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
Filed by the Registrant x Filed by a party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement | |
¨ | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
x | Definitive Proxy Statement | |
¨ | Definitive Additional Materials | |
¨ | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
Alere 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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¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
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(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):
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(4) | Date Filed:
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June 12, 2015
Dear Fellow Stockholder:
You are cordially invited to attend Alere Inc.s Annual Meeting of Stockholders on Wednesday, July 22, 2015 at 3:00 p.m., local time, at the offices of Foley Hoag LLP located at 155 Seaport Boulevard, Boston, Massachusetts 02210.
In addition to the matters described in the attached proxy statement, after the Annual Meeting we will report on our activities for our fiscal year ended December 31, 2014. You will have an opportunity to ask questions and to meet our 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 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.
Thank you for your continued support of Alere. For those of you who plan to visit with us in person at the Annual Meeting, we look forward to seeing you.
Cordially,
Gregg J. Powers
Chairman of the Board
This proxy statement and the form of proxy are first being sent or given to stockholders on or about June 12, 2015 pursuant to rules adopted by the Securities and Exchange Commission.
ALERE INC.
51 Sawyer Road, Suite 200
Waltham, Massachusetts 02453
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: | Wednesday, July 22, 2015 | |
Time: | 3:00 p.m., local time | |
Place: | Foley Hoag LLP Seaport West 155 Seaport Boulevard Boston, Massachusetts 02210 |
Purpose:
We are holding this meeting to:
1. | Vote upon the election of directors; |
2. | Approve amendments to our 2010 Stock Option and Incentive Plan to increase the number of shares of common stock available for issuance thereunder by 7,000,000, from 9,153,663 to 16,153,663 and to decrease the fungible share ratio from 3-to-1 to 2-to-1; |
3. | Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2015; |
4. | Hold an advisory vote on executive compensation; and |
7. | Conduct such other business as may properly come before the Annual Meeting and at any adjournment or postponement thereof. |
The Company cordially invites all stockholders to attend the Annual Meeting in person. You may vote at the Annual Meeting and at any adjournment or postponement thereof if you were a stockholder of record at the close of business on June 5, 2015. We will begin mailing the Notice of Internet Availability of Proxy Materials on or before June 12, 2015. Our proxy materials, including this proxy statement and our 2014 Annual Report, which includes financial statements for the year ended December 31, 2014, will also be available on or before June 12, 2015 via the Internet on the Investor Relations page of our corporate website, www.alere.com, under the heading Annual Meetings & Reports and on the website referred to in the Notice of Internet Availability of Proxy Materials.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE PROPOSALS PRESENTED TO YOU IN THIS PROXY STATEMENT.
YOUR VOTE IS IMPORTANT. Please promptly vote your shares, as soon as possible, 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, regardless of whether you plan to personally attend the Annual Meeting.
Ellen Chiniara, Esq.
Secretary
June 12, 2015
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Summary of the 2010 Stock Option and Incentive Plan, as Amended |
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PROPOSAL 3RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
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Employment Agreement and Potential Payments upon Termination or Change-in-Control |
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
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APPENDIX A: ALERE INC. 2010 STOCK OPTION AND INCENTIVE PLAN, AS PROPOSED TO BE AMENDED |
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June 12, 2015
ALERE 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 Alere Inc. for use at our 2015 Annual Meeting of Stockholders (the Annual Meeting) to be held on Wednesday, July 22, 2015 at 3:00 p.m., local time, at the offices of Foley Hoag LLP located at 155 Seaport Boulevard, Boston, Massachusetts, 02210, and at any adjournments or postponements of the annual meeting. References in this proxy statement to us, we, our and Company refer to Alere Inc., except where otherwise indicated, such as in the Compensation Committee Report and the 2014 Audit Committee Report.
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Proposal 1:
Election of Directors
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Proposal 2:
Approval of Amendments to the 2010 Stock Option and Incentive Plan to Increase the Number of Shares Available for Issuance thereunder and to Decrease the Fungible Share Ratio
Proposal 3:
Ratification of Selection of PricewaterhouseCoopers LLP as Our Independent Registered Public Accounting Firm
Proposal 4:
Advisory Vote on Executive Compensation
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The Board of Directors Voting Recommendations
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Election of Directors
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Approval of Amendments to Increase the Number of Shares of Common Stock Available for Issuance under the 2010 Stock Option and Incentive Plan and to Decrease the Fungible Share Ratio
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Ratification of Selection of Independent Registered Public Accounting Firm
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Advisory Vote on Executive Compensation
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Information Regarding Directors and Executive Officers
The following table sets forth certain information with respect to our director nominees and executive officers. For biographical information regarding directors nominated for election at the 2015 Annual Meeting, see Proposal 1Election of Directors beginning on page 9 of this proxy statement. This information has been furnished by the respective individuals.
Name |
Age | Position | ||||
Namal Nawana |
44 | Director, Chief Executive Officer and President | ||||
James Hinrichs |
47 | Chief Financial Officer, Executive Vice President | ||||
David Teitel |
51 | Senior Vice President | ||||
John Bridgen, Ph.D. |
68 | Senior Vice President, Business Development | ||||
Ellen Chiniara |
56 | Senior Vice President, General Counsel, Chief Ethics and Compliance Officer and Secretary | ||||
Daniella Cramp |
41 | Global President, Cardiometabolic | ||||
Carla Flakne |
61 | Vice President, Chief Accounting Officer | ||||
Mark Gladwell |
40 | Senior Vice President, Global Operations | ||||
Melissa Guerdan |
41 | Senior Vice President, Global Quality and Regulatory Assurance | ||||
Robert Hargadon |
58 | Senior Vice President, Global Human Resources | ||||
Sanjay Malkani |
45 | Global President, Toxicology | ||||
Avi Pelossof |
52 | Global President, Infectious Disease | ||||
Renuka Uppaluri |
44 | Senior Vice President, Global Research and Development | ||||
Gregg J. Powers |
52 | Chairman of the Board | ||||
Håkan Björklund, Ph.D. |
59 | Director | ||||
Geoffrey S. Ginsburg, M.D., Ph.D. |
58 | DirectorNominee | ||||
Carol R. Goldberg |
84 | Director | ||||
John F. Levy |
68 | Director | ||||
Brian A. Markison |
55 | Director | ||||
Thomas McKillop, Ph.D. |
72 | Director | ||||
John A. Quelch, C.B.E., D.B.A. |
63 | Director | ||||
James Roosevelt, Jr. |
69 | Director |
Executive Officers Who Are Not Directors
Jim Hinrichs joined us as Executive Vice President and Chief Financial Officer in April 2015. Before joining us, Mr. Hinrichs served as Chief Financial Officer at CareFusion Corp., a global medical technology corporation, from December 2010 until Becton Dickinson acquired CareFusion in March 2015. Prior to that role, Mr. Hinrichs served in various roles at CareFusion, including Senior Vice President of Global Customer Support and Corporate Controller from January 2009 to January 2010. Mr. Hinrichs joined Cardinal Health in 2004 and served in a variety of roles, including Executive Vice President and Controller, and Chief Financial Officer of the Clinical and Medical Products segment and Healthcare Supply Chain Services segment prior to the spin-off of CareFusion from Cardinal Health in August 2009. Before joining Cardinal Health in 2004, Mr. Hinrichs compiled 12 years of finance and marketing experience at Merck & Co. and SangStat Medical Corporation.
David Teitel has served as our Senior Vice President since April 2015. Mr. Teitel previously served as our Chief Financial Officer, Vice President and Treasurer from December 2006 to April 2015. Mr. Teitel has over 25 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.
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and Deknatel Snowden Pencer, Inc., a manufacturer of specialty surgical instruments. Mr. Teitel joined our Company in December 2003 as Director of Finance Operations and assumed the title Vice President, Finance in December 2004.
John Bridgen, Ph.D. has served as Senior Vice President, Business Development since July 2010, after serving as our Vice President, Business Development from June 2006 to July 2010. He served as our Vice President, Strategy from September 2005 to June 2006. 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.
Ellen Chiniara serves as Senior Vice President, General Counsel, Chief Ethics and Compliance Officer and Secretary and is responsible for managing legal, compliance and government affairs for our Company. Ms. Chiniara joined us in October 2006 as General Counsel, Professional Diagnostics and Assistant Secretary and became our Vice President and General Counsel in May 2007, Secretary in May 2010 and our Senior Vice President and Chief Ethics and Compliance Officer in July 2014. 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 where she focused on disease management and healthcare information technology. Prior to 1994, Ms. Chiniara was a partner with Hale and Dorr (now WilmerHale).
Daniella Cramp has served as Global President of our cardiometabolic business unit since January 2014. In this role she focuses on diagnostic products primarily marketed into hospitals and our cardiovascular and diabetes diagnostics and health management solutions. Previously, Ms. Cramp served as Global President of our chronic care business unit from March 2013 to January 2014 and as the Vice President of our cardiovascular business unit from September 2007 to March 2013. Ms. Cramp joined our Company in June 2007 upon our acquisition of Biosite Incorporated. Ms. Cramp served as the director of marketing for Biosite from 2004 to 2007. Prior to that, Ms. Cramp was the director of Biosites physician office segment where she initiated Biosites entry into the outpatient setting with its diagnostic platform, Triage. Ms. Cramp also served as the product director for the launch of the Triage BNP Test, the worlds first blood test for heart failure diagnosis. Prior to joining Biosite, Ms. Cramp worked in the pharmaceutical industry for Astra Merck and later AstraZeneca from 1994 to 2000 in various sales and marketing roles supporting cardiovascular and gastrointestinal pharmaceutical products.
Carla Flakne has served as Vice President, Chief Accounting Officer since August 2013 and is responsible for overseeing our accounting operations and financial reporting. Ms. Flakne joined us as Corporate Controller in November 2005 and became Vice President, Corporate Controller in December 2006. She has over 27 years of public and private company financial accounting experience, including six years of experience at a public accounting firm. Ms. Flakne was Corporate Controller for NaviSite, Inc. and Signal Technology Corporation prior to joining Alere and previously held various finance and accounting positions of increasing responsibility with PictureTel Corporation and AMP Incorporated. Ms. Flakne is a Certified Public Accountant.
Mark Gladwell was appointed Senior Vice President, Global Operations in January 2015. Previously, he served as Vice President of Operations for North America, Europe, Middle East and Africa since January 2014. Mr. Gladwell joined Alere in 2001 and has served in various roles since, including Vice President of Operations for North America from September 2011 to December 2013, and Vice President of Quality and Technical Service from 2007 to 2010. Before joining Alere, Mr. Gladwell held operations, quality and project leadership positions with Johnson & Johnson, Agfa Gavert and DuPont, culminating in more than 18 years of experience in manufacturing high-volume, high-technology in-vitro diagnostics and medical devices.
Melissa Guerdan has served as Senior Vice President, Global Quality and Regulatory since July 2014. She joined Alere in August 2012 as Vice President, Global Quality Assurance and became Vice President, Global Quality and Regulatory in October 2013. Prior to coming to Alere, Ms. Guerdan was Vice President of Quality
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Operations for Covidiens Pharmaceuticals business from March 2008 to August 2012. In this capacity, she was responsible for leading quality and compliance across 11 global manufacturing facilities producing and distributing products ranging from urological imaging systems, contrast media/delivery systems, nuclear medicine products, and specialty generic pharmaceuticals. Prior to that, Ms. Guerdan served as Director of Quality for Baxters Renal and Medication Delivery businesses from 2004 to 2008. In addition to these key leadership roles, Ms. Guerdan also held various quality positions at Pfizer and Aventis Behring.
Robert Hargadon joined us as Vice President, Global Human Resources, formerly referred to as Global Culture and Performance, in October 2010 and was promoted to Senior Vice President, Global Human Resources in July 2014. He has over 30 years of experience in human resources, leadership and organization development. Mr. Hargadon served as Vice President, Human Resources at drugstore.com, an online pharmacy, from November 2006 through October 2010. Prior to that, Mr. Hargadon was General Manager, Corporate Learning and Development at Microsoft from September 2005 to April 2006 and held various human resources leadership positions at Boston Scientific Corporation, a medical device manufacturer, from 1997 to 2005, including Vice President of International Human Resources and Vice President, Leadership Development from September 1997 to June 2005. Mr. Hargadon served as Vice President, Learning and Development at Fidelity Investments from 1993 to 1997. Mr. Hargadon also had 15 years of experience with the consulting firms Novations Group, Inc. and Harbridge House, which was acquired by PricewaterhouseCoopers LLP.
Sanjay Malkani has served as Global President, Toxicology since February 2013. Previously, he led our Global Toxicology unit as Vice President and has been directly responsible for that units primary US and European operations since January 2011. Mr. Malkani joined our Company as Vice President of the Toxicology Strategic Business Unit in February 2008, with responsibility for the Global Toxicology growth strategy and direct management of the US Toxicology operations. Mr. Malkani joined us from Roche Diagnostics, Inc., where he served as Vice President of Marketing for US Point-of-Care Diagnostics during 2006 to 2007, Vice President of Marketing for US Diabetes Care Hospital in 2005, and held various successive sales and marketing roles in the U.S. Diabetes Care business between 2001 and 2005. Prior to 2001, Mr. Malkani held various commercial positions at The Cambridge Group, Inc. and several start-up technology companies. Prior to completing his MBA at the Kellogg Graduate School of Management, Mr. Malkani held several sales positions at The Dow Chemical Company, Inc., where he started his career in 1991.
Avi Pelossof was appointed Global President of our infectious disease business unit in March 2013, after serving as Vice President of our infectious disease business unit from February 2008 to February 2013. Mr. Pelossof joined Alere as Vice President, Blood-Borne Pathogens in January 2007 and served in that role until January 2008. Mr. Pelossof has more than 20 years of experience in diagnostics, global health and international finance, including senior roles at Chembio Diagnostic Systems, Inc., a manufacturer of diagnostic tests for infectious diseases, and Citigroup.
Renuka Uppaluri, Ph.D. joined us as Senior Vice President, Global R&D in February 2015. Dr. Uppaluri brings with her a wealth of experience in leading R&D organizations, most recently serving as Vice President, Global R&D at Covidien, from September 2009 to February 2015 where she led her respiratory and monitoring solutions R&D team to several substantive product launches. Before Covidien, Dr. Uppaluri spent 10 years at GE Healthcare, starting as a systems engineer and ending as the General Manager of the Global Diagnostics X-Ray Imaging division. Dr. Uppaluri received a BE degree from the University of Mumbai and her Ph.D. from the University of Iowa.
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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 Discussion and Analysis beginning on page 29); and |
| all of our current directors, director nominees and executive officers as a group. |
Unless otherwise stated, beneficial ownership is calculated as of April 15, 2015. 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 | ||||||||
Name and Address of Beneficial Owner(1) |
Amount and Nature of Beneficial Ownership(2) |
Percent of Class(3) |
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EdgePoint Investment Group Inc.(4) |
8,166,124 | 9.60 | % | |||||
Invesco Ltd.(5) |
7,172,439 | 8.43 | % | |||||
FMR LLC(6) |
7,019,799 | 8.25 | % | |||||
Scopia Capital Management LP(7) |
5,404,190 | 6.35 | % | |||||
The Vanguard Group(8) |
4,634,372 | 5.45 | % | |||||
Ron Zwanziger(9) |
3,106,393 | 3.65 | % | |||||
John F. Levy(10) |
250,457 | * | ||||||
Gregg Powers(11) |
198,080 | * | ||||||
Daniella Cramp(12) |
149,784 | * | ||||||
Avi Pelossof(13) |
146,704 | * | ||||||
Carol R. Goldberg(14) |
145,570 | * | ||||||
Sanjay Malkani(15) |
145,439 | * | ||||||
Namal Nawana(16) |
117,441 | * | ||||||
David Teitel(17) |
97,396 | * | ||||||
John A. Quelch, D.B.A.(18) |
94,078 | * | ||||||
James Roosevelt, Jr.(19) |
75,495 | * | ||||||
Håkan Björklund, Ph.D.(20) |
16,240 | * | ||||||
Stephen MacMillan(21) |
16,240 | * | ||||||
Brian Markison(22) |
16,240 | * | ||||||
Thomas McKillop, Ph.D.(23) |
16,240 | * | ||||||
Regina Benjamin, M.D.(24) |
8,177 | * | ||||||
Geoffrey S. Ginsburg, M.D., Ph.D |
0 | * | ||||||
All current executive officers and directors (22 persons)(25) |
1,643,622 | 1.93 | % |
* | 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 dispositive power with respect to the shares beneficially owned by them. |
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(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, warrants and convertible securities held by such person, group, or entity that were exercisable within 60 days after April 15, 2015, but excludes shares of stock underlying options, warrants and convertible securities held by any other person, group or entity. |
(4) | This information is based on information contained in a Schedule 13G/A filed with the SEC on February 4, 2015 by EdgePoint Investment Group Inc., Cymbria Corporation, EdgePoint Canadian Growth & Income Portfolio, EdgePoint Canadian Portfolio, EdgePoint Global Growth & Income Portfolio, EdgePoint Global Portfolio and St. Jamess Place Global Equity Unit Trust, which reported that they had shared voting and dispositive power with respect to 8,166,124, 760,992, 406,133, 396,195, 1,231,595, 3,504,015 and 1,867,194 shares, respectively. The address provided therein for these reporting persons is 150 Bloor Street West, Suite 500, Toronto, Ontario M5S 2X9, Canada. |
(5) | This information is based on information contained in a Schedule 13G/A filed with the SEC on January 30, 2015 by Invesco Ltd. Invesco Ltd. reported that it has (i) sole voting power with respect to 7,111,222 shares and (ii) sole dispositive power with respect to 7,172,439 shares. The address provided therein for Invesco Ltd. is 1555 Peachtree Street NE; Atlanta, GA 30309. |
(6) | This information is based on information contained in a Schedule 13G/A filed with the SEC on February 13, 2015 by FMR LLC,Edward C. Johnson III and Abigail P. Johnson. Each of FMR LLC, Mr. Johnson and Mrs. Johnson reported that it, he or she has (i) in the case of FMR LLC only, sole voting power with respect to 518,287 shares and (ii) sole dispositive power with respect to 7,019,799 shares. The address provided therein for FMR LCC, Mr. Johnson and Mrs. Johnson is 245 Summer Street, Boston, MA 02210. |
(7) | This information is based on information contained in a Schedule 13G/A filed with the SEC on February 17, 2015 by Scopia Capital Management LP, Matthew Sirovich and Jeremy Mindich, which reported that they had shared voting and dispositive power with respect to 5,404,190 shares. The address provided therein for Scopia Capital Management LP, Matthew Sirovich and Jeremy Mindich is 152 West 57 th Street, 33 rd Floor, New York, NY 10019. |
(8) | This information is based on information contained in a Schedule 13G/A filed with the SEC on February 11, 2015 by The Vanguard Group. The Vanguard Group reported that it has (i) sole voting power with respect to 53,600 shares, (ii) sole dispositive power with respect to 4,588,172 shares and (iii) shared dispositive power with respect to 46,200 shares. The address provided therein for The Vanguard Group is 100 Vanguard Blvd, Malvern, PA 19355. |
(9) | This information is based on information contained in a Schedule 13D/A filed with the SEC on October 7, 2014 by Ron Zwanziger, Janet M. Zwanziger, Zwanziger Family 2004 Irrevocable Trust, Zwanziger Family 2012 Irrevocable Family Trust, Zwanziger Family 2009 Irrevocable Trust, Zwanziger Family Ventures LLC, The Ron Zwanziger Family Trust-1990, Ron Zwanziger 2004 Revocable Trust, David Scott, Ph.D. and Jerome F. McAleer, Ph.D. Each of Mr. Zwanziger and Mrs. Zwanziger reported that they had shared voting and dispositive power with respect to 3,106,393 shares. Zwanziger Family 2004 Irrevocable Trust, Zwanziger Family 2012 Irrevocable Family Trust, Zwanziger Family 2009 Irrevocable Trust, Zwanziger Family Ventures LLC, The Ron Zwanziger Family Trust-1990, and Ron Zwanziger 2004 Revocable Trust reported that they had sole voting and dispositive power with respect to 224,276, 472,193, 122,186, 1,466,696, 191,830 and 580,201 shares, respectively. |
(10) | Consists of 155,693 shares of common stock, and 94,764 shares of common stock underlying options exercisable within 60 days from April 15, 2015. Includes 1,007 shares of common stock owned by a charitable remainder unitrust of which Mr. Levy disclaims beneficial ownership. |
(11) | Consists of 46,000 shares of common stock owned directly by Mr. Powers,140,050 shares of common stock owned by clients of Private Capital Management, L.P. (PCM), of which Mr. Powers is Chairman and Chief Executive Officer and has trading authority, and 12,030 shares of common stock underlying options exercisable within 60 days of April 15, 2015. Mr. Powers disclaims beneficial ownership of the common shares owned by the clients of PCM. |
(12) | Consists of 6,450 shares of common stock and 143,334 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
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(13) | Consists of 4,655 shares of common stock and 142,049 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(14) | Consists of 81,807 shares of common stock and 63,763 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(15) | Consists of 6,787 shares of common stock and 138,652 shares of common stock underlying options exercisable within 60 days from April 15, 2015. Includes 565 shares of common stock owned indirectly by Mr. Malkanis spouse of which Mr. Malkani disclaims beneficial ownership. |
(16) | Consists of 5,903 shares of common stock and 111,538 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(17) | Consists of 5,201 shares of common stock and 92,195 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(18) | Consists of 9,780 shares of common stock and 84,298 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(19) | Consists of 4,444 shares of common stock and 71,051 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(20) | Consists of 16,240 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(21) | Consists of 16,240 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(22) | Consists of 16,240 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(23) | Consists of 16,240 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(24) | Consists of 8,177 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
(25) | Consists of 481,074 shares of common stock and 1,162,548 shares of common stock underlying options exercisable within 60 days from April 15, 2015. |
In addition, as of April 15, 2015, Mr. Powers directly owns 18,608 shares of our Series B preferred stock. Additionally, as of April 15, 2014, clients of PCM, of which Mr. Powers is Chairman and Chief Executive Officer and has trading authority, own 3,257 shares of our Series B preferred stock. Mr. Powers disclaims beneficial ownership of the Series B preferred stock owned by the clients of PCM. We are not aware that any of our directors or executive officers beneficially owns any other shares of Series B preferred stock.
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Compensation Discussion and Analysis
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Compensation of Executive Officers and Directors
Set forth below is information regarding the compensation of our named executive officers.
Summary Compensation Table. The following table sets forth information regarding the named executive officers compensation for the fiscal years 2014, 2013 and 2012. For our named executive officers, the amount of salary and bonus represented between 18% and 99% of the named executive officers total compensation for 2014.
Summary Compensation Table for 2014
Name and Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards ($)(1) |
Option Awards ($)(2) |
Non-equity Incentive Plan Compensation ($)(3) |
All Other Compensation ($)(4) |
Total Compensation ($) |
||||||||||||||||||||||||
Namal Nawana |
2014 | $ | 882,115 | | $ | 1,998,500 | $ | 1,798,886 | (5) | $ | 201,139 | $ | 4,440 | $ | 4,885,080 | |||||||||||||||||
Director, Chief Executive Officer and President |
2013 | $ | 784,615 | $ | 275,000 | | $ | 247,637 | (5) | | $ | 540 | $ | 1,307,792 | ||||||||||||||||||
2012 | $ | 3,077 | | $ | 2,020,700 | $ | 1,468,530 | | | $ | 3,492,307 | |||||||||||||||||||||
Avi Pelossof Global President, Infectious Disease |
2014 | $ | 486,346 | | $ | 709,000 | $ | 280,481 | (5) | $ | 124,203 | $ | 7,040 | $ | 1,607,070 | |||||||||||||||||
Daniella Cramp Global President, Cardiometabolic |
2014 | $ | 548,077 | | $ | 709,000 | $ | 280,481 | (5) | $ | 130,740 | $ | 5,944 | $ | 1,674,242 | |||||||||||||||||
Sanjay Malkani Global President, Toxicology |
2014 | $ | 650,000 | | $ | 709,000 | $ | 210,360 | (5) | $ | 130,740 | $ | 7,290 | $ | 1,707,390 | |||||||||||||||||
Ron Zwanziger |
2014 | $ | 578,750 | | | | | $ | 315 | $ | 579,065 | |||||||||||||||||||||
Former Chief Executive Officer |
2013 | $ | 954,808 | | | $ | 7,221,375 | | $ | 540 | $ | 8,176,723 | ||||||||||||||||||||
2012 | $ | 900,000 | | | $ | 2,940,000 | | $ | 1,080 | $ | 3,841,080 | |||||||||||||||||||||
David Teitel |
2014 | $ | 425,085 | | $ | 531,750 | $ | 210,360 | (5) | $ | 98,386 | $ | 8,306 | $ | 1,273,887 | |||||||||||||||||
Former Chief Financial Officer |
2013 | $ | 408,770 | | | $ | 123,819 | (5) | | $ | 8,190 | $ | 540,779 | |||||||||||||||||||
2012 | $ | 393,269 | | | $ | 73,353 | (5) | | $ | 8,580 | $ | 475,202 | ||||||||||||||||||||
(1) | These amounts represent the aggregate grant date fair value of restricted stock units awarded during 2014, and in the case of Mr. Nawana, in 2012 as well, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, CompensationStock Compensation (FASB ASC Topic 718), excluding estimated forfeitures. Under FASB ASC Topic 718, the grant date fair value of each restricted stock unit is equal to the closing price of our common stock on the grant date, or $39.97 per share for Mr. Nawanas 2014 award, $18.37 per share for Mr. Nawanas 2012 award, and $35.45 per share for the other named executive officers 2014 awards. |
(2) | These amounts represent the aggregate grant date fair value of stock option awards made during 2014, 2013 and 2012, respectively, calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures. See Note 14 of the notes to our consolidated financial statements included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2014 for a discussion of the relevant assumptions used in calculating these amounts. |
(3) | These amounts represent the amount of cash awards under our 2013 annual incentive plan that vested and were paid during 2014. These awards were payable in two equal annual installments in 2014 and 2015, subject to the recipients continued employment by us. The aggregate amount of each cash award is equal to |
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the appreciation, if any, of our stock price during 2013 multiplied by the number of shares subject to the performance options granted to the recipient for which the 2013 performance criteria were achieved. |
(4) | The amounts in this column include for 2014: (a) matching contributions we made to our defined contribution plans in the amounts of $3,900, $6,500, $5,404, $6,750 and $7,766 on behalf of Mr. Nawana, Mr. Pelossof, Ms. Cramp, Mr. Malkani and Mr. Teitel, respectively; and (b) life insurance premiums paid in the amounts of $540 on behalf of all named executive officers except Mr. Zwanziger, for whom the amount paid was $315. The amounts in this column include for 2013: (a) a matching contribution we made to our defined contribution plans in the amount of $7,650 on behalf of Mr. Teitel; and (b) life insurance premiums paid in the amounts of $540 on behalf of the named executive officers. The amounts in this column include for 2012: (a) a matching contribution we made to our defined contribution plans in the amounts of $7,500 on behalf of Mr. Teitel; and (b) life insurance premiums paid in the amounts of $1,080 on behalf of each of Messes. Zwanziger and Teitel. |
(5) | The grant date fair value of these stock options is based on our assessment, as of the grant date, of the probable outcome of applicable performance conditions. Assuming the highest possible level of achievement of the performance conditions, the grant date fair value would have been $1,807,473 and $252,690 for Mr. Nawana in 2014 and 2013, respectively; $286,205 for Mr. Pelossof in 2014; $286,205 for Ms. Cramp in 2014; $214,653 for Mr. Malkani in 2014; and $214,653, $126,346 and $74,850 for Mr. Teitel in 2014, 2013 and 2012, respectively. |
Grants of Plan-Based Awards. The following table sets forth certain information with respect to the grant of plan-based awards to the named executive officers in 2014.
Grants of Plan-Based Awards for 2014
Name |
Grant Date(1) |
Compensation Committee Approval Date(1) |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards Target (#) |
All
Other Stock Awards: Number of Shares of Stock or Units (#)(3) |
All
Other Option Awards: Number of Securities Underlying Options (#)(4) |
Exercise or Base Price of Option Awards ($ /Sh)(5) |
Grant Date Fair Value of Stock and Option Awards(6) |
||||||||||||||||||||||||||||
Shares Underlying Award (#)(2) |
Target ($)(2) |
|||||||||||||||||||||||||||||||||||
Namal Nawana |
2/28/2014 | 2/27/2014 | 30,000 | (2) | | | | | | |||||||||||||||||||||||||||
2/28/2014 | 2/27/2014 | | | 30,000 | (7) | | | $ | 36.74 | $ | 429,307 | |||||||||||||||||||||||||
10/31/2014 | 10/23/2014 | | | | | 100,000 | $ | 39.97 | $ | 1,378,165 | ||||||||||||||||||||||||||
10/31/2014 | 10/23/2014 | | | | 50,000 | | $ | | $ | 1,998,500 | ||||||||||||||||||||||||||
Avi Pelossof |
2/28/2014 | 2/27/2014 | 20,000 | (2) | | | | | | |||||||||||||||||||||||||||
2/28/2014 | 2/27/2014 | | | 20,000 | (7) | | | $ | 36.74 | $ | 286,205 | |||||||||||||||||||||||||
8/31/2014 | 8/28/2014 | | | | 20,000 | | $ | | $ | 709,000 | ||||||||||||||||||||||||||
Daniella Cramp |
2/28/2014 | 2/27/2014 | 20,000 | (2) | | | | | | |||||||||||||||||||||||||||
2/28/2014 | 2/27/2014 | | | 20,000 | (7) | | | $ | 36.74 | $ | 286,205 | |||||||||||||||||||||||||
8/31/2014 | 8/28/2014 | | | | 20,000 | | $ | | $ | 709,000 | ||||||||||||||||||||||||||
Sanjay Malkani |
2/28/2014 | 2/27/2014 | 15,000 | (2) | | | | | | |||||||||||||||||||||||||||
2/28/2014 | 2/27/2014 | | | 15,000 | (7) | | | $ | 36.74 | $ | 214,653 | |||||||||||||||||||||||||
8/31/2014 | 8/28/2014 | | | | 20,000 | | $ | | $ | 709,000 | ||||||||||||||||||||||||||
Ron Zwanziger |
N/A | | | | | | | $ | | $ | | |||||||||||||||||||||||||
David Teitel |
2/28/2014 | 2/27/2014 | 15,000 | (2) | | | | | | |||||||||||||||||||||||||||
2/28/2014 | 2/27/2014 | | | 15,000 | (7) | | | $ | 36.74 | $ | 214,653 | |||||||||||||||||||||||||
8/31/2014 | 8/28/2014 | | | | 15,000 | | $ | | $ | 531,750 |
(1) | The grant dates of the options for the named executive officers are in accordance with our option granting policy. Under this policy, grants of options approved by the Compensation Committee for existing employees shall be effective as of the next applicable Grant Date (except that any grants subject to |
40
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) | Amounts in these columns represent Cash Awards under our Annual Incentive Process, which were subject to performance conditions set forth in related Stock Option Awards. Under the terms of the Process, the executives were eligible to receive, upon satisfaction of applicable performance conditions and certification by the Compensation Committee, a Cash Award with a maximum value equal to the appreciation in the price of one share of our common stock during 2014 times the number of shares set forth in the table. Any cash value is payable in two equal installments in March 2015 and March 2016, subject to the executives continued employment on the date of payment. On February 25, 2015, the Compensation Committee certified the degree to which the performance conditions for the related Stock Option Awards had been satisfied and determined that the Cash Awards should be calculated as follows: Mr. Pelossof on the basis of 5,000 shares with an aggregate value of $9,000; Ms. Cramp on the basis of 5,000 shares with an aggregate value of $9,000; Mr. Malkani on the basis of 3,375 shares with an aggregate value of $6,075; and Mr. Teitel on the basis of 750 shares with an aggregate value of $1,350. When Mr. Nawana accepted his appointment as our CEO in October 2014, he voluntarily forfeited this award in lieu of other equity compensation. For more information regarding our Annual Incentive Process, including the performance conditions, see Compensation Discussion and Analysis beginning on page 29 of this proxy statement. |
(3) | All restricted stock unit awards were made under our 2010 Stock Option and Incentive Plan and were granted for no consideration. The terms of these awards provide for vesting and release in three equal annual installments, commencing on the first anniversary of the date of grant and conditioned upon the recipients continued employment with us on the applicable vesting date. |
(4) | All stock option awards were made under our 2010 Stock Option and Incentive Plan. 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 us on the applicable vesting date. The options generally expire on the tenth anniversary of the grant date or, if earlier, three months after the recipients employment terminates. |
(5) | The exercise price of the stock option awards is equal to the closing price of our common stock on the applicable Grant Date. |
(6) | These amounts represent the aggregate grant date fair value of restricted stock units and stock option awards granted during 2014, calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures. See Note 13 of the notes to our consolidated financial statements included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2014 for a discussion of the relevant assumptions used in calculating these amounts. For stock option awards subject to performance conditions, as described in note (7), the grant date fair value is based on our assessment, as of the grant date, of the probable outcome of applicable performance conditions. |
(7) | These amounts represent stock option awards under our Annual Incentive Process, which were subject to performance conditions as well as the vesting conditions described in note (4). On February 25, 2015, the Compensation Committee certified the degree to which the performance conditions had been satisfied and determined that the stock option awards for Mr. Pelossof would be eligible to vest on the basis of 5,000 shares; Ms. Cramp on the basis of 5,000 shares; Mr. Malkani on the basis of 3,375 shares; and Mr. Teitel on the basis of 750 shares. When Mr. Nawana accepted his appointment as our CEO in October 2014, he voluntarily forfeited this award in lieu of other equity compensation. For more information regarding our Annual Incentive Process, including the performance conditions, see Compensation Discussion and Analysis beginning on page 29 of this proxy statement. |
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Outstanding Equity Awards at Fiscal Year-End. The following table sets forth certain information with respect to outstanding options and stock awards held by the named executive officers at the end of 2014.
Outstanding Equity Awards at Fiscal Year-end for 2014
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#)(1) Unexercisable |
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) |
Option Exercise Price ($) |
Option Expiration Date(2) |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested(3)($) |
|||||||||||||||||||||
Namal Nawana |
| | | | | 100,000 | (4) | $ | 3,800,000 | (4) | ||||||||||||||||||
100,000 | 100,000 | | $ | 18.50 | 12-31-2022 | | | |||||||||||||||||||||
5,769 | 17,308 | | $ | 25.68 | 4-30-2023 | | | |||||||||||||||||||||
| 100,000 | | $ | 39.97 | 10-31-2024 | | | |||||||||||||||||||||
| | | | | 50,000 | (5) | $ | 1,900,000 | ||||||||||||||||||||
Avi Pelossof |
40,000 | | | $ | 38.70 | 1-01-2017 | | | ||||||||||||||||||||
10,000 | | | $ | 56.18 | 12-31-2017 | | | |||||||||||||||||||||
10,000 | | | $ | 19.15 | 10-31-2018 | | | |||||||||||||||||||||
2,500 | | | $ | 18.91 | 12-31-2018 | | | |||||||||||||||||||||
14,081 | | | $ | 35.58 | 6-30-2019 | | | |||||||||||||||||||||
5,000 | | | $ | 38.01 | 10-30-2019 | | | |||||||||||||||||||||
3,750 | 1,250 | | $ | 38.64 | 2-28-2021 | | | |||||||||||||||||||||
15,000 | 5,000 | | $ | 26.06 | 10-31-2021 | | | |||||||||||||||||||||
563 | 562 | | $ | 25.43 | 2-28-2022 | | | |||||||||||||||||||||
25,000 | 25,000 | | $ | 19.20 | 10-31-2022 | | | |||||||||||||||||||||
3,562 | 10,688 | | $ | 25.68 | 4-30-2023 | | | |||||||||||||||||||||
6,250 | 18,750 | | $ | 33.73 | 10-31-2023 | | | |||||||||||||||||||||
| | 20,000 | (6) | $ | 36.74 | 2-28-2024 | | | ||||||||||||||||||||
| | | | | 20,000 | (5) | $ | 760,000 | ||||||||||||||||||||
Daniella Cramp |
10,000 | | | $ | 48.14 | 8-31-2017 | | | ||||||||||||||||||||
15,000 | | | $ | 60.09 | 10-31-2017 | | | |||||||||||||||||||||
10,000 | | | $ | 19.15 | 10-31-2018 | | | |||||||||||||||||||||
2,500 | | | $ | 18.91 | 12-31-2018 | | | |||||||||||||||||||||
14,709 | | | $ | 35.58 | 6-30-2019 | | | |||||||||||||||||||||
15,000 | | | $ | 38.01 | 10-30-2019 | | | |||||||||||||||||||||
3,750 | 1,250 | | $ | 38.64 | 2-28-2021 | | | |||||||||||||||||||||
30,000 | 10,000 | | $ | 26.06 | 10-31-2021 | | | |||||||||||||||||||||
750 | 750 | | $ | 25.43 | 2-28-2022 | | | |||||||||||||||||||||
25,000 | 25,000 | | $ | 19.20 | 10-31-2022 | | | |||||||||||||||||||||
3,750 | 11,250 | | $ | 25.68 | 4-30-2023 | | | |||||||||||||||||||||
6,250 | 18,750 | | $ | 33.73 | 10-31-2023 | | | |||||||||||||||||||||
| | 20,000 | (6) | $ | 36.74 | 2-28-2024 | | | ||||||||||||||||||||
| | | | | 20,000 | (5) | $ | 760,000 |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#)(1) Unexercisable |
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) |
Option Exercise Price ($) |
Option Expiration Date(2) |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested(3)($) |
|||||||||||||||||||||
Sanjay Malkani |
35,000 | | | $ | 44.64 | 2-12-2018 | | | ||||||||||||||||||||
5,000 | | | $ | 19.15 | 10-31-2018 | | | |||||||||||||||||||||
2,500 | | | $ | 18.91 | 12-31-2018 | | | |||||||||||||||||||||
6,133 | | | $ | 35.58 | 6-30-2019 | | | |||||||||||||||||||||
10,000 | | | $ | 38.01 | 10-30-2019 | | | |||||||||||||||||||||
3,750 | 1,250 | | $ | 38.64 | 2-28-2021 | | | |||||||||||||||||||||
7,500 | 2,500 | | $ | 37.14 | 4-30-2021 | | | |||||||||||||||||||||
22,500 | 7,500 | | $ | 26.06 | 10-31-2021 | | | |||||||||||||||||||||
1,950 | 1,950 | | $ | 25.43 | 2-28-2022 | | | |||||||||||||||||||||
25,000 | 25,000 | | $ | 19.20 | 10-31-2022 | | | |||||||||||||||||||||
3,750 | 11,250 | | $ | 25.68 | 4-30-2023 | | | |||||||||||||||||||||
6,250 | 18,750 | | $ | 33.73 | 10-31-2023 | | | |||||||||||||||||||||
| | 15,000 | (6) | $ | 36.74 | 2-28-2024 | | | ||||||||||||||||||||
| | | | | 20,000 | (5) | $ | 760,000 | ||||||||||||||||||||
Ron Zwanziger |
| | | | | | | |||||||||||||||||||||
Dave Teitel |
5,000 | | | $ | 34.40 | 10-04-2016 | | | ||||||||||||||||||||
20,000 | | | $ | 38.10 | 12-15-2016 | | | |||||||||||||||||||||
20,000 | | | $ | 48.14 | 8-31-2017 | | | |||||||||||||||||||||
23,581 | | | $ | 35.58 | 6-30-2019 | | | |||||||||||||||||||||
10,000 | | | $ | 38.01 | 10-30-2019 | | | |||||||||||||||||||||
7,500 | 2,500 | | $ | 26.06 | 10-31-2021 | | | |||||||||||||||||||||
188 | 187 | | $ | 25.43 | 2-28-2022 | | | |||||||||||||||||||||
2,822 | 8,466 | | $ | 25.68 | 4-30-2023 | | | |||||||||||||||||||||
| | 15,000 | (6) | $ | 36.74 | 2-28-2024 | | | ||||||||||||||||||||
| | | | | 15,000 | (5) | $ | 570,000 |
(1) | 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. |
(3) | The value attributable to the restricted stock units equals the closing price of our common stock as reported by the New York Stock Exchange on December 31, 2014, which was $38.00, multiplied by the number of unvested units underlying the award. |
(4) | This award represents an RSU award granted on December 30, 2012 as an employment inducement award outside our stockholder-approved stock option and incentive plans pursuant to NYSE Rule 303A.08. The vesting of the RSU is as follows: 5,000 RSUs vested one year after the grant date on December 30, 2013, 5,000 RSUs vested two years after the grant date on December 30, 2014, and 100,000 RSUs will vest three years after the grant date on December 30, 2015. If Mr. Nawanas employment is involuntarily terminated without cause within three years of his hiring, his RSUs will accelerate and fully vest. The RSUs will also accelerate and fully vest if Mr. Nawana terminates his employment voluntarily after his first year of employment, other than in the presence of facts or circumstances which would constitute cause for termination by us. |
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(5) | These awards represent RSUs granted on August 31, 2014 that become exercisable in three equal annual installments beginning on the first anniversary of the date of grant. |
(6) | The vesting of these awards is subject to satisfaction of performance conditions; options for which the performance conditions are satisfied will become exercisable in four equal annual installments beginning on the first anniversary date of grant, subject to the executives continued employment on the date of vesting. On February 25, 2015, the Compensation Committee certified the degree to which the performance conditions had been satisfied and determined that the stock option awards for Mr. Pelossof would be eligible to vest on the basis of 5,000 shares; Ms. Cramp on the basis of 5,000 shares; Mr. Malkani on the basis of 3,375 shares; and Mr. Teitel on the basis of 750 shares. For information regarding a similar award forfeited by Mr. Nawana in October 2014, see notes (2) and (7) of the Grants of Plan-Based Awards for 2014 table above. For more information regarding our Annual Incentive Process and these awards, including the performance conditions, see Compensation Discussion and Analysis beginning on page 29 of this proxy statement. |
Option Exercises and Stock Vested. The following table sets forth certain information with respect to options exercised by the named executive officers and stock vested in 2014.
Option Exercises and Stock Vested for 2014
Option Awards | Stock Awards | |||||||||||||||
Name |
Number of
Shares Acquired on Exercise (#) |
Value Realized on Exercise ($)(1) |
Number of
Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)(2) |
||||||||||||
Namal Nawana |
| | 5,000 | $ | 190,950 | |||||||||||
Avi Pelossof |
| | | | ||||||||||||
Daniella Cramp |
| | | | ||||||||||||
Sanjay Malkani |
| | | | ||||||||||||
Ron Zwanziger |
| | | | ||||||||||||
David Teitel |
10,000 | $ | 104,700 | | |
(1) | Represents the difference between the aggregate exercise price and the aggregate fair market value of the common stock on the date of exercise. |
(2) | Represents the closing price of one share of our common stock on the date of vesting multiplied by the number of shares acquired on vesting. |
Non-qualified Deferred Compensation Plans. During 2014, our named executive officers did not participate in any non-qualified defined contribution or other non-qualified deferred compensation plans.
Pension Benefits. During 2014, our named executive officers did 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 Agreement and Potential Payments upon Termination or Change-in-Control. Effective December 30, 2012, we entered into a Restricted Stock Unit Agreement with Mr. Nawana in connection with his appointment as our Chief Operating Officer, pursuant to which we granted to Mr. Nawana 110,000 RSUs, which vest over a period of three years. Under the terms of the Restricted Stock Unit Agreement, if Mr. Nawanas employment is involuntarily terminated, without cause, within three years of the date of grant, or if Mr. Nawana terminates his employment voluntarily after one year, other than in the presence of facts or circumstances which would constitute cause for termination by us, his RSUs will accelerate and fully vest. The Restricted Stock Unit Agreement further provides that all of the RSUs will immediately vest upon a change of control of the Company, as that term is defined in the Restricted Stock Unit Agreement. The table below presents an estimate of the value of acceleration of vesting upon a change of control of Alere, assuming the occurrence of the change of control on December 31, 2014. The value of acceleration upon a termination of employment in either of the scenarios described above, assuming termination of Mr. Nawanas employment on December 31, 2014, would be the same as the value shown in the table below.
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In March 2013, we entered into a new at-will employment arrangement with Daniella Cramp in her role as Global President, Cardiometabolic. We agreed that, if we terminate her employment for any reason other than Cause or Disability (each as defined in the letter agreement), we would pay her 12 months of her then-current annualized base salary (less required taxes and deductions), contingent on her execution of a binding standard separation agreement containing a release of claims. We also agreed to pay her the same separation pay if she voluntarily terminates her employment before March 1, 2018, subject to the same contingency. The letter agreement provides that payments under it are intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and contains provisions for the potential deferral of payments as well as make-whole payments to Ms. Cramp for any penalties and taxes she may incur if we make payments that do not comply with Section 409A. Based on Ms. Cramps salary in effect on December 31, 2014 and assuming termination of her employment in any of the scenarios described above on December 31, 2014, we estimate that we would pay Ms. Cramp an aggregate of $548,077, which would be paid bi-weekly in accordance with our regular payroll practices. This amount does not reflect any reduction for taxes and other deductions.
In April 2015, we entered into an arrangement with Sanjay Malkani in his role as Global President, Toxicology in which we confirmed a prior agreement that, if we terminate Mr. Malkanis employment without Cause (as defined in the letter agreement), we will pay him separation pay in an amount equal to 12 months of his then-current annualized base salary (less required taxes and deductions), contingent on his execution of a binding standard separation agreement containing a release of claims. Based on Mr. Malkanis salary in effect on December 31, 2014 and assuming termination of his employment without Cause on December 31, 2014, we estimate that we would pay Mr. Malkani an aggregate of $650,000, which would be paid bi-weekly in accordance with our regular payroll practices. This amount does not reflect any reduction for taxes and other deductions.
In October 2014, we entered into change-in-control agreements with our named executive officers (other than our former CEO) which provide that if the executives employment is terminated without cause (as defined in the agreement) or by the executive with good reason (as defined in the agreement) within 12 months following a change of control of Alere (as defined in the agreement), then the executive will be released from all non-competition obligations under any agreement with us and all unvested equity awards held by the executive will immediately vest in full and the executive will be entitled to receive (i) salary continuation for a period of 18 months, calculated at the highest rate in effect for the executive at any time during the 12 months immediately preceding the termination date; (ii) the cash component of any outstanding awards granted to the executive; (iii) continued payment of health insurance premiums (less the active employee cost of such coverage) for a period of 18 months; (iv) three months of outplacement support services; and (v) if any payments to the executive constitute excess parachute payments under Section 280G of the Internal Revenue Code, a gross-up payment such that the net amount received by the executive, after the deduction of applicable taxes, will be equal to the amount that the executive is otherwise entitled to receive under the terms of the agreement.
All of the outstanding stock options and RSUs held by our named executive officers reported above under Outstanding Equity Awards at Fiscal Year-End (other than certain awards granted to Mr. Nawana) were issued under our Option Plans and all awards are subject to accelerated vesting and exercisability upon a change of control. The table below sets forth the value attributable to such an acceleration of vesting and exercisability of options and an acceleration of vesting of RSUs under the Restricted Stock Unit Agreement.
Name |
Value Attributable to Acceleration of Exercisability of Stock Options and Vesting of RSUs Upon a Change of Control(1) |
|||
Namal Nawana |
$ | 7,901,035 | ||
Avi Pelossof |
$ | 1,533,703 | ||
Daniella Cramp |
$ | 1,602,690 | ||
Sanjay Malkani |
$ | 1,583,774 | ||
Ron Zwanziger |
$ | | ||
David Teitel |
$ | 725,402 |
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(1) | Assumes the occurrence of a change of control of the Company on December 31, 2014. The value attributable to the acceleration of in-the-money stock options equals the difference between the applicable option exercise prices and the closing sale price of our common stock as reported by the New York Stock Exchange on December 31, 2014, which was $38.00, multiplied by the number of shares underlying the options. The value attributable to the acceleration of vesting of RSUs equals the closing sale price of our common stock as reported by the New York Stock Exchange on December 31, 2014, which was $38.00, multiplied by the number of units underlying the award. |
Each of our named executive officers (other than Mr. Zwanziger) would be entitled to the benefits presented in the following table if his or her employment were to be terminated by us without cause (as defined in the change-in-control agreement) or by him or her with good reason (as defined in the change-in-control agreement) within 12 months following a change in control of Alere, assuming the occurrence of a change of control and the termination of employment on December 31, 2014. As noted above, the named executive officers are entitled to the acceleration of vesting of outstanding equity awards immediately upon a change of control without regard to termination of employment. All amounts are estimates based on (i) the named executive officers salaries in effect during 2014, (ii) the cash component of awards outstanding on December 31, 2014, (iii) health insurance premiums in effect on December 31, 2014, and (iv) the estimated value of three months of outplacement support services as of December 31, 2014. The following table does not reflect (i) any increase in salary after December 31, 2014, (ii) any equity awards granted after December 31, 2014 or (iii) any non-equity incentive compensation plan awards granted after December 31, 2014.
Name |
Salary Continuation ($)(1) |
Cash Component of Awards ($)(2) |
Health Insurance Premiums ($)(3) |
Outplacement Support Services ($) |
Acceleration of Vesting ($) |
280G Gross- Up Payments ($)(4) |
Total ($) | |||||||||||||||||||||
Namal Nawana |
$ | 1,323,173 | $ | 201,139 | $ | 20,979 | $ | 8,500 | $ | 7,901,035 | $ | 1,649,058 | $ | 11,103,884 | ||||||||||||||
Avi Pelossof |
$ | 729,519 | $ | 144,203 | $ | 20,979 | $ | 8,500 | $ | 1,533,703 | $ | 834,833 | $ | 3,271,737 | ||||||||||||||
Daniella Cramp |
$ | 822,116 | $ | 150,740 | $ | 21,289 | $ | 8,500 | $ | 1,602,690 | $ | 948,932 | $ | 3,554,267 | ||||||||||||||
Sanjay Malkani |
$ | 975,000 | $ | 150,740 | $ | 20,979 | $ | 8,500 | $ | 1,583,774 | $ | 876,192 | $ | 3,615,185 | ||||||||||||||
Ron Zwanziger |
| | | | | | | |||||||||||||||||||||
David Teitel |
$ | 868,125 | $ | 113,386 | $ | 27 | $ | 8,500 | $ | 725,402 | $ | 649,907 | $ | 2,365,347 |
(1) | Salary is payable in accordance with our regular payroll practices for a period of 18 months. |
(2) | Represents (i) the amount of cash awards granted under our 2013 annual incentive process that remain unvested as of December 31, 2014 plus (ii) the maximum potential payout with respect to cash awards granted under our 2014 annual incentive process, based on the net increase during 2014 in the price per share of our common stock. |
(3) | Each named executive officer is entitled to continued payment of health insurance premiums (less the active employee cost of such coverage) for a period of 18 months. |
(4) | In accordance with the terms of the change-in-control agreements, for purposes of estimating the amount of the Section 280G gross-up payment, each named executive officer was assumed to pay federal income taxes in 2014 at the highest marginal rate of federal income taxation in that calendar year and state and local income taxes at the highest marginal rates of taxation in the state and locality of such named executive officers residence on December 31, 2014, net of the maximum reduction in federal income taxes which could be obtained from the deduction of such state and local taxes. |
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. Pursuant to the Annual
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Incentive Process, we expect to continue to award to certain executives and managers, upon satisfaction of applicable performance conditions and subject to future approval and grant by the Compensation Committee, option and cash awards. Because both the option and cash awards contemplated under this process would vest over several years, we believe that the process discourages short-term risk taking and aligns the interest of our executives and managers with those of our stockholders. We do not believe that risks arising from these practices, or our compensation policies and practices considered as a whole, are reasonably likely to have a material adverse effect on us.
The following table sets forth information regarding the compensation of our directors for 2014.
Director Compensation for 2014
Name(1) |
Fees Earned
or Paid in Cash ($)(2) |
Total ($)(3) | ||||||
Carol R. Goldberg |
$ | 86,000 | $ | 86,000 | ||||
John F. Levy |
$ | 31,500 | $ | 31,500 | ||||
John A. Quelch, D.B.A. |
$ | 18,000 | $ | 18,000 | ||||
James Roosevelt, Jr. |
$ | 80,000 | $ | 80,000 | ||||
Regina Benjamin, M.D. |
$ | 61,680 | $ | 61,680 | ||||
Håkan Björklund, Ph.D. |
$ | 10,000 | $ | 10,000 | ||||
Stephen P. MacMillan |
$ | 15,750 | $ | 15,750 | ||||
Brian A. Markison |
$ | 13,750 | $ | 13,750 | ||||
Thomas F. McKillop, Ph.D. |
$ | 15,000 | $ | 15,000 | ||||
Gregg Powers |
$ | 80,000 | $ | 80,000 |
(1) | Mr. Nawana is not included in this table as he is an employee of the Company and receives no compensation for his services as director. We show his compensation as an employee of the Company in the Summary Compensation Table above. |
(2) | Ms. Goldberg received cash payments of $22,000 each in April 2014, July 2014 and October 2014 and earned fees of $20,000 as of December 31, 2014, which amount was paid in January 2015. Mr. Levy received cash payments of $8,500 each in April 2014, July 2014 and October 2014 and earned fees of $6,000 as of December 31, 2014, which amount was paid in January 2015. Dr. Quelch received cash payments of $4,500 each in April 2014, July 2014 and October 2014 and earned fees of $4,500 as of December 31, 2014, which amount was paid in January 2015. Mr. Roosevelt received cash payments of $20,000 each in April 2014, July 2014 and October 2014 and earned fees of $20,000 as of December 31, 2014, which amount was paid in January 2015. Dr. Benjamin received cash payments of $13,128.45 each in April 2014, July 2014 and October 2014, as well as a one-time catch-up cash payment of $6,666.67 in December 2014 and earned fees of $15,628.45 as of December 31, 2014, which amount was paid in January 2015. Dr. Björklund received cash payments of $2,500 each in April 2014, July 2014 and October 2014 and earned fees of $2,500 as of December 31, 2014, which amount was paid in January 2015. Mr. MacMillan received cash payments of $3,750 each in April 2014, July 2014 and October 2014 and earned fees of $4,500 as of December 31, 2014, which amount was paid in January 2015. Mr. Markison received cash payments of $2,500 each in April 2014, July 2014 and October 2014 and earned fees of $6,250 as of December 31, 2014, which amount was paid in January 2015. Dr. McKillop received cash payments of $3,750 each in April 2014, July 2014 and October 2014 and earned fees of $3,750 as of December 31, 2014, which amount was paid in January 2015. Mr. Powers received cash payments of $20,000 each in April 2014, July 2014 and October 2014 and earned fees of $20,000 as of December 31, 2014, which amount was paid in January 2015. The cash compensation paid to directors is described in more detail below. |
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(3) | As of December 31, 2014, each director had the following number of options outstanding: Ms. Goldberg: 116,553; Mr. Levy: 157,280; Dr. Quelch: 146,814; Mr. Roosevelt: 98,841; 16,353; Dr. Benjamin: 37,727; Dr. Björklund: 53,756; Mr. MacMillan: 53,756; Mr. Markison: 53,756; Dr. McKillop: 53,756; Mr. Powers: 39,820. |
In May 2013, Radford provided the Compensation Committee with an analysis of our non-employee director compensation. After reviewing Radfords analysis, the Compensation Committee determined that the non-employee directors of the Company should continue to receive cash compensation of $70,000 annually beginning October 31, 2013, plus additional cash compensation for committee service as described in the table below, payable quarterly in arrears and subject to their continued service on our Board and any applicable committees. Each director was afforded a one-time right to receive, in lieu of all or part of her or his cash compensation through June 30, 2016, stock options of equal value calculated as described below.
Committee Chair (Total Additional Cash Compensation) |
||||
Audit |
$ | 24,000 | ||
Compensation |
$ | 18,000 | ||
Nominating and Corporate Governance |
$ | 18,000 | ||
Committee Members other than Chair (Total Additional Cash Compensation) |
||||
Audit |
$ | 15,000 | ||
Compensation |
$ | 10,000 | ||
Nominating and Corporate Governance |
$ | 10,000 |
In addition to the cash compensation described above, on October 31, 2013, each of the then-serving non-employee directors received stock options to purchase a number of shares of our common stock calculated using a Black- Scholes model based on (i) an assumed aggregate value on the grant date equal to the sum of (a) $600,000, or $200,000 annually for the period June 30, 2013 through June 30, 2016 (pro-rated for newly-appointed directors to their appointment date), and (b) the total amount of any cash compensation foregone for that period at the election of the director, as described above, (ii) the closing price of our common stock on the New York Stock Exchange on the date of grant and (iii) management estimates of other Black-Scholes variables, including estimated life and volatility. These options have an exercise price equal to $33.73 per share, expire ten years after the date of grant and vest in three equal annual installments, beginning June 30, 2014.
On December 31, 2013, Dr. Benjamin received stock options to purchase a number of shares of our common stock calculated using a Black-Scholes model based on (i) an assumed aggregate value on the grant date equal to the sum of (a) $510,662, equal to $200,000 annually for the period June 30, 2013 through June 30, 2016 (pro-rated to her appointment date of December 11, 2013), and (b) $44,643 of cash compensation foregone by Dr. Benjamin, (ii) $36.20, the closing price of our common stock on the New York Stock Exchange on the date of grant of the stock option, and (iii) management estimates of other Black-Scholes variables, including estimated life and volatility. These options have an exercise price equal to $36.20 per share, expire ten years after the date of grant and vest in three equal annual installments, beginning June 30, 2014.
Employee directors do not receive compensation for their services as directors.
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Equity Compensation Plan Information
The following table furnishes information with respect to compensation plans under which our equity securities are authorized for issuance as of December 31, 2014.
Plan Category |
Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) |
Weighted-average Exercise Price of Outstanding Options, Warrants and Rights |
Number of
Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)(2)) |
|||||||||
Equity compensation plans approved by security holders |
6,978,500 | (3) | $ | 31.34 | 4,901,594 | (4) | ||||||
Equity compensation plans not approved by security holders |
100,000 | (5) | $ | 0.00 | | |||||||
Total |
7,078,500 | $ | 30.90 | 4,901,594 | (4) |
(1) | This table excludes an aggregate of 824,506 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 $44.46. |
(2) | In addition to being available for future issuance upon exercise of options that may be granted after December 31, 2014, 2,766,984 shares under the 2010 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 6,539,500 shares issuable upon exercise of outstanding options with a weighted average exercise of $33.45 and 439,000 shares issuable upon vesting of RSUs. |
(4) | Includes 2,134,610 shares issuable under the Companys 2001 Employee Stock Purchase Plan. |
(5) | Represents shares issuable upon vesting of an RSU award issued as an inducement grant in connection with the appointment of Namal Nawana as our new Chief Operating Officer, effective December 30, 2012. |
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Independent Registered Public Accounting Firm
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Certain Relationships and Related Transactions, and Director Independence
Section 16(a) Beneficial Ownership Reporting Compliance
51
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EXPLANATORY NOTE: This Appendix A contains a copy of the Alere Inc. 2010 Stock Option and Incentive Plan, as proposed to be amended, as described in the proxy statement to which this Appendix A is attached.
ALERE INC.
2010 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Alere 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 Alere 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.
Cause, unless otherwise provided in an Award agreement or another agreement with a grantee, means the termination by the Company or a Subsidiary of the grantees employment as a result of a determination by the Company or the Subsidiary, in its sole discretion, that (i) the grantee has committed a felony (or the equivalent) or a crime involving fraud, intentional misrepresentation, dishonesty, breach of trust, embezzlement, money laundering, misappropriation or conversion of property, (ii) the grantee has committed any other crime, violation of law or misconduct that reflects adversely on the business, operations or reputation of the Company or a Subsidiary or that exposes the Company or a Subsidiary to a risk of civil or criminal liability, damages or penalties (including injunctive relief), (iii) the grantee is grossly negligent in the performance of, or has failed or refused to perform, the lawful duties or responsibilities assigned to him or her by the Company or a Subsidiary (other than by reason of disability or a leave of absence permitted by law or otherwise authorized by the Company or a Subsidiary), (iv) the grantee has violated any code of ethics, code of conduct or other policies applicable to him or her, or (v) the grantee has breached any agreement with the Company or a Subsidiary.
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.
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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.
Good Reason, unless otherwise provided in an Award agreement or another agreement with a grantee, when used with reference to a voluntary termination by a grantee of the grantees employment with the Company or a Subsidiary, means any of the following conditions, provided that (i) the grantee provides his or her employer with written notice of the condition giving rise to the termination within ninety (90) days after the initial existence of the condition, (ii) the grantee provides his or her employer with the opportunity to cure within thirty (30) days after the notice, (iii) such condition is not cured by the employer with such thirty (30) day period; and (iv) the grantee terminates employment within six (6) months after the initial existence of the condition: (a) a material diminution in the grantees annual base salary, except for diminutions equal to or less than proportionate diminutions in the annual base salaries for a majority of employees in similar positions as the grantee, (b) a material diminution in the grantees authority, duties or responsibilities or (c) the relocation of the facility at which the grantee is principally employed to a location more than 50 miles from such facility, except where such relocation does not increase the distance of the grantees regular commute.
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.
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.
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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 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; provided that repricing of Stock Options and Stock Appreciation Rights, including the cancellation of Stock Options and Stock Appreciation Rights in exchange for cash, 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); 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 five percent (5%) 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;
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(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 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 16,153,663 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. For the avoidance of doubt, any shares repurchased by the Company using the proceeds from the exercise of any Stock Option shall not be added back to the Pool. 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, that (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 stockother 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 grantwill reduce the number
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of shares in the Pool available for grant by three (3) or, for Awards made on or after the date of the Companys 2015 annual meeting of stockholders, by two (2). 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 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
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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.
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.
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(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 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.
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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.
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.
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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 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 underlying unvested Stock Options and Stock Appreciation Rights accelerated pursuant to Section 2(b)(v) other than by reason of, or in connection with, any death, disability, retirement, employment termination (without Cause), or Change of Control, is limited to five percent (5%) 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
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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.
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
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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.
(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.
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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
(a) Awards Granted On or After April , 2015. In the case of each Award granted on or after April , 2015 to any employee or member of the Board of Directors of the Company, unless otherwise provided in an Award agreement or another agreement with the grantee, if the employment of a grantee is terminated by the Company or a Subsidiary without Cause or by the grantee for Good Reason (or, in the case of a member of the Companys Board of Directors, the grantees service on the Companys Board of Directors terminates for any reason) within one (1) year after a Change of Control, then:
(i) Each such outstanding Award that is a Stock Option or Stock Appreciation Right held by the grantee at the time of termination shall automatically become fully exercisable upon such termination.
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(ii) Conditions and restrictions on each such outstanding Award that is a Restricted Stock Award, Restricted Stock Unit or Performance Share Award held by the grantee at the time of termination will be removed upon such termination.
(iii) Notwithstanding the foregoing, to the extent that the parties to a Change of Control do not provide for the assumption, continuation or substitution of Awards granted on or after April , 2015 in accordance with Section 3(c), Section 18(b) shall apply to such Awards as if they had been granted before April , 2015.
(b) Awards Granted Before April , 2015. In the case of each Award granted before April , 2015, upon the occurrence of a Change of Control:
(i) Each such outstanding Award that is a Stock Option or Stock Appreciation Right shall automatically become fully exercisable.
(ii) Except as otherwise provided in the applicable Award agreement, conditions and restrictions on each such outstanding Award that is a Restricted Stock Award, Restricted Stock Unit or Performance Share Award will be removed.
(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
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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, 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) 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.
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ALERE INC. 51 SAWYER ROAD, SUITE 200 WALTHAM, MA 02453 |
VOTE BY INTERNET - www.proxyvote.com | |||
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||||
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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VOTE BY PHONE - 1-800-690-6903 | ||||
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL | ||||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
KEEP THIS PORTION FOR YOUR RECORDS | ||||
DETACH AND RETURN THIS PORTION ONLY | ||||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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The Board of Directors recommends you vote FOR the following: |
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1. |
Election of Directors |
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1a. |
Gregg J. Powers |
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1b. |
Hakan Bjorklund, Ph D. |
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The Board of Directors recommends you vote FOR proposals 2, 3 and 4.
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Against
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Abstain
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1c. | Geoffrey S. Ginsburg |
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2 | Approve amendments to our 2010 Stock Option and Incentive Plan to increase the number of shares of common stock available for issuance thereunder by 7,000,000, from 9,153,663 to 16,153,663 and to decrease the fungible share ratio from 3-to-1 to 2-to-1.
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1d. |
Carol R. Goldberg |
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1e. |
John F. Levy |
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1f. |
Brian A. Markison |
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3 |
Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2015.
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1g. |
Sir Thomas F. Wilson |
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1h. |
John A. Quelch |
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4 | Hold an advisory vote on executive compensation. | ¨ |
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1i. |
James Roosevelt, Jr. |
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NOTE: Such other business as may properly come before the meeting or any adjournment thereof. |
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1j. |
Namal Nawana |
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Form 10-K / Annual Report is/are available at www.proxyvote.com.
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PROXY |
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS | ||||||
OF ALERE INC. | ||||||
The undersigned hereby appoints Namal Nawana and Ellen Chiniara, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Alere Inc. Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of Alere Inc. to be held July 22, 2015 or any adjournment thereof, with all powers which the undersigned would possess if present at the Meeting.
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THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR EACH OF THE PROPOSALS LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. | |||||
Continued and to be signed on reverse side
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