Item
10.
|
|
Directors
, Executive Officers and Corporate
Governance
|
|
|
Background
of Directors
The
persons listed below served as our directors during the year ended December 31,
2007.
Nominee
|
Age
|
Position
with the Company
|
Director
Since
|
Paul
G. Thomas
|
52
|
Chairman
of the Board, President and Chief Executive Officer
|
1998
|
Michael
E. Cahr (1)
|
67
|
Director
|
1991
|
David
Fitzgerald (2) (3) (4)
|
74
|
Director
|
2001
|
James
G. Foster (4) (5)
|
61
|
Director
|
1995
|
David
W. J. McGirr (6)
|
53
|
Director
|
2007
|
Michael
R. Minogue (2)
|
40
|
Director
|
2005
|
Robert
P. Roche, Jr. (3)
|
52
|
Director
|
2005
|
Martin
P. Sutter (7)
|
52
|
Director
|
2003
|
(1) Chairman
of the Audit Committee until November 12, 2007 when he retired from the Board of
Directors.
(2) Member
of the Nominating and Corporate Governance Committee.
(3) Member
of the Compensation Committee.
(4) Member
of the Audit Committee.
(5) Chairman
of the Compensation Committee.
(6) Chairman
of the Audit Committee effective November 12, 2007.
(7) Chairman
of the Nominating and Corporate Governance Committee and Presiding
Director.
All
directors hold office until the next annual meeting of stockholders or until
their successors are elected and qualified; vacancies and any additional
positions created by board action are filled by action of the existing Board of
Directors.
Paul G.
Thomas.
Mr. Thomas has served as Director, President and Chief
Executive Officer of LifeCell since October 1998. Mr. Thomas was
elected Chairman of the Board in June 1999. Prior to joining
LifeCell, Mr. Thomas was President of the Pharmaceutical Products Division of
Ohmeda Inc., a world leader in inhalation anesthetics and acute care
pharmaceuticals. Mr. Thomas was responsible for the overall
operations of Ohmeda’s Pharmaceutical Division, which had worldwide sales of
approximately $200 million in 1997. Mr. Thomas received his M.B.A.
degree with an emphasis in Marketing and Finance from Columbia University
Graduate School of Business and completed his postgraduate studies in Chemistry
at the University of Georgia Graduate School of Arts and Science. He
received his B.S. degree in Chemistry from St. Michael’s College in Vermont,
where he graduated Cum Laude. Mr. Thomas serves as a director of
Innovative Spinal Technologies, Inc., a privately held medical technology
company focused on developing minimally invasive treatments for spinal disorders
and Orthovita, Inc., (NASDAQ: VITA) a company specializing in biomaterial
products for the restoration of the human skeleton.
Michael E.
Cahr.
Mr. Cahr was a director of LifeCell from July 1991 to
November 2007, when he retired from the Board of Directors of
Lifecell. At the time of his retirement from the Board, Mr. Cahr was
President of Saxony Consultants, an Illinois-based company that provides
financial and marketing expertise to organizations in the United States and
abroad. From February 2000 through March 2002, Mr. Cahr was President and Chief
Executive Officer of IKADEGA, Inc., a Northbrook, Illinois server technology
company developing products and services for the health care, data storage and
hospitality fields. He also served as Chairman of Allscripts, Inc., a leading
developer of hand-held device technology that provides physicians real-time
access to health, drug and other critical information, from September 1997
through March 1999 and as President, Chief Executive Officer and Chairman from
June 1994 to September 1997. Prior to Allscripts, Mr. Cahr was Venture Group
Manager for Allstate Venture Capital where he oversaw investments in technology
and biotech from 1987 to June 1994. Mr. Cahr serves as a director of Pacific
Health Laboratories, a publicly traded nutritional products firm that develops
and commercializes functionally unique nutritional products. Mr. Cahr received
his undergraduate degree in Economics from Colgate University and his M.B.A.
degree from Fairleigh Dickinson University.
David
Fitzgerald
.
Mr.
Fitzgerald has been a director of LifeCell since December 2001. Mr. Fitzgerald
served as President and Chief Executive Officer of Howmedica, Inc. from 1980
until his retirement in 1996. In 1988, he was named Executive Vice President of
Pfizer Hospital Products Group, a $1.3 billion group of medical device companies
including Howmedica. In 1992, he was also named Vice President of Pfizer Inc.
Mr. Fitzgerald serves as a director of Arthrocare Corp., (NASDAQ: ARTC) a
company specializing in soft tissue surgical technology and Orthovita, Inc.,
(NASDAQ: VITA) a company specializing in biomaterial products for the
restoration of the human skeleton.
James G.
Foster
.
Mr.
Foster has been a director of LifeCell since March 1995. Mr. Foster was employed
by Medtronic,Inc., a medical technology company, from 1971 to
2001. From December 1994 through his retirement in June 2001, he was
Vice President and General Manager of Medtronic Heart Valves. From February 1984
to December 1994, Mr. Foster held various officer positions with Medtronic
including Vice President of Cardiac Surgery Sales & Strategic Planning in
1994, Vice President and General Manager of Medtronic Neurological Implantables
from 1992 through 1994, Vice President and General Manager of Medtronic
Interventional Vascular from 1990 through 1992 and Vice President and General
Manager of Medtronic Blood Systems from 1983 through 1989. Mr. Foster received
his undergraduate degree in English from St. Joseph’s University in Philadelphia
and an M.S. degree in Management from the Sloan School at
M.I.T. Currently, Mr. Foster serves as a director of Arthrocare
Corp., (NASDAQ: ARTC) a company specializing in soft tissue surgical
technology.
David W. J.
McGirr
.
Mr.
McGirr has been a director of LifeCell since November 2007. Mr.
McGirr is Senior Vice President and CFO at Cubist Pharmaceuticals, Inc. (Nasdaq:
CBST) and has served in his current position since November 2002. He also served
as Treasurer of Cubist from November 2002 until January 2003. From 1999 to 2002,
Mr. McGirr was the President and Chief Operating Officer of hippo, inc., an
internet technology, venture-financed company. Mr. McGirr served as a member of
hippo's Board of Directors from 1999 to 2003. From 1996 to 1999, he was the
President of GAB Robins North America, Inc., a risk management company, serving
also as Chief Executive Officer from 1997 to 1999. Mr. McGirr was a private
equity investor from 1995 to 1996. From 1978 to 1995, Mr. McGirr served in
various positions within the S.G. Warburg Group, ultimately as Chief Financial
Officer, Chief Administrative Officer and Managing Director of S.G. Warburg
& Co., Inc., a position he held from 1992 to 1995. Mr. McGirr received a
B.Sc. in Civil Engineering from the University of Glasgow and received an M.B.A.
from the Wharton School at the University of Pennsylvania.
Michael R.
Minogue
.
Mr.
Minogue has been a director of LifeCell since October 2005. Mr.
Minogue currently serves as Chairman of the Board, Chief Executive Officer and
President of ABIOMED, Inc. (NASDAQ: ABMD), a leading developer, manufacturer and
marketer of medical device products designed to assist or replace the pumping
action of failing hearts. Prior to joining ABIOMED in April 2004, he
held various senior management positions during a 12 year career at GE Medical
Systems. Prior to joining GE, Mr. Minogue served four years on active duty in
the U.S. Army, including completion of Army Ranger training. Mr.
Minogue received his B.S. degree in Engineering from the United States Military
Academy at West Point and his M.B.A degree from the University of
Chicago.
Robert P. Roche,
Jr
.
Mr.
Roche has been a director of LifeCell since October
2005. Mr. Roche currently serves as Executive Vice President,
Worldwide Pharmaceutical Operations of Cephalon, Inc. (NASDAQ: CEPH), a
biopharmaceutical company specializing in drugs to treat and manage neurological
diseases, sleep disorders, cancer and pain. Prior to joining Cephalon
in 1995, he served as Director and Vice President, Worldwide Strategic Product
Development, for SmithKline Beecham's central nervous system and
gastrointestinal products business. Mr. Roche joined SmithKline in
1982, and during his career there held various senior marketing and management
positions, including several international assignments. Mr. Roche graduated
from Colgate University and received his M.B.A degree from The
Wharton School, University of Pennsylvania.
Martin P.
Sutter
.
Mr.
Sutter has been a director of LifeCell since December 2003. Mr.
Sutter is a founder and a Managing Director at Essex Woodlands Health Ventures,
one of the oldest and largest venture capital organizations focused exclusively
on health care since 1994. Mr. Sutter began his career in management
consulting with Peat Marwick, Mitchell & Co. in 1977 and shortly thereafter
moved to Mitchell Energy & Development Corporation where he held various
positions in operations, engineering and marketing. He founded the Woodlands
Venture Capital Company in 1984 and Woodlands Venture Partners, an independent
venture capital partnership, in 1988. Mr. Sutter merged his venture practice
with Essex Venture Partners to form Essex Woodlands Health Ventures in
1994. He currently serves on the board of directors of LaJolla
Pharmaceutical Company (NASDAQ: LJPC), a biopharmaceutical company developing
treatments for lupus and other autoimmune diseases; and BioForm Medical, Inc.
(NASDAQ: BFRM), a publicly held company developing soft tissue augmentation
products.
Committees
of the Board of Directors
Composition of
the Board of Directors
.
Since
the adoption of the Sarbanes-Oxley Act in July 2002, there has been a growing
public and regulatory focus on the independence of directors. The
Board of Directors has determined that the members of the Audit Committee, the
Nominating and Corporate Governance Committee and the Compensation Committee
satisfy all such definitions of independence and that six of our seven directors
satisfy the NASDAQ definition of independence. Our Board of Directors
has a standing Audit Committee, Nominating and Corporate Governance Committee
and Compensation Committee.
Audit
Committee.
The Audit Committee is empowered by the Board of
Directors to, among other functions, serve as an independent and objective party
to monitor our financial reporting process, internal control system and
disclosure control system; review and appraise the audit efforts of our
independent registered public accounting firm; assume direct responsibility for
the appointment, compensation, retention and oversight of the work of the
independent registered public accounting firm; and for the resolution of
disputes between the independent registered public accounting firm and our
management regarding financial reporting issues; and provide an open avenue of
communication among the independent registered public accounting firm, financial
and senior management, and our Board of Directors. The Audit
Committee operates pursuant to a charter, available through a hyperlink located
on the corporate governance page of our website, at
http://www.lifecell.com/corporate/19/
.
Audit Committee
Financial Expert
.
The Board of
Directors has determined that David McGirr is an “audit committee financial
expert,” as such term is defined by the SEC. As noted above, Mr. McGirr, as well
as the other members of the Audit Committee, have been determined to be
“independent” within the meaning of SEC and NASDAQ regulations.
Independence of
Audit Committee Members.
Our common stock is
listed on the NASDAQ Global Market, and we are governed by the listing standards
applicable thereto. All members of the Audit Committee have been determined to
be “independent directors” pursuant to the definition contained in Rule
4200(a)(15) of the National Association of Securities Dealers’ Marketplace Rules
and under the SEC’s Rule 10A-3.
Nominating and
Corporate Governance Committee.
The Nominating and
Corporate Governance Committee is empowered by the Board of Directors to, among
other functions: identify qualified individuals for membership on the
Board; recommend to the Board the director nominees for election at the next
annual meeting of stockholders; make recommendations to the Board regarding the
size and composition of the Board and its committees; monitor the effectiveness
of the Board; and develop and implement corporate governance principles and
policies. All members of the Nominating and Corporate Governance
Committee have been determined to be “independent directors” pursuant to the
definition contained in Rule 4200(a)(15) of the National Association of
Securities Dealers’ Marketplace Rules and under the SEC’s Rule
10A-3. The Nominating and Corporate Governance Committee operates
pursuant to a charter, available through a hyperlink located on the corporate
governance page of our website, at
http://www.lifecell.com/corporate/19/
. In
addition, we have established principles of corporate governance that are
available through a hyperlink located on the corporate governance page of our
website, at
http://www.lifecell.com/corporate/19/
.
Compensation
Committee.
The Compensation Committee is empowered by
the Board of Directors to, among other functions, to assist the Board in
carrying out their responsibilities relating to compensation of our
officers. The Compensation Committee has overall responsibility for
evaluating and approving our compensation plans, policies and
programs. The Compensation Committee operates pursuant to a charter,
available through a hyperlink located on the corporate governance page of our
website, at
http://www.lifecell.com/corporate/19/
.
Background
of Executive Officers
The
following sets forth certain information regarding our executive
officers.
Name
|
|
Offices
Held
|
|
Date
of First Election
|
|
Age
|
Paul
G. Thomas
|
|
Chairman,
President and Chief Executive Officer
|
|
October
1998
|
|
52
|
Lisa
N. Colleran
|
|
Senior
Vice President, Commercial Operations
|
|
December
2002
|
|
50
|
Bruce
Lamb, Ph.D.
|
|
Senior
Vice President, Development & Regulatory Affairs
|
|
April
2005
|
|
52
|
Steven
T. Sobieski
|
|
Vice
President, Finance and Administration
&
Chief Financial Officer
|
|
June
2000
|
|
51
|
All
executive officers serve at the discretion of the Board of
Directors.
Paul G.
Thomas
.
For further
background information regarding Mr. Thomas, see “Background of
Directors.”
Lisa N.
Colleran.
Ms. Colleran joined
LifeCell in December 2002 as Vice President, Marketing and Business Development
and was named Senior Vice President, Commercial Operations in July
2004. She has over 20 years of marketing experience. Prior
to joining LifeCell, Ms. Colleran served as Vice President/General Manager –
Renal Pharmaceuticals for Baxter Healthcare Corporation, a worldwide
manufacturer and distributor of diversified products, systems and services used
primarily in the health care field, from 1997 until December 2002, and served in
various other sales and marketing positions at Baxter from 1983 through
1997. Ms. Colleran received her B.S. degree from Molloy College and
her M.B.A. degree from Loyola University of Chicago.
Bruce Lamb,
Ph.D.
Dr. Lamb joined LifeCell in April 2005 as Senior Vice
President, Development and Regulatory Affairs. He has 20 years of health
care-related experience. Prior to joining LifeCell, Dr. Lamb was Vice
President, Biosurgical Research and Development at Ethicon, Inc., a division of
Johnson & Johnson, where he served in positions of increasing responsibility
from 1999 through 2005. From 1991 through 1999, Dr. Lamb held
multiple positions including Director, Chronic Care Research and Innovation at
ConvaTec, a subsidiary of Bristol-Myers Squibb. From 1985 through
1991, Dr. Lamb was a research scientist at Pfizer Hospital Products group and
advanced to Manager, Polymer Technology at Valleylab Inc. Dr. Lamb
received his B.S. degree in Chemistry from Bradley University, his M.S. degree
in Chemistry from the University of Wisconsin and his Ph.D. in Polymer Chemistry
from the State University of New York, College of Environmental Science and
Forestry, in Syracuse.
Steven T.
Sobieski.
Mr. Sobieski joined
LifeCell in June 2000 as Vice President, Finance and Chief Financial
Officer. He has over 20 years of financial management experience in a
variety of roles in the medical technology field and public
accounting. Prior to joining LifeCell, Mr. Sobieski was Vice
President, Finance at Osteotech, Inc., a public company focused on developing
and marketing orthopedic products, where he served in various positions from
1991 to 2000. From 1981 through 1991, he served in various positions
of increasing responsibility with Coopers & Lybrand, a public accounting
firm. Mr. Sobieski received his B.S. degree in Business
Administration from Monmouth University and his M.B.A. degree with a
concentration in Accounting from Rutgers University. He is a
Certified Public Accountant. Currently, Mr. Sobieski serves as a
director of Insulet Corporation,(NASDAQ:PODD) a medical device company
specializing in insulin infusion systems.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section
16 (a) of the Securities Exchange Act of 1934 ("Section 16 (a)") requires that
our officers, directors and persons who own more than 10% of a registered class
of our equity securities to file statements on Form 3, Form 4 and Form 5 of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% stockholders are required by the
regulation to furnish us with copies of all Section 16(a) reports that they
file.
Based
solely on a review of reports on Forms 3 and 4 and amendments thereto furnished
to us during our most recent fiscal year, reports on Form 5 and amendments
thereto furnished to us with respect to our most recent fiscal year and written
representations from reporting persons that no report on Form 5 was required, we
believe that no person who, at any time during 2007, was subject to the
reporting requirements of Section 16 (a) with respect to us failed to meet such
requirements on a timely basis.
Code
of Ethics
We have
adopted a Code of Ethics, as required by NASDAQ listing standards and the rules
of the SEC, for Senior Financial Officers that applies to our principal
executive officer, principal financial officer, principal accounting officer and
controller. A copy of our Code of Ethics for Senior Financial Officers has been
filed as Exhibit 14.1 to our Annual Report on Form 10-K for the year ended
December 31, 2003, and is available through a hyperlink located on the corporate
governance page of our website, at
http://www.lifecell.com/corporate/19/
. If
we make substantive amendments to the Code of Ethics or grant any waiver,
including any implicit waiver, that applies to anyone subject to the Code of
Ethics, we will disclose the nature of such amendment or waiver on the website
or in a report on Form 8-K in accordance with applicable NASDAQ and SEC
rules.
Code
of Conduct
We have
adopted a general Code of Conduct, as required by NASDAQ listing standards and
the rules of the SEC, which applies to all of our employees. The Code of Conduct
is publicly available through a hyperlink located on the corporate governance
page of our website, at
http://www.lifecell.com/corporate/19/
.
Item
11.
|
|
Executive
Compensation
|
|
|
Compensation
Committee Report
Under
the rules of the SEC, this Compensation Committee Report is not deemed to be
incorporated by reference by any general statement incorporating this Annual
Report by reference into any filings with the SEC.
The
Compensation Committee has reviewed and discussed the following Compensation
Discussion and Analysis with management. Based on this review and these
discussions, the Compensation Committee recommended to the Board of Directors
that the following Compensation Discussion and Analysis be included in this
Annual Report on Form 10-K.
Submitted
by the Compensation Committee
James G.
Foster, Chairman
David
Fitzgerald
Robert P.
Roche
Compensation
Discussion and Analysis
Introduction
This
discussion presents the principles underlying our executive officer compensation
program. Our goal in this discussion is to provide the reasons why we
award compensation as we do and to place in perspective the data presented in
the tables that follow this discussion. The focus is primarily on our
executive’s 2007 compensation, but some historical and forward-looking
information is also provided to put 2007 information in context. The information
we present relates to Paul G. Thomas, our chief executive officer, Steven T.
Sobieski, our chief financial officer, and our two other most highly compensated
“executive officers,” who are sometimes referred to in this section as our
“named executive officers.”
Compensation Philosophy and
Objectives
We
attempt to apply a consistent philosophy to compensation for all employees,
including senior management. This philosophy is based on the premises
that our success results from the efforts of each employee and that a
cooperative, team-oriented environment is an essential part of our
culture. We believe in the importance of rewarding employees for our
successes, which is why we emphasize pay-for-performance incentive
compensation. Particular emphasis is placed on broad employee equity
participation through the use of stock options and restricted stock awards, as
well as on annual cash bonuses linked to achievement of our corporate
performance goals and the personal objectives established for our
employees.
Our
compensation programs for our named executive officers are designed to achieve a
variety of goals including to:
|
•
|
attract
and retain talented and experienced executives in the highly competitive
biological products industry;
|
|
•
|
motivate
and reward executives whose knowledge, skills and performance are critical
to our success;
|
|
•
|
align
the interests of our executives and stockholders by motivating executives
to increase stockholder value in a sustained manner;
and
|
|
•
|
provide
a competitive compensation package which rewards achievement of both
company and individual performance
goals.
|
Employment
Agreements
During
2005, we were concerned about retaining key management on a long-term basis and
in providing our executive team appropriate severance benefits to assure their
retention through the process of any potential change-in-control
situation. Accordingly, we entered into new employment agreements
with certain executive officers during 2005, including Mr. Thomas, Chairman of
the Board, President and Chief Executive Officer; Mr. Sobieski, Vice President,
Finance and Chief Financial Officer; and Ms. Colleran, Senior Vice President,
Commercial Operations. We also entered into a change-in-control
agreement with Dr. Lamb, Senior Vice President, Development and Regulatory
Affairs.
In
approaching new employment agreements for Mr. Thomas and other executive
officers in 2005 as well as executive compensation in general, the Compensation
Committee viewed compensation of executives as having three distinct
parts:
|
•
|
a
current compensation program;
|
|
•
|
a
set of standard benefits; and
|
|
•
|
a
long-term benefits program.
|
The
current compensation element focuses on the executive officer's salary and
eligibility for annual bonuses based upon performance, and is designed to
provide competitive compensation for services rendered. Our standard
benefits package consists primarily of health insurance benefits and
participation in a 401(k) plan with matching employer
contributions. The long-term benefits element is reflected in the
grants of stock options and restricted stock awards. The terms of
each employment agreement are discussed under “Change-in-control and Severance
Agreements” below. Any decisions about future levels of executive
compensation with respect to these individuals must be consistent with our
contractual obligations to them.
Elements of Executive
Officer Compensation
Overview
. Total
compensation paid to our executive officers is influenced significantly by the
need to attract and retain management employees with a high level of expertise
and to motivate and retain key executives for our long-term
success. Some of the components of compensation, such as salary, are
generally fixed and do not vary based on our financial and other
performance. Some components, such as bonus, stock options and stock
award grants, are dependent upon the achievement of certain goals jointly agreed
upon by our management and the Compensation Committee. Furthermore,
the value of certain of these components, such as stock options and restricted
stock, is dependent upon our future stock price.
We
compensate our executive officers in these different ways in order to achieve
different goals. Cash compensation, for example, provides our
executive officers a minimum base salary. Incentive bonus
compensation is generally linked to the achievement of short-term financial and
business goals, and is intended to reward our executive officers for our overall
performance, as well as their individual performance in reaching annual goals
that are agreed to in advance by management and the Compensation
Committee. Stock options and grants of restricted stock are intended
to link our executive officers’ longer-term compensation with the performance of
our stock and to build executive ownership positions in the Company’s
stock. This encourages our executive officers to remain with us, to
act in ways intended to maximize stockholder value, and to penalize them if we
and/or our stock fails to perform to expectations.
We view
the three components of our executive officer compensation as related but
distinct. Although our Compensation Committee does review total
compensation, we do not believe that compensation derived from one component of
compensation necessarily should negate or reduce compensation from other
components. We determine the appropriate level for each compensation
component based in part, but not exclusively, on our historical practices with
the individual and our view of individual performance and other information we
deem relevant, such as the data we receive from the consultant hired by our
Compensation Committee. Our Compensation Committee has not adopted
any formal or informal policies or guidelines for allocating compensation
between long-term and currently paid out compensation, between cash and non-cash
compensation, or among different forms of compensation, except that we have
historically used a 2-to-1 ratio for the grant of stock options compared to
restricted stock awards. Commencing in 2008, we intend to use a
2.5-to-1 ratio with the intent to re-assess this ratio as the Company
grows. During 2007, we did review wealth and retirement accumulation
as a result of employment with us in connection with the review of compensation
packages.
To advise
us on executive compensation in general, our Compensation Committee has engaged
the services of Radford Surveys & Consulting (“Radford”), a business unit of
Aon Consulting (“Aon”). Radford is heavily focused in the Life
Sciences area. They have produced data for us comparing our executive
officer compensation with that of peer group companies that we selected in
2007 with Radford’s assistance, including: American Medical Systems
Holdings, ArthroCare Corporation, Biosite Incorporated, Cubist Pharmaceuticals,
Inc., Cytyc Corporation, Digene Corporation, Foxhollow Technologies, Inc.,
Gen-Probe, Inc., Integra Lifesciences Holdings, Kyphon, Inc., Meridian
Bioscience, Inc., Molecular Devices Corporation, Myriad Genetics, Inc., OraSure
Technologies, Inc., OSI Pharmaceuticals, Inc., Palomar Medical Technologies,
Inc., Pharmion Corporation, Savient Pharmaceuticals, Inc., Sciele Pharma, Inc.,
Surmodics, Inc., Thoratec Corporation, United Therapeutics Corporation, Ventana
Medical System, Inc. and Wright Medical Group. The peer group is periodically
modified to account for our increased size, revenues, growth and maturity as a
company. Our Compensation Committee realizes that benchmarking our
compensation against the compensation earned at comparable companies may not
always be appropriate, but believes that engaging in a comparative analysis of
our compensation practices is useful.
Base
Salary
. We pay our executives a base salary, which we review
and determine annually. We believe that a competitive base salary is
a necessary element of any compensation program. We believe that
attractive base salaries can motivate and reward executives for their overall
performance. Base salaries are established in part based on the
individual position, responsibility, experience, skills and expected
contributions during the coming year of the executives and their performance
during the prior year. We also have sought to align base compensation
levels comparable to our competitors and other companies in similar stages of
development. We do not view base salaries as primarily serving our
objective of paying for performance, but in attracting and retaining the most
qualified executives necessary to run our business.
Based on
all of the factors described above, including base salary (which historically
lagged the marketplace based on the peer group established by Radford and
reviewed by our Compensation Committee), our performance and individual
performance reviews, in December 2006, effective for 2007, the Chief Executive
Officer and each of the other named executive officers received, on average, a
5% increase. A similar process occurred in December
2007. Again, after reviewing first performance and then benchmarking
data based on our peer group, the Committee granted the Chief Financial Officer
an 18% increase and the Chief Executive Officer and each of the other executive
officers a salary increase of approximately 5% for 2008. We believe
that our salary levels are now within our peer group and generally sufficient to
retain our existing executive officers and to hire new executive officers when
and as required.
Cash Incentive
Bonuses.
Consistent with our emphasis on pay-for-performance
incentive compensation programs, our executives are eligible to receive annual
cash incentive bonuses primarily based upon their performance during the year as
measured against predetermined company and personal performance goals
established by us, including financial measures and the achievement of strategic
objectives. The primary objective of our annual cash incentive
bonuses is to motivate and reward our employees, including our named executive
officers, for meeting our short-term objectives using a pay-for-performance
program with objectively determinable performance goals.
At the
end of each year, our management, particularly the Chief Executive Officer, sets
various company goals for the following year, which are reviewed and approved by
the Compensation Committee. The goals include both financial elements
and achievement of product development and other company business
objectives. Each goal is assigned a particular weighing in the
overall bonus formula. The amount of the awards to be paid is
conditioned upon achievement of the predetermined targets. We may not
make any payments if we fail to achieve a minimum level of
performance. The target payment amount may also be adjusted upward
for performance above the target level. For example, the 2007
financial goals represented approximately 50% of the total weight for all
company goals and included target measures for product revenue, operating income
and diluted net income per share. Specifically, the target level for
2007 was based on achieving year over year growth of 28% in product revenue, 34%
in operating income and 27% in diluted net income per
share. Non-financial goal measures in 2007 included achieving various
product development milestones, such as obtaining FDA clearance for Strattice,
and other operational metrics such as production volumes.
In
addition, at the end of each year, each executive officer meets with our Chief
Executive Officer to establish the individual’s specific goals for the upcoming
year, which are dependent on that person’s job responsibilities. The
Chief Executive Officer’s goals are the same as our overall company
goals. Individual goals and corporate goals each affect 50% of the
bonus. As previously noted, goals are set at laddered levels and
attaining the highest level is intended to be a stretch goal. We
design the cash incentive bonuses for each of our executive officers to focus
the executive officer on achieving key operational and financial objectives
within a yearly time horizon.
We next
establish the target amount of our annual cash incentive bonuses for each
executive at a level that represents a meaningful portion of our executives’
currently paid out cash compensation, and set additional threshold and maximum
performance levels above and below these target levels. For instance,
for 2007, the Chief Executive Officer’s target bonus was 60% of his base salary
and the other named executive officers had targets ranging from 30-35% of their
base salaries. Then depending on the achievement of the corporate and
individual goals, each officer could earn between 0 and 150% of the target bonus
amount. In addition to considering the incentives that we want to
provide to our executives in establishing these levels, we also consider the
bonus levels for comparable positions at our peer group of companies, as
reported by Radford, our historical practices and any contractual commitments
that we have relating to executive bonuses.
As a
result of our performance and the performance of our executive officers, for
2007 our Chief Executive Officer received a bonus equal to 80% of his base
salary and our other named executive officers received bonuses ranging from 35%
to 47% of their base salaries. For 2008, the Chief Executive
Officer’s target bonus is 70% of his base salary and the other named executive
officers have targets ranging from 30% to 40% of their base
salaries.
We
do not have a formal policy on the effect on bonuses of a subsequent
restatement or other adjustment to the financial statements, other than the
penalties provided by law.
Equity
Compensation
. We believe that stock options and restricted
stock awards are an important long-term incentive for our executive officers and
employees and that our stock option and restricted stock award program has been
effective in aligning officer and employee interests with that of our
stockholders. We review our equity compensation plan
annually. Employees are eligible for annual stock option and
restricted stock award grants based on targeted levels. These options
and grants are intended to produce value for each executive officer if: our
stock performance is outstanding; shareholders derive significant sustained
value; and the executive officer remains with us.
To
establish target levels, the Committee uses data supplied by Radford for peer
group companies and its Biotechnology survey and then seeks to deliver long-term
incentive value at the 50th to 75th percentiles blended with the market 50th to
75th percentiles number of options irrespective of value. The
Committee also considered comparable company data on the relationship of stock
options and restricted stock granted to our outstanding shares and the number of
awards available for future grant under our equity compensation
plan. The Committee then sets targeted levels of equity to be
awarded. The actual number of restricted shares and options granted
to an executive is based on performance as measured by the performance goals set
for the year just ended. The same process occurred in December 2006
and 2007 for equity grants in January 2007 and 2008, respectively.
Once a
target value is established for an executive, the Committee grants stock options
to that executive with a Black-Scholes value of approximately half the target
value, and then grants a number of restricted shares that is approximately half
of the number of option shares, based on a recommendation by
Radford. Commencing in 2008, we intend to use a 2.5-to-1 ratio of
stock options compared to restricted stock awards. Stock options are
believed to be a superior vehicle to encourage executives to focus on
increasing shareholder value and to respond to shareholder demand for
performance linkage, while grants of restricted shares are better linked to
executive retention, increasing executive ownership of the Company and
minimizing shareholder dilution. By dividing equity compensation into
both types of awards, the Committee hopes to achieve multiple
goals.
At its
December 2007 meeting, the Compensation Committee, in consultation with Radford,
considered equity grants to be made effective January 2008 for 2007
performance. The number of options and restricted shares granted to
and held by our executive officers and the prices of these options and grants of
restricted stock are reflected in the “Summary Compensation Table” and the
“Grants of Plan-Based Awards” table below.
We do not
have any program, plan or obligation that requires us to grant equity
compensation to any executive officer on specified dates. The
practice has been to approve grants in December, effective at the beginning of
January of the following year. The authority to make equity grants to
executive officers rests with our Compensation Committee (subject to
ratification by the full Board of Directors), although, as noted above, the
Compensation Committee does consider the recommendations of our Chairman and
Chief Executive Officer in setting the compensation of our other executive
officers.
In
addition, from time to time, our Compensation Committee has approved additional
performance share programs in addition to our normal grants of equity
compensation. As disclosed in our Current Report on Form 8-K filed
with the SEC in January 2008, our Compensation Committee approved equity grants
for our executive officers that will vest only if we are able to achieve stretch
revenue and operating income growth targets for the period between January 1,
2008 and December 31, 2010.
Severance and
Change-in-Control Benefits.
Mr. Thomas, Mr. Sobieski
and Ms. Colleran each have a provision in their respective employment agreements
providing for certain severance benefits in the event of termination or
retirement, as well as a provision providing for a higher payment in the event
of termination or retirement following a change-in-control as defined in the
employment agreements. Dr. Lamb has a separate change-in-control
agreement that only provides for a severance benefit following a
change-in-control. These severance provisions are described in the
“Change-in-Control and Severance Agreements” section below, and certain
estimates of these change of control benefits are provided in “Estimated
Payments and Benefits Upon Various Employment Termination Scenarios”
below.
In
determining the severance provisions that we have provided to our executive
officers, the Compensation Committee took into account that the only pension
plan or other retirement plan that we provide for these executive officers is
our 401(k) plan. We provide the opportunity for certain of our named
executive officers to be protected under the severance and change-in-control
provisions contained in their employment agreements. Such agreements
contain change-in-control arrangements, which are triggered upon both a
change-in-control and termination of employment. We provide this
opportunity to attract and retain an appropriate caliber of talent for the
position. Our severance and change-in-control provisions for the
named executive officers are summarized in the “Change-in-Control and Severance
Agreements” and “Estimated Payments and Benefits Upon Various Employment
Termination Scenarios” sections below, but generally provide that on a “trigger
event” within a period of time before or after a change-in-control, the
increased change-in-control benefit is paid. A trigger event is a
termination of employment by us without cause or a termination by the executive
for good reason. We believe that our severance and change-in-control
provisions are consistent with the provisions and benefit levels of other
companies disclosing such provisions as reported in public SEC
filings.
Benefits.
Our
executive officers participate in all of our employee benefit plans, such as
medical, group life and disability insurance and our 401(k) plan, on the same
basis as our other employees. Our 401(k) plan provides for matching
payments by us.
Perquisites.
Our
Chief Executive Officer receives an automobile allowance. Our use of
perquisites as an element of compensation is very limited. We do not
view perquisites as a significant element of our comprehensive compensation
structure.
Stock Ownership
Guidelines
We have
adopted stock ownership guidelines for our executive officers and directors in
December 2006. The purpose of the guidelines is to encourage officers
and directors to maintain a significant equity ownership in the Company and
thereby, complement our policy of awarding equity compensation so as to align
their interests with those of shareholders. The policy became
effective on January 1, 2007. The policy suggests that as a
guideline, the officers and directors maintain equity positions in our common
stock (not including stock options or unvested restricted shares) as
follows:
Title
|
|
Equity
Position
|
Chief
Executive Officer
|
|
3
times annual base salary
|
Chief
Financial Officer
|
|
2
times annual base salary
|
Other
Executive Officers
|
|
Annual
base salary
|
Directors
|
|
3
times annual cash compensation
|
The Board
has suggested that the individuals covered by the policy reach the equity
position suggested by the guidelines within five years of adoption.
The Compensation Committee
Process
Compensation
Committee meetings typically have included, for all or a portion of each
meeting, a representative of Radford, as well as preliminary discussion with our
Chairman and Chief Executive Officer prior to our Compensation Committee
deliberating without any members of management present. Our
Compensation Committee has also involved outside counsel in its deliberations as
needed. For compensation decisions, including decisions regarding the
grant of equity compensation relating to executive officers (other than our
Chairman and Chief Executive Officer), the Compensation Committee considers the
recommendations of our Chairman and Chief Executive Officer and includes him in
its discussions.
Regulatory
Considerations
We
account for the equity compensation expense for our employees under the rules of
SFAS 123R, which requires us to estimate and record an expense for each award of
equity compensation over the service period of the award. Accounting
rules also require us to record cash compensation as an expense at the time the
obligation is accrued.
With
respect to change-in-control payments for Mr. Thomas, Mr. Sobieski and Ms.
Colleran, in the event that any payment or benefit that they would receive upon
termination would otherwise constitute a “parachute payment” under Section 280G
of the Internal Revenue Code and be subject to the excise tax imposed by Section
4999 of the Code, such payment and benefits will be reduced to an amount equal
to either (a) the largest portion of the payment and benefits that would result
in no portion of the payment and benefits being subject to the excise tax or (b)
the largest portion of the payment, up to and including the total, whichever
amount, after taking into account all taxes and the excise tax, results in such
person’s receipt, on an after tax basis, of the greater amount of the payment
and benefits. If Dr. Lamb is notified that the payments and benefits
to be paid would be nondeductible by us because of Section 280G of the Internal
Revenue Code, such payments and benefits shall be reduced to the minimum extent
necessary so that all payments made are deductible under Section
280G. Dr. Lamb has the discretion as to which payments and benefits,
and the amounts thereof, shall be reduced.
Cash
and Other Compensation
The
following table, which should be read in conjunction with the explanations
provided above, provides certain compensation information concerning our Chief
Executive Officer, Chief Financial Officer and our two most highly compensated
executive officers (the "Named Executive Officers"), other than the Chief
Executive Officer and Chief Financial Officer, for the fiscal year ended
December 31, 2007.
Summary
Compensation Table
|
|
Name
and
principal
position
|
Year
|
|
Salary
|
|
|
Stock
awards
(1)
|
|
|
Option
awards
(1)
|
|
|
Non-equity
incentive
plan
compensation
($)
(2)
|
|
|
All
other
compensation
($)
|
|
|
Total
($)
|
|
Paul
G. Thomas
|
2007
|
|
$
|
500,000
|
|
|
$
|
2,002,159
|
|
|
$
|
323,883
|
|
|
$
|
397,500
|
|
|
$
|
17,000
|
(3)
|
|
$
|
3,240,542
|
|
Chairman,
President and
|
2006
|
|
$
|
477,750
|
|
|
$
|
1,904,847
|
|
|
$
|
304,255
|
|
|
$
|
390,417
|
|
|
$
|
16,500
|
(3)
|
|
$
|
3,093,769
|
|
Chief
Executive Officer
|
2005
|
|
$
|
416,042
|
|
|
$
|
641,793
|
|
|
$
|
264,702
|
|
|
$
|
368,550
|
|
|
$
|
10,000
|
(3)
|
|
$
|
1,701,087
|
|
Steven
T. Sobieski
|
2007
|
|
$
|
257,975
|
|
|
$
|
433,345
|
|
|
$
|
178,009
|
|
|
$
|
120,629
|
|
|
$
|
-
|
|
|
$
|
989,958
|
|
Vice
President,
Finance and Administration,
|
2006
|
|
$
|
246,850
|
|
|
$
|
337,298
|
|
|
$
|
141,765
|
|
|
$
|
112,490
|
|
|
$
|
-
|
|
|
$
|
838,403
|
|
Chief
Financial Officer
|
2005
|
|
$
|
232,000
|
|
|
$
|
126,447
|
|
|
$
|
96,990
|
|
|
$
|
104,748
|
|
|
$
|
-
|
|
|
$
|
560,185
|
|
Lisa
N. Colleran
|
2007
|
|
$
|
285,850
|
|
|
$
|
738,975
|
|
|
$
|
118,066
|
|
|
$
|
130,162
|
|
|
$
|
-
|
|
|
$
|
1,273,053
|
|
Senior
Vice President,
|
2006
|
|
$
|
272,225
|
|
|
$
|
711,720
|
|
|
$
|
131,423
|
|
|
$
|
130,913
|
|
|
$
|
-
|
|
|
$
|
1,246,281
|
|
Commercial
Operations
|
2005
|
|
$
|
260,750
|
|
|
$
|
239,715
|
|
|
$
|
97,825
|
|
|
$
|
117,729
|
|
|
$
|
-
|
|
|
$
|
716,019
|
|
Bruce
S. Lamb, Ph.D.
|
2007
|
|
$
|
255,900
|
|
|
$
|
63,294
|
|
|
$
|
224,246
|
|
|
$
|
88,286
|
|
|
$
|
-
|
|
|
$
|
631,726
|
|
Senior
Vice President, Development and
|
2006
|
|
$
|
246,050
|
|
|
$
|
25,087
|
|
|
$
|
193,080
|
|
|
$
|
88,578
|
|
|
$
|
-
|
|
|
$
|
552,795
|
|
Regulatory
Affairs
|
2005
|
|
$
|
176,250
|
|
|
$
|
-
|
|
|
$
|
119,968
|
|
|
$
|
92,637
|
|
|
$
|
-
|
|
|
$
|
388,855
|
|
|
(1)
|
Represents
the expense to us pursuant to FAS 123(R) for the respective year for
restricted stock or stock options awards granted as long-term incentives
pursuant to our Equity Compensation Plan. See Note 7 of our
Financial Statements for the fiscal years ended December 31, 2007, 2006
and 2005 for the assumptions used for valuing the expense under FAS
123(R).
|
|
(2)
|
Represents
bonus paid for such fiscal year.
|
|
(3)
|
Includes
$15,000 of car allowance paid by us in 2007 and 2006 and $8,750 in
2005. The remaining amount represents our match on our 401(k)
Plan.
|
Plan-Based
Awards
Option
and Stock Award Grants
The
following table provides certain information with respect to restricted stock
awards and options granted to our Named Executive Officers during the fiscal
year ended December 31, 2007 based on 2006 performance.
Grants
of Plan-Based Awards
|
|
Name
|
|
Grant
Date
|
|
Approval
Date
(1)
|
|
All
Other
Stock
Awards: Number of
Shares
of Stock or
Units
(#)
(2)
|
|
|
All
Other
Stock Awards:
Number
of
Shares
of Options (#)
(3)
|
|
|
Exercise
or
Base
Price
of
Option
Awards
($
per share)
|
|
|
Grant
Date
Fair
Value of
Stock
and Option Awards
|
|
Paul
G. Thomas
|
|
1/3/07
|
|
12/10/06
|
|
|
19,068
|
|
|
|
|
|
|
|
|
$
|
447,145
|
|
|
|
1/3/07
|
|
12/10/06
|
|
|
|
|
|
|
37,456
|
|
|
$
|
23.45
|
|
|
$
|
492,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
T. Sobieski
|
|
1/3/07
|
|
12/10/06
|
|
|
11,720
|
|
|
|
|
|
|
|
|
|
|
$
|
274,834
|
|
|
|
1/3/07
|
|
12/10/06
|
|
|
|
|
|
|
22,784
|
|
|
$
|
23.45
|
|
|
$
|
299,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa
N. Colleran
|
|
1/3/07
|
|
12/10/06
|
|
|
6,184
|
|
|
|
|
|
|
|
|
|
|
$
|
145,015
|
|
|
|
1/3/07
|
|
12/10/06
|
|
|
|
|
|
|
11,680
|
|
|
$
|
23.45
|
|
|
$
|
153,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
S. Lamb, Ph.D.
|
|
1/3/07
|
|
12/10/06
|
|
|
4,400
|
|
|
|
|
|
|
|
|
|
|
$
|
103,180
|
|
|
|
1/3/07
|
|
12/10/06
|
|
|
|
|
|
|
9,600
|
|
|
$
|
23.45
|
|
|
$
|
126,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In
accordance with its normal practice, the Compensation Committee approved
the grant of these awards effective on January 3, 2007 at a meeting of the
Compensation Committee held on December 10,
2006.
|
|
(2)
|
These
awards vest in three equal installments beginning one year after the date
of grant.
|
|
(3)
|
These
awards vest in four equal installments beginning one year after the date
of grant.
|
Based on
our performance and the performance of our Chief Executive Officer and other
executive officers in 2007, our Compensation Committee and Board of Directors,
approved the grants of stock options and restricted stock awards set forth
below:
Grants
of Plan-Based Awards
|
|
Name
|
|
|
Grant
Date
|
|
|
Approval
Date
(1)
|
|
|
All
Other
Stock
Awards: Number of
Shares
of Stock or
Units
(#)
(2)
|
|
|
All
Other
Stock Awards:
Number
of
Shares
of Options (#)
(3)
|
|
|
Exercise
or
Base
Price
of
Option
Awards
($
per share)
|
|
|
Grant
Date
Fair
Value of
Stock
and Option Awards
|
|
Paul
G. Thomas
|
|
|
1/2/08
|
|
|
12/10/07
|
|
|
|
18,552
|
|
|
|
|
|
|
|
|
$
|
805,713
|
|
|
|
|
1/2/08
|
|
|
12/10/07
|
|
|
|
|
|
|
|
36,436
|
|
|
$
|
43.43
|
|
|
$
|
760,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
T. Sobieski
|
|
|
1/2/08
|
|
|
12/10/07
|
|
|
|
12,024
|
|
|
|
|
|
|
|
|
|
|
$
|
522,202
|
|
|
|
|
1/2/08
|
|
|
12/10/07
|
|
|
|
|
|
|
|
23,380
|
|
|
$
|
43.43
|
|
|
$
|
487,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa
N. Colleran
|
|
|
1/2/08
|
|
|
12/10/07
|
|
|
|
5,856
|
|
|
|
|
|
|
|
|
|
|
$
|
254,326
|
|
|
|
|
1/2/08
|
|
|
12/10/07
|
|
|
|
|
|
|
|
11,060
|
|
|
$
|
43.43
|
|
|
$
|
230,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
S. Lamb, Ph.D.
|
|
|
1/2/08
|
|
|
12/10/07
|
|
|
|
4,600
|
|
|
|
|
|
|
|
|
|
|
$
|
199,778
|
|
|
|
|
1/2/08
|
|
|
12/10/07
|
|
|
|
|
|
|
|
9,200
|
|
|
$
|
43.43
|
|
|
$
|
191,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In
accordance with its normal practice, the Compensation Committee approved
the grant of these awards effective on January 2, 2008 at a meeting of the
Compensation Committee held on December 10,
2007.
|
|
(2)
|
These
awards vest in three equal installments beginning one year after the date
of grant.
|
|
(3)
|
These
awards vest in four equal installments beginning one year after the date
of grant.
|
Stock
Option Exercises and Vesting of Restricted Stock Awards
The
following table provides certain information with respect to option exercises
and stock vesting for each of our Named Executive Officers during the fiscal
year ended December 31, 2007.
Option
Exercises and Stock Vested
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
G. Thomas
|
|
|
72,254
|
|
|
$
|
2,620,199
|
|
|
|
103,500
|
|
|
$
|
4,206,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
T. Sobieski
|
|
|
27,525
|
|
|
$
|
885,006
|
|
|
|
19,570
|
|
|
$
|
600,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa
N. Colleran
|
|
|
83,908
|
|
|
$
|
2,375,701
|
|
|
|
38,543
|
|
|
$
|
1,591,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
S. Lamb, Ph.D.
|
|
|
27,376
|
|
|
$
|
672,296
|
|
|
|
1,314
|
|
|
$
|
30,813
|
|
|
(1)
|
Represents
the difference between the market price of the underlying securities at
exercise and the exercise price of the
option.
|
|
(2)
|
Represents
the number of shares vested multiplied by the market value of the
underlying shares on the vesting
date.
|
Outstanding
Equity Awards at Fiscal Year End
The
following table provides certain information concerning outstanding equity
awards held by each of our Named Executive Officers at December 31,
2007.
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
|
Option
Exercise Price ($)
|
|
Option
Expiration Date
|
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
|
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
(1)
|
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested (#)
|
|
|
Equity
Incentive Plan Awards: Market Value of Unearned Shares, Units or Other
Rights That Have Not Vested ($)
(1)
|
|
Paul
G. Thomas
|
|
|
-
|
|
|
|
26,250
|
|
|
$
|
19.25
|
|
01/02/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
37,456
|
|
|
$
|
23.45
|
|
01/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,739
|
|
|
$
|
4,903,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,628
|
|
|
$
|
975,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$
|
646,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,068
|
|
|
$
|
822,021
|
|
|
|
|
|
|
|
|
|
Steven
T. Sobieski
|
|
|
5,644
|
|
|
|
16,932
|
|
|
$
|
19.25
|
|
01/02/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
22,784
|
|
|
$
|
23.45
|
|
01/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
|
|
$
|
718,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,709
|
|
|
$
|
375,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,720
|
|
|
$
|
505,249
|
|
|
|
|
|
|
|
|
|
Lisa
N. Colleran
|
|
|
26,092
|
|
|
|
-
|
|
|
$
|
5.27
|
|
12/11/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,741
|
|
|
|
8,223
|
|
|
$
|
19.25
|
|
01/02/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
11,680
|
|
|
$
|
23.45
|
|
01/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,967
|
|
|
$
|
1,938,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,114
|
|
|
$
|
306,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,353
|
|
|
$
|
187,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,184
|
|
|
$
|
266,592
|
|
|
|
|
|
|
|
|
|
Bruce
S. Lamb, Ph.D.
|
|
|
22,624
|
|
|
|
50,000
|
|
|
$
|
8.84
|
|
03/31/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,628
|
|
|
|
7,884
|
|
|
$
|
19.25
|
|
01/02/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
9,600
|
|
|
$
|
23.45
|
|
01/02/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,942
|
|
|
$
|
169,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,800
|
|
|
$
|
206,928
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Based
on $43.11 per share, the closing price of the Common Stock, as reported on
the NASDAQ Global Market, on December 31,
2007.
|
Compensation
of Directors
Non-employee
directors are paid $25,000 per year, payable monthly, regardless of the number
of Board meetings attended, as well as $1,500 per meeting
attended. Non-employee directors who serve on the Compensation
Committee, the Nominating and Corporate Governance Committee and the Audit
Committee are also paid $3,000, $3,000 and $5,000 per year, respectively,
regardless of the number of committee meetings attended. The Chairman
of the Audit Committee receives an annual retainer of $10,000 and the Chairman
of the Compensation Committee and the Nominating and Corporate Governance
Committee each receive an annual retainer of $6,000 per
year. Directors are reimbursed for their expenses for attendance at
such meetings. Mr. Sutter has declined to accept any cash
compensation for his service on the Board. Our directors who are
employees of LifeCell receive no director fees.
In 2007,
newly elected non-employee directors were entitled to receive an option to
purchase 15,000 shares of common stock at an exercise price equal to the fair
market value of a share of common stock on such election
date. Additionally in 2007 and 2006, each non-employee
director was entitled to receive a restricted stock award of 3,500 shares of
common stock on the date of our Annual Meeting of Stockholders whereas in 2005,
each non-employee director received an option grant to purchase 10,000 shares of
common stock on the date of our Annual Meeting of Stockholders at an exercise
price equal to the fair market value of a share of common stock on such
date. The restricted stock awards granted to non-employee directors
in 2007 and 2006 vest in equal installments over a three-year period commencing
on the first anniversary of the date of grant. Options granted in
2005 vested one year after the date of grant and expire ten years after the date
of grant.
The
following table provides certain information with respect to the compensation
paid to our non-employee directors during the fiscal year ended December 31,
2007.
Directors
Compensation
|
|
Name
|
|
Fees
earned or paid in cash ($)
|
|
|
Stock
awards ($)
(1)
|
|
|
Option
awards ($)
(2)
|
|
|
Total
($)
|
|
Michael
E. Cahr
(3)
|
|
$
|
41,667
|
|
|
$
|
196,354
|
|
|
$
|
-
|
|
|
$
|
238,021
|
|
David
Fitzgerald
(4)
|
|
$
|
42,000
|
|
|
$
|
53,736
|
|
|
$
|
-
|
|
|
$
|
95,736
|
|
James
G. Foster
(4)
|
|
$
|
47,749
|
|
|
$
|
53,736
|
|
|
$
|
-
|
|
|
$
|
101,485
|
|
David
W. J. McGirr
(4)
|
|
$
|
6,264
|
|
|
$
|
-
|
|
|
$
|
15,188
|
|
|
$
|
21,452
|
|
Michael
R. Minogue
(4)
|
|
$
|
34,000
|
|
|
$
|
53,736
|
|
|
$
|
-
|
|
|
$
|
87,736
|
|
Robert
P. Roche, Jr.
(4)
|
|
$
|
34,000
|
|
|
$
|
53,736
|
|
|
$
|
-
|
|
|
$
|
87,736
|
|
Martin
P. Sutter
(4)
|
|
$
|
-
|
|
|
$
|
53,736
|
|
|
$
|
-
|
|
|
$
|
53,736
|
|
|
(1)
|
Represents
the compensation expense recognized in 2007 pursuant to FAS 123(R) for
restricted stock awards granted as long-term incentives pursuant to our
Equity Compensation Plan.
|
|
(2)
|
Represents
the compensation expense recognized in 2007 pursuant to FAS 123(R) for
stock options granted as long-term incentives pursuant to our Equity
Compensation Plan.
|
|
(3)
|
Mr.
Cahr retired from LifeCell’s Board of Directors effective November 12,
2007. Vesting of restricted stock awards held by Mr. Cahr was
accelerated pursuant to the Company’s non-employee director retirement
plans.
|
|
(4)
|
At
December 31, 2007, Mr. Fitzgerald had options to purchase 65,000 shares
and 5,834 restricted stock awards; Mr. Foster had options to purchase
85,000 shares and 5,834 restricted stock awards; Mr. McGirr had options to
purchase 15,000 shares; Mr. Minogue had options to purchase 25,000 shares
and 5,834 restricted stock awards; Mr. Roche had options to purchase
25,000 shares and 5,834 restricted stock awards; and Mr. Sutter had
options to purchase 25,000 shares and 5,834 restricted stock
awards.
|
Change-in-Control
and Severance Agreements
In
September 2005, we entered into employment agreements of Paul G. Thomas,
LifeCell’s Chairman, President and Chief Executive Officer; Steven T. Sobieski,
Vice President Finance and Chief Financial Officer; and Lisa N. Colleran, Senior
Vice President, Commercial Operations. We entered into a severance
arrangement with Bruce Lamb, Ph.D., Senior Vice President, Product Development
and Quality in February 2005, and a change-in-control agreement with Dr. Lamb in
April 2005.
We have
entered into such agreements with our executive officers to ensure that we will
have their continued dedication as executives, notwithstanding the possibility
of termination of their employment without cause, or the possibility, threat or
occurrence of a defined “change-in-control.” Following are details of
the agreements with each executive officer.
Paul
G. Thomas
Term
and Termination.
Mr.
Thomas’ employment under the employment agreement continues until the agreement
is terminated (a) as a result of his death or physical or mental disability that
prevents him from performing his duties under the employment agreement for a
period of at least 90 consecutive days or 120 non-consecutive days in any
12-month period, (b) by LifeCell with or without “cause” (as defined below), (c)
by Mr. Thomas with or without “good reason” (as defined below), or (d) by mutual
agreement.
The term
“cause” is defined in Mr. Thomas’ employment agreement as (a) a conviction for a
crime involving moral turpitude, including, but not limited to, fraud, theft,
embezzlement or any crime that results in or is intended to result in personal
enrichment at our expense, (b) a material breach by Mr. Thomas of the employment
agreement or of his confidentiality and non-compete agreements with us, or (c)
acts that, in the judgment of the Board, constitute willful misconduct to the
material detriment of us.
In Mr.
Thomas’ agreement, the term “good reason” refers to our doing any of the
following without Mr. Thomas’ consent (except actions during the period
beginning six months prior to and ending 18 months following a
“change-in-control” as defined below): (i) assign to Mr. Thomas any
duties inconsistent with his position and authority, (ii) remove Mr. Thomas
from, or fail to re-elect or appoint him to, any position that was held
immediately after the date of the employment agreement,
(iii) reduce Mr. Thomas’
annual base salary, (iv) fail to provide Mr. Thomas benefits substantially
similar to those he currently receives, (v) fail to provide him office space,
related facilities and support personnel or (vi) require Mr. Thomas to be
relocated to an office that will necessitate his commuting more than 25
additional miles each way.
Severance
Payments.
If Mr.
Thomas is terminated as a result of his death or disability, in addition to
accrued compensation and vested benefits, he is entitled to a bonus (based upon
the greater of the prior year’s bonus or the target bonus for the year of
termination), pro-rated based on the number of days he was employed during the
year of termination and payable as follows over 18 months.
If Mr.
Thomas is terminated without “cause” or he resigns for “good reason” (as defined
above), in addition to accrued compensation and vested benefits and the pro-rata
bonus described above, he is entitled to continuation of his salary and bonus
(based on the greater of the prior year’s bonus or his target bonus for the year
of termination) for 18 months and 18 months of subsidized COBRA
coverage. Separation payments and benefits are conditioned upon the
execution of a general release by Mr. Thomas in favor of LifeCell and related
parties.
Payments
upon Change-in-Control.
Under Mr.
Thomas’ employment agreement, if there occurs either of the following
events: (i) termination of his employment at any time during the
period beginning six (6) months prior to the effective date of a
“change-in-control” (as defined below) and ending eighteen (18) months after the
change-in-control, other than (x) a termination by Mr. Thomas for “cause” (as
defined below) or (z) a termination by Mr. Thomas without “good reason” (as
defined below), (ii) termination of his employment as a result of the failure,
upon a change-in-control, of either us or any successor to all or a substantial
portion of our business and/or or assets to continue his employment as an
executive officer for a period of at least twelve (12) months after the
effective date of the change-in-control, with a salary at least equal to his
annual base salary and a bonus each year equal to not less than the bonus that
Mr. Thomas received attributable to performance during the full fiscal year
immediately preceding the effective date of the change-in-control, or (iii)
following a change-in-control, termination of employment by Mr. Thomas after
failure of us or our successor to acknowledge or assume in writing the
obligations to Mr. Thomas set forth in his employment agreement; then Mr. Thomas
will be entitled to receive, in addition to accrued compensation and vested
benefits: (a) a lump sum payment equal to 2.9 times the sum of his base salary
and bonus (based upon the greater of his bonus for the year prior to the event
or his target bonus for the year in which the event occurred); and (b)
subsidized COBRA coverage for 18 months.
If any of
the above-mentioned events occur on or after July 1 in any calendar year, Mr.
Thomas will also be entitled to receive 50% of his target bonus for the year in
which the event occurred. Payments and benefits upon any of the above-mentioned
events are in lieu of the severance payments described in the paragraph above
captioned “Severance Payments.”
A
“change-in-control” has occurred under the terms of Mr. Thomas’ employment
agreement discussed herein when: (a) any person, firm or corporation
acquires directly or indirectly the beneficial ownership (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) of any voting security
of us and immediately after such acquisition, the acquirer has beneficial
ownership of voting securities representing 50% or more of the total voting
power of all our then-outstanding voting securities; (b) the individuals (x)
who, as of the date of each agreement, served on the Board of Directors or (y)
who thereafter are elected to the Board and whose election, or nomination for
election, to the Board was approved by a vote of at least 2/3 of the directors
in office, cease for any reason to constitute a majority of the members of the
Board; (c) our stockholders shall approve a merger, consolidation,
recapitalization or reorganization (or consummation of any such transaction if
stockholder approval is not sought or obtained), other than any such transaction
in which at least 66% of the total voting power of the surviving entity after
such transaction is beneficially owned by our stockholders; or (d) our
stockholders shall approve a plan of complete liquidation or an agreement for
the sale, lease or disposition by us of all or a substantial portion of our
assets (i.e., 50% or more in value of the total assets) other than to a
subsidiary or affiliate.
Under the
terms of Mr. Thomas’ employment agreement only, and for purposes of this
subsection “Payments upon Change-in-Control” only, the term “cause” is defined
as (a) conviction of any crime that constitutes a felony or a criminal offense
involving moral turpitude, or (b) intentionally engaging in conduct that is
materially injurious to us or our successor that is not cured by us within a
reasonable period of time after notice is given.
Further,
under the terms of Mr. Thomas’ employment agreement only, and for purposes of
this subsection “Payments upon Change-in-control” only, the term “good reason”
is defined as (a) the failure of us or our successor, without Mr. Thomas’
consent, to pay any amounts due to Mr. Thomas or to fulfill any other material
obligations to Mr. Thomas under the employment agreement, (b) the failure of us
or our successors, without Mr. Thomas’ consent, to maintain his position as an
executive officer with duties consistent with that of an executive officer, and
given our overall size and structure or our successor, Mr. Thomas neither is the
functional head of the functional business unit to which he is assigned, nor
reports to the functional head of the functional business unit to which he is
assigned, (c) any decrease, without Mr. Thomas’ consent, in his base salary,
annual bonus (based upon the annual bonus that Mr. Thomas received for the full
fiscal year immediately preceding the effective date of the change-in-control),
or in the level or in the value of Mr. Thomas’ benefits (unless the benefit(s)
changes are applicable to all executive level employees), (d) any relocation of
our offices or our successor, without Mr. Thomas’ consent, such that he would be
required to commute more than 25 additional miles each way, or (e) continued
employment of Mr. Thomas by us or our successor would be substantially likely to
cause Mr. Thomas to breach a material obligation that he reasonably believes is
owed to any prior employer or any other third party.
Additionally,
unless otherwise provided in a separate stock option agreement, restricted stock
purchase agreement or stock award agreement entered into after September 21,
2005, upon a change-in-control, all stock options and any other equity-based
compensation granted to Mr. Thomas shall become immediately vested and
exercisable for the longer of the exercise period in effect immediately prior to
the change-in-control or the period ending 90 days after the
change-in-control. However, with respect to the restricted stock
awards consisting of a retention stock award and a performance stock award
granted to Mr. Thomas on July 20, 2005, upon a change-in-control prior to the
“vesting date,” the restrictions applicable to all of the retention shares and
75,862 of the performance shares granted to Mr. Thomas shall lapse.
Modification
for 280G Parachute Payments.
In the
event that any payment or benefit that Mr. Thomas would receive upon termination
would otherwise constitute a “parachute payment” under Section 280G of the
Internal Revenue Code and be subject to the excise tax imposed by Section 4999
of the Code, such payment and benefits will be reduced to an amount equal to
either (a) the largest portion of the payment and benefits that would result in
no portion of the payment and benefits being subject to the excise tax or (b)
the largest portion of the payment, up to and including the total, whichever
amount, after taking into account all taxes and the excise tax, results in Mr.
Thomas’ receipt, on an after-tax basis, of the greater amount of the payment and
benefits.
Steven
T. Sobieski
Term
and Termination.
Mr.
Sobieski’s employment under the employment agreement continues until the
agreement is terminated (a) as a result of his death or physical or mental
disability that prevents him from performing his duties under the employment
agreement for a period of at least 90 consecutive days or 120 non-consecutive
days in any 12-month period, (b) by us with or without “cause” (as defined
below), (c) by Mr. Sobieski for any reason or no reason, or (d) by mutual
agreement.
The term
“cause” is defined in Mr. Sobieski’s employment agreement as (a) a conviction of
a felony or a criminal act involving moral turpitude, (b) commission of a
fraudulent, illegal or dishonest act in respect of us, (c) willful misconduct or
gross negligence that reasonably could be expected to be injurious to our
business, operations or reputation, (d) a material violation of our internal
policies, unless cured, (e) material failure to perform his duties as assigned,
unless cured, (f) breach of the terms of his confidentiality and non-compete
agreements with us, or (g) any other material breach of the representations,
warranties and covenants under the employment agreement, unless
cured.
Severance
Payments.
If Mr.
Sobieski is terminated as a result of his death or disability, in addition to
accrued compensation and benefits, he is entitled to a bonus (based upon the
greater of the prior year’s bonus or the target bonus for the year of
termination), pro-rated based on the number of days he was employed during the
year of termination and payable over 12 months.
If Mr.
Sobieski is terminated without cause, in addition to accrued compensation and
benefits and the pro-rata bonus described above, he is entitled to continuation
of his salary and bonus (based on the greater of the prior year’s bonus or the
target bonus for the year of termination) for 12 months, 12 months of subsidized
COBRA coverage, and an additional six months of COBRA coverage at our sole
expense. In addition, if Mr. Sobieski is terminated without cause,
(a) with respect to stock options granted prior to September 21, 2005, such
options will continue to vest in accordance with the vesting schedule set forth
in the applicable stock option agreement for a period of 12 months following the
termination, and he will have until the earlier of (1) the 10 year anniversary
of the date of the grant, or (2) the 12-month anniversary of the termination of
his employment, to exercise such options (to the extent vested), (b) with
respect to stock options granted on or after September 21, 2005, he shall have
until the earlier of (1) the 10 year anniversary of the date of the grant, or
(2) 1 day less than the 3 month anniversary of his termination, to exercise such
number of options as would have become exercisable had he continued to be
employed for a period of 12 months after termination, and (c) with respect to
only the restricted stock award covering 50,000 shares of Common Stock granted
to Mr. Sobieski on July 20, 2005, the restrictions that would have otherwise
lapsed had he continued to be employed for a period of 12-months following the
date of termination shall be deemed to have lapsed on the date of
termination. Separation payments and benefits are conditioned upon
the execution of a general release by Mr. Sobieski in favor of us and related
parties.
Payments
upon Change-in-Control.
Under Mr.
Sobieski’s employment agreement, if there occurs any of the following
events: (i) termination of his employment at any time during the
period beginning six (6) months prior to the effective date of a
“change-in-control” (as defined below) and ending twelve (12) months after the
change-in-control, other than (y) a termination by us for reason of conviction
for a felony or a criminal offense involving moral turpitude or intentional
engagement in conduct that is materially injurious to us or our successor or (z)
a termination by Mr. Sobieski without “good reason” (as defined below), (ii)
termination of his employment as a result of the failure, upon a
change-in-control, of either us or any successor to all or a substantial portion
of our business and / or our assets to continue his employment as an executive
officer for a period of at least twelve (12) months after the effective date of
the change-in-control, with a salary at least equal to his annual base salary
and a bonus each year equal to not less than the bonus that Mr. Sobieski
received attributable to performance during the full fiscal year immediately
preceding the effective date of the change-in-control, or (iii) following a
change-in-control, termination of employment by Mr. Sobieski after failure of us
or our successor to acknowledge or assume in writing the obligations set forth
in the employment agreement; then, in addition to accrued compensation and
vested benefits, Mr. Sobieski will be entitled to receive: (a) a lump sum
payment equal to two times the sum of his base salary and bonus (based upon the
greater of his bonus for the year prior to the event or his target bonus for the
year in which the event occurred); and (b) subsidized COBRA coverage for 12
months and COBRA coverage at the sole cost of LifeCell for an additional six
months.
If any of
the above-mentioned events occur on or after July 1 of any calendar year, Mr.
Sobieski also will be entitled to receive 50% of his target bonus for the year
in which the event occurred. Payments and benefits upon any of the
above-mentioned events are in lieu of the severance payments described in the
paragraph above captioned “Severance Payments.”
The
definition of “change-in-control” in Mr. Sobieski’s agreement is exactly the
same as the definition in Mr. Thomas’ agreement above.
In Mr.
Sobieski’s employment agreement, the term “good reason” is defined as (a) the
failure of us to pay any amounts due to the executive or to fulfill any other
material obligations under the employment agreement, unless cured; (b) the
failure of us to maintain Mr. Sobieski’s position as an executive officer; (c)
any decrease in Mr. Sobieski’s base salary, his annual bonus or level of
benefits; (d) any relocation of our offices such that Mr. Sobieski would be
required to commute more than 25 additional miles each way; or (e) if continued
employment by us would be substantially likely to cause Mr. Sobieski to breach a
material obligation to any prior employer or any third party.
Additionally,
unless otherwise provided in a separate stock option agreement, restricted stock
purchase agreement or stock award agreement entered into after September 21,
2005, upon a change-in-control all stock options and any other equity-based
compensation granted to Mr. Sobieski shall become immediately vested and
exercisable for the longer of the exercise period in effect immediately prior to
the change-in-control or the period ending 90 days after the
change-in-control.
Modification
for 280G Parachute Payments.
In the
event that any payment or benefit that Mr. Sobieski would receive upon
termination would otherwise constitute a “parachute payment” under Section 280G
of the Internal Revenue Code and be subject to the excise tax imposed by Section
4999 of the Code, such payment and benefits will be reduced to an amount equal
to either (a) the largest portion of the payment and benefits that would result
in no portion of the payment and benefits being subject to the excise tax or (b)
the largest portion of the payment, up to and including the total, whichever
amount, after taking into account all taxes and the excise tax, results in Mr.
Sobieski’s receipt, on an after tax-basis, of the greater amount of the payment
and benefits.
Lisa
N. Colleran
Term
and Termination.
Lisa
Colleran’s employment under the employment agreement continues until the
agreement is terminated (a) as a result of her death or physical or mental
disability that prevents Ms. Colleran from performing her duties under the
employment agreement for a period of at least 90 consecutive days or 120
non-consecutive days in any 12-month period, (b) by us with or without “cause”
(as defined below), (c) by the executive for any reason or no reason, or (d) by
mutual agreement.
Ms.
Colleran’s employment agreement defines the term “cause” exactly the same as Mr.
Sobieski’s agreement above.
Severance
Payments.
If Ms.
Colleran is terminated as a result of her death or disability, in addition to
accrued compensation and vested benefits, she is entitled to a bonus (based upon
the greater of the prior year’s bonus or the target bonus for the year of
termination), pro-rated based on the number of days she was employed during the
year of termination and payable over 12 months.
If Ms.
Colleran is terminated without cause, in addition to accrued compensation and
benefits and the pro-rata bonus described above, she is entitled to continuation
of her salary and bonus (based on the greater of the prior year’s bonus or the
target bonus for the year of termination) for 12 months, 12 months of subsidized
COBRA coverage, and an additional six months of COBRA coverage at our sole
expense. Separation payments and benefits are conditioned upon Ms.
Colleran’s execution of a general release in favor of LifeCell and related
parties.
Payments
upon Change-in-Control.
Under Ms.
Colleran’s employment agreement, if there occurs either of the following
events: (a) termination of her employment at any time during the
period beginning six (6) months prior to the effective date of a
“change-in-control” (as defined below) and ending twelve (12) months after the
change-in-control, other than (x) a termination by Ms. Colleran for cause, (y) a
termination as a result of Ms. Colleran’s death or disability, as described
above, or (z) a termination by Ms. Colleran without good reason, or (b)
following a change-in-control, termination of employment by Ms. Colleran after
failure of us or our successor to acknowledge or assume in writing the
obligations to her set forth in her employment agreement; then, in addition to
accrued compensation and vested benefits, Ms. Colleran will be entitled to
receive: (a) payments in an aggregate amount equal to the product of: (i) either
(y) 1.5, if the event occurs prior to September 21, 2006, or (z) 2.0, if the
event occurs on or after September 21, 2006; and (ii) the sum of her base salary
and bonus (based upon the greater of her bonus for the year prior to the event
or her target bonus for the year in which the event occurred), payable over 18
months or 24 months, as applicable; and (b) subsidized COBRA coverage for 12
months and COBRA coverage at the sole cost of LifeCell for an additional 6
months.
The
definition of “change-in-control” in Ms. Colleran’s agreement is exactly the
same as the definition in Mr. Thomas’ agreement above.
In Ms.
Colleran’s agreement, “good reason” is defined as (a) the failure of us to pay
any amounts due to Ms. Colleran or to fulfill any other material obligations
under the employment agreement, unless cured; (b) the failure of us to maintain
Ms. Colleran’s position as an executive officer; (c) any decrease in Ms.
Colleran’s base salary; (d) any relocation of our offices such that Ms. Colleran
would be required to commute more than 25 additional miles each
way.
If any of
the above-mentioned events occur on or after July 1 of any calendar year, Ms.
Colleran will also be entitled to receive 50% of her target bonus for the year
in which the event occurred. Payments and benefits upon any of the
above-mentioned events are in lieu of the severance payments described in the
paragraph above captioned “Severance Payments.”
Additionally,
unless otherwise provided in a separate stock option agreement, restricted stock
purchase agreement or stock award agreement entered into after September 21,
2005, upon a change-in-control all stock options and any other equity-based
compensation granted to Ms. Colleran shall become immediately vested and
exercisable for the longer of the exercise period in effect immediately prior to
the change-in-control or the period ending 90 days after the
change-in-control. However, with respect to the restricted stock
awards consisting of a retention stock award and a performance stock award
granted to Ms. Colleran on July 20, 2005, upon a change-in-control prior to the
“vesting date,” the restrictions applicable to all of the retention shares and
29,978 of the performance shares granted to Ms. Colleran shall
lapse.
Modification
for 280G Parachute Payments.
In the
event that any payment or benefit that Ms. Colleran would receive upon
termination would otherwise constitute a “parachute payment” under Section 280G
of the Internal Revenue Code and be subject to the excise tax imposed by Section
4999 of the Code, such payment and benefits will be reduced to an amount equal
to either (a) the largest portion of the payment and benefits that would result
in no portion of the payment and benefits being subject to the excise tax or (b)
the largest portion of the payment, up to and including the total, whichever
amount, after taking into account all taxes and the excise tax, results in Ms.
Colleran’s receipt, on an after-tax basis, of the greater amount of the payment
and benefits.
Bruce
Lamb
Severance
Payments.
Pursuant
to the terms of the severance agreement with Bruce Lamb, Dr. Lamb is entitled to
receive 12 months continuance of his base salary and 12 months subsidized
COBRA coverage if he is terminated by us for any reason other than for “cause”
(as defined below). These payments and benefits are conditioned upon
the execution by Dr. Lamb of a general release acceptable to
LifeCell.
The term
“cause” is defined in Dr. Lamb’s severance agreement as (a) a conviction of a
felony or a criminal act involving moral turpitude, (b) commission of a
fraudulent, illegal or dishonest act in respect of us, (c) willful misconduct or
gross negligence that reasonably could be expected to be materially injurious to
our business, operations or reputation, (d) a material violation of our
policies, unless cured, (e) material failure to perform his duties as assigned,
unless cured, (f) breach of the terms of his confidentiality and non-compete
agreement, (g) physical or mental disability that prevents him from performing
his duties under the employment agreement for a period of at least 90
consecutive days or 120 non-consecutive days in any 12-month period, or (h)
death.
Payments
upon Change-in-Control.
Under the
change-in-control agreement with Dr. Lamb, if there occurs either (i)
termination of his employment with us or any successor at any time during the
period beginning (3) three months prior to the effective date of a
“change-in-control” (as defined in Mr. Thomas’ employment agreement above) and
ending twelve (12) months after the change-in-control, other than a termination
for “cause” (as defined below) or termination of his employment by without “good
reason” (as defined below) during such period, or (ii) termination of employment
by Dr. Lamb after failure of us or such successor to acknowledge or assume in
writing the obligations to him set forth in the severance arrangement after
requested by Dr. Lamb, Dr. Lamb will be entitled to receive all then-accrued
compensation and fringe benefits, subsidized COBRA coverage for a period of 18
months and cash payments in the aggregate amount equal to 1.5 times his
annualized base salary immediately prior to the change-in-control, payable over
an 18 month period. Additionally, all stock options shall immediately
become vested and exercisable for the longer of the remainder of the exercise
period or 90 days following the effective date of the
change-in-control.
In Dr.
Lamb’s change-in-control agreement, “good reason” is defined as (a) the failure
of us to pay any amounts due to Dr. Lamb or to fulfill any other material
obligations under the employment agreement, unless cured; (b) any material
diminution, without Dr. Lamb’s consent, in his duties and responsibilities as an
executive officer of LifeCell; (c) any material decrease in Dr. Lamb’s base
salary; (d) any relocation of our offices such that Dr. Lamb would be required
to commute more than 50 additional miles each way.
The term
“cause” is defined in Dr. Lamb’s change-in-control agreement as (a) a conviction
of a felony or a criminal act involving moral turpitude, (b) commission of a
fraudulent, illegal or dishonest act in respect of us, (c) willful misconduct or
gross negligence that reasonably could be expected to be materially injurious to
our business, operations or reputation, (d) a violation of our policies, unless
cured, (e) material failure to perform his duties as assigned, unless cured, (f)
material violation of the terms of our other agreements with Dr. Lamb, (g)
physical or mental disability that prevents him from performing his duties under
the employment agreement for a period of at least 90 consecutive days or 120
non-consecutive days in any 12-month period, or (h) death.
Payments
and benefits upon any of the above-mentioned events are in lieu of the severance
payments described in the paragraph above captioned “Severance Payments” and are
conditioned upon Dr. Lamb’s execution of a general release in favor of LifeCell
and related parties.
Modification
for 280G Parachute Payments.
If,
within 15 days of an event described above, Dr. Lamb is notified by our
independent certified accountants in writing that the payments and benefits to
be paid would be nondeductible by us because of Section 280G of the Internal
Revenue Code, such payments and benefits shall be reduced to the minimum extent
necessary so that all payments and benefits made are deductible under Section
280G. Dr. Lamb shall have the discretion as to which payments and
benefits, and the amounts thereof, shall be reduced.
Estimated
Payments and Benefits upon Various Employment Termination Scenarios
The
following table describes the potential payments and benefits upon employment
termination for each of our Named Executive Officers pursuant to applicable law
and the terms of their employment and other agreements with us, as if their
employment had terminated on December 31, 2007 (the last business day of the
fiscal year) under the various scenarios described in the column headings as
explained in the footnotes below.
Name
|
|
Death
or Disability
(1)
|
|
|
Resignation
for Good Reason (
2)
|
|
|
Termination
without Cause (2)
|
|
|
Change-in-control
Trigger Event (3)
|
|
Paul
G. Thomas
|
|
$
|
390,000
|
|
|
$
|
1,350,000
|
|
|
$
|
1,350,000
|
|
|
$
|
3,932,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
T. Sobieski
|
|
$
|
112,000
|
|
|
|
----
|
|
|
$
|
560,000
|
|
|
$
|
1,603,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lisa
N. Colleran
|
|
$
|
131,000
|
|
|
|
----
|
|
|
$
|
429,000
|
|
|
$
|
1,263,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
S. Lamb, Ph.D.
|
|
|
----
|
|
|
|
----
|
|
|
$
|
263,000
|
|
|
$
|
767,000
|
|
|
(1)
|
Includes
pro-rata bonus only based on such Named Executive Officer’s bonus for the
fiscal year ended December 31, 2006, since it was higher than the target
bonus for the year ended December 31,
2007.
|
|
(2)
|
Includes
(a) a multiple of salary and bonus, based on such Named Executive
Officer’s salary for the year ended December 31, 2007 and bonus for the
fiscal year ended December 31, 2006, (b) pro-rata bonus based on such
Named Executive Officer’s bonus for the fiscal year ended December 31,
2006, (c) subsidized COBRA payments and (d) with respect to Mr. Sobieski
only, “in the money” value on December 31, 2007 of certain
stock options and restricted stock awards that would have vested within 12
months of the date of termination. The calculated amounts in
(a) above for Dr. Lamb are based exclusively on salary and do not include
any amount for a pro-rata bonus.
|
|
(3)
|
Includes
(a) a multiple of salary and bonus, based on such Named Executive
Officer’s salary for the year ended December 31, 2007 and bonus for the
fiscal year ended December 31, 2006, (b) pro-rata bonus based on such
Named Executive Officer’s bonus for the fiscal year ended December 31,
2006, (c) subsidized COBRA payments and (d) “in the
money” value on December 31, 2007 of all unvested stock options
and certain restricted stock awards. The calculated amounts in
(a) above for Dr. Lamb are based exclusively on salary and do not include
any amount for a pro-rata bonus.
|