Gen-Probe Incorporated
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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Exchange Act of 1934 (Amendment No. )
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10210 Genetic Center
Drive
San Diego, California
92121
Dear Fellow Stockholders:
You are cordially invited to attend our Companys Annual
Meeting of Stockholders on Thursday, May 31, 2007 at the
corporate headquarters of the Company at 10210 Genetic Center
Drive, San Diego, California 92121. The formal meeting will
begin at 10:00 a.m., at which time I will ask you to vote
on the following three proposals: Proposal 1: Election of
two directors whose term of office will expire in 2010;
Proposal 2: Approval of the Gen-Probe Incorporated 2007
Executive Bonus Plan; and Proposal 3: Ratification of
Independent Auditors. Following the meeting, I will report on
the Companys business.
Your vote is very important to us. The items of business to
be considered at the Annual Meeting are more fully described in
the accompanying proxy statement. Please review the enclosed
proxy materials and send in your vote today.
I look forward to seeing you at the Annual Meeting.
Sincerely,
Henry L. Nordhoff
Chairman, President and Chief Executive Officer
10210 Genetic Center Drive
San Diego, California 92121
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 31, 2007
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Gen-Probe Incorporated, a Delaware corporation
(the Company). The meeting will be held on Thursday,
May 31, 2007 at 10:00 a.m. local time at the corporate
headquarters of the Company at 10210 Genetic Center Drive,
San Diego, California 92121, for the following purposes:
1. To elect two directors to hold office until the 2010
Annual Meeting of Stockholders.
2. To approve the Gen-Probe Incorporated 2007 Executive
Bonus Plan.
3. To ratify the selection by the Audit Committee of the
Board of Directors of Ernst & Young LLP as the
Companys independent auditors for its fiscal year ending
December 31, 2007.
4. To conduct any other business properly brought before
the meeting.
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
The record date for the Annual Meeting is April 9, 2007.
Only stockholders of record at the close of business on that
date may vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Henry L. Nordhoff
Chairman, President and Chief Executive Officer
San Diego, California
April 27, 2007
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please
complete, date, sign and return the enclosed proxy, or vote over
the telephone or the Internet as instructed in these materials,
as promptly as possible in order to ensure your representation
at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for your convenience.
Even if you have voted by proxy, you may still vote in person if
you attend the meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, you must obtain a proxy issued
in your name from that record holder.
TABLE OF CONTENTS
GEN-PROBE
INCORPORATED
10210 Genetic Center Drive
San Diego, California 92121
PROXY
STATEMENT
FOR THE 2007 ANNUAL MEETING OF STOCKHOLDERS
May 31, 2007
QUESTIONS
AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I
receiving these materials?
We sent you this proxy statement and the enclosed proxy card
because the Board of Directors of Gen-Probe Incorporated
(sometimes referred to as the Company or
Gen-Probe) is soliciting your proxy to vote at the
2007 Annual Meeting of Stockholders. You are invited to attend
the annual meeting to vote on the proposals described in this
proxy statement. However, you do not need to attend the annual
meeting to vote your shares. Instead, you may simply complete,
sign and return the enclosed proxy card, or follow the
instructions below to submit your proxy over the telephone or on
the Internet.
We intend to mail this proxy statement and accompanying proxy
card on or about April 27, 2007 to all stockholders of
record entitled to vote at the annual meeting.
Who can
vote at the annual meeting?
Only stockholders of record at the close of business on
April 9, 2007 will be entitled to vote at the annual
meeting. On this record date, there were 52,415,955 shares
of common stock outstanding and entitled to vote.
Stockholder
of Record: Shares Registered in Your Name
If on April 9, 2007 your shares were registered directly in
your name with Gen-Probes transfer agent, Mellon Investor
Services, LLC, then you are a stockholder of record. As a
stockholder of record, you may vote in person at the annual
meeting or vote by proxy. Whether or not you plan to attend the
annual meeting, we urge you to fill out and return the enclosed
proxy card or vote by proxy over the telephone or on the
Internet as instructed below to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If on April 9, 2007 your shares were held, not in your
name, but rather in an account at a brokerage firm, bank,
dealer, or other similar organization, then you are the
beneficial owner of shares held in street name and
these proxy materials are being forwarded to you by that
organization. The organization holding your account is
considered to be the stockholder of record for purposes of
voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent regarding how to
vote the shares in your account. You are also invited to attend
the annual meeting. However, since you are not the stockholder
of record, you may not vote your shares in person at the annual
meeting unless you request and obtain a valid proxy from your
broker or other agent.
What am I
voting on?
There are three matters scheduled for a vote:
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Election of two directors;
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Approval of the Gen-Probe Incorporated 2007 Executive Bonus
Plan; and
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Ratification of the selection by the Audit Committee of the
Board of Directors of Ernst & Young LLP as the
Companys independent auditors for its fiscal year ending
December 31, 2007.
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How do I
vote?
For each of the matters to be voted on, you may vote
For or Against or abstain from voting.
The procedures for voting are fairly simple:
Stockholder
of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at
the annual meeting, vote by proxy using the enclosed proxy card,
vote by proxy over the telephone, or vote by proxy on the
Internet. Whether or not you plan to attend the annual meeting,
we urge you to vote by proxy to ensure your vote is counted. You
may still attend the annual meeting and vote in person if you
have already voted by proxy.
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To vote in person, come to the annual meeting and we will give
you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the
annual meeting, we will vote your shares as you direct.
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To vote over the telephone, available for USA, Canada and Puerto
Rico stockholders only, dial toll-free
1-866-540-5760
using a touch-tone phone and follow the recorded instructions.
You will be asked to provide the company number and control
number from the enclosed proxy card. Your vote must be received
by 11:59 p.m. Eastern Time on May 30, 2007 to be
counted.
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To vote on the Internet, go to http://www.proxyvoting.com/gpro
to complete an electronic proxy card. You will be asked to
provide the company number and control number from the enclosed
proxy card. Your vote must be received by 11:59 p.m.
Eastern Time on May 30, 2007 to be counted.
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Beneficial
Owner: Shares Registered in the Name of Broker or
Bank
If you are a beneficial owner of shares registered in the name
of your broker, bank, or other agent, you should have received a
proxy card and voting instructions with these proxy materials
from that organization rather than from Gen-Probe. Simply
complete and mail the proxy card to ensure that your vote is
counted. Alternatively, you may vote by telephone or over the
Internet as instructed by your broker, bank or other agent. To
vote in person at the annual meeting, you must obtain a valid
proxy from your broker, bank, or other agent. Follow the
instructions from your broker, bank or other agent included with
these proxy materials, or contact your broker, bank or other
agent to request a proxy form.
We provide telephone and Internet proxy voting to allow you
to vote your shares telephonically and on-line, with procedures
designed to ensure the authenticity and correctness of your
proxy vote instructions. However, please be aware that you must
bear any costs associated with your telephone or Internet
access, such as usage charges from telephone companies and
Internet access providers.
How many
votes do I have?
On each matter to be voted upon, you have one vote for each
share of common stock you owned as of April 9, 2007.
What if I
return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted For the
election of both nominees for director, For the
approval of the Gen-Probe Incorporated 2007 Executive Bonus Plan
and For the ratification of Ernst & Young
LLP as the Companys independent auditors for its fiscal
year ending December 31, 2007. If any other matter is
properly presented at the annual meeting, your proxy (one of the
individuals named on your proxy card) will vote your shares
using his best judgment.
2
Who is
paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In
addition to these mailed proxy materials, our directors and
employees may also solicit proxies in person, by telephone, or
by other means of communication. Directors and employees will
not be paid any additional compensation for soliciting proxies.
The solicitation of proxies may also be supplemented through the
use of a proxy solicitation firm. If used, a proxy solicitation
firm will receive a customary fee, which we estimate to be
$10,000, plus
out-of-pocket
expenses. We may also reimburse brokerage firms, banks and other
agents for the cost of forwarding proxy materials to beneficial
owners.
What does
it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
Can I
change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote
at the annual meeting. If you are the record holder of your
shares, you may revoke your proxy in any one of three ways:
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You may submit another properly completed proxy card with a
later date.
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You may send a written notice that you are revoking your proxy
to Gen-Probes Corporate Secretary at 10210 Genetic Center
Drive, San Diego, California 92121.
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You may attend the annual meeting and vote in person. Simply
attending the meeting will not, by itself, revoke your proxy.
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If your shares are held by your broker or bank as a nominee or
agent, you should follow the instructions provided by your
broker or bank.
When are
stockholder proposals due for next years annual
meeting?
To be considered for inclusion in next years proxy
materials, your proposal must be submitted in writing by
December 28, 2007, to Gen-Probes Corporate Secretary
at 10210 Genetic Center Drive, San Diego, California 92121.
If you wish to submit a proposal that is not to be included in
next years proxy materials or nominate a director, then,
pursuant to our Bylaws, you must do so by no later than
February 16, 2008 and no earlier than January 17,
2008. If you wish to bring a matter before the stockholders at
next years annual meeting and you do not notify Gen-Probe
before February 16, 2008, for all proxies we receive, the
proxyholders will have discretionary authority to vote on the
matter, including discretionary authority to vote in opposition
to the matter.
How are
votes counted?
Votes will be counted by the inspector of election appointed for
the annual meeting, who will separately count For
and Against votes, abstentions and broker non-votes.
Except with respect to the election of directors, abstentions
will be counted towards the vote total for each proposal, and
will have the same effect as Against votes. With
respect to the election of directors, abstentions will have no
effect and will not be counted towards the vote total for any
nominee. Broker non-votes have no effect and will not be counted
towards the vote total for any proposal.
What are
broker non-votes?
Broker non-votes occur when a beneficial owner of shares held in
street name does not give instructions to the broker
or nominee holding the shares as to how to vote on matters
deemed non-routine. Generally, if shares are held in
street name, the beneficial owner of the shares is entitled to
give voting instructions to the broker or nominee holding the
shares. If the beneficial owner does not provide voting
instructions, the broker or nominee can still vote the shares
with respect to matters that are considered to be
routine, but not with respect to
non-routine matters. Under the rules and
interpretations of the New York Stock Exchange
(NYSE), non-routine matters are
generally those involving a proxy contest or matters that may
substantially affect the rights or privileges of
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shareholders, such as mergers or shareholder proposals. Under
Delaware law, a broker non-vote is counted as present for quorum
purposes but is not considered to be entitled to vote on the
specified matter.
How many
votes are needed to approve each proposal?
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For the election of directors, any director receiving the
majority of votes cast in person or by proxy (number of shares
voted For a director must exceed 50% of the number
of votes cast with respect to that directors election)
will be elected as a director, provided that if the number of
nominees exceeds the number of directors to be elected (a
situation we do not anticipate), the two nominees receiving the
most For votes (among votes properly cast in person
or by proxy) will be elected. Only votes For and
Against will affect the outcome. Abstentions and
broker non-votes will have no effect.
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To be approved, Proposal No. 2, approval of the
Gen-Probe Incorporated 2007 Executive Bonus Plan, must receive
For votes from the majority of shares present and
entitled to vote either in person or by proxy. If you
Abstain from voting, it will have the same effect as
an Against vote. Broker non-votes will have no
effect.
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To be approved, Proposal No. 3, ratification of the
selection by the Audit Committee of the Board of Directors of
Ernst & Young LLP as the Companys independent
auditors for its fiscal year ending December 31, 2007, must
receive For votes from the holders of a majority of
shares present and entitled to vote either in person or by
proxy. If you Abstain from voting, it will have the
same effect as an Against vote. Broker non-votes
will have no effect.
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What is
the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A
quorum will be present if stockholders holding at least a
majority of the outstanding shares on the record date are
present at the annual meeting in person or represented by proxy.
On April 9, 2007, the record date, there were
52,415,955 shares outstanding and entitled to vote. Thus,
the holders of 26,207,978 shares must be present in person
or represented by proxy at the annual meeting to have a quorum.
Your shares will be counted towards the quorum only if you
submit a valid proxy (or one is submitted on your behalf by your
broker, bank or other nominee) or if you vote in person at the
annual meeting. Abstentions and broker non-votes will be counted
towards the quorum requirement. If there is no quorum, the
holders of a majority of the shares present at the meeting in
person or represented by proxy may adjourn the annual meeting to
another date.
How can I
find out the results of the voting at the annual
meeting?
Preliminary voting results will be announced at the annual
meeting. Final voting results will be published in the
Companys quarterly report on
Form 10-Q
for the second quarter of 2007.
4
PROPOSAL 1
ELECTION OF DIRECTORS
Gen-Probes Board of Directors is divided into three
classes. Each class consists, as nearly as possible, of
one-third of the total number of directors, and each class has a
three-year term. Vacancies on the Board may be filled only by
persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy in a class,
including vacancies created by an increase in the number of
directors, shall serve for the remainder of the full term of
that class, and until the directors successor is elected
and qualified.
The Board of Directors presently has eight members. On
December 17, 2006, Dr. Brian A. McNamee announced that
he would not stand for re-election as of the annual meeting. At
a meeting held on April 10, 2007, the Board of Directors
reduced the Board size to seven members effective as of the
annual meeting.
There are two directors in the class whose term of office
expires at the annual meeting. Each of the nominees listed below
is currently a director of the Company who was previously
elected by the stockholders. If elected at the annual meeting,
each of these nominees would serve until the 2010 annual meeting
and until his or her successor is elected and has qualified, or,
if sooner, until the directors earlier death, resignation
or removal. It is the Companys policy to encourage our
directors and nominees for director to attend our annual
meetings of stockholders. All of our directors, except
Dr. Laubach who was retiring as of the meeting date and
Mr. Schneider, attended the 2006 Annual Meeting of
Stockholders, including the nominees for election as a director
at the 2006 Annual Meeting of Stockholders.
For the election of directors, any director receiving the
majority of votes cast (number of shares voted For a
director must exceed 50% of the number of votes cast in person
or by proxy with respect to that directors election) will
be elected as a director, provided that if the number of
nominees for director exceeds the number of directors to be
elected (a contested election), directors are
elected by a plurality of the votes properly cast in person or
by proxy. The Companys Bylaws require an incumbent
director who fails to receive the affirmative vote of a majority
of the votes cast in an uncontested election at a meeting of
stockholders to promptly submit his or her resignation, with
such resignation to be considered by the members of the
Nominating and Corporate Governance Committee of the Board.
Under Delaware law, an incumbent director who fails to receive
the required votes hold over, or continues to serve
as a director, until his or her successor is elected and
qualified. The Nominating and Corporate Governance Committee
will make a recommendation to the Board whether to accept or
reject the tendered resignation, or whether other action should
be taken. The Board will act on the tendered resignation, taking
into account the Nominating and Corporate Governance
Committees recommendation, and publicly disclose its
decision regarding the tendered resignation and the rationale
behind the decision within ninety days from the date of the
certification of the election results. A director who tenders
his or her resignation will not participate in the
recommendation of the Nominating and Corporate Governance
Committee or the Boards decision with respect to his or
her resignation. If the incumbent directors resignation is
not accepted by the Board, such director shall continue to serve
until the end of his or her term of office and until his or her
successor shall have been elected and qualified, or his or her
earlier resignation or removal. If a directors resignation
is accepted by the Board, or if a nominee for director is not
elected and the nominee is not an incumbent director, then the
Board, in its sole discretion, may fill any resulting vacancy.
Shares represented by executed proxies will be voted, if
authority to do so is not withheld, for the election of the two
nominees named below. If any nominee becomes unavailable for
election as a result of an unexpected occurrence, your shares
will be voted for the election of a substitute nominee proposed
by the Companys Nominating and Corporate Governance
Committee. Each person nominated for election has agreed to
serve if elected. Our management has no reason to believe that
any nominee will be unable to serve.
5
The following is a brief biography of each nominee and each
director whose term will continue after the annual meeting.
Nominees
for Election to the Board of Directors
For a Three-Year Term Expiring at the
2010 Annual Meeting of Stockholders
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Name
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Present Position with the Company
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Mae C. Jemison, M.D.
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50
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Director
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Armin M. Kessler
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69
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Director
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Mae C. Jemison, M.D., has served as a director of
the Company since March 2004. Dr. Jemison has been
President and founder of BioSentient Corporation, a medical
devices company specializing in ambulatory physiologic
monitoring, since December 2000. She has also been President of
The Jemison Group, Inc. since 1993. The Jemison Group is a
technology consulting company that applies and integrates
science and advanced technology considering the worldwide social
and technological circumstances of the users. Dr. Jemison
founded and directs The Earth We Share, an international science
camp for students ages 12 to 16 worldwide. She was a
professor of Environmental Studies of Dartmouth College from
1996 to 2001. From 1987 to 1993, she was an astronaut with the
National Aeronautics and Space Administration (NASA) and was a
member of the Space Shuttle Endeavour Flight in September 1992.
Dr. Jemison is also a director of Scholastic, Inc., a
publishing company, Valspar Corporation and Kimberly-Clark
Corporation and a member of the Institute of Medicine of the
National Academy of Sciences. Dr. Jemison is the Chairman
of the Texas Product Development and Small Business Incubator
Board and the Biotechnical and Life Science Industry Cluster for
the State of Texas. Dr. Jemison received a B.S. in chemical
engineering and fulfilled the requirements for an A.B. in
African and
Afro-American
Studies from Stanford University in 1977, and received a
doctorate degree in medicine from Cornell University in 1981.
Armin M. Kessler, has served as a director of the Company
since November 2002. Mr. Kessler served as Chief Operating
Officer of Hoffman-La Roche in Basel, Switzerland from 1990
to 1995. Prior to being appointed Chief Operating Officer,
Mr. Kessler held several senior positions at
Hoffman-La Roche, including head of the diagnostics and
pharmaceutical divisions of the organization. Earlier positions
in his career included Director of Pharmaceutical Marketing
Worldwide for Novartis (formerly Sandoz) and President of Sandoz
KK in Tokyo. Mr. Kessler currently serves on the board of
Actelion Ltd, PRA International and The Medicines Company, and
has served on the boards of Hoffman-La Roche, Syntex
Chemicals and Genentech. Mr. Kessler received a degree in
Physics and Chemistry from Pretoria University in South Africa,
a degree in chemical engineering from the University of Cape
Town, South Africa, a juris doctorate from Seton Hall
University, and a Dr.hc. in Business Administration from the
University of Pretoria.
The Board
of Directors recommends a vote in favor of each named
nominee.
Directors
Continuing in Office until the
2008 Annual Meeting of Stockholders
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Name
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Age
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Present Position with the Company
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Raymond V. Dittamore
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64
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Director
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Abraham D. Sofaer
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68
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Director
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Phillip M. Schneider
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51
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Director
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Raymond V. Dittamore, has served as a director of the
Company since August 2002. Mr. Dittamore is a retired audit
partner of the international accounting firm of Ernst &
Young LLP. Mr. Dittamore retired from Ernst &
Young in 2001 after 35 years of service with the firm,
including 14 years as the managing partner of the
firms San Diego office. His practice in
San Diego focused on companies in the life sciences
industry, and he was a collaborative editor for Ernst &
Youngs annual biotechnology report. Mr. Dittamore is
a member of the board of directors of Invitrogen Corporation,
Qualcomm Incorporated and Digirad Corporation.
Mr. Dittamore received a B.S. in accounting from
San Diego State University.
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Abraham D. Sofaer, has served as a director of the
Company since August 2002. Since 1994, Mr. Sofaer has been
the George P. Shultz Distinguished Scholar and Senior Fellow,
The Hoover Institution, Stanford University. He previously
served as a United States District Judge for the Southern
District of New York, as the Legal Adviser for the United States
Department of State, as a Professor at Columbia University
School of Law, and as a partner in the New York law firm of
Hughes, Hubbard & Reed. Mr. Sofaer is a member of
the board of directors of two public companies, NTI, Inc. and
Rambus, Inc., and four private companies: 3L&T, Inc.
Neugenesis, IntelliGeneScan, Inc. and PLC Diagnostics. He
received a B.A. in history from Yeshiva College and an L.L.B.
from New York University School of Law.
Phillip M. Schneider, has served as a director of the
Company since November 2002. Mr. Schneider is the former
Chief Financial Officer of IDEC Pharmaceuticals Corporation.
During his
15-year
tenure at IDEC, he served as Senior Vice President and Chief
Financial Officer where he played an integral role in the
companys growth. Prior to his association with IDEC,
Mr. Schneider held various management positions at Syntex
Pharmaceuticals Corporation and was previously with KPMG, LLP.
Mr. Schneider is a member of the board of directors of
Micromet, Inc. and Targegen, Inc. Mr. Schneider holds an
M.B.A. from the University of Southern California and a B.S. in
biochemistry from the University of California at Davis.
Directors
Continuing in Office until the
2009 Annual Meeting of Stockholders
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Name
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Present Position with the Company
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John W. Brown
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72
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Director
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Henry L. Nordhoff
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65
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Chairman, President and Chief
Executive Officer
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John W. Brown, has served as a director of the Company
since December 2005. Mr. Brown has served as Chairman of
the Board of Stryker Corporation, a worldwide leader in
orthopedic medical devices, since January 1981. He was
previously the President and Chief Executive Officer of Stryker
from February 1977 to June 2003, and Chief Executive Officer of
Stryker from June 2003 through December 2004. He is also a
director of St. Jude Medical, Inc., the American Business
Conference, an association of mid-size growth companies, and
Chair of the Institute for Health Technology Studies.
Mr. Brown received a bachelors degree in Chemical
Engineering from Auburn University.
Henry L. Nordhoff, has served as a director of the
Company since July 1994. Mr. Nordhoff joined the Company in
July 1994 as Chief Executive Officer and President and was
elected Chairman of the Board in September 2002. Prior to
joining the Company, he was President and Chief Executive
Officer of TargeTech, Inc., a gene therapy company that was
merged into Immune Response Corporation. Prior to that,
Mr. Nordhoff was at Pfizer, Inc. in senior positions in
Brussels, Seoul, Tokyo and New York. He received a B.A. in
international relations and political economy from Johns Hopkins
University and an M.B.A. from Columbia University.
Mr. Nordhoff is also a member of the board of directors of
Mannkind Corporation.
INFORMATION
REGARDING THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE
Independence
of the Board of Directors
As required under The Nasdaq Stock Market (Nasdaq)
listing standards, a majority of the members of a listed
companys Board of Directors must qualify as
independent, as affirmatively determined by the
Board of Directors. The Board consults with the Companys
counsel to ensure that the Boards determinations are
consistent with all relevant securities and other laws and
regulations regarding the definition of independent,
including those set forth in pertinent Nasdaq listing standards,
as in effect from time to time.
Consistent with these considerations, after review of all
relevant transactions or relationships between each director, or
any of his or her family members, and the Company, its senior
management and its independent auditors, the Board affirmatively
determined that the following directors are independent
directors within the meaning of the applicable Nasdaq listing
standards: John W. Brown, Raymond V. Dittamore, Mae C.
Jemison, M.D., Armin M.
7
Kessler, Brian A. McNamee, M.B.B.S., Phillip M. Schneider and
Abraham D. Sofaer. In making this determination, the Board found
that none of the directors or nominees for director, other than
Mr. Nordhoff, has a material or other disqualifying
relationship with the Company. Mr. Nordhoff, the Chairman,
President and Chief Executive Officer of the Company, is not an
independent director by virtue of his employment with the
Company.
Meetings
of the Board of Directors
The Board of Directors met eight times during 2006. All
directors except Dr. Jemison and Dr. Laubach attended
at least 75% or more of the aggregate of the meetings of the
Board and of the committees on which they served, held during
the period for which they were directors or committee members,
respectively. Dr. Laubach retired from the Board and
service on the Audit Committee and the Compensation Committee as
of May 17, 2006.
As required under applicable Nasdaq listing standards, in fiscal
2006, the Companys independent directors met four times in
regularly scheduled executive sessions at which only independent
directors were present. Persons interested in communicating with
the independent directors regarding their concerns or issues may
address correspondence to a particular director or to the
independent directors generally, in care of Gen-Probe
Incorporated, Attention: Corporate Secretary, 10210 Genetic
Center Drive, San Diego, California 92121.
Information
Regarding Committees of the Board of Directors
During 2006, the Board had five committees: an Audit Committee,
a Compensation Committee, a Nominating and Corporate Governance
Committee, a Special Awards Committee, and a Succession Planning
Committee. The following table provides membership information
as of December 31, 2006 and meeting information for fiscal
2006 for each of the Board committees:
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Committee Members
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Audit
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Compensation
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Governance
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Awards
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Succession (4)
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John W. Brown(1)
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X
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X
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Raymond V. Dittamore
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X
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X
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X
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Mae C. Jemison, M.D.(2)
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X
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Armin M. Kessler
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X
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*
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X
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X
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*
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Gerald D. Laubach, Ph.D.(3)
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Brian A. McNamee, M.B.B.S.
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X
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X
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Henry L. Nordhoff
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X
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X
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Phillip M. Schneider
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X
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*
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Abraham D. Sofaer
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X
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X
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*
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Total meetings in 2006
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7
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5
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4
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0
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()
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4
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* |
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Committee Chairperson |
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() |
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The Special Awards Committee acted only by written consent
during 2006. |
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(1) |
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Mr. Brown served on the Nominating and Corporate Governance
Committee of the Board during 2006 until September 28, 2006. |
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(2) |
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Dr. Jemison served on the Compensation Committee of the
Board during 2006 until September 28, 2006. |
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(3) |
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Dr. Laubach retired from the Board and service on the Audit
Committee and the Compensation Committee as of May 17, 2006. |
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(4) |
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The Succession Planning Committee was dissolved at a meeting of
the Board held on February 8, 2007 since the Committee had
completed its primary objective of identifying and assisting in
the selection of a Chief Operating Officer. |
Below is a description of each committee of the Board of
Directors. The Board of Directors has determined that, except as
specifically described below, each member of each committee
meets the applicable Nasdaq rules and regulations regarding
independence and that each member is free of any
relationship that would impair his or her individual exercise of
independent judgment with regard to the Company.
8
Audit
Committee
The Audit Committee of the Board of Directors was established by
the Board in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934 (the Exchange Act)
to oversee the Companys corporate accounting and financial
reporting processes and audits of its financial statements. For
this purpose, the Audit Committee performs several functions.
The Audit Committee evaluates the performance, and assesses the
qualifications, of the independent auditors; determines and
approves the engagement of the independent auditors; determines
whether to retain or terminate the existing independent auditors
or to appoint and engage new independent auditors; reviews and
approves the retention of the independent auditors to perform
any proposed permissible non-audit services; monitors the
rotation of partners of the independent auditors on the
Companys audit engagement team as required by law; reviews
and approves or rejects transactions between the Company and any
related persons; confers with management and the independent
auditors regarding the effectiveness of internal controls over
financial reporting; establishes procedures, as required under
applicable law, for the receipt, retention and treatment of
complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and the
confidential and anonymous submission by employees of concerns
regarding questionable accounting or auditing matters; meets to
review the Companys annual audited financial statements
and quarterly financial statements with management and the
independent auditor; reviews the Managements
Discussion and Analysis of Financial Condition and Results of
Operations portion of the Companys periodic filings
with the Securities and Exchange Commission (SEC);
reviews the financial statements to be included in the
Companys Annual Report on
Form 10-K;
reviews earnings releases and financial information and guidance
prior to public dissemination; oversees the internal audit
function of the Company; and discusses with management and the
independent auditors the results of the annual audits and the
results of the Companys quarterly financial statements.
Three directors comprise the Audit Committee: Mr. Schneider
(Chairman), Mr. Dittamore and Mr. Sofaer. The Audit
Committee met seven times during 2006.
The Board of Directors annually reviews the Nasdaq listing
standards definition of independence for Audit Committee members
and has determined that all members of the Companys Audit
Committee are independent (as independence is currently defined
in Rule 4350(d)(2)(A)(i) and (ii) of the Nasdaq
listing standards). The Board of Directors has determined that
Mr. Schneider and Mr. Dittamore each qualify as an
audit committee financial expert, as defined in
applicable SEC rules. The Board made a qualitative assessment of
Mr. Schneiders and Mr. Dittamores level of
knowledge and experience based on a number of factors, including
their formal education and, in the case of Mr. Schneider,
his experience as a chief financial officer for a public
reporting company, and in the case of Mr. Dittamore, his
experience as a partner with Ernst & Young LLP. In
addition to the Companys Audit Committee,
Mr. Schneider also serves as Chairman of the Audit
Committees of Micromet, Inc. and Targegen, Inc. In addition to
the Companys Audit Committee, Mr. Dittamore also
serves as Chairman of the Audit Committees of Invitrogen
Corporation and Digirad Corporation and as a member of the Audit
Committee of Qualcomm Corporation. Mr. Sofaer also serves
as a member of the Audit Committee of NTI, Inc. and Rambus, Inc.
The Board of Directors has determined that such simultaneous
service does not impair Mr. Schneiders,
Mr. Dittamores or Mr. Sofaers respective
ability to effectively serve on the Companys Audit
Committee.
Report of
the Audit Committee of the Board of Directors
Each member of the Audit Committee is an independent director as
determined by the Companys Board of Directors, based on
Nasdaq listing rules and the Companys independence
guidelines. Each member of the Audit Committee also satisfies
the SECs additional independence requirements for members
of audit committees.
The Audit Committee has adopted, and annually reviews, a charter
outlining the practices it follows. The charter specifies that
the primary purpose of the Audit Committee is to assist the
Board of Directors in its oversight of:
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the adequacy of the Companys internal controls, corporate
accounting, financial reporting practices and audits of
financial statements;
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the quality, integrity, and reliability of the Companys
financial statements and financial reports to the public;
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9
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the performance of the Companys internal audit
function; and
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the independence, qualifications, and performance of the
Companys independent auditors.
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In carrying out these responsibilities, the Audit Committee,
among other things:
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monitors preparation of quarterly and annual financial reports
by the Companys management;
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supervises the relationship between the Company and its
independent auditors, including: having direct responsibility
for their appointment, compensation and retention; reviewing the
scope of their audit services; approving audit and non-audit
services; and confirming the independence of the independent
auditors; and
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oversees managements implementation and maintenance of
effective systems of internal and disclosure controls, including
review of the Companys policies relating to ethics and
conflicts of interests and review of the Companys internal
auditing program.
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The Audit Committee met seven times during fiscal 2006. The
Audit Committee schedules its meetings with a view to ensuring
that it devotes appropriate attention to all of its tasks. The
Audit Committees agenda is established by the Audit
Committees chairman and the director of internal audit.
The Audit Committee meetings include discussion of significant
accounting policies applied by the Company in its financial
statements, as well as alternative treatments. The Audit
Committees meetings include, whenever appropriate,
executive sessions in which the Audit Committee meets separately
with the Companys independent auditors, the Companys
director of internal audit, and the Companys Chief
Financial Officer.
The Audit Committee has been updated quarterly on
managements process to assess the adequacy of the
Companys system of internal control over financial
reporting, the framework used to make the assessment, and
managements conclusions on the effectiveness of the
Companys internal control over financial reporting. The
Audit Committee has also discussed with the independent auditors
the Companys internal control assessment process,
managements assessment with respect thereto and the
independent auditors evaluation of the Companys
system of internal control over financial reporting.
The Company has an internal audit department that reports to the
Audit Committee. The Audit Committee reviews and approves the
internal audit plan once a year and receives periodic updates of
internal audit activity in meetings held at least quarterly
throughout the year. Updates include discussion of audit project
results, including assessment of internal controls.
The Audit Committee recommended to the Board of Directors the
engagement of Ernst & Young LLP as the Companys
independent auditors for the year ended December 31, 2006,
and reviewed with senior members of the Companys financial
management team, the independent auditors, and the director of
internal audit, the overall audit scope and plans and the
results of internal and external audit examinations. Although
the Audit Committee has the sole authority to appoint the
independent auditors, the Audit Committee will continue its
long-standing practice of recommending that the Board ask the
Companys stockholders, at the annual meeting, to ratify
appointment of the independent auditors.
As part of its oversight of the Companys financial
statements, the Audit Committee reviews and discusses with both
management and the Companys independent auditors all
annual and quarterly financial statements prior to their
issuance. During fiscal 2006, management advised the Audit
Committee that each set of financial statements reviewed had
been prepared in accordance with generally accepted accounting
principles, and reviewed significant accounting and disclosure
issues with the Audit Committee. These reviews included
discussion with the independent auditors of matters required to
be discussed pursuant to Statement on Auditing Standards
No. 61 (Communication with Audit Committees), including
the quality of the Companys accounting principles, the
reasonableness of significant judgments and the clarity of
disclosures in the financial statements. The Audit Committee
also discussed with Ernst & Young LLP matters relating
to its independence, including a review of audit and non-audit
fees and the written disclosures and letter from
Ernst & Young LLP to the Committee pursuant to
Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). The Audit
Committee has concluded that Ernst & Young LLPs
provision of audit and non-audit services to the Company and its
affiliates is compatible with Ernst & Young LLPs
independence.
10
Taking all of these reviews and discussions into account, on
February 7, 2007, the Audit Committee recommended to the
Board of Directors that the audited financial statements be
included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, for filing
with the SEC.
AUDIT COMMITTEE
Phillip M. Schneider, Chairman
Raymond V. Dittamore
Abraham D. Sofaer
Compensation
Committee
The Compensation Committee is comprised of three directors:
Mr. Kessler (Chairman), Mr. Brown, and
Dr. McNamee. As of the date of the annual meeting,
Dr. McNamee will depart from the Board and service on the
Compensation Committee, and Mr. Dittamore will begin
serving on the Compensation Committee. All members of the
Companys Compensation Committee are independent directors
who are not employees of the Company or its subsidiaries. Please
see the Companys Compensation Discussion and Analysis (the
CD&A) for more information regarding the duties
and authority of the Compensation Committee. Commencing this
year, the Compensation Committee also began to review with
management the CD&A and to consider whether to recommend
that it be included in
proxy statements and other filings.
Compensation
Committee Processes and Procedures
Typically, the Compensation Committee meets at least once
quarterly and with greater frequency if necessary. The agenda
for each meeting is usually developed by the Chair of the
Compensation Committee, in consultation with the Companys
Vice President, Human Resources and the Companys General
Counsel. The Compensation Committee meets regularly in executive
session. However, from time to time, various members of
management and other employees, as well as outside advisors or
consultants, may be invited by the Compensation Committee to
make presentations, provide financial or other background
information or advice or otherwise participate in Compensation
Committee meetings. The Chief Executive Officer may not
participate in or be present during any deliberations or
determinations of the Compensation Committee regarding his
compensation or individual performance objectives. The charter
of the Compensation Committee grants the Compensation Committee
full access to all books, records, facilities and personnel of
the Company, as well as authority to obtain, at the expense of
the Company, advice and assistance from internal and external
legal, accounting or other advisors and consultants and other
external resources that the Compensation Committee considers
necessary or appropriate in the performance of its duties. In
particular, the Compensation Committee has the sole authority to
retain compensation consultants to assist in its evaluation of
executive and director compensation, including the authority to
approve the consultants reasonable fees and other
retention terms.
The Compensation Committee has engaged Compensia as compensation
consultants since 2005. Compensia has assisted the Company in:
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evaluating the efficacy of the Companys existing
compensation strategy and practices in supporting and
reinforcing the Companys long-term strategic
goals; and
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refining the Companys compensation strategy and in
developing and implementing an executive compensation program to
execute that strategy.
|
As part of its engagement, Compensia was requested by the
Compensation Committee to develop a comparative group of
companies and to perform analyses of competitive performance and
compensation levels for that group. Compensia also conducted
individual interviews with members of senior management and the
Compensation Committee to learn more about the Companys
business operations and strategy, key performance metrics and
strategic goals, as well as the labor markets in which the
Company competes. Compensia ultimately developed recommendations
and metrics that were presented to the Compensation Committee
for its consideration.
11
The Company does not have any relationship or arrangement with
Compensia other than retaining Compensia as a compensation
consultant.
Historically, the Compensation Committee has made most
significant adjustments to annual compensation and determined
bonus awards for executive officers of the Company, and
established new performance objectives, at one or more meetings
held during the first quarter of the year. Annual equity awards
have historically been determined at a meeting held in the third
quarter of the year. The Compensation Committee also considers
matters related to individual compensation, such as compensation
for new executive hires, as well as high-level strategic issues,
such as the efficacy of the Companys compensation
strategy, potential modifications to that strategy and new
trends, plans or approaches to compensation, at various meetings
throughout the year. Generally, the Compensation
Committees process comprises two related elements: the
determination of compensation levels and the establishment of
performance objectives for the current year. For executives
other than the Chief Executive Officer, the Compensation
Committee solicits and considers evaluations and recommendations
submitted to the Committee by the Chief Executive Officer. In
the case of the Chief Executive Officer, the evaluation of his
performance is conducted by the Compensation Committee, which
determines any adjustments to his compensation as well as awards
to be granted. For all executives and directors, as part of its
deliberations, the Compensation Committee may review and
consider, as appropriate, materials such as financial reports
and projections, operational data, tax and accounting
information, tally sheets that set forth the total compensation
that may become payable to executives in various hypothetical
scenarios, company stock performance data, analyses of
historical executive compensation levels and current
Company-wide compensation levels, and recommendations of
Compensia, including analyses of executive and director
compensation paid at other companies identified by the
consultant. The specific determinations of the Compensation
Committee with respect to executive compensation for fiscal 2006
are described in greater detail in the CD&A section of this
proxy statement.
In May 2005, the Compensation Committee recommended that the
Board of Directors form a Special Awards Committee and delegate
to the Special Awards Committee the authority to grant, at its
discretion and without any further action required by the Board
of Directors or the Compensation Committee, stock options and
restricted stock awards to employees of the Company other than
officers and other direct reports to the Chief Executive
Officer. The Special Awards Committee is currently composed
solely of Mr. Nordhoff. Under this original Board
authorization, the number of options that may be granted by the
Special Awards Committee at its discretion in any calendar year
cannot exceed 10,000 in the aggregate, and the number of
restricted stock awards cannot exceed 2,500 in the aggregate.
In October 2005, the Board of Directors authorized the Special
Awards Committee to make the final determination concerning
grants of stock options and restricted stock awards to be made
to certain non-officer employees of the Company as of
October 15, 2005 pursuant to targeted amounts and terms
established by the Compensation Committee, with the aggregate
grants not to exceed total amounts approved by the Compensation
Committee. At the same time, the Board of Directors authorized
the Special Awards Committee to make initial option grants to
newly-hired and promoted employees, other than officers, on a
standardized employment-grade basis. In May 2006, the Board of
Directors again authorized the Special Awards Committee to make
the final determination concerning grants of stock options and
restricted stock awards to be made to certain non-officer
employees of the Company as of August 15, 2006 pursuant to
targeted amounts and terms established by the Compensation
Committee, with the aggregate grants not to exceed total amounts
approved by the Compensation Committee.
The purpose of the delegation of authority to the Special Awards
Committee is to enhance the flexibility of equity incentive
grants within the Company and to facilitate the timely grant of
options to newly-hired and promoted employees, other than
officers.
Compensation
Committee Interlocks and Insider Participation
No interlocking relationship exists between any member of the
Compensation Committee and any member of any other
companys board of directors or compensation committee.
12
Compensation
Committee Report
The Compensation Committee has reviewed and discussed with
management the CD&A contained in this proxy statement. Based
on this review and discussion, the Compensation Committee has
recommended to the Board of Directors that the CD&A be
included in this proxy statement and incorporated into our
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006.
COMPENSATION COMMITTEE
Armin M. Kessler, Chairman
John W. Brown
Brian A. McNamee, M.B.B.S.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee of the Board
of Directors is responsible for identifying, reviewing and
evaluating candidates to serve as directors of the Company
(consistent with criteria approved by the Board), reviewing and
evaluating incumbent directors, recommending to the Board
candidates for election to the Board of Directors, making
recommendations to the Board regarding the membership of the
committees of the Board, assessing the performance of management
and the Board, and developing a set of corporate governance
principles for the Company. Four directors comprise the
Nominating and Corporate Governance Committee: Mr. Sofaer
(Chairman), Dr. Jemison, Mr. Kessler and
Mr. Dittamore. All members of the Nominating and Corporate
Governance Committee are independent (as independence is
currently defined in Rule 4200(a)(15) of the Nasdaq listing
standards). The Nominating and Corporate Governance Committee
met four times during 2006. The Nominating and Corporate
Governance Committee has adopted a written charter that is
available to stockholders on the Companys website at
www.gen-probe.com.
The Nominating and Corporate Governance Committee believes that
candidates for director should have certain minimum
qualifications, including the ability to read and understand
basic financial statements, being over 21 years of age and
having the highest personal integrity and ethics. The Nominating
and Corporate Governance Committee also considers such factors
as possessing relevant expertise upon which to be able to offer
advice and guidance to management, having sufficient time to
devote to the affairs of the Company, demonstrated excellence in
his or her field, having the ability to exercise sound business
judgment and having the commitment to rigorously represent the
long-term interests of the Companys stockholders. However,
the Nominating and Corporate Governance Committee retains the
right to modify these qualifications from time to time.
Candidates for director nominees are reviewed in the context of
the current composition of the Board, the operating requirements
of the Company and the long-term interests of stockholders. In
conducting this assessment, the Nominating and Corporate
Governance Committee considers skills, diversity, age, and such
other factors as it deems appropriate given the current needs of
the Board and the Company, to maintain a balance of knowledge,
experience and capability. In the case of incumbent directors
whose terms of office are set to expire, the Nominating and
Corporate Governance Committee reviews such directors
overall service to the Company during their term, including the
number of meetings attended, level of participation, quality of
performance, and any other relationships and transactions that
might impair such directors independence. To identify
relationships and transactions that might impair such
directors independence, the Nominating and Corporate
Governance Committee relies on information supplied to the
Companys legal department by the Companys executive
officers and directors in the form of responses to annual
questionnaires. In the case of new director candidates, the
Nominating and Corporate Governance Committee also determines
whether the nominee must be independent for Nasdaq purposes,
which determination is based upon applicable Nasdaq listing
standards, applicable SEC rules and regulations and the advice
of counsel, if necessary. The Nominating and Corporate
Governance Committee may engage, if it deems appropriate, a
professional search firm to help identify new director
candidates or may
follow-up on
suggestions received from members of the Board of Directors or
other sources. The Nominating and Corporate Governance Committee
conducts any appropriate and necessary inquiries into the
backgrounds and qualifications of possible candidates after
considering the function and needs of the Board. The Nominating
and Corporate Governance Committee
13
meets to discuss and consider such candidates
qualifications and then selects a nominee for recommendation to
the Board by majority vote. To date, the Nominating and
Corporate Governance Committee has not paid a fee to any third
party to assist in the process of identifying or evaluating
director candidates. To date, the Board has not received or
rejected a timely director nominee for election at the upcoming
annual meeting from a stockholder or stockholders holding more
than 5% of our voting stock.
The Nominating and Corporate Governance Committee is not
obligated to consider director candidates recommended by
stockholders, but it may do so in its discretion if it believes
consideration of a candidate would be in the Companys best
interests. The Nominating and Corporate Governance Committee
believes that it is in the best position to identify, review,
evaluate and select qualified candidates for Board membership,
based on the comprehensive criteria for Board membership
approved by the Board.
Special
Awards Committee
The Special Awards Committee of the Board of Directors is
responsible for making the further and final determination of
specific grants of stock options and restricted stock awards to
be made to certain individual non-officer employees of the
Company pursuant to guidelines and terms established by the
Compensation Committee of the Board. Mr. Nordhoff is the
sole member of the Special Awards Committee. In this capacity,
Mr. Nordhoff reviews and approves the monthly grants for
non-officer new hires of the Company and promotional grants to
non-officer employees. Mr. Nordhoff, the Companys
President and Chief Executive Officer, is not independent (as
independence is currently defined in Rule 4200(a)(15) of
the Nasdaq listing standards) by virtue of his employment with
the Company. The Special Awards Committee acted by Unanimous
Written Consent 13 times during 2006.
Succession
Planning Committee
The Succession Planning Committee is responsible for management
succession planning for the Company. As of February 8,
2007, the Board dissolved the Succession Planning Committee
since the Committee had completed its primary objective of
identifying and assisting in the selection of a Chief Operating
Officer. Prior to that time, five directors comprised the
Succession Planning Committee: Mr. Kessler (Chairman),
Mr. Brown, Mr. Dittamore, Dr. McNamee, and
Mr. Nordhoff. All members of the Companys Succession
Planning Committee, except for Mr. Nordhoff, were
independent (as independence is currently defined in
Rule 4200(a)(15) of the Nasdaq listing standards). The
Succession Planning Committee met four times during 2006.
Stockholder
Communications with the Board of Directors
Historically, the Company has not provided a formal process
related to stockholder communications with the Board.
Nevertheless, the Company makes efforts to ensure that the views
of stockholders are heard by the Board or individual directors,
as applicable, and that appropriate responses are provided to
stockholders in a timely manner. During the upcoming year, the
Nominating and Corporate Governance Committee will consider the
adoption of a formal process for stockholder communications with
the Board and, if adopted, publish it promptly and post it to
the Companys website.
Code of
Ethics
The Company has adopted the Gen-Probe Incorporated Code of
Ethics that applies to all officers, directors and employees.
The Code of Ethics is available on our website at
www.gen-probe.com. If the Company makes any substantive
amendments to the Code of Ethics or grants any waiver from a
provision of the Code of Ethics to any executive officer or
director, the Company will promptly disclose the nature of the
amendment or waiver on its website.
Open Door
Policy
The Company has adopted an Open Door Policy for Reporting
Complaints regarding accounting, auditing and other matters to
facilitate the receipt, retention and treatment of complaints
regarding misconduct, illegal activities or fraud, including any
accounting, internal accounting controls or auditing matters, or
violations of federal or state laws or of the Companys
Code of Ethics. The Open Door Policy is available on our website
at www.gen-probe.com.
14
Corporate
Governance Guidelines
In November 2003, the Board of Directors documented the
governance practices followed by the Company by adopting
Corporate Governance Guidelines to assure that the Board will
have the necessary authority and practices in place to review
and evaluate the Companys business operations as needed
and to make decisions that are independent of the Companys
management. The guidelines are also intended to align the
interests of directors and management with those of the
Companys stockholders. The Corporate Governance Guidelines
set forth the practices the Board follows with respect to board
composition and selection, board meetings and involvement of
senior management, Chief Executive Officer performance
evaluation and succession planning, and board committees and
compensation. The Corporate Governance Guidelines were adopted
by the Board to, among other things, reflect changes to the
Nasdaq listing standards and SEC rules adopted to implement
provisions of the Sarbanes-Oxley Act of 2002. The Corporate
Governance Guidelines, as well as the charters for each of the
Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee of the Board, may be viewed at
www.gen-probe.com.
The Board believes that good corporate governance practices
promote the principles of fairness, transparency, accountability
and responsibility and will ensure that the Company is managed
for the long term benefits of its stockholders. During the past
year, we have continued to review our corporate governance
policies and practices and compare them to those suggested by
various authorities in corporate governance and the practices of
other public companies. Based on this review, we recently took
the following actions to continue our implementation of best
corporate governance practices:
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In September 2006, the Companys Board of Directors
approved an amendment to accelerate the termination of the
Companys stockholder rights plan from September 2012 to
November 30, 2006. As a result, the rights plan, which was
originally adopted in September 2002, was effectively terminated
on November 30, 2006;
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In September 2006, the Companys Board of Directors adopted
a stock ownership policy for directors and officers of the
Company that requires these individuals to maintain ownership of
Company stock equal to between one and three times their annual
salary, or director fees, as applicable, depending on position;
and
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In February 2007, the Nominating and Corporate Governance
Committee recommended, and the Board agreed, to amend the
Companys Bylaws to change the voting standard for the
election of directors from a plurality to a majority vote in
uncontested elections. The Board believes that the change to a
majority vote standard will appropriately give stockholders a
greater voice in the election of directors of the Company.
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Under the majority vote standard now applicable to the
Companys director elections, a director must receive the
affirmative vote of a majority of the shares cast in the
election of directors; except that directors shall be elected by
a plurality of the votes cast if the number of director nominees
exceeds the number of directors to be elected. A majority of the
votes cast means that the number of shares voted For
a director nominee must exceed 50% of the number of votes cast
with respect to that directors election.
Under Delaware law, an incumbent director who fails to receive
the required vote holds over, or continues to serve
as a director, until his or her successor is elected and
qualified. Consequently, in order to address the hold
over issue, the Companys Amended and Restated Bylaws
require that if a nominee who already serves as a director is
not re-elected, and no successor is elected, the director shall
tender his or her resignation to the Board of Directors. The
Nominating and Corporate Governance Committee will make a
recommendation to the Board on whether to accept or reject the
resignation, or whether other action should be taken. The Board
will act on the Nominating and Corporate Governance
Committees recommendation and publicly disclose its
decision and the rationale behind it within ninety days from the
date of the certification of the election results. A director
who tenders his or her resignation will not participate in the
recommendation of the Nominating and Corporate Governance
Committee or in the Boards decision with respect to his or
her resignation. If the failure of a nominee to be elected at
the annual meeting results in a vacancy on the Board, that
vacancy may be filled by action of the Board. The Amended and
Restated Bylaws are available through our periodic filings with
the SEC, which can be viewed through our website at
www.gen-probe.com.
15
PROPOSAL 2
APPROVAL OF THE GEN-PROBE INCORPORATED
2007 EXECUTIVE BONUS PLAN
In this Proposal 2, the Company is seeking your approval of
the Gen-Probe Incorporated 2007 Executive Bonus Plan (the
Bonus Plan). The Company and the Board believe that
your approval of this Proposal 2 will enable the Company to
continue to attract and retain the highest caliber of employees,
to link incentive rewards to Company performance and to align
the interests of eligible executive employees with those of
stockholders.
On February 8, 2007, following the recommendation of the
Compensation Committee, the Board approved the adoption of the
Bonus Plan, subject to approval by the Companys
stockholders at the annual meeting. The Bonus Plan permits the
payment of yearly bonuses based upon pre-established performance
criteria for each plan year. The Company is seeking stockholder
approval of the Bonus Plan to enable it to meet the tax
deductibility requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the
Code). Participation in the Bonus Plan is limited to
the Chief Executive Officer and President of the Company and
such other employees of the Company as the Compensation
Committee may determine in its discretion. A brief description
of the principal features of the Bonus Plan follows, but the
description is qualified in its entirety by reference to the
Bonus Plan itself, a copy of which is included as
Appendix A to this Proxy Statement.
Performance Objectives. The Compensation
Committee may, in its discretion, establish the specific
performance objectives (including any adjustments) that must be
achieved in order for the participant to become eligible to
receive a bonus award payment. The performance objectives
(including any adjustments) will be established in writing by
the Compensation Committee within the earlier of
(i) 90 days of the beginning of the fiscal year or
(ii) the first 25% of the period of service in which the
performance objectives are to be achieved. In addition, the
achievement of such objectives must be substantially uncertain
at the time such objectives are established in writing. For each
calendar year with regard to which one or more eligible
participants in the Bonus Plan is selected by the Compensation
Committee to receive a bonus award, the Compensation Committee
will establish in writing one or more objectively determinable
performance objectives for such bonus award, based upon one or
more of the following business criteria, any of which may be
measured in absolute terms, as compared to any incremental
increase or as compared to the results of a peer group:
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revenue;
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sales;
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cash flow;
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earnings per share of the Companys common stock (including
earnings before any one or more of the following:
(i) interest, (ii) taxes, (iii) depreciation, and
(iv) amortization);
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return on equity;
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total stockholder return;
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return on capital;
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return on assets or net assets;
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income or net income;
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operating income or net operating income;
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operating profit or net operating profit;
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operating margin;
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cost reductions or savings;
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research and development expenses (including research and
development expenses as a percentage of sales or revenues);
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16
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working capital; and
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market share.
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The performance objectives may be expressed in terms of overall
Company performance or the performance of a division or business
unit. The Compensation Committee, in its discretion, may also
specify additional performance objectives for each bonus award
granted under the Bonus Plan. Following the end of the year in
which the performance objectives are to be achieved, the
Compensation Committee will, within the time prescribed by
Section 162(m) of the Code, determine whether and to what
extent the specified performance objective has been achieved for
the applicable year.
The Compensation Committee, in its discretion, may, at the time
of grant, specify in the bonus award that one or more
objectively determinable adjustments will be made to one or more
of the performance objectives established under the criteria
discussed above.
Maximum Award. If the performance objectives
are met, a participant will receive a bonus award based on a
percentage of such participants year-end annualized base
salary. The Bonus Plan permits payments to a participant in an
amount not to exceed $3,000,000. As discussed below, for fiscal
year 2007, the actual maximum amount that may be earned by each
participant in the Bonus Plan is less than $800,000. The Bonus
Plan, however, is not the exclusive means for the Compensation
Committee to award incentive compensation to the participants
and does not limit the Compensation Committee from making
additional discretionary incentive awards outside of the Bonus
Plan.
Form of Payment. The bonus award may be paid,
at the option of the Compensation Committee, in cash or in the
Companys common stock or right to receive the
Companys common stock, or in any combination thereof.
Bonus award payments made through the issuance of the
Companys common stock will be made in accordance with the
provisions of The 2003 Incentive Award Plan of the Company (the
2003 Incentive Plan).
Negative Discretion. The Compensation
Committee, in its discretion, may reduce or eliminate (but in no
event increase) the bonus amount otherwise payable to a
participant.
Termination of Employment. If a
participants employment is terminated with the Company,
except as part of a change in control (as defined in the Bonus
Plan, a Change in Control), for any reason other
than death or disability prior to payment of any bonus award
payment, all of such participants rights under the Bonus
Plan will terminate and such participant will not have any right
to receive any further payments under the Bonus Plan. The
Compensation Committee may, in its discretion, determine what
portion, if any, of the participants bonus award under the
Bonus Plan should be paid if the termination results from such
participants death or disability.
Change in Control. If a Change in Control
occurs during any year in which a participant is eligible to
receive a bonus award under the Bonus Plan, such bonus award
will be prorated to the effective date of the Change in Control
and all performance objectives set by the Compensation Committee
will be deemed to be met at the greater of 100% of the
performance objective or the Companys actual prorated
year-to-date
performance provided that the recipient of the bonus award
continues to be employed by the Company or its successor on the
effective date of the Change in Control.
2007 Eligibility, Target Bonus and Performance
Goals. On March 5, 2007, the Compensation
Committee determined that the Chief Executive Officer and Chief
Operating Officer would participate in the Bonus Plan. The
Compensation Committee established the 2007 target bonus for the
Chief Executive Officer at an amount equal to 75% of the Chief
Executive Officers annual base salary as of
December 31, 2007, and established the 2007 target bonus
for the Chief Operating Officer at an amount equal to 50% of the
Chief Operating Officers annual base salary as of
December 31, 2007. The Compensation Committee also
established the performance goals under the Bonus Plan for the
calendar year 2007 performance period. Bonus amounts will be
based upon two performance objectives: (1) attainment of an
adjusted earnings per share target (the EPS Target)
and (2) attainment of a revenue growth target (the
Revenue Target), each weighted in accordance with a
pre-determined performance matrix. For any bonus to be payable
under the Bonus Plan, adjusted EPS must be greater than a
threshold adjusted EPS. Adjusted earnings per share means the
Companys per share net earnings for 2007, adjusted to
remove the effects of certain specified events or items. The
bonus (if any) payable will be an amount determined by
multiplying
17
the participants target bonus amount by the target bonus
multiplier determined in accordance with the pre-determined
performance matrix. A participant may receive between 0% and
150% of his or her target bonus amount. The target bonus
multiplier will be 100% if the Company achieves (and does not
exceed) the EPS Target and the Revenue Target. The maximum
amount payable to the Chief Executive Officer and Chief
Operating Officer based on a 150% multiplier is $770,512 and
$318,750, respectively. The Compensation Committee retains
discretion to reduce or eliminate (but not increase) the bonus
that otherwise would be payable based on actual performance.
If stockholder approval of the Bonus Plan is not obtained, no
bonuses will be payable under the Bonus Plan. However, the
Compensation Committee can still make discretionary incentive
awards outside of the Bonus Plan. Separately, if the Bonus Plan
is approved, the Compensation Committee has the discretion to
award a supplemental bonus outside of the Bonus Plan based on
outstanding individual performance.
The Board
of Directors recommends a vote in favor of
Proposal 2.
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides certain information regarding all
of the Companys equity compensation plans in effect as of
December 31, 2006.
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Number of Securities
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Remaining Available for
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Number of Securities
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Issuance Under
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to be Issued Upon
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Weighted-Average
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Equity Compensation
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Exercise of
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Exercise Price of
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Plans (Excluding
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Outstanding Options
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Outstanding Options,
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Securities Reflected in
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Plan Category
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Warrants and Rights
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Warrants and Rights
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Column (a))
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(a)
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(b)
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(c)
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Equity compensation plans approved
by security holders
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6,103,337
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$
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35.40
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3,003,144
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(1)
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Equity compensation plans not
approved by security holders(2)
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196,697
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$
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21.99
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64,469
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Total
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6,300,034
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$
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34.99
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3,067,613
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(1) |
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Includes 2,348,211 shares of common stock available for
future issuance under the 2000 Equity Participation Plan and the
2003 Incentive Plan and 654,933 shares under our Employee
Stock Purchase Plan (the ESPP), as amended, as of
December 31, 2006. |
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(2) |
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Consists of shares of common stock issuable under the 2002 New
Hire Stock Option Plan (the 2002 Plan), which at the
time of adoption did not require the approval of, and has not
been approved by, the Companys stockholders. See the
description below of the 2002 Plan. |
The following equity compensation plan of the Company was in
effect as of December 31, 2006 and was adopted without
approval of the Companys stockholders.
Description
of the 2002 New Hire Plan
General Nature and Purposes of the 2002 New Hire
Plan. The principal purposes of the 2002 Plan are
to provide incentives for certain employees of the Company and
its subsidiaries through granting of options (the 2002
Plan Awards), thereby stimulating optionees personal
and active interest in the Companys development and
financial success, and inducing them to remain in the
Companys employ. The 2002 Plan was approved by the Board
on November 11, 2002 without approval by the Companys
stockholders. The Company has not issued options under the 2002
Plan since March 2004.
A brief description of the principal features of the 2002 Plan
follows, but the description is qualified in its entirety by
reference to the 2002 Plan itself, as recently amended and filed
with the SEC on February 23, 2007 as an exhibit to the
Companys Annual Report on
Form 10-K.
18
Administration of the Plan. The 2002 Plan is
administered by the Compensation Committee of the Companys
Board of Directors (or another committee or a subcommittee of
the Board assuming the functions of the Compensation Committee
under the 2002 Plan) (the Committee). The Committee
consists of at least two members of the Board of Directors, each
of whom is a non-employee director for purposes of
Rule 16b-3
under the Exchange Act
(Rule 16b-3),
and an outside director for purposes of
Section 162(m) of the Code. Subject to the terms and
conditions of the 2002 Plan, the Committee has the authority to
select the persons to whom 2002 Plan Awards are to be made, to
determine the number of shares to be subject thereto and the
terms and conditions thereof, and to make all other
determinations and to take all other actions necessary or
advisable for the administration of the 2002 Plan. The Committee
is also authorized to adopt, amend, interpret and revoke rules
relating to the administration of the 2002 Plan.
Securities Subject to the 2002 Plan. The
aggregate number of shares of common stock authorized for
issuance upon exercise of options granted under the 2002 Plan
was 200,000 as of the date the 2002 Plan was adopted. In
September 2003, the 200,000 share reserve authorized for
issuance under the 2002 Plan was adjusted to 400,000 shares
to reflect the Companys
2-for-1
stock split implemented as a 100% stock dividend.
The shares available under the 2002 Plan upon exercise of stock
options may be either previously unissued shares or treasury
shares. The Committee has the discretion to make appropriate
adjustments in the number of securities subject to the 2002 Plan
and to outstanding 2002 Plan Awards to reflect dividends or
other distributions; a reorganization, merger or consolidation
of the Company; a combination, repurchase, liquidation or
dissolution of the Company; or a disposition of all or
substantially all of the assets of the Company or exchange of
common stock or other securities of the Company; or other
similar corporate transaction or event (an extraordinary
corporate event). The 2002 Plan provides for automatic
adjustments in the number of securities subject to the 2002 Plan
and to outstanding 2002 Plan Awards to reflect a non-reciprocal
transaction between the Company and its stockholders, such as a
stock dividend, stock split, spin-off, rights offering or
recapitalization through a large non-recurring cash dividend,
that affects the shares of the Companys Common Stock (or
other securities of the Company) or the share price of the
Common Stock (or other securities of the Company) and causes a
change in the per share value of the Common Stock underlying
outstanding awards.
If any portion of a 2002 Plan Award terminates or lapses
unexercised, or is canceled upon grant of a new 2002 Plan Award
(which may be at a higher or lower exercise price than the Award
so canceled), the shares which were subject to the unexercised
portion of such 2002 Plan Award will continue to be available
for issuance under the 2002 Plan.
Term of the 2002 Plan and Amendments. The 2002
Plan will expire on November 10, 2012, unless earlier
terminated. The 2002 Plan can be amended, modified, suspended or
terminated by the Committee or the Board of Directors.
Amendments of the 2002 Plan will not, without the consent of the
participant, affect such persons rights under a 2002 Plan
Award previously awarded, unless the 2002 Plan Award agreement
governing such 2002 Plan Award itself otherwise expressly so
provides.
Eligibility. 2002 Plan Awards may be granted
only to newly hired employees of the Company, including newly
hired officers or employee directors of the Company, who have
not previously been employed by the Company.
Payment for Shares. The exercise price for all
2002 Plan Awards, together with any applicable tax required to
be withheld, must be paid in full in cash at the time of
exercise or the Committee may, in its sole and absolute
discretion (i) allow a delay in payment up to 30 days
from the date the option is exercised, (ii) allow payment,
in whole or in part, through the delivery of shares of common
stock which have been held by the holder for at least six
months, (iii) allow payment, in whole or in part, through
the surrender of shares of common stock then issuable upon
exercise of the option having a fair market value on the date of
option exercise equal to the aggregate exercise price of the
option or exercised portion thereof, (iv) allow payment, in
whole or in part, through the delivery of a notice that the
holder has placed a market sell order with respect to shares of
common stock then issuable upon exercise of the option, and that
the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the
option exercise price; provided, that the payment of such
proceeds is then made to the Company upon settlement of such
sale, and (v) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (ii),
(iii) and (iv).
19
Awards under the 2002 Plan. The 2002 Plan
provides that the Committee may grant or issue non-qualified
stock options (NQSOs). NQSOs provide for the right
to purchase common stock at the fair market value on the date of
grant and usually will become exercisable (in the discretion of
the Committee) in one or more installments after the grant date,
subject to the participants continued provision of
services to the Company. NQSOs may be granted for any term
specified by the Committee; provided that the term may not
exceed 10 years.
Agreements; Consideration to the Company. Each
2002 Plan Award will be set forth in a separate agreement with
the person receiving the 2002 Plan Award and will indicate the
terms and conditions of the 2002 Plan Award. The dates on which
2002 Plan Awards under the 2002 Plan first become exercisable
and on which they expire will be set forth in individual 2002
Plan Award agreements setting forth the terms of the 2002 Plan
Awards. The agreements generally will provide that 2002 Plan
Awards expire upon termination of the participants status
as an employee, although the Committee may provide that Awards
granted to employees continue to be exercisable following a
termination without cause, or following a Change in
Control of the Company, as defined in the 2002 Plan, or
because of the grantees retirement, death, disability or
otherwise.
General
Terms of 2002 Plan Awards under the 2002 Plan
Non-Assignability. No 2002 Plan Awards may be
assigned or transferred by the grantee, except by will, the laws
of descent and distribution or pursuant to a qualified domestic
relations order, although the shares of common stock underlying
such 2002 Plan Awards may be transferred if all applicable
restrictions have lapsed. During the lifetime of the holder of
any 2002 Plan Award, the 2002 Plan Award may be exercised only
by the holder. Notwithstanding the foregoing, the Committee may
grant NQSOs that may be assigned or transferred, subject to
certain conditions, to permitted transferees, which
include a child, grandchild, parent, spouse, niece or nephew of
the holder.
Extraordinary Corporate Events. The Committee
has discretion under the 2002 Plan to provide that 2002 Plan
Awards will expire at specified times following, or become
exercisable in full upon, the occurrence of certain specified
extraordinary corporate events; and in such event
the Committee may also give optionees the right to exercise
their outstanding NQSOs in full during some period prior to such
event, even though the NQSOs have not yet become fully
exercisable.
Effect of Change in Control. Notwithstanding
anything in the 2002 Plan or the provisions of any 2002 Plan
Award to the contrary, in the event of a Change in Control, each
outstanding 2002 Plan Award shall, immediately prior to the
effective date of the Change in Control, automatically become
fully vested or exercisable, as applicable, for all of the
shares of common stock at the time subject to such 2002 Plan
Award and, as applicable, may be exercised for any or all of the
shares of common stock subject to the 2002 Plan Award.
For purposes of the 2002 Plan, Change in Control
means a change in ownership or control of the Company effected
through any of the following transactions: (a) any person
or related group of persons (other than the Company or a person
that, prior to such transaction, directly or indirectly
controls, is controlled by, or is under common control with, the
Company) directly or indirectly acquires beneficial ownership
(within the meaning of
Rule 13d-3
under the Exchange Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the
Companys outstanding securities pursuant to a tender or
exchange offer for securities of the Company; (b) there is
a change in the composition of the Board over a period of
thirty-six (36) consecutive months (or less) such that a
majority of the Board members (rounded up to the nearest whole
number) ceases, by reason of one or more proxy contests for the
election of Board members, to be comprised of individuals who
either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or
nominated for election as Board members during such period by at
least a majority of the Board members described in
clause (i) who were still in office at the time such
election or nomination was approved by the Board; (c) a
merger or consolidation of the Company with any other
corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or another
entity) more than
662/3%
of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a
merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no person
20
acquires more than 25% of the combined voting power of the
Companys then outstanding voting securities shall not
constitute a Change in Control; or (d) a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Companys assets.
Transfer Restrictions. The Committee, in its
discretion, may impose such restrictions on the transferability
of the shares purchasable upon the exercise of a NQSO as it
deems appropriate. Any such other restriction shall be set forth
in the respective 2002 Plan Award agreement and may be referred
to on the certificates evidencing such shares.
Withholding Tax Obligations. As a condition to
the issuance or delivery of stock pursuant to the exercise of a
2002 Plan Award granted under the 2002 Plan, the Company
requires participants to discharge applicable withholding tax
obligations. Shares held by or to be issued to a participant may
also be used to discharge tax withholding obligations related to
exercise of 2002 Plan Awards, subject to the discretion of the
Committee to disapprove such use.
Securities Law. The 2002 Plan is intended to
conform to the extent necessary with all provisions of the
Securities Act of 1933, as amended (the Securities
Act), and the Exchange Act, and any and all regulations
and rules promulgated by the SEC thereunder, including without
limitation
Rule 16b-3.
The 2002 Plan will be administered, and options will be granted
and may be exercised, only in such a manner as to conform to
such laws, rules and regulations. To the extent permitted by
applicable law, the 2002 Plan and options granted thereunder
shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
21
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected
Ernst & Young LLP as the Companys independent
auditors for the fiscal year ending December 31, 2007, and
has further directed that management submit the selection of the
independent auditors for ratification by the stockholders at the
annual meeting. Ernst & Young LLP has audited the
Companys financial statements since 1989. Representatives
of Ernst & Young LLP are expected to be present at the
annual meeting. They will have an opportunity to make a
statement if they so desire and will be available to respond to
appropriate questions.
Neither the Companys Bylaws nor other governing documents
or law require stockholder ratification of the selection of
Ernst & Young LLP as the Companys independent
auditors. However, the Audit Committee of the Board of Directors
is submitting the selection of Ernst & Young LLP to the
stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the
Audit Committee of the Board of Directors will reconsider
whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee of the Board of Directors in its
discretion may direct the appointment of different independent
auditors at any time during the year if it determines that such
a change would be in the best interests of the Company and its
stockholders.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote
at the annual meeting will be required to ratify the selection
of Ernst & Young LLP.
Principal
Accountant Fees and Services
In connection with the audit of the 2006 financial statements,
the Company entered into an engagement agreement with
Ernst & Young LLP which sets forth the terms by which
Ernst & Young LLP will perform audit services for the
Company. That agreement is subject to alternative dispute
resolution procedures and an exclusion of punitive damages.
The following table represents aggregate fees billed to the
Company for fiscal years ended December 31, 2006 and 2005
by Ernst & Young LLP, the Companys principal
accountant. All fees described below were approved by the Audit
Committee.
During the fiscal year ended December 31, 2006, none of the
hours expended on the Companys financial audit by
Ernst & Young LLP were provided by persons other than
Ernst & Young LLPs full-time employees.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Audit Fees(1)
|
|
$
|
938
|
|
|
$
|
754
|
|
Audit-related Fees
|
|
|
|
|
|
|
|
|
Tax Fees(2)
|
|
|
|
|
|
|
4
|
|
All Other Fees
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
938
|
|
|
$
|
759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes the audit of the Companys annual financial
statements (including audits of the Companys subsidiaries
Gen-Probe UK Limited and Molecular Light Technology Limited and
its subsidiaries), review of the Companys financial
information included in its quarterly reports on Form
10-Q, and
accounting consultations. Also includes fees incurred for the
evaluation of managements assessment of the effectiveness
of the Companys internal controls over financial reporting
as well as the audit of the effectiveness of the Companys
internal controls over financial reporting, pursuant to the
Sarbanes-Oxley Act of 2002. |
|
(2) |
|
Includes the review of the Companys corporate tax returns. |
22
Pre-approval
Policies and Procedures
The Audit Committee has adopted a policy and procedures for the
pre-approval of audit and non-audit services rendered by
Ernst & Young LLP. The policy generally pre-approves
specified services in the defined categories of audit services,
audit-related services, and tax services, up to specified
amounts. Pre-approval may also be given as part of the Audit
Committees approval of the scope of the engagement of the
independent auditor or on an individual explicit
case-by-case
basis before the independent auditor is engaged to provide each
service. The pre-approval of services may be delegated to one or
more of the Audit Committees members, but the decision
must be reported to the full Audit Committee and ratified at its
next scheduled meeting. The Audit Committee has delegated this
pre-approval authority to the Chairman of the Audit Committee
and the Chairmans decision is discussed and ratified at
the next scheduled meeting.
The Audit Committee has determined that the rendering of the
services other than audit services by Ernst & Young LLP
is compatible with maintaining the principal auditors
independence.
The Board
of Directors recommends a vote in favor of
Proposal 3.
23
SECURITY
OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Companys common stock as of
February 28, 2007 by: (i) all those known by the
Company to be beneficial owners of more than five percent of its
common stock; (ii) each of the executive officers named in
the Summary Compensation Table; (iii) each director and
nominee for director of the Company; and (iv) all directors
and named executive officers of the Company as a group. Except
as otherwise noted, the address of each person listed in the
table is c/o Gen-Probe Incorporated, 10210 Genetic Center
Drive, San Diego, California 92121.
|
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership(1)
|
|
|
|
Number of Shares
|
|
|
Percent of Total
|
|
|
|
(#)
|
|
|
(%)
|
|
|
Five Percent Beneficial
Stockholders:
|
|
|
|
|
|
|
|
|
FMR Corp.(2)
|
|
|
7,804,633
|
|
|
|
14.99
|
%
|
Morgan Stanley(3)
|
|
|
3,551,538
|
|
|
|
6.8
|
%
|
Orbimed Advisors LLC(4)
|
|
|
3,808,900
|
|
|
|
7.32
|
%
|
Directors and Executive
Officers:
|
|
|
|
|
|
|
|
|
Henry L. Nordhoff(5)(6)
|
|
|
676,593
|
|
|
|
1.29
|
%
|
Herm Rosenman(5)(7)
|
|
|
133,868
|
|
|
|
*
|
|
Daniel L.
Kacian, Ph.D., M.D.(5)(7)
|
|
|
191,797
|
|
|
|
*
|
|
Larry T. Mimms, Ph.D.
(5)(7)
|
|
|
95,597
|
|
|
|
*
|
|
Diana De Walt(5)(7)
|
|
|
50,877
|
|
|
|
*
|
|
R. William Bowen(5)(7)(8)
|
|
|
60,616
|
|
|
|
*
|
|
Niall M. Conway(5)(7)(8)(9)
|
|
|
156,908
|
|
|
|
*
|
|
John W. Brown(5)
|
|
|
23,283
|
|
|
|
*
|
|
Raymond V. Dittamore(5)(10)
|
|
|
46,295
|
|
|
|
*
|
|
Mae C. Jemison, M.D.(5)
|
|
|
39,886
|
|
|
|
*
|
|
Armin M. Kessler(5)
|
|
|
52,751
|
|
|
|
*
|
|
Brian A. McNamee, M.B.B.S.(5)
|
|
|
60,747
|
|
|
|
*
|
|
Phillip M. Schneider(5)
|
|
|
66,275
|
|
|
|
*
|
|
Abraham D. Sofaer(5)(11)
|
|
|
74,372
|
|
|
|
*
|
|
All executive officers and
directors as a group (16 individuals)(12)
|
|
|
1,824,255
|
|
|
|
3.49
|
%
|
|
|
|
* |
|
Represents beneficial ownership of less than 1% of our common
stock. |
|
|
|
Effective April 16, 2007, Dr. Mimms and the Company
entered into an agreement whereby Dr. Mimms resigned from
his employment with the Company. |
|
(1) |
|
This table is based upon information supplied by officers,
directors and principal stockholders and Schedules 13D and 13G
(if any) filed with the SEC. Unless otherwise indicated in the
footnotes to this table and subject to community property laws
where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment
power with respect to the shares indicated as beneficially
owned. Applicable percentages are based on
52,297,605 shares outstanding on February 28, 2007,
adjusted as required by rules promulgated by the SEC. |
|
(2) |
|
Beneficially owned by FMR Corp. and certain affiliated entities,
including Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp. The business address for
FMR Corp. is: 82 Devonshire Street, Boston, Massachusetts 02109.
The foregoing information is based solely upon information
contained in a Schedule 13G filed with the SEC by the
foregoing entity on February 14, 2007. |
|
(3) |
|
The business address for Morgan Stanley is: 1585 Broadway, New
York, New York 10036. The foregoing information is based solely
upon information contained in a Schedule 13G filed with the
SEC by the foregoing |
24
|
|
|
|
|
entity on February 15, 2007. On April 9, 2007, Morgan
Stanley filed a Schedule 13G/A with the SEC indicating that it
beneficially owned 869,794 shares of our common stock. |
|
(4) |
|
Certain shares are beneficially owned by Orbimed Capital LLP.
Samuel D. Isaly is the President of Orbimed Advisors LLC and
Managing Member of Orbimed Capital LLC. The business address for
Orbimed Advisors LLC, Orbimed Capital LLC, and Samuel D. Isaly
is: 767 Third Avenue, 30th Floor, New York, New York 10017.
The foregoing information is based solely upon information
contained in a Schedule 13G/A filed with the SEC by the
foregoing entities on February 7, 2007. |
|
(5) |
|
In the case of the individuals listed below, the number of
shares beneficially owned includes the specified number of
shares issuable upon exercise of stock options exercisable
within 60 days after February 28, 2007:
Mr. Nordhoff (624,178); Mr. Rosenman (119,433);
Dr. Kacian (168,707); Dr. Mimms (71,485); Ms. De
Walt (36,458); Mr. Bowen (43,041); Mr. Conway
(138,474); Mr. Brown (18,054); Mr. Dittamore (43,166);
Dr. Jemison (39,166); Mr. Kessler (39,166);
Dr. McNamee (47,166); Mr. Schneider (59,166); and
Mr. Sofaer (59,166). |
|
(6) |
|
Includes an aggregate of 38,750 shares of deferred issuance
restricted stock awards that were vested as of February 28,
2007 or that vest within 60 days after February 28,
2007. Mr. Nordhoff has an aggregate of 80,000 deferred
issuance restricted stock awards. Pursuant to the applicable
deferred issuance agreement, the vested shares will be issued
upon the termination of his employment with the Company, or if
earlier, four years from the date of grant. All deferred
issuance restricted stock awards will further be issued in a
manner that complies with Section 409A of the Code, which
may include deferring the issuance of such shares for six months
after the termination of Mr. Nordhoffs employment. |
|
(7) |
|
Includes the following specified number of shares of restricted
stock that are still subject to restriction: Mr. Rosenman,
12,250 shares; Dr. Kacian, 19,500 shares;
Dr. Mimms, 15,000 shares; Ms. DeWalt,
12,750 shares; Mr. Bowen, 12,750 shares; and
Mr. Conway, 7,500 shares. These shares of restricted
stock were granted on October 17, 2005 and August 15,
2006 and vest as follows: one-fourth (1/4) of the shares vest
annually over four years from the date of grant. |
|
(8) |
|
As discussed in Executive Compensation, in an effort
to give a more complete picture of compensation for our
executive officers, we have included compensation information
for the officers required by current SEC rules, plus
compensation information for each other officer of the Company
that in the preceding year appeared in our proxy statement by
reason of being a Named Executive Officer under then
applicable rules. As Messrs. Bowen and Conway were Named
Executive Officers in our proxy statement for the 2006 annual
meeting of stockholders, they appear in this chart, as well as
in various tables in Executive Compensation, even
though this disclosure is not required under applicable rules.
The officers for whom disclosure is required by current SEC
rules (Messrs. Nordhoff, Rosenman, Kacian and Mimms and
Ms. De Walt) and Messrs. Bowen and Conway are
collectively referred to herein as the named executive officers,
or NEOs. |
|
(9) |
|
Includes 260 shares of common stock held by
Mr. Conways wife, Margaret Conway. |
|
(10) |
|
Includes 2,000 shares of common stock held by the Dittamore
Family Trust A, for which Mr. Dittamore is the trustee. |
|
(11) |
|
Includes 1,000 shares of common stock held by the
Trust FBO Michael J. Sofaer, in which Mr. Sofaer is a
trustee; 1,000 shares of common stock held by the
Trust FBO Helen R. Sofaer, in which Mr. Sofaer is a
trustee; 1,000 shares of common stock held by the
Trust FBO Joseph S. Sofaer, in which Mr. Sofaer is a
trustee; 1,000 shares of common stock held by the
Trust FBO Aaron R. Sofaer, in which Mr. Sofaer is a
trustee; 1,000 shares of common stock held by Raphael J.
Sofaer, in which Mr. Sofaer is a trustee. |
|
(12) |
|
Includes shares described in note (5) above. Also includes
an aggregate of 94,390 shares (including restricted shares)
which other executive officers of the Company own as of
February 28, 2007 or have the right to acquire within
60 days after February 28, 2007 pursuant to
outstanding stock options, as follows: Mr. Edelshain
(63,764); and Mr. Kondor (30,626). |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the
Companys directors and executive officers, and persons who
own more than ten percent of a registered class of the
Companys equity securities, to file with the SEC initial
25
reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Companys knowledge, based solely on a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended December 31, 2006, all Section 16(a)
filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
26
EXECUTIVES
Our
Executive Officers and Key Employees
The following table sets forth information as to persons who
serve as our executive officers and key employees as of
April 20, 2007.
|
|
|
|
|
|
|
Name
|
|
Position
|
|
Age
|
|
Henry L. Nordhoff
|
|
Chairman, President and Chief
Executive Officer
|
|
|
65
|
|
Carl W. Hull
|
|
Executive Vice President and Chief
Operating Officer
|
|
|
49
|
|
Niall M. Conway
|
|
Executive Vice
President Operations
|
|
|
61
|
|
Daniel L.
Kacian, Ph.D., M.D.
|
|
Executive Vice President and Chief
Scientist
|
|
|
61
|
|
Lyle J. Arnold
|
|
Vice President Research
|
|
|
60
|
|
Robert B. Blake
|
|
Vice President
Instrument Systems
|
|
|
52
|
|
R. William Bowen
|
|
Vice President General
Counsel and Secretary
|
|
|
54
|
|
Diana De Walt
|
|
Vice President Human
Resources
|
|
|
52
|
|
Martin B. Edelshain
|
|
Vice President
Strategic Planning and Business Development
|
|
|
58
|
|
Frederick L. Eibel
|
|
Vice President
Marketing
|
|
|
43
|
|
Stephen J. Kondor
|
|
Vice President Sales
and Marketing
|
|
|
51
|
|
Gurney I. Lashley
|
|
Vice President Supply
Chain Management
|
|
|
57
|
|
Lynda A. Merrill
|
|
Vice President
Industrial Relationships
|
|
|
57
|
|
Herm Rosenman
|
|
Vice President Finance
and Chief Financial Officer
|
|
|
59
|
|
Donald D. Tartre
|
|
Vice President Finance
and Corporate Controller
|
|
|
46
|
|
Henry L. Nordhoff, Chairman, President and Chief
Executive Officer. Mr. Nordhoff has served as a director of
the Company since July 1994. Mr. Nordhoff joined the
Company in July 1994 as Chief Executive Officer and President
and was elected Chairman of the Board in September 2002. Prior
to joining the Company, he was President and Chief Executive
Officer of TargeTech, Inc., a gene therapy company that was
merged into Immune Response Corporation. Prior to that,
Mr. Nordhoff was at Pfizer, Inc. in senior positions in
Brussels, Seoul, Tokyo and New York. He received a B.A. in
international relations and political economy from Johns Hopkins
University and an M.B.A. from Columbia University.
Mr. Nordhoff is also a member of the board of directors of
Mannkind Corporation.
Carl W. Hull, Executive Vice President and Chief
Operating Officer. Mr. Hull joined the Company in February
2007. Mr. Hull previously served as Vice
President & General Manager of the SDS/Arrays Business
Unit of Applied Biosystems, which develops and sells genomic
research systems and reagents, from January 2005 to January
2007. Prior to joining Applied Biosystems, Mr. Hull held a
number of positions with Applied Imaging Corp., which makes
automated imaging and imaging analysis systems, most recently
serving as its Chief Executive Officer from January 2001 to
December 2004. Mr. Hull received a B.A. in political
science and international relations from The Johns Hopkins
University and an M.B.A. from the University of Chicago.
Niall M. Conway, Executive Vice President
Operations. Mr. Conway joined the Company in July 2000 as
Vice President, Operations. Mr. Conway was promoted to
Executive Vice President, Sales and Operations in 2002 and has
served as Executive Vice President Operations since
July 2005. From 1996 to 2000, Mr. Conway was Vice President
Manufacturing of the American Red Cross in Washington D.C. In
addition, from 1999 to 2000 he contemporaneously held the
position of Area Vice President, based in Charlotte North
Carolina. Mr. Conway worked for over 20 years with
Pfizer in various International and U.S. based positions,
including as Vice President Manufacturing in Pfizer Corporate
Headquarters from 1987 to 1995. He received a B.E. in Chemical
Engineering from University College Dublin, Ireland, and an
M.B.A. from University College Cork, Ireland.
27
Daniel L. Kacian, Ph.D., M.D., Executive Vice
President and Chief Scientist. Dr. Kacian joined the
Company in 1985 as Director of Medical and Scientific Affairs
and until 1992 was primarily responsible for directing
Research & Development and Regulatory Affairs.
Dr. Kacian held various management positions with the
Company and, in 2002, was promoted to Executive Vice President
and Chief Scientist. From 1980 to 1985, Dr. Kacian was on
the faculty of the Department of Pathology and Laboratory
Medicine at the University of Pennsylvania and was Director of
Clinical Microbiology at the Hospital of the University of
Pennsylvania. He received an M.D. in 1978 from the University of
Miami and did his internship and residency in laboratory
medicine at Washington University and Barnes Hospital in
St. Louis. Prior to attending medical school,
Dr. Kacian received a B.A. in mathematics from Western
Reserve University and an M.S. in microbiology and Ph.D. in
molecular genetics from the University of Illinois and served on
the faculty of the Department of Human Genetics and Development
at Columbia University.
Lyle J. Arnold Ph.D., Vice President
Research. Dr. Arnold joined Gen-Probe most recently in
September 2003 as Vice President, Research. Dr. Arnold also
was associated with Gen-Probe from 1985 to 1989 as head of
technology research. Previously, he held senior scientific and
management positions at Molecular Biosystems, Genta, Synteni,
Incyte Genomics, and Oasis Biosciences, where he was President
and Chief Scientific Officer from October 2001 to September
2003. In addition, Dr. Arnold was a faculty member in the
UCSD School of Medicine and a member of the UCSD Cancer Center.
Dr. Arnold is an inventor or co-inventor on 36 issued
U.S. patents and more than 140 issued and pending patents
worldwide. In addition, he has authored more than 50 scientific
publications. He received a B.S. in Chemistry from the
University of California at Los Angeles and a Ph.D. in
Chemistry/Biochemistry from the University of California at
San Diego.
Robert B. Blake, Vice President Instrument
Systems. Mr. Blake joined the Company in October 2006 as
Vice President, Instrument Systems. Mr. Blake has over
twenty years of experience in instrument development. Prior to
joining the Company, Mr. Blake worked as a Director of
System Development in the Diagnostics Division of Bayer
Corporation, a subsidiary of Bayer AG, a global health care,
nutrition and innovative materials company, from March 2003
until October 2006, contributing to the Centaur CP, Centaur XP
and Versant 440 projects. Prior to his employment with Bayer,
Mr. Blake worked from June 2002 to March 2003 as a
consultant for NPE Systems, Inc., a life sciences company. From
January 2001 until June 2002, Mr. Blake served as Vice
President, Product Development & Manufacturing for
Varacel Corporation. Mr. Blake received a B.S. and M.S. in
Electrical/Computer Engineering and Robots from Brown University.
R. William Bowen, Vice President General
Counsel and Secretary. Mr. Bowen joined the Company in 1997
as Vice President, General Counsel and Assistant Secretary and
was appointed Secretary in August 2002. Prior to joining the
Company, he was a business litigation partner with the law firm
of Luce, Forward, Hamilton & Scripps in San Diego,
California. He received a B.S. in commerce and a J.D. from the
University of Virginia.
Diana De Walt, Vice President Human
Resources. Ms. De Walt joined the Company in
January 2005. Prior to joining the Company, Ms. De Walt
founded The HR Company in 1993 and served as its President and
Principal Consultant providing professional human resources
services to over 85 companies in a wide variety of
industries. From 1988 to 1993, Ms. De Walt worked at Mitek
Systems, Inc. as Director, Human Resources and subsequently Vice
President, Human Resources. From 1987 to 1988, Ms. De Walt
was Vice President, Human Resources of Imperial Savings Real
Estate Lending Group. From 1984 to 1987, Ms. De Walt was
Manager, Human Resources of Security Pacific Business Credit and
Vice President, Human Resources of Security Pacific Business
Finance. Ms. De Walt received an A.A. in liberal arts from
St. Cloud State University and holds a Senior Professional In
Resource Management certification.
Martin B. Edelshain, Vice President Strategic
Planning and Business Development. Mr. Edelshain joined the
Company in November 2003. Prior to joining the Company,
Mr. Edelshain served as a business consultant to the
Company for six months. From 1995 to 2002, Mr. Edelshain
was Director of International Strategy for Chugai Pharmaceutical
Co. Ltd., the Companys former parent company. From 1970 to
1995 Mr. Edelshain worked in the field of corporate finance
for S. G. Warburg & Co. Ltd, a London based investment
bank, specializing in merger and acquisition advice, debt and
equity financings, and business development in Japan. He
received a B.A. in Mechanical Sciences from Cambridge University.
28
Frederick L. Eibel, Vice President
Marketing. Mr. Eibel joined the Company in April
2007 as Vice President, Marketing. Prior to joining the Company,
Mr. Eibel held various positions with Roche Molecular
Diagnostics, including serving as Industrial Business Head,
Business Development Group from August 2006 to April 2007, as
Vice President, Genomics & Oncology, Global Product
Marketing from January 2005 to July 2006, as Vice President,
Corporate Accounts from November 2002 to December 2004 and as
Area Service Director from April 2001 to October 2002. He
received a B.A. in biology and chemistry from Indiana University
and an M.B.A. from the University of Indianapolis.
Paul E. Gargan, Ph.D., Vice President
Business Development. Dr. Gargan joined the Company as Vice
President, Business Development and Planning in 1997 and in July
2002 was named Vice President Business Development.
He was previously President and Chief Scientific Officer at
American Biogenetic Sciences. Dr. Gargans twenty
years of experience in the biotechnology industry include five
years in research and development and fifteen years in general
management specializing in technology, licensing, strategic
partnerships and alliance management. He received a B.S. in
chemistry and a Ph.D. in biochemistry from Queens University and
an M.B.A. from the University of Notre Dame.
Stephen J. Kondor, Vice President Sales and
Marketing. Mr. Kondor joined the Company in July 2005 as
Vice President, Sales and Marketing. Mr. Kondor previously
served as Vice President/General Manager Genetic
Analysis Business of Applied Biosystems (APPLERA), a life
sciences company, from November 2004 to June 2005. From January
2003 to November 2004, Mr. Kondor served as Vice President
and General Manager of Fisher Scientific, a life sciences
company. From August 2001 to January 2003, Mr. Kondor
served as Senior Vice President and General Manager of IGEN
International, a biotechnology diagnostics company. From August
2000 to January 2001, Mr. Kondor served as Vice President,
Worldwide Marketing & Sales of Avocet Medical Inc., a
life sciences company. Prior to those positions, Mr. Kondor
also held positions at Becton Dickinson Company, Biometric
Imaging, Inc., the Diagnostics Division of Abbott Laboratories,
and B. Braun Medical. Mr. Kondor received his B.S. in
Business Administration from Moravian College in 1981.
Gurney I. Lashley, Vice President Supply
Chain Management. Mr. Lashley joined the Company in 1993 as
Director of Manufacturing. He was promoted to Senior Director,
Manufacturing in 1997 and Vice President
Manufacturing, Blood Bank Products in 1999. In July 2002, he was
named Vice President Supply Chain Management. He has
27 years of experience in the diagnostics and
pharmaceutical industries, holding positions in manufacturing,
package engineering, manufacturing engineering, planning and
materials management. Mr. Lashleys previous
employment included positions at Richardson-Merrell, Becton
Dickinson, Macro-Vue and Xoma Ltd. He received a B.S. in
mathematics from East Carolina University.
Lynda A. Merrill, Vice President Industrial
Relationships. Ms. Merrill joined the Company as Vice
President Sales in June 1998 and became Vice
President Sales and Marketing in July 2002. She was
promoted in January 2004 to Executive Vice President
Commercialization, Molecular Light Technology and seconded to
Gen-Probes consolidated subsidiary, Molecular Light
Technology Limited in Cardiff, Wales, where she served as
Managing Director from January 2005 to September 2005. In
September 2005, Ms. Merrill was appointed Vice
President Industrial Relationships and subsequently
returned to the United States to fulfill this role. She has over
20 years experience in the diagnostics industry, most
recently with Boehringer Mannheim Corporation, where she worked
in the sales and marketing arena for 13 years, including
two years in the United Kingdom as Divisional Director for
Boehringer Mannheims Diabetes Care, Point of Care
Division. Ms. Merrill received a B.S. in medical technology
from Palm Beach Atlantic College and an M.B.A. from the
University of Sussex, U.K.
Herm Rosenman, Vice President Finance and
Chief Financial Officer. Mr. Rosenman joined the Company as
Chief Financial Officer in June 2001. Prior to joining the
Company, he was President and Chief Executive Officer of Ultra
Acquisition Corp., a retail chain and consumer products
manufacturer, from 1997 to 2000. He was President and Chief
Executive Officer of RadNet Management, Inc., a large healthcare
provider, from 1994 to 1997, and prior to that was Chief
Financial Officer for Rexene Corp., a Fortune 1000 company
in the petrochemicals industry. Mr. Rosenman was previously
a partner at Coopers & Lybrand (now
PricewaterhouseCoopers LLP) where he served numerous Fortune
1000 clients, principally in the pharmaceuticals and
telecommunications industries. He received a B.B.A. in finance
and accounting from Pace University and an M.B.A. in finance
from the Wharton
29
School of the University of Pennsylvania. Mr. Rosenman
serves on the Board of Directors of Infinity Pharmaceuticals, a
drug discovery and development company, where he serves as
Chairman of the Audit Committee. Mr. Rosenman also serves
on the Board of Directors of ARYx Therapeutics, a private drug
discovery and development company, where he serves as Chairman
of the Audit Committee and as a member of the Corporate
Governance Committee.
Donald D. Tartre, Vice President Finance and
Corporate Controller. Mr. Tartre re-joined the Company in
January 2004 as Vice President, Finance and Corporate
Controller, having previously served as the Companys
Controller from February 1990 to June 1997. After leaving the
Company, Mr. Tartre served as a senior financial executive
for two public biotechnology companies as Vice
President and Chief Financial Officer of Stressgen
Biotechnologies Corporation from March 2001 to January 2004 and
as Vice President, Finance & Planning and Corporate
Controller of Agouron Pharmaceuticals, Inc., which became a
subsidiary of Pfizer Inc. in 2000, from June 1997 to March 2001.
Prior to Mr. Tartres first term of service at
Gen-Probe, he worked with Ernst & Young, LLP for seven
years. He is a Certified Public Accountant and a Certified
Management Accountant, and received a B.S. in business
administration from the University of Southern California.
30
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Role
and Membership of the Compensation Committee
Members of the Compensation Committee are independent directors
who are not employees of the Company or its subsidiaries. The
Compensation Committee is currently comprised of the following
three members: Mr. Kessler, who serves as Chairperson,
Mr. Brown and Dr. McNamee. Mr. Brown replaced
Dr. Jemison on the Compensation Committee effective
September 28, 2006. As of the date of the annual meeting,
Dr. McNamee will depart from the Board and service on the
Compensation Committee, and Mr. Dittamore will begin
serving on the Compensation Committee. None of the Compensation
Committee members has any material business relationships with
the Company or its subsidiaries. All of the members of the
Compensation Committee are independent, as that term
is defined by Nasdaq Marketplace Rule 4200(a)(15).
The Compensation Committee operates pursuant to a written
charter that outlines its specific authority, duties and
responsibilities. The charter is periodically reviewed and
revised by the Compensation Committee and the Board and is
available on the Companys website at www.gen-probe.com.
The Compensation Committee meets at scheduled times during the
year and holds additional meetings from time to time to review
and discuss executive compensation issues. The Compensation
Committee may also take action by written consent. The
Compensation Committee held five meetings during fiscal year
2006 and acted by written consent on one occasion. Executive
officers are not present during the discussion of their
compensation.
The Compensation Committee acts on behalf of the Board to review
and adopt and oversee the Companys compensation strategy,
policies, plans and programs, including:
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establishment of corporate and individual performance objectives
relevant to the compensation of the Companys executive
officers and evaluation
of performance in
light of these stated objectives;
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review and approval of the compensation and other terms of
employment or service, including severance and
change-in-control
arrangements, of the Companys Chief Executive Officer and
the other executive officers and directors; and
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administration of
the Companys equity compensation plans, deferred
compensation plans and other similar plans and programs.
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Executive
Compensation Philosophy
Compensation for Gen-Probes named executive officers, or
NEOs, is intended to be largely performance-based. In
establishing the Companys compensation program for the
NEOs, the Compensation Committee has four principle objectives:
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ensuring that the Company is able to attract and retain
executives through the use of industry-competitive
base compensation;
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providing total compensation that is competitive in the industry
and that is tied to, and varies based upon, both individual and
corporate performance;
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incentivizing NEOs to make prudent business decisions and
maximize stockholder value by providing a significant portion of
total compensation opportunities in the form of direct ownership
in the Company through restricted stock and stock
options; and
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maintaining internal pay equity among employees.
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In order to address these priorities, the Compensation Committee
regularly assesses compensation components that it believes will
most cost effectively attract and motivate executive officers
and reward them for their individual achievements and those of
the Company as a whole. The Compensation Committee has retained
an independent consultant, Compensia, to assist it in its
analysis of key elements of compensation programs. Compensia is
an independent consultant specializing in compensation matters.
The Compensation Committee
31
requested and received a formal report from Compensia in August
2005. The report consisted of a review of the Companys
compensation principles, identification of peer companies, a
competitive assessment of compensation based on officer title
and various recommendations. Additionally, the Compensation
Committee utilizes compensation studies from other organizations
to further understand market trends and the competitive
landscape. In 2006, the Compensation Committee utilized the
following compensation studies in addition to the Compensia
report: the 2006 MEDIC Executive Compensation Survey and the
2006 Radford Biotechnology Survey.
The Compensation Committee allocates total compensation between
cash and equity compensation based on benchmarking to the Peer
Group, discussed below, while considering the balance between
providing short-term incentives and long-term parallel
investment with stockholders to align the interests of
management with stockholders. Annually, the Compensation
Committee evaluates the balance between equity and cash
compensation among NEOs.
Based on its review of the above-mentioned objectives, the
Company has established a compensation program that consists of
the following six components:
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base salary;
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an annual cash bonus that is dependent on individual and
corporate performance;
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equity awards, consisting of stock options and restricted stock;
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the opportunity to defer compensation under a nonqualified
deferred compensation plan;
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post-termination benefits that are triggered in limited
circumstances; and
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other health and welfare benefits generally offered to all
employees of the Company.
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To tie compensation to performance, there is no minimum award of
compensation required by the Companys bonus plan or the
Companys stock option/restricted stock award program. As a
further measure, the Company introduced a stock ownership policy
for executive officers in 2006. Under the policy, executive
officers are expected, within five years of the later of
September 28, 2006 or an executives appointment, to
acquire and hold Company stock (including restricted shares)
equal in value to at least three times base salary in the case
of the Chief Executive Officer, two times base salary in the
case of executive and senior vice presidents and one times base
salary in the case of vice presidents. The Company believes that
this ownership policy further aligns executive and stockholder
interests and thereby promotes the objective of increasing
stockholder value.
Determination
of Compensation Awards
The Compensation Committee is provided with the authority to
determine the compensation awards available to the NEOs. For
fiscal year 2006, Compensia provided advice to the Compensation
Committee with respect to competitive practices and the amounts
and nature of compensation paid to executive officers in the
Peer Group. Compensia also advised on, among other things,
structuring the Companys various compensation programs and
determining the appropriate levels of salary, bonus and other
awards payable to the Companys executive officers. Based
upon Compensias recommendations, the Companys cash
and stock-based incentive awards are weighted significantly
towards variable components to ensure that total compensation
reflects the overall success or failure of the Company, and to
motivate executive officers to meet appropriate performance
measures, thereby maximizing total return to stockholders.
The Compensation Committee does not rely solely on the results
of the consultants study in assessing the competitive
landscape for compensation. In addition, the Compensation
Committee generally consults other surveys, such as the MEDIC
and Radford surveys referenced above, which provide further data
points and help the Compensation Committee to calibrate the
findings of the compensation consultant.
Finally, to further aid the Compensation Committee in making its
determinations, the Chief Executive Officer provides
recommendations annually to the Compensation Committee regarding
the compensation of all NEOs, excluding himself. The Chief
Executive Officers recommendations are guided by the
results of the Chief Executive Officers annual performance
review of each NEO, at which time each NEOs individual
goals are assessed in light
32
of overall corporate goals. In addition, each NEO provides input
about his or her individual contributions to the Companys
success for the period being assessed.
Compensation
Benchmarking and Peer Group
The Compensation Committee sets base salary structures and
annual cash incentive targets for NEOs around the sixtieth
percentile of a Peer Group of diagnostic,
pharmaceutical and biotech companies of similar size, based on
revenue and market capitalization. The Compensation Committee
sets equity incentive targets for NEOs around the seventy-fifth
percentile of this Peer Group. The Compensation Committee also
considers the Companys geographic location in
San Diego, where there is significant competition for
employees in the diagnostic, pharmaceutical and biotechnology
industries. This approach ensures that the Companys
compensation structures will enable it to remain competitive in
its markets. An important component of setting and structuring
compensation for the Companys executive officers is
determining the compensation packages offered by comparable
diagnostic, pharmaceutical and biotechnology companies in order
for the Company to offer competitive compensation within that
group of companies. The Compensation Committee requested and has
utilized a written survey conducted by Compensia in August 2005
of the compensation practices of a peer group of companies in
the United States to assess the Companys competitiveness.
In determining the level of compensation provided to its
executive officers, the Compensation Committee evaluates the
financial performance of the Peer Group companies, in addition
to evaluating the Companys independent performance, to
gauge the Companys comparative performance within its peer
group. For fiscal year 2006, the Peer Group
companies were: Affymetrix, Amylin Pharmaceuticals, Biosite,
Cytyc Corporation, Diagnostic Products, Inverness Medical
Innovations, Martek Biosciences, IDEXX Labs, ImClone Systems,
Immucor, KOS Pharmaceuticals, Medicis, Millennium
Pharmaceuticals, Neurocrine Biosciences, Protein Design Labs,
Sepracor, TECHNE Corporation, Vertex, and United Therapeutics.
While the Compensation Committee targets cash compensation and
equity awards in the percentiles stated above, the Compensation
Committee recognizes the Companys desire to keep the best
talent among the Companys executive management team. To
retain and motivate these key individuals, the Compensation
Committee may determine that it is in the best interests of the
Company to negotiate total compensation packages with the
Companys executive management that may deviate from the
general percentages described-above. Actual pay for each
executive is determined around this structure, driven by the
performance of the executive over time, as well as the annual
performance of the Company. Equity grant guidelines are then set
by job level, using market survey data and current guidelines to
determine the appropriate annual grant levels for the upcoming
year.
Base
Salary
Each executive officers base salary is determined, during
the first quarter of the fiscal year, by the Compensation
Committee. The Chief Executive Officer has a minimum base salary
of $645,000 that was established by the terms of his employment
agreement, which is described below under Potential
Payment Upon Termination or
Change-in-Control.
The Companys other executive officers do not have a
minimum salary established by contract.
The base salary component of the Companys compensation
program is designed to provide its executive officers with total
cash compensation that is in the sixtieth percentile of the Peer
Group and that is competitive in the San Diego market. In
establishing the amount, the Compensation Committee reviews data
from the Peer Group and the other independent compensation
surveys referenced above. The Company pays a base salary at the
levels established by the Compensation Committee to satisfy the
competitive base compensation priority within the
Companys compensation philosophy.
Each year the Compensation Committee determines base salary
increases for the NEOs based upon the Compensation
Committees continuing review of Peer Group compensation,
as well as its subjective evaluation of the performance of the
executive officers as assessed by the Compensation Committee and
the Chief Executive Officer, as well the officers
experience, commitment to corporate core values and potential
for advancement. No formulaic base salary increases are provided
to the NEOs.
33
Annual
Cash Bonus
Annual cash bonuses for executive officers are determined under
the terms of the Companys annual bonus plan. As detailed
below, cash bonuses are not guaranteed and are only paid in the
event the Company achieves its performance targets, which for
2006 were based on total revenues and net income. In the event
performance targets are achieved, the amount of the
executives bonus varies based on individual performance,
subject to an overall cap for each executive. The Companys
annual cash bonus plan is designed to reward an executive
officer for his or her contribution to the Companys
achievement of its financial goals, and, only if financial goals
are achieved, reflect the executives overall job
performance.
Executive cash bonuses for fiscal year 2006 were determined
under the terms of the 2006 Gen-Probe Employee Bonus Plan (the
2006 Plan). Under the 2006 Plan, each participant
was assigned, according to employee grade, a target bonus amount
expressed as a percentage of his or her annual base salary. For
the Chief Executive Officer, the target bonus amount was 75% of
his annual base salary; for each of the other executive
officers, the target bonus amount was 25% of such officers
annual base salary. The target bonus for the Chief Executive
Officer is established pursuant to the terms of his employment
contract. The difference between the target bonus for the Chief
Executive Officer and the other members of the executive team is
based upon the Companys belief that the Chief Executive
Officers overall responsibility is managing the Company to
achieve its financial goals, whereas the other members of the
executive team have more specialized responsibilities to achieve
that end.
The following two factors, in addition to the target amounts,
were used to determine bonuses under the 2006 Plan:
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Company Performance Factor
(CPF). The CPF is a percentage that
is applied to each target bonus and is based on the achievement
of the Companys net income and total revenue goals.
Achievement of net income and total revenue goals results in the
CPF equaling 100%.
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Individual and Team Performance Factor
(ITPF). The ITPF is a percentage
applied to a portion of each participants target bonus.
Each participant was assigned an ITPF percentage based on the
assessment of his or her overall performance, including
performance on functional teams at the Company.
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Bonuses were then calculated under the 2006 Plan based on the
following formula:
Bonus = (Base Pay x % Target x CPF x 50%) +
(Base Pay x % Target x CPF x ITPF x 50%)
Based on the above calculation, each executive officer was
eligible to receive between 0% and 187.5% of his or her target
bonus amount. The annual bonus amounts paid to executive
officers in respect of fiscal year 2006 reflect a CPF of 90%,
and each executive officers ITPF.
Cash bonuses for 2007 for all officers other than the Chief
Executive Officer and Chief Operating Officer will be made under
the terms of the 2007 Gen-Probe Employee Bonus Plan (the
2007 Plan). The 2007 Plan applies the same target
bonus percentages and utilizes the same formula as the 2006 Plan
described above.
Cash bonuses for the Chief Executive Officer and Chief Operating
Officer will be made under the terms of the Gen-Probe
Incorporated 2007 Executive Bonus Plan, subject to stockholder
approval. The Gen-Probe Incorporated 2007 Executive Bonus Plan
is summarized under Proposal 2 to this Proxy
Statement.
Equity
Awards
Overview. Each executive officer, as well as
each other full-time employee of the Company, is eligible to
receive an annual award of equity compensation. The Company
believes, based on its performance-based approach to
compensation, that equity ownership in the Company is important
to tie the ultimate level of compensation to the performance of
the Companys stock and stockholder gains while creating an
incentive for sustained growth. The Company believes that this
is especially true in the case of executive officers.
Guidelines for the number of stock options and restricted stock
awards granted to each executive officer are determined using a
procedure approved by the Compensation Committee based upon the
executive officers salary grade, performance and the value
of the award at the time of grant. As a result, additional
grants other than the
34
annual award may be made following a significant change in job
responsibility or in recognition of a significant achievement.
The Compensation Committee generally does not consider the
number of options
and/or
restricted stock awards held by NEOs when making grants as it
believes that awards should be given based on successful job
performance and should not be discounted on account of
accumulated equity value. Further, the Compensation Committee
believes that competitors who may try to hire the Companys
NEOs would not give full credit for existing equity ownership in
Gen-Probe, and, to remain competitive, similarly do not credit
old awards when approving new grants. The Compensation Committee
may consider compliance or non-compliance with the
Companys stock ownership policy in making equity incentive
grants to officers.
In 2006, all stock options and restricted stock awards made to
NEOs, and all Company employees, were made under the terms of
the 2003 Incentive Plan. Stock options granted under the 2003
Incentive Plan have a four-year vesting schedule in order to
provide an incentive for continued employment. All stock options
granted after May 17, 2006, when stockholders approved an
amendment to the 2003 Incentive Plan, expire seven years from
the date of the grant. This provides a reasonable time frame in
which to align the executive officer with any price appreciation
of the Companys shares, while managing overhang more
effectively as compared to a more typical ten-year option term,
which the Company used prior to the May 2006 amendment.
Effective November 16, 2006, the exercise price of options
granted under the Companys stock plans, including the 2003
Incentive Plan, is equal to the closing price of the
Companys common stock on the date of grant. Prior to this
date, the Companys stock option plans, including the 2003
Incentive Plan, provided that the exercise price of options be
equal to the closing price of the Companys common stock on
the date prior to the date of grant.
All restricted stock awards made to NEOs have a four-year
vesting schedule, with twenty-five percent of the shares vesting
on each anniversary of the grant date. The Company believes this
vesting schedule provides an important incentive for continued
employment, especially when compared to various monthly vesting
alternatives. In addition, under the terms of the 2003 Incentive
Plan, each share of restricted stock granted subsequent to
May 17, 2006 reduces the number of shares reserved for
issuance under the plan by two shares.
In the event of a change in control of the Company, each of the
Companys equity incentive plans provides that all
outstanding stock options and restricted shares automatically
become fully vested, exercisable or payable, as applicable. The
Company believes that this provision effectively rewards its
employees, substantially all of whom receive equity
compensation, in the event the Company is acquired.
Deferred
Compensation Plan
The Company maintains a Deferred Compensation Plan (the
DCP) that allows certain highly compensated
management, including the NEOs, key employees and directors of
the Company to defer up to 80% of annual base salary or director
fees and up to 100% of annual bonus compensation. In 2006, our
Chief Executive Officer and Vice President, General Counsel were
the only NEOs to participate in the DCP.
Deferred amounts are credited with gains and losses based on the
performance of deemed investment options selected by a committee
appointed by our Board of Directors to administer the DCP. The
DCP also allows for discretionary contributions to be made by
the Company. Participants may receive distributions upon
(i) a pre-set date or schedule that is elected during an
appropriate election period, (ii) the occurrence of
unforeseeable financial emergencies, (iii) termination of
employment (including retirement), (iv) death,
(v) disability, or (vi) a change in control of the
Company as defined in the DCP. Certain participants must wait
six months following termination of employment to receive
distributions. Amounts deferred under the DCP after 2004 are
subject to Section 409A of the Code.
The Company may terminate the DCP at any time with respect to
participants providing services to the Company. Upon termination
of the DCP, participants will be paid out in accordance with
their prior distribution elections and otherwise in accordance
with the DCP. Upon and for twelve months following a change of
control, the Company has the right to terminate the DCP and,
notwithstanding any elections made by participants, to pay out
all benefits in a lump sum, subject to the provisions of the
Code.
35
Post-Termination
Benefits
Post-termination benefits for executive officers are established
pursuant to the terms of their individual employment agreements.
As further described under Potential Payment Upon
Termination or
Change-in-Control,
each NEO is entitled to certain cash consideration and other
benefits in the event the NEO is terminated other than for
cause, if the NEO terminates employment for
good reason or if the NEO is terminated following a
change of control. The employment agreements with each NEO that
provide for these benefits each have a double
trigger change of control policy. The Compensation
Committee believes that a double trigger change of control
policy best aligns stockholders and management since it keeps
the decision of paying severance costs with the acquiring
company, not with current management. As a result, in the event
an acquiring company desires to employ some or all of management
following an acquisition, the consideration that otherwise would
be allocated solely to management under a single
trigger policy, can instead by shared by all stockholders.
Other
Benefits
The Company provides its executive officers with the following
benefits that are also available to all of its full-time
employees:
Employee Stock Purchase Plan. The Company
maintains a tax-qualified ESPP that allows all participants to
acquire Gen-Probe common stock at a discount price. This plan
has a six-month look-back and allows participants to buy
Gen-Probe stock at a 15% discount to the lower of the market
price on the first and last day of the applicable six-month
offering period with up to 15% of his or her base salary or a
maximum of $21,250 annually. The Company offers the ESPP to
allow employees to profit when the value of Gen-Probe stock
increases over time. Because of the tax advantages associated
with holding stock purchased through the ESPP, the Company also
believes the ESPP aligns participants interests with
stockholders. Messrs. Conway, Kacian and Nordhoff and
Ms. De Walt purchased shares under the ESPP in 2006.
401(k) Plan. The Company offers to all
full-time employees the opportunity to participate in a 401(k)
Plan. The 401(k) Plan permits eligible employees of the Company
to defer up to 100% of their annual compensation, subject to
certain limitations imposed by the Code. The employees
elective deferrals are immediately vested and non-forfeitable
upon contribution to the 401(k) Plan. In order to incentivize
prudent retirement savings and supplement retirement income,
Gen-Probe matches up to 50% of the first 6% of an
employees contributions, subject to a four year vesting
schedule. Each NEO participated in the 401(k) Plan in 2006 and
received matching contributions in the amount of $6,600 from the
Company, except in the case of Mr. Bowen who received a
matching contribution of $6,300. The Company contributed the
remaining $300 to Mr. Bowens account under the
deferred compensation plan.
Health and Welfare Benefits. The
Companys healthcare, life and disability insurance, and
other welfare and employee-benefit programs are the same for all
eligible full-time employees, including executive officers.
Because of the importance placed by the Company on the health
and welfare of its employees, the Company paid 100% of the
premiums associated with these programs on behalf of all of its
full-time employees and their eligible dependents in 2006.
In addition to the foregoing, the Company provides the following
benefits to Mr. Nordhoff pursuant to his employment
agreement: a term life insurance policy providing for payment of
$1 million to his designated beneficiaries; a long term
disability insurance policy providing for payment at a rate of
not less than $200,000 per annum; and accidental death and
disability insurance for a benefit of $400,000 (airplane) and
$200,000 (automobile or walking) should Mr. Nordhoff suffer
accidental death or disability during the term of his employment
agreement.
Policies
with Respect to Equity Compensation Awards
The Compensation Committee evaluates the allocation of equity
awards among stock option grants, restricted stock grants, stock
appreciation rights and the various other incentives available
under the Companys stock option plans by reference to the
Peer Group discussed above. Since November 16, 2006, the
Company grants all equity incentive awards based on the fair
market value as of the date of grant. Prior to this date, the
Company used the fair market value as of the close of business
on the date prior to the date of grant, as required under the
then-applicable
36
terms of its option plans. The Company does not have a policy of
granting equity-based awards at other than the fair market value
on the date of grant. The exercise price for stock option grants
and similar awards is determined by looking at the fair market
value of the last quoted price per share on the Nasdaq Global
Select Market on the date of grant.
The Company determined the date of grant for 2006 option awards
and restricted stock grants to eligible employees other than
Mr. Nordhoff at its Board of Directors meeting immediately
preceding its annual meeting, selecting a date a number of
months in the future that was outside of a blackout period under
the Companys Securities Trading Policy. Specifically, the
Board of Directors determined on May 16, 2006 that the
grant date for all annual awards to eligible employees would be
August 15, 2006. The Compensation Committee then determined
on August 11, 2006 the actual amount of the awards to be
given to each NEO, other than Mr. Nordhoff. By selecting a
grant date a number of months in the future, and having this
date fall outside of a blackout period, the Company seeks to
avoid any market-timing with respect to its equity
grants. The Board of Directors determined at the same
May 16, 2006 meeting that Mr. Nordhoff would receive
option awards and restricted stock grants on May 18, 2006,
which coincided with the date that all other directors of the
Company received their annual equity awards. This grant date was
also outside of a blackout period under the Companys
Security Trading Policy and was consistent with the timing of
annual grants made to Mr. Nordhoff in recent years (June
2004 and May 2005).
The Company does not have any formal clawback policies relating
to equity awards. The Compensation Committee intends to evaluate
the prudence of adopting such policies in the future.
Tax
Considerations
Section 162(m) of the Code generally disallows a tax deduction
to public companies for compensation in excess of
$1 million paid to the Chief Executive Officer or any of
the four most highly compensated officers. Performance-based
compensation arrangements may qualify for an exemption from the
deduction limit if they satisfy various requirements under
Section 162(m). Although the Company considers the impact of
this rule when developing and implementing its executive
compensation programs, the Company believes it is important to
preserve flexibility in designing compensation programs.
Accordingly, the Company has not adopted a policy that all
compensation must qualify as deductible under Section 162(m).
The Companys options are intended to qualify as
performance-based compensation (as defined by the
Code). Likewise, as discussed in Proposal 2, amounts payable
under the Bonus Plan are intended to qualify as
performance-based compensation. However, amounts paid under the
Companys other compensation programs may not so qualify.
37
SUMMARY
COMPENSATION TABLE
The following table shows for the fiscal year ended
December 31, 2006, compensation awarded to or paid to, or
earned by, our NEOs, consisting of the Companys Chief
Executive Officer, Chief Financial Officer, its three other most
highly compensated executive officers at December 31, 2006,
and two additional executive officers who were Named Executive
Officers under applicable rules in 2006.
Summary
Compensation Table for Fiscal 2006
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Restricted
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Non-Equity
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All
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Stock
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Incentive Plan
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Other
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Salary
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Awards
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Option Awards
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Compensation
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)(1)
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($)(2)
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($)(3)
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($)(4)
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($)
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Henry L. Nordhoff,
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2006
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645,000
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739,503
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1,883,693
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470,000
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64,450
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3,802,646
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Chairman, President and Chief
Executive Officer
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Herm Rosenman,
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2006
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315,000
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106,721
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380,093
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83,000
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7,890
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892,704
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Vice President Finance,
Chief Financial Officer
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|
|
Daniel L. Kacian, Ph.D., M.D.,
|
|
|
2006
|
|
|
|
363,000
|
|
|
|
161,701
|
|
|
|
617,292
|
|
|
|
110,000
|
|
|
|
8,580
|
|
|
|
1,260,573
|
|
Executive Vice President and Chief
Scientist
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry T. Mimms, Ph.D.,
|
|
|
2006
|
|
|
|
360,000
|
|
|
|
140,907
|
|
|
|
564,414
|
|
|
|
70,000
|
|
|
|
7,665
|
|
|
|
1,142,986
|
|
Executive Vice
President Research and Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diana De Walt,
|
|
|
2006
|
|
|
|
276,000
|
|
|
|
109,032
|
|
|
|
639,526
|
|
|
|
68,000
|
|
|
|
7,224
|
|
|
|
1,099,782
|
|
Vice President Human
Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. William Bowen,
|
|
|
2006
|
|
|
|
317,000
|
|
|
|
109,032
|
|
|
|
450,584
|
|
|
|
87,000
|
|
|
|
7,515
|
|
|
|
971,131
|
|
Vice President, General Counsel and
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Niall Conway,
|
|
|
2006
|
|
|
|
334,000
|
|
|
|
63,294
|
|
|
|
436,220
|
|
|
|
65,000
|
|
|
|
8,580
|
|
|
|
907,094
|
|
Executive Vice
President Sales and Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective April 16, 2007, Dr. Mimms and the Company
entered into an agreement whereby Dr. Mimms resigned from
his employment with the Company. |
|
(1) |
|
The amounts included in the Restricted Stock Awards
column represent the compensation cost that was recognized by
the Company in fiscal year 2006 related to awards of restricted
stock granted during fiscal year 2006 and previous fiscal years
determined in accordance with Statement of Financial Accounting
Standards (SFAS) No. 123(R), Share-Based
Payment. The valuation assumptions used in determining
such amounts are described in Note 1 to our consolidated
financial statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2006. Please see the
Grants of Plan-Based Awards in Fiscal 2006 table for
more information regarding awards of restricted stock during
fiscal 2006. |
|
(2) |
|
The amounts included in the Option Awards column
represent the compensation cost that was recognized by the
Company in fiscal year 2006 related to grants of options during
fiscal year 2006 and previous fiscal years determined in
accordance with SFAS No. 123(R). |
|
(3) |
|
Non-Equity Incentive Plan Compensation is composed
entirely of cash bonuses awarded under the 2006 Plan with
respect to performance during fiscal year 2006. These amounts
were paid during fiscal year 2007. All goals were predetermined
and objectively measurable and all amounts paid were at the
determination of the Compensation Committee. |
|
(4) |
|
For all individuals other than Mr. Nordhoff, amounts shown
reflect the value of the Companys match under the 401(k)
Plan ($6,600 in each case, except for Mr. Bowen ($6,300))
and Company-paid life insurance premiums. For Mr. Nordhoff,
the amount reflects the value of the following: the
Companys match under the 401(k) Plan ($6,600);
Company-paid life insurance premiums ($18,450); travel expenses
related to attendance at a Company retreat ($6,677) plus an
amount to
gross-up
Mr. Nordhoff for the incremental tax liability associated
with these travel expenses being included as income ($5,694);
travel expenses related to Mr. Nordhoffs spouse |
38
|
|
|
|
|
($13,261) plus an amount to
gross-up
Mr. Nordhoff for the incremental tax liability associated
with these travel expenses being included as income ($11,310);
and other miscellaneous expenses ($2,458). |
Grants of
Plan-Based Awards
The following table shows for the fiscal year ended
December 31, 2006, certain information regarding grants of
plan-based awards to the NEOs:
Grants of
Plan-Based Awards in Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Option
|
|
|
|
|
|
Closing
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Market
|
|
|
Date Fair
|
|
|
|
|
|
|
Board or
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
Number of
|
|
|
or Base
|
|
|
Price
|
|
|
Value of
|
|
|
|
|
|
|
Comp.
|
|
|
Estimated Future Payouts Under
|
|
|
Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
on the
|
|
|
Stock and
|
|
|
|
|
|
|
Committee
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Grant
|
|
|
Option
|
|
|
|
|
|
|
Approval
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Date
|
|
|
Awards
|
|
Name
|
|
Grant Date
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)(2)
|
|
|
(#)(3)
|
|
|
($/Sh)
|
|
|
($/Sh)(4)
|
|
|
($)(5)
|
|
|
Henry L. Nordhoff
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483,750
|
|
|
|
907,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/18/06
|
|
|
|
5/16/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
52.09
|
|
|
|
1,053,800
|
|
|
|
|
5/18/06
|
|
|
|
5/16/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
52.69
|
|
|
|
52.09
|
|
|
|
2,422,000
|
|
Herm Rosenman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,750
|
|
|
|
147,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
49.98
|
|
|
|
345,030
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
49.29
|
|
|
|
49.98
|
|
|
|
393,418
|
|
Daniel L. Kacian,
Ph.D., M.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,750
|
|
|
|
170,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
49.98
|
|
|
|
591,480
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
|
|
|
49.29
|
|
|
|
49.98
|
|
|
|
629,469
|
|
Larry T. Mimms, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,500
|
|
|
|
156,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
49.98
|
|
|
|
369,675
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
49.29
|
|
|
|
49.98
|
|
|
|
491,773
|
|
Diana De Walt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,000
|
|
|
|
129,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
49.98
|
|
|
|
369,675
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000
|
|
|
|
49.29
|
|
|
|
49.98
|
|
|
|
531,114
|
|
R. William Bowen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,250
|
|
|
|
148,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
49.98
|
|
|
|
369,675
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
49.29
|
|
|
|
49.98
|
|
|
|
590,127
|
|
Niall M. Conway
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
168,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
|
|
|
|
|
|
|
|
49.98
|
|
|
|
221,805
|
|
|
|
|
8/15/06
|
|
|
|
8/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
|
|
49.29
|
|
|
|
49.98
|
|
|
|
334,405
|
|
|
|
|
|
|
Effective April 16, 2007, Dr. Mimms and the Company
entered into an agreement whereby Dr. Mimms resigned from
his employment with the Company. |
|
(1) |
|
These numbers represent the target and maximum cash bonus
amounts that could have been earned for 2006 pursuant to the
2006 Plan. Actual amounts awarded for 2006 are included in the
Summary Compensation Table above. For additional
information regarding plan-based awards granted to our named
executive officers, see CD&A above. For 2007, for all
individuals above other than Mr. Nordhoff, cash bonuses may
be paid pursuant to the 2007 Plan based upon the attainment of
certain Company, team and individual performance goals. For
Mr. Nordhoff, a cash bonus may be paid for 2007 pursuant to
the Bonus Plan, subject to approval by the Companys
stockholders at the annual meeting. |
|
(2) |
|
Restricted stock awards were granted pursuant to the 2003
Incentive Award Plan. The awards have a four-year vesting
schedule with 25% of the shares subject to each award vesting on
each anniversary of the date of grant, subject to trading window
restrictions. |
|
(3) |
|
Option grants were made pursuant to the 2003 Incentive Award
Plan. The options vest and become exercisable on a four-year
vesting schedule. Options vest 25% one year from the date of
grant and 1/48 each month thereafter until options are fully
vested. |
39
|
|
|
(4) |
|
Prior to November 16, 2006, the exercise price of grants
was based on the closing market price of the Companys
common stock on the date immediately prior to the grant date,
pursuant to the then-applicable provisions of the Companys
equity incentive plans. Effective November 16, 2006, the
Companys equity incentive plans were amended and the
exercise price of all grants is now based on the closing price
of the Companys common stock on the date of grant. |
|
(5) |
|
The amounts set forth in the Grant Date Fair Value of
Stock and Option Awards column is the full grant date fair
value of the awards determined in accordance with
SFAS No. 123(R). The valuation assumptions used in
determining such amounts are described in Note 1 to our
consolidated financial statements included in our Annual Report
on
Form 10-K
for the year ended December 31, 2006. |
Outstanding
Equity Awards at Fiscal year-End
The following table shows for the fiscal year ended
December 31, 2006, certain information regarding
outstanding equity awards at fiscal year end for the
NEOs.
Outstanding
Equity Awards At December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1)
|
|
|
Stock Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
of Unearned
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Shares,
|
|
|
Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Shares
|
|
|
Units or
|
|
|
Shares,
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
or Units of
|
|
|
Other
|
|
|
Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Stock
|
|
|
Rights
|
|
|
Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
That
|
|
|
That
|
|
|
Rights
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have
|
|
|
That Have
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(3)
|
|
|
(#)
|
|
|
($)(4)
|
|
|
Henry L. Nordhoff
|
|
|
21,396
|
|
|
|
|
|
|
|
13.66
|
|
|
|
8/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,881
|
|
|
|
|
|
|
|
12.29
|
|
|
|
9/01/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
324,673
|
|
|
|
|
|
|
|
12.29
|
|
|
|
6/01/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,332
|
|
|
|
16,668
|
|
|
|
29.53
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,990
|
|
|
|
36,010
|
|
|
|
41.94
|
|
|
|
6/01/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,583
|
|
|
|
60,417
|
|
|
|
43.55
|
|
|
|
5/20/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,541
|
|
|
|
13,459
|
|
|
|
42.50
|
|
|
|
10/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
52.69
|
|
|
|
5/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
261,850
|
|
|
|
15,000
|
|
|
|
785,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
392,775
|
|
|
|
12,500
|
|
|
|
654,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,084
|
|
|
|
632,839
|
|
|
|
7,916
|
|
|
|
414,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
1,047,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
597,396
|
|
|
|
226,554
|
|
|
|
|
|
|
|
|
|
|
|
44,584
|
|
|
|
2,334,864
|
|
|
|
35,416
|
|
|
|
1,854,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herm Rosenman
|
|
|
18,097
|
|
|
|
|
|
|
|
13.66
|
|
|
|
6/11/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,562
|
|
|
|
|
|
|
|
12.29
|
|
|
|
9/01/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,672
|
|
|
|
|
|
|
|
12.29
|
|
|
|
6/01/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,957
|
|
|
|
9,000
|
|
|
|
29.53
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,062
|
|
|
|
10,938
|
|
|
|
36.59
|
|
|
|
9/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,833
|
|
|
|
14,167
|
|
|
|
42.50
|
|
|
|
10/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
49.29
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,250
|
|
|
|
274,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
366,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
111,183
|
|
|
|
54,105
|
|
|
|
|
|
|
|
|
|
|
|
12,250
|
|
|
|
641,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40
Outstanding
Equity Awards At December 31, 2006
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1)
|
|
|
Stock Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
of Unearned
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Shares,
|
|
|
Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Shares
|
|
|
Units or
|
|
|
Shares,
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
or Units of
|
|
|
Other
|
|
|
Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Stock
|
|
|
Rights
|
|
|
Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
That
|
|
|
That
|
|
|
Rights
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have
|
|
|
That Have
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(3)
|
|
|
(#)
|
|
|
($)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel L. Kacian,
Ph.D., M.D.
|
|
|
36,749
|
|
|
|
|
|
|
|
13.66
|
|
|
|
8/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,544
|
|
|
|
|
|
|
|
12.29
|
|
|
|
9/01/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,707
|
|
|
|
|
|
|
|
12.29
|
|
|
|
6/01/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,332
|
|
|
|
11,668
|
|
|
|
29.53
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,125
|
|
|
|
21,875
|
|
|
|
36.59
|
|
|
|
9/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,750
|
|
|
|
21,250
|
|
|
|
42.50
|
|
|
|
10/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
|
|
|
49.29
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
392,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
628,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
156,207
|
|
|
|
86,793
|
|
|
|
|
|
|
|
|
|
|
|
19,500
|
|
|
|
1,021,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry T. Mimms, Ph.D.
|
|
|
3,787
|
|
|
|
|
|
|
|
12.29
|
|
|
|
6/01/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,662
|
|
|
|
11,668
|
|
|
|
29.53
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,062
|
|
|
|
10,938
|
|
|
|
36.59
|
|
|
|
9/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,208
|
|
|
|
24,792
|
|
|
|
42.50
|
|
|
|
10/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
49.29
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
392,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
392,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
62,719
|
|
|
|
72,398
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
785,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diana De Walt
|
|
|
22,916
|
|
|
|
27,084
|
|
|
|
48.81
|
|
|
|
2/01/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,291
|
|
|
|
17,709
|
|
|
|
42.50
|
|
|
|
10/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000
|
|
|
|
49.29
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,250
|
|
|
|
274,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
392,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
30,207
|
|
|
|
71,793
|
|
|
|
|
|
|
|
|
|
|
|
12,750
|
|
|
|
667,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. William Bowen
|
|
|
575
|
|
|
|
|
|
|
|
12.29
|
|
|
|
6/01/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,641
|
|
|
|
7,146
|
|
|
|
29.53
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,062
|
|
|
|
10,938
|
|
|
|
36.59
|
|
|
|
9/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,291
|
|
|
|
17,709
|
|
|
|
42.50
|
|
|
|
10/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
49.29
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,250
|
|
|
|
274,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
392,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
52,569
|
|
|
|
65,793
|
|
|
|
|
|
|
|
|
|
|
|
12,750
|
|
|
|
667,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Niall M. Conway
|
|
|
15,416
|
|
|
|
|
|
|
|
13.66
|
|
|
|
8/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
570
|
|
|
|
|
|
|
|
12.29
|
|
|
|
9/01/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,406
|
|
|
|
|
|
|
|
12.29
|
|
|
|
6/01/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,332
|
|
|
|
11,668
|
|
|
|
29.53
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,125
|
|
|
|
21,875
|
|
|
|
36.59
|
|
|
|
9/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,375
|
|
|
|
10,625
|
|
|
|
42.50
|
|
|
|
10/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
|
|
49.29
|
|
|
|
8/15/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
157,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
235,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
127,224
|
|
|
|
61,168
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
392,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective April 16, 2007, Dr. Mimms and the Company
entered into an agreement whereby Dr. Mimms resigned from
his employment with the Company. |
41
|
|
|
(1) |
|
Options vest 25% one year from the grant date and 1/48 each
month thereafter until options are fully vested. |
|
(2) |
|
Restricted stock awards vest over four years with 25% of the
shares subject to each award vesting on each anniversary of the
date of grant, subject to trading window restrictions. |
|
(3) |
|
Based on a closing stock price of $52.37 at fiscal-year end
(December 29, 2006). |
|
(4) |
|
The aggregate market value of shares of Deferred Issuance
Restricted Stock Awards that have vested, but have not yet been
received/earned. Based on a closing stock price of $52.37 at
fiscal-year end (December 29, 2006). |
Option
Exercises and Stock Vested
The following table shows for the fiscal year ended
December 31, 2006, certain information regarding option
exercises and stock vested during the last fiscal year with
respect to the NEOs.
Option
Exercises and Stock Vested in Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
Acquired on
|
|
|
Realized
|
|
|
|
Exercise
|
|
|
on Exercise
|
|
|
Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)(2)
|
|
|
($)(3)
|
|
|
Henry L. Nordhoff
|
|
|
74,000
|
|
|
|
3,060,944
|
|
|
|
17,916
|
|
|
|
911,385
|
|
Herm Rosenman
|
|
|
|
|
|
|
|
|
|
|
1,750
|
|
|
|
84,945
|
|
Daniel L. Kacian,
Ph.D., M.D.
|
|
|
20,000
|
|
|
|
800,819
|
|
|
|
2,500
|
|
|
|
121,350
|
|
Larry T. Mimms, Ph.D.
|
|
|
36,438
|
|
|
|
972,920
|
|
|
|
2,500
|
|
|
|
121,350
|
|
Diana De Walt
|
|
|
|
|
|
|
|
|
|
|
1,750
|
|
|
|
84,945
|
|
R. William Bowen
|
|
|
26,713
|
|
|
|
900,144
|
|
|
|
1,750
|
|
|
|
84,945
|
|
Niall M. Conway
|
|
|
6,500
|
|
|
|
280,077
|
|
|
|
1,000
|
|
|
|
48,540
|
|
|
|
|
|
|
Effective April 16, 2007, Dr. Mimms and the Company
entered into an agreement whereby Dr. Mimms resigned from
his employment with the Company. |
|
(1) |
|
The value is the difference between the option exercise price
and the market price of the underlying shares multiplied by the
number of shares covered by the option. |
|
(2) |
|
The number of shares of restricted stock for which the
restrictions lapsed. For Mr. Nordhoff, these shares are
comprised of Deferred Issuance Restricted Stock Awards that have
vested, but not yet been received/earned. |
|
(3) |
|
The value is the fair market value of the underlying shares on
the vesting date multiplied by the number of shares covered by
the award. |
Post-Employment
Compensation
Pension
Benefits
We do not provide pension arrangements or post-retirement health
coverage for our executives or employees, other than for
Mr. Nordhoff pursuant to his employment agreement. Our
Chief Executive Officer, vice presidents and other employees are
eligible to participate in our 401(k) plan. In any plan year, we
will contribute to each participant a matching contribution
equal to 50% of the first 6% of the participants
compensation that has been contributed to the plan, up to a
maximum matching contribution of $6,600. All of our NEOs
participated in our 401(k) plan during fiscal 2006 and received
matching contributions.
42
Nonqualified
Deferred Compensation
The following table shows for the fiscal year ended
December 31, 2006, certain information regarding
non-qualified deferred compensation benefits for the NEOs. A
description of the material terms of the Companys Deferred
Compensation Plan is included in the CD&A portion of this
proxy statement.
Nonqualified
Deferred Compensation for Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions in
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Balance
|
|
|
|
in Last FY
|
|
|
Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
at
12/31/06
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Henry L. Nordhoff
|
|
|
441,824
|
|
|
|
|
|
|
|
70,166
|
|
|
|
|
|
|
|
530,850
|
|
Herm Rosenman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel L. Kacian, Ph.D.
M.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry T. Mimms, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diana De Walt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. William Bowen
|
|
|
25,320
|
|
|
|
296
|
|
|
|
1,984
|
|
|
|
|
|
|
|
27,600
|
|
Niall M. Conway
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective April 16, 2007, Dr. Mimms and the Company
entered into an agreement whereby Dr. Mimms resigned from
his employment with the Company. |
|
(1) |
|
This column includes amounts that were also reported as either
Salary or Non-Equity Incentive Plan
Awards in the Summary Compensation Table.
These amounts have been earned during fiscal year 2006, but
payment has been deferred until a future date. |
|
(2) |
|
The Company makes a matching contribution to restore any lost
401(k) matches due to IRS limitations in the Companys
401(k) plan. To become eligible for the Company matching
contribution, a participant must defer the maximum annual amount
to the Companys 401(k) plan. The Company contributed $300
to Mr. Bowens deferred compensation plan account in
2006, and the amount deposited ($296) was net of Medicare
withholding. |
43
Potential
Payment Upon Termination or
Change-in-Control
Post-termination benefits for our NEOs are established pursuant
to the terms of their individual employment agreements. The
following table sets forth the amount of payments to each of our
NEOs based on an assumed termination: (i) other than for
cause, or a termination for good reason, in each case on
December 31, 2006 (listed below under
Severance) and (ii) as a result of a change in
control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel L.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kacian,
|
|
|
Larry T.
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry L.
|
|
|
Herm
|
|
|
Ph.D.
|
|
|
Mimms,
|
|
|
Diana De
|
|
|
R. William
|
|
|
Niall M.
|
|
Compensation Component
|
|
Nordhoff
|
|
|
Rosenman
|
|
|
M.D.
|
|
|
Ph.D.
|
|
|
Walt
|
|
|
Bowen
|
|
|
Conway
|
|
|
Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
1,290,000
|
|
|
$
|
315,000
|
|
|
$
|
363,000
|
|
|
$
|
360,000
|
|
|
$
|
276,000
|
|
|
$
|
317,000
|
|
|
$
|
334,000
|
|
Bonus
|
|
|
967,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance
|
|
|
18,450
|
|
|
|
1,290
|
|
|
|
1,980
|
|
|
|
690
|
|
|
|
624
|
|
|
|
690
|
|
|
|
1,980
|
|
Outplacement Services
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
Medical Reimbursement
|
|
|
|
(1)
|
|
|
9,600
|
|
|
|
4,692
|
|
|
|
14,400
|
|
|
|
12,048
|
|
|
|
12,048
|
|
|
|
9,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,283,950
|
|
|
$
|
333,890
|
|
|
$
|
377,672
|
|
|
$
|
383,090
|
|
|
$
|
296,672
|
|
|
$
|
337,738
|
|
|
$
|
353,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
1,935,000
|
|
|
$
|
472,500
|
|
|
$
|
544,500
|
|
|
$
|
540,000
|
|
|
$
|
414,000
|
|
|
$
|
475,500
|
|
|
$
|
501,000
|
|
Bonus
|
|
|
1,451,250
|
|
|
|
120,000
|
|
|
|
156,000
|
|
|
|
125,250
|
|
|
|
103,500
|
|
|
|
127,500
|
|
|
|
135,000
|
|
Life insurance
|
|
|
18,450
|
|
|
|
1,290
|
|
|
|
1,980
|
|
|
|
690
|
|
|
|
624
|
|
|
|
690
|
|
|
|
1,980
|
|
Outplacement Services
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
|
8,000
|
|
Medical Reimbursement
|
|
|
|
(1)
|
|
|
9,600
|
|
|
|
4,692
|
|
|
|
14,400
|
|
|
|
12,048
|
|
|
|
12,048
|
|
|
|
9,600
|
|
Gross-up
on excise tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,412,700
|
|
|
|
611,390
|
|
|
|
715,172
|
|
|
|
688,340
|
|
|
|
538,172
|
|
|
|
623,738
|
|
|
|
655,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automatic vesting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
1,422,083
|
|
|
|
579,635
|
|
|
|
920,040
|
|
|
|
760,854
|
|
|
|
354,367
|
|
|
|
603,040
|
|
|
|
768,972
|
|
Restricted stock
|
|
|
2,334,864
|
|
|
|
641,533
|
|
|
|
1,021,215
|
|
|
|
785,550
|
|
|
|
667,718
|
|
|
|
667,718
|
|
|
|
392,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,169,647
|
|
|
$
|
1,832,557
|
|
|
$
|
2,656,427
|
|
|
$
|
2,234,744
|
|
|
$
|
1,560,256
|
|
|
$
|
1,894,495
|
|
|
$
|
1,817,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective April 16, 2007, Dr. Mimms and the Company
entered into an agreement whereby Dr. Mimms resigned from
his employment with the Company. |
|
(1) |
|
Under the terms of Mr. Nordhoffs employment
agreement, summarized below, since Mr. Nordhoff has reached
age 65, he is entitled to receive up to $10,000 per
year in medical reimbursement to cover medical and prescription
expenses incurred but not covered by Medicare, regardless of the
reason for the termination of the employment relationship. |
Employment
Agreements with Executive Officers
The Company entered into an Amended and Restated Employment
Agreement with its Chairman, President and Chief Executive
Officer, Henry L. Nordhoff, on March 1, 2007, which
specifies the terms and conditions of his employment. The
agreement states that Mr. Nordhoffs base salary will
be $645,000 for the term of the agreement, which amount can be
increased annually by the Compensation Committee. The agreement
also provides that Mr. Nordhoffs salary may not be
decreased during the term of the agreement. The term of the
agreement is three years from May 17, 2006.
Mr. Nordhoffs target bonus will be 75% of his base
salary, with the actual amount determined by the Compensation
Committee. The agreement further provides that Mr. Nordhoff
may receive an annual grant of options, restricted stock or
other equity awards of the Company as determined by the
Compensation Committee. The Company is required to provide
Mr. Nordhoff with a term life insurance policy providing
for payment of $1 million to his designated beneficiaries,
a long term disability policy providing for payment at a rate of
not less than $200,000 per annum and accidental death and
disability insurance providing for a benefit of $400,000
(airplane) or $200,000 (automobile or walking) should
Mr. Nordhoff suffer accidental death or disability during
the
44
term. Mr. Nordhoff is also eligible pursuant to the
agreement to participate in the Companys retirement, stock
option, insurance and similar plans as in effect from time to
time. After Mr. Nordhoff ceases employment with the Company
for any reason and reaches age 65 (which he did this year),
the Company will provide for up to $10,000 per year in
medical reimbursement to cover medical and prescription expenses
incurred but not covered by Medicare.
Mr. Nordhoff may terminate his employment with the Company
at any time. In the event Mr. Nordhoffs employment is
terminated for reasons other than cause, or if he
terminates his employment for good reason (each as
defined below), Mr. Nordhoff will receive severance
pursuant to the agreement in the form of 24 months salary
continuation at his base salary rate in effect at the time of
the termination, plus a pro rata portion of his targeted level
bonus in the year of the termination and an amount equal to two
times his targeted level bonus in the year of termination. If
Mr. Nordhoffs termination is in connection with a
change in control (as defined in the agreement), he will receive
severance in the form of a lump sum payment, payable within ten
days of termination, equal to 36 months base salary,
and an amount equal to three times his targeted level bonus in
the year of the termination. A termination is considered in
connection with a change in control if the termination occurs
within the period six months before or 18 months after a
change in control.
The agreement also requires the Company, upon a termination
without cause or for good reason, to provide continued health
care coverage to Mr. Nordhoff and his eligible dependents
without charge until the earlier of his 65th birthday or
the first date that he is covered under another employers
health benefit program providing substantially the same or
better benefits and to pay premiums on life insurance obtained
under the Companys life insurance plan. After
Mr. Nordhoff reaches age 65, which he did this year,
the Company will provide for up to $10,000 per year in
medical reimbursement to cover medical and prescription expenses
incurred but not covered by Medicare. Further, upon a
termination without cause or for good reason,
Mr. Nordhoffs will receive the costs of life
insurance premiums for 24 months and outplacement services
for six months.
The agreement also provides that if it is determined that any
payment or distribution of any type to Mr. Nordhoff or for
his benefit by the Company, any of its affiliates, any person
who acquires ownership or effective control of the Company or
ownership of a substantial portion of its assets (within the
meaning of Section 280G of the Code and the regulations
thereunder), whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise, would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties with
respect to such excise tax, then Mr. Nordhoff will be
entitled to receive an additional gross up payment
in an amount calculated to ensure that after Mr. Nordhoff
pays all taxes (and any interest or penalties imposed with
respect to such taxes), including any excise tax, imposed upon
the gross-up
payment, Mr. Nordhoff retains an amount of the
gross-up
payment equal to the excise tax imposed upon the total payments
made to him. However, if the excise tax could be avoided by
reducing the total payments by $10,000 or less, then the total
payments would be reduced to the extent necessary to avoid the
excise tax and no
gross-up
payment would be required under the agreement.
For purposes of the agreement, good reason means any
of the following events that are not consented to by
Mr. Nordhoff: (i) the removal of Mr. Nordhoff
from his position as the Chief Executive Officer of the Company;
(ii) a substantial and material diminution in
Mr. Nordhoffs duties and responsibilities;
(iii) a reduction of Mr. Nordhoffs base salary
or target bonus percentage; (iv) the location of
Mr. Nordhoffs assignment on behalf of the Company is
moved to a location more than 30 miles from its present
location; (v) the failure of the Company to obtain a
satisfactory agreement from any successor to the Company to
assume and agree to perform the agreement; or (vi) a
material breach by the Company of its obligations under the
agreement after notice in writing from Mr. Nordhoff and a
reasonable opportunity for the Company to cure or substantially
mitigate any material adverse effect of such breach. In
addition, cause means any of the following events:
(i) any act of gross or willful misconduct, fraud,
misappropriation, dishonesty, embezzlement or similar conduct on
the part of Mr. Nordhoff;
(ii) Mr. Nordhoffs conviction of a felony or any
crime involving moral turpitude (which conviction, due to the
passage of time or otherwise, is not subject to further appeal);
(iii) Mr. Nordhoffs misuse or abuse of alcohol,
drugs or controlled substances and failure to seek and comply
with appropriate treatment; (iv) willful and continued
failure by Mr. Nordhoff to substantially perform his duties
under the agreement (other than any failure resulting from
disability or from termination by Mr. Nordhoff for good
reason) as determined by a majority of the Board after written
demand from the Board of Directors for substantial performance
is delivered to Mr. Nordhoff, and Mr. Nordhoff fails
to resume substantial performance of his duties on a continuous
basis within 30 days of such
45
notice; (v) the death of Mr. Nordhoff; or
(vi) Mr. Nordhoffs becoming disabled such that
he is not able to perform his usual duties for the Company for a
period in excess of six consecutive calendar months.
The Company also has entered into employment agreements with its
other NEOs. Each agreement provides that in the event the
executives employment is terminated for reasons other than
cause, or if the executive terminates her or his
employment for good reason (each as defined in the
agreement), the executive will receive severance in the form of
continued compensation, at the executives salary rate paid
at the time of the termination plus costs of life insurance
premiums, if any, for a period of 12 months. If the
termination is due to a change in control (as defined in the
agreement), the executive will receive severance in the form of
a lump sum payment, payable within ten days of termination,
equal to 18 months of such executives base
salary, and an amount equal to 1.5 times the greater of the
executives targeted level bonus in the year of the
termination or the executives highest discretionary bonus
in the preceding three years. A termination is considered in
connection with a change in control if the termination occurs
within the period six months before or 18 months after a
change in control.
Each executive also is entitled to receive COBRA benefits for
the executive and eligible dependents until the earlier of one
year following the executives termination date or the
first date that the executive is covered under another
employers health benefit program providing substantially
the same or better benefits, and outplacement services for six
months.
Recent
Events
On April 16, 2007, the Company entered into an agreement
(the Agreement) with Larry T. Mimms, Ph.D.,
Executive Vice President, Research and Development, whereby
Dr. Mimms resigned from his employment with the Company as
of the date of the Agreement. Dr. Mimms joined the Company
in 1994 and was appointed Executive Vice President, Research and
Development in June 2005.
The Agreement provides that the Company will continue to pay
Dr. Mimms current base salary (less applicable
withholding taxes) through July 16, 2008. The Company will
also provide Dr. Mimms and his eligible dependents with
continued health care coverage until the earlier of
(i) July 16, 2008 or (ii) the first date that
Dr. Mimms is covered under another employers health
benefit program providing substantially the same or better
benefit options, without exclusion for any pre-existing medical
condition. In addition, the Company will pay the premium for
life insurance coverage selected by Dr. Mimms under the
Companys life insurance plan through July 16, 2008,
subject to Dr. Mimms payment of the portion not
contributed by the Company. The Company will also provide
Dr. Mimms with transition support services through
July 16, 2007 or, at Dr. Mimms option, $5,000
(less applicable taxes) in lieu thereof. Dr. Mimms is also
entitled to compensation for his accrued but unused vacation,
less applicable taxes.
The Company and Dr. Mimms have agreed that performance of
the Agreement by the Company will satisfy all of the
Companys obligations to Dr. Mimms in connection with
his employment.
46
Director
Compensation
The following table shows for the fiscal year ended
December 31, 2006, certain information with respect to the
compensation of all non-employee directors of the Company.
Director
Compensation for Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Restricted
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation)
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)
|
|
|
John W. Brown
|
|
|
37,731
|
|
|
|
8,899
|
|
|
|
454,861
|
|
|
|
|
|
|
|
501,491
|
|
Raymond V. Dittamore
|
|
|
48,124
|
|
|
|
11,876
|
|
|
|
178,651
|
|
|
|
|
|
|
|
238,651
|
|
Mae C. Jemison, M.D.
|
|
|
48,124
|
|
|
|
11,876
|
|
|
|
211,477
|
|
|
|
|
|
|
|
271,477
|
|
Armin M. Kessler
|
|
|
56,148
|
|
|
|
23,852
|
|
|
|
178,651
|
|
|
|
10,000
|
(4)
|
|
|
268,651
|
|
Gerald D. Laubach, Ph.D.(6)
|
|
|
34,294
|
|
|
|
5,953
|
|
|
|
19,566
|
|
|
|
|
|
|
|
59,813
|
|
Brian A. McNamee(7)
|
|
|
43,286
|
|
|
|
16,714
|
|
|
|
178,651
|
|
|
|
17,223
|
(5)
|
|
|
255,874
|
|
Phillip M. Schneider
|
|
|
50,134
|
|
|
|
29,866
|
|
|
|
178,651
|
|
|
|
|
|
|
|
258,651
|
|
Abraham D. Sofaer
|
|
|
40,134
|
|
|
|
29,866
|
|
|
|
178,651
|
|
|
|
|
|
|
|
248,651
|
|
|
|
|
(1) |
|
The aggregate dollar amount of all fees earned or paid in cash
for services as a director, including annual retainer fees,
committee
and/or
chairmanship fees, and meeting fees. |
|
(2) |
|
The amounts included in the Restricted Stock Awards
column represent the compensation cost that was recognized by
the Company in fiscal year 2006 related to awards of restricted
stock granted during fiscal year 2006 and previous fiscal years
determined in accordance with SFAS No. 123(R). The
valuation assumptions used in determining such amounts are
described in Note 1 to our consolidated financial
statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2006. |
|
(3) |
|
The amounts included in the Options Awards column
represent the compensation cost that was recognized by the
Company in fiscal year 2006 related to grants of options during
fiscal year 2006 and previous fiscal years determined in
accordance with SFAS No. 123(R). In May 2006, each
director, other than Dr. Laubach who retired as of the 2006
annual meeting of stockholders, received an award of options to
acquire 10,000 shares with grant value of $242,747
(10,000 shares multiplied by $24.2747). |
|
(4) |
|
Amount represents payments made to Mr. Kesslers
spouse, Ann C. Kessler, Ph.D., for her service as a member of
the Companys Scientific Advisory Board, upon which she has
served since 2004. Prior to retiring in 1995, Dr. Kessler
served for 25 years with Hoffman-La Roche in a number
of management positions, including Director of International
Project Management with responsibility for global project
development decisions. |
|
(5) |
|
Amount represents actual travel costs incurred by
Dr. McNamees spouse to attend the Companys May
2006 Board of Directors meeting plus an amount to
gross-up
Dr. McNamee for the incremental tax liability associated
with this travel expense being included as income. The Company
requested that spouses of Board members attend the May 2006
meeting. The travel costs of other Board members spouses
related to the May 2006 meeting was comparatively nominal. |
|
(6) |
|
Dr. Laubach retired from the Board and did not stand for
re-election at our 2006 annual meeting of stockholders. |
|
(7) |
|
Dr. McNamee will depart from the Board and not stand for
re-election as of the date of our 2007 annual meeting of
stockholders. |
Each non-employee director of the Company receives an annual
retainer of $60,000, with a minimum of twenty percent of the
annual retainer paid in the form of restricted common stock of
the Company, if shares are then available for issuance under an
equity incentive plan adopted by the Company. The twenty percent
of the annual retainer received in the form of restricted common
stock must be held until the director retires from the Board. In
addition, directors may elect to receive the remainder of their
annual retainer in the form of restricted common stock of the
Company, subject to share availability. In 2006, non-employee
directors elected to receive an aggregate of 2,721 shares
of restricted common stock in lieu of cash compensation. Shares
are granted as restricted stock awards
47
under the 2003 Incentive Award Plan and the number of shares is
determined based on the fair market value on the date of grant.
The Company pays an annual retainer of $20,000 to the Chairman
of the Audit Committee and $10,000 to each of the chairs of the
Compensation Committee, the Nominating and Corporate Governance
Committee and the Succession Planning Committee. In the fiscal
year ended December 31, 2006, the total cash compensation
paid to non-employee directors for service on the Board or
committees of the Board was $357,975. An additional $81,414 was
paid in January 2007 for director services rendered during the
fourth quarter of 2006. The members of the Board of Directors
are also eligible for reimbursement for their expenses incurred
in attending Board meetings in accordance with Company policy.
Upon joining the Board, non-employee directors receive an
initial grant of options to purchase 20,000 shares of the
Companys common stock, if options are then available under
an equity incentive plan adopted by the Company. The shares vest
over three years with one-third of the shares vesting one year
after the date of grant and the remainder of the shares vesting
monthly thereafter over the following two years of services as a
director. The exercise price of the options granted to the
non-employee directors is equal to the fair market value of the
Companys common stock on the date of grant.
During the last fiscal year, the Company granted options to
purchase 10,000 shares of our common stock to each
non-employee director of the Company who had been in office for
at least six months as of May 17, 2006, other than
Dr. Laubach who retired as of the 2006 annual meeting of
stockholders. The options were granted at an exercise price per
share of $52.69, the fair market value of our common stock on
the date of grant, for aggregate grants to non-employee
directors of options to purchase 70,000 shares of common
stock. The shares vest over one year at the rate of one-twelfth
of the shares vesting monthly.
Related-Person
Transactions Policy and Procedures
We review all relationships and transactions in which the
Company and our directors and executive officers or their
immediate family members are participants to determine whether
such persons have a direct or indirect material interest. The
Companys legal department is primarily responsible for the
development and implementation of processes and controls to
obtain information from directors and executive officers with
respect to related person transactions and for then determining,
based on the facts and circumstances, whether the Company or a
related person has a direct or indirect material interest in the
transaction. To identify related-person transactions in advance,
the Companys legal department relies on information
supplied by its executive officers and directors in the form of
questionnaires.
In addition, pursuant to the Companys Audit Committee
Charter, the Audit Committee reviews and approves or ratifies
any related person transaction that is required to be disclosed.
Where a transaction has been identified as a related-person
transaction, the Companys legal department or management
must present information regarding the proposed related-person
transaction to the Audit Committee (or, where Audit Committee
approval would be inappropriate, to another independent body of
the Board) for such review. The presentation typically includes
a description of, among other things, the material facts, the
interests, direct and indirect, of the related persons, the
benefits to the Company of the transaction and whether any
alternative transactions were available. In the course of its
review and approval or ratification of a disclosable related
party transaction, the Audit Committee may consider:
|
|
|
|
|
the nature of the related persons interest in the
transaction;
|
|
|
|
the material terms of the transaction, including, without
limitation, the amount and type of transaction;
|
|
|
|
the importance of the transaction to the related person;
|
|
|
|
the importance of the transaction to the Company;
|
|
|
|
whether the transaction would impair the judgment of a director
or executive officer to act in the best interest of the
Company; and
|
|
|
|
any other matters the committee deems appropriate.
|
48
For purposes of our practices only, a related-person
transaction is a transaction, arrangement or relationship
(or any series of similar transactions, arrangements or
relationships) in which the Company and any related
person are participants involving an amount that exceeds
$120,000. A related person is any executive officer, director,
or more than 5% stockholder of the Company, including any of
their immediate family members, and any entity owned or
controlled by such persons.
CERTAIN
RELATED PERSON TRANSACTIONS
In September 2000, the Company made a loan in the principal
amount of $100,000 to Niall M. Conway, the Companys
Executive Vice President Operations. The Company
made this loan to Mr. Conway in order to assist him with
the purchase of his initial residence in San Diego,
California. This loan is evidenced by a promissory note which
matures upon the earlier of (a) the sale of his residence,
or (b) termination of his employment with the Company. The
promissory note is secured by a Deed of Trust in favor of the
Company. The loan by its original terms is not subject to
interest.
The Company has entered into indemnity agreements with its
directors and officers that provide, among other things, that
the Company will indemnify such officer or director, under the
circumstances and to the extent provided for therein, for
expenses, damages, judgments, fines and settlements he or she
may be required to pay in actions or proceedings which he or she
is or may be made a party by reason of his or her position as a
director, officer or other agent of the Company, and otherwise
to the fullest extent permitted under Delaware law and the
Companys Bylaws.
In May 2006, the Company entered into a non-exclusive cross
license agreement with a privately-held company that employs
Mr. Dittamores adult son in a non-executive capacity
as manager of business development. The privately-held company
paid to Gen-Probe a $100,000 initial license fee in connection
with the agreement and each party will pay royalties to the
other in the event products are commercialized using the
in-licensed technology.
The Company believes that all of the transactions described
above were on terms at least as favorable to it as they would
have been had the Company entered into those transactions with
unaffiliated third parties.
HOUSEHOLDING
OF PROXY MATERIALS
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
householding, potentially means extra convenience
for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are
Gen-Probe stockholders will be householding our
proxy materials. A single proxy statement will be delivered to
multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be
householding communications to your address,
householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and
would prefer to receive a separate proxy statement and annual
report, please notify your broker, direct your written request
to Gen-Probe Incorporated, Attention: Investor Relations, 10210
Genetic Center Drive, San Diego, California 92121, or
contact the Investor Relations Department at
(858) 410-8000.
Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request
householding of their communications should contact
their broker.
49
OTHER
MATTERS
The Board of Directors knows of no other matters that will be
presented for consideration at the Annual Meeting. If any other
matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote
on such matters in accordance with their best judgment.
By Order of the Board of Directors
Henry L. Nordhoff
Chairman, President and Chief Executive Officer
April 27, 2007
A copy of the Companys Annual Report to the Securities
and Exchange Commission on
Form 10-K
for the fiscal year ended December 31, 2006 is available
without charge upon written request to: Investor Relations,
Gen-Probe Incorporated, 10210 Genetic Center Drive,
San Diego, California 92121.
50
Appendix A
GEN-PROBE
INCORPORATED
2007 EXECUTIVE BONUS PLAN
The Gen-Probe Incorporated 2007 Executive Bonus Plan (the
Plan) is designed to motivate and reward
certain executive officers of Gen-Probe Incorporated (the
Company) to produce results that increase
stockholder value and to encourage individual and team behavior
that helps the Company achieve both short and long-term
corporate objectives.
The Board of Directors of the Company (the
Board) has adopted this Plan, effective with
respect to bonus awards for Plan Years beginning on or after
January 1, 2007, subject to approval of the Plan by the
stockholders of the Company.
ARTICLE I.
CERTAIN DEFINITIONS
Section 1.1
Base Compensation. Base
Compensation of a Participant for a Plan Year shall mean
the Participants regular base salary, excluding moving
expenses, bonus pay and other payments which are not considered
part of regular base salary, paid during such Plan Year.
Section 1.2
Change in Control. Change
in Control shall have the meaning given to such term in
the Incentive Award Plan.
Section 1.3
Code. Code shall
mean the Internal Revenue Code of 1986, as amended.
Section 1.4
Committee. Committee
shall mean the Compensation Committee of the Board, or such
other committee as may be appointed by the Board consisting
solely of two or more Directors, each of whom qualifies as an
outside director for purposes of Section 162(m)
of the Code.
Section 1.5
Common Stock. Common
Stock shall mean the common stock, par value
$0.0001 per share, of the Company.
Section 1.6
Director. Director
shall mean a member of the Board.
Section 1.7
Eligible
Individual. Eligible Individual
shall mean the Companys Chief Executive Officer and
President and such other employees of the Company as the
Committee may determine in its discretion.
Section 1.8
Fair Market Value. Fair
Market Value shall have the meaning given to such term in
the Incentive Award Plan.
Section 1.9
Incentive Award
Plan. Incentive Award Plan shall
mean the Gen-Probe Incorporated 2003 Incentive Award Plan, as
amended and restated.
Section 1.10
Paid Leave of
Absence. Paid Leave of Absence
shall mean a period of time during which a Participant performs
no duties due to an illness, incapacity (including disability),
layoff, jury duty, military duty or a leave of absence for which
the Participant is so paid or so entitled to payment by the
Company, whether direct or indirect, but excluding vacation time.
Section 1.11
Participant. Participant
shall mean any Eligible Individual selected by the Committee to
receive a bonus award under the Plan.
Section 1.12
Plan Year. Each Plan
Year shall run from January 1st through
December 31st.
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ARTICLE II.
BONUS AWARDS
Section 2.1
Participants; Bonus Awards. The
Committee, in its discretion, may grant bonus awards under the
Plan with regard to any given Plan Year to one or more of the
Eligible Individuals. At the time a bonus award is granted
pursuant to this Section 2.1, the Committee shall specify a
bonus amount to be paid upon the achievement of the performance
goals established in accordance Section 2.2, which bonus
amount may be a specific dollar amount, or a specified
percentage of the Participants Base Compensation for a
Plan Year, subject to Section 2.4.
Section 2.2
Performance Goals. For each Plan
Year with regard to which one or more Eligible Individuals is
selected by the Committee to receive a bonus award under the
Plan, the Committee shall establish in writing one or more
objectively determinable performance goals for such bonus award,
based upon one or more of the following business criteria, any
of which may be measured either in absolute terms or as compared
to any incremental increase or as compared to the results of a
peer group:
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revenue;
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sales;
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cash flow;
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earnings per share of Common Stock (including earnings before
any one or more of the following: (i) interest,
(ii) taxes, (iii) depreciation, and
(iv) amortization);
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return on equity;
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total stockholder return;
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return on capital;
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return on assets or net assets;
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income or net income;
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operating income or net operating income;
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operating profit or net operating profit;
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operating margin;
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cost reductions or savings;
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research and development expenses (including research and
development expenses as a percentage of sales or revenues);
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working capital; and
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market share.
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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 or business unit. The Committee, in its discretion, may
specify different performance goals for each bonus award granted
under the Plan. The Committee shall, within the time prescribed
by Section 162(m) of the Code, define in an objective
fashion the manner of determining whether and to what extent the
specified performance goal has been achieved for the Plan Year;
provided, however, that, subject to Section 2.3, the
achievement of each performance criteria shall be determined in
accordance with United States generally accepted accounting
principles (GAAP) to the extent applicable.
Section 2.3
Adjustments to Performance
Components. For each bonus award granted
under the Plan, the Committee, in its discretion, may, at the
time of grant, specify in the bonus award that one or more
objectively
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determinable adjustments shall be made to one or more of the
performance goals established under Section 2.2. Such
adjustments may include or exclude one or more of the following:
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items that are extraordinary or unusual in nature or infrequent
in occurrence;
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items related to a change in accounting principle;
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items related to financing activities;
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expenses for restructuring or productivity initiatives;
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other non-operating items;
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items related to acquisitions;
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items attributable to the business operations of any entity
acquired by the Company during the Plan Year;
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items related to the disposal of a business or segment of a
business;
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items related to discontinued operations that do not qualify as
a segment of a business under GAAP; and
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any other items of significant income or expense which are
determined to be appropriate adjustments.
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The amount of any adjustment made pursuant to this
Section 2.3 shall be determined in accordance with GAAP.
Section 2.4
Award Limit. The maximum
aggregate amount of all bonus awards granted to a Participant
under this Plan with regard to any Plan Year shall not exceed
$3,000,000. For purposes of this Section 2.4, bonus award
payments made in shares of Common Stock shall count against
aggregate bonus award limit based upon the Fair Market Value of
such shares on the date the bonus award payment is made.
Section 2.5
Other Incentive Awards. The Plan
is not the exclusive means for the Committee to award incentive
compensation to Participants and does not limit the Committee
from making additional discretionary incentive awards.
ARTICLE III.
PAYMENT OF BONUS AWARD
Section 3.1
Form of Payment. Each
Participants bonus award may be paid, at the option of the
Committee, in cash, or in Common Stock or right to receive
Common Stock (such as restricted stock or restricted stock
units), or in any combination of cash and Common Stock or right
to receive Common Stock (such as restricted stock or restricted
stock units). Bonus award payments made in Common Stock shall be
made in accordance with the provisions of the Incentive Award
Plan.
Section 3.2
Certification; Timing of
Payment. Prior to the distribution of any
bonus award payment, the Committee shall certify in writing the
level of performance attained by the Company (relative to the
applicable performance goals determined pursuant to
Section 2.2 (including any adjustments under
Section 2.3)) for the Plan Year to which such bonus award
relates. Bonus award payments will be made following the close
of the Plan Year after the review and certification of bonus
award payments by the Committee.
Section 3.3
Negative Discretion. The
Committee, in its discretion, may reduce or eliminate the bonus
amount otherwise payable to any Participant under a bonus award.
Section 3.4
Terminations. Except as provided
in Section 3.5, if a Participants employment with the
Company is terminated for any reason other than death or
disability prior to payment of any bonus award payment, all of
the Participants rights under the Plan shall terminate and
the Participant shall not have any right to receive any further
payments with respect to any bonus award granted under the Plan.
The Committee, in its discretion, may determine what portion, if
any, of the Participants bonus award under the Plan should
be paid if the Participants employment has been terminated
by reason of death or disability.
A-3
Section 3.5
Change in Control. If a Change
in Control occurs after the close of a Plan Year, a
Participants bonus award will be paid based on performance
in relation to the specified performance goals. If a Change in
Control occurs during the Plan Year, the Participant will be
paid a bonus prorated to the effective date of the Change in
Control and all performance goals will be deemed to be met at
the greater of 100% of the performance goal or the actual
prorated
year-to-date
performance. Notwithstanding anything to the contrary in
Section 3.2, the payment of a bonus pursuant to this
Section 3.5 shall be paid within 30 days of the
effective date of the Change in Control. The Participant must be
employed by the Company or its successor on the effective date
of the Change in Control in order to receive a bonus payment
pursuant to this Section 3.5.
ARTICLE IV.
SECTION 162(M) OF THE CODE
Section 4.1
Qualified Performance Based
Compensation. The Committee, in its
discretion, may determine whether a bonus award should qualify
as performance-based compensation as described in
Section 162(m)(4)(C) of the Code and the treasury
regulations thereunder and may take such actions as it may deem
necessary to ensure that such bonus award will so qualify.
Section 4.2
Performance Goals.
(a) The Committee may, in its discretion, establish the specific
performance goal or goals under Section 2.2 that must be
achieved in order for a Participant to become eligible to
receive a bonus award payment (including any specific
adjustments to be made under Section 2.3). The performance
goals (including any adjustments) shall be established in
writing by the Committee; provided, however, that the
achievement of such goals shall be substantially uncertain at
the time such goals are established in writing.
(b) With respect to any bonus award which the Committee
determines should qualify as performance-based compensation, the
applicable performance goals described in Section 2.2
(including any adjustments to be made under Section 2.3)
shall be established in writing no later than the 90th day
following the commencement of the period of service to which the
performance goals relate; provided, however, that in no event
shall the performance goals be established after 25% of the
period of service (as scheduled in good faith at the time the
performance goals are established) has elapsed.
ARTICLE V.
ADMINISTRATION
Section 5.1
Committee.
(a) The Committee shall consist solely of two or more Directors
appointed by and holding office at the pleasure of the Board,
each of whom constitutes an outside director within
the meaning of Section 162(m)(4)(C) of the Code and the
treasury regulations thereunder.
(b) Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the
Committee shall be filled by the Board.
Section 5.2
Duties and Powers of
Committee. It shall be the duty of the
Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the
power to interpret the Plan, and to adopt such rules for the
administration, interpretation and application of the Plan as
are consistent therewith and to interpret, amend or revoke any
such rules. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and
duties of the Committee under the Plan except with respect to
matters which under Section 162(m) of the Code are required
to be determined in the sole and absolute discretion of the
Committee.
Section 5.3
Determinations of the Committee or the
Board. All actions taken and all
interpretations and determinations made by the Committee or the
Board in good faith shall be final and binding upon all
Participants,
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the Company and all other interested persons. No members of the
Committee or the Board shall be personally liable for any
action, inaction, determination or interpretation made in good
faith with respect to the Plan or any bonus award, and all
members of the Committee and the Board shall be fully protected
by the Company in respect of any such action, determination or
interpretation.
Section 5.4
Majority Rule; Unanimous Written
Consent. The Committee shall act by a
majority of its members in office. The Committee may act either
by majority vote at a meeting or by a memorandum or other
written instrument signed by all of the members of the Committee.
ARTICLE VI.
OTHER PROVISIONS
Section 6.1
Amendment, Suspension or Termination of the
Plan. This Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any
time or from time to time by the Board or the Committee.
However, with respect to bonus awards which the Committee
determines should qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, no action of
the Board or the Committee may modify the performance goals (or
adjustments) applicable to any outstanding bonus award, to the
extent such modification would cause the bonus award to fail to
qualify as performance-based compensation.
Section 6.2
Effective Date. This Plan shall
be effective upon approval by the Board (the Plan
Effective Date), subject to stockholder approval. The
Committee may grant bonus awards under the Plan at any time on
or after the Plan Effective Date.
Section 6.3
Approval of Plan by
Stockholders. This Plan shall be submitted
for the approval of the Companys stockholders at the
annual meeting of stockholders to be held in 2007. In the event
that this Plan is not so approved, this Plan shall cease to be
effective and no payment shall be made with respect to any bonus
award granted under the Plan.
Section 6.4
Tax Withholding. The Company
shall have the authority and the right to deduct or withhold, or
require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, local and foreign taxes
required by law to be withheld with respect to any taxable event
concerning a Participant arising in connection with a bonus
award granted under this Plan.
A-5
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
GEN-PROBE INCORPORATED
The undersigned hereby appoints Henry L. Nordhoff and Herm Rosenman, 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 Gen-Probe Incorporated 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 the company to be held at 10:00 a.m. on
May 31, 2007 at Gen-Probes offices located at 10210 Genetic Center Drive, San Diego, CA 92121, or any
adjournment thereof, with all powers which the undersigned would possess at the Annual Meeting.
This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder.
If no direction is made, this proxy will be voted for the election of the nominees in proposal 1, for proposal
2 and for proposal 3.
(Continued and to be marked, dated and signed, on the other side)
For the convenience of our Japanese stockholders, this proxy form is being produced in both
English
and Japanese. Please complete, sign and return only one proxy card in the language of your preference.
5 FOLD AND DETACH HERE5
Vote by Internet or Telephone or Mail 24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
Internet
http://www.proxyvoting.com/gpro
Use the Internet to vote your proxy. Have your proxy card in hand when
you access the website.
Telephone
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card
in hand when you call. Only USA, Canada & Puerto Rico stockholders
can vote via telephone.
Mail
Mark, sign and date your proxy card and return it in the enclosed
postage-paid envelope for stockholders
in the USA, Canada and Puerto Rico.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your
proxy card.
You can view the Annual Report, 10K and Proxy Statement on the Investor Relations section of
Gen-Probes website located at www.gen-probe.com
6 [Japanese Translation of Proxy Card]6
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Please mark your
votes as indicated
in this example
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Proposals:
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1.
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To elect two directors for a three-year term to expire at the
2010 Annual Meeting of Stockholders. The present Board of
Directors of the Company has nominated and recommends
for election as director the following persons:
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FOR
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AGAINST
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ABSTAIN |
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01 Mae C. Jemison, M.D.
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FOR
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AGAINST
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ABSTAIN |
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02 Armin M. Kessler
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FOR
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2.
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To approve the Gen-Probe Incorporated 2007 Executive Bonus Plan.
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FOR
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AGAINST
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3.
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To ratify the selection of Ernst & Young LLP as the Companys
independent
auditors for the fiscal year ending December 31, 2007.
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4.
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To transact such other business as may be properly brought
before the Annual Meeting or any adjournment thereof. |
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
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http://www.proxyvoting.com/gpro
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1-866-540-5760
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