Endologix, Inc.
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. _______ )
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Endologix, Inc.
(Name of Registrant as Specified In Its Charter)
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TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 22, 2007
To the Stockholders of Endologix, Inc.:
You are cordially invited to attend the 2007 Annual Meeting of Stockholders (the Annual
Meeting) of Endologix, Inc. (the Company) on May 22, 2007 at 8:00 a.m., Pacific time. The Annual
Meeting will be held at the Companys offices at 11 Studebaker, Irvine, California 92618 for the
following purposes, as more fully described in the accompanying proxy statement:
1. To elect three individuals to serve as Class III members of the Companys Board of
Directors for a term of three years or until their successors are duly elected and qualified.
2. To ratify the selection of PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm for the fiscal year ending
December 31, 2007.
3. To transact such other business as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
Only stockholders of record at the close of business on April 17, 2007 will be entitled to
vote at the Annual Meeting or any adjournment or postponement thereof.
By Order of the Board of Directors
Paul McCormick
President and Chief Executive Officer
Irvine, California
April 18, 2007
Your vote is important. To vote your shares by proxy you may do any one of the following:
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Vote at the internet site address listed on your proxy card; |
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Call the toll-free number listed on your proxy card; or |
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Sign, date and return in the envelope provided the enclosed proxy card. |
If you choose the third option, please do so promptly to ensure your proxy arrives in sufficient
time.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Endologix, Inc. (the
Company) for use at the 2007 Annual Meeting of Stockholders (the Annual Meeting) to be held on
May 22, 2007 at 8:00 a.m., Pacific time, at the Companys offices at 11 Studebaker, Irvine,
California 92618, at which time stockholders of record as of April 17, 2007 will be entitled to
vote. On April 1, 2007, the Company had 42,718,806 shares of its common stock outstanding.
The Company intends to mail this proxy statement and the accompanying proxy card on or about
April 24, 2007 to all stockholders entitled to vote at the Annual Meeting. The Companys principal
executive offices are located at 11 Studebaker, Irvine, California 92618.
VOTING
The shares of common stock constitute the only outstanding class of voting securities of the
Company. The presence in person or by proxy of the holders of a majority of the common stock issued
and outstanding constitutes a quorum for the transaction of business at the Annual Meeting. Each
stockholder of record is entitled to one vote for each share of common stock held as of the record
date on each matter to be voted on at the Annual Meeting. For purposes of the quorum and the
discussion below regarding the vote necessary to take stockholder action, stockholders of record
who are present at the Annual Meeting in person or by proxy and who abstain, including brokers
holding customers shares of record who cause abstentions to be recorded at the Annual Meeting, are
considered stockholders who are present and entitled to vote and count toward the quorum. Brokers
holding shares of record for customers generally are not entitled to vote on certain matters unless
they receive voting instructions from their customers.
Directors are elected by the affirmative vote of a plurality of votes cast at the Annual
Meeting and therefore, broker non-votes and abstentions or votes that are withheld will be excluded
entirely from the vote and have no effect on the election of directors. Ratification of the
selection of PricewaterhouseCoopers LLP as the Companys independent registered public accounting
firm for the fiscal year ending December 31, 2007 requires the affirmative vote of a majority of
the shares present or represented and entitled to be voted at the Annual Meeting. Uninstructed
shares are entitled to vote on this matter, and therefore broker non-votes and abstentions will
have the effect of votes against the proposal.
Shares of common stock represented by a properly executed proxy received in time for the Annual
Meeting will be voted as specified therein, unless the proxy previously has been revoked. Unless
otherwise specified in the proxy, the persons named therein will vote FOR the election of each of
the director nominees named in this proxy statement and FOR ratification of the selection of
PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for
the fiscal year ending December 31, 2007. As to any other business properly submitted to
stockholders at the Annual Meeting, the persons named in the proxy will vote as recommended by the
Board of Directors or, if no recommendation is given, in their discretion.
HOW TO VOTE
You may vote by proxy or in person at the Annual Meeting. To vote by proxy, you may: vote at
the Internet site address listed on your proxy card, call the toll-free number set forth on your
proxy card or mail your signed and dated proxy card in the envelope provided. Even if you plan to
attend the Annual Meeting, you are recommended to vote by proxy prior to the Annual Meeting. You
can always change your vote as described below.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to revoke it at any time
before it is voted. It may be revoked by the holder of record by filing with the Secretary of the
Company at the address above, a written notice of revocation or a new duly executed proxy bearing a
date later than the date indicated on the previous proxy, or it may be revoked by the holder of
record attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will
not, by itself, revoke a proxy.
SOLICITATION
The Company will bear the entire cost of proxy solicitation, including costs of preparing,
assembling, printing and mailing this proxy statement, the proxy card and any additional material
furnished to stockholders. Copies of the solicitation materials will be furnished to brokerage
houses, fiduciaries and custodians holding in their names shares of common stock beneficially owned
by others, to forward to such beneficial owners. The Company may, if deemed necessary or advisable,
retain a proxy solicitation firm to deliver solicitation materials to beneficial owners and to
assist the Company in collecting proxies from such individuals. The Company may reimburse persons
representing beneficial owners of shares for their expenses in forwarding solicitation materials to
such beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone,
electronic mail or personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other regular employees
for such services.
2
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information known to the Company regarding the
ownership of the Companys common stock as of April 1, 2007 by: (i) each stockholder known to the
Company to be a beneficial owner of more than five percent (5%) of the Companys common stock; (ii)
each director; (iii) each executive officer named in the Summary Compensation Table; and (iv) all
current directors and officers of the Company as a group.
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Number of Shares |
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Percentage of |
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Beneficially |
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Outstanding |
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Owned |
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Shares |
Name and Address (1) |
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(2) |
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(3) |
Federated Investors, Inc. (4) |
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9,971,406 |
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23.3 |
% |
Elliott Associates (5) |
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5,140,000 |
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12.0 |
% |
Goldman, Sachs & Co. (6) |
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3,466,225 |
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8.1 |
% |
Franklin D. Brown (7) |
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477,200 |
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1.1 |
% |
Paul McCormick (8) |
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643,988 |
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1.5 |
% |
Robert J. Krist (9) |
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127,454 |
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* |
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Karen Uyesugi (10) |
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116,407 |
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* |
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Stefan D. Schreck (11) |
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101,890 |
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* |
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Ronald H. Coelyn (12) |
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57,500 |
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* |
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Roderick de Greef (13) |
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81,354 |
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* |
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Edward B. Diethrich, M.D. (14) |
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613,775 |
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1.4 |
% |
Jeffrey F. ODonnell (15) |
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295,417 |
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* |
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Gregory D. Waller (16) |
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81,875 |
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All directors and officers as a group (10 persons) (17) |
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2,596,860 |
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5.9 |
% |
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* |
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Represents beneficial ownership of less than 1% |
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Unless otherwise indicated, the business address of each holder is: c/o Endologix, Inc., 11
Studebaker, Irvine, CA 92618. |
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The number of shares of common stock beneficially owned includes any shares issuable pursuant
to stock options that are currently exercisable or may be exercised within 60 days after April
1, 2007. Shares issuable pursuant to such options are deemed outstanding for computing the
ownership percentage of the person holding such options but are not deemed to be outstanding
for computing the ownership percentage of any other person. |
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Applicable percentages are based on 42,718,806 shares outstanding on April 1, 2007, plus the
number of shares such stockholder can acquire within 60 days after April 1, 2007. |
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Based on information contained in a Schedule 13G/A filed with the Securities and Exchange
Commission on February 14, 2006. The address of Federated Investors, Inc. is Federated
Investors Tower, 5800 Corporate Drive, Pittsburgh, Pennsylvania 15222. |
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(5) |
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Based on information contained in a Schedule 13D/A filed with the Securities and Exchange
Commission on September 28, 2006. The address of Elliott Associates, L.P. is 712 Fifth Avenue,
36th Floor, New York, New York 10019. |
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Based on information contained in a Schedule 13G filed with the Securities and Exchange
Commission on February 12, 2007. The address of Goldman, Sachs & Co. is 85 Broad Street New
York, New York 10004. |
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Includes 212,500 shares subject to options exercisable within 60 days after April 1, 2007 and
214,700 shares held in a family trust. |
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Includes 162,500 shares subject to options exercisable within 60 days after April 1, 2007. |
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(9) |
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Includes 86,198 shares subject to options exercisable within 60 days after April 1, 2007. |
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(10) |
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Consists of shares subject to options exercisable within 60 days after April 1, 2007. |
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(11) |
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Includes 97,188 shares subject to options exercisable within 60 days after April 1, 2007. |
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(12) |
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Consists of shares subject to options exercisable within 60 days after April 1, 2007. |
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(13) |
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Consists of shares subject to options exercisable within 60 days after April 1, 2007. |
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(14) |
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Includes 523,775 shares held by T&L Investments L.P. Dr. and Mrs. Edward B. Diethrich hold a
total of 98% of the voting and dispositive power over the shares through a 98% ownership of
the capital stock of EBDFam, Inc., the general partner in T&L Investments L.P. Also includes
30,000 shares held in a family |
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trust and 60,000 shares subject to options exercisable within 60 days after April 1, 2007. |
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(15) |
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Consists of shares subject to options exercisable within 60 days after April 1, 2007.
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(16) |
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Consists of shares subject to options exercisable within 60 days after April 1, 2007. |
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(17) |
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Includes 1,250,939 shares subject to options exercisable within 60 days after April 1, 2007. |
4
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven members, divided into three classes
approximately equal in size. Each class of directors is elected for three-year terms on a staggered
term basis, so that each year the term of office of one class will expire and the terms of office
of the other classes will continue for periods of one and two years, respectively. The nominees for
election at the Annual Meeting will serve as Class III directors, with a term expiring at the
annual meeting of stockholders to be held in 2010. Each director is elected to serve until the
expiration of his term, or until his successor is duly elected and qualified.
The nominees for election as Class III directors at the Annual Meeting are Paul McCormick,
Roderick de Greef and Gregory D. Waller, each of whom is currently a director of the Company. Mr.
McCormick has served as a director since 2002 and Messrs. de Greef and Waller have served as
directors since 2003. Messrs. McCormick, de Greef and Waller have each indicated a willingness to
continue to serve on the Board of Directors if elected. However, in the event any nominee is unable
to or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted
for an additional nominee who shall be designated by the current Board of Directors to fill the
vacancy. Unless otherwise instructed, the proxy holders intend to vote all proxies received by them
in favor of the nominees listed above.
Vote Required and Recommendation of the Board of Directors
The three candidates receiving the highest number of affirmative votes of shares entitled to
vote at the Annual Meeting will be elected directors of the Company. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE NOMINEES NAMED ABOVE.
Information With Respect to Nominees And Directors
Set forth below for each nominee for election as director and for each director of the
Company, is information regarding his age, position(s) with the Company, the period he has served
as a director, any family relationship with any other director or executive officer of the Company,
and the directorships currently held by him in corporations whose shares are publicly registered.
Class III
(Directors
nominated for office with a term expiring in 2010)
Paul McCormick, 54, is the Companys President and Chief Executive Officer and has been a
director since May 2002. Mr. McCormick has more than 27 years in the medical device industry. The
majority of his career has been in emerging medical technologies. Mr. McCormick joined the former
Endologix in January 1998, prior to its merger with the Company in May 2002, as Vice President of
Sales and Marketing, and served as President and Chief Operating Officer from January 2001 until
the merger in May 2002. He then served in the same position with the Company until January 2003
when he became President and Chief Executive Officer. Previously, he held various sales and
marketing positions at Progressive Angioplasty Systems, Heart Technology, Trimedyne Inc., and
United States Surgical Corporation.
Roderick de Greef, 46, has served on the Companys Board of Directors since November 2003. Mr.
de Greef has served as the Chief Financial Officer of Cambridge Heart since October 2005. Mr. de
Greef served as the Executive Vice President, Chief Financial Officer and Secretary of Cardiac
Science, Inc. from March 2001 to September 2005. From 1995 to 2001, Mr. de Greef provided corporate
finance advisory services to a number of early stage companies including Cardiac Science, where he
was instrumental in securing equity capital beginning in 1997, and advising on merger and
acquisition activity. From 1989 to 1995, Mr. de Greef was Vice President and Chief Financial
Officer of BioAnalogics, Inc. and International BioAnalogics, Inc., both publicly held development
stage medical technology companies located in Portland, Oregon. From 1986 to 1989, Mr. de Greef was
Controller and then Chief Financial Officer of publicly held Brentwood Instruments, Inc. Mr. de
Greef has a B.A. in Economics and International
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Relations from California State University at San Francisco and an M.B.A. from the University
of Oregon. Mr. de Greef also serves on the boards of BioLife Solutions, Inc. a public biotechnology
company located in Owego, New York and True Colors International, Inc., an Irvine-based public
educational services company.
Gregory D. Waller, 57, has served on the Companys Board of Directors since November 2003.
Mr. Waller has been Chief Financial Officer of Universal Building Products, a manufacturer of
concrete construction accessories since March 2006. Previous to that, Mr. Waller had been in
retirement except for board directorships. Mr. Waller served as Vice President-Finance, Chief
Financial Officer and Treasurer of Sybron Dental Specialties, Inc., a manufacturer and marketer of
consumable dental products, from August 1993 until his retirement in May 2005 and was formerly the
Vice President and Treasurer of Kerr, Ormco and Metrex. Mr. Waller joined Ormco in December 1980 as
Vice President and Controller and served as Vice President of Kerr European Operations from July
1989 to August 1993. Mr. Waller has an MBA with a concentration in accounting from California State
University, Fullerton. Mr. Waller also serves on the board of Clarient Corporation, Cardiogenesis
Inc., and SenoRx, Inc., all publicly traded companies, where he is the audit committee chairman. He
serves on the board of two privately held companies: Alsius
Corporation, and VivoMetrics Corp. and is the
audit committee chairman on each of these boards.
Class I
(Directors
continuing in office with a term expiring in 2008)
Jeffrey F. ODonnell, 47, has served on the Companys Board of Directors since June 1998. Mr.
ODonnell joined the Company in a management capacity in 1995, became President in January 1998 and
Chief Executive Officer that June. In November 1999 Mr. ODonnell joined PhotoMedex, Inc., a
publicly traded company, as President and Chief Executive Officer and has served as a member of its
Board of Directors since that date. From 1994 to 1995 Mr. ODonnell held the position of President
and CEO of Kensey Nash Corporation, a manufacturer of Cardiology Products. Additionally, he has
held several senior sales and marketing management positions at Boston Scientific, Guidant and
Johnson & Johnson Orthopedic. Mr. ODonnell currently serves on the Board of Directors of Cardiac
Science Corporation, a publicly traded company. Mr. ODonnell is a graduate of LaSalle University
School of Business.
Ronald H. Coelyn, 62, has served on the Companys Board of Directors since January 2005. Mr.
Coelyn specializes in senior management and board appointments at the executive search firm The
Coelyn Group, which he founded in 1992. Prior to that, Mr. Coelyn served for three years as
President and Chief Operating Officer of a medical diagnostics company, American Diagnostics
Corporation, where he was responsible for sales and marketing, research and development, regulatory
affairs, quality systems, manufacturing and finance. Subsequently, Mr. Coelyn was Chairman,
President and Chief Executive Officer of a healthcare information systems company focused on
practice management and electronic medical records. Mr. Coelyn currently serves as co-Chairman of
LINC (LifeSciences Industry Council) of Orange County, California, a member of the BioMedical
Industry Councils board of directors and an advisory board member of the American Heart
Association.
Class II
(Directors
continuing in office with a term expiring in 2009)
Franklin D. Brown, 63, serves as the Companys Chairman and has been a director since 2002,
and was formerly a director of the private company Endologix, Inc. from 1997 to 2002. Following the
merger with the former Endologix in May 2002, Mr. Brown was the Companys Chief Executive Officer
and Chairman until January 2003, when he was elected Executive Chairman. Mr. Brown served as the
Companys Executive Chairman until October 2004. Mr. Brown previously served as the Chairman and
Chief Executive Officer of the former Endologix, Inc. since joining that company in 1998. From
October 1994 until the sale of the company in September 1997, Mr. Brown served as Chairman,
President and Chief Executive Officer at Imagyn Medical, Inc. From 1986 until the sale of the
company in 1994, Mr. Brown served as President and Chief Executive Officer of Pharmacia Deltec,
Inc., an ambulatory drug delivery company. Mr. Brown also serves on the board of directors of
Interventional Spine, Inc., a private medical device company.
6
Edward B. Diethrich, M.D., 71, has served on the Companys Board of Directors since May 2002. Dr.
Diethrich was a Director for the former Endologix, Inc. from 1997 until its merger with the Company
in May 2002. Dr. Diethrich has been the Medical Director and Chief of Cardiovascular Surgery of the
Arizona Heart Hospital since 1997, and has been the Director and Chief of Cardiovascular Surgery at
the Arizona Heart Institute from 1971 to the present.
Executive Officers
The executive officers of the Company, other than Mr. McCormick whose biography is set forth
above, are as follows:
Stefan G. Schreck, Ph.D., 47, joined the Company in February 2004 and serves as the Companys Vice
President of Research & Development and Operations. Dr. Schreck has more than 20 years of
experience in research and development of medical products. Prior to joining the Company, Dr.
Schreck held increasingly more responsible R&D management positions in the medical device industry.
From May 1995 to April 2000, Dr. Schreck served as Director of Research in Baxter Healthcares
Heart Valve Division. From April 2000 to August 2002, Dr. Schreck served as Senior Director R&D at
Edwards Lifesciences and was responsible for the development of all surgical heart valve repair and
replacement products. From August 2002 to February 2004, Dr. Schreck served as President & CEO of
MediMorph Solutions Inc., an engineering and management consulting firm for the medical device
industry that he founded.
Karen Uyesugi, 51, became the Companys Vice President of Clinical, Regulatory Affairs and Quality
Assurance following the Companys merger with the former Endologix in May 2002. Ms. Uyesugi has
over 25 years of both domestic and international regulatory experience in the medical device and
pharmaceutical industry. The majority of her career has been involved with a wide variety of Class
III and Class II medical devices ranging from implantable cardiovascular devices, neurosurgery, and
general surgery products. Prior to joining the former Endologix in July 1998, Ms. Uyesugi held
various positions in regulatory, clinical, and quality assurance at Neuro Navigational Corporation,
Trimedyne, Inc., Baxter Healthcare, Shiley, Inc., and Allergan Pharmaceuticals.
Robert J. Krist, 57, joined the Company in August 2004 and serves as the Companys Chief Financial
Officer and Secretary. Most recently, Mr. Krist served as Chief Financial Officer of CardioNet,
Inc., a privately held marketer of mobile cardiac outpatient telemetry devices and services based
in San Diego, California. Mr. Krist previously served for three years as Chief Financial Officer of
Irvine-based Datum, Inc., a technology manufacturer. Prior to that, Mr. Krist served for three
years as Chief Financial Officer and Vice President, Field Operations, of Bridge Medical, Inc., a
start-up pharmacy information systems company. Mr. Krist also held various management positions
during his six years at McGaw, Inc., including Chief Financial Officer and President of the Central
Admixture Pharmacy Services Division. Mr. Krist received a BS in physics from Villanova University
and an MBA from the University of Southern California.
Director Independence
All of the members of the Companys Board of Directors, other than Messrs. McCormick and Brown
are independent as defined in the Nasdaq Marketplace Rules. The Companys Board has determined
that no member has a relationship that would interfere with the exercise of independent judgment in
carrying out his responsibilities as a director. The independence of each director is reviewed
periodically to ensure that, at all times, at least a majority of the Companys Board is
independent.
Meetings of the Board of Directors
The Board of Directors met five times during the year ended December 31, 2006. Each director
attended at least 75% of the aggregate of (i) the total number of meetings of the Board of
Directors and (ii) the total number of meetings held by all committees of the Board of Directors on
which he served.
Committees of the Board of Directors
The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and
Governance Committee. Each committee operates under a written charter adopted by the Board of
Directors. Copies of the
7
charters of all standing committees are available on the Investor Relations page on the
Companys website located at www.endologix.com.
Audit Committee
The Audit Committee consists of Messrs. Waller, de Greef and ODonnell. Each member of the
Audit Committee qualifies as an independent director in compliance with the applicable rules of
the Securities and Exchange Commission and the Nasdaq Marketplace Rules. The Board of Directors has
determined that each member of the Audit Committee qualifies as an audit committee financial
expert as that term is defined by the rules and regulations of the Securities and Exchange
Commission.
The Audit Committee has the sole authority to appoint and, when deemed appropriate, replace
the Companys independent registered public accounting firm, and has established a policy of
pre-approving all audit and permissible non-audit services provided by the Companys independent
registered public accounting firm. The Audit Committee has, among other things, the responsibility
to review and approve the scope and results of the annual audit, to evaluate with the independent
registered public accounting firm the performance and adequacy of the Companys financial personnel
and the adequacy and effectiveness of the Companys systems and internal financial controls, to
review and discuss with management and the independent registered public accounting firm the
content of the Companys financial statements prior to the filing of the Companys quarterly
reports on Form 10-Q and annual reports on Form 10-K, to establish procedures for receiving,
retaining and investigating reports of illegal acts involving the Company or complaints or concerns
regarding questionable accounting or auditing matters and to establish procedures for the
confidential, anonymous submission by the Companys employees of concerns or complaints regarding
questionable accounting or auditing matters. The Audit Committee met four times during the year
ended December 31, 2006. To ensure independence, the Audit Committee also meets separately with the
Companys independent registered public accounting firm and members of management.
Compensation Committee
The Compensation Committee consists of Dr. Diethrich and Messrs. Coelyn and ODonnell, each of
whom satisfies the independence standards set forth in the Nasdaq Marketplace Rules. The
Compensation Committee is primarily responsible for evaluating and approving the cash and equity
compensation for the Chief Executive Officer and other executive officers, and administers the
Companys employee compensation plans. The Compensation Committee held 12 meetings during the year
ended December 31, 2006.
Additional information regarding the Compensation Committees consideration and determination
of executive officer and director compensation is included under the heading Compensation
Discussion and Analysis beginning on page 10 below.
Nominating and Governance Committee
The Nominating and Governance Committee consists of Messrs. ODonnell and de Greef, each of
whom satisfy the independence standards set forth in the Nasdaq Marketplace Rules. The primary
purposes of the Nominating and Governance Committee are to identify and recommend to the Board of
Directors individuals qualified to serve as members of the Companys Board of Directors and each of
its committees, to develop and recommend to the Board of Directors corporate governance guidelines
and to lead the Board of Directors in its annual review of its composition, effectiveness and
performance. The Nominating and Governance Committee held one meeting during the year ended
December 31, 2006.
Evaluation of Director Nominees
In the case of incumbent directors whose terms of office are set to expire, the Nominating and
Governance Committee reviews such directors overall service to the Company during their term,
including their level of participation and the quality of their performance. In the case of new
director nominees, the Nominating and Governance Committee screens candidates, does reference
checks, prepares a biography for each candidate for the Board to review and conducts interviews.
The members of the Nominating and Governance Committee and the
8
Companys Chief Executive Officer interview candidates that meet the criteria described below,
and the Nominating and Governance Committee recommends nominees to the Board that best suit the
Boards needs. The Nominating and Governance Committee does not intend to evaluate nominees for
director any differently because the nominee is or is not recommended by a stockholder. All of the
nominees for director in this proxy statement are standing for re-election. The Company does not
pay a fee to any third party to identify or evaluate or assist in identifying or evaluating
potential director nominees.
The Nominating and Governance Committee believes that nominees for director must meet certain
minimum qualifications, including:
|
|
|
having the highest character and integrity; |
|
|
|
|
having business or other experience that is of particular relevance to the Company; |
|
|
|
|
having sufficient time available to devote to the affairs of the Company; and |
|
|
|
|
being free of any conflicts of interest which would violate any applicable law
or regulations or interfere with the proper performance of the responsibilities of a
director. |
Stockholder Nominations of Directors
The Nominating and Governance Committee will consider stockholder recommendations for
directors sent to the Nominating and Governance Committee, c/o Corporate Secretary, Endologix,
Inc., 11 Studebaker, Irvine, California 92618. Stockholder recommendations for directors must
include: (1) the name and address of the stockholder recommending the person to be nominated and
the name and address of the person or persons to be nominated, (2) a representation that the
stockholder is a holder of record of stock of the Company, (3) a description of all arrangements or
understandings between the stockholder and the recommended nominee, if any, (4) such other
information regarding the recommended nominee as would be required to be included in a proxy
statement filed pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934,
as amended (the Exchange Act) had the nominee been nominated, or intended to be nominated, by
the Board of Directors, and (5) the consent of the recommended nominee to serve as a director of
the Company if so elected. The stockholder must also state if they intend to appear in person or by
proxy at the annual meeting to nominate the person specified in the notice. In accordance with the
Companys bylaws, the notice containing the nomination must be received by the Company not less
than 90 days prior to the annual or special meeting of stockholders or, in the event less than 100
days notice or prior public disclosure of the date of the annual or special meeting has been given,
then no later than 10 days after such notice has been given.
Communications with the Board of Directors
The Board of Directors provides a process for stockholders to send communications to the
Board. Stockholders can send communications to the Board of Directors, or an individual director,
by sending a written communication to: Endologix, Inc., 11 Studebaker, Irvine, California 92618,
Attn: Corporate Secretary. All communications sent to this address are sent to the specific
directors identified in the communication or if no directors are identified, the communication is
delivered to the Chairman of the Board. The Company does not have a policy with respect to director
attendance at annual meetings of the Companys stockholders. Historically, other than employees of
the Company, few stockholders have attended the Companys annual meetings. Five directors, two of
whom were employees of the Company, attended the Companys annual meeting in 2006.
Code of Ethics
The Company has adopted a Code of Conduct and Ethics that applies to its principal executive
officer, principal financial officer and principal accounting officer. A copy of the Code of
Conduct and Ethics is available on the Investor Relations page on the Companys website at
www.endologix.com, and a copy may also be obtained by any person, without charge, upon
written request delivered to Endologix, Inc., Attn: Corporate Secretary, 11 Studebaker, Irvine,
California 92618. The Company will disclose any amendment to, or waiver from, a provision of
9
the Code of Conduct and Ethics by posting such information on the Companys website at the
above address.
Section 16(a) Beneficial Ownership Reporting Compliance
The members of the Companys Board of Directors, the Companys executive officers and persons
who hold more than 10% of the Companys outstanding common stock are subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934 which requires them to file
reports with respect to their ownership of the common stock and their transactions in such common
stock. Based upon (i) the copies of Section 16(a) reports that the Company received from such
persons for their 2006 fiscal year transactions in the common stock and their common stock holdings
and/or (ii) the written representations received from one or more of such persons that no other
reports were required to be filed by them for the 2006 fiscal year, the Company believes that all
reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by the
Companys executive officers, Board members and greater than 10% stockholders, except that Ms.
Uyesugi sold 34,891 shares of common stock on November 1, 2006 under a Rule 10(b)5-1 plan, which
was reported on a Form 4 filed on November 9, 2006.
Compensation Committee Interlocks and Insider Participation
None of the Companys executive officers served on the board of directors or compensation
committee of any entity that has one or more executive officers serving as a member of the
Companys Board of Directors or Compensation Committee.
Related Party Transactions
The Company has not entered into a transaction with any related person since the beginning of
the Companys 2006 fiscal year.
The Audit Committee is responsible for reviewing and approving any proposed transaction with
any related person. Currently, this review and approval requirement applies to any transaction to
which the Company will be a party, in which the amount involved exceeds $120,000, and in which any
of the following persons will have a direct or indirect material interest: (a) any of the Companys
directors or executive officers, (b) any nominee for election as a director, (c) any security
holder who is known to the Company to own of record or beneficially more than five percent of any
class of the Companys voting securities, or (d) any member of the immediate family (as defined in
Regulation S-K, Item 404) of any of the persons described in the foregoing clauses (a)-(c).
In the event that management becomes aware of any related person transaction, management will
present information regarding such transaction to the Audit Committee for review and approval.
Compensation Discussion and Analysis
Overview
This compensation discussion and analysis (CD&A) is intended to provide context for the
decisions underlying the compensation reported in the executive compensation tables included in
this Proxy Statement for the Companys Chief Executive Officer (CEO), Chief Financial Officer
(CFO) and the Companys two other executive officers. These four executive officers are
collectively referred to as the Named Executive Officers or the NEOs. The Compensation
Committee of the Companys Board of Directors is responsible for policies and decisions regarding
the compensation and benefits for NEOs.
The Compensation Committee of the Board of Directors evaluates and approves the base salary
and bonuses to be paid to the Companys executive officers each fiscal year. In addition, the
Compensation Committee administers the Companys equity compensation plans with respect to option
grants and stock issuances made thereunder to officers and other key employees. The Compensation
Committee hired Remedy Compensation Consulting, an independent consulting firm, in March 2007 to
prepare a direct compensation assessment for the Companys
10
executives, and to conduct a competitive Board pay assessment. The Company previously had not
utilized any compensation consultants.
Generally, the Company strives to establish compensation practices and provide compensation
opportunities that attract, retain and reward its executives and strengthen the mutuality of
interests between its executives and the Companys shareholders in order to motivate them to
maximize shareholder value. The primary goals of the Companys executive compensation program are:
|
|
|
motivation of the Companys executive officers to cause the Company to achieve the best
possible financial and operational results; |
|
|
|
|
attraction and retention of high quality executives who can provide effective
leadership, consistency of purpose and enduring relations with relevant stakeholders; and |
|
|
|
|
alignment of long-term interests of the Companys executive officers with those of the
Companys shareholders. |
In making decisions about total compensation to each executive officer, the Compensation
Committee considers Company performance against internal plans, Company performance within the
context of its peer group, and individual performance against specific job responsibilities.
Company performance is measured by revenues and earnings. The Compensation Committee makes a
subjective determination regarding total compensation packages for the Companys executive officers
considering these factors in the aggregate. Additionally, the Compensation Committee evaluates the
relativity of compensation among its executive officers with a view to ensure that differences
properly reflect differences in title, job responsibilities and performance.
Compensation Program Components
The significant components of the Companys compensation program for executive officers
include base salary, incentive bonus, stock incentive awards and an employee stock purchase plan.
Base Salary
Base salary is a fixed component of compensation, and is reviewed and adjusted annually. The
goal is to provide the Companys executives with a stable, market-competitive base of income that
is commensurate with an executives skills, experience and contributions to the Company. Although
the Compensation Committee reviewed various compensation surveys, it did not rely upon any specific
survey for comparative compensation purposes. Instead, the Compensation Committee made its
decisions as to the appropriate market level of base salary for each executive officer on the basis
of its understanding of the salary levels in effect for similar positions at those companies with
which the Company competes for executive talent. The Compensation Committee on an annual basis will
review base salaries, and adjustments will be made in accordance with the factors indicated above.
Incentive Bonus
The Endologix Employee Bonus Plan provides the Compensation Committee with discretionary
authority to award cash bonuses to the Chief Executive Officer and to the other executive officers
in accordance with recommendations made by the Chief Executive Officer. The awards are based upon
the extent to which financial and performance targets are met and the contribution of each such
officer to the attainment of such targets. For fiscal year 2006, the performance targets for each
of the executive officers included gross sales, cash management, cost containment, engineering
product goals, manufacturing goals and regulatory milestone goals. The weight given to each factor
varied from individual to individual. In 2006, the maximum total
potential bonus was limited to 30% of base salary for three
NEOs and 35% for the CEO.
Stock Incentive Awards
Stock option awards are issued under the Companys 2006 Stock Incentive Plan and provides the
Board with the ability to align the interests of the executive officer with those of the
stockholders and provide each individual with a significant incentive to manage the Company from
the perspective of an owner with an equity stake in the business. The number of shares subject to
each option grant is based upon the officers tenure, level of responsibility and
11
relative position in the Company. The Company has established general guidelines for making
option grants to the executive officers in an attempt to target a fixed number of unvested option
shares based upon the individuals position with the Company and their existing holdings of
unvested options. However, the Company does not adhere strictly to these guidelines and will vary
the size of the option grant made to each executive officer as it feels the circumstances warrant.
Each grant allows the officer to acquire shares of the Companys common stock at a fixed price per
share (the market price on the grant date) over a specified period of time (up to 10 years from the
date of grant). The option normally vests in periodic installments over a four-year period,
contingent upon the executive officers continued employment with the Company. Accordingly, the
option will provide a return to the executive officer only if he or she remains in the Companys
employ and the market price of the Companys common stock appreciates over the option term. Stock
option awards are intended to retain executives by providing a compelling incentive for the
participating executives to remain with the Company. In any given year, the Compensation Committee
may elect to grant stock options or other stock incentive awards, such as restricted stock or
restricted stock units, depending on the Committees assessment of Company performance, business
conditions, strategic goals and plans, and executive retention risk.
Employee Stock Purchase Plan
The Company also offers an Employee Stock Purchase Plan to an eligible employee (including the
Named Executive Officers) that provides an opportunity to purchase the Companys common stock
through payroll deductions as a means of purchasing the common stock of the Company.
Summary Compensation Table
The following table sets forth summary compensation information for the year ended December
31, 2006 for the Companys CEO, CFO and each of its executive officers as of the end of the last
fiscal year whose total compensation exceeded $100,000.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
Incentive Plan |
|
Total |
Name and Principal Position |
|
Year |
|
Salary ($) |
|
($)(1) |
|
Compensation ($)(2) |
|
($) |
Paul McCormick, President
and Chief Executive
Officer |
|
|
2006 |
|
|
$ |
325,000 |
|
|
$ |
200,285 |
|
|
$ |
76,781 |
|
|
$ |
602,066 |
|
Robert J. Krist, Chief
Financial Officer |
|
|
2006 |
|
|
$ |
207,000 |
|
|
$ |
121,424 |
|
|
$ |
53,872 |
|
|
$ |
382,296 |
|
Karen Uyesugi, Vice
President, Clinical and
Regulatory Affairs and
Quality Assurance |
|
|
2006 |
|
|
$ |
194,000 |
|
|
$ |
92,621 |
|
|
$ |
46,618 |
|
|
$ |
333,239 |
|
Stefan G. Schreck, Vice
President, Research and
Development/Operations |
|
|
2006 |
|
|
$ |
194,000 |
|
|
$ |
149,645 |
|
|
$ |
41,526 |
|
|
$ |
385,171 |
|
|
|
|
(1) |
|
Represents amounts that the Company recognized as compensation expense in its financial
statements for 2006 as determined under Statement of Financial Accounting Standards 123R (FAS
123R), excluding the effect of the forfeiture estimate. The amounts are the expense for options
granted in 2006 and prior years. |
|
(2) |
|
In 2006, the Company achieved certain financial and non-financial goals that were established
by the Compensation Committee in December 2005. Incentive bonus amounts were paid in January 2007,
but were expensed in 2006 and have been included here as 2006 Bonus Compensation. |
12
Grants of Plan-Based Awards in 2006 Fiscal Year
The following table summarizes grants of awards pursuant to plans made to Named Executive
Officers during the year ended December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards: |
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under |
|
Number of |
|
Exercise or |
|
Closing |
|
|
|
|
|
|
Non-Equity Incentive Plan |
|
Securities |
|
Base Price |
|
Price on |
|
|
|
|
|
|
Awards |
|
Underlying |
|
of Option |
|
Grant |
|
|
Grant |
|
Threshold |
|
Target |
|
Maximum |
|
Options |
|
Awards |
|
Date |
Name |
|
Date |
|
($) |
|
($) |
|
($) |
|
(#) (2) |
|
($ / Share) |
|
($ / Share) |
Paul McCormick |
|
|
5/23/2006 |
(1) |
|
$ |
0 |
|
|
$ |
113,750 |
|
|
$ |
113,750 |
|
|
|
100,000 |
|
|
$ |
3.40 |
|
|
$ |
3.40 |
|
Robert J. Krist |
|
|
5/23/2006 |
(1) |
|
$ |
0 |
|
|
$ |
62,100 |
|
|
$ |
62,100 |
|
|
|
30,000 |
|
|
$ |
3.40 |
|
|
$ |
3.40 |
|
Karen Uyesugi |
|
|
5/23/2006 |
(1) |
|
$ |
0 |
|
|
$ |
58,200 |
|
|
$ |
58,200 |
|
|
|
40,000 |
|
|
$ |
3.40 |
|
|
$ |
3.40 |
|
Stefan G. Schreck |
|
|
1/17/2006 |
(1) |
|
$ |
0 |
|
|
$ |
58,200 |
|
|
$ |
58,200 |
|
|
|
20,000 |
|
|
$ |
7.12 |
|
|
$ |
7.12 |
|
|
|
|
5/23/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
$ |
3.40 |
|
|
$ |
3.40 |
|
|
|
|
(1) |
|
The amounts reported in this row represent the range of potential awards under the threshold,
target, and maximum performance objectives established by the Compensation Committee in December
2005. |
|
(2) |
|
This column shows the number of shares underlying stock option grants made in January 2006
under the 1996 Stock Option/Stock Issuance Plan and May 2006 under the 2006 Stock Incentive Plan. |
Option
Exercises
No
Named Executive Officer exercised any options during the year ended
December 31, 2006.
Outstanding Equity Awards at 2006 Fiscal Year-End
The following table summarizes outstanding equity awards held by Named Executive Officers as
of December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
|
Options |
|
Options |
|
Exercise |
|
Option |
|
|
(#) (1) |
|
(#) (1) |
|
Price |
|
Expiration |
Name |
|
Exercisable |
|
Unexercisable |
|
($/Share) |
|
Date (2) |
|
Paul McCormick |
|
|
75,000 |
|
|
|
25,000 |
|
|
$ |
3.92 |
|
|
|
12/11/2013 |
|
|
|
|
41,667 |
|
|
|
58,333 |
|
|
$ |
5.81 |
|
|
|
4/4/2015 |
|
|
|
|
|
|
|
|
100,000 |
|
|
$ |
3.40 |
|
|
|
5/23/2016 |
|
Robert J. Krist |
|
|
58,333 |
|
|
|
41,667 |
|
|
$ |
5.55 |
|
|
|
8/18/2014 |
|
|
|
|
7,958 |
|
|
|
11,142 |
|
|
$ |
5.81 |
|
|
|
4/4/2015 |
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
|
Options |
|
Options |
|
Exercise |
|
Option |
|
|
(#) (1) |
|
(#) (1) |
|
Price |
|
Expiration |
Name |
|
Exercisable |
|
Unexercisable |
|
($/Share) |
|
Date (2) |
|
|
|
|
|
|
|
30,000 |
|
|
$ |
3.40 |
|
|
|
5/23/2016 |
|
Karen Uyesugi |
|
|
49,584 |
|
|
|
|
|
|
$ |
0.85 |
|
|
|
8/6/2012 |
|
|
|
|
22,500 |
|
|
|
7,500 |
|
|
$ |
3.92 |
|
|
|
12/11/2013 |
|
|
|
|
24,958 |
|
|
|
34,942 |
|
|
$ |
5.81 |
|
|
|
4/4/2015 |
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
3.40 |
|
|
|
5/23/2016 |
|
Stefan G. Schreck |
|
|
35,417 |
|
|
|
14,583 |
|
|
$ |
6.00 |
|
|
|
2/26/2014 |
|
|
|
|
15,625 |
|
|
|
9,375 |
|
|
$ |
4.70 |
|
|
|
6/17/2014 |
|
|
|
|
19,333 |
|
|
|
27,067 |
|
|
$ |
5.81 |
|
|
|
4/4/2015 |
|
|
|
|
|
|
|
|
20,000 |
|
|
$ |
7.12 |
|
|
|
1/17/2016 |
|
|
|
|
|
|
|
|
30,000 |
|
|
$ |
3.40 |
|
|
|
5/23/2016 |
|
|
|
|
(1) |
|
Each option vests 25% upon the first anniversary of the grant date and then in equal monthly
installments over the next three years. Options are fully vested upon the fourth anniversary of
the grant date. In addition, the vesting of these options may fully accelerate upon a change in
control of the Company pursuant to written agreements entered into with each of the Named Executive
Officers. |
|
(2) |
|
Options expire ten years from the grant date. |
Compensation of Directors
Non-employee directors each receive a fee of $1,500 per quarter, $2,000 for each Board meeting
attended in person and reimbursement for certain travel expenses and other out-of-pocket costs.
Members of Board committees, other than the Audit Committee, each receive an additional fee of $500
for each committee meeting attended. Additionally, each member of the Audit Committee is entitled
to a fee of $1,000 per meeting attended and the chairman of the Audit Committee is entitled to an
additional quarterly retainer of $1,000. In addition, each individual who first becomes a
non-employee Board member, whether elected by the stockholders or appointed by the Board,
automatically is granted, at the time of such initial election or appointment, an option to
purchase 30,000 shares of common stock at the fair market value per share of common stock on the
grant date, which vests in four equal annual installments.
On the date of each annual meeting of stockholders, each individual who is to continue to
serve as a non-employee Board member after the annual meeting will receive an additional option
grant to purchase 20,000 shares of common stock, which vests upon the
completion of one year of board service. The Chairman of the Board receives an option grant
to purchase 50,000 shares of common stock, which also vests upon the completion of one year of Board
service.
Director Compensation Paid for the 2006 Fiscal Year
The following table summarizes the compensation paid to each of the Companys directors, other
than Mr. McCormick, during the fiscal year ended December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
|
|
|
All Other |
|
|
|
|
Paid in Cash |
|
Option Awards |
|
Compensation |
|
Total |
Name |
|
($) (1) |
|
($) (2) |
|
($) (3) |
|
($) |
|
Franklin D. Brown (1) |
|
$ |
|
|
|
$ |
125,274 |
|
|
$ |
150,000 |
|
|
$ |
275,274 |
|
Ronald H. Coelyn |
|
$ |
13,500 |
|
|
$ |
81,701 |
|
|
$ |
|
|
|
$ |
95,201 |
|
Roderick de Greef |
|
$ |
16,500 |
|
|
$ |
49,736 |
|
|
$ |
|
|
|
$ |
66,236 |
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
|
|
|
All Other |
|
|
|
|
Paid in Cash |
|
Option Awards |
|
Compensation |
|
Total |
Name |
|
($) (1) |
|
($) (2) |
|
($) (3) |
|
($) |
|
Edward B. Diethrich |
|
$ |
9,000 |
|
|
$ |
49,736 |
|
|
$ |
|
|
|
$ |
58,736 |
|
Jeffrey F. ODonnell |
|
$ |
16,000 |
|
|
$ |
50,670 |
|
|
$ |
|
|
|
$ |
66,670 |
|
Gregory D. Waller |
|
$ |
22,500 |
|
|
$ |
49,736 |
|
|
$ |
|
|
|
$ |
72,236 |
|
|
|
|
(1) |
|
Reflects cash compensation earned for fiscal year end 2006 for meeting attendance and annual
retainer. Annual retainers are paid in quarterly installments and prorated for any portion of a
year during which a director serves. |
|
(2) |
|
Represents amounts that the Company recognized as compensation expense in its financial
statements for 2006 as determined under FAS 123R, excluding the effect of the forfeiture estimate.
The amounts are the expense for options granted in 2006 and prior years. |
The following table sets forth the number of shares underlying outstanding stock options (vested
and unvested) held by each of the directors as of the end of the 2006 fiscal year. Directors did
not hold any unvested shares of restricted stock as of the end of the 2006 fiscal year.
|
|
|
|
|
|
|
Shares underlying |
|
|
options at 2006 |
Director |
|
fiscal year end |
|
Franklin D. Brown |
|
|
212,500 |
|
Ronald H. Coelyn |
|
|
70,000 |
|
Roderick de Greef |
|
|
85,000 |
|
Edward B. Diethrich |
|
|
60,000 |
|
Jeffrey F. ODonnell |
|
|
295,417 |
|
Gregory D. Waller |
|
|
85,000 |
|
|
|
|
(3) |
|
Represents compensation for Mr. Brown as an employee of the Company during 2006. |
Severance and Change-in-Control Arrangements for Executive Officers
The Company
has entered into employment agreements on October 18 of each
year with each of its Named Executive Officers.
Unless thirty days notice is provided by either party to the agreement before the
expiration date, the agreement automatically renews for successive one-year terms. The
agreement provides that if the Company terminates the executive officers employment without cause
or he or she resigns for good reason, the executive officer is entitled to his or her base salary
and continued benefits for six months, all stock options that would have vested over the following
six months will vest immediately upon termination and he or she would be entitled to a prorated
payment equal to the target bonus amount for which he or she would have been eligible for the year
of termination. In addition, in the event the executive officer is terminated, or resigns for good
reason, in connection with a change in control, the executive officer is entitled to his or her
base salary and continued benefits for twelve months, all stock options will accelerate and vest
and he or she would be entitled to a prorated payment equal to the target bonus amount for which he
or she would have been eligible for the year of termination.
15
Potential Payments upon Termination or Change in Control
The following table summarizes the amounts that would become payable to each of the Companys
Named Executive Officers pursuant to the change in control agreements described above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Change in |
|
After Change in |
|
|
|
|
|
|
Control |
|
Control |
|
|
|
|
|
|
Termination |
|
Termination |
|
|
|
|
|
|
without Cause or for |
|
without Cause or |
Name |
|
Benefit |
|
Good Reason |
|
for Good Reason |
|
Paul McCormick |
|
Severance Pay (1) |
|
$ |
162,500 |
|
|
$ |
325,000 |
|
|
|
|
|
Bonus Pay (2) |
|
$ |
56,875 |
|
|
$ |
113,750 |
|
|
|
|
|
Stock option
vesting
acceleration (3) |
|
|
52,083 |
|
|
|
183,333 |
|
|
|
|
|
Continuation of
Benefits(4) |
|
$ |
7,073 |
|
|
$ |
14,075 |
|
Robert J. Krist |
|
Severance Pay (1) |
|
$ |
103,500 |
|
|
$ |
207,000 |
|
|
|
|
|
Bonus Pay (2) |
|
$ |
31,050 |
|
|
$ |
62,100 |
|
|
|
|
|
Stock option
vesting
acceleration (3) |
|
|
23,013 |
|
|
|
82,809 |
|
|
|
|
|
Continuation of
Benefits(4) |
|
$ |
2,260 |
|
|
$ |
4,520 |
|
Karen Uyesugi |
|
Severance Pay (1) |
|
$ |
97,000 |
|
|
$ |
194,000 |
|
|
|
|
|
Bonus Pay (2) |
|
$ |
29,100 |
|
|
$ |
58,200 |
|
|
|
|
|
Stock option
vesting
acceleration (3) |
|
|
22,071 |
|
|
|
82,442 |
|
|
|
|
|
Continuation of
Benefits(4) |
|
$ |
2,260 |
|
|
$ |
4,520 |
|
Stefan G. Schreck |
|
Severance Pay (1) |
|
$ |
97,000 |
|
|
$ |
194,000 |
|
|
|
|
|
Bonus Pay (2) |
|
$ |
29,100 |
|
|
$ |
58,200 |
|
|
|
|
|
Stock option
vesting
acceleration (3) |
|
|
30,383 |
|
|
|
101,025 |
|
|
|
|
|
Continuation of
Benefits(4) |
|
$ |
7,073 |
|
|
$ |
14,075 |
|
|
|
|
(1) |
|
Before Change in Control NEO is entitled to his or her base salary for six months. After
Change in Control NEO is entitled to his or her base salary for twelve months. |
|
(2) |
|
Before Change in Control six month potential bonus amount shown, assuming 100% target was
met, but would be prorated equal to the target bonus amount for which he or she would be entitled
for the year of termination. After Change in Control twelve month potential bonus amount shown,
assuming 100% target was met, but would be prorated equal to the target bonus amount for which he
or she would be entitled for the year of termination. |
|
(3) |
|
Before Change in Control shares represent all stock options that would have vested in the six
months following December 31, 2006, as they would vest immediately. After Change in Control
shares represent all stock options as of December 31, 2006, as they would all vest immediately. |
|
(4) |
|
Before Change in Control represents continuation of benefits through COBRA payments for six
months. After Change in Control represents continuation of benefits through COBRA payments for
twelve months. |
16
Compensation Committee Report
The Compensation Committee of the Board has reviewed and discussed with management the
information provided under the heading Compensation Discussion and Analysis in this proxy
statement required by Item 402(b) of Regulation S-K. Based on such review and discussions, the
Compensation Committee recommended to the Board that this compensation Discussion and Analysis be
included in this proxy statement.
The Compensation Committee
Ronald Coelyn
Edward B. Dietrich, M.D.
Jeffrey ODonnell
17
PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP to
continue as the independent registered public accounting firm for the year ending December 31,
2007. The Company is asking the stockholders to ratify the selection of PricewaterhouseCoopers LLP
as the independent registered public accounting firm to audit the consolidated financial statements
of the Company for the fiscal year ending December 31, 2007 and to perform other appropriate
services. PricewaterhouseCoopers LLP audited the Companys financial statements for the year ended
December 31, 2006. A representative of PricewaterhouseCoopers LLP is expected to be present at the
Annual Meeting to respond to stockholders questions, and that representative will be given an
opportunity to make a brief presentation to the stockholders if he or she so desires and will be
available to respond to appropriate questions.
Pre-Approval Policy for Non-Audit Services
The Audit Committee reviews and pre-approves all non-audit services to be performed by the
Companys independent registered public accounting firm, PricewaterhouseCoopers LLP, subject to
certain de minimis exceptions. Such pre-approval is on a project by project basis. During 2006,
PricewaterhouseCoopers LLP did not provide any non-audit services to the Company.
Audit Fees
The following table sets forth the aggregate fees billed to the Company by
PricewaterhouseCoopers LLP for the fiscal years ended December 31, 2005 and December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2005 |
|
|
2006 |
|
Audit Fees (1) |
|
$ |
703,167 |
|
|
$ |
517,960 |
|
Audit-Related Fees |
|
|
|
|
|
|
|
|
Tax Fees |
|
|
|
|
|
|
|
|
All Other Fees |
|
|
|
|
|
|
1,500 |
|
|
|
|
|
|
|
|
Total |
|
$ |
703,167 |
|
|
$ |
519,460 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes fees for professional services rendered for the audit of the Companys annual
financial statements, the audit of managements assessment of internal control over financial
reporting and the effectiveness of internal control, reviews of the financial statements
included in quarterly reports on Form 10-Q and services that are normally provided by the
Companys independent registered public accounting firm in connection with the Companys
statutory and regulatory filings. |
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
YEAR ENDING DECEMBER 31, 2007.
Report of the Audit Committee of the Board of Directors
Management is responsible for the Companys internal control over financial reporting and for
the preparation of the consolidated financial statements in accordance with generally accepted
accounting principles. The Companys independent registered public accounting firm is responsible
for performing an independent audit of the Companys consolidated financial statements in
accordance with standards of the Public Company Accounting Oversight Board (United States) and to
issue a report on the Companys financial statements and of its internal control over financial
reporting. The Audit Committees responsibility is to monitor and oversee these processes.
18
In this context, the Audit Committee has met and held discussions with management and the
independent registered public accounting firm. Management represented to the Audit Committee that
the Companys consolidated financial statements were prepared in accordance with generally accepted
accounting principles, and the Audit Committee has reviewed and discussed the consolidated
financial statements with management and the independent registered public accounting firm. The
Audit Committee discussed with the independent registered public accounting firm matters required
to be discussed by Statement on Auditing Standards No. 61 (Communications with Audit Committees, as
amended).
The Companys independent registered public accounting firm also provided to the Audit
Committee the written disclosure required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee discussed with the
independent registered public accounting firm the independent registered public accounting firms
independence.
Based upon the Audit Committees discussions with management and the independent registered
public accounting firm and the Audit Committees review of the representations of management and
the report of the independent registered public accounting firm to the Audit Committee, the Audit
Committee recommended to the Board of Directors that the audited consolidated financial statements
be included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006
filed with the Securities and Exchange Commission.
Members of the Audit Committee
Gregory D. Waller
Jeffrey ODonnell
Roderick de Greef
The material in this report is not soliciting material and is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after the date hereof and irrespective of any general incorporation
language in any such filing.
19
DEADLINE FOR RECEIPT OF
STOCKHOLDER PROPOSALS FOR 2008 ANNUAL MEETING
If the Company holds its 2008 annual meeting of stockholders on or about the same time as this
years Annual Meeting, then any stockholder desiring to submit a proposal for action at the 2008
annual meeting of stockholders should arrange for such proposal to be delivered to the Company at
its principal place of business no later than December 27, 2007, in order to be considered for
inclusion in the Companys proxy statement relating to that meeting. However, if the Company holds
its 2008 annual meeting of stockholders on a date that is more than 30 days earlier or later than
this years Annual Meeting, then a stockholder proposal must be received by the Company at its
principal place of business in a reasonable amount of time prior to when the Company begins to
print and mail its proxy materials. Matters pertaining to such proposals, including the number and
length thereof, the eligibility of persons entitled to have such proposals included and other
aspects are regulated by the Exchange Act, rules and regulations of the SEC and other laws and
regulations.
SEC rules also establish a different deadline, the discretionary vote deadline, for submission
of stockholder proposals that are not intended to be included in the Companys proxy statement with
respect to discretionary voting. The discretionary vote deadline for the 2008 annual meeting of
stockholders is March 1, 2008 (which is at least 45 calendar days prior to the anniversary of the
mailing date of this proxy statement). If a stockholder gives notice of such a proposal after the
discretionary vote deadline, the Companys proxy holders will be allowed to use their discretionary
voting authority to vote against the stockholder proposal when and if the proposal is raised at the
Companys 2008 annual meeting of stockholders.
The Company was not notified of any stockholder proposals to be addressed at this Annual
Meeting. Because the Company was not provided notice of any stockholder proposal to be included in
the proxy statement within a reasonable time before mailing, the Company will be allowed to use its
voting authority if any stockholder proposals are raised at the meeting.
OTHER BUSINESS
The Board of Directors is not aware of any other matter which may be presented for action at
the Annual Meeting. Should any other matter requiring a vote of the stockholders arise, it is
intended that the proxy holders will vote on such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Paul McCormick
President and Chief Executive Officer
April 18, 2007
20
PROXY ENDOLOGIX, INC.
Proxy Solicited by the Board of Directors
Annual Meeting of Stockholders May 22, 2007
The undersigned hereby nominates, constitutes and appoints Paul McCormick and Robert J. Krist,
and each of them individually, the attorney, agent and proxy of the undersigned, with full power of
substitution, to vote all stock of ENDOLOGIX, INC. which the undersigned is entitled to represent
and vote at the 2007 Annual Meeting of Stockholders to be held at the companys offices at 11
Studebaker, Irvine, California 92618 on May 22, 2007, at 8:00 a.m., Pacific time, and at any and
all adjournments or postponements thereof, as fully as if the undersigned were present and voting
at the meeting, as follows:
THE DIRECTORS RECOMMEND A VOTE FOR ITEMS 1 and 2.
|
|
|
|
|
|
|
|
|
1. |
|
ELECTION OF DIRECTORS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o
|
|
FOR
|
|
o
|
|
WITHHOLD AUTHORITY |
|
|
|
|
all nominees listed below (except
as marked to the contrary below)
|
|
|
|
to vote for all nominees listed below |
|
|
|
|
|
|
|
|
|
|
|
|
|
Election of the following nominees as directors: Paul McCormick, Roderick de Greef and Gregory
D. Waller. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Instructions: To withhold authority to vote for any nominee, print that nominees
name in the space provided below.) |
|
|
|
|
|
|
|
|
|
2. |
|
RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2007: |
|
|
|
|
|
o FOR
|
|
o AGAINST
|
|
o ABSTAIN |
IN THEIR DISCRETION, ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
1
IMPORTANTPLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. WHERE NO
DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS NAMED ON THE
REVERSE SIDE OF THIS PROXY AND FOR THE RATIFICATION OF PRICEWATERHOUSECOOPERS, LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2007.
|
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|
|
Date: , 2007 |
|
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|
(Signature of stockholder) |
|
|
|
|
Please sign your name exactly as it
appears hereon. Executors,
administrators, guardians, officers of
corporations and others signing in a
fiduciary capacity should state their
full titles as such. |
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND RETURN THIS PROXY,
WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
2