REPORT OF THE AUDIT COMMITTEE
The Audit Committee is responsible for overseeing the process of accounting and financial reporting of the Company and the audits and financial statements of the Company. The Audit Committee operates pursuant to a written charter that is reviewed annually by the Audit Committee. As set forth in the Audit Committee charter, management of the Company is responsible for the preparation, presentation and integrity of the Companys financial statements and for the appropriateness of the accounting principles and reporting policies that are used by the Company. The independent registered public accounting firm is responsible
for auditing the Companys financial statements and expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States.
In the performance of its oversight function, the Companys Audit Committee reviewed and discussed with the Companys management and the Companys independent registered public accounting firm, KPMG LLP, the audited consolidated financial statements of the Company contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2015. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16,
Communications with Audit
Committees
, as adopted by the PCAOB in Rule 3200T, and as modified or supplemented. In addition, the Audit Committee has received and discussed with the Companys independent registered public accounting firm the written disclosures and the letter from the Companys independent registered public accounting firm required by PCAOB Rule 3526,
Communication with Audit Committees Concerning Independence
, and has discussed with the independent registered public accounting firm its independence.
Based on the review and discussions described in the preceding paragraph above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements referred to above be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC.
Submitted by the Audit Committee:
R. Carter Pate, Chairman
Michael Goldstein
Christopher S. Shackelton
Myron Z. Holubiak
* * * * *
34
EXECUTIVE OFFICERS
The following sets forth certain information with respect to each person currently serving as an executive officer of the Company who is not also a director of the Company. Except as set forth below, none of the corporations or organizations identified below is a parent, subsidiary or other affiliate of the Company.
Jeffrey M. Kreger, 48, Senior Vice President, Chief Financial Officer and Treasurer.
Mr. Kreger joined the Company in April 2015. Prior to joining the Company, Mr. Kreger served as the Executive Vice President, Chief Financial Officer and Treasurer of LHC Group, Inc. (LHC), a NASDAQ-listed post-acute care healthcare services company, from January 2014 to January 2015, where he managed all accounting, reporting, finance and treasury functions for the company. Mr. Kreger also served as LHCs Senior Vice President of Finance from January 2015 to April 2015, a position he also held from February
2013 to December 2013. From December 2006 to January 2013, Mr. Kreger worked as senior vice president and corporate controller for Sun Healthcare Group Inc. in Irvine, Calif. He previously held financial leadership positions with Consolidated Graphics Inc., Philip Services Corp. and American Habilitation Inc., all of Houston, as well as Sava Senior Care of Atlanta. He also worked as a financial auditor with Ernst & Young, LLP. Mr. Kreger is a graduate of the University of Texas at Austin, where he received a bachelors degree in business administration with a concentration in accounting. He earned a masters degree in business administration from the University of Houston. Mr. Kreger is a certified public accountant licensed in the state of Texas.
Chris Luthin, 51, Senior Vice President and Chief Operating Officer
. Mr. Luthin joined the Company in June 2015 as Senior Vice President of Field Finance and was appointed Chief Operating Officer in August 2015. He brings more than 25 years of healthcare experience to the Company, including extensive infusion and pharmacy operating expertise, having started his career in the Caremark Infusion Division. From May 2012 to November 2014, Mr. Luthin served as Chief Financial Officer and Executive Vice President of Millennium Pharmacy Systems, a long term care pharmacy distribution company with operations in 5
states, and previously served in a number of operational and financial roles of progressive responsibility during his 22 years at CVS Caremark Rx (CVS). In his last position with CVS, Mr. Luthin was Executive Vice President of Operations, responsible for nation-wide operations of their prescription benefit management company. Mr. Luthin holds a Masters of Management degree from the Kellogg Graduate School of Management at Northwestern University and a Bachelor of Science degree in Accounting from Northern Illinois University.
C. Britt Jeffcoat, 43, Vice President, Controller & Chief Accounting Officer
. Mr. Jeffcoat joined the Company in May 2015. From October 2013 to May 2015, Mr. Jeffcoat served as Assistant Corporate Controller of JP Energy Partners LP, a NYSE-listed owner, operator, developer and acquirer of a portfolio of midstream energy assets in the United States. From April 2007 to October 2013, Mr. Jeffcoat served as Vice President and Assistant Corporate Controller of Sun Healthcare Group, Inc., a post-acute healthcare services company. Mr. Jeffcoat holds a bachelors degree in business administration from the
University of Missouri and a masters degree in accountancy from the University of Missouri. Mr. Jeffcoat is a certified public accountant.
David Evans, 51, Senior Vice President, Strategic Operations.
Mr. Evans joined the Company in February 2009. Mr. Evans was Chief Financial Officer and Secretary of Byram Healthcare Centers, Inc., a provider of medical supplies and pharmacy items to long-term chronic patients, from August 2006 to July 2008. From June 2003 to August 2006, Mr. Evans was the Corporate Vice President, Strategic Operations of Option Care, Inc., a home infusion and specialty pharmaceutical company.
Betty Jang, 47, Senior Vice President and Chief Compliance Officer.
Ms. Jang joined the Company in October 2015. She is a lawyer with over 22 years of practice and has experience representing Fortune 500 companies on compliance, operational, and legal regulatory matters both as in-house counsel and as outside counsel. Ms. Jang began her practice as litigator in both the public and private sectors and served as an arbitrator. From 2012 to 2015, Ms. Jang served as a legal and compliance consultant, advising both individuals and pharmacy and infusion companies on fraud, waste and abuse, Medicare Part D,
healthcare regulatory laws and HIPAA privacy matters. From 2009 to 2012, Ms. Jang was legal counsel at CVS Caremark. Ms. Jang holds a juris doctor from Chicago-Kent College of Law and a Bachelor of Arts from University of Illinois at Urbana.
35
Brian Stiver, 52, Senior Vice President, Sales & Marketing.
Mr. Stiver joined the Company in March 2009 as Vice President of Sales and was appointed Senior Vice President of Sales in July 2012 and Senior Vice President Sales & Marketing in January 2015. Mr. Stiver was Vice President Specialty Pharmacy at Walgreen Co. from November 2007 to March 2009, and was Vice President of Business Development for OptionCare from January 2003 through October 2007, prior to the acquisition of OptionCare by Walgreens.
36
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview
The Compensation Committee reviews and approves the overall compensation strategy and policies for the Company as well as material compensation arrangements for senior executives. Each member of the Compensation Committee is independent as set forth in Rule 5605(a)(2) of the NASDAQ Rules. In addition, the Compensation Committee reviews and approves corporate performance goals and objectives relevant to the compensation of the Companys executive officers and other senior management; reviews and approves the compensation and other terms of employment of the Companys Chief Executive Officer and other
senior executives; and oversees the 2008 Plan, the 2001 Plan, the Directors Plan and the CHS Plan. Although there are still outstanding and unvested awards from the 2001 Plan, the Directors Plan and the CHS Plan, new awards may only be granted from the 2008 Plan. The Compensation Committee is also responsible for ensuring that adequate management development programs and activities are created and implemented in order to provide a succession plan for executive officers and other significant positions within the Company.
The Compensation Committee, from time to time, utilizes compensation consultants to assist the Committee with:
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compensation benchmarking;
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incentive plan design and grant levels;
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current and anticipated trends in executive compensation; and
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compliance with executive compensation regulations.
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Objectives of the Companys Compensation Program
The Compensation Committee adheres to the following three principles in discharging its responsibilities:
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Overall compensation programs should be structured to ensure our ability to attract, retain, motivate and reward those individuals who are best suited to achieve the desired performance results, both long-term and short-term, while taking into account the roles, duties and responsibilities of individuals and their respective departments.
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There should be a strong link between executive officer compensation and the Companys short-term and long-term financial performance.
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Annual bonuses and long-term incentive compensation for senior management and key employees should be at risk, or based upon the satisfactory achievement of pre-established financial or other performance related goals and objectives.
|
In determining compensation, the Compensation Committee considers the compensation levels, programs and practices of certain companies in the healthcare industry to assure that our programs are market competitive. The Compensation Committee reviews and periodically adjusts the peer group it uses in making compensation decisions.
37
In 2012, with the assistance of Frederic W. Cook & Co., Inc. (FW Cook), the Compensation Committee reviewed the composition of the Companys peer group, particularly in light of the Companys sale of its traditional and specialty pharmacy mail operations and community retail pharmacy stores. Based on FW Cooks review and the Companys size, business, revenue and market capitalization, in December 2012, the Board approved a peer group of the following companies:
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Air Methods Corporation
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Chemed Corporation
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Healthways, Inc.
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Almost Family, Inc.
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Exam Works Group, Inc.
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LHC Group, Inc.
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Amedisys, Inc.
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Gentiva Health Services, Inc.
(3)
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National Healthcare Corporation
|
Bio-Reference Laboratories, Inc.
(1)
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Hanger, Inc.
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PharMerica Corporation
|
Catalyst Health Solutions, Inc.
(2)
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Invacare Corporation
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Skilled Healthcare Group, Inc.
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(1)
|
Bio-Reference Laboratories, Inc. was acquired by OPKO Health, Inc. in August 2015.
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(2)
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Catalyst Health Solutions, Inc. merged with SXC Health Solutions to form Catamaran Corp., which was acquired by UnitedHealth Group Inc. in July 2015.
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(3)
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Gentiva Health Services, Inc. was acquired by Kindred Healthcare Inc. in February 2015.
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Managements Role in Compensation Practices
While the Compensation Committee does not delegate to management its authority to determine executive compensation, it considers recommendations from the Chief Executive Officer in making compensation decisions for executive officers, other than himself. In making compensation recommendations to the Compensation Committee, the Chief Executive Officer generally considers individual, business unit, division and Company performance and comparable compensation for a similar position at other competitive companies. Compensation levels and targets, as well as performance targets and compensation ranges, are then proposed by
management to the Compensation Committee, which reviews the proposals, discusses them with management and from time to time the Compensation Committees outside consultant, and considers the benchmark data. The Compensation Committee makes final decisions on compensation. The Chairman of the Compensation Committee advises the Chief Executive Officer of the Compensation Committees decisions and the Chief Executive Officer, in turn, informs other members of senior management of the decisions, as appropriate.
Stockholders Role in Compensation Practices
The Compensation Committee considers stockholder input when setting compensation for executive officers. At the 2015 Annual Meeting, 81.7% of the votes cast on the advisory vote on executive compensation were in favor of our executive compensation policies. The Board and the Compensation Committee reviewed these results and determined that, although the Company received reduced support in 2015 as compared to 2014, no major re-examination of our executive compensation policies was necessary at this time based on the vote results. The Compensation Committee will continue to consider the outcome of the annual advisory vote to
approve compensation when making future compensation decisions for the executive officers. Based on the results of the advisory vote on the frequency of advisory votes on executive compensation, which was held at our 2011 Annual Meeting, we intend to solicit input from our stockholders on our executive compensation at each annual meeting of stockholders.
38
Elements of the Executive Compensation Program
With the above principles and benchmarking data as a guide, the Compensation Committee embraces a pay-for-performance philosophy and has adopted compensation programs that it believes are competitive with compensation paid to executives in similar businesses with persons holding similar positions and having similar duties and responsibilities. The compensation program for executive officers consists of:
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annual cash incentive compensation, and
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long-term incentive compensation.
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Base Salary
. Base salary is the only fixed component of the executive compensation program and is the only element of executive compensation not directly based on Company performance. The Compensation Committee reviews base salaries for executives other than the Chief Executive Officer from time to time and approves salary levels after assessing a number of factors, including our performance, the executives performance, the executives scope of responsibilities, competitive compensation levels coupled with internal equity considerations and our ability to pay. The minimum base salary of the
Chief Executive Officer is fixed by the terms of his employment agreement, although may be increased at the discretion of the Compensation Committee.
Base salaries allow us to provide a competitive level of compensation in order to attract and retain superior employees. On an overall basis, base salary is generally targeted at the 50
th
percentile of the competitive market (as discussed above) for the Chief Executive Officer and his direct reports, subject to individual circumstances and the need to obtain or retain appropriate talent. The average base salary increase in 2015 for the Companys named executive officers was 2.25%, although only one named executive officer received a base salary increase. On March 23, 2015, the Compensation Committee increased
Brian Stivers annual base salary from $275,000 to $300,000. None of the other named executive officers received a base salary increase.
Performance-Based Annual Cash Incentive Compensation
.
We do not guarantee annual bonuses to our executives or to employees at any level. A broad group of approximately 224 management employees, including the named executive officers, are eligible to participate in a performance-based annual cash incentive plan. The cash incentive plan is designed to motivate employees to continuously improve our business performance and to promote a results-oriented business culture by rewarding an executive officers individual performance as well as the overall Company performance for a given year. Annual
cash incentive compensation is generally targeted at the median of the companies included within its selected peer group. Executive officers have an opportunity to receive annual incentive compensation under the cash incentive plan if individual, corporate and departmental or business unit goals and objectives established annually by the Compensation Committee are achieved for a given year.
Employees eligible to participate in Company-wide cash incentive awards, including those for executives, are recommended to the Compensation Committee for approval based on an assessment by the Chief Executive Officer. If previously identified financial performance thresholds or other objective corporate goals and objectives are achieved, then an incentive award is paid to individuals for that year. Because we did not meet our financial precondition to entitlement for any cash incentive being paid in 2015, no incentive awards were earned by the named executive officers for 2015. Below are the bonus targets and performance
goals that were set for 2015.
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Richard M. Smith
. The annual cash bonus for the Chief Executive Officer was targeted at 100% of base salary. Achievement of the bonus amount was tied to the Companys achievement of Adjusted EBITDA of approximately $62.1 million and certain total cash collections targets.
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Jeffrey M. Kreger
. The annual cash bonus for the Chief Financial Officer was targeted at 80% of base salary. Achievement of the bonus amount was tied to the Companys achievement of Adjusted EBITDA of approximately $62.1 million and certain total cash collections targets.
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39
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Karen Cain
. The annual cash bonus for the Senior Vice President, Post-Acute Strategy Officer was targeted at 40% of base salary. Achievement of the bonus amount was tied to the Companys achievement of Adjusted EBITDA of approximately $62.1 million and certain total cash collections targets.
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David Evans
. The annual cash bonus for the Senior Vice President, Strategic Operations & Reimbursement was targeted at 40% of base salary. Achievement of the bonus amount was tied to the Companys achievement of Adjusted EBITDA of approximately $62.1 million and certain total cash collections targets.
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Brian Stiver
. The annual cash bonus for the Senior Vice President, Sales & Marketing was targeted at 40% of base salary. Achievement of the bonus amount was tied to the Companys achievement of Adjusted EBITDA of approximately $62.1 million and certain total cash collections targets.
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Long-Term Incentive Compensation
.
We have provided long-term incentives to our executive officers through the 2008 Plan, and, prior to the 2014 Annual Meeting, through the CHS Plan. The 2008 Plan permits, and the CHS Plan used to permit, the grant of various equity-based awards, including stock options, stock appreciation rights, restricted stock units, restricted stock grants and performance units. The 2008 Plan does not allow the grant of reload options or the repricing of stock options. Long-term incentive compensation is generally targeted at the median of the companies included
within the Companys selected peer group.
The purpose of the 2008 Plan is to promote the interests of the Company by granting equity awards to key employees in order to (i) attract and retain key employees, (ii) provide an additional incentive to each key employee to work to increase the value of Common Stock, and (iii) provide each key employee with a stake in the future of the Company that corresponds to the stake of each of our stockholders. Historically stock options were the primary form of long-term incentive granted as the Compensation Committee believed that stock options were the strongest tie to stock price performance and that stock options most closely
aligned the interests of the executives with our stockholders. The Compensation Committee made this decision based on a number of factors, including the following: (i) the large number of outstanding stock options previously granted to management and other employees had exercise prices that were originally at market price on the grant date and subsequently exceeded the market price of our stock; (ii) the limited number of shares of stock remaining available for grant under the 2008 Plan; and (iii) the terms of the 2008 Plan, which provide that any grant of stock, other than options or stock appreciation rights, are counted against the pool of stock reserved for issuance under the 2008 Plan as 1.53 shares of stock for every one share of stock granted. In addition, grants of stock options have allowed the Company to reach more employees while maintaining a lower than average burn rate.
The Company recognizes that equity compensation awards dilute stockholder equity and must be used judiciously. The Companys equity compensation practices are designed to be in line with industry norms, and we believe our historical share usage has been responsible toward and mindful of the stockholders interests. The Companys average burn rate (total shares used for long term incentive compensation each year divided by the weighted average outstanding shares for each year) for the last three years was 3.03%, which is well below the industry benchmark of 5.14% set by certain proxy advisory firms. The burn rate
for fiscal year 2015 was 2.24%. The Company believes that our employees and other plan participants holdings of these options is positive for our stockholders as it represents a long-term interest of our employees and other plan participants in the value of our Common Stock.
Long-term incentive compensation is generally granted on an annual basis. In addition, awards may be made to new employees upon their joining the Company, and to employees who are promoted or are rewarded for a special achievement during the year. In 2015, long-term incentive compensation was granted to certain executives during the third quarter. Generally, executives receive only one grant per cycle or year.
On September 23, 2015, the Compensation Committee approved, as part of the annual grant of stock options to key employees, the grant of stock options to three of the named executive officers. The number of stock options granted was as follows: (i) 25,000 to Mr. Evans, (ii) 25,000 to Mr. Stiver, and (iii) 25,000 to Ms. Cain. Mr. Kreger was granted 150,000 stock options on April 27, 2015 upon joining the Company and 100,000 stock options on August 9, 2015. Each stock option granted had a strike price of the fair market
40
value on the date of, or immediately preceding, the grant. The options vest in equal amounts, with one third of the shares vesting on the first, second and third anniversaries of the date of the grant. The stock option agreements evidencing the grants each have a ten-year term.
Deductibility of Compensation
In establishing pay levels for our executive officers, the Compensation Committee considers the impact of Section 162(m) of the Code on the amount of compensation deductible by the Company. Under current tax law, Section 162(m) imposes a $1.0 million limit on the amount that a publicly traded company may deduct for compensation paid to its chief executive officer and its next three most highly compensated executives, excluding the chief financial officer. This limitation does not apply to pay that qualifies as performance-based compensation. In order to qualify as performance-based, compensation must, among other
things, be based solely on the attainment of pre-established, objective goals under a stockholder approved plan with no discretion permitted in determining award payouts.
While our annual cash incentive compensation program does not qualify as performance-based compensation under Section 162(m) because it provides discretion to the Compensation Committee to adjust awards up or down, the Compensation Committee generally seeks to structure long-term incentive compensation for the executive officers so as to qualify for full tax deductibility under Section 162(m). Although we have made some restricted stock grants to employees that vest over time, our outstanding restricted stock grants held by our executive officers are based on our achievement of pre-established performance goals.
Any future grants to executive officers are expected to include vesting based on our achievement of pre-established performance goals. In addition, stock options granted under the 2008 Plan are exempt from the deduction limit of 162(m). The Compensation Committee intends to continue to pursue a strategy of maximizing the deductibility of the compensation paid to the executive officers when appropriate. But the Committee reserves the right to make awards outside of these plans or to provide compensation that does not qualify for full tax deductibility under Section 162(m) when deemed appropriate.
Retirement
We maintain a qualified 401(k) plan in which all eligible employees (including the named executive officers) may participate.
Perquisites
The Company did not provide perquisites to any of the named executive officers in 2015.
Compensation Committee Report
Management of the Company has prepared the Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K, and the Management Development and Compensation Committee has reviewed and discussed it with management. Based on this review and discussion, the Management Development and Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and in the 2015 Annual Report.
Submitted by the Management Development and
Compensation Committee:
David W. Golding, Chairman
Myron Z. Holubiak
Christopher S. Shackelton
R. Carter Pate
Compensation Committee Interlocks and Insider Participation
David W. Golding, Myron Z. Holubiak, Christopher S. Shackelton and R. Carter Pate, who currently compose the Compensation Committee, are each independent, non-employee directors of the Company. No executive officer (current or former) of the Company served as a director or member of (i) the compensation committee of another entity in which one of the executive officers of such entity served on the Companys Compensation Committee, (ii) the board of directors of another entity in which one of the executive officers
41
of such entity served on the Companys Compensation Committee, (iii) the compensation committee of any other entity in which one of the executive officers of such entity served as a member of the Board or (iv) were directly or indirectly the beneficiary of any related party transaction required to be disclosed under the applicable regulations under the Exchange Act, during the year ended December 31, 2015.
Summary Compensation Table
The table below summarizes the total compensation for each of the Companys named executive officers in 2015, 2014 and 2013 for the years in which they served as named executive officers.
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Name & Principal Position
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Year
|
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Salary
($)
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Stock
Awards
($)
(1)
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Option/SAR
Awards
($)
(1)
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All Other
Compensation
($)
(2)
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Total
($)
|
Richard M. Smith
President & Chief
Executive Officer
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2015
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650,000
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|
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|
|
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|
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102,709
|
|
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752,709
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2014
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647,115
|
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675,690
|
|
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113,979
|
|
|
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1,436,784
|
|
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|
2013
|
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703,365
|
|
|
|
|
|
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1,484,640
|
|
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140,115
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2,328,120
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Jeffrey Kreger
(3)
Chief Financial Officer & Treasurer
|
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2015
|
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265,865
|
|
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|
|
|
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653,600
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145,652
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1,065,117
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David Evans
Senior Vice President Strategic Operations & Reimbursement
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2015
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325,000
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55,278
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|
|
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380,278
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2014
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|
325,000
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|
|
|
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|
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450,460
|
|
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|
10,568
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|
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786,028
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2013
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325,000
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556,740
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|
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10,270
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892,010
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Brian Stiver
Senior Vice President, Sales & Marketing
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2015
|
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300,000
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55,278
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|
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355,278
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2014
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275,000
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|
|
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450,460
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4,594
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|
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730,054
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2013
|
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275,000
|
|
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594,335
|
|
|
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4,680
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|
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874,015
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Karen Cain
(4)
Former Senior Vice President, Post-Acute Strategy Officer
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2015
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325,000
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|
|
|
|
|
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|
55,278
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|
|
|
|
|
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380,278
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|
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2014
|
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275,000
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|
|
|
|
|
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346,973
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2,696
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|
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624,669
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|
Hai Tran
(5)
Former Chief Financial Officer & Treasurer
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2015
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115,385
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9,832
|
|
|
|
125,217
|
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2014
|
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|
398,077
|
|
|
|
|
|
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563,075
|
|
|
|
55,719
|
|
|
|
1,016,871
|
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2013
|
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|
436,538
|
|
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|
1,188,670
|
|
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|
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45,750
|
|
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1,670,958
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Patricia Bogusz
(6)
Former Vice President, Finance & Principal Accounting Officer
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2015
|
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124,808
|
|
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|
|
|
|
|
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595,932
|
|
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|
720,740
|
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2014
|
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|
275,000
|
|
|
|
|
|
|
|
194,616
|
|
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3,940
|
|
|
|
473,556
|
|
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2013
|
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|
265,543
|
|
|
|
|
|
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463,405
|
|
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|
4,680
|
|
|
|
733,628
|
|
Thomas Pettit
(7)
Former Senior Vice President, Chief Operating Officer
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2015
|
|
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|
368,712
|
|
|
|
|
|
|
|
|
|
|
|
435,000
|
|
|
|
803,701
|
|
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|
2014
|
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|
|
170,788
|
|
|
|
|
|
|
|
926,370
|
|
|
|
154
|
|
|
|
1,097,312
|
|
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(1)
|
Values reflect the aggregate grant date fair value computed in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in the footnotes to the Companys audited financial statements for the fiscal year ended December 31, 2015 included in the 2015 Annual Report.
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(2)
|
Details regarding the amount shown can be found in the All Other Compensation table below and the footnotes thereto.
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(3)
|
Mr. Kreger joined the Company in April 2015, and was not a named executive officer in 2014 or 2013. Mr. Kregers base salary for 2015 was $395,000, of which he received a pro-rated amount for the portion of the year that he was with the Company.
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(4)
|
Ms. Cain joined the Company in February 2014, and was not a named executive officer in 2013. Ms. Cains base salary for 2014 was $325,000, of which she received a pro-rated amount for the portion of the year that she was with the Company. Ms. Cain resigned as the Companys Senior Vice President, Post-Acute Strategy Officer as of March 23, 2016.
|
|
(5)
|
On January 30, 2015, Mr. Tran resigned as Chief Financial Officer and Treasurer effective March 27,
|
42
|
|
2015. As a result of his resignation, Mr. Tran did not receive any severance compensation and the Company cancelled his unexercised options to purchase up to 191,667 shares of Common Stock and his 33,333 unvested stock awards.
|
|
(6)
|
On May 27, 2015, Ms. Bogusz left the Companys employment as Vice President, Finance and Principal Accounting Officer.
|
|
(7)
|
Mr. Pettit joined the Company in July 2014, and was not a named executive officer in 2013. Mr. Pettit served as the Companys Senior Vice President and Chief Operating Officer until August 7, 2015 and left the Companys employment on November 5, 2015.
|
All Other Compensation
The table below and related footnote disclosure describe each component of compensation included under the column heading All Other Compensation in the Summary Compensation Table above.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
Insurance
Premiums
($)
|
|
Legal/
Reimbursements
($)
|
|
Severance
($)
|
|
Total
($)
|
Richard M. Smith
|
|
|
2015
|
|
|
|
|
|
|
|
102,709
|
(1)
|
|
|
|
|
|
|
102,709
|
|
|
|
|
2014
|
|
|
|
9,010
|
|
|
|
104,969
|
(1)
|
|
|
|
|
|
|
113,979
|
|
|
|
|
2013
|
|
|
|
10,270
|
|
|
|
129,845
|
(1)
(2)
|
|
|
|
|
|
|
140,115
|
|
Jeffrey M. Kreger
|
|
|
2015
|
|
|
|
|
|
|
|
145,652
|
(1)
(3)
|
|
|
|
|
|
|
145,652
|
|
David Evans
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
10,568
|
|
|
|
|
|
|
|
|
|
|
|
10,568
|
|
|
|
|
2013
|
|
|
|
10,270
|
|
|
|
|
|
|
|
|
|
|
|
10,270
|
|
Brian Stiver
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
4,594
|
|
|
|
|
|
|
|
|
|
|
|
4,594
|
|
|
|
|
2013
|
|
|
|
4,680
|
|
|
|
|
|
|
|
|
|
|
|
4,680
|
|
Karen Cain
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
2,696
|
|
|
|
|
|
|
|
|
|
|
|
2,696
|
|
Hai Tran
|
|
|
2015
|
|
|
|
|
|
|
|
9,832
|
(1)
|
|
|
|
|
|
|
9,832
|
|
|
|
|
2014
|
|
|
|
9,410
|
|
|
|
46,309
|
(1)
|
|
|
|
|
|
|
55,719
|
|
|
|
|
2013
|
|
|
|
9,847
|
|
|
|
35,903
|
(1)
|
|
|
|
|
|
|
45,750
|
|
Patricia Bogusz
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
595,932
|
(4)
|
|
|
595,932
|
|
|
|
|
2014
|
|
|
|
3,940
|
|
|
|
|
|
|
|
|
|
|
|
3,940
|
|
|
|
|
2013
|
|
|
|
4,680
|
|
|
|
|
|
|
|
|
|
|
|
4,680
|
|
Thomas Pettit
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
435,000
|
(5)
|
|
|
435,000
|
|
|
|
|
2014
|
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
154
|
|
|
(1)
|
Represents reimbursements of commuting fees.
|
|
(2)
|
Includes legal fees of approximately $20,000 paid on behalf of Mr. Smith in connection with the negotiation of his employment agreement executed in November 2013.
|
|
(3)
|
Includes $32,917 paid to Mr. Kreger for reimbursements of relocation expenses as provided in his Engagement Letter (as defined and further discussed below).
|
|
(4)
|
In connection with her separation, Ms. Bogusz is entitled to receive $550,000 of cash severance (the Cash Severance Payment), an executive search payment of $37,147 and a $1,000 payment to reimburse Ms. Bogusz for legal fees. Ms. Bogusz was also entitled to one year of health and welfare benefits in an amount of $7,785, or the cash equivalent. A portion of the Cash Severance Payment was conditional upon Ms. Bogusz complying with certain restrictive covenants through March 15, 2016, as provided in her Separation and Release Agreement.
|
|
(5)
|
In connection with his separation, Mr. Pettit received $415,000 of cash severance and a $20,000 payment for outplacement counseling, executive coaching and/or other transition costs.
|
43
Grants of Plan Based Awards
In 2015, the Compensation Committee approved the grant of the following awards to the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
Estimated Future
Payouts
Under Non-Equity
Incentive
Plan Awards
(1)
|
|
Estimated Future
Payouts Under
Equity Incentive
Plan Awards
|
|
All Other
Option Awards:
Number of
Securities
Underlying
Options
(#)
|
|
Exercise or
base price of
option awards
($/Sh)
(2)
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
(3)
|
|
Target
($)
|
|
Maximum ($)
|
|
Target
(#)
|
Richard M. Smith
|
|
|
2-23-2015
|
|
|
|
650,000
|
|
|
|
650,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey M. Kreger
|
|
|
4-27-2015
|
|
|
|
210,667
|
|
|
|
210,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4-27-2015
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
5.17
|
|
|
|
432,540
|
|
|
|
|
8-9-2015
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
2.68
|
|
|
|
221,060
|
|
David Evans
|
|
|
2-23-2015
|
|
|
|
130,000
|
|
|
|
130,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-23-2015
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
2.67
|
|
|
|
55,278
|
|
Brian Stiver
|
|
|
2-23-2015
|
|
|
|
120,000
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-23-2015
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
2.67
|
|
|
|
55,278
|
|
Karen Cain
|
|
|
2-23-2015
|
|
|
|
130,000
|
|
|
|
130,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-23-2015
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
2.67
|
|
|
|
55,278
|
|
Hai Tran
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia Bogusz
|
|
|
2-23-2015
|
|
|
|
82,500
|
|
|
|
82,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Pettit
|
|
|
2-23-2015
|
|
|
|
332,000
|
|
|
|
332,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These columns represent the estimated amounts of annual cash incentive awards granted under the Companys performance-based annual cash incentive plan. In February 2016, the Compensation Committee determined that zero cash incentive awards with respect to the fiscal year ended December 31, 2015 were earned by the named executive officers because the Company did not meet the financial preconditions to entitlement for payment of the cash incentive awards.
|
|
(2)
|
Options are granted with an exercise price equal to the closing price per share of Common Stock on the date of grant.
|
|
(3)
|
Represents the total fair value, estimated as per ASC 718.
|
|
(4)
|
Represents stock options granted under the 2008 Plan. Vesting occurs in one-third increments on the first, second and third anniversary of the grant date.
|
44
Outstanding Equity Awards at Fiscal Year End
The following table provides information on the holdings of stock options and SARs by the named executive officers as of December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
|
Richard M. Smith
|
|
|
105,000
|
|
|
|
|
|
|
|
|
|
|
|
2.27
|
|
|
|
2-Jan-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
9.09
|
|
|
|
27-Apr-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
|
6.65
|
|
|
|
16-Jun-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
5.70
|
|
|
|
31-Dec-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
4.42
|
|
|
|
26-Apr-21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
425,000
|
|
|
|
|
|
|
|
|
|
|
|
6.62
|
|
|
|
8-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133,333
|
|
|
|
66,667
|
(1)
|
|
|
|
|
|
|
12.71
|
|
|
|
28-Mar-23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
100,000
|
(2)
|
|
|
|
|
|
|
7.71
|
|
|
|
29-May-24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey M. Kreger
|
|
|
|
|
|
|
150,000
|
(3)
|
|
|
|
|
|
|
5.17
|
|
|
|
27-Apr-25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(4)
|
|
|
|
|
|
|
2.68
|
|
|
|
9-Aug-25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Evans
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
1.71
|
|
|
|
20-Feb-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
6.65
|
|
|
|
16-Jun-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
4.42
|
|
|
|
26-Apr-21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
6.62
|
|
|
|
8-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
25,000
|
(1)
|
|
|
|
|
|
|
12.71
|
|
|
|
28-Mar-23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,334
|
|
|
|
66,666
|
(2)
|
|
|
|
|
|
|
7.71
|
|
|
|
29-May-24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
|
|
|
|
|
2.67
|
|
|
|
23-Sept-25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Stiver
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
2.73
|
|
|
|
28-Apr-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
6.65
|
|
|
|
16-Jun-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
4.42
|
|
|
|
26-Apr-21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
|
|
|
|
|
|
|
|
6.62
|
|
|
|
8-Mar-22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,334
|
|
|
|
66,663
|
(2)
|
|
|
|
|
|
|
7.71
|
|
|
|
29-May-24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
|
|
|
|
|
2.67
|
|
|
|
23-Sept-25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen Cain
|
|
|
25,000
|
|
|
|
50,000
|
(5)
|
|
|
|
|
|
|
8.19
|
|
|
|
12-Feb-24
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
|
|
|
|
|
2.67
|
|
|
|
23-Sept-25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hai Tran
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia Bogusz
(8)
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
6.46
|
|
|
|
26-May-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
4.24
|
|
|
|
26-May-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
4.42
|
|
|
|
26-May-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
6.62
|
|
|
|
26-May-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,333
|
|
|
|
|
|
|
|
|
|
|
|
12.71
|
|
|
|
26-May-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Pettit
(9)
|
|
|
66,667
|
|
|
|
|
|
|
|
|
|
|
|
7.33
|
|
|
|
1-Feb-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,667
|
|
|
|
|
|
|
|
|
|
|
|
5.99
|
|
|
|
1-Feb-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Vesting schedule is as follows: one-third vested on March 28, 2014, one-third vested on March 28, 2015 and one-third vested on March 28, 2016.
|
|
(2)
|
Vesting schedule is as follows: one-third vested May 29, 2015, one-third will vest May 29, 2016 and one-third will vest May 29, 2017.
|
45
|
(3)
|
Vesting schedule is as follows: one-third will vest April 27, 2016, one-third will vest April 27, 2017 and one-third will vest April 27, 2018.
|
|
(4)
|
Vesting schedule is as follows: one-third will vest August 9, 2016, one-third will vest August 9, 2017 and one-third will vest August 9, 2018.
|
|
(5)
|
Vesting schedule is as follows: one-third vested February 12, 2015, one-third vested February 12, 2016 and one-third will vest February 12, 2017.
|
|
(6)
|
Vesting schedule is as follows: one-third will vest September 23, 2016, one-third will vest September 23, 2017 and one-third will vest September 23, 2018.
|
|
(7)
|
On January 30, 2015, Mr. Tran resigned as Chief Financial Officer and Treasurer effective March 27, 2015. As a result of his resignation, the Company cancelled his unexercised options to purchase up to 191,667 shares of Common Stock and his 33,333 unvested stock awards.
|
|
(8)
|
On May 27, 2015, Ms. Bogusz left the Companys employment as Vice President, Finance and Principal Accounting Officer. Upon her departure, all of Ms. Boguszs unvested options were cancelled.
|
|
(9)
|
Mr. Pettit served as the Companys Senior Vice President and Chief Operating Officer until August 7, 2015 and left the Companys employment on November 5, 2015. Upon his departure, all of Mr. Pettits unvested options were cancelled. Mr. Pettit did not exercise any of his vested options before they expired on February 1, 2016.
|
|
(10)
|
Upon Ms. Cains departure on March 23, 2016, Ms. Cains unvested options were cancelled and the expiration date of her vested options was accelerated to June 21, 2016.
|
Option Exercises and Stock Vested
During the year ended December 31, 2015, no option awards were exercised by the named executive officers and no stock awards vested for any of the named executive officers.
Employment and Severance Agreements
Richard M. Smith Employment Agreement
On December 23, 2010, the Company and Mr. Smith entered into a new employment agreement which replaced his prior severance agreement with the Company (the 2010 Employment Agreement). The terms of the 2010 Employment Agreement provided for the employment of Mr. Smith as the Chief Executive Officer at an initial base annual salary of $650,000, which could be increased (but not decreased) at the discretion of the Board. Under the 2010 Employment Agreement, Mr. Smith was eligible to participate in the Companys then applicable short-term bonus or other cash incentive program at a target bonus level of 100% of the
then annual base salary and contingent on attainment of performance goals to be reasonably established in good faith by the Compensation Committee no later than 90 days after the commencement of each calendar year.
On December 31, 2010, pursuant to the 2010 Employment Agreement, Mr. Smith was granted a cash denominated SAR, which is outside of the 2008 Plan, with respect to 200,000 shares of Common Stock at a grant price equal to $5.70. Such SAR vested in three equal annual installments pursuant to the terms of the 2010 Employment Agreement and Mr. Smith may exercise this SAR, in whole or in part, and receive in cash the amount, if any, by which the closing stock price on the exercise date exceeds the grant price. Upon the exercise of any SARs, as soon as practicable under the applicable federal and state securities laws, Mr. Smith will
be required to use the net after-tax proceeds of such exercise to purchase shares of Common Stock from the Company at the closing stock price of the Common Stock on that date and hold such shares of Common Stock for a period of not less than one year from the date of purchase, except that he will not be required to purchase any shares of Common Stock if he exercises such SAR on or after a Change of Control of the Company. Mr. Smiths right to exercise such SAR will expire on the earliest of (1) the tenth anniversary of the grant date, (2) the date that he forfeits his right to exercise such SAR as a result of termination of his employment, as more fully described below, or (3) the date that such SAR is exercised in full.
On November 25, 2013, the Company and Mr. Smith entered into an amended and restated employment agreement (the 2013 Employment Agreement), effective as of December 1, 2013, regarding Mr. Smiths employment with the Company. The terms of the 2013 Employment Agreement provide for the employment of Mr. Smith as the Companys President and Chief Executive Officer at an initial base annual salary of $650,000, which may be increased (but not decreased) at the discretion of the Board. Mr. Smith is eligible to participate in the Companys then applicable short-term bonus or other cash incentive program at a
target
46
bonus level of 100% of the then annual base salary and contingent on attainment of performance goals to be reasonably established in good faith by the Compensation Committee no later than 90 days after the commencement of each calendar year. Mr. Smith is also entitled to vacation of up to 25 business days per calendar year, available in accordance with the Companys policies for its senior executives. The Company agreed to reimburse Mr. Smith for up to $20,000 for legal fees incurred in connection with review and negotiation of the 2013 Employment Agreement.
Mr. Smith is subject to a non-compete covenant, which provides that during the term of his employment and for two years following his termination, Mr. Smith may not, directly or indirectly, own, manage, operate, control or participate in any business that is competitive with the Companys business or any material component of the Companys business within the United States. Similarly, during the term of employment and for two years following the date of his termination, Mr. Smith may not, directly or indirectly, solicit or otherwise interfere with the Companys relationship with any present or former employee,
contractor or customer of the Company. Mr. Smith is also required to keep confidential during the term of employment and thereafter all confidential and proprietary information concerning the Company and its business.
Unless renewed or extended, Mr. Smiths employment will terminate upon expiration of the 2013 Employment Agreement. The 2013 Employment Agreement is for a three year term unless earlier terminated by the Company or Mr. Smith as provided in the 2013 Employment Agreement. If Mr. Smiths employment is terminated due to his death, (i) his estate or beneficiaries are entitled to receive his salary, bonus and other benefits earned and accrued prior to the date of his death; (ii) a pro-rata portion of Mr. Smiths annual bonus for the then current calendar year will be paid based on actual achievement of performance
criteria for that year; and (iii) all unvested stock options and SARs outstanding immediately prior to his death may be exercised by his estate for a period equal to the earlier of one year from and after the date of his death and the original expiration date of each option and SAR (unless a longer period is set forth in the underlying grant agreements). If the Company terminates Mr. Smiths employment due to his disability or without Cause (defined below) or if Mr. Smith terminates his employment with Good Reason (defined below) or if the Company fails to renew the 2013 Employment Agreement prior to its expiration, (i) he will be entitled to receive his salary, bonus and other benefits earned and accrued prior to the date of his disability; (ii) a pro-rata portion of Mr. Smiths annual bonus for the then current calendar year will be paid based on actual achievement of performance criteria for that year; (iii) all unvested stock options and SARs outstanding immediately prior
to his termination date will vest in full and, together with all options and SARs outstanding immediately prior to his termination date, may be exercised by him for a period equal to the earlier of one year from and after his termination date and the original expiration date of each option and SAR (unless a longer period is set forth in the underlying grant agreements); (iv) he will be entitled to receive for a period of two years following termination, his annual salary at the time of termination of his employment (less, in the case of termination due to disability, the gross proceeds paid to him on account of Social Security or other similar benefits and Company provided short-term and long-term disability plans); and (v) he will be entitled to elect continuation coverage under the Companys group health plan for a period of eighteen (18) months pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), provided that he is eligible
and remains eligible for COBRA coverage.
If the Company terminates Mr. Smith for Cause (as defined below) or if Mr. Smith terminates his employment without Good Reason (as defined below), he will be entitled to receive his salary, bonus and other benefits earned and accrued prior to the date of termination.
Cause, for purposes of the 2013 Employment Agreement, means (i) conviction of a felony or a crime of moral turpitude; (ii) commission of unauthorized acts intended to result in Mr. Smiths personal enrichment at the material expense of the Company; or (iii) material violation of duties or responsibilities to the Company which constitute willful misconduct or dereliction of duty, provided that a majority of the members of the Board must first approve a Cause termination for willful misconduct or dereliction of duty before the Company effectuates such a termination. Good Reason, for purposes of the
2013 Employment Agreement, means the existence of any one or more of the following conditions without Mr. Smiths consent that continue for more than 45 days following written notice of such conditions by Mr. Smith to the Compensation Committee: (i) a material change in or reduction of Mr. Smiths authority, duties and responsibilities, or the assignment to Mr. Smith of duties materially inconsistent with Mr. Smiths position with the Company; (ii) a
47
requirement that Mr. Smith report to any person, executive or board of directors other than the Board; or (iii) a material reduction in Mr. Smiths then current annual salary or target bonus award opportunity.
Under the terms of the 2013 Employment Agreement, if there is a change in control and the Company reasonably determines that any payment or distribution by the Company to or for the benefit of Mr. Smith would be subject to the excise tax (the Excise Tax) imposed by Section 4999 of the Code, then the Company will determine the safe harbor amount under the Code that would not result in the Excise Tax and will pay to Mr. Smith the higher of the safe harbor amount or the payments otherwise due to Mr. Smith in the absence of such provision, net of all applicable taxes, including the tax under Section 4999 of the Code.
Jeffrey M. Kreger Engagement Letter
On April 26, 2015, Mr. Kreger and the Company entered into an engagement letter (the Engagement Letter) outlining the terms of Mr. Kregers employment as the Companys Senior Vice President, Chief Financial Officer and Treasurer at an initial base annual salary of $395,000. In connection with relocation, Mr. Kreger was eligible for temporary housing reimbursements of $3,000 per month for up to 6 months as well as other reimbursements relating to relocation. Mr. Kreger was eligible to participate in the Companys Management Incentive Bonus Program with a target bonus of up to 80% of his base salary,
subject to satisfaction of certain corporate, departmental and individual objectives.
Under the Engagement Letter, Mr. Kreger was granted options to purchase 150,000 shares of Common Stock pursuant to the terms and conditions set forth in the 2008 Plan. The exercise price of such options was equal to the fair market value of the Common Stock on the date of grant and will vest in three equal installments at the rate of one-third per year over three years commencing on the first anniversary of the grant date. In addition, the Engagement Letter provided that after completion of 100 calendar days of employment with the Company and subject to achievement of certain performance milestones to be mutually agreed to by
Mr. Kreger and the Companys Chief Executive Officer during the first ten days of employment, Mr. Kreger would be considered by the Compensation Committee for an award of 20,000 shares of Common Stock, pursuant to the 2008 Plan.
Under the terms of the Engagement Letter, as a condition to his employment Mr. Kreger was required to enter into a restrictive covenant agreement with the Company which provides that during the term of employment and for one year following his termination, Mr. Kreger may not directly or indirectly participate in any business which is competitive with the Companys business. Similarly, for two years following his termination, Mr. Kreger may not solicit or otherwise interfere with the Companys relationship with any present or former employee or customer of the Company. Mr. Kreger is also required to keep confidential
during the term of employment and thereafter all confidential information concerning the Company and its business.
If Mr. Kregers employment with the Company is terminated for any reason whatsoever, whether by the Company or Mr. Kreger, then (i) he will be entitled to receive his salary and benefits earned and accrued through the date of termination; (ii) the Company will not be liable for or obligated to pay any stock or cash bonus compensation, incentive or otherwise, not already paid or accrued through the date of termination; (iii) all fully vested and exercisable options may be exercised to the extent authorized by the 2008 Plan, and all unvested stock options shall cease to vest and be forfeited as of such date; and (iv) no
other benefits shall accrue or vest subsequent to such date. In addition to the foregoing, if the Company terminates Mr. Kreger without Cause (as defined below) or if Mr. Kreger resigns for Good Reason (as defined below), then, subject to execution of a Waiver and Release Agreement, Mr. Kreger will be entitled to receive severance payments equal to 12 months of salary at his then current base salary level.
Cause for purposes of the Engagement Letter means (i) commission of criminal conduct which involves moral turpitude; (ii) acts which constitute fraud or self-dealing against the Company or any of its subsidiaries, including, without limitation, misappropriation or embezzlement; (iii) willful engagement in conduct which is materially injurious to the Company or any of its subsidiaries; or (iv) gross misconduct in the performance of duties as an employee of the Company.
Good Reason for purposes of the Engagement Letter means the existence of any one or more of the following conditions that continue without Mr. Kregers consent for more than 45 days following written
48
notice of such conditions by Mr. Kreger to the Chief Executive Officer (Cure Period): (i) a material adverse change in or reduction of Mr. Kregers title, authority, duties and responsibilities, or Mr. Kreger ceasing to report directly to the Chief Executive Officer; (ii) the assignment to Mr. Kreger of duties materially inconsistent with Mr. Kregers position with the Company; (iii) a reduction in Mr. Kregers gross bi-weekly salary below his initial gross bi-weekly salary as stated in the Offer Letter; (iv) Mr. Kreger no longer being eligible for a target bonus of 80% of his base salary, provided,
however, to the extent that a reduction in bonus eligibility is accompanied by Mr. Kregers eligibility for another form of compensation, such as an award of equity compensation, that has a substantially equivalent value to such bonus eligibility reduction, the reduction in bonus eligibility will not constitute Good Reason; or (v) all or substantially all of the assets of the Company are purchased, and within 60 days of the consummation of such transaction the purchaser neither adopts the Offer Letter nor offers Mr. Kreger an employment agreement on substantially equivalent economic terms to the Offer Letter, provided that Mr. Kreger (x) delivers such notice within 30 days following his learning of such condition(s), and (y) ceases employment within 45 days after the end of the Cure Period.
David Evans Employment Letter Agreement and Severance Agreement
Mr. Evans currently serves as the Companys Senior Vice President, Strategic Operations & Reimbursement. On January 30, 2009, Mr. Evans entered into an employment agreement with the Company which provides for his employment until terminated by the Company or Mr. Evans. In 2012, Mr. Evanss annual base salary was increased to $325,000 from his 2010 base salary of $260,000. Under the terms of the employment agreement, Mr. Evans is eligible to participate in all employee benefit plans and policies commensurate with his position and the Companys cash bonus program, subject to corporate, departmental and
individual targets being met. Under the employment agreement and subject to approval of the Board, Mr. Evans will also be eligible to receive stock options and restricted stock commensurate with his position.
In connection with the employment agreement, Mr. Evans also entered into a Restrictive Covenant Agreement effective February 2, 2009, which provides that during the term of employment and for a period of one year following his termination, Mr. Evans may not participate in, supervise or manage any competing activities in the defined territory. Similarly, for two years following the date of his termination, Mr. Evans may not solicit or otherwise interfere with the Companys relationship with any present employee or any employee whose employment with the Company was terminated within the previous year, or any customer of the
Company with whom Mr. Evans dealt in the two years prior to his termination of his employment with the Company. Mr. Evans is also required to keep confidential during the term of employment and thereafter all confidential and proprietary information concerning the Company and its business.
In connection with beginning his employment with the Company, Mr. Evans entered into a Severance Agreement dated February 2, 2009. Pursuant to the terms of such severance agreement, if the Company terminates Mr. Evans employment without cause, upon execution of the Companys standard Waiver and Release, Mr. Evans is entitled to receive (i) severance payments equal to one year of salary at his then current base salary level payable in accordance with the Companys then applicable payroll practices, and (ii) reimbursement for the cost of continuing health benefits for a period of one year following the date of
termination; provided, however, that if Mr. Evans secures new employment during the one year period following his termination, any remaining severance payments will be reduced to an amount equal to the difference between his base salary on the date of termination and his new base salary; and provided further, if his new employer offers health insurance coverage, the Company will no longer be obligated to reimburse Mr. Evans for health insurance coverage effective on the date he starts such new employment.
Brian Stiver Employment Letter Agreements and Severance Agreement
Mr. Stiver currently serves as the Companys Senior Vice President, Sales & Marketing. On March 10, 2009, Mr. Stiver entered into an employment agreement with the Company which provides for his employment until terminated by the Company or Mr. Stiver. On July 30, 2012, in connection with his promotion to Senior Vice President, Infusion Sales, Mr. Stiver entered into an additional employment agreement with the Company which supplements the employment agreement entered into on March 10, 2009. On March 23, 2015, the Compensation Committee increased Mr. Strivers annual base salary from $275,000, the amount he earned
during 2014, to $300,000. Under his employment letter agreement, Mr. Stiver is eligible to participate (i) in the Companys cash bonus program, subject to corporate, departmental and individual
49
targets being met, with a target bonus of up to 40% of his base salary, and (ii) in all employee benefit plans and policies commensurate with his position.
In connection with beginning his employment with the Company, Mr. Stiver also entered into a Restrictive Covenants Agreement, which provides that for a period of one year following his termination, Mr. Stiver may not participate in, supervise or manage any competing activities in the defined territory. Similarly, for two years following the date of his termination, Mr. Stiver may not solicit or otherwise interfere with the Companys relationship with any present employee or any employee whose employment with the Company was terminated within the previous year, or any customer, client or referral source of the Company with
whom Mr. Stiver dealt in the two years prior to his termination of his employment with the Company. Mr. Stiver is also required to keep confidential during the term of his employment and thereafter all confidential and proprietary information concerning the Company and its business.
In connection with beginning his employment with the Company, Mr. Stiver also entered into a Severance Agreement dated March 10, 2009. On March 23, 2015, the Compensation Committee increased the term of Mr. Stivers severance under the Severance Agreement from six to twelve months. Accordingly, if the Company terminates Mr. Stivers employment without cause, upon execution of the Companys standard Waiver and Release, Mr. Stiver is entitled to receive severance payments equal to twelve months of salary at his then current base salary level payable in accordance with the Companys then applicable payroll
practices; provided, however, that if Mr. Stiver secures new employment during the twelve month period following his termination, any remaining severance payments will be reduced to an amount equal to the difference between his base salary on the date of termination and his new base salary.
Karen Cain Employment Letter Agreement
Ms. Cain entered into an employment letter agreement with the Company on December 1, 2013 and commenced her employment on February 10, 2014 as Senior Vice President and Chief Strategy Officer. The employment letter agreement provided for Ms. Cains at will employment at an initial annual base salary of $275,000. In accordance with her offer letter, Ms. Cains salary was reviewed after six months and was subsequently increased to $325,000. She was eligible to participate in the Companys cash bonus program subject to corporate, departmental and individual targets being met with a target bonus of up to 40% of her
base salary. Under the terms of her employment letter agreement, Ms. Cain was entitled to receive stock option grants with exercise prices equal to the market price on the date of the grant, and was eligible to participate in all employee benefit plans and policies commensurate with her position.
In connection with beginning her employment with the Company, Ms. Cain also entered into a Restrictive Covenants Agreement, which provided that for a period of one year following her termination, Ms. Cain may not participate in, supervise or manage any competing activities in the defined territory. Similarly, for two years following the date of her termination, Ms. Cain may not solicit or otherwise interfere with the Companys relationship with any present employee or any employee whose employment with the Company was terminated within the previous year, or any customer, client or referral source of the Company with whom
Ms. Cain dealt in the two years prior to her termination of her employment with the Company. Ms. Cain is also required to keep confidential during the term of her employment and thereafter all confidential and proprietary information concerning the Company and its business.
Ms. Cain resigned as the Companys Senior Vice President, Post-Acute Strategy Officer as of March 23, 2016. Ms. Cain did not receive any severance compensation in connection with her resignation.
Potential Change in Control and Severance Payments
The following tables summarize potential change in control payments for Messrs. Smith, Kreger, Evans and Stiver. The columns below describe the payments that would apply in different termination scenarios a termination of employment as a result of the named executive officers voluntary resignation without good reason, termination of employment by the Company for cause, death, disability, termination of employment by the Company without cause, termination of employment as a result of the named executive officers resignation for good reason, or termination of employment as a result of a change in
control. The table assumes that the termination or change in control occurred on December 31, 2015. For purposes of estimating the value of amounts of equity compensation to be received in the event of a termination of employment or change in control, the below assumes a price per share of Common Stock of $1.75, which represents the
50
closing market price of the Common Stock as reported on the NASDAQ Global Market on December 31, 2015. All amounts are expressed in dollars.
Richard M. Smith
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Voluntary/
For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause/Good
Reason
|
|
Change in
Control
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
1,300,000
|
|
|
|
1,300,000
|
|
|
|
1,300,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Contribution Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
30,039
|
|
|
|
30,039
|
|
|
|
30,039
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
30,039
|
|
|
|
30,039
|
|
|
|
30,039
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
1,330,039
|
|
|
|
1,330,039
|
|
|
|
1,330,039
|
|
Cash Severance: Pro rata current bonus in the event of termination as a result of death; two times base salary and pro rata current bonus in the event of termination as a result of disability, without cause, for good reason or change in control.
Unexercisable Options: Intrinsic value of accelerated vesting of stock options based on the December 31, 2015 closing price of $1.75. As of December 31, 2015, Mr. Smith had 166,667 unvested stock options outstanding, which accelerate upon certain termination events, including death, disability, termination Without Cause, or resignation for Good Reason. The exercise price of each unvested option is greater than the December 31, 2015 closing price of $1.75.
Health & Welfare: Eighteen additional months of health and welfare benefits in the event of termination as a result of death, disability, without cause or for good reason.
Jeffrey M. Kreger
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Voluntary/
For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause/Good
Reason
|
|
Change in
Control
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
395,000
|
|
|
|
395,000
|
|
|
|
395,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Contribution Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
395,000
|
|
|
|
395,000
|
|
|
|
395,000
|
|
51
Cash Severance: One year base salary in the event of termination by the Company other than for cause or in the event of resignation for good reason.
David Evans
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Voluntary/
For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause/Good
Reason
|
|
Change in
Control
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
325,000
|
|
|
|
325,000
|
|
|
|
325,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Contribution Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
19,868
|
|
|
|
19,868
|
|
|
|
19,868
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
19,868
|
|
|
|
19,868
|
|
|
|
19,868
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
344,868
|
|
|
|
344,868
|
|
|
|
344,868
|
|
Cash Severance: One year base salary in the event of termination by the Company other than for cause.
Health & Welfare: One additional year of health and welfare benefits in the event of termination by the Company other than for cause.
Brian Stiver
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
Voluntary/
For Cause
|
|
Death
|
|
Disability
|
|
Without
Cause/Good
Reason
|
|
Change in
Control
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Contribution Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Cash Severance: One year base salary in the event of termination by the Company other than for cause.
Karen Cain
Ms. Cain resigned as the Companys Senior Vice President, Post-Acute Strategy Officer as of March 23, 2016. As a result of her resignation, Ms. Cain did not receive any severance compensation or other benefits and the Company cancelled her unvested options to purchase shares of Common Stock and the expiration date of her vested options was accelerated to June 21, 2016.
52
Hai Tran
On January 30, 2015, Mr. Tran resigned as the Companys Chief Financial Officer and Treasurer, effective March 27, 2015. As a result of his resignation, Mr. Tran did not receive any severance compensation or other benefits and the Company cancelled his unexercised options to purchase Common Stock and his unvested stock awards.
Patricia Bogusz
On May 27, 2015, Ms. Bogusz left the Companys employment as Vice President, Finance and Principal Accounting Officer. In connection with her separation, Ms. Bogusz and the Company entered into a Separation and Release Agreement under which Ms. Bogusz would receive $550,000 of cash severance (as defined above, the Cash Severance Payment), an executive search payment of $37,147 and a $1,000 payment to reimburse Ms. Bogusz for legal fees. Ms. Bogusz was also entitled to one year of health and welfare benefits, or the cash equivalent. A portion of the Cash Severance Payment was conditional upon Ms. Bogusz
complying with certain restrictive covenants not to compete with the Company through March 15, 2016, as provided in her Separation and Release Agreement. Upon her departure, all of Ms. Boguszs unvested options were cancelled.
Thomas Pettit
Mr. Pettit served as the Companys Senior Vice President and Chief Operating Officer until August 7, 2015 and left the Companys employment on November 5, 2015. In connection with his separation, Mr. Pettit and the Company entered into a Separation and Release Agreement under which Mr. Pettit would receive $415,000 of cash severance and a $20,000 payment for outplacement counseling, executive coaching and/or other transition costs. Upon his departure, all of Mr. Pettits unvested options were cancelled. Mr. Pettit did not exercise any of his vested options before they expired on February 1, 2016.
53
STOCKHOLDER PROPOSALS
Rule 14a-8 under the Exchange Act establishes the eligibility requirements and the procedures that must be followed for a stockholders proposal to be included in a public companys proxy materials. Under Rule 14a-8, proposals submitted for inclusion in the Companys 2017 proxy materials relating to the 2017 Annual Meeting must be received by the Company at its principal executive offices located at 1600 Broadway, Suite 950, Denver, Colorado 80202, Attention: Secretary, no later than the close of business on December 28, 2016, in order to be included in the Companys proxy statement and proxy relating to
the 2017 Annual Meeting; provided, however, that in the event that the date of such meeting is advanced by more than 30 days or delayed by more than 30 days from the anniversary date of the Annual Meeting, notice by the stockholder to be included in the Companys proxy statement and proxy relating to the 2017 Annual Meeting must be so delivered a reasonable time before the Company begins to print and send its proxy materials. Proposals must comply with all the requirements of Rule 14a-8 and the Companys bylaws. The Company will determine whether to include such proposal in accordance with regulations governing the solicitation of proxies.
Stockholder proposals and nominations for directors made outside of Rule 14a-8 under the Exchange Act may be considered at the 2017 Annual Meeting only if timely notice is given to the Company. To be timely, a stockholders notice shall be delivered to the Secretary at the principal executive offices of the Company no later than March 3, 2017 and no earlier than February 1, 2017; provided, however, that in the event that the date of the 2017 Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the Annual Meeting, notice by a stockholder to be timely must be so
delivered not earlier than the 120
th
day prior to the 2017 Annual Meeting and not later than the close of business on the later of the 90
th
day prior to the 2017 Annual Meeting or the tenth day following the day on which public announcement of the date of the 2017 Annual Meeting is first made. Such stockholder notice must comply with all of the requirements of the Companys bylaws. The Board or the presiding officer at the 2017 Annual Meeting may reject any such proposals that are not made in accordance with these procedures or that are not a proper subject for stockholder action in accordance with applicable law. These requirements are separate from the procedural requirements a stockholder must meet to have a proposal included in the Companys proxy statement.
ANNUAL REPORT
A copy of the 2015 Annual Report, including the financial statements and financial statement schedules, as filed with the SEC, is enclosed but is not to be regarded as proxy solicitation materials.
INCORPORATION BY REFERENCE
Upon the written or oral request of any stockholder entitled to vote at the Annual Meeting, we will provide, without charge, a copy of any document incorporated by reference into this Proxy Statement by first class mail or other equally prompt means. Requests for such documents should be directed to BioScrip, Inc., 1600 Broadway, Suite 950, Denver, Colorado 80202, Attention: Corporate Secretary, telephone: (720) 697-5200.
HOUSEHOLDING
If you and other residents with the same last name at your mailing address own shares of Common Stock in street name, your broker or bank may have sent you a notice that your household will receive only one annual report and proxy statement for each company in which you hold stock through that broker or bank. This practice of sending only one copy of proxy materials is known as householding. If you received a householding communication, your broker will send one copy of this Proxy Statement and one copy of the 2015 Annual Report to your address unless contrary instructions were given by any stockholder at that
address. If you received more than one copy of the proxy materials this year and you wish to reduce the number of reports you receive in the future and save the Company the cost of printing and mailing these reports, your broker will discontinue the mailing of reports on the accounts you select if you mark the designated box on your proxy card, or follow the instructions provided when you vote over the Internet.
54
You may revoke your consent to householding at any time by calling (800) 542-1061. The revocation of your consent to householding will be effective 30 days following its receipt. In any event, if your household received a single set of proxy materials for this year, but you would prefer to receive your own copy, we will send a copy to you if you address your written request to BioScrip, Inc., Secretary, 1600 Broadway, Suite 950, Denver, Colorado 80202, Attention: Corporate Secretary or contact BioScrip, Inc. Secretary at (720) 697-5200.
DIRECTIONS TO THE ANNUAL MEETING
If you require directions to attend the Annual Meeting, please send a written request to the Secretary of BioScrip, Inc., at 1600 Broadway, Suite 950, Denver, Colorado 80202, Attention: Corporate Secretary, telephone: (720) 697-5200.
55
Appendix A
AMENDMENT TO BIOSCRIP, INC. AMENDED AND RESTATED
2008 EQUITY INCENTIVE PLAN
56
AMENDMENT TO BIOSCRIP, INC.
2008 EQUITY INCENTIVE PLAN
This
AMENDMENT TO THE
BIOSCRIP, INC. 2008 EQUITY INCENTIVE PLAN
(the
Amendment
), is made on the date last below written by
BIOSCRIP, INC.
, a corporation organized and existing under the laws of the State of Delaware (the
Company
).
WHEREAS
, the Company adopted the BioScrip, Inc. 2008 Equity Incentive Plan, originally effective April 28, 2008, and as last amended and restated effective as of May 8, 2014, as may be further amended (the
Plan
); and
WHEREAS
, Section 17 of the Plan provides that the Company may amend the Plan from time to time; and
WHEREAS
, the Company wishes to amend the Plan to increase the number of shares of the common stock of the Company in the aggregate that may be subject to awards granted to directors under the Plan.
NOW, THEREFORE,
the Plan is amended as follows:
|
1.
|
Paragraph (a) of Section 3.1 of the Plan is amended and restated to read as follows:
|
3.1
Number of Shares
(a) Subject to adjustment as provided in Section 15, a total of 9,355,000 shares of Stock shall be authorized for issuance under the Plan (which number shall include the 6,855,000 shares of Stock previously authorized for issuance under the Plan), all of which may be subject to ISOs, less one (1) share of Stock for every one (1) share of Stock that was subject to an Option or Stock Appreciation Right granted after December 31, 2007 under the Prior Plan and one and 53/100 (1.53) shares of Stock for every one (1) share of Stock that was subject to an Award other than an Option or Stock
Appreciation Right granted after December 31, 2007 under the Prior Plan. In no event may more than 1,500,000 shares of Stock in the aggregate be subject to Awards granted to Directors. Any shares of Stock that are subject to Awards of Options or Stock Appreciation Rights shall be counted against this limit as one (1) share of Stock for every one (1) share of Stock issued. Any shares of Stock that are subject to Awards other than Options or Stock Appreciation Rights shall be counted against this limit as one and 53/100 (1.53) shares of Stock for every one (1) share of Stock issued.
|
2.
|
Except as provided in this Amendment, no other changes or amendments shall be made to the Plan as previously stated (including all prior amendments) and the remainder thereof shall remain in full force and effect.
|
IN WITNESS WHEREOF
, the Company has executed this Amendment on this
the day of
, 2016.
BIOSCRIP, INC.
|
By:
|
|
57