DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 Filed by the Registrant ☒                                                                     Filed by a party other than the Registrant ☐

 Check the appropriate box:

 

 ☐

 

Preliminary Proxy Statement

 ☐

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 ☒

 

Definitive Proxy Statement

 ☐

 

Definitive Additional Materials

 ☐

 

Soliciting Material Pursuant to 240.14a-12

ABIOMED, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

 Payment of Filing Fee (Check the appropriate box):

 

 ☒

 

No fee required.

 ☐

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

 

Title of each class of securities to which transaction applies:

 

     

 

 

(2)

 

 

Aggregate number of securities to which transaction applies:

 

     

 

 

(3)

 

 

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

   

 

     

 

 

(4)

 

 

Proposed maximum aggregate value of transaction:

 

     

 

 

(5)

 

 

Total fee paid:

 

     

 ☐

 

Fee paid previously with preliminary materials.

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  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 

(1)

 

Amount Previously Paid:

 

     

 

 

(2)

 

 

Form, Schedule or Registration Statement No.:

 

     

 

 

(3)

 

 

Filing Party:

 

     

 

 

(4)

 

 

Date Filed:

 

     

 

 


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LOGO

22 Cherry Hill Drive

Danvers, Massachusetts 01923

 

Dear Fellow Stockholder:

 

On behalf of the Board of Directors, I cordially invite you to attend the 2020 Annual Meeting of Stockholders of ABIOMED, Inc., to be held at 8:00 a.m., Eastern Time, on Wednesday, August 12, 2020, at the Beauport Hotel, located at 55 Commercial Street, Gloucester, Massachusetts 01930. The notice and proxy statement for the 2020 Annual Meeting are attached to this letter and describe the business to be conducted at the 2020 Annual Meeting.

  

LOGO

In accordance with the rules of the Securities and Exchange Commission, we sent a Notice of Internet Availability of Proxy Materials on or about June 30, 2020 to our stockholders of record as of the close of business on June 15, 2020. We also provided access to our proxy materials over the Internet beginning on that date. If you received a Notice of Internet Availability of Proxy Materials by mail and did not receive, but would like to receive, a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability of Proxy Materials.

To have your vote recorded, you should vote over the Internet or by telephone. In addition, if you have requested or received a paper copy of the proxy materials, you may vote by signing, dating and returning the proxy card sent to you in the envelope accompanying the proxy materials (or voting instruction form, if you hold your shares through a broker bank or other nominee). We encourage you to vote by any of these methods even if you currently plan to attend the 2020 Annual Meeting. By doing so, you will ensure that your shares are represented and voted at the 2020 Annual Meeting. If you decide to attend, you can still vote your shares in person if you wish.

On behalf of the Board of Directors, I thank you for your cooperation and look forward to seeing you on August 12, 2020.

Very truly yours,

 

 

LOGO

Michael R. Minogue

Chairman, President and Chief Executive Officer

June 30, 2020


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NOTICE OF 2020 ANNUAL MEETING OF

STOCKHOLDERS OF ABIOMED, INC.

 

DATE AND TIME:

  

Wednesday, August 12, 2020 at 8:00 a.m., Eastern Time

PLACE:

  

Beauport Hotel

55 Commercial Street

Gloucester, Massachusetts 01930

ITEMS OF BUSINESS:

  

1)    Elect the three Class I director nominees listed in the accompanying proxy statement (the “Proxy Statement”) to serve for a three-year term until the 2023 Annual Meeting of Stockholders;

 

2)    Consider a non-binding, advisory vote to approve the compensation of our named executive officers;

 

3)    Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2021; and

 

4)    Consider and act upon any matter which may properly come before the 2020 Annual Meeting and any adjournments or postponements thereof.

WHO CAN VOTE:

  

You are entitled to vote if you were a stockholder of record at the close of business on Monday, June 15, 2020 (the “Record Date”).

VOTING:

  

We urge you to participate in the meeting, either by attending and voting in person or by voting through other acceptable means as promptly as possible. You may vote by telephone, through the Internet or by mailing your completed and signed proxy card (or voting instruction form, if you hold your shares through a broker, bank or other nominee). Each share is entitled to one vote on each matter to be voted upon at the 2020 Annual Meeting. Your vote is important and we urge you to vote.

2020 ANNUAL REPORT:

  

A copy of our annual report to stockholders for the fiscal year ended March 31, 2020 accompanies this Proxy Statement.

 

June 30, 2020

 

Danvers, Massachusetts

 

By Order of the Board of Directors,

 

LOGO

 

Marc A. Began                                  

Vice President, General Counsel and                                  
Secretary                                  

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 12, 2020

This Notice of Annual Meeting and the accompanying Proxy Statement are being distributed or made available, as the case may be, on or about June 30, 2020, and the Proxy Statement and our annual report to stockholders for the fiscal year ended March 31, 2020 are available on our website at http://www.abiomed.com/proxy.


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QUESTIONS AND ANSWERS ABOUT THE MEETING

    1  

PROPOSALS REQUIRING YOUR VOTE

    5  

Proposal No. 1 – Election of Directors

    5  

Proposal No.  2 – Advisory Vote on Compensation of our Named Executive Officers

    12  

Proposal No.  3 – Ratification of Appointment of our Independent Registered Public Accounting Firm

    13  

EXECUTIVE OFFICERS AND SENIOR OFFICERS OF OUR COMPANY

    14  

THE BOARD OF DIRECTORS AND CERTAIN GOVERNANCE MATTERS

    17  

Corporate Governance Highlights

    17  

Board Leadership

    18  

Director Independence

    19  

Expectations for Members of our Board of Directors

    19  

Director Qualification Standards and Selection and Board Composition

    20  

Committees of the Board of Directors

    21  

Board and Committee Assessments

    23  

Engagement with Stockholders

    24  

Board Role in Risk Oversight

    24  

Director Resignation Policy

    25  

Code of Conduct and Compliance Policy

    25  

Communications with Directors

    26  

Compensation of Directors

    26  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    29  

COMPENSATION OF EXECUTIVE OFFICERS

    30  

Compensation Discussion and Analysis

    30  

Overview

    30  

Fiscal 2020 Compensation Design

    39  

Compensation Governance

    40  

Compensation Peer Group

    42  

Fiscal 2020 Base Salary

    42  

Fiscal 2020 Annual Incentive Plan

    43  

Fiscal 2020 Long-Term Incentive Awards

    46  

Other Elements of Compensation

    48  

Managing Compensation-Related Risks

    49  

Fiscal 2021 Compensation

    50  

Compensation Committee Report

    51  

Compensation Tables

    52  

Summary Compensation Table

    52  

Grants of Plan-Based Awards

    53  

Outstanding Equity Awards at Fiscal Year End

    54  

Option Exercises and Vesting of Stock

    55  

Narrative Supplement to Compensation Tables

    55  

Estimated Potential Payments Following a Change of Control

    58  

CHIEF EXECUTIVE OFFICER PAY RATIO

    60  

EQUITY COMPENSATION PLAN INFORMATION

    61  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    61  


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REPORT OF THE AUDIT COMMITTEE

    64  

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

    65  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

    66  

DELINQUENT SECTION 16(A) REPORTS

    66  

GENERAL AND OTHER INFORMATION

    66  

Stock Trading Practices

    66  

Other Proposed Action for 2020

    66  

Householding of Proxy Materials

    66  

Annual Report to Stockholders and Annual Report on Form 10-K

    67  

Stockholder Proposals for 2021

    67  


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QUESTIONS AND ANSWERS ABOUT THE MEETING

Why am I being provided with these materials?

We are providing this proxy statement (the “Proxy Statement”) to you in connection with the solicitation by our board of directors (the “Board” or the “Board of Directors”) of proxies to be voted at our annual meeting of stockholders to be held on August 12, 2020 (the “2020 Annual Meeting”), and at any postponements or adjournments of the 2020 Annual Meeting. We have either (i) delivered to you a notice of annual meeting (a “Notice”) and made these proxy materials available to you on the Internet or (ii) delivered printed versions of these materials, including a proxy card, to you by mail.

How do I vote my shares without attending the 2020 Annual Meeting?

If you are a stockholder of record (meaning your shares of our common stock are registered directly with our transfer agent, American Stock Transfer & Trust Company, LLC, or “AST”), you may vote by granting a proxy. Specifically, you may vote:

 

   

by Internet—you may submit your proxy by going to www.proxyvote.com and following the instructions on how to complete an electronic proxy card. You will need the 16-digit number included on your Notice or proxy card in order to vote by Internet.

 

   

by Telephone—you may submit your proxy by using a touch-tone telephone to dial 1-800-690-6903 and following the recorded instructions. You will need the 16-digit number included on your Notice or proxy card in order to vote by telephone.

 

   

by Mail—you may vote by mail by requesting a proxy card from us, indicating your vote by completing, signing and dating the card where indicated and by mailing or otherwise returning the card in the envelope that will be provided to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity, you must indicate your name and title or capacity.

If you hold your shares in street name, you may vote by submitting voting instructions to your bank, broker or other nominee. In most instances, you will be able to do this on the Internet, by telephone or by mail as indicated above. Please refer to information from your bank, broker or other nominee on how to submit voting instructions.

Who is entitled to vote?

Stockholders as of the close of business on June 15, 2020 (the “Record Date”) may vote at the 2020 Annual Meeting. You have one vote for each share of common stock held by you as of the Record Date, including shares:

 

   

held directly in your name as “stockholder of record” (also referred to as “registered stockholder”); and

 

   

held for you in an account with a broker, bank or other nominee (shares held in “street name”)—street name holders generally cannot vote their shares directly and instead must instruct the broker, bank or nominee on how to vote their shares.

What constitutes a quorum?

A majority in interest of all stock issued, outstanding and entitled to vote at a meeting must be present or represented by proxy to constitute a quorum at the 2020 Annual Meeting. Abstentions and shares represented by “broker non-votes,” as described below, are counted as present and entitled to vote for purposes of determining a quorum. On the Record Date, 45,044,145 shares of the Company’s common stock were outstanding, and each share is entitled to one vote at the 2020 Annual Meeting.

 

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What are the voting deadlines if I do not attend the 2020 Annual Meeting?

Internet and telephone voting facilities will close at 11:59 p.m. (Eastern Time) on August 11, 2020 for the voting of shares held by stockholders of record or held in street name.

Mailed proxy cards with respect to shares held of record or in street name must be received no later than August 11, 2020.

May I revoke my proxy or change my vote?

Yes. Whether you have voted by Internet, telephone or mail, if you are a stockholder of record, you may revoke your proxy or change your vote by:

 

   

sending a written statement to that effect to the attention of our Vice President, General Counsel and Secretary at ABIOMED, Inc., 22 Cherry Hill Drive, Danvers, Massachusetts 01923, provided such statement is received no later than August 11, 2020;

 

   

voting again by Internet or telephone at a later time before the closing of those voting facilities at 11:59 p.m. (Eastern Time) on August 11, 2020;

 

   

submitting a properly signed proxy card with a later date that is received no later than August 11, 2020; or

 

   

attending the 2020 Annual Meeting and revoking your proxy and voting in person.

If you hold shares in street name, you may submit new voting instructions by contacting your bank, broker or other nominee. You may also change your vote or revoke your proxy in person at the 2020 Annual Meeting if you obtain a signed proxy from the record holder (broker or other nominee) giving you the right to vote the shares in person.

What is a “broker non-vote” and how does it affect voting on each proposal?

A “broker non-vote” occurs if you hold your shares in street name and do not provide voting instructions to your broker on a proposal and your broker does not have discretionary authority to vote on such proposal. See below for a discussion of which proposals permit discretionary voting by brokers and the effect of a “broker non-vote.”

What if I receive more than one Notice or proxy card about the same time?

It generally means you hold shares registered in more than one account. To ensure that all your shares are voted, please sign and return each proxy card, or, if you vote by Internet or telephone, vote once for each Notice or proxy card you receive.

How do I vote my shares in person at the 2020 Annual Meeting?

First, as discussed below, you must satisfy the requirements for admission to the 2020 Annual Meeting. Then, if you are a stockholder of record and prefer to vote your shares at the 2020 Annual Meeting, you must bring proof of identification along with your Notice, proxy card or proof of ownership. You may vote shares held in street name at the 2020 Annual Meeting only if you obtain a signed proxy from the record holder (bank, broker or other nominee) giving you the right to vote the shares in person.

What do I need to be admitted to the 2020 Annual Meeting?

The health and safety of our employees, directors, stockholders and other stakeholders are of utmost importance. We are sensitive to the public health concerns that our stockholders may have and the protocols that federal, state and local governments may impose. In light of the ongoing coronavirus, or COVID-19, outbreak, you will be able to attend the 2020 Annual Meeting in person if you present no symptoms and follow appropriate social distancing restrictions at the meeting.

Additionally, for admission to the 2020 Annual Meeting, you will need a form of valid government-issued personal identification (such as a driver’s license) along with either your Notice, proxy card or proof of stock

 

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ownership as of the Record Date to enter the 2020 Annual Meeting. If your shares are held in the name of a bank, broker or other nominee and you wish to be admitted to the 2020 Annual Meeting, you must present proof of your ownership of our common stock as of the Record Date, such as a bank or brokerage account statement, a copy of the voting instruction form provided by your broker, bank or other nominee, or other similar evidence of ownership. If you are a representative or proxyholder of an entity that owns our common stock, you must present evidence that you are the entity’s authorized representative or proxyholder, and, if the entity is a street name owner, proof of the entity’s beneficial ownership as of the Record Date.

Are there other things I should know if I intend to attend the 2020 Annual Meeting?

Please note that no cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the 2020 Annual Meeting. Attendees may be subject to security inspections and other security precautions. We reserve the right to limit the number of representatives who may attend the meeting.

Who will count the vote?

Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes and act as inspector of election.

Could other matters be decided at the 2020 Annual Meeting?

At the date this Proxy Statement went to press, we did not know of any matters to be raised at the 2020 Annual Meeting other than those referred to in this Proxy Statement, and the deadline for submitting proposals under our by-laws has passed. If other matters are properly presented at the 2020 Annual Meeting for consideration and you are a stockholder of record and have submitted a proxy card, the persons named in your proxy card will have the discretion to vote on those matters for you.

Who will pay the cost of this proxy solicitation?

We will bear the cost of solicitation of proxies. Some of our officers and employees may solicit proxies by correspondence, telephone or in person, without extra compensation. We may also pay to banks, brokers, nominees and other fiduciaries their reasonable charges and expenses incurred in forwarding proxy materials to their principals. In addition, we have hired Morrow Sodali LLC, 470 West Ave, Stamford, CT 06902 to solicit proxies. We expect to pay Morrow Sodali LLC, 470 West Ave, Stamford, CT 06902 a fee of $12,500 plus reasonable expenses for these services.

What am I voting on, how many votes are required to approve each proposal, how are votes counted and how does the Board recommend I vote?

The table below summarizes the proposals that will be voted on, the vote required to approve each item, how votes are counted and how the Board recommends you vote.

 

Proposal

 

 

Vote Required

 

 

Voting
Options

 

 

Board
Recommendation(2)

 

 

Broker
Discretionary
Voting
Allowed(3)

 

 

Impact of
Abstain
Vote

 

Proposal No. 1 - Election of the three Class I director nominees listed in
this Proxy Statement
  Plurality of votes cast, with director resignation policy.(1)   “FOR”
“WITHHOLD”
 


“FOR”

 

 

 


No

 

 

 


N/A

 

 

    “FOR”
  “FOR”   No   None

Proposal No. 2 - Non-binding,
advisory vote to approve the compensation of our named executive officers

  Majority of votes cast   “AGAINST”
“ABSTAIN”
     

Proposal No. 3 - Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2021

 

 

 

Majority of votes cast

 

“FOR”
“AGAINST”
“ABSTAIN”

 

 

“FOR”

 

Yes

 

None

(1) We have adopted a director resignation policy that applies in uncontested elections of directors. This means that the plurality standard will determine whether a director nominee is elected, but our resignation policy will require that the number of votes cast “for” a director must exceed the

 

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number of votes “withheld” from the director, or the director must submit his or her resignation. The Governance and Nominating Committee of the Board of Directors (the “Governance and Nominating Committee”) would then consider whether to recommend that the Board of Directors accept or reject the resignation. See “The Board of Directors and Certain Governance Matters—Director Resignation Policy” below for additional details.

(2) If you are a registered holder and you sign and submit your proxy card without indicating your voting instructions, your shares will be voted in accordance with the Board’s recommendation.

(3) A broker non-vote will not count as a vote “for” or “against” a director and will have no effect on the outcome of the election of the three director nominees disclosed in Proposal No. 1 or on the outcome of Proposal No. 2. If a majority of the voting power of the minimum number of shares entitled to vote that would constitute a quorum at the 2020 Annual Meeting is required in order to approve the proposal as described in the column “Vote Required” above, then a broker non-vote will have the same effect as a vote “against” Proposal No. 3.

What will be the result if I submit my proxy card without making specific instructions?

If you properly submit your proxy card without making specific instructions, your shares will be voted in the manner recommended by our Board of Directors as follows: “for” each of the three Class I director nominees (Proposal No. 1); “for” the approval of the compensation of our named executive officers (Proposal No. 2); and “for” the ratification of the appointment of our independent registered public accounting firm (Proposal No. 3). If any other matters not included in this Proxy Statement properly come before the meeting, the shares represented by the proxy will be voted by the holders of the proxies in accordance with their best judgment to the extent permitted by Rule 14a-4(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The proxy may be removed at any time prior to exercise by the means discussed under “—May I revoke my proxy or change my vote?”

Is there a list of stockholders entitled to vote at the 2020 Annual Meeting?

The names of stockholders entitled to vote at the 2020 Annual Meeting will be available at the 2020 Annual Meeting and for ten days prior to the 2020 Annual Meeting for any purpose germane to the 2020 Annual Meeting, between the hours of 9:00 a.m. and 4:30 p.m. (Eastern Time), at our principal executive offices at 22 Cherry Hill Drive, Danvers, Massachusetts 01923, by contacting Marc A. Began, our Vice President, General Counsel and Secretary.

 

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PROPOSALS REQUIRING YOUR VOTE

Proposal No. 1 – Election of Directors

Our Board of Directors currently consists of seven directors and is divided into three classes. We refer to these classes as Class I, Class II and Class III. The term of a class of directors expires each year at the annual meeting of stockholders. Each director continues to serve as a director until his or her successor is duly elected and qualified, or until his or her earlier removal, death or resignation. This year, the terms of the Class I directors, Dorothy E. Puhy, Paul G. Thomas and Christopher D. Van Gorder, expire at the 2020 Annual Meeting. Eric A. Rose and Jeannine M. Rivet currently serve as Class II directors, with their terms of office expiring at the 2021 Annual Meeting of Stockholders, and Michael R. Minogue and Martin P. Sutter currently serve as Class III directors, with their terms of office expiring at the 2022 Annual Meeting of Stockholders.

Our Board of Directors has nominated each of Ms. Puhy, Mr. Thomas and Mr. Van Gorder to serve as a Class I director for a three-year term until the 2023 Annual Meeting of Stockholders, or until his or her successor has been duly elected and qualified or until his or her earlier removal, death or resignation. If any nominee at the time of the 2020 Annual Meeting is unable or unwilling to serve or is otherwise unavailable for election, and our Board of Directors designates another nominee, the persons named as proxies will vote the proxy for such substitute nominee. Our Board of Directors has no reason to believe that any substitute nominee or nominees will be required, and all of the nominees have indicated that they will be willing and able to serve as directors and to serve if elected. The nominees are not being nominated pursuant to any arrangement or understanding with any person.

The following information describes the offices held and other business directorships of each nominee for election at the 2020 Annual Meeting and each director continuing in office beyond the 2020 Annual Meeting. Ages set forth below are as of June 15, 2020. Beneficial ownership of equity securities of the nominees and other directors is described in “Security Ownership of Certain Beneficial Owners and Management.”

 

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Class I – Nominees for Term Expiring This Year

The Governance and Nominating Committee and the Board believe that each of the nominees for election at the 2020 Annual Meeting possesses a strong and unique set of attributes. The particular experience, qualifications or skills of each nominee that the Governance and Nominating Committee believes will advance the Company’s goals are included in the individual biographies below. The Governance and Nominating Committee and the Board believe that, as a group, these nominees provide the Board with an optimal balance of experience, leadership, competencies, qualifications and skills.

 

 

LOGO

 

Director Since: 2003

•  Lead Director (since 2005)

 

Board Committees:

•  Audit (Chair)

•  Regulatory and Compliance

 

Age: 68

    

 

 

DOROTHY E. PUHY

 

    

 

Position, Principal Occupation and Professional Experience:

 

Former Executive Vice President and Chief Operating Officer, Dana-Farber Cancer Institute. Ms. Puhy served as Executive Vice President and Chief Operating Officer for the Dana-Farber Cancer Institute from 2012 until her retirement in March 2019. Ms. Puhy previously served as the Chief Financial Officer of the Dana-Farber Cancer Institute from 1994 to 2012 and as its Assistant Treasurer from 1995 to 2012. From 1985 to 1994, Ms. Puhy held various financial positions at the New England Medical Center Hospitals, Inc., including Chief Financial Officer from 1989 to 1994. Ms. Puhy received her Bachelor of Arts from the University of Pennsylvania and her Master of Business Administration from the Wharton School of Business at the University of Pennsylvania.

 

Other Public Company Directorships: Eaton Vance Corp.

 

Other Current and Prior Non-Public Company Directorships, Trusteeships and Memberships: Chairwoman of the board of directors of Blue Cross Blue Shield of Massachusetts and member of the boards of directors of CRICO (a captive professional and general liability insurance company) and United Way of Massachusetts Bay and Merrimack Valley.

 

Director Qualifications: We believe Ms. Puhy’s financial acumen, her executive level experience at a major medical research institute and her extensive industry knowledge qualify her to serve as a member of our Board of Directors.

 

 

 

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LOGO

 

Director Since: 2011

 

Board Committees:

•  Compensation (Chair)

•  Governance and Nominating

•  Regulatory and Compliance

 

Age: 64

    

 

 

PAUL G. THOMAS

 

    

 

Position, Principal Occupation and Professional Experience:

 

Chief Executive Officer and Founder, Prominex, Inc. In January 2018, Mr. Thomas co-founded Prominex, Inc., a start-up company focused on the development of molecular diagnostic assays for point-of-care infectious disease testing. Mr. Thomas currently serves as Prominex’s Chief Executive Officer. Prior to his employment with Prominex, Mr. Thomas served as the founder, President, Chief Executive Officer and director of Roka Bioscience, Inc. from September 2009 until his retirement in January 2017. Previously, he served as President, Chief Executive Officer and Chairman of LifeCell from October 1998 until its acquisition by Kinetic Concepts. Prior to joining LifeCell, Mr. Thomas held various senior positions, including President of the Pharmaceuticals division, during a 15-year tenure with Ohmeda Inc. Mr. Thomas received his Bachelor of Science in Chemistry from St. Michael’s College and his Master of Business Administration from Columbia University, and completed his postgraduate studies in chemistry at the University of Georgia.

 

Other Public Company Directorships: RTI Surgical Holdings, Inc.

 

Prior Public Company Directorships (within the last five years): Aegerion Pharmaceuticals, Inc. (until its merger with Novelion Therapeutics in 2016).

 

Director Qualifications: We believe that Mr. Thomas’ extensive leadership experience with companies in the life sciences industry qualifies him to serve as a member of our Board of Directors.

 

 

 

 

LOGO

 

Director Since: 2016

 

Board Committees:

•  Governance and Nominating

•  Regulatory and Compliance (Chair)

 

Age: 67

    

 

 

CHRISTOPHER D. VAN GORDER, FACHE

 

    

 

Position, Principal Occupation and Professional Experience:

 

President, Chief Executive Officer and Director of Scripps Health. Since 2000, Mr. Van Gorder has been President, Chief Executive Officer and a director of Scripps Health, where he oversees all functions of the integrated health system. Mr. Van Gorder currently is a clinical professor of health practice at the University of Southern California Price School of Public Policy, where he also serves on the board of councilors. Mr. Van Gorder received his undergraduate degree from California State University, Los Angeles, and his master’s degree in public administration/health services administration from the University of Southern California. He has also completed the Chief Executive Officer Program at the Wharton School of Business at the University of Pennsylvania.

 

Other Current and Prior Non-Public Company Directorships, Trusteeships and Memberships: Member of the board of directors of Z-Medica, LLC. Formerly on the board of governors for the American College of Healthcare Executives and formerly on the board of directors of the California Hospital Association.

 

Director Qualifications: We believe that Mr. Van Gorder’s experience as a business leader, his expertise in the healthcare field and his executive level industry experience qualify him to serve as a member of our Board of Directors.

 

 

 

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Continuing Members of the Board of Directors

The directors whose biographies are below will continue in office beyond the term of the 2020 Annual Meeting.

Class II – Directors Whose Term Expires in 2021

 

 

LOGO

 

Director Since:  2016

 

Board Committees:

•  Compensation

•  Audit

 

Age: 72

    

 

 

JEANNINE M. RIVET

 

    

 

Position, Principal Occupation and Professional Experience:

 

Former Executive Vice President, UnitedHealth Group. Ms. Rivet served as Executive Vice President of UnitedHealth Group from 2001 until her retirement in December 2018. Previously, she served as Chief Executive Officer of UnitedHealthcare from 1998 to 2001, Chief Executive Officer of Ingenix from 2001 to 2003 and Chief Executive Officer of Optum from December 2003 to 2005. Ms. Rivet received her Bachelor of Science in Nursing from Boston College and her Master’s Degree in Public Health from Boston University. She also worked as a registered nurse for several years prior to entering the managed care business.

 

Other Current and Past Non-Public Company Directorships, Trusteeships and Memberships: Advisory board member of Solutran, Inc., a customized treasury management company. Board member of Anser Innovation LLC, a healthcare technology solutions company. Formerly on the board of directors of Schwan Food Company.

 

Director Qualifications: We believe that Ms. Rivet’s extensive knowledge of the managed care business, her direct healthcare experience, her executive-level experience and her management abilities and experience qualify her to serve as a member of our Board of Directors.

 

 

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LOGO

 

Director Since: 2014 (formerly a

director from 2007 – 2012)

 

Board Committees:

•  Audit

 

Age: 69

    

 

 

DR. ERIC A. ROSE

 

    

 

Position, Principal Occupation and Professional Experience:

 

Executive Chairman, SIGA Technologies, Inc. Dr. Rose serves as Chairman of SIGA Technologies, Inc. (“SIGA”), a developer of antiviral drugs directed at potential agents of bioterror. SIGA successfully developed a cure for smallpox, which is now in the strategic national stockpile of the United States government. The company has received more than $600 million in contract revenue and research support from the United States Biomedical Advanced Research and Development Authority. The company filed voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in September 2014 and exited from bankruptcy protection in April 2016. Dr. Rose served from 2007 to 2016 as Executive Vice President for Life Sciences at MacAndrews & Forbes and Chief Executive Officer and Chairman of SIGA. Dr. Rose chaired the Department of Health Evidence & Policy at the Mount Sinai School of Medicine from 2008 to 2013, where he now serves as professor. From 1994 to 2007, he was Surgeon-in-Chief at New York-Presbyterian Hospital/Columbia and Chairman of the Department of Surgery at the Columbia University College of Physicians and Surgeons. A heart surgeon, researcher and entrepreneur, Dr. Rose helped grow Columbia’s Department of Surgery over 25 years while investigating, managing and developing complex medical technologies. He has authored or co-authored more than 300 scientific publications and has received more than $25 million in NIH support for his research. Dr. Rose pioneered heart transplantation in children, performing the first successful pediatric heart transplant in 1984, and has investigated many alternatives to heart transplantation, including cross-species transplantation and man-made heart pumps. He received both his undergraduate and medical degrees from Columbia University.

 

Other Public Company Directorships: SIGA Technologies, Inc. and Mesoblast Ltd.

 

Other Current Non-Public Company Directorship: Member of the board of directors of Orchestra Biomed.

 

Director Qualifications: We believe that Dr. Rose’s distinguished work as a heart surgeon and researcher, his work as an entrepreneur in our industry and his executive level industry experience qualify him to serve as a member of our Board of Directors.

 

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Class III Directors Whose Term Expires in 2022

 

 

LOGO

 

Director Since: 2004

 

Age: 53

    

 

 

MICHAEL R. MINOGUE

 

 

 

Position, Principal Occupation, Professional Experience, Other Non-Public Company Directorships and Other Information:

 

Chairman, President and Chief Executive Officer, ABIOMED, Inc. Mr. Michael R. Minogue has been Chairman, President and Chief Executive Officer of ABIOMED, Inc. since 2004. Mr. Minogue transitioned the Company’s mission to creating the field of heart recovery with the acquisition and development of new technologies such as the Impella®, the world’s smallest heart pump, and extracorporeal membrane oxygenation (ECMO). ABIOMED has been one of the fastest growing, GAAP profitable medtech companies and ranked the third best performing stock on the S&P 500 for the last decade. ABIOMED has earned numerous global regulatory approvals on new products and indications in the United States, Europe, Japan and other countries. ABIOMED employs approximately 1,500 people with facilities in Danvers, Massachusetts, Aachen and Berlin, Germany and Tokyo, Japan.

 

In addition to his responsibilities at ABIOMED, Mr. Minogue currently serves on the medical device industry association board of directors for AdvaMed, and serves on the board for the Medical Device Innovation Consortium (MDIC). He also serves on Insulet Corporation’s Board of Directors and was on the boards of LifeCell and Bioventus.

 

Before joining ABIOMED, Mr. Minogue spent 11 years with General Electric Healthcare, where he held numerous leadership positions and holds three patents. Mr. Minogue also served as an officer in the U.S. Army, which included multiple distinctions including Airborne, Ranger, Desert Storm Veteran and Bronze Star. He received his Bachelor of Science degree in Engineering Management from the United States Military Academy at West Point and his Master of Business Administration from the University of Chicago.

 

Mr. Minogue co-founded the Mike and Renee Minogue Foundation and the Mentoring Veterans Program (MVPvets) (www.mvpvets.org), a 501(c)(3) nonprofit organization that helps military veterans network with industry mentors to discover career opportunities in the medtech industy. He serves on the Board of Directors after serving as the Chairman for the past eight years. Mr. Minogue is the Chairman of the Governor’s Advisory Council on Veterans’ Services for Massachusetts and supports the Inner-City Scholarship Fund, Boys and Girls Club, and multiple educational initiatives. Mr. Minogue is married with five children and enjoys reading, mentoring, running, coaching, skiing and playing sports.

 

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LOGO

 

Director Since: 2008

 

Board Committees:

•  Compensation

•  Governance and Nominating (Chair)

 

Age: 65

    

 

 

MARTIN P. SUTTER

 

    

 

Position, Principal Occupation and Professional Experience:

 

Co-Founder and a Managing Director, EW Healthcare Partners. Since 1985, Mr. Sutter has been the Co-Founder and a Managing Director of EW Healthcare Partners, previously known as Essex Woodlands Health Ventures, a healthcare-focused growth equity firm. Educated in chemical engineering and finance, Mr. Sutter has more than 35 years of management experience in operations, marketing, finance and venture capital. Mr. Sutter holds a Bachelor of Science degree from Louisiana State University and a Master of Business Administration from the University of Houston.

 

Other Current and Past Non-Public Company Directorships, Trusteeships and Memberships: Board of managers of Bioventus, an orthobiologics company focused on active healing therapies, biosurgical products and sports medicine; board of directors of Prolacta Bioscience, which provides human milk-based nutritional products for critically ill, premature infants in neonatal intensive care units; and board of directors of TissueTech, a private regenerative medicine company with a specialized focus on tissue from the amniotic membrane and umbilical cord, with wide ranging clinical applications across ophthalmology, wound care, and orthopedics. Formerly on the boards of directors of the following EW Healthcare Partners’ portfolio investments: ATS Medical (later acquired by Medtronic, Inc.); BioForm Medical (later acquired by Merz GmbH & Co KGaA); LifeCell (later acquired by Kinetic Concepts); St. Francis Medical (later acquired by Kyphon, Inc./Medtronic, Inc.); Confluent Surgical (later acquired by Tyco International/Covidien); and Rinat Neurosciences (later acquired by Pfizer, Inc.).

 

Director Qualifications: We believe that Mr. Sutter’s in-depth knowledge of the medical device industry, his skills as an investor in developing medical device companies, his extensive board experience and his position as a representative of a stockholder in our Company qualify him to serve as a member of our Board of Directors.

Our Board of Directors recommends that you vote FOR the election of each of Ms. Puhy, Mr. Thomas and Mr. Van Gorder.

 

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Proposal No. 2 – Advisory Vote on Compensation of our Named Executive Officers

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and related SEC rules, we are required to provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our “named executive officers” as disclosed in this Proxy Statement in the “Compensation Discussion and Analysis,” compensation tables and accompanying narrative disclosures from page 30 to page 59. We refer to this non-binding advisory vote as the “say-on-pay” vote. Although this vote is not binding on us, we value the opinion of our stockholders. Our Board of Directors and the Compensation Committee of our Board of Directors (the “Compensation Committee”) will carefully consider the outcome of the vote as we make future decisions on executive compensation.

As described in the “Compensation Discussion and Analysis,” by offering compensation that is competitive with peer organizations, our compensation programs are designed to attract, retain and motivate our executive officers and to reward superior financial, strategic and operational performance in a manner consistent with our team-oriented values and corporate goals. Our compensation consists of a mixture of cash payments and equity incentives, which we believe aligns our executive compensation with the interests of our stockholders. We review our compensation policies annually with the help of Willis Towers Watson, a compensation consultant, to understand how our policies compare to market practices and to ensure our compensation policies create the right incentives to attract, retain and motivate our workforce. We encourage you to carefully review the “Compensation Discussion and Analysis” for a discussion of the factors underlying the structure of our executive compensation program.

Additionally, in fiscal 2020, we undertook an extensive outreach initiative to our stockholder base to understand better our stockholders’ concerns about our pay practices, in part in response to the results of our “say-on-pay” vote for fiscal 2019. For more information about our stockholder outreach efforts, specifically related to executive compensation and the related changes made to such compensation program for fiscal 2021 (which were also strongly motivated by prior corporate performance), see “Compensation Discussion and Analysis—Review of Fiscal 2021 Executive Compensation Based on Prior Corporate Performance.”

We are asking you to indicate your support for the compensation of our named executive officers for fiscal 2020 as described in this Proxy Statement. The vote on this proposal is not intended to address any specific element of compensation but rather relates to the overall compensation of our named executive officers, as described in this Proxy Statement pursuant to Item 402 of Regulation S-K (including in the Compensation Discussion and Analysis, compensation tables and accompanying narrative disclosures). Thus, we ask our stockholders to vote in favor of the following resolution at the 2020 Annual Meeting:

“RESOLVED, that the Stockholders of ABIOMED, Inc. APPROVE, on an advisory basis, the compensation paid to the named executive officers, as disclosed in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders, pursuant to Item 402 of Regulation S-K, including the ‘Compensation Discussion and Analysis,’ the compensation tables and accompanying narrative disclosures.”

Our Board of Directors recommends that you vote FOR the non-binding, advisory vote on the compensation of our named executive officers, as disclosed in this Proxy Statement.

 

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Proposal No. 3 – Ratification of Appointment of our Independent Registered Public Accounting Firm

Under rules of the Securities and Exchange Commission (the “SEC”) and The Nasdaq Stock Market LLC (the “Nasdaq Stock Market”), the appointment of our independent registered public accounting firm is the direct responsibility of the Audit Committee of our Board of Directors (the “Audit Committee”). Although ratification by our stockholders of this appointment is not required by law, our Board of Directors believes that seeking stockholder ratification is a good practice, which provides stockholders an avenue to express their views on this important matter.

Our Audit Committee, composed solely of independent directors, has reappointed Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2021. The Audit Committee and the Board of Directors believe that the continued retention of Deloitte & Touche LLP to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its stockholders. Our Board of Directors recommends that stockholders vote to ratify the appointment. If our stockholders do not ratify the appointment of Deloitte & Touche LLP, the Audit Committee may reconsider its decision. Additionally, even if stockholders ratify the appointment, the Audit Committee may, in its discretion, appoint a new independent registered public accounting firm at any time during the year if it believes that such a change would be in the best interest of the Company and its stockholders. For information on the fees paid by us to Deloitte & Touche LLP in the 2019 and 2020 fiscal years, see “Independent Registered Public Accounting Firm Fees.”

We expect that representatives of Deloitte & Touche LLP will attend the 2020 Annual Meeting. They will have an opportunity to make a statement if they wish and will be available to respond to appropriate questions from stockholders who attend the 2020 Annual Meeting.

Our Board of Directors recommends that you vote FOR the proposal to ratify the appointment by our Audit Committee of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2021.

 

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EXECUTIVE OFFICERS AND SENIOR OFFICERS OF OUR COMPANY

Our executive officers are appointed by, and serve at the discretion of, our Board of Directors. There are no family relationships among our directors and executive officers. Our executive officers who are not also directors, as well as certain senior officers, are listed below. For information on Mr. Minogue, see “Continuing Members of the Board of Directors” under Proposal No. 1 – Election of Directors. Ages set forth below are as of June 15, 2020.

 

   

 

TODD A. TRAPP

 

LOGO

 

      Vice President and Chief

      Financial Officer

 

      Age: 49

 

 

 

Principal Occupation and Other Information

 

Mr. Trapp was appointed as our Vice President and Chief Financial Officer on April 9, 2018. He currently oversees the Finance, IT and Human Resources functions. From April 2015 to March 2018, Mr. Trapp served as Chief Financial Officer of Watts Water Technologies, Inc., where he was responsible for the global finance and IT operations. Prior to joining Watts Water Technologies, Mr. Trapp spent 13 years in a variety of financial and operational roles at Honeywell International Inc., including as Vice President of Global Financial Planning and Analysis, Chief Financial Officer of the Airlines Business Unit, Director of Finance for the Transportation Systems Business Group, Investor Relations Manager and other finance management positions. Prior to joining Honeywell, Mr. Trapp held several treasury and finance operational roles at United Business Media, Inc. and Pearson Inc. Mr. Trapp received his Bachelor of Science in Accounting from Providence College and his Master of Business Administration in Finance from Northeastern University. He is also Six Sigma Green Belt certified.

 
 

 

   

 

DAVID M. WEBER

 

LOGO

 

      Senior Vice President and

      Chief Operating Officer

 

      Age: 58

 

 

 

Principal Occupation and Other Information

 

Dr. Weber joined us in April 2007 as our Senior Vice President and Chief Operating Officer. Prior to joining us, Dr. Weber served as General Manager, Aviation Business at GE Security - Homeland Protection from April 2005 until April 2007 where he led GE Security’s Aviation and Transportation Business and was responsible for product development, marketing and sales. From June 2004 until April 2005, he served as General Manager, MRI Marketing at GE Healthcare where he was responsible for strategic product planning, go-to-market and product launch activities, including developing product roadmaps and introducing new product technologies to the market, and from March 2001 until June 2004, he served as Manager, Global High Field MRI Business, GE Medical Systems where he was responsible for new product planning and development. Dr. Weber received his Bachelor of Science in Physics from Denison University, his Bachelor of Science in Nuclear Engineering from Columbia University, his Master of Science in Medical Physics from the University of Wisconsin and his Doctor of Philosophy in Medical Physics from the University of Wisconsin.

 

 
       

 

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ANDREW J. GREENFIELD

 

LOGO

 

      Vice President and Chief

      Commercial Officer

 

      Age: 47

 

 

 

Principal Occupation and Other Information

 

Mr. Greenfield was appointed as our Vice President and Chief Commercial Officer in April of 2019. He joined us in 2005 and prior to this recent appointment, served as Vice President and General Manager, Global Marketing. In addition to overseeing our global commercial operations, Andrew oversees government affairs, reimbursement, global marketing, Asia Pacific and physician programs. Before joining us, Mr. Greenfield held positions in sales, marketing and finance at GE Healthcare including consulting with large U.S. health systems, eCommerce and Six Sigma from 1999 to 2005. Prior to GE Healthcare, he held positions in sales, marketing and finance at The Boeing Company, including European Country Manager, and is a graduate of the Fiscal Development Program. He received his Bachelor Degree in Finance from the University of Illinois and his Master of Business Administration degree from St. Louis University. Mr. Greenfield also holds a Master Blackbelt in Six Sigma and Change Acceleration Process certification from GE.

 

 
 

 

   

 

MICHAEL G. HOWLEY

 

LOGO

 

      Vice President and General

      Manager, Global Sales

 

      Age: 56

 

 

 

Principal Occupation and Other Information

 

Mr. Howley joined us in March 2009 and serves as our Vice President and General Manager, Global Sales. Prior to joining us, Mr. Howley spent 20 years at GE Healthcare. From February 2006 to February 2009, he was General Manager at GE Healthcare, overseeing the Americas X-ray and Interventional Radiology division. From April 2004 to February 2006, Mr. Howley held the General Manager position for the Clinical Information Systems at GE. From October 2002 to April 2004, he was the Americas Sales Manager of Functional and Molecular Imaging. Prior to this role, Mr. Howley held several other national and regional sales positions at GE, beginning in 1989. Mr. Howley received his Bachelor of Science in Business Administration and Marketing from Auburn University.

 
       

 

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MARC A. BEGAN

 

LOGO

 

      Vice President, General

      Counsel and Secretary

 

      Age: 53

 

 

 

Principal Occupation and Other Information

 

Mr. Began joined us in June 2018 and serves as our Vice President, General Counsel, and Secretary responsible for leading the Company’s legal, compliance and business development functions worldwide. Mr. Began joined us from Boehringer Ingelheim where he was Vice President of intellectual property responsible for medical device, pharmaceutical, and biologic intellectual property issues. Before joining Boehringer Ingelheim, Mr. Began held various positions of increasing responsibility at Novo Nordisk during a 15-year period. Before joining Novo Nordisk, Mr. Began was an associate at the law firms of Sullivan & Cromwell LLP and White & Case LLP in New York, where he handled a broad range of legal matters, including litigation, intellectual property, corporate transactions, regulatory and compliance. Mr. Began earned a Juris Doctor degree from Albany Law School at Union University and holds a Bachelor of Science degree in mechanical engineering from Rensselaer Polytechnic Institute.

 
       

 

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THE BOARD OF DIRECTORS AND CERTAIN GOVERNANCE MATTERS

 

Our Board of Directors oversees the management of our business and affairs, as provided by Delaware law, and conducts its business through meetings of the Board of Directors and four standing committees: Audit, Compensation, Governance and Nominating and Regulatory and Compliance. In addition, from time to time, special committees may be established under the direction of the Board of Directors when necessary to address specific issues.

Corporate Governance Highlights

Our commitment to good corporate governance is reflected in several practices of our Board of Directors and committees, as described below.

BOARD COMPOSITION AND ACCOUNTABILITY

 

 

 

  Independence

  

 

All of our directors and director nominees, other than our Chairman, President and Chief Executive Officer, are independent under the applicable standards.

 

 

  Committee independence

  

 

All committees are comprised of independent directors.

 

 

  Independent Lead Director

  

 

The Board has an independent Lead Director, because the Chairman of the Board is a non-independent Board member.

 

 

  Executive sessions

  

 

Independent members of the Board and each of the committees are expected to meet at least twice per year in executive session with no members of management present.

 

 

  Risk oversight

  

 

The Board and committees annually review their oversight of risk and the allocation of risk oversight among the committees.

 

 

  Board evaluation

  

 

Each of the Board and its committees evaluates and discusses its respective performance and effectiveness annually.

 

 

  Diversity of skills

  and experience

  

 

The composition of the Board encompasses a broad range of skills, expertise, industry knowledge and diversity.

 

 

  Board tenure

  

 

The Board’s balanced approach to refreshment results in an appropriate mix of long-serving and newer directors.

 

BOARD COMPENSATION

 

 

 

  Time-vesting restricted

  stock units (“RSUs”)

  

 

Each of our non-employee directors currently receives more than 50% of his or her annual compensation from us in the form of RSUs (based on the grant date fair value of $200,000 annual grants).

 

 

  Director stock ownership

  guidelines

  

 

Each of our directors is required to beneficially own shares of our common stock with the equivalent value, as of the acquisition date, of at least five times his or her aggregate annual cash retainer, by the date of the fifth anniversary of his or her appointment.

 

 

  Compensation review

  

 

The Compensation Committee reviews the appropriateness of our director compensation.

 

 

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Board Leadership

How We Select Our Leadership Structure

The Board of Directors is of the view that “one size” does not fit all, and thus does not have a formal policy regarding whether the same person should serve as both the Chief Executive Officer and Chairman of the Board. One leadership structure is not more effective at creating long-term stockholder value, and the decision of whether to combine or separate the positions of Chief Executive Officer and Chairman should vary company to company, depending upon a company’s particular circumstances at a given point in time. Specifically, an effective governance structure must balance the powers of the Chief Executive Officer and the independent directors and ensure that the independent directors are fully informed, ready to discuss and debate the issues that they deem important, and are able to provide effective oversight of management. Our Board of Directors also believes that it should retain the flexibility to make this determination in the manner it feels will provide the most appropriate leadership for the Company from time to time. Our Chairman is appointed annually by the Board.

Our Current Board Leadership Structure

 

 

  Michael R. Minogue

  Chairman, President and Chief

  Executive Officer

  

Mr. Minogue serves as Chairman of our Board of Directors and our President and Chief Executive Officer and has held such positions for the past 16 years. The combined role of Chairman and Chief Executive Officer, in the case of the Company, means that the Chairman of the Board has longstanding experience in our industry and ongoing executive responsibility with the Company. This experience enables the Board of Directors to understand the Company better and work with management to enhance stockholder value. In addition, the Board of Directors believes that this structure allows it to fulfill more effectively its risk oversight responsibilities and enhances the ability of the Chairman, President and Chief Executive Officer to communicate effectively the view of the Board of Directors to management.

 

 

  Dorothy Puhy

  Lead Director

  

 

In October 2005, our Board of Directors designated Dorothy Puhy as its Lead Director. The position of Lead Director is to be held by one of our independent directors and has responsibilities beyond those of the other directors, including but not limited to:

 

•   Board leadership-organizing and chairing executive sessions of independent directors

 

•   Chief Executive Officer compensation-working with the Compensation Committee to set performance goals for our Chairman, President and Chief Executive Officer and to evaluate his performance for the prior year;

 

•   Chairman-independent director liaison-acting as a liaison between the Chairman and the Board of Directors; and

 

•   Chief Executive Officer succession planning-leading an annual discussion of succession planning with the Chief Executive Officer and our chair of the Governance and Nominating Committee.

 

The Board believes that the responsibilities of the Lead Director help to ensure appropriate oversight of the Company’s management by the Board and optimal functioning of the Board. The effectiveness of the Lead Director is enhanced by the Board’s independent character. For more information, see “Director Independence.”

 

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Director Independence

 

Our Board of Directors has affirmatively determined that, other than Mr. Minogue, who is our Chairman, President and Chief Executive Officer, none of our directors or director nominees has a material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us. Therefore, under the applicable rules of the Nasdaq Stock Market, all of the members of our Board of Directors, other than Mr. Minogue, are “independent directors.” Additionally, each member of our Audit Committee, Compensation Committee and Governance and Nominating

  

LOGO

Committee is an “independent director” under the rules of the Nasdaq Stock Market applicable to such committees. In connection with its independence determination, the Board of Directors considered that:

 

  Director

 

 

Relationship

 

 

  Christopher D. Van Gorder, FACHE

 

 

Mr. Van Gorder is Chief Executive Officer of Scripps Health, which purchases our products and services. We recognized $1.4 million in revenues from Scripps Health during the fiscal year ended March 31, 2020, which represented less than 1% of our revenues for such year. We expect Scripps Health will continue to purchase our products in the future. The Board did not consider these amounts as impairing Mr. Van Gorder’s independence, insofar as they represented less than 1% of our total revenues in the 2020 fiscal year, and we do not depend on Scripps Health for any significant aspect of our business.

 

Expectations for Members of our Board of Directors

Directors are expected to attend Board and committee meetings on which they serve, and to meet as frequently as necessary in order to properly discharge their responsibilities.

Service on Other Boards

The Company values the experience that our directors bring from other boards on which they serve, but recognizes that those boards may also present demands on a director’s time and availability and may present conflicts or legal issues. Thus, we have adopted a policy stating that no director of this Company may simultaneously serve as a director of more than four public companies (including the Company), and that any director who is a named executive officer of a public company may not serve simultaneously as a director of more than two public companies (including the Company). Additionally, no member of the Board of Directors may become a director on any other public company board without discussing it with the Chairman of the Board of Directors and receiving the prior approval of the Governance and Nominating Committee.

Under this policy, no member of the Board of Directors may (i) become a member of the board of any private or non-profit company with which the Company has any substantial relationship or (ii) accept any affiliation with any other business or governmental unit with which the Company has any substantial relationship, in the case of either clause (i) or clause (ii), without discussing it with the Chairman of the Board of Directors and receiving the prior approval of the Chair of the Governance and Nominating Committee or the subsequent ratification of the Governance and Nominating Committee.

Attendance at Annual Meetings of Stockholders

It is our policy that, to the extent reasonably practicable, directors should attend our annual meetings of stockholders. All of our directors who were serving on our Board at the time of our 2019 Annual Meeting of Stockholders attended that meeting. We expect that our directors will attend the 2020 Annual Meeting via teleconference in light of public health concerns relating to the ongoing COVID-19 outbreak.

 

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Attendance at Board and Committee Meetings

The Board takes seriously the attendance of directors at meetings of the Board and committees of which they are members. The Board expects that directors will dedicate sufficient time and attention to ensure diligent performance of their duties and will interact with each other in real-time to encourage open and inspired discussion. During the fiscal year ended March 31, 2020, our Board of Directors held four meetings. Additionally, in accordance with the corporate governance standards of the Nasdaq Stock Market, our independent directors are expected to meet without management present at least twice per year. During the fiscal year ended March 31, 2020, the independent directors held four meetings without management present.

Each director attended at least 75% of the combined number of meetings of the Board of Directors, including, as applicable, meetings of the independent directors and meetings of committees on which he or she served, during the period in the 2020 fiscal year in which he or she served as a director or member of such committee, as applicable.

Director Qualification Standards and Selection and Board Composition

The Governance and Nominating Committee is responsible for recommending candidates for all directorships to be filled at stockholder meetings and reviewing the full composition of the Board of Directors and its committees on an annual basis, including directors not up for re-election. While the Governance and Nominating Committee lacks specific, delineated qualifications for the nomination of director candidates and the evaluation of directors not up for re-election, the Committee reviews a number of factors, qualifications and skills it deems appropriate.

 

   

Demonstrated integrity and achievement: Candidates for membership to our Board of Directors, as well as directors sitting on our Board not up for re-election, should possess the highest personal and professional ethics, mature judgment and integrity, the ability to work collegially with the other Board members and demonstrated professional achievement and leadership capabilities.

   

Time and availability: All candidates, as well as directors not up for re-election, must evidence a commitment to devote the substantial time and energy required of productive Board members.

   

Diversity and effective mix of tenures: Ensuring the Board is composed of directors who bring diverse viewpoints and perspectives to our Board, such as skills, professional experience and backgrounds, and who can effectively represent the long-term interests of stockholders, remains a priority of the Board and the Governance and Nominating Committee.

The Board believes that its record on board tenure and diversity reflect this focus on effective board composition.

 

Board Tenure

 

When recommending to the Board the slate of director nominees for election at an annual meeting of stockholders and reviewing directors not up for re-election, the Governance and Nominating Committee strives to maintain a healthy degree of board refreshment and prevent excessive entrenchment, while weighing the strong contributions delivered by directors with deep knowledge of our Company’s history and strategic long-term goals. Since 2016, two new directors have joined our Board.

 

Diversity

 

The Governance and Nominating Committee and the Board seek candidates with a broad diversity of knowledge, experience and demonstrated expertise in an area or areas of importance to our Company, such as management, healthcare, finance, marketing, technology, medicine, human resources, public policy and law. The Governance and Nominating Committee also considers traditional diversity factors such as race and gender, but has no formal policy, guidelines or procedures with respect to consideration of diversity in the nominating process.

 

  

 

 

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Director Selection Process

As part of its recurring activities, including where there are vacancies on our Board of Directors, the Governance and Nominating Committee seeks to identify qualified candidates to sit on the Board of Directors. To identify and recruit qualified candidates for the Board, the Governance and Nominating Committee has previously utilized the services of professional search firms and has also sought referrals from other members of the Board, management, stockholders and other sources. After conducting an initial evaluation of a candidate, one or more members of the Governance and Nominating Committee will interview that candidate if the committee believes the candidate might be suitable to be a director and may also ask the candidate to meet with other directors and management. If the Governance and Nominating Committee believes a candidate would be a valuable addition to the Board of Directors, it will recommend to the full Board of Directors that candidate’s election.

When considering whether the Board’s director nominees and directors not up for reelection have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Governance and Nominating Committee and Board of Directors focus primarily on results of the annual Board and committee evaluations and on the information discussed in each of the Board members’ or nominees’ biographies. In addition, in connection with the nominations of the current slate of director nominees, the Governance and Nominating Committee and Board of Directors considered their valuable contributions to the Company’s success during their years of Board service.

Stockholder Proposals of Candidates for Membership to Our Board of Directors

Our Governance and Nominating Committee will review all candidates for director in the same manner, regardless of the source of the recommendation. Candidates recommended by our stockholders will be considered in accordance with the requirements for such recommendations. See “Stockholder Proposals for 2021” below for additional details.

Committees of the Board of Directors

The Board has established various committees to assist it with the performance of its responsibilities. The Board designates the members of these committees and the committee chairs based on the recommendations of the Governance and Nominating Committee. The chair of each committee develops the agenda for its committee meetings and each committee regularly provides a full report to the Board.

The following table identifies the current members of our Board serving on each of the committees of the Board.

 

DIRECTOR   INDEPENDENT     AUDIT
COMMITTEE(1)
    COMPENSATION
COMMITTEE(2)
    GOVERNANCE
AND
NOMINATING
COMMITTEE
    REGULATORY
AND
COMPLIANCE
COMMITTEE
 

Michael R.

Minogue,

Chairman,

President and Chief

Executive Officer

                                       

Dorothy E. Puhy,

Lead Director

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Jeannine M. Rivet

 

 

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Eric A. Rose

 

 

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Martin P. Sutter

 

 

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LOGO

 

       

Paul G. Thomas

 

 

LOGO

 

         

 

LOGO

 

 

 

LOGO

 

 

 

LOGO

 

Christopher D.

Van Gorder

    LOGO                       LOGO       LOGO  
  (1)

Each member of the Audit Committee is an independent director within the meaning of the applicable rules and regulations of the SEC and the Nasdaq Stock Market, including the enhanced independence requirements applicable to members of audit committees. The Board has determined that each member of the Audit Committee is financially literate within the meaning of the Nasdaq Stock Market listing standards. In addition, the Board of Directors determined that Ms. Puhy, who serves as Chair of the Audit Committee, qualifies as an “audit committee financial expert” within the meaning of the applicable SEC rules and regulations.

 

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  (2)

Each member of the Compensation Committee is an independent director within the meaning of the applicable Nasdaq Stock Market rules, including the enhanced independence requirements applicable to members of compensation committees, and a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.

The Board has adopted written charters for each of the Audit, Compensation, Governance and Nominating and Regulatory and Compliance Committees. These charters are available in the Investor Information section on the Company’s website at www.abiomed.com. The following table summarizes the primary responsibilities of the committees pursuant to each committee’s charter.

 

 

AUDIT COMMITTEE

Meetings held in fiscal 2020: 6

 

The Audit Committee is responsible for:

 

•   the integrity of our financial statements;

•   the appointment, compensation, qualifications, independence and performance of our independent registered public accounting firm, including the pre-approval of audit and non-audit services;

•   compliance with ethics policies and legal and regulatory requirements;

•   the performance of our internal audit function;

•   the scope of our annual audit;

•   the receipt and review of the response by management to any management letter or report from the independent accountants;

•   our financial reporting process and systems of internal accounting and financial controls (including their adequacy and effectiveness); and

•   other items including risk assessment and compliance.

 

The Audit Committee is also responsible for review and approval of any related party transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K. The responsibilities and activities of the Audit Committee are further described in “Report of the Audit Committee” and the Audit Committee charter.

 

 

 

 

COMPENSATION COMMITTEE

Meetings held in fiscal 2020:

6

 

The Compensation Committee is responsible for:

 

•   reviewing our compensation philosophy and annually reviewing our executive compensation program;

•   establishing the compensation for our Chairman, President and Chief Executive Officer and approving the compensation of our executive officers (which is a broader group than our “named executive officers”);

•   evaluating the annual performance of our Chairman, President and Chief Executive Officer and other executive officers;

•   approving grants of equity awards, including stock options, RSUs and performance stock units (“PSUs”), to executive officers (except for where authority for grants to employees, who are not considered “executive officers” under Section 16 of the Exchange Act, is delegated to the Special Stock Award Committee, a non-Board, executive committee);

•   adopting rules and making other determinations with respect to the administration of our equity incentive plans, employee stock purchase plan and 401(k) plan;

•   reviewing and recommending to the Board of Directors the compensation for our directors;

•   overseeing compliance with SEC rules and regulations regarding stockholder approval of executive compensation matters; and

•   approving the “Compensation Discussion and Analysis” in accordance with applicable rules of the SEC.

 

In fulfilling its responsibilities, the Compensation Committee can delegate any or all of its responsibilities to a subcommittee of the committee consisting of two or more members. Our Lead Director, Dorothy E. Puhy, participates in meetings of the Compensation Committee as described above under “Board Leadership—Our Current Board Leadership Structure.” The Compensation Committee is authorized to retain and terminate compensation consultants, legal counsel or other advisors to the committee and to approve the engagement of any such consultant, counsel or advisor, to the extent it deems necessary after specifically analyzing the independence of any such consultant retained by the committee. A report of the Compensation Committee is set forth on page 51 of this Proxy Statement.

 

 

 

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GOVERNANCE AND NOMINATING COMMITTEE

Meetings held in fiscal 2020: 4

 

The Governance and Nominating Committee is responsible for:

 

•   developing policies and procedures relating to the consideration of director candidates proposed by stockholders;

•   making recommendations to the Board regarding the size, structure and functions of the Board and its committees;

•   determining the selection criteria for new directors and identifying and recommending new director nominees in accordance with those selection criteria;

•   reviewing and monitoring the succession plan for the Chairman, President and Chief Executive Officer and assuring that the Chairman, President and Chief Executive Officer has obtained succession plans for the senior officers of the Company;

•   conducting the annual evaluation of the performance of the Board, its committees and each director; and

•   developing and recommending corporate governance policies and procedures appropriate to the Company.

 

 

 

 

REGULATORY AND COMPLIANCE COMMITTEE

Meetings held in fiscal 2020: 4

 

The Regulatory and Compliance Committee receives regular reports from the Company’s Chief Compliance Officer and is responsible for:

 

   assisting the Board of Directors with the oversight of significant healthcare-related regulatory and compliance issues (such as healthcare fraud and abuse laws, the U.S. Federal Food, Drug and Cosmetic Act and the Health Insurance Portability and Accountability Act, and foreign laws on the same topics of the jurisdictions where we market and/or sell our products) by overseeing, evaluating and monitoring the Company’s compliance policies, standards, procedures, systems and initiatives; and

   providing recommendations, reports and guidance to the Board of Directors regarding the Company’s compliance with applicable laws, rules and regulations.

 

 

Board and Committee Assessments

The Governance and Nominating Committee evaluates each director to obtain his or her assessment of the effectiveness of the Board and each committee of the Board on which he or she sits. Separate written questionnaires are circulated for the full Board and for each of the four committees of the Board. This is intended to be an annual process. The purpose of these assessments is to identify opportunities for improvement on a number of relevant metrics such as composition, conduct of meetings, relationship between the Board and management, quality and extent of resources, succession planning and strategy and performance. The Chair of the Governance and Nominating Committee, with the assistance of management, conducts the evaluation through these questionnaires, reviews all of the responses and reports the results to the Governance and Nominating Committee.

The Governance and Nominating Committee then summarizes the evaluations and identifies areas in which the Board and its committees could improve its performance and discusses its findings with the Board and each of the other committees. The Governance and Nominating Committee also evaluates the composition of the Board to ensure that its members have the requisite skills, experience and diversity to oversee the business of the Company effectively.

 

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The written questionnaires for the Board and each committee focus on the following topics:

 

 

our Board’s and each committee’s overall responsibilities and effectiveness;

 

 

the structure and composition of our Board and each committee (including organization, size, operation, qualifications and diversity);

 

 

Board culture (both in executive session, as well as in connection with and access to management and advisors);

 

 

preparedness of Board members ahead of Board and committee meetings;

 

 

the effectiveness of the performance by the Board and each committee of the duties assigned to it and/or required by relevant rules;

 

 

oversight of and openness of communication with management, independence from management and effectiveness of involvement in the Company’s business and affairs;

 

 

the adequacy and quality of information, and access to and oversight of outside advisors such as auditors and consultants as applicable, provided to our Board and each committee; and

 

 

the Board’s and each committee’s overall policies, processes and procedures.

Engagement with Stockholders

Our Board and management value the perspectives of our stockholders and work to provide our stockholders with continuous and meaningful engagement. Our Chairman, President and Chief Executive Officer and our Chief Financial Officer have made communication with our stockholders and analysts a priority, and the Board receives relevant feedback from stockholders directly and promptly.

We regularly attend investor conferences and hold one-on-one meetings with stockholders and potential investors throughout the United States as well as overseas. In addition, we have telephonic meetings with stockholders and analysts and review correspondence submitted by stockholders to management and/or the Board.

In fiscal year 2020, in addition to our normal investor relations effort, we contacted, including with an offer to meet in person or by phone, stockholders representing more than 65% of our outstanding shares, which included 10 of our largest stockholders. Holders of approximately 10% of our outstanding shares indicated no discussion was needed and holders of an additional 15% our outstanding shares did not respond to our offers to connect. We ultimately had conversations with stockholders of approximately 40% of our outstanding shares, including six of our largest stockholders, on executive compensation and related corporate governance issues. This outreach formed part of our response to the adverse vote we received for our fiscal 2019 “say-on-pay” vote. For more information about our stockholder outreach efforts, specifically related to our executive compensation program, see “Compensation Discussion and Analysis—Review of Fiscal 2021 Executive Compensation Based on Prior Corporate Performance.”

Board Role in Risk Oversight

The Company is exposed to various risks including, but not limited to, strategic, operational, financial, liquidity and reputational risks. There are additional risks relating to reporting, pending and threatened product liability and intellectual property litigation, and regulatory and legal compliance. The Company’s enterprise risk profile is also affected by the success of our clinical trials, the actions of distributors of our products, the availability of third-party reimbursement for our products and changes in government regulation or in our receipt/maintenance of required regulatory approvals.

Our Board of Directors, as a whole, has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant Board committees that report on their deliberations to the Board of Directors. The oversight responsibility of the Board of Directors and its committees is enabled by management reporting to the Board of Directors about the identification, assessment and management of critical risks and management’s risk mitigation strategies. In particular, the Company’s Chief Financial Officer, at the direction of the Chairman, President and Chief Executive Officer, is responsible for overseeing the Company’s enterprise risk management process and periodically

 

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reports enterprise risk information to each of the Chairman, President and Chief Executive Officer, the Audit Committee and the Board of Directors. In fulfilling his risk management responsibilities, the Chief Financial Officer works closely with members of the senior management team, including the Company’s Chief Operating Officer, General Counsel and Secretary, and Corporate Controller. The Audit Committee discusses policies with respect to risk assessment and risk management, and the Company’s Chief Financial Officer meets with the Audit Committee from time to time to discuss specifically the enterprise risks facing the Company. Additionally, at certain Board of Directors meetings, the Chairman, President and Chief Executive Officer and/or Chief Financial Officer report information about major risks facing the Company.

 

 Board/Committee

  

Primary Areas of Risk Oversight

 Board of Directors

   Strategic, financial and execution risks and exposures associated with the annual operating plan, budget and longer-term strategic plan; litigation and regulatory exposures and other current matters that may present material risk to our operations, plans, prospects or reputation; acquisitions and divestitures; and senior management succession planning.

 Audit Committee

   Risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, audit oversight, internal control over financial reporting, financial policies, investment guidelines and liquidity matters, as well as cybersecurity matters.

 Governance and Nominating Committee

   Risks and exposures relating to our corporate governance and director succession planning.

 Compensation Committee

   Risks and exposures associated with executive compensation programs and arrangements, including incentive plans.

 Regulatory and Compliance Committee

   Risks and exposures associated with our compliance with regulatory and other applicable laws, rules and regulations governing our development, approval and sale of medical device products, both in the U.S. and internationally.

Director Resignation Policy

Directors are elected by a plurality of the votes cast in both contested elections (elections in which the number of nominees is greater than the number of Board seats open for election) and uncontested elections (elections in which the number of nominees does not exceed the number of Board seats open for election). However, for uncontested elections of directors, our Board of Directors has adopted a director resignation policy. In accordance with this policy, the Board of Directors will nominate for election or re-election only candidates who agree to tender, immediately following the annual meeting at which such candidate is a nominee for election/re-election, an irrevocable offer of resignation that will take effect if, in an uncontested election of directors, the nominee receives a greater number of votes “withheld” from his or her election than votes “for” his or her election. The offer of resignation is understood to be conditional upon acceptance by the Board of Directors, following consideration of the offer by the Board and the Governance and Nominating Committee.

Where a nominee fails to receive the required number of votes for reelection and the resignation offer takes effect, the Governance and Nominating Committee must promptly consider the offer and recommend to the Board of Directors whether to accept or reject it. The Board of Directors then must, within 90 days following certification of the stockholder vote, act on the Governance and Nominating Committee’s recommendation and disclose in a filing with the SEC or a widely-disseminated press release the Board’s action and reasons for taking that action.

The Board of Directors may consider any factors or information it deems relevant. In addition, the Governance and Nominating Committee and the Board of Directors may consider a range of alternatives in determining what action to take, including but not limited to: (i) accepting the resignation; (ii) rejecting the resignation, including with conditions for the director’s continued service; (iii) rejecting the resignation to allow the director to remain on the Board of Directors but agreeing that the director will not be nominated for re-election upon expiration of the director’s term; or (iv) deferring acceptance of the director’s resignation until the Board of Directors can find a replacement director with the necessary qualifications to fill the vacancy that accepting the resignation would create.

Code of Conduct and Compliance Policy

All of our directors, officers and employees are expected to act ethically, legally and with integrity at all times and are obligated to comply with our Code of Conduct and Compliance Policy, as well as our other policies and standards of

 

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conduct. The Code of Conduct and Compliance Policy constitutes a “code of ethics” under the applicable rules of the SEC. A copy of our Code of Conduct and Compliance Policy is available in the Investor Information section of our website at www.abiomed.com, and may also be obtained, without charge, by submitting a written request to our General Counsel at ABIOMED, Inc., 22 Cherry Hill Drive, Danvers, Massachusetts 01923. We intend to disclose any future amendments to, or waivers from, the Code of Conduct and Compliance Policy within four business days of the waiver or amendment through a website posting to the extent required by the rules and regulations of the SEC.

Communications with Directors

Stockholders and other interested persons may send communications to the directors on our Board. Those interested in communicating with one member of the Board of Directors or a group of such members, including the Lead Director of the Board, the Governance and Nominating Committee, the Compensation Committee, the Regulatory and Compliance Committee, the non-employee directors as a group or the Audit Committee, should address their written correspondence in care of the Vice President, General Counsel and Secretary at ABIOMED, Inc., 22 Cherry Hill Drive, Danvers, Massachusetts 01923 and specify in the correspondence to whom on the Board of Directors the correspondence is directed. Complaints or concerns relating to our financial reporting, accounting, internal accounting controls or auditing will be referred to the Chair of our Audit Committee. Correspondence will then be directed to the group of directors, or to an individual director, as appropriate.

Compensation of Directors

The Compensation Committee, with input from its independent compensation consultant, periodically reviews and evaluates director compensation and makes recommendations to the Board. Our Board reviews director compensation periodically to ensure that the director compensation package remains competitive such that we are able to recruit and retain qualified directors.

Non-Employee Director Compensation Program

The following conveys compensation paid to our directors for fiscal 2020:

 

 

NON-EMPLOYEE DIRECTOR COMPENSATION

 

 
     

Form of
Compensation*

 

    

Amount of
Compensation

 

 

 

     

 

     

 Annual retainer (all non-employee directors)

 

    

 

Cash or common stock

 

 

 

    

 

$50,000

 

 

 

 Annual stock retainer (all non-employee directors)

    





 

Time-vesting RSUs
(vesting on earlier of

(i) first anniversary of
grant or (ii) annual
meeting of
stockholders post-
grant)

 

 
 

 
 
 

 

 

    
$200,000 in grant
date fair value
 
 

 Lead Director

 

    

 

Cash or common stock

 

 

 

    

 

$25,000

 

 

 

 Chair of Audit Committee

 

    

 

Cash or common stock

 

 

 

    

 

$20,000

 

 

 

 Chair of Compensation Committee

 

    

 

Cash or common stock

 

 

 

    

 

$15,000

 

 

 

 Chair of Governance and Nominating Committee

 

    

 

Cash or common stock

 

 

 

    

 

$10,000

 

 

 

 Chair of Regulatory and Compliance Committee

 

    

 

Cash or common stock

 

 

 

    

 

$10,000

 

 

 

 Members of Audit Committee

 

    

 

Cash or common stock

 

 

 

    

 

$10,000

 

 

 

 Members of Compensation Committee

 

    

 

Cash or common stock

 

 

 

    

 

$7,500

 

 

 

 Members of Governance and Nominating Committee

 

    

 

Cash or common stock

 

 

 

    

 

$5,000

 

 

 

 

     

 

     

 Time-vesting RSU grant upon initial appointment (vesting ratably over three years on each anniversary of  grant)

 

    


 

Time-vesting RSUs
(vesting ratably over
three years on each
anniversary of grant)

 

 
 
 
 

 

    

 

$250,000 in grant
date fair value

 

 
 

 

* Where “cash or common stock” is shown, director may choose between either alternative.

 

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In addition, we provide reimbursement to our non-employee directors for their reasonable expenses related to their service as a member of the Board of Directors and any committees thereof.

We also currently have a non-employee director retirement policy that provides for the accelerated vesting of all stock options, RSUs and other equity awards held by a non-employee director if he or she permanently ceases his or her service on our Board of Directors by reason of death, disability or the non-employee director’s retirement following at least five years of service and so long as his or her age plus years of service equals or exceeds 65.

Dr. W. Gerald Austen has served as Director Emeritus of the Company since August 2016. Prior to serving as Director Emeritus, Dr. Austen served on the Company’s Board of Directors for 31 years. In exchange for his service as Director Emeritus, Dr. Austen receives an annual cash retainer equal to the retainer received by other non-employee directors, and an additional annual retainer of $5,000 for his participation in meetings of the Governance and Nominating Committee. In addition, Dr. Austen is eligible for equity grants on the same basis as non-employee directors. In connection with Dr. Austen’s transition to Director Emeritus, his equity awards that were outstanding and unvested as of the expiration of his term as a director on August 10, 2016 continue to remain outstanding and eligible to vest according to their terms so long as Dr. Austen continues to serve as Director Emeritus of the Company. Dr. Austen is the Edward D. Churchill Distinguished Professor of Surgery at Harvard Medical School, Surgeon-in-Chief-Emeritus at Massachusetts General Hospital and Chairman of the Massachusetts General Hospital Chiefs Council.

As previously disclosed in our 2020 Annual Report, to mitigate the business impact of the COVID-19 pandemic on our financial operations, our Board of Directors reduced all first quarter cash retainers for fiscal 2021 by 50% compared to fiscal 2020. These actions, among others, were designed to preserve full-time jobs, preserve cash and retain our ability to ramp up quickly when demand returns, while at the same time continuing to invest in innovation. Along with our other cost-related actions, including salary reductions for our employees, these decreases in cash retainers are intended to last through the first quarter of fiscal 2021, but may be extended as we continue to monitor the environment.

Director Compensation Table

The following table provides information regarding the compensation earned by our non-employee directors with respect to the fiscal year ended March 31, 2020. The compensation of Michael R. Minogue, our Chairman, President and Chief Executive Officer is reported below under the heading “Executive Compensation.”

Compensation of Non-Employee Directors

for the Year Ended March 31, 2020

 

  Name

   Fees Earned or
    Paid in Cash ($)    
       Stock Awards    
($)(1)
           Total ($)        

  W. Gerald Austen(2)

       55,000        199,996        254,996

  Dorothy E. Puhy

       95,000        199,996        294,996

  Jeannine M. Rivet

       67,500        199,996        267,496

  Eric A. Rose

       60,000        199,996        259,996

  Martin P. Sutter

       67,500        199,996        267,496

  Paul G. Thomas

       70,000        199,996        269,496

  Christopher D. Van Gorder

       65,000        199,996        264,996
  (1)

Amounts shown represent the aggregate grant date fair value of 1,053 RSUs granted on August 7, 2019 to each non-employee director under the Second Amended and Restated 2015 Omnibus Incentive Plan (the “2015 Plan”). In each case, amounts were computed in accordance with FASB ASC Topic 718, based on the fair market value of the underlying stock on the grant date. Please refer to Note 11 of our consolidated financial statements in our annual report on Form 10-K for the year ended March 31, 2020 (the “2020 Annual Report”), as filed with the SEC, for further discussion related to the assumptions used in our valuation.

  (2)

Dr. Austen serves as Director Emeritus.

 

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The following table provides a summary of the aggregate number of unexercised stock options and unvested RSUs outstanding for each of our non-employee directors as of March 31, 2020.

 

  Name

   Unexercised
Options
        Outstanding        
         Unvested RSUs    
Outstanding
 

  W. Gerald Austen(1)

     —            1,053      

  Dorothy E. Puhy

     —            1,053      

  Jeannine M. Rivet

     —            1,053      

  Eric A. Rose

     —            1,053      

  Martin P. Sutter

     12,000            1,053      

  Paul G. Thomas

     —            1,053      

  Christopher D. Van Gorder

     —            1,053      
  (1)

Dr. Austen serves as Director Emeritus.

Director Stock Ownership Guidelines

We have stock ownership guidelines that require each director to beneficially own shares of our common stock (including common stock held in trust, by certain family members or in the Company’s 401(k) plan and stock underlying unvested RSUs or restricted stock awards, but excluding stock underlying options or stock appreciation rights and unvested or unearned PSUs or other performance stock awards) with the equivalent value, as of the acquisition date, of at least five times the aggregate annual cash retainer for a director. Each director is required to achieve such stock ownership requirements by the date of the fifth anniversary of such director’s appointment. Until the required ownership level is reached, directors are required to retain at least 50% of the shares, net of applicable tax withholding and the payment of any exercise or purchase price (if applicable), received upon the vesting or settlement of equity awards or the exercise of stock options. As of March 31, 2020, all of our directors had met the stock ownership requirement.

 

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

Our Compensation Committee consists of Paul G. Thomas (Chair), Jeannine M. Rivet and Martin P. Sutter. No member of our Compensation Committee is a former or current officer or employee of the Company. Our Lead Director, Dorothy E. Puhy, participates in meetings of the Compensation Committee as described above under “The Board of Directors and Certain Governance Matters—Lead Director.” Mr. Minogue, while not a member of the Compensation Committee, makes recommendations to the Compensation Committee regarding the compensation of executive officers other than himself and often participates in the Compensation Committee’s deliberations, but does not vote on such matters. None of our executive officers currently serves, or has served during the 2020 fiscal year, as a member of the board of directors or compensation committee (or other committee serving an equivalent function) of any entity that has one or more executive officers serving as members of our Board of Directors or Compensation Committee.

 

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COMPENSATION OF EXECUTIVE OFFICERS

 

Compensation Discussion and Analysis

Overview

This Compensation Discussion and Analysis (CD&A) describes the compensation philosophy, policies and practices associated with our executive compensation program for fiscal 2020 and the context in which compensation-related decisions were made in relation to fiscal 2020 for the “named executive officers” listed below. It also outlines certain aspects of our executive compensation program for fiscal 2021, which was crafted based on our performance and the results of last year’s “say-on-pay” stockholder vote on executive compensation.

Our Named Executive Officers in Fiscal 2020

The following individuals were named executive officers in fiscal 2020:

 

  Named Executive Officer

 

    

Title

 

  Michael R. Minogue

 

    

Chairman, President and Chief Executive Officer

  Todd A. Trapp

 

    

Vice President and Chief Financial Officer

  Andrew J. Greenfield

 

    

Vice President and Chief Commercial Officer

  David M. Weber

 

    

Senior Vice President and Chief Operating Officer

  Michael G. Howley

 

    

Vice President and General Manager of Global Sales

Executive Summary

Performance Highlights

 

   

Financial Performance – ABIOMED’s disciplined financial approach and execution has allowed the Company to achieve substantial year-over-year increases over the last five years in key financial metrics including total revenue, GAAP operating income, GAAP operating margin, operating cash flow and cash. This performance is against a backdrop of success in significantly increasing investments in growth initiatives, delivering on critical milestone achievements, and, most recently, navigating the presenting challenges associated with the COVID-19 pandemic.

 

   

Revenue increased to $841 million in fiscal 2020, growing 9% over fiscal 2019, while facing external headwinds and the COVID-19 pandemic. Despite these impacts, this revenue growth was at the 60th percentile among the companies in our compensation peer group (as listed under below “Compensation Peer Group” and referred to in this Proxy Statement as our “Peer Group”).

 

   

GAAP operating margin was 29.6% in fiscal 2020, an increase of 40 basis points over fiscal 2019 driven by solid revenue growth and operating efficiencies across the organization. The 29.6% operating margin was the highest among our Peer Group. GAAP operating income increased from $65M in fiscal year 2016 to $249 million in fiscal year 2020, a 40% CAGR.

 

   

Operating cash flow was $315 million in fiscal 2020, an increase of 25% over fiscal 2019 due to our strong operating performance.

 

   

Cash grew to $651 million, an increase of 27% over fiscal 2019; the Company continues to have no debt and takes a disciplined approach to capital deployment in order to drive long-term sustainable growth.

 

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Revenue ($M)    Operating Income ($M) & Margin (%)

LOGO

  

LOGO

 

Operating Cash Flow ($M)    Cash ($M)

LOGO

  

LOGO

 

   

Total Stockholder Return (“TSR”) – Over the period of ten years (as of March 31, 2020), ABIOMED’s cumulative TSR ranks above the 75th Peer Group percentile and significantly above the S&P 500 index.

 

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LOGO

 

   

Business Achievements – Other key performance milestones in fiscal 2020 included:

   

Regulatory Approvals:

 

We received approval from the U.S. Food and Drug Administration (“FDA”) for the Impella 5.5® with SmartAssist.

 

For the Impella 5.0® and Impella LD®, we received extended duration of use to 14 days for cardiogenic shock derived from acute myocardial infarction (AMI) or cardiomyopathy.

   

Clinical Outcomes: We announced results of the following studies:

 

PROTECT III, the ongoing, prospective, single-arm FDA post-approval study for the pre-market approval (PMA) of the Impella 2.5 and Impella CP devices in high-risk percutaneous coronary intervention (“PCI”). PROTECT III demonstrates a reduction in the primary endpoint of death, stroke, myocardial infarction and repeat procedures at 90 days with Impella-supported Protected PCI, compared to PROTECT II.

 

Study by Al-khadra et al., published in Catheterization & Cardiovascular Interventions, showing that of 21,848 non-emergent, high-risk patients who underwent PCI with percutaneous ventricular assist devices (“PVADs”), including the Impella, PVAD patients had a lower rate of mortality and complications than patients who underwent PCI with intra-aortic balloon pumps (IABPs).

   

Clinical Trials:

 

We received FDA approval for the initiation of the STEMI DTU Pivotal Randomized Controlled Trial, and the first patients were enrolled in the trial.

   

International Business Expansion:

 

We announced that we have supported 1,000 patients in Japan with our Impella heart pumps.

   

Product Launches:

 

We announced the launch of the Impella SmartAssist® Platform in both the United States and Europe.

 

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Compensation Program Highlights

Our Compensation Philosophy and Fiscal 2020 Compensation

The primary objectives of our executive compensation program include:

 

tying executive compensation to performance objectives and long-term stockholder returns;

attracting, retaining and motivating key executives with compensation that is competitive with our peers; and

rewarding superior financial, strategic and operational performance that is achieved in a manner consistent with our team-oriented values and corporate goals.

We have a strong pay-for-performance culture, which has benefited our stockholders over the long term. This is evident in the fact that ABIOMED was one of the top three performers listed on the Nasdaq Stock Market over the last decade. As shown above in the graphs, over the last five years, our Company has been one of the fastest growing (revenue CAGR of 26%), most GAAP profitable (GAAP operating income CAGR of 40%) MedTech companies in the industry.

As part of this pay-for-performance culture, the Company consistently sets aggressive and difficult-to-achieve goals. For example, in fiscal 2020, the performance goals of our PSUs and annual cash incentive awards required absolute revenue growth in the upper quartile of our Peer Group. Despite our delivering 9% revenue growth (at the 60th percentile of Peer Group) and 29.6% GAAP operating margin (the highest amongst our Peer Group), our PSUs were paid out at zero percent. The below table shows the realizable value of fiscal 2020 equity awards, based on the zero percent PSU payout and the underwater value of fiscal 2020 stock options as of March 31, 2020.

 

NAMED EXECUTIVE OFFICER

 

  

AMOUNTS GRANTED

Expected Value of All Awards(1)

 

  

REALIZABLE VALUE

Actual Value of All Awards Paid(2)

 

  Michael R. Minogue

  

$14,936,234

  

        $0

  Todd A. Trapp

  

$2,272,218

  

        $0

  Andrew J. Greenfield

  

$2,272,218

  

        $0

  David M. Weber

  

$1,909,560

  

        $0

  Michael G. Howley

  

$1,184,243

  

        $0

 

  (1)

Includes grant date fair values of PSU and stock option awards, which assume a payout at target for all PSUs. For valuation assumptions, please see footnotes 1 and 2 to the Summary Compensation Table.

 

  (2)

In addition to a payout of PSUs at zero percent, stock options were underwater based on the difference between the options’ $266.39 exercise price and the $145.16 closing price of the Company’s common stock on March 31, 2020. The Company notes that the stock options may still have future potential value should the common stock price increase beyond the exercise price set on the grant date.

The total realizable compensation of our named executive officers in fiscal 2020 further reflects our robust pay-for-performance culture and the challenging nature of our performance targets. In addition to paying out no PSUs, the Company used negative discretion to reduce the annual cash incentive award payouts to our named executive officers under the terms of the Annual Incentive Plan. The below table shows the realizable total compensation in fiscal 2020 of each of our named executive officers based on these cash bonus payouts and the realizable value of equity awards.

 

  Name   

Salary

($)

   Realizable
Value of
Stock
Awards
($)(1)(3)
   Realizable
Value of
Option
Awards
($)(2)(3)
  

Non-Equity
Incentive Plan
Payouts

($)

   All Other
Compensation
($)
   Total
Realizable
Compensation
($)(3)(4)

  Michael R. Minogue

   768,459          899,097    8,976    1,676,532

  Todd A. Trapp

   480,000          312,000    8,976    800,976

  Andrew J. Greenfield

   336,507          201,904    8,976    547,387

  David M. Weber

   442,564          300,943    8,976    752,483

  Michael G. Howley

   369,485          144,099    8,976    522,560

 

  (1)

The amounts shown represent no payout of PSUs granted in fiscal 2020.

 

  (2)

The amounts shown represent the value as of March 31, 2020 of the options granted in fiscal 2020, which were underwater based on the difference between the options’ $266.39 exercise price and the $145.16 closing price of the Company’s common stock on March 31, 2020. The Company notes that the stock options may still have future potential value should the common stock price increase beyond the exercise price set on the grant date.

 

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  (3)

Pursuant to SEC rules, the Summary Compensation Table must still reflect the grant date values of the fiscal 2020 PSUs (at target) and stock options, along with the total compensation including such values. For these amounts, including total compensation reflecting them, see the Summary Compensation Table under “Compensation Tables—Summary Compensation Table.” We believe that this supplemental disclosure showing realizable pay more faithfully represents the amounts paid to our named executive officers.

 

  (4)

Calculated as the sum of salary, non-equity incentive plan compensation, all other compensation, the amounts of PSUs earned for fiscal 2020 and the value of stock options granted in fiscal 2020, based on the difference between their exercise price and the closing price of the Company’s common stock on March 31, 2020.

We use a mix of different forms of pay when we initially set annual compensation so as to align management’s incentives strongly with our long-term business goals and stockholder interests. Based on equity amounts originally granted in fiscal 2020 (setting aside realizable value as discussed above) and annual cash incentive awards actually paid to our named executive officers for the year, excluding benefits:

 

   

the overall mix was very heavily weighted toward variable, incentive-based cash and stock compensation (for our CEO, 95% and, on average for our other named executive officers, 84%);

 

   

variable compensation was primarily weighted toward long-term equity incentives; and

 

   

based on the grant date fair value of equity incentive awards, 100% of long-term equity incentive awards were granted in the form of performance-based equity (composed of time-vesting stock options and performance-based PSUs), with no time-vesting RSUs and with 70% of compensation comprised of performance-based PSUs, significantly up from 50% in fiscal 2019.

 

CEO TOTAL

DIRECT COMPENSATION

FOR FISCAL 2020(1)

 

 

AVERAGE OTHER NAMED EXECUTIVE OFFICER

TOTAL DIRECT COMPENSATION

FOR FISCAL 2020(1)

 

LOGO   LOGO

 

  (1)

Total direct compensation excludes the value of benefits, which were below $10,000 for each named executive officer.

 

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Fiscal 2021 Compensation

As always, our Compensation Committee solicits stockholder feedback with an eye toward improving our disclosure and compensation plan, while maintaining the strict, disciplined pay-for-performance culture that has made us successful. Due to our performance, as well as investor feedback (including the results of our fiscal 2019 “say-on-pay” vote), we made several enhancements to our fiscal 2021 executive compensation program and fiscal 2020 compensation disclosures. These included the following:

 

  PSU grants with improved design for all named executive officers:

•   three-year performance periods;

•   relative TSR metric and business operational metric for fiscal 2021 (rather than revenue metric, which was retained in annual cash incentives);

•   relative TSR metric caps payouts at target if our absolute TSR is negative, regardless of our relative TSR; and

•   relative TSR metric requires challenging 90th percentile relative TSR for maximum payout.

  Compensation of CEO based on performance:

•   During our normal end-of-year compensation planning process, based on performance, we awarded our CEO equity grants in fiscal 2021 with a total grant date fair value that was 40% lower than that of fiscal 2020 grants (assuming a value at target for fiscal 2021 PSUs).

  Risk mitigation measures:

•   more robust stock ownership guidelines; and

•   removal of single-trigger vesting provisions in new executive officer and senior officer RSU awards.

  Enhanced compensation disclosures in this Proxy Statement.

 

 

 

The key features of our executive compensation program, which includes elements already in place in fiscal 2020 and reforms made in fiscal 2021, are summarized below.

 

  Things we do

 

  

Things we don’t do

 

      Pay a significant majority of executive compensation in the form of long-term incentive-based awards, with the largest portion in performance-based awards

 

       Cap the maximum payout under our annual incentive plan and vesting of our performance-based PSUs

 

       Set challenging targets and performance metrics for our annual cash incentive awards and PSUs, sometimes leading to lower or no payouts

 

       Grant PSU awards with a three-year performance condition (beginning in fiscal 2021)

 

      Grant RSU awards with double-trigger vesting conditions upon a change in control (beginning in fiscal 2021)

 

       Use diverse performance metrics across our annual cash incentive plan and long-term performance-based equity incentive awards (beginning in fiscal 2021)

 

       Maintain a formal claw-back policy for cash- and equity-based incentive programs

 

      Require executives to adhere to robust stock ownership guidelines

 

      Conduct an annual risk assessment of our compensation programs

 

      Engage an independent consultant to provide support and advice to the Compensation Committee

 

 

  

×   Provide executive perquisites

 

×   Allow our officers or directors to hedge or pledge our stock (without exception)

 

×   Provide new tax gross-ups

 

×    Re-price underwater options

 

×   Pay guaranteed bonuses

 

×   Encourage excessive risk-taking

 

×   Pay dividends or dividend equivalents on unearned PSUs

 

×   Guarantee equity incentive awards for our named executive officers

 

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Review of Fiscal 2021 Executive Compensation Based on Corporate Performance

We are committed to using executive compensation as a way to align closely the interests of management and our stockholders and to retain and incentivize key talent. During fiscal 2020 and the first quarter of fiscal 2021, based on our performance and stockholder feedback, we made certain changes to our fiscal 2021 executive compensation program and our fiscal 2020 executive compensation disclosures. Our reforms more closely support our pay-for-performance philosophy and better align long-term stockholder value creation with our business objectives as we mature as a company. The below details our process for designing and finalizing these reforms.

Step 1: Engage Stockholders

In summer 2019, we received the preliminary voting results on our fiscal 2019 “say-on-pay” proposal for executive compensation to be voted on at the annual meeting of stockholders. We found that, in a break with past practice, some stockholders had cast votes against the proposal. We began extensive outreach to our stockholder base to discuss concerns that holders might have regarding compensation and governance. After receiving a 54% vote for fiscal 2019 “say-on-pay” at the annual meeting (well below our historically strong support of 95%, the average of results from fiscal years 2014 to 2018), we continued this outreach throughout fiscal 2020, including as part of our regular engagement program. Our stockholder outreach is summarized below.

 

  COMPANY PARTICIPANTS(1)

 

  

RESULTS OF OUTREACH

 

      Chairperson of Compensation Committee

 

      Chief Financial Officer

 

      Vice President, General Counsel and Secretary

 

       Director, Investor Relations

 

       Director, Total Rewards

  

Stockholders Contacted:

 

> 65% of outstanding shares, including 10 of our largest stockholders

 

Stockholders with Whom We Met or Spoke Individually:

 

40% of outstanding shares, including six of our largest stockholders

 

Stockholders Who Indicated No Discussion Was Needed:

 

10% of outstanding shares (holders of an additional 15% of our outstanding shares did not respond to our offers to connect)

 

 

 

  (1)

Included different combinations of these individuals.

Key themes from our stockholder outreach included concerns similar to those raised by the proxy advisers in their reports on our 2019 “say-on-pay” proposal. For more information, see “—Changes to Fiscal 2021 Executive Compensation Program and Fiscal 2020 Compensation Disclosures.”

Step 2: Reevaluate and Reform Executive Compensation Program and Disclosures

Our Compensation Committee and management met multiple times throughout fiscal 2020 to refine our executive compensation program. During this process, the Compensation Committee consulted with its independent compensation consultant, Willis Towers Watson, on peer practices and approaches to our compensation program that would respond meaningfully to stockholder and proxy adviser feedback, while aligning with our business plan and compensation philosophy. We also worked with other external advisers to counsel management and the Compensation Committee on disclosure, tax and accounting issues. Moreover, our Board met to discuss the compensation of our Chairman, President and Chief Executive Officer, based on the recommendations of the Compensation Committee.

Following this analysis throughout fiscal 2020, the Compensation Committee and/or Board developed changes to the design of our long-term equity incentive awards and certain compensation risk mitigation measures, and reflected these changes in the fiscal 2021 grants, and also worked to enhance disclosure of fiscal 2020 compensation. We opted to implement design changes beginning only with fiscal 2021 compensation, due to tax- and accounting-related factors and the fact that the fiscal 2020 grants were awarded before the Company received the preliminary results of last year’s “say-on-pay” vote.

 

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Changes to Fiscal 2021 Executive Compensation Program and Fiscal 2020 Compensation Disclosures

 

WHAT WE DID

  

WHAT WE HEARD FROM

STOCKHOLDERS AND PROXY

ADVISERS

  

DETAILED DESCRIPTION OF

WHAT WE DID

Three-Year Performance Periods under PSUs    Performance-vesting equity with longer/non-annual performance periods, rather than one-year periods, promotes long-term alignment of pay with performance, while ensuring that performance hurdles remain challenging over time.   

We eliminated the practice of awarding PSUs with one-year performance periods, and determined to begin granting PSUs for all named executive officers that have three-year performance periods. All PSUs will be forfeited if the named executive officer terminates service prior to the relevant vesting date.

•   For fiscal 2021 only, to smooth PSU payouts during this transition from a one-year to a three-year performance period, we made a transition award of PSUs to our named executive officers, under which 25% of shares underlying the PSUs may vest in fiscal 2023 and the remaining 75% may vest in fiscal 2024, based on a three-year performance period.

•   Following fiscal 2021, all PSUs will vest once after the three-year performance period.

Substitution of Revenue Metric in PSUs with Relative TSR Metric and Business Operational Metric    The performance metrics under both the annual cash incentive awards and PSUs should be diverse.    For fiscal 2021, we removed the revenue metric from the PSU awards of all named executive officers. We replaced it with a relative TSR metric and a business operational metric, each with a 50% weight. We retained the revenue metric in our fiscal 2021 cash incentive awards, based on our belief that it remains a highly effective measure of our attainment of our Patients First goal.
Relative TSR Metric (50% Weight)   

Payout Cap for Negative Absolute TSR

Under the relative TSR metric (constituting 50% weight of total payout), if our absolute TSR is negative, PSU payouts will be capped at target, regardless of our relative TSR within our Peer Group.

 

Fiscal 2021 Goals

The following table sets forth our goals for relative TSR within our Peer Group for fiscal 2021:

 

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WHAT WE DID

  

WHAT WE HEARD FROM

STOCKHOLDERS AND PROXY

ADVISERS

  

DETAILED DESCRIPTION OF

WHAT WE DID

         

Relative TSR

  

Payout

      <25th percentile    None
      25th percentile    50% of target
      50th percentile    Target
      ³90th percentile    200% of target (max.)
      Additionally, regardless of our relative TSR within our Peer Group, if our TSR is at or above 75th percentile of the S&P 500, PSUs will be paid out at a minimum of 50% of target.
Business Operational Metric (50% Weight)         PSU payouts will also be determined 50% based on the achievement of specific business goals over the course of the three-year performance period, as measured at the end of such period. We included this metric to align our PSUs more closely with our long-term business plan.
Reduced Equity Grant Date Fair Values    Grant date fair values of equity awards made to our Chief Executive Officer should be reduced based on our performance and to align better with our Peer Group.    During our normal end-of-year compensation planning process, based on performance, we awarded our Chief Executive Officer equity grants in fiscal 2021 with a total grant date fair value that was 40% lower than that of fiscal 2020 grants (assuming a value at target for fiscal 2021 PSUs).
Revised Stock Ownership Guidelines    We and our stockholders could benefit from a risk mitigation perspective if we adopted and/or revised certain compensation policies.    Revised stock ownership guidelines for executive officers and directors are more robust, requiring a holding period and stock ownership equal to 6x salary for our Chairman, President and Chief Executive Officer, 4x salary for our Vice President and Chief Financial Officer, 3x salary for our other executive officers and 5x annual retainer for our non-employee directors.
Removal of Single-Trigger Vesting Provisions    We and our stockholders could benefit from a risk mitigation perspective if we adopted and/or revised certain compensation policies.    Effective fiscal 2021, new form of RSU award agreements for senior officers, including all executive officers, no longer contain single-trigger vesting provisions upon a change of control.
Enhanced Proxy Disclosures    Greater clarity was sought regarding how our Compensation Committee and/or Board evaluates performance goals under cash awards, sizes cash and equity awards and otherwise determines payouts under both types of awards.    We bolstered disclosure around these topics in this Proxy Statement. See “—Fiscal 2020 Annual Incentive Plan” and “—Fiscal 2020 Long-Term Incentive Awards.”

 

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Fiscal 2020 Compensation Design

This section describes our fiscal 2020 executive compensation program and does not assume the larger structural changes made to our executive compensation program at the outset of fiscal 2021. For more information, see “Review of Fiscal 2021 Executive Compensation Based on Prior Corporate Performance.” Although we improved our compensation program in fiscal 2021, the same underlying principles of our compensation philosophy governed our fiscal 2020 compensation.

Compensation Elements

 

 

We aim to deliver competitive levels of total compensation in the aggregate at target, in line with our overarching pay-for-performance philosophy, while reviewing external market data. To that end, the compensation of our named executive officers in fiscal 2020 consisted of base salary, annual cash incentive awards, the grant of “at-risk” equity incentives and participation in benefit plans generally available to all employees. The largest component of our named executive officers’ annual compensation program is equity incentives, followed by, depending on the individual, cash-based incentive compensation or base salary.

As demonstrated by the pie charts in “Executive Summary,” the vast majority of fiscal 2020 compensation for our Chairman, President and Chief Executive Officer and other named executive officers was variable and incentive-based (on the basis of monetary value as shown in the “Summary Compensation Table,” for our Chairman, President and Chief Executive Officer, 95% and, on average for our other named executive officers, 84%) and 100% of our named executive officers’ fiscal 2020 equity grants were performance-based (consisting of 30% of time-based stock options and 70% of performance-based PSUs). We believe this practice to be consistent with our philosophy of tying executive compensation to performance, while also rewarding our named executive officers for exceeding expectations.

 

Element

 

 

Purpose

 

  

Key Features

 

Base Salary

 

Provide competitive baseline compensation and a level of cash income predictability and stability.

  

  Fixed cash compensation

 

  Amounts informed by competitive market levels, accounting for factors such as scope of the position, experience, and performance

 

  Target competitive range at or below median (on average among our named executive officers), among our compensation Peer Group

Annual Incentive Plan (Cash Bonus)

 

Reward the achievement of corporate and individual performance during the year and demonstration of competencies from our Core Principles and Operating Procedures.

  

  Variable cash compensation governed by terms of plan

 

  Performance metrics include absolute revenue amounts that require growth in upper quartile among companies in our compensation Peer Group

 

  Target opportunity determined in consideration of external market data, with total cash compensation (including salary and target bonus) at median among our compensation Peer Group

 

  Actual value based on a combination of Company financial performance and individually-defined, pre-established performance objectives and demonstration of competencies for any payout

 

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Element

 

 

Purpose

 

  

Key Features

 

Long-Term Equity Incentives

 

Align with the long-term interests of our Company, our stockholders and our executives, while rewarding sustainable value creation and driving retention (including through use of long-term vesting).

  

  Variable equity-based compensation governed by award agreements

 

  Performance metrics require absolute revenue targets that demand, for target payouts, growth in upper quartile among compensation Peer Group

 

  Size of awards determined in consideration of external market data

 

  In fiscal 2020, PSUs were to vest, after being earned, upon the achievement of a performance objective during a one-year period, ratably over a three-year period

 

  In fiscal 2020, no grants of time-vesting RSUs

 

  Options have three-year ratable vesting with a ten-year term and are intended to put a greater portion of total compensation “at risk”

Compensation Governance

Compensation Oversight

Role of the Compensation Committee

The Compensation Committee, which consists entirely of independent directors, oversees our executive compensation programs and met throughout fiscal 2020 to discuss the key items described under “The Annual Process.” The Compensation Committee administers our annual cash incentive and long-term equity incentive plans and reviews performance levels relevant to compensation. It also decides the compensation of all named executive officers other than our Chairman, President and Chief Executive Officer, seeks to ensure that all executive compensation is fair and aligned with our compensation policy, and makes recommendations to our Board of Directors with respect to the compensation of the Chairman, President and Chief Executive Officer and our compensation practices generally. Although the Chairman, President and Chief Executive Officer oversees the Board of Directors as its Chairman, he recuses himself from all Board discussions and decisions on his own compensation.

The Compensation Committee reviews all of the information presented and discusses the recommendations with the Chairman, President and Chief Executive Officer and with our compensation consultant. In making decisions regarding pay levels and practices for our named executive officers, the Compensation Committee considers a variety of factors, including:

 

   

absolute corporate performance relative to our objectives;

 

   

creation of long-term value for our stockholders and stockholder views on compensation;

 

   

feedback from stockholders and proxy advisers as part of outreach efforts;

 

   

our corporate performance relative to our established Peer Group; and

 

   

compensation practices observed in our established Peer Group.

The duties and responsibilities of the Compensation Committee are laid out in its charter, which can be found on our website, and described under “The Board of Directors and Certain Governance Matters—Committees of the Board of Directors—Compensation Committee.”

Role of the Independent Compensation Consultant

As outlined in its charter, the Compensation Committee has the right to retain compensation consultants (and other outside consultants) to provide independent advice to the Compensation Committee. In fiscal 2020, the Compensation Committee appointed Willis Towers Watson as an independent outside compensation consultant. During fiscal 2020, Willis Towers Watson advised the Compensation Committee on various compensation-related items, including peer group development, market practices, industry trends, investor views and market data. In addition, Willis Towers Watson reviewed and provided the Compensation Committee with an independent perspective of management recommendations on compensation. The Compensation Committee considered the six factors specified by the SEC in

 

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Rule 10C-1 and by Nasdaq Stock Market Rule 5605(d)(3)(D) to monitor the independence of its compensation consultant, and determined that Willis Towers Watson’s services during fiscal 2020 did not raise a conflict of interest.

Role of Management

Each year, the Chairman, President and Chief Executive Officer provides an assessment of the performance of each named executive officer, other than himself, during the prior year and recommends to the Compensation Committee the compensation to be awarded to each executive officer, which is then determined by the Compensation Committee. The Chairman, President and Chief Executive Officer’s recommendations are based on numerous factors including:

 

   

corporate and individual performance;

 

   

leadership competencies; and

 

   

external market competitiveness.

The Chairman, President and Chief Executive Officer also provides a self-assessment of his achievements for the prior year, which the Compensation Committee reviews and considers when making a recommendation for an appropriate level of compensation for the Chairman, President and Chief Executive Officer to the Board for approval. The Chairman, President and Chief Executive Officer does not participate in any deliberations regarding his own compensation.

The Annual Process

The Compensation Committee typically meets at least four times a year to consider the items discussed below. In light of our stockholders’ response to the fiscal 2019 “say-on-pay” proposal, our Compensation Committee met six times and took certain additional actions in fiscal 2020. For more information, see “—Review of Fiscal 2021 Executive Compensation Based on Prior Corporate Performance.”

 

  Quarter            

 

 

Typical Meeting Topics

 

  Q1  

    

 

Review and approve executive payout recommendations for fiscal 2019 grants, including annual cash incentive payouts and PSU payouts (and recommend these for the CEO)

 

 

Review and approve any salary adjustments and proposed annual cash and equity grants for fiscal 2020 (and recommend these for the CEO)

 

 

Assess compliance with stock ownership guidelines

 

 

Review historical equity awards and resulting burn rates

 

 

Review and finalize relevant proxy statement content for upcoming annual meeting of stockholders

     
  Q2  

 

Review and discuss proxy adviser reports and other investor feedback, including 54% approval rate of fiscal 2019 “say-on-pay” vote and extensive outreach conducted by Company before and after vote

 

 

Review and discuss executive compensation risk assessment

 

 

Review current compensation philosophy

 

 

Undertake Compensation Committee self-evaluation

     
  Q3  

 

Receive update on legislative, regulatory and governance environments

 

 

Conduct annual Peer Group review

 

 

Review factors affecting independence of compensation consultant

 

 

Review regulatory trends

   

 

Review and analyze potential changes to fiscal 2020 and fiscal 2021 compensation of named executive officers, based on past performance, fiscal 2019 “say-on-pay” vote and stockholder feedback

  Q4  

 

Review Compensation Committee charter

 

 

Review and consider executive compensation benchmarking

 

 

Discuss potential CD&A enhancements for fiscal 2020 compensation, including more robust disclosures in this Proxy Statement, based on stockholder feedback, and review planning timeline

   

 

Continue to assess changes to fiscal 2021 executive compensation (with such changes being finalized and adopted in Q1 of fiscal 2021)

 

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Compensation Peer Group

To understand the external market competitiveness of the compensation for our named executive officers, the Compensation Committee reviews a report analyzing publicly available information and surveys prepared by Willis Towers Watson. The report compares the compensation of each named executive officer to data for comparable positions at companies in our Peer Group. The Compensation Committee reviews our Peer Group annually, with input from Willis Towers Watson. Consideration in creating the Peer Group is given to various factors, including:

 

   

relative size to our Company (revenue, market capitalization, GAAP operating margin and other relevant criteria); and

 

   

nature of business (business focus and model).

Based on a review of these factors, our Compensation Committee did not make changes in fiscal 2020 to the Peer Group from fiscal 2019. The fiscal 2020 compensation Peer Group comprised the following companies:

 

 

   Align Technology, Inc.

 

   Avanos Medical, Inc. (formerly known as Halyard Health, Inc.)

 

   Cantel Medical Corp.

 

   CONMED Corporation

 

   DexCom, Inc.

 

   Edwards Lifesciences Corporation

 

   Globus Medical, Inc.

 

 

  

 

   Haemonetics Corporation

 

   Hologic, Inc.

 

   ICU Medical, Inc.

 

   Inogen, Inc.

 

   Integra LifeSciences Holdings Corporation

 

   Masimo Corporation

  

 

   Merit Medical Systems, Inc.

 

   Natus Medical Incorporated

 

   Nevro Corp.

 

   NuVasive, Inc.

 

   Penumbra, Inc.

 

   ResMed Inc.

 

   Teleflex Incorporated

Fiscal 2020 Base Salary

 

 

We pay each of our named executive officers a base salary to provide a baseline level of compensation that is both competitive with the external market and commensurate with each employee’s past performance, experience, responsibilities and skills. Base salaries are set using the median of companies in our compensation Peer Group as an initial reference point with consideration of the factors described above. For our named executive officers, the percentage increase from fiscal 2019 corresponded to the named executive officer’s overall performance ranking of 1 to 4 under his annual cash incentive award in fiscal 2019 (which ranking system is described in more detail under “Fiscal 2020 Annual Incentive Plan” below), while taking into account market adjustments. Base salaries may also be adjusted from time to time based upon the Company’s overall budgetary guidelines, employee promotions or increased responsibilities.

In fiscal 2020, the Compensation Committee, and in the case of the Chairman, President and Chief Executive Officer, the Board approved the following base salaries, effective for all named executive officers as of June 1, 2019. Base salary increases for our named executive officers in fiscal 2020 were consistent with the increases awarded to the broader employee population. On average among our named executive officers, these salaries ranked at or below the median of companies in our Peer Group and reflected only modest or no increase over fiscal 2019 amounts.

 

Named Executive Officer

 

  

Fiscal 2020 Base Salary

 

  

Fiscal 2019 Base Salary

 

  

Change

 

  Michael R. Minogue

  

$768,459        

  

                $753,391         

  

2%

  Todd A. Trapp

  

$480,000        

  

                $480,000         

  

0%

  Andrew J. Greenfield

  

$336,507        

  

                $329,909         

  

2%

  David M. Weber

  

$442,564        

  

                $433,886         

  

2%

  Michael G. Howley

  

$369,485        

  

                $362,240         

  

2%

 

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Fiscal 2020 Annual Incentive Plan

 

 

We maintain the Annual Incentive Plan, a cash incentive plan, for all employees, including our named executive officers. The purpose of this program is (i) to motivate and reward among our named executive officers the attainment of several measurable performance objectives, including annually-set financial, strategic and operational goals (the “Performance Goals”), and (ii) to encourage the named executive officers to uphold a strong work ethic and a healthy corporate culture via certain leadership factors (the “Leadership Factors”).

Each named executive officer is assessed against these Performance Goals and Leadership Factors according to his or her achievement during the fiscal year. Based on relative weighting among the multiple Performance Goals, as well as between the Performance Goals and the Leadership Factors, the named executive officer ultimately receives an overall rating of 1 to 4 (with 4 representing the highest degree of performance), which translates to a defined bonus payout as a percentage of target bonus. Named executive officers, other than the Chairman, President and Chief Executive Officer, are evaluated by the Chairman, President and Chief Executive Officer. The Board completes the evaluation for the Chairman, President and Chief Executive Officer.

Target Annual Cash Incentive Levels

Under the Annual Incentive Plan, at the outset of the fiscal year, the Compensation Committee analyzes external market data and prior year targets to establish target and maximum annual cash incentive levels for our named executive officers other than our Chairman, President and Chief Executive Officer. For our Chairman, President and Chief Executive Officer, the Compensation Committee undergoes the same rigorous process and recommends target and maximum annual cash incentive levels to the Board, which then determines whether to approve it. As shown in the table below, annual cash incentive opportunities for fiscal 2020 were targeted at a level that represented a meaningful portion of each named executive officer’s base salary and were competitive with our peers, with total cash compensation (including base salary and target annual cash incentive opportunity) on average ranking at the median of companies in our Peer Group for each named executive officer.

 

Named Executive Officer   

Target Cash Incentive Award        
(% of salary)        

 

Michael R. Minogue

  

                    195%

Todd A. Trapp

  

                    65%

Andrew J. Greenfield

  

                    75%

David M. Weber

  

                    85%

Michael G. Howley

  

                    65%

Actual cash incentive awards can range from 0% to 200% of target award levels. The Compensation Committee and Board found that it was important to establish maximum payout amounts under the Annual Incentive Plan to prevent a risk of excessive cash compensation.

Evaluations Based on Performance Goals and Leadership Factors

For each named executive officer, there were two components to the award in fiscal 2020:

 

   

70% was based on the achievement of the Performance Goals, including (i) revenue and (ii) depending on the named executive officer’s responsibilities, four to five other financial, operational and strategic goals.

 

   

30% was based on an assessment of the executive officer’s achievement against the Leadership Factors.

Performance Goals are developed by our Chairman, President and Chief Executive Officer, in consultation with other members of senior management, and presented to our Compensation Committee for review and approval on an annual basis (other than with respect to our Chairman, President and Chief Executive Officer, whose goals are set by the

 

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Compensation Committee and approved by the Board). For each Performance Goal, we establish quantitative or qualitative performance targets for each rating level on a 1-to-4 rating scale. To prevent excessive discretion in annual assessments of performance, these targets are clearly defined, objective hurdles—whether numerical or qualitative—that the named executive officer must satisfy to obtain the applicable rating level. We use our annual operating plan as the foundation for setting the Performance Goals. As a GAAP profitable MedTech growth company, we believe revenue represents a highly effective financial measure of the attainment of our “Patients First” goal, and so include revenue as a Performance Goal for all named executive officers. In our efforts to make our technology the standard of care, we consistently strive to improve patient outcomes. Such improved outcomes increase Impella® utilization and enable us to reinvest in training, research and development, sales, marketing and educational initiatives. We also believe that revenue has been the driving factor in our TSR, and thus a tool for promoting stockholder value.

We undergo a rigorous process to ensure our Performance Goals are challenging, aligning management incentives with enhancement of long-term stockholder value. We believe that these high and demanding targets, when looked against our maximum payouts, helped to maintain a solid and balanced incentive structure.

At the end of the fiscal year, each named executive officer is evaluated on a scale of 1 through 4 for each Performance Goal. Level “2” is the expected rating based on achieving aggressive goals or standards, with a level “3” rating assigned to those named executive officers that significantly exceed expectations and a level “4” rating being very difficult to achieve. Each Performance Goal is also assigned a sub-weight (within the overall 70%), with revenue generally carrying the plurality of the weight between 20% and 40%, depending on the named executive officer, and non-revenue goals carrying the remaining 60% to 80% of the weight. After evaluations are finalized, a weighted average of the Performance Goals is calculated (the “Weighted Average Performance Rating”), which is on a scale of 1 to 4 for the named executive officer.

For the fiscal 2020 revenue metric, all named executive officers were assessed against the same goals, with ratings corresponding to the following targets: a level “4” rating to annual revenue of at least $939 million, or growth of at least 22% over fiscal 2019; a level “3” rating to annual revenue of at least $923 million, or growth of at least 20% over fiscal 2019; a level “2” rating to annual revenue of greater than $885 million, or growth of at least 15% over fiscal 2019; and a level “1” rating to annual revenue of no more than $885 million, or growth of no more than 15% over fiscal 2019. These targets were purposely set to be difficult to achieve, requiring revenue growth in the upper quartile among the companies in our Peer Group. For fiscal 2020, all named executive officers received a 1 rating for revenue, because our revenue in fiscal 2020 was $840.9 million, which represented 9% revenue growth over fiscal 2019 and growth at the 60th percentile among our Peer Group.

Mr. Minogue’s Performance Goals were (i) revenue, (ii) product development, new product launches, Japan expansion and market access, (iii) stakeholder engagement, (iv) customer satisfaction and (v) TSR.

Mr. Trapp’s Performance Goals were (i) revenue, (ii) global sales and customer service operations, (iii) operating margin, budget management and forecasting, (iv) process automation, (v) TSR and (vi) investor relations.

Mr. Greenfield’s Performance Goals were (i) revenue, (ii) market expansion, including surgical, new product launches and Japan expansion, (iii) market access, (iv) stakeholder engagement, (v) key opinion leader and heart recovery hospitals development and (vi) customer satisfaction.

Mr. Weber’s Performance Goals were (i) revenue, (ii) product platform development, (iii) clinical data/trials, publication, education and training, (iv) regulatory approvals and (v) operational efficiency.

Mr. Howley’s Performance Goals were (i) revenue, (ii) market expansion, including surgical, new product launches and Japan expansion, (iii) key opinion leader development, (iv) optimized sales distribution and (v) customer satisfaction.

The Leadership Factors of our named executive officers, other than our Chairman, President and Chief Executive Officer, are established by our Chairman, President and Chief Executive Officer and discussed with the Compensation Committee. The Board approves these factors as they apply to our Chairman, President and Chief Executive Officer. We apply the same factors to all named executive officers, and believe that the factors promote ethical behavior in the best interests of the Company and its stockholders and encourage named executive officers to comply with our robust standards of corporate culture and to develop their substantive knowledge and leadership skills.

 

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Leadership Factor    Description

Professional competency

  

Knowledge of area of expertise and dedication to continuing advancement of level of knowledge.

 

Work ethic

  

Commitment and dedication to organization on consistent basis.

 

Flexibility/attitude

  

Adaptability to changing priorities and tasks, and cooperation within function and Company.

 

Leadership (formal and informal)

  

Ability to manage, motivate and influence others toward Company-wide objectives and beyond such stated goals and objectives.

 

Honor and integrity

  

Example for others with respect to Company values and commitment to high standards of excellence, integrity and conduct.

 

Commitment to ABIOMED Code of Conduct and Compliance Policy

  

Firm commitment to standards. See “The Board of Directors and Certain Governance Matters—Code of Conduct and Compliance Policy.”

 

Each named executive officer receives an evaluation on a 1-to-4 scale of his or her overall achievement against the Leadership Factors (the “Leadership Rating”). The Leadership Rating represented a key part of the 2020 Annual Incentive Plan, assessed based on an objective review of actions and behaviors exhibited throughout fiscal 2020 by the named executive officer in question, and was not used to make discretionary upward adjustments to a named executive officer’s Weighted Average Performance Rating.

Calculation of Payouts

To determine the annual cash incentive award payout for each named executive officer, we calculate the weighted average of the officer’s Weighted Average Performance Rating and Leadership Rating (with the Weighed Average Performance Rating representing 70% of the overall rating and the Leadership Rating representing 30% of the overall rating). The named executive officer’s overall rating of 1 to 4 then translates to a defined bonus payout (as a percentage of target bonus). According to the terms of the Annual Incentive Plan, an overall rating of 4 would have resulted in a payout of 160% to 200% of award target, a rating of 3 would have resulted in a payout of 120% to 160% of award target, a rating of 2 would have resulted in a payout of 80% to 120% of award target and a rating of 1 would have resulted in no payout.

Cash incentive award payouts for named executive officers, other than the Chairman, President and Chief Executive Officer, are recommended by the Chairman, President and Chief Executive Officer and determined by the Compensation Committee. The Board analyzes and determines the actual cash incentive payouts for the Chairman, President and Chief Executive Officer. Since overall ratings are tied to payouts within a range, the Compensation Committee (with respect to the named executive officers other than the Chairman, President and Chief Executive Officer) and the Board (with respect to the Chairman, President and Chief Executive Officer) possess discretion whether to pay out awards at the upper or low end of each applicable range.

For fiscal 2020, the Compensation Committee endorsed, and did not alter, the cash incentive amounts proposed by the Chairman, President and Chief Executive Officer for the other named executive officers. In light of fiscal 2020 performance below historical levels, due partly to external headwinds and the COVID-19 pandemic, the Board and the Compensation Committee determined that it was in the best interest of the Company to reinforce its pay-for-performance culture and used negative discretion to lower final payout amounts. Specifically, the Board and the Compensation Committee decreased the payout ranges associated with the overall rating (such that an overall rating of 4 would result in a payout up to 120%, an overall rating of 3 would result in a payout up to 100%, an overall rating of 2 would result in a payout of up to 80% and an overall rating of 1 would result in no payout) and paid all named executive officers cash bonuses at or below these levels.

 

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The table below shows the annual cash incentive award payouts for each of our named executive officers. We believe that these payouts, reflecting significant negative discretion despite revenue growth at the 60th percentile among our Peer Group, demonstrate our disciplined and balanced pay-for-performance philosophy and the demanding nature of our performance metrics, including revenue targets requiring growth in the upper quartile among companies in our Peer Group.

 

NAMED EXECUTIVE OFFICER    TARGET PAYOUT AMOUNT      ACTUAL PAYOUT  

 

           Percentage of Target     Amount  

  Michael R. Minogue

     $1,498,495        60   $ 899,097  

  Todd A. Trapp

     $312,000        100   $ 312,000  

  Andrew J. Greenfield

     $252,380        80   $ 201,904  

  David M. Weber

     $376,179        80   $ 300,943  

  Michael G. Howley

     $240,165        60   $ 144,099  

Fiscal 2020 Long-Term Incentive Awards

This section discusses our long-term equity incentive award plan for fiscal 2020. For a description of the changes to our long-term equity incentive awards for fiscal 2021, which were adopted based on our performance and extensive stockholder feedback (including the results of our fiscal 2019 “say-on-pay” vote), see “—Review of Fiscal 2021 Executive Compensation Based on Prior Corporate Performance.”

We offer equity incentives to employees to foster a culture of ownership, align compensation with stockholder interests and promote long-term retention and affiliation with the Company. Each year, the Compensation Committee determines the types and sizes of awards to be used for delivering such incentives. In doing so, the Compensation Committee considers the ability of each type of award to achieve key compensation objectives (such as retention, motivation and attraction), the needs of the business, competitive market practices, dilution and expense constraints, as well as tax and accounting implications. The Compensation Committee sets and approves the size, mix and terms of awards for all named executive officers other than our Chairman, President and Chief Executive Officer for which it makes recommendations to our Board.

Grants of Fiscal 2020 Long-Term Equity Incentive Awards

Below is a summary of the long-term incentive vehicles awarded to our named executive officers in fiscal 2020:

 

Element

 

  

Purpose

 

  

Key Features

 

 

Stock options

  

 

Incentivize long-term value creation and continued stock price growth

  

 

       Three-year ratable vesting

 

       Ten-year term

 

 

Performance-based PSUs (PSUs)

  

 

Incentivize continued focus on short- and long-term performance

  

 

       One-year performance period tied to challenging revenue growth targets

         

 

       Three-year ratable vesting (only to the extent that revenue targets are achieved)

 

Although the mix of long-term equity incentives awarded to each named executive officer can vary from year-to-year, the Compensation Committee typically seeks to ensure that PSUs represent the largest proportion of any named executive officer’s annual long-term equity incentive compensation. In determining or recommending to the Board the size of the stock option and PSU grants for fiscal 2020, the Compensation Committee reviewed market data, past financial performance and current corporate goals.

Additionally, the Compensation Committee and Board, as applicable, determined not to grant any time-vesting RSUs in fiscal 2020, so as to place more compensation “at risk” and to emphasize the focus on forward-looking, performance-based equity. In making these decisions, the Compensation Committee took into account, among other factors, our strategic plans for growth and expansion, our corporate performance, the individual performance of each named

 

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executive officer, market data and the input of Willis Towers Watson. For fiscal 2021, we re-introduced for each named executive officer RSUs to compose approximately 30% of the officer’s total equity pay mix, with PSUs continuing to make up the largest portion at approximately 50% (assuming a value at target) and options the remaining approximate 20%. We decided to add these retention-based awards after considering the compensation practices of our Peer Group, the lack of a payout under the PSU awards granted in fiscal 2020 and the countervailing significant enhancements we made to the structure of our performance-based PSUs for fiscal 2021.

The tables below show the mix and amounts of long-term equity incentive awards granted to each named executive officer in fiscal 2020, with the mix compared with fiscal 2019, based on the grant date fair values (assuming a value for PSUs at target). As discussed below, no PSUs were actually earned for fiscal 2020 performance, and, as a result, the value of awards actually paid were dramatically lower than the grants shown below. For the grant date fair values of such awards as they were actually paid to each named executive officer, see the table under “Realizable Value of Equity Awards.”

 

NEO EQUITY

COMPENSATION MIX FOR

FISCAL 2019

 

  

NEO EQUITY

COMPENSATION MIX FOR

FISCAL 2020

 

LOGO

  

LOGO

 

NAMED

EXECUTIVE

OFFICER

   AMOUNTS GRANTED  
    

 

Number of Stock
Options Granted

 

 
 

 

    
Number of RSUs
Granted
 
 
    
Number of PSUs
Granted (at Target)
 
 
      
Expected Value of All
Awards Granted(1)
 
 

 

Michael R. Minogue

 

  

 

 

 

 

50,000            

 

 

 

 

  

 

 

 

 

—            

 

 

 

 

  

 

 

 

 

38,000            

 

 

 

 

    

 

 

 

 

$14,936,234        

 

 

 

 

 

Todd A. Trapp

 

  

 

 

 

 

7,000            

 

 

 

 

  

 

 

 

 

—            

 

 

 

 

  

 

 

 

 

6,000            

 

 

 

 

    

 

 

 

 

$2,272,218        

 

 

 

 

 

Andrew J. Greenfield

 

  

 

 

 

 

7,000            

 

 

 

 

  

 

 

 

 

—            

 

 

 

 

  

 

 

 

 

6,000            

 

 

 

 

    

 

 

 

 

$2,272,218        

 

 

 

 

 

David M. Weber

 

  

 

 

 

 

6,000            

 

 

 

 

  

 

 

 

 

—            

 

 

 

 

  

 

 

 

 

5,000            

 

 

 

 

    

 

 

 

 

$1,909,560        

 

 

 

 

 

Michael G. Howley

 

  

 

 

 

 

4,000            

 

 

 

 

  

 

 

 

 

—            

 

 

 

 

  

 

 

 

 

3,000            

 

 

 

 

    

 

 

 

 

$1,184,243        

 

 

 

 

 

  (1)

Includes grant date fair values of PSU and stock option awards. For PSU awards, values assume a payout at target. For valuation assumptions, please see footnotes 1 and 2 to the Summary Compensation Table.

Calculation of Payouts

In fiscal 2020, the Compensation Committee used revenue as the performance metric for our performance-based equity awards. For more information on why we believe revenue is one of a number of effective performance metrics and how the metric is chosen, see “Fiscal 2020 Annual Incentive Plan—Evaluations Based on Performance Goals and Leadership Factors.” These revenue targets were challenging, requiring, for target payouts, revenue growth in the upper quartile among companies in our Peer Group.

 

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Fiscal 2020 revenue targets were expressed as growth over fiscal 2019 revenue. Growth of at least 22% or $939 million in revenue would have resulted in 200% of PSUs vesting. Growth of at least 18.5% or $912 million in revenue would have resulted in 150% of PSUs vesting. Growth of at least 15% or $885 million in revenue would have resulted in 100% of PSUs vesting. Growth of at least 12% or $862 million in revenue would have resulted in 50% of PSUs vesting. Growth of less than 12% or $862 million in revenue would have resulted in no PSUs vesting. The percentage of PSUs vesting between these thresholds was to be determined through linear interpolation

Realizable Value of Equity Awards

For fiscal 2020, we achieved revenues of $840.9 million, resulting in a payout of no PSUs to our named executive officers. These revenues represented a 9% increase over fiscal 2019, which, despite being at the 60th percentile among our Peer Group, was below our historical performance, due partly to external headwinds and the COVID-19 pandemic. The following table compares, for each named executive officer in fiscal 2020, the grant date fair values of all long-term equity incentive awards, including options and PSUs, with the realizable values of such awards, based on the payout of no PSUs and the value of stock options granted in fiscal 2020, which were underwater as of March 31, 2020.

 

NAMED EXECUTIVE OFFICER

    

AMOUNTS GRANTED

Expected Value of All Awards(1)

    

REALIZABLE VALUE

  Actual Value of All Awards Paid(2)   

Michael R. Minogue

     $14,936,234      $0

Todd A. Trapp

     $  2,272,218      $0

Andrew J. Greenfield

     $  2,272,218      $0

David M. Weber

     $  1,909,560      $0

Michael G. Howley

 

     $  1,184,243      $0

 

  (1)

Includes grant date fair values of PSU and option awards, which assume a payout at target for all PSUs. For valuation assumptions, please see footnotes 1 and 2 to the Summary Compensation Table.

  (2)

In addition to a payout of PSUs at zero percent, stock options were underwater based on the difference between the options’ $266.39 exercise price and the $145.16 closing price of the Company’s common stock on March 31, 2020. The Company notes that the stock options may still have future potential value should the common stock price increase beyond the exercise price set on the grant date.

The Compensation Committee believes that the lack of any payout under the fiscal 2020 PSUs, even with revenue growth at the 60th percentile among our Peer Group and the highest GAAP operating margin in our Peer Group, underscores the challenging nature and the selection of our revenue goals. Our Compensation Committee purposely set aggressive revenue growth targets in order to make them difficult to achieve, align management incentives with long-term stockholder value and optimize the amount of incentive compensation “at risk.”

Other Elements of Compensation

Benefits and Perquisites

We do not provide excessive benefits or perquisites to our executive officers. We provide them with matching contributions to our 401(k) plan, which are available to substantially all of our employees. We also provide life insurance and long-term disability insurance premiums, which represent typical elements of executive compensation. In addition, our named executive officers are entitled to certain benefits in connection with certain terminations of employment and/or in connection with a change of control, as further described in “Narrative Supplement to Compensation Tables—Change of Control Agreements with Named Executive Officers.”

Tax and Accounting Considerations

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code (the “Code”) places a limit of $1 million per year on the amount of compensation paid to certain of our executive officers that the Company may deduct for federal income tax purposes.

 

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The Tax Cuts and Jobs Act, enacted on December 22, 2017 (the “Tax Reform Law”), substantially modified Section 162(m) by, among other things, eliminating the exception for performance-based compensation to the $1 million deduction limit effective as of January 1, 2018. As a result, beginning in 2018, we generally expect that compensation paid to each of our named executive officers in excess of $1 million is nondeductible, whether or not it is performance-based.

The Compensation Committee intends to continue to maintain flexibility and the ability to pay competitive compensation by not requiring all compensation to be deductible. The Tax Reform Law also includes a transition rule under which the changes to Section 162(m) described above will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not subsequently materially modified. To the extent applicable to our existing contracts and awards, the Compensation Committee may choose to avail itself of the transition rule. However, due to uncertainties as to the application and interpretation of the transition rule, no assurances can be given at this time that our existing plans and previously-granted awards, even if in place on November 2, 2017, will meet the requirements of the transition rule. Regardless of any changes in law, the Compensation Committee intends to continue to implement compensation programs that it believes are competitive and in the best interests of the Company and its stockholders.

No New Tax Gross-ups

In May 2015, the Compensation Committee adopted a policy not to provide tax gross-ups under Sections 280G and 4999 of the Code in any new employment agreements.

Managing Compensation-Related Risks

The Compensation Committee reviews the risks associated with the Company’s compensation policies and practices to determine whether any risks associated with such policies and practices encourage unnecessary or excessive risk-taking or are reasonably likely to have a material adverse effect on the Company. The Compensation Committee also oversees an annual review of the Company’s risk assessment of its compensation policies and practices for its employees. The risk-mitigating features that the Company has adopted within our executive compensation programs are summarized below.

Claw-back Policy

We adopted a recoupment (or “claw-back”) policy in June 2015 covering each of our executive officers. The policy provides that if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws, the Compensation Committee may seek reimbursement of any cash- or equity-based bonus/other incentive compensation (including vested and unvested equity) paid or awarded to the executive officer or effect cancellation of previously-granted equity awards to the extent the compensation was based on erroneous financial data and exceeded what would have been paid to the executive officer under the restatement. Under our award agreements, we may also recover from executive officer grantees compensation in connection with the grantee’s breach of a non-competition, non-solicitation, confidentiality or similar covenant or agreement.

Anti-Hedging and Anti-Pledging Policies

Our policies prohibit, without exception, all executive officers, employees and directors from hedging their ownership of our securities, engaging in short sales with respect to our securities or pledging our securities.

Single-Trigger Vesting Arrangements

Our new forms of RSU equity award agreements, for grants to our named executive officers and senior officers starting fiscal 2021, no longer contain single-trigger vesting arrangements upon a change of control.

Executive Stock Ownership Guidelines and Share Retention Requirements

We maintain stock ownership guidelines intended to align further the interests of our executive officers with those of our stockholders. The guidelines require covered roles to hold common stock (including common stock held in trust, by certain family members or in the Company’s 401(k) plan and stock underlying unvested RSUs or restricted stock awards, but excluding stock underlying options or stock appreciation rights and unvested or unearned PSUs or other

 

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performance stock awards) worth a value expressed as a multiple of their salary. We regularly review our ownership guidelines to ensure that they align with peer group norms and governance best practices and that they remain appropriate in light of our annual equity award levels. In fiscal 2021, we amended our guidelines, including the required share ownership amounts, to bring them more in line with market norms.

Each of our current executive officers (which includes our Chairman, President and Chief Executive Officer, our Vice President and Chief Financial Officer, our Vice President and Chief Commercial Officer, our Senior Vice President and Chief Operating Officer, and our Vice President and General Manager, Global Sales) is required to meet these ownership levels by five years after his initial designation as an executive officer of the Company. Until reaching the required ownership level, executive officers are required to retain at least 50% of the shares, net of applicable tax withholding and the payment of any exercise or purchase price (if applicable), received upon the vesting or settlement of equity awards or the exercise of stock options. As of March 31, 2020, all of our executive officers had timely met the stock ownership requirement, other than Mr. Trapp, who was appointed on April 9, 2018 and has until April 9, 2023 to meet these guidelines.

 

Role

 

  

Share Ownership Guideline
(Multiple of Salary)

 

  

Compliance(1)

 

Chairman, President and Chief Executive Officer

 

   6.00    LOGO

Vice President and Chief Financial Officer

   4.00   

X

Required to meet guidelines by 2023

 

Other Executive Officers

 

   3.00    LOGO

 

  (1)

Based on salary and fair market value of counted equity as of March 31, 2020.

Fiscal 2021 Compensation

Due to our performance and extensive stockholder feedback (including the results of the “say-on-pay” vote on fiscal 2019 compensation of our named executive officers), we made expansive changes to our executive compensation program in fiscal 2021. For more information, see “—Review of Fiscal 2021 Executive Compensation Based on Prior Corporate Performance.”

Additionally, after benchmarking against the compensation practices of our Peer Group and reviewing the lack of a payout under the PSU awards granted in fiscal 2020, we re-introduced RSUs into the pay mix of each named executive officer during our normal end-of-year compensation planning process in fiscal 2021. As in prior years, PSUs continue to make up the largest portion of fiscal 2021 total pay mix at approximately 50% (assuming a value at target), with RSUs and options composing approximately 30% and 20%, respectively.

As previously disclosed in our 2020 Annual Report, to mitigate the business impact of the COVID-19 pandemic on our financial operations, we also:

 

   

reduced the first quarter salaries for fiscal 2021 of Messrs. Minogue and Weber by 100%; and

 

   

reduced the first quarter salaries for fiscal 2021 of Messrs. Trapp, Greenfield and Howley by 50%.

These actions, among others, were designed to preserve full-time jobs, preserve cash and retain our ability to ramp up quickly when demand returns, while at the same time continuing to invest in innovation. Along with our other cost-related actions, including a decrease in our directors’ cash retainers, the salary reductions are intended to last through the first quarter of fiscal 2021, but may be extended as we continue to monitor the environment.

 

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Compensation Committee Report

 

 

 

The Compensation Committee has reviewed and discussed with management the contents of the Compensation Discussion and Analysis set forth above. Based on its review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s 2020 Annual Report.

Compensation Committee

 

By:

Paul G. Thomas (Chair)

  

Martin P. Sutter

  

Jeannine M. Rivet

 

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Compensation Tables

 

 

Summary Compensation Table

The following Summary Compensation Table provides a summary of all compensation earned with respect to fiscal 2020, 2019 and 2018 by our named executive officers (to the extent such officers were employed by us at any point during those fiscal years).

 

Name and Principal Position Fiscal Year     Salary($) Stock
Awards
($)(1)
Option
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)(3)
All Other
Compensation
($)(4)
Total ($)(7)

  Michael R. Minogue

2020    

768,459

10,122,820

4,813,414

899,097

8,976

16,612,766

  Chairman of the Board, President,

2019    

753,391

12,605,010

4,259,979

1,616,024

8,826

19,243,230

  Chief Executive Officer

2018    

717,515

5,726,091

1,622,475

2,238,646

8,806

10,313,532

  Todd A. Trapp

2020    

480,000

1,598,340

673,878

312,000

8,976

3,073,194

  Vice President and Chief

2019    

480,000

2,372,706

343,200

2,232

3,198,138

  Financial Officer (5)

    

  Andrew J. Greenfield

2020    

336,507

1,598,340

673,878

201,904

8,976

2,819,605

  Vice President and General

  Manager, Global Marketing (6)

2019    

329,909

1,680,668

567,997

272,175

8,826

2,859,575

  David M. Weber

2020    

442,564

1,331,950

577,610

300,943

8,976

2,662,043

  Senior Vice President and

2019    

433,886

2,635,593

922,995

405,683

8,826

4,406,983

  Chief Operating Officer

2018    

413,225

941,570

393,327

433,886

8,806

2,190,814

  Michael G. Howley

2020    

369,485

799,170

385,073

144,099

8,976

1,706,803

  Vice President and General

2019    

362,240

1,680,668

567,997

259,002

8,826

2,878,733

  Manager, Global Sales

2018    

348,308

914,668

319,578

362,240

8,806

1,953,600

 

  (1)

Amounts shown represent the aggregate grant date fair value of an award of PSUs made to the named executive officer in fiscal 2020 and of awards of PSUs and time-based RSUs made in fiscal 2019 and fiscal 2018, as computed in accordance with FASB ASC Topic 718. The underlying valuation assumptions are discussed in Note 11 to our consolidated financial statements for our fiscal year ended March 31, 2020, included in our 2020 Annual Report. As required by SEC rules, stock awards are reported in the year of grant. For fiscal 2020, fiscal 2019 and fiscal 2018, the grant date value of PSUs as reported assumed performance at the target payout level. As required by SEC rules, the grant date fair value of the PSUs at the maximum payout levels in fiscal 2020 for each named executive officer is as follows: for Mr. Minogue, $20,245,640; for Mr. Trapp; $3,196,680; for Mr. Greenfield, $3,196,680; for Mr. Weber, $2,663,900; and Mr. Howley, $1,598,910. Following fiscal 2020, no PSUs were actually earned for the grants made in fiscal 2020 because the Company did not meet the relevant performance target. For more information, see “Compensation Discussion and Analysis—Fiscal 2020 Long-Term Incentive Awards—Realizable Value of Equity Awards.”

  (2)

Amounts shown represent the aggregate grant date fair value of option awards made to the named executive officer, computed in accordance with FASB ASC Topic 718. Fair value is calculated using the Black-Scholes value on the grant date. As required by SEC rules, awards are reported in the year of grant. The underlying valuation assumptions are discussed in Note 11 to our consolidated financial statements for our fiscal year ended March 31, 2020, included in our 2020 Annual Report.

  (3)

Reflects amounts that were earned under our annual cash incentive plan for fiscal 2020, fiscal 2019 and fiscal 2018 performance and that were determined and paid during the first quarter of each following fiscal year.

  (4)

Includes the following for the relevant fiscal years: (a) 401(k) contributions by the Company, which were (i) for Mr. Minogue, $8,400 in 2020, 8,250 in 2019 and $8,100 in 2018, (ii) for Mr. Trapp, $8,400 in 2020 and $1,800 in 2019, (iii) for Mr. Greenfield, $8,400 in 2020 and $8,250 in 2019, (iv) for Dr. Weber, $8,400 in 2020, $8,250 in 2019 and $8,100 in 2018 and (v) for Mr. Howley, $8,400 in 2020, $8,250 in 2019 and $8,100 in 2018; and (b) life insurance premium payments by the Company, which were (i) for Mr. Minogue, $576 in 2020, $576 in 2019 and $706 in 2018, (ii) for Mr. Trapp, $576 in 2020 and $432 in 2019, (iii) for Mr. Greenfield, $576 in 2020 and $576 in 2019, (iv) for Dr. Weber, $576 in 2020, $576 in 2019 and $706 in 2018 and (v) for Mr. Howley, $576 in 2020, $576 in 2019 and $706 in 2018.

  (5)

Mr. Trapp was appointed Vice President and Chief Financial Officer in April 2018.

  (6)

Mr. Greenfield was appointed Vice President and Chief Commercial Officer in April 2019.

  (7)

Following fiscal 2020, no PSUs were actually earned for the grants made in fiscal 2020 because the Company did not meet the relevant performance target. This dramatically reduced the overall value of total compensation of each of our named executive officers for fiscal 2020. For a supplemental disclosure that we believe more faithfully reflects our actual fiscal 2020 compensation, see “Compensation Discussion and Analysis—Executive Summary—Fiscal 2020 Compensation.”

 

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Grants of Plan-Based Awards

The following table provides information regarding grants of plan-based awards to the named executive officers during fiscal 2020.

 

     Grant
Date
(1)
  

Estimated Future Payouts Under Non-
Equity Incentive Plan Awards (2)

 

  

Estimated Future Payouts
Under Equity Incentive
Plan Awards (3)

 

   All Other Option
Awards: Number of
Securities
Underlying Options
(#) (4)
   Exercise or
Base Price of
Option Awards
($/Sh)
  

Grant Date Fair
Value of Stock
and Option
Awards

(5)

Name    Target ($)    Maximum ($)   

Target

(#)

  

Maximum

(#)

  Michael R.

   5/30/2019    1,498,495    2,996,990               

  Minogue

   5/30/2019                50,000    266.39    4,813,414
   5/30/2019          38,000    76,000          10,122,820

  Todd A.

   5/30/2019    312,000    624,000               

  Trapp

   5/30/2019                7,000    266.39    673,878
   5/30/2019          6,000    12,000          1,598,340

  Andrew J.

   5/30/2019    252,380    504,761               

  Greenfield

   5/30/2019                7,000    266.39    673,878
   5/30/2019          6,000    12,000          1,598,340

  David M.

   5/30/2019    376,179    752,359               

  Weber

   5/30/2019                6,000    266.39    577,610
   5/30/2019          5,000    10,000          1,331,950

  Michael G.

   5/30/2019    240,165    480,331               

  Howley

   5/30/2019                4,000    266.39    385,073
   5/30/2019          3,000    6,000          799,170

 

(1)

Reflects the dates on which the Compensation Committee approved the target fiscal 2020 annual cash incentive awards or the grants of PSUs or stock options, as applicable. No named executive officer paid any amount to us in consideration for the grant of any PSUs or stock options.

(2)

Represents potential target and maximum cash payouts set at the beginning of the fiscal year under our fiscal 2020 Annual Incentive Plan. There are no threshold cash payout levels under the fiscal 2020 Annual Incentive Plan. The amounts actually paid with respect to fiscal 2020 are reported in the Summary Compensation Table under the heading “Non-Equity Incentive Plan Compensation.” For information on the formula and/or criteria used to determine the amounts paid under these fiscal 2020 grants, see “Compensation Discussion and Analysis—Fiscal 2020 Annual Incentive Plan.”

(3)

The grants to each named officer represent shares of our common stock subject to PSUs granted under our 2015 Plan, eligible to be earned based on the achievement of revenue goals for fiscal 2020 at the target and maximum payout levels and subject to time-based vesting once earned. There are no threshold payout levels under the PSUs granted in fiscal 2020. For information on the performance conditions used in determining the amounts payable for and the vesting schedule of grants made in fiscal 2020, see “Compensation Discussion and Analysis—Fiscal 2020 Long-Term Incentive Awards.”

(4)

Represents stock options to purchase shares of our common stock granted under our 2015 Plan that are subject to ratable time-based vesting over three years on each anniversary of the date of grant.

(5)

Amounts shown do not reflect compensation actually received by the named executive officer. Instead, the amounts shown reflect the grant date fair values of the awards computed in accordance with FASB ASC Topic 718. For stock options, fair value is calculated using the Black-Scholes value on the grant date. In calculating these values, we used the assumptions described in Note 11 to our consolidated financial statements, included in our 2020 Annual Report. The grant date fair value of PSUs is determined based on the probable outcome of the performance conditions associated with the awards. The actual amount of compensation that may be earned by the named executive officer depends on the extent to which the awards vest and the price of our common stock at the time of exercise or vesting. Following fiscal 2020, no PSUs were actually earned for the grants made in fiscal 2020 because the Company did not meet the relevant performance target. For more information, see “Compensation Discussion and Analysis—Fiscal 2020 Long-Term Incentive Awards—Realizable Value of Equity Awards.”

 

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Outstanding Equity Awards at Fiscal Year End

The following table provides information regarding outstanding equity awards held by the named executive officers on March 31, 2020.

 

    

Option Awards

  

Stock Awards

  Name

 

  

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

 

  

Number of
Securities
Underlying
Unexercised
Options(#)
Unexercisable (1)

 

  

Option
Exercise
Price($)

 

  

Option Expiration
Date

 

  

Number of
Shares or Units
of Stock That
Have Not
Vested(#)(2)

 

  

Market Value of
Shares or
Units of Stock That
Have Not
Vested($)(3)

 

  

Equity Incentive Plan
Awards: Number of
Unearned Shares,

Units, or Other Rights

That Have Not
Vested(#)(4)

 

  

Equity
Incentive
Plan
Awards:
Market or
Payout Value
of Unearned
Units That
Have Not
Vested($)(3)

 

  Michael R. Minogue

   100,000       22.44    5/22/2022    51,513    7,477,627    38,000    5,516,080
   85,000       23.15    5/14/2023            
   85,000       21.55    5/14/2024            
   35,000       66.25    5/13/2025            
   30,500       99.62    5/24/2026            
   22,000    11,000    134.51    5/15/2027            
   10,000    20,000    381.97    5/16/2028            
      50,000    266.39    5/30/2029            

  Todd A. Trapp

      7,000    266.39    5/30/2029    5,585    810,719    6,000    870,960

  Andrew J. Greenfield

   5,000       21.55    5/14/2024    7,654    1,111,055    6,000    870.960
   5,000       66.25    5/13/2025            
   5,000       99.62    5/24/2026            
   4,333    2,167    134.51    5/15/2027            
   1,333    2,667    381.97    5/16/2028            
      7,000    266.39    5/30/2029            

  David M. Weber

   13,000       23.15    5/14/2023    9,446    1,371,181    5,000    725,800
   10,825       21.55    5/14/2024            
   10,000       66.25    5/13/2025            
   7,000       99.62    5/24/2026            
   5,333    2,667    134.51    5/15/2027            
   4,334    2,166    381.97    5/16/2028            
      6,000    266.39    5/30/2029            

  Michael G. Howley

   15,000       23.15    5/14/2023    7,654    1,111,055    3,000    435,480
   7,500       21.55    5/14/2024            
   5,000       66.25    5/13/2025            
   8,000       99.62    5/24/2026            
   4,333    2,167    134.51    5/15/2027            
   1,333    2,667    381.97    5/16/2028            
      4,000    266.39    5/30/2029            

 

  (1)

The stock options with an exercise price of $134.51, $381.97 and $266.39 vest in equal installments over three years on each anniversary of the following respective grant dates: May 15, 2017, May 16, 2018 and May 30, 2019.

  (2)

Represents the following number of time-based RSUs, one-third of which were eligible to vest on May 15, 2018 (and did vest), one-third of which were eligible to time vest on May 15, 2019 (and did vest), and one-third of which are eligible to vest on May 15, 2020 (and did vest), subject to the executive’s continued employment through each such date: Mr. Minogue, 4,634 RSUs; Mr. Greenfield, 600 RSUs; Dr. Weber, 1,000 RSUs; and Mr. Howley, 600 RSUs. Represents the following number of time-based RSUs, one-third of which were eligible to vest on May 16, 2019 (and did vest), and one-third of which are eligible to vest on May 16, 2020 (and did vest), and one-third of which are eligible to vest on May 16, 2021, subject to the executive’s continued employment through each such date: Mr. Minogue, 7,334 RSUs; Mr. Greenfield, 934 RSUs; Dr. Weber, 1,600 RSUs; and Mr. Howley, 934 RSUs. Represents the following number of RSUs that performance vested based on fiscal 2018 revenue, one-third of which were eligible to time vest on May 15, 2018 (and did vest), one-third of which were eligible to time vest on May 15, 2019 (and did vest) and one-third of which are eligible to time vest on May 15, 2020 (and did vest), subject to the executive’s continued employment through such date: Mr. Minogue, 19,114 RSUs; Mr. Greenfield, 3,334 RSUs; Dr. Weber, 2,667 RSUs; and Mr. Howley, 3,334 RSUs. Represents the following number of RSUs that performance vested on fiscal 2019 revenue, one-third of which were eligible to vest on May 16, 2019 (and did vest), and one-third of which are eligible to vest on May 16, 2020 (and did vest), and one-third of which are eligible to vest on May 16, 2021, subject to the executive’s continued employment through each such date: Mr. Minogue, 20,431 RSUs; Mr. Trapp, 1,393 RSUs; Mr. Greenfield, 2,786 RSUs; Dr. Weber, 4,179 RSUs; and Mr. Howley, 2,786 RSUs. Represents the following number of time-based RSUs, one-third of which were eligible to vest on April 9, 2019 (and did vest), and one-third of which are eligible to vest on April 9, 2020 (and did vest), and one-third of which are eligible to vest on April 9, 2021, subject to the executive’s continued employment through each such date: Mr. Trapp, 4,192 RSUs.

  (3)

The market value of unvested shares of RSUs or unearned/unvested PSUs is based on $145.16, the closing market price of our common stock on March 31, 2020, the last trading day of fiscal 2020.

  (4)

Represents the following number of PSUs that were eligible to performance vest at the target performance level based on fiscal 2020 revenue. Pursuant to SEC rules, these PSUs are reported at the target level due to a lack of threshold payout levels with respect to such PSUs. Following the close of fiscal 2010, it was determined that the Company did not meet the prescribed performance milestones in fiscal 2020 and therefore no shares were earned for these PSUs.

 

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Option Exercises and Vesting of Stock

The following table provides information regarding the exercise of stock options by our named executive officers and shares acquired upon the vesting of RSU and PSU stock awards held by them during fiscal 2020.

 

       Option Awards      Stock Awards

  Name

 

     Number of Shares
Acquired on Exercise
(#)
     Value Realized
on Exercise ($)(1)
     Number of Shares
Acquired on Vesting (#)
     Value Realized on
Vesting ($)(2)(3)

  Michael R. Minogue

               169,139      42,83,003

  Todd A. Trapp

               2,792      773,800

  Andrew J. Greenfield

               9,124      2,367,423

  David M. Weber

     4,175      771,196      57,008      14,403,296

  Michael G. Howley

               9,124      2,367,423

 

(1)

The value realized on exercise of stock option awards is based on the difference between the average weighted price at which the shares of common stock were sold on the date of exercise of the stock option award and the exercise price of the stock option.

(2)

The value realized on vesting of stock awards granted prior to May 5, 2016 is based on the closing market price of our common stock on the date of vesting of the stock award. The value realized on vesting of stock awards granted on or after May 5, 2016 is based on the closing market price of our common stock on the date prior to vesting.

(3)

SEC rules require us to show the value realized upon vesting of awards as if the underlying shares were sold on the vesting date. None of the named executive officers subsequently sold the shares that vested in fiscal 2020, and in alignment with our stockholders’ interests, continue to be at risk for subsequent changes in the value of these shares.

Narrative Supplement to Compensation Tables

Employment Arrangements with our Named Executive Officers

Michael R. Minogue

On April 5, 2004, we entered into an employment agreement with Michael R. Minogue in which we agreed to employ him as our President and Chief Executive Officer. At that time, the Company’s market capitalization was $193 million, which is 62 times lower than its market capitalization as of June 2020. The agreement initially provided for an annual base salary of $325,000 for the fiscal year ended March 31, 2005, and a target bonus for such fiscal year of up to $325,000. Mr. Minogue’s employment agreement also provides that our Compensation Committee will review Mr. Minogue’s base salary and target bonus on an annual basis. In addition, pursuant to the employment agreement, Mr. Minogue was granted stock options to purchase 400,000 shares of our common stock on his date of hire. The agreement also provides for, among other things, certain vacation, life insurance and other benefits to Mr. Minogue. The employment agreement has an indefinite term and is terminable by either party upon notice to the other.

Todd A. Trapp

On March 30, 2018, Todd A. Trapp accepted our offer letter to become our Vice President and Chief Financial Officer. The letter initially provided for an annual base salary of $480,000 for the fiscal year ended March 31, 2019, and a target bonus for such fiscal year of up to $312,000. Mr. Trapp’s offer letter also provides that our Compensation Committee will review Mr. Trapp’s base salary and target bonus on an annual basis. In addition, pursuant to the letter, Mr. Trapp was granted PSUs and RSUs with an expected value of $1,800,000 shortly following his start date and was entitled to receive additional stock awards with an expected value of $850,000 in fiscal year 2020. The stock awards vest in three equal annual installments on each anniversary of the date of grant. The letter also provides for, among other things, certain vacation, life insurance and other benefits to Mr. Trapp.    

Andrew J. Greenfield

On December 31, 2004, Mr. Greenfield accepted our offer letter to become our Vice President, Healthcare Solutions. The offer letter provided that Mr. Greenfield would receive a starting base salary of $150,000 per year and a sign-on bonus of $60,000. The offer letter provided for the grant to Mr. Greenfield of a stock option to purchase 30,000 shares of our common stock on his date of hire, vesting annually over four years. In addition, Mr. Greenfield was eligible for an annual cash incentive award with a target payout of $50,000. Mr. Greenfield is currently our Vice President and Chief Commercial Officer.

 

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David M. Weber

On April 10, 2007, Dr. Weber accepted our offer letter to become our Chief Operating Officer. The offer letter provided that Dr. Weber would receive a starting salary of $250,000 per year and a signing bonus of $12,000. The offer letter provided for the grant to Dr. Weber of a stock option to purchase 130,000 shares of our common stock on his date of hire, vesting annually over four years. In addition, Dr. Weber was eligible for an annual cash incentive award with a target payout of $100,000 under the offer letter. Dr. Weber is currently our Senior Vice President and Chief Operating Officer.

Michael G. Howley

On March 5, 2009, Mr. Howley accepted our offer letter to become our Vice President and General Manager, Global Sales and Marketing. The offer letter provided that Mr. Howley would receive a starting base salary of $250,000 per year. The offer letter provided for the grant to Mr. Howley of a stock option to purchase 80,000 shares of our common stock on his date of hire, vesting annually over four years. In addition, Mr. Howley was eligible for an annual cash incentive award with a target payout of $50,000. The agreement also provides for, among other things, certain vacation and other benefits to Mr. Howley.

Additionally, each of our named executive officers that signed an offer letter rather than an individualized employment agreement (Mr. Trapp, Dr. Weber, Mr. Greenfield and Mr. Howley) also entered into our standard nondisclosure and noncompetition agreement, which contains provisions on the handling of proprietary information and assignment of inventions, as well as restrictions on competition and solicitation during the period of employment and for two years after termination. In addition, the agreements provide that, as the executive is employed at will, we may terminate the executive with or without cause, but in the case of a termination without cause more than six months after the date employment begins, we are required to provide 28 days’ prior notice.

Change of Control Agreements with Named Executive Officers

Michael R. Minogue

We entered into a change of control agreement with Mr. Minogue when he began employment with us in April 2004. The agreement was entered into in order to provide Mr. Minogue with a sense of job security and the ability to focus on his work regardless of any impending change of control. In April 2004, the Company had a market capitalization of $193 million, which is 62 times lower than its market capitalization as of June 2020, and the terms of Mr. Minogue’s agreement reflect the significant risks associated with assuming leadership of the Company at that time. The agreement specifically provides that, following a change of control, we will continue to employ Mr. Minogue for 24 full months in the same or a similar position at an annual base salary equal to at least twelve times the highest monthly base salary received within the last twelve months prior to the change of control and an annual cash incentive award equal to his average cash award over the last three fiscal years. In addition, Mr. Minogue agreed to remain our employee for six months following a change of control. If Mr. Minogue is still employed at the end of this six-month period following a change of control, all unvested stock options and stock appreciation rights held by him will become vested. Mr. Minogue can terminate his employment for good reason, and we may terminate his employment for or without cause. The agreement provides for certain payments to be made to Mr. Minogue or his family upon certain circumstances following a change of control, including upon his death, disability, termination of employment by us without cause, and termination of employment by him for good reason. If we terminate Mr. Minogue’s employment without cause, or Mr. Minogue terminates his employment for good reason, he will be entitled to receive cash severance payments equal to 2.99 times his base amount (as defined in Section 280(G)(b)(3) of the Code). For up to 18 months following any such termination, we are also required to provide for continuation of certain benefits provided to Mr. Minogue before the change of control on terms at least as favorable to Mr. Minogue as in effect before the change of control. These payments and benefits are described in more detail below. Additionally, upon such a termination, the vesting of all of Mr. Minogue’s then-unvested and outstanding stock options and stock appreciation rights will accelerate. In the event that Mr. Minogue is obligated to pay any excise or payroll-related taxes, including interest and penalties, under Section 4999 of the Code, Mr. Minogue will be entitled to receive a “gross-up” payment such that he will receive an after-tax amount sufficient to enable him to pay all such excise taxes, interest and penalties.

 

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Todd A. Trapp

We entered into a change of control severance agreement with Todd A. Trapp on April 6, 2018, when he became our Vice President and Chief Financial Officer. The agreement provides that if, within two years from the date of the consummation of a change of control, we terminate Mr. Trapp without “cause” (other than in connection with the sale of some or all of the assets of the Company) or Mr. Trapp terminates his employment for “good reason,” we must pay certain severance and other benefits. These severance and benefits payments include: (i) base salary continuation payments for 24 months following the date of termination; (ii) provided Mr. Trapp makes a timely election for COBRA coverage, reimbursement for medical insurance premiums for 24 months following the termination date, unless Mr. Trapp earlier receives medical coverage through another employer; (iii) reasonable outplacement assistance with an aggregate cost of up to $10,000; and (iv) accelerated vesting of all outstanding stock options, stock appreciation rights, and restricted stock held by Mr. Trapp as of his termination date.

If, in connection with a change of control, the Board or the Compensation Committee elects to cancel outstanding stock options, stock appreciation rights or RSUs, any stock options and stock appreciation rights held by Mr. Trapp will accelerate and become exercisable 10 days prior to the change of control, and all RSUs held by Mr. Trapp will accelerate and vest immediately prior to the change of control.

Andrew J. Greenfield

We entered into a change of control severance agreement with Andrew J. Greenfield in September 2008. The agreement provides that, following a change of control, the Company will continue to employ Mr. Greenfield for two years with a position (including status, offices, titles and reporting requirements), authority, duties and responsibilities that are at least commensurate in all material respects with the most significant of those held by Mr. Greenfield during the 180-day period immediately prior to such change of control, at the location where he was employed immediately prior to the change of control or within 35 miles from such location. During this period, we will also be obligated to pay: (i) annual base salary equal to at least 12 times the highest monthly base salary paid or payable to Mr. Greenfield within the 12-month period prior to the month in which the change of control occurs, (ii) annual cash bonus at least equal to his target bonus for the fiscal year in which the change of control occurs, (iii) entitlement to participate in plans or policies applicable to his peer executives at the Company on terms no less favorable to such benefits provided to Mr. Greenfield during the one-year period prior to the change of control, and (iv) entitlement to reimbursement for reasonable business expenses and fringe and other benefits (including payment of up to $10,000 in outplacement assistance fees upon Mr. Greenfield’s termination without “cause” or his resignation). In addition, Mr. Greenfield agrees to remain employed by the Company for six months following a change of control to assist in the transition caused by the change of control on the same terms described above and with all of the same compensation and benefits described above in accordance with the most favorable plans, practices, policies and programs. If, in connection with a change of control, the Board or the Compensation Committee elects to cancel outstanding stock options, stock appreciation rights or RSUs, any unvested stock options and stock appreciation rights held by Mr. Greenfield will accelerate and become exercisable 10 days prior to the change of control, and any unvested RSUs held by Mr. Greenfield will accelerate and vest immediately prior to the change of control.

During the two-year period after a change in control, Mr. Greenfield can terminate his employment for “good reason,” and the Company can terminate his employment for or without cause. The agreement provides for certain payments to be made to Mr. Greenfield or his family upon a qualifying termination during this period. If during this period the Company terminates Mr. Greenfield’s employment without cause, or Mr. Greenfield resigns (other than during the six-month period following a change of control), he will be entitled to receive the following from the Company: (i) a lump-sum cash severance payment equal to two times his annual base salary and target bonus; (ii) continuation of medical and dental benefits on terms at least equal to those in effect before the change of control, which may become secondary benefits if Mr. Greenfield becomes eligible for such benefits under another employer’s plans or may be converted into tax-adjusted payments of an equivalent amount if the plans do not allow for Mr. Greenfield’s continued participation; (iii) reimbursement of up to $10,000 in fees paid for outplacement benefits and any other payments or benefits for which Mr. Greenfield or his family would be eligible and that generally apply to Mr. Greenfield’s peer executives at the Company and their families; and (iv) only if the Company terminates Mr. Greenfield without cause or he resigns for good reason, all remaining unvested stock options or stock appreciation rights will immediately and automatically become exercisable and all RSUs will fully vest. In the event that Mr. Greenfield is obligated to pay any excise taxes, including interest and penalties, under Section 4999 of the Code, the Company will make a “gross-up” payment to Mr. Greenfield such that he will receive an after-tax amount that equals the total amount of all excise taxes, income taxes, interests and penalties.

 

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David M. Weber

On August 13, 2008, our Compensation Committee also authorized us to enter into change of control agreements with Dr. Weber. Under the change of control agreements, if we terminate Dr. Weber’s employment for any reason other than for cause, death or disability during the two-year period following a change of control, as defined in the change of control agreements, or if the executive terminates his employment with us for good reason during the 18-month period beginning six months after a change of control, Dr. Weber will be entitled to a lump sum payment equal to two times the sum of the executive’s then-effective annual base salary plus his target bonus. For up to two years following any such termination, we are also required to provide medical and dental benefits to Dr. Weber and his family. Additionally, upon such a termination, the vesting of all of Dr. Weber’s then-unvested and outstanding stock options and stock appreciation rights will accelerate. Upon a change of control, whether or not the executive’s employment terminates, if the Compensation Committee elects to cancel outstanding stock options, stock appreciation rights, and RSUs, all such awards then outstanding and held by the executive will accelerate and vest immediately prior to the change of control.

Michael G. Howley

On April 15, 2009, we entered into a change of control agreement with Mr. Howley that is similar to Dr.  Weber’s agreement described above.

Estimated Potential Payments Following a Change of Control

The following table provides information regarding the estimated amounts payable to the individuals named below upon the occurrence of the triggering events described below, in each case assuming that a change of control had occurred on March 31, 2020, the last day of our last fiscal year. The amounts shown as payable upon the triggering events described below do not include amounts earned by the individual and accrued before the occurrence of the triggering event but payable after the triggering event, such as accrued and unpaid salary or the value of accrued but unused vacation days.

 

Name and Triggering Events Following
Change of Control
   Severance
($)
     Acceleration
of Stock
Options
($)(1)
     Acceleration
of RSUs
($)(2)
     Benefits
Continuation
and
Outplacement
($)
     Tax
Reimbursement
($)(3)
     Total
($)(4)
 

Michael R. Minogue

                 

Automatic acceleration of options and RSUs upon change of control(5)

            117,150        12,993,706                      13,110 ,856  

Continues employment for six months(6)

            117,150                             117,150  

Termination by us other than for cause or by executive for good reason(7)

     144,191,423        117,150        12,993,706        34,747        54,607,487        211,944,514  

Todd A. Trapp

                 

Automatic acceleration of options and RSUs upon a change of control (8)

                   1,681,679                      1,681,679  

Termination by us other than for cause or by executive for good reason(7)

     960,000               1,681,679        49,662               2,691,341  

Andrew J. Greenfield

                 

Automatic acceleration of options and RSUs upon change of control(9)

            23,079        1,982,014                      2,005,093  

Termination by us other than for cause or by executive for good reason(7)

     1,177,774        23,079        1,982,014        49,662               3,232,529  

David M. Weber

                 

Automatic acceleration of options and RSUs upon change of control(10)

            28,404        2,096,982                      2,125,386  

Termination by us other than for cause or by executive for good reason(7)

     1,637,485        28,404        2,096,982        49,662               3,812,533  

Michael G. Howley

                 

Automatic acceleration of options and RSUs upon change of control(11)

            23,079        1,546,534                      1,569,613  

Termination by us other than for cause or by executive for good reason(7)

     1,219,300        23,079        1,546,534        49,662               2,838,575  

 

(1)

Represents the estimated value of the acceleration of the vesting of stock options held by the executive, assuming a stock price of $145.16, which was the closing market price of our common stock on March 31, 2020. This value is based on the difference between such price and

 

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the exercise price of the accelerated stock options. All stock options held by the named executive officers accelerate in full if the executive is terminated following a change of control other than for cause or if the executive terminates employment for good reason. In addition, in the case of Mr. Minogue, all stock options and stock appreciation rights accelerate in full if following a change of control his employment continues for at least six months. In the case of all named executive officers, the stock options will also vest in full if our Board of Directors or Compensation Committee exercises its discretion to cancel outstanding stock options in a change of control.

(2)

Represents the estimated value of the acceleration of the vesting of certain time-based RSUs and performance-based PSUs (for unearned PSUs, assuming payout at target, and for previously-earned PSUs which vest on a time basis only, reflecting payouts based on actual performance) held by the executives, assuming a stock price of $145.16, which was the closing market price of our common stock on March 31, 2020. Additional detail about such acceleration is described in the footnotes below.

(3)

Represents the estimated gross-up payment owed to the executives based on the assumptions in this table. Mr. Minogue is entitled to a full gross-up payment to the extent of any excise tax imposed pursuant to Section 4999 of the Code. The other named executive officers, with the exception of Mr. Trapp, are entitled to a gross-up payment to the extent that any excise tax is imposed by Section 4999 of the Code, but subject to other limitations on the amount of gross-up for the excise tax.

(4)

Does not include amounts the executive would be entitled to if his employment was terminated due to death or disability. Each executive or his estate is, upon the executive’s termination due to death or disability, entitled to receive the executive’s earned but unpaid compensation as well as benefits at least equal to the most favorable family benefits provided by the Company to surviving families of peer executives.

(5)

Reflects the value of all outstanding stock option awards granted to Mr. Minogue on May 15, 2017, May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company (assuming the stock options are not assumed or substituted in the transaction). Reflects the value of all outstanding time-based RSU awards granted to Mr. Minogue on May 15, 2017 and May 16, 2018, each of which by its terms vests in full upon a change of control of the Company. Also reflects the value of performance-based PSU and time-based RSU awards granted to Mr. Minogue on May 15, 2017, May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company.

(6)

This row does not reflect the value of continued compensation for services rendered during the course of employment or the effect of continued vesting of stock options following a change of control.

(7)

Assumes that termination occurs on March 31, 2020. Termination later in the year would also entitle the executive to a pro rata portion of his bonus, based on the number of days lapsed during the year prior to termination. Bonus amounts and severance payments are payable in a lump sum. Benefits continuation consists of the continuation of medical benefits for the executive and his family, which, as of March 31, 2020, are payable over a period of 18 months in the case of Mr. Minogue and over 24 months for the other named executive officers. Also includes outplacement of up to $5,000 in the case of Mr. Minogue, and $10,000 in the case of the named executive officers other than Mr. Minogue. Other perquisites and personal benefits are excluded because the estimated aggregate amount of such benefits is less than $10,000 for each named executive officer.

(8)

Reflects the value of all outstanding stock option awards granted to Mr. Trapp on May 30, 2019, which by its terms vests in full upon a change of control of the Company. Reflects the value of all outstanding time-based RSU awards granted to Mr. Trapp on April 9, 2018, which by its terms vests in full upon a change of control of the Company. Also reflects the value of performance-based PSUs and time-based RSU awards granted to Mr. Trapp on May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company.

(9)

Reflects the value of all outstanding stock option awards granted to Mr. Greenfield on May 15, 2017, May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company (assuming the stock options are not assumed or substituted in the transaction). Reflects the value of all outstanding time-based RSU awards granted to Mr. Greenfield on May 15, 2017 and May 16, 2018, each of which by its terms vests in full upon a change of control of the Company. Also reflects the value of performance-based PSUs and time-based RSU awards granted to Mr. Greenfield on May 15, 2017, May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company.

(10)

Reflects the value of all outstanding stock option awards granted to Dr. Weber on May 15, 2017, May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company (assuming the stock options are not assumed or substituted in the transaction). Reflects the value of all outstanding time-based RSU awards granted to Dr. Weber on May 15, 2017 and May 16, 2018, each of which by its terms vests in full upon a change of control of the Company. Also reflects the value of performance-based PSUs and time-based RSU awards granted to Dr. Weber on May 15, 2017, May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company.

(11)

Reflects the value of all outstanding stock option awards granted to Mr. Howley on May 15, 2017, May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company (assuming the stock options are not assumed or substituted in the transaction). Reflects the value of all outstanding time-based RSU awards granted to Mr. Howley on May 15, 2017 and May 16, 2018, each of which by its terms vests in full upon a change of control of the Company. Also reflects the value of performance-based PSUs and time-based RSU awards granted to Mr. Howley on May 15, 2017, May 16, 2018 and May 30, 2019, each of which by its terms vests in full upon a change of control of the Company.

 

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CHIEF EXECUTIVE OFFICER PAY RATIO

 

Pursuant to the Dodd-Frank Act and related SEC rules, we are required to disclose the median of the annual total compensation of our employees, the annual total compensation of our Chief Executive Officer, Mr. Minogue, and the ratio of these two amounts. For the twelve-month period ended March 31, 2020, our last completed fiscal year:

 

 

The estimated annual total compensation for the median employee of the Company (excluding Mr. Minogue) was $112,393; and

 

 

Mr. Minogue’s annual total compensation, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement, was $16,612,766.

Based on this information for fiscal 2020, we estimate that the ratio of the annual total compensation of Mr. Minogue to the median annual total compensation of our employees (other than Mr. Minogue) was approximately 148 to 1.

We believe this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for identifying the median of the annual total compensation of our employees and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions regarding their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio for the Company. Unless stated below, we have not applied any such exclusions.

To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and Mr. Minogue, we took the following steps:

 

 

Pursuant to SEC rules, we used the same median employee we used to calculate the pay ratio under SEC rules in fiscal 2018 and fiscal 2019, who we previously identified as of January 31, 2018. In fiscal 2020, compared to fiscal 2019, there was no significant change to the Company’s employee population or compensation arrangements, and the median employee’s circumstances did not change so as to impact significantly the pay ratio.

 

 

We combined all of the elements of the median employee’s compensation for fiscal 2020 in accordance with applicable SEC rules (all compensation as would be disclosed in the Summary Compensation Table if the employee were a named executive officer), resulting in annual total compensation of $112,393. The difference between such employee’s annual total compensation as used for purposes of determining our median employee and as used for purposes of determining our Chief Executive Officer pay ratio was approximately $5,344, which reflects that, for purposes of determining our Chief Executive Officer pay ratio, the median employee’s annual total compensation included certain benefits.

 

 

With respect to the annual total compensation of Mr. Minogue, we used the amount reported in the “Total Compensation” column of the Summary Compensation Table for fiscal 2020.

 

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EQUITY COMPENSATION PLAN INFORMATION

 

The following table provides information as of March 31, 2020 regarding securities authorized for issuance under our equity compensation plans. Our equity compensation plans under which awards may currently be granted include the 2015 Plan and our Amended & Restated 1988 Employee Stock Purchase Plan (the “ESPP”), both of which have been approved by our stockholders.

 

  Plan Category

  Number of securities to
  be issued upon exercise  

of outstanding options,
warrants and rights
    Weighted-average
exercise price of
  outstanding options,  

warrants and rights
      Number of securities remaining  
available for future issuance
under equity compensation plans
(excluding securities reflected in
column (a))
 
    (a)     (b)     (c)  

  Equity compensation plans approved by security holders(1)

    1,188,100   (1)    $ 112.03   (2)      3,759,079   (3) 

  Equity compensation plans not approved by security holders

    —         —         —    

Total

    1,188,100       $ 112.03         3,759,079    

 

(1)

Consists of the following amounts under the 2015 Plan: 869,347 shares of common stock underlying outstanding stock options; 318,753 shares of common stock deliverable upon the vesting of outstanding time-vesting RSUs and earned PSUs; and 97,293 shares of common stock deliverable upon the vesting of unearned PSUs at the target payout level (which would have been 194,586 assuming a payout at the maximum level). Following fiscal 2020, no PSUs were actually earned for the grants made in fiscal 2020, because the Company did not meet the relevant performance target and these shares were cancelled in the first quarter of fiscal 2021. For more information, see “Compensation Discussion and Analysis—Fiscal 2020 Long-Term Incentive Awards—Realizable Value of Equity Awards.”

(2)

The weighted-average exercise price only includes all outstanding stock options.

(3)

Consists of 3,609,512 securities available for future issuance under the 2015 Plan and 149,567 securities available for future issuance under the ESPP.

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

At the close of business on June 15, 2020, there were 45,044,145 shares of our common stock issued and outstanding and entitled to vote. The following table provides information, as of June 15, 2020, with respect to the beneficial ownership of our common stock by:

 

 

each person known by us to be the beneficial owner of five percent or more of our common stock;

 

 

each of our directors and nominees for director;

 

 

each of our “named executive officers” listed in the Summary Compensation Table under “Executive Compensation” above; and

 

 

all of our current directors and executive officers as a group.

The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage.

 

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This information is based upon information received from or on behalf of the individuals named therein. Unless otherwise noted, the address for each individual is c/o ABIOMED, Inc., 22 Cherry Hill Drive, Danvers, Massachusetts 01923.

 

  Name(1)

  Shares
  Outstanding  
Beneficially
Owned
      Shares Subject  
to Right to
Acquire Within
60 Days(8)
      Total Number of  
Shares
Beneficially
Owned
      Percentage of  
Total
Outstanding
Shares
Beneficially
Owned
 

   Five-Percent-or-More Beneficial Owners

       

  PRIMECAP Management Company(2)

 

 

3,082,840  

 

 

 

—  

 

 

 

3,082,840  

 

 

 

6.8% 

 

  The Vanguard Group, Inc.(3)

 

 

4,786,463  

 

 

 

—  

 

 

 

4,786,463  

 

 

 

10.6% 

 

  Blackrock, Inc.(4)

 

 

3,629,943  

 

 

 

—  

 

 

 

3,629,943  

 

 

 

8.1% 

 

  Sands Capital Management, LLC(5)

 

 

2,441,076  

 

 

 

—  

 

 

 

2,441,076  

 

 

 

5.4% 

 

  Renaissance Technologies LLC(6)

 

 

2,323,023  

 

 

 

—  

 

 

 

2,323,023  

 

 

 

5.2% 

 

  Baillie Gifford & Co(7)

 

 

2,719,881  

 

 

 

—  

 

 

 

2,719,881  

 

 

 

6.0% 

 

  Directors and Named Executive Officers(8)

 

 

  

 

   

 

  

 

 

 

 

 

  Michael R. Minogue(9)

 

 

494,513  

 

 

 

405,166  

 

 

 

899,679  

 

 

 

2.0% 

 

  Todd A. Trapp

 

 

3,087  

 

 

 

2,333  

 

 

 

5,420  

 

 

 

*    

 

  Andrew J. Greenfield(10)

 

 

49,422  

 

 

 

26,499  

 

 

 

75,921  

 

 

 

*    

 

  David M. Weber(11)

 

 

145,598  

 

 

 

55,158  

 

 

 

200,756  

 

 

 

*    

 

  Michael G. Howley(12)

 

 

67,876  

 

 

 

45,999  

 

 

 

113,875  

 

 

 

*    

 

  Martin P. Sutter

 

 

187,186  

 

 

 

1,053  

 

 

 

188,239  

 

 

 

*    

 

  Dorothy E. Puhy(13)

 

 

25,434  

 

 

 

1,053  

 

 

 

26,487  

 

 

 

*    

 

  Paul G. Thomas

 

 

7,867  

 

 

 

1,053  

 

 

 

8,920  

 

 

 

*    

 

  Christopher D. Van Gorder

 

 

5,568  

 

 

 

1,053  

 

 

 

6,621  

 

 

 

*    

 

  Jeannine M. Rivet

 

 

6,946  

 

 

 

1,053  

 

 

 

7,999  

 

 

 

*    

 

  Eric A. Rose

 

 

13,183  

 

 

 

1,053  

 

 

 

14,236  

 

 

 

*    

 

All current executive officers and directors as a group (11 persons)(14)

 

 

1,006,680  

 

 

 

541,473  

 

 

 

1,548,153  

 

 

 

3.4% 

 

 

*

Less than one percent.

(1)

Unless otherwise noted, each person identified possesses sole voting and investment power over the shares listed.

(2)

Based on information provided in a Schedule 13G filed by PRIMECAP Management Company on February 12, 2020. PRIMECAP Management Company has sole voting power with respect to 3,082,840 shares of common stock and sole dispositive power with respect to 3,082,840 shares. The principal business address of PRIMECAP Management Company is 117 E. Colorado Blvd., 11th Floor, Pasadena, CA 91105.

(3)

Based on information provided in a Schedule 13G filed by The Vanguard Group, Inc. on February 12, 2020, in its capacity as investment adviser. Includes 53,674 shares of common stock beneficially owned by Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., as a result of its serving as investment manager of collective trust accounts and 38,154 shares beneficially owned by Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., as a result of its serving as an investment manager of Australia investment offerings. The Vanguard Group, Inc. has sole voting power with respect to 68,970 shares, sole dispositive power with respect to 4,709,099 shares, shared voting power with respect to 12,274 shares and shared dispositive power with respect to 4,786,463 shares. The principal business address of The Vanguard Group, Inc. and other reporting persons is 100 Vanguard Blvd., Malvern PA 19355.

(4)

Based on information provided in a Schedule 13G filed by Blackrock, Inc. on February 5, 2020. Blackrock, Inc. has sole voting power with respect to 3,230,956 shares of common stock and sole dispositive power with respect to 3,629,943 shares. The principal business address of Blackrock, Inc. is 55 East 52nd Street, New York, NY 10055.

(5)

Based on information provided in a Schedule 13G filed by Sands Capital Management, LLC on February 14, 2020. Sands Capital Management, LLC has sole voting power with respect to 1,751,851 shares of common stock and sole dispositive power with respect to 2,441,076 shares. The principal business address of Sands Capital Management, LLC is 1000 Wilson Blvd., Suite 3000, Arlington, VA 22209.

(6)

Based on information provided in a Schedule 13G filed by Renaissance Technologies LLC on February 12, 2020. Renaissance Technologies LLC has sole voting power with respect to 2,144,839 shares, sole dispositive power with respect to 2,285,587 shares, shared voting power with respect to 9,454 shares and shared dispositive power with respect to 2,323,023 shares. The principal business address of Renaissance Technologies LLC and other reporting persons is 800 Third Avenue, New York, New York 10022.

(7)

Based on information provided in a Schedule 13G filed by Baillie Gifford & Co on January 17, 2020. Baillie Gifford & Co has sole voting power with respect to 2,565,128 shares of common stock and sole dispositive power with respect to 2,719,881 shares. The principal business address of Baillie Gifford & Co is Calton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland (UK).

(8)

Shares are deemed to be beneficially owned due to the individual’s right to acquire the shares upon the exercise of outstanding stock options or vesting of RSUs within 60 days from June 10, 2020 or upon termination of service other than for death, disability or involuntary termination.

 

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(9)

Based on information provided in a Form 4 filed pursuant to Section 16(a) of the Exchange Act on June 2, 2020, shares beneficially owned by Mr. Minogue include 262,482 shares of common stock beneficially owned indirectly through trusts.

(10)

Based on information provided in a Form 4 filed pursuant to Section 16(a) of the Exchange Act on June 2, 2020, shares beneficially owned by Mr. Greenfield include 12,032 shares of common stock beneficially owned indirectly through a trust.

(11)

Based on information provided in a Form 4 filed pursuant to Section 16(a) of the Exchange Act on June 2, 2020, shares beneficially owned by Dr. Weber include 15,497 shares of common stock beneficially owned indirectly through a trust.

(12)

Based on information provided in a Form 4 filed pursuant to Section 16(a) of the Exchange Act on June 2, 2020, shares beneficially owned by Mr. Howley include 20,510 shares of common stock beneficially owned indirectly through a trust.

(13)

Based on information provided in a Form 4 filed pursuant to Section 16(a) of the Exchange Act on June 9, 2020, shares beneficially owned by Ms. Puhy include 11,335 shares of common stock beneficially owned indirectly through a trust.

(14)

Includes shares beneficially owned by Michael R. Minogue, Dorothy E. Puhy, Jeannine M. Rivet, Eric A. Rose, Martin P. Sutter, Paul G. Thomas, Christopher D. Van Gorder, Andrew J. Greenfield, Michael G. Howley, Todd A. Trapp and David M. Weber.

 

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REPORT OF THE AUDIT COMMITTEE

 

The Audit Committee operates pursuant to a written charter adopted by the Board of Directors. Pursuant to this charter, the Company’s management is responsible for the financial reporting process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. The Company’s independent auditors are responsible for auditing those financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. In addition, the independent registered public accounting firm is responsible for auditing and expressing an opinion on the Company’s internal controls over financial reporting. The Audit Committee’s responsibility is to monitor and review these processes and to oversee the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements, but not to verify independently the information provided to the Audit Committee. A brief description of the primary responsibilities of the Audit Committee is included under the heading “The Board of Directors and Certain Governance Matters—Committees of the Board of Directors—Audit Committee.”

In the performance of its oversight function, the Audit Committee reviewed and discussed with management and Deloitte & Touche LLP, the Company’s independent registered public accounting firm for the fiscal year ended March 31, 2020, the audit financial statements for the fiscal year ended March 31, 2020. To oversee management’s testing and evaluation of the Company’s internal control over financial reporting, the Audit Committee also received periodic updates on this topic provided by management and Deloitte & Touche LLP at each scheduled Audit Committee meeting. The Audit Committee met with Deloitte & Touche LLP, with and without the Company’s management present, to discuss the overall scope and plan of the audit, the results of the audit and the independent registered public accounting firm’s evaluation of the Company’s internal controls and the overall quality of the Company’s financial reporting.

The Audit Committee also discussed with Deloitte & Touche LLP matters required to be discussed by the applicable standards of the Public Company Accounting Oversight Board (the “PCAOB”). In addition, we received from Deloitte & Touche LLP written disclosures and the letter required by applicable requirements of the PCAOB and discussed these documents with Deloitte & Touche LLP, as well as other matters related to Deloitte & Touche LLP’s independence from management and the Company.

Based on the reviews and discussions referred to above, and subject to the limitations on the Audit Committee’s role and responsibilities referred to above and in the Audit Committee Charter, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements be included in its 2020 Annual Report for filing with the SEC.

Audit Committee

Dorothy E. Puhy (Chair)

Jeannine M. Rivet

Eric A. Rose

 

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

 

Fees of Independent Registered Public Accounting Firm

The following table shows fees for professional audit services, billed to us by Deloitte & Touche LLP, including its affiliates, for the audit of our annual consolidated financial statements for the fiscal years ended March 31, 2020 and 2019, and fees billed to us by Deloitte & Touche LLP for other services provided during such fiscal years:

 

Fee Category

   Year ended
3/31/2020
  Year ended
3/31/2019

Audit fees

  

 $

        1,266,800 

 

 

 $

        1,418,500 

 

Audit-related fees

  

 

 

 

 

 

Tax fees

  

 

78,022

 

 

 

82,500

 

All other fees

  

 

2,000

 

 

 

2,000

 

  

 

 

 

 

 

 

 

Total fees

    $ 1,346,822      $ 1,503,000  
  

 

 

 

 

 

 

 

Audit fees. Audit fees include fees paid by us to Deloitte & Touche LLP in connection with its annual audit of our consolidated financial statements and its reviews of our interim financial statements as reported in our quarterly filings with the SEC. Audit fees also include fees paid by us to Deloitte & Touche LLP in connection with its annual audit of the effectiveness of our internal control over financial reporting and its engagements and services associated with the issuance of consents on SEC registration statements.

Audit-related fees. Audit-related fees typically include fees paid by us to Deloitte & Touche LLP for assurance and related services traditionally performed by our independent registered public accounting firm.

Tax fees. Tax fees cover services performed by the tax personnel of Deloitte & Touche LLP, except those services specifically related to the audit of our consolidated financial statements, and include fees for tax compliance, tax planning and advice.

All other fees. All other fees include the aggregate fees recognized for services provided by Deloitte & Touche LLP (including our subscription to the firm’s accounting research tool), other than audit, audit-related and tax services.

Our Audit Committee has determined that the services Deloitte & Touche LLP performed for us during the fiscal year ended March 31, 2020 were at all times compatible with its independence.

Policy on Pre-Approval of Audit and Non-Audit Services

Our Audit Committee has the sole authority to approve the scope of the audit and any audit or permitted non-audit services, as well as all audit fees and terms. Our Audit Committee must pre-approve any audit and permitted non-audit services provided by our independent registered public accounting firm. Our Audit Committee will not approve the engagement of our independent registered public accounting firm to perform any services that the firm would be prohibited from providing under applicable securities laws.

In assessing whether to approve the use of our independent registered public accounting firm for permitted non-audit services, our Audit Committee endeavors to minimize relationships that could appear to impair the objectivity of our independent registered public accounting firm. Our Audit Committee has delegated pre-approval authority for non-audit services to the Chair of our Audit Committee within the guidelines discussed above. The Chair is required to inform our Audit Committee at its next scheduled meeting of each decision to permit our independent registered public accounting firm to perform non-audit services. All audit and other services provided by Deloitte & Touche LLP were pre-approved for each of the last two fiscal years.

 

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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 

Under its charter, the Audit Committee of our Board of Directors is responsible for reviewing any proposed related party transaction (as defined under the rules of the Nasdaq Stock Market and Item 404(a) of Regulation S-K) and, if appropriate, approving such transaction. In addition, the conflict of interest section in our Code of Conduct and Compliance Policy provides that specified conflict of interest transactions are prohibited. Examples of these conflict of interest transactions include serving as a director, officer or employee of or consultant to any competitor or any entity that does business with us or having a substantial undisclosed direct or indirect interest in any entity that does business with us. Other than the foregoing, we have no established policies or procedures, written or otherwise, for the review, approval or ratification of transactions where related persons have a material interest.

Mr. Van Gorder, a member of our Board, is Chief Executive Officer of Scripps Health, which purchases our products and services. We recognized $1.4 million in revenues from Scripps Health during the fiscal year ended March 31, 2020, which represented less than 1% of our revenues for such year. We expect that Scripps Health will continue to purchase our products in the future. Other than these transactions with Scripps Health, there were no related party transactions in the fiscal year ended March 31, 2020 as required to be reported under Item 404(a) of Regulation S-K.

 

 

DELINQUENT SECTION 16(A) REPORTS

 

Section 16(a) of the Exchange Act requires that our executive officers and directors, as well as persons who own more than 10% of our common stock (“ten-percent stockholders”), file reports of ownership and changes of ownership in our common stock and other equity securities with the SEC.

Based solely on a review of the copies of Forms 3, 4 and 5 filed with the SEC and on written representations from certain reporting persons, we believe that during fiscal year 2020, our directors, executive officers and ten-percent stockholders complied with all applicable Section 16(a) filing requirements on a timely basis, except for one Form 4 filing for Mr. Trapp, which was filed late on May 17, 2019, due to administrative oversight, and reported our withholding on April 9, 2019 of 934 shares of common stock for the payment of withholding taxes upon the vesting of his RSUs.

 

 

GENERAL AND OTHER INFORMATION

 

Stock Trading Practices

We maintain an insider trading policy that, among other things, prohibits officers, directors, employees and contract employees of the Company and its subsidiaries from trading the Company’s securities during quarterly blackout periods and also contains other restrictions on trading activities designed to avoid any circumstance where Company insiders may be deemed to have traded on material nonpublic information. As discussed in “Compensation Discussion and Analysis,” the policy also prohibits insiders (including all executive officers, employees and directors) from hedging their ownership of our securities, engaging in short sales with respect to our securities or pledging our securities.

Other Proposed Action for 2020

Our Board of Directors knows of no other business to come before the 2020 Annual Meeting. However, if any other business should properly be presented at the meeting, the proxies will be voted in accordance with the judgment of the person or persons holding the proxies pursuant to Rule 14a-4(c) under the Exchange Act.

Householding of Proxy Materials

The SEC permits companies and intermediaries such as brokers to satisfy the delivery requirements for proxy materials with respect to two or more stockholders sharing the same address by delivering a single set of proxy materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra conveniences for stockholders and cost savings for companies.

Some brokers household our proxy materials, delivering a single proxy statement or notice 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 it will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent.

 

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If, at any time, you no longer wish to participate in householding and would prefer to receive a separate set of proxy materials, or if you are receiving multiple sets of proxy materials and wish to receive only one, please notify your broker. Stockholders who currently receive multiple sets of the proxy materials at their address and would like to request “householding” of their communications should contact their broker.

Annual Report to Stockholders and Annual Report on Form 10-K

Additional copies of our annual report to stockholders for the fiscal year ended March 31, 2020 and copies of our annual report on Form 10-K for the fiscal year ended March 31, 2020 as filed with the SEC (referred to this in this Proxy Statement as the “2020 Annual Report”) are available to stockholders without charge upon written request addressed to: Investor Relations, ABIOMED, Inc., 22 Cherry Hill Drive, Danvers, Massachusetts 01923.

Stockholder Proposals for 2021

Stockholders who wish to present a proposal for inclusion in our proxy materials for our 2021 Annual Meeting of Stockholders should follow the procedures prescribed in Rule 14a-8 under the Exchange Act. Those procedures require that we receive a stockholder proposal in writing no later than March 2, 2021 in order for such proposal to be included in our proxy materials. Written requests for inclusion should be addressed to: ABIOMED, Inc., 22 Cherry Hill Drive, Danvers, Massachusetts 01923, Attention: Vice President, General Counsel and Secretary.

Under our bylaws, stockholders who wish to nominate a director or include a proposal in our 2021 Annual Meeting of Stockholders (but do not wish to include such nomination or proposal in our proxy materials) must give us timely notice. To be timely, the notice must be received by us at our principal executive offices no later than the close of business on the 90th day before the one-year anniversary of the 2020 Annual Meeting and no earlier than the close of business on 120th day before the one-year anniversary of the 2020 Annual Meeting. In the event the 2021 Annual Meeting of Stockholders is held more than 30 days before or more than 60 days after the one-year anniversary of the 2020 Annual Meeting, the notice must be received by us at our principal executive offices not later than the close of business on the later of the 90th day before the scheduled date of such annual meeting of stockholders or the 10th day following the day on which public announcement of the date of such meeting is first made.

The notice must contain specified information that is prescribed in our bylaws about you and the director nominee or the proposal, as applicable. Written requests should be addressed to: ABIOMED, Inc., 22 Cherry Hill Drive, Danvers, Massachusetts 01923, Attention: Vice President, General Counsel and Secretary.

 

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ABIOMED, INC. 22 CHERRY HILL DRIVE DANVERS, MA 01923 YOUR VOTE IS IMPORTANT. VOTE BY INTERNET/TELEPHONE/MAIL 24 HOURS A DAY, 7 DAYS A WEEK VOTE BY INTERNET—www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. If you are a shareholder of record or hold shares through a broker or bank, your vote must be received by 11:59 p.m. Eastern Time on August 11, 2020. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D18270-P39630-Z77055 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY ABIOMED, INC. For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark “For All Except” and write the The Board of Directors recommends that you vote number(s) of the nominee(s) on the line below. FOR ALL nominees in Proposal 1: 1. Election of Directors ! ! ! Nominees: 01) Dorothy E. Puhy 02) Paul G. Thomas 03) Christopher D. Van Gorder The Board of Directors recommends that you vote FOR Proposal 2: For Against Abstain 2. Approval, by non-binding advisory vote, of the compensation of our named executive officers. ! ! ! The Board of Directors recommends that you vote FOR Proposal 3: 3. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2021. ! ! ! NOTE: IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF THIS PROXY IS SIGNED AND NO DIRECTION IS GIVEN WITH RESPECT TO A PROPOSAL, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH NOMINEE LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. For address changes and/or comments, please check this box and write them ! on the back where indicated. Please indicate if you plan to attend this meeting. ! ! Yes No Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date


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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice of Annual Meeting of Stockholders, Proxy Statement and Annual Report are available at www.proxyvote.com. For directions to the Annual Meeting, please visit http://www.abiomed.com/proxy. D18271-P39630-Z77055 ABIOMED, INC. Annual Meeting of Stockholders August 12, 2020 8:00 A.M. Eastern Time This proxy is solicited by the Board of Directors. The undersigned, revoking all prior proxies, hereby appoints Michael R. Minogue, Todd A. Trapp and Marc A. Began and each of them acting singly, as proxies, with full power of substitution, to vote all shares of capital of ABIOMED, Inc. that the undersigned is entitled to vote at the 2020 Annual Meeting of Stockholders of ABIOMED, Inc. to be held at 8:00 A.M. Eastern Time on August 12, 2020 at the Beauport Hotel, 55 Commercial Street, Gloucester, Massachusetts 01930, and at any adjournments or postponements thereof, upon the matters set forth in the Notice of Annual Meeting and the related Proxy Statement, copies of which have been made available to the undersigned, and in their discretion upon any business that may properly come before the meeting or any adjournment or postponement thereof. Attendance of the undersigned at the Annual Meeting or any adjournment or postponement thereof will not be deemed to revoke this proxy unless the undersigned affirmatively indicates the undersigned’s intention to vote the shares represented hereby in person prior to the exercise of this proxy. This proxy, when properly executed, will be voted in the manner directed herein. If this proxy is signed but no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark the corresponding box on the reverse side.)