretionary, one-time cash bonuses to many
of the Companys executives for 2009. These discretionary,
one-time bonuses, or the 2009 Bonuses, for which a total of
$4.0 million was reserved during the fourth quarter of
2009, were not part of any previously announced compensation
plan or arrangement. The Compensation Committees overall
executive compensation strategy and philosophy continue to focus
on base salary combined with long-term equity incentives.
The 2009 Bonuses were established based on an assessment of each
executives performance and contribution to our achievement
of company goals and objectives during the year. Twelve senior
executives reviewed the list of approximately fifty executives
(other than the key executives) and rated them on a scale as to
their overall performance and leadership behaviors. Once
completed, the CEO and the Sr. Vice President of Leadership
Development analyzed the results and submitted recommended bonus
amounts intended to compensate for market comparisons as well as
performance to the Compensation Committee, which ultimately
approved all of the 2009 Bonuses.
In establishing the amount of the 2009 Bonuses, the Compensation
Committee also considered the 2009 Radford Report for our key
executives, the 2009 Radford Survey for our other executive
officers and most other executives, and other regional data
sources for certain executives. Generally, the total 2009 cash
compensation for each executive awarded a bonus was targeted at
the average of the range of total annual cash compensation for
executives in similar positions with similar responsibilities at
comparable companies, although comparison to other executives
within our Company was also considered. In some cases, retention
considerations were also evaluated.
The following named executive officers received 2009 Bonuses in
the following amounts:
|
|
|
|
|
Executive Officer
|
|
2009 Bonus
|
|
Ron Zwanziger
Chairman, CEO and President
|
|
|
$250,000
|
|
David Scott, Ph.D.
Chief Scientific Officer
|
|
|
$125,000
|
|
Jerry McAleer, Ph.D.
Vice President, Research and Development
|
|
|
$125,000
|
|
David Teitel
Chief Financial Officer
|
|
|
$100,000
|
|
John Bridgen, Ph.D.
Senior Vice President,
Business Development
|
|
|
$125,000
|
|
Tom Underwood
Chief Executive Officer, Alere Health, LLC
|
|
|
$125,000
|
|
30
In determining Mr. Zwanzigers bonus, the Compensation
Committee first considered that, prior to the bonus,
Mr. Zwanzigers total cash compensation (which
consisted of salary only) was significantly below the average
range for total cash compensation within our peer group
according to the 2009 Radford Report. Taking into consideration
the information from the 2009 Radford Report, coupled with the
various factors described above, including
Mr. Zwanzigers significant history and role in
forming and leading our Company and in establishing and
developing our core business strategy and direction, his
expertise and experience as a successful chief executive and his
performance and contribution to our overall goals and
objectives, the Compensation Committee discussed and adopted the
bonus described above in an effort to be more in line with our
cash compensation objectives. While background, expertise and
experience, and individual performance and contribution to our
overall goals and objectives are all subjective measures, and
are not based on any stated quantifiable objectives, they play
an important role in the Compensation Committees overall
decision-making process. These subjective factors are considered
in the aggregate and, accordingly, no specific factor played a
greater role in determining the amount of
Mr. Zwanzigers bonus.
In determining Dr. Scotts bonus, the Compensation
Committee first considered that, prior to the bonus,
Dr. Scotts total cash compensation (which consisted
of salary only) was below the average range for total cash
compensation within our peer group according to the 2009 Radford
Report. Taking into consideration the information from the 2009
Radford Report, coupled with the various factors described
above, including Dr. Scotts significant history with
our Company as a founder and as a driving force in developing
and implementing our overall business strategy and technology
initiatives, his expertise and experience in these areas and his
performance and contribution to our overall goals and
objectives, the Compensation Committee discussed and adopted the
bonus described above in an effort to be more in line with our
cash compensation objectives. Because his salary was already
closer to our targeted objective, the bonus awarded to
Dr. Scott was less than that awarded to Mr. Zwanziger.
While background, expertise and experience, and individual
performance and contribution to our overall goals and objectives
are all subjective measures, and are not based on any stated
quantified objectives, they play an important role in the
Compensation Committees decision-making process. These
subjective factors are considered in the aggregate and,
accordingly, no specific factor played a greater role in
determining the amount of Dr. Scotts bonus.
In determining Dr. McAleers bonus, the Compensation
Committee first considered that, prior to the bonus,
Dr. McAleers total cash compensation (which consisted
of salary only) was below the average range for total cash
compensation within our peer group according to the 2009 Radford
Report. Taking into consideration the information from the 2009
Radford Report, coupled with the various factors described
above, including Dr. McAleers significant history
with our Company as a founder and as a driving force in
developing and implementing our overall business strategy and
technology initiatives, his expertise and experience in these
areas and his performance and contribution to our overall goals
and objectives, the Compensation Committee discussed and adopted
the bonus described above in an effort to be more in line with
our cash compensation objectives. Because his salary was already
closer to our targeted objective, the bonus awarded to
Dr. McAleer was less than that awarded to
Mr. Zwanziger. While background, expertise and experience,
and individual performance and contribution to our overall goals
and objectives are all subjective measures, and are not based on
any quantified objections, they play an important role in the
Compensation Committees decision-making process. These
subjective factors are considered in the aggregate and,
accordingly, no specific factor played a greater role in
determining the amount of Dr. McAleers bonus.
As noted above, one of the subjective factors that played a role
in determining each of the key executives bonus award (as
well as the option grants discussed below) was such
persons performance and contribution to our overall goals
and objectives. Generally, our overall goals and objectives are
continued growth, innovation, increasing profitability and
ultimately maximizing shareholder value. Our core strategy for
achieving these goals is to lead the way in the convergence of
rapid diagnostics with technology-driven health
31
management programs focused on personal healthcare. By utilizing
our innovative diagnostics in these programs we can enable
consumers to gain greater control over their own health, as well
as enable healthcare providers to improve clinical outcomes and
lower costs. With respect to achievement of these goals, and
implementation of our core strategy, over the last three years
we have, through strategic acquisitions, established our Company
as a leading supplier of cardiology diagnostic products,
significantly enhanced our position in drugs of abuse testing,
established a presence in oncology, continued to build a
worldwide distribution network and become a leader in the
growing health care management market. Through our research and
development programs, we are developing new technology platforms
that will facilitate our core strategy by moving testing out of
the hospital and central laboratory and into the
physicians office and ultimately the home. Additionally,
through our strong pipeline of novel proteins or combinations of
proteins that function as disease biomarkers, we are developing
new tests targeted towards all of our areas of focus. Other
achievements include continuing to consolidate certain of our
higher-cost manufacturing operations into lower-cost facilities,
continued progress with respect to business integration
activities and consolidating sales processing and certain other
back-office services from multiple U.S. operations into a
shared services center.
Assessing each executives contribution to achievement of
these goals is a subjective analysis, as there are no stated
quantified objectives on which compensation-related decisions
are based, either at the Company level or the individual level.
In general, when making a compensation-related decision, the
Compensation Committee considers, along with all of the other
factors described above, the executives role with us in
light of these goals and our considerable achievements relative
to these goals, as described above. As CEO, Mr. Zwanziger
was evaluated with respect to establishing and developing our
goals and our core strategy for achieving those goals, and our
progress towards achieving our goals, particularly our progress
as it relates to our acquisition strategy and our financial
performance. As Chief Scientific Officer and as Vice President,
Research and Development, respectively, Dr. Scott and
Dr. McAleer were evaluated with respect to developing our
core strategy, and our progress towards implementing this
strategy, particularly our progress on technology initiatives
supporting this strategy.
In determining Mr. Teitels bonus, the Compensation
Committee considered Mr. Teitels performance, as
rated by management in the manner described above, and his
contribution to our achievement of company goals and objectives
during the year. In deciding to award Mr. Teitel a bonus,
the Compensation Committee determined that
Mr. Teitels overall performance was rated as
outstanding and considerably above expectations. This assessment
of Mr. Teitels performance was subjective in nature,
and not based on any stated quantified objectives. Subjective
factors are considered in the aggregate, and accordingly, no
specific factor played a greater role in determining
Mr. Teitels bonus award. The Compensation Committee
also considered that, prior to the bonus, Mr. Teitels
total cash compensation (which consisted of salary only) was
significantly below the average range for total cash
compensation for chief financial officers at comparable
companies based on the 2009 Radford Survey.
In determining Dr. Bridgens bonus, the Compensation
Committee considered Dr. Bridgens performance, as
rated by management in the manner described above, and his
contribution to our achievement of company goals and objectives
during the year. In deciding to award Dr. Bridgens
bonus, the Compensation Committee determined, based upon the
assessment and rating process described above, that his overall
performance was rated as outstanding and considerably above
expectations. This assessment of Dr. Bridgens
performance was subjective in nature, and not based on any
stated quantified objectives. Subjective factors are considered
in the aggregate, and accordingly, no specific factor played a
greater role in determining Dr. Bridgens bonus award.
The Compensation Committee also considered that, prior to the
bonus, Dr. Bridgens total cash compensation (which
consisted of salary only) was significantly below the average
range for total cash compensation for heads of business
development at comparable companies based on the 2009 Radford
Survey.
In determining Mr. Underwoods bonus, the Compensation
Committee considered Mr. Underwoods performance, as
rated by
32
management in the manner described above, and his contribution
to our achievement of company goals and objectives during the
year. In deciding to award Mr. Underwood a bonus, the
Compensation Committee determined, based upon the assessment and
rating process described above, that his overall performance was
rated as outstanding and considerably above expectations and
also considered the strategic importance of his new role as
Chief Executive Officer of our Alere Health business unit. This
assessment of Mr. Underwoods performance was
subjective in nature and not based on any stated quantified
objectives. Subjective factors are considered in the aggregate
and, accordingly, no specific factor played a greater role in
determining Mr. Underwoods bonus award.
Mr. Geraty, who is expected to leave the Company in the
near future, was not awarded a 2009 Bonus.
On November 18, 2009, we paid Tom Underwood a bonus of
$462,666 pursuant to a retention and severance agreement with
Mr. Underwood dated the same day. This agreement, which
provides for identical bonuses in 2010 and 2011 subject to
continued employment, represents a restructuring of a change of
control severance obligation under a 2007 agreement between
Mr. Underwood and Matria Healthcare, Inc., a predecessor of
Alere Health. The 2007 agreement predated our acquisition of
Matria Healthcare and we viewed it as providing a potential
disincentive to Mr. Underwoods continued employment.
Stock Option and Stock-based Awards.
We
continue to believe long-term performance is best stimulated
through an ownership culture that encourages such performance
through the use of stock-based awards. The Inverness Medical
Innovations, Inc. 2001 Stock Option and Incentive Plan, or the
2001 Option Plan, was established to provide certain of our
employees, including our executive officers, with incentives to
help align those employees interests with the interests of
stockholders and with our long-term success. The Compensation
Committee believes that the use of stock options and other
stock-based awards offers the best approach to achieving our
long-term compensation goals. While the 2001 Option Plan allows
our Compensation Committee to grant a number of different types
of stock-based awards, other than one restricted stock grant
made to Mr. Zwanziger in 2001, we have relied exclusively
on stock options to provide equity incentive compensation. Stock
options granted to our executive officers have an exercise price
equal to the fair market value of our common stock on the grant
date, except that the options granted in February 2010,
discussed below, as well as certain options granted to the key
executives in July 2008, have a premium exercise price of
$61.49. Our stock options typically vest 25% per annum based
upon continued employment over a four-year period, and generally
expire ten years after the date of grant. Stock option grants to
our executive officers are made in connection with the
commencement of employment, in conjunction with an annual review
of total compensation and, occasionally, following a significant
change in job responsibilities or to meet other special
retention or performance objectives. Proposals to grant stock
options to our executive officers are made by our CEO to the
Compensation Committee. With respect to proposals for grants
made to our executive officers, the Committee generally reviews
competitive compensation survey data and, if applicable,
consultant reports, as discussed above, individual performance,
the executives existing compensation and other retention
considerations. The Compensation Committee considers the
estimated Black-Scholes valuation of each proposed stock option
grant in determining the number of options subject to each
grant. Generally, stock option grants for a particular
individual are based on the factors discussed above and are
intended to be valued near the average of the range of the value
of long-term incentive awards for executives in similar
positions with similar responsibilities at comparable companies,
although other elements of compensation, including salary, may
also be considered.
Generally, stock option grants to executive officers have been
made in conjunction with meetings of the Board of Directors.
During 2007, we adopted and currently have in force a stock
option granting policy that includes the following elements:
|
|
|
|
|
Options to purchase shares of our common stock shall be granted
effective as of the last calendar day of the following months:
February, April, June, August, October and December (each such
date a Grant Date);
|
33
|
|
|
|
|
For each employee (or prospective employee) that is not (or,
upon hire, will not be) subject to Section 16 of the
Exchange Act, the CEO shall have the authority to grant, in his
sole discretion, an option or options to purchase up to an
aggregate of 5,000 shares of common stock (on an annual
basis); provided, however, that total number of shares of common
stock underlying such option grants shall not exceed 150,000 per
calendar year.
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The Compensation Committee must approve all other stock option
grants. Grants by the Compensation Committee must be approved
only at a meeting of the Compensation Committee with and in
consultation with the other independent directors and not by
written consent.
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Grants of options approved for existing employees, shall be
effective as of, and the grant date thereof shall for all
purposes be deemed to be, the Grant Date following the date of
approval (except that any grants subject to stockholder approval
shall be effective as of the date of stockholder approval).
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Options approved for new hires, including those hired through
acquisitions, shall be effective as of, and the grant date
thereof shall for all purposes be deemed to be, the Grant Date
following the later of (i) the date of such approval or
(ii) the date on which the new hires employment
commences.
|
We have not adopted stock ownership guidelines.
During 2009, our Compensation Committee considered the fact that
the value of the CEOs total long-term incentive awards
trails the market at the 25th percentile and the value of the
long-term incentive awards to our other key executives
approximates the market at the 50th percentile. In February
2010, the Compensation Committee approved grants of stock
options, or the February Grants, to purchase 250,000, 90,000 and
75,000 shares of common stock to Mr. Zwanziger,
Dr. Scott and Dr. McAleer, respectively. While the
closing price of our common stock on the date of grant was
$39.02, these options were granted with a premium exercise price
of $61.49, which was the offering price of a secondary offering
of our common stock conducted by the Company in November 2007.
Due to the premium exercise price and the fact that the price of
our common stock would need to increase almost 65% in order for
these option grants to even be in the money, the
Compensation Committee considered these grants to be stronger
incentives than standard option grants and in the best interest
of our stockholders.
In determining Mr. Zwanzigers February Grant, the
Compensation Committee considered the analysis set forth in the
2009 Radford Report of the number of stock options required to
deliver market competitive annual long-term
incentives within the range of 2009 grants by our peer group.
Taking that into consideration, coupled with the various factors
described above, including Mr. Zwanzigers cash
compensation, prior equity grants, significant history and role
in leading our Company, his expertise and experience and his
performance and contribution to our overall goals and
objectives, as well as the fact that the exercise price of the
grant would be at a significant premium to the then current
trading price of our common stock, the Compensation Committee
discussed and adopted the February Grant in an effort to meet
our total compensation objectives. While background, expertise
and experience, and individual performance and contribution to
our overall goals and objectives are all subjective measures,
and are not based on any stated quantifiable objectives, they
play an important role in the Compensation Committees
overall decision-making process. These subjective factors are
considered in the aggregate and, accordingly, no specific factor
played a greater role in determining the grant.
In determining Dr. Scotts February Grant, the
Compensation Committee considered the analysis set forth in the
2009 Radford Report of the number of stock options required to
deliver market competitive annual long-term
incentives within the range of 2009 grants by our peer group.
Taking that into consideration, coupled with the various factors
described above, including Dr. Scotts cash
compensation, prior equity grants, significant history and role
with our Company, his expertise and experience and his
performance and contribution to our overall goals and
objectives, as well as the fact that the exercise price of the
grant would be at a significant premium to the then
34
current trading price of our common stock, the Compensation
Committee discussed and adopted the February Grant in an effort
meet our total compensation objectives. While background,
expertise and experience, and individual performance and
contribution to our overall goals and objectives are all
subjective measures, and are not based on any stated
quantifiable objectives, they play an important role in the
Compensation Committees overall decision-making process.
These subjective factors are considered in the aggregate and,
accordingly, no specific factor played a greater role in
determining the grant.
In determining Dr. McAleers February Grant, the
Compensation Committee considered the analysis set forth in the
2009 Radford Report of the number of stock options required to
deliver market competitive annual long-term
incentives within the range of 2009 grants by our peer group.
Taking that into consideration, coupled with the various factors
described above, including Dr. McAleers cash
compensation, prior equity grants, significant history and role
with our Company, his expertise and experience and his
performance and contribution to our overall goals and
objectives, as well as the fact that the exercise price of the
grant would be at a significant premium to the then current
trading price of our common stock, the Compensation Committee
discussed and adopted the February Grant in an effort meet our
total compensation objectives. While background, expertise and
experience, and individual performance and contribution to our
overall goals and objectives are all subjective measures, and
are not based on any stated quantifiable objectives, they played
an important role in the Compensation Committees overall
decision-making process. These subjective factors are considered
in the aggregate and, accordingly, no specific factor played a
greater role in determining the grant.
As of June 30, 2009, Mr. Underwood, Mr. Teitel,
Dr. Bridgen and Dr. Geraty were granted options to
purchase 12,000, 23,581, 22,564 and 36,069 shares of common
stock, respectively, at an exercise price of $35.58 per share.
In approving these grants, as well as other grants made to other
officers, managers and employees of the Company as of the same
date, the Compensation Committee considered the disincentive
offered by underwater stock options held by each
individual as a result of declines in the Companys stock
price during 2008 and 2009 and determined the amount of the
grants initially based upon a formula applied against all
outstanding company stock options. The Compensation Committee
then adjusted the amount of each award after considering the
various subjective factors previously described. With respect to
these grants, the Compensation Committee considered each
recipients cash compensation, prior equity grants, role in
leading our Company, expertise and experience, and his
performance and contribution to our overall goals and
objectives. While background, expertise and experience, and
individual performance and contribution to our overall goals and
objectives are all subjective measures, and are not based on any
stated quantified objectives, they play an important role in the
Compensation Committees decision-making process. These
subjective factors are considered in the aggregate and,
accordingly, none of these subjective factors played a greater
role in determining the grants.
As of August 31, 2009, Mr. Underwood was granted
options to purchase 40,000 shares of common stock at an
exercise price of $35.60 per share, in connection with
Mr. Underwoods appointment as our Chief Information
Officer. The Compensation Committee considered this grant an
appropriate incentive for Mr. Underwood in accepting this
new role, which the committee expected would constitute a
global, strategic leadership role once Mr. Underwood was
able to transition into it. The Compensation Committee also
considered an analysis of total compensation for comparable
executives, the estimated Black-Scholes valuation of the
proposed stock option grant, as well as
Mr. Underwoods background, expertise and experience,
and individual performance and past contribution to our overall
goals and objectives in approving this grant. While many of
these factors are subjective measures, and are not based on any
stated quantified objectives, they play an important role in the
Compensation Committees decision-making process. These
subjective factors are considered in the aggregate and,
accordingly, no specific factor played a greater role in
determining the grant.
In addition, as of October 30, 2009, Mr. Teitel was
granted options to purchase 10,000 shares of common stock
at an exercise price of $38.01 per share. The Compensation
Committee considered an analysis of total
35
compensation for comparable executives and determined that
Mr. Teitels long-term incentive compensation remained
significantly lower than that of executives at comparable
companies. In approving this grant, the Compensation Committee
also considered the estimated Black-Scholes valuation of the
proposed stock option grant, as well as Mr. Teitels
background, expertise and experience, and individual performance
and past contribution to our overall goals and objectives. While
many of these factors are subjective measures, and are not based
on any stated quantified objectives, they play an important role
in the Compensation Committees decision-making process.
These subjective factors are considered in the aggregate and,
accordingly, no specific factor played a greater role in
determining the grants.
Other Compensation.
Other than as discussed
below, our named executive officers do not have employment
agreements. The named executive officers are not eligible to
participate in, and do not have any accrued benefits under, any
company-sponsored defined benefit pension plan. They are
eligible to, and in some case do, participate in defined
contributions plans, such as a 401(k) plan, on the same terms as
other employees. The terms of these defined contribution plans
vary depending on the jurisdiction of employment of the
executive. In addition, consistent with our compensation
philosophy, we intend to continue to maintain our current
benefits and perquisites for our executive officers; however,
the Compensation Committee in its discretion may revise, amend
or add to the officers executive benefits and perquisites
if it deems it advisable. We believe these benefits and
perquisites are currently lower than median competitive levels
for comparable companies. Finally, all of our executives are
eligible to participate in our other employee benefit plans,
including, medical, dental, life and disability insurance.
Tax
Implications
Section 162(m) of the Internal Revenue Code of 1986, as
amended, limits the deductibility on our tax return of
compensation of over $1,000,000 to certain of the named
executive officers unless, in general, the compensation is paid
pursuant to a plan which is performance-related,
non-discretionary and has been approved by our stockholders. We
periodically review the potential consequences of
Section 162(m) and may structure the performance-based
portion of our executive compensation to comply with the
exemptions available under Section 162(m). We believe that
options granted under the 2001 Option Plan will generally
qualify as performance-based compensation under
Section 162(m). However, we reserve the right to use our
judgment to authorize compensation payments that do not comply
with these exemptions when we believe that such payments are
appropriate and in the best interest of the stockholders, after
taking into consideration changing business conditions or the
officers performance.
36
Compensation
Committee Report
We, the Compensation Committee, have reviewed and discussed the
Compensation and Discussion and Analysis beginning on
page 28 of this proxy statement with management.
Based on this review and discussion, we recommended to the Board
of Directors that the Compensation Discussion and Analysis be
included in this proxy statement.
THE COMPENSATION COMMITTEE
Carol R. Goldberg, Chairperson
Eli Y. Adashi, Member
Robert P. Khederian, Member
37
Compensation
of Executive Officers and Directors
Set forth below is information regarding the compensation of our
Chief Executive Officer, our Chief Financial Officer, our other
key executives and our three other most highly-compensated
executive officers for the fiscal year 2009. Such officers are
collectively referred to as the named executive
officers.
Summary Compensation Table.
The
following table sets forth information regarding the named
executive officers compensation for fiscal years 2009,
2008 and 2007. For our named executive officers, the amount of
salary and bonus represented between 45% and 100% of the named
executive officers total compensation for 2009.
Summary
Compensation Table
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Change in
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Pension
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Value and
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Non-Qualified
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Non-Equity
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Deferred
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Option
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Incentive Plan
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Compensation
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All Other
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Name and Principal
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Salary
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Bonus
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Stock
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Position
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Year
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($)
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($)
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Awards
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($)(1)
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($)
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($)
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($)(2)
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($)
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Ron Zwanziger
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2009
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$
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900,000
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$
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250,000
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$
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713
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$
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1,150,713
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Chairman, Chief
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2008
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$
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824,423
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$
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1,366,500
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$
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778
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$
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2,191,701
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Executive
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2007
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$
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750,000
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$
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6,024,000
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$
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990
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$
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6,774,990
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Officer and President
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David Teitel
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2009
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$
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300,000
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$
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100,000
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$
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490,566
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$
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8,063
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$
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898,629
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Chief Financial Officer
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2008
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$
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299,808
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$
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7,678
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$
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307,486
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2007
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$
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241,250
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$
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477,400
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$
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7,601
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$
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726,251
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David Scott, Ph.D.(3)
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2009
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$
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550,306
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$
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125,000
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$
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675,306
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Chief Scientific Officer
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2008
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$
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622,791
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$
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683,250
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$
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1,306,041
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2007
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$
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648,626
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$
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3,012,000
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$
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3,660,626
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Jerry McAleer, Ph.D.(3)
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2009
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$
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510,998
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$
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125,000
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$
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635,998
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Vice President, Research
&
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2008
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$
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553,581
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$
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592,150
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$
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1,145,731
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Development and Vice
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2007
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$
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540,521
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$
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2,510,000
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$
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3,050,521
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President, Cardiology
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John Bridgen, Ph.D.(4)
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2009
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$
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428.600
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$
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125,000
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$
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324,922
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$
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8,063
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$
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886,585
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Senior Vice
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President, Business
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Development
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Tom Underwood(4)
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2009
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$
|
439,600
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$
|
587,666
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$
|
752,000
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$
|
7,569
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$
|
1,786,835
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Chief Executive
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Officer, Alere
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Health, LLC
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Ron Geraty, M.D.(5)
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2009
|
|
|
$
|
550,008
|
|
|
|
|
|
|
|
|
|
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$
|
519,394
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|
|
|
|
|
|
|
|
|
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$
|
8,063
|
|
|
$
|
1,077,465
|
|
Former Chief
|
|
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2008
|
|
|
$
|
498,022
|
|
|
$
|
165,871
|
|
|
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|
|
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$
|
774,000
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|
|
|
|
|
|
|
|
|
|
$
|
7,786
|
|
|
$
|
1,445,679
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|
Executive Officer of
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2007
|
|
|
$
|
41,921
|
|
|
|
|
|
|
|
|
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$
|
2,035,133
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|
|
|
|
|
|
|
|
|
|
$
|
6,677
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|
|
$
|
2,083,731
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Alere Health, LLC
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(1)
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These amounts represent the aggregate grant date fair value of
stock option awards made during 2009, 2008 and 2007,
respectively, calculated in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718,
Compensation Stock Compensation (FASB ASC Topic
718), excluding estimated forfeitures. See Note 16 of the
Notes to our consolidated financial statements included in our
Annual Report on
Form 10-K/A
for the year ended December 31, 2009 for a discussion of
the other relevant assumptions used in calculating these amounts.
|
38
|
|
|
(2)
|
|
The amounts in this column include for 2009: (a) matching
contributions made by our Company to our defined contribution
plans in the amount of $7,350 on behalf of Mr. Teitel,
Dr. Bridgen and Dr. Geraty and $6,856 on behalf of
Mr. Underwood and (b) life insurance premiums paid by
our Company in the amount of $713 on behalf of
Mr. Zwanziger, Mr. Teitel, Dr. Bridgen,
Mr. Underwood and Dr. Geraty. The amounts in this
column include for 2008: (a) matching contributions made by
our Company to our defined contribution plans in the amount of
$6,900 on behalf of Mr. Teitel and Dr. Geraty and
(b) life insurance premiums paid by our Company in the
amount of $778 on behalf of Mr. Zwanziger and
Mr. Teitel and $886 on behalf of Dr. Geraty. The
amounts in this column include for 2007: (a) matching
contributions made by our Company to our defined contribution
plans in the amount of $6,750 on behalf of Mr. Teitel,
(b) life insurance premiums paid by our Company in the
amount of $990 and $851 on behalf of Mr. Zwanziger and
Mr. Teitel, respectively, and (c) $6,677 in commuting
expenses for Dr. Geraty.
|
|
(3)
|
|
Salary and other compensation paid in British pounds. British
pounds were converted to U.S. dollars using the average exchange
rate for the year reported.
|
|
(4)
|
|
Dr. Bridgen and Mr. Underwood were not named executive
officers in 2008 or 2007.
|
|
(5)
|
|
Dr. Geraty joined the Company on November 16, 2007
when we acquired Alere Medical, Inc. The bonus earned by
Dr. Geraty was the last Management Incentive Plan bonus
authorized by Alere, which was cancelled upon the merger with
the Company.
|
Grants of Plan-Based Awards.
The
following table sets forth certain information with respect to
options granted to the named executive officers in fiscal year
2009.
Grants of
Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Date
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Fair
|
|
|
|
|
|
|
Under
|
|
Estimated Future Payouts
|
|
Number of
|
|
Number of
|
|
or
|
|
Value
|
|
|
|
|
Compensation
|
|
Non-Equity
|
|
Under Equity
|
|
Shares of
|
|
Securities
|
|
Base Price
|
|
of Stock
|
|
|
|
|
Committee
|
|
Incentive Plan Awards
|
|
Incentive Plan Awards
|
|
Stock or
|
|
Underlying
|
|
of Option
|
|
and
|
|
|
Effective
|
|
Approval
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Option
|
Name
|
|
Grant Date(1)
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)(2)(3)
|
|
($ / Sh)(4)
|
|
Awards(5)
|
|
David Teitel
|
|
|
6/30/09
|
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,581
|
|
|
$
|
35.58
|
|
|
$
|
339,566
|
|
|
|
|
10/30/09
|
|
|
|
9/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
$
|
38.01
|
|
|
$
|
151,000
|
|
John Bridgen, Ph.D.
|
|
|
6/30/09
|
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,564
|
|
|
$
|
35.58
|
|
|
$
|
324,922
|
|
|
|
|
6/30/09
|
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
$
|
35.58
|
|
|
$
|
172,800
|
|
Tom Underwood
|
|
|
8/31/09
|
|
|
|
7/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
$
|
35.60
|
|
|
$
|
579,200
|
|
Ron Geraty, M.D.
|
|
|
6/30/09
|
|
|
|
5/21/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,069
|
|
|
$
|
35.58
|
|
|
$
|
519,394
|
|
|
|
|
(1)
|
|
The grant date of the options for the named executive officers
is in accordance with our stock option granting policy, in which
grants of options approved by the Compensation Committee for
existing employees shall be effective as of the next Grant
Date following the date of approval (except that any
grants subject to stockholder approval shall be effective as of
the date of stockholder approval). Under this policy,
Grant Date means the last day of the following
months: February, April, June, August, October and December.
|
|
(2)
|
|
All stock option awards were made under our 2001 Stock Option
and Incentive Plan.
|
|
(3)
|
|
The terms of these options provide for vesting in four equal
annual installments, commencing on the first anniversary of the
date of grant and conditioned upon the recipients
continued employment with the Company on the applicable vesting
date. The options will expire on the tenth anniversary of the
grant date or, if earlier, 90 days after the
recipients employment terminates.
|
|
(4)
|
|
The exercise price of the stock option awards to the named
executive officers is equal to the closing price of the common
stock on the applicable grant date.
|
|
(5)
|
|
These amounts represent the aggregate grant date fair value of
stock option awards made during 2009 calculated in accordance
with FASB ASC Topic 718, excluding estimated forfeitures. See
Note 16 of the Notes to our consolidated financial
statements included in our Annual Report on
Form 10-K/A
for the year ended December 31, 2009 for a discussion of
the other relevant assumptions used in calculating these amounts.
|
39
Outstanding Equity Awards at Fiscal
Year-End.
The following table sets forth
certain information with respect to unexercised options held by
the named executive officers at the end of fiscal year 2009.
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Plan Awards:
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
Market or
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Payout Value
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
of Unearned
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares, Units
|
|
Shares, Units
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of
|
|
or Other
|
|
or Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
Stock That
|
|
Stock That
|
|
Rights That
|
|
Rights That
|
|
|
Options
|
|
Options
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
|
(#)
|
|
(#)(1)
|
|
Options
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date(2)
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Ron Zwanziger
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
$
|
14.92
|
|
|
|
2-12-2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
$
|
17.15
|
|
|
|
12-20-2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,065
|
|
|
|
|
|
|
|
|
|
|
$
|
15.55
|
|
|
|
8-23-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,576
|
|
|
|
|
|
|
|
|
|
|
$
|
21.78
|
|
|
|
12-31-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
|
|
|
$
|
39.72
|
|
|
|
5-17-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
112,500
|
|
|
|
|
|
|
$
|
61.49
|
|
|
|
7-23-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Teitel
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
21.38
|
|
|
|
12-11-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
24.25
|
|
|
|
12-17-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
1,250
|
|
|
|
|
|
|
$
|
34.40
|
|
|
|
10-4-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
5,000
|
|
|
|
|
|
|
$
|
38.10
|
|
|
|
12-15-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
48.14
|
|
|
|
8-31-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,581
|
|
|
|
|
|
|
$
|
35.58
|
|
|
|
6-30-2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
38.01
|
|
|
|
10-30-2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Scott, Ph.D.
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
$
|
14.92
|
|
|
|
2-12-2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,691
|
|
|
|
|
|
|
|
|
|
|
$
|
15.47
|
|
|
|
11-30-2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,284
|
|
|
|
|
|
|
|
|
|
|
$
|
15.60
|
|
|
|
9-3-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,252
|
|
|
|
|
|
|
|
|
|
|
$
|
21.78
|
|
|
|
12-31-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
|
|
|
$
|
39.72
|
|
|
|
5-17-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
56,250
|
|
|
|
|
|
|
$
|
61.49
|
|
|
|
7-23-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry McAleer, Ph. D.
|
|
|
16,000
|
|
|
|
|
|
|
|
|
|
|
$
|
14.92
|
|
|
|
2-12-2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189,706
|
|
|
|
|
|
|
|
|
|
|
$
|
15.47
|
|
|
|
11-30-2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129,413
|
|
|
|
|
|
|
|
|
|
|
$
|
16.76
|
|
|
|
12-2-2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,805
|
|
|
|
|
|
|
|
|
|
|
$
|
15.60
|
|
|
|
9-3-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,656
|
|
|
|
|
|
|
|
|
|
|
$
|
21.78
|
|
|
|
12-31-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
62,500
|
|
|
|
|
|
|
$
|
39.72
|
|
|
|
5-17-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,250
|
|
|
|
48,750
|
|
|
|
|
|
|
$
|
61.49
|
|
|
|
7-23-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Bridgen, Ph.D.
|
|
|
36,750
|
|
|
|
|
|
|
|
|
|
|
$
|
11.75
|
|
|
|
9-30-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,664
|
|
|
|
|
|
|
|
|
|
|
$
|
21.78
|
|
|
|
12-31-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
$
|
24.25
|
|
|
|
12-17-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
|
|
|
$
|
42.26
|
|
|
|
2-28-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
$
|
56.18
|
|
|
|
12-31-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,564
|
|
|
|
|
|
|
$
|
35.58
|
|
|
|
6-30-2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tom Underwood
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
$
|
33.17
|
|
|
|
6-30-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250
|
|
|
|
750
|
|
|
|
|
|
|
$
|
18.91
|
|
|
|
12-31-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
$
|
33.58
|
|
|
|
6-30-2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
$
|
35.60
|
|
|
|
8-31-2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ron Geraty, M.D.
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
|
|
|
$
|
56.18
|
|
|
|
12-31-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
|
|
|
|
$
|
33.17
|
|
|
|
6-30-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
22,500
|
|
|
|
|
|
|
$
|
35.52
|
|
|
|
8-29-2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,069
|
|
|
|
|
|
|
$
|
35.58
|
|
|
|
6-30-2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Unless otherwise noted, options become exercisable in four equal
annual installments beginning on the first anniversary of the
date of grant.
|
|
(2)
|
|
Unless otherwise noted, the expiration date of each option
occurs ten years after the date of grant of such option.
|
40
Option Exercises and Stock Vested.
The
following table sets forth certain information with respect to
options exercised by the named executive officers in fiscal year
2009.
Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized
|
|
Number of Shares
|
|
Value Realized
|
|
|
Acquired on Exercise
|
|
on Exercise
|
|
Acquired on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)(1)
|
|
(#)
|
|
($)
|
|
Ron Zwanziger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Teitel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Scott, Ph.D.
|
|
|
50,000
|
|
|
$
|
1,540,245
|
|
|
|
|
|
|
|
|
|
Jerry McAleer, Ph.D.
|
|
|
40,000
|
|
|
$
|
1,213,904
|
|
|
|
|
|
|
|
|
|
John Bridgen, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tom Underwood
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ron Geraty, M.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents the difference between the aggregate exercise price
and the aggregate fair market value of the common stock on the
dates of exercise.
|
Non-qualified
Deferred Compensation
Non-qualified Defined Contribution and Other Non-qualified
Deferred Compensation Plans.
Our named
executive officers do not participate in any non-qualified
defined contribution or other deferred compensation plans.
Pension Benefits.
Our named executive
officers do not participate in any plan that provides for
specified retirement benefits, or payments and benefits that
will be provided primarily following retirement, other than
defined contribution plans such as our 401(k) savings plan.
Employment Agreements and Potential Payments upon
Termination or
Change-in-Control.
On
November 18, 2009, we entered into a retention and
severance agreement with Tom Underwood in order to restructure
change of control severance obligations existing under a 2007
agreement between Mr. Underwood and Matria Healthcare,
Inc., a predecessor to Alere Health. In addition to a bonus paid
in 2009, Mr. Underwoods current retention and
severance agreement provides for two further stay
bonuses of $462,666 payable November 18, 2010 and
June 30, 2011, as well as severance payable in the event of
involuntary termination without cause or voluntary termination
with good reason. As consideration for these severance benefits,
Mr. Underwood agreed that (i) for one year after his
employment terminates if less than all of the stay bonuses have
been paid, or (ii) for two years after his employment
terminates if the full amount of all of the stay bonuses has
been paid, he will not provide similar services to any business
that competes with Alere Health in many states within the United
States. As part of the agreement, Mr. Underwood also
entered into Alere Healths standard non-solicitation
agreement.
Dr. Geraty, who is expected to leave the Company in the
near future, has an employment agreement which provides for
severance payments in the event of involuntary termination
without cause or constructive termination. These payments will
be triggered by his departure. Dr. Geraty has agreed not to
engage in any business activity which is directly or indirectly
in competition with us within the United States or to solicit
our employees or customers for a period of one year following
the date his employment terminates.
41
The table below sets forth the estimated payments and benefits
that would be provided to the extent that payments under these
agreements are triggered, or in the case of Dr. Geraty, the
amount of the expected payment obligation that will be triggered
when he leaves the Company.
|
|
|
|
|
|
|
|
|
|
|
Name and Position
|
|
Date of Termination
|
|
Severance Payments
|
|
Benefits
|
|
Tom Underwood
|
|
Prior to Nov. 18, 2010
|
|
$
|
925,332
|
(1)
|
|
$
|
52,354
|
(5)
|
Chief Executive Officer, Alere
|
|
Nov. 18, 2010 through June 30, 2011
|
|
$
|
462,666
|
(2)
|
|
$
|
52,354
|
(5)
|
Health, LLC
|
|
After June 30, 2011
|
|
$
|
439,600
|
(3)
|
|
$
|
14,072
|
(6)
|
Ron Geraty, M.D.
|
|
Any
|
|
$
|
550,008
|
(4)
|
|
$
|
0
|
|
Former Chief Executive Officer, Alere Health, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Severance obligation is a lump-sum payment equal to the greater
of (i) any unpaid stay bonuses, as discussed above, or
(ii) 12 months of Mr. Underwoods
then-current salary. Mr. Underwood is entitled to stay
bonuses of $462,666 each if he remains employed on
November 18, 2010 and June 30, 2011, both of which
would be accelerated and would, in the aggregate, exceed the
value of 12 months of his current salary.
|
|
(2)
|
|
Represents June 30, 2011 stay bonus, which would be
accelerated and would exceed the value of 12 months of
Mr. Underwoods current salary.
|
|
(3)
|
|
Represents 12 months of Mr. Underwoods current
salary.
|
|
(4)
|
|
Represents Dr. Geratys current annual salary.
Severance obligation is 12 months continuation of
Dr. Geratys then-current salary.
|
|
(5)
|
|
Represents the current cost of continuation of all group
benefits for which executives are eligible at the time of
termination for two years, including cell phone and auto
insurance, based on the assumptions used for financial reporting
purposes under generally accepted accounting principles.
|
|
(6)
|
|
Represents the current cost of medical and dental insurance
coverage for one year, based on the assumptions used for
financial reporting purposes under generally accepted accounting
principles.
|
Our named executive officers are otherwise
employees-at-will
and do not have employment contracts with us. Other than
provisions in our 2001 Stock Option and Incentive Plan that
provide for all stock options to automatically become fully
exercisable and any stock awards to become vested and
non-forfeitable in the event of a change of control
as defined in the plan, there are no other contracts,
agreements, plans or arrangements that provide for payments to
our named executive officers at, following, or in connection
with any termination of employment, change in control of our
Company or a change in a named executive officers
responsibilities. All of the outstanding stock options held by
our named executive officers reported above under
Outstanding Equity Awards at Fiscal Year-End were
issued under our 2001 Stock Option and Incentive Plan and are
subject to accelerated exercisability upon a change of control.
The table below sets forth the value attributable to such an
acceleration of exercisability.
|
|
|
|
|
|
|
Value Attributable to Acceleration of
|
|
|
Exercisability of Stock Options
|
Name
|
|
upon a Change of Control(1)
|
|
Ron Zwanziger
|
|
$
|
268,500
|
|
David Teitel
|
|
$
|
200,773
|
|
David Scott, Ph.D.
|
|
$
|
134,250
|
|
Jerry McAleer, Ph.D.
|
|
$
|
111,875
|
|
John Bridgen, Ph.D.
|
|
$
|
133,805
|
|
Tom Underwood
|
|
$
|
557,010
|
|
Ron Geraty, M.D.
|
|
$
|
536,314
|
|
|
|
|
(1)
|
|
Assumes the occurrence of a change of control of the Company on
December 31, 2009. The value attributable to the
acceleration of stock options equals the difference between the
applicable option
|
42
|
|
|
|
|
exercise prices and the closing sale price of our common stock
as reported by the New York Stock Exchange on December 31,
2009, which was $41.51, multiplied by the number of shares
underlying the options.
|
Risk
Related to Compensation Policies
Our compensation policies and practices for our employees,
including our executive compensation program described in our
Compensation Discussion and Analysis, aim to provide a
risk-balanced compensation package which is competitive in our
market sectors and relevant to the individual executive.
Generally, we provide cash compensation in the form of base
salary to meet competitive cash compensation norms and non-cash
compensation, primarily in the form of stock-based awards, to
reward superior performance against long-term strategic goals.
This focus on base salary supplemented by long-term, non-cash
compensation discourages short-term risk taking and provides
motivation for employees to pursue the same strategic goals,
including increasing shareholder value. While we did provide
one-time, discretionary bonuses to many of our executives and
managers for 2009, as discussed in our Compensation Discussion
and Analysis, and we do provide commission-based compensation to
a limited number of sales personnel consistent with industry
practices, we do not believe that these practices, or our
compensation policies and practices considered as a whole, are
reasonably likely to have a material adverse effect on us.
Compensation
of Directors
The following table sets forth information regarding the
compensation of our directors during fiscal year 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name (1)
|
|
($)(2)
|
|
|
($)
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Eli Adashi, M.D.
|
|
$
|
56,250
|
|
|
|
|
|
|
$
|
104,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
161,130
|
|
Carol R. Goldberg
|
|
$
|
85,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
85,500
|
|
Robert P. Khederian
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Levy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Quelch, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Roosevelt, Jr.
|
|
$
|
75,000
|
|
|
|
|
|
|
$
|
71,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
146,360
|
|
Peter Townsend
|
|
$
|
92,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
92,750
|
|
|
|
|
(1)
|
|
Ron Zwanziger, Jerry McAleer and David Scott are not included in
this table as they are employees of our Company and,
accordingly, receive no compensation for their services as
directors. The compensation received by Mr. Zwanziger,
Dr. McAleer and Dr. Scott as employees of our Company
are shown in the Summary Compensation Table above.
|
|
(2)
|
|
Dr. Adashi received cash payments of $18,750 each in June
2009, September 2009 and December 2009. Ms. Goldberg
received a cash payment of $85,500 in December 2009.
Mr. Roosevelt received cash payments of $18,750 each in
April 2009, June 2009, September 2009 and December 2009.
Mr. Townsend received a cash payment of $92,750 in December
2009. The details of the cash compensation is described in more
detail below.
|
|
(3)
|
|
These amounts represent the aggregate grant date fair value of
stock option awards made during 2009 calculated in accordance
with FASB ASC Topic 718, excluding estimated forfeitures. See
Note 16 of the Notes to our consolidated financial
statements included in our Annual Report on
Form 10-K/A
for the year ended December 31, 2009 for a discussion of
the other relevant assumptions used in calculating these
amounts. As of December 31, 2009, each director had the
following number of options outstanding: Eli
|
43
|
|
|
|
|
Adashi: 8,000; Carol R. Goldberg: 53,003; Robert P. Khederian:
26,484; John F. Levy: 76,850; John A. Quelch: 74,204; James
Roosevelt, Jr.: 8,000; and Peter Townsend: 24,686.
|
We historically compensated our non-employee directors solely
through option grants, consistent with our overall compensation
philosophy of focusing on long-term performance and aligning the
interests of our directors with the interests of stockholders.
These option grants vest over a three-year period in order to
compensate for three years of service. Employee directors do not
receive compensation for their services as directors.
During 2007, the Compensation Committee engaged a compensation
consultant, Pearl Meyer & Partners, to assist the
committee in assessing non-employee director compensation. The
Compensation Committee concluded that our non-employee
directors annual compensation should be based on the total
annual compensation (combined cash and equity) reflected in the
75th percentile of the 2007 peer group data. Accordingly,
effective October 31, 2007, the Compensation Committee
granted a number of options to the non-employee directors, using
a Black-Scholes valuation model, designed to compensate the
directors on an annual basis within the 75th percentile of
the peer group data. Consistent with past practice, such options
vest over a three-year period and compensate the directors for
three years of service (2008 through 2010). In this case,
however, the non-employee directors were given the option to
elect to receive a portion of such compensation in the form of
cash (and forego a portion of the option grant of equal value).
If a director exercised this option, he or she would receive
annual cash payments during 2008, 2009 and 2010 based on the
total annual cash compensation paid in the 75th percentile
of the peer group data provided by our consultant and would
receive a reduced option grant designed to compensate the
director for three years of service based on the total equity
compensation (rather than combined cash and equity) paid in the
75th percentile of same peer group data. Two directors,
Carol R. Goldberg and Peter Townsend, opted to exercise this
right. Accordingly, Ms. Goldberg and Mr. Townsend
received cash payments of $85,500 and $92,750, respectively, in
January 2008, December 2008 and December 2009. Upon their
election to the Board during 2009, Dr. Adashi and
Mr. Roosevelt were each awarded compensation for the first
year of their service as a director of $75,000, payable
quarterly in arrears, and an option to purchase
8,000 shares of our common stock. This package of cash
compensation and stock options was intended to offer these new
non-employee directors a similar level of total annual
compensation to that awarded to our incumbent non-employee
directors through the October 2007 grants.
44
Equity
Compensation Plan Information
The following table furnishes information with respect to
compensation plans under which equity securities of the Company
are authorized for issuance as of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
remaining available for
|
|
|
Number of securities
|
|
|
|
future issuance under
|
|
|
to be issued upon
|
|
Weighted-average
|
|
equity compensation plans
|
|
|
exercise of outstanding
|
|
exercise price
|
|
(excluding securities
|
|
|
options, warrants and
|
|
of outstanding options,
|
|
reflected in column
|
Plan category
|
|
rights(1)
|
|
warrants and rights
|
|
(a)(2))
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
7,639,675
|
|
|
$
|
35.06
|
|
|
|
2,193,901
|
(3)
|
Equity compensation plans not approved by security holders
|
|
|
75,000
|
(4)
|
|
$
|
35.60
|
|
|
|
|
|
Total
|
|
|
7,714,675
|
|
|
$
|
35.07
|
|
|
|
2,193,901
|
(3)
|
|
|
|
(1)
|
|
This table excludes an aggregate of 2,123,450 shares
issuable upon exercise of outstanding options assumed by the
Company in connection with various acquisition transactions. The
weighted average exercise price of the excluded acquired options
is $33.49.
|
|
(2)
|
|
In addition to being available for future issuance upon exercise
of options that may be granted after December 31, 2009,
1,120,841 shares under the 2001 Stock Option and Incentive
Plan may instead be issued in the form of restricted stock,
unrestricted stock, performance share awards or other
equity-based awards.
|
|
(3)
|
|
Includes 1,073,060 shares issuable under the Companys
2001 Employee Stock Purchase Plan (the ESPP).
|
|
(4)
|
|
Represents shares issuable upon exercise of outstanding options
issued as inducement grants in connection with our acquisition
of Concateno, plc. These options have terms which are
substantially the same as options granted under our 2001 Stock
Option and Incentive Plan.
|
45
2009
Audit Committee Report
We, the Audit Committee, oversee the Companys accounting
and financial reporting processes and assist the Board in its
oversight of the qualifications, independence and performance of
the Companys independent registered public accountants. In
fulfilling our oversight responsibilities, we discussed with the
Companys independent registered public accounting firm,
BDO Seidman, LLP, the overall scope and plans for their audit.
Upon completion of the audit, we discussed with BDO Seidman the
matters required to be discussed by Statement on Auditing
Standards No. 61, as amended.
We also reviewed and discussed the audited, consolidated
financial statements with management. We discussed with
management certain significant accounting principles, the
reasonableness of significant judgments and the clarity of
disclosures in those financial statements.
The Audit Committee received and reviewed the written
disclosures and the letter from BDO Seidman required by
applicable requirements of the Public Company Accounting
Oversight Board regarding BDO Seidmans communications with
the Audit Committee concerning independence, and discussed with
BDO Seidman the auditors independence from management and
the Company. We determined that the services provided by BDO
Seidman during fiscal year 2009 are compatible with maintaining
such auditors independence.
In reliance on the reviews and discussions referred to above, we
recommended to the Board (and the Board approved) that the
audited, consolidated financial statements be included in the
Companys Annual Report on
Form 10-K/A
for the year ended December 31, 2009 for filing with the
Securities and Exchange Commission.
AUDIT COMMITTEE
John F. Levy, Chairperson
Peter Townsend, Member
Robert P. Khederian, Member
Independent
Registered Public Accountants
Our Audit Committee engaged BDO Seidman, LLP to serve as our
independent registered public accountant during the fiscal year
ended December 31, 2009. We are currently interviewing
accounting firms, including BDO Seidman, to serve as our
principal accountant for the fiscal year ending 2010.
We expect representatives of BDO Seidman to be present at our
2010 annual meeting of stockholders, that they will have the
opportunity to make a statement at such meeting if they so
desire, and that they will be available to respond to
appropriate questions from stockholders.
Audit
Fees
We expect aggregate audit fees billed by BDO Seidman for fiscal
year 2009 to be approximately $3,384,737 of which $2,747,522 has
been billed to date. This includes $630,000 billed for
professional services rendered in connection with the principal
independent registered public accountants audit of our
internal control over financial reporting in connection with the
2009 audit. Audit fees also include fees billed in connection
with the principal independent registered public
accountants review of our quarterly financial statements
and audit services normally provided by the principal
independent registered public accountant in connection with
other statutory or regulatory filings. Aggregate audit fees
billed by BDO Seidman for fiscal year 2008 were approximately
$3,246,668.
Audit-related
Fees
Aggregate audit-related fees billed in 2009 and 2008 by BDO
Seidman were $484,650 and $515,473, respectively. Audit-related
fees consist primarily of fees billed for professional services
rendered by the principal independent registered public
accountant for accounting consultations and services related to
business acquisitions and financings.
46
Tax
Fees
Aggregate tax fees billed in 2009 and 2008 by BDO Seidman were
$404,000 and $347,000, respectively. Tax fees include fees
billed for professional services rendered by the principal
public accountant for tax compliance, tax advice and tax
planning.
All Other
Fees
During 2009 and 2008, no other fees were billed by BDO Seidman,
LLP.
Pre-approval
Policies and Procedures
The Audit Committee pre-approves all audit and non-audit
services provided by the independent registered public
accountant other than permitted non-audit services estimated in
good faith by the independent registered public accountant and
management to entail fees payable of $25,000 or less on a
project by project basis and which would otherwise qualify for
exemption from the pre-approval requirements of the Securities
Exchange Act of 1934, as amended (the Exchange Act).
This authority to pre-approve non-audit services may be
delegated to one or more members of the Audit Committee, who
shall present any services so pre-approved to the full Audit
Committee at its next meeting.
Certain
Relationships and Related Transactions
Policies
and Procedures with Respect to Related Party
Transactions
Our Audit Committee Charter requires that members of the Audit
Committee, all of whom are independent directors, conduct an
appropriate review of, and be responsible for the oversight of,
all related party transactions on an ongoing basis.
Investments
by the Zwanziger Family Trust
In November 2008, the Zwanziger Family Trust, a trust
established for the benefit of the children of Ron Zwanziger,
our Chairman, Chief Executive Officer and President, and the
trustee of which is Mr. Zwanzigers sister, purchased
certain of our securities from third parties in market
transactions. The purchase consisted of approximately
$1.0 million of each of the following securities: our
common stock, our Series B Convertible Perpetual Preferred
Stock, our 3% senior subordinated convertible notes,
interests ($1.0 million face amount) in our First Lien
credit agreement and interests ($1.0 million face amount)
in our Second Lien credit agreement. To the extent we make
principal and interest payments under the convertible notes and
the credit facilities in accordance with their terms, the
Zwanziger Family Trust, as a holder of convertible notes and as
a lender under the credit facilities, will receive its
proportionate share. In connection with its purchases of
interests under our First Lien credit agreement and Second Lien
credit agreement, the Trust agreed that, whenever the consent or
vote of the lenders is required under the credit facilities, it
will vote the outstanding principal amount of its holdings in
the same proportion as the votes cast by the other lenders under
these credit facilities.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers and
directors and persons who own more than 10% of our outstanding
shares of common stock to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and the
New York Stock Exchange. Such persons are required by applicable
regulations to furnish us with copies of all reports filed
pursuant to Section 16(a).
To our knowledge, based solely on a review of the copies of such
reports received by us and certain written representations that
no other reports were required, we believe that for the fiscal
year ended December 31, 2009, all Section 16(a) filing
requirements applicable to its officers, directors and 10%
beneficial owners were complied with.
47
Stockholder
Proposals
Stockholders who wish to present proposals pursuant to
Rule 14a-8
promulgated under the Exchange Act for consideration at our 2011
annual meeting of stockholders must submit the proposals in
proper form to us at the address set forth on the first page of
this proxy statement not later than February 4, 2011 in
order for the proposals to be considered for inclusion in our
proxy statement and form of proxy relating to the 2011 annual
meeting.
Stockholder proposals intended to be presented at our 2011
annual meeting submitted outside the processes of
Rule 14a-8
must be received in writing by us no later than the close of
business on April 14, 2011, nor earlier than March 16,
2011, together with all supporting documentation and information
required by our bylaws. Proxies solicited by the Board will
confer discretionary voting authority with respect to these
proposals, subject to SEC rules governing the exercise of this
authority.
Our Nominating and Corporate Governance Committee will consider
director candidates recommended for nomination by stockholders.
There are no differences in the manner in which the Nominating
and Corporate Governance Committee evaluates nominees for
director based on whether the nominee is recommended by a
stockholder. In order to have a director candidate considered by
the Nominating and Corporate Governance Committee, the
recommendation must be submitted to the Company Secretary at the
address set forth on the first page of this proxy statement not
later than February 4, 2011 and must include: the name,
address and phone number of record of the stockholder; a
representation that the stockholder is a record holder of our
voting stock, or if the stockholder is not a record holder of
our voting stock, evidence of ownership in accordance with
Rule 14a-8(b)(2)
of the Exchange Act; the name, age, business and residential
address, educational background, current principal occupation or
employment, and principal occupation or employment for the
preceding five (5) full fiscal years of the proposed
director candidate; a description of the qualifications and
background of the proposed director candidate which addresses
the minimum qualifications and other criteria for Board
membership approved by the Board from time to time; a
description of all arrangements or understandings between the
stockholder and the proposed director candidate; the consent of
the proposed director candidate (i) to be named in the
proxy statement relating to our annual meeting of stockholders
and (ii) to serve as a director if elected at such annual
meeting; and any other information regarding the proposed
director candidate that is required to be included in a proxy
statement filed pursuant to the rules of the Securities and
Exchange Commission.
Other
Information
A copy of our Annual Report on
Form 10-K/A,
including the financial statements and the financial statement
schedules, for the year ended December 31, 2009 (the
Annual Report) shall be provided without charge to
each person solicited hereby upon the written request made
to:
Inverness Medical Innovations, Inc.
Investor Relations Department
51 Sawyer Road
Suite 200
Waltham, MA
02453-3448
Attn: Doug Guarino
In addition, copies of any exhibits to the Annual Report will
be provided for a nominal charge to stockholders who make a
written request to us at the above address.
The Board is aware of no other matters, except for those
incident to the conduct of the annual meeting, that are to be
presented to stockholders for formal action at the annual
meeting. If, however, any other matters properly come before the
annual meeting or any adjournments or postponements thereof, it
is the intention of the persons named in the proxy to vote the
proxy in accordance with their judgment.
By order of the Board
Ron Zwanziger
Chairperson, Chief Executive Officer and
President
[ ],
2010
48
Appendix A
AMENDMENT
TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
THIRD AMENDMENT TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF INVERNESS MEDICAL INNOVATIONS, INC.
PURSUANT TO SECTION 242
OF THE GENERAL CORPORATION LAW OF
THE STATE OF DELAWARE
Inverness Medical Innovations, Inc., a corporation organized and
existing under the laws of the State of Delaware (the
Corporation), hereby certifies:
The Board of Directors of the Corporation, by vote of its
members, duly adopted, pursuant to Section 242 of the
Delaware General Corporation Law (the DGCL), an
amendment to the Amended and Restated Certificate of
Incorporation of the Corporation filed with the Delaware
Secretary of State on November 19, 2001 and declared said
amendment to be advisable. The amendment was duly adopted by the
affirmative vote of the stockholders in accordance with the
provisions of Section 242 of the DGCL.
RESOLVED
: That the Article I of the
Amended and Restated Certificate of Incorporation of the
Corporation be amended to read as follows:
The name of the Corporation is Alere Inc.
And
RESOLVED
: That the Amended and Restated
Certificate of Incorporation of the Corporation be amended as to
replace Inverness Medical Innovations, Inc.
throughout with Alere Inc.
IN WITNESS WHEREOF, the Corporation has caused this Third
Amendment to the Certificate of Incorporation to be executed on
its behalf by its
[ ],
[ ],
as of this [ ] day of
[ ],
2010.
Inverness Medical Innovations, Inc.
By:
Name:
Title:
A-1
Appendix B
EXPLANATORY NOTE:
This Appendix B
contains a copy of the Inverness Medical Innovations, Inc. 2010
Stock Option and Incentive Plan, as proposed and described in
the proxy statement to which this Appendix B is attached.
Inverness
Medical Innovations, Inc.
2010 STOCK OPTION AND INCENTIVE PLAN
SECTION 1.
GENERAL PURPOSE OF THE PLAN;
DEFINITIONS
The name of the plan is the Inverness Medical Innovations, Inc.
2010 Stock Option and Incentive Plan (the Plan). The
purpose of the Plan is to encourage and enable the officers,
employees, Independent Directors and other key persons
(including consultants) of Inverness Medical Innovations, Inc.
(the Company) and its Subsidiaries upon whose
judgment, initiative and efforts the Company largely depends for
the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such
persons with a direct stake in the Companys welfare will
assure a closer identification of their interests with those of
the Company, thereby stimulating their efforts on the
Companys behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
Act
means the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
Administrator
is defined in Section 2(a).
Award
or
Awards,
except
where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Units,
Restricted Stock Awards, Unrestricted Stock Awards, Performance
Share Awards and Dividend Equivalent Rights.
Board
means the Board of Directors of the
Company.
Change of Control
is defined in
Section 18.
Code
means the Internal Revenue Code of 1986,
as amended, and any successor Code, and related rules,
regulations and interpretations.
Committee
means the Committee of the Board
referred to in Section 2.
Covered Employee
means an employee who is a
Covered Employee within the meaning of
Section 162(m) of the Code.
Dividend Equivalent Right
means Awards
granted pursuant to Section 12.
Effective Date
means the date on which the
Plan is approved by stockholders as set forth in Section 20.
Exchange Act
means the Securities Exchange
Act of 1934, as amended, and the rules and regulations
thereunder.
Fair Market Value
means the closing price for
the Stock on any given date during regular trading, or if not
trading on that date, such price on the last preceding date on
which the Stock was traded, unless determined otherwise by the
Administrator using such methods or procedures as it may
establish.
Incentive Stock Option
means any Stock
Option designated and qualified as an incentive stock
option as defined in Section 422 of the Code.
Independent Director
means a member of the
Board who is not also an employee of the Company or any
Subsidiary.
Non-Qualified Stock Option
means any Stock
Option that is not an Incentive Stock Option.
B-1
Option or Stock Option
means any
option to purchase shares of Stock granted pursuant to
Section 5.
Outside Director
means a current member of
the Board who is: (i) not a current employee of the
Company, (ii) not a former employee of the Company who
receives compensation from the Company for prior services (other
than benefits under a qualified retirement plan) during the
taxable year, (iii) has not been an officer of the Company,
and (iv) does not receive remuneration from the Company,
either directly or indirectly in exchange for goods or services,
in any capacity other than as a director, all as set out in
detail in Treasury
Regulation 1.162-27(e)(3).
Performance Criteria
means the criteria that
the Administrator selects for purposes of establishing the
Performance Goal or Performance Goals for an individual for a
Performance Cycle. The Performance Criteria (which shall be
applicable to the organizational level specified by the
Administrator, including, but not limited to, the Company or a
unit, division, group, or Subsidiary of the Company) that will
be used to establish Performance Goals are limited to the
following: (i) earnings before interest, taxes,
depreciation and amortization; (ii) net income (loss)
(either before or after interest, taxes, depreciation
and/or
amortization); (iii) changes in the market price of the
Stock; (iv) cash flow; (v) funds from operations or
similar measure; (vi) sales or revenue;
(vii) acquisitions or strategic transactions;
(viii) operating income (loss); (ix) return on
capital, assets, equity, or investment; (x) total
stockholder returns or total returns to stockholders;
(xi) gross or net profit levels; (xii) productivity;
(xiii) expense; (xiv) margins; (xv) operating
efficiency; (xvi) customer satisfaction;
(xvii) working capital; (xviii) earnings per share of
Stock; or (xix) lease up performance, net operating income
performance or yield on development or redevelopment
communities, any of which under the preceding clauses (i)
through (xix) may be measured either in absolute terms or
as compared to any incremental increase or as compared to
results of a peer group.
Performance Cycle
means one or more periods
of time, which may be of varying and overlapping durations, as
the Administrator may select, over which the attainment of one
or more Performance Criteria will be measured for the purpose of
determining a grantees right to and the payment of a
Restricted Stock Award, Restricted Stock Units, or Performance
Share Award. Each such period shall not be less than
12 months.
Performance Goals
means, for a Performance
Cycle, the specific goals established in writing by the
Administrator for a Performance Cycle based upon the Performance
Criteria.
Performance Share Award
means Awards granted
pursuant to Section 10.
Restricted Stock Award
means Awards granted
pursuant to Section 7.
Restricted Stock Units
means Awards granted
pursuant to Section 8.
Section 409A
means Section 409A of
the Code and the regulations and other guidance promulgated
thereunder.
Stock
means the Common Stock, par value
$0.001 per share, of the Company, subject to adjustments
pursuant to Section 3.
Stock Appreciation Right
means an Award
granted pursuant to Section 6.
Subsidiary
means any corporation or other
entity (other than the Company) in which the Company owns at
least a 50% interest or controls, either directly or indirectly.
Unrestricted Stock Award
means any Award
granted pursuant to Section 9.
|
|
SECTION 2.
|
ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT
GRANTEES AND DETERMINE AWARDS
|
(a)
Committee
. The Plan shall be
administered by either the Board or a committee of not less than
two Independent Directors (in either case, the
Administrator), as determined by the Board from time
to time;
provided that
, (i) for purposes of Awards
to Directors or Section 16 officers of the Company, the
Administrator shall be deemed to include only Directors who are
Independent Directors and no director who is not an Independent
Director shall be entitled to vote or take action in connection
with any such proposed
B-2
Award and (ii) for purposes of Performance Based Awards,
the Administrator shall be a committee of the Board composed of
two or more Outside Directors.
(b)
Powers of Administrator
. The
Administrator shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and
authority:
(i) to select the individuals to whom Awards may from time
to time be granted;
(ii) to determine the time or times of grant, and the
extent, if any, of Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards,
Restricted Stock Units, Unrestricted Stock Awards, Performance
Share Awards and Dividend Equivalent Rights or any combination
of the foregoing, granted to any one or more grantees;
(iii) to determine the number of shares of Stock to be
covered by any Award;
(iv) to determine and modify from time to time the terms
and conditions, including restrictions, not inconsistent with
the terms of the Plan and Section 2(b)(v) below, of any
Award, which terms and conditions may differ among individual
Awards and grantees, and to approve the form of written
instruments evidencing the Awards; except that repricing of
Stock Options shall not be permitted without shareholder
approval and further provided that, other than by reason of, or
in connection with, any death, disability, retirement,
employment termination (without cause), or Change of Control,
the Administrator shall not accelerate or waive any restriction
period applicable to any outstanding Restricted Stock Award or
any Restricted Stock Unit beyond the minimum restriction periods
set forth in Section 7 and Section 8, respectively,
nor shall the Administrator accelerate or amend the aggregate
period over which any Performance Share Award is measured to
less than one (1) year;
(v) to accelerate at any time the exercisability or vesting
of all or any portion of any Award consistent with
Section 2(b)(iv) and further provided that, other than by
reason of, or in connection with, any death, disability,
retirement, employment termination (without cause), or Change of
Control, the Administrator shall not accelerate the
exercisability or vesting of unvested Stock Options or Stock
Appreciation Rights which in the aggregate, when combined with
the aggregate number of shares of Stock issued pursuant to
Section 9, exceed ten percent (10%) of the maximum number
of shares of stock reserved and available for issuance under the
Plan pursuant to Section 3(a), as amended;
(vi) subject to the provisions of Section 5(a)(ii), to
extend at any time the period in which Stock Options may be
exercised;
(vii) to determine at any time whether, to what extent, and
under what circumstances distribution or the receipt of Stock
and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the grantee
and whether and to what extent the Company shall pay or credit
amounts constituting interest (at rates determined by the
Administrator) or dividends or deemed dividends on such
deferrals;
(viii) at any time to adopt, alter and repeal such rules,
guidelines and practices for administration and operation of the
Plan and for its own acts and proceedings as it shall deem
advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all
determinations it deems advisable for the administration and
operation of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the
administration of the Plan; and
(ix) to make any adjustments or modifications to Awards
granted to participants who are working outside the United
States and adopt any sub-plans as may be deemed necessary or
advisable for participation of such participants, to fulfill the
purposes of the Plan and/or to comply with applicable laws.
All decisions and interpretations of the Administrator shall be
binding on all persons, including the Company and Plan grantees.
(c)
Delegation of Authority to Grant
Awards
. The Administrator, in its discretion, may
delegate to the Chief Executive Officer of the Company all or
part of the Administrators authority and duties with
respect to the granting of Awards at Fair Market Value, to
individuals who are not subject to the reporting and other
B-3
provisions of Section 16 of the Exchange Act or Covered
Employees. Any such delegation by the Administrator shall
include a limitation as to the amount of Awards that may be
granted during the period of the delegation and shall contain
guidelines as to the determination of the exercise price of any
Stock Option, the conversion ratio or price of other Awards and
the vesting criteria. The Administrator may revoke or amend the
terms of a delegation at any time but such action shall not
invalidate any prior actions of the Administrators
delegate or delegates that were consistent with the terms of the
Plan.
(d)
Indemnification
. Neither the Board
nor the Committee, nor any member of either or any delegate
thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection
with the Plan, and the members of the Board and the Committee
(and any delegate thereof) shall be entitled in all cases to
indemnification and reimbursement by the Company in respect of
any claim, loss, damage or expense (including, without
limitation, reasonable attorneys fees) arising or
resulting therefrom to the fullest extent permitted by law
and/or
under
any directors and officers liability insurance
coverage which may be in effect from time to time.
SECTION 3.
STOCK ISSUABLE UNDER THE PLAN;
MERGERS; SUBSTITUTION
(a)
Stock Issuable
. The maximum number of
shares of Stock reserved and available for issuance under the
Plan shall be
[ ]
*
shares, subject to adjustment as provided in Section 3(b)
(the Pool). For purposes of this limitation, in
respect of any shares of Stock under any Award which shares are
forfeited, canceled, satisfied without the issuance of Stock,
otherwise terminated, or, for shares of Stock issued pursuant to
any unvested full value Award, reacquired by the Company at not
more than the grantees purchase price (other than by
exercise) (Unissued Shares), the number of shares of
Stock that were removed from the Pool for such Unissued Shares
shall be added back to the Pool. Notwithstanding the foregoing,
upon the exercise of any Award to the extent that the Award is
exercised through tendering previously owned shares or through
withholding shares that would otherwise be awarded and to the
extent shares are withheld for tax withholding purposes, the
Pool shall be reduced by the gross number of shares of Stock
being exercised without giving effect to the number of shares
tendered or withheld. Subject to such overall limitation, shares
of Stock may be issued up to such maximum number pursuant to any
type or types of Award; provided, however, (i) Stock
Options or Stock Appreciation Rights with respect to no more
than 1,000,000 shares of Stock may be granted to any one
individual grantee during any one calendar year period and
(ii) each share subject to a full value award settled in
stock other than an Award that is a stock option or
other award that requires the grantee to purchase shares for
their fair market value at the time of grant will
reduce the number of shares in the Pool available for grant by
three (3). The shares available for issuance from the Pool may
be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company and held in its treasury.
(b)
Changes in Stock
. Subject to
Section 3(c) hereof, if, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in the
Companys capital stock, the outstanding shares of Stock
are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or
additional shares or new or different shares or other securities
of the Company or other non-cash assets are distributed with
respect to such shares of Stock or other securities, or, if, as
a result of any merger or consolidation, sale of all or
substantially all of the assets of the Company, the outstanding
shares of Stock are converted into or exchanged for a different
number or kind of securities of the Company or any successor
entity (or a parent or subsidiary thereof), the Administrator
shall make an appropriate or proportionate adjustment in
(i) the maximum number of shares reserved for issuance
under the Plan, (ii) the number of Stock Options or Stock
Appreciation Rights that can be granted to any one individual
grantee, (iii) the maximum number of shares that may be
granted under a Performance-Based Award, (iv) the number
and kind of shares or other securities subject to any then
outstanding Awards under the Plan, (v) the repurchase price
per share subject to each outstanding Restricted Stock Award,
and (vi) the price for each share subject to any then
outstanding Stock Options and Stock
* The total number of shares of Stock issuable pursuant to
the Plan would equal 1,000,000, plus an additional number of
shares equal to the number of shares remaining available for new
grants or awards under the Inverness Medical Innovations, Inc.
2001 Stock Option and Incentive Plan as of the date that the
Plan is approved by stockholders.
B-4
Appreciation Rights under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by
the number of Stock Options or Stock Appreciation Rights) as to
which such Stock Options and Stock Appreciation Rights remain
exercisable. The adjustment by the Administrator shall be final,
binding and conclusive. No fractional shares of Stock shall be
issued under the Plan resulting from any such adjustment, but
the Administrator in its discretion may make a cash payment in
lieu of fractional shares.
The Administrator may also adjust the number of shares subject
to outstanding Awards and the exercise price and the terms of
outstanding Awards to take into consideration material changes
in accounting practices or principles, extraordinary dividends,
acquisitions or dispositions of stock or property or any other
event if it is determined by the Administrator that such
adjustment is appropriate to avoid distortion in the operation
of the Plan, provided that no such adjustment shall be made in
the case of an Incentive Stock Option, without the consent of
the grantee, if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h)
of the Code.
(c)
Mergers and Other Transactions
. In
the case of and subject to the consummation of (i) the
dissolution or liquidation of the Company, (ii) the sale of
all or substantially all of the assets of the Company on a
consolidated basis to an unrelated person or entity,
(iii) a merger, reorganization or consolidation in which
the outstanding shares of Stock are converted into or exchanged
for a different kind of securities of the successor entity and
the holders of the Companys outstanding voting power
immediately prior to such transaction do not own a majority of
the outstanding voting power of the successor entity immediately
upon completion of such transaction, or (iv) the sale of
all of the Stock of the Company to an unrelated person or entity
(in each case, a Sale Event), upon the effective
time of the Sale Event, the Plan and all outstanding Awards
granted hereunder shall terminate, unless provision is made in
connection with the Sale Event in the sole discretion of the
parties thereto for the assumption or continuation of Awards
theretofore granted by the successor entity, or the substitution
of such Awards with new Awards of the successor entity or parent
thereof, with appropriate adjustment as to the number and kind
of shares and, if appropriate, the per share exercise prices, as
such parties shall agree (after taking into account any
acceleration hereunder). In the event of such termination, each
grantee shall be permitted, within a specified period of time
prior to the consummation of the Sale Event as determined by the
Administrator, to exercise all outstanding Options and Stock
Appreciation Rights held by such grantee, including those that
will become exercisable upon the consummation of the Sale Event;
provided, however, that the exercise of Options and Stock
Appreciation Rights not exercisable prior to the Sale Event
shall be subject to the consummation of the Sale Event.
Notwithstanding anything to the contrary in this
Section 3(c), in the event of a Sale Event pursuant to
which holders of the Stock of the Company will receive upon
consummation thereof a cash payment for each share surrendered
in the Sale Event, the Company shall have the right, but not the
obligation, to make or provide for a cash payment to the
grantees holding Options and Stock Appreciation Rights, in
exchange for the cancellation thereof, in an amount equal to the
difference between (A) the value as determined by the
Administrator of the consideration payable per share of Stock
pursuant to the Sale Event (the Sale Price) times
the number of shares of Stock subject to outstanding Option and
Stock Appreciation Rights (to the extent then exercisable at
prices not in excess of the Sale Price) and (B) the
aggregate exercise price of all such outstanding Options and
Stock Appreciation Rights.
(d)
Substitute Awards
. The Administrator
may grant Awards under the Plan in substitution for stock and
stock-based awards held by employees, directors or other key
persons of another corporation in connection with the merger or
consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The
Administrator may direct that the substitute awards be granted
on such terms and conditions as the Administrator considers
appropriate in the circumstances. Any substitute Awards granted
under the Plan shall not count against the share limitation set
forth in Section 3(a).
SECTION 4.
ELIGIBILITY
Grantees under the Plan will be such full or part-time officers
and other employees, Independent Directors and key persons
(including consultants and prospective employees) of the Company
and its Subsidiaries as are selected from time to time by the
Administrator in its sole discretion.
B-5
SECTION 5.
STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as
the Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive
Stock Options or Non-Qualified Stock Options. Incentive Stock
Options may be granted only to employees of the Company or any
Subsidiary that is a subsidiary corporation within
the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option,
it shall be deemed a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after
July 14, 2020.
(a)
Stock Options
. Stock Options granted
pursuant to this Section 5(a) shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the
Plan, as the Administrator shall deem desirable. If the
Administrator so determines, Stock Options may be granted in
lieu of cash compensation at the optionees election,
subject to such terms and conditions as the Administrator may
establish.
(i)
Exercise Price
. The exercise price
per share for the Stock covered by a Stock Option granted
pursuant to this Section 5(a) shall be determined by the
Administrator at the time of grant but shall not be less than
100 percent of the Fair Market Value on the date of grant.
If an employee owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than
10 percent of the combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation and
an Incentive Stock Option is granted to such employee, the
option price of such Incentive Stock Option shall be not less
than 110 percent of the Fair Market Value on the grant date.
(ii)
Option Term
. The term of each Stock
Option shall be fixed by the Administrator, but no Stock Option
shall be exercisable more than 10 years after the date the
Stock Option is granted. If an employee owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of
the Code) more than 10 percent of the combined voting power
of all classes of stock of the Company or any parent or
subsidiary corporation and an Incentive Stock Option is granted
to such employee, the term of such Stock Option shall be no more
than five years from the date of grant.
(iii)
Exercisability; Rights of a
Stockholder
. Stock Options shall become
exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at or
after the grant date. Subject to Section 2(b)(v), the
Administrator may at any time accelerate the exercisability of
all or any portion of any Stock Option. An optionee shall have
the rights of a stockholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock
Options.
(iv)
Method of Exercise
. Stock Options
may be exercised in whole or in part, by giving written notice
of exercise to the Company, specifying the number of shares to
be purchased. Payment of the purchase price may be made by one
or more of the following methods to the extent provided in the
Option Award agreement:
(A) In cash, by certified or bank check or other instrument
acceptable to the Administrator;
(B) Through the delivery (or attestation to the ownership)
of shares of Stock that are not then subject to restrictions
under any company plan. Such surrendered shares shall be valued
at Fair Market Value on the exercise date;
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company for the purchase price;
provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of
indemnity and other agreements as the Administrator shall
prescribe as a condition of such payment procedure; or
(D) With respect to Stock Options that are not Incentive
Stock Options, by a net exercise arrangement
pursuant to which the Company will reduce the number of shares
of Stock issuable upon
B-6
exercise by the largest whole number of shares with a Fair
Market Value that does not exceed the aggregate exercise price.
(E) Any other method permitted by the Administrator.
Payment instruments will be received subject to collection. The
delivery of certificates representing the shares of Stock to be
purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting
in his stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such
shares and the fulfillment of any other requirements contained
in the Option Award agreement or applicable provisions of laws.
In the event an optionee chooses to pay the purchase price by
previously-owned shares of Stock through the attestation method,
the number of shares of Stock transferred to the optionee upon
the exercise of the Stock Option shall be net of the number of
shares attested to.
(v)
Annual Limit on Incentive Stock
Options
. To the extent required for
incentive stock option treatment under
Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the shares of Stock with
respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000. To
the extent that any Stock Option exceeds this limit, it shall
constitute a Non-Qualified Stock Option.
(b)
Non-transferability of Options
. No
Stock Option shall be transferable by the optionee otherwise
than by will or by the laws of descent and distribution and all
Stock Options shall be exercisable, during the optionees
lifetime, only by the optionee, or by the optionees legal
representative or guardian in the event of the optionees
incapacity. Notwithstanding the foregoing, the Administrator, in
its sole discretion, may provide in the Award agreement
regarding a given Option that the optionee may transfer his
Non-Qualified Stock Options to members of his immediate family,
to trusts for the benefit of such family members, or to
partnerships in which such family members are the only partners,
provided that the transferee agrees in writing with the Company
to be bound by all of the terms and conditions of this Plan and
the applicable Option.
(c)
Form of Settlement
. Shares of Stock
issued upon exercise of a Stock Option shall be free of all
restrictions under the Plan, except as otherwise provided in the
Plan.
SECTION 6.
STOCK APPRECIATION RIGHTS
(a)
Nature of Stock Appreciation Rights
. A Stock
Appreciation Right is an Award entitling the recipient to
receive shares of Stock having a value on the date of exercise
calculated as follows: (i) the grant date exercise price of
a share of Stock is (ii) subtracted from the Fair Market
Value of the Stock on the date of exercise and (iii) the
difference is multiplied by the number of shares of Stock with
respect to which the Stock Appreciation Right shall have been
exercised.
For example, if the grant date exercise price is $10.00 and the
Fair Market Value on the date of exercise is $20.00, the
difference is $10.00. If the grantee is exercising the Stock
Appreciation Right as to 100 shares of Stock, he or she
will receive shares with a value on the exercise date of
$1,000.00 ($20.00 − $10.00 = $10.00. $10.00 x 100 =
$1,000.00.) The grantee will receive 50 shares of stock.
($1,000.00
¸
$20.00 = 50 shares.)
(b)
Exercise Price of Stock Appreciation
Rights
. The exercise price of a Stock
Appreciation Right shall not be less than 100 percent of
the Fair Market Value of the Stock on the date of grant.
(c)
Grant and Exercise of Stock Appreciation
Rights
. Stock Appreciation Rights may be granted
by the Administrator independently of any Stock Option granted
pursuant to Section 5 of the Plan.
(d)
Terms and Conditions of Stock Appreciation
Rights
. Stock Appreciation Rights shall be
subject to such terms and conditions as shall be determined from
time to time by the Administrator. The term of a Stock
Appreciation Right may not exceed ten years.
B-7
SECTION 7.
RESTRICTED STOCK AWARDS
(a)
Nature of Restricted Stock Awards
. A
Restricted Stock Award is an Award entitling the recipient to
acquire, at such purchase price as determined by the
Administrator, shares of Stock subject to such restrictions and
conditions as the Administrator may determine at the time of
grant (Restricted Stock). Conditions may be based on
continuing employment (or other service relationship)
and/or
achievement of pre-established performance goals and objectives.
The grant of a Restricted Stock Award is contingent on the
grantee executing the Restricted Stock Award agreement. The
terms and conditions of each such agreement shall be determined
by the Administrator, and such terms and conditions may differ
among individual Awards and grantees.
(b)
Rights as a Stockholder
. Upon
execution of a written instrument setting forth the Restricted
Stock Award and payment of any applicable purchase price, a
grantee shall have the rights of a stockholder with respect to
the voting of the Restricted Stock, subject to such conditions
contained in the written instrument evidencing the Restricted
Stock Award. Unless the Administrator shall otherwise determine,
certificates evidencing the Restricted Stock shall remain in the
possession of the Company until such Restricted Stock is vested
as provided in Section 7(d) below, and the grantee shall be
required, as a condition of the grant, to deliver to the Company
a stock power endorsed in blank.
(c)
Restrictions
. Restricted Stock may
not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein
or in the Restricted Stock Award agreement. If a grantees
employment (or other service relationship) with the Company and
its Subsidiaries terminates for any reason, the Company shall
have the right to repurchase Restricted Stock that has not
vested at the time of termination at its original purchase
price, from the grantee or the grantees legal
representative.
(d)
Vesting of Restricted Stock
. The
Administrator at the time of grant shall specify the date or
dates
and/or
the attainment of pre-established performance goals, objectives
and other conditions on which the non-transferability of the
Restricted Stock and the Companys right of repurchase or
forfeiture shall lapse. Subsequent to such date or dates
and/or
the
attainment of such pre-established performance goals, objectives
and other conditions, the shares on which all restrictions have
lapsed shall no longer be Restricted Stock and shall be deemed
vested. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to
Section 16 below, in writing after the Award agreement is
issued, a grantees rights in any shares of Restricted
Stock that have not vested shall automatically terminate upon
the grantees termination of employment (or other service
relationship) with the Company and its Subsidiaries and such
shares shall be subject to the Companys right of
repurchase as provided in Section 7(c) above.
(e)
Restriction Period
. Restricted Stock
subject to vesting upon the attainment of performance goals or
objectives shall vest after the attainment of the stated
performance goals or objectives but only after a restricted
period of at least one (1) year. All other Restricted Stock
shall vest after a restriction period of not less than three
(3) years; provided, however, that any Restricted Stock
with a time-based restriction may become vested incrementally
over such three-year period.
(f)
Waiver, Deferral and Reinvestment of
Dividends
. The Restricted Stock Award agreement
may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.
SECTION 8.
RESTRICTED STOCK UNITS
(a)
Nature of Restricted Stock Units
. A
Restricted Stock Unit is a bookkeeping entry representing the
equivalent of one share of Stock for each Restricted Stock Unit
awarded to a grantee and represents an unfunded and unsecured
obligation of the Company. The Administrator shall determine the
restrictions and conditions applicable to each Restricted Stock
Unit at the time of grant. Conditions may be based on continuing
employment (or other service relationship)
and/or
achievement of pre-established performance goals and objectives.
The terms and conditions of each such Award agreement shall be
determined by the Administrator, and such terms and conditions
may differ among individual Awards and grantees. Notwithstanding
the foregoing, in the event that any such Restricted Stock Units
granted to employees shall have a performance-based goal, the
restriction period with respect to such Award shall not be less
than one year, and in the event any such Restricted Stock Units
granted to employees shall have a time-based restriction only
(without any prior performance condition to the grant or vesting
thereof), the total restriction period with
B-8
respect to such Award shall not be less than three years;
provided, however, that any Restricted Stock Units with a
time-based restriction may become vested incrementally over such
three-year period. At the end of the vesting period, the
Restricted Stock Units, to the extent vested, shall be settled
in the form of shares of Stock. To the extent that an award of
Restricted Stock Units is subject to Section 409A, it may
contain such additional terms and conditions as the
Administrator shall determine in its sole discretion in order
for such Award to comply with the requirements of
Section 409A.
(b)
Election to Receive Restricted Stock Units in Lieu
of Compensation
. The Administrator may, in its
sole discretion, permit a grantee to elect to receive a portion
of future cash compensation otherwise due to such grantee in the
form of an award of Restricted Stock Units. Any such election
shall be made in writing and shall be delivered to the Company
no later than the date specified by the Administrator and in
accordance with Section 409A and such other rules and
procedures established by the Administrator. Any such future
cash compensation that the grantee elects to defer shall be
converted to a fixed number of Restricted Stock Units based on
the Fair Market Value of Stock on the date the compensation
would otherwise have been paid to the grantee if such payment
had not been deferred as provided herein. The Administrator
shall have the sole right to determine whether and under what
circumstances to permit such elections and to impose such
limitations and other terms and conditions thereon as the
Administrator deems appropriate. Any Restricted Stock Units that
are elected to be received in lieu of cash compensation shall be
fully vested, unless otherwise provided in the Award.
(c)
Rights as a Stockholder
. A grantee
shall have the rights as a stockholder only as to shares of
Stock acquired by the grantee upon settlement of Restricted
Stock Units; provided, however, that the grantee may be credited
with Dividend Equivalent Rights with respect to the phantom
stock units underlying his Restricted Stock Units, subject to
such terms and conditions as the Administrator may determine.
(d)
Termination
. Except as may otherwise
be provided by the Administrator either in the Award agreement
or, subject to Section 16 below, in writing after the Award
is issued, a grantees right in all Restricted Stock Units
that have not vested shall automatically terminate upon the
grantees termination of employment (or cessation of
service relationship) with the Company and its Subsidiaries for
any reason.
SECTION 9.
UNRESTRICTED STOCK AWARDS
(a)
Grant or Sale of Unrestricted
Stock
. The Administrator may, in its sole
discretion, grant (or sell at a purchase price determined by the
Administrator) an Unrestricted Stock Award to any grantee,
pursuant to which such grantee may receive shares of Stock free
of any restrictions (Unrestricted Stock) under the
Plan. Unrestricted Stock Awards may be granted or sold as
described in the preceding sentence in respect of past services
or other valid consideration, or in lieu of any cash
compensation due to such participant. The aggregate number of
shares of Stock issuable pursuant to this Section 9, when
combined with the number of shares of underlying unvested Stock
Options accelerated pursuant to Section 2(b)(v)
other
than by reason of, or in connection with, any death, disability,
retirement, employment termination, or Change of Control
, is
limited to ten percent (10%) of the maximum number of shares of
Stock reserved and available for issuance under the Plan
pursuant to Section 3(a), as amended.
(b)
Elections to Receive Unrestricted Stock in Lieu of
Compensation
. Upon the request of a grantee and
with the consent of the Administrator, each grantee may,
pursuant to an advance written election delivered to the Company
no later than the date specified by the Administrator, receive a
portion of the cash compensation otherwise due to such grantee
in the form of shares of Unrestricted Stock (valued at Fair
Market Value on the date or dates the cash compensation would
otherwise be paid) either currently or on a deferred basis.
(c)
Restrictions on Transfers
. The right
to receive shares of Unrestricted Stock on a deferred basis may
not be sold, assigned, transferred, pledged or otherwise
encumbered, other than by will or the laws of descent and
distribution.
B-9
SECTION 10.
PERFORMANCE SHARE AWARDS
(a)
Nature of Performance Share Awards
. A
Performance Share Award is an Award entitling the recipient to
acquire shares of Stock upon the attainment of specified
performance goals. The Administrator may make Performance Share
Awards independent of or in connection with the granting of any
other Award under the Plan. The Administrator in its sole
discretion shall determine whether and to whom Performance Share
Awards shall be made, the performance goals, the periods during
which performance is to be measured (which in the aggregate
shall not be less than one (1) year), and all other
limitations and conditions.
(b)
Restrictions of Transfer
. Performance
Share Awards, and all rights with respect to such Awards may not
be sold, assigned, transferred, pledged or otherwise encumbered.
(c)
Rights as a Stockholder
. A grantee
receiving a Performance Share Award shall have the rights of a
stockholder only as to shares actually received by the grantee
under the Plan and not with respect to shares subject to the
Award but not actually received by the grantee. A grantee shall
be entitled to receive a stock certificate evidencing the
acquisition of shares of Stock under a Performance Share Award
only upon satisfaction of all conditions specified in the
Performance Share Award agreement (or in a performance plan
adopted by the Administrator).
(d)
Termination
. Except as may otherwise
be provided by the Administrator either in the Award agreement
or, subject to Section 16 below, in writing after the Award
agreement is issued, a grantees rights in all Performance
Share Awards shall automatically terminate upon the
grantees termination of employment (or cessation of
service relationship) with the Company and its Subsidiaries for
any reason.
SECTION 11.
PERFORMANCE-BASED AWARDS TO
COVERED EMPLOYEES
(a)
Performance-Based Awards
. A
Performance-Based Award means any Restricted Stock Award,
Restricted Stock Units, or Performance Share Award granted to a
Covered Employee that is intended to qualify as
performance-based compensation under
Section 162(m) of the Code and any regulations appurtenant
thereto. Any employee or other key person providing services to
the Company and who is selected by the Administrator may be
granted one or more Performance-Based Awards in the form of a
Restricted Stock Award, Restricted Stock Units or Performance
Share Awards payable upon the attainment of Performance Goals
that are established by the Administrator and related to one or
more of the Performance Criteria, in each case on a specified
date or dates or over any period or periods determined by the
Administrator. The Administrator shall define in an objective
fashion the manner of calculating the Performance Criteria it
selects to use for any Performance Cycle. Depending on the
Performance Criteria used to establish such Performance Goals,
the Performance Goals may be expressed in terms of overall
company performance or the performance of a division, business
unit, or an individual. The Administrator, in its discretion,
may adjust or modify the calculation of Performance Goals for
such Performance Cycle in order to prevent the dilution or
enlargement of the rights of an individual (i) in the event
of, or in anticipation of, any unusual or extraordinary
corporate item, transaction, event or development, (ii) in
recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company, or the financial
statements of the Company, or (iii) in response to, or in
anticipation of, changes in applicable laws, regulations,
accounting principles, or business conditions provided however,
that the Administrator may not exercise such discretion in a
manner that would increase the Performance-Based Award granted
to a Covered Employee. Each Performance-Based Award shall comply
with the provisions set forth below.
(b)
Grant of Performance-Based
Awards
. With respect to each Performance-Based
Award granted to a Covered Employee, the Administrator shall
select, within the first 90 days of a Performance Cycle
(or, if shorter, within the maximum period allowed under
Section 162(m) of the Code) the Performance Criteria for
such grant, and the Performance Goals with respect to each
Performance Criterion (including a threshold level of
performance below which no amount will become payable with
respect to such Award). Each Performance-Based Award will
specify the amount payable, or the formula for determining the
amount payable, upon achievement of the various applicable
performance targets. The Performance Criteria established by the
Administrator may be (but need not be) different for each
Performance Cycle and different Performance Goals may be
applicable to Performance-Based Awards to different Covered
Employees.
B-10
(c)
Payment of Performance-Based
Awards
. Following the completion of a Performance
Cycle, the Administrator shall meet to review and certify in
writing whether, and to what extent, the Performance Goals for
the Performance Cycle have been achieved and, if so, to also
calculate and certify in writing the amount of the
Performance-Based Awards earned for the Performance Cycle. The
Administrator shall then determine the actual size of each
Covered Employees Performance-Based Award, and, in doing
so, may reduce or eliminate the amount of the Performance-Based
Award for a Covered Employee if, in its sole judgment, such
reduction or elimination is appropriate.
(d)
Maximum Award Payable
. The maximum
Performance-Based Award payable to any one Covered Employee
under the Plan for a Performance Cycle is 200,000 shares of
Stock (subject to adjustment as provided in Section 3(c)
hereof).
SECTION 12.
DIVIDEND EQUIVALENT RIGHTS
(a)
Dividend Equivalent Rights
. A
Dividend Equivalent Right is an Award entitling the recipient to
receive credits based on cash dividends that would be paid on
the shares of Stock specified in the Dividend Equivalent Right
(or other award to which it relates) if such shares were held by
the recipient. A Dividend Equivalent Right may be granted
hereunder to any participant, as a component of another Award or
as a freestanding award. The terms and conditions of Dividend
Equivalent Rights shall be specified in the grant. Dividend
equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in
additional shares of Stock, which may thereafter accrue
additional equivalents. Any such reinvestment shall be at Fair
Market Value on the date of reinvestment or such other price as
may then apply under a dividend reinvestment plan sponsored by
the Company, if any. Dividend Equivalent Rights may be settled
in cash or shares of Stock or a combination thereof, in a single
installment or installments. A Dividend Equivalent Right granted
as a component of another Award may provide that such Dividend
Equivalent Right shall be settled upon exercise, settlement, or
payment of, or lapse of restrictions on, such other award, and
that such Dividend Equivalent Right shall expire or be forfeited
or annulled under the same conditions as such other award. A
Dividend Equivalent Right granted as a component of another
Award may also contain terms and conditions different from such
other award.
(b)
Interest Equivalents
. Any Award under
this Plan that is settled in whole or in part in cash on a
deferred basis may provide in the grant for interest equivalents
to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms
and conditions as may be specified by the grant.
SECTION 13.
TAX WITHHOLDING
(a)
Payment by Grantee
. Each grantee
shall, no later than the date as of which the value of an Award
or of any Stock or other amounts received thereunder first
becomes taxable, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any
Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such income. The Company and
its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind
otherwise due to the grantee. The Companys obligation to
deliver stock certificates to any grantee is subject to and
conditioned on tax obligations being satisfied by the grantee.
The Companys obligation to deliver stock certificates to
any grantee is subject to and is conditioned on tax obligations
being satisfied by the grantee.
(b)
Payment in Stock
. If provided in the
instrument evidencing an Award, the Company may elect to have
the minimum required tax withholding obligation satisfied, in
whole or in part, by (i) withholding from shares of Stock
to be issued pursuant to any Award a number of shares with an
aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or
(ii) allowing a grantee to transfer to the Company shares
of Stock owned by the grantee with an aggregate Fair Market
Value (as of the date the withholding is effected) that would
satisfy the withholding amount due.
B-11
SECTION 14.
SECTION 409A AWARDS
To the extent that any Award is determined to constitute
nonqualified deferred compensation within the
meaning of Section 409A (a 409A Award), the
Award shall be subject to such additional rules and requirements
as specified by the Administrator from time to time in order to
comply with Section 409A. In this regard, if any amount
under a 409A Award is payable upon a separation from
service (within the meaning of Section 409A) to a
grantee who is then considered a specified employee
(within the meaning of Section 409A), then no such payment
shall be made prior to the date that is the earlier of
(i) six months and one day after the grantees
separation from service, or (ii) the grantees death,
but only to the extent such delay is necessary to prevent such
payment from being subject to interest, penalties
and/or
additional tax imposed pursuant to Section 409A. Further,
the settlement of any 409A Award may not be accelerated or
postponed except to the extent permitted by Section 409A.
SECTION 15.
TRANSFER, LEAVE OF ABSENCE,
ETC
.
For purposes of the Plan, the following events shall not be
deemed a termination of employment:
(a) a transfer to the employment of the Company from a
Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another; or
(b) an approved leave of absence for military service or
sickness, or for any other purpose approved by the Company, if
the employees right to re-employment is guaranteed either
by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Administrator
otherwise so provides in writing.
SECTION 16.
AMENDMENTS AND TERMINATION
Subject to requirements of law or any stock exchange or similar
rules which would require a vote of the Companys
shareholders, the Board may, at any time, amend or discontinue
the Plan and the Administrator may, at any time, amend or cancel
any outstanding Award for the purpose of satisfying changes in
law or for any other lawful purpose, but no such action shall
adversely affect rights under any outstanding Award without the
holders consent. If and to the extent determined by the
Administrator to be required by the Code to ensure that
Incentive Stock Options granted under the Plan are qualified
under Section 422 of the Code or to ensure that
compensation earned under Awards qualifies as performance-based
compensation under Section 162(m) of the Code, if and to
the extent intended to so qualify, Plan amendments shall be
subject to approval by the Company stockholders entitled to vote
at a meeting of stockholders. Nothing in this Section 16
shall limit the Administrators authority to take any
action permitted pursuant to Section 3(c).
SECTION 17.
STATUS OF PLAN
With respect to the portion of any Award that has not been
exercised and any payments in cash, Stock or other consideration
not received by a grantee, a grantee shall have no rights
greater than those of a general creditor of the Company unless
the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the
Administrator may authorize the creation of trusts or other
arrangements to meet the Companys obligations to deliver
Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements
is consistent with the foregoing sentence.
SECTION 18.
CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this
Section 18:
(a) Each outstanding Stock Option shall automatically
become fully exercisable.
(b) Except as otherwise provided in the applicable Award
Agreement, conditions and restrictions on each outstanding
Restricted Stock Award, Restricted Stock Unit and Performance
Share Award will be removed.
B-12
(c) Change of Control shall mean the occurrence
of any one of the following events:
(i) any Person, as such term is used in
Sections 13(d) and 14(d) of the Act (other than the
Company, any of its Subsidiaries, or any trustee, fiduciary or
other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its
Subsidiaries), together with all affiliates and
associates (as such terms are defined in
Rule 12b-2
under the Exchange Act) of such person, shall become the
beneficial owner (as such term is defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing in excess of 50% of either
(A) the combined voting power of the Companys then
outstanding securities having the right to vote in an election
of the Companys Board of Directors (Voting
Securities) or (B) the then outstanding shares of
Stock of the Company (in either such case other than as a result
of an acquisition of securities directly from the
Company); or
(ii) persons who, as of the Effective Date, constitute the
Companys Board of Directors (the Incumbent
Directors) cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger
or similar transaction, to constitute at least a majority of the
Board, provided that any person becoming a director of the
Company subsequent to the Effective Date shall be considered an
Incumbent Director if such persons election was approved
by or such person was nominated for election by either
(A) a vote of at least a majority of the Incumbent
Directors or (B) a vote of at least a majority of the
Incumbent Directors who are members of a nominating committee
comprised, in the majority, of Incumbent Directors; but provided
further, that any such person whose initial assumption of office
is in connection with an actual or threatened election contest
relating to the election of members of the Board of Directors or
other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board, including by
reason of agreement intended to avoid or settle any such actual
or threatened contest or solicitation, shall not be considered
an Incumbent Director; or
(iii) the consummation of a consolidation, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a
Corporate Transaction); excluding, however, a
Corporate Transaction in which the stockholders of the Company
immediately prior to the Corporate Transaction, would,
immediately after the Corporate Transaction, beneficially own
(as such term is defined in
Rule 13d-3
under the Act), directly or indirectly, shares representing in
the aggregate more than 80% of the voting shares of the
corporation issuing cash or securities in the Corporate
Transaction (or of its ultimate parent corporation, if
any); or
(iv) the approval by the stockholders of any plan or
proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change of Control
shall not be deemed to have occurred for purposes of the
foregoing clause (i) solely as the result of an acquisition
of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the
proportionate number of shares of Voting Securities beneficially
owned by any person in excess of 50% or more of the combined
voting power of all then outstanding Voting Securities;
provided
,
however
, that if any person referred to
in this sentence shall thereafter become the beneficial owner of
any additional shares of Voting Securities (other than pursuant
to a stock split, stock dividend, or similar transaction or as a
result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns in excess
of 50% of the combined voting power of all then outstanding
Voting Securities, then a Change of Control shall be
deemed to have occurred for purposes of the foregoing clause (i).
SECTION 19.
GENERAL PROVISIONS
(a)
No Distribution; Compliance with Legal
Requirements
. The Administrator may require each
person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until
all applicable securities law and other legal and stock exchange
or similar requirements, whether located in the
United States or a foreign jurisdiction,
B-13
have been satisfied. The Administrator may require the placing
of such stop-orders and restrictive legends on certificates for
Stock and Awards as it deems appropriate.
No Award under the Plan shall be a nonqualified deferred
compensation plan, as defined in Code Section 409A, unless
such Award meets in form and in operation the requirements of
Code Section 409A(a)(2),(3), and (4).
(b)
Delivery of Stock Certificates
. Stock
certificates to grantees under this Plan shall be deemed
delivered for all purposes when the Company or a stock transfer
agent of the Company shall have mailed such certificates in the
United States mail, addressed to the grantee, at the
grantees last known address on file with the Company.
(c)
Other Compensation Arrangements; No Employment
Rights
. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be
either generally applicable or applicable only in specific
cases. The adoption of this Plan and the grant of Awards do not
confer upon any employee any right to continued employment with
the Company or any Subsidiary.
(d)
Trading Policy Restrictions
. Option
exercises and other Awards under the Plan shall be subject to
such companys insider trading policy, as in effect from
time to time.
(e)
Forfeiture of Awards under Sarbanes-Oxley
Act
. If the Company is required to prepare an
accounting restatement due to the material noncompliance of the
Company, as a result of misconduct, with any financial reporting
requirement under the securities laws, then, to the extent
required by law, any grantee who is one of the individuals
subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002 shall reimburse the Company for the
amount of any Award received by such individual under the Plan
during the
12-month
period following the first public issuance or filing with the
United States Securities and Exchange Commission, as the case
may be, of the financial document embodying such financial
reporting requirement.
(f)
Loans to Grantees
. The Company shall
have the authority to make loans to grantees of Awards hereunder
(including to facilitate the purchase of shares) and shall
further have the authority to issue shares for promissory notes
hereunder.
(g)
Designation of Beneficiary
. At the
discretion of the Administrator the instrument evidencing an
Award may permit the grantee to designate a beneficiary or
beneficiaries to exercise any Award or receive any payment under
any Award payable on or after the grantees death. Any such
designation shall be on a form provided for that purpose by the
Administrator and shall not be effective until received by the
Administrator. If no beneficiary has been designated by a
deceased grantee, or if the designated beneficiaries have
predeceased the grantee, the beneficiary shall be the
grantees estate.
SECTION 20.
EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of
a majority of the shares of Stock of the Company present or
represented and entitled to vote at a meeting of stockholders at
which a quorum is present or by written consent of the
stockholders. Subject to such approval by the stockholders,
Stock Options and other Awards may be granted hereunder on and
after adoption of this Plan by the Board.
SECTION 21.
GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, applied without regard to conflict of law
principles.
B-14
Appendix C
AMENDMENT
TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
FOURTH AMENDMENT TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF INVERNESS MEDICAL INNOVATIONS, INC.
PURSUANT TO SECTION 242
OF THE GENERAL CORPORATION LAW OF
THE STATE OF DELAWARE
Inverness Medical Innovations, Inc., a corporation organized and
existing under the laws of the State of Delaware (the
Corporation), hereby certifies:
The Board of Directors of the Corporation, by vote of its
members, duly adopted, pursuant to Section 242 of the
Delaware General Corporation Law (the DGCL), an
amendment to the Amended and Restated Certificate of
Incorporation of the Corporation filed with the Delaware
Secretary of State on November 19, 2001 and declared said
amendment to be advisable. The amendment was duly adopted by the
affirmative vote of the stockholders in accordance with the
provisions of Section 242 of the DGCL.
RESOLVED
: That the first paragraph of
Article IV of the Amended and Restated Certificate of
Incorporation of the Corporation be amended to read as follows:
The total number of shares of capital stock which the
Corporation shall have authority to issue is Two Hundred Five
Million (205,000,000) shares, of which (i) Two Hundred
Million (200,000,000) shares shall be a class designated as
common stock, par value $0.001 per share (the Common
Stock), and (ii) Five Million (5,000,000) shares
shall be a class designated as preferred stock, par value $0.001
per share (the Preferred Stock).
IN WITNESS WHEREOF, the Corporation has caused this Fourth
Amendment to the Certificate of Incorporation to be executed on
its behalf by its
[ ],
[ ],
as of this [ ] day of
[ ],
2010.
Inverness Medical Innovations, Inc.
By:
Name:
Title:
C-1
inverness medical innovations, inc.
C123456789
MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6
DQQQQM
000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
Electronic Voting Instructions
You can vote by Internet or telephone! Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to
vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on July
14, 2010.
Using a black ink pen, mark your votes with an X as shown in this example. Please do
not write outside the designated areas.
Vote by Internet
Log on to the Internet and go to
www.envisionreports.com/IMA2010
Follow the steps outlined on the secured website.
Vote by telephone
Call toll free 1-800-652-VOTE (8683) within the USA,
US territories & Canada any time on a touch tone
telephone. There is NO CHARGE to you for the call.
Follow the instructions provided by the recorded message.
Annual Meeting Proxy Card
1234 5678 9012 345
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH
AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proposals The Board of Directors recommends a vote
FOR
all the nominees listed
and
FOR
Proposals 2-4.
1. Election of Class III Directors to serve until the 2013 annual meeting of
stockholders:
For Withhold For Withhold For Withhold
02 David Scott, Ph.D.
03 Peter Townsend
01 Robert P.
Khederian 04 Eli
Y. Adashi, M.D.
2. Approval of an amendment to Inverness Medical Innovations, Inc.s Amended and Restated
Certificate of Incorporation, as amended, to change the name of the Company.
4. Approval of an amendment to Inverness Medical Innovations, Inc.s Amended and Restated
Certificate of Incorporation, as amended, to increase the number of authorized shares of
common stock by 50,000,000 from 150,000,000 to 200,000,000.
For Against Abstain
3. Approval of the Inverness Medical Innovations, Inc. 2010 Stock Option and Incentive Plan.
In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the meeting.
For Against Abstain
Non-Voting Items
Change of Address Please print new address below.
Authorized Signatures This section must be completed for your vote to be counted. Date
and Sign Below
Please sign this proxy exactly as names appear hereon. When shares are held by joint tenants,
both should sign. When signing as an attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign in partnership by authorized person.
Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box.
Signature 2 Please keep signature within the box.
C 1234567890 JNT
1UPX 0257561
MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MRASAMPLEAND MRASAMPLEAND
MRASAMPLEANDMRASAMPLEANDMRASAMPLEAND MRASAMPLEAND MRASAMPLEAND MRASAMPLEAND
|
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
inverness medical innovations,inc.
Proxy Inverness Medical Innovations, Inc.
51 SAWYER ROAD, SUITE 200 WALTHAM,
MASSACHUSETTS 02453
Proxy For Annual Meeting of Stockholders To Be Held
July 14, 2010 This Proxy is Solicited on Behalf of the
Board of Directors
The undersigned hereby appoints RON ZWANZIGER and PAUL T. HEMPEL, and each of them acting
singly, proxies with full power of substitution in each of them, in the name, place and stead of
the undersigned, to vote all shares of the voting stock of Inverness Medical Innovations, Inc.
which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Inverness
Medical Innovations, Inc. to be held on July 14, 2010 at 12:30 P.M. at the Companys Corporate
Headquarters, 51 Sawyer Road, Suite 200, Waltham, MA 02453, or any adjournment or postponement
thereof, upon the matters set forth on the reverse side.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON THE REVERSE SIDE; IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS LISTED ON THE REVERSE
SIDE.
(Continued and to be voted on reverse side.)
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